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Morris County Industrial Park v. Thomas Nicol Co.

Decided: July 28, 1961.


For affirmance -- Chief Justice Weintraub, and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For reversal -- None. The opinion of the court was delivered by Hall, J.


This case involves a problem of the extent of protection given a materialman by the municipal mechanics' lien law, N.J.S. 2A:44-125, et seq., and the bond act, N.J.S. 2A:44-143, et seq.

Plaintiff supplied dirt from its pit to defendant L.G. Kitchell, Inc., which had a contract with defendant Thomas Nicol Co. to furnish fill needed in Nicol's work as general contractor on a public construction project of defendant New Jersey Turnpike Authority. There was no contractual relationship between plaintiff and Nicol. Defendant Standard Accident Insurance Company was the surety on the performance bond Nicol was required to furnish the Authority pursuant to the bond act.

The dirt was delivered at the job site in trucks of Kitchell and of a hauler hired by plaintiff at Kitchell's request. It was dumped at locations designated by Nicol's employees and was actually used in the project. Plaintiff charged Kitchell one price for dirt hauled by the latter and a much higher figure for the dirt delivered by the trucks plaintiff hired. Nicol paid Kitchell's bill for the fill by a check drawn to the order of Kitchell individually, on the representation that his one-man corporation was no longer in existence. (This fact has no bearing on the issues before us.) Kitchell then absconded and plaintiff has never been paid its bill of some $2,485 for the dirt it supplied.

Plaintiff asserted a lien under the municipal mechanics' lien law against moneys in the hands of the Authority due Nicol under the general contract. Alternatively, it made a claim against Nicol's surety under the additional obligation of the performance bond imposed by the bond act to assure the payment of subcontractors and materialmen. The instant suit was brought in the Chancery Division to enforce the claims and also to obtain a judgment against Kitchell. The latter defaulted and judgment was entered accordingly. There is no doubt that, procedurally, plaintiff perfected the claims under both statutes in timely and proper fashion and if it were successful under either theory, the burden of double payment would ultimately fall on Nicol, a solvent entity.

The trial court decided that plaintiff was not entitled to recover either on the asserted lien or the bond obligation, finding as a fact that Kitchell was not a subcontractor of Nicol, but a materialman, that plaintiff was therefore a materialman who had supplied another materialman, and that as matter of law neither statute extended benefit in that situation. 64 N.J. Super. 381 (1960). These holdings present the main issues on plaintiff's appeal, certified on our motion while pending in the Appellate Division.

A preliminary matter is asserted by respondents in support of the judgment below. They urge that the Turnpike

Authority is not intended to be included within the governmental units or agencies specified in either the lien law or the bond act and that consequently the benefits of neither statute are available where a construction project of the Authority is involved. Essentially the same contention was made by a pretrial motion to the trial court and rejected.

This initial question brings to the fore the underlying standard to be applied in construing the two statutes, which is also pertinent in considering the main issues of the appeal. This court has voiced the frequently stated principle that, in general, all mechanics' lien laws, being of statutory origin and in derogation of the common law, should be strictly construed with respect to the provisions giving rise to the lien, but liberally construed as to provisions for enforcement. Friedman v. Stein, 4 N.J. 34, 40 (1950). See, especially concerning municipal mechanics' liens, Fidelity and Deposit Company of Maryland v. McClintic-Marshall Corporation, 115 N.J. Eq. 470, 473-474 (Ch. 1934), affirmed o.b. 117 N.J. Eq. 440 (E. & A. 1935); Wilson v. Robert A. Stretch, Inc., 44 N.J. Super. 52 (Ch. Div. 1957). This is really saying no more than that where a statute imposes a non-contractual obligation or charge, and one which may result in one party, or his property in the case of a private building project, having to satisfy the debt of another party, a court should not extend the substantive benefit thereby given beyond the fair intent and purpose of the legislation, to be discerned primarily from the language of the statute itself and related enactments. See Arrow Builders Supply Corp. v. Hudson Terrace Apartments, Inc., 15 N.J. 418, 421 (1954), petition for rehearing denied 16 N.J. 47 (1954). The same criterion should ground the interpretation of the bond act which, though differing in some aspects from the municipal lien law as will be pointed out, essentially simply affords a further remedy in basically the same situation. The two statutes are in pari materia

and are to be construed together. Key Agency v. Continental Casualty Co., 31 N.J. 98, 104 (1959).

The lien law provides in N.J.S. 2A:44-128:

"Any person who, as laborer, mechanic, materialman, merchant or trader, or subcontractor, in pursuance of or conformity with the terms of any contract for any public improvement made between any person and a public agency as defined in section 2A:44-126 of this title and authorized by law to make contracts for the making of public improvements, performs any labor or furnishes any materials, including the furnishing of oil, gasoline or lubricants and vehicle use, toward the performance or completion of any such contract, shall, on complying with the provisions of sections 2A:44-132 and 2A:44-133 of this title, have a lien for the value of the labor or materials, or both, upon the moneys due or to grow under the contract and in the control of the public agency, to the full value of the claim or demand." (Emphasis added)

"Public agency" is defined by N.J.S. 2A:44-126 as:

" any county, city, town, township, public commission, public board or other municipality in this state authorized by law to make contracts for the making of any public improvement in any city, ...

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