Anderson v. John L. Hayes Const. Co.

• Decision Date: 09 July 1926
• Citation: 153 N.E. 28,243 N.Y. 140
• Parties: ANDERSON v. JOHN L. HAYES CONST. CO., Inc., et al.
• Court: New York Court of Appeals Court of Appeals

243 N.Y. 140

153 N.E. 28

ANDERSON

v.JOHN L. HAYES CONST. CO., Inc., et al.

Court of Appeals of New York.

July 9, 1926.

Action to foreclose mechanic's lien by John Anderson against the John L. Hayes Construction Company, Inc., and others. From a judgment of the Appellate Division (215 App. Div. 109, 213 N. Y. S. 513), reversing in part, on the law and facts, and modifying in part, a judgment on a decision of the Special Term, plaintiff and certain defendants appeal.

Judgment of the Appellate Division reversed, and that of the Special Term affirmed.

Appeal from Supreme Court, Appellate Division, Second Department.

William H. Sweny, of Yonkers, for appellant Anderson.

I. J. Beaudrias, of Yonkers, for appellant Westchester County Trust co.

Joseph A. Murphy, of Albany, for appellant Acme Cement Corporation.

James E. Duross, of New York City, for appellant Atlas Powder Co.

Walter N. Gill, of Kingston, for appellant Hasbrouck.

John J. Kinney, of Yonkers, for appellant Rosoff Sand & Gravel Corporation.

Gould & Newman, of New York City, for appellant Concrete Steel Co.

Albert Ottinger, Atty. Gen. (Albert J. Danaher, of Watervliet, of counsel), for the People.

CARDOZO, J.

The state of New York, by its department of public works, bureau of highways, made a contract with the John L. Hayes Construction Company whereby for $355,264.40 the construction company was to construct a highway in Greene and Ulster counties. There were to be monthly estimates of the amount of work done and material in place. Ninety per cent. of the value so computed was thereupon to be paid to the contractor, the remaining 10 per cent. to be retained until the completion of the job. The statute made it the duty of the counties to contribute a prescribed quota of the cost. Highway Law, §§ 139, 140, 141-a; Consol. Laws, c. 25. As between the parties to the contract, the obligation to pay at the times and in the amounts agreed was the obligation of the state.

On October 15, 1924, an installment of the price fell due in accordance with a monthly estimate. To pay this installment, the state, by its bureau of highways, drew two drafts, dated October 20, 1924, one for $8,948.23, and the other for $348.25, to the order of the contractor, upon the treasurer of Ulster county. The drafts were presented to the treasurer for payment, and payment was refused; the treasurer wrongfully taking the position that the contract was without binding force either on the state or on the county. The contractor, deprived by these acts of the means of going forward with the work, gave notice to the state on October 31, 1924, that payment had not been made in accordance with the contract, and that work would cease thereafter. The state retaliated with a notice on November 6, 1924, directing the contractor to go on, with warning that the default if continued for 10 days, would lead the state to declare the contract broken and to relet the work to others. The contractor did not go on, and the state declared a default in accordance with its notice.

The plaintiff brings this action to foreclose a mechanic's lien for labor furnished to the contractor in the building of the highway. He has joined as defendants the state of New York and also other lienors. One of the defendants, the Westchester Trust Company, is an assignee of the liens of laborers for $6,791.88. To the extent of $23,700 it is the assignee of the contractor, by force of an assignment made on the stoppage of the work as collateral security for moneys previously loaned. The Special Term held that the state was in the wrong, and that there was due under the contract at the date of such default the sum of $75,138.34, the value of the work and material furnished at that time. From the moneys so found to be due, the state was directed to pay the claims of lienors, and also that of the Westchester Trust Company as the contractor's assignee. The payments thus directed did not exhaust the fund. The balance left over would, of course, belong to the contractor, but the court conceived itself to be powerless to make the necessary award. A contractor, unlike materialmen or laborers, is without a lien against the state. Lien Law (Consol. Laws, c. 33) § 5. For that reason, the judgment was in favor of lienors and assignee, without prejudice to the remedy of the contractor by proceedings in the Court of Claims. In this ruling the contractor acquiesced. The appeal that followed was the state's.

The judgment of the Appellate Division requires for its understanding a summary of the provisions of the Lien Law. The statute says that one who performs labor for or furnished materials to a contractor for a public improvement, under a contract with the state or a municipal corporation, shall have a lien upon the moneys of the state or the corporation, to the extent of the amount due or to become due under the contract, upon filing a notice of lien in the form prescribed by law. Lien Law, § 5. The statute also says that this lien may be enforced against the funds of the state in the same court and in the same manner as a mechanic's lien on real property (section 42); that the state may be joined as a defendant in the same manner as a private person (section 44); and that the court shall render judgment directing the state to pay to the lienors so much of the money which may be found due from the state to the contractor as will satisfy their liens, with interest and costs (section 60).

Upon appeal to the Appellate Division, the Attorney General took the ground, as he does in this court, that the Supreme Court is without jurisdiction to adjudge the payment of such a lien, unless there is a concession by the state of money due to the contractor. Only in that event, it is said, has the state consented to be sued, except in the Court of Claims. If the indebtedness is disputed, the lienors are helpless.

The Appellate Division so held, and in thus holding eviscerated the judgment. It wiped out all the provisions adjudicating the default of the state and the existence and amount of an indebtedness at the cessation of the work. It left nothing but an adjudication that the liens were enforceable against any sum that might finally be determined to be due to the contractor in an action in the Court of Claims. If such an action were not brought, or, being brought, were determined adversely to the contractor, the liens would not attach to anything. They were left in the meantime suspended in midair. Another action would be needed to bring them down to earth.

[1] We find no basis in the statute for this division of judicial functions. The state has consented to be sued in the ordinary courts of justice, when the subject-matter of the controversy is a lien upon money owing to its contractor, and has consented that, out of any money that may be found to be so owing, judgment may be rendered, directing payment to be made. In consent so explicit, we see no suggestion of a condition that the remedy is to fail if the debt shall be disputed. Justice and covenience combine with the plain wording of the statute in forbidding us to imply a condition so oppressive. No sensible reason can be imagined why the state, having consented to be sued, should thus paralyze the remedy. A court of dignity and power had the parties before it, and had heard the controversy between them. To transfer the controversy to the Court of Claims could work no gain to any interest worthy of protection. Indeed, the special limitations applicable to claims in that court (Court of Claims Act [Laws 1920, c. 922] § 12) might often bring it to pass that the claim would be barred before the transfer could be made. The exemptionof the sovereign from suit involves hardship enough, where consent has been withheld. We are not to add to its rigor by refinement of construction, where consent has been announced.

[2] Our holding, therefore, is that there was jurisdiction to determine the sum chargeable with liens, and to direct payment to the lienors out of the balance so adjudged. A closer question is whether the Westchester Trust Company has the standing of a lienor, in so far as it claims as the contractor's assignee. We have seen that a contractor with the state, unlike materialmen and laborers, is not a lienor. His remedy as plaintiff is by action in the Court of Claims. There is plausibility in the suggestion that the rights to be accorded to his assignee can be no greater than his own. We think, however, that other provisions of the Lien Law point to the conclusion that an assignee of moneys due under a contract for public improvement, when brought into court at the suit of lienors, is on a parity with lienors in respect of...