Court Opinion

ID: 9454026
Source: CourtListenerOpinion
Date Created: 2023-08-04 18:33:00.84163+00
Date Added: 2024-06-11T17:33:56.037657
License: Public Domain

PER CURIAM:
The petitioners, who are unsecured general creditors of the bankrupt, appeal *29from the decision of the District Court for the Northern District of New York confirming the order of the Referee in Bankruptcy which upheld the validity of a mortgage lien.
The mortgage in question was executed by the bankrupt, William Bookheim & Sons, Inc. (Bookheim) to Globe Food Sales Co., Inc. (Globe) on July 18, 1962 and was duly recorded three weeks later. From the conflicting testimony, the Referee found that the consideration for the mortgage was merchandise delivered by Globe to the bankrupt one week before the execution of the mortgage. The principal issue on appeal is whether that mortgage is void under § 15 of the New York Stock Corporation Law, McKinney’s Consol.Laws, c. 59, which reads in pertinent part:
“No conveyance * * * nor any * * * lien created or security given by [the corporation] or by any officer * * * when the corporation is insolvent or its insolvency is imminent, with the intent of giving a preference * * * shall be valid.”
To set aside the transfer under § 15, the complaining creditor must establish, among other things, that insolvency existed or was imminent at the time when the transfer was made; that the transfer resulted in a preference; and that the transferor intended to give a preference to the transferee. Haberman v. Larens Corp., 35 N.Y.S.2d 533, 535 (Sup.Ct.1942); In re Anjopa Paper & Board Manuf. Co., 269 F.Supp. 241, 263 (S.D.N.Y.1967). The petitioners have not carried their burden with respect to these three issues. There is evidence, including the continued operation of the bankrupt for eight months, to support a finding that insolvency was not imminent. Globe delivered the merchandise on condition that Bookheim give the mortgage; and such new and fair consideration belies the existence of a preference. Shaw v. Jewel Radio Corporation, 6 A.D.2d 707, 174 N.Y.S.2d 315 (1958). Finally, there is sufficient evidence from which the Referee could fairly have concluded that Bookheim did not intend to prefer Globe over other creditors. Since the Referee’s findings of fact are not clearly erroneous, based as they are in large part on the credibility of witnesses, the determination of the validity of the mortgage was proper.
We affirm.