Hilton Bridge Const. Co. v. Gouverneur & O. Railroad

MAYHAM, P. J. The record on this appeal shows that the New York Central & Hudson River Railroad Company and the Gouverneur & Oswegatchie Railroad Company are, respectively, corporations organized under the laws of the state of New York, and that the Moffett, Hodgkins & Clarke Company is a foreign corporation, organized under the laws of New Jersey; that the Gouverneur & Oswegatchie Railroad Company was engaged in the construction of a railroad in the state of New York, and that on the 11th day of May, 1892, the above-named railroad companies entered into a contract whereby the first-named railroad company would construct the railroad of the latter company, with all the necessary erections and constructions, and would acquire and pay for the lands, and furnish such last-named company good and sufficient deeds therefor, and complete the construction and equipment of such road, by the 1st of November, 1892, for the sum of $650,000, which sum. the Gouverneur & Oswegatchie Railroad Company agreed to pay, as follows: $350,-000 cash on the 15th day of July, 1892; $50,000 cash or first mortgage bonds on the 15th day of August, 1892;. $50,000 cash or such bonds on the 15th day of September, 1892; $50,000 cash or bonds on the 15th day of October, 1892; and, within 15 days after the complete performance of such contract, $100,000 in cash or like bonds. The case discloses that after the making of this contract, and on the same day of the date thereof, the defendant the New York Central & Hudson River Railroad Company entered into a contract with the Moffett, Hodgkins & Clarke Company, whereby the latter company, for a consideration therein expressed, agreed to construct the Gouvernuer & Oswegatchie Railroad, in the manner therein particularly [516] set out, and to be paid therefor as therein specified, under which agreement the Moffett, Hodgkins & Clarke Company commenced and continued work for some time, but failed to finish the same, and secure the right of way as was agreed by them, and became insolvent; whereupon Booream and O’Brien were appointed receivers of that corporation in this state, and were acting as such at the time of the commencement of this action. Before the appointment of such receiver, the Moffett, Hodgkins & Clarke Company assigned to Louis Marshall its interest in the contract with the Hew York Central & Hudson River Railroad Company as collateral to the payment of some of its obligations. While the Moffett, Hodgkins & Clarke Company were operating under their contract with the railroad company, they employed Conger & Orvis as attorneys to secure the right of way for the railroad, and procure titles and releases therefor, and such attorneys performed work under such employment, and had in their possession, at the time of the commencement of this action, such conveyances and releases, which they refused to surrender to the railroad company until their alleged liens for services were paid. The Moffett, Hodgkins & Clarke Company, as is alleged, had also employed the plaintiff to build and construct bridges on the line of this railroad, for which plaintiff claims it has not been paid, and for which it is alleged liens were filed, which are now being foreclosed in this action. It is claimed by the Hew York Central & Hudson River Railroad Company that that company, by its contract with the Moffett, Hodgkins & Clarke Company, was protected against liens, and that it has fully paid that company for all it is liable to pay on account of the contract with it. Upon these facts the defendants insist that the persons and firms brought in by the order appealed from are necessary and material parties to this action. The first objection urged by the plaintiff to the granting of this order is that the defendants were guilty of laches in making the motion, and the order should have been refused by the special term on that account. The action was brought on the 3d of February, 1894. The answers set up the nonjoinder of the Moffett Company, Louis Marshall, and Booream and O’Brien as defendants, and such answers appear to have been served in time for the May circuit, at which circuit the plaintiff noticed action for trial; and the defendants the two railroad companies on the 27th of April served notice in writing on Marshall and the receivers, Booream and O’Brien, to appear at that circuit and protect their interests. The case discloses that soon thereafter negotiations were commenced between the attorney for the plaintiff and the railroad companies, and also the attorneys for the parties brought in by the order appealed from, looking to the question of bringing in such parties; but no definite result was reached by such negotiations, and finally, on the 11th of September, 1894, a motion was made at a special term, and this order granted. Under the circumstances of this case, we do not think the court on appeal should reverse this order on the ground of laches in making this motion. It cannot be said that the defendants in the action, [517] as originally commenced, took any such subsequent step after serving the answer as would be a waiver of their rights to make this motion. In the answer the question of defect of parties defendant was specifically raised, and the plaintiff seemed to regard that question as still open after the service of the answer, by participating to some extent in negotiations looking to the bringing in of other parties defendant. Besides, the question of laches is one that to some extent is addressed to the discretion of the special term (Lawrence v. Jones, 15 Abb. Pr. 110), and we do not think the special term, in disregarding the delay in making this motion, abused that discretion. But upon the merits it is insisted that the motion as to the receivers was improperly granted. The receivers represent the plaintiff’s obligors, or the parties for whom the plaintiff performed the work, and it is only by reason of the railroad companies’ interest in the property against which the lien was filed that they are made parties defendant. It is conceded by the learned counsel for the plaintiff that it would have a personal action against the receivers, arising out of the contract between the plaintiff and the contracting company, which the receivers represent; but it is insisted that if they were parties to the action, and should succeed in defeating the plaintiff’s claim, the receivers would still be compelled to try the legal issue with the Central Bailroad Company whether that company owed the receivers or party represented by them or not. We do not think that would follow in this case. If in this action it turn out that the Central Bailroad Company owed nothing to the contracting company, then the plaintiff "would, it seems to us, fail in this action; but that question could not be effectually tried, so as ..to bind the receivers, unless they were before the court in this action; and, as the rights and liabilities of all the parties arise out of the same subject-matter of the action, the rights of each and all, if before the court in this action, can be effectually adjudicated and determined so as to bind all. For that purpose the receivers of the Moffett, Hodgkins & Clarke Company would seem, not only to be proper, but necessary, parties, for the purpose of determining whether or not the railroad company owed the Moffett, Hodgkins & Clarke Company anything ón which the plaintiff’s lien would attach under its employment by the latter company. No complete determination- of the controversy could be had without the presence of the representatives of the Moffett, Hodgkins & Clarke Company, and they would therefore seem to be proper and necessary parties, under the provisions of section 452 of the Code of Civil Procedure. The counsel for the plaintiff objects, also, that the motion of the railroad company to bring in Louis Marshall, the assignee of the Moffett, Hodgkins & Clarke Company, was improvidently granted. Marshall was the assignee of the interest of the Moffett, Hodgkins & Clarke Company in its contract with the Central Bailroad Company. As such, he was directly interested in the amount, if any, of the plaintiff’s recovery against that company, provided that amount was to be taken out of any balance due from the railroad company to Marshall on Hodgldns & Clarke’s claim, which had [518] been assigned to him; and while he, as assignee, might not be bound by the result of the plaintiff’s action against the railroad company, he would, for the reason stated above in the discussion of the question as to the propriety of the receiver being made a party, in like manner be a proper party for the purpose of a complete determination of the matter in controversy, to wit, the amount, if any, of the indebtedness of the railroad company to the Moffett, Hodgkins & Clarke Company, and, if so, whether the plaintiff or the receiver of the Moffett, Hodgkins & Clarke Company are entitled to the same. In theory, it is insisted by the plaintiff, the railroad companies must litigate the question of the indebtedness of the Hew York Central & Hudson River Railroad Company to the Moffett Company in an action between the plaintiff and railroad companies, which will in no sense bind the Moffett Company or its representatives as to the fund over which the controversy is waged, leaving the railroad companies and the Moffett Company to settle their rights to the same fund in an independent action, thus subjecting the railroad companies to the hazard of being twice charged with the same fund. Against such a result we think section 452 of the Code of Civil Procedure furnishes a remedy, or rather a preventive. That section is as follows: “The court may determine the controversy as between the parties before it, when it can do so without prejudice to the rights of others, or by saving their rights; but when a complete determination of the controversy cannot be had without the presence of other parties, the court must direct them to be brought in. And where a person not a party to the action has an interest in the subject thereof, or in real property, the title to which may in any manner be affected by the judgment and makes application to the court to be made a party, it must direct him to be brought in.” We think the provision of the Code is broad enough to cover a case of this kind, and justify the order bringing in the receiver and assignee of the Moffett, Hodgkins & Clarke Company. By the terms of the agreement between the Hew York Central & Hudson River Railroad Company and the Moffett, Hodgkins & Clarke Company, the latter agreed to procure the right of way for the Gouverneur & Oswregatchie Railroad, and in the attempt to perform that contract the Moffett Company employed Conger & Orvis, attorneys, to procure a clear title to such right of way, which to some considerable extent they did, but retained in their own hands, by virtue of .their lien as attorneys, the titles so secured, in default of payment for their "services; and, upon the motion of the receivers of the Moffett Company, their attorneys were, on this motion, ordered to be brought in as defendants, so that their lien upon the muniments of title to the right of way might, on an adjustment and payment of their lien in this action, be settled, and the title deeds in their hands might be delivered to the party entitled to the same. This claim also arises out of the transactions involved in the action, and the subject-matter in controversy therein, and, while they have not filed notice of their lien, they nevertheless have liens, both at common law and by statute, "which cannot be divested except upon payment; and in this action, which is in the nature of an equitable [519] action, to enforce a lien against this property, we see no reason why these attorneys are not proper parties defendant therein. We think, on the whole case as presented on this appeal, the order of the special term was proper, and should be affirmed. Order affirmed, with §10 costs, and printing and other disbursements. All concur.