
    Alonzo H. Terwilliger and Charles P. Terwilliger, Appellants, v. Dewitt C. Wheeler and Others, as Trustees of Union School District No. 14 of the Town of Covert, and Others, Respondents.
    
      The erection of a schoolhousefw a common school district is a “public improvement” —filing and service of the notice of lien —judgment may be entered determining the rights of all parties, although the lien is invalid.
    
    The erection of a schoolhouse for a common school district upon land, the- title to which is vested in the trustees of the school district, but which belongs in reality to the school district, is a public improvement within the meaning of section 1 of the Lien Law (Laws of 1897, chap. 418), and not a private improvement.
    Under section 13 of the Lien Law, a lien for materials used in the erection of the schoolhouse should be filed with the board of- trustees and the treasurer of the school district. It is not sufficient that the lien be filed in the county clerk’s office and that copies thereof be personally served upon one of the trustees of the school district who was called the-treasurer of such trustees. There is no statutory authority for the creation of such an office.
    Where the plaintiff in an action brought to foreclose a lien for a public improvement fails to establish a valid lien, the court may, under sections 3403 and 3413 of the Code of Civil Procedure, proceed to determine the rights of the parties in the fund in controversy and grant the plaintiff a personal judgment against such of the defendants as are indebted to him.
    Appeal by the plaintiffs, Alonzo H. Terwilliger and another., from a judgment of the Supreme Court in favor of certain of the defendants, entered in the office of the clerk of the county of Seneca on the 3d day of July, 1902, upon the report of a referee dismissing the complaint as to certain of the defendants.
    
      
      George E. Zartman and Charles A. Harnley, for the appellants.
    
      William S. MacDonald and Frederick L. Manning, for the respondents.
   Williams, J.:

The judgment should be reversed and a new trial granted before another referee, with cos,ts. to appellants to abide event.

The action was for the foreclosure of two mechanic’s liens.

Before the taking of any evidence the complaint was dismissed as to the trustees with costs, and as to the defendants Barlow and Woodcock without costs, on the ground that no lien was ever created and none existed which could form the basi. of a judgment. The motion ivas based upon the allegations of the complaint, which must, therefore, be regarded as true.

The plaintiffs were dealers in lumber and building materials. Wheeler and his associates were trustees of Union School District No. 14 of the town of Covert, Seneca county, N. Y., and as such were vested with the title to the real property described in the complaint. Barlow and Woodcock were contractors and builders, and in May, 1900, made á contract with the trustees to furnish the materials and erect a school on such real property and were tobe paid for the work and materials in installments at particular stages while the work was in progress and any balance of the contract price upon the completion of the contract. With the knowledge and consent of the trustees the contractors made an agreement with the Mays to furnish the materials for and do the carpenter work in the erection of the schoolhouse, and at various times between June 20 and September 25, 1900, the plaintiffs sold and delivered to the Mays materials which were used by them in the erection of the schoolhouse of the value and at the agreed price of $1,680.42. Before the completion of the carpenter work the Mays Avere discharged by the contractors, who took charge of the balance of the work and took and used the balance of the materials furnished by plaintiffs' to the Mays. The plaintiffs have been paid the sum of $680.80 and there remains unpaid for the materials so furnished by them $999.62. September 26, 1900, and within ninety days after furnishing the materials, the plaintiffs filed a notice of lien in Avriting for the balance so unpaid them for materials in the clerk’s office of Seneca county, and served a copy thereof on Wheeler, called the treasurer of the trustees. The lien was entered and docketed by the clerk September 29,1900, and a copy of the notice so filed and docketed is annexed to the complaint. It stated that the plaintiffs had and claimed a lien against the trustees as owners of the real property and upon such property for the amount of their claim remaining unpaid;

Stephen N. Keener also had a claim- and filed a like lien for $496, the balance unpaid him, and this claim and lien Was assigned to the plaintiffs prior to the commencement of this action.

Prior to the filing of these liens the trustees had in their possession from the sale of bonds in their district a sufficient amount to pay the entire contract price for erecting the schoolhouse, and at the time the liens were filed the trustees still retained possession of the building fund, an amount sufficient to satisfy both the liens, and there was due and owing to the contractors and' the Mays under their contracts an amount sufficient to satisfy both liens.

The plaintiffs demanded judgment that they be adjudged to have liens on the real property, and upon the moneys of the building fund in the hands of the trustees; that the liens with interest and costs be paid from such moneys, and that they have deficiency judgment against the contractors and the Mays for any amount remaining after this application of the moneys.in the trustees’ hands, and for such other relief as might be necessary to protect their rights.

The action was commenced September 25, 1901.

There were answers in the case, but they are not contained in the record. They cannot, therefore, be considered upon this appeal, The Lien Law of the State (Laws of 1897, chap. 418, §§ 12, 23) provides a different procedure to create and enforce liens in cases of “public improvements” "from that provided in case of private improvements. •

The plaintiffs claim the building of the schoolhouse "in question was a private improvement, while the defendants insist it was a public one. Section 2 of the Lien Law defines a public improvement as one made upon any real property belonging to the State or a municipal corporation. The General Corporation Law (Laws of 1892, chap. 687, § 3, as amd. by Laws of 1895, chap. 672) provides that a municipal corporation includes a county, town, school district, village, city, etc. A school district is not in express terms included within the term “ municipal corporation,” as used in the General "Municipal Law (Laws of 1892, chap. 685, § 1). The formation of common school districts is provided for by the Consolidated School Law (Laws of 1894, chap. 556, tit. 6, as amd'.). Meetings in these districts and the election of officers thereof, including trustees, are provided for by title 7, article 1, of the law. The locating of schoolhouse sites and the raising of moneys to build schoolhouses are provided for by article 2 of such title (as amd. by Laws of 1895, chap. 274). The inhabitants of the district vote upon these subjects, and the trustees carry Out the directions of the inhabitants.

Article 6 of such title (by §§ 42, 43) provides that the trustees of each district shall constitute a board, which is created a body corporate, and that all property vested in them for the use of the schools shall be held by them as a corporation. Section 47 (as amd. by Laws of 1896, chap. 264) prescribes the powers and duties of trustees, and, among other things, authorizes them to purchase a site for a schoolhouse and to build a schoolhouse thereon, when and as directed by the inhabitants of the district, at a meet- ' ing thereof. The result of these provisions seems to be, that while the title to the cchoolhouse site is taken and held by the trustees as a so-called corporation and in their corporate name, still the property belongs to the school district. The building of a schoolhouse thereon for the use of the district is, therefore, within the fair meaning of the Lien Law, a public and not a private improvement. Any other conclusion would be contrary to the whole purpose of the Lien Law, to protect public buildings from liens and the enforcement thereof by the sale of the property, and to provide in place thereof a lien upon the fund furnished by the public to pay for the improvement.

Title 8 of the Consolidated School Law (as amd.) provides for the establishment of union free school districts, in which the trustees constitute what are called boards of education. These boards are created bodies corporate, and have power to purchase sites and to build schoolhouses thereon, to take and hold the title to the property, raise money, etc., under certain restrictions and the direction of the school commissioners. As to such districts, the same rule is applicable, however, that the schoolhouse property really belongs to the district, though the title is taken and held by the board of education in its corporate name. It is not clear what kind of a district the one in question is.- The complaint calls it a Union school district, leaving out the word “ free,” and calls its officers trustees instead of a board of education. We assume that thei district was not a union free school one having a board of education^ but a common- school district. Why the word “Union”.happens to-be in the;designation of the,district does not appear, and is of no real consequence. The lienors in this case have not adopted the procedure provided for in case of a “ public improvement,” to secure a lien upon the fund provided to pay for the construction of the schoolhouse in question, but have attempted to secure a lien upon the school building and property' as in case of a private improvement. ■ The liens were filed in the county clerks office when they should have been filed under the provisions of section 12 of the Lien Law with the board of trustees of the district who had charge of the construction of the schoolhouse, and the treasurer of the school district who was the financial officer of the district and was charged with the custody and disbursement, of the funds provided for the making of the improvement. It is said that there was a substantial compliance with the statute when copies of the liens were personally served upon one-of the trustees of the district, who is called the treasurer of such trustees. There is no provision Of law for any treasurer of the trustees of a common school district. A treasurer is elected by the inhabitants of the district* and he having given a bond, all moneys are required to be placed in his hands by the trustees. They cannot retain any money in the hands of a treasurer of their own or otherwise. (Laws of 1894, chap. 556, tit. 7, §§ 14, 35.)

In union free school districts the boards of education appoint their treasurers (Id. tit. 8* § 7, as amd. by. Laws of 1897, chap. 466). This district is not, however, alleged to be such an one, nor to have any board of education, nor is Wheeler alleged to be the treasurer of the board of education, but of the trustees. The funds provided for the building of. this schoolhouse are alleged to be in the possession- of the trustees of the district, and this must be assumed, for the purpose of this appeal, to be true in fact, but they should he in the custody of the treasurer of the district. The . trustees have no right to the possession of the same,;and for the purpose of determining whether a lien has been properly created against the - funds we must consider who is-the legal' rather than the actual custodian thereof.

The treasurer of the school district was the party with whom the notice of the lien should have been filed as the financial officer of the district and the person charged with the custody and disbursement of the funds. It was his duty to disburse them upon the orders of the trustees of the district.

Ho notice of the lien is alleged or claimed to have been filed with such school district treasurer, and we are unable to see how ■a lien could be created under the statute without such filing.

It is further provided by sections 11 and 20 of the Lien Law (as amd. by Laws of 1899, chap. 25, and Laws of 1898, chap. 169, respectively) that a lien for a public improvement continues for three months only after the filing of the same, and is discharged by the lapse of such time, unless an action is commenced to foreclose the same within that time, and notice of pendency of the action is filed with. the financial officer with whom the lien was filed. The liens in question, if ever acquired by a proper filing, ceased, to exist and were discharged under these sections long before the commencement of this action,- which was nearly a year after the filing of the liens.

At the time this action was commenced, therefore, there were no liens to foreclose or enforce.

It is claimed, however, that the action should have been retained for the purpose of settling the rights of the parties in the funds and awarding judgment according to the rights thus established, even though the liens were never legally created, or had ceased to exist, or been discharged by lapse of time before the action was commenced.

The proceedings for the enforcement'of liens for public and private improvements are provided for in the same title of the Code of Civil Procedure (§§ 3398 et seq.). The former are enforced against the funds provided for the improvement, the latter against the property improved (§§ 3399, 3400). The court may, in an' action to enforce liens, adjust and determine the equities of the parties and the order of priority of the liens, and determine all issues raised by any defense or counterclaim '(§ 3403). If there is a failure for any reason to establish a valid lien in the action the lienor may recover judgment for such sums as are due -him, or as he might recover in an action on contract against any party to the action (§' 3412). If liens for a public improvement are established, judgment shall be rendered directing the municipal corporation to pay over and distribute the funds according to the rights of the parties as determined by the judgment (§ 3418).

The procedure for the enforcement of liens was made a part of the Code of Civil Procedure at the same time the Lien Law was passed, in 1897, the one act being chapter 418 and the other, chapter 419 of the laws of that year. These two acts together were designed to regulate the subject-matter of liens and the enforcement of the same, and under sections 3403 and 3412 of the Code it is very clear that the plaintiffs were entitled to proceed with their action, and to have the rights of the parties in the fund determined, although the liens which were the basis of the action were, as we have found, invalid. These sections apply as well to actions to enforce liens for public improvements, as those to' enforce liens for private improvements. Section 3412 expressly provides for such continuance of the action and for the recovery by the plaintiff of a personal judgment, and then section 3403 provides that the courts may adjust all equities and determine all issues raised by a defense or counterclaim. There is abundant authority in these' provisions of the Code for the settlement of the rights of the parties in this action, though the liens were not established.

In Smith v. City of New York (32 Misc. Rep. 380) the liens were filed after the passage of these sections of the Code, and Justice Russell held that the plaintiff could recover a personal judgment, even though, the liens were invalid, under section 3412.

Most of the cases cited by the respondents here arose before 1897, when these provisions were inserted in the Code. The case particularly relied upon is McDonald v. Mayor (29 Misc. Rep. 504; 58 App. Div. 73; 170 N. Y. 409). That case was tried at Special Term in New York in November, 1899. The lien was filed against a fund, provided for a public improvement, under the Consolidation Act of New York city (Laws of 1882, chap. 410, § 1824 et seq.) The lien was filed March 6, 1897, and the action to foreclose it Was commenced while the provisions as to liens against the city in the Con-' solidation Act were still in force. Those provisions were very likely repealed September 1, 1897, when the General Lien Law for the whole State took effect (See § 121). They were certainly repealed by chapter 195 of the Laws of 1899. (See McKay v. City of New York, 46 App. Div. 582.) The Consolidation Act contained no provision similar to those in section 3412 of the Code. The trial court held the lien in that case was invalid because not properly verified. The Appellate Division affirmed that holding, but the Court of Appeals reversed both- branches of the Supreme Court, and held the lien was properly verified and was valid. The trial court held that, the lien being invalid, no personal judgment could be rendered in the action, and the complaint was accordingly dismissed. In arriving at the the latter conclusion the -court, Justice Beekman, relied upon the old cases of Burroughs v. Tostevan (75 N. Y. 567) and Weyer v. Beach (79 id. 409) in which it was distinctly stated that there was no provision in the statute there involved for any personal judgment on failure to establish a lien, and then referring to section 3412 of the Code, said : Doubtless in the case of a lien against a public improvement filed under the Lien Law of 1897, the sections above referred to, would authorize the court to render a personal judgment against defendants liable for the claim, but the lien in this case was filed under the provisions of the Consolidation Act and this action was brought under the authority, and subject to the limitations of such provisions. When the action was commenced such a, result as a personal judgment against any of the defendants was not possible, nor, where the lien was found to be invalid, under the circumstances'existing here, could any adjudication upon the merits of the claim be either necessary or proper; so that, to hold that section 3412 of the Code (supra) became applicable to this case, when the provisions of the Consolidation Act on the subject were repealed, would be virtually giving a retroactive effect to the section, to the extent of injecting into a suit, which had been .commenced long before it became applicable to such actions in this city, another cause of action. I am satisfied that such a construction of the statute is quite inadmissible.”

The Appellate Division took this same view of the question, citing and relying on Burroughs v. Tostevan and Weyer v. Beach (supra), but making no reference to section 3412 of the Code. The Court of Appeals' made no reference to this question at all. It will thus be seen that this McDonald case cannot be regarded as authority for the dismissal of the complaint in this case.

J ustice Beekman alone referred to or considered the effect of section 3412, and he regarded it as permitting a personal judgment.

Scerbo v. Smith (16 Misc. Rep. 102) was a case under the provisions of the Consolidation Act, and Justice B.eékman there stated that there was no provision in the statute for a personal judgment, and, therefore, Weyer v. Beach (supra) was applicable.

In Mertz v. Mapes-Reeve Construction Co. (30 Mise. Rep. 343) it was held that the provisions of the Consolidation Act were applicable to the case, that no provision therein was made for a personal judgment, and Weyer v. Beach was controlling.

In Gallick v. Engelhardt (36 Misc. Rep. 269) the lien was filed under the General Lien Law of 1897, and of course after the section of the Code in question had been passed. The court, J ustice Scott, held the lien invalid, and that no personal judgment could be rendered in the action, citing Weyer v. Beach and McDonald v. Mayor (supra), but he made no reference to- section 3412 of the Code expressly authorizing such personal judgment. Apparently his attention was not called thereto, nor to the suggestions made by Justice Beekman in McDonald v. Mayor, nor to the reasoning in the case of Weyer v. Beach, rendering it inapplicable to a lien filed under the Lien Law of 1897,, and attempted to be enforced under the provisions of the Code (supra).

Glen Cove Granite Co. v. Costello (65 App. Div. 43) was also-a case arising upon a lien filed prior to the Lien Law of 1897 and the amendments to the Code of the same date. The decision was based upon McDonald v. Mayor (supra), and no reference was made to section 3412 of the Code.

The Mechanics’ Lien Law of 1885 (Chap. 342, § 15) provided for a personal judgment in nearly the same language as Section 3412 of the Code. The act of 1897 (Chap. 419, § 3) repealed that section, and enacted section 3412 of the Code in its place. While section 15 (supra) was in force it was frequently held that a personal judgment could be rendered in an' action to enforce a lien under that act, when the plaintiff failed to establish the lien. (Altieri v. Lyon, 13 N. Y. Supp. 617; Hutton Bros. v. Gordon, 2 Misc. Rep. 267; Snaith v. Smith, 7 id. 37; Stapleton v. Mayer. 17 id. 67; Ringle v. Wallis Iron Works, 149 N. Y. 439, 446.)

In the case last cited Judge Gray dissented'“ upon the ground that because thó notice of lien failed to comply with the requirements of the statute and contained untruthful statements as to the material facts, no valid lien was created, which plaintiffs could enforce, and they could only have a personal judgment against the Wallis Iron Works for the actual amount dué them.”

The General Term in this latter case (76 Hun, 449) held the lien was invalid for the reasons stated by Judge Gray, but under section 15 of the act of 1885 allowed a personal judgment against the iron works to stand.

From this examination of the cases decided in this State it would seem very clear that, in view of the provisions of section 3412 of the Code, the referee erred in dismissing the complaint and in refusing to permit the plaintiffs to recover a personal judgment against such of the defendants as were indebted to him. And then, under section 3403, it would seem that the court might go further and adjust all the equities between the parties to the action and determine all the issues raised by any defense or counterclaim, which would apparently result in settling the rights of all the parties in the fund, and in a judgment directing the distribution thereof in accordance with the terms of the judgment.

As before suggested, the answers are not before us and we cannot say what issues are raised thereby, or counterclaims setup therein.

It is sufficient for the purposes of this appeal that the complaint contains allegations which entitle the plaintiffs to recover a personal judgment against the contractors and sub-contractors and equitable relief against the trustees settling the rights of the parties in the fund alleged to be in the possession of such trustees.

We conclude, therefore, that the judgment should be reversed and a new trial granted before another referee, with costs to the appellant to abide event.

McLennan, Spring, Hiscock and Hash, JJ., concurred.

Judgment reversed and new trial ordered before another referee, with costs to the appellant to abide event, upon questions of law only, the facts having been examined and no error found therein.  