Opinion
April Term, 1900.
Ralph Earl Prime, Jr., for the appellant.
Frank M. Tichenor, for the respondents.
This case has been before this court on a previous occasion, but in such a different aspect that it has little relation to the present situation. The controversy grows out of the construction of a schoolhouse in the city of Mount Vernon. Dawson Archer were the contractors with the municipality for the erection of the building. They entered into a sub-contract with one John Burden, under which he agreed to furnish all the materials required for the carpenter work, and to perform the carpenter work required by the terms of the principal contract. The plaintiff sold and furnished building materials to Burden in such quantity that, on September 10, 1897, about $2,500 or $2,700 was due to him for such materials. On the previous trial of this action the learned court found that, in order to enforce his claim for this amount, the plaintiff at that time contemplated filing a mechanic's lien against the school property, but, at an interview between his agent and Burden and the defendant Dawson, Burden and Dawson stated to plaintiff's agent, as was a fact, that the terms of Burden's sub-contract provided for and required the retention by Dawson Archer of fifteen per cent of the value of all work done under said sub-contract until final payment and completion, "and that said moneys had been and would be retained, and said provisions and terms of said contract as to payment kept and observed by the defendants Dawson Archer." Relying upon these representations, the plaintiff refrained for the time being from filing any lien. On the very day of the interview, however, Dawson Archer paid out $3,000 to materialmen (Hartman Brothers), between whom and Dawson Archer there appears to have been no relation except such as grew out of the fact that Hartman Brothers had supplied material to Burden, which he put into the school building. Dawson Archer also subsequently paid to Burden $2,274.30 in advance of the terms of their sub-contract with him, that amount representing the fifteen per cent already mentioned as not being payable under the terms of the contract before January 1, 1898. After these payments had been made, and on October 28, 1897, when a balance of $1,825.92 remained due from Burden to the plaintiff, the plaintiff duly filed his lien.
We have adopted substantially the language of this court on the previous appeal in stating the case ( Lawrence v. Dawson, 34 App. Div. 211); and in commenting the court say that "notwithstanding the plaintiff's reliance thereon, which led him to withhold the filing of his lien for more than six weeks, the learned trial judge holds that the facts and circumstances are not sufficient to justify a finding that the advance payment of the fifteen per cent to the sub-contractor was made for the purpose of avoiding the provisions of the Mechanics' Lien Law, and he does find in fact that such payment was not so made, but was made in good faith." This the court held not warranted by the evidence.
On the subsequent trial of this action the learned trial court found as a fact that "no representations as to the retention of the fifteen per cent were made by Mr. Dawson as alleged in the complaint," and that "none of the payments complained of were fraudulent, illegal, collusive or in violation of the statute." These facts, sustained, as we believe, by the weight of evidence, place the case in a very different light from that presented on the former appeal. It appears from the evidence that Dawson Archer, with the knowledge and consent of Burden, gave Hartman Brothers a written guaranty for the amount of their claim against Burden for materials furnished for the construction of the schoolhouse, and that at the time Burden told plaintiff's agent, on September 10, 1897, that he had no claim upon Dawson Archer for more cash than $1,000 at that time; that the said Dawson Archer were legally bound to pay, on behalf of Burden, the $3,000 which was, in fact, paid on that day to Hartman Brothers.
It is urged, however, on the part of the plaintiff that the guaranty given by Dawson Archer to Hartman Brothers was void and ineffectual as against plaintiff's lien, because not filed in the county clerk's office as required by the Lien Law. Assuming that the law of 1897 applied to this case, we are of the opinion that the amount of Hartman Brothers' claim having actually been paid before any attempt was made on the part of the plaintiff to file his lien, it constituted a valid payment upon the contract, and relieved Dawson Archer of liability to that extent. "If the owner, at the request of the original contractor, prior to an attempt to create liens by any one, assumes a legal obligation to pay sub-contractors or materialmen for labor or material used in the erection of a building, it constitutes a valid payment upon the contract to the extent of such obligation." ( Gibson v. Lenane, 94 N.Y. 183, 187, citing Garrison v. Mooney, 9 Daly, 218.) The only effect of section 15 of chapter 418 of the Laws of 1897 is to require the filing of the evidences of such legal obligations to pay where the payments are to be subsequently made; it does not require the filing of such evidence where the payment is made at the request of the contractor before the filing of notice of lien, and where the payment is for materials actually furnished the contractor. It is understood in the present case that the contractor stands in the position of the owner, and the sub-contractor in the relation of the contractor; and it is well settled that dealings in good faith between the owner of a building and a contractor for its construction, before the filing of a notice of lien, are protected. This is a recognition of the rule frequently declared, that the owner is protected in respect to payments to the contractor made bona fide, before the filing of notice of lien, and this, although the notice was filed within the statutory time; and an obligation assumed by the owner to pay a third person is regarded as equivalent to payment to the extent of the obligation. ( McCorkle v. Herrman, 117 N.Y. 297, 304.) The guaranty of Dawson Archer to Hartman Brothers is dated July 16, 1897, while the Lien Law of 1897 (Chap. 418) did not go into effect until September 1, 1897; and as there was no law at the time of making the guaranty which interfered with the rule as laid down by the courts, the defendants Dawson Archer were at liberty to pay to Hartman Brothers the amount due at the time of making such payment, and prior to the filing of plaintiff's lien.
It is urged, however, that the Lien Law of 1897 is a re-enactment of the provisions of chapter 915 of the Laws of 1896, in so far as it relates to the question now under consideration, and that this law was in effect at the time of making the guaranty, and that it must control. The act of 1896, relied upon by the plaintiff, was an amendment to the General Lien Law of 1885 (Chap. 342, § 5), which applied only to liens for the improvement of private property, while the act which governed in respect to public improvements at the time this guaranty was given was chapter 315 of the Laws of 1878. The act of 1897 undertook to consolidate these statutes, but it cannot be made to relate back and cover the case now under consideration, for the payments to Hartman Brothers were made under the provisions of a guaranty which was entirely lawful at the time it was made; and as the trial court has found as a matter of fact that the defendant Dawson did not make the representations to plaintiff's agent alleged in the complaint, it is difficult to understand how the plaintiff has any rights under his lien, other than those which existed at the time of filing the same. As was said in Payne v. Wilson ( 74 N.Y. 348): "He acquires a specific lien when he files his notice, but up to that time he is a general creditor, with no greater equities than other general creditors. Hence he is affected by all equities existing in favor of those dealing with his debtor; and when he acquires his specific lien against the debtor, it attaches to no more than the estate and interest of the debtor as it then exists, which is no more than is left to the debtor after the satisfaction of those equities."
The questions involved being controlled by the law as it existed at the time the contract was made and the guaranty was given, and there being no evidence to warrant the conclusion that any of the payments were made in fraud of the rights of the plaintiff, we are of opinion that the case was properly disposed of by the court below, and that the judgment should be affirmed.
The judgment appealed from should be affirmed, with costs.
All concurred, except HIRSCHBERG, J., not sitting.
Judgment affirmed, with costs.