Case Name: CONCORD CONST. CO. v. PLANTE et al.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1910-03-11
Citations: 121 N.Y.S. 1026
Docket Number: 
Parties: CONCORD CONST. CO. v. PLANTE et al.
Judges: 
Reporter: West's New York Supplement
Volume: 121
Pages: 1026–1030

Head Matter:
CONCORD CONST. CO. v. PLANTE et al.
(Supreme Court, Appellate Division, First Department.
March 11, 1910.)
1. Partnership (§ 183 )—Application op Assets—Assignment op Firm Assets to Pay Individual Debts—Validity.
An assignment by a partner in the name of the firm of the amount due „ to the firm on a contract with a city, given in satisfaction of individual obligations of the partner, incurred prior to the formation of the firm, and not assumed by it, is without consideration and void as against lien . claimants of the firm, and they are entitled to the fund in preference to the trustee in bankruptcy of the firm.
[Ed. Note.—For other cases, see Partnership, Cent. Dig. § 333; Dec. Dig. § 183. ]
2. Fraudulent Conveyances (§ 83 )—Consideration—Assignment as Security to Guarantor—Validity.
A wife of a partner made an accommodation note to the order .of the firm, which indorsed it and discounted it at a bank. A third person guaranteed the payment of the note or any renewal. A renewal note was' given, and before its maturity the firm assigned to the guarantor part of a fund due to it oh a city contract, ostensibly as collateral security. When he guaranteed the note, he did not ask for indemnity, nor was any promised. He was liable only in case both the firm and the wife failed to pay the note. He did not change his position by reason of the assignment. Held, that the assignment was without consideration and void as against lien claimants of the firm, though he subsequently voluntarily paid the note, and the wife was able to pay the note at maturity, and the Hen claimants were entitled to the fund in preference to the trustee in bankruptcy of the firm.
[Ed. Note.—For other cases, see Fraudulent Conveyances, Cent. Dig. § 213; Dec. Dig. § 83. ]
Ingraham, P. ,T., and Miller, X, dissenting.
Appeal from Special Term, New York County.
Action by the Concord Construction Company against Guthrie B. Plante, trustee in bankruptcy of the firm of H. M. Weed & Co., and others, to foreclose a mechanic’s lien. From a judgment (63 Mise. Rep. 120, 116 N. Y. Supp. 153) adjudging the invalidity of assignments made by the firm as a general contractor, and directing the payment of the fund to plaintiff and certain of the defendants as lien claimants, defendant Guthrie B. Plante, trustee, and others, appeal.
Affirmed.
Argued before INGRAHAM, P. J., and McLAUGHLIN, MILLER, LAUGHLIN, and DOWLING, JJ.
Jacob J. Lesser, for appellant Plante, trustee.
Benjamin N. Cardozo, for appellant Bolton and others.
Walter H. Gilpatric, for respondents Concord Construction Company and others.
A. S. Gilbert, for respondent John Pinches Co.
H. Schieffelin Sayers, for respondents Alberne Stone Co. and others.
Frank M. Avery, for respondents General Fire Proofing Co. and others.
Fixman & Lewis, for respondents Baumann & Hagan.
For other cases see same topic & § number in Dec. & Am. Digs.. 1907 to date, & Rep’r Indexes

Opinion:
McLAUGHLIN, J.
Action by a subcontractor to foreclose a mechanic's lien upon a fund due the general contractor from the city of New York. The general contractor was the firm of H. M. Weed & Co., which was a partnership composed of H. M. Weed and one Barrett. On the 2d of October, 1907, Weed executed, 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 3d, 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 H. M. Weed, incurred prior to the time the partnership was formed. It did not appear—at least evidence was not offered 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. Crane Co. v. Pneumatic Signal Co., 94 App. Div. 53, 87 N. Y. Supp. 917, affirmed sub nom. Crane Co. v. Smythe, 182 N. Y. 545, 75 N. E. 1128. Whether the assignments were void or voidable under the bankruptcy act, if indeed that question were properly before the court, was 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 1st, 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 15th, was giyen in its place. The assignment to him for $2,050 was executed at the same time the other assignments were—October 2d—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. Ills 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 N. J. Eq. 567, 49 Atl. 431. When the note fell due on October 15th, Bolton voluntarily paid it, without even a demand for payment having been made upon him or the maker. No 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 circumstances, 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, 66 N. E. 665; Starin v. Kelly, 88 N. Y. 418), and for that reason the same was properly set aside (N. Y. L. Co. v. Seventy-Third Street Bldg. Co., 5 App. Div. 87, 38 N. Y. Supp. 869; Gross v. Daly, 5 Daly, 540; Linneman v. Bieber, 85 Hun, 477, 33 N. Y. Supp. 129; Tisdale v. Moore, 8 Hun, 19).
If the foregoing views be correct, then it follows the judgment appealed from should be affirmed, with costs to each respondent appearing separately and presenting briefs.
EAUGHEIN and DOWEING, JJ., concur.