Beneficial Finance Co. v. Wegmiller Bender Lumber Co., Inc.

• Decision Date: 27 March 1980
• Docket Number: No. 1-579A150,1-579A150
• Citation: 402 N.E.2d 41
• Parties: BENEFICIAL FINANCE COMPANY, Appellant (One of Defendants Below), v. WEGMILLER BENDER LUMBER COMPANY, INC., Appellee (Plaintiff Below), and John L. Myers, Cheryl A. Myers, Brown County Federal Savings and Loan Association, and Treasurer of Brown County, Appellees (Defendants Below).
• Court: Indiana Appellate Court

Page 41

402 N.E.2d 41

BENEFICIAL FINANCE COMPANY, Appellant (One of Defendants Below), v. WEGMILLER BENDER LUMBER COMPANY, INC., Appellee (Plaintiff Below) and John L. Myers, Cheryl A. Myers, Brown County Federal Savings and Loan Association, and Treasurer of Brown County, Appellees (Defendants Below).

No. 1-579A150.

Court of Appeals of Indiana, Fourth District.

March 27, 1980.

Rehearing Denied May 13, 1980.

See 403 N.E.2d 1150.

James A. Knauer, James G. Lauck, Kroger, Gardis & Regas, Indianapolis, for appellant.

Gary J. Clendening and Thomas Bunger, Bloomington, for appellee.

CHIPMAN, Judge.

This action was brought by Wegmiller Bender Lumber Company, Inc. (Wegmiller), appellee, against John and Cheryl Myers, to foreclose upon a mechanics' lien. Defendants Beneficial Finance Company (Beneficial) and Brown County Federal Savings and Loan Association (Savings and Loan) claimed mortgage interests in the subject real estate and were included as party defendants. By way of cross-complaints, both Beneficial and Savings and Loan requested foreclosure of their respective mortgage liens. The trial court granted the foreclosure and ordered the proceeds generated from the sale of the real estate be applied to satisfy the claims of Wegmiller, Savings and Loan, and Beneficial, in that order of priority. Beneficial appeals from the decision of the trial court, raising the following issues for our review:

1) whether the trial court erred by finding Wegmiller's mechanics' lien to be valid despite the fact the statutory notice filed by Wegmiller named only one spouse as "owner" of property actually held by both husband and wife as tenants by the entireties, and

2) whether the trial court erred in granting Wegmiller's mechanics' lien priority over the mortgage liens of Beneficial and Savings and Loan.

Affirmed.

On April 11, 1976, John L. Myers, acting on his own behalf and as an agent for his wife, Cheryl Myers, executed a credit application authorizing Residential Design and Construction, Charles Steele, and Tom Grissom to purchase materials from Wegmiller for use in the construction of a home upon real estate owned by John and Cheryl Myers as tenants by the entireties. Wegmiller delivered materials for use in the construction of the residence from April 21, 1976 through September 25, 1976. The Myers' general contractor, Charles Steele, performed labor and supplied materials for the construction from April 21, 1976, through October 8, 1976. The total amount due to Wegmiller from the Myers for materials furnished was $21,337.54. On October 6, 1976, Wegmiller filed a Notice of Intention to Hold Mechanics' Lien in the office of the Recorder of Brown County.

On May 7, 1976, the Myers borrowed $45,000 from Savings and Loan and in consideration thereof executed a promissory note secured by a real estate mortgage upon the subject real estate, the latter of which was duly recorded on May 10, 1976. The Myers later defaulted on their note and then owed to Savings and Loan the sum of $44,950.81.

During the summer months of 1976, the Myers found it necessary to secure additional financing to complete the construction of the residence. On September 27, 1976, the Myers executed a promissory note and became indebted to Beneficial in the amount of $45,120. ¹ In consideration for the loan, the Myers executed a mortgage upon the real estate which was duly recorded on October 4, 1976. The Myers caused a portion of their Beneficial loan, specifically $9,000 to be issued directly to Charles Steele in payment for labor rendered during construction. The remaining portion of the Beneficial loan was apparently used to pay other construction costs. The Myers defaulted on the note and they then owed Beneficial $13,867.42.

As a result of the default by the Myers on their obligations to Wegmiller, Savings and Loan, and Beneficial, this lawsuit was commenced on November 16, 1976 and all three creditors requested money judgments and foreclosure of their respective liens. After numerous continuances and trial settings the parties entered into stipulations of fact and no other evidence was presented. On September 15, 1978, the trial court held arguments on issues of law and a default judgment was entered against the Myers. By agreement of the parties, the real estate was sold and the proceeds, amounting to $65,000, were placed in escrow pending final judgment on the issues. On December 29, 1978, the trial court issued findings of fact and conclusions of law, ordering foreclosure of the mechanics' and mortgage liens. The money from the sale of the real estate was ordered to be applied in the following manner:

(D)istribution of the proceeds shall be made in the following order and amounts:

a. The defendant Brown County Federal Savings and Loan Association the sum of $818.32. ²

b. The plaintiff, Wegmiller Bender Lumber Company, Inc. the sum of Twenty One Thousand Three Hundred Thirty Seven and 54/100 dollars ($21,337.54) plus interest in the amount of Seven Thousand Six Hundred Eighty One and 51/100 dollars ($7,681.51) plus attorney's fees in the amount of Five Thousand Eight Hundred Three and 03/100 dollars ($5,803.03).

c. Brown County Federal Savings and Loan Association the sum of Forty Four Thousand Nine Hundred Fifty and 81/100 dollars ($44,950.81) plus interest in the amount of Six Thousand Nine Hundred Thirteen and 86/100 dollars ($6,913.86) plus attorney's fees in the amount of Five Thousand dollars ($5,000.00).

d. Beneficial Finance Company the sum of Thirteen Thousand Eight Hundred Sixty Seven and 42/100 dollars ($13,867.42) plus attorney's fees in the amount of Two Thousand Five Hundred dollars ($2,500.00).

I. Validity of Wegmiller's Mechanics' Lien

Beneficial first argues the lower court erred in finding Wegmiller's mechanics' lien to be valid despite the fact the Notice of Intention to Hold Mechanic's Lien filed by Wegmiller named only John Myers as owner of the encumbered real estate. In support of this contention, Beneficial cites Ind.Code 32-8-3-3, which provides in pertinent part:

Any person who wishes to acquire a lien . . . shall file in the recorder's office of the county, at any time within sixty (60) days after performing such labor . . . a sworn statement in duplicate of his intention to hold a lien upon such property for the amount of his claim, specifically setting forth the amount claimed, the name and address of the claimant and the named of the owner . . . . The name of the owner and legal description . . . will be sufficient if they are substantially as set forth in the latest entry in the county auditor's transfer books . . . . (emphasis added)

There is no question that the names of both John and Cheryl Myers were set forth in the Brown County Auditor's transfer books at the time Wegmiller filed its statutory notice. Because Wegmiller failed to strictly comply with the notice requirements by naming only one owner of the property, Beneficial argues Wegmiller failed to properly perfect, and therefore no valid mechanics' lien ever attached to the property. We hold Wegmiller substantially complied with the filing and notice requirements of IC 32-8-3-3.

Our resolution of this issue necessarily depends upon the manner in which we construe the applicable provisions of our mechanics' lien law. Generally, it appears that courts in other jurisdictions take one of three views on the subject. Some courts have stated because the rights derived from the mechanics' lien statute are in derogation of the common law, the entire statute must be strictly construed in favor of the landowner. ³ This view has received support in Indiana. See, e. g. Valley View Development Corp. v. Cheugh and Schlegel of Dayton, Inc., (1972) 151 Ind.App. 450, 280 N.E.2d 319; Aetna Glass Corp. v. Mercury Builders Inc., (1969) 145 Ind.App. 286, 250 N.E.2d 598. Other courts have taken the position that while the mechanics' lien statute may be in derogation of the common law, it should be strictly construed only as to its scope, that is, only as to a determination whether the claimant is in the class of persons intended to be protected by the legislation. Once it is determined the claimant is within the scope of the statute, the remedial provisions of the legislation, e. g., provisions governing perfection and enforcement of the lien, should be liberally construed so that the purpose of the statute may be accomplished. ⁴ This view has also received support in Indiana. See, e. g., Hough v. Zehrner, (1973) 158 Ind.App. 409, 302 N.E.2d 881; West v. Dreher, (1920) 73 Ind.App. 133, 126 N.E. 688; Cline v. Indianapolis Mortar and Fuel Co., (1917) 65 Ind.App. 383, 117 N.E. 509; Rader v. A. J. Barrett Co., (1914) 59 Ind.App. 27, 108 N.E. 883. Still other courts apparently make no distinction between the various provisions of their mechanics' lien statute. They view the entire piece of legislation as remedial in nature, and apply a liberal construction to all its provisions. ⁵

Our Supreme Court enunciated the purpose of our mechanics' lien legislation in Moore-Mansfield Construction Co. v. Indianapolis, New Castle & Toledo Railway Co., (1913) 179 Ind. 356, 372, 101 N.E. 296, 302:

The mechanics' lien laws of America, in general, reveal the underlying motive of justice and equity in dedicating, primarily, buildings and the land on which they are erected to the payment of the labor and materials incorporated, and which have given to them an increased value. The purpose is to promote justice and honesty, and to prevent the inequity of an owner enjoying the fruits of the labor and material furnished by others, without recompense.

We reject the idea that our entire mechanics' lien statute must be strictly construed with such hypertechnicality so as to frustrate the remedial purpose of the legislation. The perfection and enforcement provisions of the statute should be fairly and reasonably construed and applied so as to afford materialmen and laborers the security...