Mertz v. Press

Hatch, J.: The plaintiffs herein furnished certain work, labor and materials to the Mapes-Reeve Construction Company in connection with a contract between it and the city of New York for the building of a schoolhouse. Not having been paid therefor, the plaintiffs filed a mechanic’s lien with the comptroller of the city of New York and with the board of education, claiming a lien upon funds due and to become due to the extent of the claim therein specified. After the filing of this lien the Mapes-Reeve Construction Company caused to be executed by the defendant, The City Trust, Safe Deposit and Surety Company of Philadelphia, a bond for the purpose of obtaining a discharge of the lien. This bond recited the filing of the lien; that the construction company desired to discharge the same, pursuant to chapter 605 of the Laws of 1895,* and it provided “ that the said Mapes-Reeve Construction Company will pay on demand to the said William J. Mertz and William M. Dawson, * * * the amount of — 445 — any judgment which may be recovered against said Mapes-Reeve Construction Company in or upon the claim or demand specified in such notice of lien not exceeding the sum of ” $6,993.53 with interest and costs. After the giving of the bond the city of Hew York paid to the construction company an amount in excess of the sum claimed in the plaintiff’s lien. Thereupon the plaintiff brought an action against the construction company to foreclose their lien. The complaint in that action set up the contract of the construction company with the city and the plaintiff’s contract with the former, the furnishing of material and the amount due therefor and claimed a lien upon the funds in the possession of the city and asked judgment that the amount of their lien be determined, and that such sum be declared to be a lien upon the funds in the possession of the city, and directing the city to pay the same. Issue was joined therein by the service of an answer, the case came on for trial at Special Term and resulted in a judgment dismissing the complaint. In the decision the court found that the lien was properly filed; that there was in the hands of the comptroller of the city of Hew York more than sufficient money to pay the amount of plaintiffs’ claim in full, and that they had secured a valid lien upon the moneys in the hands of the comptroller. The court also found that the amount due and unpaid to the plaintiffs from the construction company was the sum of $6,057.75, with interest from September 29, 1898. In directing judgment for the defendants the court said that its “ decision (was based) upon the sole ground of want of power in the court to render a personal judgment in this action in favor of the plaintiffs against the MapesReeve Construction Company, their lien having been discharged before the commencement of this action by the giving and approval of the bond hereinbefore referred to.” From this judgment no appeal was taken. Thereafter the plaintiffs brought this action, making the construction company a party through its receiver, one having been appointed ad interim, together with the sureties in the bond. The complaint herein sets out all of the facts and proceedings which have been had and taken in connection with the lien and demands a money judgment against all of the defendants for the amount of the claim, with interest from September 29,1898. Issue was joined by the service of separate answers by the respective defendants, and the case was brought to trial before the court and a jury without — 446 — objection upon the part of the defendants, and at the close of the trial the court directed a verdict against both for the amount of the plaintiffs’ claim. Judgment having been entered thereon, this appeal is taken. The action for the foreclosure of the mechanic’s lien and the judgment entered thereon dismissing the complaint did not constitute the same a bar to this action. It was not a determination upon the merits, but was based solely upon the ground that there was no lien to be foreclosed. The court was in error in the disposition which it made of that case, as the plaintiffs were entitled to have a judgment establishing the validity of their lien and also of the amount due thereunder. While no judgment of foreclosure of the lien could be decreed, as there was no fund upon which it could operate, its effect would be to furnish a basis for enforcing the bond which had been substituted in the place of the fund, and an adjudication was necessary as to the validity of the lien and the amount due thereunder in order to form a basis for the prosecution of the bond. The determination, however, does not conclude the plaintiffs from maintaining this action, assuming that upon any ground the plaintiffs show a right to recover. The real question in the case, aside from the Statute of Limitations, hereinafter noticed, is, can the plaintiffs, without first establishing by judgment the validity of the lien and the amount due thereunder, maintain an action against the sureties in the bond and have established in such action the validity of the lien and its amount and a personal judgment against the construction company and the sureties in the bond at the same time and in the same action ? It is contended that this may not be done. In Morton v. Tucker (145 N. Y. 244) an action was brought to enforce a mechanic’s lien, in which were made parties the defendant who had contracted the debt to enforce which the lien was filed, and also against the sureties in the bond which had been given to discharge the lien. A demurrer was interposed by the sureties, based upon the ground that they were not primarily liable and could not be charged therein until the plaintiffs had exhausted their remedy by an action against the debtor for the purpose of foreclosing the lien. The appellants therein insisted that an action at law could be maintained upon the bond without first resorting to an action to foreclose the lien upon the property. Upon this subject, — 447 — as pointed out by the court, the lower courts had differed. In disposing of the question the court said: “ The action is in equity brought under the statute in which all of the persons interested, including the sureties upon the bond, are made parties. The complaint is in the usual form, with the exception that it should allege the giving of the bond and the discharging of the lien, so far as the real estate is concerned, and instead of asking judgment for a sale of the premises it should demand relief as against the persons executing the bond for the amount that should be determined to be payable upon the lien. The court then upon the trial can determine the rights and equities of all of the parties and award the final judgment contemplated by the statute.” If this statement be regarded as laying down the correct practice, then this case was properly brought. The facts pleaded in the complaint show it to be an action in equity, brought to establish the validity of the lien and the amount of the debt due thereunder, and this being adjudged, judgment can pass against the debtor for the sum so found due, and also against the sureties in the bond, as it appears that the parties hereto are the only parties in interest in the fund. Thé demand for a money judgment does not characterize the action, and if it did, as the parties went to trial at the Trial Term before a jury without objection and litigated the question, they have waived any rights in this respect to which they might otherwise have been entitled, had objection thereto at the proper time been interposed. (Steuerwald v. Gill, 85 App. Div. 605.) It is said, however, that the rule announced in Morton v. Tucker (supra) was obiter and is in conflict with subsequent decisions. The basis for this contention lies in a decision rendered by this court in Ringle v. Matthiessen (10 App. Div. 274). Therein a judgment of foreclosure had been obtained establishing the amount of the lien and its validity. After such judgment an action at law was brought against the sureties on the bond. It was held that this was proper practice and that the action could be maintained. Upon appeal this decision was affirmed by the Court of Appeals (158 N. Y. 740). The court, in commenting upon the decision in Morton v. Tucker, stated that the remarks of the court therein were obiter, and, therefore, not binding as a conclusive rule of practice, and the affirmance by the Court of Appeals clearly indicates that such is the view of that court. It does not, — 448 — however, follow that because the rule of practice laid down in Morton v. Tucker was obiter that it does not state a sound question of law and furnish, if not an exclusive rule, at least a proper practice for the adjustment of rights in this class of actions. There seems to be no substantial reason why an action in equity may not be maintained to establish the validity of the' lien, the amount due thereunder, and also establish the liability of the sureties in one action. When a judgment is had establishing the amount and validity of the lien, the case is brought squarely within the terms of the bond, and there seems to exist no reason why the entire determination may not be had in one action as well as in two. If any question arises in such action upon which any of the defendants are entitled to a jury trial, they can protect every right by insisting thereon when the same may be awarded. (Steuerwald v. Gill, supra.) It was said by Hr. Justice Bradley in Miller v. McKeon (15 App. Div. 133), in commenting upon a similar question : “ The provision that the person making the undertaking will pay on demand the amount of any judgment which may be recovered in an action upon the claim or demand, etc., does not, we think, necessarily require that a recovery must primarily be had in an action against the contractor alone, as all that is requisite within the purpose of the statute in that respect may be accomplished in an action in equity in which he and the sureties may be made parties defendant. The personal judgment can, in such case, be directed and rendered against the contractor and the liability of the sureties also established by the judgment to pay on his default. * * * In that view of the statute all parties interested may be brought in and heard upon the subject of the existence of the lien which had been discharged and the amount of it. This right to go into equity in the first instance does not deny to the claimant the right to proceed by action at law against the contractor, and after the recovery of judgment against him to proceed by a further action to charge the parties upon the undertaking.” In Sullivan v. Goodwin (30 App. Div. 194) the court said, in speaking of the decision in Morton v. Tucker (supra) : “ This decision was intended to set at rest some conflicting authorities upon the question and under it the plaintiff is entitled to recover against the sureties upon the bond, without any reference to the proceedings in an action to foreclose the mechanic’s — 449 — lien.” Upon appeal this decision was affirmed by the Court of Appeals (164 N. Y. 583). In Van Den Driesch v. Rohrig (45 App. Div. 526) this court said, speaking through Hr. Justice Patterson : “ It was formerly a question whether the recovery of a judgment establishing a right to a lien and its extent and amount was not a condition precedent to a right of action on the bond against the sureties; but it was settled in Morton v. Tucker (145 N. Y. 244) that the establishment of the lien and the enforcement of the liability of the sureties may be in one suit in equity against all parties in interest. The undertaking of the surety it is there said is ‘ to pay the amount which it should be adjudged was due and owing to the plaintiffs and which was chargeable against the property by virtue of their notice of lien,’ and that, by the statute, 1 it was evidently intended that the bond should take the place of the property and become the subject of the lien,’ and that ‘ the action is in equity brought under the statute in which all of the persons interested, including the sureties upon the bond, are made parties,’ and the relief against them is for the amount that may be determined to be payable upon the lien.” The result of these decisions seems to fairly settle the law that either course of procedure is permissible; one to proceed with the foreclosure action against the debtor alone and recover a judgment establishing the validity of the lien and its amount, and then maintain an action at law against the sureties in the bond; the other to bring all of the parties into equity, where the judgment establishing the validity and amount of the lien may be had and at the same time, based thereon, personal judgment can be directed against the judgment debtor and the sureties. As the matter now stands the practice in each case has the sanction of the courts, and we see no sound reason in principle why resort may not be had to either method. As the first action for the foreclosure of the lien was not a bar to the maintenance of this action, plaintiffs would seem to have brought themselves squarely within the rule of law authorizing a resort to an equitable action, and as the parties must be deemed to have consented to the trial of the cause at the Trial Term no objection to such procedure is now available. As it was both proved and conceded that the lien was valid and the amount was — 450 — not in dispute and no defense appeared in favor of the sureties or the receiver, the direction of a verdict was proper. It is said, however, that the Statute of Limitations provided by the statute (Laws of 1882, chap. 410, § 1836, as amd. by Laws of 1895, chap. 605) is an answer to the maintenance of the present action. If the statute applies to an action upon a bond, the defendants are undoubtedly correct. We do not think that any sound distinction can be made between a deposit of money and the giving of a bond, as provided by the statute for the discharge of a lien. In each case the deposit or the bond takes the place and is a substitute for the fund, and in enforcement of the claim is subject to the same rules. The case of Hafker v. Henry (5 App. Div. 258), decided by this court, is conclusive of the question that the short Statute of Limitations provided by the statute for the enforcement of the lien does not apply in such a case. While the statute in many respects is obscure in its language, it does not call for the application of any different rule to this case than is applied in the case of a deposit under similar statutes. It follows from these views that the decision below was correct, and the judgment should, therefore, be affirmed, with costs. Van Brunt, P. J., Patterson and O’Brien, JJ., concurred. Footnotes [*] Laws of 1882, chap. 410, § 1886, as amd. by Laws of 1895, chap. 605.— [Rep.