Opinion
06-20-1893
BRADLEY & CURRIER CO., Limited, v. BERNZ.
Elwood C. Harris, for complainant. Ellis F. Morrow, for defendant.
(Syllabus by the Court.)
Bill by the Bradley & Currier Company, Limited, against Otto Bernz, to recover the amount of an order on the owner of a building given by a contractor to a material man. Heard on demurrer to the bill. Demurrer sustained in part.
Elwood C. Harris, for complainant.
Ellis F. Morrow, for defendant.
BIRD, V. C. It appears by the bill of complaint that the complainant obtained an order from the contractor, under a building contract, for $515, the amount of his bill for materials furnished for the erection of the buildings, which order was direct to the defendant, the owner of the said buildings. This order was properly served upon the defendant, but he refused to accept it, or to pay the amount mentioned therein. The first cause of demurrer is that it does not appear in the bill of complaint that the defendant accepted the said order, or that he ever agreed to pay the same. As I understand the law in this respect, the rights of the complainant as against the defendant did not and do not depend upon the defendant's formally accepting this order. The order which was delivered to the complainant by the contractor was an equitable assignment of so much of the moneys which were in the hands of the defendant as were due or which might become due to the contractor; and the right of the complainant to collect the amount due from the defendant in this court does not depend upon his accepting such order, provided he has the funds in hand wherewith to pay the same, upon which no other person has an equal or superior claim. Superintendent of Schools v. Heath, 15 N. J. Eq. 22; Wightman v. Brenner, 26 N J. Eq. 489; Burnett v. Mayor, etc., 31 N. J. Eq. 341; Shannon v. Mayor, etc., 37 N. J. Eq. 123; Terney v. Wilson, 45 N. J. Law, 282; Kirtland v. Moore, 40 N. J. Eq. 106,2 Atl. Rep. 269; Brokaw v. Brokaw, 41 N. J. Eq. 215,7 Atl. Rep. 414.
Another cause of demurrer is the want of allegation that there is really anything due to the contractor, because it is not alleged that he actually finished the buildings concerning which the contract was entered into; and also that it does not appear that the certificate of the architect, to the effect that the said buildings were completed "according to the terms of the contract, has ever been produced. I think the allegations of the bill meet the requirements of the case. The bill shows that, while the buildings are substantially completed, and that the defendant has entered Into possession thereof, rented the same, and is in the receipt of rents and profits thereof, they are not fully completed according to the terms of the contract, but that the additional amount of work and material necessary to complete the same will be very slight. It also appears that the defendant, by his contract, was authorized to proceed and complete the said buildings according to the terms of the contract, after the contractor had neglected for three days so to do, upon giving notice to the contractor to that effect; and it further appears that by the contract the contractor undertook to build the said buildings by the 1st day of September, 1892; and also that the said complainant requested the said defendant to complete the said buildings in order that the true balance due upon the said contract might be ascertained. This statement shows that it was within the power of the said defendant to complete the said buildings, and also shows that under the said contract it was his duty to proceed to complete them, in order that he might ascertain the amount, if any, which still remained due to the contractor. It also makes it manifest that, if the architect had been attending to the erection of said buildings, and bad given certificates of their completion, step by step, according to the terms of the contract, nothing further was required of the complainant, so far as the services of the architect might be required, for the protection and benefit of the defendant, because the complainant acknowledges that the buildings are incomplete. Neither the time nor the occasion had arrived for the interference or aid of the architect. Nevertheless it does appear by the bill of complaint that the complainant requested the architect to proceed to an examination of the said building, and to make his report thereon, with which request he absolutely refused to comply.
It is assigned as cause of demurrer that there is no allegation in the bill that releases have been procured and presented to the defendant, releasing the rights and interests of all other laborers and material men who may have done and performed work upon or supplied material for the erection of the buildings named in the bill of complaint, together with an affidavit that no others did work or supplied materials. As the bill stands, this is good cause for demurrer. I have no doubt but from the facts which do appear upon the bill it might be so framed as to do justice to all parties interested, and completely protect the defendant as owner, without the allegation that the releases required by the statute were produced, together with the affidavit, as will be shown hereafter. I may state here that this view is suggested by the fact already referred to, that the buildings are not completed, and that the occasion, therefore, has not been reached when by any possibility the contractor could procure such releases, and make such an affidavit, upon which he would be entitled to demand, by force of this statute as amended, the third and last installment, which only is due upon the completion of the building. As the statute now stands, the owner is not obliged to make any payments to the contractoruntil he is furnished with these safeguards. The complainant is in no better position than the contractor himself. The fact that the complainant was also a material man, furnishing goods for the erection of said buildings to the amount of the order under which it claims, cannot improve its condition, since it does not file its bill to recover by virtue of an allegation that it is such material man, and that the owner has made payments, so that he may proceed under the supplement passed June 19, 1890, but relies solely upon the position given to him by virtue of the order; that is, the same position the contractor himself would occupy. This view is sustained by the interpretation of the supplement passed June 19, 1890, in the case of Lumber Co. v. Friedlander, 54 N.J. Law, 375, 24 Atl. Rep. 434. Nor do I find any satisfactory reason in the bill for the nonproduction of the releases and affidavits required by the statute.
It is also said that there is no allegation charging any connivance upon the part of the defendant at the neglect or refusal of the contractor to complete the buildings. I do not think there are any substantial grounds for demurrer in this. It is very apparent that several months have elapsed since the buildings were to have been completed under the contract, and since the defendant has taken possession of the same, and since he had a right to insist upon it that the buildings should be completed by the contractor, or that he complete them himself. It was his duty to do the one or the other. The result to those who are interested in the money earned under the contract, whether they be laborers or material men, is the same, whether contrived in actual fraud or in the merest indifference. It cannot be pretended that he could hold his hands, and thus avoid indefinitely the payment of a large sum of money. Could he do this, the lien law would indeed be an instrument productive of great mischief. In such case equity cannot fail to administer relief. It will see to it that the rights of all parties are protected. The owner will be required to complete the contract, and to be compensated therefor; and, if there be any balance of the contract price remaining, those who are interested therein will be enabled to establish their rights. The claim that the complainant has a remedy at law is without any foundation whatsoever. See cases, supra. Its rights under an order not accepted are purely equitable, and relief in such cases can only be administered in equity. As the case stands, there is no legal liability whatsoever upon the part of the defendant.
Another cause of demurrer is the absence of the contractors as parties defendant to this suit. It is urged that they have some interest in the balance that is due from the owner. It may be true that they have an interest in whatever may appear to be due over and above the amount of this order, so far as to have it appropriated to the payment of any other liabilities, if there be such, and, if not, to be paid to themselves. Such right, however, is not of itself, in a case like the present, sufficient to justify the court in say ing that they are necessary parties. The complainant asks nothing of the contractors. It asks from the defendant, the owner, that which the contractors have by their order conceded to be due them; so that the contractors no longer have any interest in so much of the money in the hands of the defendant as shall be necessary to discharge the amount of the order. The bill, it will be perceived, only looks to such an adjustment of the case as will enable the complainant to recover the amount of the order. No effort whatever is made to make any other disposition of the case. And 1 think that, if the real status of the case had been such that the complainant could have produced the releases and the affidavit required by the statute, and it had been so presented before the filing of this bill, the allegations, as they now stand, although not very specific or distinct, would be sufficient, under the prayer for general relief, to justify the court in requiring the defendant to answer. And, upon the other hand, I am strongly inclined to think that the absence of the allegation of the production of the releases and affidavit required by the statute would be no cause of demurrer in a case like the present, had the complainant proceeded, like, I think, he might have done and ought to have done, to bring into court all the parties interested in the fund, showing their rights and interests as far as he possibly could, and to that end demanding a discovery at the hands of the owner, and possibly also of the contractors, and praying an accounting, in order to settle priorities, and to determine finally the rights of the respective parties to the money. I think a full consideration of the mechanic's lien law, and the effectual bar that it would present, if the remedy last suggested should be denied, will commend such remedy to the favorable consideration of every one acquainted with the administration of justice upon equitable principles. It is also entirely in harmony with the principles of the court in dealing with conflicting questions arising between owner, contractor, material men, and laborers under this law. Indeed, there is no other method of adjusting the rights of parties under the circumstances. Heretofore the owner has taken the initiative, as the cases all show. He has filed his bill, showing that the buildings were left in an incomplete state; that he had finished the same; and that there were material men and laborers, and also persons holding orders unaccepted, drawn against the funds in his hands, praying relief. The court has never failed to take cognizance of every such case, and to finally determine the rights of the parties. The case in hand is of precisely the same nature, with the only difference that the owner of the order in this case filed the bill. But it cannot be deprived of its rights because the owner of the fund refuses to proceed. The complainant undoubtedly has a right to have this fund administered. The owner has a right not only to be protected against all further litigation, but to have every just right properly settled in a single controversy. If this course be pursued,if a bill should be framed upon this theory, and the production of the releases and affidavit required by the statute should be avoided, in such case the owner would be as fully protected as if the releases and affidavits were produced, because ail parties interested should certainly be brought before the court before final decree. The discovery sought for would put it within the reach of the complainant to accomplish this end. Under a bill so framed it would be within the province of the court to see that the owner completed the buildings according to the terms of the contract. Especially would this be eminently proper in a case like the present, in which it was admitted upon the argument that the contractors had abandoned the work, and disappeared beyond the reach of notice. My conclusion, therefore, is that, upon the bill as framed, the only cause of demurrer is that respecting the absence of an allegation showing that the releases and affidavit were produced and tendered to the defendant; but also that from the statements made in the bill the complainant will necessarily encounter an insuperable barrier to a decree in not asking for an administration of the whole fund, so as to settle the rights of all parties, establishing priorities, and thereby securing both completion of the contract and protection to the owner, who holds the fund, against any further or other litigation. To this extent the demurrer is well taken, and the defendant is entitled to costs.