Newman v. Levy , 91 N.Y. Sup. Ct. 478 ( 1895 )

PRATT, J.

The mooted question in this case seems to "be wheth-

er an order on Levy, the owner, given by Sehring, the contractor, in favor of J. A. and E. J. Wolff, should take precedence of a lien of Lanzer, a subcontractor, and should, I think, be decided in the affirmative, on the ground that the payment of the order was made in good faith, and for a valuable consideration, before any service of notice of Lanzer’s lien upon the owner, Levy, and in fact before he had any knowledge that there was a lien. Lauer v. Dunn, 115 N. Y. 405, 22 N. E. 270. The statute on this point is specifically worded: “And after such service such owner or person in interest shall not be protected in any payment made to such contractor or other claimant.” Hence it appears that service of notice of lien is necessary to fix the rights of the lienor as against the owner or person in interest. In Kenney v. Apgar, 93 N. Y. 541, it would appear that, although the service of the notice of lien is not necessary to the validity of the lien, it is necessary to prevent the payment by the owner to the contractor after the filing of the notice of lien to the prejudice of the lienor, and acts as a protection to the owner against his contractor’s fraud. If such notice is not served or the owner informed of the lien, as in Kelly v. Bloomingdale, 139 N. Y. 343, 34 N. E. 919, all payments, acceptances, or other payments or advances hold good as against the lienor. McCorkle v. Hermann, 117 N. Y. 303, 22 N. E. 948, holds principally that the lienor may subject the debt to a lien by filing his notice of lien, and taking the other steps prescribed in this act. It also holds that the filing of a notice of lien creates a lien, but as the circumstances of that case were different from the present case, and the point as to service of notice of lien upon the owner to prevent any further payments to his contractor did not come up, it can hardly be held an adjudication on the case herein. In Kelly v. Bloomingdale there was sufficient, although not technical, notice, within the statute, given to the owner or party in interest; and throughout there was a presumption of fraud on the part of the party owning sufficient to show that the owner sought to avoid the lien by collusively paying his contractor when he was fully aware of the lien.

The time prescribed by the statute for the service of the notice of lien on the owner or party in interest is 10 days, and, if such notice is not served within that time, the owner or party in interest is protected in any payment he may make to his contractor until the next steps provided by the statute are taken; i. e. service of summons to foreclose the lien. Now, if service of such notice is necessary within 10 days,—and from the decision it has been held that this notice was necessary for the protection of the owner or party in interest against paying his contract, or any other party claimant,—it is unjust to so construe the statute that an owner acting in good faith and without notice should be held to pay not only what he owed his contractor, but also whatever any lienor claims against said contractor, thus forcing him virtually to pay twice for his houses. In fact, the lienor, Lanzer, seeks to abrogate a specific provision of the statute, although he was very careful to try to carry it out by serving a notice of lien upon the owner, Levy; and, when he found that Levy had paid or contracted to pay the Wolffs what has been allowed by all parties to be an assignment pro tanto of all funds in the owner’s hands due the contractor at the time, he took steps to push his whole lien upon the owner, on the ground, that the payment to the Wolffs was subsequent to his lien, and consequently void as against him, holding that the filing of his notice of lien was sufficient notice. This statute was not enacted to be technically abused by the lienor, and under it the owner has some rights, one of them being service of the notice of lien, which fact Lanzer has acknowledged by serving Levy, and now he tries to set aside his own act as unnecessary. The citations in this case bear only on the particular points set forth in the cases to which they relate, and none bear upon the points in issue herein sufficiently to make them conclusive in this case. I think, therefore, that the payment of the order on Levy, given by Behring, his contractor, in favor of the Wolffs, is good and valid, and that the balance that Levy now acknowledges he owes Behring ($821.87) should be the extent of Lanzer’s lien. I also think, on principles of equity, that all the lienors should be awarded judgments against Behring for the balance due them as subcontractors and uncollected, with interest to date; also, that no costs should be allowed against Levy except disbursements and costs up to the offer of judgment. The plaintiff, in all the actions, should have been granted judgments against the contractor Behring.

We think, as between Lanzer and the other defendants, the findings of fact and conclusions of law are correct, as his lien was prior in point of time, and the description of the premises was sufficient. This conclusion is applicable to action No. 2 and the other cases depending upon the result therein by application. The judgment in that action is reversed, and a new trial granted; costs to abide event.

In action No. 1, the only appellant being the plaintiff, and the only point made being that he should have been awarded a judgment against the contractor, the judgment is affirmed, with costs. The contractor did not appear in the action, and there was no issue before the referee as to him. If plaintiff desires such a judgment, * he may apply for it at any time at special term. All concur.