Winter v. Hazen-Latimer Co.
Winter v. Hazen-Latimer Co.
Opinion of the Court
delivered the opinion of the Court:
The conditions under which liens of this sort may be established are stated in sec. 1240, D. C. Code [31 Stat. at L. 1384, chap. 854], which provides: “All such liens in favor of parties so employed by the contractor shall be subject to the terms and conditions of the original contract, except such as shall relate to the waiver of liens, and shall be limited to the amount to become due to the original contractor and be satisfied, in whole or in part, out of said amount only; and if said original contractor, by reason of any breach of the contract on his part, shall be entitled to recover less than the amount agreed upon in his contract, the liens of said parties so employed by him shall be enforceable only for said reduced amount, and if said original contractor shall be entitled to recover nothing said liens shall not be enforceable at all.”
The issue involved in this appeal, as urged by appellants, is
The statute limits the. right of a subcontractor to a lien upon money due the contractor from the owner at the time notice is given the owner. It is conceded that notice was not given in this case until after the first payment had been made to the contractor and he had abandoned his contract. It does not appear from the record that anything remained due the contractor on the date the OAvner was notified of the claim of plaintiff. But it is urged, and so found by the court below, that, by electing to assume the contract and complete the building, the surety stood in the position of an assignee of the contractor, and, as such, stepped into his shoes, and therefore became liable for plaintiff’s claim.
We are not in accord with this contention. No privity existed- between plaintiff and the surety. The surety contracted in its bond to protect the owner from loss at the hands of the contractor. When the contractor absconded, the owner had paid him in full. All had been done which the statute required-to. protect the OAvner against the assertion of a lien by plaintiff. Blaintiff was without remedy against the owner, and it is hard to conceive of a right of action against the surety, when all it obligated itself to do was to protect the owner from loss by the act. of the contractor. The liability of the -surety in this in
The ride is generally supported that “performance of a building contract by a surety after abandonment of it by the principal is not, in law, performance by the principal.” 2 Brandt, Suretyship, sec. 759. In the case of St. Peter’s Catholic Church v. Vannote, 66 N. J. Eq. 78, 56 Atl. 1037, where a contractor had been paid all that was due him at the time of the abandonment of his contract, except 20 per cent reserve to be paid upon final completion of the building, the sureties assumed the contract and completed the building. The sureties were held, as against certain materialmen, to be entitled not only to the price contracted to be paid by the owner, but also the reserve of 20 per cent,, in so far as necessary to compensate them for their work. The court, considering this feature of the case, said: “The sureties did the work, not for the contractors, nor for the owner, but to relieve themselves, as cheaply as possible, from their obligation to the owner. What they did was by virtue of their contract with the owner. Their obligation as sureties was to the owner; they owed no debt to the contractors. What they did was not for the contractors. Nor can the contractors claim any portion of the contract price by reason of what the sureties did. * * * This right of the sureties so far as it concerns the owner and contractors is clear. I also think that the right of the sureties is superior to the claims of the materialmen and laborers. The claims of the latter reach only such moneys as was due at the time of the several demands and notices, or thereafter became due to' the contractors. Nothing, aside from what
Counsel for plaintiff rely upon the case of Smith v. Lange, 81 App. Div. 192, 80 N. Y. Supp. 1078. But in that ease, unlike the case at bar, there was a formal assignment of the contract from the original contractor to the surety. This relation we have found not to exist, even constructively, in the present case. True, the New York court suggested in the opinion that the situation would not be different where the surety assumed the contract and performed its conditions. But this declaration was not necessary to the decision of the case, and is contrary to the express holding of the higher New York court.
The rule here announced is equitable. The owner is entitled to equal protection with the subcontractor. The subcontractor should acquaint himself with the terms and conditions of the building contract. This information is made available by statute. D. C. Code, sec. 1243 [31 Stat. at L. 1385, chap. 854]. In the absence of anything to the contrary, we must assume that plaintiff possessed this information. If it knew when the next payment would be made to the contractor after it completed its work, it must be presumed to know the condition of the statute which expressly gave it a lien only against money owing the principal contractor at the time of noti«e of its claim to the owner. It could have given the owner notice the day it completed its work. It cannot, shift its neglect, by assuming that
The decree is reversed, with costs, and the cause remanded for further proceedings not inconsistent with this opinion.
Reversed and remanded.
Reference
- Full Case Name
- WINTER v. HAZEN-LATIMER COMPANY
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- 3 cases
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- Syllabus
- Mechanics’ Liens; Notice of Lien; Subcontractor; Default by Contractor ; Principal and Surety; Completion by Surety. 1. A subcontractor who did work upon and furnished materials for a. building under contract with the contractor who thereafter absconded upon receiving payment in full for work already done, the owner having duly made the payments without notice of the subcontractor’s right, has no lien or claim upon moneys subsequently accruing to the contractor’s surety by reason of its completion of the work under power reserved to it in the bond, where, as in the District of Columbia, the statute limits the subcontractor’s lien to money due the contractor from the owner at the time the latter receives notice from the subcontractor. •2. Performance of a building contract by the surety of the contractor after abandonment by the latter is not in law a performance by the principal, and the surety occupies a new relation to the owner, exactly as if it had been a stranger to the original contract. 3. A subcontractor, in the absence of anything to show the contrary, will be presumed to have known the terms and conditions of the contractor’s contract with the owner, in view of the fact that see. 1243, D. G. (31-Stat. at L. 1385, chap. 854), renders such information available.