Carroll v. Carroll


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Docket Number: 2009-CA-00328-COA
Linked Case(s): 2009-CA-00328-COA2009-CT-00328-SCT
Oral Argument: 09-15-2010
 

 

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Court of Appeals: Opinion Link
Opinion Date: 12-14-2010
Opinion Author: Lee, P.J.
Holding: Affirmed in part, reversed and rendered in part.

Additional Case Information: Topic: Fraudulent conveyance - Section 15-3-3
Judge(s) Concurring: King, C.J., Irving, Griffis, Barnes, Ishee, Roberts, Carlton and Maxwell, JJ.
Non Participating Judge(s): Myers, P.J.
Procedural History: Bench Trial
Nature of the Case: CIVIL - OTHER

Trial Court: Date of Trial Judgment: 12-15-2008
Appealed from: MONROE COUNTY CHANCERY COURT
Judge: Talmadge Littlejohn
Disposition: FOUND TRANSFER OF FUNDS TO BE FRAUDULENT AND ORDERED THE MONEY TO BE REPAID TO THE REGISTRY OF THE CHANCERY COURT OF MONROE COUNTY FOR EQUITABLE DISTRIBUTION IN THE DIVORCE PROCEEDINGS
Case Number: 2005-53-48-L

  Party Name: Attorney Name:   Brief(s) Available:
Appellant: Verna Mae P. Carroll




RICHARD SHANE MCLAUGHLIN, NICOLE H. MCLAUGHLIN



 
  • Appellant #1 Brief
  • Appellant #1 Reply Brief

  • Appellee: Anna F. Carroll CARTER DOBBS JR.  

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    Topic: Fraudulent conveyance - Section 15-3-3

    Summary of the Facts: Roger Carroll and his parents signed an “Agreement for Sale and Transfer of Assets,” under which Roger would purchase Mississippi Gravel Sales, Inc. from his parents for $450,000. The terms of the contract provided that Roger would pay $150,000 at the time of closing and pay the remaining $300,000 in monthly installments over ten years at the rate of seven percent per year. As part of the purchase price, Roger obtained ownership of MGS’s equipment. Roger was the president and sole shareholder of MGS. Several years later, Roger’s wife, Anna, filed a complaint for divorce. While the divorce case was still pending, Roger sold MGS for $500,000 to Mississippi Gravel Sales, LLC. From the sale proceeds, Roger paid several creditors as well as $191,772.29 to his mother. The money paid to his mother included $153,274.65, which was the amount Roger still owed her under the purchase agreement, and $38,497.64 for certain equipment. In the judgment of divorce, the chancellor divided the marital assets and ordered Roger to pay Anna certain sums including alimony in the amount of $4,000 per month. In regard to MGS, the chancellor stated that if the sale of MGS was ever set aside, Anna would be entitled to one-half of the net proceeds from the sale of MGS’s assets. Roger appealed, and the Court of Appeals reversed and remanded. Anna filed a complaint against Roger, his mother, Cynthia Ann Carroll Loden, Tim Parker, MGS, and Mississippi Gravel Sales, LLC. The complaint asserted several claims relating to the sale of MGS to Mississippi Gravel Sales, LLC, as well as a purported fraudulent conveyance. Loden, Parker, and Mississippi Gravel Sales, LLC, were subsequently dismissed. The chancellor found that Roger’s payment of $153,274.65 to his mother was fraudulent and ordered her to pay that amount into the registry of the chancery court for equitable distribution in Anna and Roger’s divorce proceeding. The chancellor found that the transfer of $38,497.64 to Roger’s mother was not fraudulent. Roger’s mother appeals, and Anna cross-appeals.

    Summary of Opinion Analysis: The appellant argues that the chancellor improperly applied the Uniform Fraudulent Transfer Act. According to section 15-3-3, a conveyance is fraudulent if it results from fraud or with the intent or purpose to delay, hinder, or defraud creditors. This section also deems fraudulent a transfer made for consideration not deemed valuable in law and a fraudulent loan of goods and chattels. When examining a conveyance to determine if it is fraudulent, a court searches for certain ‘badges of fraud,’ or suspicious circumstances, which usually accompany a fraudulent conveyance. These can include inadequacy 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, attempt to give evidence of fairness, retention of possession, failure to take a list of the property covered by the conveyance, relationship of the parties, and transfer to person having no apparent use for the property. In addition, transfer in anticipation of litigation and amount of control over property by debtor after transfer are considered badges. There is no evidence in the record that Roger intended to defraud Anna – a fact which Anna admitted at trial. The transaction was well documented; Anna was notified of the transaction; Roger did not retain any interest in the funds after transfer; and his mother used the funds after the transfer from Roger. There was clear-and-convincing evidence that the transfer of funds to his mother by Roger to pay an outstanding debt was legitimate, and the chancellor erred in finding otherwise. On cross-appeal, Anna argues that the transfer of $38,497.64 to Roger’s mother was fraudulent. This amount represented the value of certain equipment that Roger’s mother testified she owned. When Roger sold MGS, he included this equipment in the sale price. Roger testified that $38,497.64 was a fair value for the equipment. This amount is listed as a lien payable to his mother on the settlement statement. Attached to the settlement statement is an affidavit by the mother that states the specific equipment involved and its value at $38,497.64. Thus, the chancellor did not err in finding that this transfer was not fraudulent.


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