Opinion
January, 1904.
Nathan Ottinger, for the appellants.
Charles Coleman Miller, for the respondent.
This action was brought to foreclose a mechanic's lien for work performed and materials furnished in erecting for defendants a building in the city of New York.
The complaint alleged that the parties entered into a contract by which the plaintiff agreed to do certain work and furnish certain materials for the erection of a building for the defendants in the city of New York, and for which it was to receive the sum of $6,600; that the plaintiff duly performed all the terms and conditions of the contract upon its part, together with certain additions thereto authorized in writing, by which it was entitled to receive the further sum of $155, and also that it performed extra work and furnished extra materials not specified in the contract or authorized in writing, by which it became entitled to receive the further sum of $1,100, making a total of $7,855 for which judgment was demanded. The answer admitted the making of the contract; denied the other material allegations of the complaint, and specifically denied the claim for $1,100 for extra work. It further set up a counterclaim amounting to $20,200, for damages alleged to have been sustained by reason of plaintiff's failure to perform the contract in furnishing the materials required and completing the work within the time specified. The plaintiff had a recovery for $4,755, together with interest thereon from September 5, 1901, to December 10, 1902, and a foreclosure was directed to satisfy this amount. Judgment was entered to this effect and defendants have appealed from so much thereof as allows interest on the amount recovered.
I think the judgment should be modified in so far as the defendants have appealed from it. The plaintiff sought to recover $7,855 and interest. It recovered only $4,755; in other words, the trial court held that the claim which it made against the defendants was invalid in upwards of thirty-nine per cent. The claim of $1,100 for extra work was disallowed upon the merits, and in addition thereto the court found that the defendants were entitled to offset against the plaintiff's claim the sum of $2,000 by reason of the defective way in which it performed the work specified in the contract and inexcusable delays in completing the same. The contract price, it will be remembered, was $6,600 and the plaintiff predicated its right to recover upon full performance. The trial court found, and the evidence sustains the finding, that it did not fully perform; on the contrary, that nearly one-third of the value of the contract remained unperformed at the time the notice of lien was filed and the action commenced, and by reason thereof the defendants had been damaged to the extent of $2,000, which amount they could set off in reduction of plaintiff's claim. Upon this state of facts the plaintiff was not entitled to recover. ( Mitchell v. Williams, 80 App. Div. 527.) In the case cited the contractor failed to perform one-seventh of the work specified in his contract. The trial court, after deducting such amount from the contract price by reason of defective materials furnished and delays in completing the work, gave judgment for the balance. On appeal the judgment was reversed, this court holding that, where there had been such a material part of the contract unperformed, a party could not recover upon an allegation of full performance. In the case now before us the trial court found that nearly one-third of the contract remained unperformed, and had it followed the rule laid down in the case cited the complaint would have been dismissed. This, however, was not done, and inasmuch as there has been no appeal from any portion of the judgment except that allowing interest, the same must be affirmed except so far as appealed from, and in that respect the judgment must be modified.
The plaintiff was not entitled to recover interest for another reason. The claim made by it was unliquidated and was subject to a reduction as the trial court found of $3,100. This being the situation, the case fell directly within the rule laid down in Delafield v. Village of Westfield ( 41 App. Div. 24; affd., 169 N.Y. 582). There action was brought to recover the contract price for labor performed and materials furnished, and the defendant claimed damages for breaches of the contract, which claim was allowed to the extent of $2,000. Here, as already said, the damages were unliquidated. The plaintiff had not performed its contract, and for which it was legally liable to respond in damages to the extent of $2,000, nor was it entitled to recover $1,100 claimed for the extra work. But it is said that the case of Delafield v. Village of Westfield ( supra) has in effect been overruled by Sweeny v. City of New York ( 173 N.Y. 414.) We do not think it has. The Sweeny case is clearly distinguishable from the Delafield case and the one now before us. In the Sweeny case the plaintiff entered into a contract with the city of New York for tearing down the walls and removing from the ruins of the Windsor Hotel the debris and recovering the dead bodies buried therein. The contract did not prescribe any gross sum to be paid for the work, but plaintiffs were to be allowed a specified price for each item of labor and materials furnished by them. After the completion of the work the plaintiffs presented a claim to the comptroller for something over $100,000. The claim was rejected and thereupon action was brought and a recovery had for over $79,000 upon which interest was allowed from the time stated. On appeal to this court the judgment was modified ( 69 App. Div. 80), but on appeal to the Court of Appeals the judgment of this court was reversed and that of the trial court affirmed, but in affirming the judgment the Court of Appeals reaffirmed the doctrine laid down in the Delafield case, Judge CULLEN delivering the opinion, saying: "In Delafield v. Village of Westfield ( 41 App. Div. 24; affirmed without opinion by this court, 169 N.Y. 582) the plaintiff's claim was on a quantum meruit for labor and materials furnished under a contract which had been broken by each party. The claim was subject to reduction for damage caused the defendant by the plaintiff's breach of contract and improper performance of his work. The defendant's set-off was unliquidated, and the plaintiff's recovery was necessarily dependent on the amount of that set-off. Interest was, therefore, allowed to neither party."
Here the plaintiff's claim was subject to reduction for damages caused by its breach of contract. The amount of the set-off was unliquidated and what the plaintiff was entitled to could not be ascertained until the amount of the set-off had been determined. Such amount was determined upon the trial to be $2,000, and in addition the claim made by the plaintiff was subject to a further reduction of $1,100 for extra work. It cannot be that one can be subjected to a liability for interest which depends upon a proper demand because he does not accede to an improper demand. The demand made by the plaintiff prior to the commencement of the action upon which the claim for interest has been allowed not only exceeded by $2,000, the amount due upon the contract, but it was also coupled with an illegal demand for $1,100 for extra work which had never been done, and for which, as already indicated, the court expressly found it was not entitled to recover anything. The contract did not in express terms provide for interest, and a demand was, therefore, necessary to set interest running, and it is well settled that when such demand is necessary, it must be for the amount due, and if it includes any item not recoverable, the demand is illegal and interest cannot be allowed. ( Cutter v. Mayor, 92 N.Y. 166; Deering v. City of New York, 51 App. Div. 402; Carpenter v. City of New York, 44 id. 230.) Where one fails to perform his contract to the extent of upwards of thirty-nine per cent, and then seeks to maintain an action to recover the contract price, basing his right to recover upon full performance, a court of equity will not permit a recovery. ( Mitchell v. Williams, 80 App. Div. 527; D'Amato v. Gentile, 54 id. 625; affd., 173 N.Y. 596; Smith v. Ruggiero, 52 App. Div. 382; affd., 173 N.Y. 614.) So here, had the defendant appealed from the whole judgment, it would, under the authorities cited, have to be reversed and the entire claim disallowed, but, as already said, defendants have only appealed from so much of the judgment as allows interest and to that extent it is erroneous.
The plaintiff was not entitled to recover for another reason, and that is because it did not produce the architect's certificate entitling it to payment. The contract provided that the payments were to be made upon the certificate of the architect. It is true the complaint alleges that the architect wrongfully withheld the certificate, but the findings made by the trial court show that this is not the fact. Plaintiff had not performed his part of the contract and, therefore, was not entitled to be paid. Under a clause in a contract of this character the obtaining of the certificate is indispensable to a recovery. ( Weeks v. O'Brien, 141 N.Y. 199; O'Brien v. Mayor, 139 id. 543.) Discussion is unnecessary to demonstrate that the architect was not unreasonable in refusing a certificate where the court finds, after an investigation, that the plaintiff had not performed its contract, and by reason thereof defendants were entitled to an allowance by way of damages in nearly one-third of the entire contract price.
The judgment, so far as appealed from, therefore, must be modified by striking out the allowance for interest and as thus modified affirmed, with costs to the appellants.
VAN BRUNT, P.J., O'BRIEN, INGRAHAM and HATCH, JJ., concurred.
Judgment modified by striking out allowance of interest and as so modified affirmed, with costs to appellants.