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Simkin v. Massiah

April 13, 1961

CHARLES SIMKIN & SONS, INC., A CORPORATION OF THE STATE OF NEW JERSEY, PLAINTIFF-APPELLANT IN 13,423,
v.
FREDERICK MASSIAH, DEFENDANT-APPELLANT IN 13,422, AND CITY OF TRENTON, DEFENDANT.



Author: Mclaughlin

Before GOODRICH, McLAUGHLIN and FORMAN, Circuit Judges.

McLAUGHLIN, Circuit Judge.

The first of these two appeals denied plaintiff's (Simkin's) application for an interlocutory injunction to compel defendant (messiah) to withdraw a lien claim filed by him. The second denied defendant's application for an interlocutory injunction against plaintiff's continued possession and use of defendant's equipment and tools. Both arise out of the following facts.

In April 1959, plaintiff entered into a contract with the City of Trenton, New Jersey, for the construction of a Sewage Treatment Plant at Duck Island, Trenton. Pursuant to the requirements of N.J.S.A. 2A:44-143 and 144, plaintiff provided performance and payment bonds with sureties in the amount of $3,752,714.00. These bonds were conditioned as prescribed by N.J.S.A. 2A:44-144, and were in the required form of N.J.S.A. 2A:44-147.

Plaintiff, by written agreement, subcontracted the concrete work to the defendant. During the course of performance of the subcontract, various disputes arose between the parties, and on June 10, 1960, the plaintiff gave notice of termination for the alleged default of the defendant. On July 12, 1960, defendant filed with the City of Trenton, a notice of lien claim in the amount of $413,110.60. On July 13, 1960, the plaintiff took possession of defendant's tools and equipment and assumed performance of the concrete work.

Ten days later, plaintiff instituted an action in the Superior Court of New Jersey and inter alia secured an order directing the defendant to show cause why the defendant should not "* * * waive and release the Notice of Lien Claim * * *" and why the City of Trenton should not be directed to refrain from withholding payments otherwise due plaintiff under the contract. Upon the requisite showing, the defendant removed the case to the Federal District Court. Defendant filed an answer and counterclaimed for sums allegedly due under the contract, breach of contract, conversion of the tools and equipment and injunctive relief against the plaintiff's continued use and possession of them. Thereafter, plaintiff secured an Order to Show Cause asking for the same injunctive relief that was originally sought in the New Jersey Superior Court. Defendant moved by similar proceedings to obtain possession of the tools and equipment seized and used by the plaintiff. The District Court denied both petitions.

I.

Plaintiff's right to have the defendant's notice of lien claim removed is based on the waiver provision in the subcontract which reads:

"22. The Subcontractor hereby waives and releases any and all liens or right of lien under any applicable State or Federal law which he now has or may hereafter have against any fund, building, structure and land in connection with which labor shall be performed and materials furnished under this Contract, and further, expressly agrees not to file or place on record any Mechanic's notice of intention, stop notice or lien claim of any kind against any such fund, building, structure and land."

The terms of this clause are clear. It is a waiver by the defendant of any right to assert or file "* * * any and all liens or right of lien under any applicable State or Federal law * * *." (Emphasis supplied). The defendant voluntarily agreed to the waiver and is bound by its terms. Under New Jersey law such provisions are valid and enforceable. Mitchell v. Wrightstown Community Apartments, Inc., App.Div. 1949, 4 N.J.Super. 321, 67 A.2d 203; City Hall Building & Loan Ass'n of Newark, N.J. v. Florence Realty Company, Ch.1932, 110 N.J.Eq. 12, 158 A. 506. And this is true though the person seeking to invoke the waiver is the party in default. Mitchell v. Wrightstown Community Apartments, Inc., supra. In the Mitchell case, supra, the plaintiff urged the proposition that if the defendant breached the contract, the defendant could not assert the contractual waiver of lien. The court unequivocally held to the contrary, stating at page 325 of 4 N.J.Super., at page 205 of 67 A.2d:

"The plaintiff contends that the defendant's breach of the contract, as alleged in the complaint and quoted above, estops the defendants to deny plaintiff's right to a lien. In support of this novel proposition, no authorities are cited and certainly plaintiff does not show a situation within the usual definition of estoppel. Pom.Eq.Jur. ยง 805. The lien of the contractor comes into play only upon the owner's breach of the contract, for if the owner pays the contractor what falls due from time to time, the lien is unimportant. The waiver of the lien means that, in case the owner fails to pay, the contractor will assert no lien on the land but will rely upon the owner's general credit. Clearly, the defendants' failure or refusal to pay does not estop them from asserting the waiver of the lien." (Emphasis supplied).

The holding in Mitchell is applicable to the Simkin suit. Regardless of which party is found to have breached the contract at the trial that will follow, the plaintiff is entitled to enforce, and the defendant is bound by, the contractual waiver of lien.

The district court as one of its reasons for denying plaintiff's petition stated [186 F.Supp. 233]:

"* * * N.J.S.A. 2A:44-130 expressly provides that the funds to which a lien has attached may be released and paid to the contractor by the municipality upon the filing with the latter of a bond in double the sum of all claims filed under the provisions of the statute against the contract or the funds due or to grow due thereunder, and ...


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