Case Name: Benjamin G. Hitchings, Respondent, v. Edward D. Teague and Frances Teague, Appellants, Impleaded with John W. Carman, Defendant
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1906-06-15
Citations: 113 A.D. 670
Docket Number: 
Parties: Benjamin G. Hitchings, Respondent, v. Edward D. Teague and Frances Teague, Appellants, Impleaded with John W. Carman, Defendant.
Judges: 
Reporter: Appellate Division Reports
Volume: 113
Pages: 670–672

Head Matter:
Benjamin G. Hitchings, Respondent, v. Edward D. Teague and Frances Teague, Appellants, Impleaded with John W. Carman, Defendant.
Second Department,
June 15, 1906.
Mechanic’s lien — materialman in absence of notice entitled to rely on terms of written building contract — effect on lien of secret agreement reducing contract price.
A materialman furnishing material to a contractor has a right to rely upon the, terms of the written building contract, made by the owner, in the absence of notice or knowledge of facts which would put him upon inquiry as to the -real’ terms of the agreement with the contractor.
Hence-, when the owner has placed in the hands of a contractor a written contract which shows that the latter was to be paid a certain price,; and a materialman relying thereon has furnished material to .the contractor, the foreclosure of a mechanic’s lien thereafter filed by him cannot be defeated because of a secret and collusive agreement between the owner and contractor making the price to be paid to the contractor .a less sum, which false contract was ■ drawn in order to perpetrate a fraud upon a trust company by procuring a larger loan. . ^
. Appeal by the defendants, Edward D- Teague and another, from a judgment of the Supreme Court in favor of the plaintiff,' entered in the office of the clerk, of the county of Kings on the 2-fth day of October, 1905, upon the decision of the court, rendered after a trial (at the Kings County Special Term, directing the sale of certain premises in an action to foreclose a mechanic’s lien and barring the defendants’ equity of redemption therein.
John H. Kemble, for the appellants.
Hector M. Etchings, for the respondent.

Opinion:
Woodward, J.:
The defendant Frances Teague was the owner of certain premises in the borough of Brooklyn, and on the 20th day of June, 1904, with her husband, the defendant Edward F>. Teague, entered into a written contract with the defendant John W. Garman for the construction of a dwelling house upon the premises owned by Frances Teague, the price agreed uj>on as written in the contract being " $7,100. After entering into this contract Carman went to the plaintiff, who conducted a lumber yard and planing mill and was engaged in furnishing building material, and tried to purchase a bill of goods aggregating $1,131. The plaintiff refused to make the sale until he had seen the contract for the building. Carman showed the written contract to theplaintiff, calling his attention to the contract price of $7,100 and stated that he was to get this amount for the Construction of the building. The plaintiff then made inquiries of the architect, Ditmas, who was to have supervision of the construction, and was told by the latter that the contract was for $7,100, and thereupon sold and delivered the goods desired by Carman in the work of constructing the dwelling. Subsequently Carman assigned to the plaintiff the sum of $1,119.13 out of móneys due and to become due to him upon the said contract, and this assignment was immediately filed in the clerk's office of Kings county as provided by section 15 of the Lien Law, and a copy of the same was at once served on Teague. The defendant's paid to Car-man, during the progress of the work, $4,610, and after receiving this amount and delivering the assignment to the plaintiff, Carman abandoned the work, and it was completed under the terms of the contract by the defendants at a cost of $1,200, leaving a- balance of $1,290 due under the terms of the contract to the contractor or his assignees.
It is not disputed that under the terms of the contract as entered-into between the defendants Teague and Carman, the plaintiff would be entitled to recover, but it is urged that there was a secret understanding between the parties to this contract that the real price was' to be $6,100 or $1,000 less than the figures placed in the written contract, and the learned court has found as a matter of fact that this was the real contract between them, the contract béing raised this amount " for the secret, collusive and fraudulent purpose of showing the same to the Brooklyn Trust Company for the purpose-of obtaining a larger building loan upon said property than would have been granted if the contract price liad been sixty-one hundred dollars." There is no suggestion, that the plaintiff had, any knowledge of this secret and collusive agreement, and the practical question presented by this appeal is whether the defendants, having entered into a written contract for a fraudulent and collusive purpose, may now set up this wrong to defeat the claim of the plain tiff,who. was a materialman ? It seems to us entirely clear that the, Lien Law (Laws of 1897, chap. 418), in limiting the liability of the owner to a sum not " greater than the value or agredd price of the labor and materials remaining unpaid at the time of filing notices of such Kens " (§ 4), and in providing that " a statement of the terms of q contract pursuant to which an improvement of real property is being made, and of the amount due of to become due thereon, shall be furnished upon demand, by the owner, or his duly- authorized agent, to a sub-contractor," etc. (§ 8), contemplated that the owner, Was to become.liable up to the full amount of the' contract price to any sub-contractor or materialman who should comply with the terms of the statute. The defendants Teague having entered into a contract and. having placed that contract in the- hands of Carman, are not in a position, as against a materialman, to say ¡hat that contract was not the real contract but one entered into for the purpose of working a fraud upon a tim'd party. The plaintiff had a right in the absence of notice or of some fact which would make it his duty to inquire to rely upon the written contract which the defendants Teague had placed-in the hands of Carman,.and, having furnished goods for the purpose of enabling Carman to carry out his contract upon the strength of the defendants' agreement to pay $7,100 for the work, it would defeat the-purpose of the Lien Law -to permit the .defense now.urged to prevail.
The judgment appealed from should be affirmed, with costs.
Hirschberg, B. J., Jenks, Hooker and Miller, JJ., concurred.
- Judgment affirmed, with costs;