Summary
In Kenney v. Apgar, 93 N.Y. 539, it was held that the same principle is applicable generally to the foreclosure of mechanics' liens in the absence of statutory provision to the contrary, and that it is the most convenient and expedient practice.
Summary of this case from Jepherson v. GreenOpinion
Argued October 10, 1883
Decided October 23, 1883
H.C.M. Ingraham for appellants. Nathaniel C. Moak for Thomas Millea, respondent. F.P. Bellamy for Bierds et al., respondents.
This is a proceeding to foreclose a mechanic's lien, under chapter 478, of the Laws of 1862. The case shows that in November, 1878, the defendant Pedersen, then owner of certain lots in the city of Brooklyn, entered into a contract with the defendants Leonard and Ebury to complete certain buildings thereon and to make certain improvements, including the flagging of a sidewalk in front of the premises, for which she agreed to pay the contractors the sum of $5,100, the payments to be made as the work progressed. The plaintiff under a contract with Leonard and Ebury furnished the flagging for the sidewalk, laid the same, and performed some other work upon the premises, and filed a lien therefor April 27, 1879.
The defendants, other than the owners of the premises and the contractors, are lienors upon the same premises for work and materials done and furnished to the contractors upon the same contract. Some of the liens are prior to that of the plaintiffs and others are subsequent thereto.
The complaint in the action after averring the facts relating to the plaintiff's lien, alleges the existence of the liens of the other defendants spoken of, and demands judgment for an accounting and sale of the premises in satisfaction of the plaintiff's lien, and also a personal judgment against the contractors for the amount of the debt owing to the plaintiff. The other lienors appeared and answered in the action setting forth the particulars of their respective liens, and they likewise demanded judgment for an accounting and sale of the premises and to have the proceeds applied in satisfaction of their respective liens. The several lienors also alleged an indebtedness from the owner to the contractors on account of the contract, beyond the amount of their respective liens. The defendant Pedersen answered in the action as did also the defendant Apgar, a subsequent grantee of the premises. The court on the trial found the existence of the several liens set forth in the pleadings and also that there was a balance unpaid on the contract with Leonard and Ebury, and directed a sale of the premises to satisfy the several liens and the costs adjudged in the proceedings and directed them to be paid out of the proceeds of the sale in the order of their priority as determined by the court.
The appeal here is on the part of the owners alone, there being no appeal on behalf of the contractors or the other defendants. It is claimed on the part of the appellants that there was no power in the court under the act of 1862, or according to the general principles of equity, to grant affirmative relief to the lienors who were defendants, for the sale of the premises and the payment of their respective liens from the proceeds. The contention is that the only relief which can be granted in a proceeding of this character is to direct a sale and foreclosure of the plaintiff's lien, leaving the question in respect to the rights of the several co-defendants to be determined on an application for the distribution of the surplus moneys arising upon the sale. It is very clear that under the act of 1862, lienors prior to the plaintiff were properly made defendants in the action. The twelfth section provides that in all sales under judgments in the proceedings, the interest of the owner should be sold subject to all prior liens existing thereon, unless the claimants under such liens shall be made parties to the proceedings, clearly implying that prior lienors may be made defendants in the action.
We are of opinion also that according to the general practice in equity, subsequent lienors if not necessary, are proper defendants for the purpose of having the amount and priorities of their respective liens established, and that a judgment may properly provide for a sale of premises in behalf of all lienors, when made parties to the proceedings and for the payment to them of their liens according to their respective rights. A proceeding for the foreclosure of a mechanic's lien is analogous to the proceedings for the foreclosure of a mortgage, and in respect to the latter it is well settled that all subsequent mortgagees are proper parties to the foreclosure of a prior mortgage (Story's Equity Pleadings, § 193), and the former practice in chancery permitted defendants in an action of foreclosure holding junior mortgages to litigate as between themselves, all questions arising in respect to the existence and priority of their several mortgages. In Beekman v. Gibbs (8 Paige, 511), the chancellor granted the application of a subsequent mortgagee, who was a party to the foreclosure of a prior mortgage, to have inserted in the decree a direction to the master to sell sufficient of the mortgaged premises to satisfy the junior mortgage in addition to the complainant's mortgage, but held that since the act of 1840, to reduce the expenses of the foreclosure of mortgages in chancery, distribution of the proceeds of sale could not be made to subsequent incumbrancers until after the master's report of the sale had been filed and the surplus money brought into court, for the reason that as by that act judgment creditors were not necessary parties to the foreclosure, and were cut off by the sale, they should have an opportunity to be heard in respect to the distribution. In the subsequent case of Tower v. White (10 Paige, 395), which was an action of foreclosure, the chancellor said, "Previous to the adoption of the 123d and the 136th rules of this court, junior incumbrancers, who were made defendants, not only were authorized to litigate their claims with the complainant, but also with their several co-defendants, previous to the decree of sale. And as a general rule they were required to do so. ( Renwick v. Macomb, Hopk. Ch. 277.)" "The object of these two rules," the chancellor further said, "was to relieve the complainant from the expense and delay of the litigation between co-defendants, or of attempting to set up their respective rights in his bill." There was undoubtedly great inconvenience in permitting co-defendants in a foreclosure action to litigate between themselves in that action, questions in which the complainant had no interest, and while the power of the court to permit such a litigation cannot well be denied, it has been the recent practice for the court to decline to delay the plaintiff in his proceedings, to await the determination of a controversy between co-defendants. It cannot, however, we think be doubted that in proceedings under the Mechanic's Lien Laws, it is the most convenient and expedient practice to permit the adjustment and settlement in a single action, of all liens upon the premises arising under the same contract, and we think this practice is justified not only by the inherent power of a court of equity in the absence of statutory regulation to control and manage its procedure, but by the provisions of the Code of Civil Procedure. Section 1204, which is a substantial re-enactment of section 274 of the prior Code, provides that judgment may be given for or against one or more plaintiffs, and for or against one or more defendants. "It may determine the ultimate rights of the parties on the same side as between themselves, and may grant to the defendant any affirmative relief to which he is entitled." It has been remarked in several cases in respect to section 274 above referred to, that the affirmative relief spoken of in this section, was relief against the plaintiff, and one of the reasons given for this construction was that the section contained no provision for an issue as between co-defendants, or for any notice from one to the other of any hostile claim made by them respectively. This difficulty as to defendants who appear and answer, has been removed by section 521 of the Code of Civil Procedure, which is a new provision not contained in the former Code. That section provides as follows: "Where the judgment may determine the ultimate rights of two or more defendants as between themselves, a defendant who requires such a determination, must demand it in his answer, and must at least ten days before the trial serve a copy of his answer upon the attorney for each of the defendants to be affected by the determination. The controversy between the defendants shall not delay a judgment to which the plaintiff is entitled, unless the court otherwise directs." In this case copies of the answers of defendants, lienors, were served upon their co-defendants, the owners, against whose property the liens were claimed, and the latter had an opportunity to contest the liens and assert any defense thereto. It is to be observed that the objection now made is on the part of the owners alone. The court took evidence of all the facts necessary to determine the existence and priorities of the several liens; the plaintiff interposed no objection, and we are of the opinion that the court had power as incident to the determination of the rights of the respective lienors, to adjudge a sale of the premises and to direct the several liens so established to be paid from the proceeds. (See opinion of WRIGHT, J., in Smart v. Bement, 4 Abb. Ct. App. Dec. 253.)
We will now consider other objections made on the part of the appellants. It is claimed that the judgment is erroneous in the fact that it directs a sale of the right, title and interest which the owner had in the premises February 12, 1879, or at any time thereafter, whereas the lien of the plaintiff was not filed until April 29, 1879. But in this respect the judgment departs from the direction contained in the decision of the court, and where a judgment does not conform to the decision, the remedy of the party aggrieved is by application to the court to correct the judgment, and not by appeal. Another answer to the objection is that as there was no change in the title between February 12, 1879, and April 29, 1879, when the plaintiff's lien was filed, the point is wholly immaterial.
It is further claimed that the judgment is erroneous on the ground that it directs a sale of the premises and a satisfaction of the plaintiff's lien out of the proceeds, when it appears by the findings in the case that there were prior liens to be paid more than sufficient to exhaust the sum owing by the owner to the contractors. This objection, if founded in fact, would doubtless be a valid one. But it is only true upon the theory that the owner cannot be adjudged to pay the costs of the proceeding in addition to the sum found to be due to the contractor. If the costs are not chargeable against the balance found to be unpaid, then the prior liens adjudged to be paid did not exhaust the sum due to the contractors. The lien of Leonard and Ebury, the contractors, is subordinate in equity to the liens in favor of the other parties for debts owing by them, and moreover they have acquiesced in the judgment. ( Kaylor v. O'Connor, 1 E.D. Smith, 675.) We are of opinion that the court had power to adjudge costs to be paid in favor of the co-defendants against the owners. The expenses of the litigation were mainly caused by them in resisting liens claimed by the respective parties. Costs in equity are discretionary, and a reference to the sixth, ninth and thirteenth sections of the law of 1862, will show that it was contemplated that costs might be adjudged against the owner in proceedings for the enforcement of a lien. It is true that the first section provides that the owner shall not be obliged to pay, in consideration of all liens authorized by the act, any greater sum or amount than the price stipulated and agreed to be paid by the owner in his contract, but the costs are charged against the fund, not by virtue of a lien created by the act of 1862, but according to the general principles of equity and under a power lodged in the court to adjudge the payment of costs as incident to the litigation.
The point is also taken that there was error in finding the amount of the plaintiff's lien, on the ground that it included the expense of a sidewalk constructed by the plaintiff on the street and avenue adjoining the house to which the contract of Leonard and Ebury related. It is claimed that as the lot of the owner is bounded by the side of the street and does not include it, the expense of constructing the sidewalk cannot be made a lien upon the lot under the act of 1862. We are of opinion that the case of Moran v. Chase ( 52 N.Y. 346) decides this question adversely to the appellants; for although it did not appear in that case affirmatively that the party against whom the lien was claimed did not own to the center of the street, the decision was not placed upon the legal presumption of such ownership, but upon the broader ground that the word "appurtenances" covered the making of a sidewalk in front of the premises upon which the building was erected. We think we should not be justified in applying a different rule upon the distinction now suggested. The owner of a lot abutting on an avenue or street has an interest therein in common with the public at large, but also a special and peculiar interest, and we think it may be fairly held that a sidewalk in front of a building is an appurtenance thereto within the meaning of the lien law.
The point that several small orders drawn by Leonard and Ebury, other than that in favor of Richardson, Boynton Co., constituted equitable assignments to the amount of the several orders of the money due upon the contract, is not presented by any finding or exception and cannot be considered on this appeal.
The counsel for the owners, after the trial had commenced, demanded that the issues between them and their co-defendants should be tried by jury, at the same time stating that he waived such trial as between themselves and the plaintiff. The court overruled the demand on the ground that it was made at too late a stage in the action. We think the denial may be sustained upon the ground upon which it was placed by the court. At the commencement of the action, the defendants' counsel objected to the trial of any issue between his clients and their co-defendants, or the taking of any evidence in regard to the issue between them, but he did not at that point make any objection to proceeding with the case on the ground that they were entitled to a trial by jury, and the demand for such trial was not made until near the conclusion of the direct examination of the plaintiff. Subdivision 4 of section 1009 of the Code of Civil Procedure, provides that a party may waive his right to a trial by jury, "by moving the trial of the action without a jury, or if the adverse party so moves it by failing to claim a trial by jury before the production of any evidence upon the trial." And within this section there was, we think, a waiver of this right, if such existed, on behalf of the defendants. But we think it is also a conclusive answer that the action was an action in equity, triable by the court without a jury, as to which neither party had a right to a jury trial except as to such issues as might be framed and sent to a jury.
It was not necessary to the validity of the lien that a copy of the notice of lien should be served upon the owner. That is only necessary to prevent payments by the owner to the contractor after the filing of the lien to the prejudice of the lienor. ( Hall v. Sheehan, 69 N.Y. 618.)
The point that it did not appear that the lien of defendants Ropes, was filed within three months after the furnishing of the labor and materials by them, which was a consideration of the lien, was not raised by any exception in the case, and that point cannot now be taken.
The only remaining question which we deem it necessary to consider relates to the aggregate amount of the liens, which by the judgment are directed to be paid out of the proceeds of sale. There is no question but that the aggregate amount of the liens chargeable against the owner cannot exceed the sum owing by him to the contractor. The court finds that of the $5,100 payble by the contract to Leonard and Ebury, $3,200 had been paid by the owner in cash. It is also found that the owner completed the buildings after Leonard and Ebury had ceased to work upon them, under notice to them that the owner would complete them on their account, and that she necessarily expended for such completion, $600. The contract was not declared to be forfeited by the owner by reason of non-completion of the contract by the contractors, and the court finds that they stopped work upon the buildings by reason of the owners' declining to pay them according to contract. The contractors were, therefore, entitled to $1,300 after the completion of the buildings, and this sum, with interest, was the full amount unpaid on the contract. The order of April 7, 1879, drawn by Leonard and Ebury in favor of Richardson, Boynton Co. for $390, payable out of the last payment on the contract, was held by the court to be an equitable assignment of that sum out of the contract price, and this point is not now controverted. It is found that the agent of the owner paid in full settlement of this order the sum of $350; the owner was entitled to be credited on the sum unpaid on the contract, either, as she claims, the whole sum of $390, or the sum actually paid to the drawees in satisfaction of the order. We are of opinion that she was entitled to charge as against the sum unpaid on the contract, the full amount of the order, and that the discount which is allowed by the drawees of the order inured to her benefit, and not to that of the lienors. After applying the sum of $390 upon the $1,300 unpaid, the liens directed to be paid by the judgment exceed the balance unpaid by the owner, and we think the judgment should be modified by directing payment of the several liens in the order of priority fixed by the judgment, to the extent of $1,300 and interest thereon from May 1, 1879, to the time of the sale, after deducting therefrom the amount of Ryan's lien, found to be outstanding, and the sum of $390, the amount of the order to Richardson, Boynton Co.
The judgment should, therefore, be affirmed as modified, without costs to either party.
All concur.
Judgment accordingly.