Joseph H. Benzing & Co. v. F. J. Hughes Contracting Corp.

Motions for reargument granted and on reargument the decision of this court handed down on February 6, 1939 [ante, p. 922], is amended to read as follows: Judgment reversed on the law and the facts and new trial granted, costs to abide the event. The findings 989 of the trial court that the transfer was made while the defendant corporation was insolvent and that the transfer constituted a preference of one creditor to the exclusion of others was amply sustained by the evidence. Assuming that the findings that the advances by the individual defendant to the corporation are equally well sustained, the evidence, nevertheless, establishes that the grantee as well as the grantor had notice that the transfer effected a preference to the detriment of other creditors and, therefore, was invalid under section 15 of the Stock Corporation Law. At common law a transfer which effected a preference was valid even though the consideration be a pre-existing indebtedness (Lehrenkrauss v. Bonnell, 199 N. Y. 240, 244), but that rule only obtains “ in the absence of any statute to the contrary.” Section 15 prohibits a transfer which effects a preference where the grantee has knowledge of such an effect and where the grantor is a corporation. The defendants have no standing to assert rights on behalf of third parties or other creditors. They had adequate opportunity on the trial to adduce every pertinent item of evidence to sustain the transaction attacked. In view, however, of the claim, that relevant evidence may be available to meet the effect of section 15 of the Stock Corporation Law, a new trial is granted to afford that opportunity or to adjust the matter in view of the provisions of that statute. For the pur-poses of the new trial the findings of fact and conclusions of law are reversed. Lazansky, P. J., Hagarty, Johnston, Adel and Taylor, JJ., concur.