Court Opinion

ID: 5343031
Source: CourtListenerOpinion
Date Created: 2022-01-08 06:05:58.729469+00
Date Added: 2024-06-11T08:29:36.090632
License: Public Domain

The action is brought to recover the value of property alleged to have been illegally transferred to certain directors, thereby denuding the corporation of assets and defeating and impairing the rights of creditors. It is brought under the provisions of sections 60 and 61 of the General Corporation Law and is in its nature one for conversion. The plaintiff was appointed as receiver in supplementary proceedings on the application of one judgment creditor. (See Civ. Prac. Act, § 805, as amd. by Laws of 1934, chap. 565.) The property of the defendants vested in the receiver. (Civ. Prac. Act, § 809.) So far as it appears in the record, there is only one other creditor, in comparatively small amount. What disposition or distribution of the property may be made after recovery is had is a question that does not now concern us. It will be a matter for the court to determine on an accounting when it may appear that other creditors are sufficiently vigilant to claim a share in the recovery. Such an action at law in behalf of the corporation is maintainable. (People v. Equitable Life Assurance Society, 124 App. Div. 714, 733; Stephens v. Meriden Britannia Co., 160 N. Y. 178, 181; Whalen v. Strong, 230 App. Div. 617, 620.) Order denying defendants’ motion to dismiss the complaint under rules 106 and 107 of the Rules of Civil Practice affirmed, with ten dollars costs and disbursements, with leave to answer within ten days from the entry of the order herein. Lazansky, P. J., Young, Hagarty, Tompkins and Davis, JJ., concur.