Terwilliger v. Wheeler

The judgment should be reversed, and a new trial granted, before another referee, with costs to appellant to abide event. The action was for the foreclosure of two mechanics’ liens. Before the taking of any evidence, the complaint was dismissed as to the trustees with costs, and as to the defendants Barlow and Woodcock without costs, on the ground that no lien was ever created, and none existed which could form the basis of a judgment. The motion was based upon the allegations of the complaint, which must therefore be regarded as true.

The plaintiffs were dealers in lumber and building materials. Wheelock and his associates were trustees of union school district No. 14 of the town of Covert, Seneca county, N. Y., and as such were vested with the title to the real property described in the complaint. Barlow and Woodcock were contractors and builders, and

Prior to the filing of these liens the trustees had in their possession, from the sale of bonds in their district, a sufficient amount to pay the entire contract price for erecting the schoolhouse, and at the time the liens were filed the trustees still retained possession of the building fund—an amount sufficient to satisfy both the liens—and there was due and owing to the contractors and the Mays under their contracts an amount sufficient to satisfy both liens. The plaintiffs demanded judgment that they be adjudged to have liens on the real property, and upon the moneys of the building fund in the hands of the trustees; that the liens, with interest and costs, be paid from such moneys; and that they have deficiency judgment against the contractors and the Mays for any amount remaining after this application of the moneys in the trustees’ hands, and for such other relief as might be necessary to protect their rights. The action was commenced September 25, 1901.

There were answers in the case, but they are not contained in the record. They cannot, therefore, be considered upon this appeal. The lien law of the state (chapter 418, p. 520, Laws 1897), in section 12, provides a different procedure to create and enforce liens in cases of “public improvements” from that provided in case of private improvements. The plaintiff claims the building of the schoolhouse in question was a private improvement, while the defendants insist it was a public one. Section 1 (Laws 1897, p. 514, c. 418) of

Title 7 of the consolidated school law (Laws 1894,. p. 1210, c. 556) provides for the establishment of union free school districts, in which the trustees constitute what are called “boards of education.” These are created bodies corporate, and have power to purchase sites and to build schoolhouses thereon, to take and hold the title to the property, raise money, etc., under certain restrictions, and the direction of the school commissioners. As to such districts the same rule is applicable, however, that the schoolhouse property really belongs to the district, though the title is taken and held by the board of education in its corporate name. It is not clear what kind of a district the one in question is. The complaint calls it a “union school district,” leaving out the word “free,” and calls its officers “trustees” instead of a “board of education.” We assume the district was not a union free school one having a board of education, but a common school district. Why the word “union,” happens to be in the designation of the district does not appear, and is of no real consequence. The lienors in this case have not adopted the procedure provided

In union free school districts the boards of education appoint their treasurers. This district is not, however, alleged to be such a one, nor to have any board of education, nor is Wheeler alleged to be the treasurer of a board of education, but of the trustees. The funds provided for the building of this schoolhouse are alleged to be in the possession of the trustees of the district, and this must be assumed, for the purpose of this appeal, to be true in fact; but they should be in the custody of the treasurer of the district. The trustees have no right to the possession of the same, and for the purpose of determining whether a lien has been properly created against the funds we must consider who is the legal, rather than the actual, custodian thereof. The treasurer of the school district was the party with whom the notice of the lien should have been filed as the financial officer of the district, and the person charged with the custody and disbursement of the funds. It was his duty to disburse them upon the orders of the trustees of the district. No notice of the lien is alleged or claimed to have been filed with such school district treasurer, and we are unable to see how a lien could be created under the statute without such filing. It is further provided by sections 17 and 20 of the lien law (Laws 1897, pp. 522, 524, c. 418) that a lien for a public improvement continues for three months only after the filing of the same, and is discharged by the lapse of such time, unless an action is commenced to foreclose the same within that time, and notice of pendency of the action is filed with the financial officer with whom the lien was filed. The liens in question, if ever acquired by a proper filing, ceased to exist, and were discharged under these sections long before the commencement of this action, which was nearly a year after the filing of the liens. At the time this action was commenced, therefore, there were no liens to foreclose or enforce.

It is claimed, however, that the action should have been retained

In Smith v. The City of New York, 32 Misc. Rep. 380 , 66 N. Y. Supp. 686 , the liens were filed after the passage of these sections of the Code, and Justice Russell held that the plaintiff could recover a personal judgment even though the liens were invalid under section 3412. Most of the cases cited by the respondents here arose before 1897, when these provisions were inserted in the Code. The case particularly relied upon is McDonald v. Mayor, 29 Misc. Rep. 504 , 62 N. Y. Supp. 72 , 58 App. Div. 73 , 68 N. Y. Supp. 462 , on appeal 170 N. Y. 409 , 63 N. E. 437 . That case was tried at Special Term in New York in November, 1899. The lien was filed against a fund provided for a public improvement, under the consolidation act of New York City. Laws 1882, p. 439, c. 410, § 1824 et seq. The lien was filed March 6, 1897, and the action to foreclose it was commenced while the provisions as to liens against the city in the consolidation act were still

“Doubtless, in the case of a lien against a public improvement filed undeir the lien law of 1897, the sections above referred to would authorize the .court to render a personal judgment against the defendants liable for the claim; but' the lien in this case was filed under the provisions of the consolidation act, and this action was brought under the authority, and subject to the-limitations, of such provisions. When the action was commenced, such a result as a personal judgment against any of the defendants was not possible, nor, where the lien was found to be invalid, under the circumstances existing here, could any adjudication upon the merits of the claim be either necessary or proper; so that, to hold that section 3412 of the Code, supra, became applicable to this case when the provisions of the consolidation act were repealed would be virtually giving a retroactive effect to the section, to the' extent of injecting into a suit, which had been commenced long before it became applicable to such actions in this city, another cause of action. I am satisfied that such a construction of the statute is quite inadmissible.”

The Appellate Division took the same view of the question, citing and relying on Burroughs v. Tostevan and Weyer v. Beach, above, but making no reference to section 3412 of the Code. The Court of Appeals made no reference to this question at all. It will thus be seen that this McDonald Case cannot be regarded as authority for the dismissal of the complaint in this case.. Justice Beekman alone referred to or considered the effect of section 3412, and he regarded it as permitting a personal judgment.

Scerbo v. Smith, 16 Misc. Rep. 102 , 38 N. Y. Supp. 570 , was a case under the provisions of the consolidation act, and Justice Beekman there stated there was no provision in the statute for a personal judgment, and therefore Weyer v. Beach, above, was applicable. In Mertz v. Mapes-Reeve Con. Co., 30 Misc. Rep. 343 , 63 N. Y. Supp. 455 , it was held that the provisions of the consolidation act were applicable to the case, that no provision therein was made for a personal judgment, and that Weyer v. Beach was controlling. In Gallick v. Engelhardt, 36 Misc. Rep. 269 , 73 N. Y. Supp. 309 , the lien was filed under the general lien law of 1897, and of course after the section of the Code in question had been passed. The court (Justice Scott) held the lien invalid, and that no personal judgment could be rendered in the action, citing Weyer v. Beach and McDonald v. Mayor, above;

The mechanic’s lien law of 1885 (Laws 1885, p. 589, c. 342) § 15, provided for a personal judgment in nearly the same language as section 3412 of the Code. The act of 1897 repealed that section, and enacted section 3412 of the Code in its place. While section 15, above, was in force, it was frequently held that a personal judgment could be rendered in an action to enforce a lien under that act when the plaintiff failed to establish the lien. Alteri v. Lyon (Sup.) 13 N. Y. Supp. 617 ; Hutton Bros. v. Gordon, 2 Misc. Rep. 267 , 23 N. Y. Supp. 770 ; Sneith v. Smith, 7 Misc. Rep. 37 , 27 N. Y. Supp. 379 ; Stapleton v. Mayor, 17 Misc. Rep. 67 , 39 N. Y. Supp. 849 ; Ringle v. W. Iron Works, 149 N. Y. 439 , 446, 44 N. E. 175 , wherein Judge Gray dissented “upon the ground that because the notice of lien failed to comply with the requirements of the statute, and contained untruthful statements as to the material facts, no valid lien was created, which plaintiffs could enforce, and they could only have a personal judgment against the Wallis Iron Works for the amount actually due them.” The General Term in this latter case ( 76 Hun, 449 , 28 N. Y. Supp. 107 ) held the lien was invalid for the reasons stated by Judge Gray, but under section 15 of the act of 1885 allowed a personal judgment against the iron works to stand.

From this examination of the cases decided in this state it would seem very clear that in view of the provisions of section 3412 of the Code the referee erred in dismissing the complaint and refusing to permit the plaintiff to recover a personal judgment against such of the defendants as were indebted to him. And then under section 3403 it would seem that the court might go further, and adjust all the equities between the parties to the action, and determine all the issues raised by any defense or counterclaim, which would apparently result in settling the rights of all the parties in the fund, and in a judgment directing the distribution thereof in accordance with the terms of the judgment. As before suggested, the answers are not before us and we cannot say what issues are raised thereby, or counterclaims set up theréin. It is sufficient for the purposes of this appeal that the complaint contains allegations which entitle the plaintiffs to recover a personal judgment against the contractors and subcontractors, and equitable relief against the trustees settling the rights of the parties in the fund alleged to be in the possession of such trustees.

We conclude, therefore, that the judgment should be reversed, and a new trial granted before another referee, with costs to the appellants to abide event.