#### Oscar Lind *et al.,*Respondents, *against*Philip Braender, Appellant, *et al.*

(Decided December 2d, 1889).

In an. action by subcontractors for work on a building, to enforce against the owner their liens upon the balance due to the contractor on the contract, it having been abandoned before completion, the owner is. entitled to. show how much of the work remained undone, and what it would cost to complete it in the manner provided in the contract, and _ to have such amount deducted from the contract price.

In section 2 of the mechanic’s lien law of 1885, providing that if the owner of a house “ shall for the purpose of avoiding the provisions of this act, or in advance of the terms of the contract, pay by collusion, any money,” he shall be liable to the subcontractors, etc., therefor, the words “by collusion” apply as well to advance payments as to payments made to avoid the act.

Appeal from a judgment of this court entered on the report of a referee.

John Walsh made a contract with defendant Braender, the owner of four houses, to do certain carpentering work thereon for a certain sum, and employed plaintiffs to do.work in performance of such contract. Before the last installment of the contract price became due on his contract, Walsh abandoned the work, but not until after he had obtained advances'from defendant on such installment. Plaintiffs filed liens and brought this action to foreclose them. On trial before a referee, he reported in favor of plaintiffs and judgment for plaintiffs was entered on the report. From the judgment defendant Braender appealed.

*Philip L. Wilson,*for appellant.

*Leonard J. Langbein,*for respondents.

Van Hoesen, J.

Walsh, the contractor, abandoned the *371work before it was finished. Exactly how far from completion the building was when Walsh deserted the contract, the evidence does not disclose. The defendant attempted to prove by competent evidence how much of the work remained undone, and what the cost of completing the building in the manner provided for by the contract with Walsh actually was, but the referee refused to receive the evidence. This was error, and the defendant’s exception to that ruling is of itself enough to call-for the reversal of the judgment. In order to ascertain what was due to Walsh, it was necessary to learn how much work he had done, and what the value of that work was. Then the amount that the defendant was compelled to expend in finishing what Walsh left incomplete was to be proved. From these data a calculation could be made as to how much, if anything, was due to Walsh, and the amount payable to Walsh is the sum that the lienors could recover from the defendant in this action *(Wright*v. *Rob*erts, 43 Hun 413; *Van Clief*v. *Van Vechten,*48 Hun 305 ; *Devlin*v. Mack, 2 Daly, 94; *Cheney*v. *Troy*Hospital, 65 N. Y. 282).

The referee assumed that, no matter what the defendant had been compelled to lay out in completing Walsh’s unfinished contract, the defendant was still liable to pay the original contract price to the subcontractors. That this ruling is erroneous, it requires no argument to prove. But as the referee was led to this conclusion by an erroneous construction of the lien law of 1885, it is proper that this court should express its views upon the section that he undertook to construe.

Section 2 of the act provides that if the owner shall, for the purpose of avoiding the provisions of this act, or in advance of the terms of any contract, pay by collusion any money or other valuable thing on such contract, and the amount still due, or to become due, to the contractor, subcontractor, or assignee, after such payment has been made, shall be insufficient to satisf)’- the claims made in conformity with the provisions of this act, such owner shall be liable to the amount that would have been unpaid, had no such payment been made. *372In other words, a payment made in advance of the time fixed for it by the contract, or a payment made for the purpose of evading the operation of the act, shall hot be permitted to deprive a subcontractor of what is due to him, if it were made by collusion between the owner and the contractor. A collusive payment, made before the time appointed for it by the contract, or made with intent to evade the lien law, shall be thrown entirely out of consideration in determining how large the fund is to which the subcontractor may resort for the satisfaction of his lien.

We have been urged by the plaintiffs to disregard the words “ by collusion,” as used in this act, and to construe the section as though the provision read, “ If the owner shall, for the purpose of avoiding the operation of this act, or in advance of the terms of any contract, pay any money,” etc., such payment shall not be taken into account; but we feel that we have no right to do so. Effect must be given to the words “ by collusion, ” and if they are to be considered at all they necessarily apply to payments made in advance as well as to payments made in evasion of the law. Again, we have been urged to interpolate the word “ or ” so that the section would read, “ If the owner, for the purpose of avoiding the provisions of this act, or in advance of the terms of any contract, or by collusion, pay any money, ” etc; but we cannot assume any such power. It is said that the Court of Appeals, in *Post*v. *Campbell*(83 N. Y. 283), gave just such a construction to an act very similar to the lien law of 1885. In that case the court, in construing the Kings County Act of 1862, which disallowed payments made “ by collusion, for the purpose of avoiding the provisions of the act, or in advance of the terms of the contract,” said: “ It is possible to construe the provision so as to make, the word 6 collusion,’ apply to both payments made for the purpose of evading the act and to payments in advance, but we think the natural construction of the sentence is that payments made by collusion for the purpose of evading the act constitute one class to be disallowed, and payments made in advance constitute another class.” The words of the lien law of 1885 are the *373same as those of the Kings County Act, but the arrangement of them is different, and I believe that the change in the collocation of them was deliberately made. The inconvenience resulting from making any payment in advance highly dangerous to the owner, must have been felt by laborers, contractors, material-men, and all others whose employment makes them possible lienors. It must have often happened that a contractor could not pay his men because he could get no advance from the owner. A laborer would feel that an advance payment was not a bad thing when it gave to him his wages on a Saturday night. A collusive payment, that is, a payment made to cheat and defraud him, would be a great evil; but not an advance payment honestly made. Hence, it seems to me that the framers of the lien law of 1885 intentionally so altered the position of the words which the Court of Appeals had construed, that, without doing violence to every rule of construction, it is impossible to say that the words “ by collusion ” do not apply to payments in advance as well as to payments made to evade the act. Both kinds of payment are mentioned, and then follows the provision that if such payments are made “ by collusion ” they shall not prejudice subcontractors.

It was easy, in construing the Kings County Act, to limit he words “ by collusion ” to the phrase that immediately followed them, namely, “ for the purpose of avoiding the provisions, ” etc., but no such limitation is possible in construing the act of 1885. “ By collusion ” refers to both kinds of payment, or it does not refer to either.

If the payment to Walsh were not made collusively, it ought to have been credited to the defendant.

Larremore, Ch. J., concurred.

Judgment reversed and new trial ordered, with costs to abide the event.