Mansfield State Bank v. Cohn
| Decision Date | 15 September 1977 |
| Citation | 407 N.Y.S.2d 373,95 Misc.2d 326 |
| Parties | MANSFIELD STATE BANK, Judgment-Creditor, v. Maurice J. COHN, Judgment-Debtor. |
| Court | New York Supreme Court |
Gifford, Woody, Carter & Hays, New York City, for judgment-creditor.
John M. Burns, III, New York City, for judgment-debtor.
This is a motion brought on by order to show cause seeking an order vacating the filing of a judgment in the office of the Clerk of New York County and/or staying the execution thereon, and permanently enjoining the enforcement of the judgment in this State.
On December 27, 1976, a judgment by default was rendered by the District Court of Tarrant County, Texas, against the judgment debtor Maurice J. Cohn. A transcript of this judgment was filed in New York on June 16, 1977, pursuant to Art. 54 of the CPLR, and an execution was thereafter issued to the Sheriff.
A brief history of the Texas litigation is essential to an understanding of the issues herein.
Mansfield State Bank (Mansfield), the judgment creditor, commenced an action in Texas against Cohn, Garywood Development Corporation (Garywood) and Atlan-Tex Realty & Funding Corporation (Atlan-Tex), in December of 1975 in which Mansfield alleged nonpayment of a promissory note of Garywood executed on September 30, 1975 by Cohn, as president of Garywood, and guaranteed by Atlan-Tex, which was also signed by Cohn as President of Atlan-Tex.
Summary judgment was obtained against the corporations and the action against Cohn, together with a third party action commenced by Cohn, was severed.
The action against Cohn is predicated upon Article 12.14 of Title 122A, Chapter 12 of the Texas Tax Code, which provides in substance that a director or officer of any corporation which right to do business in the State was forfeited, shall, as to any and all debts of such corporation created or incurred with his knowledge, approval and consent after the forfeiture, be deemed and held personally liable thereon as if the director or officer was a partner of the corporation.
Cohn claims that he has a meritorious defense to the Texas action in that at the time he executed the note he was unaware that Garywood had forfeited its charter, and that in order for him to be liable thereon, it is essential that the plaintiff prove he had actual knowledge thereof, i. e., that scienter is an element of the plaintiff's proof.
Mansfield contends that it is not a requirement that the officer or director have actual knowledge of the forfeiture of the corporate charter when the debt was created or incurred an in any event this is not an issue for the New York courts since this issue has been decided in Texas and is not subject to collateral attack in New York.
Cohn appeared in the Texas action on January 29, 1976 and participated in various pretrial proceedings. He commenced a third party action against a Herman J. Smith seeking indemnification.
On or about August 26, 1976, Cohn's Texas attorney moved to withdraw as counsel for Cohn and the other defendants on the ground of nonpayment of his fee and noncooperation. This motion was granted on November 2, 1976. On November 11, 1976, counsel for Mansfield sent the Texas Court and Cohn, who is a New York attorney, a notice requesting that the trial be set for the week of December 27, 1976. Cohn does not dispute receipt of this notice. The local rules of practice provide that a case is noticed for trial by the plaintiff mailing a letter to the court requesting that the case be set for trial for a specific week. The case appears on the Monday of the requested week and is thereafter tried as soon as it is reached.
Cohn contends that his failure to appear and the subsequent default was excusable because the notice sent him was insufficient to apprise him that a trial would actually be held on the date requested, and that the Texas default judgment is subject to collateral attack in New York.
On January 19, 1977, Cohn moved in Texas to set aside the default judgment upon substantially the same grounds raised in the motion before this court. The motion was denied and an appeal taken therefrom, which is still pending. Pursuant to Rule 364(a) of the Texas Rules of Civil Procedure, Cohn could file a "supersedeas bond" which would stay the execution of the judgment pending the outcome of the appeal. Cohn failed to file such a bond and is therefore not entitled to a stay in this court pursuant to CPLR 5404(a).
The judgments of sister states are entitled to full faith and credit so long as the rendering court had personal or subject matter jurisdiction. Such a judgment is entitled to full faith and credit in this state and is only subject to collateral attack when the courts either lacked jurisdiction or there was fraud in the entry of the judgment (Williams v. State of North Carolina, 317 U.S. 287, 63 S.Ct. 207, 87 L.Ed. 279). Defendant may not for a second time challenge the validity of plaintiff's rights in our courts (Magnolia Petroleum Co. v. Hunt, 320 U.S. 430, 64 S.Ct. 208, 88 L.Ed. 149) for a judgment of a sister state, where...
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Boorman v. Deutsch
...litigated on the merits in a foreign state and judgment is sought to be entered in this jurisdiction (see, e.g., Mansfield State Bank v. Cohn, 95 Misc.2d 326, 407 N.Y.S.2d 373). Here, the New Jersey proceedings are incidental to the New York action and constitute an enforcement device. If, ......
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Scarnavack v. Amandio
...(subd. [a] ).” Id. The factual scenario here is also similar to that in the 1983 decision of Mansfield State Bank v. Cohn, 95 Misc.2d 326, 407 N.Y.S.2d 373 (Sup. Ct., New York County 1977). In Mansfield, a judgment was issued against the defendant by a Texas trial court after the defendant ......
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