#### The Reading Hardware Co., Plaintiff, *v.*The City of New York et al., Defendants.

(Supreme Court, New York Special Term,

May, 1899.)

Mew York city—Priorities of lien, on moneys due a contractor with the city, as between a materialman and. the general assignee of his subcontractor.

In an action to foreclose a lien filed against moneys due by the city of New York to a contractor, it appeared that the plaintiff had furnished materials to a subcontractor and that the latter had made a general assignment before the plaintiff had filed her lien.

Held, that as the lien was asserted, not against the property of an insolvent in the hands of a general assignee, but against the property of another with whom the insolvent had contracted, the plaintiff was entitled to receive the moneys from the city in preference to the general assignee, of the subcontractor.

This is an action brought to foreclose a mechanic’s lien. The plaintiff furnished materials to one Margaret McCarthy who’ was a subcontractor under one Patrick Gallagher, who was the principal *449contractor, with the'mayor, aldermen and commonalty of the city of New York, through its board of education, for the erection of a school building on the southern side of Rivington street, between' Forsyth and Eldridge streets in said city of New York. The performance of the work by the contractor is admitted, and the furnishing of the materials by the plaintiff for which its lien was filed is not disputed. The defendant, the city.of New York, which is the successor of the mayor, aldermen and commonalty of the city of New York, has in its hands sufficient of the moneys due said Gallagher to pay plaintiff’s claim, interest and costs. The question whether the .plaintiff is entitled to recover dr not, arises out of the fact that said subcontractor, Margaret McCarthy, to whom the plaintiff furnished the materials for which its lien is filed, made a' general assignment for the benefit of creditors to the defendant, Alfred Bienhauer, on the 6th day of May, 1898. The plaintiff’s notice of lien herein was filed on the 24th day of May, 1898. The contest is between the plaintiff and said assignee.

L. E: Warren and James F. O’Bieme, for plaintiff,

(John H. O’Brien, for city of New York.

James C. Lenney, for defendants McCarthy and Bienhauer*.

Werner, J.

The defendant McCarthy, as the assignor, and the defendant Bienhauer, as the assignee, under a general assignment for the benefit of creditors, made before the filing of plaintiff’.s lien, contest the validity of the latter upon the theory that the assignment takes precedence over the lien. It is claimed by these defendants that the absence of any provision in the Mechanic’s Lien Law protecting a lien filed on account of, and against, a public improvement, brings this case within the rule laid down in Noyes v. Burton, 29 Barb. 631; Quimby v. Sloan, 2 Abb. Pr. 93; and Jackson v. Sloan, 2 id. 104. The rule referred to in these cases is that “ when an owner is insolvent and makes an assignment for the benefit of creditors, such assignee takes the property free from the lien, unless the notice of lien was filed prior to the assignment.”

This rule is modified by section 13, chapter 418, Laws 1897, which provides that “ A lien for materials furnished or labor performed in the improvement of real property shall have priority * * * over the claim of a creditor who has not furnished *450■materials or performed labor upon snob property, if such property has been assigned by the owner by a general assignment for the benefit of creditors, within thirty days before the filing of such notice.” It is contended that this modification does not embrace liens filed on account of public improvements and that the plaintiff’s lien is, therefore, secondary to the general assignment,

. We do not concur in this view. The rule which these defendants seek to invoke seems, to us, to have no application to the ease at bar. This is not the case of a general assignment made by the owner of the property ■ against which a mechanic’s lien is filed. Here the general assignment is made by a subcontractor who has no interest in the property and to' whom-the plaintiff lienor sustains the relation of materialman..

This case is analogous to Smith v. Daily, 8 Daly, 128; McMurray v. Hutcheson, 10 id. 64; and In re Christie Manufacturing Co., 36 N. Y. 923. In the latter case the distinc-. tion between the ppsition contended for by the defendants herein,' and the one which they actually occupy, is very briefly and forcibly pointed out as follows: “ The owner of the property, upon the filing of a lien by a subcontractor, becomes responsible for the payment of the claim, although there is no privity of contract between him and the claimant, with tire -single limitation that such liability shall not extend beyond the amount then due from him to the person with whom he has directly contracted. Of course this necessarily involves the right of the owner, upon paying any such lien, to charge his contractor with the amount thereof, and to deduct it from the contract price, as a payment made on account thereof. It is plain that the right of the owner to any such credit cannot be defeated by any transfer of the debt either made by the principal contractor or effected by operation of law in proceedings} instituted against him. If a foreclosure of the lien should be instituted, on what theory could the owner successfully ' defend on th&fground that the corporation which contracted with him for the performance of'the work had passed into the hands of a receiver? Does he not still owe. the same amount of money on the same contract, and has not the statute thereupon subjected his property to the lien of the subcontractor *pro tanto?*He could, of course, show, if it were the fact, that the subcontractor had been paid, or that he had no claim against the principal contractor; but no such claim is presented here. The debt is still due *to*the subcontractor.

*451It is the means of payment on the part of the principal debtor that is wanting, and this certainly is no defense. '

This reasoning is entirely decisive of the contest before us. In that case, as in this, the lien is asserted not against the property of an insolvent in the hands of an assignee, but against the property of another with whom the insolvent has contracted.

The plaintiff is entitled to judgment in accordance with the decision filed herein.

Judgment for plaintiff.