No. 13405 INTHE SUPREME COURT OF THE STATE OF MONTANA 1977

JACK KEARNS, Plaintiff and Respondent,

McINTYRE CONSTRUCTION COMPANY, a corporation and S. BIRCH INC., a corporation, Defendants and Appellants.

Appeal from: DistrictCourt of the Second Judicial District, Honorable Arnold Olsen, Judge presiding. Counsel of Record: For Appellants: Jardine, Stephenson, Blewett and Weaver, Great Falls,

Montana Alexander Blewett argued, Great Falls, Montana For Respondent: Corette, Smith and Dean, Butte, Montana Kendrick Smith argued, Butte, Montana

Submitted: March 17, 1977 Decided:

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Filed:

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### '971Mr. Justice Gene B. Daly delivered the Opinion of the Court:

Defendants appeal from the final judgment of the district court, Silver Bow County. The district court, sittingwithout a jury, found for plaintiff and decreed thatplaintiff recover from defendants the full amount of plaintiff's alleged damages, $9,160.01, with interest,plus costs in the amount of $19.40. Plaintiff brought this action to recovermoney damages for injuriespurportedly caused by defendants to plaintiff's real and personal property. The injuries occurred on a ranch near Melrose, Montana, owned by plaintiff. A portion of the ranch was condemned by the State of Montana for the purpose of constructing

a highway. Defendants, acting in a joint venture, contracted with the State Department of Highways, to construct the new highway. To complete its highway construction contract, itwas necessary for defendants to obtain quantities of gravel and borrow (earth taken from one location to be used for fill at another location). Defendants entered into two written contracts with plaintiff. The first contract, executed on May 17, 1972,hereinafter referred to as the gravel agreement, gave defendants the right to

remove rock, gravel, sand and earth fromplaintiff's land for the price of 4$ per ton. The contract specified: (1)The area on plaintiff's land fromwhich these materials were to be taken, (2) granted defendants the right of ingress and egress to remove these materials, and (3)that defendants could extract as much gravel material from plaintiff's property as they deemed necessary to satisfy their construction needs, with a required minimum quantity of 110,000 tons. The second contract, apparently executed on May 16, 1972, hereinafter referred to as the borrow agreement, gave defendants the right to remove borrow material, consisting of rock,gravel,silt, sand and earth, from a specified tract of plaintiff's land for the price of 26per cubic yard. The contract granted defendants the right of ingress and egress to extract asmuch borrow material as defendantsdeemed necessary to satisfy theirconstruction needs. Defendants,as additional consideration,agreed to provide the services of land scrapers, levelers and rippers for a specified period of time. This action was commenced on September 4, 1974, when plaintiff filed his original complaint. The original complaint sought to recover money damages in the amount of $16,611.90, plus costs. Subsequent to the filing of the original complaint,plaintiff and defendants settled certain claims which were asserted. On March 21, 1975,plaintiff filed an amended complaint, recognizing and acknowledging defendantshad paid to plaintiff the sum of $3,295.90, and sought further money damages in the following amounts: "6

# . "That in addition to the amount of $288.00 due from Defendants to Plaintiff as alleged in Paragraph 5, there are other sums due by reason of damages caused by Defendants to Plaintiff as follows:"a. Defendants have failed to restore the Plaintiff's fields where they were cut down and damaged by Defendants' trucks; "b. Defendantsdamaged a crossing-pipe belonging to Plaintiff when a fuel truck got stuck; "c. Defendants cut, removed, and destroyed a 12" irrigation pipe 40' long, and in attempting to repair the irrigation line made an improper installation resulting in leaking of the irrigationpipeline and causing dirt, gravel, and rocks to fill in said pipeline. "d. Defendants failed to put gravel on the ditch road as agreed. "e. Defendants failed to do repair work on the lane as agreed. "f. Defendantsdamaged 43 acres of landbecause Defendants created a situation where Plaintiffwas unable to shut off irrigationwater on said lands which will require disking, harrowing, and seeding. "g. Defendants in connection with backsloping failed, neglected, and refused to do the same in a careful and prudent manner to the Plaintiff's damage fornecessary backsloping, repair of fences,and installing drainage facilities. "h. Defendants carelessly and negligently shut off, or failed to supply, water for hay production to Plaintiff's damage. "And that all of said acts of the Defendants were to the Plaintiff's additional damage in the amount of $9,258.68." Subsequent to the filing of the amended complaint, defendants effected discovery throughwritten interrogatoriesand plaintiff's deposition. OnApril 9,1975, defendants filed a motion to dismiss. The trial court record fails to disclose any ruling by the district court on thismotion. OnApril 21, 1975, defendants answered plaintiff's amended complaint. Defendants' answer generally denied plaintiff's allegations yet admitted defendants' past indebtedness toplaintiff in the amount of $9,611.90, subject to an offset in the amounts of $6,316.00, which comprised the cost of installing 350 feet of irrigation pipe at $12.00 per lineal foot, and $2,116.00, the cost for land leveling services performed by defendants. Defendants further denied any indebtedness alleged inparagraph 6, subsections (a)

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### , and (h)of plaintiff's amended complaint since those claims were barred by the statute of limitations, section 93-2607(2), R.C.M. 1947. On November 12, 1975, defendants filed a motion for summary judgment pursuant to Rule 56, I4.R.Civ.P. Briefs were submitted in supportof and in opposition to defendants' motion for summary judgment. On January 9, 1976, the district court issued its ordersummarily denying defendants'motion. The district court failed to file any opinion ormemorandum in support of its order denying defendants'motion for summary judgment. On January 19, 1976,plaintiff filed amotion to amend his amended complaint. Themotion specifically sought amendment of subsections (a), (b), (c), (f), (g)and (h)of paragraph 6 of the amended complaint. The district court heard themotion to amend the amended complaint on the morning of trial, January 26, 1976. Defendants objected to any amendment of the amended complaint

on the grounds the original complaint and the first amended complaint sought recovery on a tort theory and not on a contract theory, which was the effect of the proposed amendments. Defendants contended the purpose of the amendmentswas to overcome the obstacle of the statute of limitations, the basis for defendants' motion for summary judgment. Plaintiff resisted defendants' objections

on the grounds the doctrine of implied provision of written contracts and the doctrine of third-party beneficiary contracts supported the motion to amend. On January 26, 1976, this causewent to trial on the legal theories set forth in the amended complaint,as further amended by the motion to amend. At the conclusion of trial,both parties submitted proposed findingsof fact and conclusions of law. On May 6,1976,the district court entered judgment in favor of plaintiff, decreeing thatplaintiff recover $9,160.01, with interest accruing on item (g) ($667.00) from October 1, 1973, while interest on all other items ($8,493.01),was to accrue "from at least October, 1972, (someof the Items having been in May and June of the sameyear)". The amount sought as damages in subsection (b)of paragraph 6 is excluded from the judgment, defendants having voluntarily paid the sum of $98.67 to plaintiff. In its findings of fact and conclusions of law the districtcourt held the gravel and borrow agreements, when reasonably construed and interpreted,contained the implied obligation that defendantswere to use reasonable care inworking in and upon plaintiff's ranch; to leave the ranch premises in good condition; and to refrain from unreasonably damaging plaintiff's land. The district court concluded defendantshad breached express contracts, implied contractsand third-party beneficiary contracts, entitling plaintiff to full recovery for his damages. Defendants present five issues for review: 1. Whether the district court erred when it failed to grant defendants' motion for summary judgment? 2. Whether the district court erred when itpermitted plaintiff to amend his previously amended complaint on the day of trial? 3. Whether there was sufficient evidence to support the district court's findings of fact,conclusions of law and judgment? 4. Whether the district court erred in entering findings of fact, conclusions of law and judgment in plaintiff's favor on particular claimswhen there were no pleadings to support such findings, conclusions and judgment? 5. Whether the district court erred in its rulings on the admissibility of the following evidence: a) Admitting into evidence a letter fromplaintiff's counsel to defendants' counsel which specified the alleged damages and their respective estimated monetary worth. b) Allowing plaintiff's testimony adopting the estimates embodied in the letter. c) Admitting into evidence a copy of a written estimate of damages when the preparer of the estimate was not present in court during the trial. d) Allowing plaintiff's testimony adopting the writtenestimate of damages. e) Allowing plaintiff to testify to an estimate of damages, the estimatewas in the form of an out-of-court oral statementby a third party, and allowing plaintiff's testimony adopting the estimate. f) Admitting par01 evidence to alter the terms of the gravel and borrow agreements. Defendants inittally contend the district court erred in denying defendants' motion for summary judgment on the claims asserted in subsections (c), (£1 and (h)of paragraph 6 of the amended complaint. Defendants' grounds for seeking summary judgment were: (1)Thepleadings, answers to interrogatoriesand plaintiff's deposition failed to establish that the claims set forth in subsections (c), (f)and (h)were based upon any breach of an agreement or contract,but were plead in tort; (2) the alleged damages were not incurredwithin two years of the filing of the action; (3)the claimswere barred by section 93-2607(2), R.C.M. 1947,which provides: "Two-year limitation. Within two years:

"2. An action for injury to or for waste or trespass on real or personal property; provided that,when the waste, trespass or injury is committed by reason of underground work upon any mining claim or seismic exploration, location, spacing,drilling,equipping, producing, or other operation related to exploration or production of oil, gas, water,geothermal, or other minerals, the cause of action shallnot be deemed to have accrued until the discovery by the aggrieved party of the facts constituting suchwaste, trespass, or injury." Defendants argue plaintiff's amended complaint, answers to defendants' interrogatories,and deposition all establish therewas no genuine issue ofmaterial fact to be determined as to the claimspresented in these subsections and defendantswereentitled to judgmenton these claims as amatter of law. Rule 56, M.R.Civ.P., provided in pertinent part: 

### " (c)

## * * * The judgment sought shallbe rendered forthwith if the pleadings, depositions, answers to interrogatories,and admissions on file show that there isno genuine issue as to anymaterial fact and that themoving party is entitled to judgment as a matter of law." See Harland v. Anderson, Mont. 

## , 548 P.2d 613, 33 St.Rep. 363, for a discussion of summary judgment under Rule 56,M.R.Civ.P. The first amended complaint fails to specify the claims asserted in subsections (c)

### , (f)and (h)are based on a contract theory of recovery. Theplain meaning of the language would indicate that recoverywas sought for the tortious or negligent acts of defendants. The first specific indicationplaintiff sought recovery based upon a contract theory is found in plaintiff's motion to amend the amended complaint. However, these secondary amendments cannotbe considered when reviewing themerits of defendants'motion for summary judgment, since they were filed subsequent to the district court's summary ruling denying defendants' motion for summary judgment. Defendants refer toplaintiff's answers to defendants' interrogatories and the depositionof plaintiff in support of their contention the statute of limitations is a bar to the claims in subsections (c), (f)and (h)

# . Plaintiff stated therewas no contractbetween plaintiff and defendants for the installation of irrigation pipeline (item (c)of paragraph 6). Plaintiff's answers to defendants' interrogatories and the deposition of plaintiff established there was no contractbetween plaintiff and defendants upon which plaintiff could base his claim for flood damage to hay fieldsand the loss of hay production (items (f)and (h)of paragraph 61,but thatplaintiff was seeking recovery on the theory defendantshad negligently controlled the source of irrigationwaters during construction. Plaintiff's answers to defendants' interrogatories further established the damages allegedly caused by defendants occurred inMay or June of 1972,more than two years prior to the filing of plaintiff's original complaint. After a carefulreviewof the district court record, we find the pleadings, depositions,answers to interrogatories and admissions show therewas no genuine issue of material fact and defendantswere entitled to judgment as a matter of law on the claims asserted in subsections (c), (£1 and (h)of paragraph 6 of the amended complaint. Accordingly, the portion of the district court judgmentdecreeing that plaintiff recover damages in the amounts of $1,553.65 for item (c),$1,417.00 for item (5)and $3,000.00 for item (h)isvacated and the claimsdismissed. Defendants' second issue attacks the district court's granting of plaintiff's motion to amend the amended complaint on the morning of trial. Defendants contend the amendments "changed the issues to be tried from those of negligence to those of contract" and resulted in defendantshaving to prepare an entirely different defense. Rule 15,M.R.Civ.P., provides: "Rule 15. Amended and supplementalpleadings. "(a) AMENDMENTS. A party may amend his pleading once as a matter of course at any time before a responsivepleading is served or, if the pleading is one towhich no responsivepleading ispermitted and the action has not been placed upon the trial calendar,he may so amend it at any timewithin 20 days after it is served. Otherwise a partymay amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires. A party shallplead in response to an amended pleading within the time remaining for response to the originalpleading or within 10 days after service of the amended pleading, whichever period may be the longer, unless the court otherwiseorders." (Emphasisadded.) Defendants citeMcGuire v. Nelson, 162Mont. 37, 42, 508P.2d 558, for the proposition a plaintiff is denied the right to amend his complaint when the amendments materially change the theory of recovery and prejudice defendantby denying defendant sufficient time for preparation of a defense. McGuire held: "AlthoughRule 15 (a)M.R.Civ.P., establishes that leave to amend shallbe freely granted, amendments should not be allowed where the theory presented by the amendments is totally inapplicable to the case

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## * *". 162Mont. 42 InMcGuire plaintiff initially sought recovery on a negligence theory. Shortly before trial plaintiff sought to amend his complaint seeking recovery on a breach of warranty theory. This Court reversed the district court and denied plaintiff leave to amend his complaintbecause of the basic inconsistency between a negligence action and a breach ofwarranty action and the prejudice incurred by defendant as a resultof the amendments. The facts in the present action do notpresent a case of substantialprejudice incurred by defendants. Themotion to amend the amended complaintwas filed on January 19, 1976, oneweek prior to the date of trial, and defendants were duly notified of plaintiff's intent to amend. The effect of the amendmentswas to change the basis of recovery onparticular claims from tort to contract. However, some of the claims had previously been plead on the theory of recovery based on contract and no additional facts

or agreementsbetween the parties were interjected by the amendments Defendants' recourse to any prejudicial effect from the late filing of the amendmentswas to seek a continuance for the purpose of preparing their case. The trial record fails to disclose any motion by defendants for a continuanceand the element of surprise is clearly absent. SeeMitchell v. Mitchell, Mont

# . , 545 P.2d 657, 33 St.Rep. 73. Therefore,we hold the district court's granting of plaintiff'smotion to amend the amended complaintwas not an abuse ofdiscretion. ÿ he third and fourth issues challenge the sufficiency of the pleadings and the evidence the district court relied upon in its findingsof fact, conclusions of law and judgment. The function of this Court is to determine whether there is sufficient evidence to support the district court's findings and those findingswill not be set aside unless there is a clear preponderance of evidence against them. Crncevichv. Georgetown Recreation Corp., 168Mont. 113, 541 P.2d 56, 32 St.Rep. 963;Cope

### v. Cope, 158Mont. 388, 493 P.2d 336. The judgmentof thedistrict courtmust be sustained if substantial evidence,viewed in the light of a theory found in the pleadings, supports the judgment. Hagerty v. Hall, 135 Mont. 276, 340 P.2d 147; State ex rel. Bottomly v. Johnson, 116 Mont. 483, 154 P.2d 262. Defendants contend the district court erred when itbased its findings of fact,conclusions of law and judgment for the claims asserted in subsections (a), (d)

## , (e)and (g)on breach of implied contracts, express contracts and third-party beneficiary contracts. Defendants argue (1)the bases for recovery relied upon by the district courtwere not plead by plaintiff, and (2)the district court erred when it allowed plaintiff to recover on the concurrent bases of breach of implied and express contracts. We note the effect of the amendments to the amended complaintwas to conform the basis for recovery on items (a)and (g) to that of items (d)and (e)previously plead in contract. We find no deficiency in the final amendments which would deny recovery on the grounds of a failure to plead recovery in contract. Furthermore, there is no clear preponderance of evidence conflicting with the district court's findings of fact, conclusions of law and judgmenton these items. Plaintiff testified as to the value of his real and personal property, before and after the allegeddamages. These are facts within plaintiff's knowledge and are clearly admissible testimony. Dooling v. Bright-Holland Co., 152 Mont. 267, 

### 448 P.2d 749. Estimates of damage repair costs, prepared by third parties, were likewise submitted to the district court in support of the award. Defendants' fifth issue challenges the district court's rulings on the admissibility of evidence. Our discussion is premised upon defendantshaving made timely and specific objections to each item of evidence raised on review. The first item of admitted evidence which defendants object to is the letter from plaintiff's counsel to defendants' counsel which specified the alleged damages and their respective estimated monetary worth. Defendants also object to plaintiff's testimony adopting the written estimate of damages embodied in the letter. Plaintiff's counsel offered the letter into evidence on the grounds the letter represented a list of estimated damages,prepared by plaintiff with the aid of plaintiff's son, an engineer, and submitted to plaintiff's counsel who transferred the computations to the letter dated March 21, 1975 and mailed to defendants' counsel. Although defendants' counsel cross-examined plaintiff on the subject of the estimate of damages embodied in the letter, defendants failed to introduceany evidence rebutting either the authenticity or themateriality of the computations. plaintiff may testify as to thevalue of his real and personal property, before and after the alleged damages as these are facts within plaintiff's knowledge. We fail to find defendants were substantially prejudiced when the district court admitted the letter into evidence. The second item of evidence admitted by the district court and challenged by defendants is a copy of a written estimate for the repair and replacementof irrigationpipeline. p his estimate pertains to item (c)of the amended complaint and our holding vacatingthe portion of the district court judgmentdecreeing that plaintiff recover damages for item (c)renders any further discussion in that area moot. The third item of evidence admitted by the district court and objected to by defendants isplaintiff's testimony adopting a third party's out-of-courtoral statementestimating damages as to item (dl,defendants' alleged failure to gravelplaintiff'sditch road. Plaintiff testified he based his estimate of damages upon

an estimate computed by Eugene Camel, an engineer for Montana Department of Highways. Mr. Camel testified during the course of the trial, subsequent to plaintiff's testimony, and defendants were afforded sufficient opportunity to examine the witness. Defendants failed to examineMr. Camel on this subject and failed to introduce evidence contradicting plaintiff's testimony. We find no error in the district court's ruling admitting this testimony. The last item of evidence objected to by defendants is purported parol evidence, in the form of oral statementsmade by third parties and admitted into evidence through plaintiff's testimony. Defendants contend the oral statements altered the terms of the gravel and borrow agreements and these "varied terms"were the basis for the district court allowing plaintiff to recover on items (a)and (g)of paragraph 6 of the amended complaint. Upon reviewing the transcript of the trial proceedings, inparticular those sections cited in appellants' brief, we note the absence of any specific objection on the grounds the evidence introduced violates the provisions of the parol evidence rule. 

### his Court has repeatedlyheld that claimed error must be raised in the district court and may not be urged for the first time on appeal. Pickettv. Kyger, 151Mont. 87, 439 P.2d 57; Bower v. Tebbs, 132 Mont. 146, 314 P.2d 731.We hold that portion of the district court judgment decreeing thatplaintiff recover damages in the amounts of $1,553.65 for item (c); $1,417.00 for item (f); and $3,000.00 for item (h) is vacated and the claimsdismissed. Thebalance of the district court judgment is affirmed.

Justice

F7e Concur:

, - vhiefJustice