Gaskell v. Beard — 33 N.Y. St. Rep. 852

Majority

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William Gaskell et al., Resp’ts, v. William H. Beard et al., App’lts, The Hilton Timber & Lumber Co. et al., Resp’ts.

(Supreme Court, General Term, First Department,

Filed October 24, 1890.)

Headnote

1. Municipal corporations—Contract—Corporations mat pile lien por SUPPLIES.

A corporation is a person within the meaning of § 1825 of the consolidation act, which gives any person who performs labor, or furnishes

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material towards tira performance or completion of a contract with the city, a right to file a lien against moneys due or to become due under the contract.

3. Same.

The mere fact that the amount claimed in the notice of lien exceeds that actually due is not sufficient to defeat a recovery, where it is clearly shown that the overcharge is the result of mistake or of erroneous advice of counsel.

Appeal from, a judgment recovered on trial before a referee.

Matthews & Smith, for app’lts; S. B. Brownell and Benjamin Bstes, for resp’ts.

An action was commenced by William Gaskell and others against Duncan A. Gillies and others, to enforce a lien for materials supplied to the defendant Gillies, in the removal of an old wharf and the construction of a new one at the foot of Bivington street, in the city of New York. Another action was commenced for a like object, in favor of William H. Beard and another against Duncan A. Gillies and others. These actions, by consent and on motion, were consolidated, and were after-wards tried together before the referee. By his report he found that there was payable to Gillies, under his contract for the work, the sum of §7,324.51, which was in the hands of the comptroller, to be paid as the balance of the contract price still owing by the city of New York.

Against this balance the Hilton Timber & Lumber Company, which was a corporation formed under the laws of the state of Georgia, and a defendant in the action, filed with the head of the department or bureau having charge of the work, and with the comptroller of the city, notices in the form prescribed by § 1825 of chap. 410, of the Laws of 1882, claiming a lien upon this balance for timber furnished and delivered to the contractor in the performance of this work. The plaintiffs Gaskell and others filed a similar notice in their own behalf for materials in like manner furnished and used, and so did the plaintiffs Beard and Kimpland to enforce a lien in their favor against this sum of money. The balance was insufficient to satisfy the demands existing in favor of these different claimants. The referee concluded that the Hilton Timber & Lumber Company, which was a defendant in both actions, was entitled to be first paid out of the balance and the firm of Gaskell and others to be next paid and the plaintiffs Beard and Kimpland to be entitled to payment after the other two demands had been discharged. This left the plaintiffs Beard and Kimpland without sufficient money applicable to the payment of their debt, and they accordingly appealed from the judgment entered upon the report of the referee. The contractor Gillies also appealed from so much of the judgment as sustained the claim of Gaskell and others as a second lien upon the balance remaining unpaid to him for the work done under his contract.

In support of the appeal of the plaintiffs Beard and Kimpland the position has been taken that this company was not entitled to enforce its lien against the balance due to the contractor, for the reason that it was not a person, and could not be included in so

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much, of the statute as ■ relates to and provides for this remedy. The objection is that the law has secured the remedy only to, “Any person or persons, who shall hereafter, as laborer, mechanic, merchant or trader, in pursuance of or in conformity with the terms of any contract made between any person or persons, and the city, to perform any labor or furnish any material towards the performance or completion of any contract made with the city, on complying with the next section, shall have a lien for the value of such labor or materials, or either, upon the moneys in the control of the city, due or to grow due under said contract with said city, to the full value of such claim or demand. And these liens may be filed and become an absolute lien to the full and par value of all such work and materials, to the extent of the amount due, or to grow due on said contract, in favor of every person or persons who shall be employed or furnish materials to the person or persons with whom the said contract with the city is made, or the sub-contractors,” etc., and that a corporation is not a person. This section of the law has been very broadly, expressed, and its general intention evidently was to create a lien in favor of all persons performing labor or furnishing material to a contractor with the city, to enable him to perform and fulfill his contract. And no reason has been evinced for making any distinction in the right to the lien between a natural and artificial person, as a corporation is recognized as being in judgment of law. The remedy was designed to be general without discriminating in favor of or against the party by whom the materials should be supplied or the service should be rendered. What was the design of the legislature, was to prescribe and create this security in favor of the party who should furnish the materials or perform the service mentioned in it. And a corporation is as completely within the intention of the section as a natural person would be, and is equally entitled to its protection.. For as a matter of justice, no distinction can possibly exist between the merits of a claim for materials furnished by a corporation and an individual, but each is entitled to be equally supported and each may be fairly presumed to be a person within the intention of the act. It will be seen that it has not provided, by the most critical implication, that the person or persons to be protected shall be natural persons, but the provision is that any person or persons furnishing the material or performing the labor or service shall be entitled to the lien. And a corporation is a person within the meaning of this language. As to the effect of such legislation, is has been stated that “ The construction is that when persons are mentioned in a statute corporations are included if they fall within the general reason and design of the statute.” Angelí & Ames on Corporations, 10th ed., § 6.

And this seems to follow from the legal definition of a corporation, and that is that it is an artificial person. Marshall v. Balti more, etc., R. R. Co., 16 How., U. S., 314, 327.

In the case of United States v. Amedy, 11 Wheat., 392 , the defendant was indicted for destroying a vessel with intent to prejudice the underwriters. And whether it could be sustained or not

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depended upon the construction to be given to the language of an act of Congress declaring it to be an offense to do the act charged with intent, or design, to prej udice any person, or persons, that had underwritten any policy or policies of insurance thereon. It was insisted, in support of a motion to arrest the judgment, as the insurance was made by a corporation, that no offense had been established within the act. But the court held the objection not to be well taken, and said that “ the mischief intended to be reached by the statute is the same, whether it respects private or corporate persons. That corporations are in law for civil purposes deemed persons is unquestionable.” Id., 412 .

This principle of construction was again applied in Society, etc., v. Town of New Haven, 8 Wheat., 464 . That case arose under the treaty with England, declaring that there should be no future confiscations made, nor any prosecutions commenced, against any person, or persons, for or by reason of the part which he, or they, may have taken in the present war, and that no person shall on that account suffer any future loss or damage, either in his person, liberty or property. And this was considered to be so broad as to include the case of a corporation.

In the case of Beaston v. Farmers' Bank, etc., 12 Peters, 102, a similar question arose under another statute of the United States securing it priority in the payment of its debts. And it was objected that a corporation was not within the construction which should be given to the language of the act. But in the opinion of the majority of the court it was said that “ no authority has been adduced to show that a corporation may not in the construction of statutes be regarded as a natural person. While on the contrary authorities have been cited which show that corporations are to be deemed and considered as persons when the circumstances in which they are placed are identical with those of natural persons expressly included in such statutes.” Id., 134.

And this principle is directly applicable to the disposition of this objection. For the position and relation of the company to the contractor, and the justice of its demand, were identical with those of natural persons endeavoring to enforce the same remedy. In People v. Rector, etc., 22 N. Y., 44 , a corporation was held by the court of appeals of this state to be a person within the meaning of that term as it was contained in the statute of limitations. Id., 57 . And the principle was also generally followed in Risley v. Phenix Bank, 83 N. Y., 318 . And it is well supported by the legal rule that it is the duty of courts so to construe statutes as to meet the mischief which the law was intended to remedy, and to advance the remedy when that may be done without violating fundamental principles. Dibble v. Hathaway, 11 Hun, 571 .

The referee was accordingly entirely right in overruling this objection as he did at the trial.

A further objection was taken in behalf of the plaintiffs, Beard and Kimpland, to the allowance of the debt of the Hilton Timber & Lumber Company, on the ground that it had exceeded in its notices the amount actually owing to it for the timber which it had delivered. The amount claimed in favor of the company was the

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sum. of $4,716.69, while the debt as it was maintained by the evidence was for the sum of $4,221.82, which presented an overcharge in its notices amounting to $494.87. The law, by § 1825 of chap. 410 of the Laws of 1882, has required the notices which are allowed to be filed to be verified by oath or affirmation. And that the notice shall state the amount claimed, from whom it is due, or to become due, “giving the amount of the demand, after deducting all" just credits and offsets,” etc. And because the correct amount of the demand was not stated in the notices, this firm having the third in the order of notices filed resisted the right of the company to a recovery. It is no doubt true that the intention of the act is that a correct statement of the indebtedness or claim should be inserted in the notices. This is required not only for the protection of the contractor himself, but also for that of the subsequent creditors who have similar claims against him. The law intends that a truthful statement shall be made, and has required as much as that from the creditor making it. And if this overcharge remained without any explanation, it might be inferred that a fraudulent augmentation of the debt was intended by the creditor, which would prejudice the claims of others as justly entitled to satisfaction. And that, under the authorities, would be sufficient to defeat a recovery by the creditor chargeable with the fraud. Lynch v. Cronan, 6 Gray, 531 ; Hoffman v. Walton, 36 Missouri, 613; Foster v. Schneider, 50 Hun, 151 ; 19 N. Y. State Rep., 449 ; Hubbell v. Schreyer, 15 Abb., N. S., 300, 304; Reeve v. Elmendorf 9 Vroom, N. J., 125; McPherson v. Walton, 42 N. J. Eq., 282 . And the case of McMillan v. Seneca Lake, etc., Co., 5 Hun, 12 , proceeded upon no departure from this strict rule. For there the excess consisted of no more than the demand for interest, which the court held might be rejected as surplusage. The case of Morgan v. Taylor, 5 N. Y. Suppl., 920; 24 N. Y. State Rep., 60, seems to be a departure from the principle maintained by the other authorities. But it is not necessary to determine how far it should be followed in the disposition of these appeals. For evidence was given upon the trial directly tending to prove the fact to be that the overcharge made by the company in its notices was the result of mistakes on the part of the persons" having charge of the details of its business.

The evidence given to establish this fact was quite satisfactory. It explained the source and the manner through which the error had been produced. And it was proved that it arose out of no disposition to charge against the contractor’s' balance any more than was actually owing by him to the company. And the referee for that reason considered that the statute did not require so strict a construction as to produce a forfeiture of this demand as has now been insisted upon in support of the appeals. And, in following that construction, the case has proceeded no farther than litigated controversies are permitted to be carried in the correction of mistakes, and avoiding their consequences. That such a mistake will not justify the exclusion of the demand containing it was held in Harrington v. Dollman, 64 Ind., 255 . And so it was

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in Kiel v. Carll, 51 Conn., 440 . And in Odd Fellows' Hall v. Masser, 24 Penn., 507 , it was stated by the court that in these proceedings what was required was good faith. And that appears to have been observed by the persons in charge of the business of the company. A similar objection was considered in Allen v. Frumet, etc., Co., 73 Mo., 688 . There items aggregating $1,779 were erroneously included in the demand. This was proven to have arisen out of a mistake as to the location of a furnace, and not from any intention to defraud. . And it was for the reason held not to “invalidate the whole lien, especially where no one has been injured by the mistake, and the items are easily separable from the balance of the account” Id., 692-3 . These authorities, as well as the reason and equity of the statute, sufficiently support the conclusion adopted under the evidence by the referee to require so much of the judgment as is in favor of the Hilton Timber & Lumber Company to be sustained.

The resistance made by the plaintiffs Beard and Kimpland, and the contractor Gillies, to the demand allowed in favor of Gaskell & Company, has been placed upon a very similar state of facts. They included in their notices articles which had been used to improve their own property, and forming no part of the materials appropriated to the construction of the pier. But it was proved upon the trial that this arose out of a mistake, and from erroneous advice given to the creditors by their counsel. How he could have supposed that the materials supjDlied and used for an entirely different and distinct object could be included legally in the claim made against the contractor’s balance, is somewhat mysterious. But evidence was given from which the referee considered this fact to have been established. It was, undoubtedly, a liberal view adopted by him for the protection of the creditor against the obvious mistake of his counsel. And as the evidence did directly tend to exhibit this to be the fact, it should not now be held that the referee, in his generosity, had taken too charitable a view of what was shown to have occurred. For the creditors themselves do not appear to have been responsible for the error brought about in this manner in the statement of their claim. They, on the other hand, appear to have been disposed to demand no more than they were legally entitled to claim. There was no fraudulent enhancement of their demand, as was the case in several of the authorities which have been cited, and the rule which those authorities sustain should not, therefore, be enforced against these plaintiffs. By the disposition which was made of their claim no more has been allowed or recovered than it was entirely just they should receive.

The referee has added to his report a very carefully considered opinion. And for the reasons which he has assigned, and which have also now been stated, this judgment should be affirmed.

Van Brunt, P. J., and Brady, J., concur.