Phœnix Iron Co. v. Vessels , 6 N.Y. St. Rep. 724 ( 1887 )

Barnard, P. J.:

The firm of Ward, Stanton & Co., purchased iron work of the plaintiff, which was designed to enter into the construction of the two steamers in question.

The greater part of the articles ordered went into the vessels. The sale provided for no credit. The proof shows that the delivery of the iron commenced early in August, 1880, and continued until October, 1884. On the 15th of November, 1884, Ward, Stanton & Co. conveyed to the Iloboken Land and Improvement Company, the two steamers in an extremely unfinished condition. The firm had contracted to build the vessels for a fixed sum for that company and made the transfer by reason of an inability to complete them, for a short time thereafter they made a general assignment for the benefit of the creditors of the firm. On the 21st of November, 1884, the firm inclosed by letter, notes for the iron work payable at' a future time. The plaintiff accepted the notes in ignorance of the condition of the firm of Ward, Stanton & Co., and also of the change in respect to the title to the vessels in which the plaintiff was entitled to a lien under chapter 482 of the Laws of 1862. The judge has found that the firm at the time of sending the notes was insolvent, knew of its hopeless insolvency and of its inability to pay the notes. The court refused to find that the concealment of the insolvent condition was made with a fraudulent intent. This finding seems not only to be against the finding made, but against the evidence. If the fact be that the firm was bankrupt, without hope of an ability to pay the notes, and if the firm had transferred the property of the plaintiff to the improvement company and had received a valuable consideration therefor, and if as the law is well settled a note with a credit suspended the lien (Happy v. Mosher, 48 N. Y., 313), and if a.s to a greater or less part of the debt, the statute period to enforce a lien would run out before the notes matured, the evidence of fraud is conclusive. The mere concealment of the change of the condition of the firm in respect to the vessels is sufficient to establish fraud. (Anonymous, 67 N. Y., 598; Hennequin v. Naylor, 24 id., 139 ; Wright v. Brown, 67 id., 1.)

If this conclusion be just then there should be a new trial, for this failure to find a fact which destroyed ttie notes as suspending the lien.

The court found the contract to be one made in this State. The sale was not complete until delivery, although the order was given for the property by a foreign company. The claim was a hen against the vessels such as the proof shows them to be. This seems to be clearly established in Phillips v. Wright (5 Sandf., Sup. Ct., 342), and also that the materials furnished were a basis for a lien, although not actually put in the vessels at the time of the action to enforce the lien.

There should, therefore, be a new trial granted, with costs to abide event.

Pratt, J., concurred.

Judgment reversed, and new trial granted, costs to abide event.