Court Opinion

ID: 5496365
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:52:50.948229+00
Date Added: 2024-06-11T08:33:49.411680
License: Public Domain

Barker, P. J.
The real question in this case is, was the action prematurely commenced? That the defendant was indebted to the plaintiffs in the sum of $700, the amount mentioned in the order, was established by the undisputed facts of the case. The contract for building the defendant’s house was completed by the contractor on the 18th day of April, 1888, and there was then a balance of $750 unpaid thereon, as the defendant admits, which by the terms thereof became due at the expiration of 30 days after the completion of the building. This action was not commenced until after such balance became due and payable, as provided by that term of the agreement. The plain-. tiff’s’ title to the said sum of $700 is based on the order which was made and delivered to them by the drawer on the 19th day of April, of which the defendant had immediate notice. At that time the drawer owed the plaintiffs, the payees named in the order, more than the sum for which the order was drawn, for work and labor done by them on the building as subcontractors. There is no room for doubt but that the drawer and payee intended that on payment of the order the same should be applied to the debt which the former owed the latter. Ho question has been raised before us to the contrary. The rule is now well settled that when, for a valuable consideration from the payee, an order is drawn upon a third party, and made payable out of a particular fund then due from him to the drawer, the delivery of the order to the payee operates as an assignment pro tanto of the fund, and the drawee is bound, after notice of such assignment, to apply the fund; as it accrues, to the payment of the order, and to no other purpose, and the payee may, by action, compel such appropriation. The rule as thus stated was formulated from the previous decisions in this state by Mr. Justice Rapallo, in Brill v. Tuttle, 81 N. Y. 454, and its accuracy has not been questioned by the learned counsel for the defendant. See, also, Grain Cleaner Co. v. Smith, 110 N. Y. 83, 17 N. E. Rep. 671.
It sometimes becomes a doubtful question as to the intention of the parties to the order by reason of the form of the same, together with the state of the accounts between the drawer and the drawee, and, when their intention is left in doubt, a mixed question of law and fact arises, to be determined by the jury with proper instructions from the court. On the argument of this appeal the defendant’s counsel did not contend, nor was the question presented *163•on the trial in any form, that it was not the purpose of the drawer to transfer to the payees a portion of the debt due him from the defendant equal to •the sum named in the order. The owner of an entire debt has the right to sell and assign a part of it without the consent of his debtor, so as to vest in the assignee a right to proceed in his own name for the recovery of the portion of the debt transferred. The debtor cannot bar a defense to a recovery upon the objection that a transfer of a part of an entire debt might subject him to several actions to enforce the payment of a single obligation, for he may demand the bringing in of all interested parties, if the protection of his rights should require it. Risley v. Bank, 83 N. Y. 318.
As we understand the position of the defendant, it is this: that the sum remaining unpaid on the contract at the time of the completion of the building was extended beyond the 30 days mentioned in the contract for its payment, and was not due at the time of the commencement of this action, by force of the provisions of the contract, which provides that the payment of a sum may be withheld by him equal to not less than double the amount from which a lien or liens shall exist at the expiration of the said 30 days. It is conceded for the purposes of this appeal that certain liens were placed on the property by third parties, who were creditors of the builder before the said balance of $750 became due and payable, and that the sums owing the lienors by the builder were more than the aggregate of the sum remaining unpaid. But neither of the proceedings were instituted by the lienors until four days after the said order was delivered to the plaintiff, and notice •thereof given the defendants. The drawer of the order had the unqualified right, acting in good faith, to assign and transfer the whole or any part of the debt owing him by the defendant on the building contract; and, after the defendant became notified of the fact, he became a debtor to the payees, and thereafter no lien could be placed on his property that could defeat the payees’ right to th.e money, nor could a payment of the same be enforced from the defendant by the lienors. Deducting from the sum unpaid' by the defendant on the contract the amount of the order, and there remained owing to the builder $50, and no more, and that was the only sum which the lienors could require the defendant to pay, and their liens on the property were limited to that •amount, and could have been satisfied by the defendant at any time by paying to them that sum. We think the contract will bear the construction that the amount of the payment which the defendant was at liberty to withhold under the clause of the contract relied upon, and above quoted, was no greater than double the sum of money he owed the builder when the lien was filed, and it seems plain that such was the intention of both parties. The provision was intended for the defendant’s protection, and, if he was permitted to retain in his own hands twice the sum for which a lien could be legally placed on his property, it would seem as if his indemnity would be at all times ample by giving to the contract such a construction. If no liens had been filed by third parties within 30 days after the completion of the contract, the plaintiffs could have maintained this action, and recovered the $700 beyond all dispute. The lienors may collect, if their proceedings are regular, the $50 which remains due to the builder from the defendant. They can recover nothing more, and it does not appear from the record that they claim anything beyond that sum. The contract is very explicit that the payment which the defendant may withhold shall be equal to not less than double the amount of or from which such lien can or shall exist, and it does not in terms permit him to retain more, and, without such express provision permitting liimr to do so, the remaining sum owing by him on the contract would become due in 30 days from the completion of the building. We incline to the opinion that the filing of liens by third parties did not have the effect to postpone the time of payment of •a part of the debt transferred to the plaintiffs by the order.
It remains to be determined what effect, if any, the institution of proceed*164ings by the plaintiffs to create a lien on the owner’s property had in extending-the tipie of payment of the portion of the debt transferred to them by the-builder. It appears from the case that they filed a notice with the county-clerk on the same day the other lienors did; whether before or after is not. stated. In the notice the amount of their claim is mentioned as $700, and. that it existed against Hería, the contractor, and the defendant, the owner of the premises, and that the same became due to them as subcontractors for labor and material supplied in the construction of the building. It does not appear from the notice filed, or from any other evidence given on the. trial, that, the demand which they are seeking to secure by a lien on the building is fertile $700 assigned to them by the builder. They had a demand, as subcontractors, against Hería, the builder, after applying thereon the amount of the-order, which might, by a proper proceeding, have been made a lien on the-property to the extent of the sum paid on the contract, after deducting the $700 embraced in the order. We are of the opinion that the provisions of the contract allowing the defendant to withhold the payment of a portion of the money due from him to the contractor, in case a lien should be created,, does not apply to a lien to secure a debt or demand which the builder himself' might have against the defendant, and that the provisions of the contract on-that subject relate wholly to liens created to secure claimants who were not. parties to the agreement. One of the purposes of the agreement was to delay the time of payment of the sum mentioned until after the amount due the-claimant could be adjusted in some manner satisfactory to or binding on thecontraetor by a final judgment in the proceedings. The language of the contract does not in terms apply to a lien which the contractor himself may place-upon the property to secure the money which may be due him under the contract, and it would be unreasonable to place upon the same any construction which supports such a contention. It is manifest that it was not intended to-bring within the terms of the stipulation a lien placed on the property to secure a debt for which the owner was personally liable, because in such a case-he could discharge the lien by payment of the debt, and, if that was in dispute, then the litigation over that question would have the effect to postpone-the time of payment, and there would be no advantage gained by the owner by inserting such a provision in the contract. So, if it could be held that the-lien created by the action of the plaintiffs embraces the debt owing by the defendant personally to the plaintiffs, it would not defeat this action upon the ground that the debt sued for was not due and payable. The order and judgment appealed from should be reversed. All concur.