Herman Hafker and Another, Appellants, v. George W. Henry, Respondent, Impleaded with Others

Herman Hafker and Another, Appellants, v. George W. Henry, Respondent, Impleaded with Others. Mechanic’s lien — effect upon the lienor’s rights of a deposit and the cancellation of the lien — time within, which the claim may be enforced against the money — an application to obtain the money must be on notice. On tlie 11th. day of June, 1894, Herman Hafker and another filed a mechanic’s lien upon premises situate in the city of New York, which were owned by Mary Ellen Carroll and others, to secure themselves for materials furnished to George W. Henry, who was a contractor doing work upon the premises. On the 18th day of October, 1894, the owners and the contractor discharged the lien by making a deposit in lieu thereof with the county clerk. On the 11th day of June, 1895, on the motion of the lienors, the lien was continued by an order of the court. On the 17th day of October, 1895, the contractor, alleging that the lien had been paid on October 12, 1894; that no action had been brought to foreclose the lien, and that the time to foreclose it had expired, upon an ex pcn-ie application obtained an order that the money on deposit should be repaid to the Carrolls and himself. Subsequently the lienors made an application, upon notice, that the order directing the moneys to be paid over by the chamberlain should be vacated, and that the persons receiving the money should be required to pay it back, which was denied. Held, that this was erroneous; That the cancellation of the lien in October, 1894, by a deposit, merely discharged the lien so far as it affected the real estate and shifted it to the fund so deposited; That the lien thus imposed upon the fund was not discharged by lapse of time, there being no statutory provision requiring that the action to establish the lien upon the fund should be brought within one year, nor any provision that the lien upon the fund must be continued by an order of the court; That, until the persons who deposited the money had given the notice provided for in subdivision 5 of section 24 of chapter 342 of the Laws of 1885, and had obtained an order vacating tlie claim, or until an action bad been brought, by the lienors and their claim upon the fund had been established, the money must remain in court to await the determination of their rights; That, in the present case, the proceeding by motion, to vacate the order under which the chamberlain paid the contractor and to require tlie person who received the money to pay it back, was the proper practice. (Amble, that the fact that the order directing tlie payment of tlm money by the chamberlain to the contractor was made without notice to the lienors was an irregularity for which, if it had been insisted upon, the order should have been vacated. Appeal by Charles H. Kranichfeld, as assignee of Herman Hafker and Christopher Hollwedel, from an order of the Supremo Court, made at the New York Special Term and entered in the office of the clerk of the county of New York on the 26th day of February, 1S96, and an order resettling the same, entered March 6,1896, denying his motion to compel the repayment to the chamberlain of the city” of New York of money which had been deposited with the county clerk of New York county to discharge a mechanic’s lien. F. T. Trautman, for the appellants. William Porter Allen, for the respondent. [MAJORITY — Rumsey, J.:] Rumsey, J.: It appears from the papers in this case that on the 11th day of June, 1894, Hafker and Hollwedel filed a mechanic’s lien upon premises situate in the city of New York known as No. 229 Mott street, which were owned by Mary Ellen Carroll and others, to secure themselves for materials furnished to George W. Henry, who was doing work upon said premises as a contractor. The amount of the lien claimed was $350. On the 18th of October, 1894, the, Carrolls and Henry deposited with the county clerk the sum of $360 to procure a discharge of the-lien, and an entry was thereupon made in the docket, opposite the entry of lien, that it was discharged by payment October 18, 1894. On the 11th of June, 1895, an application was made to the Court of Common Pleas to continue the lien, which was ordered, and the county clerk directed a new docket of the lien so continued. That, was done in the usual form. On the 17th of October, 1895, the respondent Henry, by Allen, his attorney, made an ex parte application to the Court of Com-mon Pleas that the amount of money on deposit to secure this lien should be repaid to him. The affidavit stated that the lien had been canceled and discharged by the payment of the money on the 12th of October, 1894; that no action had been brought to foreclose the lien, and that the time to foreclose the lien had expired. Upon this affidavit the Court of Common Pleas, without requiring notice to be given to the lienors, entered an order ex parte directing the chamberlain to pay over to the Carrolls and Henry the money which had been deposited with the county clerk, with interest, which was accordingly done. A check of the chamberlain was made to the order of the Carrolls and Henry. Henry received it and indorsed it, and delivered it to the Car-rolls, who procured the money upon it. Afterwards, and on the 29th of January, 1896, the lienors made an application to the Special Term upon notice that the order directing the money to be paid over by the chamberlain should be vacated and set aside, and that the persons receiving the money should be required to pay it back. The affidavits and order to show cause upon the motion, although addressed to the Carrolls as well as to Ilenry and Allen, were only served upon Ilenry, and Allen admitted service individually and not as attorney for anybody. Upou the hearing of the motion it was denied, and from the order denying it this appeal is taken. The order directing- the payment of this money by the chamberlain to the depositors -was made without notice having been given to the lienors, and without any opportunity on their part to claim or establish their rights. This of itself was an irregularity for which the order should have been set aside, if it had been insisted upon. It is stated that it has been the practice to grant these orders without notice to anybody. If that be so it certainly is a practice which should continue no longer. The money deposited stands in the place of the lien and belongs to the lienors, so far as is necessary to pay the amount of their claim against the premises. It is not proper that that money should be paid out by the chamberlain and the lienors thus deprived of their right to apply it in payment of their debt, until they shall have been heard. If the motion had been made to set aside the order for that irregularity we should not hesitate to grant'it, but as that question has not been raised we must examine further and see whether or not the order directing the repayment of this money was a proper one to he made upon the facts as they are shown to exist. It appears that the lien was filed on the 11th of June, 1894, and that this money was deposited to cancel the lien on the eighteenth of October of the same year. That was done in pursuance of section 24 of the Lien Law (Laws of 1885, chap. 342). When that had been done the lien upon 'the real estate was discharged by virtue of the statute, and it was shifted to the fund which remains in the office of the chamberlain, liable for the payment of the amount which the lienors should establish to be due to them. (Ward v. Kilpatrick, 85 N. Y. 413.) From that time on the lienors had no interest in the real estate, and the charge which before then had existed upon the land, ceased to exist. The ground upon which this order was made was, that there was no provision for the continuance of the lien upon the fund, or for the continuance of the lien upon th.e real estate which had been discharged by the deposit. It is quite true that there was no provision for the continuance of the lien upon the real estate, because, as we have seen, the express provision of the statute is, that the payment of the money into court is a discharge of the lien upon the real estate. But there is no provision of the statute that the lien upon the fund shall be discharged by lapse of time. The provision with regard to the continuance of the lien is, that no lien shall hind the property therein described for more than one year unless an action is commenced to enforce it, or an order made continuing the lien. (Laws of 1885, chap.. 342, § 6.) But for this provision of the statute the lien, when once filed, would continue a charge upon the real estate indefinitely, and the statutory provision is effectual to put an end to the lien only so far as it is prescribed in the section, and that is to put an end to the lien so far as it hinds the property. Section 6 does not apply to the money deposited with the county clerk. That remains in his hands impressed with a charge in favor of the lienor for whatever amount lie shall be able to establish against it. It takes the place of the charge upon the property. (People ex rel. Flynn v. Butler, 61 How. Pr. 274.) There is no provision of the statute requiring either that the action to establish the charge upon this money should bo brought in one year, or that that charge should he continued. Subdivision 4 of section 24 of the Lien Law, which provides that when one year has elapsed from the time of the filing of the notice of lien, and no action has heeii commenced to enforce such claim or order of the court made continuing the lien, the lien shall be discharged, does not apply to the lien upon the fund, but only to the lien upon the laud which is created by filing the original notice. Subdivision 5 of the same section of the statute permits any owner of property, or person affected by the notice of lien, to require an action to be brought within a certain time, and if no such action is brought, it provides that the court may direct the claim or lien to be vacated. There is no provision in the statute specifying when the action to enforce this claim upon the money must be brought, but we think that the rights of the depositors are amply protected by the provisions of the statute just cited, and that until they have given the notice provided for in subdivision 5 of section 24-, and obtained an order vacating the claim, or until an action has been brought by the lienor •and his claim upon the fund established, the money must remain in court to await the determination of his rights. In this case the proceeding to procure a restoration of this money was properly taken by motion, and the proper motion was the one which was made here to vacate the order of October II, 1895, and to require the persons who received the money to pay it back again. All those persons should have been, as they were, made ptarties to the proceeding, and the motion papers should have been served upon them. As they were not served upon the Carrolls, no relief can be had in this proceeding against them, but that is not very material. The papers were served upon Ilenry, who seems to have been the party to whom the check was originally paid. It does not appear what the relative rights of Henry and the Carrolls were to this money. It does appear, however, that the check -was made payable to all of them and that Henry received it and indorsed it over to the Carrolls. That being so, he is liable to pay back the money, because the Carrolls could not have received it but for his action. The lienors are entitled to look to him by whose action and interference the money was taken from its proper place of deposit, for its restoration. If Henry has any rights which it is necessary for him to establish against the Carrolls, he will be at liberty to assert them in such way as he shall be advised, but the fact that he may have such rights' affords no reason why the lienors should not be permitted to look to him for the money which he improperly took away from them. The order denying the motion to compel the repayment of the money should be reversed, with ten dollars costs and disbursements, and the motion granted that Henry pay back to the chamberlain the money so paid to him, with interest, within ten days after the service of a copy of this order, and that the appellants shall have ten dollars costs of this motion. Barrett, Williams, Patterson and Ingraham, JJ., concurred. Order reversed, with ten dollars costs and disbursements, and motion granted as directed in opinion, with ten dollars costs.