Aetna Casualty and Surety Company v. Lafayette National Bank of Brooklyn in New York

• Decision Date: 16 March 1972
• Citation: 30 N.Y.2d 638,331 N.Y.S.2d 666
• Parties: , 282 N.E.2d 621 AETNA CASUALTY AND SURETY COMPANY, etc., Respondent-Appellant, v. LAFAYETTE NATIONAL BANK OF BROOKLYN IN NEW YORK et al., Appellants, Franklin National Bank of Franklin Square, Respondent, Maynard Merel, et al., Defendants.
• Court: New York Court of Appeals Court of Appeals

Page 666

331 N.Y.S.2d 666

30 N.Y.2d 638, 282 N.E.2d 621

AETNA CASUALTY AND SURETY COMPANY, etc., Respondent-Appellant, v.LAFAYETTE NATIONAL BANK OF BROOKLYN IN NEW YORK et al Appellants, Franklin National Bank of Franklin Square, Respondent, Maynard Merel, et al., Defendants.

Court of Appeals of New York.

March 16, 1972.

Appeal from the Supreme Court, Appellate Division, First Department, 35 A.D.2d 137, 314 N.Y.S.2d 818.

Wrenn & Schmid, Brooklyn (Pallister H. Feely, Brooklyn, of counsel), for defendant-appellant, Lafayette National Bank of Brooklyn in New York.

Norman Geiger, Brooklyn, for defendants-appellants, Nathan Weiss, John D. Weiss and David Weiss.

Surety on performance bond for construction company, which had been awarded contract for construction of a high school, brought an action to recover trust funds allegedly diverted in violation of the Lien Law,Consol.Laws, c. 33, § 1 et seq.The Supreme Court, New York County, Thomas C. Chimera, J., entered an order dismissing the amended complaint after trial and the surety appealed.

The Appellate Division modified the judgment and, as so modified, affirmed.It held that where lending bank knew of borrowing corporate contractor's financial difficulties when it accepted from director a certified check for the amount borrowed and knew that monies had been received by contractor for high school construction and that some of the...