Lichtenstein v. Grossman Construction Corp. , 248 N.Y. 390 ( 1928 )

We agree with the Appellate Division that section 13 of the Lien Law (Cons. Laws, ch. 33) applies to these liens and that they are valid to the amount of the labor and material put into each building. The apportionment as made by the referee has been properly affirmed except in one particular. The Globe Tile Co., Inc., furnished labor and material for both buildings in the amount of $9,201. There has been paid to it $6,500, leaving a balance unpaid of $2,701. All of this unpaid balance cannot be charged up against the corner building which has produced a surplus in mortgage foreclosure proceedings sufficient to pay the mechanics' liens in part. The lien of the Globe Tile Co., Inc., therefore, with the other liens which have been filed against both buildings must be limited to the amount of labor and material put into the corner building.

The referee found that amount to be $5,321 which left $3,880 going into the inner or other building. The payment of $6,500, however, he divided equally between the two buildings, deducting from $5,321, $3,250 and thus arriving at his figure of $2,071, which he found to be the amount of the lien of the Globe Tile Co., Inc., on the corner building payable out of the surplus.

Having made an apportionment of the amount of the labor and material as added to each building he also should have apportioned the credits in like proportion. This is the rule in equity. Where both the debtor and creditor have failed to direct the application of a payment it is the duty of the court to apply it according to equitable principles (Orleans Co. Nat. Bank v.Moore, 112 N.Y. 543; Field v. Holland, 10 U.S. [6 Cranch] 7, at page 28; Union School District of Guilford v. Bishop,76 Conn. 695; Robie v. Briggs, 59 Vt. 443.)

The $6,500 payment, therefore, should be applied in the proportion which $3,880, the amount going into one building, bears to $5,321, the amount going into the corner building, which is as $2,741 to $3,759. This means that the amount of the payment to be applied on the lien of the corner house is this larger amount of $3,759. Deducting this from the amount of the lien, $5,321, as found by the referee, leaves a balance due to the Globe Tile Co., Inc., of $1,562, instead of $2,071 found by the referee.

The order of the Appellate Division should, therefore, be modified by fixing the lien of the Globe Tile Co., Inc., at this amount of $1,562 with interest, and as thus modified affirmed, without costs.

CARDOZO, Ch. J., POUND, CRANE, ANDREWS, LEHMAN, KELLOGG and O'BRIEN, JJ., concur.

Ordered accordingly.