McPherson v. Walton

• Decision Date: 31 October 1886
• Parties: MCPHERSON and others v. WALTON and others.
• Court: New Jersey Court of Chancery

11 A. 21

42 N.J.B. 282

MCPHERSON and others

v. WALTON and others.

Court of Chancery of New Jersey.

October Term, 1886.

W. D. Holt, for complainants. James S. Aitkin, B. T. Green, G. D. W. Vroom, Howell & Bro., James Buchanan, F. C. Lowthrop, and D. Cooper Allinson, for defendants.

Bird, V. C. In this case I find that the consideration which the complainants agreed to pay for the houses to be built by the defendant Walton, independent of extras, was -

$20,840 00

I find that Walton did extra work to the value of - -

1,073 48

$21,913 48

I find that the complainants paid Walton, cash,

$12,870 60

And his due-bill, - - - -

2,040 00

To which is to be added the cost of completing the buildings after his failure, - -

3,458 01

18,368 61

Showing a balance of - - - - -

$3,544 87

This would be the cash due to Walton on the contract, had not the contract made provision that $6,000 of the consideration money should be paid in houses. The contract provides that on final settlement Walton shall take two of the houses on Wall street, at $6,000, in payment. The title to these houses is still in the complainants, and the amount due Walton is not equivalent to the value put upon the houses in the agreement by $2,455.13.

Because of Walton's failure to complete his contract, a number of material-men, having claims which Walton refused to pay, presented their claims to the complainants, and demanded payment. The claims greatly exceed the balance due, ($3,544.87.) But this balance is in the two houses and lots to be conveyed to Walton by the contract. And the case is complicated by the fact that Walton agreed with one J. W. McKelvy to convey one of the Walton houses to Mrs. Conner for $2,500. I find that the complainants had knowledge of this agreement, and in the law assented to the transfer; I do not mean to say they assented to the price. Mrs. Conner was put into possession. Walton had a right to make sale of his interest in these two houses. I know of no principle embodied in the mechanics' lien law, nor in any other, that offers a bar to such a transaction. Nor was he obliged to wait until the contract between him and complainants was complete, and a final settlement concluded. The complainants could not interfere, nor could creditors of Walton. The rights that may spring up between laborers and material-men on the one hand, and the complainants on the other, under such a contract, filed, as this was, under the statute, is perhaps a more difficult question. It is not so clear to my mind that the complainants were not bound to retain the $6,000 until the final settlement, or at least until a reasonable time after the contract was completed. However, it may be claimed that it could make no difference in the result, which is perhaps the truth.

On November 1, 1879, the defendant Walton gave an order on the complainants for $1,000 to McPherson & Maharg, material-men. McPherson & Maharg now claim that they are entitled to be first paid the amount of this order out of the funds still due on this contract to Walton. It is claimed by counsel that this was an assignment of $1,000 of these moneys to McPherson & Maharg. This view is resisted. It is said that the order was general, having no application to any certain funds, and that at the time of its acceptance, if it was accepted, there was no such amount due on this particular contract. As to the first point, Mr. McPherson, the defendant, says "that it was distinctly understood at that time that this order was not in payment for any lumber that went on Wall street; he still owed us that amount and $1,164 on our books over that amount; that he gave me the order for, and he owed me, $1,250 on notes that had been furnished within four months from the date that I made this thing, making $3,400; the order was not for lumber furnished for the Wall-street or Clinton-street houses; it was a general order." With such a clear and emphatic statement as this from Mr. McPherson, it is quite apparent that the other material-men are justified in resisting the payment of this $1,000 order out of the funds in hand.

As to the next point, the acceptance. He took the order at once to one of the complainants, Mr. Joseph McPherson, who said "there was no money coming to Mr. Walton at that time," and "out of the first money due Mr. Walton he would pay this order." There was no formal acceptance, but the complainant, Mr. Joseph McPherson, took possession of the order, and held it until the day of hearing, over three years. When asked whether or not Joseph paid him the cost, he answered: "No, sir; there was no money coming to Mr. Walton; he gave me, after some days, a note 'for $1,000.' He gave me this note for $1,000, which I supposed was for the order; went to the office and credited Benjamin P. Walton with $1,000 on our books, but my brother's understanding of the matter was, as I afterwards learned, that he loaned me that $1,000 to assist me, as I needed money." I find from these facts that the complainants accepted that order, and that the defendants, McPherson & Maharg, were entitled to the payment thereof out of the first money due to Walton on that contract. That order has not been paid; I shall advise a decree directing its payment out of the funds in the hands of the complainants due to Walton on the contract named.

Besides the amount of this order, other large sums of money were due McPherson & Maharg. On November 3, 1879, three days after they obtained the order, they gave notice to the complainants that they should look to them for the payment of $1,000, for materials furnished to Walton in the construction of the houses above referred to. This notice was given under the third section of the act respecting mechanics' liens. The other material-men resist this claim also. They insist that every such demand is founded on a request of the debtor to pay, and of a refusal by him, of a sum of money actually due, and that in this case there was not $1,000 due, if anything. The views expressed by the chief justice in Reeve v. Elmendorf, 38 N. J. Law, 125, 133, very emphatically sustain this view of the statute. His language is: "A privilege to make exorbitant and ill-founded claims, and on a refusal of payment to intercept such sums, and hold them in the hands of the owner an indefinite time, would be simply an instrument of vexation...