No. 85-367 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

TRI-COUNTY PLUMBING & HEATING, INC., 

a Montana corp., and ATLAS ELECTRIC, 

INC., a Montana corp., & INGRAM-CLEVENGER, 

INC., a Montana corp., Intervening Plaintiff, 

Plaintiffs and Respondents, 

LEVEE RESTORATIONS, INC., a Montana corp., 

and DEER LODGE BANK & TRUST CO., a corp., 

Defendants and Appellants. 

APPEAL FROM: District Court of the Twelfth Judicial District, 

In and for the County of Choteau, 

The Honorable Chan Ettien, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Swanberg, Koby, Swanberg & Matteucci; Gorham Swanberg, 

Great Falls, Montana (Levee Restorations) 

Jardine, Stephenson, Blewett & Weaver; Greg Luinstra 

argued, Great Falls, Montana (Deer Lodge Bank) 

For Respondent: 

Hooks & Rudewitz; Tom Budewitz argued, Townsend, 

Montana 

Ronald F. Waterman argued, Helena, Montana 

Submitted: April 22, 1986 

Decided: June 5, 198b 

Filed: yub! 5 - 1986 

Clerk 
Mr. Justice John Conway Harrison delivered the Opinion of the 

Court. 

Plaintiff Tri-County Plumbing and Heating, Inc./Atlas 

Electric, Inc. (hereinafter "Tri-County") brought this action 

in Chouteau County District Court to foreclose a mechanics' 

lien filed by them against certain real property located in 

Fort Benton, Montana, owed by defendant Levee Restorations, 

Inc. (hereinafter "Levee"). The Deer Lodge Bank and Trust 

Company (hereinafter "Bank") was also named as a defendant by 

virtue of its mortgage on the same real property. 

Ingram-Clevenger, Inc. (hereinafter "Ingram-Clevenger") filed 

a motion to intervene as a plaintiff in order to foreclose 

its own mechanic's lien on the same property. The Bank then 

cross-claimed against Levee to foreclose its mortgage on the 

subject property. 

The matter was heard by the District Court, sitting 

without a jury, in March of 1985. In June of 1985, the trial 

court issued its findings of fact, conclusions of law, and 

decree granting judgment against Levee in favor of Tri-County 

and Ingram-Clevenger for the amounts requested in their 

respective mechanic's liens plus interest, attorneys fees and 

costs. The trial court also awarded judgment against Levee 

in favor of the Bank for the amount of their mortgage plus 

interest, attorneys fees, and costs. The trial court further 

accorded the liens of Tri-County and Ingram-Clevenger equal 

status and declared them to be superior in priority to the 

mortgage of the Bank. In addition, the trial court granted 

lien status to certain items furnished by Tri-County and 

Ingram-Clevenger which followed the date on which their 

mechanic's liens were filed. These additional items were 

supplied by the two plaintiffs for the preservation and 

protection of the subject property and were awarded a first 
priority by the trial court over payment of all other liens 

and encumbrances. Only the Bank, and not Levee, appeals from 

this judgment of the trial court. We affirm. 

On November 4, 1983, Ingram-Clevenger (a general 

contractor with its principal place of business in Helena, 

Montana) entered into several contracts with Levee for the 

interior restoration, remodeling and renovation of the Grand 

Union Hotel ("Hotel") located in Fort Benton, Montana. The 

total contract price for the work to be performed under these 

contracts was $862,260. Ingram-Clevenger then subcontracted 

a major portion of the work to Tri-County (a plumbing, 

heating and electrical contractor with his principal place of 

business in Helena, Montana) for the performance of the 

plumbing, heating and electrical work on the Hotel. 

On February 6, 1984, Levee obtained a loan from the Bank 

in the amount of $210,000. The majority of this loan 

($179,500) was applied by Levee to the Hotel renovation 

project. This loan was secured by two mortgages given by 

Levee to the Bank, one of which included a mortgage on the 

Hotel. The other mortgage given by Levee to the Bank was not 

at issue in this lawsuit. The mortgage on the Hotel was 

recorded in the Chouteau County Clerk and Recorder's office 

on February 10, 1984. 

Ingram-Clevenger started work on the Hotel project on or 

about November 4, 1983. From time to time, as required under 

the construction contracts, Ingram-Clevenger submitted 

applications for payment to Levee's architect for the 

project, Richard Shope. Ingram-Clevenger submitted a total 

of nine applications for payment to Shope, of which only the 

first four were approved and paid covering the period from 

November, 1983 through February, 1984. The last five 

applications for payment (covering March through May, 1984) 
were not approved or paid by Shope because Levee had not 

secured future financing for the Hotel project. After the 

last payment was made by Levee to Ingram-Clevenger in 

February of 1984, Ingram-Clevenger continued to work on the 

project apparently in anticipation of Levee securing future 

financing. During the late spring of 1984, it became 

apparent that future financing for the project could not be 

found and Ingram-Clevenger halted work at the end of May. It 

appears that the only financing obtained by Levee for the 

Hotel project was the above mentioned loan from the Bank. To 

date, Levee has only paid the sum of $145,440 to 

Ingram-Clevenger under the Hotel project contracts, despite a 

total of over $600,000 worth of work having been performed by 

the plaintiffs. 

On June 7, 1984, Tri-County filed a mechanic's lien 

against the Hotel in the amount of $149,829. This sum 

represented the amount it was owed by Ingram-Clevenger for 

its unpaid subcontracting work. On July 7, 1984, 

Ingram-Clevenger filed its own mechanic's lien against the 

Hotel for the sum of $441,344. This sum was the unpaid 

portion of the Hotel project contracts at the time the lien 

was filed, and it was based on the unpaid applications for 

payment presented to Levee. Both of these liens were 

properly recorded with the Clerk and Recorder of Chouteau 

County. 

It should be noted tha.t Tri-County' s mecha.nic ' s lien 

claim was included in its entirety in Ingram-Clevenger's lien 

except for the sum of $2,369. This amount represented items 

which were negotiated directly between Tri-County and Levee, 

and this sum was included in Tri-County's lien of $149,829. 

Following the filing of the mechanic's liens by 

Tri-County and Ingram-Clevenger, both Ingram-Clevenger and 
Tri-County continued to incur expenses relating to the 

protection and preservation of the Hotel project. These 

expenses included $10,000 for the installation of a water 

line, $3,671.99 for insurance premiums, $5,303.91 for gas and 

electricity, and $629 for repairs due to freezing. 

Once it became apparent that no more funds were 

forthcoming from Levee for the Hotel project, Tri-County 

filed suit on its mechanic's lien on June 8, 1984, and the 

above-described proceedings ensued. The District Court 

granted judgment against Levee in favor of Tri-County and 

Ingram-Clevenger for the respective amounts of their 

mechanic's liens, $149,829 and $312,491 (which included a 

$20,976 mathematical error discovered during trial). 

Ingram-Clevenger's judgment was later reduced by the trial 

court to the sum of $300,076 due to the sale of certain 

construction supplies from the Hotel project. The trial 

court also accorded equal lien status to the liens of 

Ingram-Clevenger and Tri-County, and declared the mortgage of 

the Bank ($210,000) to be second in priority. The trial 

court further decreed that the "preservation" expenses 

incurred by Ingram-Clevenger and Tri-County should be 

accorded a first priority of payment over all other liens and 

encumbrances. 

The Bank now presents the following pertinent issues for 

review by this Court: 

1. Did the District Court err in not granting a 

continuance of the trial in order that discovery could be 

initiated and completed? 

2. Was there substantial evidence to support the 

finding of the District Court as to the amount of 

Ingram-Clevenger's lien and that the lien was not in fact 

overstated? 
3. Did the District Court err in awarding lien status 

to certain "preservation expenses" incurred subsequent to the 

filing of Ingram-Clevenger's and Tri-County's mechanic's 

liens and granting a priority to these expenses superior to 

that accorded either the mechanic's liens or the Bank's 

mortgage? 

4. Did the District Court err in awarding 

Ingram-Clevenger an amount in excess of the stated amount of 

its lien as actually filed with the Clerk and Recorder where 

no additional or supplemental lien was filed? 

5. Did the District Court err in awarding the liens a 

priority status over that of the Bank's mortgage? 

I. 

Did the District Court err in not granting a continuance 

of the trial in order that discovery could be initiated and 

completed? 

The Bank basically argues the District Court erred in 

not granting its request for a continuance on the day of 

trial. The Bank argues it needed the continuance because it 

was not prepared to adequately cross-examine the lien 

claimant's witnesses due to an insufficient amount of time to 

conduct discovery. The Bank points out this case had 

originally been set for trial in November, 1984. At that 

time, the parties stipulated to a vacation of that trial date 

due to pending settlement negotiations. Thereafter, on 

January 24, 1985, the original counsel for the Bank withdrew 

from the case and present counsel was substituted. The 

District Court then set the case for trial on February 26, 

1985, which was just over one month after the present counsel 

for the Bank came into the case. The Bank argues its present 

counsel immediately filed a motion for a continuance, which 

was granted, but the trial date was only set back some three 
weeks to March 12, 1985. The Bank points out its present 

counsel had only been appointed for seven weeks when the 

trial began. 

The Bank contends due to the quick trial date of this 

case after its substitution of new counsel, adequate 

discovery was not conducted by any of the parties involved. 

In fact, the Bank argues, no discovery had been initiated by 

any of the parties until the Bank's present counsel came into 

the case. Therefore, the Bank argues, it was prevented at 

trial from properly cross-examining the claimants' witnesses 

(especially with regard to the amounts of the mechanic's 

liens), and this Court should grant it a new trial. We 

disagree. 

First, it must be pointed out that any motion for a 

continuance of trial is within the sound discretion of the 

District Court. This Court has said it will not overrule a 

District Court's decision to deny a motion for a continuance 

of trial unless there is "an affirmative showing that the 

complaining party has suffered prejudice." State v. Bailey 

(1935), 99 Mont. 484, 488, 44 P.2d 740, 742. In the present 

case, there is no showing that the Bank suffered prejudice by 

proceeding to trial on the scheduled date. 

As the claimants point out, the Bank had nine months to 

do whatever discovery it deemed necessary from the date the 

suit was filed (June 8, 1984) until the date of trial (March 

12, 1985). Admittedly, new counsel was substituted for the 

Bank on January 24, 1985, but one continuance of the trial 

was granted for this reason (February 26 to March 12, 1985). 

Furthermore, once new counsel was substituted for the Bank, 

they made no effort to do any discovery on their own. The 

record indicates they made no effort to schedule any 

depositions or request the production of documents. 
Therefore, the District Court did not abuse its 

discretion in denying the Bank's motion for a continuance 

made on the day of trial. 

Was there substantial evidence to support the finding of 

the District Court as to the amount of Ingram-Clevenger's 

lien and that the lien was not in fact overstated? 

The Bank correctly points out that under Montana law a 

mechanic's lien claimant does not have a right to a lien 

until he can show or prove his lien. 

The burden is upon the plaintiff to establish his 

lien (citation omitted), and, to support this 

burden, he must show, not only that he furnished 

the materials, but also that they were used for the 

enhancement of the property to which he claims he 

has a right to resort as security for the debt thus 

created. In the absence of this showing, his 

equity does not arise (citations omitted). 

Rogers - Templeton Lumber Co. v. Welch (1919), 56 Monte 321, 

The Bank further points out it is clear in Montana that 

a lien holder is entitled to the reasonable value of its 

labor and materials furnished. 

The abandonment of an improvement before the 

completion thereof, by the owner of the premises, 

without fault on the part of the contractor, does 

not abrogate the right of the contractor, laborers, 

and material men to mechanics' liens for the value 

of the work done and the material furnished. 

(Citations omitted) . 

Williams Brothers Construction v. Vaughn (Mont. 1981), 631 

In light of these standards, the Bank argues that 

Ingram-Clevenger, and therefore Tri-County, have not 

established the amounts of their liens. The Bank asserts the 

measure of damages to which the lien claimants are entitled 

is determined by the value of the materials and labor 

furnished which, of course, is a matter of proof. The Bank 
argues the claimants cannot base the amounts of their liens 

solely on estimates of the labor and materials they put into 

the Hotel project. Yet, the Bank argues, that is exactly 

what the lien claimants have done and that is the basis upon 

which the District Court awarded them the amounts of their 

liens. 

The Bank contends in the present case the amount of 

Ingram-Clevenger's lien, which includes Tri-County's lien, 

was established mainly through the testimony of Joe Petrini, 

the secretary/treasurer for Ingram-Clevenger. The Bank 

claims that Petrini testified at trial that he was the person 

who prepared and submitted the applications for payment to 

Levee's architect for the Hotel project, Richard Shope. The 

Bank further claims that Petrini testified that these 

applications for payment submitted to Levee were not based on 

the actual amount of materials and labor put into the 

project, but rather he testified that these applications for 

payment were based solely on estimates of the labor and 

materials furnished. The Bank strongly relies on the 

following testimony from Petrini to establish that 

Ingram-Clevenger's applications for payment were solely based 

on estimates: 

Q. (By Ronald Waterman, Ingram-Clevenger's 

counsel) Mr. Petrini, in the application 

forms, as an example, the application dated 

through the period of December 3rd, 1983, 

would you tell the court, are these commonly 

prepared by you? 

A. (By Petrini) In the course of our business, 

yes. 

Q. And how are these prepared? 

A. At the request of an architect, owner. And to 

eliminate confusion, to try to allow the 

architect and the owner to reasonably review 

percentage of completion, we prepared a 

breakdown. In this case, at the request of 

the architect prior to submittal, this was 
acceptable to him. And we proceeded on that 

basis. 

Q. Did you actually develop this application, 

you, yourself? 

A. Yes. Idid. 

Q. And were these figures drawn from other books 

and records which are regularly kept within, 

with Ingram-Clevenger? 

A. Okay. These figures are developed using our 

estimated, estimating procedure. This I 

funnel all of those estimated costs into a 

category. Just to allow everyone to be able 

to better understand the billing process. 

(Emphasis added. ) 

The Bank claims the above testimony, together with other 

testimony by Petrini, establishes that the figures used on 

the applications for payment submitted to Levee were based 

only on estimates of the work completed and were not 

developed from an actual tally of hours spent on the job or 

from materials invoiced and installed. The Bank argues there 

was no proof presented at trial whatsoever which established 

a certain dollar figure of the labor and materials actually 

put into the Hotel project. Consequently, the Bank argues, 

because these estimated applications for payment were the 

basis for the amounts of the claimants' liens, the liens 

themselves are only estimates and must be disregarded. 

Furthermore, the Bank argues, there was also strong 

evidence presented at trial that Ingram-Clevenger's lien, 

which includes Tri-County's lien, was in fact overstated. 

The Bank points to the testimony of Richard Shope (Levee's 

architect for the project) and Larry Truchot (an architect 

and independent contractor who testified on behalf of Levee 

and the Bank) to establish that Ingram-Clevenger's lien was 

excessive. The Bank argues both of these men separately 

evaluated the amount of materials and labor which actually 

went into the project and compared this amount to the figures 
on Ingram-Clevenger's filed lien, and both men concluded that 

Ingram-Clevenger's lien was excessive. In fact, the Bank 

asserts, Shope and Truchot testified that Ingram-Clevenger's 

filed lien should be reduced somewhere between 15 percent and 

22 percent. Therefore, the Bank argues, because 

Ingram-Clevenger's lien appears to be intentionally 

overstated based on a faulty "estimating procedure," the lien 

itself should be vitiated (voided). See, Duval v. Fuchs 

(1962), 141 Mont. 123, 375 P.2d 541. At the very least, the 

Bank seems to argue, this case should be remanded for a new 

trial for an accounting of the actual amounts of the 

claimants' liens. We disagree. 

We hold there is substantial evidence in the record to 

support the award as to the amount of a Ingram-Clevenger's 

mechanic's lien and that this lien was not in fact 

overstated. First, the amount of Ingram-Clevenger's lien was 

not based on estimates as the Bank suggests. Joe Petrini 

(Ingram-Clevenger's secretary/treasurer), testified 

thoroughly and completely during trial about the work which 

had been performed by the claimants on the Hotel project but 

which remained unpaid. Petrini's testimony was not based on 

estimates, but rather it was based. upon the actual records of 

labor performed, materials supplied, and subcontract work 

done. The District Court had before it the summaries of the 

labor and materials supplied by the claimants (plaintiffs' 

exhibits A-1 through A-10) and also the primary documents 

from which these summaries were taken (plaintiffs' exhibits B 

and C). As Petrini testified with regard to exhibit C: 

Q. (By Mr. Waterman) Handing you what has been 

marked proposed exhibit C, what is exhibit C? 

A. (By Petrini) Exhibit C is a computer prepared 

job cost information. 

THE COURT: What? 
A. Job cost information for all of our projects. 

Q. This is all of your projects that are ongoing? 

A. That's correct. 

g. Does part of these records contain the job 

cost information relative to the Grand Union 

Hotel? 

A. That's correct. 

Q. And is that designated in exhibit C with this 

white mark? 

A. That's correct. 

Q. And where are those records drawn from? 

A. From actual costs, labor, actual invoices. 

Subcontract expenses. (Emphasis added.) 

Q. Do these job costs, were these job costs then 

used in making the calculations to come up 

with the exhibits A and A-1 through A-lo? 

A. That's correct. 

As evidenced from the above testimony, we hold 

Ingram-Clevenger's lien was not based on estimates, but 

rather it was based upon actual job cost figures. Therefore, 

there is substantial evidence in the record to support the 

amounts of the claimants' liens. 

We further find that Ingram-Clevenger's lien was not 

overstated. The testimony of Richard Shope and Larry 

Truchot, who both testified that Ingram-Clevenger's lien 

should be reduced by 15 percent to 22 percent, was obviously 

disregarded by the District Court. We see no reason to 

disturb that finding by the lower court, especially in light 

of the overwhelming evidence in the record, as discussed 

above, that supports the amount of Ingram-Clevenger's filed 

lien. Therefore, we find the amount of Ingram-Clevenger's 

lien was not overstated and the award as to the amount of the 

lien shall stand. 
Did the District Court error in awarding lien status to 

certain "preservation expenses" incurred subsequent to the 

filing of Ingram-Clevenger's and Tri-County's mechanic's 

liens and in granting a priority to these expenses superior 

to that accorded either the mechanic's liens or the Bank's 

mortgage? 

As noted in the facts section of this opinion, following 

the filing of the mechanic's liens by Tri-County and 

Ingram-Clevenger, both of these claimants continued to incur 

expenses relating to the protection and preservation of the 

Hotel project. These expenses included $10,000 for the 

installation of a waterline, $3,671.99 for insurance 

premiums, $5,303.91 for gas and electricity, and $629 for 

repairs due to freezing. The District Court concluded that 

these preservation expenses incurred by the claimants should 

be accorded a first priority of payment over all other liens 

and incumbrances involving the Hotel project. 

Apparently the Bank does not take issue with the 

District Court's characterization of these expenses as 

"preservation and protection expenses." Rather, the Bank 

argues these items should not be accorded lien priority 

status ahead of the claimants' mechanic's liens or its 

mortgage. The Bank essentially argues there is no authority 

in Montana which entitles a mechanic's lien claimant to tack 

onto its lien, after it is filed, expenditures for the 

"preservation and protection" of the encumbered property. 

The Bank argues this does not mean the preservation expenses 

are not due and the claimants are not entitled to recover 

these sums from Levee, it simply means these expenses are 

only a general judgment lien on the Hotel property with a 

priority behind that of both the mechanic's liens and the 

Bank's mortgage. We disagree. 
We hold there is sufficient statutory authority to allow 

the claimants to add on to their liens, after they are filed, 

expenditures for the preservation and protection of the Hotel 

property. Section 71-3-112, MCA, provides: 

Holder --- of lien not entitled to compensation. - 

Except as otherwise provided by the Uniform 

Commercial Code, one who hold property by virtue of 

a lien thereon is not entitled to compensation from 

the owner thereof for any trouble or expense which 

he incurs respecting it, except to the same extent 

as a borrower under 70-7-110 and 70-7-111. 

Of the two statutes mentioned in § 71-3-112, MCA, 

§ 70-7-110 is the statute which is pertinent to the instant 

case and reads as follows: 

Who --- to bear expenses. The borrower of a thing for 

use must bear all its expenses during the loan, 

except such as are necessarily incurred by him to 

preserve it -- from unexpected and unusual injury. 

For such expenses he is entitled to compensation 

from the lender, who may, however, exonerate 

himself by surrendering the thing to the borrower. 

(Emphasis added.) 

Although these statutes do not specifically address the 

situation of the instant case, they make one obvious point--a 

lien claimant is entitled to reimbursement from the owner for 

any expenses necessary to preserve his security from 

unexpected and unusual injury. Section 71-3-112 is contained 

under the general provisions regarding lien statutes (Title 

71, Chapter 3, Part 1, MCA), therefore its meaning applies to 

all types of liens involving both real and personal property. 

We agree with the claimants that installation of the 

water line, premiums for fire insurance, the costs of gas and 

electricity, and repairs due to freezing were necessary to 

"preserve it [the Hotel property] from unexpected and unusual 

injury." It is clear that the absence of any of these items 

would have adversely affected the Hotel property and the 

improvements made by the claimants. Further, these are 

expenses that Levee would benefit from if it were to redeem 
its interest in the Hotel property at some future date. 

Therefore, the protection of the claimants ' mechanic ' s liens 

should extend to these items. 

Finally, after finding the preservation expenses may be 

added to the claimants' mechanic's liens, we agree with the 

District Court that these items should be accorded a first 

priority of payment. If a lien priority status is not 

awarded to these items, a mechanic's lien claimant would be 

forced with a choice of either permitting damage or 

destruction to its security, or spending money without hope 

of reimbursement. Furthermore, as mentioned above, the owner 

of the property (i.e. Levee) also indirectly benefits from 

any necessary preservation expenses. Consequently, the 

District Court's ruling regarding the preservation expenses 

shall stand. 

IV. 

Did the District Court err in awarding Ingram-Clevenger 

an amount ($20,976) in excess of the stated amount of its 

lien as actually filed with the Clerk and Recorder where no 

additional or supplemental lien was filed? 

Simply stated, the Bank argues that Ingram-Clevenger is 

not entitled to the amount of a mathematical error discovered 

during the course of trial. During trial, Petrini 

(Ingram-Clevenger's secretary/treasurer) testified there was 

a $20,976 mathematical error in Ingram-Clevenger's filed 

mechanic's lien and that the lien should be increased by this 

amount. The District Court ultimately awarded 

Ingram-Clevenger this math error and tacked it onto the 

amount of their filed lien. The Bank argues there is no 

authority in Montana which permits a lien claimant (such as 

Ingram-Clevenger) to increase (amend) its lien over that 

which has officially been filed. The Bank goes on further to 
argue that Ingram-Clevenger's only remedy would have been to 

file a new lien, which was not done. Just as with regard to 

issue 3, the Bank argues this does not mean the mathematical 

error is not due and Ingram-Clevenger cannot recover this sum 

from Levee, it simply means the mathematical error is only a 

general judgment lien on the Hotel property with a priority 

behind that of both the mechanic's liens and the Bank's 

mortgage. Once again, we disagree with the Bank. 

The Bank correctly points out that under Montana's 

mechanic's lien statutes, certain procedures must be followed 

in order to establish a valid lien. Further, these statutory 

procedures by which a lien is perfected and enforced must be 

strictly followed or the lien is void. See, Crane and Ordway 

Co. v. Baatz (1917) 53 Mont. 438, 164 P. 533; ~arco-~ruden v.

Nelson (1979), 181 Mont. 252, 593 P.2d 48; General ~lectric 

Supply Co. etc. v. Bennett (Mont. 1981), 626 P.2d 844, 38 

St.Rep. 553. However, this Court has also repeatedly said 

that this state's mechanic's lien laws are to be "liberally 

construed": 

[It is a] well-known rule that mechanics' lien laws 

are remedial, and therefore to be liberally 

construed and applied . . . It is that, the 

necessary steps having once been taken to secure 

the lien, the law is subject to the most liberal 

construction, for it is remedial in character, and 

rests upon broad principles of natural equity and 

commercial necessity. 

Crane, 164 P. at 534. 

Also, along this same line, this Court recently stated: 

This Court has uniformly held that the requirements 

of the mechanic's lien statutes as to procedure 

will be strictly enforced. Once the procedure has 

been fulfilled, the statutes will be liberally 

construed so as to give effect to their remedial 

character. (Citations omitted.) 

General Electric, 626 P.2d at 846. 

We hold the above principles are applicable to the 

instant case. Ingram-Clevenger, as the record indicates, 
precisely followed Montana ' s statutory procedure 

(5 71-3-51 (1) , MCA) in perfecting and securing its 

mechanic's lien--the only problem being it made a good faith 

mathematical error in the amount of the lien. As the General 

Electric case indicates, once the procedure to establish a 

lien has been fulfilled, the statutes will be liberally 

construed so as to give effect to their remedial character. 

We hold Ingram-Clevenger should not be prejudiced by its good 

faith mistake. The company made every effort to comply with 

the steps necessary to acquire its lien, and equity demands 

it receive the entire value of its labor and materials put 

into the Hotel project. Therefore, the District Court was 

correct in awarding Ingram-Clevenger the amount of its 

mathematical error. 

Did the District Court err in awarding the mechanic's 

liens a priority status over that of the Bank's mortgage? 

The Bank begins its argument by stating that assuming 

arguendo the mechanic's liens filed by Ingram-Clevenger and 

Tri-County are valid and enforceable for their stated amounts 

(which we have held they are), they are still not entitled to 

a priority over the Bank's mortgage. 

The Bank asserts that 5 71-3-502(4), MCA, is the section 

that controls with regard to the priorities of the instant 

case. This statute provides: 

Section 71-3-502. Priorities. 

(4) The liens attach to the buildings, 

structures, or improvements for which 

they were furnished or the work was done 

in preference to any prior lien, 

encumbrance, or mortgage upon -- the land 

upon which sai~buildings, structures, or 

improvements were erected; and any person 

enforcing such lien may sell the same 

under execution, and the purchaser may 
remove the property sold within a 

reasonable time thereafter. (Emphasis 

added. ) 

The Bank essentially argues that although this statute 

specifically says that a mechanic's lien has priority over a 

prior recorded mortgage, by the words "mortgage upon - the 

land" and "were erected" the priorities of this statute apply 

only where a mechanic's lien arises out of the construction 

of a new structure on previously unimproved land. The Bank 

adopts this interpretation from two early cases by this 

Court: Interstate Lumber Company v. Rider (1933), 93 Mont. 

489, 19 P.2d 644 and Dewey Lumber Company v. McQuirk (19341, 

96 Mont. 294, 30 P.2d 475. 

With regard to the instant case, the Bank argues that 

although its mortgage on the Hotel property was recorded 

prior to the claimants' mechanic's liens, their mechanic's 

liens -- do not have priority under 5 71-3-502(4) because their 

liens arose out of an existing structure on previously 

improved land. The Bank asserts that because the claimants 

were remodeling and renovating an existing structure (i.e. 

the Hotel), the priorities of $ 71-3-502(4) do not apply and 

the claimants' liens must yield to the Bank's mortgage. 

To reach the above result, the Bank admits this Court 

must overrule one of its recent decisions. In Home 

Interiors, Inc. v. Hendrickson (Mont. 1984), 692 ~.2d 1229, 

41 St.Rep. 2408, this Court directly interpreted the meaning 

of $ 71-3-502(4) and stated under the facts of the case that 

mechanic's liens are superior to prior recorded. mortgages or 

trust indentures regardless of the nature of the work done by 

the lien claimants. The Court in Home Interiors refused to 

strictly interpret the words "upon the land" as the Bank now 

suggests, and stated such an interpretation would defeat the 
purpose of § 71-3-502(4) which is that a mechanic's lien has 

priority over a prior recorded mortgage. 

The claimants, on the other hand, argue their mechanic's 

liens have priority over the Bank's mortgage by virtue of a 

simple statute which the Bank has overlooked. Section 

71-3-502 (3), MCA, provides: 

71-3-502. Priorites. 

(3) The liens for work or labor done or 

material furnished, as specified in this 

part, shall be prior to and have 

precedence over any mortgage, 

encumbrance, or other lien made 

subsequent to the commencement of work on 

any contract for the erection of such 

building, structure, or other 

improvement. 

The claimants point out they contracted with Levee to 

restore and remodel the Hotel on November 4, 1983, and 

commenced work on or about the same day. The Bank advanced 

its loan to Levee on February 6, 1984, and filed its mortgage 

on February 10, 1984. The claimants note that under the 

clear wording of subsection (3) of 5 71-3-502 their 

mechanic's liens are superior to the Bank's mortgage. 

Therefore, the statute and cases relied upon by the Bank are 

- not relevant to the present case. Section 71-3-502 (3) , MCA, 

is the only pertinent law which needs to be applied to this 

case. We agree. 

We further find no merit in the Bank's argument that 

5 71-3-502(3) should be strictly construed to pivot on the 

phrase "for the erection of such building, structure, or 

other improvement." Under subsection (3), the priority of a 

mechanic's lien over a subsequent mortgage is - not limited to 

a situation where a new structure is built (erected) on 

previously unimproved land. Such an interpretation would 

defeat the obvious purpose of the statute. 
Finally, the claimants argue, and we agree, even if 

S 71-3-502(3) was not applicable to the present case (which 

it is) , this Court has recently held under the facts in Home 

Interiors that a mechanic's lien is superior to a prior 

recorded mortgage. In Home Interiors we stated that 

mechanic's liens held by material suppliers had priority over 

a prior recorded trust indenture under § 71-3-502(4) because 

the holder of the trust indenture was the party with the 

greatest ability to protect its interest by either 

withholding funds to the extent of the contemplated 

improvements or by requiring the landowner to obtain lien 

waivers. We went on to say this result does not spell 

imminent disaster for the holder of a prior recorded trust 

indenture; it merely requires the holder of a trust indenture 

to exercise ordinary business prudence where construction is 

contemplated. As we stated: 

We therefore hold the party having the greatest 

ability to protect its interests has the burden of 

exercising due care to prevent overreaching by an 

interested party. In this case respondent [a 

mortgage corporation] was in the best position to 

protect against non-payment by the landowner by 

either withholding funds to the extent of the 

contemplated improvements or by requiring the 

landowner to obtain lien waivers from the 

mechanics. 

Home Interiors, 692 P.2d at 1232. 

We see no reason to distinguish the Home Interiors case 

from the instant case. The Bank in the present case had the 

same opportunity and responsibility as the respondent in Home 

Interiors if it wanted to protect its mortgage from the lien 

claimants rights. We hold our decision in Home Interiors is 

still sound law, and we reject the Bank's analysis of 

$3 71-3-502(4) as set forth above. Therefore, even under this 

Court's ruling in Home Interiors, the claimants' liens take 

priority over the Bank's mortgage. 
The judgment of the District Court is affirmed.