In re Thames
| Decision Date | 02 November 1981 |
| Docket Number | Complaint No. 81-0164.,Bankruptcy No. 80-01082 |
| Court | U.S. Bankruptcy Court — District of South Carolina |
| Parties | In re Henry W. THAMES, Jr. and Janet D. Thames, d/b/a The Flower Shop, Debtors. Kevin CAMPBELL, Trustee, Plaintiff, v. Janet D. THAMES and Henry W. Thames, Jr., Defendants. |
Ackerman, Woodard & Campbell, Walterboro, S.C., for plaintiff.
Harvey, Battey & Bethea, P.A., Beaufort, S.C., for defendants.
The plaintiff, as trustee in bankruptcy, asks this court to set aside a transfer of a one-half undivided interest in real property by the debtor H. William Thames, Jr., to his wife, Janet D. Thames (both debtors herein), on the ground that it was a fraudulent transfer under 11 U.S.C. § 548(a)(2) of the Bankruptcy Code because it was made without adequate consideration while Mr. Thames was insolvent. The plaintiff also asks this court to deny Mrs. Thames' claim of exemption in the transferred property.1 The defendants request that the complaint be dismissed. The plaintiff has moved for summary judgment.
For the reason that no money or other consideration was given by Mrs. Thames for the transfer, the trustee contends that, regardless of the intent of the defendants in making the transfer, it is fraudulent under § 548 which provides, in pertinent part:
The defendants argue that because, at the time of the transfer, Mrs. Thames equitably owned the property interest no consideration for the transfer was required.
1. H. William Thames, Jr. and Janet D. Thames, the debtors-defendants herein, have been married for approximately twenty years.
2. On February 21, 1975, the defendants jointly purchased, for use as their residence, a house and four lots in Beaufort County, South Carolina, financing the purchase by note and mortgage. They intended to have the property jointly owned, i.e., jointly titled.
3. While all previous residences owned by them were titled in both defendants, the new residence, through error and without their desire, was titled only in the name of Mr. Thames.
4. The defendants, shortly after February 21, 1975, sold the house in which they had been living and which they owned as tenants in common, and applied a portion of the proceeds to improving their new residence.
5. The mortgage payments on the new residence were paid partially out of a joint checking account of the defendants, and partially by a flower business operated by Mrs. Thames.
6. The greater part of the defendants' income during their marriage has been earned by Mrs. Thames.
7. The defendants became aware of the titling error in November 1980 when, as a result of financial difficulties, they consulted an attorney concerning the filing of a bankruptcy case.
8. Pursuant to the advice of counsel, Mr. Thames, on November 21, 1980, conveyed an undivided one-half (½) interest in the residence to Mrs. Thames by deed which recited, as consideration for the transfer, a sum representing: (a) Mrs. Thames' one-half of the mortgage payments paid against the principal balance of the outstanding loan secured by their residence, and (b) Mrs. Thames' promise to assume one-half of the said loan obligation on which she already was obligated as an original promisor. The mortgage shows that she and her husband were the original mortgagors.
9. At the time of the November 21, 1980 transfer, Mr. Thames was insolvent.
10. On December 18, 1980 the defendants voluntarily filed a joint petition for relief under Chapter 7 of the Bankruptcy Code (11 U.S.C. §§ 701 et seq.). In the petition, both Mr. and Mrs. Thames claimed (under 11 U.S.C. § 522(d)(1)) an exemption in their respective interests in the property.
11. The transfer was within one year before the filing of the petition for relief.
12. Kevin Campbell is the duly appointed trustee of the debtors' estate.
1. A transfer by a debtor may be avoided by the trustee under § 548(a)(2) if (1) the transfer was made with intent to hinder, delay, or defraud, or (2) the debtor-transferor was insolvent on the date of the transfer and received less than a "reasonably equivalent value" in exchange for the interest transferred. As the party asserting that the transfer is fraudulent, the trustee has the burden of proving the above elements. In re J.K. Chemicals, Inc., 7 B.R. 897 (Bkrtcy.D.R.I.1981); 4 Collier on Bankruptcy ¶ 548.101 at 548-106 (15th ed. 1979).
The transfer to Mrs. Thames may not be avoided because: first, the trustee has not produced any convincing evidence that the transfer was made with intent to hinder, delay or defraud any entity especially since the original titling of the residence in Mr. Thames' name alone seems to have been contrary to the express intentions of Mr. and Mrs. Thames; second, even though Mr. Thames was insolvent at the time of the transfer of the undivided one-half interest in the residence to Mrs. Thames, the trustee has not shown that the transfer was without "reasonably equivalent value" because, at the time of the transfer, Mrs. Thames was already the equitable owner of the interest transferred.
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