Opinion
08-12-1902
SOUTH END IMP. CO. OF CAMDEN v. HARDEN et al.
Ralph W. Donges, for complainant. S. H. Grey, for defendants F. Sabin & Co. John O. Wilson, for defendant Hugh Hatch. F. D. Weaver, for defendants Sigfried Marcus, the Camden Lime Co., Carl Horlbeck, Jacob W. Hauck, Wilson Harbison & Co., Redmond Bentley, and Louis Reeves. George H. Pierce and Henry F. Stockwell, for defendants C. B. Coles Sons & Co. P. T. Shinn, for defendants Thomas Z. Horner and Richard R. Lloyd. Thomas B. Hall, for defendants Martin W. Moore and Michael F. Moore. William J. Kraft, pro se.
Bill by the South End Improvement Company of Camden, N. J., against Frank J. Harden and others. Decree advised.
On bill for interpleader filed by complainant to have determined the relative priority of the claims of certain materialmen who have filed stop notices for materials furnished for work done on contracts between the complainant and defendants.
Ralph W. Donges, for complainant.
S. H. Grey, for defendants F. Sabin & Co.
John O. Wilson, for defendant Hugh Hatch. F. D. Weaver, for defendants Sigfried Marcus, the Camden Lime Co., Carl Horlbeck, Jacob W. Hauck, Wilson Harbison & Co., Redmond Bentley, and Louis Reeves.
George H. Pierce and Henry F. Stockwell, for defendants C. B. Coles Sons & Co.
P. T. Shinn, for defendants Thomas Z. Horner and Richard R. Lloyd. Thomas B. Hall, for defendants Martin W. Moore and Michael F. Moore. William J. Kraft, pro se.
REED, V. C. Harden and Coverly, Sr., partners, agreed on May 20, 1900, to buildnine houses for the South End Improvement Company, for the price of $11,900, to be paid in installments at certain stages of construction. Work was begun on May 22d. On May 28th a supplemental agreement was entered into between the parties, by the terms of which two windows, instead of one, were to be placed in the first floor of each house, at an increased price of $70. On July 20th another contract was entered into, by which the contractors agreed to build a shed in the rear of each house, and also to make some changes in the position of hydrants and kitchen arrangements, at a total expense of $238.50. On August 10th, by a memorandum agreement, the contractors agreed to put a wardrobe in the second-story front room of one house, at a cost not to exceed $10, and to cut a doorway in two houses, at a cost not to exceed $10 for both doors. On November 12, 1901, the contractors gave notice to the complainant that they were unable to complete their contracts. Thereupon the complainant proceeded to do so under the terms of their contract, at an expense of $1,818.13. They had already paid six Installments, of $1,000 each; leaving due upon the main contract and the three supplemental contracts, when finished, the sum of $6,228.70. These payments, together with the costs incurred in completing the contracts, left due on the original main contract the sum of $4,252.96, and upon the supplemental contracts $157.61, making in all the sum of $4,410.57. The complainant has also deducted the sum of $495 as liquidated damages arising from failure of contract to finish the work. The complainant therefore admittedly has in hand $3,915.57 which it has paid into court. A series of notices were served upon the complainant, on behalf of materialmen to retain amounts which, in the aggregate, exceed the amount of the contract price still unpaid. These notices were served in the following order: Thomas Z. Horner, $100.00, November 11, 1901; Richard R. Lloyd, $467.15, November 13, 4:14 p. m.; Camden Lime Company, $152.37, November 13, 5:03 p. m.; Moore Bros., $442.50, November 14, 7:55 a. m.; Carl Horlbeck, $137.44, November 14, 9:15 a. m.; Jacob W. Hauck, $996.50, November 14, 9:50 a. in.; Wilson, Harbison & Co., $442.92, November 14, 10 a. m.; Redmond Bentley, $230, November 14, 11:45 a. m.; Louis Reeves, $136.23, November 14, 2:55 p. m.; Frederick Sabin & Co., $588.69, November 16, 10:45 a. m.; Hugh Hatch, $903.75, November 16, 12:10 p. m.; Sigfried Marcus, $30, November 18, 4:10 p. m.; Coles Sons & Co., $1,936.18, November 18, 7:40 p. m.; Coles Sons & Co., $1,936.18, November 20, 4:30 p. m.; Coles Sons & Co., $1,936.18, January 8, 1902, 6:30 p. m. Coles & Sons also filed a claim November 19, 1901, for $146.50 for materials used in work under the three supplementary contracts. The total amount of claims is $6,543.63, exclusive of the $146.56. Harden & Coverly on February 10, 1902, filed a petition in bankruptcy in the federal district court, and they were adjudged bankrupt on February 10th; and on February 26th William J. Kraft was appointed trustee in bankruptcy. The trustee, however, took the property of the bankrupts subject to all liens, legal or equitable, which existed thereon at the time of filing the petition. Taylor v. Taylor, 59 N. J. Eq. 80, 45 Atl. 440. The legal demands followed by service of notices upon the builder created a lien or an equitable assignment of the amount due the materialmen upon the funds in the hands of the builder. Wighman v. Brennen, 26 N. J. Eq. 489; Bradley & Currier Co. v. Berns, 51 N. J. Eq. 437, 26 Atl. 908; Id., 55 N. J. Eq. 15, 35 Atl. 832; Smith v. Dodge & Bliss Co., 59 N. J. Eq. 584, 44 Atl. 639. The rights of all who had served legal stop notices before the filing of the petition in bankruptcy are enforceable in this court.
A question is presented, arising out of the fact that a portion of the materials furnished by Coles & Sons was used in executing the work covered by the three supplementary contracts. The query is whether the moneys due the contractor for this work is to be regarded as a part of the moneys due under the original contract, or is to be treated as a separable part, to be applied only to those who did work or furnished materials for those additional alterations and additions provided for by the supplementary contracts. The solution of this question depends upon whether this work was done in pursuance of the original contract, or aside from it. The original contract contains this provision: "The parties hereto may agree to alterations in said buildings at any time during their construction, upon terms to be agreed on, without in any way altering or invalidating this agreement; the same to be settled for in final payment." The work under the supplementary claims was, in my judgment, not done in pursuance of the original contract. By that contract the builder was not entitled to demand, or the contractor bound to make, alterations or additions. The clause in the original contract only provided that the parties might agree to alterations, and that after they did so it should not alter or invalidate the original agreement. I think the claim of Coles & Sons in respect to materials furnished for the work under the supplementary contracts is a lien upon those buildings, as for extra work. On behalf of Coles & Sons there is an attack on the legality of several of the demands and notices antecedent to their own.
The claim of Richard R. Lloyd is challenged on the ground that they did not make a legal demand upon the contractor for payment before they gave their notice. The criticism is not that they demanded more, but they demanded less, than was due tothem. I think, however, under the circumstances, a refusal to pay any part of what was due them was equivalent to a refusal to pay all.
The claim of Louis Reeves is objected to on the ground that when he made his demand he had not completed the work, so as to become entitled to payment. He had a contract for painting, for the price of $405, of which he had been paid $145. On November 12th the parties rescinded the contract, and the contractor admitted in writing that there was due for work and materials at that time the sum of $136.23. Mr. Reeves' account of the transaction is this: The contractors took all his men off from the work and sent them around to him (Reeves), and he sent them back. Then Mr. Harden came and told Mr. Reeves that the contract was to be thrown up, and told him to make out his bill. Mr. Reeves says he made out his bill and took it to the contractors, and they told him it was correct. He asked them about the payment of the $136.25. He is uncertain whether he made the demand before or after this. A paper signed by the contractors respecting the rescission of contract, and fixing the amount due Reeves, was given him. It is obvious that he presented the bill before the paper was signed, for the bill fixes the amount due him, mentioned in the paper. When he presented his bill, he probably asked for the money, and was told to put in his claim to the defendants. I think there was a legal demand and a refusal.
The next claim attacked is that of Moore Bros. That claim arose under a contract to execute the tin roofing at a price fixed at $452.50. It is insisted that, when this demand was made, it was before the contract was completed, and then the demand was only for $200. There is a conflict of testimony respecting this. Michael Moore says he made the demand after he was through with the job. He admits that he had asked for $250 previous to that date. Coverly first says he asked for $100 on account before the work was completed, and then says he asked for $200, but made no further demand upon him. Harden says Moore asked several times for money, once for $200, and then the work was practically completed. There was practically nothing to be done. He says he does not think Moore asked for the whole amount of the bill at any time. Now it appears that the work was completed when the notice was given, and the question is whether it was completed when payment was demanded? I think the probabilities are that the demand was made after the work was completed.
The next claim attacked is that of Carl R. Horlbeck. It is insisted that he made the demand, and then assigned his claim to the Camden Lime Company, and that after he made this assignment he gave his stop notice to the complainant. It appears that Horlbeck made a demand on the contractors, who refused payment. He then gave the order upon the contractors to pay $137.44, the amount of his bill, to the Camden Lime Company, who accepted it. This order was given to the Camden Lime Company because Horlbeck owed them for materials furnished him in executing this work. It does not appear, however, that the order was taken in payment for that amount, but it seems to have been taken only to be credited upon the debt due by Horlbeck whenever it should be paid. It was not paid, and the order was returned to Horlbeck, who afterward gave the notice. There was no novation of the triangular indebtedness. The order was a mere power to collect and apply, and when the order was returned the power was canceled. This view renders it unnecessary to consider the force of the line of cases which hold that, when the assignment of a claim under the mechanic's lien assignment is made, it is for the assignor to take the necessary steps in completing the lien. Phil. Mech. Liens (3d Ed.) § 54a. The notice was legal.
The next claim attacked was that of Jacob W. Hauck, plumber and gas fitter. He seems to have had an entire written contract, which was not completed when the original contract was abandoned. An agreement was entered Into with him by the contractors on November 12, 1901, by which his contract was rescinded for the uncompleted portion of the work, and the amount then due upon the executed portion of the contract admitted to be $990.50. I think it clear that this paper was given because the contractors were unable to proceed with their work. I think it equally clear that, by an understanding between Hauck and the contractors, the paper meant that the contractors were unable to pay any debts incurred in executing the work, including his debt, and the paper was given with the understanding that, because they could not pay, he should use it for the purpose of filing the notice with the builder. I think his demand and notice were sufficient.
I have thus, I think, decided all the questions raised in the case, and will advise a decree in conformity with the results reached.