Somers Brick Co. v. Souder

| New York Court of Chancery | Sep 13, 1905

Gbex, Y. C.

There is an indisputable principle at the base of all these suits, which must control them.

The several complainants have not recovered judgments at law against their alleged debtor, Prank A. Souder, nor have they any grounds for relief against him or against the city of Atlantic City, on any equitable principle. Yet they all seek to - obtain decrees in this court which will take from Atlantic City the contract price which it has agreed to pay to Souder, and give it to them to satisfy the debts which they say Souder owes to them.

It is obvious that such procedures must be based upon some right or equity created by statute. The complainants all insist that their right to the contract price arises by operation of the above-cited statute of 1892 (P. L. 18&2 p. 369) and their conformity to the requirements of its provisions.

As the right of the claimants is wholly dependent upon the force of that statute, the omission of any claimant to comply with its requirements must operate to defeat his claim.

The statute, in section 2,- provides that any claimant, -at any time before and within fifteen days after the whole work to be performed by the contractor is completed or accepted by the city, may file notice of his claim with the chairman, or the head man in charge of the work, or with the financial officer of the city, &e. The financial officer shall enter in a book the name, &c., of the claimant, and the date of filing, &c.

Section 4 pf the act of 1892 (P. L. J.89'2 p. 370) declares that no lien provided for in the act shall be binding, &e., unless an action be commenced within ninety days from filing the same, and notice of pendency thereof be served on the financial officer of the municipality. y

The statute creates a right of action which theretofore had no existence. It prescribes certain conditions and limitations, and declares that if they be not observed, the right, given only by the statute, shall not arise, or shall be defeated.

In such cases the observance of the prescribed statutory conditions is necessary to the acquirement or maintenance of the right. It is for the legislature only, and not for the courts, to change the requirements of those statutory conditions. The courts do not make/they only administer the law.

There are eight complainants named in the consolidating order. The Italian Marble Mosaic Company is named as a complainant probably in mistake. No suit by such a complainant appears. No proofs have been submitted for that company.

Of the other seven complainants named in the consolidating order, the Somers Brick Company’s suit was commenced ninety-six days after its claim was filed, and no notice of its pendency appears to have been given. The Excelsior Terra Cotta Company and James Conover do not appear to have given any notice of pendency of their suits.

The statute disposes of these claims by declaring, in section 4, that no lien shall be binding unless suit be commenced within ninety days of filing the same, and a notice of pendency be filed with the financial officer of the municipality.

Only four complainants brought their suits within ninety days after filing their claims and gave to the financial officer of Atlantic City the notice of pendency of such suits, as required by section 4 of the statute of 1892. These four are: Michael J. Horan, Lucjr E. Freeman, Atlantic City Lumber Company, John M. Frere.

The claims of Horan, of Freeman and of Atlantic City Lumber Company were not challenged on the argument of the consolidated causes. •• ■

That of John M. Frere is opposed by Atlantic City on the ground that section 2 of the statute requires the notice of claim to bo filed before the whole work is completed, or within fifteen days after it is so completed or accepted. It is admitted that, by resolution of the property committee of Atlantic City’s council, the work was accepted on August 1st, 1903, and that actual possession on behalf of the city was then taken of the premises; that Frere’s lien claim notice was not filed until September 8th, 1903, which was more than fifteen days after the city had accepted the work.

The complainant Frere insists that the statute (section 3) must be construed to give to bim the choice of three periods within which to file his lien claim notice—either before the work was completed, or within fifteen days after it was accepted, or within fifteen days after it shall at any time be completed, whether accepted or not.

In my view, but two periods are offered by the statute during which the lien claim notices may be filed. First, before the whole work is completed; second, within fifteen days after it is either completed or is accepted, whichever date may come first. The arrival of the one is intended to exclude the other. It is not to be supposed that after the city has finally accepted the work, a period for the filing of liens against the contract price may continue to run until fifteen days after the work shall, at a. date no matter how remote, finally be completed, or that after all the work has been completed, a lien period may continue until the city shall have formally accepted it.

Mr. Erere’s lien claim notice, having been filed more than fifteen days after the city had accepted the work, does not comply with the requirements of the statute.

This is also an additional and successful objection made by Atlantic City to the lien claim notices filed by James Conover on August 20th, 1903, and by Excelsior Terra Cotta Company on September 26th, 1903.

On the argument of these consolidated causes some reference was made to an order given on January 23d, 1903, to the Excelsior Terra Cotta Company by Souder, upon the contract price, directing Atlantic City to pay the Terra Cotta Company $3,359.32.

The counsel for that company contended that under the pleadings his client should have the benefit of this order as an •equitable assignment, &c. An inspection of the terra cotta company’s bill of complaint will show that there is in it no presentation of any right under the above-named order. The bill of •conrplaint is limited strictly to the assertion of the lien claim filed on September 26th, 1903. There is no pleading to which any proofs touching the order of January 23d, 1903, can relate, and no prayer for relief thereon.

The claimants insist that the portion of the contract price for which Atlantic City m-aSt respond in these suits must include the first payment of $3,000, made Ma}r loth, 1902, without any certificate of the architect and before the second floor joists were' laid, as provided in the contract. This payment was made under the authority of a resolution of Atlantic City council passed on May 12th, 1902. It is contended that by the statute (section 5) the lien extends to any funds which majr be due or to grow due to the contractor under the contract when the lien claim is filed; that the city had no power to make payments in advance of the period named in the contract, &e.

This argument assumes that the furnishers of work or material have, under the statute, some lien or charge on the contract price before tire filing of the lien claim, or possess antecedently to the time of filing the lien claims some right to require the city to pay only according to the terms of the contract.

The claimant, under the act of 1892, secures his lien for the first time when he files his notice of claim. This is the effect of the statute. Vice-Chancellor Eeed so held in Harris v. Garretson, 57 Atl. Rep. 414. Preceding the filing of the notice of lien claim, tire contractor might transfer his interest in the contract price. So also the contractor and the city, before any claims are filed, being the sole parties to the contract, may postpone' or anticipate payments thereunder.

This was the ease under notices by virtue of the third section of the Mechanics’ Lien act (Craig v. Smith, 37 N. J. Law (8 Vr.) 549) before the supplement of March, 1895, changed its operation and gave an inchoate lien to the workmen and materialmen before notice served. Slingerland v. Binns, 56 N. J. Eq. (11 Dick.) 413. In the act of 1892, now under consideration, there is no prohibition against anticipated payments, no inchoate -lien on the fund, and no provision making the owner who prepays liable to a subsequent lien claimant.

The words fixing the lien upon any funds which may “be due or to grow due under the contract” clearly refer to the portion of the contract price which remains unpaid when the lien claim is filed. The city passed its resolution allowing the contractor this $3,000 on his contract on May 12th, 1902, and notified the comptroller on Máy 13th, 1902, and the $3,000 was actually paid on May 15th, 1902. This was a year before any lien claim notice was filed. The city cannot he held to respond to the lien claimants for the advance payment of $3,000 made May 15th, 1902.

The result is that the only lien claims which are shown to have complied with the requirements of the statute of 1892 are those of Michael J. Horan, which became a lien on May 15th, 1903; Lucy E. Freeman, which became a lien on June 27th, 1903, and Atlantic City Lumber Company, which became a lien on July 2d, 1903.

These lien claims became a charge at the above dates on the portion of the contract price due or to grow due from the city at or after the filing of the lien claim notices, less, of course, the ¿mount necessarily expended by the city in completing the contract.

The account of Atlantic City’s liability stands as follows:

Whole contract price...................... $25,587 00

Paid out before May 15th, 1903,

the date of filing of first lien, $18,000 00 ‘ Expended for completing contract, 129 60

- 18,129 60 '

Amount of contract price liable to liens...... $7,457 40

On this sum the above liens are successive charges in the order of their filing: First, Michael J. Horan, for $1,074.35; second, Lucy E. Ereeman, for $1,075; third, Atlantic City Lumber Company, for $4,635.54.

A decree will he advised in accordance with the views above expressed.