No. 13620 IN THE SUPREME COURT OF THE STATE OF MONTANA 1977

CARL LAUTERJUNG, Plaintiffand Appellant,

CARLTON J. JOHNSON, Defendant and Respondent.

Appeal from: District Court of the Eighteenth Judicial District, Honorable W. W. Lessley, Judge presiding. Counsel of Record: For Appellant: Vadala, Schwickert & Hanson, Kalispell, Montana Randy Schwickert argued, Kalispell,Montana For Respondent: Brown, Pepper and Kommers, Bozeman,Montana William L. Pepper arqued, Bozeman,Montana

Submitted: October 3, 1977 Decided:

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## IE~Mr. JusticeFrank I. Haswell delivered the Opinion of the Court.

This case concerns the interpretation and effect of a partnership dissolution agreement entered intoby appellant and respondent.Appellant brought this action to recover damages alleged to have been due him under the partnership dissolution agreement. Respondent counterclaimed for the sum of $2,000. The District Court entered judgment in favor of respondent for the sum of $2,000 on the grounds that the agreementwas ambiguous and that the ambiguity should be construed against the appellant in light of the fact that he prepared the agreement. The District Court found that the damages claimed by appellantwere not of a type forwhich respondentagreed to be responsible and were incurred prior to a final testing or inspection of certainwork the partnershipwas obligated to perform. The court concluded that respondentwas only responsible for extraordinary expenses of the partnership incurred subsequent to the final testing or inspection. The court further concluded that damages incurred by appellant subsequentto the said final testing or inspectionwere not extraordinary and that appellant owed respondentthe sun of $2,00O,togetherwith interest from December, 1974. Following the entry of judgment, appellantmoved to amend the findings of fact, conclusions of law and judgment. Appellant's motion was denied and he now appeals to this Court. In the summer, 1973,appellant and respondententered into

an oralpartnership agreement creating the Trails End Construction Company. The partnershipwas engaged in the business of constructingwater, sewer and sanitary sewer lines. InNovember, 1973, the partnership entered into a contractwith Rural Special ImprovementDistrictNo. 305 at Big Sky, Montana, to install a sanitary sewer line. Respondent undertook the responsibility ofsupervising all field work involved in installing the sewer line. Appellant assumed the administrative and managerial duties

on behalf of the partnership. Thepartnership began work on the sewer line inNovember, 1973. 

### By April, 1974, the sewer line was approximately 92% completed. On April 13, 1974,appellantand respondent agreed to dissolve their partnership and the agreement in question was signed. Appellant prepared the dissolution agreement. Prior to the dissolution appellanthad expressed concern with the quality of the work on the Big Sky project. Under the terms of the dissolution agreement, appellant agreed to complete the construction of the sewer line and to pay respondent the sum of $5,000. $3,000of this amount was paid at the time the agreementwas signed and the remaining $2,000was to have been paid at the time the partnership received final payment from Rural Special Improvement ~istrict No. 305. The $2,000payment was not made and is the basis for respondent's counterclaim. The agreement provided as follows in regard to the completion of Rural Special ImprovementDistrictNo. 305: "It is further agreed that Lauterjung will be solely responsible for all existing liabilities of the partnershipwith the exception of Rural Special ImprovementDistrict #305 located in Gallatin and Madison Counties,Montana. With regard to R.S.I.D. 305 it is agreed that Lauterjung will complete the work required on said project but due to the fact that Johnson has previously been primarily involved in the project and due to the fact that theremay be required a testing of the installation involved in thisproject; if such testing or inspection shows a deficiencywhich results in expense which normally would not have been incurred as a part of said project, it is agreed that the parties shall share such expense equally." As a resultof the continuing testing and inspection of the project, deficiencieswere revealedwhich allegedly resulted in abnormal expenses totaling $15,791.64. Appellant demanded one-half of this amount or $7,895.82 from respondent on March 22,1975. Following respondent's failure to respond this action

was commenced. Two issues are before this Court upon appeal:

(1) Whether the evidence supports the ~istrict Court's finding of fact and conclusion of law that the dissolution agreement was ambiguous concerning themeaning of the terms "testing

or inspection". (2)Whether the evidence supports the District Court's findings of fact and conclusions of law that respondent's liability under the dissolution agreementwas only for certain extraordinary partnership expenses arising as a result of a final testing or inspection. This Court recently stated in Luppold v. Lewis, Mont. 

### , 563 P.2d 538, 540, 34 St.Rep. 227 (1977),that: "Whenreviewing findings of fact and conclusions of law of a district court, sittingwithout a jury, this Court has repeatedlyheld such findings and conclusions will not be disturbed if supportedby substantial evidence and by the law. Compton v. Alcorn, 140nt

# . , 557 P.2d 292, 33 St.Rep. 1186 (1976); Brady v. State Highway Cornm'n, 163 Mont. 416, 517 P.2d 738;Timermanv. Gabriel, 155Mont. 294, 470 P.2d 528;Wash. Water Power Co. v. Morgan Electric Co., 152Mont. 126, 448 P.2d 683. When reviewing evidence itwill be viewed in the lightmost favorable to the prevailing party in the district court, and the credibility ofwitnesses and the weight assigned to their testimony is for the determination of the district court in a nonjury trial. (Citations omitted.)

### " The crux of appellant's first issue is a determination of whether thatportion of the dissolution agreement dealing with the testing and inspection of the Big Sky job is ambiguous. Appellant specifically takes issuewith the District Court's finding that the phrase 

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## * if such testing or inspection shows a deficiency which results in expensewhich normallywould not have been incurred as a part of said project, it is agreed that the parties shall share such expense equally" is ambiguous. Appellantargues that the testing or inspection referred to is the interim testing. Respondent, however, argues that his liability, if any,
arose as a result of a final testing of the project. We find an abundance of substantial evidence in the record which supports the District Court's finding of ambiguity. Appellant's Exhibit W1 is a copy of the job specificationsprepared for the Big Sky job. A reading of these specifications clearly reveals that periodic tests and inspections aswell as a final test

were contemplated. Several types of testswere required to be performed at various stages in the construction. Appellant himself testified that his understanding of the term inspectionmeant that the owner or his engineer had the right to inspect the materials and workmanship at any time during construction. It is clear therefore that the dissolution agreement is ambiguous in regard to defining which inspection triggered respondent's duty to share the cost ofmodifications or corrections to the sewer line. The core of appellant's second issue is a determination of whether the District Court correctly ruled that respondent was responsible for extraordinary partnership expenses arising as a result of the final test or inspection only. In cases of uncertainty as to themeaning of a contract this Court has repeatedly followed the rule that the contract should be interpretedmost strongly against the party who caused the uncertainty to exist. Section 13-720,R.C.M. 1947;Miller

v. Walter, 165Mont. 221, 527 P.2d 240; Miller v. Meredith,

### ill and Whitfield, 149Mont. 125, 423 P.2d 595. Appellant drafted the dissolution agreement sowe must construe its termsmost strongly against him in determining the intent of the parties. The District Court ruled that the parties intended that appellant and respondent share the cost ofmodification or repair of the sewer linewhich was required after final inspection.Appellant's argument that the testing and inspection contemplated by the parties was an interim testing simplywas not accepted by the DistrictCourt. Substantial evidence is found in the record to support this ruling. Respondent testified concerning his understanding of the dissolution agreement: "Q. Did you have any discussionswith the Plaintiff concerning the meaning of that language at the time you signed it? A. I asked him about it and he just clarified what I had already thought. "Q. What were the substancesof those discussions? Just summarize it. A. Well, I asked him what it meant and what it involved. And he said thatwe had to do a lot ofwork after the final inspection. He expectedme to help him do half of it,which I agreed to do. "Q. Was ityour understanding that he agreed to finish the job? A. Yes. "Q. And the words 'Testingand Inspection' used in that paragraph, what did Mr. Lauterjung indicate to you that they meant? A. Well, the testing and final inspection before he sold it to Big Sky. "Q. Did he state that to you? A. Yes. It has been a long time,but Iam positive itwas." Furthermore,on cross-examination, appellant himself admitted that: "Q. he language 'testing',Mr. Lauterjung, that implies a final testing; is that not correct? A. Yes. I' The judgment of the District Court is affirmed.

Justice