Dember Const. Corp. v. P & R Elec. Corp.

• Decision Date: 02 September 1980
• Citation: 431 N.Y.S.2d 586,76 A.D.2d 540
• Parties: DEMBER CONSTRUCTION CORPORATION, Respondent, v. P & R ELECTRIC CORP., Appellant.
• Court: New York Supreme Court — Appellate Division

Page 586

431 N.Y.S.2d 586

76 A.D.2d 540

DEMBER CONSTRUCTION CORPORATION, Respondent, v. P & R ELECTRIC CORP., Appellant.

Supreme Court, Appellate Division, Second Department.

Sept. 2, 1980.

Demov, Morris, Levin & Shein, New York City (Michael H. Klein, New York City, of counsel), for appellant.

Harold S. Elovich, New York City, for respondent.

Before HOPKINS, J. P., and TITONE, LAZER, MANGANO and O'CONNOR, JJ.

TITONE, Justice.

The question presented upon appeal is whether a notice of mechanic's lien, otherwise properly filed, is subject to summary discharge pursuant to subdivision (6) of section 19 of the Lien Law for failure of the lienor to allege, upon the face of the notice of lien, compliance with the provisions of section 15 of the Lien Law. Following are the facts upon which this question arose.

On or about September 3, 1976, Dember Construction Corporation contracted with IBM Corporation to erect for IBM a commercial building in Kings County. The general contract between IBM and Dember obligated the latter to employ and subcontract with minority businesses, in compliance with the President's Executive Order 11246, as amended, on the subject of Equal Employment Opportunity. Accordingly, Dember awarded a subcontract for all of the electric work in the project to Berkel Electric Co., Inc., a minority contractor.

In turn, Berkel assigned to P & R Electric Corporation the "benefits and obligations" of its subcontract with Dember, "because P & R would be doing the work." Paragraph 6(t) of the subcontract prohibits assignment without the prior written consent of the general contractor, and the record fails to disclose the existence of any written consent to the assignment by Dember. The parties to this appeal dispute whether Dember had ever approved, and actively participated in, the assignment of the subcontract from Berkel to P & R Electric.

P & R contends that it had been the preferred and the intended subcontractor, but that Dember, being required to choose a minority concern, subcontracted to Berkel. Moreover, while Dember alleged that it had dealt only with Berkel, and stated that all requisitions for payment were made by Berkel and that all payments were made to Berkel, P & R asserted that it, and not Berkel, had provided all of the materials and labor in connection with the electrical subcontract.

On November 22, 1978 P & R filed a notice of mechanic's lien in the sum of $243,000 against the IBM property to secure its alleged interest in unpaid sums relating to labor and materials actually furnished to the project and to materials which were manufactured for, but not delivered to the project. By order to show cause dated February 7, 1979, Dember moved for summary discharge of the mechanic's lien. ^*

Special Term granted the relief sought upon two grounds: first, because P & R, as an assignee of the "benefits and obligations" of the subcontract between Dember and Berkel, was not a lienor as defined in section 2 (subd. 1) of the Lien Law because it was not a "successor in interest"; and, second, because the purported lienor failed to record notice of its assignment, as required by section 15 of the Lien Law, it "ha(d) no lien".

Special Term erred in granting Dember summary discharge of P & R's notice of mechanic's lien under section (subd. (6)) of the Lien Law. From a reading of the face of the notice of lien it is apparent that there are no defects thereon of the type contemplated within such statutory provision governing the drastic remedy of summary discharge.

Specifically, section 19 (subd. (6)) of the Lien Law authorizes summary discharge whenever: first, the character of the labor or the materials furnished as identified upon the face of the notice of lien, and for which a lien is claimed, discloses the absence of a valid lien; or, second, the notice of lien is invalid for failure of the lienor to have complied with the provisions of section 9 of the Lien Law relative to particular contents of the notice; or, third, public records disclose a failure to have complied with section 10 of the Lien Law relative to filing requirements.

However, it was not upon any of these bases that Dember sought summary discharge of the lien filed by P & R. Rather, Dember alleged a facial defect in the notice of lien because P & R was an "alleged assignee of the claim of Berkel, which had furnished labor and materials"; Berkel, as assignor, "did not have the right to file a Notice of Mechanic's Lien" and had not done so; a "successor in interest", pursuant to section 2 of the Lien Law, is one who succeeds to the rights of another under a previously filed, valid notice of lien; hence, P & R lacked standing pursuant to sections 2 and 3 of the Lien Law to file a notice of lien.

Dember's argument succeeded at Special Term, which, by order dated July 6, 1979, vacated and discharged of record the mechanic's lien. The court's memorandum decision indicated a dual basis for discharge of the lien. I find neither to have been applied correctly to the facts of this case.

Focusing upon that language in the notice of lien which recited assignment to P & R of "the benefits and obligations" of a contract between Berkel and Dember, Special Term correctly concluded that P & R had "not become a subcontractor of Berkel but a mere assignee" of the subcontract between Dember and Berkel. However, the court incorrectly concluded therefrom that as "an assignee of a claim for work and materials", P & R was not entitled to file a notice of lien because it was not a "successor in interest" within the meaning of subdivision 1 of section 2 of the Lien Law. That subdivision provides that "(t)he term 'lienor,' when used in this chapter, means any person having a lien upon property by virtue of its provisions, and includes his successor in interest."

It is well settled that a successor in interest, for purposes of the application of subdivision 1 of section 2 of the Lien Law, may only be "one who succeeds to a lienor's rights under a valid notice of lien already filed, by assignment or otherwise * * * (T)he assignor must have an existing lien before he can have a 'successor in interest' " (Tisdale Lumber Co. v. Read Realty Co., 154 App.Div. 270, 271, 138 N.Y.S. 829, 831).

This rule excludes from the definition of lienor those who are assignees of claims for money arising solely out of the performance of labor and/or the furnishing of materials by others for the simple reason that a mechanic's lien is a remedy, the right to which is personal to the laborer, predicated upon his labor (Rollin v. Cross, 45 N.Y. 766). Since the right is a personal one, it is only the laborer or materialman who may obtain the provisional remedy of a mechanic's lien; he may have a successor in interest only when he has already prima facie established his claim by having filed, properly and validly, a notice of lien.

In this instance, P & R did not file its notice of mechanic's lien as a successor in interest either to a previously filed notice of lien, or to a claim properly assertable by Berkel. P & R asserted a right in its own name as the provider of the unpaid labor and materials. Although the notice of lien does not particularly so state, a fair reading leads with little obstacle to that conclusion. There...