Opinion
April Term, 1854
Thomas Darlington for the appellants.
J.B. Dillon for the respondent.
The act entitled "An act for the better security of mechanics and others erecting buildings in the city and county of New-York," provides that every mechanic doing any work towards the construction of any building in the city of New-York "erected under a contract in writing between the owner and builder, or other person," "may deliver to the owner of the building an attested account" of such labor, "and thereupon such owner shall retain out of his subsequent payments to the contractor the amount of such work and labor, for the benefit of the person so performing the same." ( Stat., 1830, 412, § 1.) The subsequent sections of the act provide for the adjustment of the account between the contractor and the party who rendered it, where it shall be disputed, which is to be brought about by arbitration if the parties cannot agree; and when the amount due shall have been determined, if the contractor shall not pay it in ten days, "the owner shall pay the same out of the fund as above provided; and which amount due may be recovered from the said owner by the creditor of the said contractor, in an action for money had and received to the use of said creditor, and to the extent in value of any balance due by the owner to his contractor under the contract with him at the time of the notice first given as aforesaid, or subsequently accruing to such contractor under the same, if such amount shall be less than the sum due from the said contractor to his creditor." (§ 4.) If by collusion or otherwise the owner of the building shall pay the contractor in advance of the times of payment mentioned in the contract, and there shall not be enough left to pay the party who shall have served the account, the owner shall notwithstanding be liable to the party as though such payments in advance had not been made. (§ 5.) This is the whole of the act; and the question in this case is, whether the relation between the defendant of one part and Mullaney and Flinn of the other, is that of owner and contractors for building, within the true construction of the statute. Assuming that the contract for the sale of the lot was entered into in good faith and without any view to evade the provisions of the lien law, it certainly presents a different case from the one which was primarily in the contemplation of the legislature. The object of the law was to enable a laborer, mechanic or sub-contractor to attach, in effect, in the hands of the person for whom the building was erected, any debt which the latter might owe to the immediate contractor, on his contract for the work. As no lien attaches to the real estate, the title to the lot is not a matter of any importance; and the question would be the same, so far as I can perceive, if one should agree to lend money to the owner of a lot to enable him to build a house thereon, with an agreement to secure the loan by mortgage when the building should be completed. It would not be seriously contended in such a case that a mechanic or laborer employed by the borrower could proceed under the act to reach the money agreed to be loaned. The remedy which the statute gives is against money due to the principal contractor for the work which he agreed to do, but which the sub-contractor or mechanic has actually performed for him. It does not extend to money payable to the contractor on any other account. It is quite reasonable that the party meritoriously entitled to be paid for the work should be allowed to intervene between the owner for whom the house was built and the person who had contracted to build it, and to divert the course of the payments, which would have passed into the hands of such contractor, to his own. It is a form of equitable subrogation regulated by statute, but it is limited by the act to the plain case of money due upon a contract for performing the work.
The case is equally without the letter of the statute. It is the "owner of the building" against whom the remedy is given. In this case, although the title of the lot remained in the defendant, Mullaney and Flinn were erecting the building for themselves and not for the defendant. They, and not the defendant, were to own it when it should be completed. The money which the plaintiffs seek to obtain is money agreed to be loaned and not a debt agreed to be paid. It is only the latter to which the statute applies. If public policy or the joint interest of laborers and mechanics requires that the remedy should be extended so as to embrace the case of money agreed to be advanced otherwise than by a party contracting to have a building erected for himself, it is for the legislature to provide for such cases by new enactments.
I am aware that the supreme court in the first district has arrived at a different conclusion in a similar case; but with every disposition to concur in opinion with so respectable a tribunal, I find myself unable to assent to the judgment in that case. ( McDermott v. Palmer, 11 Barb., 9.)
I see no reason to doubt but that the parties to the contract for the sale of the lot intended in good faith to make the precise bargain contained in it. It is not an unreasonable, nor, I believe, an unusual arrangement for the owner of town lots to connect with a contract to sell them, an agreement to loan money to the purchaser to be expended in building upon them, taking a lien on the real estate to secure both the purchase price and the money loaned.
There is no ground for holding the defendant liable on the draft. Considering what was said between the parties as an agreement to accept, it is unavailable for two reasons: first, it was not in writing (1 R.S., 768, §§ 6, 7, 8); and second, the plaintiffs were to present this bill to the defendant on the same day on which the conversation was had; and it was only on that condition that the defendant agreed to accept. It does not appear to have been presented at all. There was no promise to pay for this work except what was said about accepting the bill. The ruling in the court below was therefore correct, and the judgment ought to be affirmed.
EDWARDS, J. The plaintiffs in this action claim that they are entitled to recover from the defendant the contract price of certain materials furnished to one James Mullaney, and used by him in the erection of a certain building in the city of New-York. The agreement between the plaintiffs and Mullaney was proved upon the trial, and it is not denied that the materials were furnished pursuant to that agreement. The only question which is raised upon this branch of the case is, whether the defendant is liable to the plaintiffs for the price of the materials, under the provisions of the "act for the better security of mechanics and others in the city of New-York," passed April 20, 1830, amended April 13, 1832. (2 R.S., 648, 3 d ed.)
The statute of 1830 applied to "every mechanic, workman or other person doing or performing any work towards the erection, construction or finishing of any building in the city of New-York erected under a contract in writing between the owner and builder or other person," c. The amendment of 1832 extended the provisions of the act to "all materials furnished and used in the performance of any work," c. The object of the statute was to protect the person furnishing work and labor or materials, by giving him a primary claim upon all moneys due upon the contract in the performance of which the work and labor or materials should be furnished. The claim of such person was considered as more meritorious than that of the contractor, and was preferred to it. But such preference was intended to be given only in cases where there was a building contract, and a debt due to the contractor by reason of the work and labor or materials furnished by the mechanic, laborer or sub-contractor, or otherwise. This is clearly the intent and meaning of the statute. The question then arises whether the agreement proved in this case contains a building contract. It certainly does not in its terms, and I think that it does not in its spirit.
The principal object contemplated by the parties to it was the sale of the lot described in it. It will be observed that no money was to be paid by the parties of the first part until some time after a deed should be executed. The sale was to be entirely upon credit; and, in addition to this, a loan was to be made to the parties of the second part to enable them to make such improvements upon the property as would render the purchase an advantageous one to them. The money to be advanced was expressed to be a loan to be made to the parties of the second part to aid them in the erection of the building, and not a payment as a consideration for its erection. The parties of the second part were thus to receive the benefit of the capital of the party of the first part, and there was probably a corresponding advantage to the party of the first part in the consideration which he was to retain, and which was to be secured by a mortgage upon the property, as enhanced in value by the improvements to be placed upon it by the parties of the second part. Under these circumstances I think that the relation of builder and contractor did not exist between the parties. It is true that the party of the first part would continue to be owner of the premises until a conveyance of them should be given; but the parties of the second part would not be contractors within the meaning of the statute. The case of McDermott v. Palmer (11 Barb., 9) was referred to by the counsel for the plaintiffs; but it will be observed that in that case there was a building contract, and it was upon that ground that the court based their decision. In giving their opinion they say "that the moneys were to be advanced, not as a loan, but, as is expressly stated in the agreement, as a consideration for the finishing of the houses according to the contract."
The plaintiffs next claim that they are entitled to recover upon the orders drawn by Mullaney upon the defendant. It is not pretended that the orders were accepted, and it does not appear that they were drawn in such a manner as to operate as an assignment of any particular fund or claim.
The judgment should be affirmed.
The whole court concurring,
Judgment affirmed.