New York Law Review

Tag: Koffman v. A. O. Brokaw Co.

  • Koffman v. A. O. Brokaw Co., 40 N.Y.2d 880 (1976): Availability of Turnover Order Without Prior Execution

    Koffman v. A. O. Brokaw Co., 40 N.Y.2d 880 (1976)

    A judgment creditor is not required to obtain priority by execution before using other enforcement devices under CPLR Article 52, including seeking a turnover order, and may challenge fraudulent conveyances in such proceedings.

    Summary

    This case addresses whether a judgment creditor must levy execution on a judgment debtor’s assets before seeking a turnover order against a third party allegedly holding property belonging to the debtor. The Court of Appeals held that no such requirement exists. A judgment creditor can pursue remedies like turnover orders and actions to set aside fraudulent conveyances without first obtaining priority through execution. The Appellate Division erred in requiring prior execution. The case was remitted to the Appellate Division to consider the fraudulent conveyance claim, including the relevance of Section 273-a of the Debtor and Creditor Law.

    Facts

    The petitioner, Koffman, obtained a judgment against P.D.C. Koffman then sought a turnover order against the Hoffman Group, alleging that the Hoffman Group held property belonging to P.D.C. or that P.D.C. fraudulently conveyed property to the Hoffman Group or Bella Vista Apartments, Inc. The petitioner sought to satisfy its judgment against P.D.C. by obtaining assets held by the Hoffman Group.

    Procedural History

    The trial court ruled against Koffman. The Appellate Division affirmed, based on the premise that Koffman could not secure a turnover order because there had not been a levy of execution on the Koffman Group under petitioner’s judgment against P.D.C. The Court of Appeals reversed the Appellate Division’s order and remitted the matter for further consideration.

    Issue(s)

    Whether a judgment creditor must levy execution on a judgment debtor’s assets before seeking a turnover order against a third party alleged to be holding property belonging to the judgment debtor under CPLR 5225(b) and 5227?

    Holding

    No, because there is no requirement that a judgment creditor obtain priority by way of execution before resorting to one of the other enforcement devices provided by CPLR article 52.

    Court’s Reasoning

    The Court of Appeals found that the Appellate Division’s requirement of prior execution was erroneous. The court emphasized that CPLR Article 52 provides various enforcement devices, and a judgment creditor is not obligated to pursue execution before utilizing other remedies like turnover orders or actions to set aside fraudulent conveyances. The Court cited Weinstein-Korn-Miller, Manual CPLR 30-17, 30-18, stating that a judgment creditor need not obtain priority by execution before using other enforcement devices. Specifically, the court noted: “plaintiffs right to set aside as fraudulent a conveyance of property by P. D. C. to the Hoffman Group or to Bella Vista Apartments, Inc., may be determined in the present proceeding (6 Weinstein-KornMiller, NY Civ Prac, pars 5225.16, 5225.17, pp 52-375, 52-376).” The court directed the Appellate Division to consider Section 273-a of the Debtor and Creditor Law, which addresses conveyances made without fair consideration that leave the grantor with unreasonably small capital.