Milbank-Frawley Housing Development Fund Co. v. Marshall Const. Co.

• Decision Date: 16 August 1972
• Docket Number: MILBANK-FRAWLEY
• Citation: 335 N.Y.S.2d 598,71 Misc.2d 42
• Parties: Application ofHOUSING DEVELOPMENT FUND COMPANY, Inc., Petitioner, v. MARSHALL CONSTRUCTION CO., Inc. and Maryland Casualty Co., Inc., Respondents.
• Court: New York Supreme Court

Page 598

335 N.Y.S.2d 598

71 Misc.2d 42

Application of MILBANK-FRAWLEY HOUSING DEVELOPMENT FUND

COMPANY, Inc., Petitioner, v. MARSHALL CONSTRUCTION CO., Inc. and Maryland Casualty Co., Inc., Respondents.

Supreme Court, Special Term, New York County, Part I.

Aug. 16, 1972.

Cora T. Walker, New York City, for Milbank-Frawley.

Goetz & Fitzpatrick, New York City (Robert S. Peckar, New York City, of counsel), for Marshall Construction Co. and Maryland Casualty.

CHARLES G. TIERNEY, Justice:

This is an application by petitioner for an order pursuant to Section 19, subdivision 6, of the Lien Law summarily discharging the notice of lien filed by respondent Marshall Construction Co., Inc. (hereinafter called Marshall), and for a further order directing respondent Maryland Casualty Co., Inc. (hereinafter referred to as Maryland), to guarantee payment of all labor and materials furnished by subcontractors.

On or about July 29, 1971 petitioner and respondent Marshall entered into a written agreement for rehabilitation work of approximately 81 housing units. Maryland, as surety, executed and delivered to petitioner performance and payment bonds in connection with the construction work undertaken by Marshall.

It appears that petitioner discharged Marshall as the prime contractor on or about July 1, 1972. Thereafter, Marshall filed a notice of lien claiming an unpaid balance of $530,647.35.

Petitioner contends that under Article 7 of the construction contract, respondent Marshall waived any right to file a lien against the real property and consequently the notice of lien filed by Marshall should be discharged. It is not disputed that the waiver provision set forth in the construction contract is clear and unambiguous. Nevertheless, it has been held in similar circumstances that a lien may not be summarily discharged where the waiver does not appear from the face of the notice of lien. (In Matter of Harbour Green Estates v. North Shore Elec. Corp., 7 Misc.2d 541, 162 N.Y.S.2d 788; Simonetta Concrete Const. Corp. v. Dean Const. Co., Sup., 192 N.Y.S.2d 96; Matter of Blitz, Inc. v. Di Cesare & Monaco, 36 Misc.2d 1028, 234 N.Y.S.2d 671; see J. B. Cieri Construction Co., Inc. v. Gramercy Construction Corp., 13 A.D.2d 901, 215 N.Y.S.2d 994). The courts have no inherent power to cancel or discharge a mechanic's lien other than those specified under the applicable provisions of the Lien Law (Matter of Cohen, 209 App.Div. 413, 205 N.Y.S.2d 90; Supreme Plumbing Co. v. Seadco Building Corp., 224 App.Div. 844, 230 N.Y.S. 760). Petitioner here has moved pursuant to Section 19 of the Lien Law. The grounds provided under that section are:

(1) release by the lienor;

(2) failure to timely commence a foreclosure action;

(3) by order of the Court for neglect of the lienor to prosecute a foreclosure action;

(4) upon the filing of a bond in an amount not less than the amount claimed in the notice of lien;

(5) upon a judgment rendered in favor of the owner, or

(6) where the notice of lien is invalid on its face.

Petitioner has not demonstrated the existence of any of the aboveenumerated grounds warranting a discharge of the lien.

Petitioner also contends that it is a public benefit corporation and that under Section 5 of the Lien Law, liens filed against public improvements encumber funds due under the contract and are not chargeable against the real property.

There are few controlling precedents which have defined what is a public benefit corporation. Generally, however, public corporations are instrumentalities of the state and are owned by the government or subdivisions thereof (11 N.Y.Jur. Corporations § 6). Petitioner's certificate of incorporation states that it is organized pursuant to Article XI of the Private Housing Finance Law and the Membership Corporations Law. Section 571 of the Private Housing Finance Law sets forth the legislative findings and purposes in creating housing development fund companies. Section 573 permits the incorporation of a housing development company, either under the Business Corporation Law or the Not For Profit Corporation Law. However, nowhere is there any indication that the Legislature intended that such companies should be considered public benefit corporations. By comparison, the Legislature, in creating the New York City Housing...