Woodward & Lothrop, Inc. v. Union Trust Co. of Rochester
Opinion of the Court
These appeals involve a decree in the Supreme Court of the District sustaining certain exceptions and overruling other exceptions to the report of a special master in a case growing out of a suit to enforce mechanics’ liéns.
In June of 1913 Woodward & Rothrop contracted with F. T. Nesbitt Company, of New York, for the erection of a store building at Eleventh and F. Streets, Northwest, in this city, and at about the same time contracted with the John Hofman Company, of Rochester, N. Y., for the furnishing and installation, for $31,000, of the store fixtures in the new building and in parts of the adjoining old building. This installation was completed in December following.
During the month of September, 1913, and while the contract of the Hofman Company was being executed, that company borrowed sums of money from the Central Bank of Rochester aggregating more than $16,000, for which it gave its promissory notes and executed assignments of money due and to become due from Woodward & Ro-throp; the balance due under these assignments when the work was completed being $9,280. During the same month the Hofman Company borrowed from the Union Trust Company of Rochester $5,000 under the same conditions, and there was a balance due under that assignment to this bank of $2,170 at the completion of the contract.
Shortly after the execution of the above assignments 'the Hofman Company became financially embarrassed, and on November 8, 1913, the company notified its creditors that a petition for voluntary dissolution had been filed in New York, and that G. Albert Taylor had been appointed temporary receiver. On December 26th following the company was adjudged a bankrupt, and Mr. Taylor subsequently was appointed trustee. On November 11, 1913, the Union Trust Company notified Woodward & Rothrop of its assignment from the Hofman Company, and on November 14th following wrote Woodward & Ro-throp that it might disregard the former notice, and might make settlement “direct with the receiver, G. Albert Taylor.” The Central Bank first notified Woodward & Rothrop of its assignment from Hofman & Co. on January 13, 1914. On the same day the Union Trust Company wrote Woodward & Rothrop, requesting direct payment to the bank under its assignment.
Among -the subcontractors of the Hofman Company was the Pittsburgh Plate Glass Company, and on the 27th of December, 1913, it filed in the court, below its notice of lien in the sum of $3,286.53. On the 30th of December following an order was passed in the court below, authorizing Woodward & Rothrop to pay into the registry of the court
Numerous other subcontractors of the Plofman Company filed notice of liens during December of 1913 and January of 1914, and on April 20, 1914, the Garden City Plating & Manufacturing Company, one of these lienors, filed a bill for the enforcement of its lien against Woodward & Lothrop and the Plofman Company, and also naming the other lienors, including the Pittsburgh Plate Glass Company, as defendants. In that bill were detailed the proceedings culminating in the decree in favor of the Pittsburgh Plate Glass Company.
On October 26, 1915, a decree pro confe§so was taken against the Plofman Company, and on November 10th following this decree was set aside on motion of counsel for the Plofman Company. On the same day the Hofman Company and the two hanks, by leave of court, filed intervening petitions in the suit of the Garden City Company, one of the banks claiming $9,280 and the other $2,170 under the assignments already mentioned. Leave to file a similar petition also was sought and obtained by the trustee in bankruptcy of the Hofman Company, but no petition was filed.
While the record does not definitely disclose who then represented the banks, it is fair to assume that the counsel who obtained the setting aside of the pro confesso decree, and thereby laid the foundation for the filing of the intervening petitions by the banks also represented them. This inference is supported by the fact that since that time he has represented the banks. The intervening petitions of the two banks are silent as to the averments in the main petition concerning the suit of the Pittsburgh Plate Glass Company; the allegation being merely that the claims of the interveners are paramount to those of the plaintiff or of any of the defendants. The cause was referred to a special master, to report findings of fact and conclusions of law.
At the first session before the special master on November 15, 1915.
To this report the bank filed exceptions, claiming that Woodward & Rothrop was not entitled to credit for the money paid into court in the Pittsburgh Plate Glass Company’s suit, and that interest should have been allowed on the balance due from Woodward & Rothrop on 'December 30, 1913. The first of these exceptions was sustained, and the second overruled. Accordingly, Woodward & Rothrop appealed from the first, and the banks appealed from the second, ruling.
The evident purpose of sections 1254 and 1255 is to enable the owner, against whose building or fixtures a lien has been asserted, to be relieved of the embarrassment of the lien through the payment into court of a sum equal to the amount of the lien with interest and costs, or the filing of an undertaking to cover that amount. Where admittedly an amount is due the principal contractor, and the lien is asserted by a subcontractor, there is no contest between the owner and the subcontractor; the issue being restricted to the contractor and subcontractor. If the owner does not take advantage of these provisions of the Code for the release of the lien, the statute imposes upon him no duty to notify the contractor of the pendency of the subcontractor’s suit. In the present case, had Woodward & Rothrop failed to take advantage of the provisions of either of these sections of the Code, the result would have been exactly the same, for, after the Pittsburgh Company had obtained a. final decree confirming its lien, Woodward & Rothrop would have beer-fully protected in satisfying that decree.
Plow, then, were the banks prejudiced in any way by what actually was done? The Pittsburgh Company had asserted its lien, the court authorized the payment into its registry of the amount claimed, and when the suit was filed that amount was in court, where it was treated as a deposit under the statute, and from that time on exactly the same procedure was followed as though the filing of the suit had preceded the deposit. In substance and effect there was a compliance with the terms of the statute. To hold otherwise would be to prefer form to substance, and impose upon the owner a duty not contemplated by the statute. It will be observed that no notice is required under section 1254, where a money payment is made by the owner; the theory evidently being that cash speaks for itself, and that no one possibly could be prejudiced by the substitution of cash for the obligation of the owner to pay the amount due under its contract. It was for this reason that section 1255 makes no mention of a clash payment. The object of the filing of an undertaking is to release the property from the lien and to satisfy the final decree. When the suit of the Pittsburgh Company was instituted, therefore, the court had a right to treat the payment of Woodward & Rothrop as a payment made on account of that suit. There the responsibility of Woodward & Rothrop ended, for money thus paid into court no longer is under the control of the owner, but of the court.
Counsel assert that it should have been ruled in this proceeding that the asserted lien of the Pittsburgh Plate Glass Company was without foundation. That question was not hefore the court, having been finally adjudicated in another proceeding.
The decree in No. 3260 is reversed, with costs, and the cause remanded for a decree in conformity with this opinion. The decree in No. 3261 is affirmed, with costs.
No. 3260 reversed.
No. 3261 affirmed.
Dissenting Opinion
is of the view that payment into court by an owner, being a statutory right, must be in strict conformity with the statute, and he therefore dissents from the opinion and decree of the court in appeal No. 3260. In appeal No. 3261, he is of the view that Woodward & Rothrop, having had the use of the balance due, should pay interest, and he therefore dissents from the opinion and decree of the court in that cause.
Reference
- Full Case Name
- WOODWARD & LOTHROP, Inc. v. UNION TRUST CO. OF ROCHESTER, N. Y. UNION TRUST CO. OF ROCHESTER, N. Y. v. WOODWARD & LOTHROP, Inc.
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