Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

La Salle Bank, N.A. v. DeCarlo

January 17, 2003

LA SALLE BANK, N.A., AS SUCCESSOR TO FREIGHTFORCE WORLDWIDE, LTD., AND FREIGHTFORCE INTERNATIONAL, INC., PLAINTIFF-APPELLEE,
v.
RICHARD DECARLO AND ELAINE DECARLO, DEFENDANTS-APPELLANTS (FREIGHT FORCE OVERSEAS, INC., DEFENDANT).



Appeal from the Circuit Court of Du Page County. No. 96-CH-1160 Honorable Bonnie M. Wheaton, Judge, Presiding.

The opinion of the court was delivered by: Justice Byrne

Defendants Richard DeCarlo and Elaine DeCarlo appeal the judgment of the circuit court of Du Page County, which granted the motion of plaintiff, La Salle Bank, N.A., to set aside the transfer of property into tenancy by the entirety. We affirm.

This appeal arose from an action in which Freightforce Worldwide, Ltd., and Freightforce International, Inc. (Freightforce), had obtained a judgment against defendant Richard DeCarlo and his company, Freight Force Overseas, Inc., for $81,242. Plaintiff succeeded to Freightforce's interest in the judgment. On September 3, 1999, we affirmed the judgment against Richard (Freightforce Worldwide, Ltd. v. DeCarlo, No. 2--98--1502 (1999) (unpublished order under Supreme Court Rule 23). On September 20, 1999, Richard transferred his title to his home, which he had owned with his wife, Elaine, as joint tenants since 1977, into tenancy by the entirety. In order to collect on the judgment, plaintiff filed a motion to set aside the transfer pursuant to section 12--112 of the Code of Civil Procedure (Code) (735 ILCS 5/12--112 (West 1998)).

Richard and Elaine were represented by counsel and each appeared and gave testimony at the evidentiary hearing concerning plaintiff's motion. At the time of the transfer, defendants had more than $200,000 of equity in their property.

Richard testified that, excluding his residential property, he owned less than $4,000 of assets at the time of the transfer. He transferred the title into tenancy by the entirety in September 1999 because a family lawyer suggested it to him in late 1997 or early 1998. According to Richard, the advice given by the attorney was received prior to the judgment in the underlying suit and was given without any awareness of the present litigation. A realtor also suggested it to him sometime in 1997. Richard stated that the purpose of the transfer was "to protect the estate" and his wife. Richard further stated that he was told that his residence would "transfer easier" upon his death because "[our] assets are tied up in the business and we don't really have a business agreement." Richard stated that the advice from the family attorney was the prime motivating factor to transferring title and that it was never his intent to defraud a creditor. Richard claimed that he waited until September 1999 to effect the transfer because he was preoccupied by an illness and a death in his family.

Elaine testified that she first began discussing a possible transfer sometime before 1998 when defendants were taking care of her parents' affairs. She stated that she had no intent to defraud any creditor and that, at the time of the transfer, she had no credit problems or judgments pending against her. Elaine first became aware of the underlying litigation around May 2001. Elaine further testified that Richard had "never discussed business at home" and he failed to disclose that a judgment had been attained against him until she was asked to sign documents in connection with this case.

The trial court first construed section 12--112 of the Code and held that the statute looks to the intent of the transferor who had the debt at the time the transfer was made. Because at issue was Richard's transfer of his interest in the property as a joint tenant, the court found Elaine's transfer of the property to be irrelevant. The court then found that Richard's reasons for the transfer were "vague, inarticulate, specious and totally incredible," and concluded that the transfer of the title to Richard's residence into tenancy by the entirety "was made with the sole intent to avoid the payment of debts existing at the time of transfer beyond [Richard's] ability to pay those debts as they become due." As a result of the finding, the trial court set aside the transfer into tenancy by the entirety as being fraudulent and in derogation of the rights of plaintiff and held that the title to the property remains vested in Richard and Elaine "as joint tenants and not as tenants in common." The trial court did not make any finding as to Elaine's intent with respect to the transfer. Defendants timely appeal.

Plaintiff filed a motion to set aside the transfer under section 12--112, which states in relevant part:

"Any real property, or any beneficial interest in a land trust, held in tenancy by the entirety shall not be liable to be sold upon judgment entered on or after October 1, 1990 against only one of the tenants, except if the property was transferred into tenancy by the entirety with the sole intent to avoid the payment of debts existing at the time of the transfer beyond the transferor's ability to pay those debts as they become due." (Emphasis indicates language added by amendment.) Pub. Act 90--514, eff. August 22, 1997. See also 735 ILCS 5/12--112 (West 1998)

On appeal, defendants first contend that the trial court erred in finding that section 12--112 applies to the debtor and not the debtor's spouse. Defendants assert that the intent of the debtor's spouse is just as relevant in cases where property is transferred into tenancy by the entirety because, in enacting section 12--112, the legislature clearly intended to protect the property of married couples from judgment creditors and, more specifically, to protect the unsuspecting wife from the improper actions of her spouse.

Defendants raise an issue of statutory construction, to which we apply a de novo standard of review. See Paris v. Feder, 179 Ill. 2d 173, 177-78 (1997). Well-established principles guide us in resolving an issue of statutory construction. The primary rule of statutory construction is to ascertain and give effect to the legislature's intent. Lieb v. Judges' Retirement System, 314 Ill. App. 3d 87, 92 (2000). To determine the legislature's intent, a court should look first to the statute's plain language and should accord the language its plain and commonly understood meaning. The court must not read into the plain language exceptions, limitations, or conditions that the legislature did not intend. Davis v. Toshiba Machine Co., America, 186 Ill. 2d 181, 184-85 (1999).

We agree with defendants that section 12--112 clearly sets forth the legislative goal of creating a veil of protection for the marital property from prospective creditors by preventing land held in tenancy by the entirety to be sold to satisfy a judgment. See Harris Bank St. Charles v. Weber, 298 Ill. App. 3d 1072, 1077 (1998). In 1997, however, the legislature amended the statute, creating an exception when creditors may force the sale of such property to satisfy a judgment. See Pub. Act 90--514, eff. August 22, 1997. By creating the exception, the legislature unambiguously expressed its intent to allow a creditor to break through the veil of protection when the transfer into tenancy by the entirety is made to avoid the payment of debts which existed at the time of the transfer beyond the transferor's ability to pay those debts as they become due. See Premier Property Management, Inc. v. Chavez, 191 Ill. 2d 101, 109 (2000). Because the exception is clearly directed to avoiding the payment of debts existing at the time of the transfer, we believe that the legislature intended that the focus is on the debtor's intent in transferring the property. See Harris Bank, 298 Ill. App. 3d at 1081 (property may be excluded from the protection of tenancy by the entirety, depending on transferor's intent).

However, because the legislature could have used the words "with the sole intent of the debtor" if it had so chosen, we must look to legislative history to interpret the statute (see Harris Bank, 298 Ill. App. 3d at 1072). The legislature was concerned about an unsuspecting wife or husband who found herself or himself in a position of losing the family residence as a result of some clandestine or inappropriate action by her or his spouse dealing with the equity in that residence. On the other hand, the legislature was cognizant of the rights of creditors and of limiting a debtor from circumventing a judgment debt. In balancing these concerns, the legislature set forth one instance when a creditor can avoid a transfer of property into a tenancy by the entirety. Senator Cullerton voiced this concern. He stated that "only in a very limited situation, where after there is literally a judgment entered against you, you can't transfer your property into -- from joint tenancy into tenancy by the entirety; you should do it beforehand." 90th Ill. Gen. Assem., Senate Proceedings, March 17, 1997, at 32 (statements of Senator Cullerton). Senator Cullerton further suggested that the factors listed in the Uniform Fraudulent Transfer Act (Fraudulent Transfer Act) (see 740 ILCS 160/5(b) (West 1998)) would be helpful in determining the intent to hinder, delay, or defraud creditors. 90th Ill. Gen. Assem., Senate Proceedings, March 17, 1997, at 33.

While there is no specific interface between the two statutes, it is apparent that the amendment to section 12--112 of the Code was gleaned, in part, from section 5 of the Fraudulent Transfer Act. Under that section, a transfer made or obligation incurred by a debtor is fraudulent as to a creditor if the debtor made the transfer or incurred the obligation with the intent to hinder, delay, or defraud any creditor of the debtor. 740 ILCS 160/5(a)(1) (West 2000). We believe that the legislature similarly intended that we look to the debtor's intent in determining whether the debtor transferred the property into tenancy by the entirety to escape judgment creditors. Our interpretation is consistent ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.