Appeal from judgment of Court of Common Pleas, Civil Division, of Allegheny County, April T., 1974, No. 1204, in case of Stringert & Bowers, Inc. v. On-Line Systems, Inc., owner, and McKnight Construction Company, contractor.
C. Daniel Carney, with him Thorp, Reed & Armstrong, for appellant.
James R. Miller, with him David B. Fawcett, Jr., and Dickie, McCamey & Chilcote, for appellees.
Watkins, P. J., Jacobs, Hoffman, Cercone, Price, Van der Voort, and Spaeth, JJ. Opinion by Price, J. Watkins, P. J., dissents. Van der Voort, J., did not participate in the consideration or decision of this case.
[ 236 Pa. Super. Page 198]
The issue in this case is whether an agreement by a subcontractor to waive a mechanics' lien, obtained through the owner's fraud, can validly be asserted to prevent the subcontractor from filing a lien claim. We hold that it cannot be so asserted.
The lower court disposed of this case by sustaining the defendants-appellees' preliminary objections in the nature of a demurrer to plaintiff-appellant's complaint. Thus, for purposes of this appeal, we must accept as true the facts averred in appellant's complaint, and he must be accorded all the inferences reasonably deducible therefrom. Allstate Insurance Co. v. Fioravanti, 451 Pa. 108, 299 A.2d 585 (1973).
Appellant's complaint alleged that appellee On-Line Systems, Inc. (On-Line) engaged appellee McKnight Construction Co. (McKnight) to perform construction work on a building owned by On-Line in Ross Township, Allegheny County. On September 24, 1971, McKnight engaged appellant as a subcontractor. The written contract entered into by McKnight and appellant contained, on page 5, a waiver of lien agreement which was subsequently recorded in the prothonotary's office. Prior to this time, McKnight had submitted to appellant a copy of the proposed contract between McKnight and On-Line, prepared for the purpose of inducing bids from general contractors and subcontractors. This contract contained a clause which would have required McKnight to procure performance and materials bonds, guaranteeing payment to the subcontractors. Appellant averred that he relied on these clauses in signing the waiver of lien agreement.
[ 236 Pa. Super. Page 199]
Appellant further averred that the performance and materials bond clause was fraudulently omitted by McKnight and On-Line in the final contract between them.
Appellant completed his work under the contract on June 16, 1972, and sought payment of $12,000 for labor and materials. When payment was not forthcoming, appellant instituted a complaint on mechanics' lien against On-Line's property. On-Line filed preliminary objections to the complaint in the nature of a demurrer (Pa. R. C. P. No. 1017(b)(4)), setting forth the waiver, and asking that the complaint be dismissed. The lower court sustained the preliminary objections and dismissed the complaint. From this action the appellant appeals.
At this court noted in Malin v. Nuss, 234 Pa. Superior Ct. 259, 262, 338 A.2d 676, 678 (1975), "[a] waiver of lien agreement is basically a contract between two parties in which one party promises not to file a lien against property of the other." The general rule, of course, is that fraud in the inducement renders a contract voidable at the option of the defrauded party. Restatement of Contracts § 476 (1932); Rose v. Rose, 385 Pa. 427, 123 A.2d 693 (1956). One would expect fraud in the inducement, then, to render a waiver of lien agreement voidable at the option of the defrauded party. In Vansciver v. Churchill, 35 Pa. Superior Ct. 212 (1908), this court held that a "covenant against liens"' procured through fraud and deception was void.
In the present case, On-Line contends that fraud cannot be held to void the waiver of lien agreement because the waiver was filed in the prothonotary's office. The purpose of such filing is to give "notice to the world" that a waiver of lien agreement has been executed. On-Line contends that to allow the waiver of liens to be voided would defeat the purpose of filing and giving notice. However, filing the agreement is for the benefit ...