Russell & Erwin Manufacturing Co. v. City of New York

Laughlin, J.: The motion to discharge the liens upon giving an undertaking was made by the Twelfth Ward Bank, which held an assignment from the contractors of part of the moneys to be paid by the city under the contract. The first claim made by the appellants is that such an assignee has no standing to obtain a discharge of the liens. The statute only expressly authorizes the discharge upon the application of the contractor, but the courts have held that it should be construed as authorizing a discharge upon the application of an assignee of the contractor, who stands in the shoes of the original contractor. (Lien Law [Laws of 1897, chap. 418], § 20 as amd. by Laws of 1902, chap. 37; Id. 22; Matter of Hudson Water Works, 111 App. Div. 860. See, also, Hawkins v. Mayes-Reeve Construction Co., 82 id. 72.) It is claimed that the decision last cited does not authorize an assignee of part of the fund merely to make the application. We are of opinion, however, that either an assignee of the entire contract or an assignee of part of the moneys due thereunder shoúld be permitted to obtain the funds upon giving tiie undertaking required by the statute. It is not conceivable that [90] any one can be prejudiced by such course, and an assignee of part of the fund is quite as much within the spirit of the statute as an assignee of the contract.. The point is that the person claiming to be entb tied, to the money earned under the contract may obtain it upon giving an undertaking to protect the other claimants. The undertaking, upon the giving of which the court has authorized - a discharge of these liens, however, does not conform to the statute. The order merely requires an undertaking “ conditioned for the payment to each lienor respectively of any sum found due' on account of said lien to the’ extent that the said sum shall be found to have priority bver and above the lien, if any, created by the said assignment of Flood & Ryan to the -Twelfth Ward Bank.” If the assignee of the entire contract or the assignee of part of the moneys due thereunder wishes to obtain the benefit of the statute and have the .liens discharged and receive the money, he must take the same responsibility that the original contractor would have been obligated to assume, which is to give an undertaking for “ the payment of any judgment .which maybe recovered in an action to enforce the lien.” (Lien Law, §. 20," subd. 5, added by Laws of 1898, chap. 169, and re-enacted by-Laws of 1902, chap. 37.) This would, of course, make the bank and its surety responsible for the debts of third parties ; but if it wishes to obtain the moneys, it must assume.' that responsibility, for it is only upon executing such an undertaking that the original contractor, who would have been liable to the lienors, was entitled to obtain the fund. The authority of the. court to discharge such a lien by motion is wholly statutory, and, therefore, the discharge may only be granted on complying with the requirements of the statute. It follows that the order should be modified by requiring an undertaking in the language of the statute, and as modified affirmed, without costs. Patterson, P. J., Ingraham, Houghton and Lambert, JJ., concurred. Order modified as directed in opinion, and as modified affirmed, without costs. Settle order on notice.