Majority
p. 543Jacob Miller and Isaac Shaurman v. Charles M. Clark, impleaded with John O’Brien, James McNeven and others.
Headnote
An owner of the legal title to land, who makes a contract with a builder, whereby the latter agrees to erect thereon a building, and the former to make advances in aid of the construction, and, when the building shall be completed, to convey it, with the land, to the builder, provided he performs certain covenants contained in the contract—the purchase money and advances to be secured by a mortgage upon the premises simultaneously with the making of the conveyance—is not the “ owner,” within the meaning of the “ act for the better security of mechanics,” &c., in the city of New York, passed July 11, 1851.Hence, under such circumstances, a person who has furnished materials to the building, in pursuance of an agreement with the builder, and in conformity with the terms of the contract with the legal owner of the land, acquires no lien by filing the notice prescribed in the sixth section of the act, specifying the latter as the owner and the former as the contractor.
p. 544General Term, December, 1854.
The decisions of this and of other courts in this state, upon the construction of the word “ owner,” as used in the lien laws of 1830,1844 and 1851, reviewed. (See note a, p. 548.)
Osr the 30th of August, 1853, the defendant, Clark, being the owner in fee of land in the' city of New York, entered into a contract with the defendants, O’Brien and McNeven, of which the provisions were as follows : 1. Clark covenants
•.to sell to them the land, at the price of $4,500, with interest, payable half yearly, from November 1st, 1853; and 2. To lend them, in aid of the construction by them of three buildings upon the land, $4,500, payable in instalments during the course of the erection,' provided, however, the materials and workmanship shall prove, during the progress of the buildings, equal to those in a pattern house ; each instalment to bear interest from the day of payment. 3. All taxes and assessments now existing upon the land, to be paid-by Clark.. 4. The interest which shall have accrued, with any premium of insurance, tax or assessment, hereafter becoming a lien upon the premises, to be retained by Clark out of the last instalment of the loan. 5. O’Brien and McNeven covenant to .erect upon the land three buildings, of a prescribed style, to be completed on the first day of January, 1854, in accordance with law and with the regulations of the fire department; and, upon notice, remove any lien that may be effected upon their interest in the premises, or that can affect the land under the lien law of this state, and cause any proceeding taken under that act to be discharged. 6. In default of a full performance of the covenants last above mentioned, the whole contract, at the option of Clark, to “ cease and determine,” and he “ to have the right to sell all the right, title and interest of O’Brien and McNeven in the premises, under this contract, at public auction,” giving them ten days’ notice thereof, “ and the surplus, after paying Clark, to be paid to them.” 7. They are to insure the buildings, when enclosed, in a satisfactory company, for a reasonable amount, and assign the policies to him as security; in de
p. 545
fault whereof, Clark to insure and charge the premium to them. 8. When the -buildings are completed, Clark to-convey them and the land, in fee simple, to O’Brien and McNeven, by a warranty deed, they at the same time executing to him three bonds, with mortgages upon the premises, “ in which their wives shall unite,” the same to be for $3,000 each, payable within three years, with interest semiannually, and containing “ the usual thirty days interest and insurance clauses.”
The erection of the buildings was proceeded with by O’Brien and McNeven. On the ninth of November, 1853, they received the fourth of the nine instalments provided for. On the 16th and 17th of the same month, the plaintiff, in pursuance of an agreement with them, and in conformity with the terms of their contract with Clark, furnished lumber to the buildings. On the 16th, O’Brien and McNeven being insolvent, executed to the defendants, John W. Miller and Daniel Crane, a voluntary assignment for the benefit of creditors.
On the 18th, two days subsequently, the plaintiff filed a notice, pursuant to the sixth section of the “ act for the better security of mechanics,” &e., passed July 11,1851, specifying Clark as the owner, and O’Brien and McNeven, and their assignees, as the persons against whom the claim was made; and afterwards proceedings were taken in the Sixth District Court to bring the supposed lien to a close. It was claimed, that at the time the notice was filed, the work upon the buildings had progressed so far and was of such quality as to render the fifth instalment due and payable. This was denied. Judgment was given in favor of the plaintiff, from which the defendant, Clark, appealed to this court.
It appeared that afterwards, on the first day of December, 1853, without availing himself of the right to sell at auction, the defendant, Clark, entered into a contract with the assignees, to convey the premises to them, for their own personal use, and that they proceeded with the erection of the buildings on their own account.
p. 546Clark, urged, among other arguments, the following: The contract between Clark, and O’Brien and McNeven, was for the sale of the lots in question, and by it money was to be advanced only as a loan. It was not such a contract as is contemplated by the act commonly known as the lien law of July 11, 1851. The appellant was not erecting a house or houses on the premises. He was, it is true, owner in fee of the land, but he never had the slightest ownership in the houses erected thereon, except by the possibility of their reverting to him on non-compliance with the contract, and even then the contract provided that he might sell the property at auction, so that he was virtually dispossessed of all ownership in the property. And as matter of fact, since the appeal in this action was taken, the appellant has, in consequence of such dispossession, conveyed the property in fee under a contract with the assignees of the contractors for $5,000, being $475 less than the price agreed upon for the lots and the money actually advanced by him up to and including the said ninth day of November. He was not, in any sense, contemplated by the statute an “ owner.” argued the following points: I. It makes no possible difference as to Clark’s liability, whether the materials are to be considered as furnished to Mm through O’Brien and McNeven as his agents, or furnished to ‘them as contractors; in either case he is equally liable. II. It is not pretended that Clark should have notified the “ material menP We do say that he was bound to object to the boards when he saw them on the ground, and knew that they were to be used in the roofing of the houses by the contractors. If he was dissatisfied with them, of course the objection could be made to the contractors. By remaining silent and suffering the materials to be used in the houses,
Augustus E. King, for the defendant,
John M. Cooper and John B. Scoles, for the plaintiffs,
p. 547he assented to their use and accepted the materials. This is the well established legal rule. III. Parties cannot evade the lien law by such a contract as this. Until the land is conveyed by deed executed, the fee continues in the owner, and he is in law as in reality the owner of the houses which are being erected upon his land. If the contractors should never become entitled to a conveyance by the terms of the contract, the land and the houses are alike the property of the owner of the land. If the contractors become entitled to a conveyance, and get one, even then they do not obtain an entire seisin of the land, for they have immediately to execute a mortgage upon the property for the purchase money. That, under such circumstances, the contractors do not obtain an entire seisin of the land, has been clearly settled by adjudication. The wife, for this reason, is not dowable against the mortgage. (4 Kent's Commentaries, p. 39.) The houses, then, are going up on the owner’s land, for the owner’s benefit, and the lien of the material man attaches. IV. Calling the payment a “loan ” does not alter the fact, nor vary the rule of law. O’Brien and McNeven become entitled to their payment when their work and materials are received without objections, even though inferior to what the contract calls for, subject to deduction under circumstances of proof of deficiency, &c. Otherwise, see the absurd conclusion that follows. The contractor furnishes labor and material, the owner of the land stands by, inspects and makes no objection, and after having thus received the benefit of the contractor’s labor and materials, refuses to pay anything for them, alleging that they are inferior to what the contract calls for, and so the owner is to have his houses built for nothing, because they are not equal in materials or workmanship to the pattern house. This p Dsition, absurd upon its face, is the one seriously contended for on the other side. The true doctrine is laid in Hollingshead v. Macher, 13 Wend. 276 , and Korress v. Windsor, 3 Fairf., 293. We will quote the language of the authority from note in
p. 548Ohitty on Contracts, p. 451: “ Where one has interest into a special agreement to perform work for another and furnish materials, and the work is done, and the materials furnished, but not in the niwrmer stipulated in the contract, yet if the materials are of any value or benefit to the other party, he is answerable to the amount whereby benefitted.” This is the rule of law, and it is equally applicable to the ordinary contract for building a house, or a special contract like the present calling for advance of money, as work is performed and materials furnished. The defendant, Clark, was liable, first, on the ground that the hemlock boards were furnished to him, through O’Brien and McNeven, as his agents; and secondly, on the ground that they were furnished to O’Brien and McNeven as contractors, Clark being the owner.
It was decided by this court, in McDermott v. Palmer, that an owner of land who agrees, under what is usually denominated a building contract, to advance to the builder sums of money, from time to time, to be applied towards the erection of a building on the land, and when the building is finished, to convey the land to the builder, in fee, receiving from him a mortgage for the advances made, is not the owner of the building within the meaning of the lien law. Our decision in that case (which was made when the decisions of the Common Pleas were subject to review in the Supreme Court) was reversed by that court; (11 Barbour, 9;) but this court having made the same decision in Loonie v. Hogan, an appeal was taken to the Court of Appeals, and the decision of this court sustained. (See 6 Selden’s notes of cases in Court of Appeals, April, 1854, p. 42.[1] That case arose under the act of 1830, and in
p. 549
Gay v. Brown, (1 E.
p. 550
arises. This is decisive of the question of Clark’s liability in this suit. There are several other grounds stated in the notice of appeal, upon which this judgment should be re
p. 551
versed, but the ground above stated being conclusive, it be comes unnecessary to discuss them.
Judgment reversed.
Footnotes
- * See, also, “ Notes of oases decided in the Court of Appeals, April 18, 1854,” No. 6, p. 42, prepared by Mr. Selden. The fourth volume of his regular reporte—being the last as yet published by him—concludes with the decisions of October, 1858; while the first publication of his successor, Mr. Keenan, commences with those of June, 1854. As respects this case, the hiatus is well supplied by the elaborate report in the Legal Observer, which is copied in the closing pages of this volume.
Cases cited
- Hollinsead v. Mactier 13 Wend. 276 p. 547