641 N.Y.S.2d 947 | N.Y. App. Div. | 1996
—Judgment unanimously modified on the law and as modified affirmed without costs in accordance with the following Memorandum: On March 6, 1994 defendant Lauer’s Furniture Acquisition, Inc. (LFA) conveyed all its assets to defendant Pittsford Furniture, Inc. (PFI) in exchange for PFI’s assumption of LFA’s debts. At the time of the transfer, LFA was indebted to plaintiff and defendant John M. Summers, the
Supreme Court properly granted plaintiffs motion insofar as it sought summary judgment on the causes of action alleging that the conveyance was constructively fraudulent. Plaintiff established as a matter of law that the transfer of all the assets of LFA to PFI, benefiting the president and sole shareholder of both corporations over other creditors, was not made in good faith (see, Matter of Superior Leather Co. v Lipman Split Co., 116 AD2d 796; Farm Stores v School Feeding Corp., 102 AD2d 249, affd 64 NY2d 1065; Laco X-Ray Sys. v Fingerhut, 88 AD2d 425, lv dismissed 58 NY2d 606; Southern Indus. v Jeremias, 66 AD2d 178; Julien J. Studley, Inc. v Lefrak, 66 AD2d 208, affd 48 NY2d 954).
As a general rule, the creditor’s remedy in a fraudulent conveyance action is "limited to reaching the property which would have been available to satisfy the judgment had there been no conveyance” (Marine Midland Bank v Murkoff, 120 AD2d 122, 133, appeal dismissed 69 NY2d 875; accord, Blakeslee v Rabinor, 182 AD2d 390, 392, lv denied 82 NY2d 655). In the instant action, however, where the assets of LFA have been sold and commingled with those of PFI, a money judgment was properly granted as a substitute for those assets (see, Valentine v Richardt, 126 NY 272, 277). The amount of that judgment against PFI, the transferee, is "limited only by the value of the transferred property” (Brown v Kimmel, 68 AD2d 896, 897). Because the record establishes that the value of the property exceeds the amount of LFA’s indebtedness to plaintiff, judgment was properly granted against PFI for the full amount of that debt.
The judgment against the individual defendant, however, must be modified. Summers is liable to plaintiff only "to the extent of the value of the money or property he or she wrongfully received” (Farm Stores v School Feeding Corp., supra, at 255; see also, Federal Deposit Ins. Corp. v Porco, 75 NY2d 840). Summers received only $150,000 as the result of the fraudulent conveyance and we modify the judgment, therefore, by reducing the award against him to that amount plus interest.
The court properly denied plaintiffs motion insofar as it sought summary judgment on the fifth cause of action, alleging that the conveyance from LFA to PFI was made with actual
