Case Title: MOUNTAIN STATES RESOURCES INC v

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1981-11-27T00:00:00Z

Document:
NO, 81-158 IN THE SUPRGME COURT OF THE STATE OF MONTANA 1981 MOUNTAIN STATES RESOURCES, INC., Plaintiff and Appellant, VS . M . D. EHLERT, Defendant and Respondent, VS . MONTE GRANDE EXPLORATION, INC., Additional Defendant on Counterclaim and Appellant. Appeal from: District Court of the Ninth Judicial District, In and for the County of Glacier Honorable R . D. McPhillips, Judge presiding. Counsel of Record: For Appellant: Frisbee, Moore & Stufft, Cut Bank, Montana For Respondent: Alexander & Baucus, Great Falls, Montana Filed: Submitted on briefs: July 30, 1981 Decided : fi ov 2 7 1 9 @ i Mr. Justice John Conway Harrison delivered the Opinion of the Court. Mountain States Resources, Inc., filed suit against Ehlert to set aside Ehlert's oil and gas lien and to collect damages for slander of title. Ehlert counterclaimed and joined Monte Grande Exploration, Inc., an undisclosed prin- cipal of Mountain States Resources, in the suit. Montana's Ninth Judicial District, in and for Glacier County, upheld the lien and awarded judgment to Ehlert. Mountain States Resources and Monte Grande Exploration raise eleven, issues on appeal: 1. Was the lien filed prematurely? 2. Are oil and gas liens proper for work done on gas pipelines? 3. Does a lien on a pipeline entitle the claimant to a lien on oil and gas leaseholds served by the pipeline? 4. Must a claimant use the exact language contained in the statute when filing a lien? 5. Was there an overstatement of amounts due in the lien? 6. Was the construction completion date correctly listed in the lien? 7. Was the lien invalid because the pipeline owner was not listed in the lien? 8. Was a proper description of the property given in the lien? 9. Was the lien's affidavit sufficient? 10. Was the lien against Monte Grande Exploration invalid because Monte Grande Exploration was not named in the original lien? 11. Is Ehlert liable for slander of title? On S e p t e m b e r 2 7 , 1 9 7 7 , t h e p l a i n t i f f - a p p e l l a n t , Mountain S t a t e s Resources, I n c . (MSR), c o n t r a c t e d w i t h M. D. E h l e r t t o f u r n i s h and e r e c t t h r e e s t e e l b u i l d i n g s t o be used i n connection with t h e Gypsy-Highview ( n a t u r a l g a s ) Gather- i n g System (GHGS) i n Pondera and Teton c o u n t i e s i n Montana. Monte Grande E x p l o r a t i o n , I n c . (MGE) was an u n d i s c l o s e d p r i n c i p a l of MSR. G H G S was e v e n t u a l l y owned 50% by MSR, 25% by MGE, and 25% by a s s o c i a t e s of M S R and MGE. The same man, J. V. Montalban, is p r i n c i p a l e x e c u t i v e o f f i c e r , 10% s t o c k owner, and dominant d r i v i n g f o r c e of both M S R and MGE. On September 27, 1977, MGE owned t h e o i l and g a s l e a s e on t h e land where t h e b u i l d i n g s were l o c a t e d , b u t t h e r e was no w r i t t e n l e a s e f o r t h e a c t u a l l a n d . M S R was t h e a g e n t and p r o j e c t manager f o r t h e c o n s t r u c t i o n p r o j e c t . MGE was an u n d i s c l o s e d p r i n c i p a l . M S R and MGE both owned o i l and g a s l e a s e s a d j o i n i n g and s e r v i c e d by t h e GHGS b u i l d i n g s . GHGS was designed t o g a t h e r , p r o c e s s , t r a n s p o r t and d e l i v e r n a t u r a l g a s from M S R and MGE wells t o Montana Power Company, which p u r c h a s e d t h e g a s . GHGS became a n "independent" l e g a l e n t i t y a f t e r t h e MSR-Ehlert c o n t r a c t was f i n a l i z e d . A $43,199 b u i l d i n g c o n t r a c t provided f o r a compressor b u i l d i n g w i t h f l a s h i n g , and sweetening a.nd d e h y d r a t o r b u i l d - i n g s w i t h o u t f l a s h i n g . ( F l a s h i n g is t h e m a t e r i a l p l a c e d around a p i p e a t t h e p o i n t where it i n t e r s e c t s a w a l l i n o r d e r t o make t h e j o i n t w e a t h e r p r o o f . ) F l a s h i n g provided f o r t h e two l a t t e r b u i l d i n g s was an e x t r a , t o be p a i d f o r i n a d d i t i o n t o t h e $43,199 c o n t r a c t p r i c e . Between October 22, 1977, and December 1 5 , 1977, E h l e r t , a t t h e s p e c i f i c r e q u e s t of Bo Mikkelson, MSR's s u p e r v i s o r y a g e n t , i n s t a l l e d f l a s h i n g on t h e sweetening and dehydrator b g i l d i n g s . On J a n u a r y 18, 1978, M S R p a i d E h l e r t t h e balance due on t h e $43,199 con- t r a c t , b u t r e f u s e d t o pay f o r t h e e x t r a f l a s h i n g , amounting t o $1,818.39, u n t i l c o r r e c t i o n s were made. On March 8 , 1978, a f t e r s e v e r a l r e q u e s t s f o r payment had been r e f u s e d , E h l e r t f i l e d a $1,818.39 l i e n p u r s u a n t t o s e c t i o n 45-1001, R.C.M. 1947, now s e c t i o n 71-3-1002, MCA, a g a i n s t t h e proceeds of any n a t u r a l g a s s o l d by M S R ( b u t n o t MGE and GHGS) t o Montana Power Company. M S R f i l e d s u i t a g a i n s t E h l e r t t o s e t a s i d e h i s l i e n and t o recover $15,000 f o r s l a n d e r of t i t l e a s a r e s u l t of t h e improper f i l i n g of t h e l i e n . E h l e r t , by answer and c o u n t e r c l a i m , joined MGE and sought t o f o r e c l o s e t h e l i e n a g a i n s t M S R and MGE. The t r i a l c o u r t , s i t t i n g w i t h o u t a j u r y , d i s m i s s e d MSR's complaint and awarded E h l e r t $1,818.39 f o r t h e l i e n , p l u s i n t e r e s t and a t t o r n e y f e e s , t o t a l i n g $8,024.19. The c o u r t a l s o r u l e d t h a t t h e l i e n was v a l i d a g a i n s t a l l M S R and MGE p r o p e r t y named i n t h e l i e n , and t h e proceeds of a l l n a t u r a l g a s s o l d by MSR, MGE o r GHGS named i n t h e l i e n . M S R and MGE a p p e a l . I s s u e No. 1: Was t h e l i e n f i l e d p r e m a t u r e l y , t h e r e f o r e making t h e l i e n i n v a l i d ? W e hold t h a t t h e l i e n was t i m e l y and v a l i d . M S R made t h e l a s t c o n t r a c t payment of $14,199, which was due seven days a f t e r t h e b u i l d i n g s were complete and i n s p e c t e d , on J a n u a r y 18, 1978. A l l work o r d e r s f o r t h e e x t r a f l a s h i n g were complete on t h a t d a t e . Adjustments and r e p a i r s were s u b s e q u e n t l y made on t h e d o o r s and f l a s h i n g , b u t t h e c o n t r a c t work was s u b s t a n t i a l l y complete. T h e r e f o r e , the lien, filed on March 8, 1978, was filed after the build- ing was substantially complete, and the lien is valid. See, Turf Irr. & W.W. Sup. Co. v. Lawyers Title of Phoenix (1975), 24 Ariz.App. 80, 535 P.2d 1311, 1314; Tabet Lumber Company v. Baughman (1968), 79 N.M. 57, 439 P.2d 706, 709. Cf., Western Plumbing of Bozeman v. Garrison (1976), 171 Mont. 85, 556 P.2d 520; Olson v. Westfork Properties, Inc. (1976), 171 Mont. 154, 557 P.2d 821. tan\ Issue No. 2 : Does section 45-l&€%+, R.C.M. 1947, now section 71-3-1002, MCA, permit an oil and gas lien for labor, services and materials provided on the gas pipeline? We hold the lien is valid. loat Section 4 5 - + @ + E , R.C.M. 1947, provides in pertinent part: "Any person . . . which shall contract . . . with the owner of any leasehold for . . . gas . . . furnish material or services used in . . . completing, [or] operating [a] gas pipeline . . . whether or not such material is incorporated therein or becomes a part thereof, shall have a lien . . . upon all material owned by the owner of such lease- hold . . . and . . . upon all oil or gas produced from such leasehold . . ." J. V. Montalban, president of MSR and MGE, noted in a letter to Ehlert, that using the three buildings Ehlert con- structed, without doors, during December and January caused "severe and impossible working conditions." It follows that the completed buildings, with doors installed, were an essential part of the gas gathering system. In any event, a lien is valid under the statute "whether or not such mate- rial is incorporated therein or becomes a part thereof." Elhert is therefore entitled to a gas lien for the labor and materials he provided. See, Nemeroff v. Cornelison Engine Maintenance Co. (Okla. 1962), 369 P.2d 604. I s s u e No. 3: Does E h l e r t ' s l i e n on t h e g a s g a t h e r i n g system e n t i t l e him t o a l i e n on t h e l e a s e h o l d s served by t h e system? M S R c l a i m s t h a t M S R and MGE, which own t h e g a s l e a s e s , a r e completely independent of GHGS, which owns t h e g a t h e r i n g system. Thus, t h e l i e n a g a i n s t t h e g a s g a t h e r i n g system does n o t extend t o M S R and MGE. E h l e r t c l a i m s , and w e a g r e e , t h a t GHGS is a f r o n t f o r M S R and MGE. E h l e r t c o n t r a c t e d w i t h MSR, and M S R served a s t h e a g e n t and p r o j e c t manager f o r t h e b u i l d i n g p r o j e c t . MGE was an u n d i s c l o s e d p r i n c i p a l i n t h e b u i l d i n g p r o j e c t . GHGS was n o t e s t a b l i s h e d a s an independent e n t i t y and owner of t h e g a s g a t h e r i n g s y s t e m u n t i l a f t e r E h l e r t s t a r t e d c o n s t r u c t i n g t h e b u i l d i n g s . G H G S d i d n o t o b t a i n a w r i t t e n l e a s e f o r t h e l a n d on which b u i l d i n g s sit u n t i l a f t e r t h e l i e n was f i l e d . Thus, we hold t h a t E h l e r t c o n t r a c t e d w i t h M S R and MGE, and t h a t E h l e r t ' s l i e n e x t e n d s t o t h e d e s i g n a t e d M S R l e a s e s , MGE l e a s e s , and t h e GHGS. See g e n e r a l l y , Blose v. Havre O i l & Gas Co. ( 1 9 3 4 ) , 96 Mont. 450, 31 P.2d 738. I s s u e No. 4: Did E h l e r t use t h e proper language, a s per s e c t i o n 45-1001, R.C.M. 1947, now s e c t i o n 71-3-1002, EI'ICA, i n h i s l i e n ? M S R a s s e r t s t h a t E h l e r t is r e q u i r e d t o use t h e e x a c t language of t h e s t a t u t e and c l a i m a l i e n on t h e " o i l or g a s produced from such l e a s e h o l d s and t h e proceeds t h e r e o f i n u r i n g t o t h e working i n t e r e s t . . ." The language E h l e r t a c t u a l l y used was " c l a i m a n t makes t h i s l i e n and a s s e r t s h i s r i g h t s under p r o v i s i o n s of R . C . M . , of 1947, S e c t i o n 45-1002 e t s e q . " W e hold t h a t t h e language used by E h l e r t , which c i t e s t h e o i l and g a s l i e n s t a t u t e , is adequate. Although t h i s Court h a s n o t s p e c i f i c a l l y addressed t h i s i s s u e i n t h e p a s t , we have noted t h a t " [1] i e n s t a t u t e s should r e c e i v e a l i b e r a l c o n s t r u c t i o n t o t h e end t h a t t h e o b j e c t s and purposes of t h e s t a t u t e s may be c a r r i e d o u t . " Caird Engineering Works v. Seven-Up Gold Mining Co. ( 1 9 4 1 ) , 111 Mont. 471, 479, 111 P.2d 267, 272; F a u s e t t v. Blanchard ( 1 9 7 0 ) , 154 Mont. 301, 463 P.2d 319, 322. Nothing i n t h e s t a t u t e r e q u i r e s p a r t i e s f i l i n g l i e n s t o u s e t h e e x a c t language of t h e s t a t u t e r e l i e d upon. T h i s Court s h a l l r e f r a i n from c r e a t i n g an a d d i t i o n a l burden f o r p a r t i e s f i l i n g l i e n s . The s t a t u t e , l i b e r a l l y c o n s t r u e d , a l l o w s g e n e r a l language t o be used i n t h e l i e n . I s s u e No. 5: Did E h l e r t o v e r s t a t e t h e amount claimed by l o % , and t h e r e f o r e i n v a l i d a t e t h e l i e n ? W e hold t h a t t h e $1,818.39 claimed is v a l i d . The t r i a l c o u r t ' s f i n d i n g s of f a c t e s t a b l i s h e d t h a t $1,818.39 was due and owing. While t h e r e was evidence t h a t E h l e r t added 10% t o h i s a c t u a l c o s t s , t h e r e was a l s o evidence t h a t t h i s was h i s s t a n d a r d c o n t r a c t i n g procedure. I n any e v e n t , " [ a l n o v e r s t a t e m e n t of t h e amount due, a b s e n t f r a u d or bad f a i t h , does n o t i n v a l i d a t e a l i e n . " F i g g i n s v . Stevenson ( 1 9 7 3 ) , 163 Mont. 425, 517 P.2d 735, 737. I s s u e No. 6: Was t h e c o n s t r u c t i o n completion d a t e c o r r e c t l y l i s t e d i n t h e l i e n ? The l i e n shows December 15, 1977, a s t h e l a s t day of work. E h l e r t c l a i m s t h a t o n l y r e p a i r s and a d j u s t m e n t s were made a f t e r t h a t d a t e . M S R contends t h a t t h e work was n o t completed u n t i l January 1 2 , 1978. The l i e n was f i l e d on March 8 , 1978. Thus, t h e e x a c t d a t e t h a t work was completed is i m m a t e r i a l , a s e i t h e r d a t e is w e l l w i t h i n t h e six-month l i m i t allowed by s e c t i o n 45-1004, R.C.M. 1947, now s e c t i o n 71-3-1004, MCA. I f no p a r t y is i n j u r e d , a minor t e c h n i c a l i t y should n o t p r e c l u d e an o t h e r w i s e v a l i d l i e n from being e n f o r c e d . See, Brown v. F a r r e l l ( 1 9 7 1 ) , 258 Or. 348, 483 P.2d 453, 455. I s s u e No. 7: Was t h e l i e n i n v a l i d because GHGS, t h e p i p e l i n e owner, was n o t l i s t e d i n t h e l i e n ? A s we noted a b o v e , E h l e r t c o n t r a c t e d w i t h M S R t o c o n s t r u c t t h e b u i l d i n g s . G H G S d i d n o t become a s e p a r a t e l e g a l e n t i t y u n t i l sometime a f t e r t h e c o n t r a c t was made. F u r t h e r , t h e r e was no w r i t t e n l e a s e f o r t h e land on which t h e b u i l d i n g s s i t u n t i l a f t e r t h e l i e n was f i l e d . T h e r e f o r e , E h l e r t ' s f a i l u r e t o list GHGS i n t h e l i e n was n o t e r r o r and d i d n o t a f f e c t t h e l i e n . See g e n e r a l l y , Blose v. Havre O i l & Gas Co. ( 1 9 3 4 ) , 96 Mont. 450, 31 P.2d 738. I s s u e No. 8: Was a proper d e s c r i p t i o n of t h e p r o p e r t y g i v e n i n t h e l i e n ? M S R c l a i m s t h a t s i n c e one of t h e l e a s e s l i s t e d a s belonging t o M S R a c t u a l l y belonged t o MGE, t h e l i e n is i n v a l i d . W e do n o t c o n s i d e r t h i s t o be f a t a l t o t h e l i e n . A s noted above, M S R was t h e a g e n t and p r o j e c t manager of t h e b u i l d i n g p r o j e c t , and it is t h e r e f o r e l i a b l e t o E h l e r t . MGE was an u n d i s c l o s e d p r i n c i p a l i n t h e c o n s t r u c t i o n p r o j e c t and is t h e r e f o r e a l s o l i a b l e . F i n a l l y , GHGS was t h e s u c c e s s o r i n i n t e r e s t and is a l s o l i a b l e . R e g a r d l e s s of which c o r p o r a t i o n h e l d t i t l e a t t h e t i m e of t h e l i e n , f i l i n g t h e l i e n would g i v e n o t i c e of t h e e x i s t e n c e of t h e l i e n t o i n t e r e s t e d t h i r d p a r t i e s , which is t h e purpose of t h e l i e n . Morrison-Maierle, I n c . v . S e l s c o ( 1 9 8 0 ) , Mont. I 606 P.2d 1085, 1087, 37 St.Rep. 299. The d e s c r i p t i o n was adequate t o p r o p e r l y i d e n t i f y t h e p r o p e r t y s u b j e c t t o t h e l i e n ; consequently, t h e d e s c r i p t i o n and t h e l i e n a r e v a l i d . Varco-Pruden v. Nelson ( 1 9 7 9 ) , - Mont . , 593 P.2d 48, 50, 36 St.Rep. 704. I s s u e No. 9: Was t h e l i e n ' s a f f i d a v i t s u f f i c i e n t ? W e hold t h a t t h e a f f i d a v i t was adequate. An a f f i d a v i t is d e f i n e d a s " a w r i t t e n s t a t e m e n t , under o a t h , sworn t o or a f f i r m e d by t h e person making it b e f o r e some p e r s o n who h a s a u t h o r i t y t o a d m i n i s t e r an o a t h or a f f i r m a t i o n . " S t a t e v. Knight ( 1 9 7 6 ) , 219 Kan. 863, 549 P.2d 1397, 1401. The maker must have p e r s o n a l knowledge of t h e i n f o r m a t i o n c o n t a i n e d i n t h e s t a t e m e n t and must swear t o its v a l i d i t y . Saunders Cash-Way, E t c . v. Herr i c k ( 1 9 7 8 ) , 179 Mont. 233, 587 P.2d 947, 949, 35 St.Rep. 1846. E h l e r t ' s a f f i d a v i t c o n t a i n e d w r i t t e n i n f o r m a t i o n about items of which he had p e r s o n a l knowledge. He swore t o its v a l i d i t y b e f o r e a n o t a r y p u b l i c . T h e r e f o r e , t h e a f f i d a v i t was adequate. I s s u e No. 10: Was t h e l i e n a g a i n s t MGE i n v a l i d because MGE was n o t named i n t h e o r i g i n a l l i e n ? W e hold t h a t t h e D i s t r i c t C o u r t ' s f i n d i n g of l i a b i l i t y was c o r r e c t . T r u e , MGE was n o t named i n t h e l i e n a s r e q u i r e d by s e c t i o n 45-1004, R.C.M. 1947. But, t h e D i s t r i c t Court found t h e r e was an a g e n t - p r i n c i p a l r e l a t i o n s h i p between M S R and MGE. E h l e r t was unaware of t h i s r e l a t i o n s h i p u n t i l a f t e r he f i l e d t h e l i e n . Consequently, E h l e r t p r o p e r l y joined MGE i n t h e s u i t when E h l e r t f i l e d h i s answer and c o u n t e r c l a i m . E h l e r t h a s a v a l i d l i e n a g a i n s t MGE. M i l l e r v. Melaney ( 1 9 7 7 ) , 172 Mont. 74, 560 P.2d 902, 9 0 4 . I s s u e No. 11: Is E h l e r t l i a b l e f o r s l a n d e r o f MSR's t i t l e ? S i n c e we have found t h a t E h l e r t h a s a v a l i d l i e n , w e need n o t a d d r e s s t h i s i s s u e . The judgment o f t h e D i s t r i c t C o u r t is a f f i r m e d . W e c o n c u r : Q u s t i c e s L!h 47 , ,