T.C. Memo. 2000-377

UNITED STATES TAX COURT

DIXIE VAN AERNAM, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 8972-97. Filed December 14, 2000.

R claims that P is liable as a transferee of H 

for deficiencies in H’s income taxes. P and H

contracted to buy property. P and two others

contributed to the purchase price. Deed number one

conveyed the property from the seller to P, alone. 

Deed number two conveyed the property from the seller

to H, alone. Subsequently, by deed number three, H

conveyed the property to P, alone. R claims that deed

number three was a fraudulent transfer under the

Uniform Fraudulent Transfer Act, Fla. Stat. Ann. secs.

726.101 through 726.112 (West 2000). R relies

exclusively on the stipulated facts to establish the

elements of a fraudulent transfer. P’s testimony

contradicts inferences to be drawn from the stipulated

facts. R has failed to carry his burden of proof that

the transfer was fraudulent. Held: P has no

transferee liability under sec. 6901(a), I.R.C.
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1 Respondent determined deficiencies, additions to tax, and

penalties totaling $50,539 with respect to Steven W. Van Aernam’s

(Steven’s) Federal income tax liabilities for such years.

Dixie Van Aernam, pro se.

Michael D. Zima, for respondent.

MEMORANDUM OPINION

HALPERN, Judge: By notice of transferee liability dated

February 7, 1997, respondent claims that petitioner is liable as

a transferee of property of Steven W. Van Aernam (Steven) for

deficiencies in Steven’s income taxes for 1988 through 1990.1

Since respondent believes that, at the time of transfer, the

value of property transferred by Steven to petitioner was

$15,000, respondent limits his claim to that amount, less $10

paid by petitioner for the property, plus interest. The sole

issue for decision is whether petitioner is liable in the amount

of respondent’s claim as a transferee of property of Steven.

Unless otherwise indicated, all section references are to

the Internal Revenue Code of 1986, as amended, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

Some facts have been stipulated and are so found. The

stipulation of facts, with accompanying exhibits, is incorporated

herein by this reference. We need find few facts in addition to

those stipulated and will not, therefore, separately set forth

our findings of fact. We will make additional findings of fact
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as we proceed. Our discussion under the heading “Background” is

drawn principally from the facts and exhibits stipulated by the

parties.

Background

Petitioner resided in Daytona Beach, Florida, at the time

the petition was filed.

Petitioner is married to Steven (together, the Van

Aernams), and they have been married since December 27, 1979. 

The Pelican Avenue property (sometimes, the property) is a

parcel of real property located in Volusia County, Florida. As

relevant to this case, the property was first owned by Sandra L.

Archer, who, sometime in 1993, offered the property for sale. 

Phillip Niles, a real estate broker representing Steven,

contacted Ms. Archer and informed her that the Van Aernams were

interested in buying the property and building a house upon it. 

By a document entitled “Contract for Sale and Purchase” (the sale

contract), Ms. Archer agreed to sell, and the Van Aernams agreed

to buy, the property. The sale contract describes the property

as a vacant lot. The sale contract provides that the purchase

price (purchase price) is $14,000, $5,000 of which is to be

deposited in escrow with a broker (Thomas Archer), and the

remaining $9,000 of which is to be paid within 30 days of the

contract. Ms. Archer and the Van Aernams executed the sale

contract on October 25 and 26, 1993, respectively. The parties
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have stipulated the following with respect to payment of the

purchase price:

10. Pursuant to the * * * [sale contract],

$5,000.00 in cash was given to Thomas Archer, a real

estate broker and husband of Sandra L. Archer, to

hold in an escrow account.

11. On December 23, 1993, an additional

$9,000.00 was paid to Sandra L. Archer via a

cashier’s check purchased by Mr. John K. Richards. 

Mr. Niles, the broker who represented Steven, wrote a

letter to respondent’s counsel in this case. That letter, dated

January 18, 1999, is headed “STATEMENT OF FACTS”, and, among

other things, it states:

I HAD SANDRA ARCHER SIGN CONTRACT ON OCT. 25, 1993

AS THE SELLER AND MR. AND MRS. VAN AERNAM SIGNED THE

FOLLOWING DAY, OCT. 26, 1993 AS THE BUYERS. AT THAT

TIME MR. VAN AERNAM WENT TO MRS. VAN AERNAM WHO WAS

THEN RESIDING AT A SEPARATE RESIDENCE. WE OBTAINED

THE DEPOSIT IN CASH FROM HER AND SHE SIGNED CONTRACT

AND INITIALED CHANGES MADE IN THE CONTRACTUAL TERMS

ON THE CONTRACT. WE THEN LEFT WITH THE DEPOSIT AND

IT WAS DELIVERED TO TOM ARCHER’S ESCROW ACCOUNT WHO

IS A BROKER AND HUSBAND OF THE SELLER.

On May 13, 1994, Steven was arrested and charged with

trafficking in cocaine, possession of cannabis over 20 grams

(together, the drug charges), and the unlawful possession of a

firearm by a convicted felon. 

There are in evidence copies of two papers purporting to

convey the property from Ms. Archer: The first is entitled “Quit

Claim Deed” (the first quitclaim deed), executed on May 21, 1994,

and conveying the property to petitioner. The second is entitled
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“Warranty Deed” (the first warranty deed), executed on July 15,

1994, and conveying the property to Steven. Both the first

quitclaim deed and the first warranty deed were recorded with the

Clerk of Courts, Volusia County, Florida (sometimes, the Clerk). 

The first warranty deed was recorded first, on August 17, 1994,

and the first quitclaim deed was recorded second, on September

26, 1994. 

On June 10, 1994, Volusia County filed a Notice of Lis

Pendens against the Van Aernams concerning their property located

at 1700 Ridge Avenue, Holly Hill, Florida. 

On July 25, 1995, Steven executed a quitclaim deed (the

second quitclaim deed) conveying the property to petitioner. The

second quitclaim deed was recorded with the Clerk on August 3,

1995. 

On July 25, 1995, Steven was under indictment on the drug

charges. 

On September 28, 1995, Steven, having been convicted of

the drug charges, was sentenced to a 15-year term of imprisonment

and fined $250,000.

The following is the text of a letter dated November 15,

1995, from David C. Robinson, Attorney at Law, to Steven, who was

then in prison (enclosures omitted):
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RE: Pelican Avenue Vacant Lot

Dear Steve;

John “Thumper” Richards has asked me to assist

him in recovering some of the money he invested in

the above referenced property.

Enclosed herewith is a copy of the $8,000.00

check representing his portion of the purchase

price. The assessed value is $13,292.00 with the

actual value being somewhat more.

I have enclosed a Quit Claim Deed for your

(consideration) execution.

Thumper would like to purchase your interest for

a “fair” (?) amount. This transfer could be

accomplished by you sending the executed Quit Claim

Deed to your wife; then Thumper could give her a

cashier’s check in exchange for the deed.

Please call (collect) either myself or Thumper

(672-1654) to discuss this further.

Sincerely,

 /s/ 

DAVID C. ROBINSON

ATTORNEY AT LAW

On January 2, 1996, Sun Beach Investments, Inc. purchased

the property from petitioner for $15,000. 

By notice of deficiency dated December 19, 1996,

respondent determined deficiencies and additions to tax totaling

$63,817 with respect to Steven’s Federal income tax liabilities

for 1991 through 1994.
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2 SEC. 6901. TRANSFERRED ASSETS.

 (a) Method of Collection. The amounts of the following 

liabilities shall, except as hereinafter in this

section provided, be assessed, paid, and collected in

the same manner and subject to the same provisions and

limitations as in the case of the taxes with respect to

which the liabilities were incurred:

 (1) Income, Estate, and Gift Taxes.--

 (A) Transferees. The liability, at law or

in equity, of a transferee of property --

(i) of a taxpayer in the case of a

tax imposed by subtitle A (relating

to income taxes),

* * * * * * * 

 (b) Liability.--Any liability referred to in

subsection (a) may be either as to the amount of tax

shown on a return or as to any deficiency or

underpayment of any tax.

* * * * * * * 

(continued...)

Discussion

I. Introduction

As stated, we must determine whether petitioner is liable

for the amount of respondent’s claim as a transferee of property

of Steven.

Section 6901 addresses the liability of a transferee of

property (transferee) for certain taxes, including income taxes,

of the transferor of such property (transferor). Pertinent

provisions of section 6901 are set forth in the margin.2 
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2(...continued)

 (h) Definition of Transferee.--As used in this

section, the term “transferee” includes donee * * *

3 Respondent does not bear the burden of proving that the

transferor is liable for the tax. See Rule 142(d); see also sec.

6902(a). Petitioner assigned error to respondent’s attribution

to her of transferee liability. In support of petitioner’s

assignment that respondent erred in attributing to her transferee

liability, petitioner avers, among other things, that there are

no deficiencies in Steven’s taxes. Petitioner has offered no

evidence to support that averment, however, and she has failed to

address it on brief. We, conclude, therefore, that she concedes

the deficiencies on which respondent’s notice of liability is

based. See Bernstein v. Commissioner, 22 T.C. 1146, 1152 (1954),

affd. 230 F.2d 603 (2d Cir. 1956); Lime Cola Co. v. Commissioner,

22 T.C. 593, 606 (1954); Roberts v. Commissioner, T.C. Memo.

1996-225.

Section 6901 imposes no liability on any transferee; rather,

subsection (a) thereof merely provides a procedure by which

respondent may collect from a transferee unpaid taxes owed by the

transferor if a basis exists under applicable State law or equity

for holding the transferee liable. See Commissioner v. Stern,

357 U.S. 39, 42–47 (1958); Hagaman v. Commissioner, 100 T.C. 180,

183 (1993); Gumm v. Commissioner, 93 T.C. 475, 479 (1989), affd.

without published opinion 933 F.2d 1014 (9th Cir. 1991). The

burden of proof as to transferee liability is on respondent. See

Rule 142(d); see also sec. 6902(a).3

II. Elements of Transferee Liability

Respondent argues that the law of Florida governs whether

petitioner is liable as a transferee of Steven. Petitioner does

not disagree, and we look to the law of Florida to make that

determination. Respondent directs us to the Uniform Fraudulent
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4 Fla. Stat. Sec. 726.105 is entitled “Transfers fraudulent

as to present and future creditors”. Subsection (1) thereof

provides as follows:

(1) A transfer made or obligation incurred by a

debtor is fraudulent as to a creditor, whether the

creditor’s claim arose before or after the transfer was

made or the obligation was incurred, if the debtor made

the transfer or incurred the obligation:

(a) With actual intent to hinder, delay, or

defraud any creditor of the debtor; or

(b) Without receiving a reasonably equivalent

value in exchange for the transfer or obligation, and

the debtor:

 1. Was engaged or was about to engage in a

business or a transaction for which the remaining

assets of the debtor were unreasonably small in

relation to the business or transaction; or

 2. Intended to incur, or believed or reasonably

should have believed that he or she would incur, debts

beyond his or her ability to pay as they became due.

Subsec. (2) thereof, which is not reproduced, sets forth a

number of factors that, among others, may be considered in

(continued...)

Transfer Act (UFTA), Fla. Stat. Ann. secs. 726.101 through

726.112 (West 2000) (hereafter Fla. Stat. sec. 726.xxx). In

particular, respondent directs us to Fla. Stat. secs. 726.105(1)

and 726.106(1). In pertinent part, Fla. Stat. sec. 726.105(1)

provides that a transfer is fraudulent as to a creditor if the

transfer is made with actual intent to defraud the creditor or

without the transferor receiving fair consideration in return, if

the transferor knew, or should have known, that he would be

unable to pay his debts as they became due.4 In pertinent part,
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4(...continued)

determining actual intent under subsec. (1)(a) thereof. We

describe and discuss some of those factors infra in sec.

IV.D.3.b.

Since respondent does not rely on Fla. Stat. sec.

726.105(1)(b)1., we disregard it in the discussion that follows.

5 Fla. Stat. sec. 726.106 is entitled “Transfers fraudulent

as to present creditors”. Subsec. (1) thereof provides as

follows:

(1) A transfer made or obligation incurred by a

debtor is fraudulent as to a creditor whose claim arose

before the transfer was made or the obligation was

incurred if the debtor made the transfer or incurred

the obligation without receiving a reasonably

equivalent value in exchange for the transfer or

obligation and the debtor was insolvent at that time or

the debtor became insolvent as a result of the transfer

or obligation.

Fla. Stat. sec. 726.106(1) provides that a transfer is fraudulent

as to a creditor if the transferor is or, as a result of the

transfer, will become insolvent and the transferor does not

receive fair consideration in return.5 In pertinent part, for

purposes of the UFTA, the term “insolvency” is defined as

follows:

(1) A debtor is insolvent if the sum of the

debtor’s debts is greater than all of the debtor’s

assets at fair valuation.

(2) A debtor who is generally not paying his or her

debts as they become due is presumed to be

insolvent.

Fla. Stat. sec. 726.103. Under the UFTA, if a transfer is

fraudulent as to a creditor, the creditor may, among other

remedies (1) obtain avoidance of the transfer to the extent
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necessary to satisfy his claim or (2) recover judgment against

the transferee for the lesser of the value of the asset

transferred or the amount of his claim. See. Fla. Stat. secs.

726.108(1)(a) and 726.109(2), respectively.

III. Arguments of the Parties

A. Respondent’s Argument

 Respondent proposes that we find: “As to third party

creditors of Steven W. Van Aernam, he owned a fee simple interest

in the Pelican Avenue property as of July 25, 1995. [He] * * *

transferred his fee simple in the Pelican Avenue Property to

petitioner * * * on July 25, 1995.” Respondent argues that such

transfer of the Pelican Avenue property by Steven to petitioner

was fraudulent with respect to respondent under either Fla. Stat.

sec. 726.105(1) or sec. 726.106(1). As a result, respondent asks

that, in effect, we grant respondent a judgment in the amount of

$14,990, the value of the property (which value is less than the

amount of respondent’s claim), plus interest. 

B. Petitioner’s Argument

Petitioner responds that, in fact, Steven never owned an

interest in the Pelican Avenue property. She proposes that we

find that, initially, she, not Steven, acquired the Pelican

Avenue property from the seller (Sandra L. Archer). She claims

that the first warranty deed (from Ms. Archer to Steven) was in

error, and the second quitclaim deed (from Steven to her) was
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given by Steven only to undo the mistake of the first warranty

deed. She concludes: “[T]here is no basis in fact for the

assertion of Transferee liability against [her]”.

IV. Discussion

A. Introduction

1. Petitioner’s Defense

Petitioner does not deny that Steven transferred the

property to her. We interpret petitioner’s argument as

interposing a defense to respondent’s claim of a fraudulent

transfer; i.e., she, not Steven, was the beneficial owner of the

property, and, if Steven held any interest in the property at

all, he held it on her behalf, and he conveyed it to her by the

second quitclaim deed. See Bender v. General Elec. Supply Corp.,

117 Fla. 275, 157 So. 573 (1934) (fraud on creditor of husband

not presumed where it is shown that property transferred to wife

was purchased with money that was the separate property of the

wife, husband who took title held it in trust for wife, and wife

was, at all times, beneficial owner of property). Petitioner

need not rely on her defense (and we will not further discuss

it), since respondent has failed to carry his burden of proving a

fraudulent transfer.
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2. Respondent’s Burden

To establish a fraudulent transfer, respondent must prove

that there was a transfer of property from Steven to petitioner

and, with respect to respondent, that transfer was fraudulent,

all within the meaning of Fla. Stat. sec. 726.105(1) or sec.

726.106(1).

B. Evidence

Besides the pleadings, the record in this case consists

principally of the stipulation of facts and a transcript of the

testimonies of petitioner and a witness called by respondent to

introduce records of assessments and payments pertaining to

Steven’s taxable years 1988 through 1990. We have set forth

relevant portions of the stipulation of facts under the heading

“Background”. In presenting his case in chief, respondent called

only petitioner. He asked her whether she could explain the

notice of lis pendens filed by Volusia County. Petitioner could

not, and respondent asked her no further questions. He then

rested his case. Petitioner called no witnesses, but she

testified on her own behalf. In pertinent part, she testified as

follows: Since 1989, she has lived by herself, with her two

children. At the time of the acquisition of the Pelican Avenue

property, she and Steven “were going through a horrible divorce”. 

She paid Thomas Archer the funds deposited in escrow pursuant to

the sale contract. Those funds were derived from $2,000 received
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6 We are aware that the total of those two amounts is

$5,500, which exceeds a stipulation that $5,000 was deposited in

escrow pursuant to the sale contract. We cannot explain that

discrepancy or the discrepancy between the stipulation that an

additional $9,000 was paid to Sandra L. Archer by a cashier’s

check purchased by John K. Richards and the copy of an $8,000

check attached to the letter dated Nov. 15, 1995, from 

Mr. Richard’s attorney to Steven. We will assume that the

deposit made by petitioner was $5,000 and the amount paid by John

Richards was $9,000, which adds up to the $14,000 purchase price

for the Pelican Avenue property specified in the contract of

sale.

from her father-in-law and $3,500 from insurance proceeds and an

inheritance received by her.6 John Richards paid $9,000 towards

the purchase price. He was a builder, and the plan was to build

on the property. John Richards was supposed to get his money

returned “at whatever the profit was”. Notwithstanding that

there are no documents evidencing Mr. Richard’s participation in

the purchase of the property, she believed that she was obligated

to repay him, and she has asked him to hold off collecting until

she straightens things out. She received the first quitclaim

deed while Steven was in jail: “Steve was in jail at that time

and I went to get it. It was going to be a hard mess all around. 

I was just glad to receive it.” Notwithstanding the sale

contract, she was worried that she would lose the money she had

invested in the property since there had been no closing of the

sale. Steven obtained the first warranty deed in order to

deprive her of her interest in the property. 
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C. Transfer

A necessary element of both Fla. Stat. secs. 726.105(1)

and 726.106(1) is a transfer of property by the debtor. The

second quitclaim deed is prima facie evidence of a transfer of

the Pelican Avenue property from Steven to petitioner on July 25,

1995 (the transfer and the transfer date, respectively). See 19

Fla. Jur. 2d Deeds sec. 1 (1998) ("‘Deed’" is synonymous with

‘conveyance.’"). But cf. Barr v. Schlarb, 314 So. 2d 609, 611

(Fla. Dist. Ct. App. 1975) (deed may signify mortgage). 

Petitioner having failed to introduce contradictory evidence, we

find accordingly.

D. Fraud With Respect to Respondent

1. Introduction

To prove that, with respect to the United States, the

transfer was fraudulent, respondent must prove that it was

fraudulent within the meaning of either Fla. Stat. sec.

726.105(1) or sec. 726.106(1). Realistically (based on the

record before us), for respondent to prove fraud within the

meaning of Fla. Stat. sec. 726.105(1), respondent must show

Steven’s actual fraudulent intent or his unreasonable belief that

he could pay his debts as they came due. See supra note 4. For

respondent to prove fraud within the meaning of Fla. Stat. sec.

726.106(1), respondent must show Steven’s insolvency. See supra

note 5. By failing to call any witnesses in support of his case
- 16 -

in chief, except for petitioner, who was of no help to

respondent, respondent has limited himself to the stipulated

facts, and certain inferences that the UFTA allows us to draw, to

carry his burden of proof. While not free from all doubt with

respect to Steven’s intent or belief, the stipulated facts (and

inferences we may draw from those facts), when considered in

light of petitioner’s testimony, fail to persuade us that Steven

had the necessary fraudulent intent or that Steven unreasonably

believed that he could pay his debts as they came due. See Fla.

Stat. sec. 726.105(1)(a) and (b)2. Also, respondent has failed

to persuade us of Steven’s insolvency. Since certain conclusions

best reached in our consideration of Fla. Stat. sec. 726.106(1)

are also necessary to our consideration of Fla. Stat. sec.

726.105(1), we will examine such latter section first.

2. Fla. Stat. Sec. 726.106

a. Introduction

To prevail under Fla. Stat. sec. 726.106, respondent must

show, among other things, either that, at the time of the

transfer, Steven was insolvent or, as a result of the transfer,

he became insolvent. See Fla. Stat. sec. 726.106(1). Respondent

has failed to make either showing.

b. Fla. Stat. Sec. 726.103(1)

Under Fla. Stat. sec. 726.103(1), a debtor is insolvent if

the sum of his debts is greater than the fair value of all of his
- 17 -

7 Respondent claims that Steven owed approximately $364,000

to the State of Florida and the Internal Revenue Service. 

assets (balance sheet insolvency). The record is adequate for us

to find that, on the transfer date, Steven had substantial

liabilities.7 Respondent has failed to propose any finding of

fact with respect to the fair value of Steven’s assets. On

brief, respondent asks us conclude that Steven was insolvent on

the transfer date because, on that date: “Steven W. Van Aernam’s

income stream had dwindled to a trickle or had ceased altogether,

since he had been convicted on two federal crimes and was about

to be sentenced to a prison term.” Respondent states: 

“Respondent has been unable to locate assets in Steven W. Van

Aernam’s name whose value approaches his income tax liabilities”.

Petitioner credibly testified that Steven had assets on

the transfer date and afterwards: “[H]e had plenty of tools and

equipment, money to give his divorce lawyer, money to give his

lawyer at that time and then afterwards, even after he went into

jail-–that he gave money to have his appeal made, so I believe

that he definitely has money out there.” 

Respondent has failed to carry his burden of proving

Steven’s balance sheet insolvency. Respondent’s statement on

brief that he has been unable to locate assets in Steven’s name,

unsupported by any testimony or other evidence concerning his

search, carries no weight. Respondent’s claim that Steven’s

income may have slowed to a trickle or stopped is also of no
- 18 -

weight, since unsupported by evidence. Petitioner’s testimony

that Steven had money contradicts respondent’s conclusion that

Steven had no income or assets. On brief, respondent states that

Steven is currently serving the third year of a 15-year prison

sentence. Respondent has not shown any effort to obtain Steven’s

testimony as to the extent of his assets. Respondent has failed

to carry his burden of proving that Steven was insolvent within

the meaning of Fla. Stat. sec. 726.103(1) because he has failed

to establish the fair value of Steven’s assets. Respondent

having failed to do that, we cannot say that Steven was insolvent

within the meaning of Fla. Stat. sec. 726.103(1).

c. Fla. Stat. Sec. 726.103(2)

Under Fla. Stat. sec. 726.103(2), a debtor is presumed to

be insolvent if he is generally not paying his debts as they

become due. Respondent has failed to propose any finding with

respect to whether Steven was generally paying his debts as they

came due. Respondent’s argument on brief is that Steven “was

unable to pay his debts as they became due, since his assets were

of limited value and his income producing potential had

dissipated.” That argument has no more traction here than it did

with respect to Fla. Stat. sec. 726.103(1). While, on the

transfer date, Steven may have been liable for his tax bills,

respondent has failed to prove that, generally, he was not paying

his debts as they came due.
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d. Conclusion

Respondent has failed to prove that, with respect to the

United States, Steven made a fraudulent transfer within the

meaning of Fla. Stat. sec. 726.106(1).

3. Fla. Stat. Sec. 726.105

a. Introduction

To prevail under Fla. Stat. sec. 726.105(1), respondent

must show that the transfer was made either with (1) fraudulent

intent or (2) without receiving a reasonably equivalent value in

exchange, and the debtor knew, or should have known, his debts

would be beyond his ability to pay as they fell due. Respondent

has failed to make either showing.

b. Fla. Stat. Sec. 726.105(1)(a)

To prevail under Fla. Stat. sec. 726.105(1)(a), respondent

must show, among other things, that the transfer was made with

“actual intent to hinder, delay, or defraud any creditor of the

debtor”. Fla. Stat. sec. 726.105(2) provides that, in

determining actual intent, consideration may be given to (but is

not limited to) several factors. Respondent directs our

attention to the following of those factors:

1. The transfer was to an insider (including a relative).

2. Before the transfer was made, the debtor had been sued

or threatened with suit.

3. The transfer was of substantially all the debtor’s

assets.
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4. The value of the consideration received by the debtor

was reasonably equivalent to the value of the asset

transferred.

5. The debtor was insolvent or became insolvent shortly

after the transfer was made.

6. The transfer occurred shortly before or after a

substantial debt was incurred.

Fla. Stat. sec. 726.105(2)(a), (d), (e), (h), (i), (j),

respectively. An additional factor is whether the transfer was

disclosed or concealed. See Fla. Stat. sec. 726.105(2)(c).

We can draw no inferences from the third and fifth

factors, since respondent has failed to prove that the transfer

was of substantially all of Steven’s assets or he was insolvent. 

In petitioner’s favor is the fact that the transfer was disclosed

(a public record was made on August 3, 1995). The remaining four

factors (the four factors), considered only in light of the

stipulated facts, could support a finding that Steven’s actual

intent was to defraud any creditor: The transfer was to Steven’s

wife, after he had been indicted on the drug charges, shortly

before Steven incurred a large fine, and apparently without

Steven’s receiving consideration of reasonably equivalent value. 

The stipulated facts, however, are not the only light in which to

consider the four factors. There is also petitioner’s testimony.

Considering petitioner’s testimony together with the

stipulated facts, we surmise that the following led up to

petitioner’s sale of the Pelican Avenue property (altogether, the
- 21 -

Pelican Avenue transaction): Steven found the Pelican Avenue

property. He, along with John Richards, intended to improve it

by building a house upon it, which they would then sell. John

Richards and Steven’s father contributed $9,000 and $2,000,

respectively, towards the purchase price. Steven convinced

petitioner to contribute $3,000 or $3,500. Steven made no cash

contribution. The contract of sale was between Sandra Archer, as

seller, and the Van Aernams, as buyers. When Steven was

arrested, the purchase price had been paid, and the time

specified in the sale contract to close the purchase had expired,

but no closing had taken place. Petitioner, worrying that she

would lose her money, asked for a deed, and, on May 21, 1994, she

obtained the first quitclaim deed from Ms. Archer. 

On July 15, 1994, Steven obtained the first warranty deed from

Ms. Archer. On July 25, 1995, Steven conveyed the property back

to petitioner by the second quitclaim deed. By letter dated

November 15, 1995, John Richards, by his attorney, suggested that

Steven convey the property to Mr. Richards, who would purchase

Steven’s interest for a “fair” price. The property was

subsequently sold for $15,000. 
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8 In part, that may be due to the fact that respondent

waited until the start of the trial to add Fla. Stat. sec.

726.105(1) (actual intent to defraud or lack of fair

consideration) to Fla. Stat. sec. 726.106(1) (insolvency) as the

basis for his claim that the Pelican Avenue property was

fraudulently transferred to petitioner. While respondent must

have believed that he could prove fraudulent intent from the

stipulated facts, petitioner appears to have been caught off

guard by that addition to respondent’s claim. Our review of

petitioner’s direct testimony convinces us that she had given no

consideration to the relationship between the stipulated facts

and the elements of the fraudulent intent claim. No doubt, that

is because, until the start of the trial, respondent’s trial

memorandum had not informed her of that claim. Her direct

testimony was principally in rebuttal to the claim that Steven

was insolvent. Indeed, much of the testimony from which we

construct the Pelican Avenue transaction came during respondent’s

cross-examination of petitioner. In part, we accord her

testimony credibility because of its spontaneous nature.

The record here leaves much to be desired.8 Nevertheless,

stipulated facts and exhibits confirm petitioner’s testimony that

the deposit was received from her, John Richards paid a portion

of the purchase price of the property, and none of the purchase

price came from Steven. We think the following to be fair

inferences from the record, and we so find: Petitioner

contributed her own money to the Pelican Avenue transaction. She

contributed that money on her own behalf; she did not make a loan

to Steven. John Richards and petitioner’s father-in-law likewise

contributed their own moneys in their own interest (and not as

loans to Steven). Steven contributed no money, but, nonetheless,
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on account of finding the property, he would share in the profit

from developing the property. The arrangement among petitioner,

Steven, petitioner’s father-in-law, and John Richards to acquire,

improve, and sell the property was in the nature of a joint

venture (the joint venture). The Van Aernams were to take title

to the property as trustees or, in some other capacity, as

custodians of title on behalf of the joint venturers. The joint

venture plan was abandoned sometime after Steven’s indictment. 

In recognition of such abandonment, and anticipating John

Richards’ efforts to recover his investment in the joint venture,

Steven conveyed the property to petitioner by the second

quitclaim deed. Petitioner received the property from Steven in

recognition of her own interest and subject to the interests of

John Richards and her father-in-law (and also Steven).

Considering the four factors in light of petitioner’s

testimony (and the fifth factor, favorable to petitioner, of

disclosure), we decline to infer from the factors listed in Fla.

Stat. sec. 726.105(2) that Steven’s actual intent was to hinder,

delay, or defraud any creditor of his in connection with the

transfer.

Respondent offers no other basis for us to find a

fraudulent transfer within the meaning of Fla. Stat. sec.

726.105(1)(a). There are numerous persons other than petitioner

who could have shed light on the Pelican Avenue transaction. 
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Respondent failed to call any of them. Respondent has failed to

prove a fraudulent transfer within the meaning of Fla. Stat. sec.

726.105(1)(a).

c. Fla. Stat. Sec. 726.105(1)(b)

Respondent seeks to prevail under Fla. Stat. sec.

726.105(1)(b) by showing that Steven made the transfer “[w]ithout

receiving a reasonably equivalent value in exchange”, and when he

“[i]ntended to incur, or believed or reasonably should have

believed that he * * * would incur, debts beyond * * * his

ability to pay as they became due.” Fla. Stat. sec.

726.105(1)(b)2. To satisfy the intent or belief element in the

statute, respondent relies on what Steven reasonably should have

believed, not on what he intended or actually believed: “Steven

W. Van Aernam * * * reasonably should have believed that he would

soon incur debts beyond his ability to pay as they became due at

the time he made * * * [the] transfer.” Respondent argues that

Steven had already accrued substantial debts to the Internal

Revenue Service and: “With the impending criminal fine of as

much as $250,000.00, Steven W. Van Aernam reasonably should have

believed that, on July 25, 1995, he would soon incur debts beyond

his ability to pay as they became due.” 

First, respondent has failed to prove that the transfer

was not made for reasonably equivalent value. We have found that

Steven contributed no money to the purchase of the property, yet,
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on account of finding the property, he would share in any profit

from developing the property. See supra sec. IV.D.3.b. There

was no development of the property, and respondent has failed to

show that Steven’s interest in the property was worth more than

the $10 that he received in consideration of the transfer. Also,

respondent has failed to carry his burden of proving that, at the

time of the transfer, Steven reasonably should have believed that

he would incur debts beyond his ability to pay them as they

became due. Respondent’s principal failure in that regard is the

same as his failure with respect to his showing of Steven’s

insolvency. See infra sec. IV.D.2. He has not shown Steven’s

assets, and, therefore, we cannot reach the conclusion that

Steven lacked the ability to pay. Nor can we infer that fact

from the fact that Steven did not pay his debts. Although the

parties have stipulated that, on September 28, 1995, Steven

incurred a criminal fine of $250,000, they have not stipulated,

nor is there any evidence, that Steven did not pay that fine when

it came due. Also, as stated, we have in evidence records of

assessments and payments pertaining to Steven’s taxable years

1988 through 1990. Respondent’s witness testified to some of the

entries on those records. She did not, however, testify that any

assessments shown on those records remain unpaid. The records

are not self-explanatory, and we will not presume to interpret

them ourselves, especially since respondent failed to propose any
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findings of fact based either on the records or his witness’

testimony.

Respondent has failed to prove a fraudulent transfer

within the meaning of Fla. Stat. sec. 726.105(1)(b)2.

V. Conclusion

Petitioner is not, on account of the transfer of the

Pelican Avenue property, liable as a transferee of Steven.

Decision will be entered

for petitioner.