No. 81-97 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

LEN ANDERSON, d/b/a LEN ANDERSON 

CONSTRUCTION COMPANY, 

Plaintiff and Respondent, 

NORMAN D. HOBBS, individually and NORMAN 

D. HOBBS, d/b/a C. D. VENTURES, 

Defendant and Appellant. 

Appeal from: District Court of the Fifth Judicial District, 

In and for the County of Beaverhead. 

Honorable Frank Blair, Judge presiding. 

Counsel of Record: 

For Appellant: 

Harrison, Loendorf and Poston, Helena, Montana 

For Respondent : 

Drysdale, McLean, Screnar & Cok, Bozeman, Montana 

Submitted on briefs: August 27, 1981 

Filed: gkc. - 'T [h!8;i 

Clerk 
Mr. Justice John Conway Harrison delivered the Opinion of 

the Court. 

This appeal arises from a contract for construction 

on appellant's nursing home in Dillon, Montana. The parties 

entered into the written agreement in January 1977, and the 

work was completed sometime in the late summer of 1977. 

Respondent filed a mechanics' lien against appellant's 

property on October 19, 1977. After trial without a jury, 

the District Court of the Fifth Judicial District upheld the 

lien and issued a judgment for $15,687.92 plus interest and 

attorney fees. This appeal followed. 

In December 1976, at the request of appellant, 

respondent, a general contractor doing business as Len 

Anderson Construction Co., a sole proprietorship, began work 

on Park View Acres in Dillon, Montana, a nursing home owned 

by appellant, Norman D. Hobbs, doing business as C. D. 

Ventures. 

In January 1977 the parties entered into a written 

contract whereby respondent would renovate the existing 

fifty-four-bed facility of Park View Acres and add a fiftyfour-bed wing to the building. The contract provided appellant would pay respondent all costs plus an eight percent 

contractor's fee. Costs included all costs necessarily 

incurred in the proper performance of work paid by the contractor; all wages paid for labor in the direct employ of 

the contractor; all salaries of contractor's employees; a 

portion of reasonable transportation, traveling and hotel 

expenses of the contractor, its officers and employees 

incurred in the discharge of their duties; the cost of all 

materials, supplies and equipment incorporated into the 

work; all payments made by the contractor to subcontractors 
for work performed according to subcontracts under this 

agreement; and costs, including transportation and maintenance, of all materials, supplies, equipment, temporary 

facilities and hand tools not owned by the workmen, which 

are consumed in the performance of the work, and the costs 

less salvage value on such items used but not consumed which 

remained property of the contractor. 

Respondent concluded construction on the project in 

the summer of 1977. On October 19, 1977, respondent filed a 

lien in the amount of $31,218.27. On the lien application 

respondent stated his final day of performance on the 

project was July 21, 1977. At trial respondent testified 

his last full-time work on the project was in the middle of 

August 1977. Respondent also introduced a "punch list" 

prepared by appellant's employees and dated September 23, 

1977. Respondent argued the "punch list" established the 

last day respondent spent any time on the job was in 

September. The costs claimed by respondent were supported 

almost exclusively at trial by cancelled checks. 

The District Court found the lien was filed within 

the ninety-day period required by Montana statute. The 

court also found respondent's lien valid and enforceable and 

made the following determination of the amount owing: 

Costs for Anderson's 

out-of-pocket expenses. . . . . . .$150,362.72 

Defendant's payments 

to date for expenses. . . . . . . . 139,633.00 

$ 10,729.72 

Due Plaintiff for costs. . . . . . . . .$ 10,729.72 

Contractor's fee as a portion 

of 8% of contract and 

total costs on contract . . . . . .$366,977.56 

Contractor's fee equals 8% 

of $366,977.56, for a 

total of. . . . . . . . . . . . . . 29,358.28 
Defendant's payment to date 

for contractor's fee. ....... 12,600.00 

Due Plaintiff for contractor's 

fee ............... .$ 16,758.28 

Total due to Plaintiff by 

Defendant for costs ........ 10,729.72 

Total due to Plaintiff by 

Defendant for fees. ........ 16,758.20 

TOTAL. ................ .$ 27,487.92 

LESS THE FOLLOWING OFFSETS: 

Liquidated damages. ........ 8,000.00 

Lumber from personal stock. .... 3,800.00 

TOTALOFFSETS. ..... .$11,800.00 

TOTAL DUE TO PLAINTIFF ........ .$ 15,687.92 

Four issues are before this Court: 

1. Was the lien filed by respondent within the 

statutory ninety-day period? 

2. Are there gross and substantial exaggerations in 

claims made which constitute fraud and void the filed lien? 

3. Did the District Court err in failing to make 

certain deductions to the amount of the lien? 

4. Did the District Court err in determining in the 

memorandum supporting its findings of fact and conclusions 

of law that Exhibit K was inadmissible as hearsay? 

To perfect a mechanics' lien it must be filed within 

ninety days after material or machinery is furnished or work 

or labor performed. Section 7-3-511(1), MCA. Appellant 

argues there is no credible evidence on the record to 

support the District Court's finding that the lien was filed 

within the statutory period. Respondent filed the lien on 

October 19, 1977, and on the lien stated the last work had 

been done on July 21, 1977. Appellant claims that the last 

work was performed by respondent on July 15, 1977, which was 

when the nursing home opened. At trial, respondent testified 

the date listed on the lien was incorrect and that, in fact, 
his last full time on the job was in the middle of August 

and that he returned in September to complete the project. 

Respondent also submitted into evidence a "punch list" prepared by appellant's employee containing the date September 

23. 

The District Court found the lien had been filed 

within the ninety-day period and specified respondent's work 

was completed on August 19, 1977. 

The standard of this Court on review is whether the 

District Court's findings and conclusions are supported by 

substantial credible evidence. Toeckes v. Baker (1980), - 

Mont . , 611 P.2d 609, 37 St.Rep. 948. If substantial 

evidence exists, this Court will not overturn the District 

Court. Schuman v. Study Comm'n of Yellowstone County (1978), 

176 Mont. 313, 578 P.2d 291. 

It is apparent from the record and the District 

Court's findings that the court gave considerable weight to 

respondent's testimony at trial that his last full-time work 

on the project was in mid-August 1977. In its supporting 

memorandum, the District Court chose August 19, 1977, as the 

final date. The record makes no mention of that specific 

date in August. Therefore, the finding of August 19 cannot 

be aff irned. This Court will, however, give credence to the 

weight the District Court obviously gave respondent's testimony. 

"The credibility and weight given the witnesses . . . 

is not for this Court to determine. This is a primary function of a trial judge sitting without a jury; it is of 

special consequence where the evidence is conflicting." 

Hellickson v. Barrett Mobile Home Transport, Inc. (1973), 
161 Mont. 455, 459, 507 P.2d 523, 525. Where the evidence 

indicates reasonable grounds for different conclusions, the 

findings of the District Court will not be disturbed. Morgen 

& Oswood Const. Co. v. Big Sky of Mont. (1976), 171 Mont. 

268, 274, 557 P.2d 1017, 1021; Morrison v. City of Butte 

(1967), 150 Mont. 106, 112, 431 P.2d 79, 83. 

If respondent's last work on the project occurred any 

time in August or September, the filing of the lien was 

within the statutory ninety-day period. An exact date in 

August or September, however, is necessary for an accurate 

accounting of the $100-a-day offset allowed for late completion of the job. We therefore remand this matter for a 

hearing to establish the exact date in August or September 

on which respondent completed his full-time work on the job. 

The next issue before us is appellant's contention 

that respondent's claim contained such gross and substantial 

exaggerations as to constitute fraud and invalidate the 

lien. 

Fraud must be plead affirmatively to be relied on as 

a defense. Rule 8(c), M.R.Civ.P.; Ekestrand v. Wunder 

(1933), 94 Mont. 57, 20 P.2d 622. In the case before us 

fraud was not plead in either the original or the amended 

answer. Therefore, it cannot now be argued as a defense to 

the lien. 

Appellant also claims the District Court erred in 

failing to make reductions in the lien amount for three 

i tems. 

The first item appellant claims was erroneously 

allowed by the District Court is $2,558.60 of the $7,000 

claimed paid to Simkins-Hallin. Respondent submitted a 
cancelled check for $7,000 in support of the Simkins-Hallin 

claim. However, the statement on Simkins-Hallin Invoice No. 

6988 indicates that of the $7,000, $4,441.40 was appropriated to respondent's job in Dillon. We therefore find there 

is not substantial evidence to support the entire $7,000 

claim and that the lien amount should be reduced by 

$2,558.60. 

To evaluate the second item appellant claims was 

erroneously included by the District Court, we must first 

consider the evidentiary issue before us. Appellant argues 

there is a discrepancy between the amount respondent claimed 

was paid to M & M Concrete and the amount actually paid. 

In support of that argument at trial, appellant presented for admission into evidence a total account and a 

copy of invoices of the Dillon job with Anderson Construction from M & M Concrete. The document was prepared by the 

bookkeeper of M & M Concrete at the direction of the general 

manager and at the request of appellant's counsel. The 

account indicated a discrepancy between the amount received 

by M & M Concrete on the job and the amount respondent 

claimed had been paid. 

Respondent objected on the basis the offered evidence 

was hearsay and lacking proper foundation. The District 

Court overruled the objection and admitted the evidence as 

defendant's Exhibit K. 

At the conclusion of the trial, the District Court 

issued findings of fact and conclusions of law with a 

supporting memorandum. The memorandum stated Exhibit K had 

been admitted subject to ruling as to its admissibility on 

the final submission of the case and that on further review, 
the court found it inadmissible as hearsay. 

Appellant argues the District Court's af ter-the-fact 

ruling on the admissibility of Exhibit K was prejudicial 

because it precluded him from calling other witnesses or 

otherwise presenting proof. 

The transcript shows the court did not specifically 

reserve judgment regarding Exhibit K. The court's statement 

was: "Well, the objection is overruled and it will be 

admitted. " 

The court's later determination of Exhibit K as inadmissible was, however, correct. The document was a statement 

other than one made by the declarant while testifying at 

trial and was offered to prove the truth of the matter asserted. As such, it was hearsay. Rule 801(c), M0nt.R.Evi.d. 

Since the account statement was made, not in the ordinary 

course of business of M & M Concrete but at the request of 

appellant's counsel, it was not excepted from the hearsay 

rule and was inadmissible. Rule 803(6), Mont.R.Evid. 

While the District Court's final ruling on Exhibit K 

was correct, the manner in which it was reached was procedurally irregular and resulted in substantial prejudice to 

appellant. Had he been aware of the court's determination 

or its reservation of judgment during the trial, appellant 

could have presented and made available for cross-examination the witnesses who prepared the M & M Concrete account. 

To allow the District Court's exclusion of Exhibit K to 

stand in the face of such prejudice would be inherently 

unjust. We therefore remand this matter for reconsideration. 

The final item appellant claims was erroneously 

included in the lien is that amount claimed for respondent's 
personal wages as a carpenter. Appellant first argues that 

because there was no mention of the possibility of a personal claim in this agreement between the parties and 

respondent made no submission of such a charge to appellant 

prior to this suit, that respondent is not entitled to the 

claim. 

In support of this argument, appellant cites Article 

10, Paragraph 10.1.6, of the parties1 contract which states 

as costs not to be reimbursed: "The cost of any item not 

specifically and expressly included in the items described 

in Article 9." 

Article 9, Paragraph 9.1.1, however, specifies that 

costs include "[wlages paid for labor in the direct employ 

of the contractor. . ." Since wages for labor are expressly 

included in the contract and there is no specific limitation 

on who performs the labor, the contract did not preclude 

Anderson from working on the project. 

Appellant also argues the hourly compensation the 

District Court allowed for Anderson's work was excessive and 

unsupported by credible evidence. 

The parties1 contract in Article 9, Paragraph 9.1, 

allows for reimbursement of costs necessarily incurred in 

the proper performance of the work. It further provides 

that "[sluch costs shall be at rates not higher than the 

standard paid in the locality of the work except with prior 

consent . . ." 

At trial Anderson, a carpenter with twenty years1 

exerience, testified he charged $18 an hour for his labor. 

Of that amount, $14 was for his work as a skilled carpenter 

and $4 for use of his tools. He testified the $14 amount 
was based on costs in the area for his work. No other 

testimony was offered by either party regarding the value of 

the work of a carpenter of Anderson's skill. 

Based on Anderson's unrebutted testimony, the District Court found that the $14-an-hour wage portion of the 

charge was reasonable. We agree. 

The $4-an-hour charge for the use of Anderson's tools 

is another matter, however. While Anderson testified as to 

what the $4 was for, he did not testify or provide evidence 

of any kind indicating what the figure was based on or 

whether it was reasonable. Without any supporting evidence 

we are unable to uphold the District Court's judgment 

allowing $4 an hour for the use of tools. 

We remand this matter for a reaccounting of the 

costs. At the same time, we suggest a review of the calculations in the original findings of fact and conclusions of 

law, since there appears to be an arithmetic error in the 

computation of Anderson's out-of-pocket expenses. 

Justices 
Mr. Justice John C. Sheehy concurring: 

I concur in the foregoing, but I also think the lien 

filed in this case was timely under the facts. 

Justice