Hubbell v. Schreyer

—Before passing upon the exceptions to the referee’s report, it will be necessary to consider a general objection as to the manner in which the report comes before us an appellate tribunal.

It is claimed that the reference in actions brought for the enforcement of mechanic liens is, within the meaning of Rule 39 of the Supreme Court, a reference, other than for the trial of the issues of the action, inasmuch as the amendatory lien law of 1863 (Laws of 1863, p. 862, ch. 500, § 7), provides that the referee is to report in a summary manner, as in case of claims to surplus moneys in mortgage cases. • It is apparent that the person who drew the amendatory lien law of 1863, or who framed this particular provision, had no practical acquaintance with the nature of reference of claims to the sv/rpVus moneys m mortgage cases as established by the practice of the former Court of Chancery and regulated by the existing rules of the Supreme Court, or he would have known that a reference of “ the whole matter ” in a mechanic’s lien case, so far as the right or liability of the owner may be in question, is an inquiry

Formerly the practice was otherwise, and the rights of the subsequent incumbrancers, with respect to each other were ascertained and reported upon by the master, previous to decree of sale (Renwick v. Macomb, Hopk. Rep. 277); but as the effect of this was to delay the mortgagee in the foreclosure of his mortgage, the practice was changed by a rule of the Court of Chancery (Rules of 1830, as amended in 1840), since which the present practice has prevailed. A reference is ordered to ascertain the amount due under the mortgage to the complainant, and to prior incumbrancers if there should be any among the defendants. Upon the coming in of this report, the decree of sale is made, and after the sheriff has sold, he applies the proceeds to the payment of the claim of the complainants and any prior incumbrancer’s claim, and if after the payment of claims and all costs and charges, there is any surplus, it is brought by the sheriff into court, for the benefit of whoever may be entitled to it, and deposited by him with the chamberlain,—in this county, and in other counties with the county treasurer,—subject to the order of the court. After the filing of the report of the sale, any one having a claim to the surplus or to any portion of it, may file a notice of his claim, and upon this a reference is ordered to ascertain the validity of the claim, or generally who are entitled to the surplus.

I have detailed the course of procedure in mortgage cases, as it will assist in the interpretation of the meaning of the amendatory lien law of 1863, not only from the reference then made to this particular procedure, but because there is a close analogy between the foreclosure of a mortgage a/nd the foreclosure of a lien. The 7th section of this amendatory lien law of 1863, has provided that the court may take the proofs and determine the equities of the parties, the amount due to each, and by whom to be paid, or it may order any question, to be tried by a jury, or it may '•‘•refer the whole matter to a referee to examine and pass upon the rights of the respective parties, a/nd report upon the same in a summary manner, as i/n case of claim to su/rplus moneys i/n mortgage cases.” Where the owner admits that a certain amownt is due wider the contract which he made for the erection of the building, and that amount is insufficient to satisfy the claims of all the parties, so that the question of priority of liens becomes material, and which may also involve questions as to the validity of any of the liens in the event of any lien being disputed by the contractor or by subsequent lienors, then “ the whole matter,” in the language of the act, if referred, may be reported upon “in a summary manner, as in case of claims to surplus moneys in mortgage cases,” for the proceeding is of the same nature, there being a fund, as in surplus moneys in mortgage cases, to which there may be many claimants, and the general inquiry being, who are entitled to it, or in what way it is to be distributed, apportioned, and to whom ? All the claimants are actors; that is, each appears as the representative of his own

In such a proceeding there are no formal pleadings, and consequently there are no issues; for an issue, as defined by Blackstone, is, “ when, in the course of pleading, the parties in a cause come to a point which is affirmed on one side and denied on the other. They are then said to be at issue; all their debates being at last contracted into a single point, which must be determined either in favor of the plaintiff or the defendant (3 Bl. Com. 313); or, as it has been more accurately defined by Ohitty, it is “ a single, certain and material point arising out of the pleadings of the plaintiff and defendant” (1 Chit, on Pleading, page 690, 6th Am. ed.), and is not necessarily confined to a single point, for there may be in the action several issues arising upon the same pleadings. Nothmg of this character arises upon a reference of the description under consideration. It is simply an inquiry, summary in its nature, to enable the court to distribute the fund to the parties entitled to it, in which the report of the referee does not, when it is filed, like the report of the trial of the issues in the action, stand as the decision of the court, for, under the 39th rule of the Supreme Court, eight days must elapse after service of the notice of the filing of it, that exceptions may he filed and served; which exception, if taken, must be heard and passed upon by a judge at the special term before the report is confirmed and becomes absolute.

The proceeding to foreclose a mechanic’s lien is, in the statute of 1863, denominated a “ suit” and an “action” (sections 6-10), and calling it by the name which the statute gives it, there may be in the action, in the language of the 39th rule, a “ trial of the issues.” If the owner puts in an answer denying that there was anything due by him Under the contract when the lien was filed, an issue is created which supersedes and suspends every other inquiry; for if that is found to be the fact, it puts an end to all further proceeding, and the action must be dismissed.

The foreclosure of a lien, whether it arises under the mechanic’s lien law or otherwise, is a matter of equitable juris

In the notice of lien filed by Hubbell, he sets forth that he has a claim of $1,444 48 against the owner, Schreyer, and the contractor, Holt, for building materials furnished by him in pursuance of a verbal agreement had with Schreyer, the owner, and Holt the contractor; and in the notice filed by Muldoon he states that he has a claim against Schreyer, the owner, of $883, and against Holt, the contractor, of $1,349, for materials furnished in pursuance of an agreement, written and by parol, between Holt, the contractor, and Schreyer, the owner, and himself, Muldoon.

Hubbell claims upon a contract made by him with Schreyer the owner, and Holt, the contractor ; but Muldoon claims to

But, as the owner, Schreyer, denies each and every allegation in the complaint of Hubbell and in the answer of Muldoon, and as the contractor, Holt, put in no answer, an issue was created, by which Hubbell affirmed and Schreyer denied that the materials were furnished upon a contract made by Hubbell with Schreyer and Holt; which issue, if found in Schreyer’s favor, put an end to all claim on the part of Hub-bell against Schreyer, and to any lien upon the premises ‘of which Schreyer was the owner. For Hubbell did not claim in his notice to have a lien upon the premises for materials furnished in pursuance of the contract made between Schreyer and Holt, but upon a contract made by himself with Schreyer and Holt (Hauptman v. Halsey, 1 E. D. Smith, 668; Nott’s N. Y. Lien Law, pp. 10, 11). And as respects Muldoon, whether his claim be regarded as founded upon an alleged contract made by him with Schreyer and Holt, or upon the furnishing of materials by him in pursuance of the contract made by Schreyer with Holt, or in part upon both, an issue was created by Schreyer’s answer, which Avent to the whole of Muldoon’s claim, upon whatever ground it rested, inasmuch as Schreyer averred that he had paid Holt all that was due to him under his contract before Muldoon’s lien was filed ; and he objected in his answer to the regularity of the notices of lien filed in each case; and in addition denied each and every allegation in the answer of Hubbell and Muldoon.

There were, therefore, two issues to be tried in respect to the claimant Hubbell, and three in the case of Muldoon, the determination of which in the owner’s favor, would put an end to the action; for although Holt had suffered it to go by default,a personal judgment could not be obtained against him ; for to authorize such a judgment, it must be proved, or conceded, that a lien was obtained upon the premises for the work

As the pleadings stood, there were several issues to be tried : 1st. Whether the notices filed by either Schreyer or Muldoon were notices under which any lien could be acquired; 2d. The personal liability of Schreyer, assuming the notices to be sufficient under the statute ; 3d. Whether anything was due by him upon his contract with Holt, to which the lien of Muldoon could attach. It is not essential in this case to determine whether the court, under the act of 1863, . could order these issues to be tried by a referee, as- the reference in this case was with the consent of all the. parties; although if the point were material, I should not hesitate to hold that the authority given by the act to “refer the whole matter to a referee,” is sufficient to authorize such a reference; that the referee’s report would have to be a finding upon the issues, and being a report upon the whole issue, would, under the 272d section of the code, stand as the decision of the court; and that a report in a summary manner, as in case of claims to surplus moneys, is and can be made only when the litigation is between the claimants. The statutes declare that upon the reference “ every party shall be at liberty to take proof for or against any claim or lien, and such judgment or decree shall be made thereon as to the rights and equities of the several parties among themselves, and as against any owner, as may be just.” This provision I regard as applying to the reference generally, whether the contract is exclusively between the claimants therm-selves or between the claimants and the owner. I do not interpret it as providing, in all cases in which the whole matter is to be referred, that the report is to be as in case of claim to surplus moneys in mortgage cases. Such may have been the expectation of the person who framed this provision ; as the object aimed at in many of the amendments of the lien law within the past twenty years, has been to do what is impossible; to make a proceeding exceedingly simple which is in its nature complicated; for to ascertain and adequately adjust the rights of all the parties—

Hubbell’s notice of lien was of a claim against Schreyer as owner, and Holt as contractor, for material furnished in pursuance of a verbal agreement made, in the language of the notice, with the contractor and the owner. This is not, as the

On the contrary, it appeared that Hubbell had ceased to furnish materials for the building, giving as his reason that Holt was a stranger to him; that he was not a responsible man; that he had stated or said that he, Hubbell, had been told that Holt had no means of his own, and was not to be trusted. The referee has found that the materials were furnished upon the credit of Schreyer as well as of Holt, but he negatives any such conclusion in respect to Holt. There is evidence that they were supplied upon the credit of Schreyer ; that is, upon his expressed promise to pay for them, made after Schreyer was informed by Hubbell, that he would not send goods to the building any more unless Holt paid for them. The materials appeared to have been ordered by Holt in the presence of Schreyer, after Schreyer had declared that he would pay for them, and the only conclusion warranted by the evidence is that they were furnished upon the exclusive credit of Schreyer, who said expressly before they were ordered, that if Hubbell was afraid of Holt, he (Schreyer) would see every cent’s worth of materials sent to his buildings would be paid for; that he would pay for them.

They were entered in Hubbell’s ledger, “ Thomas Holt for

The only interpretation to be put upon the evidence is, that it was an original promise on .the part of Schreyer, that if the materials wanted were furnished, he would pay for them.

The fact that the notice of lien filed set forth a joint contract, and that no joint contract was proved, but only an individual undertaking on the part of Schreyer, is not a matter of which Schreyer ought to be allowed to avail himself. It was a matter of defense for Holt, but he made no complaint, having suffered judgment to go against him by default. The lien law requires that the notice of lien filed shall state the amount claimed, and from, whom, (Laws of 1863, p. 862, ch. 500, § 6). This is essential to distinguish the claim of a subcontractor, who has simply a lien upon the building to the extent of the amount which may be due from the owner to the contractor, and the claim of the contractor directly against the owner; who has not only a lien upon the building, but the right also to a personal judgment against the owner. This distinction is apparent in the present notice. It is not the claim of a subcontractor, but of a contractor with the owner. The amount is claimed from Schreyer as owner; and it does not, in my judgment, invalidate the notice that the amount is claimed also from Holt,- the contractor. It is sufficient, for the purposes of the statute, that it is claimed from Schreyer; and that the

The materials were furnished between the 25th of May and the 22d of December, 1870 ; the notice of lien was filed on the 23d December following, the day after the delivery of the last item ; and the objection is taken that the lien, by the express terms of the statute, attaches only to so much of the materials

It was held by the Court of Appeals, in Spencer v. Barnett, 35 N. Y. Rep. 94 , that under the Kings county act, the lien did not attach to materials furnished more than sixty days before the filing of the notice, although furnished under the same contract as the materials which were delivered within the sixty days.

There was a difference between the Kings county act, under which decision was made, and the act applicable to this county; as, under the former act, the material-man had double the time given to him for the filing of his lien, that was given to the mechanic, which has not been the case in any of the acts applicable to this city, nor is it now under the present Kings county act; this distinction in Kings county between- the mechanic and the material-man having been repealed in 1862 (Laws of 1862, p. 949, § 3). My colleague, Judge Robinson, before whom and myself the argument upon this appeal was heard, is of opinion that this distinction between the provisions in the two acts can make no difference in the application of the decision of the Court of Appeals; that that decision, as a construction of the lien law, is as applicable to the law enacted for this county as it was to the Kings county act; and I confess that I am not prepared to hold that the difference between the two acts is such as to warrant us in saying that that decision is to be limited to the Kings county act as it existed prior to 1862, and does not apply to the law as enacted for this county; and, but for this decision, I should certainly have taken the same view as Judge Mott, in his Treatise, page 89—that the lien law did not contemplate the amount claimed being from time to time split up by separate liens, nor a repetition of a lien for parts of the same thing; and in the case of an entire contract, that the three months begins to run from the completion of the work, or the delivery of the last item of the materials contracted for.

Assuming, as I think we must do, that the decision of the Court of Appeals is to be received and followed as an interpretation of our own act, then, the finding of the referee, that

I now pass to the claim of Muldoon. He filed the notice of his lien on the 12th of January, 1871. It set forth two claims ; one against Holt for §1,349, and one against Schreyer for §883. They were both for brown stone furnished for, cut, and set in the building.

The stone in the claim against Holt was alleged to have been furnished, cut and set in pursuance of a contract between Holt and Schreyer—that is, it was a claim as subcontractor,— and the other was a claim for extra work and materials upon a contract made by Muldoon with Schreyer, for which Schreyer would be personally liable.

The lien, so far as respects the first claim of $1,349, is objected to on the ground that Holt’s contract was made with Muldoon, Kenney and Doonan, and in the notice filed the claim is stated to be simply the claim of' Muldoon. The act of 1863 prescribes that the notice shall state to whom the amount claimed is due, and when the notice of lien was filed, the amount was due, not to Muldoon individually, but to the three partners, Muldoon, Kenney and Doonan.

This being an express statutory provision, it cannot be dispensed with. The lien is created by the filing of the notice, and everything which the statute requires to be stated in it is an essential prerequisite to the creation of the lien, and if anything inquired by the statute is omitted, nothing is accomplished by the filing of the notice (Beals v. Congregation B'nai Jeshurun, 1 E. D. Smith, 654; Nott’s Treatise on Mechanic’s Lien Laws, pp. 10, 11, 13).

If the claim is due to three persons jointly, the notice should state that the amount claimed is due to them, and stating that it is due to one of them only is not a compliance with the statute. If that were permitted, each of them might fil e a separate notice in the same way, and the anomaly would be presented

At the hearing before the referee, an assignment in writing of the claim by Doonan and Kenney to Muldoon, was given in evidence by Muldoon. The instrument was dated the 16th of September, 1870, which would be more than three months before Muldoon filed his notice, the notice having been filed on the 12th of January, 1871. The lien being a personal right, the right to create it cannot be transferred or assigned to another (Rollin v. Cross, 45 N. Y. R. 771; Daubigney v. Du-

The assignment after the filing of the notice, and the institution of proceedings to foreclose the lien, could not cure the defect in the notice. If the statute had not. provided that the notice should state to whom the amount was due (as in the act of 1851, which had no such provision), we might get over the difficulty by leaving the owner or contractor to plead or set up the non-joinder in the action brought to foreclose the lien. But the act of 1863 has made this statement in the notice essential, and no lien can be created where anything.is omitted, which the statute has expressly required.

When the evidence on the part of Muldoon was closed, a motion was made to dismiss his claim, on the ground, that the work was done by. the firm; that no assignment of the claim to him by his copartners was made prior to the filing of the

The objection having been taken, it was error on the part of the referee to disregard it. This applied to the claim stated in the notice to be against Holt, $1,349, for which, the referee held, a good and valid lien was created by the filing of the notice.

Though the notice of lien distinguished between the claim which Muldoon stated in the notice he had as a subcontractor against Holt, $1,349, and the claim he had separately against Schreyer, $883, the referee made no such distinction; but putting both claims together, which amounted to the sum of $2,232, he found that the whole sum was due from Schreyer to Muldoon, with interest, and reported that Muldoon was entitled to judgment against Schreyer for that amount, with costs.

Judge Nott, in his carefully considered treatise, was of the opinion'that under the acts of 1851 and 1855 distinct claims against the owner and the contractor could not be joined in the same lien; that the statutes then existing did not contemplate and would not warrant such a course. The act of 1863 is in this respect, however, more comprehensive, and as it gives the court the power to determine the rights and equities of all parties, and the amounts due to each, I see no objection to including a claim against the owner and a claim against the contractor in the. same notice, where, as in this case, each claim is separately distinguished ; for the court may enforce one as a lien upon the building to the extent of the payments due by the owner to the contractor, and* as respects the other, not only enforce it as a. lien upon the building, but render a personal judgment against the owner for the amount of it.

The first' section gives a lien to the person designated, for labor performed or materials furnished in pursuance of the terms of a contract with or employment by the owner, or in conformity with the terms of such a contract (which embraces the case of a subcontractor) “ or by or in accordance with the direction of the owner or his agent.” This is very comprehensive and includes a subcontractor’s contract, if in con formity with the contract for the building, made with the

The referee, therefore, erred upon two grounds: 1st, by holding that upon a claim stated in the notice to be against, the contractor, a personal judgment could be rendered against the owner; and 2d, that Muldoon acquired a valid lien upon a claim due to him jointly with two others by filing a notice stating that the claim was du"e to him.

Independent of this joint contract, Muldoon claimed to recover $967 for extra work, upon which claim the referee allowed him the amount stated in his notice, $883. It did not appear that Doonan or Kenney had anything to do with this extra work, or that any contract, express or implied, was made for it with Holt. It would seem that after Muldoon’s partners left, Muldoon finished the work, and that he received a plan from Schreyer out of which this extra work arose, the new plan being different from the previous one. When this plan was presented by Schreyer to Muldoon, he objected to it without being paid extra for work done according to it. Schreyer insisted that he should do it, as that was to be .the finish when the building was completed, and after some discussion, Schreyer said he was willing to and would pay for anything extra on the building; upon which Muldoon replied that he would go on with it, and he finished the work according to the new plan. This conversation with Schreyer occurred before Muldoon commenced on the new plan, or did any of the extra work, which extra work he charged upon his books to Schreyer.

The evidence warranted a decree for the enforcement of a lien upon the building for the materials which had been furnished by Hubbell three months prior to the filing of his lien. As the lien never attached to the materials which were furnished before that'time, I do not think a personal judgment could be rendered in this action for the enforcement of a lien for .the materials anteriorly furnished. If they had been furnished under the same contract as the materials subsequently supplied, and to which the lien attached, there might be some ground for arguing that, having acquired jurisdiction in respect to the contract by the action to foreclose, a lien was acquired under the contract, but not for all the materials furnished under it'; we might give the. relief which the statute contemplates, in the rendition of a personal judgment, under the familiar rule that where a court of equity has gained jurisdiction of a cause for one purpose, the court may determine the whole matter in controversy, to prevent further needless litigation or multiplicity of suits, if it can give the f urther relief without the assistance of a jury (Armstrong v. Gilchrist, 2 Johns. Cas. 430 , 431; Rathhone v. Warren, 10 Johns. 596 ; King v. Baldwin, 17 Id. 386 ; Russell v. Clark, 7 Cranch, 89 ; Parker v. Dee, 2 Ch. C. 200, 201 ; Story’s Eq. Jur. § 72).

But Judge Robinson has pointed out that the order given by Schreyer to Hubbell for the furnishing of materials, had not the characteristics of an entire contract, each item, in his opinion, constituting an independent contract, as to which the stafute of limitations would run from the day of the delivery of the items,- and under that view, I do not think that we have jurisdiction, under the act of 1863, to render a personal judgment upon contracts performed three months before the notice of lien was filed, and which, consequently, it did not embrace. The evidence warranted a judgment against Schreyer for the extra work done by Muldoon. The report will therefore have to be reversed as to Hubbell, except for the materials furnished

The referee’s finding upon Muldoon’s claim will have to be reversed, unless Muldoon consents to reduce the judgment entered in his favor to $883, and interest, in which event it will be affirmed for that amount.

There were several objections taken by Schreyer to the admission and exclusion of evidence. These-exceptions, or very many of them, would scarcely be available in an action at law, and in an equitable proceeding or action, errors of this description are hot regarded, if, taking the whole evidence together, the court is satisfied that no injustice has been done by the errors complained of (Clark v. Brooks, 2 Daly, 164 , 165); and such, we are satisfied, is the case here.

—I concur fully in all the conclusions to which the Chief Justice has arrived in his opinion, and without entertaining doubt on the question suggested by him, that the lien of the plaintiff Hubbell is limited to the items of his account supplied within three months prior to the filing of his notice of lien (Dec. 23, 1870), amounting to $173 47. The subsisting mechanics’ lien law, applicable to this city (Laws of 1863, chap. 500), by its 6th section, only authorized the filing of a notice and creation of a lien “ within three months after the work is done, or materials furnished.” Had all the materials of Hubbell’s claim been furnished under an entire con tract, for certain materials, or all such as were required by their plans and specifications for the erection of the building, it would probably have deferred the plaintiff’s compensation therefor, until his contract was completed, and have attached the right of lien to articles that he had supplied on such contract, more than three months prior to the filing of the notice of lien ; but I find nothing in the evidence warranting the conclusion that Hubbell furnished the materials for which his claim is made, upon an account running for seven months, upon any such entire agreement. Prior to May 23d, he had been selling materials to Holt, the contractor, and being dissatisfied by reason of the difficulty in obtaining payment, re

The mechanic’s lien law, being in derogation of common-law rights, must be strictly construed, as to all essentials necessary to the creation of the lien. The operation of the 6th section, allowing the filing of the lien “ within three months after the work is done or the materials furnished,” is not, as in ordinary statutes of limitation, the imposition of forfeiture of the remedy or right of recovery, by cutting up the items of account, against which the prescription runs (Kimball v. Brown, 7 Wend.

While such a construction requires a prompt assertion of claim by way of lien, it also protects the owner and others interested in the property from stale claims and latent liens. Besides, the decision of the Court of Appeals in Spencer v. Barnett, 35 N. Y. 94 , in my opinion is controlling upon the point. Except in the difference of time fixed by the Kings county act, then under review, requiring the notice of lien to be filed within sixty days after the materials are furnished, I can discover nothing in principle to distinguish from this.

The limitation of Hubbell’s lien to articles furnished, as per his account, within three months of the filing of his notice of lien, to wit, after September 23d, 1870, is upon principle and authority.

Judgment as to Muldoon reversed, unless he consent to reduce it to $883 and interest.

Judgment as to Hubbell reduced to $173 47 and interest.