General Insurance Co. of America v. Tilcon New York, Inc.

—Judgment, Supreme Court, New York County (Diane Lebedeff, J.), entered February 21, 2001, after a nonjury trial, in favor of intervenor United States of America, in the principal amount of $214,663.56, unanimously affirmed, without costs. The evidence fully supported the finding of the trial court that defendant had actual knowledge that the checks it received from the State of New York were funds from a statutory trust created under article 3-A of the Lien Law, and therefore defendant is not entitled to defend as a holder in due course (see, Lien Law § 72 [1]). To the extent defendant claims it took the checks under assignment, defendant’s rights could be no greater than those of its assignor, nonparty Morano Construction Corporation, the general contractor on a public improvement project, whose right to funds under the project contract was subject to outstanding trust obligations (see, New York Natl. Bank v Primalto Dev. & Constr. Co., 270 AD2d 22, 23). Concur—Williams, P.J., Tom, Mazzarelli, Ellerin and Marlow, JJ.