In Tyers the trial court found that the grantor-husband owed a legitimate debt to the grantee-wife which exceeded the value of the property interest conveyed, and that that debt provided sufficient consideration for the husband's conveyance of property to the wife.Summary of this case from In re Andersen
The plaintiff, who had received an unsecured $50,000 promissory note from the defendant M as partial payment for a restaurant the plaintiff had sold to him, sought, in two actions that were consolidated in the trial court, to collect the unpaid balance of the note and to set aside M's allegedly fraudulent conveyance of an interest in certain real property to his wife, the defendant A. M had quitclaimed to A his interest in their marital residence after she demanded repayment of certain funds he had obtained from her for use in the purchase of the restaurant. The trial court rendered judgment in favor of the plaintiff in the collection action and in favor of the defendants in the fraudulent conveyance action. On the plaintiffs appeal, held that the trial court was entitled to accept the testimony of M that he did not intend to deprive the plaintiff of money owed when he made the transfer, and that court's finding that he had transferred the property in partial satisfaction of a debt owed to A was not clearly erroneous.
Argued December 8, 1989
Decision released February 20, 1990
Actions to recover on a promissory note and to set aside an alleged fraudulent conveyance, and for other relief, brought to the Superior Court in the judicial district of Waterbury, where the cases were consolidated for trial; thereafter, the matter was referred to Hon. James T. Healey, state trial referee, who, exercising the powers of the Superior Court, rendered judgment for the plaintiff to recover on the promissory note and for the defendants in the action to set aside the conveyance, and the plaintiff appealed. No error.
Jeffrey D. Ginzberg, for the appellant (plaintiff).
Donald W. McGill, with whom, on the brief, was Rene G. Martineau, for the appellees (defendants).
This is an appeal from a judgment of the trial court, Hon. James T. Healey, state trial referee, refusing to set aside an allegedly fraudulent transfer of real property. The dispositive issues are: (1) whether the trial court failed to consider one of the two alternative tests required to establish a fraudulent conveyance; and (2) whether the trial court's factual determinations are supported by the evidence. We find no error.
The trial court found the following: On July 31, 1984 the Travelers Insurance Company paid the defendant Aizije Coma $115,000 in satisfaction of a workers' compensation claim. This sum represented compensation for a permanent injury to Mrs. Coma's right arm. Mr. Coma thereafter deposited the entire amount of the compensation settlement into a passbook money market bank account that she owned jointly with her husband, the named defendant Medi Coma. Each defendant could withdraw the entire sum of money any time.
Thereafter, Mr. Coma requested permission from Mrs. Coma to borrow funds from the settlement proceeds for his own business purposes. Mrs. Coma consented to the withdrawals, but only upon the expected condition that all funds withdrawn be repaid. Mr. Coma agreed. Mrs. Coma never withdrew any of the funds herself, but consented to the withdrawals made by Mr. Coma.
On November 22, 1985, Mr. Coma purchased a restaurant business from the plaintiff. Mr. Coma gave the plaintiff an unsecured $50,000 promissory note as part of the purchase price. Both defendants intended the restaurant to be a gift for their twenty-one year old son. For a variety of reasons the business was not profitable.
On November 1, 1987, Mr. Coma defaulted on the payment of the promissory note held by the plaintiff On April 24, 1988, he closed the doors of the restaurant. By that date, the contents of the joint money market bank account had been exhausted. Mrs. Coma thereupon demanded immediate repayment of all sums that Mr. Coma owed her.
On May 25, 1988, Mr. Coma executed a quitclaim deed transferring to Mrs. Coma his one-half interest in the marital premises, located in Wolcott. The stated consideration on the deed was $75,000. At the time of the conveyance, the fair market value of the property was approximately $250,000, and it was subject to mortgages approximating $150,000. Mr. Coma had no other assets at that time.
On June 20, 1988, nearly one month after the conveyance, the plaintiff began a collection action seeking the balance due on the note. Incident thereto, the plaintiff sought, by way of prejudgment remedy, to attach Mr. Coma's interest in the marital premises. On January 23, 1989, the plaintiff, having discovered the earlier conveyance, commenced a second action, this time against both defendants, seeking to set aside the transfer as a fraudulent conveyance. The two actions were thereafter consolidated for trial.
On June 26, 1989, the trial court rendered judgment in the collection action in favor of the plaintiff, against Mr. Coma, in the amount of $45,695.70 together with interest of $7824.21. In the fraudulent conveyance action, however, the trial court rendered judgment in favor of the defendants. The plaintiff appealed from the judgment in the fraudulent conveyance action to the Appellate Court. We thereafter transferred the matter to ourselves pursuant to Practice Book 4023.
On appeal, the plaintiff raises three claims of error: (1) the trial court erred in considering only one of the two alternative tests for establishing a fraudulent transfer; (2) the trial court erred by concluding that there was good consideration for the transfer of the property from Mr. Coma to Mrs. Coma; (3) the trial court erred in failing to conclude that Mrs. Coma made an inter vivos gift to Mr. Coma of the compensation settlement proceeds, rather than a loan.
The party seeking to set aside a conveyance as fraudulent bears the burden of proving either: (1) that the conveyance was made without substantial consideration and rendered the transferor unable to meet his obligations; or (2) that the conveyance was made with a fraudulent intent in which the grantee participated. Bizzoco v. Chinitz, 193 Conn. 304, 312, 476 A.2d 572 (1984); Zapolsky v. Sacks 191 Conn. 194, 200, 464 A.2d 30 (1983). The party seeking to set aside the conveyance need not satisfy both alternatives. Bizzoco v. Chinitz, supra.
General Statutes 52-552 provides that "[a]ll fraudulent conveyances suits, judgments, executions or contracts, made or contrived with intent to avoid any debt or duty belonging to others, shall, notwithstanding any pretended consideration therefore, be void as against those persons only their heirs, executors, administrators or assigns, to whom such debt or duty belongs."
The plaintiff argues that the trial court failed to apply the second test, i.e., that Mr. Coma made the conveyance with a fraudulent intent in which Mrs. Coma participated. We do not agree.
Whether the conveyance in question was fraudulent is purely a question of fact. Zapolsky v. Sacks, supra. Fraudulent intent must be proved, if at all, by "`"clear, precise and unequivocal evidence."' [Alaimo v. Royer, 188 Conn. 36, 39, 448 A.2d 207 (1982)]." J. Frederick Scholes Agency v. Mitchell, 191 Conn. 353, 358, 464 A.2d 795 (1983). This standard of proof applied to intra-familial conveyances. Where the factual basic of the court's decision is challenged we must determine whether the facts set out in the memorandum of decision are supported by the evidence. See Pandolphe's Auto Parts, Inc. v. Manchester, 181 Conn. 217, 221, 435 A.2d 24 (1980). As the factfinder, the trial court was entitled to accept the testimony of Mr. Coma that he did not intend to deprive the plaintiff of the money owed him when he transferred the real estate to Mrs. Coma. See Kaplan v. Kaplan, 186 Conn. 387, 391, 441 A.2d 629 (1982). The trial court was entitled, similarly, to accept the testimony of both defendants that a loan agreement existed between them that obligated Mr. Coma to repay the entire $115,000 amount owed to his wife. The trial court was further entitled to accept the testimony of both defendants that the transfer of Mr. Coma's equity in the marital premises was in partial satisfaction of his obligation to his wife. "Since the trier of fact is the ultimate judge of the credibility of witnesses, we may not pass upon [their credibility]. Johnson v. Flammia, 169 Conn. 491, 497, 363 A.2d 1048 (1975)." State v. DeForge, 194 Conn. 392, 398, 480 A.2d 547 (1984). We conclude that the trial court properly considered the applicable law, and that the plaintiff simply failed to meet his burden of proof, in the eyes of the trial court, as to the elements necessary to set aside the conveyance as fraudulent.
The plaintiff next argues that the trial court erred when it found that consideration existed to support the subsequent transfer of the marital premises. As the party attempting to prove the lack of consideration, the plaintiff bore the burden of proof. Taft Realty Corporation v. Yorkhaven Enterprises, Inc., 146 Conn. 338, 342, 150 A.2d 597 (1959); see also Iseli Co. v. Connecticut Light Power Co., 211 Conn. 133, 142, 558 A.2d 966 (1989).
The trial court found that the conveyance of Mr. Coma's equity in the marital premises to Mrs. Coma was part of the contract between them to repay the $115,000 that he had borrowed from her compensation settlement, and was in fact a partial repayment of Mr. Coma's original obligation. This contention, as claimed by both Mr. and Mrs. Coma in their testimony, presented a factual issue that was within the sole province of the trial court to decide. See, e.g., Zapolsky v. Sacks, supra, 201. We conclude that the trial court did not clearly err in making that finding.
"[Practice Book] Sec. 4061. (Formerly Sec. 3060D). REVIEW BY THE SUPREME COURT "The supreme court may reverse or modify the decision of the trial court if it determines that the factual findings are clearly erroneous in view of the evidence and pleadings in the whole record, or that the decision is other wise erroneous in law. "If the supreme court deems it necessary to the proper disposition of the cause, it may remand the case for a further articulation of the basis of the trial court's factual findings or decision. "It is the responsibility of the appellant to provide an adequate record for review."
The plaintiffs final contention is that the trial court erred in not concluding that Mrs. Coma made an inter vivos gift of her $115,000 compensation settlement when she placed that amount in the money market bank account jointly owned with Mr. Coma. This, again, in a factual matter to be determined by the trial court In this instance, the trial court chose to accept the testimony of both defendants that the agreement between them was a loan, and that Mrs. Coma expected Mr. Coma to repay all funds borrowed from the account We find that the conclusion implicitly drawn by the trial court, i.e., that Mrs. Coma did not make an inter vivos gift, is supported by the testimony of the parties. See Bergen v. Bergen, 177 Conn. 53, 56-57, 411 A.2d 22 (1979); Clayman v. Prochaska, 2 Conn. App. 430, 435 479 A.2d 1214 (1984).
Factual findings may not be rejected on appeal because the reviewing judges personally disagree with the conclusion of the trial court or would have found differently had they been sitting as factfinders. Kaplan v. Kaplan, supra, 391. This court may reject factual findings only if they are "clearly erroneous" in view of the entire record. Practice Book 4061; Kaplan v. Kaplan, supra, 392. This is not the case here.