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Esb Inc. v. Fischer

Decided: April 26, 1982.

ESB, INC., PLAINTIFF,
v.
ROBERT J. FISCHER AND JOAN S. FISCHER, DEFENDANTS



Dreier, J.s.c.

Dreier

Plaintiff ESB, Inc. seeks first to set aside an alleged fraudulent conveyance by defendant Robert J. Fischer to his wife Joan, next to execute upon defendant husband's interest in the real estate, and finally to have the property sold in a partition sale. Defendants contend that the husband's interest in the property, originally held by the Fischers as tenants by the entirety, was validly transferred to the wife and thus is immune from plaintiff's claim.

In this summary judgment motion the court must accord defendants all reasonable inferences that can be gleaned from their affidavits and certifications. Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 77 (1954); R. 4:46-1. Applying this principle, the following appears: Prior to September 1976 defendant husband had converted substantial quantities of plastic tape from plaintiff, his then employer. When the theft was discovered, defendant was fired and soon thereafter was indicted and convicted. In March 1980 plaintiff, in a separate civil suit, obtained an $80,000 judgment against defendant. This judgment was uncollectable, however, as it was subsequently discovered that shortly after his indictment defendant had conveyed his sole asset, namely his interest in the subject

premises (which interest is acknowledged to be worth approximately $22,000, net of mortgage), to his wife for a recited consideration of one dollar. Plaintiff then commenced this action to set aside the real estate transfer under N.J.S.A. 25:2-3, alleging the same to have been fraudulent.

I

Under the Fraudulent Conveyance Act, N.J.S.A. 25:2-3, a transfer made with the intent to "hinder, delay, or defraud creditors" may be set aside, notwithstanding any "feigned consideration." Likewise, under the Uniform Fraudulent Conveyance Act,*fn1 N.J.S.A. 25:2-15, a creditor who has reduced his claim to judgment may set aside a transfer of real estate by the debtor to a third party, unless the transfer is supported by "fair consideration." This latter phrase has been defined in N.J.S.A. 25:2-9 as follows:

Fair consideration is given for property or obligation:

a. When in exchange for such property or obligation, as a fair equivalent therefor, and in good faith, property is conveyed or an antecedent debt is satisfied; or

b. When such property or obligation is received in good faith to secure a present advance or antecedent debt in amount not disproportionately small as compared with the value of the property or obligation obtained.

Transfers between close relatives are at best viewed with suspicion. See Coles v. Osback, 22 N.J. Super. 358, 364 (App.Div.1952); Haberstroh v. DeMarco, 2 N.J. Super. 429, 432 (Ch.Div.1949). We must therefore carefully assess the adequacy of the consideration claimed by defendants. They contend that the consideration for the transfer of the real property from husband to wife was threefold: (1) the wife's agreement not to institute divorce proceedings; (2) the wife's desire to feel more secure with the home solely in her name and (3) satisfaction of the

husband's future support obligation to his wife and children in light of the wife's allegation that he had had a poor ...


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