Stevens v. Ogden — 41 N.Y. St. Rep. 331

Majority

p. 331

Chauncey Stevens, Resp’t, v. E. H. Ogden and A. P. Bigelow, Impl’d, App’lts.^[1]

(Court of Appeals, Second Division,

Filed December 1, 1891.)

Headnote

Mechanics’ lien—Laws 1885, chap 342.

There is no provision in the mechanic’s lien law (Laws 1885, chap. 342) forbidding a contractor to pay his creditors out of the money due or to become due him from the owner to the exclusion of laborers ana material men who have not filed liens. And where the contractor gives a creditor an order upon the owner of the building, payable out of the amount due him, which is accepted by such owner, it operates as an assignment pro tanto of that fund, provided no lien has been filed at the time of accepting the order.

Appeal from a judgment of the general term of the supreme court, in the first judicial department, which modified, and, as modified, affirmed a judgment entered on a decision of the special term.

Between September 21, 1886, and December 22, 1886, Alexander Anderson furnished building materials and made repairs on No. 115jj- Waverly Place, New York, for which he was entitled to receive, January 26, 1887, $1,545.48, pursuant to a contract with Bridget M. Reynolds, the owner in fee of the property.

While the work was in progress the plaintiff sold ana delivered to Anderson lumber used in the reparation of the building of the value and at the agreed price of $1,097.93, no part of which having been paid, he on the 15th of February, 1887, duly filed a mechanic’s lien, pursuant to chapter 342 of the Laws of 1885, the general mechanic’s lien law of this state.

Between October 7 and November 5, 1886, E. H. Ogden & Co. sold and delivered to Anderson lumber of the value and of the agreed price of $909.94, a part of which, of the value of $400, was used in repairing the building. No part of said $909.94 has been paid. On the 15th of November, 1886, Anderson

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executed and delivered to E. H. Ogden & Oo. an order on Bridget M. Reynolds, of which the following is a copy:

“Please pay to the order of E. H. Ogden & Co. nine hundred and nine 94-100 dollars and charge to account of my contract with you for the carpenter work at 115£ Waverly Place, it being for lumber materials used in construction of same, the amount to be paid of the last payment of $1,900.” This order was given and accepted as payment for said lumber, and on the day of its date it was duly presented to Mrs. Reynolds, but she did not accept it in writing nor promise to pay the amount represented by it.

November 24, 1886, Anderson, by a written order, directed Mrs. Reynolds to pay Eben Peek $113.76 out of the sum to become due January 26, 1887, for the work performed, which was presented to her November 27th, and she then agreed to pay the amount represented by it. August 1,1887, this action was begun to foreclose the lien filed by the plaintiff. The special term held that the orders drawn in favor of E. H. Ogden & Co. and Peek were valid assignments of portions of the fund ($1,545,48) due January 26, 1887, and that they were entitled to be first paid out of it, and that the plaintiff was only entitled to the remainder. A judgment was entered in accordance with this decision, and the plaintiff appealed to the general term from that part of the judgment which adjudged the claim of E. H. Ogden & Co. to be prior to his, but did not appeal from the part adjudging the claim of Peek to be prior to his. The general term modified the judgment of the special term by deducting $504.94 from the claim of E. H. Ogden & Co., and adjudged that they were entitled to $400, the value of the lumber sold by them, which was used on the building, with interest thereon from November 15, 1886, and gave the claim of the firm priority over the claim of the plaintiff to that extent, and awarded to him the remainder, without costs to either party. Prom this j udgment E. H. Ogden & Co. appeal to this court.

Charles H. Machin, for resp’t; Charles A, Decker, for app’lts.

The order drawn by the contractor on the owner in favor of E. H. Ogden & Co. for $909.94 being, by its terms, payable out of a particular fund specified in the order, operated as an assignment pro tanto of that fund. Brill v. Tuttle, 81 N. Y., 454 ; Conselyea v. Blanchard, 103 id., 222; 2 St. Rep., 738 ; Lauer v. Dunn, 115 N. Y., 405 ; 26 St. Rep., 412 .

In McCorkle v. Herrman, 22 St. Rep., 519 ; rev’d 117 N. Y., 297 ; 27 St. Rep., 333 , several persons had performed labor and furnished materials for a building erected by a contractor for the owner. After the work had been done and the materials supplied, but before any lien was filed, a judgment creditor of the contractor began supplementary proceedings to collect his judgment, which did not arise out of and had no connection with the building contract, and procured the appointment of a receiver. Subsequently the laborers and material men duly filed their liens, and the question arose whether they or the receiver had the prior right to the sum due from the owner to the contractor.

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It was held at the general term that the lienors had the prior right. In discussing this question the court said: “ The statute gives a creditor a lien against a particular fund upon his doing certain things, and that lien is superior to the claim of any other creditor who has not taken the steps designated by the statutes to secure a liem The plaintiff, by his appointment as receiver, undoubtedly became vested with all the right, title and interest of his judgment debtor in and to this fund as of the time when the preliminary order was served. But he gets no greater right than he would have had if his judgment debtor had assigned the same to him on that day, and he cannot enforce any other or greater rights than his judgment debtor could enforce. His creditors, by the permission of the statute, have been enabled to assert a claim upon this debt due to the judgment debtor, and, by reason of the statute, having taken those steps, they have a superior claim upon this debt due to him, and by the transfer of this debt to another person, whether by operation of law or by a voluntary assignment, the plaintiff’s debtor could not deprive the creditors of the rights which the law conferred upon them.”

The court of appeals reversed the judgment, and in discussing the question, said : “ The real question presented by the demurrer relates to the priority of lien between a judgment-creditor of a contractor who has duly commenced supplementary proceedings on his judgment, terminating in the appointment of a receiver, and laborers and material men who, subsequent to the commence ment of the supplementary proceedings, and within the time allowed by law, filed notices of lien to reach the debt owing the ■contractor, under a contract with the owner of a building for its construction. The section of the lien law, chap. 342 of the Laws •of 1885, which governs the right of the lienors in this case, prescribes that upon ‘ filing the notice of lien ’ a lien shall be acquired, etc. The filing of the notice originates the lien. Anterior to this act the laborer or material man has no preferential right to be paid for his labor or material out of the sum which is due from the owner of the building to the contractor, but stands in the same position as other creditors. He may subject the debt to a lien in his favor on filing the notice and taking the proceeding prescribed by the act. But if before this has been done other ■creditors, pursuing the usual remedies for the collection of debts, have acquired a legal or equitable right to have the debt applied in satisfaction of their claims, the right is not overreached by liens subsequently filed under the act, unless priority is given by the provisions of the act itself.”

“ Which of the claimants have the prior right? We think the plaintiff, as receiver, has the superior claim. He stands as the assignee of the claim of the contractor against the defendant, by a title which ante-dates the filing of the notices of lien. When the liens -were filed there was a debt owing by the defendant. If the proceedings instituted by the creditor, whom the plaintiff represents, had been abandoned, the liens would have had priority. But not having been abandoned, and the equitable lien existing when the liens were filed having been converted into a legal title

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as of a time anterior to the filing of the liens, the right to the debt, as between the plaintiff and the lienors, vested in the former. The plaintiff, we think, stands' in as good a position at least as if prior to the filing of the liens the contractor had in good faith assigned his claim against the defendant to the creditor in the supplementary proceedings as security for his debt The assignee, under such an assignment, according to the general current of authorities, would take precedence over lienors under liens subsequently filed.”

The case cited, like the one at bar, arose under chap. 342, Laws 1885, and is decisive of the question presented.

There is no provision in the statute forbidding a contractor to-pay his creditors out of the money due or to become due him. from the owner, to the exclusion of laborers and material men who have not filed liens. This may be an omission, but if so, it can only be supplied by the legislature, for the courts cannot extend these purely statutory rights beyond the terms of the statute-by which they are created.

The judgment of the general term should be reversed, and the-judgment entered on the decision of the special term affirmed, with costs.

All concur, except Parker, J., absent.