The opinion of the court was delivered by: BRIEANT
The above entitled action having been fully tried before me on October 5 and 6, 1971, I now make the following findings of fact and reach the following conclusions of law with respect thereto:
1. This plenary action was brought by Armende Lesser, as Trustee of R.B.M. Cleaners, Inc. and Hy-Mac Cleaners, Inc., bankrupts. Plaintiff Lesser is the Trustee in a bankruptcy proceeding pending in the United States District Court for the Southern District of New York. By an Order dated December 8, 1969, the prosecution of this action in a court of plenary jurisdiction was authorized by Hon. Edward J. Ryan, Referee in Bankruptcy.
2. R.B.M. Cleaners, Inc. (hereinafter "RBM") and Hy-Mac Cleaners. Inc. (hereinafter "Hy-Mac"), New York corporations, were adjudicated bankrupts resulting from involuntary petitions filed against them. The filing of the petitions occurred July 30, 1968. The adjudications were effected on August 15, 1968. On September 26, 1968, plaintiff Lesser was duly elected the Trustee of both bankrupts.
3. By Order dated December 7, 1970, Referee Ryan authorized the separate bankruptcy proceedings relating to RBM and Hy-Mac to be consolidated upon his finding that "both corporations had the same officers, directors and stockholders; that the affairs of both were commingled and that the two corporations operated as a unit; that the creditors of each corporation are the same; and that all receipts and disbursements were handled through a common bank account."
4. Defendants Morris Mendelson and Morris Berro are officers and directors of defendant Jewel Factors Corp., a New York corporation (hereinafter "Jewel"). Defendant Mendelson is its sole shareholder. Leatrice Cleaners, Inc. (hereinafter "Leatrice") and M.D.Y. Cleaners, Inc. (hereinafter "MDY"), defendants, are New York corporations. Defendant Alvin Cohen is a domiciliary of the State of New York and defendant Alex Awerbach is a domiciliary of the State of New Jersey.
5. The Complaint seeks to recover the sum of $75,000.00 in damages, claimed as the value arising out of fraudulent transfers of the bankrupts' property achieved by the defendants at the expense of the bankrupts and general creditors, (11 U.S.C.A. § 110, N.Y. Debtor and Creditor Law §§ 273-276, McKinney's Consol.Laws, c. 12).
6. RBM on July 1, 1968, and for some time prior thereto, owned and operated a retail dry-cleaning store at 1933 Third Avenue in the City of New York, as well as a retail dry-cleaning store at 1838 Third Avenue, New York City.
7. Hy-Mac on July 1, 1968, and for some years prior thereto, owned and operated a dry-cleaning store and plant at 33 First Avenue, New York City.
8. On July 1, 1968, and for some time prior thereto, defendant Alex Awerbach was the owner of one-half of the outstanding stock of each bankrupt corporation and was the President thereof. The balance of the stock of each bankrupt was owned by Alma Awerbach, his wife.
9. On June 30, 1968, and for about one year prior thereto, defendant Alvin Cohen, was an employee of Hy-Mac and managed the store at 33 First Avenue under the direction and control of Alex Awerbach. Cohen is the brother-in-law of Awerbach in that he is the brother of Awerbach's wife.
10. On October 12, 1965, the bankrupts owned certain machinery located at various addresses, including 1838 Third Avenue, 33 First Avenue, New York City and at 1783 Southern Boulevard in the Bronx, New York, all of which machinery is more particularly listed in defendant Jewel's Exhibit A.
11. On October 12, 1965, RBM, Hy-Mac and Awerbach Cleaners, Inc. were jointly and severally indebted to Jewel in the sum of $25,000.00 and on that date a valid written Security Agreement in the nature of a chattel mortgage was duly executed and delivered by the bankrupts and by Awerbach Cleaners, Inc. The corporations executing the said Security Agreement agreed to pay in weekly installments; with interest at 10% per annum.
12. At some time thereafter, plaintiff Lesser, as attorney for one Jacques Garnier, lent the bankrupts and Awerbach Cleaners, Inc. the approximate sum of $12,000.00.
13. During 1966 and 1967 certain creditors of the bankrupts were not being paid regularly. The payments to Garnier and to Jewel were in arrears and Lesser individually became head of an informal creditors committee for the purpose of overseeing the credit situation of the businesses. Payments were received by Lesser, which he, in turn, allocated and divided among creditors.
14. At all times from about 1967 until adjudication, the bankrupts were insolvent in that they were unable to meet their obligations in due course. They were delinquent in the payment of certain indebtedness, including the obligations to Lesser and to Jewel, and were functioning with the aid of an informal ...