International Harvester Co. of America, Inc. v. Whelan

*165 O’Brien, J. August 18, 1931, defendant Whelan entered into a contract with the State for the construction and reconstruction of certain highways in Fulton county. Early, in August, 1932, Kalman Steel Corporation (predecessor of defendant Bethlehem Steel Corporation), defendant Keystone Portland Cement Company and three others filed liens against moneys due under the contract, and on August 16, 1932, by order of court pursuant to section 21, subdivision 6, of the Lien Law (Cons. Laws, ch. 33), the Comptroller was authorized to deduct from the amount due the contractor the sum of $4,200, which includes the amount of those five liens filed earlier in that month, and. to retain it until the liens should be discharged as otherwise prescribed in section 21. In October, 1932, the State canceled Whelan’s contract for the reason that he had failed to make proper progress and during the same month the work was relet to Harp & Conway Construction Company which completed it. The price for the work under the original contract was $202,313.63. To the original contractor the State paid $94,514.04 and to Harp & Conway Construction Company, for cost of completion, $57,706.76. The State also paid $1,332.74 fpr. keeping the road passable for traffic after Whelan’s default. There remained unpaid, therefore, from the contract price the sum of $48,770.09. When the State relet. the contract to Harp & Conway Construction Company, the contractor bid lower prices than the State had agreed to pay Whelan and as a result the sum of $4,953.63 was saved to the.State. The Central Bridge Trucking Corporation performed work for Whelan and in September, 1932, it filed notice of lien for the sum of $9,997.19 and assigned its lien to plaintiff. Other liens for the respective sums of $170.45, $700 and $1,445.60 were assigned to plaintiff and it brought this action to foreclose these liens amounting to $12,313.24 against the moneys owing to defendant Whelan. *166 The first question is whether Bethlehem Steel Corporation, as successor to Kalman Steel Corporation, and Keystone Portland Cement Company have exclusive rights to the fund of $4,200 which was deducted and retained by the Comptroller from the amount due to Whelan pursuant to the court order of August 16, 1932, entered in accordance with the provisions of section 21, subdivision 6, of the Lien Law. The same issue of law was presented and decided by this court in Bethlehem Fabricators, Inc., v. Wills, Taylor & Mafera Corp. (272 N. Y. 170). Our decision therein requires the application of the same rule here and an answer that these two parties have such an exclusive right. No other lienor may participate in this special fund set apart under section 21, subdivision 6. The special fund of $4,200 should, therefore, be deducted from the general fund. The second question is whether the sum of $4,953.63, which was saved to the State on reletting the contract to Harp & Conway Construction Company, should also be deducted from the general fund. By the judgment of the Appellate Division that sum was deducted. We agree. This action is to foreclose liens against moneys due to Whelan from the State. The $4,953.63 is no part of the moneys due to Whelan or to the succeeding contractor or applicable to this public improvement. The cost was reduced on reletting from $202,313.63 to $197,359.95. Neither the original contractor nor his substitute has any interest in the amount saved on the reletting and lienors’ rights must necessarily depend upon the contractors’ interest in the fund. In respect to the validity of certain assignments or Kens and the sufficiency of notices of liens, we agree with the referee and the Appellate Division. The judgment of the Appellate Division should be modified in accordance with this opinion, and as so modified affirmed, without costs. Crane, Ch. J., Lehman, Hubbs, Loughran, Finch and Rippey, JJ., concur. Judgment accordingly.