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General Electric Co. v. Sulzer

Decided: August 23, 1966.


Gaulkin, Labrecque and Brown. The opinion of the court was delivered by Brown, J.A.D.


Plaintiff General Electric Company (G.E.) recovered judgment against defendant American Cyanamid Company (Cyanamid), impressing a mechanic's lien on the latter's land and building in the Township of Wayne for material and labor furnished to defendant E. Fred Sulzer & Co. (Sulzer) in connection with construction of the Cyanamid building. The general contractor for the construction was defendant Frank Briscoe Company, Inc. (Briscoe). Sulzer, Briscoe's subcontractor, was adjudicated bankrupt before payment of its debt to G.E. and has not appeared in the action. Cyanamid has appealed from the judgment. There is a cross-appeal by G.E. contesting that portion of the judgment denying interest on the adjudicated amount of the lien claim.

The general contract was not filed and G.E.'s lien was based upon a notice of intention filed on August 1, 1961. The controversy centers upon the right of G.E. to this remedy. Cyanamid's contentions thereon are substantially as follows: (1) recourse to a lien claim was expressly prohibited by the general contract as well as the subcontract, and G.E. had notice of and was bound by these contractual provisions; and (2) G.E. was estopped to file the notice of intention because of a prior agreement with Briscoe for an alternative method

of securing payment from Sulzer. It further contended that, even if the notice was properly filed, (1) the over-all transaction constituted an entire or indivisible contract, or, at least, certain of the purchase orders resulted in entire contracts, so that G.E.'s delivery of material pursuant thereto before filing of the notice precluded a lien for any part delivered after the filing date; and (2) in any event, payments to G.E. made after the filing of the notice of intention, which were applied to Sulzer's indebtedness incurred before that date, should have been applied on account of the debt for which the lien is now sought.

The trial judge made determinations adverse to defendants as to each of these contentions.


A large part of Cyanamid's brief is devoted to a close analysis of the lengthy record in support of its argument that, in finding that G.E.'s right to a lien was not barred and that it was not estopped to pursue the remedy, the court went "contrary to the believable testimony" and made credibility evaluations which were "totally illogical and untenable."

Assuming that the contracts forbade assertion of a lien, it was necessary for Cyanamid to prove that G.E. knew of the prohibition. Bates Machine Co. v. Trenton, & N.B.R.R. Co., 70 N.J.L. 684, 693 (E. & A. 1904). Cyanamid offered evidence of three meetings with G.E. representatives at which the prohibition against liens was allegedly discussed. In addition, Cyanamid offered proof that G.E. personnel would necessarily have been aware of the lien provision in the general contract in the course of preparing a quotation for the electrical work. All this was disputed by G.E.'s witnesses. The judge, in his written opinion, stated: "Such testimony is completely irreconcilable and the Court is unable to determine where the truth lies in this respect." Being thus "perplexed," the judge turned to a consideration of the conduct of the parties to resolve the contradictions.

Joseph James McNulty, Sulzer's engineer and estimator, testified that at a meeting with G.E. employees in late February or early March 1961 he stated to them that a mechanic's lien "was in violation of the contract." Thomas Joseph Kearney, a Briscoe executive, stated that he had made the same thing clear to Eric Hundt, G.E.'s Newark credit manager, at a meeting with him during the following April. The seriousness with which Kearney regarded the consequences of filing a notice of intention was stressed by him, he said, at that time when he warned "no one could get paid."

If the prospect of filing a notice of intention engendered the reaction which McNulty and Kearney said they had expressed up to and including April, it is reasonable to expect that their principals, sometime during May, June or July, would have found a way to register with G.E. an unequivocal warning against the taking of such a step. Yet, after the notice was filed on August 1, no protest emanated from Briscoe or Sulzer. Only one formalized reaction is in evidence -- the McCloskey letter of August 8 in which the effectiveness and propriety of the notice were apparently recognized. In no respect was it shown by defendants in their proofs that performance of the general contract or the subcontract was thereafter affected by what G.E. had done. Deliveries and payments continued into December. McNulty and Kearney who, according to their testimony, had each warned against such a contract violation, remained silent. We are led to the conclusion that the evident and continuing adjustment of Briscoe and Sulzer to the notice of intention constitutes a practical construction of the contract language favoring the availability of recourse to the lien procedure.

In short, our review of the proofs as a whole satisfies us that the structure of undisputed circumstances following the transactions referred to warranted the trial judge's determination that the burden ...

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