Federal Deposit Ins. Corp. v. Porco

Decision Date13 February 1990
Citation552 N.E.2d 158,552 N.Y.S.2d 910,75 N.Y.2d 840
Parties, 552 N.E.2d 158 FEDERAL DEPOSIT INSURANCE CORPORATION, Appellant, v. Daniel A. PORCO et al., Respondents, et al., Defendants.
CourtNew York Court of Appeals Court of Appeals
OPINION OF THE COURT MEMORANDUM.

The order of the Appellate Division, 147 A.D.2d 422, 538 N.Y.S.2d 261, should be affirmed, with costs, and the certified question answered in the affirmative.

Plaintiff, the receiver of an insolvent bank, obtained a $6,000,000 money judgment in Federal court against a director of the bank's parent corporation, for losses suffered by the bank as a result of the director's involvement in the bank's financial affairs. Several years thereafter, plaintiff brought this action alleging that, during the pendency of the Federal suit, defendants, two officials of the bank, had assisted the director in transferring certain moneys, in which the director had a beneficial interest, to an account in Switzerland. Plaintiff does not claim that defendants were the recipients of the funds or that they benefited in any way from the transfer. Plaintiff alleges only that defendants helped the director make the transfer and, thereby, fraudulently deprive plaintiff of moneys to which it should be entitled as a result of the Federal judgment.

Supreme Court denied defendants' motion to dismiss the complaint for failure to state a cause of action. The Appellate Division, however, reversed on the ground that, under long-standing New York law, a creditor has no cause of action against a party who merely assists a debtor in transferring assets where, as here, there was neither a lien on those assets nor a judgment on the debt. We agree with the Appellate Division.

On this appeal, plaintiff concedes that the traditional rule in this State rejects any cause of action for mere participation in the transfer of a debtor's property prior to the creditor's obtaining a judgment or a lien on that property (see, Braem v. Merchants' Natl. Bank, 127 N.Y. 508, 515, 28 N.E. 597). Plaintiff argues, however, that the rule was changed with the enactment of sections 278 and 279 of the Debtor and Creditor Law (L.1925, ch. 254, § 1). But, as the courts of this State have consistently held since the adoption of those provisions (see, e.g., Hearn 45th St. Corp. v. Jano, 283 N.Y. 139, 143, 27 N.E.2d 814; Marine Midland Bank v. Murkoff, 120 A.D.2d 122, 131, 508 N.Y.S.2d 17; Northville Dock Corp. v. Aller, 15 A.D.2d 947, 226 N.Y.S.2d 313, affd 15 N.Y.2d 498, 254 N.Y.S.2d 109, 202 N.E.2d 556), a creditor's remedy for the transfer of its debtor's assets, where undertaken prior to a judgment on the debt, is still to obtain a nullification of the conveyance (see, § 279) and, where undertaken after judgment, additionally to secure the assets in satisfaction of the debt (see, § 278). Those sections did not, either explicitly or...

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  • SEC. INV. PROTECTION v. Stratton Oakmont, Inc.
    • United States
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    ...is not alleged to be the recipient or transferee of the fraudulently conveyed assets, see Federal Deposit Insurance Corporation v. Porco, 75 N.Y.2d 840, 842-43, 552 N.Y.S.2d 910, 552 N.E.2d 158 (1990), and whereas I have already determined that Maxwell does not fall within the aegis of § 55......
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    ...conveyance." Roselink Investors, L.L.C. v. Shenkman, 386 F. Supp. 2d 209, 226 (S.D.N.Y. 2004) (quoting F.D.I.C. v. Porco, 75 N.Y.2d 840, 842, 552 N.Y.S.2d 910, 910, 552 N.E.2d 158 (1990)) (alteration added); Gallant v. Kanterman, 198 A.D.2d 76, 80, 603 N.Y.S.2d 315, 318 (1stDep't 1993) (aff......
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    ...to any case that actually allowed a claim of aiding and abetting a fraudulent conveyance. The case of Fed. Deposit Ins. Co. v. Porco, 75 N.Y.2d 840, 552 N.Y.S.2d 910, 552 N.E.2d 158 (1990), cited in Amusement's opposition papers, see # 21 Opp. at 25; # 32 Opp. at 18–19, specifically states ......
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    ...Corp., 832 F.Supp. 728, 737 (S.D.N.Y.1993), aff'd,99 F.3d 401, 1995 WL 737512 (2d Cir.1995); Fed. Deposit Ins. Corp. v. Porco, 75 N.Y.2d 840, 552 N.Y.S.2d 910, 552 N.E.2d 158, 159 (1990). In Federal Deposit Insurance Corp. v. Porco, New York's highest court interpreted the plain language of......
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