Toff v. Vlahakis

• Decision Date: 14 March 1955
• Citation: 112 A.2d 340,380 Pa. 512
• Parties: Herbert TOFF, Trustee for Estate of James P. Vlahakis, Bankrupt, v. Stella J. VLAHAKIS, Appellant.
• Court: Pennsylvania Supreme Court

112 A.2d 340

380 Pa. 512

Herbert TOFF, Trustee for Estate of James P. Vlahakis, Bankrupt, v. Stella J. VLAHAKIS, Appellant.

Supreme Court of Pennsylvania.

March 14, 1955

Trustee in bankruptcy of deceased proprietor of restaurant brought suit in equity against the proprietor's wife to recover funds transferred by proprietor to his wife, on ground that the transfer constituted a fraudulent conveyance. The Court of Common Pleas of Northampton County, at No. 4 June term, 1953, in Equity, Carleton T. Woodring, J., entered decree against wife, and wife appealed. The Supreme Court Jones, J., No. 108, January term, 1955, held that where proprietor of restaurant assigned his leasehold interest received checks from assignee, and gave checks endorsed in blank to his wife at time when he was insolvent, and wife cashed checks as proprietor's agent and expended proceeds for care of proprietor, who was suffering from cancer, and for his funeral expenses, transfer of checks by proprietor to wife was a ‘ fraudulent conveyance’ within meaning of the Uniform Fraudulent Conveyance Act, and that proprietor's trustee in bankruptcy could recover funds from proprietor's wife.

Decree affirmed.

Nathan L. Reibman, Easton, for appellant.

Raymond J. DeRaymond (of Coffin & Grifo), and George F. Coffin, Jr., Easton, for appellee.

Before STERN, C. J., and STEARNE, JONES, BELL, CHIDSEY, and MUSMANNO, JJ.

JONES Justice.

Herbert Toff, as trustee of James P. Vlahakis in bankruptcy, instituted this suit in equity against the bankrupt's wife, Stella J. Vlahakis, to recover funds transferred by Vlahakis to his wife without adequate consideration while he was either insolvent or rendered insolvent by the transfer. The complaint alleged that, in the circumstances pleaded, the transfer constituted a fraudulent conveyance within the intendment of the Uniform Fraudulent Conveyance Act of May 21, 1921, P.L.1045, 39 P.S. § 351 et seq. The defendant answered, denying that the transfer was made with the intent to hinder, delay or defraud the husband's creditors. The plaintiff thereupon moved for judgment on the pleadings which the court below granted. This appeal by Stella J. Vlahakis followed.

For the purpose of passing upon a plaintiff's motion for judgment on the pleadings, the well pleaded allegations of fact contained in the defendant's answer are to be taken as true. Wark & Co. v. Twelfth & Sansom Corporation, 378 Pa. 578, 580, 107 A.2d 856. But, the inferences to be drawn from the pleaded facts are deducible by an appellate court, and conclusions of law are, of course, reviewable. London v. Kingsley, 368 Pa. 109, 111, 81 A.2d 870. And, while a summary judgment is to be entered only in a clear case, if the complaint sufficiently pleads a cause of action and the answer fails to present a meritorious legal defense, judgment for the plaintiff on the pleadings should, on motion, be entered in the interest of expediting justice. Wark & Co. v. Twelfth & Sansom Corporation, supra; Madison-Kipp Corporation v. Price Battery Corporation, 311 Pa. 22, 25, 166 A. 377. Viewing the pleading in this case with the foregoing legal principles in mind, the following material facts appear.

On May 17, 1951, Vlahakis assigned to one Joseph L. Friedman, for a stated consideration of $5,000, his leasehold interest in premises in Easton, Pennsylvania, where he had installed fixtures and operated a restaurant. At the time of the assignment of the lease, Vlahakis received from Friedman a check in the sum of $2,000. The balance of the consideration was paid to an escrow agent to be held pending Vlahakis' vacation of the premises and the completion of certain repairs thereto. Vlahakis gave notice to his creditors that he was liquidating his assets, and on June 5, 1951, sold the restaurant fixtures at public sale for the ostensible benefit of his creditors. The proceeds of the sale, however, were barely sufficient to pay the expenses incident to the sale, and Vlahakis made no payments to his creditors. On June 11, 1951, Vlahakis and Friedman, by a supplemental agreement, arranged that the $3,000 held by the escrow agent should be distributed as follows: $500 to be retained by the escrow agent pending completion of the repairs to the demised property; $140 to be paid to Friedman; and the balance ($2,360) to be paid to Vlahakis, for which he contemporaneously received a check in that amount. Vlahakis then endorsed in blank this check and the earlier check for $2,000 and turned them over to his wife. Both checks were presented by Mrs. Vlahakis for payment which she received. Shortly thereafter Mrs. Vlahakis took her husband to Florida with her. About a month later (viz., July 20, 1951), the petition of Vlahakis' creditors, whereon he was adjudged bankrupt by the United States District Court for the Eastern District of Pennsylvania, was filed, and on December 18, 1951, the District Court appointed the present plaintiff, Herbert Toff, as trustee of Vlahakis' estate in bankruptcy. Vlahakis died in July, 1952.

Following an unavailing attempt to recover amicably from Mrs. Vlahakis for the benefit of the bankrupt's estate, the trustee instituted the present suit in equity in the Court of Common Pleas of Northampton County and compelled an appearance by the defendant through the issuance of a writ of foreign attachment against her, attaching real estate in Easton owned by Mrs. Vlahakis individually.

The complaint averred facts substantially as above recited and asserted that the sale of the leasehold was carried out with the intent to hinder, delay and defraud creditors of the insolvent husband; that the transfer to Mrs. Vlahakis of the procees of the sale of the leasehold, without consideration, rendered Vlahakis insolvent; and that his wife was fully award of her husband's insolvency when she received and cashed the checks aggregating $4,360. The plaintiff prayed the court to compel Mrs. Vlahakis to restore the $4,360 to the bankrupt's estate or to enter a judgment against the defendant in that amount.

In her answer, Mrs. Vlahakis admitted that her husband was insolvent at the time he gave her the checks but denied that the delivery to her of the checks endorsed in blank constituted a conveyance within the contemplation of the Uniform Fraudulent Conveyance Act, cit. supra. The defendant further alleged that, at all times presently material, her husband was afflicted with an advanced stage of cancer which required his confinement to bed; that, because of his physical disability, he was unable to attend to his own business affairs; that, at her husband's request and insistence, she undertook to act for him at his direction and subject to his...