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

256 A.D. 922, 9 N.Y.S.2d 612, 1939 N.Y. App. Div. LEXIS 5477

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: February 6, 1939
• Status: Published

Opinion

Action of judgment creditor to set aside the transfer of a parcel of real property. Judgment reversed on the law and the facts, with costs, and judgment directed in favor of the plaintiff, with costs, for the relief demanded in the complaint. The findings 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. Findings of fact and conclusions of law inconsistent herewith are reversed and new findings will be made. Lazansky, P. J., Carswell, Davis, Johnston and Close, JJ., concur. Settle order on notice. [See post, p. 988.]