3.3.1 Family Relationship

Several cases examine the importance of a family relationship as an indicium of fraud, concluding that it is not necessarily, of itself, conclusive. In Oles Envelope Corp. v. Oles, 193 Md. 79, 65 A.2d 899 (1949), a husband sold closely held family stock to his father immediately preceding his divorce. The Court reviewed extensive evidence concerning the family dynamics (the father was displeased about his son’s mid-life crisis) and looked at the consideration paid for the stock. The father paid a premium over book value: “[I]t is argued that the stock was worth considerably more than book value. But it must be appreciated that it might have taken some time to find someone who would invest more than a quarter of a million dollars in an unlisted stock, and that Oles (the son) wanted to sell promptly…. [W]e … hold here that there is not such a glaring inadequacy of consideration as of itself to stamp the transaction with fraud by shocking the common sense of honesty and thereby to render the transaction void.” (At 89-90).

Cases involving transfers between near relatives shift the burden of proof. In those situations, the relative receiving the property must prove sufficient consideration and the lack of fraudulent intent:

“Though he who alleges fraud must prove it, facts and circumstance of a conveyance, especially one between near relatives, may be such as to shift to one who claims to be a bona fide purchaser for value the burden of proving that he is. Freedman v. Yoe, 141 Md. 482, 487, 119 A. 260; Commonwealth Bank v. Kearns, 100 Md. 202, 209, 210, 59 A. 1010; Kennard v. Elkton Bank and Trust Company, 176 Md. 497, 500-501, 6 A.2d 258. It is necessary to establish both a sufficient consideration and also bona fides. If a conveyance is made and accepted with intent to hinder, delay or defraud creditors, it matters not that a full consideration has been paid. McCauley v. Shockey, 105 Md. 641, 649-650, 66 A. 625.”

Kline v. Inland Rubber Corp., 194 Md. 122, 137-8, 69 A.2d 774, 780 (1949).