The opinion of the court was delivered by: FOLLMER
New York State Natural Gas Corporation (hereinafter called the Owner) on May 31, 1951 entered into a no lien construction contract
with Harold B. Fink, d/b/a Fink Construction Company (hereinafter called the Contractor), to furnish labor and material for the construction of office building and shops at Sabinsville, Pennsylvania. This contract was duly filed of record in the Office of the Prothonotary of Tioga County, Pennsylvania.
Plaintiff, Van Etten, entered into a subcontract with the Contractor to furnish the electrical work and materials pursuant to the contract between the Owner and the Contractor and duly performed all of the work and supplied all the materials required by said subcontract. The value of the work performed and materials supplied by the plaintiff under his contract with the Contractor and for which he has not been paid is $ 13,244.52. On or about March 27, 1952 the plaintiff terminated work due to the failure of the Contractor to make the payments required by the contract between the plaintiff and the contractor. On that date the plaintiff had not completed work or furnished materials of the value of $ 570.74. During the months of May and June, 1952, plaintiff completed the work and extras to complete the contract and was paid the sum of $ 570.74 by Tioga County Savings and Trust Company of Wellsboro, Pennsylvania, pursuant to an agreement made between the plaintiff, the Owner, the Contractor and the creditors of the Contractor.
The Commissioner of Internal Revenue assessed against Harold B. Fink, d/b/a Fink Construction Company, withholding taxes and Federal unemployment taxes in the total sum of $ 13,446.69. These taxes covered the period starting with the second quarter of 1951 through the second quarter of 1952. The first liens arose on May 21, 1952, and the last liens arose on November 5, 1954. The first notice of lien was filed on May 23, 1952, and the last notice of lien was filed November 8, 1954.
Under the provisions of Article 4 of the contract between the Owner and the Contractor, the Owner, New York State Natural Gas Corporation, retained the sum of $ 13,186.79 which, pursuant to an Order of this Court, has been deposited in the registry of the Court.
Plaintiff brought this action to obtain judgment for the retained funds. The District Collector of Internal Revenue was named a codefendant with the Owner and Contractor aforesaid. The District Collector was later dismissed as a defendant and the United States intervened to enforce the Federal tax liens and to obtain judgment against Contractor for outstanding tax assessments in the sum of $ 13,446.69, plus interest as allowed by law.
The contractor did not and could not furnish a statement that all the subcontractors and material men had been paid.
The pertinent portions of the contract are as follows:
'Before issuance of final certificate the Contractor shall submit evidence satisfactory to the Engineers that all payrolls, material bills, and other indebtedness connected with the work have been paid.'
General conditions of the contract:
'Art. 22. * * * If the Contractor * * * should fail to make prompt payment to subcontractors or for material or labor, * * * then the Owner, upon the certificate of the Engineers that sufficient cause exists to justify such action, may, without prejudice to any other right or remedy and after giving the Contractor seven days' written notice, terminate the employment of the Contractor * * *. In such case the Contractor shall not be entitled to receive any further payment until the work is finished. If the unpaid balance of the contract price shall exceed the expense of finishing the work including compensation for additional managerial and administrative services, such excess shall be paid to the Contractor. If such expense shall exceed such unpaid balance, the Contractor shall pay the difference to the Owner. * * *
'Art. 26. * * * The Engineers may withhold or, on account of subsequently discovered evidence, nullify the whole or a part of any certificate to such extent as may be necessary ...