creates a presumption of fraud where a conveyance renders the transferor insolvent, id. at § 354, that section only protects creditors existing at the time of conveyance. County of Butler v. Brocker, 455 Pa. 343, 314 A.2d 265, 268 (1974); Baker v. Geist, 457 Pa. 73, 321 A.2d 634, 636 (1974). Section 7 applies to "present or future creditors," id. at § 357; however, in order to establish a fraudulent conveyance under section 7, the City must prove that Isadore Neuman possessed an actual intent to defraud the City, id. The City has made no such averment.
II. The Trust is Not Liable as Eastern States' Successor
Although the City referred to the Sarah Kate Neuman Trust as the "successor-in-interest" to Eastern States in its complaint, Am. Compl. at 4, in its response to defendants' motion for summary judgment, it does not pursue this theory of recovery. Nonetheless, I will briefly discuss why successor liability fails as an alternative argument.
It is well-settled under Pennsylvania law that when one company sells or transfers all of its assets to another, the transferee does not become liable for the debts and liabilities, including torts, of the transferor. Polius v. Clark Equipment Co., 802 F.2d 75, 77 (3d Cir. 1986). There are, however, four generally recognized exceptions to this rule of non-liability. The transferee may be held liable where: (1) it expressly or impliedly assumes the obligations of the transferor; (2) the transaction amounts to a consolidation or a de facto merger; (3) the transferee is a mere continuation of the transferor; or (4) the transaction is fraudulent and intended to escape liability. Id. at 78; Philadelphia Elec. Co. v. Hercules, Inc., 762 F.2d 303, 308-09 (3d Cir. 1985).
There is no evidence that the trustees ever agreed -- either expressly or impliedly -- to assume the obligations of Eastern States. There was no " de facto merger" since the trust is an interest in property, not a corporate entity. The trust is clearly not a continuation of Eastern States since it is not in the business of manufacturing paint and varnish. Finally, there has been no allegation that either Neuman or the trustees intended to defraud the City. See supra pp. 1494-1495. It follows that the trust is not liable as the "successor-in-interest" to Eastern States since no exception to the rule of non-liability applies to the transfer of assets from the company to the trust.
The City is not a corporate creditor of Eastern States; therefore, it cannot have the transfer of assets from Eastern States to the Sarah Kate Neuman Trust voided. The City cannot pursue the assets of the trust under a successor liability theory. An order follows.
AND NOW, this 1st day of May, 1989, it is hereby ordered that the summary judgment motion of defendants Nathan Auritt and Riva Snyderman, trustees of the Sarah Kate Neuman Trust, is granted. Judgment is hereby entered in favor of defendants Auritt and Snyderman and against Plaintiff. Defendants Auritt and Snyderman are dismissed from this action.