Opinion
07-20-1898
WEAVER v. ATLANTIC ROOFING CO. et al.
Carlton Godfrey, for Atlantic Lumber Co. A. Stephany & Son, for V. B. Griffin & Son. Charles C. Babcock, for Showell & Clark, Edward S. Lee, J. J. Finkelpaugh, Samuel E. Rears, and David Pettit & Co. C. L. Cole, for Edward Moss, Atlantic Roofing Co., and Charles L. Cranmer.
(Syllabus by the Court.)
Bill by Caroline Weaver against the Atlantic Rooting Company and others.
The complainant files her bill of complaint, in the nature of an interpleader, seeking to be protected from the conflicting claims of the defendants upon $745.78, which has been deposited in this court, as the money remaining due under the terms of a contract made between the complainant and one Ellwood Thompson for the alteration of an old building and the erection of a new part of a building at Atlantic City. The contract is dated February 20, 1896, and thereby the contractor, Thompson, agrees "to make such alterations and erect such new work as shown on the plans and described in specifications, and finish the same in good, substantial, and workmanlike manner, on lot situated on the north side of Pacific avenue, designated as '703,' Atlantic City, New Jersey, agreeable to the plans and specifications hereto annexed and forming a part of this agreement." On June 4, 1896, the contract was filed. The specifications mentioned in the contract were not filed at any time. There was no other definition of the extent of the work to be done or the materials to be furnished under the contract than is indicated by the above-quoted clause. The defendants are the workmen and materialmen who furnished work and materials for the alterations and construction of the building, and who were not paid by the contractor, some of whom claim to have given notices under the third section (now the thirty-eighth) of the mechanic's lien act (2 Gen. St. p. 2073), and others of whom make claims upon the funds remaining in the hands of the owner by reason of orders for payment given by the contractor upon the owner. The complainant prays that the claimants may be restrained from proceeding at law against her; that she may pay the balance of the money in her hands into this court; and that the defendants may interplead and adjust the matters in controversy as between themselves. The defendants filed answers substantially admitting the facts set forth in the complainant's bill, but disputing, as between themselves, the priority of their several claims upon the fund. A decree has been made that the complainant is entitled to the relief prayed for, and that the defendants shall interplead and adjust their claims upon the fund as between themselves. An agreed statement of facts, entered into by all of the defendants, has been filed, and the cause has been argued upon the facts and the disputing answers of the defendants, taken, under the modern practice, to be interpleadings.
Carlton Godfrey, for Atlantic Lumber Co.
A. Stephany & Son, for V. B. Griffin & Son.
Charles C. Babcock, for Showell & Clark, Edward S. Lee, J. J. Finkelpaugh, Samuel E. Rears, and David Pettit & Co.
C. L. Cole, for Edward Moss, Atlantic Roofing Co., and Charles L. Cranmer.
GREY, V. C. It has been settled in this state that to invest a claimant, for work done or materials furnished in constructing a building, with the right, under the third section of the mechanic's lien act, to give notice to the owner, demanding payment of the debt due the claimant from the contractor, the building must have been erected by contract in writing filed in the clerk's office, under section 2 (now section 37) of that act, in such manner that the claimant is thereby deprived of his right to file a mechanic's lien. In case there is no such contract and filing, his remedy is by proceeding by way of lien under the first section of the act. Summerman v. Knowles, 33 N. J. Law, 205. The second section of the act (as now amended, section 37, 2 Gen. St. p. 2073) provided that, when the building shall be erected in whole or in part by contract in writing, the building, and the land whereon it stands, shall be liable to the contractor alone for work done or materials furnished in pursuance of such contract, provided that the contract, or duplicate thereof, with the specifications accompanying the same, be filed, etc. The requirement that the contract shall be filed is to inform laborers and materialmen to what extent the building is exempt from liens, and how far they must look to the contractor alone for their pay. When, by the terms of the contract filed, all the work is agreed to be done, and all the materials are agreed to be furnished, by the contractor, the contract sufficiently advises workmen and materialmen that all work and material is to be furnished by the contractor. But where the contract is so expressed that only such new work andsuch alterations of old work are to be done under the contract as may be shown by the specifications, to which reference is made, as forming part of the contract, then the specifications, as well as the contract, must be filed, for the purpose of giving notice to the workmen and materialmen, in order that they may be advised how far they are excluded from their right to a lien, and to what extent they must rely upon the contractor alone for payment. Pimlott v. Hall, 55 N. J. Law, 193, 20 Atl. 94; La Foucherie v. Knutzen, 58 N. J. Law, 236, 33 Atl. 203, and cases there cited. The test whether the specifications referred to in the contract must be filed with it, in order to free the building from liability to lien, is expressed with precision in the opinion of Chancellor McGill in Freedman v. Sandknop, 53 N. J. Eq. 245, 31 Atl. 233. The learned chancellor there states the question to be: "Is it necessary to examine the specifications referred to in the contract to ascertain how much of the work and materials in the erection of the building it covers? If it is necessary, the contract was not properly filed, and the claimants have their liens, and cannot be obliged to look to the fund in court."
Applying this clearly-stated rule to the contract now under consideration, it does not provide that the contractor, shall do all the work and furnish all the materials named in the plans and specifications. The terms of the contract show that the work intended to be done, under the agreement, included both the making of alterations of a building and the construction of new work; but the contract did not express what alterations were intended to be made, nor what new work was to be erected, save by a reference to the plans and specifications, which it stated were thereunto annexed. For all information as to the work to be done or materials to be furnished, the parties interested are referred to the specifications. If a workman had been employed by the contractor to work on the owner's building, and he examined the contract to ascertain whether the particular work upon which he was engaged was within or without the contract, he would have been unable to tell whether the alterations or new work on which he did labor were included in the contract or not, unless he had the plans and specifications also, because it was only such work as these called for that the contract required to be done. In the contract under consideration, it is not in terms declared that the contractor shall do work on a portion of the building, or furnish a portion of the materials, yet it is plain that the work in hand was not the construction of an entire house, or a single thing which might be included in a general agreement to complete it, and thereby make needless an inspection of the plan and specifications in order to know the scope of the contract. The phrasing of the contract shows that alterations of an old structure and construction of new work were within the contemplation of the parties, and that the plans and specifications were referred to as defining what part was to be altered, and how, and what part newly constructed. It was therefore impossible for any one to know, without Inspecting the plans and specifications, what work the contractor agreed to do and what materials he agreed to furnish. Under these circumstances, the filing of the contract, without the plans and specifications, did not relieve the land from liability to lien, and workmen and materialmen have no right to resort to the remedies provided by the third section (now the thirty-eighth section) of the lien act.
This condition renders ineffectual all of the notices claimed to have been given by workmen and materialmen to the owner to retain and pay from the contract price, by virtue of the provisions of the latter section. All who were in this class of creditors of the contractor had their remedy by filing a lien claim under the first section and the other provisions of the act, from which they were not precluded by the tiling of the contract alone. Summerman v. Knowles, supra. The effect of this situation was that the contract price was left in the hands of the owner, open to the disposition of the contractor by giving orders upon it in the nature of equitable assignments. In the case of Slingerland v. Binns, 39 Atl. 712, the court of appeals interpreted the fifth section of the supplement to the mechanic's lien law approved March 14, 1895 (2 Gen. St. p. 2074). That court declared that workmen and materialmen who served notices upon the owner secure, under the terms of that act, a right to payment from any moneys thereafter growing due upon the contract, in preference to the right of persons to whom the contractor had, by orders given, assigned such money before the notices were served. But the terms of the statute are applicable only to those cases where there is a written contract which has been duly filed, whereby the land has been freed from liens, and workmen and materialmen are relegated to the moneys due on the contract. When it appears, as in this case, that the contract is inefficient (by reason of the nonfiling therewith of the plans and specifications) to cut off claimants from their right to a lien, the fifth section of the supplement of 1895, and the interpretation of it in the case last cited, have no application.
In ascertaining the order of priority of those who claim equitable assignments of the fund in the hands of the owner, the defendants V. B. Griffin & Son assert their right under a notice of which the following is a copy: "Atlantic City, N. J., 5—15, 1896. Mrs. C. M. Weaver, Philadelphia—Dear Madam: You are hereby authorized to hold sufficient funds on my contract with you for extension to your cottage, No. 703 Pacific avenue, in favor of V. B. Griffin and Son, No. 1518 Atlantic avenue, as may be sufficientto cover their bill for heating and plumbing, probably amounting to $200.00, at which time, with the approval of your contractor, a release of lien will be signed by V. B. Griffin and Son. [Signed] B. Thompson, Jr." The above notice and authorization was served upon the complainant, Mrs. Weaver, on or about the 15th day of May, 1896.
No particular form of words is necessary to constitute an equitable assignment. Bower v. Stone Co., 30 N. J. Eq. 171; Lyon v. Bower, Id. 340. Any writing or act which indicates the intent of the assignor to make an appropriation of the fund, or part of it, will in equity be enforced as an assignment. Harlem Bank v. City of Bayonne, 48 N. J. Eq. 253, 21 Atl. 478; Lanigan's Adm'r v. Bradley, 50 N. J. Eq. 205, 24 Atl. 505, and cases cited. The writing above quoted does not in terms transfer to Griffin & Son the immediate, absolute ownership of the sum necessary to cover their bill. It directs Mrs. Weaver, who had the fund, to hold, in favor of Griffin & Son, a sufficient portion of it to cover their bill. This was an appropriation by Thompson, who owned the money, of a part of it for the benefit of Griffin & Son, and Mrs. Weaver became by this appointment a trustee to retain for Griffin & Son enough of the fund to pay their bill. So far as Thompson was concerned, he had by giving this order finally disposed of his interest in so much of the fund as was necessary to meet Griffin & Son's bill, and he could exercise no further control over this portion. The essential requisite of such an assignment is not the vesting of a right to immediate payment in the party in whose favor it is given, for it may be subject to prior equities (Harlem Bank v. City of Bayonne, 48 N. J. Eq. 253, 21 Atl. 478), but that the assignor should presently strip himself of his interest in the fund, or in some part thereof. This he may do by directing payment to the party to be benefited, or to some one else for his use. It may be either an absolute or a conditional order, by a direction for immediate payment, or to dispose of the fund. These notices are also criticized because they were served on Mr. Hoffman, an attorney then acting for Mrs. Weaver. The agreement does not state that he was acting for her in the particular transaction in question. And it is also insisted that the notices were of no force unless served personally on Mrs. Weaver. I consider neither of these points, as the notices must fail, because, as above shown, the contract did not deprive these parties of their liens.
On October 1, 1896, the defendants Howell & Clark obtained from Thompson, and served on Mrs. Weaver, a written and signed order for the payment of $113. This transferred $113 more. On October 23, 1896, the defendants V. B. Griffin & Son served on Mrs. Weaver a more formal assignment to them by Thompson for their bill of $331.34, out of the fund, with an authorization to Mrs. Weaver to pay that sum to Griffin & Son. This was an authorization to Mrs. Weaver actually to pay to Griffin & Son the sum of $331.34 for the amount of their bill, and was delivered to Griffin & Son and served on Mrs. Weaver at such an early date that, even if the first direction in favor of Griffin & Son were inoperative as an equitable assignment, there remained enough of the fund to pay Griffin & Son's bill, and this latter assignment certainly transferred to them an amount sufficient to pay the whole of the bill. The defendant the Atlantic Roofing Company afterwards, but on the same day, October 23, 1896, received from Thompson and served a like assignment on Mrs. Weaver for the sum of $180.25. On October 28, 1896, the defendant Charles A. Cranmer received and served a like assignment for $300. If there be enough of the fund to pay this defendant anything, it is certain that this latter assignment more than exhausted the fund, so that the account stands thus: Fund deposited in this court, $745.78; expenses of this suit deducted, $——; due (1) to defendants V. B. Griffin & Son, $331.34; due (2) to defendant Edward Moss, $48.08; due (3) to defendants Showell & Clark, $113; due (4) to defendant Atlantic Roofing Company $180.25; due (5) to defendant Charles Cranmer, the residue, not exceeding $300.
There are one or two more claims, by way of equitable assignment, which fail because the fund is insufficient to pay them. I will advise a decree in accordance with the above opinion.