
    Joseph W. Cody and Walter C. Adams, Copartners under the Firm Name of Joseph W. Cody & Co., Appellants, v. The Turn Verein in the City of New York and Others, Respondents.
    
      Mechanics’ lien — counterclaim in favor of the principal contractors against the sub-' contractors filing the lien — the foreclosure is analogous to that of a mortgage.
    
    In an action by sub-contractors to foreclose a mechanics’ lien filed by them for a balance due them from the principal contractors, to which the principal contractors, the owner of the premises and the surety on a bond given to discharge the lien are parties, the principal contractors may set up a counterclaim against the plaintiffs arising out of the breach by the latter of another contract between the parties.
    
      It seems, that so far as the right to counterclaim is concerned there is no distinction between an action to foreclose a mechanics’ lien and an action to foreclose a mortgage upon real estate.
    Appeal by the plaintiffs, Joseph W. Oody and another, copartners under the firm name of Joseph W. Oody & Co., from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of New York on the 28th day of July, 1899, upon the report of a referee.
    
      William H. Newman, for the appellants.
    
      A. J. Simpson and Benjamin N. Cardozo, for the respondents.
    Judgment affirmed, with costs, on the opinion of the referee.
    Present — Van Brunt, P. J., Barrett, Patterson, O’Brien and McLaughlin, JJ.
    The following is the opinion of the referee :
   Ernest Hall, Referee :

The plaintiffs seek by this action to foreclose a mechanics' lien filed by them against the real estate of the Turn Yerein of the city of New York for a balance due them under a sub-contract with the defendants John Weber’s Sons, who were the principal contractors with the Turn Yerein for the erection of a building on the lands affected by the lien; the surety company is made a party to the action by reason of having furnished a bond to discharge the lien. There is practically no dispute between the parties as to the performance by plaintiffs of the work required under their contract with Weber & Sons upon this building; excepting in some minor particulars, in which Weber & Sons performed work which plaintiffs, neglected to perform and for which an allowance, of $50.20 has been made. I find no evidence to contradict. that of the witness Hugo Weber regarding the necessity and performance of this work, and .that it was part of the work which should have been performed by plaintiffs under their contract, except a very general statement that plaintiffs performed their contract, which cannot be regarded as sufficient to overcome the positive and detailed .evidence referred to. Except for the countertilaim hereinafter referred to, the plaintiffs would be entitled to judgment against Weber & Sons for $449.80 and interest, and establishing their lien for that amount and for recovery against the surety company which bonded the lien.

The defendants Weber & Sons, however, set up as a counterclaim against the plaintiffs a claim for damages for the non-performance of another contract between the parties, made on May "28, 1898, under which the plaintiffs agreed to excavate and remove the rock and earth from certain premises of the Pabst Brewing Company of Milwaukee, on West Forty-eighth and Forty-ninth streets, Hew York city, for the sum of $2,875, it being claimed that plaintiffs commenced work under such contract and shortly afterwards abandoned the same, and that the defendants Weber & Sons were obliged to pay and did pay for the completion of the same the sum of $4,479.47, leaving a balance due them from plaintiffs of $1,604.27.

The plaintiffs’ counsel insists, if I rightly understand his position, that the defendants Weber & Sons cannot set up their counterclaim in this action, but must resort to a separate action for the recovery of any damages under their contract upon two grounds: The first, that this action is equitable in its nature and no counterclaim resting in contract can be set up, and secondly, that the counterclaim exists (if at all) in favor of only one of the defendants.

The action to foreclose a mechanic’s lien is similar in its nature to an action for the foreclosure of a mortgage, and the procedure is made to conform as nearly as may be to such an- action.

The action to foreclose a mortgage is founded on the debt, as evidenced by a bond or note or by the mortgage itself where no bond or note is given, and the action proceeds in rem against the mortgaged property and in personam against the debtor on the bond and any others who have assumed the debt.

The action to foreclose a lieu has its foundation in a debt owing to the plaintiffs by some one or more of the defendants, and proceeds in rem against the property affected by virtue of the statute creating the lien, and im personam against the debtor. The lien created by statute may be likened, then, to the mortgage and the original debt to the bond, but in either case the foundation of the action is the debt secured in one case by the mortgage and in the other by .the statutory lien. In either case judgment may be had' for deficiency against the original debtor, and in the case of a lien, judgment may be had against the.debtor for the entire amount of the debt, even though the lien fails.

I can see no distinction, therefore, between the two actions, so far as the right to counterclaim exists.

The authorities in this State are all to the effect that a counterclaim may be set up and maintained in an action for the foreclosure of a mortgage in favor of the mortgagor and against the mortgagee. (Holden v. Gilbert, 7 Paige, 208 ; Chapman v. Robertson, 6 id. 627; Bathgate v. Haskin, 59 N. Y. 537; Irving v. De Kay, 10 Paige, 319 ; Knapp v. Burnham, 11 id. 332.)

These authorities, in addition- to the weight to which they are entitled as expounding and settling the law in this State, have the support of reason and justice; -any matter which would tend to reduce the debt would'reduce the lien on the security pro tamto. If the debt did not exist the security would be relieved entirely, and it is immaterial whether the reduction or cancellation of the debt arises from direct payment, in whole or in part, or by reason of a cause of action on contract existing in favor of the mortgagor against the mortgagee or holder of the mortgage; and so in the case aE bar, if the debt due the plaintiffs is reduced the real estate of the Turn Yerein is relieved to that extent, and if it is paid it is relieved entirely, and there can be no difference whether it is extinguished by direct payment or by the existence of a proper cause of action in favor of defendants'against plaintiffs for as great or greater amount than plaintiffs’ claim.

The second ground of objection is practically disposed of by the authorities cited and for the reasons before stated. It is unimportant whether the counterclaim exists in favor of all the defendants so long as it exists in favor of the primary debtor. It is by reason of the de”bt, aud the debt alone, that the lien exists; -without it there could be no lien, and the owner of the realty could not be a party. The surety company merely takes the place of the land affected. If no debt exists in favor of plaintiff, then no liability exists against the company on its bond. I am, therefore, of opinion that the defendants Weber & Sons had a right to set up their counterclaim in this action and to maintain it if supported by the evidence.

By the contract of May 28, 1898, between plaintiffs and defendants Weber & Sons, the plaintiffs agreed on or before July 1, 1898, for the sum of $2,875, to excavate and remove all rock, buildings, and level off on the property of the Pabst Brewing Company, West Forty-eighth and Forty-ninth streets, as. described on a survey map made by George C. Hollorith, dated March 24, 1898, in a good, workmanlike and substantial manner to the satisfaction and under the direction of the engineer of the Pabst Brewing Company, to be testified by a writing or certificate under the hand of the Pabst Brewing Company.

Payments were to be made as the work progressed to the amount of eighty-five per cent of the work done and certified by the engineer of the Pabst Brewing Company of Milwaukee, Wis., and the balance upon completion of the work and upon the final certificate of said engineer. -

The plaintiffs proceeded with their work and performed 'work variously estimated as amounting at contract price to from $300 to $1,500 and demanded a payment of $1,000, or $1,500, which the Webers refused to make except u2)on the certificate of the engineer, which certificate was never furnished; and about July nineteenth, they filed a lien against the property and soon after that gave up and abandoned their work and removed their tools and plant from the premises. The defendants Weber sent repeated notices to them to go on and complete their work and that in default thereof they would go on and complete the work under the provisions of the contract. f

.The plaintiffs refused and neglected to go on and complete the work, and defendants then proceeded to advertise for bids for completing the work required by the contract; they received several bids and accepted the lowest, which was $4,400, and the work was accordingly completed. The defendants Weber were compelled to expend an additional sum of. $79.47 for the performance of some additional work which was included in plaintiffs’ contract with them, but which was inadvertently omitted from the contract for the completion of the work.

There was no dispute whatever before me as to the perfect fairness of the proceedings of the defendants in procuring bids for completing the contract or as to the payment by them of the amount claimed for such completion; nor was there any claim or proof that the amount paid for completion Was more than the reasonable value of the work, the sole contention of the plaintiffs being, that the defendants Weber having refused to make payments to them under the terms of the contract, committed a breach which justified the plaintiffs in refusing to further perform their contract and entitled them to recover the value of the work done.

There was little or no pretense on the part of the plaintiffs of complying with that portion of the contract .which required them to procure a certificate from the engineer of the Pabst Brewing Company of Milwaukee, Wis., as a condition predecent to payment. It is true that a Mr. Adams, not a member of plaintiffs’ firm, went to the office of the Pabst Brewing Company of Hew York, an entirely separate and distinct corporation, and asked for a payment under plaintiffs’ contract, and was informed that the company did not recognize the plaintiffs, but that the company had made its contract with the Webers and could not recognize any one else. This ended the efforts on plaintiffs’ part to procure a certificate.

There is no claim that the contract was unfairly made or did not express the exact agreement of the parties; they knowingly agreed as a part of it to procure the .certificate of the engineer of the Pabst Brewing Company of Milwaukee, Wis., .as a condition precedent to payment, but there is not a word of evidence to show the slightest attempt on their part to procure such certificate.

The company had an engineer, and a proper communication to it would have produced the required measurements of the work and certificate, or would have put them in a position to have claimed that the certificate had been unreasonably withheld and refused; but no such attempt was made, no certificate Ivas demanded and none was furnished. .

But even if the engineer of the Pabst Brewing Company had unreasonably refused to grant a certificate, the plaintiffs could .not have demanded the payment, of an arbitrary sum for the work done; they would have been obliged to ascertain in the best way they could by measurement by another engineer or some other competent person, the amount of work done and then they could have demanded an eighty-five per cent payment.

Their demand for payment of $1,000 or $1,500 was grossly excessive and far beyond the value of the work done by them, which from the. evidence did not. exceed $500 at the outside at contract prices, and their claim that half the work was done was no.t supported by the.evidence.

At the time of the conferences and correspondence looking to an adjustment of the differences between the parties, the time limited by the contract for the completion of the work had long since expired and plaintiffs showed no desire or intention to complete their work; the reason of this is rendered apparent to me from the evidence.

The plaintiffs had taken the contract at a very low price, expecting to blast out the rock in very large and heavy pieces and to use. them in government fortifications, but they seem to have been disappointed in their object and allowed the rock to remain on the ground instead of removing it, and they saw that it would require reblasting to render it fit for ordinary uses or for removal without the use of a derrick; there was evidently no profit in doing this, as is shown by the cost to defendants of completing the contract, and plaintiffs preferred to take their chance of success in a lawsuit in recovering for the work done, and throwing the blame on defendants for the breach of the contract.

' I am of opinion that plaintiffs unlawfully abandoned their contract and that defendants Weber are entitled to set off so much as necessary of their damages'for such breach as will cancel the claim of the plaintiffs in this action, and to recover against the plaintiffs for the balance, with costs.  