Court Opinion

ID: 5696223
Source: CourtListenerOpinion
Date Created: 2022-01-12 15:34:07.608913+00
Date Added: 2024-06-11T08:40:14.536245
License: Public Domain

In a proceeding for an assignment for the benefit of creditors, the assignee appeals from an order authorizing and directing the 'United States Government to pay in full, from the funds it holds for the benefit of the assignor, the claim of a creditor who furnished labor and materials for certain machines made by the assignor for the Government. Order reversed, without costs, and motion denied, without costs, and without prejudice to any right respondent may have to claim a preference upon the judicial accounting of the assignee. Those who furnish labor and materials may have an equitable claim to be paid ahead of general creditors (see United States v. Munsey Trust Co., 332 U. S. 234; Seaboard Surety Co. v. United States, 67 P. Supp. 969) which may arise from work done on personalty as well as realty (see 33 Am. Jur., Liens, § 18; 4 Romeroy on Equity Jurisprudence [5th ed.], § 1233). However, such claim may be enforced only for the benefit of all creditors who furnished labor and materials, as a class, so that they may share pro rata in the available funds if there are not sufficient to pay them all in full. Such claim may not be enforced by an individual creditor in that class, for his own individual benefit, since he may not thus gain a preference as against others in his class (cf. Debtor and Creditor Law, §§ 22, 23, 189; Lien Law, §§ 36-a, 71; Matter of Einaeh, 1 Mise 2d 537; Matter of Marstan Plumbing Co., 176 Mise. 956; Continental Cas. Co. v. Ben-Mil, 175 Mise. 220, affd. on other grounds 261 App. Div. 958). Wenzel, Acting P. J., Murphy, Ughetta, Hallinan and Kleinfeld, JJ., concur.