Case Title: PRUDENTIAL FEDERAL v McDOUGALL

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1977-08-02T00:00:00Z

Document:
No. 13381 I N T H E SUPREME COURT O F T H E STATE O F M O N T A N A 1977 PRUDENTIAL FEDERAL SAVINGS AND L O A N e t a l . , P l a i n t i f f and Respondent, -vs- G L E N N M c D O U G A L L e t a l . , Defendants and Respondents, -vs- BUILDING AGENCIES, I N C . , a c o r p o r a t i o n , Third-Party Defendant and A p p e l l a n t . Appeal from: D i s t r i c t Court of t h e F i f t h J u d i c i a l D i s t r i c t , IJonorable James D. Freebourn, Judge p r e s i d i n g . Counsel of Record: For Appellant: Robert P. Ryan argued, B i l l i n g s , Montana For Respondents: McCaffery, P e t e r s o n and Murray, B u t t e , Montana W. D. Murray, Jr. argued, B u t t e , Montana C h e s t e r Lloyd Jones argued, V i r g i n i a C i t y , Montana Submitted: June 6 , 1977 Decided: 4UG 2 1917 \!I6 ,j $n F i l e d : X r . dhiei J u s ~ i c e !>aul G. Hatfield delivered the Opinion of the Court . 3uilding Agencies, Inc. , appeals from a judgment of the d i s t r i c t court, Madison County, for $2,858.40 plus attorney fees of $250 and court c o s t s , and f o r additional attorney fees of $250 adjudged upon a t h i r d party complaint. Defendants McDougall arrived i n Sheridan, Montana from Xegina, Saskatchewan, February 3, 1967, and purchased a log house south of Sheridan. I n July 1967, they were contacted by a salesman f o r Building Agencies, Inc. The s o l i c i t a t i o n by the Agencies' agent was t o refurbish the e x t e r i o r of the log home by coating it with a p l a s t i c ~ o a t i n g carrying the trade name of Tex-Cote. O n July 26, 1967, McDougalls and Agencies entered i n t o an ~greernent t o apply the coating a s specified f o r the agreed sum of 32,850 with $50 paid i n advance. As a p a r t of the agreement Agencies was t o secure financing, which it did, through Prudential Federal Savings and Loan Associa- tion. O n August 7 , 1967, McDougalls signed a note, t h e subject $21: t h i s action, running t o Agencies i n the amount of $2,998.80 to be paid i n 96 monthly installments of $45.50, commencing October 7 , 1-967. Agencies immediately assigned the note t o Prudential ~11d Prudential issued i t s payment to Agencies i n the amount of j2,800. The work was completed by Agencies within a few days and Xcihugalls made the f i r s t $45.50 payment on October 12, 1967. Payments were made each month thereafter u n t i l January 1969, when ~ n i y $23. was paid; March 10, 1969 when $20 was paid; March 20 when $20 was paid; (oddly enough, according t o the exhibit received ~t t r i a l , his $40 was credited t o reduce principal); on May 26, 1969, $20 was paid and credited t o i n t e r e s t and the f i n a l payment of $20 was paid on June 18, 1969, credited t o i n t e r e s t for a balance owing on June 18, 1969 of $2,684.71. During the time January 1969 t o a t l e a s t May 25, 1969, Waneta McDougallls response t o Prudential's requests f o r payment was t h a t the McDougalls were having financial problems but "we s h a l l g e t these paid a s soon a s possible." She t e s t i f i e d she complained of cracking and peeling of the coating t o Prudential, and Prudential on July 9, 1969, wrote McDougalls t h a t Prudential was "going t o g e t i n touch with the dealer regarding h i s workmanship." The t r i a l judge found t h a t within a year a f t e r application Agencies' work proved improperly performed. I n the agreement of July 26, 1967 Agencies agreed t o perform much preparatory work. In Agencies1 b r i e f t h i s i s s e t out: "The contract called for extensive preparation of the log surfaces, including sandblasting, silicone water- proofing, sealer coat and other measures and then a f i n a l coat of Tex-cote, a p l a s t i c material. 'I* * * Tex-Cote1 s f u l l guarantee, with underlining added, reads: '"This i s t o c e r t i f y t h a t the Tex-Cote applied on che above property i s hereby guaranteed f o r a ten year period against flaking, chipping or peeling. This guarantee is t o be i n force f o r a period of ten years from the r e g i s t r a t i o n date (Date of Application) and f u l l material replacement s h a l l be made should t h i s replacement be necessary a s a r e s u l t of a defect i n t h i s product only. * * >k ! f ' . * i ' ; * I "Building Agencies warranted the workmanship. The c o n ~ r a c t u a l provision (underlining added) reads : " ' ( 1 ) Tex-Cote is guaranteed by Textured Coating - of Americar,, Inc. and no warranty o r guaranty i s made by Building Agencies, Inc. ~ u i l d i n g ~ ~ e n c i e ; , Inc . does warrant the workmanship f o r a period of one year from the date of completion of che work. The warranty of workmanship is expressly limited t o correc- tion of the work which w i l l be done promptly a f t e r written notice of defective work i s received by Building Agencies, Inc. Building Agencies, Inc. s h a l l have no l i a b i l i t y f o r consequential damages, or any other l i a b i l i t y not herein expressed. I : I McDougalls refused further payments a f t e r June 18, 1969 assigning as t h e i r reason Agencies' f a i l u r e t o perform the work and labor s e t o u t i n the agreement.in a satisfactory manner. Prudential f i l e d s u i t against McDougalls on December 18, 1969. McDougalls answered and f i l e d a t h i r d party complaint against Building Agencies, Inc. The t h i r d party complaint and sunimons thereon was served on Agencies' president January 14, 1971. Shortly thereafter Waneta McDougall returned home t o find a "machine" i n her yard. According t o her testimony she did not know who it belonged t o or why i t was there. She called the sheriff t o have it towed away. She l a t e r learned the machine belonged t o Agencies and was there t o patch up the work. Her uncontradicted testimony was: "He said it was t o patch up the job, i s h i s words.'' She refused. The matter went t o t r i a l before the court without a jury. iiter testimony, the court granted summary judgment t o Prudential dgainst McDougalls i n the amount of $2,858.40 plus $250 attorney feds and costs. T h e t r i a l court further found: ' x * * t h a t the Defendants, GLENN and WANETA M c D O U G A L L , have judgment against the Third Party Defendant, BUILDING b~GENCIES, I N C . , a s follows : " ( I ) For the sum of Two Thousand Eight Hundred 41iity Eight and 40/100 Dollars ($2858.40) plus Two qundred F i f t y Dollars ($250.00) and Court costs a s provided f o r i n the Judgment against the Defendants [McDougalls ] above. ' ( 2 ) For attorney fees in the amount of Two HuriilreJ F i f t y Dollars ($250.00) .'I '[he issues on appeal are: (1) \&ether Agencies' warranty limited t o "correction of the work", limits the remedy of the purchaser t o correction aP the work only? (2) Can the purchaser prevent correction of the work and chen refuse payment on the contract price on the ground the work i s useless and there is a f a i l u r e of consideration? Both p a r t i e s agree t h a t Agencies warranted the work. Agencies presented no testimony. McDougallsl expert t e s t i - fied that i n May 1970 he inspected the house and the coating was deteriorating and coming o f f ; t h a t the "underpart of it showed the building had not been properly prepared for the product t o adhere t o it. + C * * Due t o foreign matter underneath the product i s general reason f o r it not adhering t o the building". Further, i n h i s opinion, proper preparation was not done -- T I - k Jc M y there w a s other foreign matter, paint, grease o r something t h a t had not been cleaned off so t h a t paint did not adhere t o it and it j u s t came off i n big flakes and I assume t h a t t h a t was due t o some foreign matter being underneath the coating." Agencies r e l i e s on section 878-2-719, R.C.M. 1947, Montana's Uniform Commercial code, a s t o whether the agreement may l i m i t the buyer's remedy and c i t e s M t . States Tel. & Tel. Co. v. D i s - t r i c t Court, 160 Mont. 443, 503 P.2d 526 a s authority f o r i t s contention. See also: Whitaker v. Farmhand, Inc., Mont . - 9 P.2d 3 S t .Rep. , No. 13228, handed down by t h i s Court on August 2, 1977 , and cases c i t e d therein. The problem here i s that no such issue i s presented. The t r i a l judge found,based upon the only evidence presented, and t h i s Court finds it t o be substantial and credible, (McGuire v. American Honda Company, Mont . Y P.2d Y 34 S t . Rep. 632), t h a t Agencies warranted and guaranteed i t s work and the work was improperly performed. Further, a l l the dtidence i n the record indicates f a i l u r e t o properly prepare the log surface was the cause of the Tex-Cote coating t o chip, flake, and peel. Therefore, the question of limitation of remedies i n the contract i s not presented on t h i s appeal. The cause of the defect was the breach of the express warranty. As t o whether Waneta McDougall prevented performance, again a l i i s the evidence i s t h a t she did not. ~ c ~ o u g a l l s ' expert t e s t i f i e d it would be necessary t o clean the building and coat it with a primer and sealer and then repaint. These a r e the exact things Agencies agreed t o do in the o r i g i n a l agreement and, according t o the only testimony presented, it did not do. There i s no testimony Agencies i n 1971 agreed t o s t a r t over and re-do the job. Therefore t h a t issue f a i l s . Mitchell v. Carlson, 132 Mont. 1, 313 P.2d 717. As a secondary issue the amount of the judgment i s questioned. The prayer of Prudential was f o r $2,684.71, i n t e r e s t , costs and attorney fees. Summary judgment was granted. N o appeal was taken from the summary judgment. P l a i n t i f f s t a t e s a balance of $2,684.71 a s of June 18, 1969. From the pleadings, not amended, the most t h a t could be awarded would be $2,684.71 plus i n t e r e s t . There was no testimony a s t o attorney fees i n the s u i t by Prudential against McDougalls, and there i s no pleading o r evi- dence of attorney fees by McDougalls against Agencies. Compton v. A1cor11, Mont . ----- , 557 P.2d 292, 33 St.Rep. 118.5; F i r s t Security Bank of Bozeman v. Tholkes, IvIon t . 547 P.2d 1328, 33 St.Rep. 341. Therefore, the judgment of the t r i a l court i s affirmed a s modified. The judgment f o r Prudential against McDougalls s h a l l > . a be i n the amount of $2,684.71, with i n t e r e s t from June 18, 1969 t o Yarch 19, 1976, together with i n t e r e s t a t 6% on t h i s amount i l r ~ r i l paid. Judgment s h a l l be entered i n the same amount against t h i r d p a r t y defendant Building Agencies, Inc. A Chief J u s t i c e