Case Name: The First National Bank of Warwick et al., Plaintiffs, v. John Murray Mitchell et al., Defendants
Court: New York Supreme Court
Jurisdiction: New York
Decision Date: 1904-12
Citations: 46 Misc. 30
Docket Number: 
Parties: The First National Bank of Warwick et al., Plaintiffs, v. John Murray Mitchell et al., Defendants.
Judges: 
Reporter: New York Miscellaneous Reports
Volume: 46
Pages: 30–41

Head Matter:
The First National Bank of Warwick et al., Plaintiffs, v. John Murray Mitchell et al., Defendants.
(Supreme Court, Orange Trial Term,
December, 1904.)
Building contract construed — Rights of subcontractor who has filed mechanic’s lien — Recovery on quantum meruit when completion prevented — Reasonable cost of completion of building by owner after abandonment of contract, how figured.
In a building contract the contract itself together with the plans and specifications are to be read together and when they call for the erection óf a house and stable the contract is an entirety and payments made thereon are on account of the whole work, not on account of the house and stable separately.
When a subcontractor makes several successive subcontracts to do work, under the entire contract aforesaid, such subcontracts are deemed to constitute an entire contract, especially as between the owner and the subcontractor who has filed a mechanic’s lien on the premises.
Where such subcontractor has been stopped in the further performance of his work, by reason of differences between the owner and, the contractor, and has substantially performed his contract he may recover of the owner upon a quantum meruit and such owner cannot set up equities which may exist between the contractor and the subcontractor.
Where the original contract with the owner provides that fifteen per cent, of the contract price is to be retained until the completion of the work, a lien, filed by a subcontractor, attaches to all sums earned by the contractor and remaining unpaid, subject^ however, to deductions if the amount unearned under the original contract should prove insufficient to meet the reasonable cost of completing the building by the owner.
Where the owner’s architect testifies that, out of the sums paid to the original contractor, fifteen per cent, of the work actually done was retained, the owner’s contention that his subsequent contract, for the completion of the building, which includes such unpaid balance was the reasonable fair cost thereof cannot be credited.
Where the owner’s contract for the completion of a building provides that the contractor, before final payment, shall produce satisfaction pieces of all liens, the contract price is not the reasonable cost of completion because it includes the payment of all liens filed under the prior contracts.
The value of materials delivered but not used and extra work done by an original contractor, who has suspended operations, should be deducted from the owner’s contract for the completion of the work in arriving at the fair value Of such completion.
A mechanic’s lien is a chose in action and may be assigned.
Action upon a contract.
F. V. Sanford, for plaintiffs.
Samuel W. Bower, for defendants.

Opinion:
Maddox, J.
Plaintiff Meyer was a subcontractor and if his lien is valid the main questions here, as between himself and the owner, are whether there was anything due to Dali, the original contractor, pursuant to the terms of his contract, when the lien was filed and whether there remained, upon the completion of the work contracted for by Dali, any difference between the fair and reasonable cost of completion and the amount unpaid when the lien was filed.
Dali's contract was " for the complete erection of house (exclusive of heating and electrical work, which will be done under another contract) at Tuxedo, New York, also the complete erection of stable at Tuxedo, New York," for $14,319, " and additional for rock excavation, if required one 25/100 dollars per cubic yard," payable as follows: " On the first day of each month during the progress of the work the contractor shall file with the architects a true statement of the value of all labor and materials actually incorporated in the building, and on finding the same correct, the architects shall issue their certificate for 85/ of such amount, or such part thereof as in their judgment is due to the contractor, after deducting the amount of all previous payments. The final certificate shall, include the 15/ retained on all previous payments."
The contract, plans and specifications are to be read together and we find therefrom the contemplation of the parties; it was the erection and completion of a country house, with a stable, at Tuxedo. The contract was an entirety (Ming v. Corbin, 142 N. Y. 334), such being the intention of the parties, for the contract price included the house and stable as a whole and the payments were to be made on account of the whole work as it progressed, not for the house and stable separately.
Meyer, by three separate proposals dated respectively April 3, June 24, and September 28, 1901, which were accepted by Dali, agreed to perform and furnish " at the J. Murray Mitchell house at Tuxedo, R. Y. earth excavation, filling, furnish and lay earthen pipe around .foundation, furnish all stone, mortar and labor to complete the building (except the cut stone). to receive and set all cut stone, terra cotta, limestone,granite and bluestone,coal-chute; to furnish material and labor for all concrete floors and deafening for hearth, furnish Lafarge cement as per specification in connection with stone work. to grade bleaching yard and furnish material, remove all rubbish in connection with " his " work. Do all cutting for other mechanics and include all scaffolding in connection with " his " work " for $12;,625, and extra for all " rock excavation One dollar and fifteen cents ($1.15) per cubic yard" and for " dirt excavation. twenty-five cents ($0.25) per cn. yd." To furnish " all cut local stones for quoins, sills and band courses in accordance with revised plans and specifications for the J. Murray Mitchell House at Tuxedo, N. Y. to furnish the water table on the court side now specified in granite, in local stone cut out as per drawing " for $2,800. Also to furnish " all mason material and labor as per plans and specifications for the J. Murray Mitchell stable at Tuxedo, N. Y," for $3,200, but not to " include brick, bluestone hearth or cap for chimney." Payments for the foregoing were to be made as the work progressed, " 85$ as per monthly statement to be rendered " and the balance of fifteen per cent, on the completion of the work to the " satisfaction of owner and architect." For obvious reasons I have considered it necessary to here state at some length that which Meyer undertook to do and to furnish.
The work was entered upon early in April, 1901, a day or two after the offer of April third, and was continued by Meyer until Jxyie 4, 1902, when he stopped, having on June second received from Dali a telegram so to do.
Meyer's three proposals must, I think, in view of all the circumstances be deemed an entire contract, more especially as between the owner and himself. From the evidence it would appear that Meyer and Dali so considered it; payments were made not for the work done and materials furnished on the stable and the house separately, but on account of the whole work performed, including for extras, as it progressed. Meyer first put in his proposal for the mason work on the house and while that was in progress made his offers, or bids, for doing the other work specified, whereupon the whole seems to have gone on as under one contract. If it was the intention of the parties that it should be so considered then that intention must be given effect (Johnston v. Dahlgreen, 166 N. Y. 354) and the proofs' lead to the conclusion that such was their intentiou.
Dali's contract called for completion of his work by March 1, 1902. The stable was completed in May, 1902, but the house was not completed in June, 1902; "when the owner took upon himself the completion of the work. There had been paid to Dali, up to May 14, 1902, on account of his contract, $52,455.45, which, upon the evidence, must be held to be approximately eighty-five per cent, of the value of the work done and the materials furnished by him up to the time of the last estimate furnished. That was in consonance with the contract. No measurements of the work done were ever made; none were called for, and the issuance of the certificates was not made dependent upon measurements. The contemplation of the parties was that fifteen per cent, of the value of all work on which payments were made should be retained until the final payment and should be included in the final certificate; that the judgment of the architects should obtain in determining " the value of all labor and materials actually incorporated in the building." The contractor was to submit a true statement and if that was found correct then the certificate for the eighty-five .per cent, thereof was to issue, but if that statement was found to be incorrect then the certificate was to be based on " such part thereof " (that is, the statement) " as jn their (the architects') judgment is due the contractor," that is, " the value of all labor and materials actually incorporated in the building." Their judgment was called for, first, as to the correctness of the statement and, second, if that be incorrect then. as to the amount " due," not payable but then earned, since so determining, whether from the correctness of the statement or upon their judgment as to the amount " due," then the certificate was to issue for the " 85$ of such amount after deducting the amount of all previous payments," and we see that "the final certificate shall include the 15$ retained on all previous payments."
Winterbum, one of the " architects, acting for the purposes of " the " contract as agents of the owner " and who' had charge of and undertook the determining of the amount due and for which certificates should issue, testified, among other things, that when he went to make an estimate he " thoroughly examined all through;" that he " just' examined the whole thing, saw how much of that work was done;" that "he made particular examinations;" that they were " keeping back 15 per cent, of the entire amount all the time on all payments, from month to month;" that in certifying the amounts payable he " knew the amount "* certified to was not above 85 per cent, of the value of the work performed." This being so there was due to Dali on his contract at the time of the filing of plaintiff's lien, May 20, 1902, something in excess of $9,000, representing the fifteen per cent, of .the value of the work performed so retained as aforesaid.
The estimate of March 26, 1902, was presented to the architects, and the witness Winterbum certified to performance of work calling for the tenth payment of $4,000, and thereafter certified to the last payment, that of May fourteenth, of $812.19, to pay workmen, whereupon the work was stopped, except some men Meyer still had at work.
Meyer was stopped in the further performance of his contract about June 4, 1902, at which time, allowing for his inability to have fully' completed his work because of the delays of other subcontractors, he had substantially performed his contract and may now claim to recover as against the owner upon a quantum meruit; equities which might have existed as between Dali and him cannot be availed of by the owner, for there is no privity of contract as between them. He did not abandon his work; he was stopped because of some default on the part of the original contractor and because of the action of the owner in undertaking the completion of the work by others than Dali.
The complaint alleges substantial performance; Dali is a party to the action and as conceded on the trial was served with the summons and complaint, as were all the other de- . fendants named. The owner only has answered and as to those who* have defaulted in pleading the allegations of the complaint must be taken as admitted.
Meyer's contract with Dali was for the excavating, grading and mason work, exclusive of extras, for $18,625; the rock and earth excavation, which were extras, amounted to $1,187.45, and other extra work of the value of $1,687, as to which Ho question is.raised, was done, all amounting to $21,499.45. As said before' there was a substantial performance by Meyer of his work and an inspection of the photographs, numbered 1 to 12, inclusive, leads irresistibly to the conclusion that the mason work upon the building, as called for by Meyer's proposals and the acceptance, was substantially performed. From the evidence it appears that to have fully completed his. work would not have cost more than $750; indeed that, I think, is a liberal estimate. Thus the value of his work then performed was $20,749.45, on account of which he had received payments aggregating $15,242.55, which includes $1,684.55 theretofore paid on account of extras other than rock and earth excavation, leaving a balance of $5,506.90 due to Meyer at the time the work was suspended. He had; received from Dali notes amounting to $3,105, .not as .payment on account, but as collateral whereon to borrow money. These were not paid and are not considered here.
As stated before and as will appear from the architects' certificates for payments upon Dali's contract, if such payments represented eighty-five per cent, of the work actually performed then there was more than $9,000 earned by and due to Dali remaining unpaid at the time plaintiff's lien was filed, and to that the lien attached, subject, however, to deduction if the amount remaining unearned should prove insufficient to meet the fair and reasonable cost of completing the Dali contract. If, as testified to by Winterburn, the amount theretofore paid, $52,455.45, represented eighty-five per cent. " of the value of the work performed," then the true value of the work theretofore done was about $61,712.29 and the fifteen per cent, thereof retained under the architects' certificates amounted to about $9,256.84.
The Dali contract was for $74,319, and the extras, which included $1,029.63 for rock excavation done by Meyer and ordered prior to Dali's suspension of work, amounted to $9,869.14, aggregate $84,188.14, and of this there remained $31,732.69 after deducting the payments of $52,455.45. Again, if the payments made represented eighty-five per cent, of the value of the work done, then we have a performance of about seventy-three and three-tenths per cent, of the work called for by the Dali contract, including the extras as aforesaid, and this accords with my judgment and conclusion, after a full and careful consideration of the testimony and the exhibits, that the Dali contract had been about three-fourths completed.
After Dali's suspension and in August, 1902, the contract was entered into by the owner for the completion of the unfinished work called for by Dali's contract, including materials to be furnished, also the completion of certain extra work theretofore ordered of Dali and for the replacement of any defective work on the building for $35,961.74.
If this contract price, $35,961.74, was, as the owner contends, the fair and reasonable cost of the completion thereof, then the work was, in June, 1902, but fifty-seven and three-tenths per cent, completed or sixteen per cent, less than contemplated by the architects' certificates for payments, and the architects had certified to and had permitted actual over-payments of upwards of $4,200 to Dali. Can this be deemed' likely? In view of Winterburn's testimony and the certificates of his firm I unhesitatingly answer that it is very improbable and I do not credit it, for while Winterburn testified that he made no measurements yet he examined the work as it progressed and " knew the amount " he " certified to was not above 85 per cent, of the value of the work performed," and that they " were keeping back 15 per cent, of the entire work all the time on all the payments " from month to month.
Payments under the contract of August, 1902, were to be made practically in the same manner as under the Dali contract, that is, monthly, eighty-five per cent, of the value of the work done, to be determined by the certificate of the architects based upon monthly statements, itemized, to be filed by the contractors, the remaining fifteen per cent, to await the final certificate, but with this further provision, i. e., that the sum of $5,000, a part of the contract price, was to be excluded in estimating such eighty-five per cent, of the value of the work so done and was to be included with the fifteen per cent, retained on all previous payments in the final certificate.
It was also therein provided that the contractor shall, before the first payment, " cause to be delivered to the archi teets, satisfaction pieces of all mechanics' lien filed by or against any of the " persons therein named as contractors; " also a release signed by J. Dali, in the form annexed, in escrow, to be delivered by them to the owner, if he fulfills his obligations under " that " contract . And before the final payment said contractors shall cause all liens now on or which hereafter may be filed against said building or the owner, to be satisfied of record; also to deliver to the owner releases in same form, signed and acknowledged by each contractor aforesaid." The final payment was to be made within thirty-days after the contract was fulfilled " and the delivery of the release and papers " above indicated. The foregoing is certainly a significant provision, for by it the contractors were, before final payment, to " cause all liens on," that is, then " against said building or -the owner, to be satisfied of record " and plaintiff's lien was then, and for some time prior had been, a matter of record and was known to the owner and to his architects. Such, however,--is the plain language of the contract: there is no ambiguity, and what was its purpose? Was it that the $5,000 so to be excluded in estimating the eighty-five - per cent, as therein provided, together with 'the fifteen per cent, retained, thus making up the final payment, was to be applied to the payment and discharge of the mechanics' liens then of record of others than those joining in said contract and such as might thereafter be filed? It will be noticed that the' liens of those entering into the contract in question were to be discharged before the first- payment and in the next sentence that " all liens now on or which hereafter may be filed " were to be satisfied before the final payment.
All -who joined in the August, 1902, contract were subcontractors under Dali, though all of them had not filed liens; all of the lienors, excepting Meyer and Androvett, were parties to the contract and discharged their liens, while all of those subcontracting or doing work for Dali, excepting Meyer and one or two others, joined in or were represented in that contract for the completion of the work.
Appended to the August; 1902, contract is a memorandum of the extra work (aggregating $9,869.14) to be completed, and the proof is clear that much of that had been fully completed or partly done before August, 1902; indeed, more than one-third thereof. There was also much material on the premises, some stored in the stable, theretofore delivered and afterward used in the completion of the house; it was of a value greater than $3,000 and that was " included in the sum it took to finish."
No estimates of the work done under that contract were submitted and no measurements were made by the architects; written requests were made to the architects for payment and they issued from time to time their certificates upon which $31,800 have been paid, though Randall testified that he had " received $30,500 on account of the completion of the work," and that $5,466.74 remained unpaid. The amount paid is much in excess of eighty-five per cent, of that contract price and that without excluding the $5,000 before referred to.
The difference between Ball's contract price and the sum total paid to him is $31,732.69, while the agreed price to complete is $35,961.74, an excess of $4,229.05.
The defendant owner contends that that sum, viz., $35,961.74, is the fair and reasonable cost of completion, and that might obtain but for some facts which must now be considered.
It appears that when Dali suspended there was material on the premises; that that material, of the value of $3,000 at least, was used in the building, and that value was considered in the cost of completion. If that be so, and there is no contradiction, then it did not form part of the cost of completion. It had been furnished under Dali's contract and had been delivered to be used in the construction of the house and stable.
Again, it appears that there was paid to the lienors joining in the contract for such completion thirty-eight per cent, of their liens. While I am. quite mindful of the attempted contradiction of such testimony, still taking the testimony of the witness Randall, at its true value, I am convinced that such payments were so made.
The liens filed aggregated $24,923.47, while those of Meyer and Androvett, who did not join in the contract and received none of the thirty-eight per cent, payment, amounted to $6,981.12. Thirty-eight per cent, of the liens, other than those of Meyer and Androvett, amounts to $6,819.09, and that should not be allowed as a part of the reasonable cost of completion.
Again, many of the items of the extras, as they appear by the memorandum attached to the contract, had been completed before Meyer was stopped in his work; the testimony-leads to the conclusion that the items of the extra work so completed amounted to more than $3,500. The rock excavation, amounting to $1,029.63, had been done by Meyer; also the changing of stonework in piers, $185.02; of the fireproofing partitions and walls upward of $2,400 had been done and earned. Much more of the extra work had been done.
Deducting the value of the materials delivered to Dali and used as above, the thirty-eight per cent, paid to lienors and the $3,500 for extra work previously completed, from the August, 1902, contract price, we have $23,642.65 remaining, while the sum unearned of the Dali contract over and above the fair value of his completed work, if the architects' certificates truthfully certified to the performance of eighty-five per cent. " of the value of all labor and materials actually incorporated in the building" and for which amount payments were actually made was $22,475.85.
From all the evidence it appears that the reasonable cost •of completion, allowing for every consideration, was not greater than $25,000, which deducted from the sum remaining unpaid on the Dali contract leaves a balance of $6,732.69, to which plaintiff's lien attached.
The lienor Meyer complied with every requirement of the statute, and the lien states all thereby called for. The work was done upon the property, as, a whole, toward the erection of a gentleman's country house and] stable; the original contract was an entirety, and it is of no consequence here that the stable is on a lot not adjoining the lot tin which the residence stands, but close thereto; the contract called for the erection of a house and stable at Tuxedo, N. Y.
Meyer had the right to assign his lien or any part of it, conditionally or otherwise; it is a chose in action and hence the assignee, the bank, is a proper party here.
Judgment for plaintiff.