Berger Manufacturing Co. v. City of New York , 206 N.Y. 24 ( 1912 )

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]

[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] The Lien Law (Cons. Laws, ch. 33) provides that "At any time before the construction of a public improvement is completed and accepted by the state or by the municipal corporation, and within thirty days after such completion and acceptance, a person performing work for or furnishing materials to a contractor, his sub-contractor, assignee or legal representative, may file a notice of lien * * *." (Section 12.)

The lien is upon "the moneys of the state or of such corporation applicable to the construction of such improvement, to the extent of the amount due or to become due on such contract, * * *." (Section 5.)

The principal question for our consideration is, whether the lien of the Shoemaker Company was lost by its failure to commence an action to enforce it within three months after it was filed.

The duration of a lien is prescribed by statute and the right to enforce it, like the right to file and create it, is derived therefrom, and each is entirely dependent upon its terms. It is expressly provided by statute that a lien for labor done or materials furnished for a public improvement "shall not continue for a longer period than three months from the time of filing the notice of such lien, unless an action is commenced to foreclose such lien within that time, and a notice of the pendency of such action is filed with the comptroller of the state or the financial officer of the municipal corporation with whom the notice of such lien was filed, or unless an order be made by a court of record, continuing such lien, and a new docket be made stating such fact * * *." (Lien Law, sec. 18; former section 17.) Such lien may be discharged as follows: "1. By filing a certificate of the lienor or his successor in interest, duly acknowledged and proved, stating that the lien is discharged.

"2. By lapse of time, when three months have elapsed since filing the notice of lien, and no action has been commenced to enforce the lien.

"3. By satisfaction of a judgment rendered in an action to enforce the lien.

"4. By the contractor depositing with the comptroller of the state or the financial officer of the municipal corporation * * * a sum of money * * * which shall not be less than the amount claimed by the lienor, with interest thereon for the term of one year from the time of making such deposit, and such additional amount * * * to cover all costs and expenses. The amount so deposited shall remain with the comptroller or such financial officer * * * until the lien is discharged as prescribed in subdivision 1, 2, or 3, of this section.

"5. Either before or after the beginning of an action by a contractor executing an undertaking with two or more sufficient sureties, * * * to the state or the municipal corporation with which the notice of lien is filed, in such sums * * * not less than the amount claimed in the notice of lien, conditioned for the payment of any judgment which may be recovered in an action to enforce the lien * * *." (Lien Law, section 21, former section 20.)

Subdivision 5 of said section of the statute permits the substitution of an undertaking for the money "due or to become due on such contract" to the contractor from the municipality and thus to discharge the amount due or to become due from such lien. The purpose of the statute is to relieve the contractor and municipality from the embarrassment of the lien without waiting for the result of an action to enforce the lien and without relieving the lienor from the necessity of enforcing his right to a lien and to payment from the fund, in all respects as provided by statute. The necessity of enforcing the right to a lien even after an undertaking is given is clearly shown by the condition which the statute prescribes for such undertaking, viz.: "The payment of any judgment which may be recovered in an action to enforce the lien." The undertaking does not change the relation and rights of the parties other than to substitute its provisions for the fund remaining due or to become due from the municipality to the contractor. The statute does not purport to extend the time provided by section 18 of the Lien Law in which an action to enforce the lien must be commenced. Under subdivision 4 of said section a prescribed amount of money must be left in the physical possession of the comptroller or other financial officer and consequently a specific provision is included in that subdivision as to the time that such money shall so remain on deposit with such officer. Where an undertaking is given its condition determines the obligation of the parties and its continuance. A valid lien on the primary fund must be established to require payment pursuant to the terms of the undertaking. (Milliken Brothers, Inc., v. City of N.Y., 201 N.Y. 65.) The Shoemaker Company having failed to commence an action to enforce its lien within three months after filing the same, it could not establish a lien on the primary fund nor call upon the contractor and his surety for the payment of a judgment recovered in an action to enforce said lien. The condition of the undertaking, which is plain in terms, is the full measure of the liability of the parties to it.

The Special Term was right, therefore, in adjudging that the lien of the Shoemaker Company was unenforceable. (Clonin v.Lippe, 121 App. Div. 466; Kelly v. Highland ConstructionCo., 133 App. Div. 579; Matter of Thirty-fifth Street FifthAvenue R. Co., 121 App. Div. 625; Matter of Thornton ApartmentCo., 74 Misc. Rep. 210.)

The decision in Mertz v. Press (99 App. Div. 443), relied upon by the appellant, is based upon a different statute. The lien in that case and the undertaking given to discharge the same were filed pursuant to the consolidated charter of the city of New York (section 1836, chapter 410, Laws of 1882, as amended by chapter 605 of the Laws of 1895). The condition of the undertaking as required by said charter was "that the said (construction company) will pay on demand to the (lienors) * * * the amount of any judgment which may be recovered against said (construction company) in or upon the claim or demand specified in such notice of lien * * * not exceeding" the sum specified therein. The action was brought upon the undertaking and it was held that the short Statute of Limitations prescribed by said charter did not apply.

The decision in Hafker v. Henry (5 App. Div. 258) was based upon the Lien Law of 1885 (Laws of 1885, chap. 342) and is not applicable to the facts in this case. Many of the other questions discussed by the appellant are not considered in this opinion, because they are not properly before us. The judgment is based upon the findings. The evidence is not before us, and the judgment of the Special Term has been unanimously affirmed by the Appellate Division and we must take the facts stated in the findings as incontrovertibly established. There are no rulings or exceptions presenting any material question relating to the pleadings. The plaintiff having commenced an action which it has sustained, and having duly filed a lis pendens, and the defendants Goemann Sisti, and the Hall's Safe Company having each interposed an answer in the action setting up its lien as provided by the Lien Law, before its lien had expired, it was not necessary for either to commence a further and independent action to foreclose its lien. The statute provides that the court may adjust and determine the equities of all the parties to the action, and the order of priority of the different liens. (Lien Law, section 45.)

The appellant contends that the plaintiff having filed a lien in August and failed to commence an action to enforce the same within three months thereafter, is not authorized by the Lien Law to file another lien, even although the same was filed within the time provided by statute. The statute in regard to filing liens is permissive. The right to file a lien under contracts for public improvements does not expire as we have seen until the improvements is completed and accepted, and until thirty days after it is completed and accepted. Such authority would seem to include the right to file a second lien within the time so provided, at least to cure an irregularity in a lien first filed, or to reassert a lien when the prior one has been lost by delay in its enforcement. (Clarke v. Heylman, 80 App. Div. 572. )

The terms of the appellant's undertaking do not directly or by inference include the right to a personal judgment against the contractor Nesbit Company and its surety thereon. (MillikenBrothers v. City of N.Y., supra; Lien Law, section 54.)

The judgment should be affirmed, with one bill of costs to the respondents.

CULLEN, Ch. J., GRAY, HISCOCK and COLLIN, JJ., concur; WILLARD BARTLETT, J., not voting; VANN, J., absent.

Judgment affirmed.