People v. Third Nat. Bank of Syracuse

• Decision Date: 06 June 1899
• Citation: 54 N.E. 35,159 N.Y. 382
• Parties: PEOPLE v. THIRD NAT. BANK OF SYRACUSE et al.
• Court: New York Court of Appeals Court of Appeals

159 N.Y. 382

54 N.E. 35

PEOPLE

v.THIRD NAT. BANK OF SYRACUSE et al.

Court of Appeals of New York.

June 6, 1899.

Appeal from supreme court, appellate division, Third department.

Interpleader by the people of the state of New York against the Third National Bank of Syracuse and others. From a judgment of the appellate division affirming a judgment distributing the fund (40 N. Y. Supp. 1147), defendants the Third National Bank and William C. Rodger appeal. Affirmed.

Louis Marshall, for appellant Third Nat. Bank.

Arthur L. Andrews, for appellant Rodger.

GRAY, J.

This action was brought by the people of the state, in the nature of an interpleader, for the purpose of determining the claims of the several defendants to a sum of money due from the plaintiff to McLean & Rockwell, under certain contracts made with them in August, 1887, for work upon the canals of the state. There were three of these contracts with the state,-one relating to lock No. 7 on the Oswego Canal, and two to locks Nos. 35 and 72 on the Erie Canal. It was provided, among other things, in these contracts, ‘that fifteen per cent. of the amount of work done or materials furnished under this contract, at the contract price thereof, shall be reserved by the superintendent of public works until the whole work which is the subject of contract shall be fully and entirely completed’; that ‘within twenty days from the expiration of each month * * * the superintendent of public works will pay such sums as shall not, together with former payments, exceed the amount actually due under this contract, according to the estimate of the engineer, except the sum due on the final account’; and, further, that, ‘within ninety days after the work shall have been fully completed,’ a final account and estimate shall be made, upon which, after approval, the superintendent is to pay what should thereby appear to remain due. The scheme of these contracts, evidently, was to accumulate a reserve fund of 15 per cent. upon each monthly payment which might be made to the contractors, for the security of the state against a failure to properly perform the contract according to its terms. This reserve fund, upon the satisfactory completion of the work, together with what should have been earned in the last month, the final account and estimate would show to remain due to the contractors. The contracts for lock No. 72 on the Erie Canal, and for lock No. 7 on the Oswego Canal, were fully performed, and there remained due upon them from the state moneys amounting, in the aggregate, to the sum of $10,486.47, which the plaintiff is ready to pay, with interest at the rate of 3 per cent., upon the priority of the conflicting claims of these defendants being determined. In January, 1888, the contractors, McLean & Rockwell, executed an assignment to the defendant the Third National Bank of Syracuse; which, after reciting the contracts and the desire of the contractors to borrow money from time to time of the bank, assigned to it, for the purpose of securing any such loans, ‘all of the reserve money or (15 per cent.) fifteen per cent. held by the state of New York on monthly or all estimates for the completion of the aforesaid mentioned contracts now due or to become due to them on said contracts.’ The assignment was filed with the superintendent, and thereupon the bank made loans to the contractors, which amounted, with interest, at the time of the trial, to $10,984.94, and it claims that the whole of the fund due from the state should be applied in payment. The defendant William C. Rodger and E. C. Johnson were sureties on the bonds given by the contractors to the plaintiff for the faithful performance of their contract and for the payment of labor and wages. The contractors failed to perform the contract for work on lock No. 35 of the Erie Canal, and, an abandonment being declared, the state, under the provisions of the contract, completed the same at a cost which brought the contractors into its debt in the sum of $7,000. Until that indebtedness was discharged by them, the superintendent of public works refused to make any payment to the contractors upon their other contracts. Thereupon an arrangement was made between the contractors and the defendant Rodger, by which the latter agreed to pay to the state the sum of $5,056.80 upon the indebtedness, and Johnson, the other surety, paid the remainder. It was agreed between the contractors and Rodger, at the time, that, if the indebtedness was discharged, Rodger should have what moneys were then due, or were to become due, from the state on the other contracts. When the indebtedness of the state was discharged, payment of what was due to the contractors was then made, amounting to $8,200, to both Rodger and Johnson, who applied the amount upon wages then due from the contractors to their laborers. Subsequently the defendant Rodger, at the request of the contractors, paid out the further sum of $4,100, for the completion of the work on locks Nos. 7 and 72, upon the promise that he should have what money was coming to the contractors for the plaintiff under the contracts relating to those two locks. There thus resulted an indebtedness from the contractors to Rodger of about $9,100. This is the basis of their claim to the fund held by the state. The third claimant was the defendant Alexander Reid, to whom the contractors, subsequently to the above assignment, assigned the moneys due or to become due from the state; but this claim had no priority over the others, and is not the subject of appeal.

The trial court has decided, and its judgment has been affirmed by the appellate division in the third department, that the claim of the bank under its assignment was limited strictly to ‘the reserve money,’ which, under the contracts, the state was to withhold upon the monthly estimates, and that it had no interest in the final estimates of sums due upon the completion of the work, except so far as those final estimates would include such ‘reserve money.’ The result was to award to the bank, of the fund held by the state and involved in this action, the sum of $6,261. Rodger was awarded the remainder of the fund, amounting to the sum of $4,225.47.

It was, and it is now, the contention of the appellant bank, that, by the fair interpretation...