Onondaga Commercial Dry Wall Corp. v. 150 Clinton Street, Inc.
This case concerns the conflict between two classes of claimants, lienors under Article 2 of the Lien Law and trust beneficiaries under Article 3-A (the United States and the State of New York with tax claims), over a $23,000 balance due from an owner on a contract for the construction of apartment buildings. The fund was deposited into court under Lien Law § 55 in prior lien foreclosure actions. The Special Term initially favored the lienors, denying the U.S.'s application to enjoin foreclosure, but the Appellate Division reversed, granting the injunction and seemingly prioritizing tax claims. The Court of Appeals, interpreting the Lien Law, determined that Article 3-A provisions were intended to supplement, not supersede, older mechanic's lien provisions, especially regarding funds paid into court under section 55. The court held that such funds take the place of the property, making lien claims against them akin to claims against the property itself, which are not subject to tax claims under the statute. Therefore, the court reversed the Appellate Division's order and reinstated the Special Term's order, granting priority to the lienors.