### NO, 81-158 INTHE SUPRGMECOURTOF THE STATEOF 

### MONTANA 1981

MOUNTAIN STATESRESOURCES, INC., Plaintiff andAppellant,

VS

# . M. D. EHLERT, Defendantand Respondent,

VS

# . MONTE GRANDE EXPLORATION, INC., Additional Defendanton CounterclaimandAppellant.

Appeal from: District Court of theNinth Judicial District, Inand for theCountyofGlacier HonorableR. D. McPhillips,Judgepresiding. Counselof Record: ForAppellant: Frisbee,Moore & 

### Stufft, CutBank,Montana ForRespondent: Alexander & 

### Baucus,GreatFalls,Montana

Filed: Submittedonbriefs: July 30, 

### 1981 Decided: 

## fi

# ov27

## 19@i

### Mr. Justice John Conway Harrison delivered the Opinion of the Court. Mountain States Resources, Inc., filed suit against Ehlert to set aside Ehlert's oil and gas lien and to collect damages for slander of title. Ehlert counterclaimed and joined Monte Grande Exploration, Inc., an undisclosed principal of Mountain States Resources, in the suit. Montana's Ninth Judicial District, in and for Glacier County, upheld the lien and awarded judgment to Ehlert. Mountain States Resources and Monte Grande Exploration raise eleven,issues

on appeal: 1. Was the lien filed prematurely? 2. 

### Are oil and gas liensproper for work done on gas pipelines? 3. Does a lien on apipeline entitle the claimant to
a lien on oil and gas leaseholds served by the pipeline? 

### 4. Must a claimant use the exact language contained in the statute when filing a lien? 5. 

### Was there an overstatement of amounts due in the lien? 6. 

### Was the construction completion date correctly listed in the lien? 

### 7. Was the lien invalid because the pipeline owner was not listed in the lien? 8. 

### Was aproper description of theproperty given in the lien? 9. 

### Was the 

### lien's affidavit sufficient? 10. Was the lien against Monte Grande Exploration invalid because Monte Grande Exploration was not named in the original lien? 11. IsEhlert liable for slander of title?On September 27, 1977, the plaintiff-appellant, Mountain StatesResources, Inc. (MSR), contracted with M. D. Ehlert tofurnish and erectthree steelbuildings tobe used in connection with the Gypsy-Highview (naturalgas) Gathering System (GHGS) in Pondera and Teton counties inMontana. Monte Grande Exploration, Inc. (MGE) was an undisclosed principal of MSR. GHGS was eventuallyowned 50%by MSR, 25% by MGE, and 25%by associatesof MSR and MGE. The same man, J. V. Montalban, 

### is principal executive officer, 10%stock owner, and dominant driving forceof both MSR and MGE. On September 27, 1977, MGE owned the oil and gas lease on the land where the buildings were located, but therewas no written lease for the actual land. MSR was the agent and projectmanager for the construction project. MGE

was an undisclosed principal. MSR and MGE both owned oil and gas leases adjoining and serviced by theGHGS buildings. GHGS was designed to gather, process, transport and deliver natural gas from MSR and MGE 

### wells toMontana Power Company, which purchased the gas. GHGS became an "independent" legal entity after theMSR-Ehlert contractwas finalized. A $43,199 building contractprovided for a compressor building withflashing, and sweetening a.nd dehydrator buildings without flashing. (Flashing 

### is the material placed around a pipe at the point where it intersects a wall in order to make the joint weatherproof.) Flashing provided for the two latterbuildings was an extra, tobepaid for in addition tothe $43,199 contractprice. Between October 22, 1977, and December 15, 1977, Ehlert, atthe specificrequest of 

### Bo Mikkelson, MSR's supervisory agent, installed flashingon the sweetening and dehydrator bgildings. On January 18, 1978, MSR paid Ehlert the balance due on the $43,199 contract, but refused topay for the extra flashing, amounting to$1,818.39, until correctionswere made. On March 8, 1978, after several requests for payment had been refused, Ehlert filed a $1,818.39 lienpursuant to section 45-1001, R.C.M. 1947, now section 71-3-1002, MCA, against the proceeds of any natural gas soldby MSR (butnot MGE and GHGS) toMontana Power Company. MSR filed suit against Ehlert to set aside his lien and to recover $15,000 for slander of 

### title as a result of the improper filing of the lien. Ehlert, by answer and counterclaim, joined MGE and sought to foreclose the lien againstMSR and MGE. The trial court, sitting without a jury, dismissed MSR's complaint and awarded Ehlert $1,818.39 for the lien, plus interest and attorney fees, totaling $8,024.19. The court alsoruled thatthe lienwas valid against allMSR and MGE property named in the lien, and the proceeds of all naturalgas soldby MSR, MGE or GHGS named in the lien. MSR and MGE appeal. Issue No. 

### 1: Was the lien filed prematurely, therefore making the lien invalid? We hold that the lien

was timely and valid. MSR made the lastcontract payment of $14,199, which

was due seven days after the buildings were complete and inspected, on January 18, 1978. All work orders for the extra flashing were complete on that date. Adjustments and repairs were subsequently made on the doors and flashing, but the contractwork was substantiallycomplete. Therefore,

### the lien, filed onMarch 8,1978,was filed after the building was substantially complete, and the lien isvalid. See, Turf Irr. & 

### W.W. Sup. Co. v. Lawyers Title of Phoenix

(1975), 24 Ariz.App. 80, 535 P.2d 1311, 1314; Tabet Lumber Company v. Baughman (1968), 79 N.M. 57, 439 P.2d 706, 709. Cf., Western Plumbing of Bozeman v. Garrison (1976), 171 Mont. 85, 556 P.2d 520; Olson v. Westfork Properties, Inc.

(1976), 171Mont. 154, 557 P.2d 821. 

### tan\ IssueNo. 2: Does section 45-l&€%+, R.C.M. 1947, now section 71-3-1002, MCA, permit an oil and gas lien for labor, services and materials provided on the gas pipeline? We hold the lien is valid. loat 

### Section45-+@+E, R.C.M. 1947, provides in pertinent part: "Any person

# .. . which shall contract 

# .

# . . with the owner of any leasehold for

# . . .gas



# . . . furnish material or services used in



# . . . completing, [or] operating [a] gas pipeline 

# . . . whether or not such material is incorporated therein or becomes a part thereof, shall have a lien 

# . . 

# . upon all material owned by the owner of such leasehold 

# . . . and 

# . . . upon all oil or gas produced from such leasehold

# ..."

J. 

### V. Montalban, president of MSR and MGE, noted in a letter to Ehlert, that using the three buildings Ehlert constructed,without doors, during December and January caused "severe and impossible working conditions." It follows that the completed buildings, with doors installed, were an essential part of the gasgathering system. Inany event, a lien is valid under the statute "whether or not such material is incorporated therein or becomes a part thereof." Elhert is therefore entitled to 

### a gas lien for the labor and materials he provided. See, Nemeroff v. Cornelison Engine Maintenance Co. (Okla. 1962), 369 P.2d 604.IssueNo. 3: Does Ehlert's lienon thegasgathering system entitlehim toa lienon the leaseholds served by the system? MSR claims that MSR and MGE, which own the gas leases, are completely independent of GHGS, which owns the gathering system. Thus, the lien against the gas gathering system does not extend to MSR and MGE. Ehlert claims, and



### we agree, that GHGS 

### is a front for MSR and MGE. Ehlert contracted with MSR, and MSR served as the agent and project manager for the building project. MGE was an undisclosed principal inthebuildingproject. GHGS was not established

as an independent entity and owner of the gas gathering system until after Ehlert started constructing the buildings. GHGS didnot obtaina written lease for theland

on which buildings 

### sit until after the lien was filed. Thus, we hold that Ehlert contracted with MSR and MGE, and that Ehlert's lienextends tothe designatedMSR leases, MGE leases, and the GHGS. See generally, Blose v. Havre Oil & Gas Co. (1934),96 Mont. 450, 31 P.2d 738. IssueNo. 

### 4: Did Ehlert use the proper language, as per section 45-1001, R.C.M. 1947, now section 71-3-1002, EI'ICA, in his lien? MSR asserts that Ehlert 

### is required to

use the exact language of the statute and claim a lien on the "oil or gas produced from such leaseholds and the proceeds thereof inuring to the working interest. 

# . ." The language Ehlert actuallyused was "claimant makes this lien and asserts his rights under provisions of R.C.M., of 1947, Section45-1002 etseq." 

### We hold that the language used by Ehlert, which cites the oil and gas lien statute, 

### is adequate. Although this Court has not specifically addressedthis issue in the past, we have noted that 

### "[1]ien statutes should receive a liberal construction to the end that the objects and purposes of the statutes may be carried out." Caird Engineering Works v. Seven-Up Gold Mining Co. (1941), 111 Mont. 471, 479, 111 P.2d 267, 272; Fausett v. Blanchard (1970), 154 Mont. 301, 463 P.2d 319, 322. Nothing in the statute requires parties filing liens to use the exact language of the statute relied upon. This Court shall refrain from creating an additional burden for parties filing liens. The statute, liberally construed, allows general language tobe used inthe lien. IssueNo. 5: Did Ehlert overstate the amount claimed by

## lo%,and therefore invalidatethe lien? Wehold that the $1,818.39 claimed 

### isvalid. The trial court's findings of fact established that $1,818.39 was due and owing. While there was evidence that Ehlert added 10% to his actual costs, there was also evidence that this was his standard contracting procedure. In any event, "[alnoverstatement of the amount due, absent fraud or bad faith, does not invalidate a lien." Figginsv. Stevenson (1973), 163Mont. 425, 517 P.2d 735, 737. Issue No. 6: Was the construction completion date correctly listed in the lien? The lien shows December 15, 1977, as the last day of work. Ehlert claims that only repairs and adjustments were made after that date. MSR contends that the work was not completed until January 12, 1978. The lienwas filedon March 8, 1978. Thus, the exact date that work was completed 

### is immaterial, as either date 

### is well within the six-month limit allowed by section 45-1004, R.C.M. 1947, now section 71-3-1004, MCA. If noparty 

### is injured, a minor technicality should not preclude

an otherwise valid lien from being enforced. See, Brown v. Farrell (1971),258 Or. 348, 483 P.2d 453, 455. Issue No. 7: Was the lien invalid because GHGS, the pipeline owner, was not listed in the lien? As we noted above, Ehlert contracted with MSR to construct the buildings. GHGS did not become a separate legal entity until sometime after the contract was made. Further, there

was no written lease for the land on which thebuildings 

### sit until after thelienwas filed. Therefore, Ehlert's failure to 

### list GHGS in the lien was not error and did not affect the lien. See generally, Blose v. Havre Oil & Gas Co. (1934), 96 Mont. 450, 31P.2d 738. Issue No. 8: Was a proper description of the property given in the lien? MSR claims that since one of the leases listed as belonging to MSR actually belonged to MGE, the lien 

### is invalid. We do not consider this to be fataltothe lien. Asnoted above, MSR was the agent and project manager of the building project, and 

### it 

### is therefore liable to Ehlert. MGE was an undisclosed principal intheconstruction project and 

### is therefore also liable. Finally, GHGS was the

successor in interest and 

### is also liable. Regardless of which corporation held titleatthe

### timeof the lien, filing the lienwould give notice of the existence of the lien to interested third parties, which 

### is the purpose of the lien. Morrison-Maierle, Inc. v. Selsco (1980), Mont. I 606 P.2d 1085, 1087, 37 St.Rep. 299. The description was adequate to properly identify the property subject to the lien; consequently, the description and the lienare valid.Varco-Pruden v. Nelson (1979),

## -Mont

# . , 593 P.2d 48, 50, 36 St.Rep. 704. Issue No. 9: Was the lien's affidavit sufficient? We hold that the affidavitwas adequate. An affidavit 

### is defined as "a written statement, under oath, sworn to or affirmed by the person making 

### it before some person who has authority to administer an oath

or affirmation." Statev. Knight (1976), 219 Kan. 863, 549 P.2d 1397, 1401. The maker must have personal knowledge of the information contained inthe statement and must swear to 

### its validity. Saunders Cash-Way, Etc. v. Herrick (1978), 179Mont. 233, 587 P.2d 947, 949, 35 St.Rep. 1846. Ehlert's affidavit contained written information about 

### items of which he had personal knowledge. He swore to 

### its validity before

a notarypublic. Therefore, the affidavitwas adequate. Issue No. 10: Was the lien against MGE invalid because MGE was not named in the original lien? We hold that theDistrictCourt's finding of liabilitywas correct. True, MGE was not named in the lien as required by section45-1004, R.C.M. 1947. But, theDistrictCourt found there was an agent-principal relationship between MSR and MGE. Ehlertwas unaware of this relationship until after he filedthe lien. Consequently, Ehlertproperlyjoined MGE in the suit when Ehlert filed his answer and counterclaim. Ehlert has 

### a valid lien against MGE. Miller v. Melaney (1977), 172Mont. 74, 560 P.2d 902, 904. IssueNo. 11: Is Ehlert liable for slander of MSR's title? Sincewe have found thatEhlerthas a valid lien, 

### we need not addressthisissue.The judgment of theDistrictCourt 

### is affirmed.



### We concur:



# Q ustices 

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