Case Name: The Baldwin Locomotive Works v. Edward Hines Lumber Company et al.
Court: Supreme Court of Indiana
Jurisdiction: Indiana
Decision Date: 1919-12-18
Citations: 189 Ind. 189
Docket Number: No. 22,922
Parties: The Baldwin Locomotive Works v. Edward Hines Lumber Company et al.
Judges: Lairy, J., dissents to the overruling of the petition for rehearing.
Reporter: Indiana Reports
Volume: 189
Pages: 189–201

Head Matter:
The Baldwin Locomotive Works v. Edward Hines Lumber Company et al.
[No. 22,922.
Filed December 18, 1919.
Rehearing denied March 12, 1920.]
1. Mechanics’ Liens. — Waiver by Contract. — A direct and positive covenant in the principal contract against liens precludes all who work under, or furnish material to, the principal contractor, since the authority of persons so working and of materialmen depends upon the contract, and they are bound to know what is in it affecting the statutory right of lien. pp. 191, 192.
2. Mechanics’ Liens. — Waiver of Right. — Public PoUey. — Positive stipulations in the principal contract against mechanics’ liens do not conflict with any rule of public policy, p. 193.
3. Mechanics’ Liens. — Waiver.—Pleading.—Waiver of the right to a mechanics’ lien, being in the nature of new matter, should be specially pleaded, p. 193.
4. Mechanics’ Liens. — Contract.—Inconsistent Provisions as to Waiver. — A provision in the principal contract permitting the owner to retain payment from the principal contractor until liens are discharged, is not sufficient to overcome a direct and positive covenant against liens, p. 194.
From Lake Superior Court; A. D. Bartholomew, Special Judge.
Action by the Edward Hines Lumber Company and others against the Baldwin Locomotive Works. From a judgment for the plaintiffs, the defendant appeals.
Reversed.
Bomberger, Peters & Morthland, Harvey J. Curtis and Oliver Starr, for appellant.
John E. Crawford, George E. Hershman, W. B. Van Horn, Frank B. Pattee, Leander J. Monks, L. V. Cravens, Knapp & Campbell, John R. Cochran, and Rabb, Mahoney $ Fansler, for appellees.

Opinion:
Townsend, C. J.
Appellees, materialmen, brought suit against appellant, owner, to enforce mechanics' liens. The issues were formed by complaint of the first appellee named and cross-complaints of the other three, which complaint and cross-complaints appellant answered by general denial and a second paragraph of special answer, which set up the contract between appellant and appellant's contractor. • The court sustained a demurrer to each paragraph of special answer, which ruling appellant assigns as error. The trial resulted in a judgment in favor of each of the appellees and a foreclosure of liens.
The contract, made a part of the special answer, contained the following stipulation:
"No contractor, subcontractor, materialman, or other person furnishing labor or materials for the work herein provided for, or for any alterations or additions thereto, shall have any right to file any mechanic's lien, or claim of any sort or kind against the premises, or any part thereof."
This presents the question of whether a direct and positive covenant in the principal contract precludes appellees from having a lien under the statute. While the lien arises independent of contract, it does not arise in spite of contract; nor does it arise where there is no contractual relation, mediate or immediate, between the person claiming the lien and the owner. The owner must consent to have the work done, or the material furnished, before the lienor may invoke the statute. We can conceive of no case in which this consent does not arise from contract, express or implied, mediate or immediate. Therefore we make no distinction between direct and derivative right conferred by the statute. (The statute in this state is one of the so-called direct.) If there must be authority from the owner and he who seeks to enforce a lien must show that he had the consent of the owner directly or indirectly to furnish the material or perform the labor on the owner's premises before he may have a lien, then the question is, Can the owner so curtail the authority of his contractor as to limit the right of all of those who touch the premises by virtue of the authority given the contractor, that their rights under the statute may be cut off.
The better rule seems to be that where there is a direct and positive covenant in the principal contract against liens, it precludes all who work under, or furnish material to, the principal contractor. Schroeder v. Galland (1890), 134 Pa. St. 277, 19 Atl. 632, 7 L. R. A. 711, 19 Am. St. 691; Geo. B. Swift Co. v. Dolle (1906), 39 Ind. App. 653, 80 N. E. 678; Carson, etc., Co. v. Cleveland, etc., R. Co. (1914), 57 Ind. App. 357, 105 N. E. 503. The cases which seem to be at variance to this and are so cited sometimes, when examined, disclose that there was not a direct and positive covenant against liens, but some stipulation by which the contractor agreed to indemnify the owner against liens—Whittier v. Wilbur (1874), 48 Cal. 175; Jarvis v. State Bank (1896), 22 Colo. 309, 45 Pac. 505, 55 Am. St. 129—or to permit the owner to retain payment until liens were discharged. Evans v. Grogan (1893), 153 Pa. St. 121, 25 Atl. 804; Taylor v. Murphy (1892), 148 Pa. St. 337, 23 Atl. 1134, 33 Am. St. 825.
All decisions concede that a subcontractor or materialman could not furnish material or help to erect a structure different from that provided for in the principal contract, and still be permitted to enforce a lien. In other words, the decided cases are, so far as the nature of the structure is concerned, that those who come in under the principal contract are bound to know what is in it. If they are bound to look to the principal contract for this authority, then it is difficult to see why they should not be required to discover all stipulations in the contract which limit the authority of the principal contractor and those who do anything under him.
In the instant case, even though the court sustained a demurrer to the several paragraphs of special answer, this contract was admitted in evidence as a part of appellees' proof. This was done on the very principle that we have previously stated: that it was incumbent upon these material-men to show a contractual relation between the owner and the contractor with whom these materialmen dealt. That is, if was necessary for them to establish that the owner consented either directly or indirectly to their furnishing the material for the premises in question. It is rather anomalous to say that these materialmen had to look to some contractual relation for authority, and that they are bound by certain stipulations in the contract which affect them, as to the kind and quality of the structure, and are not bound by others which affect their statutory right of lien.
That no public policy is involved is shown by the fact that courts of last resort in four states have declared statutes void which attempted to nullify stipulations against liens. Palmer v. Tingle (1896), 55 Ohio St. 423, 45 N. E. 313; Waters v. Wolf, Exr. (1894), 162 Pa. St. 153, 29 Atl. 646, 42 Am. St. 815; Kelly v. Johnson (1911), 251 Ill. 135, 95 N. E. 1068, 36 L. R. A. (N. S.) 573, and note; Spry Lumber Co. v. Sault, etc., Trust Co. (1889), 77 Mich. 199, 43 N. W. 778, 6 L. R. A. 204, 18 Am. St. 396.
We hold that the stipulation in the contract in the instant case precludes appellees from having' a lien under the statute, and we hold that the court erred in sustaining a demurrer to these paragraphs of special answer.
It is insisted by the appellees that appellant was not harmed by this ruling because the contract was admissible under the general denial. We hold that waiver in a case like this is similar to estoppel, and should be specially pleaded. - It is in the nature of new matter and falls within the rule laid down by Mr. Pomeroy, cited in Vol. 1 of Works' Practice, p. 377, as follows: "Whatever fact,, if proved, would not thus tend to contradict some allegation of the plaintiff's first pleading, but would tend to establish some circumstance, transaction or conclu sion of fact not inconsistent with the truth of all of those allegations, is new matter. ' '
It is also insisted by appellees that another provision in the contract, by which the owner was permitted to retain payment from his principal contractor until liens were discharged, abrogates the provision heretofore set out. It is true that this
provision, standing alone, might amount to the recognition of the right of a lien, but it is not sufficient to overthrow a direct and positive covenant against liens. Morris v. Ross (1898), 184 Pa. St. 241, 38 Atl. 1084; Commonwealth, etc., Trust Oo. v. Ellis (1899), 192 Pa. St. 321, 43 Atl. 1034, 73 Am. St. 816.
(We are fully cognizant of North v. Clark [1893], 85 Me. 357, 27 Atl. 252, and the cases in other states which follow it.)
The judgment of the trial court is reversed, with instructions to overrule the demurrers to each of the paragraphs of special answer.
Lairy, J., dissents to the overruling of the petition for rehearing.