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Citizens National Bank of Havre De Grace v. Leffler

Decided: April 10, 1962.

CITIZENS NATIONAL BANK OF HAVRE DE GRACE, ETC.
v.
LEFFLER



Appeal from the Circuit Court for Harford County; Day, C. J.

Henderson, Prescott, Horney, Marbury and Sybert, JJ. Marbury, J., delivered the opinion of the Court.

Marbury

The plaintiff below has appealed from an order of the Circuit Court for Harford County sustaining without leave to amend the appellee's demurrer to the bill of complaint in a suit to set aside an alleged fraudulent conveyance.

This case involves the question is the appellant's action

against the appellee wife, for alleged fraudulent conveyance from husband to wife, absolutely barred by the provisions of Code (1951), Article 45, Section 1,*fn1 which requires creditors to assert their claims within three years after the acquisition of the property by a married woman from her husband, the conveyance in question having been made on October 14, 1946, and suit having been instituted on December 1, 1955; and there being no wrongdoing alleged on the part of the wife. The facts alleged in the bill of complaint, and shown in the exhibits filed therewith, may be briefly summarized.

William A. Leffler, who died during the pendency of the case in the lower court, was married to Vesperina M. Clark, also deceased, many years prior to these proceedings. On March 31, 1927, while William was married to Vesperina, they acquired fee simple title, as tenants by the entireties, to a lot and premises known as 904 South Washington Street, in Havre de Grace, Harford County, Maryland, which is the subject of this suit. Vesperina died on March 16, 1941, vesting title to the property in William alone, by right of survivorship. On November 24, 1943, he married Mary Fahey Clark, a codefendant and the appellee here. On October 14, 1946, William conveyed the subject property, through straw conveyances, to himself and the appellee, as tenants by the entireties. Both deeds effecting the transfer were recorded on October 16, 1946. The bill states no consideration was given by Mrs. Leffler, nor was any received by her husband as a result of this conveyance.

At the time of the conveyance Leffler was insolvent and greatly in debt to his employer, the Citizen's National Bank, as a result of embezzlement, misappropriation, and false entries made in its books and records by him for a period of at least twenty years, which was subsequently established to be $94,945.57, the books and records of the bank having been destroyed up to a period of three or four years prior to December 20, 1954, by or under the instructions of Leffler, or at least with his full knowledge and acquiescence. The cause of action resulting from this situation was fraudulently concealed

by Leffler until its discovery by the employer bank on or about that date, when he was dismissed from his position as executive vice-president, after being employed by the bank for approximately fifty years.

A judgment was entered in favor of the appellant against William A. Leffler in the Circuit Court for Harford County, on September 7, 1955, in the sum of $97,794.04, which amount had been paid under the bond of the United States Fidelity and Guaranty Company. The U. S. F. & G. Co. later became assignee of the bank, and is equitable plaintiff in this case.

On May 26, 1955, Leffler and the appellee, while federal charges were pending against him, to which he afterwards pleaded guilty and was fined and imprisoned, conveyed title to the Washington Street property to Frederick J. Hatem and Arianna W. Hatem, his wife, for a total consideration of $38,500. A purchase money mortgage for $25,000 of that amount was executed in favor of the appellee only. Counsel for the appellant stipulated that the Hatems were bona fide purchasers of the property, and the lower court sustained a demurrer filed on their behalf without leave to amend, subject to the agreement of counsel that all payments on account of the mortgage from them to the appellee would be continued to be made by the Hatems into a special account in the Citizen's National Bank of Havre de Grace pending the outcome of these proceedings.

The special relief now sought by the appellant is that the mortgage, and all payments made pursuant to it into the special account, be assigned to the U. S. F. & G. Co. to be credited on ...


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