Art-Camera-Pix, Inc. v. Cinecom Corp.

Decision Date24 November 1970
Citation64 Misc.2d 764,315 N.Y.S.2d 991
Parties, 8 UCC Rep.Serv. 408 , Plaintiff, v. CINECOM CORPORATION, Barry Mahon and Pioneer Venture Corporation, Respondents.
CourtNew York Supreme Court

Roy I. Mandelbaum, Hicksville, for petitioner.

Fleisher, Dornbush, Mensch & Mandelstam, New York City (Robert F. Van Lierop, New York City, of counsel), for Pioneer Venture Corporation, respondent.

MAX BLOOM, Justice.

This is a proceeding brought pursuant to Section 5239 of the CPLR to determine the respective rights of petitioner Art-Camera-Pix (Art), and the intervenor-respondent Pioneer Venture Corporation (Pioneer) to certain warrants issuable by respondent Cinecom Corporation (Cinecom), to respondent Barry Mahon.

The facts have been stipulated.

On June 10, 1962, Pioneer advanced to Cinema Syndicate, Inc., the sum of $20,000. Mahon, who was an officer and principal stockholder of the corporation personally guaranteed the loan. Cinema Syndicate, Inc., defaulted on this obligation and, as a result, personal liability fastened on Mahon.

On January 18, 1968, somewhat more than five and one-half years later, Art entered judgment against Mahon in the sum of $19,513. Two years later, in February, 1970, Mahon became entitled to receive from Cinecom 3,000 warrants to purchase the stock of that corporation in return for certain services theretofore performed by him for Cinecom. The following month, Mahon informed Cinecom of his intention to assign these warrants to Pioneer and on March 27, 1970, he did, in fact, execute the assignment in consideration of the forbearance by Pioneer to enforce the obligation owing by Mahon to Pioneer to the extent of $10,000.

More than a month after the assignment by Mahon to Pioneer, Art served upon Cinecom a restraining notice to garnishee, pursuant to Section 5222 of the CPLR. On June 4, 1970, Art issued an execution with notice to garnishee to the Sheriff. Levy was made thereon on June 8, 1970. The following day, this proceeding in aid of the execution, was brought against Cinecom and Mahon. Pursuant to order dated July 13, 1970, Pioneer intervened and interposed its answer and cross claim demanding that it be adjudged the rightful owner of the warrants, and that Art be excluded from all interest therein.

Under our law, the mere entry of judgment creates no lien against the personal property of the judgment debtor. The lien comes into existence only upon issuance of execution to the Sheriff (CPLR § 5202; United States v. Pearson, D.C., 258 F.Supp. 686; Dean Const. Co. v. Simonetta Concrete Const. Corp., D.C., 37 F.R.D. 242; Ruppert v. Community National Bank, 22 A.D.2d 165, 254 N.Y.S.2d 341, affd. 16 N.Y.2d 589, 261 N.Y.S.2d 52, 209 N.E.2d 100). Thus, the race, under state law, is to the swift. Since the assignment was first in time it is, absent some statutory inhibition, entitled to precedence over the execution (Stathos v. Murphy, 26 A.D.2d 500, 276 N.Y.S.2d 727; Matter of Aird Island, Inc. v. De Paula, 29 Misc.2d 666, 217 N.Y.S.2d 776; Matter of Neilson Realty Corp. v. Motor Vehicle Acc. Indem. Corp., 47 Misc.2d 260, 262 N.Y.S.2d 652; Seamon v. Federated Films, City Ct., 142 N.Y.S.2d 324 (not officially reported); In re Ideal Mercantile Corporation, D.C., 143 F.Supp. 810, affd. 2 Cir., 244 F.2d 828, cert. den. 355 U.S. 856, 78 S.Ct. 84, 2 L.Ed.2d 63; Rockmore v. Lehman, 2 Cir., 129 F.2d 892, cert. den. 317 U.S. 700, 63 S.Ct. 525, 87 L.Ed. 559; cf. Matter of City of N.Y. (Nassau Expressway), 56 Misc.2d 602, 289 N.Y.S.2d 680).

Art claims to be relieved of this limitation by asserting that the assignment by Mahon to Pioneer created a 'security interest' and that the Uniform Commercial Code requires the filing of a financing statement to perfect all except specified security interests not here involved (Uniform Commercial Code, §§ 9--102, 9--302; Recchio v. Mfrs. and Traders Trust Co., 55 Misc.2d 788, 286 N.Y.S.2d 390). Necessarily, therefore, we are concerned with the meaning of the term 'security interest'. The Code (U.C.C., § 1--201(37)), so far as is here material, defines a 'security interest' as 'an interest in personal property or fixtures which secures payment or performance of an obligation * * *. The term also includes any interest of a buyer of accounts, chattel paper, or contract rights which is subject to Article 9.'

Mahon's assignment of the warrants to Pioneer was not to secure payment of some part of the obligation owing to Pioneer. The transfer was in payment of $10,000 of that debt. From the moment of assignment Mahon had neither title to nor interest in the warrants. He could not reclaim them by payment of the extinguished indebtedness. Conversely, if a sale of the warrants by Pioneer on the open market brought less than the portion of the debt extinguished by the transfer, Pioneer could not look to Mahon for the balance. The assignment terminated Mahon's interest in the warrants and Pioneer's interest in that portion of the debt which it had agreed to forbear from enforcing. Thus, it is clear that Pioneer's interest in the warrants was not to secure 'payment or performance of an obligation'. Hence, the first portion of the definition has no application to the situation here presented.

Nor does the second part of the definition afford comfort to petitioner. Article 9 of the Uniform Commercial Code is, by its terms, applicable to a 'contract right'. Under Section 9--106, a 'contract right' is defined as 'any right to payment under a contract Not yet earned by performance and not evidenced by an instrument or chattel paper'. (Italics supplied.) Since it is agreed that Mahon's right to the warrants had been Earned by performance at least a month prior to the...

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  • Miller v. Wells Fargo Bank International Corp.
    • United States
    • U.S. District Court — Southern District of New York
    • December 22, 1975
    ...themselves and not merely to provide security are not controlled by the U.C.C., see § 1-201(37); Art-Camera-Pix, Inc. v. Cinecom Corp., 64 Misc. 2d 764, 766, 315 N.Y.S.2d 991 (Sup.Ct.1970). But see J. White & R. Summers, Handbook of the UCC (1972) § 22-8 at 778. Nevertheless, there is no ev......
  • In re Cosmopolitan Aviation Corp.
    • United States
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    ...Lucasa International, Ltd., 13 B.R. 596, 4 C.B.C.2d 1190, 7 B.C.D. 1356 (Bkrtcy.S.D.N.Y.1981); Art-Camera-Pix, Inc. v. Cinecom Corporation, 64 Misc.2d 764, 315 N.Y.S.2d 991 (S.Ct.N.Y.Co.1970); Meyerhardt v. Heinzelman, 71 N.Y.S.2d 692 (S.Ct.N.Y.Co.1947); see also In re Riddervold, Notwithst......
  • Rose v. Amsouth Bank of Florida
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    ...had and received against the wrong claimant if [the wrong claimant] receives the money"); Art-Camera Pix, Inc. v. Cinecom Corp., 64 Misc.2d 764, 315 N.Y.S.2d 991, 992 (Sup.Ct., N.Y. County 1970) ("Since the assignment was first in time it is, absent some statutory inhibition, entitled to pr......
  • In re Syed Industries Corp.
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    ...In re Lucasa International Ltd., 13 B.R. 596, 4 C.B.C.2d 1190, 7 B.C.D. 1356 (Bkrtcy.S.D.N.Y.1981). Art-Camera-Pix, Inc. v. Cinecom Corp., 64 Misc.2d 764, 315 N.Y.S.2d 991 (S.Ct.N.Y.Co.1970). 2) The transfer was simultaneously perfected for the purposes of § 547(e)(1)(B) when the defendant ......
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