P.A. Building Co. v. Silverman

Oct 31, 2002
Versions:298 A.D.2d 327
750 N.Y.S.2d 13
2002 N.Y. App. Div. LEXIS 10385

Judgment, Supreme Court, New York County (Charles Ramos, J.), entered October 4, 2001, bringing up for review an order and amended order, same court and Justice, entered July 11, 2001 and August 8, 2001, respectively, which, insofar as appealed from as limited by the brief, granted petitioner’s motion for summary judgment as to its cause of action pursuant to Debtor and Creditor Law § 275, and ordered appellant to turn over to petitioner the sum of $392,135.97 plus interest, unanimously affirmed, with costs.

We reject appellant’s claim that, as a participant in a constructive, as opposed to an actual, fraudulent conveyance, *328he retains a right of pro rata distribution for repayment of antecedent debts (48-48 Assoc. v Piccoli, 243 AD2d 291). We further find that petitioner’s status as a creditor with a turnover order from the Supreme Court gives it priority over appellant, since appellant did not obtain the property for fair consideration (CPLR 5202 [b]; 5225 [b]). Even were appellant able to establish that the funds he transferred from a corporation of which he was the chairman and 80% shareholder were equivalent to the value of the loans he had previously advanced to it, those transfers would still be invalid, inasmuch as preferential transfers to directors, officers and shareholders of insolvent corporations in derogation of the rights of general creditors do not fulfill the requirement of good faith (see Farm Stores v School Feeding Corp., 102 AD2d 249, 254, affd 64 NY2d 1065).

We have considered and rejected appellant’s remaining contentions.' Concur — Mazzarelli, J.P.. Saxe, Ellerin, Lerner and Marlow, JJ.