No. 12564 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1974 

INTERMOUNTAIN ELECTRIC, INC., 

Plaintiff and Appellant, 

WILLIAM R. BERNDT and BARBARA A. 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 the Eighteenth Judicial District, 

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 

1974 
Mr. Justice Frank I. Haswell delivered the Opinion of the Court. 

This action involves an attempted foreclosure of a 

mechanic's lien against a homeowner by an electrical subcontractor. The district court of Gallatin County, Hon. W. W. Lessley, 

district judge, sitting without a jury, entered findings of fact, 

conclusions of law and judgment for the defendant 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 as contractor for 

the construction of a dwelling house for a price of $21,800. The 

agreement and specifications provid9d that the contractor would 

furnish all labor and supply all electrical wiring, attached fixtures, and electrical heat, and specifically provided that the 

contractor would not have a right to sublet, transfer or assign 

the contract or any part thereof'without the prior written consent 

of the homeowners. 

In January, 1972, plaintiff-subcontractor, Intermountain 

Electric, Inc. entered into a verbal agreement with the contractor 

for installation of electrical service and electrical heat in the 

house being constructed by the contractor. The district court 

found that the subcontractor made no inquiry as to whose house 

was being constructed or as to the extent or limits of the contractor's authority. The subcontractor dealt exclusively with 

the contractor. The homeowners were not informed of this agreement nor did they consent in writing or verbally. 

On January 17, 1972, an employee of the electrical subcontractor began installing the electrical service in the owner's 

house. The equipment was originally billed to the contractor. 

About the first part of February the employee submitted a bill to 

the contractor for the work done and materials supplied up to 

that time and attempted to collect from the contractor. However, 
the contractor communicated to the subcontractor's employee 

that it was broke. On February 4, 1972, the subcontractor 

left the job when 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 for payment, nor did he 

ever try to find the homeowners and ask if they wanted him to 

complete the electrical work. 

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 Production Corporation was joined as thirdparty defendant. 
Following trial on this foreclosure action, the district 

court made findings of fact, conclusions of law and granted 

judgment in favor of the homeowners. The basis of the district 

court's action was that there was no contract, express or implied, 

nor any consensual or 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 subcontractor was not entitled to a lien because it wilfully 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 is whether 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: 

"Every mechanic, 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, or material, machinery 

or fixtures furnished, has a lien upon the property 

upon which the work or labor is done or material 

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, 

144 Mont. 234, 395 P.2d 252; Merrigan v. English, 9 Mont. 113, 

As pointed out in Glacier State Electric Supply v. Hoyt, 
152 Mont. 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 is necessary, 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 homeownersf position, 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. 53 Am Jur 2d, Mechanic's Liens, 851; Fidelity 

Savings & L. Assfn of Port Arthur v. Baldwin, 416 S.W.2d 482 

(Texas 1967). 

"Where there has been only a part performance of 

the contract by 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 case where the materialman 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, 167 N.Y.S. 102, 101 

Misc. 18, aff'd. 170 N.Y.S. 1083, 184 App.Div. 890. For the subcontractor to fall within the exception it must prove that the 

contractor's failure to pay was a substantial breach of the contract preventing completion of the work. 

The rule as to breach of contract is stated in Corbin 
on Contracts, 8946, as follows: 

"The non-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: 

" * * * it depends upon the particular facts of 

each case whether or not non-payment of an installment is a total breach enabling the contractor to 

cease work, or whether it is merely a partial 

breach entitling the contractor to sue for the 

partial breach, but not permitting him to abandon 

the contract." 

In Gram this Court affirmed the district court's finding of a 

total breach entitling the contractor to a lien where prompt 

payment by the owner and time was of the essence. Unlike Gram, 

there is nothing 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 February when 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-for materials and labor to the contractor on the first of 

February. No such bill, however, was ever sent to the homeowners 

although he knew who the house was being constructed for. When 

the contractor did not come forth with 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 Fausett v. Blanchard, 154 Mont. 301, 305, 
463 P.2d 319, in affirming a judgment foreclosing certain liens 

on mining claims, stated: 

"In reviewing equity cases, although all evidence is examined, the trial court will not be 

reversed if there is substantial evidence which 

would justify an inference supporting the judgments." (Citations omitted.) 

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