Williams v. Fox

227 A.D.2d 909, 643 N.Y.S.2d 270, 1996 N.Y. App. Div. LEXIS 6813

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: May 31, 1996
• Status: Published

Opinion

Judgment unanimously affirmed without costs. Memorandum: Following a bench trial, Supreme Court determined that a transfer of funds from the cash account of AGK Communications, Inc. (AGK), to defendant, Craig L. Fox, at a time that plaintiff’s action seeking money damages for breach of contract was pending against AGK, was fraudulent under Debtor and Creditor Law § 273-a. The court’s determination is supported by the record. During the pendency of plaintiff’s action against AGK, the assets of AGK were sold to Atlantic Ventures for $3.5 million. Atlantic Ventures paid another $1 million for a covenant not to compete given by defendant, AGK’s president and a principal shareholder of AGK’s parent company. Atlantic Ventures transferred the total amount into AGK’s cash account, and AGK then transferred directly to defendant that portion of the proceeds attributable to the covenant not to compete. Plaintiff presented evidence that no portion of the sale price was allocated to the good will of AGK, although accountants for both parties testified at trial that the sale of a successful radio station that had been operating for 10 years should have included the sale of its good will, which would have been an asset of AGK from which plaintiff’s judgment could have been satisfied. Defendant was responsible for negotiating the transfer of assets and the manner in which the proceeds of the sale of AGK would be allocated. In our view, the evidence adduced at trial supports the determination that the transfer of funds from AGK to defendant was not in good faith (see, Debtor and Creditor Law § 272; Matter of Superior Leather Co. v Lipman Split Co., 116 AD2d 796, 797). (Appeal from Judgment of Supreme Court, Onondaga County, Murphy, J. — Damages.) Present — Pine, J. P., Wesley, Callahan, Doerr and Boehm, JJ.