This action was brought to foreclose a mechanic’s lien. The plaintiff, appellant, a subcontractor of *317defendant Brady, furnished material of the conceded value of $1,000 which was used in the premises. Appellant was not paid by Brady and filed a mechanic’s lien, foreclosure of which is sought in the present action. Brady, whose agreement with the defendant owner, Ards Building Corporation, called for the payment of $10,600, abandoned his contract about March 1, 1923. At that time he had received $9,400 including two promissory notes of $1,000 and $700. The defendant owner completed the contract at a cost of $1,163.87 not including the expenses of bonding plaintiff’s lien, counsel fees in connection therewith and related disbursements, as to none of which was there pleading or proof. On this record, therefore, $36 remains from the contract price, even though the owner be credited with the amount of the notes.
Appellant claims that as two of the payments to Brady were by notes which matured and were met after the filing of its lien, the amounts thereof, aggregating $1,700, are not to be credited as having been paid on the contract to Brady.
It is also asserted that even if the credit of $1,700, the total of the notes, be allowed, the owner held $1,172.13 after completing the contract and that such amount should be applied in payment of appellant’s lien. This is based upon a letter which respondent’s attorney wrote to the lienor on April 12, 1923, to the effect that $1,172.13 was in the hands of the Ards Building Corporation after completion. An affidavit verified by the attorney, received at the trial in lieu of common-law evidence, shows that there was an error in the letter and that the balance on hand was $36.13, alleged to be subject to deductions also indicated therein. No proof was given by the plaintiff to contradict this evidence.
The respondent contends that the principal contractor having defaulted and there being no provision in the contract to cover such contingency, no sum was or could become due to the contractor from the owner. In this respondent cannot be sustained. The defendant owner asserted no such right. On the contrary, it notified the contractor that it would finish the work and charge the cost thereof to him; and it submitted a statement, the letter referred to by the lienor showing the amount of the contract and the amount necessarily paid to complete the contract, leaving a balance of $1,172.13 available to the lienors.
On the trial it was shown that this statement Was incorrect in that a payment by the owner to the contractor was entered as $1,000 instead of $2,000. It was also shown that after the statement had been made the owner expended the sum of $136 for bronzing risers and radiators, part of the contractor’s Work. This left a corrected balance of $36.13 which defendant owner *318claimed was subject to counsel fees and expenses of bonding, although there is no proof as to these items, and they are not pleaded in the answer of the defendant owner. They cannot be allowed without being pleaded or proved.
On these facts, judgment should have been rendered in any event in favor of the plaintiff for thirty-six dollars and thirteen cents.
There is another important point in this case. The appellant contends that the two notes aggregating $1,700 paid by defendant owner should not have been deducted from the amount due under the contract. One of these notes was for $1,000, was indorsed over to the Dimock & Fink Company and paid by defendant owner to that company after plaintiff’s lien was filed. The Dimock & Fink Company were also subsequent lienors and this note was in payment of the lien of Dimock & Fink. It was dated December 21, 1922, payable in three months and was paid on March 15, 1923. While it does not appear when this note was delivered to the Dimock & Fink Company it does appear from the record that the lien of the Dimock & Fink Company was filed subsequently to plaintiff’s hen. The Dimock & Fink Company did not appear upon the trial of the action.
It is conceded that plaintiff’s lien was filed March 3, 1923, and that, on said day, a copy of the lien was, pursuant to statute, served upon the defendant owner. Under the Lien Law an owner is protected as to payments made after liens are filed only when such payments are made in good faith and without knowledge that liens have been filed. (See Lien Law, § 11, as amd. by Laws of 1913, chap. 88.)
In this case the defendant owner not only had constructive notice of the filing of plaintiff’s lien, but had actual notice. To credit the defendant owner with this payment without proof that the note had been indorsed and paid to the Dimock & Fink Company before plaintiff’s lien was filed would in effect give preference to a subsequent lienor. The Lien Law (§ 23) requires a liberal construction so as to give effect to the beneficial purposes of the statute, but such liberal construction does not permit an interpretation which would in effect nullify the provisions of the statute regarding priority of liens. (See Lien Law, § 13, as amd. by Laws of 1916, chap. 507.)
With reference to the note of $700, it appears that it was dated December 8, 1922, payable in three months and was paid to the contractor Brady on March 8, 1923, five days after plaintiff’s lien was filed. The owner, therefore, did not pay the note to a third party.
The defendant owner, when it paid the note to the contractor *319Brady, did so with knowledge of plaintiff’s claim and lien and in effect paid Brady for the material furnished by the lienor, the material for which the lienor had filed a lien.
If a contractor is permitted to defeat a lien by taking notes in payment for material to be furnished by a materialman, and is to be permitted to receive payment of such notes after a lien has been filed by the materialman, the Lien Law does not give the protection it was intended to give; for it can too readily be evaded.
The transactions referred to above resulted not only in a subsequent lienor being paid by notes given before the work was performed, but in payment for a lienor’s material being made to the contractor after a lien therefor was filed. Moreover, in this case, Brady’s contract did not provide for payment as the work progressed; and I am not satisfied that the advances made on the contract were made under such circumstances as to protect the owner.
I believe the trial court erred in the credits allowed to the defendant owner and that the amount of the notes should be held available to plaintiff under its lien. For these reasons, the determination appealed from and the judgment and order of the City Court should be reversed and a new trial ordered, with costs to appellant in all courts to abide the event.
Finch, J., concurs.
Determination affirmed, with costs.