A. The Bill of Sale to Sally Wersba
Under New York State law,
the February 1958 Bill of Sale to Sally Wersba is void as a fraudulent conveyance. A conveyance is fraudulent when the grantor, even though solvent, is motivated by an intent to hinder, delay or defraud his creditors. Debtor and Creditor Law, § 276; Pattison v. Pattison, 301 N.Y. 65, 92 N.E.2d 890 (1950). Charles Wersba made the Bill of Sale only to prevent his creditors from reaching the said assets. He acted with a fraudulent intent, and therefore this transaction is clearly within the above rule and is void.
B. Charles Wersba and Charles Wersba Hosiery Corporation
Charles Wersba treated Charles Wersba Hosiery Corporation as a sole proprietorship. He held himself out and acted as sole owner, manipulating it as he saw fit. Now, he seeks to protect himself with the corporate entity which he so readily disregarded. This the Court will not permit. New York and Pennsylvania both provide that the corporate fiction will be disregarded to protect innocent third parties from and to prevent fraud and injustice. Great Oak Building and Loan Association v. Rosenheim, 341 Pa. 132, 19 A.2d 95 (1941); Bartle v. Home Owners Cooperative, 309 N.Y. 103, 127 N.E.2d 832 (1955); Petrovich v. Felco Chemical Corporation, 194 Misc. 111, 86 N.Y.S.2d 327 (1949). This doctrine, often called "piercing the corporate veil", applies in full force to the instant case.
It would be a gross injustice and a fraud to let Charles Wersba hide behind this corporation, which existed as a separate entity only when it was to his advantage, and thus evade an obligation which was incurred so that the business of this same corporation might survive. It is this type of corporate manipulation which the "corporate veil" doctrine seeks to prevent. The facts overwhelmingly show that once Wersba-Seiler, Inc. was formed, Charles Wersba Hosiery Corporation continued to exist only on paper. Therefore, the Court concludes that Charles Wersba Hosiery Corporation is not a third party, but is Charles Wersba himself.
C. The Assignment for Creditors of Wersba-Seiler, Inc. and Charles Wersba Hosiery Corporation
Without actually deciding the validity of this transfer as against defendant Schlager, in light of the preceding Section B, it need only be said that Charles Wersba, by assigning the said machinery and equipment to Wersba-Seiler, Inc. for creditors of Wersba-Seiler, Inc. and Charles Wersba Hosiery Corporation, accomplished nothing which would immunize the title. The assignment for creditors of Charles Wersba Hosiery Corporation would necessarily include defendant Schlager.
Thus, in conclusion, the Court makes note that even now, the Seilers do not want to keep Charles Wersba's inventory from him. They have declared in open Court that he can have all that remains.
All proposed Findings of Fact and Conclusions of Law submitted by both plaintiff and defendants, inconsistent with the above Findings of Fact and Conclusions of Law, are refused.
And now, to wit, this 13th day of February, 1967, for the reasons set forth in the foregoing Findings of Fact and Conclusions of Law, it is ordered, adjudged and decreed that judgment be entered in favor of all the defendants and against the plaintiff.