Court Opinion

ID: 5191933
Source: CourtListenerOpinion
Date Created: 2022-01-06 15:37:28.589955+00
Date Added: 2024-06-11T08:25:56.309685
License: Public Domain

Laughlin, J.:
This is an action to foreclose a mechanic’s lien. The defendant Robinson was the general contractor with the defendant Kinney, who was the owner of premises situate at the northwest corner of Fifty-sixth street and Madison avenue for the construction of a hotel thereon according to certain plans and specifications. The owner agreed to pay the contractor the actual cost of the labor and materials and five per cent in addition to such cost, not exceeding in all the sum of $317,310; and to make payments from time to time during the progress of the work in amounts equal to ninety per cent of the value of the labor and materials furnished, as such value should be certified by the architect, and in addition two and a half per cent upon such value on account of said additional five per cent. It was provided that the final payment should be whatever sum remained due the contractor and should be. made within thirty days after the complete performance of the work. The contractor entered upon the performance of the work and performed all of the conditions of the contract down to the 7th day of March, 1900, rvlien he failed in business and made a general assignment to the appellant for the benefit of creditors. At that time the agreed price and value of the materials theretofore furnished and the labor theretofore performed by the contractor was $134,438.79, and he had been paid on account thereof the sum of $70,398.88, leaving a balance *484of about $70,000 earned and unpaid. It is not stated whether or not the architect had certified that this amount had been earned, so that it had become due and payable at that time. The plaintiff’s lien was filed after the general assignment. ■ The only lienors whose liens were filed prior to the assignment are the firms of Barr, Thaw & Fraser and Owen R. Mason.
On the 12th day of March, 1900, the owner duly served a notice upon the contractor pursuant to the terms of the contract that unless he should supply a sufficiency of workmen and materials within three days, the owner would provide the same, terminate the employment of the contractor and take possession of the premises for the purpose of completing the work. Thereafter, at the expiration of the time specified in the notice, the owner entered upon the premises and completed the work according to the contract. In the meantime the other liens had all been filed. The contract provided that in case of completion by the owner if the cost of completion should not exceed the balance unpaid on the contract he should pay the difference to the contractor. The amount unpaid on the contract exceeded the cost of completion by the sum of $58,398.86. The referee found that the liens attached to this balance in the order of their priority.
' In the case of Armstrong v. Borden's Condensed Milk Co. (65 App. Div. 503) it was held, in the second department, upon a controversy ai'ising on another contract made by the defendant Robinson between lienors and his assignee, that the assignment took preference over 'liens subsequently filed. That decision has been followed by this court in the case of Kane Co. v. Kinney (68 App. Div.163). The respondents attempt to distinguish those cases upon the ground that the rights of the lienors did not depend upon the subsequent completion pf the work by the owner, but that at the time the liens were filed an amount sufficient to pay the lien had been earned under the contract and that the liens attached thereto. We think that the facts in those cases and this are substantially the same, and that this argument is untenable. If it be the effect of the decision in this case that a large balance was due and owing from the owner to thé contractor at the time the liens were filed, that balance was likewise due and owing at the time of the general assignment, and the logical effect of the Armstrong cáse is that the *485right to demand and receive such balance passed to the assignee, for the court treated the general assignment the same as an assignment to an individual creditor of part of a fund due which it was held in Bates v. Salt Springs Nat. Bank (157 N. Y. 322) took priority over a lien subsequently filed. If the decision in the Armstrong case is to be followed as a precedent, it should be given effect, and its legitimate effect is that whatever was due at the time of the assignment or subsequently became due by reason of the owner completing the work under the contract and leaving a surplus, passed to the assignee as against subsequent lienors. In these circumstances, although the contractor failed to perform the contract, the owner having taken possession and completed the work under the contract, the contractor, were it not for the liens, would be entitled to any balance unpaid on the contract after deducting the cost of completion. (Crouch v. Gutmann, 134 N. Y. 45 ; Edison Electric Co. v. Guastavino Co., No. 2, 16 App. Div. 358 ; Ogden v. Alexander, 140 N. Y. 356; De Lorenzo v. Von Raitz, 44 App. Div. 329.)
Therefore, in deciding this appeal, we, for the reasons stated in Kane Co. v. Kinney (supra) should follow the decision in the Armstrong case. The defendant Mason, whose lien was filed prior to the assignment, alleged in his answer that he was employed by “the defendant Robinson on behalf of and as agent for the defendant Kinney.” On the trial the referee, under objection and exception, permitted him to amend the answer by omitting the allegation “ on behalf of and as agent for the defendant Kinney.” It is claimed that this was error. The allegation was manifestly inserted for the purpose of showing that the work was done with the knowledge and consent of the owner. The lien, stated that it was done under a contract with Robinson and such was the proof upon the trial. We think the amendment was properly, alio wed as no one could have been prejudiced or even surprised thereby.
It appears that the several defendants served their answers upon the co-defendants as well as upon the plaintiff. Therefore, the defendants whose liens were filed prior to the assignment were entitled to a judgment of foreclosure. There is no controversy about the facts and they are all fully found in the decision of the referee.
The judgment should, therefore, be modified accordingly and *486direct that the surplus after the payment of the costs and disbursements of the defendants Barr, Thaw & Fraser and Owen R. Mason, including their costs and disbursements on this appeal and the amount of their liens, be paid to the assignee. It should also be modified by striking out the award of. costs to Bernard McQuillan and Hallsted & McNaugher on the ground that they did not appear on the trial. No other costs are allowed on this appeal.
O’Brien and McLaughlin, JJ., concurred ; Hatch and Ingraham, JJ., dissented.