McKay v. City of New York

O’Brien, J.:

This action was brought to- determine the rights of various parties to- money due under a contract-made and entered' into on June. 24, 1897, between David F. Gibb and the city of Yew York, through the board of education, for the building of a schoolhouse. The total amount of the contract was $124,164, of which there has been paid $93,600, leaving in the hands of the comptroller the sum of $30,564, which is the subject of this controversy.

The contractor testified that the claim of the Eleventh Ward Bank ivas for money borrowed to use for payrolls and to pay bills; that he, the contractor, was obliged to borrow some money to carry on the business, and money was used to the extent of $7,500, which was the consideration named in the assignment to the bank, in carrying on the work; that the money was obtained from the bank at different times, but the full amount.of $7,500 had been advanced when the assignment was executed; that at that date.there was due, on the contract more than $7,500 in addition to sufficient money to pay the prior liens which had been filed against the fund.

In other words, it clearly appears that the assignment executed to the bank was for a good and valuable consideration, and that when made there was owing by the city on the contract sufficient to pay the $7,500 — in addition to enough to pay the «prior lienors.

The main question presented on this appeal is as to the priority of the claim of the Eleventh Ward Bank over subsequent lienors — whether the assignment by the contractor Gibbs to the bank of a part of the fund due, or to grow due, is postponed in time óf pay- - ment to liens subsequently filed. The subsidiary questions relate to the validity of the liens, exception being taken to some of them on the ground that they were improper in form or were not filed - in the proper offices; and under these objections is presented the question as to whether liens against a fund arising out of a public improvement are regulated by the General Lien Law or by the provisions of the Consolidation Act relating to liens against the city.

Upon the main questions, the conclusion reached by the court below, based upon the cases in the Court of Appeals of Merchants & Traders' National Bank v. Mayor (97 N. Y. 355) and Mechanics dé Traders' Bank v. Winant (123 id. 265), was that the assignment was not to be treated as of the date of filing, but the assignee’s rights ■to participate in the fund should be postponed to all the liens, including those that were subsequently filed. The correctness of that decision is before us for consideration.

As stated by Judge Gray in the case of Bates v. Salt Springs National Bank (157 N. Y. 322, 328): “ These cases related to contracts made by the city of New York in 1875 and 1876.” It will be seen from that opinion that the general rule applicable to lienors was inapplicable to city contracts in 1875 and 1876, for the reason that there being then no lien law relating to contracts with the city, they were controlled by the terms of an ordinance passed by the board of aldermen and by the provisions of the contract pursuant to the ordinance between the contractor and the city.

These bank cases referred to and relied upon are no longer controlling for the reason that the conditions have changed. The ordinance was superseded by the Lien Law of 1878 (Laws of 1878, chap. 315) which was re-enacted and re-embodied in the Consolidation Act passed in 1882 (Consol. Act of 1882, §§ 1824-1838). The-rights of the parties are consequently to be determined under the Consolidation Act and the terms of the present contract with the city, unless the provisions of the Consolidation Act, in turn, have been modified or repealed by subsequent legislation.

Although there were some minor amendments extending the scope or declaratory of the intention of the Consolidation Act, none of them needs consideration till we come the General Lien Law of 1897 (Laws of 1897, chap. 418), which is a general statute upon the' subject of mechanics’ liens, and to chapter 419 of the Laws of 1897,.

amending the Code of Civil Procedure, both of which went into effect on September 1, 1897. This act of 1897 has a provision (Laws of 1897, chap. 418, § 5) relating to liens under contracts for public improvements which, at first blush, might be regarded as affecting the Consolidation Act. When, however, we consider the rule of construction that a special and local statute providing for a particular case or class of cases is not repealed by a subsequent statute general in its form, provisions and applications unless the intent to repeal or alter is manifest, although the terms of the general act are broad enough to indicate cases embaced in the general law (McKenna v. Edmundstone, 91 N. Y. 231), it becomes evident that the Consolidation Act was not repealed, for we fail to find in -the general act any intent to supersede its provisions. *

This view is strengthened by the act passed in 1899 (Chap. 195, Laws of 1899), which expressly repeals the sections of the Consolidation Act and acts amendatory thereof (relating to mechanics’ liens on account of public improvements in the city of New York), and which expresses the legislative construction that those sections of the Consolidation Act were not repealed or affected by the act of 1897. The rights of the parties here, therefore, having accrued while the Consolidation Act was in full force and effect, are to be determined by its provisions and the terms of the contract with the city under consideration. By referring to them, but without setting them forth at length, it will be noticed that the ordinance and the contracts affecting the city work prior to 1878, and the provisions of the Consolidation Act and of the contract here in question, are radically different; and we must conclude, therefore, as did the court in the case of Bates v. Salt Springs National Bank (157 N. Y. 322), that the Bank Oases (supra) are not applicable.

The Consolidation Act provides for the filing of a lien, and there is nothing, in its terms which would prevent the contractor from assigning any portion of the moneys due or to grow due thereunder to one to whom he is indebted or who, on the faith of the contract, advances money. Nor is there any good reason, in the absence of .an express inhibition, why the contractor, who may have proceeded in part with his work and who is prevented from going ahead by lack of funds, should not have the right to obtain money by way of loan, which may be used for the benefit of the work, and pledge the moneys due and to grow due under the contract by means of an assignment for the repayment thereof. We can see no distinction between the rights of a contractor who does work for the city in this respect, and one who enters into a private contract. There is nothing in the Consolidation Act any more than in the General Lien Law which expressly gives a preference to a lien over an assignment. If one does work or advances money to aid the work, there is nothing in the law to compel him to file a lien in preference to taking an assignment.

There are many decisions which, following the case of Lauer v. Dunn (115 N. Y. 405), recognize in contracts made between private parties the right of a contractor to make' an assignment and the priority of such an assignment over liens subsequently filed. (See Fortunato v. Patten, 147 N. Y. 277; MeCorkle v. Herrman, 117 id. 297; Stevens v. Ogden, 130 id. 182; Beardsley v. Cook, 143 id. 143.) These cases uphold the rule enunciated in Lauer v. Dunn (supra), which is well summarized in Bates v. Salt Springs National Bank (supra), as follows: “ In the absence of anything to the contrary in the contract, and- before any notice is filed, the contractor may assign to his creditor in payment of his debt, the whole or any portion of the moneys due or to become due under the contract, and the assignee acquires a preference over a subsequent lienor.”

That this rule is equally applicable to contracts made with a municipal corporation is supported by the case of Hackett v. Campbell (10 App. Div. 523; affd., 159 N. Y. 537, without opinion). There the question involved a provision of a contract between the board of education of the city of Yonkers and a contractor, to the effect that no assignment of any portion of the amount due upon the contract should be made without the consent first had in writing of the committee of the board of. education. During the progress of the work, numerous assignments having been made by the contractor and paid, this was deemed to constitute a waiver of the provision and the consent; and it was accordingly held that as the-provision' was one intended solely for the benefit of the board, and as its sole function was to prevent a claim from being asserted against the city without its consent, in that particular case, the provision having been wañved, an order, which was received and entered! in the book, operated as an assignment pro tanto of the Jrund due-to the contractor and was entitled to be paid before a lien subsequently filed by sub-contractors who furnished merchandise and material to the contractor. While the precise question that we are-considering was not directly passed upon, yet the case referred to> is an authority favorable to the appellant because it was therein assumed to be the rule that there is no distinction existing between, a private and a public contract as to preference of an assignment, and a lien.

There being, therefore, no prohibition in law, unless it is found in the terms of the contract, there is no good reason furnished why the assignment here should not take effect as of its date. In the contract with the city there is a provision that the contractor will not permit liens, attachments or other incumbrances to remain on. the property. In Lauer v. Dunn (supra) where there was a provision that “ in case any lien or liens .* * * shall exist upon the property * * * at the time or times when * * * any payment is to be made,” etc., it was held that the provision was-for the protection of the owner simply, just as in the present, contract the provision' is for the purpose of protecting the city-A similar construction was given to . provisions in city contracts in Hackett v. Campbell (supra) and Fortunato v. Patten (supra). The city is not concerned with the persons who shall get the moneys due under the contract ; but it is concerned with the right of the contractor to demand his mbney or with persons claiming under him demanding the fund while there are others who insist upon urging claims against the city. Were it not for the provision of the contract, the city might be subjected to multifarious suits and to vexatious and damaging litigation which are-avoided by removing the right of the contractor to demand money while liens or claims against the fund of which it has notice exist; hence it is provided that the city or the contractor may commence a suit in which all the others shall be made parties, and in which the rights of all may be determined. (Consol. Act, §§ 1828-1830.)

It will be noticed that the clause of the contract refers not only to mechanics’ liens, but also has reference to attachments or other incumbrances which, while they exist, preclude the contractor from demanding payment; and thus it fully protects the city.

We find, therefore, neither in the Consolidation Act nor in the contract, anything which limits the right of a contractor to make an assignment which shall take precedence over liens subsequently filed, and our conclusion is that the assignment to the Eleventh Ward Bank, based as it was upon a good consideration and notice of it having been filed with the comptroller, took precedence in payment over subsequent liens.

This determination renders it unnecessary to discuss any of the other questions urged by the appellant as to the invalidity of the subsequent liens, for the reason that the bank, the appellant here, is not concerned with them.

Upon the trial no serious contest was made except by the bank as to the validity of any of the liens, and all the parties on that subject should have a day in court. This requires us, rather than determine those questions here, to order a new trial, with costs to the bank, payable out of the fund, to abide the event.

Judgment reversed, new trial ordered, costs to appellant, payable Dut of the fund, to abide event.

Van Brunt, P. J., Eumsey and Patterson, JJ., concurred; Ingraham, J., dissented.