Hedden Construction Co. v. Proctor & Gamble Co.

Blackmar, J.

The only questions submitted for the decision of the court are the claim of the Kellar Lumber Company for a preference as a material-man under section 3414 of the Code, the validity of the lien and claim of Heinicke, Inc., and the question of interest on the several claims and costs.

Hilliken Bros., the contractors, are insolvent. It is conceded that the amount of $27,486.46, became due under their contract' from the Proctor & Gamble Company, the owner, and the different parties to the action claim to share in this amount as lienors. There is not enough to satisfy all the liens and, therefore, all the questions above stated, except the validity of the claim of the Heinicke Company, are vital ones for the plaintiff, the last and largest lienor.

The Kellar Lumber Company claims to be a material-man within the statutory definition and, therefore, entitled to a preference over the other lienors. This company furnished to Hilliken Bros., the contractor, “ Oak flooring,” of a certain grade, quality and size, pursuant to two orders therefor made by Hilliken Bros., and accepted by the Lumber Company. In the written order of January 22, 1907, after certain printed and typewritten matter relating to the price, the manner of delivery and certain shipping directions, appear the words, “charge-contract 1981 — C — 5.” In the other order, dated August 14, 1906, there appears on the face of the order the following: “ This order supersedes and cancels order Ho. 8 and covers the furnishing and delivering F. O. B. cars Proctor & Gamble’s Special switch — oak flooring for a contract known in this office as 1981.” It is conceded that the contract referred to as Ho. 1981 is the contract between the general contractor Hilliken Bros, and the owner. The Lumber Company contends that these orders, so given and accepted, did not constitute a contract for “ the improvement of such real property;” but that the contract was one for the furnishing of materials, only, and that, therefore, it is a material-man and not a subcontractor, within the meaning of section 2 of the Lien Law. The plaintiff contends that such contract so made brought the Lumber Company within the definition of the term subcontractor, and that, by means of the reference to contract USTo. 1981, the portion of that contract relating to “ oak flooring ” was in effect sublet.

I do not think the contract, created by the giving and acceptance of these orders, constituted the Lumber Company a subcontractor. It was not a contract for the improvement of real property, neither did the Lumber Company obligate itself to complete any portion of the main contract between the contractor and the owner. The extent of the contractual obligation of the Lumber Company was to make delivery of certain lumber at a certain time and place for a specified price. In my opinion, the transaction was simply a sale, and brought the Lumber Company within the definition of the term “ material-man.” It is doubtless true that the giving and acceptance of the orders constituted a contract, and it may, therefore, be said that the Lumber Company did contract with Milliken Bros., the general contractor, but every sale is the consummation of a contract express or implied ; and, if it can be successfully contended that a sale to a contractor makes the seller a subcontractor, on the theory that a sale is a contract, it is difficult to see what state of facts or what transaction would clothe a person with the character of a “ Material-man.” The reference in the orders to contract No. 1981, permits, in my opinion, no legal inference of any character. Mere knowledge that material sold to a contractor is to be used in the performance of a certain contract between the contractor and the owner cannot, of itself, constitute a subletting. If it could, there might be as many sublettings as there were separate purchases made by the contractor. It seems to me, therefore, that the Lumber Company is a material-man and not a subcontractor. The question is then presented whether, being a material-man, the Lumber Company is entitled to a preference over other lienors who are admittedly subcontractors. I think that, under section 3414 of the Code, the claim of preference must be allowed. Section 20, of chapter 342 of the Lien Law of 1885, as amended by chapter 420 of the Laws of 1887, provided as follows: “All persons, firms, corporations • or associations entitled to liens, under the provisions of this act, except those who contracted with the owner, shall be deemed subcontractors, and the court in the judgment shall direct the amount due subcontractors and workmen to be paid out of the proceeds of sales in their order of priority as herein provided before any part of such proceeds are paid to the contractors * * *. Persons standing in equal degree, as colaborers or various persons furnishing materials, shall have priority according to the date of filing their liens, provided, however, that in all cases workmen or laborers working for daily or weekly wages shall have preference over employers of labor, subcontractors or contractors, without reference to the date when such workmen or laborers shall have filed their liens.” This section, under the generic head, “ Sub-contractors,” grouped, all lienors who are under the present law designated as subcontractors and material-men, and the section gave a preference to workmen and laborers over all other lienors including those now called material-men. The section quoted was repealed by chapter 419, Laws of 1897, which .enacted section 3414 of the present Code. It seems to me that this latter section has extended to a material-man, as that term is defined in the Lien Law, the preference that formerly existed in favor of a workman or laborer only. The claim of the Kellar Lumber Company to a preference is allowed; and the Kellar Lumber Company is, therefore, entitled to prior satisfaction of its claim, amounting to $948.98, and interest from the date of filing the lien.

Among the other lienors, it is conceded that the lien of the defendant P. Hart & Son, for $10,488, is prior in point of time and entitled to satisfaction before that of plaintiff. Since the hearing, an order was granted upon consent permitting the payment of this lien. If it has been paid, evidence of that fact should be presented with the findings. The evidence may be in the shape of a stipulation of counsel or a certified copy of the order and evidence of payment under it. If the amount of such lien has heen paid, interest thereon is waived. The remainder of the fund belongs to •the plaintiff under its lien, which is greater than the fund.

The contract of H. ft. Heinicke, Inc., was made with Milliken Bros., and not with Proctor & Gamble. It is not necessary to pass upon the sufficiency of the notice of this lien under the statute, as the lien is invalid because expressly waived in the contract with Milliken Bros. Even if valid, it would be of no practical value, for prior liens would absorb the fund.

In my opinion, interest should be awarded against Procter & Gamble from the time the Milliken Bros.’ contract was finally completed. Section 4 of the Lien Law, cited by counsel, was not intended to absolve the owner from paying interest upon a liquidated and valid debt which is due. It was meant to limit the owner’s liability to all lienors to the sum for which he could be made liable under the original contract. This sum includes interest from the date when it is due and payable. It is my recollection that there was introduced in evidence a certificate, showing when the contract was finally completed; but I do not find it among the papers, and the stenographer’s minutes are not before me. If this date appears in the evidence, the decree should provide for interest on the sum of $21,486.46, to be computed from such date. If such date does not appear in the evidence, interest may be computed from the time of the beginning of the action.

All the parties to the action may have their disbursements taxed as costs payable out of the fund. Bills of costs are allowed to all the parties except Milliken Bros., payable by Milliken Bros. The plaintiff may have judgment for deficiency against Milliken Bros. The defendant Heinicke, Inc., may have personal judgment against Milliken Bros., if desired.

Counsel may present findings and proposed decree on or before the fourth day of September. Settle decree on notice.

Ordered accordingly.