
    Westervelt and another v. Levy.
    (Before Duer, Bosworth, & Emmet, J.J.)
    October 20.
    November 19 1853.
    In an action against the owner of a building in the city of Mew York, to recover a balance, alleged to be due from him upon the contract for the erection of the building, the defendant cannot set tip as a bar to a recovery, that mechanics and other persons had taken the necessary preliminary steps for establishing liens upon the building, for labor performed, or materials furnished by them, at the request of the contractor.
    The defendant, in such a case, should seek relief, either by instituting a cross-action, making all the persons claiming liens parties thereto; or by a special application for liberty to pay into court the amount due from him upon the contract, to abide a final decision upon the claims, and for a stay of proceedings in the meantime.
    The mere pending of claims under the lien law, which have not been satisfied nor even established, can be no defence to an action for the recovery of the sum he had expressly covenanted to pay. Judgment for plaintiff affirmed with costs.
    
      Appeal by defendant from a judgment at special term upon the report of a referee, in favor of the plaintiff, for $4627.70, including costs.
    The action was brought to recover a balance, alleged to be due from the defendant upon a contract between him and one Purss, for the erection of a building upon lot 49 Maiden Lane, in the city of Mew York. The plaintiff claimed as the assignee of Purss.
    The principal defence set up in the answer, and that to which the questions before the court alone related, was, that certain mechanics and other persons, who, at the request of Purss, had performed labor, and furnished materials for the building, had acquired liens thereon, pursuant to and in the manner required by the 6th section of the Act, “ For the better security of mechanics and others, erecting buildings and furnishing materials therefor, in the city and county of Mew York,” passed July 11,1851. That the liens so created had not been discharged, nor in any manner brought to a close, and amounted to the sum of $8,247.96, which sum the defendant claimed to set off against the demand of the plaintiff.
    The referee, W. Inglis, Esq., made a special report—that part of it, which relates to the above defence, is as follows.
    And I do further report, that I find that Horace Beals, surviving partner, &c., on the eleventh day of September, one thousand eight hundred and fifty-one, served a notice in writing upon the clerk of the city and county of Mew York, specifying that, under an agreement with the said Joseph D. Purss, he had furnished materials and performed labor towards the erection of the said building, number 49 Maiden Lane, to the amount of $561.97 ; that on the twenty-third day of September, in the same year, Charles H. O’Hara served a notice on the said clerk, specifying that, under an agreement with the said Purss, he had furnished materials and performed labor towards the erection of the said building to the amount of $704.05; that on the third day of October, in the same year, William Joyce served a notice on the said clerk, that, under an agreement with the said Purss, he had furnished materials towards the erection of the said building to the amount of $545 ; that on the fourth day of October, one thousand eight hundred and fifty-one, George J. Lorton served a notice on the said clerk, that, under an agreement with the said Purss, he had furnished towards the erection of the said building, materials to the amount of $250; that on the sixth day of October, in the same year, L. W. Halsey served a notice on the said clerk, that, under an agreement with the said Purss, he had furnished materials and performed labor towards the erection of the said building, to the amount of $700 ; that, on the nineteenth day of ¡November, one thousand eight hundred and fifty-one, Westervelt & Bogart served upon the said clerk a notice, that, under an agreement with the said Purss, they had furnished materials to the erection of the said building to the amount of $2,924.27; that on the eighth day of January, one thousand eight hundred and fifty-two, William A. Sinclair served a notice on the said clerk, that, under an agreement with the said Purss, he had furnished materials to the erection of the said building on the lot number 49 Maiden Lane, to the amount of $25.48; that on the thirteenth day of February, in the year last mentioned, Levin FT. Cowley served upon the clerk of the city and county of ¡New York a notice that, under an agreement with the said Purss, he had furnished building materials to the erection of the said building to the amount of $130. That the said Levin FT. Cowley, on the seventeenth day of February last aforesaid, served upon the said clerk a notice, that, under an agreement with the said Purss, he had furnished materials to the erection of the said building to the amount of $130 ; that on the eighteenth day of the same month and year last aforesaid, certain persons doing business under the name and firm of S. B. Althouse & Co., served upon the said clerk a notice, that, under an agreement with the said Purss, they had furnished materials to the erection of the said building, to the amount of $2,277.19. That such notices specified the amounts of the respective claims of the said persons, for such labor performed and materials furnished in and upon the said building, and the name of the person against whom the said olarmK were made, the name of the owner of the building, and the situation of the building by its street and number, and that the said clerk entered the particulars of the said notices in a book kept in his office, called the “ lien docket,” pursuant and in the manner required by the 6th section of an act of the legislature of the State of New York, entitled, “ An Act for the better securing of mechanics and others erecting buildings, and furnishing materials therefor, in the city and county of New York,” passed July 11th, 1851; and that the persons, excepting the said William A. Sinclair, who have given such notices to the said clerk of the city and county of New York, pursuant to and in the manner required by the 6th section of the said act, respectively caused notices to be served personally on the defendant in this action, requiring him to appear in the Court of Common Pleas for the city and county of New York, at certain times specified in the said notices, none of which times were less than twenty days from the time of such services, and submit to an accounting and settlement in the said court of the amount claimed to be due for the matters aforesaid; that bills of particulars of the amount of each and every of the said claims, except that of the said William A. Sinclair, were also served on the said defendant within fifteen days after service of the said last mentioned notices, and that the said notices that were served on the said clerk and on the said defendant were served before the commencement of this action.
    And I do further report, that I find that the serving of the said notices effected a lien, in each and every of the cases above stated, upon the lot number 49 Maiden Lane, in the city of New York, and the building on it, for the value of the labor and materials in the respective cases above mentioned, upon the lot of the defendant, number 49 Maiden Lane, in the city of New York, and the building thereon, to the extent of the right, title, and interest existing at the times of filing the said notices with the said clerk, or the said defendant therein; that the said liens were imposed and held to secure the payment of the sums of money, claimed to be due from the aforesaid Joseph D. Purss to the aforesaid persons who gave such notices as aforesaid.
    And I do further report, that, in allowing the sum hereinafter reported to be due to the plaintiffs, any claim under the liens above mentioned, has not been considered, and that no deduction has been made therefor.
    
    And I do further report, that I find that the defendant is entitled to an allowance of one hundred and forty-seven dollars and sixty-six cents, by way of recoupment or counter-claim, which sum I have deducted from the amount hereinafter reported to be due to the plaintiff.
    And I do further report, that I find that there is due and owing to the said plaintiffs from the said defendant, at the date of this report, the sum of four thousand five hundred and thirty-one dollars and eighty-one cents.
    March 31st, 1853. • William Inglis.
    
      C. Haring, for the defendant,
    moved for the reversal of the judgment, and argued as follows.
    I. The plaintiffs, as assignees of Purss (the contractor), take subject to all equitable as well as legal defences which can be urged against the assignor (Graves v. Woodbury, 4 Hill, 561; 1 Cowen, 56, 206).
    II. The plaintiffs, as assignees, &c., were not entitled to demand the notes, or the payment of the $4,400, alleged to be due, until the architect’s certificate was obtained, 2d March, 1852 ; previous to which time, between the 11th September, 1851, and 18th February, 1852, liens were perfected under the act of 11th July, 1851, amounting to $8,247.96, for work and materials furnished by sub-contractors, under agreements with Purss, the contractor, for the building of the defendant, 49 Maiden Lane. The rights of the plaintiffs were, therefore, subject to those liens; and the liens being for a far greater amount than the claim of the plaintiffs, no judgment can be rendered for the plaintiffs until those liens are discharged.
    ITT. The effect of the law for the better security of mechanics, &c., in the city of New York, passed July 11th, 1851, is to substitute the sub-contractor in place of the contractor, to the extent of the amount due the sub-contractor, and to render the owner absolutely liable to him for such amount. See case of Sullivan v. Brewster & Gale, N. Y. Common Pleas, General Term, May, 1853 (8 How. Pr. Rep. 209), where held, that “ The operation of the lien law is to transfer to the snb-contractor, so much of the contractor’s claim against the owner as would be sufficient to pay the debt of the contractor to his subcontractor.” Under the above decision, the whole amount due by the defendants is transferred to the lien holder. In Lehretter v, Koffman (Com. Pleas, January, 1852), a suit was brought by an owner, to obtain injunction restraining a lien holder from enforcing his lien, on the ground that prior liens would absorb the whole amount due, held, “ If there are prior liens sufficient to absorb the funds remaining in the hands of the owner, it is a good defence to a suit on a subsequent lien.”
    IV. The report of the referee shows that a valid lien was effected upon the building of the defendant, for work done, under an agreement with Purss. The holders of those liens are to be paid their claims at all events, the law having been passed for the especial protection of sub-contractors; should the judgment, in favor of the plaintiff, be allowed to stand, the defendant will be compelled to pay at least double the amount due by him. The owner cannot be compelled to pay on account of the building, any greater sum than the price stipulated to be paid by the contract between himself and the contractor (Doughty v. Devlin, General Term, Com. Pleas).
    V. The referee states, that in allowing the sum reported in favor of the plaintiff, any claims under the liens mentioned have not been considered. It is submitted that he has erred in his decision. 1. In omitting to consider the defence interposed by the defendant, founded on the liens, and state his conclusion of law thereon. 2. In reporting in favor of the plaintiff the sum of $4,531.81 for erection of the building, 49 Maiden Lane, while there were valid and subsisting liens against said building, for work and materials furnished, under agreements with the contractor, to the amount of $8,247.96.
    VI. The judgment entered in favor of the plaintiff should be reversed, or all proceedings under it suspended, until the liens on said building are discharged.
    
      E. Sandford, for plaintiff.
   By the Court. Bosworth, J.

The facts found by the referee, in relation to the service of notices in writing, upon the Clerk of the City and. County of New York, by Horace Beals, Charles H. O’Hara, William Joyce, and others, and the entry by the clerk of the particulars of such notices in the “ Lien Docket,” in relation to the service of notices upon the defendant, requiring him to appear in the Common Pleas, and submit to an accounting; and in relation to the service on the defendant of bills of the particulars of each of said claims, created a lien on the defendant’s lot and building, in favor of bach claimant, for such sum as it might be adjudged was due to him on such claim. The referee does not find, that either claimant had performed the labor or furnished the materials specified in his notice, or that anything was owing to either on account of such claim.

The question is, what is the effect of serving papers and taking proceedings proper in form to create a lien for securing the payment of a claim, the existence of which is not established, but which may or may not be established. Does it absolutely bar an action in favor of the original contractor ? If so, on what principle ? The referee has not found that these claims are valid, or what, if anything, is due upon them. For . aught that appears, the whole amount, or no part of the amount of them, or of any one of them, may be adjudged to be owing to the claimant.

Unless something is due on them, the plaintiffs should recover the balance owing by the defendant. If something, but less than the amount of such balance is due on them, they are entitled to the difference, at all events.

We do not see any objection, in a case like the present, to the defendant’s bringing a cross action and making all the claimants parties, so as to conclude them as to the amount owing -by the defendant on his contract, by the judgment in this action, and to obtaining a judgment enjoining the collection of that amount by the plaintiffs, until the decision upon the claims, and directing the payment of the amount, or so much of it as might be necessary to satisfy the claims as they should be established, and according to the rights of the claimants, and the surplus, if any, to the plaintiffs.

Neither is it perceived, that any successful resistance could have been made, to an application by the defendant, after the amount of his liability had been determined by the referee, for leave to pay the amount into court, to abide the decision upon the claims made, and for a stay of all further proceedings in this action in the mean time.

It is entirely obvious, that there are adequate remedies by which the defendant can shield himself against the hazard of being compelled to pay the same debt twice. It is also very clear, that the fact of a claim having been made against him, which would, if established and satisfied, be a bar to the action, is no bar until it is established, even if it would be. before satisfaction.

Would the recovery of a judgment against him, by the claimants, without satisfaction of it, extinguish all liability on his part to the plaintiffs? Would the recovery of a judgment against him by the claimants, without satisfaction of it, preclude them from recovering the amount due them, from the original contractor, who employed them to do the work, and furnish the materials, for which such judgment was rendered ?

If the defendant is discharged from all liability to the plaintiffs, by the effect and force of the recovery of a judgment against him, without payment of it, then such recovery without payment ought to have the effect of discharging the original contractor from all liability to such claimants.

It is difficult to find anything in this act to justify the conclusion, that the creation of a lien upon the lot of the owner, and the recovery of a judgment against him, by the mechanics, for the amount owing to them, in effect, and in judgment of law, extinguishes the liability of the original contractor to them, for the services rendered or materials furnished on his employment, and promise to pay for them, irrespective of the question whether anything is, or can be realized, on such judgment. The creation of a lien and establishment of a claim by a judgment against the owner, secures to the claimant the responsibility of the owner, the security which the extent of his interest in the building and lot at the time of creating the lien may furnish, and, perhaps, the further remedy of an execution on the judgment, against his other property real and personal (§§ 7 and 8, Laws of 1851, p. 955.)

But does it extinguish, the liability of the original contractor to the claimant ? Is it anything more than a statutory security for the satisfaction of such liability ? „

If it does not extinguish such liability, then, on what principle can a recovery by the claimant against the owner, without payment, extinguish the owner’s liability to the original contractor ?

Whatever may be the proper answer to these questions, we ■ are clear in the opinion, that the facts found by the referee do not constitute a bar to the action. It necessarily follows that the judgment appealed from must be affirmed, and the defendant must resort to other proceedings to stay the enforcing of the judgment by the plaintiffs, until the determination of the claims mentioned in the referee’s report.  