Turner v. Hudson Cement & Supply Co. of Baltimore City

• Court: Maryland Supreme Court
• Citation: Turner v. Hudson Cement & Supply Co. of Baltimore City, 104 A. 455, 133 Md. 134 (Md. 1918)
• Decision Date: 20 June 1918
• Docket Number: 24.
• Parties: TURNER et al. v. HUDSON CEMENT & SUPPLY CO. OF BALTIMORE CITY et al.
• Writing for the Court: BOYD, C.J.

104 A. 455

133 Md. 134

TURNER et al. v. HUDSON CEMENT & SUPPLY CO. OF BALTIMORE CITY et al.

No. 24.

Court of Appeals of Maryland

June 20, 1918

Appeal from Circuit Court of Baltimore City; Morris A. Soper, Judge.

Suit by the Hudson Cement & Supply Company of Baltimore City and others against Roberta L. Turner and Carroll A. Turner, her husband, and Frederick E. Tobe. From the decree, defendants appeal. Reversed, and cause remanded.

THOMAS, PATTISON, STOCKBRIDGE, and CONSTABLE, JJ.

Benjamin Rosenheim and Myer Rosenbush, both of Baltimore, for appellants.

John C Kumpf and Ferdinand C. Dugan, both of Baltimore (Meyer Steinberg, of Baltimore, on the brief), for appellees.

BOYD C.J.

The bill of complaint was filed in this case by the appellees against the appellants to set aside two deeds made by Frederick E. Tobe to his daughter, Roberta L., who is now Mrs. Turner, a deed from Roberta L. Turner and her husband to said Tobe, and a lease from him to his daughter, and to sell the property described in the deeds and apply the net proceeds to the payment of the claims alleged to be due the plaintiffs. The American Exchange & Savings Bank and the West North Avenue Savings & Loan Association, mortgagees, were also made defendants. A decree was passed, adjudging (1) that Frederick E. Tobe was indebted to the Lafayette Mill & Lumber Company in the sum of $6,454, to the Hudson Cement & Supply Company in the sum of $664.94, to George H. Harrington & Bro in the sum of $187.79, and to A. Weiskittel & Son Company in the sum of $191.39; (2) that the deeds and lease be set aside; and (3) that the properties, or so much thereof as may be necessary, be sold subject to the mortgages thereon. From that decree this appeal was taken.

The evidence shows that Frederick E. Tobe was what is spoken of as a "bonus builder," and had been for some years. In this instance a Mr. Lauer made an arrangement with Mr. Tobe, and after Mr. Lauer's death his wife continued the arrangement, by which she advanced at different stages of completion of the houses built on her property 75 per cent. of the cost, and then made leases to Tobe subject to ground rents, varying from $70 to $120 per annum. He then executed mortgages to her to secure the amounts so advanced. The appellees furnished Tobe with materials used in the houses. This had been going on for some years, and the Hudson Cement & Supply Company and the Lafayette Mill & Lumber Company had large dealings with Tobe.

On May 5, 1910, Tobe assigned to his wife, for a consideration named in the deed as $3,500 a leasehold property known as No. 2403 West North avenue, subject to an annual ground rent of $120. On the same day she gave a mortgage to the West North Avenue Savings & Loan Association for $1,040. On May 7, 1914, the Provident Realty Corporation conveyed to her and to her husband, as tenants by the entireties, a property known as 2804 Garrison avenue. On that day they gave a mortgage on that property to the West North Avenue Savings & Loan Association for $1,768. Mrs. Tobe died on November 8, 1914, and her husband qualified as her administrator on November 12th. On November 24th an inventory was returned which included the leasehold property on West North avenue, appraised at $2,500. On the same day the administrator filed an account, distributing that property-one-third to himself, as surviving husband, and two-thirds to his daughter-Roberta L. Tobe (now Turner). On the same day he executed a deed as administrator, conveying the property to himself and his daughter in the proportions mentioned, and also on that day assigned his third interest in that property to his daughter. On February 17, 1915, Roberta L. Tobe gave a mortgage on the North avenue property to the West North Avenue Savings & Loan Association for $1,976, the other mortgage having been taken up or paid off. On December 3, 1914, Frederick E. Tobe conveyed to his daughter the Garrison avenue property. On August 11, 1915, she mortgaged it to the American Exchange & Savings Bank for $3,500. The same day she and her husband conveyed it to Frederick E. Tobe, and he leased it to her, reserving a ground rent of one cent per annum.

We do not deem it necessary to discuss the transfer of the Garrison avenue property from Mr. and Mrs. Turner to Tobe and the lease from him to his daughter, as they were evidently made simply for the purpose of making it leasehold, instead of fee-simple property. We do not understand the appellees to question the title of Mrs. Tobe to those two properties, and the bill does not attack the deeds to her. As the one-third interest in the leasehold on West North avenue was distributed to him, and as the survivor of his wife he became entitled to the Garrison avenue property in fee, they being tenants by entireties, our inquiry will be confined to his right to convey them to his daughter.

It would have saved us some labor in ascertaining the amounts of the liabilities and assets of Tobe at the dates of the transfers, if more concise statements giving them had been in the record, but for the purposes of this opinion it will be sufficient to adopt the admission in the appellants' brief and what Mr. Tobe himself testified to. In that brief is the following:

Liabilities of F. E. Tobe, December 3, 1914.

Lafayette Mill & Lumber Co ..............	$5,455.77
Hudson Cement & Supply Co ................	1,311.00
Harrington & Bro ...........................	317.00
Sundry other creditors .....................	500.00
-----------	----------
Total liabilities, December 3, 1914,	$7,583.77

In the examination in chief of Mr. Tobe this appears:

"Q. That made your total assets on December 3, 1914, $11,725; is that correct? A. About that; yes. Q. And your total liabilities as $7,583.77? A. About that. Q. Making you have an excess of assets over liabilities of $4,142; is that right? A. Yes." The appellants contend that at the dates of those transfers he had ample property to meet his obligations, and hence he had the right to convey the properties to his daughter; but, without taking up each item included in the statement of his resources, it is clear that most of them were subject to reductions. The ground rent and interest on prior mortgages had to be deducted out of the proceeds of sales that he made, but were not allowed in the estimates of resources. There were other items which were at least questionable, and, if not allowed, as the appellees contend they should not be, there was no excess of assets at the time of the transfers. But, without discussing them, and conceding that there was the nominal excess testified to by Tobe, the evidence showed that he was contracting new debts and making use of the assets he had, which were of a very doubtful character-being dependent upon his ability to sell the property. The mortgages he had were second or third mortgages, and the equities in other properties were on unfinished houses and leasehold lots, the titles to which were not as a rule in him. That they were of a most unsatisfactory character is shown by the fact that when there was a foreclosure of some of the mortgages the property brought much less than the estimates of Tobe, and nothing went to the second mortgages on them. The collection of those which were collected was postponed until Tobe could make sales of the properties, which of itself would, in many instances, have delayed the creditors for several years if they had to rely on them. We can have no doubt that when he transferred the properties to his daughter he did not have sufficient assets, or of such kind as authorized him to do so.

In one of the latest cases in this court on the subject (Wilmer v. Placide, 131 Md. 399, 102 A. 541), we quoted from Goodman v. Wineland, 61 Md. 449, where it was said that:

"It is a 'hindrance' to creditors for a debtor to dispose of his real property and tangible chattels, which are readily subjected to execution, and compel them to reply upon merely personal obligations, with the risks and the necessity for numerous attachments usually incident to such a resource."

In the Wineland Case it was contended that he had ample means outside of what he had conveyed to his wife, and, immediately preceding what we have quoted above, the court said:

"It is further to be observed that in showing the debts due to Wineland, they are not such means as can be considered equal to real and personal property, such as was conveyed to his wife, in their availability to creditors for the prompt satisfaction of their claims."

In Bullett v. Worthington, 3 Md. Ch. 99, the chancellor on page 106 said:

"If there be a reasonable doubt of the adequacy of his means, or if his property be so circumstanced that delays, difficulties, and expense must be encountered before it can be made available to his creditors, then, as I conceive, the voluntary conveyance must fall, because then it has the effect to delay and hinder his creditors."

That was quoted with approval by Judge Eccleston in Williams v. Banks, 11 Md. 198, and was not disapproved of by the other judges in that case, and was later approved in Warner v. Dove, 33 Md. 579. In the latter case, the effort was to set aside three sales of real estate which had been conveyed to the wife by third parties. While under the circumstances there proven the court refused to set aside the deeds, the decision does not support the contention of the appellant that the appellees are not entitled to relief, because the properties owned by Tobe at the time he made the deeds were of the same character as those he had when the debts were contracted, as the facts were so different. It was there said:

"The evidence in our judgment shows beyond reasonable doubt that the husband

...