Daley v. Somers Lumber Co.

70 N.J. Eq. 343 | New York Court of Chancery | 1905

G-key, Y. C.

The phase of this case now under consideration presents only one question, and that is whether the complainant has shown himself to be entitled to a decree against the defendants which will compel them to interplead with each other to fix their claims upon the sum of $884, which the complainant alleges is all that remains in his hands of the contract price agreed to be paid for the construction of the building.

This is the bone of contention, the defendants insisting that the complainant has no right to compel them to interplead, because the sum he tenders, $884, is not the full portion of the contract price which is lawfully applicable to the payment of the stop-noticing claimants.

The complainant’s Exhibit 0 'ffl is a notice from him to Muth, the contractor,'of the stop notices which had been served on him (Daley). In this exhibit of the complainant he gives a list of those stop notices as follows:

“D. B. Ingersoll (material), notice served December

24th, 1902 ................*.................. $381 10

Somers Lumber Company (labor and materials),

notice served May 26th, 1903 .................. 2,307 44

Harry Madara (materials), notice served July 28th,

1903 ........................................ 53 50

W. H. Towbey (labor and materials), notice served August 20th, Ü903 ........................... • 245 60"

The contract on file prescribes the last payment of $5,384 shall be made upon the architect’s certificate. The complainant concedes that his advances to the contractor intrude upon this last payment of the contract price, and that they yere made without any architect’s certificate coincidentally or precedently given. In short, it is admitted that the complainant has paid $4,500 (part of the last payment of $5,384) without any architect’s certificate whatever.

The complainant’s contention is that he' was authorized to make these advances because when he made them the building was in truth completed, although the architect had not-yet certified to the fact; that he did certify to it several months after the payments had been made, and after the contesting defendants had served their stop notices upon the complainant.

The contract did not authorize the last payment to be made when the building was in fact completed. It expressly declared that the last payment of $5,384 was to be made upon the architect’s certificate. There is a mention, in clause 4 of the contract, of payment when the building is completed, but that reference has nothing to do with the" fixing of a time for payment of the several installments of the contract price. This provision in clause 4 follows a prescription of the mode in which neglect or suspension of work on the part of the contractor may be rectified by employment of other parties to do it in his place, the expense so to be deducted from the contract price. Then the contract declares:

“In such an event the payments herein agreed upon shall not be due until the entire work shall be completed. Any balance due the contractor when the work is completed shall be paid to the contractor by the owner,1’ &c.

• This provision is not intended to fix a time when the last payment shall become due. That is fixed in definite terms in the fifth clause of the contract. All that is done by the quoted fourth clause is to provide a protection to the owner by which, if the contractor fails to perform, the owner may retain all payments until the work is completed.

The fifth section of the Mechanics’ Lien act prohibits payments by the owner in advance of the terms of the filed contract. In Slingerland v. Binns, 56 N. J. Eq. (11 Dick.) 413, the court of errors and appeals declared that under this section the owner shall not in any way discharge his liability to pay under the contract, until according to the terms of the contract, the time to do so has arrived, in order that until that time such liability may be preserved for the benefit of workmen and materialmen who serve the statutory notices.

The complainant does not deny that he made advances without the certificate of the architect, which the contract required, but seeks to excuse them on the ground that an unreasonable or fraudulent refusal by the architect to certify might subject the contractor to great loss and the owner to delay and embarrassment. These are in this case purefy hypothetical questions. There is no proof that the conduct of the architect was either unreasonable or fraudulent regarding the issuing of his certificate to justify the last payment of $5,384. If the owner was of opinion that the requirement of the architect’s certificate might subject him to trouble, he might readily have protected himself bv so framing his contract that the last installment of the contract price should be payable when the building should be completed, without the provision for the architect’s certificate. He did not do this. By the express terms of the filed contract, the last installment of the contract price, $5,384, was to be paid on the architect’s certificate. Under section 5 of the statute, and the decision of Slingerland v. Binns, ubi supra, the parties furnishing labor and materials had a right to presume that the last payment would be made only when the architect’s certificate had been given, as prescribed by the filed contract.

What happened ivas that on December 24th, 1902, the de-’ feudant Ingersoll served a stop notice on the complainant. The latter has since paid $5,500 of the contract price without paying Ingersoll. On May 26th, 1903, no architect’s certificate had been given in relation to the last payment. On that day the Somers Lumber Company served its stop notice. Under the contract on file, and the law as declared in the above-cited case, this should have impounded, and did impound, the whole of the last payment of $5,384 for the payment of the claims of the noticing creditors. It makes no difference that the complainant, after the serving of the stop notice, and after he had made the advances to the contractor, obtained the architect’s certificate. The rights of the parties were fixed as of the time of serving the stop notice on May 26th, 1903. The complainant-owner had at that time wrongfully paid out $4,500 on account of the last payment of $5,384, without having any architect’s certificate to justify those payments, as required by the filed contract. The architect could not lawfully, in July, 1903, give a certificate of the completion of the building to relate back to the preceding April (’as he tried to do), and thus wipe out the Somers Lumber Company’s lien on the fund.

The case at bar is, in my view, controlled by the decision in Slingerland v. Binns, ubi supra.

The complainant has in his hands, or under the law, as declared in that case, is responsible, not for $884, as he claims in his bill, but in truth for the wdiole of the last payment, amounting to $5,384. This sum is more than sufficient to satisfy in Ml all the claims of the stop-noticing defendants. There are therefore no conflicting claims which might require that the complainant be protected from double liability by an inter-pleader decree. He has, in contemplation of the law, enough of the contract price in hand to satisfy all the defendants’ claims upon it. Hnder this condition of affairs he has no standing to maintain an interpleader bill against them.

The complainant’s bill should be dismissed, with costs.