On plaintiffs' appeal from the District Court.
For the appellants, Joseph Grossman.
For the respondents, Charles W. Weleck.
Before Justices Parker, Donges and Colie.
The opinion of the court was delivered by
PARKER, J. The action is under the Mechanics' Lien Statute, N.J.S.A. 2:60-105 et seq. for materials furnished for a building. There was a motion to "strike out the complaint" as showing on its face that plaintiffs had received payment in full for all materials supplied after the "notice of intention" required by section 2:60-112 of the act had been filed; and the District Court judge "dismissed the action" as against the present respondents, charged in the complaint as "owners."
The case is submitted on briefs; and the only question to be decided at this time relates to the application of payments. The bill of particulars annexed to the complaint (so styled in the act, 2:60-139, though the action was in a District Court) consists of a large number of minor items of material, beginning on September 30th, 1940, together with two "contracts," one for $970 not dated, but preceding the item of September 30th, and called "lumber contract," and the other, called "garage contract" accompanying minor items of November 10th, 1940. The last item is dated December 9th. There were payments on account, of $400 on October 21st, $214.35 November 19th, $20.33 on November 22d, $293.65 on December
23d, $300 on January 30th, 1941, and a credit of $5.55 materials returned, not dated, but following the item of $300. The debit balance claimed was $200.75, for which amount lien was claimed and judgment asked.
The difficulty arises from the fact that the "notice of intention" was not filed until October 10th, at which time $34.30 of material had been furnished, in addition to the contract price of $970 charged at the outset. Just what part, if any, of the material covered by the $970 had been supplied, is a question not answered by anything in the case; nor need we consider the question, not suggested in either brief, whether a lien will lie for the amount of a lump sum contract irrespective of whether there had been any performance in whole or part; for the rules as to application of payments are perfectly well settled. Those here applicable are as follows: 1. A debtor owing several debts to a creditor is entitled to direct application of any payment to whichever debt he wishes it applied. 2. If the debtor does not so direct, the creditor may make the application. 3. If neither party makes the application, and one debt is secured and another unsecured, a court of equity will usually direct application to the unsecured debt; and 4, as regards the items of a running account, payments not appropriated by either party will be applied to the earlier items. Terhune v. Colton, 12 N.J. Eq. 232; Ibid., 312 (320); Turner v. Hill, 56 Id. 293; Hickey v. First National Bank, 110 Id. 52; Grover v. Board of Education, &c., 102 Id. 415; 104 Id. 197; Forst v. Kirkpatrick, 64 Id. 578.
In the present case it seems to be conceded that apart from questions of payment, the "notice of intention" filed on October 10th will support a lien claim for material supplied after that date: but the argument for respondents is, as we understand it, that the payments credited must be applied, so far as required, to the liquidation of items later in date than October 10th, leaving the earlier unlienable items recoverable only by a general action at law against the "builders." We do not so view the matter. No application of payments by the debtors is made to appear, so it was open to the creditors to apply them, which apparently they have
done by application to the earlier unsecured items, as evidenced by their claim for a general balance; or failing action by either party, the court will make that application. It follows that the judgment of dismissal was ...