No. 12564 INTHE SUPREME COURT OF THE STATE OF MONTANA 1974

INTERMOUNTAIN ELECTRIC, INC., Plaintiff and Appellant,

WILLIAM R. BERNDT and BARBARAA. BERNDT, husband and wife, GEORGE A. STUBLAR, JOHN GARDNER, d

### /b/a GARDNER CONSTRUCTION and THOMAS C. HAGGERTY, Defendants and Respondents.

Appeal from: District Court of theEighteenth JudicialDistrict, Honorable W. W. Lessley, Judge presiding. Counsel of Record: For Appellant: Drysdale, McLean & Scully, Bozeman, Montana James A. McLean argued, Bozeman, Montana For Respondents

### : Berg, 0'Connell

## ,Angel and Andriolo

## ,Bozeman, Montana Charles F. Angel argued, Bozeman, Montana Landoe and Gary, Bozeman, Montana

Filed:

# @6 15

# t974 Submitted: January 15, 1974 Decided:

# J~E$ 1 1974Mr. Justice Frank I. Haswell delivered the Opinion of the Court. This action involves an attempted foreclosure of a mechanic's lienagainst a homeowner by an electrical subcontractor. The districtcourt of Gallatin County, Hon. W. W. Lessley, districtjudge, sittingwithout a jury, entered findings of fact, conclusions of law and judgment for thedefendant homeowners. On September 8, 1971, William R. Berndt and Barbara A. Berndt, husband and wife, entered into a written agreement with Component Development Production Corporation ascontractor for the construction of a dwelling house for a price of $21,800. The agreement and specifications provid9d that the contractor would furnishalllabor and supply allelectricalwiring, attached fixtures, and electrical heat, and specificallyprovided that the contractor would not have a right to sublet, transfer or assign the contract or any part thereof'without theprior written consent of the homeowners. In January, 1972, plaintiff-subcontractor, Intermountain Electric, Inc. entered into a verbal agreement with the contractor for installationof electrical service and electricalheat inthe house being constructed by the contractor. The districtcourt found that the subcontractor made no inquiry astowhose house

was being constructed or astothe extent or limitsof the contractor's authority. The subcontractor dealt exclusively with the contractor. The homeowners were not informed of thisagreement nor did they consent inwriting orverbally. On January 17, 1972, an employee of theelectrical subcontractor began installingthe electrical service in the owner's house. The equipment was originally billed tothe contractor. About the firstpart of February the employee submitted a billto the contractor for the work done and materials supplied up to that timeand attempted tocollect from the contractor. However,the contractor communicated to the subcontractor's employee that it was broke. On February 4, 1972,the subcontractor left the jobwhen it was only 40% completed. When the subcontractor was unable to obtain money from the contractor,he did not seek out the owners and ask them forpayment, nor did he

ever try to find the homeowners and ask if they wanted him to complete the electricalwork. The homeowners made payments of approximately $15,000 to the contractor under their agreement; these payments were made in approximately $5,000 installments,the last being made on December 3, 1971. The contractor has never requested any additional monies from the homeowners. After the contractor went broke the homeowners had to take over the completion of the dwelling house, and in so doing expended in excess of $8,000 in completing items called for by the plans and specifications in their agreement with the contractor. In addition thereto, the homeowners incurred a bill in the amount of $2,038.05 to Service Electric of Bozeman, Montana, to complete the installation of electrical service and electrical heat that had been voluntarily abandoned by the subcontractor. When the homeowners employed Service Electric to complete the electrical work, they had not learned the identity of subcontractor. After being unable to collect against the contractor, the electrical subcontractor filed a mechanic's lien against the 1947. owneSpursuant to section 45-501, et seq., R.C.M. 

### / This lien forclosure action resulted. Plaintiff joined George J. Stublar, the mortgagee of said property; Thomas C. Haggerty and John Gardner,d/b/a Gardner Construction, lienholders,as defendants in this action in addition to the homeowners. The contractor, Component Development ProductionCorporation was joined as thirdparty defendant.Following trial on this foreclosure action, the district courtmade findings of fact, conclusions of law and granted judgment in favor of the homeowners. The basis of the district court's actionwas that there was no contract, express or implied,

nor any consensualor contractual authority running from the homeowners to the electrical subcontractor upon which to base a mechanic's lien. In addition, the court concluded that the subcontractorwas not entitled to a lien because itwilfully and voluntarily abandoned its work before there had been substantial performance of its agreement with the contractor. This appeal by the subcontractor followed. The underlying issue upon appeal iswhether under the facts the subcontractor has a valid lien against the homeowner. We answer in the negative. The controlling statute is section 45-501,R.C.M. 1947, which provides in pertinent part: "Everymechanic, miner, machinist, architect, foreman, engineer, builder, lumberman, artisan, workman, laborer,and any other person,performing any work and labor upon, or furnishing any material, machinery, or fixture for,any building 

## * * * upon complying with the provisions of this chapter, for his work or labor done, ormaterial, machinery or fixtures furnished,has a lien upon the property upon which thework or labor is done ormaterial is furnished." Plaintiff disputes the district court's conclusion of law on the basis that section 45-501,R.C.M. 1947,does not require a contract to create a mechanic's lien. It contends that all that is required is the performance of labor or the furnishing of materials. The lien is created by an implied agency vested in the general contractor. Green Plbg. & Heating Co. v. Morris, 144Mont. 234, 395 P.2d 252;Merrigan v. English, 9Mont. 113,

As pointed out in Glacier State Electric Supplyv. Hoyt,152Mont. 415, 451 P.2d 90, there is an implied agency vested in the general contractor. This does not abrogate, however, the necessity of the requirement that in addition to furnishing materials and labor, there must be a contract, express or implied, by the owner of the property before there can be a valid lien. See also Dewey Lumber Co. v. McQuirk, 96 Mont. 294, 30 P.2d 475. The subcontractor further argues that although substantial performance isnecessary, there is an exception which allows a lien to a subcontractor who has failed to complete the work because of the prime contractor's failure to pay. 57 C.J.S. Mechanic's Liens, §113(b). It is the homeownersfposition, on the other hand, that one cannot successfully assert a mechanic's lien upon property where there has only been part performance or

a lack of substantial performance of the work for which the party claims the lien. 53Am Jur 2d,Mechanic's Liens, 851;Fidelity Savings & L. Assfnof PortArthur v. Baldwin, 416 S.W.2d 482

(Texas1967). "Where there has been only a part performance of the contractby a materialman, it seems clear that he cannot assert a mechanic's lien for the materials furnished." 53 

### Am Jur 2d,Mechanic's Liens, 851. Under certain circumstances the materialman may be granted

a lien under the exception to the general rule that the contracted work must be completed. In those instances, however, it is usually the casewhere thematerialman has substantially completed his work; or that he was prevented from completing his work by the breach of the owner or a third party. Fontaine v. Storrie, 45 P.2d 361, 7 C.A.2d 104;green berg,^. Mamh, 167N.Y.S. 102, 101 Misc. 18, aff'd. 170N.Y.S. 1083, 184App.Div. 890. For the subcontractor to fall within the exception itmust prove that the contractor's failure to pay was a substantial breach of the contractpreventing completion of the work. The rule as to breach of contract is stated in Corbinon Contracts, 8946,as follows: "Thenon-payment of an installment of money when due will always create a right of action for that money, but it will not always be a total breach." This Court said in Gramm v. Insurance Unlimited, 141 Mont. 456, 461, 378 P.2d 662: 

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## * it depends upon the particular facts of each casewhether or not non-payment of an installment is a total breach enabling the contractor to cease work, orwhether it ismerely a partial breach entitling the contractor to sue for the partial breach, but notpermitting him to abandon the contract." In Gram this Court affirmed the district court's finding of a total breach entitling the contractor to a lienwhere prompt payment by the owner and time was of the essence. Unlike Gram, there isnothing in the record to suggest that the contractor's failure to pay actually prevented the subcontractor from completing the work. In fact there is no evidence to indicate that the subcontractor was entitled to or had any right to demand any money from the contractor on the first of Februarywhen it submitted the bill to the contractor. Nor was there any proof that prompt payment by the contractor and time was of the essence to completion of the work. The subcontractor's employee testified that he sent a billing-formaterials and labor to the contractor on the first of February. No suchbill, however,was ever sent to the homeowners although he knewwho the house was being constructed for. When the contractordid not come forthwith the money, the subcontractor did not go to the homeowners and ask them for payment of the bill,

nor did he ever ask them if they wanted the electrical work completed. Instead,he voluntarily removed all tools from the premises, leaving behind materials delivered,and abandoned his work--40% completed. This Court,in Fausettv. Blanchard, 154 Mont. 301, 305,463 P.2d 319, in affirming a judgment foreclosing certain liens

onmining claims, stated: "Inreviewing equity cases, although all evidence is examined, the trial courtwill not be reversed if there is substantial evidencewhich would justify an inference supporting the judgments." (Citationsomitted.) There is substantial evidence in the present case to support the district court's judgment denying a mechanic's lien to the subcontractor for the reason that the subcontractor wilfully and voluntarily abandoned the installation of electrical services before there had been substantial performance of its agreement with the contractor. We affirm the judgment of the district court.

Justice