Mayor of New York v. Crawford — 20 N.Y. St. Rep. 507

Majority

p. 507

The Mayor, Etc., of the City of New York, Resp’t, v. Erastus Crawford, App’lt.^[1]

(Court of Appeals,

Filed January 15, 1889.)

Headnote

Mechanics’ liens—Undertaking by contractor to procure payment— Liability op surety.

The city of New York paid money due to a contractor against which mechanics’ liens had been filed, upon receiving a bond reciting the facts, in which bond the defendant, as surety, covenanted to protect the city from “any judgment, costs, damages, claims, or recovery” in the actions prosecuted by the lienors, and to pay any judgment that might be recovered against the city. The actions of the lienors went to judgment. The validity and amount of their liens was established. The judgments entered directed the city to pay the respective amounts out of the contract balance in its possession or secured to be paid to it by the bond of indemdemnity: Held, that it was within the precise terms of the sureties' covenant, not merely to pay a judgment recovered against the city, but to save it harmless from any judgment, damages, costs or recovery in the actions prosecuted by the lienors.

Appeal from a judgment of the supreme court, general term, first department, affirming a judgment in favor of the plaintiff entered upon the verdict of a jury directed- by the court. The facts will be found fully stated in the general term opinion reported in 14 N. Y. State Rep., 891.

T. M. Tyng, for app’lt; D. J. Dean, for resp’t.

This action was brought upon a bond of indemnity, and resulted in a recovery against the sureties which they seek to reverse on this appeal. The city was building a shoal-house for the construction of which they had contracted with one Peter J. Vanderbilt, agreeing to pay him something over $30,000 in twelve specified instalments. At the date of the bond there was a balance of over $14,000, due and to become due, to the contractor, but its payment by the city had been made perilous by the filing of mechanic’s liens under chapter 315 of the Laws of 1878, and notices of the pendency of actions to foreclose those liens. Their effect upon the city was manifest.

Under the law, payment to the contractor was to be withheld, and the sums due him retained to meet the emergency of a recovery by the lienors, and a diversion to them of the sums due to the contractor; or payment was to be made to him at a risk on the part of the city of a liability to pay a second time to the lienors the sums alreády paid to the contractor. The extent of that risk is apparent from the terms of the statute. The debts due the lienors became a positive incumbrance upon the balance due and to become due to the contractor and made the lienors creditors of the city in the room and instead of the contractor himself, and subrogated them to his right of payment and recovery.

p. 508

The lien was upon specific fund only in the sense that it could not exceed the balance due, but that balance was in the city treasury, and separated from other moneys only by the appropriations. It was thus a lien upon the debt or liability of the city due to the contractor, and the necessary effect of the lien when foreclosed was to make the city debtor to the lienors to the extent of the balance earned and unpaid.

In this situation of affairs the bond sued on was given and the facts thus far stated are derived from its recital and the terms of the statute. The sureties covenanted to protect the city from “any judgment, costs, damages, claims, or recovery,” in the actions prosecuted by the lienors, and to pay any judgment that might be recovered against the city. Upon the execution of this bond the city paid the contractor as if no liens had been filed. It is obvious that the purpose of the bond was to induce that payment, and protect the city against its consequences. The actions of the lienors went to judgment. The validity and amount of their liens was established. The judgments entered directed the city to pay the respective amounts out of the contract balance in its possession or secured to be paid to it by the bond of indemnity, and was within the precise terms of the sureties’ covenant; for that was not merely to pay a judgment recovered against the city, but to save it harmless from any jugdment, damages, costs or recovery in the actions prosecuted by the lienors. Such a recovery had been obtained; the city was bound to pay it; the statute-authorized the enforcement by execution; and while the judgment entered provided that no personal judgment was-rendered against the city that could mean only a general judgment irrespective of the amount of the balance and of the debt due to the contractor and could not nullify or render incapable of enforcement the judgment actually rendered which required the city to pay to the extent of its liability to the contractor.

It cannot be maintained, therefore, either that the judgment recovered by the lienors could not be enforced against the city, nor that it was not within the terms of the bond..

The subsequent amendment of the judgment was rather formal than material, and in no respect enlarged or changed the liability of the sureties. That amendment did not-touch or alter the terms of their contract. Those remainecL the same in all respects unchanged, and without the amendment the city, would have been compelled to pay thelienors and the sureties to reimburse the city.

The argument of the appellant to the contrary necessarily nullifies the statute of 1878, and makes the giving of the bond little better than an absurdity. That argument is that under the statute the lien was upon the specific fund, and execution could seize that alone, and since the city did not

p. 509

have it because it had been paid to the contractor, there was nothing which the lienors could seize until the city repossessed itself of the money paid to the contractor. The city could only do that, if at all, by a suit against the contractor, and if he had nothing would get nothing, and be liable to the lienors only for what it got. Thus the whole protection of the statute dwindles to a mere personal judgment against the contractor, which the lienors could have had without the singular intervention of the statute, and the bond was idle and needless for the city could pay with impunity and be liable to the lienors only in the event that it succeeded in getting the fund back from the contractor. No such construction is possible. The liability of the city to the lienors, whatever it may have done with the fund is. the very pith of the statutory protection, and to answer to the city for that liability was the exact purpose of the bond.

The question as to the extent of the recovery was not raised in such a manner as to be open to our review.

The judgment should be affirmed with costs.

.All concur.