S. Silberstein & Son, Inc. v. Cohen

Martin, J. The defendants moved for judgment “ as demanded in the answer,” a dismissal of the complaint, “ and more particularly for judgment dismissing the second cause of action ” for insufficiency. The motion was denied and judgment was granted in favor of plaintiff for the relief demanded in the second cause of action. The second count is an attempt to state a cause of action for relief under the Bulk Sales Act or the Sales in Bulk Act (Pers. Prop. Law, § 44, as amd. by Laws of 1914, chap. 507); and it is attacked as faffing to allege that plaintiff was a creditor prior to the transfer of the partnership and individual assets of and by the partners David Cohen and Joseph Katz to Benjamin Cohen and Louis Cohen who turned the same over to Cohen & Katz, Inc., to which, as alleged, no other capital was paid in. [250] It is alleged and not denied that at the time of said transfers of assets, plaintiff had brought suit in the City Court against Katz and David Cohen, in which some years later judgment was entered for plaintiff. The nature of the City Court action is not pleaded. At Special Term it was held that the judgment evidences a debt from the commencement of the City Court action, thus making plaintiff a “ creditor ” before the transfers. We are of the opinion that every chose in action is not necessarily a “ debt ” so as to give its owner a standing as a “ creditor ” under the Sales in Bulk Act. (Apex Leasing Company, Inc., v. Litke, 173 App. Div. 323; affd., 225 N. Y. 625; Matter of Hevenor, 144 id. 271.) Whether plaintiff was such at the time of the transfer cannot be determined from the complaint. We are required, therefore, to hold that the second count is defectively stated. The first cause of action to set aside a conveyance as in fraud of creditors is sufficiently alleged. It includes allegations to the effect that there was no consideration for either of said transfers; that they were made to defraud creditors, in which fraudulent attempt Benjamin and Louis Cohen are alleged to have intentionally participated, the transfers being intended, as it is set forth, by all to defraud plaintiff by rendering uncollectible any judgment it might recover. The order should be reversed, with ten dollars costs and disbursements, the plaintiff’s motion denied, and defendants’ motion granted as to the second cause of action and denied in all other respects, with leave to plaintiff to serve an amended complaint on payment of said costs. Dowling, P. J., Merrell and Proskauer, JJ., concur; O’Malley, J., dissents.