Case Name: Edwin P. Sears, as Permanent Receiver of the John T. Noye Manufacturing Company, Respondent, v. William N. Wise, as Trustee of Russell & Birkett, Bankrupts, and Henry Russell, Appellants, Impleaded with Others
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1900-05
Citations: 52 A.D. 118
Docket Number: 
Parties: Edwin P. Sears, as Permanent Receiver of the John T. Noye Manufacturing Company, Respondent, v. William N. Wise, as Trustee of Russell & Birkett, Bankrupts, and Henry Russell, Appellants, Impleaded with Others.
Judges: 
Reporter: Appellate Division Reports
Volume: 52
Pages: 118–122

Head Matter:
Edwin P. Sears, as Permanent Receiver of the John T. Noye Manufacturing Company, Respondent, v. William N. Wise, as Trustee of Russell & Birkett, Bankrupts, and Henry Russell, Appellants, Impleaded with Others.
Mechanic’s lien —• it extends to machinery delivered, but not installed, as well as to that actually installed — the theory of the trial will be followed on appeal — questions between a lienor and a trustee in bankruptcy.-
A vendor who delivers to the vendees milling machinery, sold under a contract by which the vendees are to install the machinery and the vendor is to supervise the starting and adjusting thereof, acquires a valid lien for the machinery,. delivered but not installed, as well as for that actually installed, where it appears that the failure to install the machinery not installed was due; in the first instance, to a fire, and later to the bankruptcy of the vendees.
A case must -be disposed of on appeal upon the theory "on which it was tried.
Questions which may arise between a lienor and a trustee in bankruptcy, stated.
Appeal by the defendants, William R. Wise, as trustee of Russell & Birkett, bankrupts, 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 Tates on the. 2d day of Rovember, Í899, upon the decision of the court rendered after a trial at the Tates Special Term.
Calvin J. Huson, for the appellants.
William L. Marcy, for the respondent.

Opinion:
Laughlin, J.:
This is an action to foreclose a mechanic's lien. Shortly prior to the 12th day of March, 1899, plaintiff delivered to'the firm'of Russell & Birkett, at Penn Yan, N. Y., certain milling machinery, pursuant to a contract by which said firm agreed to pay'therefor the sum of $1,853. The agreement provided that the purchasers were to install the machinery and. that plaintiff should thereafter .supervise starting and adjusting it. A feed mill of the value of $325, being part of said machinery, was put in operation, adjusted .and accepted during said month of March. The other machinery was to constitute part of a plant for manufacturing brewers' grists .and meals.. Its installation was delayed first by a fire and later by the bankruptcy of the firm. On the 12th day of April, 1899, plaintiff duly filed a mechanic's lien against the premises and plant, which were owned by the purchasers, for the contract price of the machinery and interest. On the following day the firm filed a petition in bankruptcy and were adjudged bankrupts on April fifteenth. On May third thereafter defendant Wise was appointed their trustee in-bankruptcy. The answers interposed by the trustee and by the defendant Henry Russell admit that the feed mill was used in repairing the plant; but deny that the other machinery was used in or upon the premises, and also deny that the notice of lien complied with the requirements of the statute. Russell's answer also avers, that he holds two mortgages executed on September 4, 1893, which are prior liens upon the premises. These were the only.' material issues presented by the pleadings..
It appears from the record,, and especially from 'the motion to dismiss the complaint, made in behalf of both appellants who appeared by the same attorneys, and. by the statement of the trial judge at the close of the evidence, that the case was tried on the part of the defendants upon the theory that plaintiff acquired a valid lien for the value of the feed mill which had been installed, but not for the other machinery because it had not been installed.
Section 3 of the Mechanic's Lien Law, being chapter. 418, Laws of 1897, provides as follows :
" § 3. Mechanics' lien on real property.— A contractor, sub-contractor, laborer or. materialman, who performs labor or furnishes materials for the improvement of real property' with the consent or at the request of the owner thereof, or of his agent, contractor or sub-contractor, shall have a lien for the principal and interest of-the value, or the agreed price, of such labor or materials upon the real property improved, or to be improved, and upon such improvement, from the time of filing a notice of such lien as prescribed in this article."
'The preceding .section provides that the term " improvement," as-used in that chapter, " includes the erection, alteration or repair of' any structure upon, connected with, or beneath the surface of any real property, and any work done upon such property, or materials furnished for its permanent improvement." (§ 2.)
The plaintiff performed his contract, excepting as he was prevented by the failure of said firm and. of its trustee in bankruptcy to-install the machinery. The materials were furnished and delivered for the permanent improvement of the premises against which a. lien is claimed. The Legislature has directed that this lien law shall be interpreted liberally " to secure the beneficial interests.and purposes thereof." .(§ 22.) On these facts such a construction requires that a lien be declared in favor of the plaintiff for the machinery delivered and not installed, as well as for that actually installed.
The. appellants contend on this appeal that the notice. of lien having been filed within four months previous to filing the petition in bankruptcy, it is rendered null and void by section 67 of the Bankruptcy Act, which provides as follows:
"f. That all levies, judgments, attachments or other liens, obtained through legal, proceedings against a person who is insolvent, at any time within four months .prior to the filing of a petition in bankruptcy against him shall be.deemed, null and'void in case he is adjudged a bankrupt and the property, affected by'the levy, judg ment, attachment or other lien shall be deemed wholly discharged and released from the same, and shall pass to the trustee as a part of the estate of the bankrupt, unless the court shall, on due notice, order that the right under such levy, judgment, attachment or other lien shall be preserved for the benefit of the estate, and thereupon the same may pass to and shall be preserved by the trustee .for the benefit of the estate as aforesaid."' (30 U. S. Stat. at Large, 564, 565.)
The Federal decisions are not in harmony as to whether this provision applies to cases of voluntary bankruptcy.. Other interesting questions as to whether the lien was acquired in good faith to secure a present as distinguished from a past indebtedness, which would bring it within the saving clause of' subdivision d of said section ; as to whether the lien is given by the statute, the filing of the notice being merely a condition subsequent to prevent the loss of the lien; as to whether the lien was obtained " through legal proceedings " within the contemplation of said subdivision " f " of section 67, would require careful consideration were the question now raised, as to'the eflect of the Bankruptcy Law, properly presented. Some of these questions would largely depend upon technical distinctions on the facts. (Matter of Vaughn, 97 Fed. Rep. 560; Matter of Emslie, Id. 929 ; Matter of Emslie, 98 id. 716 ; Matter of Kerby-Denis Co., 94 id. 818 ; affd., 95 id. 116 ; Matter of Dey, 9 Blatchf. 285.)
Much of the evidence was stipulated upon the trial. . Had this question been raised by answer or suggested below, doubtless more care would have been taken in presenting the proofs and in making the findings as to the, relative time of delivery of the material and filing of the lien and the circumstances attending each, and the precise nature of the work remaining to be done. It is possible that it might also have been shown that owing,to the mortgages held by the appellant Russell, which were not proved, the estate of the bankrupts is not interested in the. litigation. If so, the lien would . in any event be valid as against the mortgagee, and the trustee having submitted to the jurisdiction of the court without claiming . the property under the Bankruptcy Act, is bound by its decision. (Alden v. Boston, Hartford & Erie R. R. Co., 5 Nat. Bank. Reg. 230; Reed v. McIntyre, 98 U. S. 507; Dodge v. Sheldon, 6 Hill, 9 ; Everett v. Stone, 3 Story, 446 ; Seaman v. Stoughton, 3 Barb... Ch. 348; 15 Nat. Bank. Reg. 228 ; Eyster v. Gaff, 91 U. S. 524; TFmchester v. Heiskell, 119 id. 450 ; Scott v. Kelly,. 22 Wall. 57; Mays v, Fritton, 20 id. 414.)
For these reasons we think the rule shoiild be here applied that a case must be disposed of on appeal on the theory on which it has been tried. (Drucker v. Manhattan Ry. Co., 106 N. Y. 157; Martin v. Home Bank, 160 id. 199'; Ringle v. Wallis IronWorks, 85 Hun, 279 ; Post v. Manhattan R. Co., 125 N. Y. 697 ; Cornell v. Dakin, 38 id. 256 ; Stapenhorst v. Wolff, 65 id. 596; Hooper v. Beecher, 4 N. Y. St. Repr. 473.)
. It follows that the judgment appealed from should be affirmed, with costs.
All concurred. .
Judgment affirmed, with costs.