Opinion
April 19, 1971
In consolidated matters (Action No. 1 is a proceeding by the corporate successor of judgment creditor M.F. Hickey Co., Inc. to compel respondent-appellant, Underhill Construction Corp., which is allegedly indebted to the judgment debtor, defendant Cefalu Bros., Inc., to make payment on account of the judgment [CPLR 5227]; and Action No. 2 is to foreclose a mechanic's lien on real property for building material furnished by said M.F. Hickey Co., Inc.), (1) petitioner-plaintiff appeals from a judgment of the Supreme Court, Kings County, entered September 23, 1970 after a nonjury trial, which, as to Action No. 1, dismissed the petition and awarded a monetary recovery to the interpleaded respondent, United States of America, and, as to Action No. 2, inter alia, dismissed the complaint as to said respondent-appellant; and (2) said respondent-appellant appeals from so much of the judgment as granted said monetary award against it. Judgment reversed, on the law and the facts, and new trial granted, with costs to abide the event. There is no evidence in the record to sustain a finding that appellant, a foreign corporation, was doing business in this State without authority and lacked capacity to maintain this action and proceeding. Moreover, there is nothing in the Federal Trade Commission order of January 20, 1964 which divested appellant of its right to foreclose the lien ( American Cement Corp. v. Dunetz Bros., 47 Misc.2d 747, 749). The fact that the notice of mechanic's lien, naming M.F. Hickey Co., Inc., as the lienor and executed by Hickey, was filed one day after filing of the certificate of merger between appellant and Hickey did not invalidate the lien. The notice was prepared and executed on or about November 22, 1963 and named Hickey as the lienor. If Hickey passed out of existence on December 2, 1963 because the merger was immediately effective, then the notice was filed the following day by appellant which then possessed all the rights of each of the constituent corporations (Business Corporation Law, § 906, subd. [b], pars. [1], [2]). Moreover, the certificate of merger provided that the merger was to be effective at the earliest practicable date. This can be reasonably construed to have deferred the effect of the merger until after filing of the notice of lien on December 3, 1963 (Business Corporation Law, § 906, subd. [a]). Lastly, there is nothing in the record to sustain the finding that the mechanic's lien was invalid because the notice of lien untruly stated the agreed price and value of the material furnished. While the contract between Underhill and Cefalu was an entire contract, there is nothing to indicate that only one contract existed between Cefalu and Hickey, which supplied Cefalu with ready-mix concrete. The record indicates that the amount reflected in the notice as the agreed price of the material furnished was the total due and owing to Hickey for a number of separate deliveries and that no part of the amount had been paid. The notice of lien accurately stated the agreed price and value of the materials and the amount unpaid to the lienor. We also think that the trial court's finding that Underhill checks to Cefalu for $18,000 and $15,000 on August 5, 1963 constituted payments on account of the contract is against the weight of the credible evidence. Underhill did not part with any of its own money at that time, merely facilitating Peter Cefalu in the discounting of four notes provided by Cefalu, three of which were payable to a corporation in which Peter Cefalu's brother was an officer and which had no dealings with Underhill. Underhill carried these four notes in a notes receivable ledger and charged interest on them for a substantial period of time after Cefalu had ceased its work under the contract. Unlike all other checks concededly issued in payment on the contract, an indorsement was placed on the two August 5 checks to the effect that they were payments on the contract. This departure from normal procedure in connection with these two checks suggests that Underhill realized the extraordinary context in which they were issued. Underhill's president agreed that this was an "extraordinary" transaction. The testimony of Livingston that Underhill had borrowed the $33,000 from Cefalu and that interest was charged only because someone in Underhill did not understand the nature of the transaction is hardly sufficient to explain away the contrary evidence indicating that the $33,000 was not a payment on the contract. The trial court's finding that Underhill telephoned Hickey before advancing this money to Cefalu and that an agreement was reached for the advance of the money is not supported by the record. The record indicates that the telephone conversation between Livington and Fallon involved a payment to be made on September 13, 1963 in the amount of $20,000 and did not obviate the filing of a notice of lending. We think the evidence is insufficient to permit this court to determine the amount of backcharges properly claimed by Underhill. Because of rulings on the trial, the evidence as to completion of the work on the St. James and Ryerson buildings was curtailed. In addition, the evidence indicates that the Underhill employees responsible for preparation of the timekeeper's summaries as to construction of the areaways at the Pratt building may not have been entirely familiar with the range of the work Cefalu was obligated to perform under its contract. Accordingly, the propriety and amount of all backcharges in dispute should be examined upon the new trial. Hopkins, Acting P.J., Latham, Christ, Brennan and Benjamin, JJ., concur.