Title: MAXWELL v ANDERSON

State: montana

Issuer: Montana Supreme Court

Document:

No. 14336 IN THE SUPREME COURT OF THE STATE OF MONTANA 1978 RAY C. MAXWELL, Plaintiff, Respondent and Cross-Appellant, G. C. ANDERSON, JR., and CAROLE J. ANDERSON, husband and wife, Defendants and Appellants. Appeal from: District Court of the Thirteenth Judicial District, Honorable Jack Shanstrom, Judge presiding. Counsel of Record: For Appellants: Ayers and Alterowitz, Red Lodge, Montana Michael G. Alterowit argued, Red Lodge, Montana For Respondent: Meglen, Murray and Bassett, Billings, Montana J. F. Meglen argued and Chares A. Murray, Jr. argued, Billings, Montana Submitted: December 19, 1978 Decided: MAR 2 8 1979 Filedr , 2, 19f9 M r . J u s t i c e Gene B. Daly d e l i v e r e d t h e Opinion of t h e Court. This a c t i o n involves t h e f o r e c l o s u r e of a mechanic's l i e n by respondent Ray C. Maxwell on a house which he con- t r a c t e d t o b u i l d f o r a p p e l l a n t s Anderson. The D i s t r i c t Court, Thirteenth J u d i c i a l D i s t r i c t , ordered t h e Andersons t o pay Maxwell, t h e c o n t r a c t o r , $15,038.88 on h i s l i e n and a t o t a l of $9,223.41 t o o t h e r s u p p l i e r s who a l s o held l i e n s f o r m a t e r i a l s i n t h e house. I n a d d i t i o n , t h e D i s t r i c t Court ordered Andersons t o pay t h e c o n t r a c t o r ' s a t t o r n e y ' s f e e s i n t h e amount of $3,500. From t h e f i n a l judgment, Andersons appeal. I n May 1976, G. C. Anderson, Jr., prepared and entered i n t o a w r i t t e n agreement with Ray Maxwell t o have Maxwell b u i l d a house f o r t h e Andersons. The w r i t i n g , e n t i t l e d a "construction agreement," provided a r e c i t a t i o n of an "estimated c e i l i n g -- c o s t of $46,500" and allowing f o r a 10 percent margin. During t h e course of construction, Anderson requested numerous changes o r a d d i t i o n s , which t o t a l e d i n c o s t some $14,157.40. The construction agreement provided t h a t Maxwell was t o be paid on a monthly b a s i s f o r h i s m a t e r i a l s and on a bi-weekly b a s i s f o r labor. The construction proceeded normally and Andersons made t h e i r payments on schedule u n t i l September 13, 1976, when M r . Anderson t o l d Maxwell he d i d n o t have enough money t o make t h e next payment. Maxwell considered himself ter- minated on t h e 1 7 t h of September and withdrew h i s crew from t h e p r o j e c t . Anderson contacted Maxwell on t h e 23rd t o arrange h i s r e t u r n t o t h e job, b u t on t h e following day no workmen w e r e on t h e job. Maxwell f i l e d a mechanic's l i e n t o p r o t e c t h i s i n t e r e s t and t h e m a t e r i a l s f o r which he had n o t been paid. At trial Maxwell limited his proof to the issue of how much money he had put into the project by the time his lien was filed and the amount he had actually been paid. Following September 1976, three other business firms, Marchello Hardware, Sherwin Williams, and American Appliance Co., also filed liens on materials used on the project. By the pleadings, the parties had put into issue the question of which party, the Andersons or Maxwell, was responsible for this payment. (The American Appliance lien was included in Maxwell's lien, and Maxwell has acknowledged its payment prior to appeal.) At the conclusion of trial without a jury, the court entered the following conclusions and judgment: "1. Mr. Maxwell has filed a mechanic's lien in accordance with Section 45-502, Revised Codes of Montana, 1947, as amended. "2. The mechanic's lien was properly foreclosed and recovers the value of labor and material as set forth in the lien. "3. Mr. Maxwell substantially completed construc- tion of the defendants' dwelling. "4. The defendants are legally responsible for additional liens and charges against the defen- dants, individually or against the property. "5. The term 'estimates' as used in the May 15, 1976, agreement does not limit the amount of money that the plaintiff may recover. "6. That the defendant, G. C. Anderson, is not entitled to any damages based on loss of wages. "7. That Mr. Maxwell is not a general contractor as a matter of law. "8. The plaintiff is entitled to reasonable attor- neys' fees as provided by Section 93-8614, Revised Codes of Montana, 1947, as amended. "JUDGMENT "Pursuant to the foregoing Findings of Fact and Con- clusions of Law, judgment is entered in plaintiff's favor as follows: "1. The defendants s h a l l pay t o t h e p l a i n t i f f t h e sum of F i f t e e n Thousand S i x Hundred Thirty-Six and 38/100 D o l l a r s , ($15,636.38), minus t h e following s e t - o f f s , f o r a t o t a l of F i f t e e n Thousand Thirty- E i g h t and 88/100 D o l l a r s ($15,038.88): " a . Bypass Valve----------- $70.00 "b. C o r r e c t i o n of W a l l - - - - - 7.50 "c. Correction of S t a i r w e l l 20.00 "d. Correction of C r a w l Space ---------------- 500.00 $597.50 "2. The defendants s h a l l pay t o t h e p l a i n t i f f i n t e r e s t on t h e above amount from September 23, 1976, u n t i l t h e e n t i r e d e b t has been p a i d i n f u l l . "3. That i n t h e e v e n t t h e defendants a r e unable t o pay t h e amount of t h e judgment, t h e Court s h a l l s u p e r v i s e t h e s a l e of any and a l l a s s e t s of defen- d a n t s which may be h e l d t o s a t i s f y s a i d judgment. " 4 . That p l a i n t i f f have judgment a g a i n s t defendants f o r any d e f i c i e n c y remaining i n t h e e v e n t t h e pro- ceeds from t h e s a l e do n o t s a t i s f y p l a i n t i f f ' s claim. "5. That t h e defendants pay any and a l l a d d i t i o n a l l i e n s a g a i n s t t h e property. "6. The defendants s h a l l pay reasonable a t t o r n e y s ' f e e s i n t h e amount o f T h i r t y Five Hundred D o l l a r s ($3500.00), and t h e p l a i n t i f f s h a l l pay t h e balance of F i f t e e n Hundred Two D o l l a r s ($1502.00). "7. That defendants s h a l l pay a l l c o s t s of s u i t . " Appellants p r e s e n t f i v e i s s u e s f o r review by t h i s Court: 1. Is a l i e n h o l d e r e n t i t l e d t o judgment on h i s mechanic's l i e n without r e f e r e n c e t o a n estimated p r i c e s t a t e d i n t h e c o n t r a c t upon which t h e l i e n i s based? 2. Is t h e defendant i n a l i e n f o r e c l o s u r e a c t i o n e n t i t l e d t o a d i r e c t e d v e r d i c t when t h e l i e n h o l d e r f a i l s t o show by t h e p a r t i e s ' c o n t r a c t t h a t he w a s i n f a c t e n t i t l e d t o t h e amount on which he i n t e n d s t o f o r e c l o s e ? 3. Is an award of a t t o r n e y ' s f e e s properly made when ( a ) t h e p r e v a i l i n g p a r t y f a i l e d t o p r e s e n t evidence on f e e s i t s case-in-chief? and, (b) t h e l o s i n g p a r t y had no opportunity t o cross- examine a s t o t h e amount of f e e s involved? 4. May a D i s t r i c t Court properly order a p a r t y i n a l i e n f o r e c l o s u r e a c t i o n t o pay o f f l i e n s held by o t h e r l i e n h o l d e r s who are n o t p a r t i e s t o t h e foreclosure? 5. Is an a p p e l l a n t e n t i t l e d t o a t t o r n e y ' s f e e s i n t h e event t h a t he p r e v a i l s on appeal? The f i r s t two i s s u e s involve t h e same b a s i c question and can be t r e a t e d as one i s s u e . Appellants' p o s i t i o n i s t h a t t h e maximum p r i c e they could be expected t o pay under t h e f a c t s i s t h e " t o t a l c e i l i n g c o s t " of $51,150 p l u s a d d i t i o n a l c o s t s f o r t h e i r a l t e r a t i o n s , amounting t o $14,157.40. Although a p p e l l a n t s do not s t a t e t h i s f i g u r e i n t h e i r b r i e f , it appears t h a t t h e t o t a l they consider themselves t o owe Maxwell under any circumstance i s $65,307.40. Appellants do n o t consider themselves responsible f o r t h e payment of $9,223.41 t o o t h e r c o n t r a c t o r s . The D i s t r i c t Court s p e c i f i c a l l y found t h e Andersons " l e g a l l y responsible f o r a d d i t i o n a l l i e n s and charges." Maxwell contends t h a t because he chose t o proceed under t h e l i e n s t a t u t e s , r a t h e r than c o n t r a c t law, t h e l i e n law governs t h i s case. Under t h e applicable l i e n law, he con- tends, he i s e n t i t l e d t o an e q u i t a b l e quantum meruit f o r m a t e r i a l s and labor p u t i n t o t h e p r o j e c t without regard t o any underlying c o n t r a c t o r agreement. H e f u r t h e r argues t h a t , even i f t h e matter were t o be decided under c o n t r a c t law, t h e estimated p r i c e indicated i n t h e construction agreement would n o t a c t as a l i m i t on t h e c o n t r a c t o r ' s recovery. The Montana mechanic's l i e n s s t a t u t e does n o t speci- f i c a l l y say what r o l e t h e c o n t r a c t between t h e owner and l i e n h o l d e r p l a y s i n determining t h e amount of t h e l i e n . S e c t i o n 45-501, R.C.M. 1947, now s e c t i o n 71-3-501 MCA, simply provides: "Every . . . b u i l d e r . . . performing any work and l a b o r upon, o r f u r n i s h i n g any m a t e r i a l . . . f o r , any b u i l d i n g . . . upon complying with t h e p r o v i s i o n s of t h i s chapter, f o r h i s work o r l a b o r alone, o r m a t e r i a l . . . furnished, has a l i e n upon t h e property upon which t h e work o r l a b o r i s done o r material i s furnished." While a n agreement i s necessary as a p r e r e q u i s i t e t o a l i e n ' s e x i s t e n c e , t h e r i g h t i s s t a t u t o r y and n o t dependent on whether t h e c o n t r a c t with t h e owners of t h e property i s w r i t t e n , o r a l , express o r implied. Nontana d e c i s i o n s are less c l e a r a s t o how t h e t o t a l c o n t r a c t p r i c e a f f e c t s t h e amount of t h e l i e n . The p a r t i c u l a r q u e s t i o n r a i s e d by ap- p e l l a n t s h e r e was addressed i n Smith v. Gunniss (1943), 115 Mont. 362, 383-84, 1 4 4 P.2d 186, 193. I n Gunniss t h e owners had c o n t r a c t e d f o r work t o be done on t h e i r home, b u t had n o t agreed upon a t o t a l p r i c e . I n s t e a d , t h e owners had agreed t o pay f o r t h e remodeling by s i g n i n g " a T i t l e One Federal Housing n o t e i n t h e amount due" a t t h e completion of t h e p r o j e c t . Such n o t e s w e r e l i m i t e d t o $2500 by l a w . Therefore, t h e owners argued t h a t they had l i m i t e d t h e i r o b l i g a t i o n t o t h a t amount. The Court noted, however, t h a t t h e owners had been a p p r i s e d during t h e remodeling t h a t t h e c o s t s w e r e going over $2900 and t h a t t h e owners permitted t h e work t o continue beyond t h a t p o i n t . Thus, it r u l e d t h a t t h e owners had acquiesced i n an abandonment of t h a t c o n t r a c t provision. Gunniss i s n o t our c a s e on a l l p o i n t s b u t does demon- s t r a t e t h a t under proper circumstances an award can be made based on t h e reasonable c o s t of labor and m a t e r i a l s f u r - nished by t h e l i e n h o l d e r , i n disregard of t h e o r i g i n a l c o n t r a c t . Maxwell i s i n a s t r o n g e r p o s i t i o n because he was building under an agreement drawn by t h e owner which w a s based on an "estimated" c o s t of m a t e r i a l and labor f o r a c e r t a i n s t r u c t u r e . The estimated c o s t was f u r t h e r s u b j e c t t o a number of v a r i a b l e s , i.e., 10 percent o r i g i n a l e r r o r , owner permitted t o f u r n i s h a l l labor p o s s i b l e t o hold down c o s t s and t h e a b s o l u t e r i g h t of t h e owner t o change plans and s p e c i f i c a t i o n s a t w i l l . I n any event, o t h e r c o u r t s have determined estimated c o s t s t o mean: "The 'estimated c o s t ' of a building means t h e rea- sonable c o s t of a building e r e c t e d i n accordance with plans and s p e c i f i c a t i o n s r e f e r r e d t o and n o t n e c e s s a r i l y t h e amount agreed upon by t h e p a r t i e s o r an o f f e r accepted by defendant. . . An estimate i s equivalent of 'more o r l e s s ' and does n o t pre- tend t o be based on absolute c a l c u l a t i o n s . Use of t h e word precludes accuracy. 'To make an e s t i m a t e ' o r d i n a r i l y means t o c a l c u l a t e roughly o r t o form an opinion a s t o amount from imperfect d a t a . See B e e l e r v. M i l l e r , Mo. App., 254 S.W.2d 986, 990, and a u t h o r i t i e s c i t e d ; 15 Words and Phrases, 'Es- t i m a t e ' , pp. 373-380; Black, Law Dictionary (Fourth Ed. 1951), 648; B a l l e n t i n e ' s Law Dictionary (Third Ed. 1969), 420." Denniston and P a r t r i d g e Co. v. Mingus (Iowa 1970), 179 N.W.2d 748, 752-53. Appellants admit t h a t a l l m a t e r i a l and labor claimed by Maxwell were i n f a c t used i n t h e construction of t h e house, and t h a t a p p e l l a n t s changed t h e plans many t i m e s during construction. The D i s t r i c t Court found that t h e owners "acted independently and f o r t h e i r own b e n e f i t when they purchased m a t e r i a l and secured s e r v i c e s from o t h e r c o n t r a c t o r s . " Appellants do n o t attempt t o show evidence contrary t o t h e D i s t r i c t C o u r t ' s conclusion. They r e l y i n s t e a d upon t h e c o n t r a c t o r ' s f a i l u r e t o show a modification i n t h e construc- t i o n agreement allowing f o r a higher t o t a l p r i c e . I n t h i s kind of s i t u a t i o n , it i s not necessary t o prove a modifica- t i o n of t h e c o n t r a c t by Maxwell. The p a r t i e s never had a "firm" c e i l i n g . Therefore, t h e D i s t r i c t Court properly determined t h e value of t h e l i e n which Maxwell held on Andersons' house. Additionally, t h e findings of t h e D i s - t r i c t Court on t h i s i s s u e were never challenged by substan- t i a l evidence t o t h e contrary and must stand affirmed. Morrison v. City of Butte (1967), 150 Mont. 106, 112, 431 P.2d 79. The remaining i s s u e s may be t r e a t e d summarily. F i r s t , a p p e l l a n t s contend t h a t t h e D i s t r i c t Court wrongly awarded Maxwell a t t o r n e y ' s f e e s because Maxwell f a i l e d t o put on evidence of f e e s during h i s case-in-chief and because appel- l a n t s were denied an opportunity t o cross-examine a s t o t h e i r reasonableness. A s t o t h e f i r s t objection, appellants focus primarily on t h e D i s t r i c t Court's f a i l u r e t o o f f e r an explanation f o r permitting Maxwell t o reopen h i s case-in-chief and present evidence of a t t o r n e y ' s fees. Appellants concede t h a t t h e matter of permitting a l i t i g a n t t o reopen h i s case-in-chief i s placed within t h e d i s c r e t i o n of t h e t r i a l court. Section 93-5101(4), R.C.M. 1947, now s e c t i o n 25-7-301(4) MCA. They contend, however, t h a t they were injured by t h e c o u r t ' s a c t i o n by t h e mere f a c t t h a t Maxwell was permitted t o p u t on evidence and received an award. This has nothing t o do with t h e i n j u r y t h a t might r e s u l t from a d i s o r d e r l y presentation of evidence. N o showing i s made t h a t a p p e l l a n t s were in- jured by t h e manner i n which t h e evidence was presented. While reopening a case-in-chief may n o t be d e s i r a b l e , a more s u b s t a n t i a l showing of harm should be made before t h i s i s declared r e v e r s i b l e e r r o r . A s t o t h e second contention, t h e D i s t r i c t Court ordered Maxwell t o present an itemized statement within twenty days, which he did. Some two months l a t e r t h e D i s t r i c t Court issued i t s findings, conclusions, and judgment. Appellants could have obtained a copy and entered t h e i r objections a t any time during t h e interim. They should not now be per- mitted t o r a i s e t h e i s s u e a s r e v e r s i b l e e r r o r . Appellants' next i s s u e concerns t h e D i s t r i c t Court's j u r i s d i c t i o n t o order them t o pay debts and l i e n s t o e n t i - ties not p a r t i e s t o t h e foreclosure action. The D i s t r i c t Court d i d n o t order appellants t o make payments of any s p e c i f i c sums t o s p e c i f i c businesses. Instead, it found a p p e l l a n t s l e g a l l y responsible f o r o t h e r l i e n s and charges and ordered generally t h a t appellants pay those. The i s s u e of o t h e r l i e n s and charges arose from t h e a c t i o n s of t h e p a r t i e s . Maxwell included t h e l i e n of A m e r i - can Appliance Co. i n h i s amended l i e n . Appellants, on November 2 , 1977, submitted a motion t o amend t h e i r answer and counterclaim. I n t h e i r amended counterclaim they asked t h e D i s t r i c t Court t o order Maxwell t o pay t h e debts t o Marchello Hardware and Sherwin Williams Co. Thus, t h e p a r t i e s asked t h e D i s t r i c t Court t o determine which of them owed various separate businesses and thereby submitted themselves t o i t s j u r i s d i c t i o n . O n t h i s b a s i s t h e r e appears no reason t o reverse t h e D i s t r i c t Court's determination of which p a r t y owes these o t h e r debts. Appellants' l a s t i s s u e involves a t t o r n e y ' s fees. heir argument i s very b r i e f on t h i s point. They note f i r s t t h a t they requested reasonable a t t o r n e y ' s f e e s i n t h e i r answer and counterclaim. Second, they p o i n t t o t h e evidence of a t t o r n e y ' s f e e s which they presented a t t r i a l . Third, they note t h a t on A p r i l 15, 1977, they made an o f f e r of judgment t o p l a i n t i f f , conditioned upon p l a i n t i f f ' s paying o f f a l l t h e o t h e r mechanic's l i e n s which had been f i l e d on t h e house. Their argument then is: "Given t h e f a i l u r e of proof on t h e p a r t of Respondent, a s w e l l a s Appellants' w i l l i n g - ness t o s e t t l e t h i s matter e a r l y on, it i s submitted t h a t Appellants w e r e e n t i t l e d t o be awarded a t t o r n e y f e e s a s prayed f o r and t h a t t h e Supreme Court should e i t h e r order t h e payment of such a t t o r n e y f e e s t o Appellants o r remand t h e i s s u e of a t t o r n e y f e e s t o t h e D i s t r i c t Court f o r f u r t h e r testimony i n con- nection therewith. " Section 93-8614, R.C.M. 1947, now s e c t i o n 71-3-124 NCA, e s t a b l i s h e s t h e p r i n c i p l e of when a t t o r n e y ' s f e e s a r e recover- a b l e on a l i e n f o r e c l o s u r e a c t i o n . They a r e recoverable i n a reasonable amount " t o each claimant whose l i e n i s estab- l i s h e d " and " t o t h e defendant a g a i n s t whose property a l i e n i s claimed, i f such l i e n be n o t e s t a b l i s h e d . " The s t a t u t e makes a t t o r n e y ' s f e e s recoverable t o t h e p r e v a i l i n g party. I f t h e defendants, a p p e l l a n t s i n t h i s case, do not win, they a r e not e n t i t l e d t o a t t o r n e y ' s f e e s . W e concur: Jpstices 4