PRICE TRUCKING CORP. v. AAA ENVIRONMENTAL, INC.
Price Trucking Corp. (plaintiff-respondent) commenced an action alleging that First Niagara Bank, N.A. (defendant-appellant) violated Lien Law article 3-A by automatically transferring funds from AAA Environmental, Inc.'s operational account into its line of credit account, which Price Trucking claimed constituted a diversion of Lien Law trust assets. The Supreme Court granted Price Trucking's motion for partial summary judgment, finding First Niagara liable as a Lien Law statutory trustee and that it had both actual and constructive notice of the diversion. The Appellate Division, Fourth Judicial Department, modified the order, denying Price Trucking's motion in its entirety. It concluded that First Niagara was not a statutory trustee under the facts and that the Supreme Court erred in applying a constructive notice standard, asserting that only actual notice is applicable to banks for the holder in due course defense under Lien Law § 72 (1).