Case Name: Adrien MORIN et al. v. Dana M. DUBOIS et al.
Court: Maine Supreme Judicial Court
Jurisdiction: Maine
Decision Date: 1998-06-25
Citations: 713 A.2d 956
Docket Number: 
Parties: Adrien MORIN et al. v. Dana M. DUBOIS et al.
Judges: Before WATHEN, C.J., and ROBERTS, CLIFFORD, RUDMAN, DANA, LIPEZ, and SAUFLEY, JJ.
Reporter: West's Atlantic Reporter, Second Series
Volume: 713
Pages: 956–961

Head Matter:
1998 ME 160
Adrien MORIN et al. v. Dana M. DUBOIS et al.
Supreme Judicial Court of Maine.
Submitted on Briefs Dec. 23, 1997.
Decided June 25, 1998.
William J. Smith, Van Burén, for Appellants.
E. Allen Hunter, Solman & Hunter, Caribou, for Appellees.
Before WATHEN, C.J., and ROBERTS, CLIFFORD, RUDMAN, DANA, LIPEZ, and SAUFLEY, JJ.

Opinion:
DANA, Justice.
[¶ 1] Adrien Morin appeals from the judgment entered in the Superior Court (Aroostook County, Archibald, A.R.J.) denying his request for relief pursuant to the Maine Uniform Fraudulent Transfer Act, 14 M.R.S.A. § 3571-3582 (Supp.1997). On appeal he contends that the court erred in finding that Paul Dubois, Dana's father, did not make certain transfers with the actual intent to hinder, delay, or defraud his creditors and that the transfers were not fraudulent pursuant to 14 M.R.S.A. § 3575(1)(B)(2) and § 3576(1). We agree and vacate the judgment.
[¶ 2] The following facts are undisputed. Between 1982 and 1990 Paul Dubois, an accountant and owner of a hearing aid business, accepted hundreds of thousands of dollars from his clients after falsely representing that he would invest the money for them. In 1989, after learning that he had serious health problems, he began to divest himself of his assets. In September of that year he conveyed four parcels of real estate to his son, Dana, in exchange for Dana's promise to pay to Beulah Dubois, Paul's wife and Dana's mother, twelve percent of the gross income of the accounting and hearing aid businesses that Paul, not Dana, then owned. Fifteen months later for the same consideration Paul conveyed to Dana the two businesses. Paul and Dana signed documents that valued the real estate and the businesses at $230,000. Paul admitted that these transfers left him with no assets. Within a few months Paul filed for personal bankruptcy listing liabilities exceeding $882,-000 and was indicted for multiple counts of theft by deception. Paul entered a guilty plea but died before sentencing. Morin and ten others, victims of Paul's investment scheme, filed a complaint against Dana and Richard Dubois in 1992 requesting that the court set aside and void the transfers to Dana and award damages pursuant to 14 M.R.S.A. § 3578 (Supp.1997). After a non-jury trial the court found that the conveyances were not made with the actual intent to hinder, delay, or defraud Paul's creditors and ruled in the Dubois' favor. This appeal followed.
[¶ 3] One who challenges the validity of a transfer must prove that the conveyance was fraudulent by clear and convincing evidence. Federal Deposit Ins. Corp. v. Proia, 663 A.2d 1252, 1254 n. 2 (Me.1995). Whether a conveyance is fraudulent under the Act is a question of fact, and we will not overturn the trial court's findings of fact unless they are clearly erroneous. Id. at 1254. We will not overturn a finding for the defendant unless the evidence also compels a finding in the plaintiffs favor. Findings are clearly erroneous when no competent evidence supporting the finding exists in the record; the factfinder clearly misapprehended the meaning of the evidence; or the force and effect of the evidence, taken as a whole, rationally persuades us to a certainty that the finding is so against the great preponderance of the believable evidence that it does not represent the truth and right of the case. Glidden v. Belden, 684 A.2d 1306, 1316-17 (Me.1996).
[¶ 4] A transfer by a debtor is fraudulent if it is made with "actual intent to hinder, delay or defraud any creditor of the debt- or...." 14 M.R.S.A. § 3575(1)(A) (Supp. 1997). Although the court failed to clearly articulate its consideration of the factors that are used to analyze the fraud issue, we are convinced that it clearly misapprehended the meaning of the evidence and that the evidence compels a finding for the plaintiffs. Paul admitted by deposition that his motivation for putting "all my property in my son's name . (was) for the simple reason that I . did not want to have anything in case of high medical bills." Although the court concluded that Paul's transfers were motivated by the desire to provide for his wife and mother, it is often the case that a transfer considered fraudulent pursuant to the Act has the underlying purpose of retaining resources to provide for oneself or one's family rather than have those resources available to creditors.
[¶ 5] Precisely because a transferor's stated reasons for transferring assets will rarely include an explicit admission of intent to defraud creditors, the statute provides a comprehensive, although not exclusive, list of factors to be examined when considering whether a transfer was made with the actual intent to hinder, delay, or defraud a creditor. Pursuant to the statute, a factfinder is instructed to consider the following factors when determining whether a conveyance is fraudulent within the meaning of 14 M.R.S.A. § 3575(1)(A):
A.The transfer or obligation was to an insider;
B. The debtor retained possession or control of the property transferred after the transfer;
C. The transfer or obligation was disclosed or concealed;
D. Before the transfer was made or obligation was incurred, the debtor sued or [was] threatened with suit;
E. The transfer was of substantially all the debtor's assets;
F. The debtor absconded;
G. The debtor removed or concealed assets;
H. The value of the considerdtion received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;
I. The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;
J. The transfer occurred shortly before or shortly after a substantial debt was incurred; and
K. The debtor transferred the essential assets of the business to a lienor who had transferred the assets to an insider to the debtor.
14 M.R.S.A. § 3575(2)(A)-(K) (Supp.1997). The number of these factors present given the undisputed facts in this case compels the inexorable conclusion that the conveyances at issue were fraudulent within''the meaning of the Act.
[¶6] Paul's conveyances to Dana were transfers to an insider, see Hatheway v. Hanson, 230 Iowa 386, 297 N.W. 824 (1941) (transfer from a parent to a child requires a critical examination of the surrounding circumstances); Paul admitted that he had no assets after he transferred the properties to Dana; Paul received grossly inadequate consideration for the transfers — indeed, the initial transfers of the four parcels of real estate involved no consideration given that Paul retained ownership of the 'businesses from which the consideration was to be paid, see Michaud v. Michaud, 129 Me. 282, 151 A. 559 (Me.1930) (conveyance of a debtor's entire property in consideration of his own future support or that of members of his family is prima facie voidable as a fraudulent transfer); Paul filed for bankruptcy in 1991, demonstrating his insolvency shortly after the transfers; and the transfers occurred shortly before Paul expected to incur substantial medical expenses.
[¶7] There is no suggestion in the court's judgment that it considered the factors relevant to determining when a transfer was made with the actual intent to hinder, delay, or defraud creditors. In light of the presence of so many of the factors indicating an actual intent on the part of Paul to avoid his creditors, the court's finding that the plaintiffs had not established by clear and convincing evidence the elements of a fraudulent transfer pursuant to 14 M.R.S.A. § 3575(1)(A) is clearly erroneous and cannot stand. If one steals in order to provide for one's family, it is no less a theft. In the same way, if one transfers assets while insolvent in order to provide for one's family, it is no less a fraudulent transfer.
[¶ 8] Furthermore, the court did not address the plaintiffs' claim that Paul also violated section 3575(1)(B)(2) despite the plaintiffs' incorporation of the section's language in their complaint, their argument for its application in their post-trial brief, and their further reference to the section in their motion to amend the findings. Section 3575(1)(B)(2) provides in pertinent part:
1. Fraudulent transfer. A transfer made . by a debtor is fraudulent as to a creditor . if the debtor made the transfer .
B. Without receiving a reasonably equivalent value in exchange for the transfer . and the debtor:
(2) Intended to incur, or believed or reasonably should have believed that he would incur, debts beyond his ability to pay as the debts became due.
At a time when he owed others in excess of $800,000, Paul transferred assets he valued at $230,000 when he was anticipating additional medical bills as a result of his physical condition. Paul admitted that he transferred all his assets to his son because he was afraid that his final illness would consume all of his resources. Paul's conduct is a textbook example of a fraudulent conveyance in violation of section 3575(1)(B)(2).
The entry is:
Judgment vacated. Remanded to the Superior Court with instructions to enter a judgment for the plaintiffs and for a determination of the appropriate relief pursuant to 14 M.R.S.A. § 3578-79.
. The plaintiffs in this matter are Adrien, Fer-nand, Edgar and Joseph Morin; Michael Abbott; Richard Paradis; and Raymond Freeman. At the trial the plaintiffs also included Rióla, and Marie Rose Morin; Claudette Freeman; and Diane Paradis.
. Richard, Dana's brother, was a codefendant at the trial, but Morin does not challenge the trial court's determination that Richard was not a "transferee" within the meaning of the Act.
. 14 M.R.S.A. § 3578 provides in pertinent part;
1. Action for relief. In any action for relief against a transfer or obligation under this Act, a creditor, subject to the limitations provided in section 3579, may obtain:
A. Avoidance of the transfer or obligation to the extent necessary to satisfy the creditor's claim;
B. An attachment, trastee process or other provisional remedy against the asset transferred or other property of the transferee in accordance with the procedure prescribed bylaw; or
'C. Subject to applicable principles of equity and in accordance with applicable civil rales of procedure:
(1) An injunction against further disposition by the debtor or a transferee, or both, of the asset transferred or of other property;
(2) Appointment of a receiver to take charge of the asset transferred or of other property of the transferee;
(3) Damages in an amount not to exceed double the value of the property transferred or concealed; or
(4) Any other relief the circumstances may require.