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Hiller & Skoglund Inc. v. Atlantic Creosoting Co.

Decided: March 23, 1962.

HILLER & SKOGLUND, INC., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-RESPONDENT,
v.
ATLANTIC CREOSOTING COMPANY, INC., A MARYLAND CORPORATION, DEFENDANT-APPELLANT, AND CONTINENTAL CASUALTY COMPANY, AN ILLINOIS CORPORATION AUTHORIZED TO DO BUSINESS IN THIS STATE, UNIVERSAL PILE CO., INC., A CORPORATION OF THE STATE OF NEW JERSEY, AND BOROUGH OF WOOD-RIDGE, A MUNICIPAL CORPORATION, DEFENDANTS-RESPONDENTS



Goldmann, Freund and Foley. The opinion of the court was delivered by Freund, J.A.D.

Freund

Defendant Atlantic Creosoting Company, Inc. (Atlantic) appeals from so much of the judgment of the Superior Court, Chancery Division, as: (1) discharged the municipal lien claim filed by it against moneys due to plaintiff Hiller & Skoglund, Inc. (Hiller) from defendant Borough of Wood-Ridge, N.J.; and (2) ordered Wood-Ridge to release and pay to plaintiff the sum of $22,393.30. By an order the judgment has been stayed pending this appeal. Atlantic had filed its lien claim alleging there was due $22,393.30 from its debtor, Universal Pile Co., Inc. (Universal), a subcontractor of Hiller in its construction of a sewage treatment plant for Wood-Ridge.

On November 25, 1959 plaintiff entered into a contract with Wood-Ridge for the performance of certain work in the construction of a sewage treatment plant. Plaintiff subcontracted to Universal for the delivery and installation of certain creosoted pilings necessary for the performance of that contract. It was stipulated that prior to any pilings' being supplied by Atlantic for use on the Wood-Ridge project, Universal was already indebted to Atlantic for $26,707.53 on a book account. Between December 21, 1959 and January 26, 1960 pilings having a value of $22,393.30 were delivered by Atlantic to Universal for use in connection with the Wood-Ridge project.

On February 3, 1960 Universal, having completed its subcontract, submitted to Hiller an invoice for $39,815.75, representing the full payment due for the piling work done on the sewage plant. Hiller paid this bill in full on February 19. The same day Universal forwarded its check to Atlantic for $15,000, which was cashed. When this check was forwarded, no instructions were given as to the account to which the check was to be applied. On May 2 Universal forwarded to Atlantic an additional check for $5,000. On the face of the $5,000 check there was a notation of "on a›."

Meanwhile, Atlantic had on April 27, 1960 filed with Wood-Ridge its notice of lien claim for the $22,393.30 due it from Universal.

The pertinent provision of the Municipal Mechanics' Lien Law, N.J.S. 2A:44-128, provides:

"Any person who, as * * * materialman, * * * in pursuance of or conformity with the terms of any contract for any public improvement made between any person and a public agency * * * furnishes any materials, * * * 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 control of the public agency, to the full value of the claim or demand. * * *"

It was agreed that Atlantic had complied with all the procedural requirements of the statute and that Atlantic is a materialman within the meaning of its provisions.

On May 23, 1960 Wood-Ridge informed Hiller for the first time that Atlantic had filed a lien claim. The general contractor claims that this was the first information it received that the moneys due for the pilings used in the sewage plant had not been paid. Wood-Ridge retained the sum of $22,393.30 from the balance due on the general contract. Subsequently the court ordered the moneys to be deposited in an institution paying interest thereon.

On May 31, 1960 Universal forwarded to Atlantic a third check for $2,393.30 which bore the legend "Hiller & Skoglund paid in full." Atlantic refused to accept the check as written. It was stipulated in the pretrial order that this check could be received and credited to the amount of the lien claim, without the attached condition. Later, Universal informed Atlantic not to cash the check, and it has continued to remain unpaid.

The trial judge determined that Universal had directed that the payments of $15,000 and $5,000 were to be applied towards the payment of the Wood-Ridge project and not to its general ...


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