
    Phœnix Iron Company, App’lt, v. The Vessels the Hopatcong and Musconetcong, their Tackle, etc., Resp’ts.
    
      (Supreme Court, General Term, Second Department,
    
    
      Filed February 15, 1887.)
    
    1. Fraud—Evidence—What conclusive evidence of.
    A certain firm was bankrupt, without hope of having ability to pay the notes given to plaintiff. Said firm had previously transferred the property (in payment for which the notes were given) to a third party, and had received a valuable consideration therefor. The plaintiff accepted the notes in ignorance of the condition of said firm, and also of the change in respect to the title of the vessels, in which the plaintiff was entitled to a lien, under chapter 483, Laws of 1863. Said notes extended the credit so that, as to a part of the debt, the statutory period to enforce a lien against the vessels would run out before the notes matured. Held, the evidence of fraud was conclusive, and that it avoided the suspension of the lien procured, or attempted to be procured, by the giving of the notes.
    3. Lien on vessels—Laws of 1863, chap. 483.
    Under Laws 1863, chapter 483, materials furnished for the construction of a vessel are a basis for a lien, although not actually put in the vessel at the time the action to enforce the lien is brought.
    Appeal from a judgment of the Orange county special term.
    
      Harvey Weed, for app’lt, Eugene A. Brewster, of counsel; Albert & Fuller, for resp’t.
   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 Hoboken Land and Improvement Co., 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, 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 enclosed 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 chap. 482, 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 not with 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 hen, Happy v. Mosher (48 N. Y., 313), and if as 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 meré concealment in 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 destroys the notes 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 Sanfords Sup. Ct., 342), and also that the materials furnished were a basis for a hen although not actually put in the vessels at the time of the action to enforce the hen.

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

Pratt, J., concurs.  