NO, 81-158 

IN THE SUPRGME COURT OF THE STATE OF MONTANA 

1981 

MOUNTAIN STATES RESOURCES, INC., 

Plaintiff and Appellant, 

VS . 

M. D. EHLERT, 

Defendant and Respondent, 

VS . 

MONTE GRANDE EXPLORATION, INC., 

Additional Defendant on 

Counterclaim and Appellant. 

Appeal from: District Court of the Ninth Judicial District, 

In and for the County of Glacier 

Honorable R. D. McPhillips, Judge presiding. 

Counsel of Record: 

For Appellant: 

Frisbee, Moore & Stufft, Cut Bank, Montana 

For Respondent: 

Alexander & Baucus, Great Falls, Montana 

Filed: 

Submitted on briefs: July 30, 1981 

Decided : fi ov 2 7 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 liens proper for work done on gas 

pipelines? 

3. Does a lien on a pipeline 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 a proper description of the property 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. Is Ehlert liable for slander of title? 
On September 27, 1977, the plaintiff-appellant, 

Mountain States Resources, Inc. (MSR), contracted with M. D. 

Ehlert to furnish and erect three steel buildings to be used 

in connection with the Gypsy-Highview (natural gas) Gathering System (GHGS) in Pondera and Teton counties in Montana. 

Monte Grande Exploration, Inc. (MGE) was an undisclosed 

principal of MSR. GHGS was eventually owned 50% by MSR, 25% 

by MGE, and 25% by associates of MSR and MGE. The same man, 

J. V. Montalban, is principal executive officer, 10% stock 

owner, and dominant driving force of both MSR and MGE. 

On September 27, 1977, MGE owned the oil and gas 

lease on the land where the buildings were located, but 

there was no written lease for the actual land. MSR was the 

agent and project manager for the construction project. MGE 

was an undisclosed principal. MSR and MGE both owned oil 

and gas leases adjoining and serviced by the GHGS buildings. 

GHGS was designed to gather, process, transport and 

deliver natural gas from MSR and MGE wells to Montana Power 

Company, which purchased the gas. GHGS became an 

"independent" legal entity after the MSR-Ehlert contract was 

finalized. 

A $43,199 building contract provided for a compressor 

building with flashing, 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 latter buildings was an extra, to be paid for in 

addition to the $43,199 contract price. Between October 22, 

1977, and December 15, 1977, Ehlert, at the specific request 

of Bo Mikkelson, MSR's supervisory agent, installed flashing 
on the sweetening and dehydrator bgildings. On January 18, 

1978, MSR paid Ehlert the balance due on the $43,199 contract, but refused to pay for the extra flashing, amounting 

to $1,818.39, until corrections were made. 

On March 8, 1978, after several requests for payment 

had been refused, Ehlert filed a $1,818.39 lien pursuant to 

section 45-1001, R.C.M. 1947, now section 71-3-1002, MCA, 

against the proceeds of any natural gas sold by MSR (but not 

MGE and GHGS) to Montana 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 

against MSR 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 also ruled that the lien was valid against all MSR and 

MGE property named in the lien, and the proceeds of all 

natural gas sold by 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 last contract 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 contract work was substantially complete. Therefore, 
the lien, filed on March 8, 1978, was filed after the building was substantially complete, and the lien is valid. 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), 171 Mont. 154, 557 P.2d 821. 

tan\ 

Issue No. 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 

Section 45-+@+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 gas gathering system. In any 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. 
Issue No. 3: Does Ehlert's lien on the gas gathering 

system entitle him to a lien on 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 in the building project. GHGS was not established 

as an independent entity and owner of the gas gathering 

system until after Ehlert started constructing the 

buildings. GHGS did not obtain a written lease for the land 

on which buildings sit until after the lien was filed. 

Thus, we hold that Ehlert contracted with MSR and MGE, and 

that Ehlert's lien extends to the designated MSR leases, MGE 

leases, and the GHGS. See generally, Blose v. Havre Oil & 

Gas Co. (1934), 96 Mont. 450, 31 P.2d 738. 

Issue No. 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 actually used was "claimant makes this lien 

and asserts his rights under provisions of R.C.M., of 1947, 

Section 45-1002 et seq." We hold that the language used by 

Ehlert, which cites the oil and gas lien statute, is 

adequate. 

Although this Court has not specifically addressed 
this 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 to be used in the lien. 

Issue No. 5: Did Ehlert overstate the amount claimed 

by lo%, and therefore invalidate the lien? We hold that the 

$1,818.39 claimed is valid. 

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, "[aln overstatement of the amount due, absent 

fraud or bad faith, does not invalidate a lien." Figgins v. 

Stevenson (1973), 163 Mont. 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 lien was filed on 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 no 
party 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 the buildings sit 

until after the lien was 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, 31 P.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 

fatal to the lien. 

As noted above, MSR was the agent and project manager 

of the building project, and it is therefore liable to 

Ehlert. MGE was an undisclosed principal in the construction 

project and is therefore also liable. Finally, GHGS was the 

successor in interest and is also liable. Regardless of 

which corporation held title at the time of the lien, filing 

the lien would 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 lien are 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 affidavit was 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." State v. Knight (1976), 219 Kan. 863, 549 

P.2d 1397, 1401. The maker must have personal knowledge of 

the information contained in the statement and must swear to 

its validity. Saunders Cash-Way, Etc. v. Herr ick (1978), 

179 Mont. 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 notary public. Therefore, the affidavit was adequate. 

Issue No. 10: Was the lien against MGE invalid 

because MGE was not named in the original lien? We hold 

that the District Court's finding of liability was correct. 

True, MGE was not named in the lien as required by 

section 45-1004, R.C.M. 1947. But, the District Court found 

there was an agent-principal relationship between MSR and 

MGE. Ehlert was unaware of this relationship until after he 

filed the lien. Consequently, Ehlert properly joined MGE in 

the suit when Ehlert filed his answer and counterclaim. 

Ehlert has a valid lien against MGE. Miller v. Melaney 

(1977), 172 Mont. 74, 560 P.2d 902, 904. 

Issue No. 11: Is Ehlert liable for slander of MSR's 

title? Since we have found that Ehlert has a valid lien, we 

need not address this issue. 
The judgment of the District Court is affirmed. 

We concur: 

Q ustices L!h 47 ,,