Mann v. Schnarr

• Decision Date: 16 November 1950
• Docket Number: No. 28729,28729
• Citation: 228 Ind. 654,95 N.E.2d 138
• Parties: MANN et al. v. SCHNARR.
• Court: Indiana Supreme Court

Page 138

95 N.E.2d 138

228 Ind. 654

MANN et al. v. SCHNARR.

No. 28729.

Supreme Court of Indiana.

Nov. 16, 1950.

Milford M. Miller, Wm. C. Welborn, Evansville, for appellants.

E. Menzies Lindsey, Evansville, for appellee.

EMMERT, Chief Justice.

This is an appeal fom a personal judgment against both appellants in the sum of $7,649.29, which included the principal sum of $6,586.58, interest in the sum of $316.41, and an attorney's fee in the sum of $746.30, for the payment of which real estate of appellants was ordered sold on foreclosure of a mechanics' lien. There was no special finding of facts, nor was there any motion to modify the judgment of the trial court, but since the cause must be retried, items which incidently affect the judgment will be considered. Difficult questions have been presented, and we feel constrained to note that we have not had proper assistance from the briefs in the determination of these matters.

The error assigned here is the overruling of a motion for new trial, which stated as causes therefor that (1) the decision of the court was not sustained by sufficient evidence, (2) was contrary to law, and (3) the recovery was too large.

The complaint in substance alleged that on or about May 1, 1946, appellee and appellants entered into a verbal contract by the terms of which appellee was to furnish all materials and labor for the construction of a brick building on appellants' real estate, in consideration of which appellants promised to pay appellee for materials and labor plus 10% thereof; that certain payments were made from time to time, leaving a balance due in the sum of $6,586.58 on which interest was due; that appellee filed a notice of his intention to hold a mechanics' lien which should be foreclosed to pay said sum plus reasonable attorney's fees. The prayer was for a personal judgment against each appellant for principal, interest and attorney's fees and the foreclosure of the lien.

Appellants' first paragraph of answer substantially denied the allegations of the complaint. The second paragraph of answer in substance alleged that (1) appellant Mann and appellee had an express oral contract for the construction of a brick building for $8,000.00, and (2) an express oral contract for construction of a storage room within the brick building for the sum of $2,500.00, and (3) an express oral contract for the construction of a garage and driveway for the total sum of $1,150.00; and that appellants had overpaid appellee in the sum of $1,051.57 for which recovery was prayed. The reply to this second paragraph of answer denied the allegations, except payment in the sum of $10,020.96.

Appellants also filed a counter-claim setting up the same express oral contracts alleged in their second paragraph of answer, overpayment, and defective workmanship for which recovery was prayed in the sum of $2,500.00. Appellee's answer to the counter- claim in substance admitted the amount paid to him, but denied all other allegations.

The finding of the court was against the appellants on their counter-claim and for the appellee on his complaint. The appellants were brother and sister, and will hereafter sometimes be referred to as such; the appellee was a contractor, who will hereafter at times be so designated. When we consider the evidence most favorable to the prevailing party in the trial court, a personal finding against the brother on the cost plus contract was sustained by sufficient evidence. However, we do not find any fact in evidence or any reasonable inference therefrom which would authorize a personal finding and judgment against the sister, although from the facts in the record and reasonable inferences therefrom the trial court could properly have found that her interest as tenant in common in the real estate was subject to a mechanics' lien.

All the items which might properly be embraced within the provisions of a cost plus contract do not necessarily constitute labor, materials or machinery under the provisions of § 43-701, Burns' 1940 Replacement, which grants the statutory right to a mechanics' lien. A lien cannot exist without the existence of a debt which, under the statute, it secures. The debt must arise out of contract, express or implied, but the right to the lien which the section of the statute grants is one in rem, and a lien may be declared and foreclosed without the recovery of a personal judgment. Peck and Wife v. Hensley, 1863, 21 Ind. 344, 350. Thus, even though a personal judgment against the sister was not sustained by sufficient evidence, it does not follow that the lien did not attach to her interest in the real estate and be subject to foreclosure by a judgment in rem.

The contractor testified that he had a conversation with the brother in which 'I agreed to do the job on the basis of cost, plus 10%. As a stipulated sum, I would not do it. That was agreeable to Mr. Mann.' A couple of weeks later the brother asked the contractor when he would get started and there was further conversation about the basis on which the building was to be constructed and it was stated it was to be 'cost, plus 10%.' Although the complaint stated the agreement was for labor and material plus 10%, the proof did not constitute a fatal variance and on appeal we will regard the complaint amended to conform with the evidence in this respect, Section 2-3231, Burns' 1946 Replacement. Curtis Storage & Trans. Co. v. Rosenberg, 1939, 106 Ind.App. 622, 21 N.E.2d 440; Esch v. Leithesier, 1946, 117 Ind.App. 338, 69 N.E.2d 760. Nor was the recovery on quantum meruit instead of an express contract.

Appellants assert that various items which were included in the finding were not costs within the contract, nor materials or labor under the lien statute. The trial court's finding was based upon a cost plus contract, and the contractor was entitled to recover under this contract for every item which the evidence showed to be an essential cost of construction, but the lien could only secure such items as were labor or material under the lien statute.

The contract was general and did not define costs. We do not have the benefit of many cases or authorities on cost plus contracts. See Graske, War Contract Claims, ch. 4, § 44 et seq.; 9 Williston, Contracts (Rev.Ed.) ch. 4, § 44 et seq.; Shaw v. Beaumont Co., 88 N.J.Eq. 333, 102 A. 151, 2 A.L.R. 126; 27 A.L.R. 48. In the well considered case of Lytle, Campbell & Co. v. Somers, Fitler & Todd Co., 1923, 276 Pa. 409, 120 A. 409, 27 A.L.R. 41, the court construed a construction contract, where the plaintiff was a general contractor principally engaged in repairing, remodeling and altering buildings, with its main office in Pittsburgh, from which it supervised other construction contracts being performed at the same time. The contract under consideration provided for compensation 'on a time and material basis, with ten per cent. (10%) profit as compensation to the contractor, the records of the cost to be kept at all times in such a manner as to be checked and audited by the woners.' The court clearly distinguished between overhead charges and operating costs. The court held that operating charges were items inseparably connected with the productive end and contained 'all elements of labor and materials' and were 'capable of being ascertained by those dealing with' the contractor. On the other hand, overhead, or general expense, which included salaries of executive or administrative officials, interest charges for floating bonds, carrying charges, depreciation, taxes and general office expense could not be allowed as an operating charge in a cost plus contract, in the absence of language bringing it within the term costs. In Lovell v. United States, 1912, 47 Ct.Cl. 361, the court held that the words 'actual necessary cost' for extra work under paragraph 24 of the written contract, included liability insurance of laborers, depreciation of the plant, fixed charges and depreciation of warehouses, under the construction given the contract by the parties before the work was undertaken, although items for loss of board of men which were incurred to prevent a pay increase was not allowable as a cost item. In James Stewart & Co. v. United States, 1924, 59 Ct.Cl. 295, the court held that the employment of expediters, war taxes on freight bills, telegrams, express charges and passenger fares incurred in the purchase of material and performance of the contract were allowable as costs after being agreed to and approved by the officer in charge of the work.

Different considerations are involved in determining whether items properly costs are within the definition of labor or materials of the lien statute. If articles are essentially personal in character, and in the absence of an intention that they are to be attached as permanent fixtures to the real estate, they are not materials under the lien statute. Menzenberger v. American State Bank, Inc., 1935, 101 Ind.App. 600, 198 N.E. 19. However, the work and labor of superintending a construction job enters into the lien. Ferguson v. Despo, 1893, 8 Ind.App. 523, 34 N.E. 575. In Beeson v. Overpeck, 1942, 112 Ind.App. 195, 44 N.E.2d 195, 197, the court reasoned that since "one who labors with body or mind, or both" is a "laborer," an architect who drew plans and specifications and did supervision of the construction, was a laborer under the lien statute. See 40 C.J. 81; 57 C.J.S., Mechanics Liens, § 37. In Wells v. Christian, 1906, 165 Ind. 662, 76 N.E. 518, 519, the court said, concerning a contract to lay a seven inch steam pipe from a boiler room into a public street, and to restore the street to its original condition, that 'hauling of materials to be used in the performance of the work, and hauling away the surplus earth excavated, were incidental matters inseparably connected with the principal undertaking, and constituted items of labor for which a lien may be acquired.' The Court of Appeals of...