Summary
In Norton v. Sinkhorn, 63 N.J.Eq. 313, 50 Atl. 506, it is also held that in a suit by a claimant under the municipal liens act the contractor cannot recoup unliquidated damages arising under his contract with the claimant, because a court of equity cannot entertain a claim for the recovery of unliquidated damages.
Summary of this case from City of Millville v. CoreyOpinion
04-06-1901
NORTON v. SINKHORN et al.
Linton Satterthwaite, for complainant. Edwin Robert Walker, for defendants.
(Syllabus by the Court.)
Bill by Richard D. Norton against John Sinkhorn and others. Portions of answer stricken out.
Linton Satterthwaite, for complainant.
Edwin Robert Walker, for defendants.
GREY, V. C. (orally). This bill is filed by Richard D. Norton (a subcontractor who undertook to deliver stone on a road being built under the road improvement law in the county of Mercer) against John Sinkhorn and Charles B. Walton, partners, etc., contractors with that county for the building of the road. The bill is filed under the act of March 30, 1892 (2 Gen. St. p. 2078), to secure the payment to laborers and others employed upon and furnishing material in the performance of any work or public improvement in cities, counties, or municipalities of this state. The complainant seeks to impound the money due from the county on the contract, and to have a decree that a portion of it lie applied to satisfy his claim for hauling done on the road on his subcontract with Sinkhorn. Sinkhorn answers, and sets up as part of his answer an allegation that Norton, in doing the work for which he claims to hold the fund, so delayed his performance that Sinkhorn was subjected to considerable loss in completing the work. Part of the damage was demurrage, which Sinkhorn was obliged to pay the Pennsylvania Railroad Company, in order to obtain delivery of the stone which Norton had agreed to cart There are two suits, one upon the Windsor, and the other upon the Edinborough, road. In one of these suits Sinkhorn files, not only his answer setting up the defense adverted to, but also a cross bill claiming that the amount of loss to him by reason of the nonperformance on the part of Norton was such that he was obliged to pay a greater sum than on that contract is coming due to Norton, and for that greater sum he prayed, by way of cross-bill relief, a decree affirmative in its nature against Sinkhorn. Norton now comes into court, the record being in that condition, and moves, under rule 213, to strike out from these answers so much of them as sets up the defense mentioned, and also the whole of the cross bill which seeks affirmative relief against him.
The statute under which this bill is filed has been passed upon in the case of Construction Co. v. Sayre, 60 N. J. Law, 449, 38 Atl. 666, by the court of errors. That court declared that the act contained no provision for a personal judgment against the contractor as a debtor, and in this followed the New York interpretation of the same statute, which was enacted in that state before it was passed here. Sny. Ann. Mech. Lien Law, 140; Scerbo v. Smith, 16 Misc. Rep. 102, 38 N. Y. Supp. 570. In the case of Garrison v. Borio (N. J. Ch.) 47 Atl. 1063, in this court, the same course was taken, in accordance with the declaration of the court of errors. There are some phrasings of the statute which to some extent imply that under it there may be an order for a personal judgment. Section 70 provides that the plaintiff must make all parties who have filed claims parties defendant, and that as to all parties against whom no personal claim is made the plaintiff may, with the summons, serve a notice, etc., stating briefly the object of the action, and that no personal claim is made, and that all parties who have filed claims under the act may, by answer in such action, set forth the same, and the court in which the action is brought may decide as to the extent, justice, and priority of the claims of all parties to the action. The next section (71) provides that the court in which the action is brought shall determine the amount due from the debtor to the contractor and from the contractor to the respective claimants, and at nearly the end of the section it provides that the judgment rendered under this act may be indorsed by execution.
If the proceeding is one wholly in rem, against a fund already in the municipal treasury, and to determine only what disposition shall be made of that fund, there seems to be but little reason that the summons should give notice that a personal claim is made against the defendant, or that there should be any provision for a judgment enforceable by execution, because if the fund only is the subject-matter of the jurisdiction, and the suit is only to fix the mode in which thatIs to be distributed, there is no occasion whatever for an execution. The court of errors noted the discrepancies which are indicated upon the face of the statute, and which have in part been occasioned by a too close following of the New York act by the draftsman of the New Jersey act. It may be true that the declaration by the court of errors in the ease of Construction Co. v. Say re, that the statute did not provide for a personal judgment against the contractor as a debtor, was obiter dictum, yet it is an Interpretation of a doubtful statute by the highest judicial authority by unanimous vote. It has established a mode of procedure under the statute, and has been followed in enforcing its provisions. I am quite unwilling in this court to consider the matter as still unsettled. The cross bill is wholly dependent for its support upon an interpretation of the statute that there may be in this proceeding a personal decree against the subcontractor for the balance due from him. As above shown, this construction cannot be maintained. The cross bill should be stricken out.
The question remains whether the portions of the answers which set up a claim against the complainant for damages suffered by Sinkhorn, by reason of the complainant's partial failure to perform his contract, should be stricken out. This relief can be granted only upon a showing that the matter challenged might have been successfully excepted to under the old form of procedure. Doane & Jones Lumber Co. v. Essex Bldg. & Land Co. (N. J. Ch.) 45 Atl. 537; Brill v. Riddle Co. (N. J. Ch.) 47 Atl. 223. It appears that this claim stands to a considerable extent, if not wholly, upon a sum paid by way of demurrage by Sinkhorn to the railroad company. Sinkhorn claims the delay in removal of material was occasioned by Norton's neglect to cart it away from the railroad station according to his contract. It does not appear that there was any definite contract by Norton whereby the sum of damages which might result to Sinkhorn by reason of the delay was in any way liquidated. Nor does it appear that Norton was obliged to recognize the definite arrangement for the same by way of demurrage, contained in any contract for carriage of material between the railroad company and Sinkhorn. Norton is not claimed to have been a party to that contract. If Sinkhorn suffered a damage because Norton failed to remove the material from the railroad station, that is a matter which is yet to be adjusted—First, in the establishment of the obligation of Norton to pay for losses suffered because of the delay; and, secondly, by the establishment of the amount which Norton ought to pay it is a legal claim for an unliquidated sum of damages made by Sinkhorn against Norton. No equitable element appears in the transaction set up in the pleading. The face of the pleadings, therefore, shows that there is a seeking in this court to set up a claim for unliquidated damages by way of answer, in reduction of the complainant's demand in this suit.
It is quite well established that this court cannot entertain a claim for the recovery of unliquidated damages. The court of appeals in Trotter v. Heckseher, 40 N. J. Eq. 656, 4 Atl. 83, and in Alpaugh v. Wood, 45 N. J. Eq. 153, 16 Atl. 670, has so declared in cases which in their facts somewhat resemble this case. In each of those cases, as in this, the damages presented were alleged to have been suffered by reason of breaches of the contracts on which the complainant founded his suit. The declaration of the court of appeals was, "A purely legal demand for unliquidated damages is not cognizable in a court of equity." Alpaugh v. Wood, 45 N. J. Eq. 157, 16 Atl. 678.
Counsel for the defendant Sinkhorn also contends that if it be held that this court cannot entertain jurisdiction of these unliquidated damages which he desires to present, on general principles, yet he insists that the court may consider the question under the special authority conferred by the provisions of this act, and particularly section 70, which declares that the court shall decide as to the extent, justice, and priority of the claims of all parties. The statute cannot be construed to confer such jurisdiction. If it be correctly held that the statute contemplates a proceeding solely for the purpose of ascertaining what payments should be made out of a contract price, constituting a fund, and that no personal judgment can be awarded, as I have already declared, then the provision, by which the court is authorized to decide as to the extent, justice, and priority of claims, applies only to the court's action in relation to the subject-matter under the jurisdiction of the court, which is the claims of the parties upon the contract price to be paid out to him. No claims can be entertained for anything else than to establish or refute the right to share in the division of that money. The portions of the answers which set up the claim for unliquidated damages must be stricken out as impertinent, because those portions seek to introduce matter not germane to the pending controversy and not cognizable in this court. I will advise an order that the portions of the pleadings specified should be stricken out The complainant is entitled to costs.