Title: AGRILEASE iNC v GRAY

State: montana

Issuer: Montana Supreme Court

Document:

No. 1 3 4 9 5 I N T H E SUPREME COURT OF THE STATE O F MONTANA 1977 AGRILEASE, INC. , P l a i n t i f f and A p p e l l a n t , T H E L M A GRAY, Defendant and Respondent. _______-_-_____--_-___--------_----__------------ T H E L M A GRAY, Third P a r t y P l a i n t i f f and Respondent, AGRILEASE, I N C . , Third P a r t y Defendant and Appellant. Appeal from: District Court of t h e S i x t h J u d i c i a l D i s t r i c t , Honorable Jack D. S h a n s t r m , Judge p r e s i d i n g . Counsel of Record: For Appellant: Hutton, Sheehy and Cromley, B i l l i n g s , Montana John C. Sheehy argued, B i l l i n g s , Montana For Respondent: David DePuy argued, Livingston, Montana Submitted: May 2 3 , 1977 Decided: JuL SF 1971 F i l e d : J U L I P igiii M r . J u s t i c e John Conway Harrison d e l i v e r e d t h e Opinion of t h e Court. This appeal from the d i s t r i c t c o u r t , Park County, a r i s e s from a judgment where two causes of a c t i o n were consolidated f o r t r i a l and t r i e d by a jury. Agrilease, Inc. is p l a i n t i f f i n one a c t i o n and t h i r d p a r t y defendant i n t h e o t h e r . Thelma Gray i s defendant i n one a c t i o n and t h i r d p a r t y p l a i n t i f f i n t h e o t h e r . Agrilease appeals i n both c a s e s . I n February 1974, Thelma Gray, a rancher along t h e Yellowstone River, south of Livingston, Montana, contracted with Agrilease, I n c . of B i l l i n g s , Montana, f o r a pumping and irriga- t i o n system designed t o take water from t h e Yellowstone River and t o r a i s e it over 100 f e e t t o undeveloped land f o r t h e purpose of r a i s i n g a l f a l f a . The o r i g i n a l c o n t r a c t was f o r $34,235.00. Thereafter changes r e q u i r i n g e x t r a work and material u l t i m a t e l y r a i s e d t h e t o t a l c o s t t o $42,559.29. Gray made two payments on t h e contract--$15,000 on February 26, 1974; and $7,500 on May 31, 1974. No o t h e r payments were made. Thelma Gray owned water r i g h t s of approximately l,OOO miner's inches out of t h e Yellowstone River. The plan was f o r a pumping system t h a t would t a k e 500 inches of water o u t of t h e r i v e r t o be used t o irrigate previously undeveloped land. M r . Bick, a c t i n g f o r Agrilease, placed a purchase order w i t h Worthington V e r t i c a l Pump Corporation on February 21, 1974, f o r a pump t h a t would pump and raise some 4,000 g a l l o n s per minute t o t h e lands t o be i r r i g a t e d . He requested shipment by May 21, but t h e company i n its acknowledgement of t h e order gave September 13 a s t h e d e l i v e r y d a t e f o r t h e pump. The pump did n o t a r r i v e u n t i l l a t e October when it was i n s t a l l e d . Gray t e s t i f i e d and was supported by witnesses who worked on t h e ranch, t h a t Bick assured h e r he would have t h e system i n s t a l l e d and working before June 1, 1974. Bick denies t h i s and t e s t i f i e d he d i d everything he could t o g e t t h e pump by June 1, b u t due t o t h e Arabian o i l c r i s i s of 1973 i n d u s t r i a l goods were hard t o get, went up i n p r i c e , and he had problems of supply, shipment and d e l i v e r y . The testimony c l e a r l y shows Gray i n d i c a t e d t o Bick she planned t o break up and p l a n t some 85 a c r e s of previously un- developed land t o r a i s e a l f a l f a . I n f a c t , t h a t was t h e reason f o r t h e p r o j e c t and Bick t o get t h e c o n t r a c t surveyed t h e land f o r d i t c h e s and l e v e l i n g . He was aware t h e land was plowed, planted and harvested. Due t o the f a i l u r e of t h e pump t o a r r i v e on time f o r t h e 1974 hay crop, the h a r v e s t was a d i s a s t e r . The crop burned up i n May and June and only 70 tons were r e a l i z e d , when 155 t o 160 tons were a n t i c i p a t e d i f i r r i g a t i o n had been a v a i l a b l e . Even t h e 70 tons would n o t have been possible, except Bick furnished a small pump t o get some water t o the acreage. He testified it c o s t him more than $5,000 t o do t h i s t o assist Gray. I n a d d i t i o n Gray t e s t i f i e d she l o s t pasture i n 1974, due t o t h e f a i l u r e of t h e pump t o a r r i v e and she had t o purchase hay t h a t year. To e s t a b l i s h t h e pumping system Bick had t o b u i l d a r e t a i n i n g w a l l near t h e r i v e r and t o provide i n l e t s from t h e lower p a r t of t h e w a l l i n t o two sumps o r wet walls i n t o which t h e Worthington pump was t o be i n s e r t e d t o remove water from t h e r i v e r and out i n t o t h e p i p e l i n e and then i n t o t h e d i t c h e s . Approximately 2,200 f e e t of 12 inch p i p e l i n e was t o be used. Although t h e c o n t r a c t w a s signed i n February and o r d e r s were placed f o r the pump and t h e pipe i n February, Bick d i d n o t s t a r t c o n s t r u c t i o n of t h e r e t a i n i n g walls u n t i l e a r l y May. This proved t o be a bit l a t e f o r as usual. i n t h e s p r i n g the r i v e r r i s e s r a p i d l y and i n 1974 t h e r e was an unusually heavy run-off. Bick t e s t i f i e d he b u i l t a dike f i v e times, the water coming over each time, t o g e t r e t a i n i n g wall footings and foundations estab- lished. The s t e e l pipe a r r i v e d i n l a t e A p r i l , the motor t o drive the pump came i n May, the sump i n s t a l l a t i o n was finished i n l a t e August, a l l too l a t e t o be of much help t o the 1974 crop. The pump a r r i v e d and was i n s t a l l e d and was attached t o the pipe already i n place i n October. Bick t e s t e d the operation of the pumping system i n the presence of Mrs. Gray and her employees and no problems were found with t h e system a t t h a t time. The contract c a l l e d f o r a f i n a l payment upon the ~ o m p l e t i ~ o n of the i n s t a l l a t i o n of the system and it being put i n t o operation. It was completed i n l a t e Qctober but Gray made no payment then o r a f t e r t h a t date, although she admits it was due. Statements were s e n t monthly t h e r e a f t e r and no p r o t e s t s were heard from Gray. To p r o t e c t i t s e l f Agrilease, Inc. f i l e d a mechanic's l i e n a g a i n s t Mrs. Gray's ranch i n the amount of $20,059.29. In May 1975, Bick was c a l l e d t o the ranch t o start the system working. After s t a r t i n g up it seemed t o work, s o he shut it off and then s t a r t e d it up when a " ~ u r p h y switch", a s a f e t y device broke and had t o be removed and taken t o B i l l i n g s . This was not replaced u n t i l June 15, 1975. Thereafter, e a r l y i n July a vibration developed and on August 7 o r 8, Bick removed the pump from i t s well and found the s t r a i n e r surrounding the suction end of the pump had collapsed, and a rock had entered and lodged i n the impeller. Bick agreed t o take the pump t o h i s shop i n B i l l i n g s but asked Gray t o pay o f f t h e balance of the contract, o r a t l e a s t $10,000. She agreed but d i d not pay, so Bick refused t o go ahead with the r e p a i r s . He took the pump and i t s motor and held them i n h i s shop. A s a r e s u l t Gray alleged a l o s s of the 1975 hay crop. Bick a l l e g e d t h e system would have worked without t h e " ~ u r p h y switch", b u t t h a t made l i t t l e d i f f e r e n c e t o t h e f i n d i n g of t h e jury. The i s s u e of negligence i n n o t screening t h e i n l e t s t o t h e t h e sump pump was submitted to/jury and it found a g a i n s t Bick. A judgment awarded Agrilease, Inc. damages a g a i n s t Mrs. Gray i n an amount of $20,059.29; and an award f o r Mrs. Gray a g a i n s t Agrilease i n t h e sum of $22,397 o r a n e t amount t o Mrs. Gray of $2,337.71. Appellant Agrilease, Inc. r a i s e s s e v e r a l i s s u e s on appeal: 1. Did t h e c o u r t err i n amending t h e v e r d i c t form, over objection, and submitting t o t h e jury a f t e r i n s t r u c t i o n s were s e t t l e d , an i s s u e of damages t o t h e pump, when such damages were n o t plead, were n o t based on evidence and were n o t covered by jury i n s t r u c t i o n s ? 2 . Did t h e c o u r t e r r i n submitting t o t h e jury, over objections, t h e i s s u e of damages f o r t h e l o s s of the hay crop f o r t h e year 1974, where t h e only evidence of t h e market value of the hay crop was based on gross market value, without deducting t h e c o s t of production and marketing such crop? 3. Is Agrilease Inc. e n t i t l e d t o i n t e r e s t on t h e unpaid balance of t h e c o n t r a c t a s a matter of law? 4. Did t h e c o u r t e r r i n allowing t h e jury t o consider an o f f s e t t o t h e Agrilease claim f o r t h e payment of t h e L i n v i l l e [subcontractor under ~ g r i l e a s e ] l i e n i n excess of $2,139.36? I s s u e 1. This i s s u e concerns amendment of t h e v e r d i c t form a f t e r a l l i n s t r u c t i o n s had been s e t t l e d . The posture of t h e case was t h a t both s i d e s had r e s t e d , t h e i n s t r u c t i o n s were s e t t l e d , and Agrilease, Inc. had o f f e r e d a v e r d i c t form f o r submission t o t h e jury. A t t h a t point counsel f o r Gray moved t h e c o u r t t o amend t h e v e r d i c t form, s o t h e jury could make specific findings on several additional issues. One amendment allowed permitted the jury t o award a sum f o r damages t o the pump and the jury awarded $4,799 damages. A t the time the t r i a l judge allowed the amendment he noted: "There was no proof i n there a t a l l a s t o what it would cost t o r e p a i r it." W e agree and find the court erred i n allowing t h i s amendment. Here, the complaint s e t f o r t h seven counts; none covered the cost of r e p a i r t o the pump or the damages t o the pump. N o e f f o r t was made t o prove the cost of repair or t h a t the pump or the system sustained any loss i n market value by virtue of the damaged pump. The sole evidence a s t o the value of the pump appears from Agrileasels exhibit, the purchase order, indicating a cost of $4,000. There was nothing i n the record for the jury t o base a market value on, due t o the damage t o the pump or the cost of r e p a i r . N o instructions were given on the cost t o r e p a i r the pump, nothing supports the $4,747 figure. Gray argues there was evidence the pump cost $4,000; t h a t it was badly damaged and the cost t o r e p a i r it would be a t l e a s t $4,000. Gray c i t e s a s authority t o amend a verdict form the case of Smith v'. Jacobsen, 224 O r . 627, 356 P.2d 421. . Neither t h i s case nor cases l a t e r c i t i n g it a s authority for amending pleadings allowed an amendment a t t h i s stage of the case. Dorr v. Janssen, 233 O r . 505, 378 P.2d 999; Beard v. Beard, 232 O r . 552, 376 P.2d 404, 406; Eck v. Market Basket, 264 O r . 400, 505 P.2d 1156. In Beard the Oregon Court noted: "* * * amendment is allowed with reasonable l i b e r a l i t y , particularly where the matter covered by the amendment i s s u f f i c i e n t l y brought t o the notice of the adversary i n the original pleading and during the t r i a l so t h a t he can be prepared t o meet the issue." 376 P'.2d 406. That i s not the case before us. Here, Gray did not move t o amend her pleadings t o conform t o the evidence, r a t h e r she moved t o amend t h e v e r d i c t form t o include an i s s u e r e l a t i n g t o damages t o t h e motor caused by negligence. The holding of t h i s Court i n Lovely v. Burroughs Gorp., 165 Mont. 209, 217, 527 P.2d 557, c o n t r o l s : a am ages may properly be awarded when they serve t o compensate t h e p l a i n t i f f f o r detriment proximately caused by t h e defendant. Section 17-301, R.C.M. 1947. Before an award can be made, t h e damages must be c l e a r l y a s c e r t a i n a b l e i n both t h e i r n a t u r e and o r i g i n . Section 17-302, R.C.M. 1947. Damages which a r e a m a t t e r of mere s p e c u l a t i o n cannot be t h e b a s i s of recovery. [ c i t i n g c a s e s ] " 165 Mont. 217. Gray's r e l i a n c e on Bos v. Dola jak, 167 Mont. 1, 534 P.2d 1258, does not bear f r u i t . There t h e damages were c e r t a i n and capable of determination. Here, they a r e n o t . To recover t h e p a r t y seeking damages f o r l o s s of personal property must show i t s value before and a f t e r o r t h e c o s t of Yepair. Bos v . Dola jak, supra; Spackman v. Ralph M. Parsons Co., 147 Mont. 500, 414 P.2d 918. I s s u e 2 . This i s s u e concerns a l l e g e d e r r o r by t h e t r i a l c o u r t on damages f o r l o s s of t h e 1974 hay crop. Agrilease a l l e g e s evidence of t h e market value of t h e hay was based on t h e gross market value, without deducting t h e c o s t of production and marketing. Here, t h e jury awarded $13,585 f o r t h e l o s s of t h e hay crop and f o r use of pasture occasioned by A g r i l e a s e f s f a i l u r e t o g e t water t o t h e crop. No value was a s s e s s e d t o the 1974 hay crop l o s s i n t h e v e r d i c t . While Gray claimed damages f o r a l o s s of 155 tons, valued a t $43 per ton, she d i d recover about 70 t o n s from t h e first c u t t i n g , b u t t h e r e was no evidence i n t h e record on t h e c o s t of plowing, weeding, o r h a r v e s t i n g t h a t crop. The c o u r t i n s t r u c t e d as t o damages: "YOU a r e i n s t r u c t e d t h a t t h e measure of damages f o r t h e l o s s of crops and forage i s t h e market value l e s s c o s t s of growing t h e crops and forages i f s o l d by t h e grower, however, i f t h e grower of t h e crops o r forage uses t h e crops and forage l o s t f o r o t h e r feed f o r t h e grower's l i v e s t o c k then t h e measure of damages is t h e market value of t h e crops and forage 10s t . I' This i n s t r u c t i o n was improper and caused e r r o r due t o t h e f a c t it gave no consideration t o the c o s t f a c t o r s . W e f i n d no a u t h o r i t y f o r t h a t portion of t h e i n s t r u c t i o n r e l a t i n g t o where t h e crops a r e used t o feed t h e grower's c a t t l e , t h e pro- duction c d s t s a r e t o be deducted. While Gray t e s t i f i e d she had t o purchase hay t o r e p l a c e h e r 1974 crop l o s s , she d i d n o t t e s t i f y how much was purchased o r a t what p r i c e . Gray r e l i e s on t h i s Court's holding i n Eablonski v. Close, 70 Mont. 292, 225 P. 129. That case is n o t i n p o i n t f o r t h e r e testimony was permitted, because t h e r e w a s n o t an e s t a b - l i s h e d o r known market value f o r timothy hay. Here, t h e market value was e s t a b l i s h e d by Gray and o t h e r witnesses. I n a: l a t e r case involving t h e l o s s of a hay crop, . Goetschius v. Lasich, 137 Mont. 465, 476, 353 P.2d 87, t h e Court e s t a b l i s h e d t h i s r u l e f o r a s c e r t a i n i n g damages: "NO c a l c u l a t i o n was made of t h e expense of h a r v e s t i n g o r marketing t h e drop, which should have been f i g u r e d i n showing n e t l o s s . I n e s t i m a t i n g h i s damages, he included $114.20 f o r t h a t which was necessary t o be done i n order t o r a i s e a crop, and t h e a c t u a l damages he could recover, would be $244, i f no con- s i d e r a t i o n be given c o s t of marketing, o r h a r v e s t i n g crop, The c o u r t gave him a judgment f o r $395.55 on account of l o s s of crop a g a i n s t a l l defendants. "on t h e face of t h e record, it would appear t h a t i f t h e p l a i n t i f f s should have grossed $244 from t h e i r crop, with necessary prepara- t i o n , and had an expense i n producing t h e crop of $114.20, t h e i r n e t l o s s would be $129.80. W e know of no r u l e of law which would j u s t i f y t h e allowances which were made i n t h i s case. " 137 Mont. 476. This case follows t h e long e s t a b l i s h e d r u l e of law i n t h i s s t a t e t h a t only t h e n e t value, n o t t h e g r o s s value of l o s t crops can be recovered. Carron v. Wood, 10 Mont. 500, 26 P. 388; Hopkins v. Butte & Montana Commercial Co., 16 Mont. 356, 40 P. 865; Rass v. Sharp, 46 Mont. 474, 128 P. 594. I s s u e 3. This i s s u e is d i r e c t e d t o whether o r n o t Agrilease is e n t i t l e d t o i n t e r e s t on t h e unpaid balance of t h e c o n t r a c t . Section 17-204, R.C.M. 1947, provides as t o c o n t r a c t claims, t h a t every person who i s e n t i t l e d t o recover damages c e r t a i n , o r capable of being c e r t a i n by c a l c u l a t i o n , and t h e r i g h t t o recover which is vested i n him on a day c e r t a i n i s a l s o e n t i t l e d t o recover i n t e r e s t thereon from t h a t day. Respondent Gray argues t h a t Agrilease, Inc. claimed items t o which it was n o t e n t i t l e d , s o t h e account between them was n o t " c e r t a i n by c a l c u l a t i o n " , t h e r e f o r e no i n t e r e s t . I n support respondent c i t e s Daly v. Swift & Co., 90 Mont. 52, 300 P. 265; School D i s t . No. 1. v. Globe & Republic I n s . Co., 146 Mont. 208, 404 P.2d 889. W e f i n d t h e s e cases n o t a p p l i c a b l e t o t h e f a c t s i t u a t i o n i n t h e i n s t a n t c a s e . I n e f f e c t , what respondent argues is t h a t t h e recovery of i n t e r e s t on a l i q u i d a t e d claim can be defeated by a counterclaim f o r an u n l i q u i d a t e d amount. W e do n o t agree, nor do we f i n d a u t h o r i t y i n support of r e s p o n d e n t t s argument. The c o n t r a c t i n t h e i n s t a n t case provided f o r t h e f i n a l payment on t h e day the system w a s placed i n operation. That date came i n l a t e October 1974, and Gray received monthly statements t h e r e a f t e r by c e r t i f i e d mail. A t t r i a l t h e jury returned a v e r d i c t i n t h e exact amount of those monthly statements $20,059.29, b u t f a i l e d t o consider i n t e r e s t due t o an e r r o r by the t r i a l c o u r t i n f a i l i n g t o approve an i n s t r u c t i o n on an account s t a t e d . Several California cases properly construe section 17- 204, R.C.M. 1947, as it was taken from the California Code, Section 3287. The most recent California case Tripp v. Swaap, 131 Cal. Rptr. 789, 552 P.2d 749, 757, s e t s out the f a c t o r s necessary t o s a t i s f y Section 3287: "Under Section 3287, subdivision ( a ) as i n t e r - preted i n Mass, supra, a claimant must s a t i s f y three conditions f o r the recovery of i n t e r e s t i n a mandamus a c t i o n against a s t a t e : (1) There must be an underlying monetary obligation; (2) the recovery must be c e r t a i n o r capable of being made c e r t a i n by calculation; and (3) the r i g h t t o recover must vest on a p a r t i c u l a r day. I t 552 P.2d 757 See a l s o : Hansen v. Covell, 218 Cal. 622, 24 P.2d 772; Lineman v. Schmid, 32 C.2d 204, 195 P.2d 408; Anno. 60 ALR3d 487, 512. Here Agrilease f u l f i l l e d the t h r e e conditions s e t f o r t h i n Tripp t o recover i n t e r e s t . I t s r i g h t t o payment accrued as of October 1974, and the payment was f o r an amount c e r t a i n . A l l t h a t happened t h e r e a f t e r i n the summer of 1975 t o the " ~ u r p h y switch" and t o the pump does not a f f e c t the f i n a l c o n t r a c t payment d a t e . A s f o r the items t h a t might reduce t h a t sum, the unused pipe, the use of Gray's t r a c t o r , e t c . , a r e a l l e a s i l y ascertainable and can be made c e r t a i n a t any time. O n f i e t r i a l Agrilease is e n t i t l e d t o i n t e r e s t as a matter of law. Issue 4. This i s s u e i s d i r e c t e d a t the c o u r t ' s e r r o r i n allowing the jury t o consider the o f f s e t t o the Agrilease claim f o r the payment of the Linville l i e n i n excess of $2,139.49. L i n v i l l e was the subcontractor who f i l e d a l i e n on Gray's property f o r payment of its account f o r e l e c t r i c a l services perfomed on the pump and the i r r i g a t i o n system. The a c t i o n t o foreclose the l i e n was s e t t l e d j u s t p r i o r t o t r i a l . I f Gray had paid Agrilease the balance of the contract when t h a t account was due, the mechanic's l i e n by L i n v i l l e would not have been f i l e d , f o r L i n v i l l e would then have been paid by Agrilease, Inc. The t r i a l court allowed the jury t o award, by i t s i n s t r u c t i o n , Gray the sum of $2,481. This amounted t o a payment of i n t e r e s t t o L i n v i l l e and its a t t o r n e y fees. This award was improper and should not be considered a t r e t r i a l . The judgment of the t r i a l court is reversed and the case is remanded f o r new t r i a l , unless i n the a l t e r n a t i v e , Gray agrees t o accept a reduction of $12,113.51 plus i n t e r e s t from h e r t o t a l recovery within 30 days. W e Concur: J u s t i c e s