E. I. DuPont De Nemours Powder Co. v. Thomas McNally Co. ( 1916 )

Smith, J.:

This DuPont Powder Company furnished material to the' McNally Company, which was used by the McNally Company in constructing the new Catskill aqueduct for the city of New York. The value of such material was upwards of $7,000. On December 1, 1908, the DuPont Company filed with the comptroller a notice of mechanic’s lien covering the moneys due to the McNally Company. Thereafter the McNally Company became insolvent, and the appellant here, together with one William E. Paine, were appointed receivers. Upon application to the court these receivers were authorized to issue $150,000 of receivers’ certificates, which were made by the order a first lien upon all moneys due or to become due as retained percentages upon the said contract with the city. After the issue of the said certificates the said receivers settled with the said DuPont Powder Company and gave to them certificates to the amount due upon their claim, and received from them a satisfaction of the mechanic’s lien which they had filed against the moneys due under the McNally contract. The receivers thereupon completed the McNally contract, and a large amount of moneys remained due from the city to the receivers, which the city now refuses to pay. The refusal to pay said moneys is based upon a notice of lien filed by the said DuPont Company on January 12,1915, which purports to be a mechanic’s lien filed to protect the claim of the DuPont Company under the receivers’ certificates, which they took in satisfaction of their original mechanic’s lien, and upon which default had been made. This alleged lien was twice extended by ex parte orders of the court, and upon the third extension the receiver Odell, who had become sole receiver, by reason of the death of Paine, moved to vacate such extension. This motion was denied, and from the order denying the motion this appeal has been taken.

It/ will be noticed that the claimed lien is upon fifty per cent only of the retained percentages. This would seem to be the amount of said retained percentages applicable to the payment of the receivers’ certificates, although the record is not explicit as to the reason why the claim is so limited. This fact, however, does not affect the questions here involved.

The application is to vacate an order extending a lien. It might well have been made to vacate the lien itself, because the right to vacate the order is based exclusively upon the invalidity of the lien, and if the lien be valid the respondent should prevail upon this appeal.

I am wholly unable to see any authority for the filing of this lien. This is not the original mechanic’s lien filed under the statutes for the value of merchandise used in construction. That mechanic’s lien was satisfied in consideration of the issuance by the receivers to the DuPont Company of the receivers’ certificates. We are referred to no authority which authorizes any holder of these receivers’ certificates to file a lien in aid of his claim under those certificates. The moneys made applicable to the certificates, if thereafter received by the receiver, would be held by him in trust for the benefit of the certificate holders. The DuPont Company needs no lien, unless the percentages thus applicable should be insufficient to pay. all of the certificates, in which case the object of the lien could only be to secure preference in payment, which clearly would be both against the letter and the spirit of the order authorizing the issuance of the certificates and of the settlement between the DuPont Company and the receivers. Without authority then for the filing of the lien the order extending the lien, as well as the original filing of the lien, is invalid and should have been set aside. The order here appealed from must be reversed, with ten dollars costs and disbursements, and the motion granted, with ten dollars costs.

Clarke, P. J., McLaughlin, Dowling and Davis, JJ., concurred.

Order reversed, with ten dollars costs and disbursements, and motion granted, with ten dollars costs.