Van Royen v. Lacey, 423

• Decision Date: 11 May 1971
• Docket Number: No. 423,423
• Citation: 262 Md. 94,277 A.2d 13
• Parties: Irene Fetty VAN ROYEN v. Robert H. LACEY, Jr., et al.
• Court: Maryland Court of Appeals

Page 94

262 Md. 94

277 A.2d 13

Irene Fetty VAN ROYEN v. Robert H. LACEY, Jr., et al.

No. 423.

Court of Appeals of Maryland.

May 11, 1971.

Joseph A. Mattingly, Bethesda, for appellant.

Charles Norman Shaffer, Rockville (Shaffer, McKeever & Fitzpatrick, Rockville, on the brief), for appellees.

Argued before HAMMOND, C. J., and BARNES, McWILLIAMS, FINAN, SINGLEY, SMITH and DIGGES, JJ.

FINAN, Judge.

On December 4, 1970, the Circuit Court for Montgomery County (Shearin, J.) sustained the appellees' demurrer to a declaration filed by Irene Fetty Van Royan (appellant) in which she alleged a conspiracy among the defendant-appellees to defraud her by means of certain real estate transfers. On December 10, 1970, judgment was entered for the appellees, Robert H. Lacey, Jr., Marianne K. Lacey, his wife, Rose F. Kelly, his mother-in-law and Robert A. Hickey, a brother-in-law.

The events culminating in the present appeal began in December, 1965, when the appellant gave $15,000 of her money to appellee Robert H. Lacey, Jr. (Lacey) to be invested on her behalf. Instead, Lacey converted the money to his own use. Upon discovering the defalcation, the appellant sued Lacey for conversion in July, 1966.

In January, 1967, while the suit for conversion was pending and unbeknownst to the appellant, Lacey, his wife, and his mother-in-law conveyed a house in Montgomery County to Lacey's brother-in-law for no consideration. The house and property had been owned by Lacey, his wife, and his mother-in-law as joint tenants. Immediately thereafter, the brother-in-law reconveyed the property to Marianne K. Lacey and her mother Rose F. Kelly, against without any consideration passing between the parties. The result contemplated by these transfers was to divest Lacey of any interest in the property. On the same day, January 7, 1967, Marianne K. Lacey and Rose F. Kelly placed a $20,000 deed of trust on the property, replacing a then existing deed of trust for $16,155.22. The difference of $3,844.78 was spent by Marianne Lacey and her mother Rose F. Kelly, again for household expenses. (Lacey, his wife, and his mother-in-law, along with the Lacey children, all lived in the house in question.)

In July, 1967, the appellant was awarded a $15,900 judgment against Lacey in her suit for the conversion of her $15,000, but she could find no assets from which to satisfy the judgment. During the summer of 1968, the appellant learned of the above described real estate transfers and filed an equity suit to have the two conveyances set aside as fraudulent. In December, 1969, Judge James H. Pugh, sitting as a chancellor in equity, determined that the conveyances had been fraudulently made, declared them null and void, and ordered the deeds in question set aside. We affirmed in Lacey v. Van Royen, 259 Md. 80, 267 A.2d 91 (1970).

On August 13, 1970, the appellant filed a declaration in the Circuit Court for Montgomery County alleging that the appellees (Lacey, his wife, his mother-in-law, and Robert A. Hickey) had fraudulently conspired to prevent the appellant from satisfying the judgment she had received in her original suit against Lacey by means of the real estate transfers which had been set aside in the equity suit. In an amended bill of complaint, the appellant demanded judgment of $10,000 compensatory and $100,000 punitive damages from each of the appellees. The trial court sustained the appellees' demurrer without leave to amend and entered judgment against the appellant for costs on December 10, 1970. This appeal followed.

The question we must decide is whether a general, unsecured creditor who has no lien on the debtor's property, nevertheless has a sufficient legal interest in the property to enable her to maintain an action for conspiracy against the debtor and his co-conspirators who had fraudulently transferred the property in order to hinder, delay, or defraud that creditor. For the reasons which follow, our answer is in the negative, and we affirm the judgment of the lower court.

It would appear to be well settled law in this State that a conspiracy, standing alone, is not actionable. In order for a civil action for conspiracy to be maintained there must be, in addition to a confederation of two or more persons, (1) some unlawful act done in furtherance of the conspiracy, and (2) actual legal damage resulting to the victim-plaintiff. Damazo v. Wahby, 259 Md. 627, 638, 270 A.2d 814 (1970); Kimball v. Harman, 34 Md. 407, 409-410 (1871).

In the equity suit to set aside the conveyance among the several appellees, the chancellor ruled that the transfers should be set aside as violative of either Section 4 (conveyance by insolvent) or Section 7 (conveyance made with intent to defraud) of the Uniform Fraudulent Conveyance Act. Maryland Code (1971 Repl. Vol.), Art. 39B, §§ 4, 7. We specifically affirmed that ruling on appeal. Lacey v. Van Royen, supra, 259 Md. at 94, 267 A.2d 91. It would appear, then, that these conveyances were an 'unlawful act' within the meaning of Kimball v. Harman, supra, and satisfy the first prerequisite to maintaining a civil suit for conspiracy.

However, it is in her attempt to prove 'actual legal damage' that the appellant's case falls short. She alleged in her declaration that the fraudulent conveyances by the appellees reduced her lien on the property by $1,281.59. She arrived at that figure by taking one-third of the $3,844.78 surplus realized by Marianne K. Lacey and her mother Rose F. Kelly from their re-financing of the property at the time of the conveyances to and from the brother-in-law, Robert A. Hickey, on January 7, 1967, reasoning that the decision in Lacey v. Van Royen had the effect of restoring Lacey's undivided one-third interest in the property (and presumably a one-third interest in the amount of the surplus). Specifically, she states as follows in her brief:

'The appellant contends that when she had gotten a judgment against Robert H. Lacey, Jr. for $15,900.00 (in the suit for conversion), she also obtained an inchoate lien against his real estate in that amount. That by instituting the fraudulent conveyance suit (the equity action) and prevailing in it she reduced her inchoate lien to a true legal lien. That if she can now prove in a third suit that the conspiracy of the defendants caused her lien to be reduced by some $1200.00 in value that she has a cause of action for this wrong which is properly alleged in the amended declaration.'

Assuming, arguendo, the validity of the appellant's contention, it is manifest that she obtained no legal lien on the property in question until at least July 14, 1967, the date of the judgment in her suit against Lacey for conversion. Code (1966 Repl. Vol.), Art. 26, §§ 20, 21; Maryland Rule 620 a. This was, of...