Case Title: Horseshoe Estates v. 2M Co., Inc.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1986-01-31T00:00:00Z

Document:
Horseshoe Estates v. 2M Co., Inc.1986 WY 27713 P.2d 776Case Number: 84-203Decided: 01/31/1986Supreme Court of Wyoming
HORSESHOE ESTATES, A 
WYOMING 
PARTNERSHIP, APPELLANT (DEFENDANT), COUNTRY CLUB OF THE BIG HORNS, A WYOMING 
CORPORATION, RICHARD E. SHANOR, (DEFENDANTS), 

 
 
v. 

 
 
2M COMPANY, INC., 
APPELLEE (PLAINTIFF).

 
 
Appeal from the District 
Court, SheridanCounty, Leonard McEwan, 
J.

 
 
 
 
Representing 
Appellant:

Dan B. Riggs and E. 
Michael Weber of Lonabaugh & Riggs, Sheridan.

 
 
Representing 
Appellee:

S.B. Freeman, III of 
McCarty, Bormuth & Freeman, Cody and Rodd A. Hamman of Calton & Hamman, 
P.C., Billings, Mont.

 
 
Before THOMAS, C.J., 
ROSE,* ROONEY** and CARDINE, JJ., and 
GUTHRIE, J., Retired.

* Retired November 1, 
1985.

 
 
** Retired November 30, 
1985.

 
 

GUTHRIE, Justice, 
Retired.

 
 

[¶1.]     2M Company, Inc. 
commenced these proceedings by filing its complaint and praying for the 
foreclosure of a mechanic's lien naming Country Club of the Big Horns, Richard 
E. Shanor, and Horseshoe Estates as defendants. During the course of the 
proceedings in this action, the trial court entered a final judgment against 
Country Club of the Big Horns and Richard E. Shanor, jointly and severally, in 
the sum of $195,113.92 as of January 10, 1984, and against Horseshoe Estates, a 
Wyoming partnership, foreclosing the mechanic's lien, and awarded attorney's 
fees in the sum of $1,500 and $292.50 previously levied by the court, along with 
the costs.

 
 

[¶2.]     Neither Country Club of 
the Big Horns nor Richard E. Shanor has appealed, and the judgment is in full 
force and effect as against them. Horseshoe Estates is the sole appellant and 
seeks reversal of this judgment insofar as it affected Horseshoe Estates and 
allows foreclosure of the lien.

 
 

[¶3.]     In questioning the 
propriety of this judgment and seeking its reversal, Horseshoe Estates makes the 
following points, which it presents for review:

 
 
"1. Is the supplier of 
construction materials for a golf course entitled to a money judgment against 
the owner of the golf course property on a theory of unjust enrichment when the 
supplier has not shown the amount of alleged `unjust enrichment' to the golf 
course owner?

 
 
"a. Is proof of work done 
on property, or goods delivered, competent evidence to establish an amount of 
unjust enrichment?

 
 
"2. Did the trial Court 
error [sic] in granting judgment upon the theory of unjust enrichment in the 
complete absence of evidence of misconduct, fault or undue advantage on the part 
of Appellant?

 
 
"3. Is the supplier of 
construction materials for a golf course entitled to foreclosure upon a 
materialman's lien when the lien statement fails to provide a legal description 
as required by W.S. § 29-1-301(b)(xii)?"

 
 
Our disposal of this 
matter is necessarily and properly limited to the area of the appellant's claim 
and the contentions which it submits to this Court.

 
 

[¶4.]     The genesis of the 
dispute lies in a contract which was entered into between 2M Company, Inc. and 
Richard E. Shanor, as an individual, and Country Club of the Big Horns, a 
Wyoming 
corporation, which contract was executed on behalf of the corporation by Richard 
E. Shanor and signed by said Shanor, apparently as guarantor. This contract 
generally required 2M Company, Inc. to provide "all sprinkler system design 
services" and all the "necessary materials" for "an 18 hole golf 
course."

 
 

[¶5.]     The contract describes 
Richard E. Shanor and Country Club of the Big Horns as "the Owner" and does not 
mention Horseshoe Estates which was in fact the owner of the premises upon which 
the sprinkler system was installed. Horseshoe Estates is a partnership 
consisting of Richard E. Shanor and Richard L. Shanor, his son. Richard E. 
Shanor conducted all the negotiations with 2M Company, Inc. and was on the 
property inspecting and supervising the work during the time it was being done. 
There is no evidence of any participation by Richard L. Shanor. The contract was 
prepared and submitted by Richard E. Shanor after 2M Company, Inc. had submitted 
a suggested form of its own. A financial statement of Richard E. Shanor and Jean 
E. Shanor, his wife, dated January 15, 1982, and submitted to 2M Company, Inc. 
in connection with the dealings herein shows him to be the owner of the 
Horseshoe Ranch and lists Horseshoe Estates contracts as an 
asset.

 
 
MEASURE OF 
COMPENSATION

 
 

[¶6.]     Preliminary to a 
detailed discussion of the applicable measure of compensation in this contract 
resultant from the application of the theory of unjust enrichment, and 
particularly in view of appellant's contention that the proper measure of 
recovery in cases where labor and materials are expended for improvements on 
real estate is "clearly the difference between the market value of the realty 
before and after the improvements," an examination of the possible results of 
the application of such a rule will be made. These demonstrate that it could 
have undesirable results, possibly in this and all other such 
cases.

 
 

[¶7.]     It is entirely 
conceivable that a partially completed golf course might reduce the value of the 
lands, upon which it was constructed, for agriculture or other use to which it 
had formerly been placed and resultant from the construction of a golf course 
thereon, and that until it was satisfactorily completed as such golf course, it 
would have no value for use as such course. If this resulted in a reduction in 
the value rather than enhancement, should the supplier here, because of these 
factors entirely beyond his control, be deprived of any compensation for the 
materials which he furnished? The writer thinks not.

 
 

[¶8.]     Viewed from a contrary 
viewpoint, would appellant be contending here for the application of this rule 
if the enhancement in value of the premises, by virtue of it having created a 
popular and busy golf course, far exceeded the value of the materials or labor 
furnished? It is suggested here that this would not be the contention of the 
appellant if this were the case.

 
 

[¶9.]     Myriad examples of the 
injustice or ridiculous result which might result from strict adherence to such 
rule could easily be imagined. It is because of these possibilities that 
Restatement of the Law (Second) of Contracts 2d § 371 (1981) notes that the 
measure of recovery should be as justice requires and apparently recognizes 
that, this being an equitable relief, the facts and circumstances governing the 
cases should dictate the proper rule.

 
 

[¶10.]  This Court has generally recognized that 
unjust enrichment is an equitable doctrine. Rocky Mountain Turbines, Inc. v. 660 
Syndicate, Inc., Wyo., 623 P.2d 758 (1981), along with Bereman v. Bereman, Wyo., 645 P.2d 1155 
(1982), has recognized that no person should be permitted to unjustly enrich 
himself at the expense of someone else and that he should be required to make 
restitution of or for property or benefits received or retained where it is just 
and equitable that such restitution be made. See also 66 Am.Jur.2d, Restitution 
and Implied Contracts, § 3 (1973).

 
 

[¶11.]  In Engle v. First National Bank of Chugwater, Wyo., 
590 P.2d 826, 830 (1979), this Court, citing with approval 53 Am.Jur.2d, 
Mechanics' Liens, § 2 at 516-517 (1970), set out as 
follows:

 
 
"`The basis for a 
mechanic's lien and the mechanic's lien laws lies in the principles of equity 
and the dictates of natural justice. Such laws are based on the equity of paying 
for work done or materials delivered. The principle or doctrine upon which the 
mechanic's lien and the mechanic's lien laws rest is stated to be the equitable 
principle of restitution or the prevention of unjust enrichment, and estoppel to 
deny a benefit. But it appears that it is 
the detriment to the mechanic or materialman rather than the benefit to the 
landowner or other party which provides the fundamental basis for the lien, so 
that a lien may exist even though the value of the owner's property has not been 
increased. * * *' (Footnotes omitted.)" (Emphasis 
added.)

 
 

[¶12.]  We further find a clear and logical 
answer to the appellant's contention that the measure of recovery available here 
to 2M Company, Inc. under these facts is solely the enhancement of the value of 
the property upon which this machinery and effort were placed. The Supreme Court 
of Montana has recently considered a question of this character in the case of 
Robertus v. Candee, Mont., 670 P.2d 540, 543 (1983), when it said:

 
 
"There may be cases where 
the enhancement to the defendant's property will be far less than the quantum meruit value of the plaintiff's 
efforts. For example, where the improvement did not enhance the value of the 
property but did result in a pecuniary saving to the defendant, the enhancement 
measure would not reflect the unjust enrichment. Conversely, there may be cases 
where the value of the enhancement greatly exceeds the cost of the improvement, 
as in this case.

 
 
"Thus the rule has 
evolved that the proper measure of damages in unjust enrichment should be the greater of the two measures. Restatement 
of Law, Contracts 2d § 371 comment b; 12 Williston, Contracts § 1480." (Emphasis 
in original.)

 
 
We have, in this case, 
the agreed contract price and the contract entered into by Shanor and the 
Country Club of the Big Horns with 2M Company, Inc. This, standing alone, would 
be evidence of reasonable value of the property placed thereon. Keneally v. Orgain, 186 Mont. 1, 606 P.2d 127 (1980); Bodde v. Burnham, Mo. 
App., 588 S.W.2d 516 (1979). The record further reveals that neither Shanor nor 
the Country Club of the Big Horns had ever denied the delivery and receipt of 
all the materials covered in the lien claim and for which this claim was made, 
nor have they made any showing that the value claimed was not the reasonable or 
proper value. Apparently there is no complaint made on this score at all, but 
appellant has chosen to rest, in this area at least, on his contention that 
enhancement of value is the sole and only measure which can be proven to sustain 
this recovery, but which is not the proper measure of compensation under these 
authorities. 

 
 
HORSESHOE ESTATES' 
LIABILITY

 
 

[¶13.]  The foundation of appellant's view that 
it cannot be held upon the theory of unjust enrichment and that it has no 
obligation to pay for, or even to return, any of the materials here supplied is 
that there is no showing Horseshoe Estates took advantage of 2M Company, Inc., 
nor was there any element of misconduct or fault. From a reading of appellant's 
brief and its contention of complete innocence and lack of knowledge that the 
partnership of Horseshoe Estates had a complete lack of involvement herein and 
bore no relation to 2M Company, Inc., this writer is in some way reminded of the 
couplet about the little man who wasn't there and who isn't there again 
today.

 
 

[¶14.]  This contention is made in face of the 
fact that Richard E. Shanor is one of the partners, that he signed the original 
contract naming Country Club of the Big Horns as owner of the property, that he 
signed the contract as guarantor, and that he knew of, and inspected, the work 
being done and property being placed on the lands of Horseshoe Estates. To say 
that this partnership did not have complete knowledge of all these dealings and 
that 2M Company, Inc. dealt alone with Shanor and Country Club of the Big Horns 
is not reasonable. A partnership is not so ephemeral that it is a completely 
removed and detached entity from the partners or their activities or 
representations and can have no responsibility or notice of their acts, 
particularly when these parties, all three, are engaged in the building of a 
single developed unit with a common purpose. Horseshoe Estates must be said to 
have had notice and knowledge of Richard E. Shanor's representation, statements, 
acts, activities, and knowledge, § 17-13-304, W.S. 1977, so that it knew 2M 
Company, Inc. was performing a contract and placing machinery and a sprinkler 
system upon partnership property, and that, even despite of said knowledge, 
Shanor, as such partner, made no attempt to stop or to advise 2M Company, Inc. 
that it was on Horseshoe Estates land where the equipment was being placed. From 
the facts before recited, we cannot say that Horseshoe Estates was not guilty of 
some misconduct or fault, nor do we believe that such behavior would recommend 
itself highly to a court sitting in equity.

 
 

[¶15.]  Without consideration, however, of the 
wrongful conduct of Horseshoe Estates, the partnership is forced to live with 
the rule that restitution lies for services or chattels placed upon lands which 
benefit another with his knowledge. Costanzo v. Stewart, 9 Ariz. App. 430, 453 P.2d 526, 528 (1969), citing Restatement of the Law of Restitution § 40 
(1937).

 
 

[¶16.]  This case represents a rather widely 
recognized exception to the rule, which has been promulgated in several cases, 
that recovery for unjust enrichment requires an element of fraud or tortious 
conduct on the part of the person receiving the benefit of the work or materials 
furnished. Other cases require, if the purpose of unjust enrichment is to be 
served, that when a party receives, with full knowledge, materials or services 
to his benefit from an innocent furnisher of such supplies, he should be 
accountable therefor. The case of Gee v. 
Eberle, 279 Pa. Super. 101, 420 A.2d 1050 (1980), 
specifically holds that in a claim for unjust enrichment, proof of wrongdoing or 
wrongful intent is unnecessary. That case cites with approval the case of Roman Mosaic and Tile Co., Inc. v. Vollrath, 
226 Pa. 
Super. 215, 313 A.2d 305 (1973), which sets out that to recover on a claim of 
unjust enrichment, it must be shown that the property was wrongfully secured or 
passively received. See also In re Brereton's Estate, 388 Pa. 206, 130 A.2d 453 
(1957). It is hard to assume a set of facts which would more clearly make this 
rule applicable in the instant case.

 
 

[¶17.]  In support of appellant's contention that 
in order to recover under this theory it must be shown there was some misconduct 
or fault, Commercial Fixtures and 
Furnishings, Inc. v. Adams, Utah, 564 P.2d 773 (1977), is cited. This case 
is not factually applicable to our situation and does not hold as the appellant 
asserts, the holding being not that broad. It merely enunciates a narrow rule 
that the "mere fact" some third party may benefit does not sustain a claim for 
unjust enrichment. It is to be noted that 2M Company, Inc. does not assert its 
claim on this sole basis but on an entirely different set of facts. It is 
observed that this case involved a divided court and that the dissent may well 
be considered more persuasive and impressive than the views of the majority.1

 
 
LAND 
DESCRIPTION

 
 

[¶18.]  In considering appellant's claim that the 
lien is invalid and unenforceable because there was no adequate description of 
the property contained in the lien statement, we are bound to consider this 
contention in light of the earlier expressed philosophy of this Court, which has 
always been that we are reluctant to hold a lien invalid because of a loose 
description. We will be liberal in upholding such liens in the event no 
third-party interest has arisen. Mawson-Peterson Lumber Co. v. Sprinkle, 
59 Wyo. 
334, 140 P.2d 588, 147 A.L.R. 1089 (1943).

 
 

[¶19.]  We held in Engle v. First National Bank of Chugwater, 
supra, where the lien statement described an entire ranch rather than the 
one-acre tract upon which a house was placed, it would not vitiate the lien 
where there is no allegation that the parties were deceived or prejudiced as the 
result of said description. Generally, when there is no question of innocent 
parties' rights being affected by a deficient or loose description, the courts 
have been most liberal in upholding the validity of lien statements. An 
excellent illustration of this appears in the cases cited in Annot., 52 A.L.R.2d 
12, 48-53 (1957). Significantly, appellant does not assert a claim of prejudice, 
does not contend that it was misled, and does not claim that it does not know 
the identity of the lands upon which this lien has been 
asserted.

 
 

[¶20.]  The burden was upon the appellant, 
Horseshoe Estates, to establish that it had been so misled. Kirby Building Systems, Inc. v. Independence Partnership 
No. One, Wyo., 634 P.2d 342 
(1981).

 
 

[¶21.]  Absent any such claim of prejudice or 
being misled in any manner by the description which appeared in the lien 
statement, we must hold that it was sufficient.

 
 
PREJUDGMENT 
INTEREST

 
 

[¶22.]  In addition to the errors which were 
asserted and set out earlier herein, appellant claims there is reversible error 
by virtue of the trial court's allowance of prejudgment interest. It is asserted 
that in an unjust enrichment case, this is manifest error. Prejudgment interest 
was included therein and computed by virtue and under the terms of the contract 
provisions.

 
 

[¶23.]  In support of this proposition, appellant 
asserts that this was an unliquidated claim resting upon two propositions; i.e., 
first, that there is no evidence of the before and after value of the property 
and, secondly, that the right of restitution did not exist until the judgment 
was entered. The first such asserted proposition finds its answer in the 
preceding portion of this opinion when the measure of recovery was discussed. 
Insofar as the Country Club of the Big Horns and Shanor are concerned, this was 
a liquidated claim because it was and is susceptible of calculation by reference 
to the contract and the invoices. Laramie 
Rivers Company v. Pioneer Canal Company, Wyo., 565 P.2d 1241 (1977); Rissler & McMurry Company v. Atlantic 
Richfield Company, Wyo., 559 P.2d 25 (1977). Appellant concedes 
that this is a liquidated claim as against the other defendants. Since it also 
had the same knowledge as the named parties, it must also be charged with notice 
of this amount. 

 
 

[¶24.]  If we adhere to the view that it is the 
detriment to the lien claimant which is the basis of the lien law, Engle v. First National Bank of 
Chugwater, supra, we find it difficult to say that when a lien claimant has 
furnished large amounts of equipment and installed it upon the lands of the 
appellant his detriment will not be further exacerbated by refusing to allow 
interest. Restatement of the Law of Restitution § 156 comment c (1937), suggests 
that interest should be paid if it is required to avoid injustice. In comment b 
to this section, it is stated:

 
 
"* * * Ordinarily if the 
sum due is sufficiently definite so that the transferee would have reason to 
know the amount he should pay, it would be unjust not to allow interest from the 
time when it should have been paid, as where an agent who has received money on 
his principal's account can fix a minimum sum which on a balance of accounting 
must be due the principal, although the precise sum cannot be ascertained. 
(Compare Restatement of Contracts, § 337)."

 
 
This claim was certainly 
determinable.

 
 

[¶25.]  In this case, we have a claimant who has 
furnished a large amount of equipment and installed or placed the same upon 
these premises. His work was undertaken relying upon the misrepresentations or 
actions of the Country Club of the Big Horns and Shanor. We have heretofore 
mentioned that the appellant here, as a copartnership, is charged with knowledge 
of, and is considered to have complete notice of, these dealings and sat 
silently by. It is then an injustice to deprive this claimant of interest for 
the amount of the materials furnished and placed upon these premises during this 
period. It is perfectly blameless and has been placed in this situation by 
virtue of the affirmative acts of Shanor and Country Club of the Big Horns and 
the passive acceptance by the appellant. These facts as set out demonstrate that 
interest should be allowed to avoid an injustice.

 
 

[¶26.]  The sole case authority which appellant 
cites for its position is Midland Diesel 
Service & Engine Company v. Sivertson, N.D., 307 N.W.2d 555 (1981), and 
we find that case so factually different that we are unable to apply the 
suggested rule for which the appellant contends. It is our further observation 
that insofar as interest for appellant is concerned, the court only held that 
the trial court had not abused its discretion in refusing to allow interest when 
it was discretionary by statute.

 
 

[¶27.]  We find no reversible error in the areas 
of which appellant complains.

 
 

[¶28.]  The judgment is 
affirmed.

 
 

1 The writer attaches some 
significance to the fact that the authority cited in support of this 
proposition, i.e., 66 Am.Jur.2d, Restitution and Implied Contracts, § 16 (1973), 
sets out that this is not applicable in every case and cites Costanzo v. Stewart, supra, illustrating 
the exception. This also supplies an inference that the Utah court would 
recognize such an exception in a case with this factual 
situation.