Concord Construction Co. v. Plante

McLaughlin, J.: Action by a sub-contractor to foreclose a mechanic’s lien upon a fund due the general contractor from the city of Hew York. The general contractor was the firm of H. M. Weed & Co., which was a partnership composed óf H. If. Weed and one Barrett. On the 2d of October, 190T, Weed’exeeuted, in the name of the firm, four assignments, the aggregate amount of which covered substantially the entire fund in question. . The plaintiff filed its notice of lien on October third, and similar notices were filed by the other respondents on the same day, or shortly thereafter. The firm was subsequently adjudicated a bankrupt and the appellant Plante appointed trustee. The trial court found' that the assignments were without consideration, fraudulent and void as against the lienors, and directed payment - of the fund to the plaintiff and the other respondents, and the’balance remaining, if any, to the trustee. Judgment was entered to this effect, from which the assignees and the trustee — who claims the exclusive right to attack the assignments — appeal The evidence adduced ■ at the trial fully established that the assignments, with the exception of that to' the appellant Bolton, were given in satisfaction of the individual obligations of IT. M. Weed, incurred prior to the time the partnership was formed. It did'not appear— at least evidence was not offeréd which would have justified a finding—that these obligations, or any of 'them, were ever assumed by the firm, and the trial court, therefore, was correct in finding that the assignments were without consideration > and void as against the 'lienors.. That being so, the lienors, in preference to the trustee, were entitled to payment from the fund. [245] (Crane Co. v. Pneumatic Signal Co., 94 App. Div. 53 ; affd. sub nom. Crane Co. v. Smythe, 182 N. Y. 545.) Whether the assign^ ments were void or voidable under the Bankruptcy Act, if indeed that question were properly before the court, wás immaterial. The assignment to Bolton was given under different circumstances. In August, 1907, Mrs. H. M. Weed made an accommodation note for $2,000, payable.October first following to the order of H. M. Weed & Co. The firm indorsed this note and had it discounted by a bank. Bolton* by a separate instrument, guaranteed to the bank the payment of the note or any renewals thereof. When the note became due a renewal note, payable October fifteenth, was given in its place. The assignment to him for $2,050 was executed at the same time the other assignments were, October second, and was ostensibly to secure him upon his guaranty. I am unable to see where there was any consideration for this assignment. Bolton himself testified that it was not given in consideration of his. guaranty, and it could not have been, because that was over a month before the assignment was made. He did not ask when he guaranteed the note that he be indemnified against liability, nor was indemnity promised him. His name did not appear upon the note, and he was liable only in case both H. M. Weed & Co. and Mrs. Weed, the maker of the note, refused to pay it. When the assignment was made the note was not due and he had no claim whatever against the firm. He did not agree to pay the note or change his position in any way by reason of the assignment; in fact he knew nothing about the assignment and “ did not expect it ” until he received the instrument through the mail with a note stating that a copy had been filed in' the county clerk’s office, and when asked, “ What was the consideration of the assignment you received ? ” he answered, £< There was none.” The assignment was an absolute one, and, as against the lienors, who were creditors of the firm, it seems to me it was clearly without consideration and void. (Craft v. Schlag, 61 H. J. Eq. 567.) When the note fell due on October fifteenth Bolton voluntarily paid it without even a demand for payment having been made upon him or the maker. Ho evidence was offered that Mrs. Weed was unable to pay the note; on the contrary, the court found that she was able to pay it when it fell due and Bolton knew it when he paid the note. Under such circum [246] stances a voluntary payment on his part could not operate to validate the assignment, "otherwise void in its inception. (Wood v. Hunt, 38 Barb. 302.) Not only this, but the only conclusion which I am able to draw from the undisputed facts is that the assignment was given and accepted with the intent, of hindering and defrauding the lienors and the trial court so found. It was, therefore, void as to them, even if his voluntarily paying the note constituted a consideration (Greenwald v. Wales, 174 N. Y. 140; Starin v. Kelly, 88 id. 418), and for that reason the same was properly set aside. [New York Lumber Go. v. Seventy-third St. Bldg. Co., 5 App. Div. 87; Gross v. Daly, 5 Daly, 540; Linneman v. Bieber, 85 Hun, 477; Tisdale v. Moore, 8 id. 19.) If the foregoing views be correct, then it follows that the judgment appealed" from should be affirmed, with costs to each respondent appearing separately and presenting briefs. Laughlin and Dowling, JJ., concurred; Ingraham, P. J., and Miller, J., dissented.