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Cruickshank-Wallace v. County Banking and Trust Co.10/31/2005
Kenney, Eyler, Deborah S., Adkins, JJ.
In the Circuit Court for Cecil County, County Banking and Trust Company ("the Bank"), the appellee, sued Bonnie Cruickshank Wallace ("Bonnie"), the appellant, for actual and constructive fraudulent conveyances under the Maryland Uniform Fraudulent Conveyance Act ("MUFCA"), Md. Code (1975, 2000 Repl. Vol.), sections 15-201 through 15-214 of the Commercial Law Article ("CL").
In a prior suit ("the Debt Action"), the Bank had obtained a judgment against Great Christian Books, Inc. ("GCB"), and William Wallace ("William"), Bonnie's husband, as guarantor of a debt of GCB. It is undisputed that the judgment in the Debt Action rendered William insolvent. In the case at bar, the Bank alleged that, in 1999, after he was insolvent, William fraudulently conveyed his 1998 federal and state income tax refunds to Bonnie, thus keeping them out of the Bank's reach.
Bonnie and the Bank each moved for summary judgment. The court denied Bonnie's motion and granted the Bank's motion.
Bonnie noted an appeal, posing two questions, which we have rephrased slightly:
I. Did the circuit court err in denying her motion for summary judgment on the fraudulent conveyance claim for the amount of the 1998 federal and state income tax refunds?
II. Did the circuit court err in granting summary judgment to the Bank on its fraudulent conveyance claim for the amount of the 1998 federal and state income tax refunds?
For the reasons set forth below, we answer "no" to both questions and shall affirm the judgment of the circuit court. FACTS AND PROCEEDINGS
At all times pertinent to this case, William and Bonnie were husband and wife and were living together in an intact marriage with their two sons, born in 1990 and 1993. William has an adult child from a prior marriage who visits the Wallaces occasionally, but does not live with them.
The Wallaces were married in 1987. On November 27, 1987, they executed a property agreement. They amended that agreement on December 4, 1991, while residing in the State of Washington, which is a community property state, by means of a document entitled "Separate Property Status Agreement." It appears from the name of the December 4, 1991 agreement that it and the prior agreement were entered into for the purpose of characterizing some of the Wallaces' property-that otherwise would be community property under the laws of the State of Washington-as their own separate property.
On June 8, 1994, William purchased 75% of the stock of GCB from Walter C. Hibbard and Phillip Hibbard.
A week later, the Wallaces executed a "Community Property Agreement," modifying their December 4, 1991 Separate Property Status Agreement. The modification language states:
[Bonnie] and [William] agree as follows . . . . [Bonnie] and [William] shall own as community property the assets pertaining to the June 8, 1994 Agreement Stock Ownership Of Great Christian Books, Inc. entered into between Walter C. Hibbard, Phillip Hibbard, and [William] including, without limitation: 203 shares of Great Christian Books, Inc. ("GCB") stock transferred from Walter C. Hibbard; and 547 shares of authorized GCB stock to be immediately issued; and all future issued and transferred GCB Stock and any stock of any present and future affiliate of GCB to either [Bonnie] or [William] or any entity owned in part or whole by either or both of the parties hereto.
Sometime in late 1994 or early 1995, the Wallaces moved from Washington to Pennsylvania, which is not a community property state. In May of 1995, the Bank extended a one-year revolving line of credit
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