New York Law Review

ABKCO Industries, Inc. v. Apple Films, Inc., 39 N.Y.2d 670 (1976): Attachment of Intangible Contract Rights

Published by

The New York Law Review

in

ABKCO Industries, Inc. v. Apple Films, Inc., 39 N.Y.2d 670 (1976)

A party’s rights under a contract, even if the value of those rights is contingent or not yet fully realized, constitute attachable “property” under CPLR 5201(b) if those rights are assignable, and the situs of that intangible property is where the party obligated to perform under the contract is located.

Summary

ABKCO sought to attach assets of Apple Films, LTD (an English corporation) in New York to satisfy a debt. ABKCO argued that LTD’s contract with Apple Films, Inc. (a New York corporation), which entitled LTD to a percentage of film profits, was attachable property. The New York Court of Appeals held that LTD’s rights under the contract constituted attachable property under CPLR 5201(b) because the rights were assignable. The court reasoned that the situs of this intangible property was in New York, where Apple Films, Inc. was located and obligated to perform under the contract, regardless of whether LTD was currently owed any money under the agreement.

Facts

Apple Films, LTD (LTD), an English corporation, entered into a licensing agreement with Apple Films, Inc. (INC), a New York corporation. The agreement granted INC the right to promote the film “Let It Be.” INC agreed to pay LTD 80% of the net profits from the film’s promotion.
INC then entered into a distribution agreement with United Artists, transferring distribution rights in exchange for 50% of adjusted gross receipts.
ABKCO Industries sought to recover a loan from LTD and attempted to attach LTD’s assets in New York.
At the time of the attempted attachment, INC had advanced expenses and had not yet received substantial sums from United Artists, resulting in a net balance favoring INC over LTD.

Procedural History

ABKCO sought to attach LTD’s interest in the Licensing Agreement to establish quasi-in-rem jurisdiction in New York.
The lower courts held that LTD had an attachable interest in the Licensing Agreement.
The case was appealed to the New York Court of Appeals.

Issue(s)

Whether LTD’s rights under the Licensing Agreement with INC constitute attachable “property” under CPLR 5201(b), allowing for quasi-in-rem jurisdiction in New York.

Holding

Yes, because LTD’s rights under the Licensing Agreement constitute assignable property, and the situs of that property is in New York where INC, the party obligated to perform under the contract, is located.

Court’s Reasoning

The court classified LTD’s rights under the Licensing Agreement as

More ARTICLES