City of Evansville v. Verplank Concrete & Supply, Inc.
| Decision Date | 01 October 1973 |
| Citation | 400 N.E.2d 812 |
| Parties | CITY OF EVANSVILLE, Indiana, Green Construction of Indiana, Inc., Grex Realty Corporation, Inc., Corley Concrete Corporation, Old National Bank in Evansville, as Trustees under a Trust Indenture dated |
| Court | Indiana Appellate Court |
Curtis V. Kimmell and L. Edward Cummings, Kimmell, Funk & Cummings, Vincennes, Robert T. Bodkin, Bamberger, Foreman, Oswald & Hahn, Evansville, for defendants-appellants.
Richard H. Adin, Robert S. Matthews, Matthews & Shaw, Evansville, for plaintiff-appellee.
Defendants-appellants City of Evansville, Green Construction Corporation of Indiana, Inc., Grex Realty Corporation, Inc., Corley Concrete Corporation, Old National Bank in Evansville, and Robert E. Green, appeal the judgment of the Vanderburgh Superior Court ordering the foreclosure of a mechanic's lien held by plaintiff-appellee Verplank Concrete & Supply, Inc., upon certain property known as the Executive Inn Parking Garage.
In August, 1972, Robert E. Green (Green), a director and officer of both Green Construction of Indiana, Inc. (Green Construction) and Grex Realty Corporation, Inc. (Grex Realty), purchased certain real estate located within the city limits of Evansville. He conveyed the property to Green Construction on October 27, 1972.
In January, 1973, Green Construction undertook the construction of a parking garage on the property. Green Construction entered into a contract with Corley Concrete Corporation (Corley) providing that Corley would supply preformed and prestressed concrete beams, "T's", and the like, according to the architect's specifications. These component structures were prefabricated at Corley's plant in Lafayette and shipped to Evansville. Green Construction, as owner/contractor, was responsible for the erection of the structure.
From January 31, until October 11, 1973, Verplank Concrete & Supply, Inc. (Verplank) supplied Corley with various mixtures or grades of cement for use in precasting the segments. At some point in time, Corley ran into financial difficulty as a result of which Verplank did not receive payment for approximately $49,500 worth of cement delivered to the Lafayette factory.
On July 30, 1973, Green Construction conveyed the aforementioned property along with other adjacent parcels to Grex Realty. Grex Realty then conveyed the property to the City of Evansville (the City) on October 31. 1
On November 6, 1973, Verplank filed notice of intent to hold a mechanic's lien upon the property known as the Executive Inn Parking Garage. Verplank filed suit to foreclose the lien in September, 1974; a judgment in Verplank's favor is the basis of the appeal.
Appellants present two issues for review: 2
1) Whether the trial court erred in allowing the filing of a mechanic's lien upon public property.
2) Whether the trial court erred in allowing the materialman of a materialman a mechanic's lien upon the property.
We reverse.
Mechanic's liens are governed by statutory law, Ind.Code 32-8-3-1 et seq. Ind.Code 32-8-3-1 (Supp.1979) provides, in part:
"(That) contractors, subcontractors, mechanics, lessors . . ., journeymen laborers and all other persons performing labor or furnishing materials or machinery, . . . for the erection, altering, repairing or removing any . . . building, . . . may have a lien separately or jointly upon the . . . building, . . . which they may have erected, altered, repaired, moved or removed or for which they may have furnished materials or machinery of any description, and, on the interest of the owner of the lot or parcel of land on which it stands or with which it is connected to the extent of the value of any labor done, material furnished, or either . . . ."
In Moore-Mansfield Construction Company v. Indianapolis, Newcastle and Toledo Railway Company (1913) 179 Ind. 356, 372, 101 N.E. 296, our Supreme Court described the purpose of mechanic's liens as follows:
It has long been the law that mechanic's liens may not be acquired or enforced upon public property. Fatout v. Board of School Commissioners of City of Indianapolis (1885) 102 Ind. 223, 1 N.E. 389; Board of Commissioners of Parke County v. O'Conner (1882) 86 Ind. 531; Repp and Mundt, Inc. v. Hitzelberger Supply Co., Inc. (1976) Ind.App., 353 N.E.2d 547. Appellants contend that Verplank's lien, notice of which was filed on November 6, 1973, failed to attach for the reason that the property was owned by the City at that time.
Although it is uncontested that the City holds fee simple title to the property as a result of the conveyance from Grex Realty, whether the parking garage is the type of public property or property held for a public use traditionally afforded immunity from mechanic's liens remains a contested issue.
On March 23, 1973, while the real property was owned by Green Construction, Grex Realty submitted a report to the Evansville Economic Development Commission (the Commission) on the economic impact of the proposed project. On March 26, the Commission, established under and acting pursuant to authority granted by Ind.Code 18-6-4.5-1 et seq., passed a preliminary resolution concerning the proposed project. On October 1, the Common Council of the City passed an ordinance authorizing the construction, acquisition, and leasing of the garage as an economic development facility, the issuance of revenue bonds to finance the construction thereof, and the safeguarding of the interests of holders of said bonds by lease and trust indenture.
The lease was signed by Grex Realty and the City on October 1; the trust indenture, entered into by the City, Grex Realty, and the Old National Bank of Evansville (the Bank), was executed and dated the same day. The trust indenture was signed on October 31; the property was conveyed to the City by warranty deed the same day "for the sum of one dollar and other good and valuable consideration." The City issued tax-exempt Economic Development First Mortgage Revenue Bonds, Grex Realty Corporation, Inc., 3 in the aggregate amount of $1,500,000. To secure the bonds, the City "borrowed" that sum from the Bank and executed a trust indenture which was, according to its terms, a mortgage, a deed of trust, and a security interest. The City transferred all rights and interests in the real estate, buildings and improvements, lease, etc., to the trustee, the Bank.
The lease, effective October 1, 1973, through October 1, 1989, or until all bonds are redeemed, provides that the lessor will construct or complete and equip the building, with the lessee's approval, paying the costs of same with disbursements from the general construction fund, and will reimburse the lessee for all costs incurred in purchasing and improving the property. According to the terms of the indenture, interest and principal on the bonds are to be paid with funds generated by the operation of the facility and tendered as rent in accordance with the schedule of redemption. The lessee has the option to purchase the facility at any time after the lessee tenders to the trustee the amount of money necessary to redeem all bonds and cover the trustee's fees and expenses. The purchase price is ten dollars.
The appellants correctly note that in Ind.Code 18-6-4.5-1 (Supp.1979), the legislature expressly declares that the financing of economic development facilities and pollution control facilities for use by others is a public purpose. They contend that, the instant facility having been financed in accordance with the statutory provisions set forth in Ind.Code 18-6-4.5-1 et seq., it unquestionably attains the status of public property used for a public purpose. While we agree with the assertion that the garage has been deemed an economic development facility, the financing of which is a public purpose, we are not convinced that the facility is the type of property which should be afforded protection from the attachment of mechanic's liens.
As mentioned above, mechanic's liens have not been permitted to attach to public property held for public use. Such property has traditionally included the following: schools, Fatout, supra ; United States Fidelity & Guaranty Company v. American Radiator Company (1908) 41 Ind.App. 712, 84 N.E. 558; United States Fidelity & Guaranty Company v. American Blower Company (1908) 41 Ind.App. 620, 84 N.E. 555; courthouses, Board of Commissioners of Parke County, supra; bridges, Board of Commissioners of Pike County v. Norrington (1882) 82 Ind. 190; state university housing, Repp & Mundt, Inc., supra. Judge Lybrook stated in Repp & Mundt, Inc., supra, at page 548 of 353 N.E.2d, "(P)ublic policy and public necessity alike forbid the acquisition or enforcement of such a lien." It requires very little imagination to realize how disruptive the attachment and attempted foreclosure of such liens might be to the orderly operation of state and local government.
The legislature has, however, provided for the protection of such interests in Ind.Code 5-16-5-1 et seq. Ind.Code 5-16-5-1 states, in part:
"when any public building or other public work or public improvement of any character whatsoever is being constructed, erected, altered or repaired under contract at the expense of the state or at the expense of any county, city, town, township, school corporation, assessment district, or...
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