Tri-City Electric Co. v. People

473 N.E.2d 240, 63 N.Y.2d 969, 483 N.Y.S.2d 990, 1984 N.Y. LEXIS 4738

Opinion

OPINION OF THE COURT

Memorandum.

The order of the Appellate Division which modified the judgment in favor of Lake Steel Erection, Inc., by reducing it to $51,000, the amount of the discharge bond, should be affirmed, with costs.

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Lake Steel Erection filed a mechanic’s lien in the amount of $47,342.41, which was discharged with the consent of Lake Steel by the filing of an undertaking in the amount of $51,000 under court order made pursuant to subdivision 5 of section 21 of the Lien Law. Upon the filing of such a discharge bond the public improvement lien previously filed attaches to the bond, which is substituted for the liened property (Milliken Bros, v City of New York, 201 NY 65, 74; Morton v Tucker, 145 NY 244, 248). Recovery against the surety on the bond may not exceed the face amount of the bond as originally fixed, unless an amendatory order is thereafter obtained increasing the amount of the bond (CPLR 2508; Lien Law, § 21, subd 5), or the surety defaults on the bond, in which later event the amount recoverable from the surety may include interest from the time of default in addition to the face amount (General Obligations Law, § 7-301; CPLR 2502; Carrols Equities Corp. v Villnave, 57 AD2d 1044,1045; see MendelMesick-Cohen-Architects v Peerless Ins. Co., 74 AD2d 712, 713). Interest in excess of the face amount of the discharge bond is not otherwise recoverable (see McClendon Blacktop Co. v Johnson Bldg. Co., 46 AD2d 724). Here no default has been shown.

Moreover, Lake Steel was not entitled to enforce its claim for interest in excess of that payable under the discharge bond under the trust fund provisions of article 3-A of the Lien Law. Neither the State as owner nor Aetna as surety on the payment and performance bond can be charged under article 3-A for other than “the cost of improvement” (Lien Law, § 71, subd 1; Northern Structures v Union Bank, 57 AD2d 360, 368-369; Gruenberg v United States, 29 AD2d 527).

Chief Judge Cooke and Judges Jasen, Jones, Wachtler, Meyer, Simons and Kaye concur.

Order, insofar as appealed from, affirmed, with costs, in a memorandum.

The appeal of Lake Steel Equipment Rental, Inc., and the cross appeal of Suburban Excavators et al. have previously been dismissed for nonfinality (61 NY2d 833).