American Trust Co. v. Kaufman

119 A. 749, 276 Pa. 35, 1923 Pa. LEXIS 523
CourtSupreme Court of Pennsylvania
DecidedJanuary 3, 1923
DocketAppeals, Nos. 128 and 129
StatusPublished
Cited by25 cases

This text of 119 A. 749 (American Trust Co. v. Kaufman) is published on Counsel Stack Legal Research, covering Supreme Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Trust Co. v. Kaufman, 119 A. 749, 276 Pa. 35, 1923 Pa. LEXIS 523 (Pa. 1923).

Opinion

Opinion by

Mr. Justice Schaffer,

This proceeding is one of foreign attachment on a judgment recovered in the State of New York. Defend[38]*38ant has taken two appeals, one from a judgment entered against him on a verdict, the oj;her from the refusal of a motion to quash the writ because of its defective return, this motion having been made after the verdict. Both appeals will be disposed of in this opinion.

The firm of Kaufman & Garcey was indebted to plaintiff trust company on promissory notes. It recovered judgment against the copartnership and its members individually in New York and issued a foreign attachment in the Common Pleas of Allegheny County, under which the interest of Kaufman, the appellant, in certain real estate, was attached. He entered an appearance de bene esse for the purpose of challenging the jurisdiction of the court to maintain the writ, on the ground that he possessed no property within its reach, the real estate returned by the sheriff as attached having been conveyed by him to his wife some months prior to the issuing of the attachment in payment of an indebtedness, so he alleged, due by him to her. The property attached consisted of an undivided interest in real estate in the possession of tenants who were also served with the process and summoned as garnishees. The position of plaintiff is that this conveyance made by defendant to his wife through a third person for a nominal consideration was fraudulent and that, as to it, appellant has an interest in the property which is attachable. Appellant set up that he had incurred the indebtedness of his wife prior to the time the deed was made, and that it exceeded the value of the property, and therefore he had no interest in it.

After plaintiff had filed its declaration and affidavit of cause of action, the garnishees moved to dissolve the attachment on the ground that the, appellant did not own the property; this motion was discharged, and, thereafter, appellant entered his special appearance and filed a plea to the jurisdiction, based on the allegation that he did not own and had no interest in the property attached ; on this plea, the case went to trial and at the [39]*39close of the testimony the court gave binding instructions for plaintiff, holding appellant had such an interest in the property as subjected it to attachment.

As part of his proofs, defendant put in evidence the deed from himself and wife to a straw man and from the latter to her for the property in question; these deeds were executed shortly before plaintiff commenced suit; in addition, evidence was submitted on the question whether the indebtedness claimed to be due to the wife was bona fide. She testified in her husband’s behalf that she had loaned money and securities to him to an amount exceeding $30,000 — greater than, the value of the property conveyed to her; in plaintiff’s favor it was shown that in written statements signed by appellant shortly before the execution of the deeds -and intended to disclose his true financial condition, no mention was made of any indebtedness to his wife. It also appeared that in bankruptcy proceedings carried on against him subsequent to the time when it was alleged he had borrowed a considerable part of the money from his wife, he did not list her among his creditors. No notes or other evidences of indebtedness were given by the husband to the wife for the major part of the alleged debt. The wife was not a party to the proceeding we are reviewing and did not intervene in it.

As the wife’s title was acquired for a nominal consideration, the conveyance was voluntary and presumptively fraudulent against creditors of the husband: Chisolm v. Moore, 49 Pa. Superior Ct. 132. “Fraudulent collusion between husband and wife is so easy of execution and so difficult of proof that it is the well-settled rule that a wife claiming as a creditor against other creditors of the husband, must prove her claim by evidence clear and satisfactory to a degree beyond that required of other creditors, and leave no doubt of its good faith and its truth in fact”: Dalley’s Assigned Est., 200 Pa. 140. A conveyance of property made by a debtor to defraud creditors is void as to them: Statute 13 Elizabeth, ch. 5, [40]*40section 2, Robert’s Digest 295; Thomson v. Dougherty, 12 S. & R. 448; Garrison v. Monaghan, 33 Pa. 232; Heath v. Page, 63 Pa. 108; and the title for the purpose of enabling creditors to enforce their debts remains in the grantor just as if the conveyance had not been made: Heath v. Page, 63 Pa. 108; Garrison v. Monaghan, 33 Pa. 232. A judgment creditor is allowed to levy upon and sell any title or interest or supposed interest alleged to be in the grantor and to try the validity of the title afterwards in an action of ejectment: Taylor’s App., 93 Pa. 21; Davis v. Michener, 106 Pa. 395; Hyde v. Baker, 212 Pa. 224, 227; Mantz v. Kistler, 221 Pa. 142.

There can be no question that had plaintiff’s judgment been recovered in Pennsylvania, it could have levied on appellant’s interest in the land and sold it. No satisfactory reason has been offered to us why his interest cannot be attached just as it could be levied upon. If the sale was fraudulent, the property, so far as creditors were concerned, was just as much the defendant’s as it' was before he made the deed to his wife and the law will look through the thin veneer of a conveyance to her to the realities of the situation: Delphia Knitting Mills Co., Inc., v. Richards, 62 Pa. Superior Ct. 9; Weber v. Aschbacker, 205 Pa. 558; Curtis & Co. v. Olds, 250 Pa. 320. It is in the interest of fair dealing and common honesty that transactions between husband and wife shall be scrutinized, where the husband is in debt and endeavors to put his property beyond his creditor’s reach, and that the law shall by its processes aid in every possible way an inquiry into the good faith of the transaction. If a conveyance by a husband to a wife is in good faith for a valuable consideration passing from her to him, she has adequate remedies both in law and in equity to protect herself: Hunter’s App., 40 Pa. 194; Natalie Anthracite Coal Co. v. Ryon, 188 Pa. 138; Kreamer v. Fleming, 200 Pa. 414.

Under the circumstances here appearing, not necessary at this time to be further elaborated, and which may [41]*41be given another aspect in litigation in which the wife may be a party, we think the court was justified, at the stage the litigation had reached before it', in giving binding instructions to find for plaintiff on the question of jurisdiction. Every creditor can test the bona fides of such a conveyance; hence, when it appears it was made after the debt to plaintiff arose, the latter has the right, after a sheriff’s sale of the husband’s interest, to contest the wife’s title in ejectment and the jury in that proceeding is the only one which could or should be allowed to pass on that dispute. If the wife desiies to assert her rights prior to the sheriff’s sale, her remedy lies at her hand under the doctrine announced in Hunter’s App., 40 Pa. 194. It was admitted defendant was a nonresident of the State'; this being so, the question whether the writ would lie turned on his ownership of property within the jurisdiction of the court at the time it was issued: Mindlin v. Saxony Spinning Co., 261 Pa. 354.

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Bluebook (online)
119 A. 749, 276 Pa. 35, 1923 Pa. LEXIS 523, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-trust-co-v-kaufman-pa-1923.