44 N.Y.S. 164 | N.Y. App. Div. | 1897
Lead Opinion
The order given by the contractor to the plaintiff upon the defendants was prior in point of time to the filing of the mechanics’ liens, though it is conceded that both by some months antedated the time when the third payment became due. No request was made to go to the jury upon the question of the acceptance of the order; and, even if we regard the testimony as conflicting, a verdict having been directed, it must be assumed that this conflict was resolved in plaintiff’s favor. The question, therefore, presented upon this appeal is whether the rights of the plaintiff under the order take precedence over the rights of the lienors in and to the
"We do not regard this as any longer an open question. In Lauer v. Dunn (115 N. Y. 408) it is said : “ If, before any liens were filed, the contractor had been paid, or had assigned his interest in the fund, in good faith and for a valuable consideration, in payment of a claim of the sub-contractor, and the owner is notified, no subsequent liens could operate to affect the owner with any further liability.” That case is sought to be distinguished by the fact there appearing that the order on the owner was given by the contractor the day after the houses were completed and his money was earned, and that the liens were filed a few days after the order was given, and, therefore, after the houses were completed. This suggestion is answered in Stevens v. Ogden (180 N. Y. 186). It therein appeared that orders were given on a payment which was not due to the contractor until after such orders were given. After the payment was due to the contractor, and within the time allowed by the Mechanics’ Lien Law, a lien was filed; and the question was thus directly presented as to the priority between the orders and the lien. It was therein held that if, before notice of' the lien is filed, the contractor assigns to a creditor in payment of his debt the whole or any portion of the moneys due or to become due on his contract, the assignor is entitled to the same in preference to the lienor, and in the course of the opinion it is said : “ ‘ Anterior to this act (Chap. 342, Laws of 1885, General Mechanics’ Lien Law of this State), the laborer or materialman has no preferential right to be paid for his ■ labor or material out of the sum which is due from the owner of the building to the contractor, but stands in the same position as other creditors. He may subject the debt to a lien in his favor on filing the notice and taking the proceeding prescribed by the act. But if, before this has been done, other creditors, pursuing the usual remedies for the collection of debts, have acquired a legal or equitable right to have the debt applied in satisfaction of their claims, the right
W e have examined the cases relied upon by the defendants of Post v. Campbell (83 N. Y. 279) and Hilton Bridge Co. v. N. Y. Cen. & H. R. R. R. Co. (145 id. 390). All that the court decided in the latter case was that, where the plaintiff’s cause of action depended upon payments by the owner of premises to the contractor before they were due by the terms of the contract, an order was proper bringing in the contractor as a party for the purpose of determining the rights of all the parties. While the only question in that gase was as to whether in such an action the contractor was a proper party, there is a statement in the opinion, on which the defendants rely, to the following effect: “Under the Lien Act of 1885 (Chap. 342) it has been held in this court that where the owner has made payments to his contractor, although without fraud or collusion, before they are due under the terms of the contract, such payments cannot be allowed to the owner.” (Citing Post v. Campbell, supra, as the authority for this proposition.) A reference to the latter case, however, will show that it involved the construction of the Lien Law applicable to Kings and Queens counties, which act (Laws of 1862, chap. 478, § 1) provided for disallowing as against lienors any payment made by “ collusion, for the purpose of avoiding the provisions of this act, or in advance of the terms of any contract.” As therein said,'“ We think that the intention of this provision was to exclude payments made either by collusion or in advance of the terms of the contract.” The Lien Law applicable to the city of ¡New York which was in existence at the time of the filing of the liens against the defendant’s property differs from the act relating to Kings and Queens counties, in that it recites that a lien shall not be defeated
The good faith of the drawing of the order in suit, and the delivery thereof to the plaintiff in payment of a bona fide debt, are not questioned, nor is there any dispute about the same having been presented to the owner for payment before any liens were filed against the property. Under the authorities cited, therefore, the order was an equitable assignment pro tanto of the third payment ; and as there was no prior claim, the same became a first charge upon the fund whenever that became due. The defendants were charged with notice thereof, and were bound to reserve sufficient to pay the order in full. If they had any doubt upon this question, instead of resolving it against the plaintiff, they might well have required the matter to be litigated between the plaintiff and the lienors. They undertook, however, to determine for themselves the legality or correctness of the claims under the liens, and to pay the same out of the contractor’s moneys, without his consent and without a judicial determination that the claimants were entitled to be so paid. Notwithstanding this fact, if they were correct in their view that they had the right to pay the lienors in preference to the plaintiff, they' would be entitled to a ruling, because directly presented, upon that question. As we have said, however, upon the authorities bearing upon the General Mechanics’ Lien Law, as it existed when the rights here involved accrued, we must regard it as settled law that an order drawn on an owner by a contractor, payable out of a particular fund, and delivered to a sub-contractor in payment of a valid claim, takes precedence over liens filed after the owner has been notified of the existence of such order. It is unnecessary for us to determine the construction to be given to the
We think, therefore, that the action of the court below in directing a verdict in plaintiff’s favor was right, and that the exceptions should be overruled and judgment ordered for the plaintiff, with costs.
Van Brunt, P. J., Williams and Patterson, JJ., concurred; Ingraham, J., dissented.
Dissenting Opinion
I am unable to concur with Mr. Justice O’Brien in the conclusion at which he has arrived. A contract was executed between one Taylor and the defendants whereby Taylor was to erect and finish some new buildings on Morris avenue in the city of New York, and whereby the defendants agreed to pay Taylor the sum of $4,665 in three payments, the third of which payments was $2,000, and was to be paid “ when all work is completely finished according to plans and specifications and to the entire satisfaction of the architect.” This contract was dated August 6,1895. On January 3,1896, Taylor gave to the plaintiff an order for $1,472, drawn upon the defendants “ for materials furnished and to be furnished to your houses on Morris Av. and 161st St., and deduct the same out of my third payment on contract when due.” The plaintiff caused this order to be presented to th e defendan ts and asked Mr. Ward to accept it. To that Mr. Ward replied that there was no necessity of accepting the order, but when the person who presented the order to Ward was asked whether he did not remember that Ward said that he would not accept the order, the witness said that he did not remember. Ward testified that he refused to accept the order, and that he did not recognize the order from the fact that there were so many things to be done, but that he thought he was safe in giving him $1,000 on account at that time. This $1,000 was paid on the 14th of January, 1896, for which the plaintiff gave receipt for $1,000 “ on account of Taylor’s carpenter contract on houses on Morris avenue.” LTothing is said in the receipt given for that $1,000 about this order, nor did Ward in any way accept it. When this order was given, and when
By the Mechanics’ Lien Law, in force at the time this order was given (§ 1, chap. 342, Laws of 1885), it is provided that any person who shall hereafter perform any labor or services, or furnish any materials which have been used or which are to be used in the erection of any house, with the consent of the owner or his agent, or any contractor or sub-contractor, or any other person contracting with such owner to erect any building, may, upon filing the notice of lien prescribed in the 4th section of the act, have a lien for the principal and interest of the price and value of such labor and materials upon such house, and upon the lot, premises, parcel or farm of
It does not seem to me that either of the cases relied on by the plaintiff determines this question. The case of McCorkle v. Herrman (117 N. Y. 304) was upon a demurrer to an answer which alleged that liens were filed prior to the commencement of the action; and the court held that such an allegation in the answer was not a « defense to an action to recover, by a receiver in supplementary proceedings, moneys which were due at the time "of the commencement of the proceedings, the court expressly limiting its decision by saying : “ Our decision relates to a case of money due or earned at the time those proceedings were instituted.” In Lauer v. Dunn (115 N. Y. 405) the order was delivered after the completion of the buildings for a portion of a sum remaining then due; and in determining that case the court said: “ The question, therefore, here is whether the order which the contractor gave to these plaintiffs amounted in law to an assignment pro tanto of the fund in the owner’s hands. We think that it did. When the building was completed the contractor had earned his moneys, though he might not be able to enforce payment thereof until thirty days had expired. That provision, for time, we look upon as one of grace to the owner. He was not bound to wait, but he had the right to elect to do so.
In the case of Brill v. Tuttle (81 N. Y. 458) the order was to pay to the plaintiff $300 “ and charge the same to our account for labor and materials performed and furnished in the repairs and alterations of the house.” There was a dispute in the evidence as to the amount due at the time of the date of the order, and the question was submitted to the jury with the instruction that the plaintiff was entitled to recover any money in arrears on the 1st of September, 1816, the day of the presentation of the order to him, and at any time thereafter before the commencement of the suit, on the account mentioned in the order on the first of September. The evidence showed that the job was nearly completed at the time the order was drawn, and the amount due from the defendant to the drawers at or after the time of the presentation of the order, on the designated account, was established by the verdict of the jury at $243. For that sum the plaintiff had judgment, and that judgment was sustained. There was no question as to the rights of others who had intervened, and who would be entitled to the sum because of any lien which had attached to the premises upon which the house was built, either prior or subsequent to the granting of the order.
In the case of Stevens v. Ogden (130 N. Y. 185) it appeared that on January 26, 1887, one Anderson was entitled to receive the sum of $1,545 under a contract with one Reynolds, the owner in fee
We have here a case, of an equitable assignment of money to grow due for work to be thereafter performed or materials thereafter funished, which sum never became due to the contractor until after the mechanics’ liens were filed, and until after the amendment of the law of 1885, hereafter noted. By chapter 915 of the Laws of 1896, taking effect May 27, 1896, it is provided that the liens provided for by the act “ shall be preferred as prior liens to any conveyance, judgment or other claim which was not docketed or recorded at the time of filing the notice prescribed in the fourth
It is quite clear that if the right of the plaintiff had become fixed prior to the passage of this act, if he had prior to that time become entitled to any sum of money from the defendant under his order, or if the contractor had become entitled to any sum of money from
I think, therefore, that, upon the evidence as it stood upon the trial, the direction of a verdict in favor of the plaintiff was error, and that the exceptions should be sustained and a new trial ordered, with costs to the appellant to abide the event.
Exceptions overruled, and judgment ordered for plaintiff, with costs.