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A & J BUYERS v. JOHNSON (07/01/69)

COURT OF APPEALS OF NEW YORK 1969.NY.42321 <http://www.versuslaw.com>; 250 N.E.2d 845; 25 N.Y.2d 265 decided: July 1, 1969. A & J BUYERS, INC., RESPONDENT,v.JOHNSON, DRAKE & PIPER, INC. ET AL., APPELLANTS; C. F. H. CONTRACTING CO., INC., ET AL., RESPONDENTS, ET AL., DEFENDANTS A & J Buyers v. Johnson, Drake & Piper, 30 A.D.2d 775, reversed. Counsel William J. Pastore and David E. Montgomery for appellants. Richard F. Griffin, Eugene C. Tenney and Courtland R. La Vallee for respondents. Chief Judge Fuld and Judges Breitel and Jasen concur with Judge Scileppi; Judge Bergan dissents and votes to affirm in a separate opinion in which Judge Burke concurs. Author: Scileppi


A & J Buyers v. Johnson, Drake & Piper, Chief Judge Fuld and Judges Breitel and Jasen concur with Judge Scileppi; Judge Bergan dissents and votes to affirm in a separate opinion in which Judge Burke concurs.

Author: Scileppi

 On June 7, 1962 appellant Johnson, Drake & Piper, Inc. (hereinafter JDP) entered into a prime contract with the State of New York for the construction of a portion of the Niagara Parkway in Niagara Falls, New York. Under purchase orders issued by JDP, defendant Franjoine Trucking, Inc. (hereinafter Franjoine) agreed to supply gravel and stone to JDP at the jobsite for purposes of constructing the roadbed and also as backfill in other portions of the project. In making deliveries under these purchase orders, Franjoine used highlifts to load the trucks in the gravel pits and dump trucks to transport the gravel to the jobsite. Franjoine, however, only owned four dump trucks and one highlift and, therefore, it became necessary to lease from plaintiff-respondent, A & J Buyers, Inc., and the cross-claiming defendants, a number of trucks and highlifts with drivers and operators to fulfill its obligations under the purchase orders.

Although JDP paid Franjoine a substantial amount of that due and owing for the materials delivered to the jobsite, Franjoine allegedly failed to pay the respondent and cross-claiming defendants the amounts due them for the leasing of their trucks and highlifts. As a result, the respondent (claiming) and the defendants (cross-claiming) brought this action against JDP and its bonding company on the payment bond for liens aggregating approximately $83,000.

Section 5 of the Lien Law provides: "A person performing labor for or furnishing materials to a contractor, his subcontractor or legal representative, for the construction or demolition of a public improvement pursuant to a contract by such contractor with the state or a public corporation, shall have a lien for the principal and interest of the value or agreed price of such labor or materials upon the moneys of the state or of such corporation applicable to the construction or demolition of such improvement" (emphasis added).

Clearly having furnished materials to JDP, the general contractor for the State, Franjoine would have a valid lien under this section on all moneys due and owing from JDP. That, however, is not the question before us. The respondent and cross-claiming defendants, not having dealt directly with JDP, cannot establish lienor status by furnishing labor or materials to a contractor pursuant to a contract with the State. They dealt only with Franjoine and, therefore, to establish their status as lienors under this section, it must be shown that Franjoine was a subcontractor of JDP; for if it be determined that Franjoine's performance was only that of a materialman, then respondent and cross-claiming defendants would not qualify as lienors since section 5 does not recognize a materialman's lien against another materialman.

The appellants moved for summary judgment against the respondent and cross-claiming defendants on the ground that they were mere materialmen of a materialman and thus did not have valid liens. Special Term, however, granted partial summary judgment against appellants finding that Franjoine was in fact a subcontractor of JDP. On appeal, the Appellate Division modified by reversing that portion of the order which granted partial summary judgment. The court stated that "[under] the facts in this case a trial is required to determine whether Franjoine Trucking, Inc., was a subcontractor or merely a materialman on the construction project" (25 A.D.2d 716).

The essential facts adduced at trial bearing on the issue of Franjoine's status are substantially the following: In addition to the construction of the road, JDP was required by the job specifications to build certain bridges, and backfill a sewer line. Pursuant to the State's standard specifications, JDP was required to use various grades of gravel depending upon the nature of the work being performed at a particular jobsite. Sixty percent of the gravel sold by Franjoine, primarily used by JDP in the construction of the bridge abutments and backfilling the sewer excavation, was delivered by trucks to the jobsite and just dumped in a pile where it was needed; after which the trucks merely left the jobsite. The deliveries of the remaining 40% of the gravel sold, items 39 and 39AV, used by JDP in constructing the subbase of the road, had a much more sophisticated method of delivery. The truck, with chains hooked onto the tailgate to prevent its opening more than about eight inches, would drive onto the roadway being constructed by JDP. The driver would then raise the body of the truck and slowly proceed forward spilling out the load, simultaneously spreading it onto the right of way. After item 39 had been "dumped", JDP employees would then spread the gravel evenly over the roadbed with a bulldozer, water it to aid compaction, pass over it a minimum of eight times with a roller and finally would further adjust the course of the road to achieve the specified grade and compaction. Next Franjoine would deliver item 39AV and dispose of it in the same manner as described above. JDP would then go through the same operation as it had performed with item 39. Finally, after steel forms had been set, the gravel subbase was brought to a very fine tolerance with a specially equipped fine grading machine and then the surface was ready to be paved with concrete.

Although Franjoine played no part in the construction of the road, it was paid on the basis of the engineer's measure in place. That is, once the gravel had been graded, moistened and compacted the project engineer would measure its thickness and compute the cubic measure of the material laid and Franjoine would be paid accordingly.

Primarily on the basis of the above, the trial court concluded: "Here, Franjoine was Johnson's subcontractor. The contracts between them contemplated work on the site which Johnson was directed to perform under the prime contract. Franjoine's work away from the site was actually done in performance of the prime contract to be paid as part of the unit contract price after Items 2 EF-B, 2 U F, 39 and 119A were either prepared, furnished, loaded, delivered, placed or spread on the roadbed, as required by the plans and specifications. Franjoine was to be paid after the engineer measured the Items in place."

The Appellate Division unanimously affirmed that determination. It is our opinion that the findings of fact as determined by the courts below do not establish Franjoine's status as a subcontractor as contemplated by the Lien Law.

Section 2 (subd. 10) of the Lien Law defines a subcontractor as "a person who enters into a contract with a contractor and/or with a subcontractor for the improvement of such real property or such public improvement or with a person who has contracted with or through such contractor for the performance of his contract or any part thereof."

Section 2 (subd. 12) of the Lien Law defines a materialman as "any person who furnishes material or the use of machinery, tools, or equipment, or compressed gases for welding or cutting, or fuel or lubricants for the operation of machinery or motor vehicles, either to an owner, contractor or subcontractor for, or in the prosecution of such improvement."

The respondent and cross-claiming defendants argue that any person who merely furnishes materials to a contractor which become part of the permanent improvement is a subcontractor as such term is contemplated by the Lien Law. They arrived at this conclusion by first setting forth the definition of improvement. Section 2 (subd. 4) (as amd. by L. 1947, ch. 878) provides: "The term 'improvement,' when used in this chapter, includes the demolition, erection, alteration or repair of any structure * * * and any work done upon such property or materials furnished for its permanent improvement * * *, and shall also include the reasonable rental value for the period of actual use of machinery" (emphasis added).

Respondent and cross-claiming defendants contend that if a subcontractor is any "person who enters into a contract with a contractor * * * for the improvement of such real property or such public improvement" (emphasis added) and improvement as defined includes materials furnished which become part of the permanent improvement, then it necessarily follows that ...


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