Court Opinion

ID: 8269082
Source: CourtListenerOpinion
Date Created: 2022-10-16 19:20:01.38963+00
Date Added: 2024-06-11T16:43:27.744642
License: Public Domain

Garrison, J.
(dissenting).
The fund brought into court is the final payment due from the owner to the contractor who had assigned it to the bank as security for a note of his that it held. The contestants for the fund are this assignee of the contractor and a materialman (who had served a stop notice on the owner), each of whom claims under the contractor, the bank directly, the materialman under the Mechanics’ Lien act. Under the scheme of this act, the unpaid contract price in the hands of the owner is a fund for the payment *567of certain claims, which, even before notice is served on the owner, are inchoate liens on the money so due to the contractor, to be worked out by the machinery of the act, one feature of which is that the correctness of such claims, if disputed by the contractor, shall be established by an action at law. The sole purpose of this statutory provision is to protect the fund which, after such statutory claims upon it are paid, belongs to the contractor or his assigns. An assignee of the contractor, therefore, upon familiar principles, takes the fund subject to such inchoate liens upon it as may be worked out in compliance with the terms of the statute. In accordance with such terms, the correctness of the claim of the materialman in the present case was established as against the fund in so far as it would have gone to the contractor had he not assigned it, and hence, was established as against the contractor’s assign of the fund, not upon the ground of privity or under the doctrine of res judicata, but because such assignee of the fund took it subject to its being diminished by claims, the correctness of which was established in the manner prescribed by the statute. The bank therefore had no better standing to question in the court of chancery the correctness of the claim than the contractor had or than the bank would have had if the owner had paid to the materialman the amount of his judgment in the action at law.
This, in my opinion, is the proper construction of the Lien act in respect to the establishment of a claim against the unpaid balance due to the contractor, hence, I think that the decree in the present ease was erroneous and therefore vote to reverse.
For affirmance — The Chief-Justice, Swayze, Trenchaed, Bergen, Yoorhees, Bogert, Yredenburgh, Yroom, Congdon, Sullivan — 10.
For reversal — Garrison, Parker, Minturn — 3.