Klebach v. Mellon Bank, N.A.

• Decision Date: 06 November 1989
• Citation: 565 A.2d 448,388 Pa.Super. 203
• Parties: Arlene H. KLEBACH v. MELLON BANK, N.A., Appellant. 1198 PITTS. 1988
• Court: Pennsylvania Superior Court

Page 448

565 A.2d 448

388 Pa.Super. 203

Arlene H. KLEBACH v. MELLON BANK, N.A., Appellant.

1198 PITTS. 1988

Superior Court of Pennsylvania.

Argued April 26, 1989.

Filed Sept. 12, 1989.

Reargument Denied Nov. 6, 1989.

Jesse L. Katz, Pittsburgh, for appellant.

William J. Helzlsouer, Dravosburg, for appellee.

Before MONTEMURO, JOHNSON and CERCONE, JJ.

CERCONE, Judge:

This is an appeal from an order entered July 14, 1988 in the Court of Common Pleas of Allegheny County, Civil Division which removed a lien filed by Mellon Bank against real property owned by appellee. We affirm.

The record discloses that Mellon Bank, N.A. (hereinafter "Mellon"), filed a judgment by confession against Edward R. Klebach the former husband of Arlene H. Klebach, in December of 1982. This judgment was entered on December 14, 1982 in Allegheny County and was indexed solely against Edward R. Klebach. On the date of entry, Edward and Arlene Klebach were husband and wife and held title by the entireties to the marital residence located at 633 Regency Drive in Plum Borough, Pennsylvania. The Klebachs were, however, in the midst of a divorce proceeding. Prior to the divorce decree, husband and wife, on December 28, 1982, entered into an agreement in which husband promised to convey his interest in the family residence to the wife, said conveyance to be made simultaneously with the signing of the agreement. On December 30, 1982, the divorce decree was entered in Allegheny County directing Mr. Klebach to convey all of his interest in the marital residence to Mrs. Klebach and incorporating the terms of the agreement. In accordance with the judicial decree, Edward and Arlene Klebach duly executed a deed on January 4, 1983 which was recorded on January 13, 1983.

The case sub judice arose in October of 1987, when appellee, Arlene Klebach, filed an action to quiet title on the Regency Drive property by removing the judgment lien filed by Mellon against her former husband. On December 4, 1987, Mellon revived the judgment against Edward R. Klebach and added Arlene H. Klebach as terre-tenant ¹ of the Regency Drive property. After argument before the Honorable Eugene B. Strassburger III, judgment was granted on the pleadings. The lower court entered an order on July 14, 1988 which declared that Mellon had no lien on the property in question. The instant timely appeal followed.

Appellant Mellon raises three issues for our consideration: (1) whether the lower court erred in granting judgment on the pleadings when a factual issue remained undetermined, namely, whether appellee and her former husband transferred property pursuant to their divorce agreement thereby effectively rendering Edward Klebach insolvent; (2) whether the lower court erred in failing to consider that pursuant to statutory law, property held by a husband and wife as tenants by the entireties is immediately converted to ownership as tenants in common upon the entry of a divorce decree; and (3) whether the transfer of property from ownership by appellee and her former husband to ownership by appellee alone violated the constitutional rights of Edward Klebach's creditors. Thus, the gravamen of appellant's complaint is that the lower court permitted appellee and her former husband to perpetrate a fraud upon the creditors of Edward Klebach in derogation of the statutory law of this Commonwealth.

Our scope of review is plenary when reviewing a trial court's decision to grant judgment on the pleadings. Keystone Automated Equipment v. Reliance Insurance Co., 369 Pa.Super. 472, 475, 535 A.2d 648, 649 (1988), allocatur den. 519 Pa. 654, 546 A.2d 59 (1988). Our appellate role is to determine if the action of the trial court was based on a clear error of law or whether there were facts disclosed by the pleadings which should properly go to the jury. Id.; Vogel v. Berkley, 354 Pa.Super. 291, 296, 511 A.2d 878, 880 (1986). An appellate court must confine its consideration to the pleadings and relevant documents, accept as true all well pleaded statements of fact by the party against whom judgment was granted, and consider only those facts that the party against whom judgment was granted specifically admits. Keystone Automated Equipment, supra 369 Pa.Super. at 475, 535 A.2d at 649. However, we may not consider conclusions of law or unjustified inferences asserted by either party. Jones v. Travelers Insurance Company, 356 Pa.Super. 213, 216, 514 A.2d 576, 578 (1986), allocatur den. Jan. 15, 1987. Judgment on the pleadings may only be granted where no material facts are in dispute and the case is so free from doubt that a trial would clearly be a fruitless exercise. Keystone Automated Equipment, supra 369 Pa.Super. at 475, 535 A.2d at 649. We note that in an action to quiet title, an appellate court ordinarily will not reverse the determination of the lower court absent error of law or a capricious disregard of the evidence. Castronuovo v. Sordoni, 357 Pa.Super. 187, 191, 515 A.2d 927, 929 (1986).

The first and third issues raised by appellant turn on the same facts and we will consider them together. Appellant first contends that the lower court erred in granting judgment on the pleadings because a factual issue remained unresolved. Specifically, appellant argues that it is not possible on the basis of the pleadings to resolve the question of whether appellee and her former husband concluded a divorce agreement with the intent to defraud Edward Klebach's creditors. The gravamen of appellant's complaint as set forth in the third issue is that permitting the Klebachs to transfer property rights away from Edward Klebach pursuant to the divorce agreement, but without the consent of his creditors, rendered Mr. Klebach insolvent in violation of the constitutional rights of the creditors. For the following reasons, we disagree with both contentions.

The law of Pennsylvania is quite clear that a judgment creditor may execute on entireties property to enforce his judgment if both spouses are joint debtors. Arch Street Bldg. & Loan Assn. v. Sook, 104 Pa.Super. 269, 158 A. 595 (1932); In re Riley, 48 B.R. 194 (Bankr.E.D.Pa.1985); Matter of Cipa, 11 B.R. 968 (Bankr.W.D.Pa.1981). However, if only one spouse is a debtor, entireties property is immune from process, petition, levy, execution or sale. Amadon v. Amadon, 359 Pa. 434, 59 A.2d 135 (1948); In re Williamson, 11 B.R. 791, 795 (Bankr.W.D.Pa.1981). See Sterrett v. Sterrett, 401 Pa. 583, 585, 166 A.2d 1, 2 (1960); McGary v. Lewis, 384 Pa. 173, 119 A.2d 497 (1956). In the latter situation, the judgment creditor has only a potential lien against property held by the entireties based on the debtor spouse's expectancy to become sole owner. Wylie v. Zimmer, 98 F.Supp. 298 (E.D.Pa.1951). See also Iscovitz v. Filderman, 334 Pa. 585, 6 A.2d 270 (1939) (property lawfully held by husband and wife as tenants by entireties cannot be reached by creditors of husband). Further, where a husband and wife own property as tenants by the entireties, they may alien it without infringing upon the rights of one spouse's creditors. Stauffer v. Stauffer, 465 Pa. 558, 351 A.2d 236 (1976) (Per Eagen, J., with two justices concurring and three justices concurring in the result); Murphey v. C.I.T. Corp., 347 Pa. 591, 33 A.2d 16 (1943).

In the instant case, Edward and Arlene Klebach entered into an agreement on December 28, 1982, whereby Arlene Klebach was to receive sole ownership of the marital residence in lieu of any other claim she might have in her husband's other interests. The Klebachs were still husband and wife on the date they signed the settlement agreement. Under the law of this Commonwealth, the Klebachs were free to dispose of entireties property pursuant to such an agreement concluded during the term of their marriage without implicating the rights of third party creditors of only one spouse. See C.I.T. Corporation v. Flint, 333 Pa. 350, 5 A.2d 126 (1939) (where husband and wife hold title as tenants by entireties, owner of judgment against husband holds it subject to its possible extinction as lien by change of title caused by act of parties and creditor has no standing to complain of conveyance which prevents property from falling into his grasp). See also Stop 35, Inc. v. Haines, 374 Pa.Super. 604, 543 A.2d 1133 (1988) (judgment creditor of husband could not claim conveyance of entireties property was fraudulent attempt to avoid lien because creditor had no interest in entireties property and could not acquire any interest in such property while both husband and wife were alive and married to one another).

At the time the agreement was concluded between Mr. and Mrs. Klebach, Edward Klebach held no separate interest in the marital residence to which Mellon's lien could attach. Entireties property is simply unavailable to satisfy claims of a creditor of only one of the joint tenants. Patwardhan v. Brabant, 294 Pa.Super. 129, 439 A.2d 784 (1982). It must be kept in mind that the agreement between husband and wife in this case was incorporated into the divorce decree thus carrying along with it the full implication and objective of the Divorce Code. That is, "to effectuate economic justice between the parties who are divorced or separated ... and insure a fair and just termination in settlement of their property rights." 23 Pa.C.S.A. § 102(a)(6). In this case, the wife gave up all her interest in her husband's office building, his insurance brokerage business, all rights to her husband's deferred compensation and extended earnings and she released all rights to equitable distribution of other property. She also assumed the mortgage on the house and released her husband from any responsibility as to mortgage payments when the agreement pertaining to the property transfer was entered into. This exchange of considerations made for a binding contract between husband and wife entered into prior to the divorce decree and was ultimately strengthened by...