New Jersey Steel & Iron Co. v. Robinson

This action is brought to foreclose a mechanic’s lien filed by the plaintiff. The defendant Kinney is the owner of the-premises. The defendant Andrew J. Robinson was the general contractor, and the plaintiff and the other defendants subcontractors under him. The defendant Robinson made default in the performance of his contract with the defendant owner, and made a general assignment for the benefit of creditors. The owner thereafter completed the contract, pursuant to the provisions thereof authorizing him so to do, and upon completion a considerable sum of money became due and payable to the contractor under the terms of the contract; it having cost the owner much less to complete the building than the sum stipulated therein to be paid. This fund amounted at the time of the trial of this action to the sum of $70,761.90, out of which the liens of the respective parties have been adjudged to be paid, so far as the same is found sufficient. The judgment entered upon the report of the referee determines that the plaintiff has a valid lien upon the fund for $37,077.25; that the other lienors are prior in point of time to the plaintiff’s lien, and are entitled to be paid therefrom $37j877-4i- Costs amounting to the sum of $4,852.49 are awarded to the respective parties in different amounts, and are made paj'able from the fund. The sum allowed as the lien of Thaw, Barr, and Fraser is $16,575 and costs. Deducting the amount of the liens superior to the plaintiff’s which are charged upon the fund, including the costs awarded and to be deducted therefrom, leaves a deficiency for the payment of the plaintiff’s lien in the sum of $9,135.23. The defendant the American Exchange National Bank is the assignee of an undivided interest to the extent of $5,000 of the lien of Barr, Thaw, and Fraser. Its rights in the premises are dependent upon the validity of the lien of such contractors. The plaintiff’s attack is upon that part of the judgment which determines that Barr, Thaw, and Fraser have a lien for the amount adjudged, and also upon the. allowance of costs, as between it and the defendant Kinney.

The appellant contends that the notice of lien filed by Barr, Thaw,, and Fraser is insufficient under the statute, and, being so insufficient,. no lien upon the fund was acquired in their favor, or in favor of their assignee, as against this plaintiff. It is the settled law that, to entitle a claimant under the mechanic’s lien law to the benefit of the-statute, the notice of lien must comply substantially with all of its requirements, and, if there is not such compliance, no lien is acquired. McKinney v. White, 15 App. Div. 423 , 44 N. Y. Supp. 561 , affirmed

The notice of Barr, Thaw, and Fraser is claimed to be defective in statement as to the work and labor performed and materials furnished, the amount and value thereof, and the amount which was therein claimed to be due and unpaid for such work, labor, and materials. The notice in this respect reads:

“(4) The labor performed or to be performed is the cutting and setting of all the cut lime stone for the building on the premises, and the materials furnished or to be furnished is the stone so to be cut and set, and the agreed price or value of such labor and materials is forty-four thousand seven hundred dollars. There has also been furnished extra work and materials at agreed prices amounting to $1,543.00. (5) The amount unpaid to the lienors for such labor and materials is forty-three thousand two hundred and forty-three dollars.”

The criticism upon this notice is that it does not state either the labor performed or the materials furnished, nor state the agreed price or the value of the labor or the materials furnished, nor of the labor to be performed or materials to be furnished, nor the agreed

The notice, so far as the extra work is concerned, complies with the statute, as the statement relating to it is that there has been furnished such extra work and materials. To this extent the notice is good, and should be upheld, were it not for another defect and reason why the lien in this case is void as to the plaintiff. The statement in the lien is that the labor performed or to be performed and the agreed price of such labor or materials is $44,700, and for extra work $1,543, and that the amount unpaid to' the lienors for labor and materials is $43,243. The lienors intended, and, except for a mistake to be hereinafter noticed, did, state therein, assuming that there was a statement of fact, that the contract price was the first-named sum and the extra work the given sum, and that the amount-unpaid was $43,243. The lienors thus stated the full amount of the contract price, if they stated anything, as being the amount and value of the work, labor, and materials furnished, and that the sum which they were entitled to receive was nearly that sum. In point of fact the reasonable value of the work and labor furnished under the contract did not equal such sum, but was only the sum of $15,000. The claim of the amount due was, therefore, grossly exaggerated, the excess over the true amount being $28,243. For the item of extra work, which was stated to be $1,543, only $500 had been furnished — an ■exaggeration of something over two-thirds. The learned referee : found that the amount unpaid under the contract price was $44,300 and of extra work $1,521, and that the amount due and unpaid, instead of being $43,243, was $42,821. With these corrections made, the exaggeration in excess of the amount which the lienors were entitled to recover is $27,321. The force of these facts was sought to be avoided by a finding that at the time of filing the notice of lien the price of the materials furnished could not be separated without .an agreement between the parties thereto. It is evident that this finding has no effect whatever in relieving the lienors from their ■exaggerated statement. The amount and value of the materials which had been furnished and the work and labor bestowed upon the building could have been approximated at that time as well as at any other. Manifestly, the statement that the lienors were entitled to have and receive by virtue of their lien the grossly exaggerated sum stated in the notice must have been known to them. It is not possible that they could then honestly have made the statement that $42,000 and upwards was due and owing to them, when the fact was that, including the work performed under the contract and the extra work and labor, only the sum of $16,000 was owing. In Aeschlimann v. Presbyterian Hospital, 165 N. Y. 296 , 59 N. E. 148 , 80 Am. St. Rep. 723 , Martin, J., after reviewing the authorities upon this subject, states:

“We think the rule so generally established is a proper one, and should be adopted by this court. There certainly can be no hardship in requiring a claimant to avoid intentionally and willfully making an exaggerated claim which he knows not to exist. The requirement that he shall truthfully state his claim is in no way unjust to the claimant, but it is pre-eminently just to the owner, to other claimants or lienors, and to those who are engaged

in administering the lien law. We are therefore of the opinion that, the trial court, having found that the plaintiffs ‘enormously exaggerated’ their claim, and intentionally and by pretense of a fictitious contract sought to enforce and establish a false and fabricated demand, was justified in holding that the plaintiffs had thereby forfeited their right to recover any judgment against the sureties upon the bond in question.”

While it is true that in that case there were elements of actual and affirmative fraud upon the part of the contractors, which find no place in this case, and with which the lienors cannot be charged, yet it is evident that they willfully, and therefore intentionally, grossly exaggerated their lien, and thereby worked, or might have worked, an injury to subsequent lienors and other parties interested in the fund. Such gross exaggeration must be regarded in law as willfully made, as it must have been known to the lienors to be untrue at the time when the statement was made. Thereby there was a violation of the terms of the statute, which requires that the claim shall be truthfully stated, and it is in no way unjust to the claimants to insist upon compliance with the .statute in this respect.

The case of Ringle v. Wallis Iron Co., 149 N. Y. 439 , 44 N. E. 175 , which holds, in effect, that a mistake in stating the amount which the lienor is entitled to enforce does not invalidate the lien, in no wise conflicts with this view. That case recognized that a willful and intentional false statement might invalidate the lien. The two cases last cited indicate the state of the law upon this subject, and we think lay down the rule that, where no mistake of fact exists, the lienor is not justified in exaggerating his claim, and that, where the exaggeration is gross, willful, and intentional, the lienor should be held to forfeit his lien. There is no hardship in such requirement, nor does such rule operate to defeat an honest claimant who has made a mistake.

It follows from these views that the judgment in favor of Barr, Thaw, and Fraser cannot be upheld, and that the judgment of the American Exchange National Bank, as it is dependent thereon, must also fall, as to the plaintiff in the action. The judgment in this respect, however, is not invalid as to any party except the plaintiff, as no one else appeals, nor is it made to appear that any other party is aggrieved. It follows that the plaintiff becomes entitled to a judgment as against Barr, Thaw, and Fraser and the American Exchange National Bank, declaring its lien to be superior to such lienors, including the costs awarded to it in the judgment. The fund is sufficient to pay the amount of the other lienors aside from Barr, Thaw, and Fraser and the American Exchange National Bank, with costs. It is therefore unnecessary to determine the plaintiff’s equitable right to costs as against the defendant owner.

It follows that the judgment should be modified by declaring the lien of the plaintiff superior to the lien of Barr, Thaw, and Fraser and the American Exchange National Bank; such amount, with all costs awarded to the plaintiff, to be paid from the fund before the last-named parties shall be entitled to receive anything; and, as modified, the judgment should be affirmed, with costs to the appellant. All concur.