Baldwin Kitchen Cabinet Corp. v. Artz

• Decision Date: 13 December 1960
• Citation: 209 N.Y.S.2d 39,27 Misc.2d 265
• Parties: , 7 A.F.T.R.2d 1456, 61-2 USTC P 9502 BALDWIN KITCHEN CABINET CORP., Plaintiff, v. Hyman ARTZ, A & B Home Improvement Corp., Frank's Tile & Marble Works, Inc., and Kent Custom Sink Tops, Inc., Defendants.
• Court: New York Supreme Court

Page 39

209 N.Y.S.2d 39

27 Misc.2d 265, 7 A.F.T.R.2d 1456,

61-2 USTC P 9502

BALDWIN KITCHEN CABINET CORP., Plaintiff, v. Hyman ARTZ, A & B Home Improvement Corp., Frank's Tile &

Marble Works, Inc., and Kent Custom Sink Tops,

Inc., Defendants.

Supreme Court, Special Term, Nassau County, Part I.

Dec. 13, 1960.

Marvin Usdin, New York City, for plaintiff.

S. S. Goldsmith, New York City, for defendant A & B Home Improvement Corp.

Cornelius W. Wickersham, Jr., U. S. Atty., Brooklyn, for the United States.

MARIO PITTONI, Justice.

A sub-contractor has brought this action to foreclose a mechanic's lien. The defendant, A & B Home Improvement Corp. (hereafter called the contractor), was the general contractor for the remodelling of a house owned by the defendant, Hyman Artz (hereafter called the owner). The sub-contractor now moves for an order granting leave to Hyman Artz, the owner of the property, upon payment to the plaintiff sub-contractor of the full amount of the judgment entered by the contractor against owner Artz on January 11, 1960, to have that judgment cancelled, and to have the plaintiff sub-contractor's mechanic's lien vacated and cancelled.

On April 20, 1959, the sub-contractor filed a mechanic's lien against the owner in the amount of $1,081.91 for materials furnished . Subsequently the sub-contractor sued the defendant contractor, and recovered a judgment in the same sum.

On May 22, 1959, the contractor sued the owner, and on January 11, 1960 obtained a judgment in the amount of $1,008.24. Although the owner and contractor agreed to settle this judgment for $950, the compromise was never consummated.

On March 27, 1959, and on June 5, 1959, the government levied tax assessments against the contractor in the sums of $720.51 and $310.90, respectively. These assessments were never filed in Nassau County, but were recorded in New York and Queens counties, and with the owner and his attorney between September 24 and March 17, 1959.

By order dated July 28, 1960, Mr. Justice Brennan denied a motion to add the Treasury Department as a party defendant and to permit the owner to pay the judgment owing to the contractor into court. Denial of permission to pay the obligation due the contractor into court was predicated on the fact that settlement of the judgment for $950 was never effectuated and that this judgment did not bind the sub-contractor, whose lien and judgment is for $1,081.96.

On this motion, the sub-contractor and owner again seek to pay the $950.00 into court on condition that the sub-contractor's lien and the contractor's judgment be cancelled. The attorney for the contractor asserts the priority of his lien attaching to the judgment procured by his services, and the government asserts the priority of its tax lien.

Section 475 of the Judiciary Law provides that 'From the commencement of an action * * * the attorney who appears for a party has a lien upon his client's cause of action, * * * which attaches to a * * * judgment * * * in his client's favor, and the proceeds thereof in whatever hands they may come * * *.' It is to be noted that the statutory lien attaches to the judgment from the date of commencement of the action (Matter of City of New York [U.S.A.--Coblentz], 5 N.Y.2d 300, 307, 184 N.Y.S.2d 585, 590, certiorari denied sub. nom. United States v. Coblentz, 363 U.S. 841, 80 S.Ct. 1606, 4 L.Ed.2d 1726), which in this instance is May 22, 1959. The lien of the subcontractor, however, had been filed one month earlier, April 20, 1959, and takes precedence.

Lien Law, section 36-a (now section 70) applicable to private improvements, declares that funds received by a contractor from an owner are trust funds to be applied first to the payment of sub-contractors. For the purpose of civil action only, the trust funds include the right of action upon an obligation for moneys due. Lien Law, Sec. 36-a, now Sec. 70. When the action in behalf of the contractor was begun, its attorney did so with knowledge of the sub-contractor's prior filed lien. He thereby assumed the risk that his attorney's lien could be nullified, since any moneys recovered were first subject to the payment of sub-contractors. Here that risk became a reality.

Although the attorney's retainer is dated prior to the time that the sub-contractor's lien was filed, that fact is of no help to him in his case. The retainer provides: '* * * You hereby agree to pay me, and you authorize me to retain out of any moneys that may come into my hands, 50% of any sums received or recovered by you * * *.' The language of the retainer contract speaks of a future transfer of money to the attorney, at a subsequent time upon receipt of funds. The retainer does not purport to vest a present or immediate assignment, effective on the date of the making of the contract (cf. Matter of the City of New York [U.S.A.-Coblentz], 5 N.Y.2d 300, 307, 184 N.Y.S.2d 585, 590). Consequently, the retainer is not sufficient to defeat the priority of the subcontractor's lien. Nor does the derivative nature of a sub-contractor's lien affect its status. A sub-contractor's rights as lienor are measured by the rights of the general contractor only in the sense that he cannot recover more than is due the contractor from the owner. Lien Law, Sec. 4; Lorber v. Eskof Real Estate, Inc., 21 Misc.2d 308, 194 N.Y.S .2d 766, 769, and cases cited.

Turning to the government's tax lien, this court, at the outset, is faced with a challenge directed to its jurisdiction. The government appears specially (Civil Practice Act, § 237-a), and states that because it was not made a party to the action or served with process herein, this court is without jurisdiction to determine its rights. This self-same contention was made and rejected by the court in Matter of the City of New York [U.S.A.-Coblentz], 5 N.Y.2d 300, 301, 184 N.Y.S.2d 585, 592. The Court of Appeals therein said: 'This is not a situation in which the Government is cast in the role of a defendant being sued without its consent but, rather, that of a claimant to disputed funds. In intervening for the purpose of presenting its claim, the United States is an actor--voluntarily asserting a claimed right--and is not a defendant. In so acting, the Government suffers no impairment of its...