LARKIN v. McMULLIN

LARKIN v. McMULLIN. N. Y. Court of Appeals, Second Division; April, 1890. -Mechanics' liens; subcontractors.] A subcontractor who has filed a lien under L. 1885, c. 342, cannot recover against an owner who has completed the building after the contractor has abandoned it, although for a less sum than the remaining payments under the contract, where there is no provision in the contract for the completion of the work by the owner, and there was no understanding between the owner and contractor that the former should complete the work. Appeal by defendant, Joseph Kahn, from an order of the general term of the court of common pleas for the city of New York, reversing a judgment entered upon the report -of a referee, which judgment was in favor of the said defendant and dismissed the complaint. The action was brought by Patrick and Thomas Larkin against Michael McMulIin, •Joseph Kahn and others to foreclose a mechanic’s lien. The issues were referred to Jambs A. Blanchabd, Esq., to hear and determine, who made the following findings of fact: First. That the defendant, Joseph Kahn, prior to May 1, 1886, was, and he still continues to be, the owner in fee of -the premises known as number 87 Pike street, in the city of New York, being the same premises described in the complaint. Second. That on May 1, 1886, the defendant Kahn, as owner of the premises 87 Pike street, New York city, and the defendant, Michael McMullin, entered into a. written agreement (including certain plans and specifications) ■ in and by which said McMullin agreed to complete certain alterations in and upon said premises for the aggregate price-of $900. Third. That it was stipulated and agreed, in and by said contract, that said price should be payable, as the work progressed, in four instalments, as follows : 1st, $200; 2nd, $250 ; 3d, $250; and. 4th, $200 ; said payments to be made-upon the certificate of Edward Kenny, architect, as provided in said contract. * Fourth. That said McMullin completed the work, entitling him to the 1st and 2nd payments, and received the-same in full, viz., $450. Fifth. That on July 10, 1886, said McMullin received from said Kahn, on account of the 3d payment, the sum of' $100. Sixth. That thereafter, in the latter part of July, 1886, said McMullin failed to continue with the work described, in said contract to entitle him to the 3d and 4th payments, although duly notified and required by said Kahn so to do,, but abandoned the same. Seventh. That after the abandonment of said contract by said McMullin, neither said McMullin nor any one acting-for or on his behalf, performed said contract in whole or in part. Eighth. That the terms of said contract to be performed by said McMullin have not been performed by any person whatsoever. Ninth. That the defendant Kahn has performed all tíretenos of said contract on his part to be performed. Tenth. That the work done upon said premises by the defendant Schmohl and by Barrett and Heinzer, after said MeMuIIin had abandoned the said contract, were done by them upon their personal and independent agreements with, and -employment by, the owner, the defendant Kahn, at the •several agreed prices and considerations, which have been fully paid to each of them by said Khan. Upon these facts the referee found the following conclusions of law: First. That after the payment of said sum of $100, on or about July 10, 1886, no further part of the price stipulated and agreed to be paid in and by the terms of said • contract became due to said McMullin. Second. That at the time the liens herein were filed, viz., that of the plaintiff, Larkin, July, 30, 1886, that of the defendant Schmohl, August 4, 1886, and that of the •defendant Matthews, August 18, 1886, no part of the price stipulated and agreed to be paid in said contract remained unpaid. Third. That the complaint be dismissed. Fourth. That the liens in the complaint mentioned be ■discharged. Fifth. That judgment be rendered in favor of the ■ defendant, Joseph Kahn, for costs, to be taxed against defendant Michael McMullen only. Judgment was thereupon entered as directed in said report. The plaintiffs and the defendant Schmohl both appealed to General Term, where the judgment was reversed, and a new trial ordered, that court holding that the subcontractors .had a lien upon the difference between the aggregate sums paid by the defendant owner upon the contract and in completing the work, and the $900 agreed to be paid by the ■ contract for the completed work. From such order of the General Term, this appeal was taken by defendant Kahn, by leave of the General Term. Arthur Hurst, for appellant. Bartlett Wilson & Hayden, for respondent Schmohl. Merrit A. Potter, for plaintiff and respondent. [MAJORITY — Bradley, J.] Bradley, J. The only question upon the trial was whether the notices of the liens were effectual to charge the premises with the claims of the lienors, and that was dependent upon the further question whether, at the time they were filed, anything was due or remained unpaid for the work the defendant McMullin had performed under the contract with the defendant Kahn. The purpose of the statute, known as that relating to mechanics’ liens, is to enable those doing work, or furnishing materials to be used upon structures on real estate, to obtain security and payment through the means ■and in the eases provided by it, but in no case shall the owner ■of the premises be liable to pay, by reason of liens filed pursuant to the act, “ a greater sum than the price stipulated and agreed to be paid in such contract and remaining unpaid at the time of filing such lien, or, in case there is no contract, than the amount of the value of such labor and material then remaining unpaid ” {Laws 1885, c. 342, § 1). In the present ■case the work was done and materials furnished by McMullin in performance of a contract between him and the owner, Kahn, providing for a certain compensation, and designating the terms of payment regulated by the work performed in its stages to completion. • The referee found that McMullin performed the work entitling him to the first and second payments, and received them in full; that, although he received $100 on the third payment, July 10,1886, he failed to ■continue the work to entitle him to that or the fourth payment, but in the latter part of July he abandoned the work; that after such abandonment neither McMullin, nor any one acting for him or in his behalf, performed the contract, and ■it has not been performed, and that the defendant Kahn performed all the terms of the contract on his part to be performed. It thus appears by the findings of the referee that nothing was due McMullin at the time the liens were filed. It Is, however, urged that because there was evidence tending to prove that the completion of the contract would cost less than the amount unpaid to McMuIlin of the contract prices for the entire work, the liens should be effectual to reach such difference. So far as the question is presented by exceptions to findings, and to refusals to find of the referee, it. may be considered, but no further, as questions of law only-can have consideration on this review, since it does not appear by the order appealed from that the judgment was reversed and a new trial granted on questions of fact {Code, §■ 1338). The amount of compensation and the right to it were regulated by the terms of the contract, and whether anything-remained unpaid was dependent on its provisions. As found by the referee, McMuIlin received all he was entitled to under the agreement, and $100 more, before either of the-liens was filed. In that view nothing then remained unpaid. The right of the owner, as well as that of McMuIlin, rested in the contract between them, and whether anything was due to the latter was dependent upon its terms; and to enable a subcontractor, laborer, or person furnishing material to the-contractor or subcontractor to act advisedly, they are given the right on demand to the inspection of the contract under which the work is being done (Laws 1885, c. 342, § 3). Their rights for the purposes of a lien as against the owner are-mainly dependent upon those which the contractor takes by the contract, and whether anything is due upon it is governed by its provisions. As a general rule, therefore, it cannot be-said that anything remains unpaid which the owner is not, by the terms of contract, and does not become, liable to pay. While the rule in all its force applicable as between the owner and contractor may not be applied as between the former and a third party, who asserts a lien for labor or materials, at least-in so far as relates to the question of good faith of the-contractor, the owner cannot be required to perform any other than the contract he has made with the contractor. The mere fact that the completion of work abandoned by the contractor, when nothing is due to him, may cost something less than the amount unpaid of the contract price for the entire work, does not necessarily support the claim of a. lienor. That rule is applied to determine the amount unpaid, for the purposes of a lien, and to give effect to it as to any difference in favor of the contractor, so produced, when by means of the contract the contractor has taken the equitable title, and such contract, by reason of his failure to perform it, is forfeited or in any manner terminated by the owner of the legal title. In such case the latter, or any party through him, takes the property subject to the lien (Hackett v. Badeau, 63 N. Y. 476; Rollin v. Cross, 45 Id. 766). The same rule is also applicable when the right is reserved to the owner by the terms of the contract to complete the work on failure of the contractor to do so. In such case the work of completion by the owner is performed pursuant to the contract (Murphy v. Buckman, 66 N. Y. 297). Also where the contractor abandons the work by reason of default of the owner, who goes on and completes it (Graf v. Cunningham,, 109 N. Y. 369; 16 N. E. Rep. 551). And when the work is substantially performed by the contractor, the lien is effectual, subject to the right of the owner to recoup such damages-, as he shay have sustained by the failure to entirely finish it (Heckmann v. Pinkney, 81 N. Y. 211). As held in the-case last cited, it is not essential that a liability to pay exists, at the time of filing the notice of lien. It is sufficient that; an amount has then been, under the contract, earned by the contractor, which is unpaid. In the case at bar there was no provision in the contract for the completion of the work by the owner in the event of failure by the contractor, nor was there any understanding between them that the owner should proceed with the work, but, on the contrary, the contractor abandoned it against the protest of the owner, and refused to go on with it. Upon that state of facts, without saying anything further, it is difficult to see that there was at the time of filing the notices of lien anything unpaid or to become due for the work done by McMulIin under the contract (Lumbard v. Railroad Co., 55 N. Y. 491; Crane v. Genin, 60 Id. 127). But it is claimed that the right of a lienor is something more and beyond that of subrogation to the rights of the contractor, and that if it can be ascertained that at the time the lien is filed the latter had earned any amount which was unpaid, the lien is effectual to reach it, although the contractor has, before such filing, abandoned the work, and is not entitled to assert any claim against the owner; -and to support that proposition are cited Wright v. Roberts (43 Hun. 413), Van Clief v. Van Vechten (1 N. Y. Supp. 99), Sheffield v. Loeffler (20 N. Y. St. Rep. 890). These cáses go further than any other to which our attention has been called, and the last one cited seems, as reported, to go so far as to determine that a lien filed by a subcontractor, after abandonment of the work by the contractor, may be supported by proof of the amount paid to the latter and the sum that the completion of the work would cost, and the difference between the amount of these two sums and the contract price of the entire work, if the latter exceed that amount, is available to discharge the claim of the lienor as against the owner. It may be seen that this could properly be done if the subcontractor offered to go on and complete the contract, or if there was some provision in the contract, •or otherwise made, which in some manner might be construed to save the right of the subcontractor; otherwise it is difficult to see how the doctrine of that case has any well-founded principle for its support. The facts of that case may not be fully disclosed in the report of it as there made. The theory of that, as well as the others of those cases, evidently was that the contractor had earned an amount unpaid at the time of filing the lien, and that the proof of such difference was evidence upon the question of the amount so earned in excess of what had been paid. But in the present case there is no finding that the contractor, McMullin, had earned anything more than he received in payment upon . the contract, nor was there any request made to the referee to find any such fact. The referee was requested and refused to find that Kahn procured all remaining work to be done for $125.50, except certain other work specified, the value ¡and cost of which was not more than $85 ; also, that there remained in the hands of Kahn, of said contract price, $155 ; •and exceptions were taken to such refusals. The evidence is not decisive of those facts, which the referee was so re■quested to find, although they were in accordance with the weight of evidence. If, therefore, those facts were deemed important upon the merits, the exceptions raise no question -of law, and for the reason before given, the questions of fact ■are not the subject of review on this appeal (Bedlow v. Dry Dock Co., 112 N. Y. 263; 19 N. E. Rep. 800; Raft Co. v. Roach, 97 N. Y. 378). But we do not hold that those facts, if found, would establish the proposition that anything ■earned by the contractor remained unpaid. While they might be some evidence of the proportion of the work done •by him, they would not necessarily establish that fact as a matter of law, and there is no exception that presents for ■consideration the question whether what, if anything, he had earned, measured by the work he did, in excess of the amount paid him, would to that extent have supported the -claims founded upon such liens. The case of Hackett v. Badeau (supra), has no necessary application to that question in this case. There the contract was one to sell the premises upon which the work was done, and, as before : suggested, the party employing the contractor had an equitable title, the termination of which did not defeat the existing lien. And in the case of Heckmann v. Pinckney •(supra), the contract was found by the referee to have been ■substantially performed by the contractor, and in other re■spects performance waived by the owner. These views lead to the conclusion that the order should be reversed, and the judgment entered on the referee’s report affirmed. All the judges concurred.