Potter v. Cline

¶1Opinion concurring in part, dissenting in part

¶2While I concur in the majority opinion as to Parts I and III, I respectfully dissent from Part II thereof and from that portion of the remand order which permits modification of the judgment with respect to the order of sale. As does the majority, I would reverse the judgment below as it affects J. LeRoy Potter and Robert F. Potter and would affirm the personal judgment against Potter Material Service, Inc. I would however reverse the judgment insofar as it orders a sale of real estate, and would order the trial court to vacate and set aside that order of sale.

¶3The portion of the judgment ordering sale of the real estate is as follows:

“IT IS THEREFORE CONSIDERED AND ADJUDGED by the Court that plaintiff have and recover of defendants the sum of $3,934.50 and court costs and that the real estate described in plaintiff’s complaint, to-wit:

[description contained in decree excepts by metes and bounds a portion not excepted in plaintiff’s complaint]1

or so much thereof as may be necessary for the_ purpose, be sold by the sheriff as lands are sold on execution, without appraisement, and the proceeds applied to the payment of his judgment and costs and that the balance be paid to the defendants.”

¶4The order of sale is not restricted to satisfaction of the lien as against such interest as the corporate defendant, Potter Material Service, Inc., may hold. It purely and simply orders sale of the real estate to satisfy a lien in the amount *366of $3,934.50 and that the balance be paid to the defendants. As held by the majority, the individual defendants are not shown to be liable for the amount of the judgment nor are they shown to hold any interest in the real estate to which a lien might attach. The interest of the corporate defendant may or may not be equal to the $3,934.50 judgment amount (the record gives us no assistance in this regard), but the majority opinion would purportedly cure the defective sale order by permitting modification to limit the sale to such interest, if any, owned by Potter Material Service, Inc.

¶5For reasons herein set forth, I believe that the order was erroneous and is unmodifiable and that it must therefore be vacated and held for naught.

¶6The majority poses the question in terms of whether proof of a lienable interest, i.e., “ownership”, is essential to a judgment of foreclosure.2 This posture leads my brothers to then rationalize a negative answer to the question by stating that such a foreclosure is not reversible since all that can be sold upon foreclosure is the interest, if any, held by the judgment defendant; and that if such defendant has no lien-able interest at all, the sole adverse effect is upon the sale purchaser who acquires nothing.

¶7This reasoning ignores a fundamental proposition of lien law, i.e., that a lien may only attach to the extent that the defendant holds a lienable interest. IC 1971, 32-8-3-1, Ind. Ann. Stat. §43-701 (Burns 1965) and IC 1971, 32-8-3-2, Ind. Ann. Stat. §43-702 (Burns 1965) ; City of Portland v. Indpls. Mortar & Fuel Co. (1914), 57 Ind. App. 166, 106 N.E. 735. If such interest is not shown by the evidence, no lien may be held to attach and the question of foreclosure and of a sale to satisfy a lien is never reached. It seems *367clear to me, therefore, that if no lien is shown to have attached to the real estate, any foreclosure decree ordering a sale of the property is erroneous and must be set aside. That conclusion is compelled not only by the limitations of the lien statute itself, but by the following language from Courtney v. Luce (1936), 101 Ind. App. 622, 626, 200 N.E. 501:

“A person in possession of real estate under a contract of purchase cannot defeat or cloud the vendor’s title by suffering a mechanic’s lien to be filed against such real estate for improvements made thereon by him. In order that a lien may attach to the real estate it is necessary that such materials should be furnished or labor performed by the authority and direction of the owner and something more than mere inactive consent on the part of such owner is necessary in order that such lien may be acquired against him. Holland v. Farrier (1920), 75 Ind. App. 368, 130 N.E. 323; Peoples Savings, Loan and Building Assn. v. Spears et al. (1888), 115 Ind. 297, 301, 17 N.E. 470; Rush v. Pittman (1904), 34 Ind. App. 159, 162, 72 N.E. 473; Toner v. Whybrew (1911), 50 Ind. App. 387, 98 N.E. 450; Robert Hixon Lumber Co. v. Rowe (1925), 83 Ind. App. 508, 149 N.E. 92.” (Emphasis supplied)

¶8I am in disagreement, therefore, with the dictum of the majority opinion which would permit foreclosure without proof by plaintiff that the defendant owns some lienable interest in the real estate.

¶9The remedies afforded by the Mechanics Lien Statute are in derogation of the common law and those who seek to avail themselves of the benefits of the law must strictly prove themselves to be within its scope and intendment. Saint Joseph’s College v. Morrison, Inc. (1973), 158 Ind. App. 272, 302 N.E.2d 865. An essential element of such proof is that the defendant against whom foreclosure is sought, holds an interest in the described real estate to which the asserted lien may attach. Contrary to my brothers, I read Littler v. Friend (1906), 167 Ind. 36, 78 N.E. 238 and Littler v. Robinson (1906), 38 Ind. App. 104, 77 N.E. 1145, to require such proof.

¶10*368The majority somewhat cursorily opines that an ill-considered order of sale based upon little more than proof of a debt against someone, even if a total stranger to the real estate, for labor or materials supplied, is not subject to direct appellate attack since the owner or owners cannot be harmed by such sale order. To be sure, such a decree can not divest the title of those not parties to the foreclosure. This truism should not, however, be viewed as justification for an erroneous foreclosure judgment and order of sale. Such a decree most certainly tends to cloud title and puts a true owner to the burden or expense of prosecuting or defending a quiet title action as in Krotz v. A. R. Beck Lumber Co. (1905), 34 Ind. App. 577, 73 N.E. 273; to enjoin the foreclosure sale as in Martin v. Berry (1902), 159 Ind. 566, 64 N.E. 912; to seek recovery of possession as in Marvin v. Taylor (1866), 27 Ind. 73; or to defend against a possessory action as in Holland v. Jones (1857), 9 Ind. 495. I believe such a burden to be onerous and unjustified, particularly when, as here, a contention is made upon direct appeal attacking, upon that basis, the validity of the order of sale. If the order is defective, it should be corrected at the first appellate opportunity. We should not avoid the question upon the reasoning that it is probable that no one will be prejudiced by such an order. Rather we should recognize the order’s invalidity and thereby avoid possible, if not probable, future, unnecessary litigation.

¶11More important to the result of this cause on appeal than my disaffection with the dictum set forth in the majority opinion, is my disagreement with the conclusion of my brothers that the evidence is sufficient to establish a lienable interest held by Potter Material Service, Inc.

¶12In my estimation, the evidence of record and as recited by the majority falls far short of establishing, even prima facie, ownership of a lienable interest in Potter Material Service, Inc. The majority relies upon speculation and upon *369the premise that one exercising substantial control and domain over real estate must necessarily own an interest therein.

¶13I do not believe such inference to be reasonable; nor do I believe that Merritt v. Pearson (1881), 76 Ind. 44, Littler v. Friend, supra,or Littler v. Robinson, supra,justifies such inference.

¶14In Merritt, the defendant himself testified that he was the owner of the real estate involved in the lien foreclosure and in both Littler cases, documentary evidence in the form of the real estate transfer records of the county auditor were admitted which showed Littler as owner of record. The testimony of a Potter Material Service employee to the effect that he had been so employed “from when they bought the place” is dramatically and substantially different not only in degree but in kind from that present in Merrittand the Littler cases. See Windfall National Gas, Mining & Oil Co. v. Roe (1908), 41 Ind. App. 687, 84 N.E. 996.

¶15The speculative exercise in which the majority indulges does violence to the law of real estate titles and, if not rendering our title recordation statutes virtually meaningless, jeopardizes the security of titles and interests so recorded. As stated by Judge Hoffman, concurring in William F. Steck Co. v. Springfield (1972), 151 Ind. App. 671, 281 N.E.2d 530 at 536:

“The mechanics’ lien statute depends upon the public records to give it vitality. A no-lien contract is only effective when filed of record. A lien must be timely filed of record to give it existence. Notice of lien is required to be mailed to the latest address of the owner as shown by the public records. The description of real estate to be placed upon the notice of lien is that shown by the public records. The entire mechanics’ lien statute demonstrates the legislative intent that any person who wishes to acquire a lien upon any property, must depend upon the public records when acquiring or enforcing their mechanic’s lien.”

¶16Since the court below made no determination with respect to the extent of Potter Material Service, Inc.’s interest in the *370real estate, if any, the order of sale which did not restrict the interest or interest to be sold was unlawfully and erroneously extensive. By its unrestricted breadth, the order of sale included all interests in the real estate described. It included not only the undefined (at least by evidence of record) interest of Potter Material Service, Inc.,3 but the fee simple title as well. It included real estate in which the corporation may well have had no interest whatever.4 It is my view of the law, that such order was therefore erroneous and should be reversed. It is impossible of meaningful and proper modification pursuant to the evidence of record.

¶17The remand order of the majority herein would have the trial court modify its order of sale “to expressly state that only the interest of the Potter Material Service, Inc., if any, subject to the lien is being ordered sold.” I wholly fail to divine from the record any evidence upon which the trial court could determine and delineate the nature or extent of the interest to be sold. It is not enough that the trial court order sold defendant’s interest, “if there be any.” It must first determine that there is a lienable interest owned by defendant to which plaintiff’s lien may attach. In order to make that requisite initial determination, there must be evidence of the nature and extent of the interest held. As heretofore stated, I do not believe that there is evidence from which the court can reasonably make such determination and for that reason, I consider the order of sale unmodifiable and would order it vacated.

¶18Note. — Reported at 316 N.E.2d 422.