Dallas Co., Inc. v. William Tobias Studio, Inc.

• Decision Date: 14 November 1974
• Docket Number: No. 2--673A138,2--673A138
• Parties: The DALLAS COMPANY, INC., the Dalco Electric Corporation, Appellants-Plaintiffs, Tracy Construction, Inc., Appellant-Cross Plaintiff, v. WILLIAM TOBIAS STUDIO, INC., et al., Appellees-Defendants.
• Court: Indiana Appellate Court

Page 568

318 N.E.2d 568

162 Ind.App. 213

The DALLAS COMPANY, INC., the Dalco Electric Corporation, Appellants-Plaintiffs, Tracy Construction, Inc., Appellant-Cross Plaintiff, v. WILLIAM TOBIAS STUDIO, INC., et al., Appellees-Defendants.

No. 2--673A138.

Court of Appeals of Indiana, Second District.

Nov. 14, 1974.

Eugene H. Yockey, William F. LeMond, Kammins, LeMond, Carson & Stewart, Indianapolis, for The Dallas Co., Inc., The Dalco Electric Corp.

Joseph P. Sullivan, Eugene H. Yockey, Indianapolis, for Tracy Const., Inc.

Thomas A. Deal, Raikos, Melangton, Dougherty & Christ, Keith L. Andrews, DeWester, Raftery, Andrews & Hall, Indianapolis, for William Tobias Studio, Inc., William Tobias.

Carl T. Reis, White, Raub, Reis, Wick & Riegner, Indianapolis, for Robert J. Moore and Arthur C. Schrader, Jr. d/b/a Moore- John T. Rocap, Bruce M. Pennamped, Rocap, Rocap, Reese & Young, Indianapolis, for Pryce Louden and Lois Louden.

Schrader Realty Co. and Standard Federal Savings and Loan Association.

Walter Houppert, Reddington, Fisher, Houppert & Doyle, Indianapolis, for Standard Federal Savings and Loan Association.

BUCHANAN, Judge.

CASE SUMMARY

This is a consolidated appeal by the Appellants, The Dallas Company, Inc., The Dalco Electric Corporation, and Tracy Construction, Inc., (Contractors) who appeal from a summary judgment entered against them on their complaints to foreclose mechanics liens claiming there existed a genuine issue of material fact as to whether or not each of the Appellees, ¹ Moore-Schrader Realty Co. (Moore-Schrader), Standard Federal Savings and Loan Association (Standard), and Pryce and Lois Louden (Loudens), actively consented to the construction of certain improvements by the Contractors upon commercial property occupied by a lessee.

We reverse and remand.

FACTS

The facts based upon the pleadings, motions, affidavits, and counter-affidavits appear to be:

Prior to July 1, 1972, improvements were begun by the Contractors upon commercial property located at 2121 Production Drive, Indianapolis, Indiana. Then on July 1st Moore-Schrader, as lessors, entered into a lease agreement with William Tobias Studio, Inc. (Tobias), as lessee, to rent this commercial property to Tobias. On that date, July 1st, the Loudens were the owners of this real estate, but subsequently conveyed to Moore-Schrader. On August 23rd Moore-Schrader executed a mortgage to Standard.

In September, the Contractors timely filed their notice of intent to hold mechananics liens on the property in question.

Thereafter, complaints to foreclose mechanics liens were filed by the Contractors, and also a complaint for breach of contract by Tobias. The actions were eventually consolidated for trial.

In December, 1972, Moore-Schrader and Standard filed Motions for Summary Judgment with supporting affidavits and the Contractors countered by filing a Reply with affidavits attached in opposition to these motions. Moore-Schrader subsequently filed additional affidavits. Although the lease between Moore-Schrader and Tobias was referred to in various affidavits, no sworn or certified copy was attached.

On January 16, 1973, the trial court entered judgment against the Contractors and in favor of all the Appellees (except the Loudens) specifically finding that there was no genuine issue as to any material fact, that the Appellees did not contract with the Contractors or authorize or direct them to supply labor or materials, and that they did not consent or approve any of the work done or in any way agree thereto; and further that the notice of mechanics liens was null and void and that the Contractors constructed wholly with Tobias.

The Loudens, on January 3, 1973, also filed a Motion for Summary Judgment with affidavits attached against the Contractors, which motion was granted by the trial court on April 10, 1973.

ISSUE

Was a genuine issue of material fact presented as to whether the Appellees had knowledge of and actively consented The Contractors contend that by contract or otherwise the Appellees had full knowledge of and approved the construction of the improvements on the real estate, thereby allowing their lien to attach to the extent of the Appellees' interest in the commercial property.

to the improvements, and as to whether all the Appellees were necessary parties because they owned an interest in the real estate?

In reply, Moore-Schrader and Standard assert the record demonstrates the absence of any authority or direction on their part to the construction of the improvements.

The Loudens response is they not only did not consent to the improvements but they no longer have any interest in the property in question to which mechanics liens could attach.

DECISION

CONCLUSION--It is our opinion that genuine issues of material fact were apparently raised by the pleadings and the supporting affidavits, and summary judgment was therefore improper.

The theory of defense raised by the Appellees is drawn from Snelling v. Wortman (1940), 107 Ind.App. 422, 24 N.E.2d 791:

"In order that a lien may attach to real estate for material used in a building erected thereon, it is necessary that such material should be furnished by the authority and directions of the owner, and something more than the mere inactive consent on the part of such owner is necessary . . .' Abrams v. Silver, 1936, 102 Ind.App. 97, 99, 1 N.E.2d 286, 287.

See also Courtney v. Luce, 1936, 101 Ind.App. 622, 200 N.E. 501; Natl. Brick Co. v. Russell, 1934, 99 Ind.App. 53, 190 N.E. 614; Morgan v. Brightwood Lumber Co., 1937, 104 Ind.App. 4, 7 N.E.2d 525.' (Emphasis supplied) 107 Ind. at 425, 24 N.E.2d at 792.

So there could be a material issue of fact if the materials and labor in question were furnished by the authority and direction of the Appellees, i.e., if they did something more than merely inactively consent.

The first affidavits filed by Moore-Schrader stated that they did not contract with the Contractors nor did they authorize or direct them to supply labor and materials. The affidavit of Walter W. Houpper on behalf of Standard and the affidavit of the Loudens made essentially the same statement.

However, the affidavit of William A. Pappas, an officer of one of the Contractors, stated in part that:

'. . . on July 1, 1972, the said Robert J. Moore and Arthur C. Schrader, Jr., for themselves and as agents for the aforesaid Pryce Louden and Lois Louden, entered into a lease contract with William Tobias and Tobias Studios, Inc. . . .; that siad lease provided that the lessors granted express authority to the lessee to make improvements, install fixtures, partitions and additional structural changes . . . and assented to the making of such improvements by the lessee.'

'That thereafter, Tracy Construction, Inc. and its subcontractors, including The Dallas Company, Inc., performed work and furnished materials for the construction of improvements . . . at the instance and request of Tobias Studios, Inc., and with the express knowledge and consent of the owners and their agents as lessors . . .'

'That thereafter, while the aforesaid improvements were in progress, . . . Robert J. Moore and Arthur C. Schrader, Jr., with full knowledge of the construction being made on said real estate, negotiated for the purchase thereof; that defendant, Standard Federal Savings and Loan Association, caused an appraisal to be made on said real estate, and affiant disclosed fully to said appraiser who was the agent of Standard Federal Savings and Loan Association, the plans and specifications for the improvements then in progress . . .'

'That prior to their acquisition of ownership of said property, and during the completion of the said improvements, Robert J. Moore and Arthur C. Schrader, Jr. had knowledge of and assented to said improvements; that Standard Federal Savings and Loan Association, through its agent as aforesaid had knowledge of and assented to the making of said improvements prior to accepting a mortgage on said real estate . . .'

Pappas states that the Appellees 'granted express authority', had 'full knowledge', and 'assented to' the construction of the improvements. The Appellees say they did not 'contract with' or 'authorize or direct' and did not 'consent to or authorize' the making of the improvements.

This apparent issue of fact is accentuated by supplemental affidavits of both Moore and Schrader in which they state, 'that at no time did he (they) agree, consent to, or approve any work allegedly done by the Tracy Construction, Inc. . . .' and 'that at no time did affiant have any discussion with one William A. Pappas to the effect that he approved, consented or agreed to pay for any work allegedly done by Tracy Construction, Inc. . . .'

The affidavits of both Moore and Schrader go on to so violently disagree with the statement of Pappas as to charge that his statement 'is slanderous and the statements therein amount to perjury'.

Trial Rule 56(C) prohibits exactly this kind of a "tis and 'tain't' factual issue. Summary judgment should be denied unless 'there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law'.

Another factual issue seems to arise from Moore's statement in his affidavit, 'that said lease did not require that lessee make any improvements of any kind or nature on the leased premises'. Whereas, Pappas in his affidavit states that, 'said lease provided that the lessors granted express authority to the lessee to make improvements, install fixtures, partitions and additional structural changes in said real estate, and assented to the making of such improvements by the lessee'. So the provisions of the lease become pertinent to determine if it provides for the assenting by the lessor to the construction and improvements in such a way that the lessor could be considered to have done something more than merely 'inactively consent'.

In this regard neither party followed the...