Opinion
May Term, 1903.
Nathan G. Goldberger, for the appellant.
E.S. Booth, for the respondent.
This is an action to foreclose a mechanic's lien. Defendant Josephine H. Coggeshall owned the premises known as No. 1 East Fortieth street in the borough of Manhattan, New York. She contracted with the Jones Construction Company for doing certain plumbing work and furnishing materials incident thereto in the alteration and repair of the building upon these premises, and the agreement provided that the contractor should be paid in installments as the work progressed, the particular stages of the work, at which the several installments should become due and payable, being specified, and the balance or final installment to be paid upon completion of the work. The construction company sublet the contract for this work to M. Abbott's Sons, and agreed to pay them in like installments as the work progressed, and the latter sublet the work, including all extra plumbing work that might be required, to one Tracy for the gross sum of $1,171.26. The complaint alleges that Tracy fully performed and completed this work, including the extra work, on or about the 18th day of March, 1902, and that the work was done and the materials were furnished with the knowledge and consent of the owner and of the construction company; that he duly filed and served a mechanic's lien therefor in the form and manner required by law on the 10th day of April, 1902; that thereafter, and prior to the commencement of the action, he duly assigned his right, title and interest in and to the lien and the claim upon which the same was based to the plaintiff, which assignment was duly filed; that the claim has not been paid, and that the lien remains in full force; that at the time of the filing of the lien the construction company, under its contract with the owner, had so far performed and completed the work as to become entitled to an installment payment of $1,082.77, which was then due and owing to it by the owner, and due and owing from the construction company to M. Abbott's Sons on account of the plumbing contract work and extra plumbing work. These allegations of the complaint are put in issue by the answer, but not by that part of the answer to which the demurrer relates. The 7th subdivision or paragraph of the answer to which the demurrer relates is as follows:
" Seventh. For a further defense, and by way of counterclaim and equitable set-off, this defendant alleges that the said defendant, The Jones Construction Company, failed to complete the work required by her said contract with said company, mentioned in the complaint herein, in the manner and within the time therein specified, whereby this defendant was deprived of the use of her said premises for a long period of time, to her damages in an amount largely in excess of $600. But that, on the settlement aforesaid with the said defendant, The Jones Construction Company, said damages were compromised, adjusted and allowed by and between this defendant and the said Jones Construction Company at the sum of $600."
The demurrer is upon the ground that it appears upon the face of that part of the answer demurred to that the same does not state facts sufficient to constitute a defense or counterclaim or equitable set-off. Under a well-settled rule the other parts of the answer containing denials cannot be considered for the purpose of determining the sufficiency or validity of the defense to which the demurrer relates, and the allegations of the complaint are, therefore, deemed admitted. If the answer showed that this counterclaim or partial defense existed at the time the lien was filed the demurrer could not be sustained, but we do not think it does. It being conceded that the installments specified in the complaint had become due and owing from the owner to the construction company and from the latter to its sub-contractor and by the latter to the plaintiff's assignor at the time the lien was filed, we think the fair construction of the allegations in the 7th subdivision or paragraph of the answer relating to the partial or equitable defense or counterclaim is that it arose subsequently through the failure of the construction company to complete the work in the manner and within the time required. While it would, therefore, be a partial defense or counterclaim against the final payment or against any installment falling due after it arose, the rights of the plaintiff's assignor accrued at the time of filing the lien and the amount specified being then due and owing by the owner under the contract, the rights of the plaintiff's assignor and of the plaintiff could not be affected by a subsequent breach of the contract on the part of the construction company. It will be observed that upon these facts if the defense or counterclaim to which the demurrer relates refers to matters occurring after the installment became due from the owner to the construction company, the rule that a sub-contractor by filing a lien acquires no greater right than the contractor and that the owner's liability cannot be increased by the filing of liens by sub-contractors is not infringed. The construction company itself could have refused to proceed with the work unless the owner paid this installment at that time, and the owner could not have justified his withholding payment on any theory that the construction company might not subsequently fulfill the uncompleted part of the contract. Consequently the installment having become due and owing from the owner to the construction company, it might have been assigned for value, and a subsequent violation of the contract by the construction company would have been no defense to an action by the assignee of the installment. The lienor by virtue of the statute (Laws of 1897, chap. 418, art. 1, as amd.) succeeded to the extent of his claim to the accrued rights of the construction company as fully and effectually as would an assignee of the installment then due. The lien, therefore, attached to the installment due and could not be defeated or affected by a subsequent breach of contract on the part of the construction company. ( Foshay v. Robinson, 137 N.Y. 134; Van Clief v. Van Vechten, 130 id. 571.)
It follows, therefore, that that part of the interlocutory judgment from which the appeal is taken should be reversed, with costs, and the demurrer sustained, with costs, but with leave to the defendant to amend upon payment of the costs of the appeal and of the demurrer.
VAN BRUNT, P.J., PATTERSON and McLAUGHLIN, JJ., concurred; INGRAHAM, J., dissented.
Judgment reversed, with costs, and demurrer sustained, with costs, with leave to defendant to amend on payment of costs in this court and in the court below.