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Manufacturers & Traders Trust Co. v. Lauer's Furniture Acquisition, Inc.
Citations: 226 A.D.2d 1056; 641 N.Y.S.2d 947; 1996 N.Y. App. Div. LEXIS 5513Docket: Appeal No. 2
Court: Appellate Division of the Supreme Court of the State of New York; April 19, 1996; New York; State Appellate Court
Judgment was modified and affirmed without costs based on the following findings: On March 6, 1994, Lauer’s Furniture Acquisition, Inc. (LFA) transferred all its assets to Pittsford Furniture, Inc. (PFI) in exchange for PFI assuming LFA's debts, while LFA was indebted to the plaintiff and John M. Summers, the president and sole shareholder of both companies. The plaintiff sought to annul the transfer, claiming it was constructively fraudulent under the Debtor and Creditor Law. The court granted summary judgment in favor of the plaintiff regarding the constructive fraud claims, determining that the asset transfer favored Summers at the expense of other creditors, indicating a lack of good faith. The general remedy for fraudulent conveyance typically allows creditors to access only the property available for judgment satisfaction, but in this case, since the assets were commingled with PFI, a monetary judgment was appropriate, reflecting the value of the transferred assets. The judgment against PFI was upheld for the full amount of LFA’s indebtedness to the plaintiff, as the asset value exceeded the debt. However, the judgment against Summers was modified; he was liable only for the value of the amount wrongfully received, which was determined to be $150,000 plus interest. The court denied the plaintiff's motion for summary judgment regarding claims of actual intent to defraud, as intent is typically a factual issue unsuitable for summary judgment resolution. Thus, parts of the order granting summary judgment on certain causes of action were subsumed into the final judgment, and the defendants' appeal from that order was dismissed.