Freund, Stanton and Francis. The opinion of the court was delivered by Francis, J.c.c. (temporarily assigned).
[26 NJSuper Page 287] Respondent and one Alexander Ulesky, trading as Cedar Construction Company, entered into a written contract for the construction of a home on property owned by her at 170 West 24th Street, Bayonne, New Jersey. The contract was duly recorded in the office of the County Clerk of Hudson County. Appellant, a subcontractor, thereafter filed with the county clerk and served upon the respondent a stop notice in accordance with N.J.S. 2 A:44-77, 78. Subsequently this action was brought
to enforce payment of the obligation described in the stop notice out of monies allegedly due under the building contract and still in the hands of respondent as owner. At the close of the trial respondent's motion for judgment was granted and this appeal followed.
The record discloses that on May 21, 1951 the written contract referred to was executed. Two days later it was filed with the county clerk. The total sum agreed to be paid thereunder to the contractor for the construction was $17,200. This amount was to be paid according to a specific schedule set out therein.
During the course of the work materials were delivered to the job for use by the general contractor and subcontractors in advance of the need for them, the construction not being sufficiently advanced to permit of their immediate use. Apparently Ulesky was not able to pay for them at the particular times, and in order to keep the work going the owner, on certificates of the architect, made certain payments to materialmen and to the contractor which were not in accordance with the schedule outlined in the written contract.
There is nothing in the record to indicate that this course of conduct was not pursued by the owner in entire good faith. Appellant himself was a beneficiary of the largesse. The outline of his claim, which is attached to the complaint, shows that Mrs. Pasquale "paid on behalf of plaintiff to the Standard Heating and Plumbing Supply Co. on November 21, 1951" the sum of $1,140 for which a credit was given.
However, even this deviation from the schedule of payments did not save the contractor and on February 15, 1952 he abandoned the project, leaving the building incomplete.
At the time of abandonment respondent had already paid out $14,683.06, leaving a balance of $2,516.94 to be disbursed if the work had been completed. The last payments to or on behalf of Ulesky were made on November 23, 1951, one in the amount of $843.06, and the other for $1,140. The latter is the one made on behalf of appellant, although he gives the date incorrectly as November 21, 1951.
As already indicated, appellant held a subcontract for part of the work. On September 4, 1951 he and Ulesky executed a written contract under which for $3,395 he agreed to do certain plumbing work and to supply certain materials and fixtures in connection therewith. This task was partially finished when Ulesky withdrew from the premises.
On February 19, 1952 Falcone filed a stop notice in the county clerk's office and served a copy thereof on respondent. This notice presented a claim in the amount of $1,495 "for the materials furnished by me * * * and used * * * in the erecting and constructing of the one family brick veneer and frame two story building etc." It is noted that the quoted statement is not entirely accurate because the claim is for labor as well as for materials.
It was stipulated at the trial that the unpaid balance on the principal contract was $2,516.94 and that it cost respondent "at least $3703.50 to complete the building."
The general rule is that where there is an unpaid balance under a construction contract the claim of an owner who expends money to complete the structure following default of the contractor, is superior to that of stop notice claimants. Post v. Geldziler , 105 N.J.L. 370 (E. & A. 1929); Brown v. Home Development Co. , 129 N.J. Eq. 172 (Ch. 1941). This doctrine formed the basis of the action of the trial court in granting the motion for judgment in favor of respondent. He said:
"It is the court's view of the law, and it is the principle of law to which the court will adhere in disposing of the motion, that in a situation of this sort, with respect to monies held in the hand of the owner at the time of the filing of the stop notice, more especially where, as here, such monies are insufficient to complete the building, the prior right is in the owner to bring about completion and to expend the monies that she has to that end."
The view that the unexpended balance measured against the cost of completion exonerated the owner because the latter exceeded the former did not give the necessary consideration to ...