Lambert, J.:
• The question upon the merits presented by this appeal'is whether thp prdéró drawn upon ■ "W"-. & J, Sloane. by Grissler 4? Sons and *217accepted by. the former operated as an equitable assignment of the funds .then due or to become, due from, tlie original contractors in such a manner as to defeat the.rights of the plaintiff under the Lien Layv. We are of the opinion that Under the law as it existed in this State prior to 1896 the effect of the transaction would have been to deprive the plaintiff of any rights under his subsequent lien. We are, however, to consider tlie law. as it existed at the time of these transactions. Chapter 418 of the Laws of 1897 has materially changed the provisions of the prior- statutes. Section. 15 of that act now provides as follows: • .
“ § 15. Assignments of contracts and orders to be.filed. — ISTo assignment of a contract for the performance of labor or. the furnishing of materials for the improvement of real property or of the money or any part thereof due or to become due therefor- nor an order drawn by a contractor or sub-contractor upon the owner of' such real property for the payment of such, money shall be valid, until the contract or a statement containing the substance, thereof and such assignment or a copy of each or a copy., of such order be filed in the office of the county clerk of the county wherein the real property improved or to be improved is situated, and such contract, assignment or order shall have effect and be enforceable from the time of such filing.”
In our judgment the-letters from the Grisslers to the Sloanes, coupled with their letters to the sub-contractors, - constituted an equitable assignment- of so much of the funds in the hands of W. & J. Sloane as was necessary to the payment of the sums earned by. these several sub-contractors in performing, their contracts with Grrissler & Sons, and these equitable assignments, as against - every one other than lienors, would be valid.. But when we concede that there was an equitable assignment “of the money or any part thereof due or to become due therefor,” we bring the case within the letter and spirit of the section of the - statute above quoted, and which was intended to protect the rights of subcontractors and materialmen in the funds in the hands of the owner or contractor at the time of filing the lien, unless record notice of the. existence of such assignment ivas given. The language of the statute'is broad and comprehensive and includes all assignments, or prders drawn upon the owner- (| 15), whether such assignment? *218are legal or equitable in their nature. .These letters did not constitute an absolute promise on the part of W. & J. Sloane to pay the sub-contractors; they merely agreed to retain and devote to the payment of these sub-contractors the amount which they might earn in performing their contract with Grissler .&■ Sons. Tile entire transaction contemplated that the sub-contractors were performing their contracts with Grissler & Sons, and the respondents Sloan.es merely being authorized to retain so miich of the contract price of the work with the Grisslers as should be necessary to the payment of the subcontractors. This was ndt, therefore, the case of an owner or contractor paying in good faith an amount of money due upon the performance of a contract before the filing of a lien, ñor was it the case of an owner or contractor in good faith advancing money or its equivalent in payment of work and material thereafter to be furnished. It constituted merely an equitable assignment of a fund for the payment of sub-contractors when their work should be completed Under Grissler <& Sons’ contract, and such an assignment is required to be filed in the manner pointed out by the statute before it can become operative as against subsequent liens. This was not done. The whole scheme of the statute points to this purpose. • There is no provision which prevents an owner or a contractor from ¡laying in advance for work of improvements, provided the contract provides for such payment, and no materialman, laborer or sub-contractor could complain or gain any rights thereby under the law, for it is provided that if labor is performed for, or materials furnished to a contractor or sub-contractor for an improvement, the lien shall not be for a sum greater than the sum earned and unpaid on the contract at the time' of filing the notice of lien, and any sum subsequently earned thereon, and that in “ no case shall the owner be liable to pay by reason of all liens created pursuant to this-article a sum greater than the value or agreed price of the labor- and materials remaining unpaid at the time of filing notices of such liens,-except as hereinafter provided.” (Lien Law, § é.) This is so -that the sub-contractors and others interested -may contract with a knowledge of'the-facts. Section 8 of the act provides that- a “ statement of the terms of' a contract pursuant to which an improvement of real property is being made, and of the amount due or to become *219due thereon, shall be furnished upon demand, by the owner or his duly authorized agent, to a sub-contractor,” etc. Section 1, in harmony with the general scheme, provides that “any payment by the owner to a contractor upon a contract for the improvement of real property, made prior to the time when, by the terms of the contract, such payment becomes due, for the purpose of avoiding the provisions of this article, shall be of no effect as against the lien • of a sub-contractor, laborer or material man under such contract, created before such payment actually becomes due.” Any owner or contractor may make a contract to pay for the. work or improvement in. ad vanee, or at stated times during the progress of the work, and he may make such payments when they become due, unless in the meantime a notice of lien has been filed. The statute provides for giving each person in interest an opportunity to know the contents of the contract and the amount due or to become due thereon, so that he may act intelligently in reference to 1ns own interests, and section 15 fits into this scheme and provides that if there is any assignment of the contract or of moneys due or to become due under the same, record notice of such fact shall be given. Both by the terms of the act (§ 22) and by that rule which requires a liberal construction of remedial statutes, we are required to construe this statute in the' interests of those whose rights are to be protected, and an examination of the cases to which attention is called confirms the view here reached. (Lawrence v. Dawson, 50 App. Div. 570 ; affd., 167 N. Y. 609; Harvey v. Brewer, 82 App. Div. 589; affd., 178 N. Y. 5; Kane Co. v. Kinney, 174 id. 69; Armstrong v. Chisolm, 99 App. Div. 465.) These cases have dealt with a variety of facts, but they have all recognized the effect of section 15 of the Lien Law, as requiring equitable assignments to be filed in order to become effective as against subsequent liens. The conclusion is reached that the letters and acceptances involved in the transactions mentioned did not operate as a payment of sums due under the. provisions of the original or any of the sub-contracts, and, therefore, we are of opinion that the learned court at Special Term erred in the conclusion that the case was not within the provisions ,of the statute.
*220The respondent contends that because it paid the Grisslers. the sum of' $12,000 in consideration that they would sublet portions of the work under, their contract to the nominees of the Sloanes, and that Ferguson and Hilbrand were named and did portions of the work with the understanding that payments to each of them were to be made by the Sloanes, the conclusion is permissible that to the extent-of perforniance by them, they .became subcontractors of the Sloanes, and, therefore, not within the requirements-of the statute. If such were the facts, the conclusion would be unassailable. They are, however, the contrary. ■ The pleadings'of the respective, parties to the action admit that Ferguson, Hilbrand and Grimmer & -Son were sub-contractors of Grissler &. Sons. ' In respondent’s answer' we find the following specific allegation, *' * * “ were thereupon subcontracted by said Grissler & Sons, part .to the defendant- Robert B. Ferguson . * ■ *. * and part . to one Rudolph Hilbrand *. * *; that at some time * * ■* prior, to September 1, 1903, the said Grissler & Sons -sub-contracted to the firm of Ohas. Grimmer & Son- ^ ■* -■ *" certain work under their said contract with this defendant.” Beyond this, the executed contracts of the parties under which the work, was done are in evidence, by which it is. disclosed. that those parties were sub-contractors' of Grissler & Sons., The contention of the-respondent is without the slightest foundation-. ■
As we view- the law applicable to the facts appearing in the appeal book herein, a reversal of the judgment would be unavailing to tlie appellant. The. foundation of this, action is the lien upon the “ real property improved or to be improved, and upon such improvement,” (Lien Law,-§ 3.) This foundation has been taken away by-the judgment dismissing the. complaint iipon the merits, as-against the owner of the real property, and now. made conclusive by reason of the expiration of the time in which an appeal might have been taken as of right. Before the argument of this appeal, however, a motion was- made by the respondent upon notice to dismiss the appeal herein, From the record there disclosed it-appears that the owner,. Mr. Astor, after the time' to take an appeal as to him had expired and under some alleged stipulated, right,‘ paid the balance of the .contract price of construction of the building in question to the general contractor (Sloanes), and it may be that upon *221a trial of the case it will be shown that the money payment was to be held as a substitute for the “ real property improved ” to abide the event of the action, or that it was paid and received under such circumstances that it became impressed with a trust available to the appellant.
These are considerations for the trial court. The judgment should be reversed and a new trial ordered, without costs to either party of this appeal.-
Houghton and Clarke, JJ.; concurred; Patterson, P. J., and Ingraham, J/, dissented. ■ ' •
Lien Law, art. 1.— [Rbp..
Ingraham, J.
(dissenting):
I think this judgment should be affirmed. It seems to me that the arrangement between W. & J. Sloane and their sub-contractor, Grissler & Sons, entered into before any order was given to the plaintiff or any materials furnished or work done by it under its contract with Grissler & Sons, substituted Ferguson and Hilbrand as contractors and withdrew the work that they were to do from the contract between W. &'J. Sloane and Grissler & Sons. The form adopted was an. agreement by which the amount payable to Ferguson and Hilbrand was to be deducted from the amount that W. & J. Sloane were to pay Grissler & Sons. But I think the court should look beneath the form that was adopted and get at the real intention of the parties as evidenced by the whole transaction. The agreement of W. & J. Sloane to Ferguson and Hilbrand was not to pay to-them any part of the. money that was payable under the contract to Grissler .& Sons, but was a new promise to pay for the work to be done, by Ferguson and Hilbrand which was necessary to carry out the contract between W. & J. Sloane and the ownéf of the building. Ferguson and Hilbrand thus became original contractors with W. & J. Sloane by which W. & J. Sloane were bound to pay them for the work and material that they furnished for the building, and while the contract made between Grissler & Sons and Ferguson, and Hilbrand was adopted as the basis of W."& J. Sloane’s contract with Ferguson and Hilbrand, the effect of the arrangement was that Grissler & Sons were relieved from the performance of their contract so far as it related *222to what was to be furnished by Ferguson and Hilbrand, so that a new contract was made by which Ferguson and Hilbrand furnished certain work and materials directly to W. & J. Sloane and with the performance of that work Grissler & Sons had nothing- to do. It seems to me, therefore, that payment for this work and materials furnished by Ferguson and Hilbrand never became moneys due .to Grissler & Sons for which a contractor with Grissler & Sons would, after the substituted arrangement, be entitled to have applied to his contract..
Hoi* do I think the sum of $12,000- that W. & J. Sloane agreed to allow Grissler & Sons was a part of the contract price. The payment of that sum to Grissler & Sons was in consideration of their allowing W. & J. Sloane to select the persons to do this particular work. It was a pure gratuity — not a payment for the work that Grissler & Sons had agreed to do and so was not to be considered as ■ money due under the contract. It was the consideration paid by W. & J. Sloane to allow the new contract to be made with other persons to do a part of the work to be done. It seems to me there was a complete- substitution of contractors and after the execution of these agreements W. & J. Sloane became directly responsible to Ferguson and Hilbrand. Grissler & Sons' were never entitled to receive the money that W. & J; Sloane paid them- for the work that had been done under the contract between W. & J. Sloane and Ferguson a-nd Hilbrand, and the $12,000 paid to Grissler & Sons from W. & J. Sloane never was a part of the money due under the , contract between W. & J. Sloane and Grissler & Sons but was money due under the'new arrangement by which a portion of the work that Grissler & Sons'had’agreed to' do was to be done by the contractors selected by W. & J. Sloane and to be paid to them, not by Grissler & Sons but by W. & J.- Sloáne.
-Patterson, P. J., concurred.
Judgment reversed and new trial ordered, without costs of appeal to either party.