Jacobs, J.
The defendants appeal from a Superior Court judgment which orders the sale of property on Valentine Street in Fall River (the locus) found to have been fraudu[703] lently conveyed by Joseph and Dale Callahan and directing that the proceeds be applied to the plaintiff bank’s claim. They argue that the bank is not entitled to such relief after Joseph’s discharge in bankruptcy. We disagree and affirm the judgment.
We take our facts as found by the judge after a jury-waived trial. Following a mortgage foreclosure sale in June, 1977, of property owned by Joseph on South Main Street in Fall River, the bank’s attorney informed him of a deficiency of about $29,000. Anticipating that the bank would look to the locus to satisfy the deficiency Joseph and his wife, Dale, in July, 1977, conveyed it to Richard M. Alegría, who gave no consideration for the conveyance and who then conveyed it to Anita Callahan, the mother of Joseph. The deed to Anita Callahan never was recorded.
After initiating a deficiency action in the District Court, the bank filed the present action in 1978, pursuant to G. L. c. 109A, the Uniform Fraudulent Conveyance Act, seeking to set aside the conveyances to Alegría and Anita Callahan. In 1985, before this action came to trial, Joseph filed a Federal bankruptcy petition and was discharged. The bank’s request for relief from the automatic stay provisions of the Federal Bankruptcy Act,3 originally sought in 1986, was allowed by the Federal District Court in 1988, in an unpublished decision which, in effect, removed any Federal barrier to “state court proceedings against parties other than the Debtor pertaining to the alleged fraudulent conveyance.” In his decision, the Federal judge noted that “[t]he question whether . . . ch. 109A provides any relief for the Bank . . . against parties other than the Debtor ... is a matter to be decided by the state courts unencumbered by a federal bankruptcy stay whose office is to protect only a debtor and his estate.”4 [704] The Superior Court judge concluded that the conveyances to Alegría and Anita were “fraudulent” under G. L. c. 109A, § 7.5
1. The effect of the Federal bankruptcy on the bank’s claim. Placed beyond the reach of a creditor is a conveyance to a “purchaser for fair consideration without knowledge of the fraud at the time of the purchase.” See G. L. c. 109A, § 9(1). The judge found that Anita “did not take title to the property for fair consideration.” A creditor may, pursuant to G. L. c. 109A, § 9(l)(a), have the fraudulently conveyed property “set aside ... to the extent necessary to satisfy his claim.” David v. Zilah, 325 Mass. 252, 256 (1950). See also Joseph P. Manning Co. v. Shinopoulos, 317 Mass. 97, 99 (1944).
While the bank no longer has a remedy against Joseph Callahan, his discharge in bankruptcy neither extinguished his debt nor, in the circumstances, prevents the bank from maintaining its status as a creditor and satisfying its judgment from the property in the hands of the transferee. “It is established that a ‘discharge [in bankruptcy] destroys the remedy but not the indebtedness.’ Zavelo v. Reeves, 227 U.S. 625, 629 (1913).” Groden v. Kelley, 382 Mass. 333, 336 (1981). See Webster v. Kowal, 394 Mass. 443, 447-448 (1985).
It is significant that the trustee in bankruptcy could not have avoided the deeds in question either at the time this action was brought or at the time of trial. That the conveyances occurred more than seven years before the bankruptcy petition was filed puts them well beyond the reach back powers of the trustee under 11 U.S.C. § 547(b) or [705] § 548(a)(1988). In any event, even if the trustee could have avoided the conveyances, he would have been required to bring suit within two years of his appointment on June 3, 1985. 11 U.S.C. § 546(a)(1988).
No Massachusetts cases have come to our attention on the question whether a creditor may utilize G. L. c. 109A once the Federal bankruptcy trustee is time-barred from recovering property that has been fraudulently transferred by the debtor. However, that question has been answered affirmatively by another State’s court in applying the Uniform Fraudulent Conveyance Act in generally similar circumstances. In Dixon v. Bennett, 72 Md. App. 620, 636 (1987), an unsecured creditor brought an action under the Maryland Uniform Fraudulent Conveyance Act seeking to reach certain assets which she claimed had been fraudulently transferred to the defendants. The suit was filed after the debtor had been discharged under the Federal Bankruptcy Act and also after the right of the trustee in bankruptcy to sue to avoid fraudulent transfers had expired. The Maryland Court of Special Appeals held that the creditor’s suit under the State fraudulent conveyance law was not barred once the trustee was precluded from suing to recover assets fraudulently transferred by the debtor. The court reasoned that the barring of the State action after the expiration of the trustee’s powers “would only serve to shield the recipients of fraudulent transfers at the expense of the unsecured creditor.” Id. at 634. Aside from agreeing with the reasoning of this case,6 we are mindful of the direction that our statute “shall be interpreted and construed as to effectuate its general purpose to make uniform the law of those states which enact it.” General Laws c. 109A, § 12.
Free access — add to your briefcase to read the full text and ask questions with AI
Jacobs, J.
The defendants appeal from a Superior Court judgment which orders the sale of property on Valentine Street in Fall River (the locus) found to have been fraudu[703] lently conveyed by Joseph and Dale Callahan and directing that the proceeds be applied to the plaintiff bank’s claim. They argue that the bank is not entitled to such relief after Joseph’s discharge in bankruptcy. We disagree and affirm the judgment.
We take our facts as found by the judge after a jury-waived trial. Following a mortgage foreclosure sale in June, 1977, of property owned by Joseph on South Main Street in Fall River, the bank’s attorney informed him of a deficiency of about $29,000. Anticipating that the bank would look to the locus to satisfy the deficiency Joseph and his wife, Dale, in July, 1977, conveyed it to Richard M. Alegría, who gave no consideration for the conveyance and who then conveyed it to Anita Callahan, the mother of Joseph. The deed to Anita Callahan never was recorded.
After initiating a deficiency action in the District Court, the bank filed the present action in 1978, pursuant to G. L. c. 109A, the Uniform Fraudulent Conveyance Act, seeking to set aside the conveyances to Alegría and Anita Callahan. In 1985, before this action came to trial, Joseph filed a Federal bankruptcy petition and was discharged. The bank’s request for relief from the automatic stay provisions of the Federal Bankruptcy Act,3 originally sought in 1986, was allowed by the Federal District Court in 1988, in an unpublished decision which, in effect, removed any Federal barrier to “state court proceedings against parties other than the Debtor pertaining to the alleged fraudulent conveyance.” In his decision, the Federal judge noted that “[t]he question whether . . . ch. 109A provides any relief for the Bank . . . against parties other than the Debtor ... is a matter to be decided by the state courts unencumbered by a federal bankruptcy stay whose office is to protect only a debtor and his estate.”4 [704] The Superior Court judge concluded that the conveyances to Alegría and Anita were “fraudulent” under G. L. c. 109A, § 7.5
1. The effect of the Federal bankruptcy on the bank’s claim. Placed beyond the reach of a creditor is a conveyance to a “purchaser for fair consideration without knowledge of the fraud at the time of the purchase.” See G. L. c. 109A, § 9(1). The judge found that Anita “did not take title to the property for fair consideration.” A creditor may, pursuant to G. L. c. 109A, § 9(l)(a), have the fraudulently conveyed property “set aside ... to the extent necessary to satisfy his claim.” David v. Zilah, 325 Mass. 252, 256 (1950). See also Joseph P. Manning Co. v. Shinopoulos, 317 Mass. 97, 99 (1944).
While the bank no longer has a remedy against Joseph Callahan, his discharge in bankruptcy neither extinguished his debt nor, in the circumstances, prevents the bank from maintaining its status as a creditor and satisfying its judgment from the property in the hands of the transferee. “It is established that a ‘discharge [in bankruptcy] destroys the remedy but not the indebtedness.’ Zavelo v. Reeves, 227 U.S. 625, 629 (1913).” Groden v. Kelley, 382 Mass. 333, 336 (1981). See Webster v. Kowal, 394 Mass. 443, 447-448 (1985).
It is significant that the trustee in bankruptcy could not have avoided the deeds in question either at the time this action was brought or at the time of trial. That the conveyances occurred more than seven years before the bankruptcy petition was filed puts them well beyond the reach back powers of the trustee under 11 U.S.C. § 547(b) or [705] § 548(a)(1988). In any event, even if the trustee could have avoided the conveyances, he would have been required to bring suit within two years of his appointment on June 3, 1985. 11 U.S.C. § 546(a)(1988).
No Massachusetts cases have come to our attention on the question whether a creditor may utilize G. L. c. 109A once the Federal bankruptcy trustee is time-barred from recovering property that has been fraudulently transferred by the debtor. However, that question has been answered affirmatively by another State’s court in applying the Uniform Fraudulent Conveyance Act in generally similar circumstances. In Dixon v. Bennett, 72 Md. App. 620, 636 (1987), an unsecured creditor brought an action under the Maryland Uniform Fraudulent Conveyance Act seeking to reach certain assets which she claimed had been fraudulently transferred to the defendants. The suit was filed after the debtor had been discharged under the Federal Bankruptcy Act and also after the right of the trustee in bankruptcy to sue to avoid fraudulent transfers had expired. The Maryland Court of Special Appeals held that the creditor’s suit under the State fraudulent conveyance law was not barred once the trustee was precluded from suing to recover assets fraudulently transferred by the debtor. The court reasoned that the barring of the State action after the expiration of the trustee’s powers “would only serve to shield the recipients of fraudulent transfers at the expense of the unsecured creditor.” Id. at 634. Aside from agreeing with the reasoning of this case,6 we are mindful of the direction that our statute “shall be interpreted and construed as to effectuate its general purpose to make uniform the law of those states which enact it.” General Laws c. 109A, § 12.
2. Other issues. Contrary to the defendants’ claim, there is ample evidence in the record to support the judge’s conclu[706] sion that the defendants’ purpose in participating in the conveyances was to hinder, delay or defraud the bank. There was no inconsistency in his concluding also that the defendants Dale and Anita Callahan and Richard Alegría, acting as “passive vehicles,” did not violate G. L. c. 93A. Lastly, there is no merit in the defendants’ contention that the order of sale must be limited by the extent of the interest in the property which Anita Callahan received from Dale Callahan. This action was brought, and the conveyances in question were made, at a time when the characteristics of a tenancy by the entirety were governed by the common law.7 See West v. First Agric. Bank, 382 Mass. 534, 535 (1981). At common law, a wife’s sole interest in property held by her and her husband as tenants by the entirety was her right to survivorship. Licker v. Gluskin, 265 Mass. 403 (1929). See Glen-don, Tenancy By The Entirety In Massachusetts, 59 Mass. L.Q. 53 (1974). When Dale voluntarily joined Joseph in the fraudulent conveyance to Alegría, the tenancy by the entirety was severed and her survivorship interests terminated. See Mt. Washington Coop. Bank v. Benard, 289 Mass. 498, 500-501 (1935); Childs v. Childs, 293 Mass. 67, 70 (1935); West v. First Agric. Bank, supra at 536 n.4; Eno & Hovey, Estate Law § 5.43, at 140 (3d ed. 1995).
Judgment affirmed.