Court Opinion

ID: 5233244
Source: CourtListenerOpinion
Date Created: 2022-01-06 17:02:29.848127+00
Date Added: 2024-06-11T08:27:32.909364
License: Public Domain

Kellogg, J. (dissenting):
The original contract price was $75,500, of which eighty-five per cent was to he paid on estimates of the architect from time to time as the work progressed and the remaining fifteen per cent ($11,350) was to be paid thirty days after the completion of the contract. In March, 1912, the work done (about two-thirds of the requirements of the contract) had cost $65,300. The payments to the contractor at that time aggregated $55,505, leaving apparently over $32,000 of work to be done by the contractor for which appellant was to pay $19,995. He was urging that more money be paid to enable him to continue the work, and was apparently in embarrassed circumstances. It was agreed in March, 1912, in order to facilitate the work and secure the completion of the contract, that the appellant would pay to him the balance of the contract price, he giving to appellant a surety bond for the completion of the work. The bond was given, the balance paid, and the contractor continued the work until June 13, 1912, when he abandoned it. The architect’s certificate shows that the cost of the work and material in .place at that time was $83,300. The surety upon the bond was required to continue the work, and expended $8,000 thereon. The appellant spent $2,000 as it claims in the completion of the contract after the surety claimed the contract was performed. The total cost of the work, therefore, was $90,300, or $92,300 if the amount expended by the owner is allowed. No attention has been paid to the extra work which was paid for and does not enter *766into this controversy. The plaintiff, a large creditor, was notified in advance that the advance payments were to be made unless it objected, and it apparently was willing to look to the contractor for its pay. Certainly as to it no question can arise as to the entire good faith of the appellant; the owner was not seeking to avoid the provisions of the Lien Law as to that creditor. It is quite evident if the advance payments had not been made that the work would not have progressed and the appellant would have sustained a great loss and the present lienors would have had no interest in the contract. Clearly the payments were not accelerated for the purpose of defeating the Lien Law but for the sole purpose of protecting the substantial rights of the appellant. It did what was necessary for its own protection and was well within its rights. It was not seeking to favor the contractor or to prejudice the material-men, subcontractors or laborers. Apparently they were as well off when the contractor abandoned the work as they would have been if the crises had occurred in March when the agreement was made.
Section 7 of the Lien Law is a reasonable provision and sim, ply requires that the owner shall not accelerate payments for the purpose of defeating the liens which may be filed against the property. Where a payment is accelerated for good and sufficient reasons for the necessary protection of the owner, and only to the extent reasonably necessary for his protection, it cannot he claimed that such payment was made for the purpose of avoiding the provisions of the act. It is not material just how many dollars and cents were actually expended in completing the work; it was reasonably within the contemplation of the appellant at the time that the entire payments advanced by it would he necessary for the completion of the work. In so large a transaction where the figures so nearly approach each other there is no foundation for the claim that the act was prompted by any ulterior or improper purpose. The reasonable intendment of good faith is sufficient under the circumstances of this case to protect the payment made by the appellant. Had the Legislature intended that under no circumstances should the owner make payments to the contractor prior to their becoming due, it could havei made the *767intent clear by saying so. It did not do this but provided that a payment made before it becomes due should be of no effect as against the lien of the subcontractor, laborer or materialmen if made “for the purpose of avoiding the provisions of this article.” It would seem to follow that any payment made for any other legitimate purpose remains unaffected by the statute. The mere fact that the owner knows that a contractor is indebted to laborers, materialmen or subcontractors is not sufficient to charge upon him an improper purpose in making the payments. When the evidence is all in the payments must be allowed unless it appears that they were the result of a purpose to avoid the statute. If it appears that it was for the sole purpose of continuing the work and enabling the contractor to perform his contract, and was reasonably necessary therefor, the payment is valid. (Wagner v. Butter, 155 App, Div. 425; Hudson River Blue Stone Co. v. Huntington, 143 id. 99.)
I favor a reversal of the judgment.
Woodward, J., concurred.
Judgment as to the plaintiff reversed on law and facts, and complaint dismissed, with costs; judgment as to the other lienors affirmed, with costs. The court disapproves of findings Nos. 17 and 18, so far as they find that the payments of March 19 and 26, aggregating $19,995, were made, as to the plaintiff, for the purpose of avoiding the provisions of the Lien Law, and that the plaintiff is entitled to be paid the amount of its said claim, and substitutes a finding that as to said plaintiff said payments made in advance were not made for the purpose of avoiding the provisions of the Lien Law, and that said plaintiff is not entitled to be paid by appellant or to enforce its lien for any sum whatever.