A strict adherence to the rules of pleading would require that the judgment be affirmed and the contrary result recommended is based on the interests of justice and does not imply that the learned Trial Justice was at fault in resolving the dilemma before him as he did.
The action was to foreclose a mechanic’s lien. The amount of the lien as filed was $22,804.68 over and above all payments previously made. The trial court found that the amount actually due plaintiff was $9,380.89 and that the amount claimed represented a willful exaggeration. The court thereupon found the lien to be void but allowed the plaintiff a recovery of the balance due as a personal claim, as requested in the complaint.
'Section 39-a of the Lien Law provides that where the court finds a lien to be void on account of willful exaggeration the person filing the lien shall be liable in damages, in addition to the owner’s expenses, for the difference between the amount claimed in the lien and the amount actually due. It is quite clear that no cause of action arises until a suit is instituted to enforce the lien (Matter of Lustbader Contr. Corp., 144 Misc. 875), nor can there be any recovery unless the court finds that there is willful exaggeration (Clemente Constr. Corp. v. Cox Contr. Co., 172 Misc. 904). Yet it is apparently proper to assert the willful exaggeration in a counterclaim which necessarily antedates the court’s finding of willful exaggeration and, if so found, to recover on it (Fox Constr. Corp. v. Halikman, 88 N. Y. S. 2d 156*). And it apparently has become the practice that this is the only way in which the claim of willful exaggeration may be asserted (Durand Realty Co. v. Stolman, 197 Misc. 208).
Here, two counterclaims were asserted based on section 39-a, but in neither did defendant demand as damages the difference between the amount of the asserted lien and the sum actually due. Instead, it sought the expenses of defending and injury to its reputation or credit by the filing of the lien. The court found that neither of these items was established and the finding is unexceptionable. At no time did the defendant claim on the trial that it was entitled to recover the aforesaid difference, even after the court had announced its finding of willful exaggeration.
*643So, as to both pleading and procedure defendant has been remiss. Yet by the findings of the trial court it would have been entitled to a recovery if it had asked for it. We believe that the interests of justice warrant a disposition in accord with the findings rather than the procedure. As the interests of justice necessarily differ with the peculiar circumstances of the cases involved, a more detailed exposition of the reasons why this case merits such consideration is in order.
It must be apparent that the relief accorded in section 39-a poses a threat to a lienor quite at variance with the sophisticated lenience with which most claims are regarded. In most types of litigation the plaintiff sets his own estimate on the damages and the most aggravated exaggeration passes without comment. Here it is attended with consequences that have been described as penal (see Joe Smith, Inc. v. Otis-Charles Corp., 279 App. Div. 1, 4). Coupled with that is the difficulty of making a determination between what is willful exaggeration and an honest, though mistaken, opinion of the value of goods or services (Collins v. Peckham Road Corp., 18 A D 2d 860; John H. Reetz Inc., v. Stackler, 24 Misc 2d 291). These elements have combined to subject the provisions of section 39-a to a rigid and technical interpretation (Joe Smith, Inc. v. Otis-Charles Corp., supra). In the instant case we do not have these elements. The exaggeration arose through factors which could well be described as fraud. On a cost plus contract the lienor charged material and labor to the job which were used on other jobs and sought to escape detection through the happenstance that the material and labor so charged was of the same nature as that used on this job. The court had neither difficulty nor reluctance in finding exaggeration and that it was willful. While courts naturally are prone to award just compensation for work actually performed, and are not easily deterred from so doing by the fact that the workman asked for more than what he may have been entitled to, this is not that case. Here the sufferance of a forfeit and the imposition of a penalty does not offend against fair play nor come close to shocking the conscience. The enactment of section 39-a had an obvious purpose, namely, to insure that the drastic remedy of the lien should not be abused and the rights given to one performing labor should not be diverted to an instrument of oppression.
Here that purpose should not be nullified by defendant’s failure to demand its rights in the proper manner. We vote to reverse and remand the matter to Special Term for judgment in accord with its findings but, in view of defendant’s presentation, without costs.
Valente, J. P., McNally and Witrner, JJ., concur in Memorandum by the court; Steuer, J., dissents in opinion, in which Stevens, J., concurs.
Judgment insofar as appealed from affirmed, with costs to respondent.
This procedure has the indorsement of an authoritative text, Jensen, Mechanics’ Liens [4th ed.], p. 440.