No. 13405 

IN THE 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: District Court 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 : 'JUL 2 8 1977 

Filed: <ji~~ 2, ,-, '971 
Mr. 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, sitting without a 

jury, found for plaintiff and decreed that plaintiff 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 recover money damages 

for injuries purportedly 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, it was 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 from plaintiff's land for the 

price of 4$ per ton. The contract specified: (1) The area on 

plaintiff's land from which 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 26 per cubic yard. The contract granted defendants 

the right of ingress and egress to extract as much borrow material 

as defendants deemed necessary to satisfy their construction 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 defendants had 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. Defendants damaged 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 irrigation pipeline 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. Defendants damaged 43 acres of land 
because Defendants created a situation 

where Plaintiff was unable to shut off 

irrigation water 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 

for necessary 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 through written interrogatories and 

plaintiff's deposition. On April 9, 1975, defendants filed a 

motion to dismiss. The trial court record fails to disclose any 

ruling by the district court on this motion. 

On April 21, 1975, defendants answered plaintiff's 

amended complaint. Defendants' answer generally denied plaintiff's 

allegations yet admitted defendants' past indebtedness to plaintiff 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 in paragraph 6, 

subsections (a) , (b) , (c) , (f) , (g) , 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 support of and in opposition to defendants' motion for summary 

judgment. On January 9, 1976, the district court issued its order 
summarily denying defendants' motion. The district court failed 

to file any opinion or memorandum in support of its order denying 

defendants' motion for summary judgment. 

On January 19, 1976, plaintiff filed a motion to amend 

his amended complaint. The motion specifically sought amendment 

of subsections (a), (b), (c), (f), (g) and (h) of paragraph 6 of 

the amended complaint. The district court heard the motion 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 amendments was 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 cause went 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 findings of fact and conclusions of 

law. On May 6, 1976, the district court entered judgment in 

favor of plaintiff, decreeing that plaintiff 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, (some of the Items having been in 

May and June of the same year)". 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 district 
court held the gravel and borrow agreements, when reasonably 

construed and interpreted, contained the implied obligation that 

defendants were to use reasonable care in working 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 defendants had breached express contracts, 

implied contracts and 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 it permitted 

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 claims when 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 from plaintiff'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 written 
estimate of damages. 

e) Allowing plaintiff to testify to an estimate of 

damages, the estimate was in the form of an out-of-court oral 

statement by 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) The pleadings, answers to interrogatories and 

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 incurred within two years of the filing 

of the action; (3) the claims were 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 shall not be deemed to have 

accrued until the discovery by the aggrieved 

party of the facts constituting such waste, 

trespass, or injury." 

Defendants argue plaintiff's amended complaint, answers 

to defendants' interrogatories, and deposition all establish 

there was no genuine issue of material fact to be determined as 

to the claims presented in these subsections and defendants were 
entitled to judgment on these claims as a matter of law. Rule 56, 

M.R.Civ.P., provided in pertinent part: 

" (c) * * * The judgment sought shall be rendered 

forthwith if the pleadings, depositions, answers 

to interrogatories, and admissions on file show 

that there is no genuine issue as to any material 

fact and that the moving 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. The plain meaning of the language would indicate that recovery was sought for the tortious or negligent acts 

of defendants. The first specific indication plaintiff sought 

recovery based upon a contract theory is found in plaintiff's 

motion to amend the amended complaint. However, these secondary 

amendments cannot be considered when reviewing the merits 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 to plaintiff's answers to defendants' 

interrogatories and the deposition of plaintiff in support of 

their contention the statute of limitations is a bar to the claims 

in subsections (c), (f) and (h) . Plaintiff stated there was no 

contract between 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 contract between plaintiff and defendants 

upon which plaintiff could base his claim for flood damage to hay 

fields and the loss of hay production (items (f) and (h) of 

paragraph 61, but that plaintiff was seeking recovery on the theory 

defendants had negligently controlled the source of irrigation 
waters during construction. Plaintiff's answers to defendants' 

interrogatories further established the damages allegedly caused 

by defendants occurred in May or June of 1972, more than two years 

prior to the filing of plaintiff's original complaint. 

After a careful review of the district court record, we 

find the pleadings, depositions, answers to interrogatories and 

admissions show there was no genuine issue of material fact and 

defendants were 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 judgment decreeing 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) is vacated and the claims dismissed. 

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 defendants having to prepare an entirely 

different defense. 

Rule 15, M.R.Civ.P., provides: 

"Rule 15. Amended and supplemental pleadings. 

"(a) AMENDMENTS. A party may amend his 

pleading once as a matter of course at any time 

before a responsive pleading is served or, if the 

pleading is one to which no responsive pleading 

is permitted and the action has not been placed 

upon the trial calendar, he may so amend it at any 

time within 20 days after it is served. Otherwise 

a party may 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 shall plead in response to an 

amended pleading within the time remaining for 

response to the original pleading or within 10 

days after service of the amended pleading, whichever period may be the longer, unless the court 

otherwise orders." (Emphasis added.) 

Defendants cite McGuire v. Nelson, 162 Mont. 37, 42, 508 
P.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 defendant by denying defendant 

sufficient time for preparation of a defense. McGuire held: 

"Although Rule 15 (a) M.R.Civ.P., establishes 

that leave to amend shall be freely granted, 

amendments should not be allowed where the 

theory presented by the amendments is totally 

inapplicable to the case * * *". 162 Mont. 42 

In McGuire 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 complaint because of the basic inconsistency between a 

negligence action and a breach of warranty action and the prejudice 

incurred by defendant as a result of the amendments. 

The facts in the present action do not present a case of 

substantial prejudice incurred by defendants. The motion to amend 

the amended complaint was filed on January 19, 1976, one week 

prior to the date of trial, and defendants were duly notified of 

plaintiff's intent to amend. The effect of the amendments was 

to change the basis of recovery on particular 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 agreements between the parties were interjected by the amendments 

Defendants' recourse to any prejudicial effect from the late filing 

of the amendments was to seek a continuance for the purpose of 

preparing their case. The trial record fails to disclose any 

motion by defendants for a continuance and the element of surprise 

is clearly absent. See Mitchell v. Mitchell, Mont . , 545 

P.2d 657, 33 St.Rep. 73. 

Therefore, we hold the district court's granting of plaintiff's motion to amend the amended complaint was not an abuse of 
discretion. 

ÿ he third and fourth issues challenge the sufficiency of 

the pleadings and the evidence the district court relied upon in 

its findings of 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 findings will 

not be set aside unless there is a clear preponderance of evidence 

against them. Crncevich v. Georgetown Recreation Corp., 168 Mont. 

113, 541 P.2d 56, 32 St.Rep. 963; Cope v. Cope, 158 Mont. 388, 

493 P.2d 336. The judgment of the district court must 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 it based 

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 court were 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 complaint was 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 judgment on these items. Plaintiff testified as to the value 

of his real and personal property, before and after the alleged 
damages. 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 defendants having 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 introduce any evidence rebutting either the 

authenticity or the materiality of the computations. plaintiff 

may testify as to the value 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 replacement of irrigation pipeline. p his estimate 

pertains to item (c) of the amended complaint and our holding vacating 
the portion of the district court judgment decreeing 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 is plaintiff's testimony adopting a 

third party's out-of-court oral statement estimating damages as to 

item (dl, defendants' alleged failure to gravel plaintiff's ditch 

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 examine Mr. 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 statements made 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, in particular 

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 repeatedly held that claimed error must be raised in the district court and may not be urged for the first time on appeal. 

Pickett v. Kyger, 151 Mont. 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 that plaintiff 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 claims dismissed. The balance of the district 

court judgment is affirmed. 

Justice 

F7e Concur: 

, - 

vhief Justice