Court Opinion

ID: 9719254
Source: CourtListenerOpinion
Date Created: 2023-08-26 07:46:37.40255+00
Date Added: 2024-06-11T18:24:05.496697
License: Public Domain

DISSENTING OPINION
Achor, J.
The evidence in the above case most favorable to the appellees is that on November 3, 1948 the appellees Hastings entered into a no-lien contract with one John Oldenkamp, under,the terms of which the latter was to build a house, for them in the city of Wabash. The record shows that the appellees Hastings recorded their no-lien contract' but did not post a sign on the property as required by the no-lien statute. Burns’ 1942 Replacement (1949 Supp.), §43-701.
*360The building materials used in the building, which are the subject of this action, were furnished by appellant. The appellants • maintained a building supply business and lumber yard in the city of Wabash. Immediately prior to and during part of the time the materials were furnished by appellant, Dean Krom was employed by appellant as general manager of the business. He was appellant’s only business representative in Wabash. As such manager he was responsible for “sales, collections, overseeing the yard and equipment, manager of the office and supervising the people in the office.”
On November 5, 1948, immediately prior to the furnishing of any materials by appellant to Oldenkamp, the contractor, appellees Hastings and Krom, on behalf of appellant, discussed the matter of payment for materials and the filing of a lien on appellees’ property, by reason of the materials furnished. The testimony as to their conversation is as follows:
A. “Í went from here to Wilkinson Lumber Compány, and told Dean Krom I had a no-lien contract to build a house in Bonbrook with John Oldenkamp, and I had understood from Mr. Oldenkamp that he was to buy part of his supplies from the Wilkinson Lumber Company. I told Dean Krom that I would appreciate it if he would let me know if John Oldenkamp didn’t keep his bills paid up as I understood he didn’t have very much money, to which Dean answered, ‘You need have no fear because we have a credit arrangement with John Oldenkamp whereby if he does not pay, we shut off his credit.’ ”
Q. “Did he ' say anything further about your proceeding and giving it-no further attention?”
■A. “He said we had nothing to worry about as :far as payment of the material between the lumber company and John Oldenkamp as he would take care of that.”
A. “If he (Oldenkamp) didn’t pay, would let us know.”
*361The following question was asked Mr. Krom, with reference to the coversation with the Hastings’:
Q. “Did they at any time say anything to you about not wanting any liens filed against the house that was being built?”
A. “They said they wanted to make sure that their house had no liens filed against it.”
Thereafter, appellant furnished the contractor, Oldenkamp, materials for appellees’ house. On December 7, 1948, appellees paid Oldenkamp $2,000.00 for labor and materials . furnished pursuant to this contract. The latter part of December, while appellees were at appellant’s place of business, they asked Mr. Krom, “How is everything coming with the house? Did you take care of everything ?” Mr. Krom said that he did. Thereafter, between December 7, 1948 and May 17, 1949, appellees paid Oldenkamp additional sums totaling $9,500.00. On May 17, 1949, while appellees were again at appellant’s place of business, appellees “remarked to Mr. Hamilton (successor to Mr. Krom as manager of appellant’s business) ‘has Oldenkamp taken care of his bills to date?’ to which Hamilton said ‘he has not paid a dollar.’”
Appellee, LeRoy Hastings, testified that “After I learned of this situation, I paid nothing further to Oldenkamp.” Thereafter appellant filed the mechanic’s lien which is the basis of this action.
Appellee, by way of affirmative answer, alleged the above facts in avoidance. The finding and judgment of the court was for the appellees.
Appellant’s motion for a new trial asserts that the “decision” of the court was not sustained by sufficient evidence and was contrary to law. Appellant contends first that appellees’ answer was neither proper in form nor sufficient in allegation of fact to constitute either a *362waiver or estoppel. Appellees only contend that it contains sufficient allegation of fact to constitute estoppel.
Appellees’. answer does not specifically denominate it as an answer of equitable estoppel. However, as stated in 31 C. J. S., page 449, §156:
“The essential facts constituting estoppel or waiver must be pleaded, but it is not necessary that estoppel or waiver be specifically designated as such in the pleading.”
As to appellant’s contention that the allegations of fact are insufficient to constitute equitable estoppel, appellant made no objection thereto by demurrer. Therefore, the objection is deemed waived. §2-1014, Burns’ 1946 Replacement; Atkinson et al. v. Lindsey (1872), 39 Ind. 296. Furthermore, there being no objection to the evidence before us, the complaint is considered amended to conform to the evidence.
Appellant contends secondly that its manager, Dean Krom, “had no authority to defeat appellant’s lien by waiver, estoppel or otherwise.” The authority granted agents and officers of corporations generally is stated in 13 Am. Jur., 896, §930 :
“The officers or agents of a corporation have only such power to release, settle, or compromise claims owing to the corporation as is conferred upon them expressly or impliedly, . . . The authority, however, to release or compromise corporate claims may be inferred from the manner in which the officer or agent has been permitted to conduct the business of the corporation. Upon similar principle, a corporation may be bound by its duly authorized agent acting within the real or apparent scope of his authority, and the agent may waive forfeitures and estop the corporation, so as to prevent it from setting up a defense tohich would operate as a fraud on the other contracting parties.” (Our italics.)
*363Since appellees do not contend that Krom’s actions constituted a waiver, it is not necessary to consider his authority or lack of authority to waive his employer’s right to a lien by contract, release, or any' other formal legal act. We are only required to determine whether or not, as the manager of the appellant company, he was held out by his superiors as having authority in the sale of merchandise and the collection of accounts, to limit or extend credit to such an extent as to (1) adopt a policy of shutting off the credit of a general contractor if he does not pay; (2) to assure the owner that such a policy would be continued as between the materialman, the contractor, and the owner; and (3) agree to look solely to the credit of the contractor for payment of materials purchased by him.
There was evidence before the court from which reasonable men might conclude that Krom had such authority or was held out by appellant as having such authority. Therefore, this court cannot say that Krom did not have authority to make the representations in evidence and to bind his principal to the consequences thereof.
Appellant contends thirdly that the facts in evidence do not support the necessary elements of equitable estoppel. Upon this subject 31 C. J. S., Estoppel, §67, p. 254 states as follows:
“In order to constitute an equitable estoppel or estoppel in pais' there müst exist a false representation or concealment of material facts; it must have been made with knowledge, actual or constructive, of the facts; the party to whom it was made must have been without knowledge or the means of knowledge of the real facts; it must have been made with the intention that it should be acted on; and the party to whom it was made must have relied on or acted on it to his prejudice.”
*364The doctrine of equitable estoppel as stated, with some variance from the above statement, by this court as follows in the case of Johnson v. Spencer (1912), 49 Ind. App. 166, 96 N. E. 1041:
“An estoppel in pais arises when by the fault of one person another has been induced, ignorantly or innocently, to change his position for the worse. Its existence is determined by the acts, knowledge and conduct of both parties.” (Our italics.)
Appellant contends that there was no such “false representation of material facts” (31 C. J. S., 254, §67) or “fault” (Johnson v. Spencer, supra) on the part of appellant sufficient to constitute estoppel. Upon this issue appellant has argued and cited numerous authorities to the effect that oral notice of a no-lien contract is not sufficient (Kendall Lumber & Coal Co. v. Roman (1950), 120 Ind. App. 368, 91 N. E. 2d 187), and that reliance by the materialman “primarily upon the credit of the contractor does thereby waive, forfeit or estop his right to a lien.” Johnson v. Spencer, supra; Clark et al. v. Huey et al. (1895), 12 Ind. App. 224, 40 N. E. 152.
The above statements of law are correct but are not germain to the facts before us. We do not have a circumstance where there is merely an oral notice of á no-lien contract to the materialman or where the materialman merely relies primarily upon the credit of the contractor. In the case before us there is evidence to support the conclusion that appellant affirmatively committed himself to rely solely upon the credit of the contractor; that “as far as payment of the material between the lumber company and Oldenkamp (was concerned) he (Krom) would take care of that.” Such an affirmative representation was not present in the cases cited, and it is this representation which is the basis of estoppel in the case,
*365It is strongly contended further that since mechanic’s lien statutes are creatures of statute and not of contract, they must be strictly construed; that mechanic’s liens can only be avoided by compliance with the statute and that any estoppel in avoidance of such a lien must be related to one of the acts omitted by the owner as required by the no-lien statute; that the only failure of compliance on the part of appellee was in not posting the statutory notice on the property and that, therefore, any false representation or inducement on the part of appellant to be material in this particular case must have been such as to have prevented appellee from posting the required notice.
I do not concur in this contention. I cannot conceive that the legislature intended that the no-lien statute be used as a straight-jacket with which to shackel an innocent property owner against the “legalized rape” of an “unprincipled suitor” who, by deceit or false representations, has lured the owner into a false sense of security.
The no-lien statute merely establishes statutory measures by which mechanic’s liens may be avoided. It does not presume to revoke the common law doctrine or equitable estoppel in mechanic’s lien cases, as affirmed in the cases of Clark et al. v. Huey et al. (1895), 12 Ind. App. 224, 40 N. E. 152 and Johnson v. Spencer, supra.
Whether the conduct of the materialman, as related to that of the owner, was outside or partially within the veil of the no-lien statute, was not a controlling factor in this case but was only a material circumstance in determining whether or not the conduct of the material-man under all the existing circumstances was sufficient to constitute an estoppel. The trial court, on the basis of the evidence before it, found this fact favorably to *366the appellees and it is not within the province of this court to disturb this finding.
It is contended further that the fault or fraud of the appellant concerned itself only with the future conduct of the appellant; that the misrepresentations were not as to existing facts and, therefore, were not sufficient to constitute an estoppel.
In order to constitute fraud, the fraudulent representation must be as to an existing fact. It is true that a fraudulent act which misleads another to his damage may be asserted in estoppel. However, equitable estoppel is not necessarily predicated upon fraud. As stated in 155 A. L. R. 350, §62:
“The doctrine of equitable estoppel or estoppel in pais is said to be founded upon principles of morality and fair dealing and to be intended to sub-serve the ends of justice. It always presupposes error on one side and fault or fraud upon the other and some consequent change of position of which it would be inequitable for the party against whom the doctrine is asserted to take advantage . . .” (Our italics.)
And as heretofore stated in the case of Johnson v. Spencer, supra:
“An estoppel in pais arises when by the fault of one person another has been induced, ignorantly or innocently, to change his position for the worse. Its existence is determined by the acts, knowledge and conduct of both parties.” (Our italics.)
The case of Roose v. McDonald (1864), 23 Ind. 157, 161, is cited as supporting appellant’s position. The statement in that case is as follows:
“. . . The declarations and statements complained of were as to the future conduct of the plaintiff, and not in relation to any existing fact at the time . . .”
*367In the above case the court stated that representations which relate only to future conduct are not sufficient to constitute estoppel. However, that case, when applied to the facts in the case at bar, would seem to support a conclusion opposite to that asserted by appellant. The necessary conclusion from the statement is that although the declarations and statements are as to future conduct, if they are related to existing facts, they are sufficient. In the case at bar, we have a representation as to future conduct (a positive assurance of future payment from Oldenkamp or the termination of credit to him) directly related to and predicated upon (an established credit arrangement with Oldenkamp) an existing fact. The character of Krom’s representations was sufficient upon this issue to constitute estoppel.
Appellant contends further that the appellees failed in their burden of proof to show that they relied upon the statements made by Krom. Upon this issue they contend first, that appellees’ damage resulted from their contract with Oldenkamp, which preceded their conversation with Krom, and not from any reliance upon subsequent statements by Krom. Appellant has cited Johnson v. Spencer, supra, as supporting this contention. However, the facts in that case are entirely different on this point. Further argument upon this point seems so obviously falacious as not to justify further discussion regarding it.
Appellant also contends, upon the issue of reliance upon the representations of Krom, that there is no evidence supporting the fact of such a reliance. The record does not disclose any direct evidence upon this point. However, the court was not bound to direct evidence. He was entitled to also consider circumstantial evidence and all reasonable inferences which might be drawn therefrom.
*368It appears from the evidence that appellees made payment to Oldenkamp under their contract just as Krom must have inferred that they would and as he told them they could, because “as far as payment of the material between the lumber company.and John Oldenkamp (was concerned) he would take care of that” and would let them know if he did not. Appellees made a payment of $2,000.00 on December 7, 1948. The evidence further discloses that the latter part of that month the appellees asked Mr. Krom: “How is everything coming on the house ? Did you take care of everything?” to which “Mr. Krom said he did.” As a matter of fact, Oldenkamp “had not paid a dollar” for the materials in the house at that or at any time.
In the light of the above evidence, both as to statements made by and conduct of the parties, it cannot be said that there was no evidence from which reasonable inferences might be drawn in support of the finding of the court that the appellees relied upon the representations made by appellant, (1) that appellant could and would look solely to Oldenkamp for payment and, (2) that appellees could make payment directly to Oldenkamp as provided in their contract, and that in doing so they “had nothing to worry about.”
It would appear that the acts and representations of the appellant, as stated above, are such that upon “principles of morality and fair dealing” the ends of equity and justice were served by denying a second liability on the part of the appellees for the obligation sought to be recovered, that the doctrine of equitable estoppel was properly applied by the trial court and that its judgment should be affirmed.
Note. — Reported in 103 N. E. 2d 451.