Church E. Gates & Co. v. Empire City Racing Ass'n

• Decision Date: 07 January 1919
• Citation: 225 N.Y. 142,121 N.E. 741
• Parties: CHURCH E. GATES & CO., Inc., v. EMPIRE CITY RACING ASS'N et al.
• Court: New York Court of Appeals Court of Appeals

225 N.Y. 142

121 N.E. 741

CHURCH E. GATES & CO., Inc.,

v.EMPIRE CITY RACING ASS'N et al.

Court of Appeals of New York.

Jan. 7, 1919.

Appeal from Supreme Court, Appellate Division, Second Department.

Action by Church E. Gates & Co., Incorporated, against the Empire City Racing Association and others, to foreclose a mechanic's lien. From a judgment of the Appellate Division of the Supreme Court in the Second Judicial Department (172 App. Div. 581,158 N. Y. Supp. 1070), affirming a judgment of the Westchester Special Term, foreclosing certain liens, the named defendant appeals. Affirmed in part and reversed in part.

Joshua M. Fiero, of New York City, for appellant.

George H. Taylor, Jr., of New York City, for respondents Church E. Gates & Co., Inc., and another.

Stephen Holden, of Mt. Vernon, for respondents Jacob Norden and others.

William J. Foster, of New York City, for respondent Colwell Lead Co.

Nathan S. Zucker, of New York City, for respondent Bloom.

Milo J. White, of Mt. Vernon, for respondent Yonkers Lumber Co.

William J. Wallin, of Yonkers, for respondents Samuel Woodfaulk and others.

CHASE, J.

This action is brought to foreclose a mechanic's lien for materials furnished pursuant to a contract with a lessee of real property and used in improvements thereon. Included among the defendants are the owner of the real property, Empire City Racing Association, the appellant; its lessee, National Fair and Exposition Association; ten individuals and corporations each of whom has filed a lien for materials furnished to the lessee and used in such improvements; one hundred and eleven individuals, each of whom has filed a lien for labor performed on such improvements; and the trustee in bankruptcy of the lessee. Judgment was obtained for the foreclosure of the plaintiff's lien, and also of the liens of the ten defendant materialmen, and seventy-nine of the laborers who had filed liens for their labor. The lien of one of the ten materialmen was not, however, sustained as against the appellant herein. The judgment in favor of the plaintiff and of the nine defendant materialmen and seventy-nine laborers sustaining their liens, respectively, and directing the foreclosure thereof, was affirmed by the Appellate Division (172 App. Div. 581,158 N. Y. Supp. 1070). It is as to each of said defendant lienors, challenged by the appellant in this court.

The Lien Law (Cons. Laws, ch. 33) § 3, provides:

‘A contractor, subcontractor, laborer or materialman, who performs labor or furnishes materials for the improvement of real property with the consent or at the request of the owner thereof, or of his agent, contractor or subcontractor, shall have a lien for the principal and interest of the value, or the agreed price, of such labor or materials upon the real property improved or to be improved and upon such improvement, from the time of filing a notice of such lien as prescribed in this article.’

[1][2] Proof of the consent or request of the appellant, as the owner of the real property in question, to the performance of labor and furnishing of materials for the improvement thereof, is essential to sustain the several liens. The appellant owner denies that its consent has been given, or that it requested the performance of the labor or furnishing of the materials within the meaning of the section of the statute quoted. The Special Term has found that the consent and request was given, and that finding has been sustained by the affirmance of the judgment at the Appellate Division.

On the 28th day of December, 1912, an agreement was entered into between the appellant and the defendant National Fair and Exposition Association, by which the racing association leased to the exposition association the real property on which the improvements were made for the term of five years from January 1, 1913, together with the personal property thereon. The exposition association agreed at its own expense to hold, annually, on said grounds known as the Empire City Park, an agricultural, live stock, and amusement enterprise, during the month of August, and, under certain conditions, for a longer period, and to pay the racing association 20 per cent. of the gross receipts from the sale of tickets and admissions, with certain exceptions therein specified, and 20 per cent. of the gross receipts for admissions to, and seats in, the grand stand. The exposition association agreed to keep the grounds and buildings in good condition and repair, and to use the same for other entertainments, baseball, public meetings, racing, house training, etc., subject to the approval of the racing association, and to pay the racing association 50 per cent. of the moneys received from all such sources except as in the agreement specifically provided.

It also therein provided that the exposition association has the--

‘right to change the location of, alter, rearrange or remodel any buildings, fences, walks, roads, or track now on the grounds, provided the consent of the first party is first obtained in writing.’

It also therein provided that the exposition association has--

‘the right to erect new buildings on such locations as are approved by the first party (racing association) or to allow the privilege of erecting buildings to others; such new buildings as may be erected by the second party (exposition association) are to remain their property, and may be removed from the premises by them at the termination of this contract, provided that all the agreements herein contained have been faithfully performed by them.

‘All other buildings erected by exhibitors are subject to removal by their owners at any time, it being understood that second party (exposition association) is to provide insurance on any buildings erected by themselves or by their permission.’

It also therein provided that the exposition association is to--

‘spend or cause to be spent the sum of twenty thousand dollars ($20,000) on buildings and improvements within two (2) years, and a total sum of fifty thousand dollars ($50,000) within four (4) years.’

It also contained a provision for the renewal of the lease at the end of term.

The exposition association, without first obtaining the consent of the racing association in writing, commenced, early in 1913, to alter, rearrange, and remodel many of the buildings, fences, walks, roads, and tracks on said grounds. On July 9, 1913, the exposition association delivered a letter to the racing association, and therein referred to conversations theretofore had with its officers, and gave a detailed statement of changes and additions that it desired to make to the buildings and grounds of the park, and asked for written consent therefor. The racing association replied on the same day, in which reply it referred to the provisions of the lease by which changes and additions are required to be made at the expense of the exposition association, and added:

‘Subject to your furnishing us with a satisfactory guarantee of your ability to pay for such changes and additions and provided the work is completed before August 31, 1913, we will accord you the following consents under the terms of said lease, to take effect when such guarantee is furnished.’

Then followed a statement in detail of proposed alterations and improvements to which it would assent as in the letter stated.

It refused its assent without qualifications to certain proposed alterations, and it also included a statement as follows:

‘In reference to the improvements of the present roadways, and making new connections for the convenience of the public, we shall require full details before giving our sanction to the same.’

On July 10th the exposition association gave to the racing association a bond as required by the letter of July 9th signed by two individual sureties. On July 11th the racing association wrote the exposition association as follows:

‘We beg to acknowledge receipt of your temporary bond, and to say that with the understanding that you will supplement it by July 22nd, 1913, with one issued by the National Surety Company of New York City for $20,000, the same is acceptable to us.’

The bond, with individual sureties, was not rejected, but retained and accepted. The statement in the letter quoted that its acceptance was with the understanding that another bond supplementary to it be issued by the National Surety Company by July 22d is a condition subsequent to the receipt and its acceptance of the bond styled by it a ‘temporary bond.’ The bond with individual sureties, or, as termed, the ‘temporary bond,’ is the one referred to as acceptable to the racing association, and its acceptance constituted a consent to the improvements within the meaning of the lien law. Such consent was in no way qualified or restricted. It was as broad and comprehensive as the obligation of the bond or guaranty so accepted by it.

The failure of the exposition association to give, as required by the letter accepting the temporary bond, a further and supplementary bond of the National Surety Company, did not in itself constitute a withdrawal of the consent of the racing association to the continuance of the improvements, at least without some specific affirmative action on the part of the racing association. The improvements that were continued pursuant to the consent during the time between the receipt of the letter of July 11th and July 22d, the day named therein, proceeded without interruption or notice, so far as appears by the record, until about August 18th, when proceedings were commenced which resulted in the exposition association being declared a bankrupt on August 29, 1913.

Expenditures by the exposition association to the amount of $20,000 in two years, and $50,000 in four years, were not only contemplated by the racing association, but were, as we have shown from the lease, made obligatory on the part of the exposition association. The rental to be paid by the exposition association was wholly...