Opinion ID: 1783903
Heading Depth: 1
Heading Rank: 5

Heading: Was the chancery court's judgment of May 21, 1990, voiding Martin's deed of future interests in certain real property to his mother and sister, erroneous?

Text: The May 21, 1990, judgment set aside Martin's deed of August 5, 1987, which granted his future interest in two parcels of land to his mother and sister finding it was given without consideration and fraudulent. Parcel one as set out in the purported deed was executed by Martin and his sister, Patricia Garriga, and attempted to convey a life estate to their mother with the remainder interest being vested in Martin's sister. Parcel one was deeded to Martin and his sister by their mother on August 23, 1985, reserving unto the grantor a life estate. Parcel two described in the deed attempted to convey Martin's remainder one-half interest in which his mother also possessed a life estate to his sister. The court found that the deed of August 5, 1987, conveyed nothing to Martin's mother since she already possessed a life estate in both parcels of property. The court held that the deed was conveyed with the obvious intent to prevent Janice from collecting any sums due to her by Martin and cancelled the deed holding it for naught. Both Martin and his sister, Patricia Garriga, testified that the reason he deeded the property back to his mother and sister was to pay back a continuing $60,000.00 debt he owed his family. Patricia Garriga stated that she had nothing to do with the granting of the deed and did not know the deed was drafted until after the fact. Martin admitted that he typed the deed himself but forged J.P. Compretta's blue black deed cover placing it with the deed to make it look as if Mr. Compretta, an attorney in Bay St. Louis, had prepared it. Martin testified that he forged the document to persuade his mother that the document was a will drafted by an attorney that she trusted [Mr. Compretta]. The testimony in this case is replete with Martin's prior financial history, which always resulted in deals gone bad and how he often manipulated his parents out of large amounts of money. To invalidate fraudulent conveyances, Miss. Code Ann. § 15-3-3 (1972) was enacted to avert debtors from keeping property, accessible to payment of their debts, away from creditors. Barbee v. Pigott, 507 So.2d 77, 84 (Miss. 1987). Miss. Code Ann. § 15-3-3 states in pertinent part: Every ... conveyance of lands, ... by writing . .. had or made and contrived of ... fraud, covin collusion, or guile, to the intent or purpose to delay, hinder, or defraud creditors of their just and lawful actions, suits, debts ... shall be deemed and taken only as against the person or persons, . .. and every of them whose debts, ... or interests by such guileful and covinous devices and practices shall or might be in any wise disturbed, hindered, delayed, or defrauded, to be clearly and utterly void; any pretense, color, feigned consideration, expressing of use, or any other matter or thing to the contrary notwithstanding. Miss. Code Ann. § 15-3-3 (1972). In the seminal case of Blount v. Blount, 231 Miss. 398, 95 So.2d 545 (1957), this Court addressed an attempt to circumvent a wife's suit for unpaid child support. In Blount, the husband conveyed all his real and personal properties to his father. Blount, 95 So.2d at 548. This left him with essentially no assets to satisfy the claims against him. His argument was to the same effect as Martin's in the case sub judice in that the properties were conveyed in order to cover antecedent debts. Id. at 549. We held that a fraudulent conveyance made with the exclusive purpose of cheating creditors is void whether backed by consideration or not. Id. at 553. See Barbee v. Pigott, 507 So.2d 77 (Miss. 1987). This Court additionally articulated: The rule is well settled that, in a case of this kind, where it is claimed that a conveyance was made to satisfy or secure an antecedent indebtedness, there must be clear and convincing proof of the existence of a valid debt, including disclosure of details as to the items and amount of the debt, and it must clearly appear that the conveyance was in fact made in consideration of such debt. The necessity of clear and satisfactory proof of indebtedness particularly exists in the case of conveyances to near relatives, as in ... between parent and child.       The burden of proof in this case was on the appellant to show by clear and satisfactory evidence not only a bona fide indebtedness, which was intended to be enforced, but also that the amount thereof was not materially less than the fair and reasonable value of the property conveyed to him. Blount, 95 So.2d at 557-59. See Cobb v. Cobb, 485 So.2d 691, 694 (Miss. 1986); Morgan v. Sauls, 413 So.2d 370, 374 (Miss. 1982). In order to ascertain whether, under the facts, actual fraud occurred, the trial court should analyze the presence of the `badges of fraud' to determine the issue of a bona fide conveyance. Southeast Bank v. I.P. Sarullo Ent., 555 So.2d 704, 708 (Miss. 1989); see also Barbee, 507 So.2d at 85; Reed v. Lavecchia, 187 Miss. 413, 193 So. 439, 441 (1940). In Reed v. Lavecchia, 187 Miss. 413, 193 So. 439 (1940), we enumerated several `badges of fraud' regarding the issue of a bona fide conveyance: [I]nadequacy of consideration, transaction not in usual course or mode of doing business, absolute conveyance as security, secrecy, insolvency of grantor, transfer of all his property, attempting to give evidence of fairness ... retention of possession, ... relationship of the parties, and transfer to person having no apparent use for the property. Id. at 424-25, 193 So. at 441. McNeil v. McNeil, 607 So.2d 1192, 1195 (Miss. 1992). Martin admits that the selling price of $165,000.00 was far below the true value of his interests. However, Martin claims to owe his family $60,000.00. The $105,000.00 difference is indeed a material difference. There was no monetary consideration given in the case sub judice and the transfer of all Martin's property was made after his divorce was granted. Absent this future interest, Martin in effect was insolvent. There was no itemization or specific support by records or documentary evidence as to Martin's alleged previous debts. Moreover, the record shows no demand was made on Martin to pay back what he had allegedly obtained from his family estate. The transaction definitely was not made in the usual mode of doing business since Martin admits to drafting the document himself without informing his sister or mother until after the fact. The chancellor, acting as finder of fact, found that there was clear and convincing evidence to show that a fraudulent conveyance had been made. We cannot say that this finding is without support. The chancellor is affirmed.