32 A.D.2d 810 | N.Y. App. Div. | 1969
In a proceeding by a judgment creditor to direct third parties to turn over money which is the property of or owed to the judgment debtor, pursuant to CPLR 5225 and 5227, the third parties appeal from an order of the Supreme Court, Suffolk County, entered November 15, 1968, which granted the application. Order affirmed, with $20 costs and disbursements. The judgment debtor entered into a contract for the bulk sale of his businesses to Advance Technology Corporation on October 11, 1967. The contract provided that the seller would execute an affidavit to the effect that he had no creditors, in lieu of complying with the provisions of article 6 of the Uniform Commercial Code which requires notice of a pending bulk sale to be given to the creditors of the seller. Subsequently the seller conceded that creditors did exist and the parties to the sale agreed that the entire purchase price, $140,000, was to be placed in escrow and held for distribution to the creditors in accordance with an agreed-upon schedule which listed preferred claims to be paid in full and general claims to be paid at the rate of 17.795%. Pursuant to this agreement, $140,000 was placed in the hands of the escrow agents and later, after deduction of $5,000 therefrom for said agents’ fees and expenses, the balance was transferred to appellants,.as substituted escrow agents. The terms and conditions of the escrow, • contained in a letter signed by both parties to the sale, directed that the escrow agents were not required to satisfy the claim of any creditor if the amount of the fund was less than the aggregate of the amount allowed to each creditor plus (1) sums, if any, owing by the seller to the buyer for breach of the contract or under an indemnity agreement contained in the contract, (2) the amount of any other debts or liabilities of the seller existing on the date of the escrow agreement and (3) the amount