Opinion
January 28, 1971
Order, Supreme Court, New York County, entered on September 16, 1970, unanimously reversed, on the law, defendant's motion for summary judgment granted and the complaint dismissed. Appellant shall recover of respondent $50 costs and disbursements of this appeal. Plaintiff seeks recovery of $23,000 which he claims defendant was to hold for his (plaintiff's) benefit pursuant to a stipulation dated December 5, 1961, entered into between the plaintiff and Sandler Medical Gases, Inc. (hereinafter referred to as Sandler) and further approved by defendant J. Ballay Co., Inc. The stipulation provided in effect that defendant (which was financing Sandler's accounts receivable) was to retain any equity in the accounts receivable of Sandler to the extent of $23,000 over the debt due defendant until the disposition or determination of the actions which had been brought by plaintiff against Sandler. The plaintiff, having recovered judgments in excess of $27,000 against Sandler, now urges that he is entitled to the $23,000 alleging that defendant has collected far in excess of that amount on the accounts receivable. Defendant urges that the stipulation as written is ambiguous and that in fact it was intended only to apply to those accounts receivable which had been created prior to the filing of the chapter XI petition by Sandler. It is argued that since with respect to those accounts there was no surplus fund and indeed there were insufficient moneys collected to repay defendant, plaintiff's cause of action must fall. With respect to those moneys collected on the accounts receivable generated after the filing of the chapter XI petition, defendant admits that a surplus did result but states that such funds were duly remitted to the trustee in bankruptcy. We need not consider whether the stipulation was intended to apply only to the old accounts or whether it was intended in addition to cover those new accounts of the debtor in possession, for whichever interpretation is adopted the plaintiff cannot prevail and there being no issues of fact, summary judgment must be directed in favor of the defendant. The record does not reveal that there was any equity remaining in the old accounts receivable and hence, if the stipulation was restricted solely to those accounts the plaintiff cannot recover. And even if the stipulation be interpreted as covering the new accounts receivable, the plaintiff still cannot recover since in that event under the facts of this case the stipulation would have provided for an unlawful preference in favor of the plaintiff which would be void as against the debtor in possession, a party acting as trustee for all of the creditors. (See Bankruptcy Act, § 70, subd. [e], par. [1]; §§ 302, 342; U.S. Code, tit. 11, § 110, subd. [e], par. [1]; §§ 702, 742.)
Concur — Capozzoli, J.P., McNally, Tilzer and Macken, JJ.