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Martinez v. Knochel





Appeal from the Circuit Court of Logan County; the Hon. John T. McCullough, Judge, presiding.


This appeal involves mechanics' liens that were filed against five acres of land outside Lincoln. The four plaintiffs together owned an undivided one-half interest in the land; the owner of the other one-half interest was defendant Raymond Knochel, the plaintiffs' uncle. On September 10, 1979, Knochel agreed to sell the land to defendant Paul Jackson and his company, Sports Systems, Inc., who planned to construct and operate a sports center on the property. In pursuit of that plan Jackson then procured a contractor to construct the envisioned building. Construction went forward in the last several months of 1979, but the building was never completed. The liens at issue arise from the contractor's agreements with various subcontractors that did work or supplied materials but were not paid.

The plaintiffs sued to cancel the claims against their interests, arguing that they had not authorized or permitted the construction. After hearing testimony, the trial judge found that Knochel had been acting as the plaintiffs' agent and held that the liens were valid against them. The major issue on appeal concerns the scope of Knochel's authority as the plaintiffs' agent. Alternatively, the plaintiffs argue that two of the subcontractors did not perfect their claims, and they also attack the trial court's allowance of various costs. Except for the plaintiffs' objection to the costs, the parties do not dispute the amounts involved here.

The plaintiffs filed their complaint July 3, 1980, seeking to cancel the mechanics' liens that had been filed against their property. The plaintiffs alleged that although they had given Knochel oral approval to sell the five acres for $45,000, they had never signed a contract, had not known about the construction activity until after it was already under way, and had not authorized it. According to the complaint, the contractor had filed a claim against them for $150,000, and this included the claims of 10 subcontractors totaling about $63,000. The plaintiffs later amended the complaint by alleging that they first noticed the construction on the property on October 15, 1979.

Only five of the subcontractors sought to enforce their claims in response to the complaint: Curry Ready Mix, which supplied concrete, Curry Ice & Coal, which supplied and hauled sand and similar materials, Chanen's, which supplied fabricated steel, St. Louis Flexicore, which supplied and installed floor slabs, and Reilly Construction, which pumped concrete. Five other subcontractors did not perfect their claims and were eventually defaulted. Jackson, Sports Systems, Inc., and the general contractor also failed to participate and were eventually defaulted.

After hearing testimony and reviewing the record, the trial judge found that the five active claimants had valid, perfected liens. The court specifically found that Knochel had acted as the plaintiffs' agent and that the plaintiffs and Knochel had permitted the making of the contracts with the lien claimants.

On March 4, 1983, the court entered a proposed decree of foreclosure and sale of the five affected acres. Each of the five successful lien claimants was awarded the amount of its claim, the cost incurred in establishing the claim, and the appropriate amount of interest. Thus, the court ordered the plaintiffs and Knochel to pay Curry Ready Mix $13,223.13, Curry Ice & Coal $9,043.90, Chanen's $6,758.87, St. Louis Flexicore $14,177.36, and Reilly Construction $2,375.08.

Whether the subcontractors' liens are enforceable against the plaintiffs and their interests in the five acres depends upon the circumstances surrounding the sale of the land to Jackson and his company. Testifying at trial were the four plaintiffs, defendant Knochel, and Daniel Bock, the realtor who handled the sale of the property. The testimony centered on the scope of Knochel's authority and the extent of the plaintiffs' knowledge of what was occurring on their property. Few of the underlying facts are in dispute.

The five acres involved here are part of an 80-acre tract of farmland once owned by George and Katherine Knochel. In 1953 Katherine, then a widow, died, leaving the land to her two children, Raymond Knochel and Catherine Knochel Dehner, as tenants in common. Catherine Dehner died in 1977, leaving her interest in the land to her four children, the plaintiffs, in equal shares as tenants in common.

The plaintiffs had moved away from Lincoln before their mother's death. Plaintiff James Dehner testified that the land was for sale even before Catherine Dehner died. The property was listed with Bock, the realtor, who had signs on the property advertising it for sale in 1979. James Dehner also said that Raymond Knochel had the children's oral approval to try to find a buyer; Knochel generally handled all matters concerning the property, including the payment of taxes and the collection of crop rentals. Dehner testified that he and his sisters wanted the five acres cleared of trees and brush before it was sold — it was not tillable — but that they never agreed for construction to proceed before the sale was final. Dehner knew in September 1979 that a potential buyer had been found, and a month later he learned that construction was going ahead on the land. On October 27, 1979, he and his sisters met with attorney John Gehlbach to discuss their mother's estate, which Gelbach was handling; Gehlbach was their uncle's lawyer also. At this meeting the plaintiffs demanded that the construction cease. Early in 1980 Dehner began receiving 90-day notices of liens from various subcontractors.

Plaintiff Kathy Killion testified that in September 1979 Bock told her that the five-acre parcel had been sold to Jackson and that a sports center was going to be built there. Killion visited Lincoln October 5, 1979, to meet with Gehlbach about her mother's estate; Killion and her brother were co-executors. During that visit Gehlbach took her to the construction site, and later that day she met Jackson, the buyer. Killion communicated with her siblings that day, telling them about the construction. Killion acknowledged that she did not demand a halt to the construction until later that month, at the meeting on October 27. Killion also testified that Raymond Knochel had received her oral approval to try to find a buyer for the land and that the land had been advertised for sale since before 1977.

Plaintiff Cynthia Stephens testified that she, her siblings, and Knochel attended two funerals of relatives in Lincoln in August 1979 and on both occasions discussed, in general terms, the sale of the land.

Plaintiff Mary Martinez repeated much of her siblings' testimony. She had known that the land was for sale and that Knochel and Bock were trying to find a buyer for it.

Defendant Raymond Knochel testified that he managed the farm that includes the five acres at issue here. He had been seeking a buyer for the five acres since 1975, when he and Catherine, his sister, decided to try to sell it. He believed that he had the plaintiffs' authority to sell the land, and he ...

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