No. 83-506 

IN THE SUPREME COURT OF THE STATE OF XONTANA 

1984 

KENNETH D. COLLINS AGENCY, 

a Montana corp., 

Plaintiff and Respondent, 

LEON R. HAGEROTT, Architect, 

a professional corp., 

Defendant and Appellant. 

APPEAL PROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Bonorable William J. Speare, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Lynaugh, Fitzgerald & Hingle; Thomas Lynaugh argued, 

Billings, Montana 

For Respondent : 

Ralph Herriott argued, Billings, Montana 

Filed: 

- - - 

Clerk 
Mr. Justice L.C. Gulbrandson delivered the Opinion of the 

Court. 

This case comes on appeal from an order of the 

District Court, Thirteenth Judicial District, Yellowstone 

County, granting the appellant, Leon Hagerott, $10,000 in 

architectural fees and holding Hagerott's lien on certain 

real estate invalid. The District Court also awarded the 

respondent, Kenneth D. Collins Agency, attorney's fees in 

the amount of $3,851.25. We affirm in part, vacate in pa.rt 

and remand. 

The appellant is a North Dakota professional 

corporation (hereinafter referred to as Hagerott) with Leon 

Hagerott being the principal officer and stockholder. 

Hagerott is an architect licensed in the State of Montana. 

Respondent is a Montana corporation (hereinafter referred to 

as Collins) with Kenneth Collins being the principal officer 

and stockholder. 

Collins is the owner of certain real property located 

in Custer County. During February, 1978, Collins and 

Hagerott contemplated application to the Farmers Home 

Administration (FHA) for authority to receive a loan to 

build twenty-four low-cost housing units. The cost of the 

units was to be subsidized by the FHA and the units were to 

be located on Collins' property in Custer County. 

On July 27, 1978, Collins and Hagerott entered into a 

contract which provided that Hagerott would draw plans and 

specifications and perform other architectural services for 

construction of the twenty-four units. Section 5 of the 

architectural contract provided that Hagerott, as architect, 

would receive five percent of the construction cost of the 
project. Hagerott prepared plans and specifications which 

were approved by Collins and the FHA. 

Costs of the project were prepared by Collins in 

conjunction with Hagerott and the total cost of construction 

was determined to be approximately $630,500. These costs 

were set forth in the basic loan application which was 

signed by Hagerott. The FHA approved the Collins' loan 

application in the amount of $570,000. 

After further negotiations between the parties and an 

unsuccessful bid letting, no further progress was made on 

the project until March of 1980 at which time Hagerott with 

Collins' approval, procured a new bid on the project. On 

April 3, 1980 Collins prepared and submitted a new cost of 

the project to Hagerott and the FHA that raised the total 

cost of the project to $740,000. 

On May 23, 1980 Hagerott wrote a letter to Collins 

reiterating his desire to continue with the project and 

stating his willingness to keep the project going. However, 

late that same month Collins decided to terminate the 

project and contacted John Ramage and Tom Fields in Miles 

City for the purpose of turning the project and loan 

application over to them. In late May, 1980, Ramage and 

Fields met with Hagerott and told him they were no longer 

interested and his services were terminated. Ramage and 

Fields never took over the project and abandoned the plans 

in the fall of 1980. 

When Hagerott was notified his services were 

terminated he filed a lien against the real estate of the 

original project site. Eventually, the project was reduced 

in size and constructed on a different site. 
Collins commenced this action to remove Hagerott's 

lien filed against Collins' real property at the original 

project site and for damages, attorney's fees and costs. 

Hagerott counterclaimed for the amount of architectural fees 

due under the contract or on the basis of quantum meruit. 

On April 1, 1983, the District Court held that 

Hagerott was entitled to $10,000 on the basis of quantum 

meruit but concluded that the lien filed by Hagerott against 

the real property of Collins was invalid because Hagerott 

failed to show that he furnished materials for the 

enhancement of Collins' property. The District Court stated 

that, "[tlhe burden of proof is on a lien claimant to 

establish his lien and support his burden; he must show not 

only that he furnished the materials, but also that they 

were used for the enhancement of the property to which he 

claims a right to resort as security for the debt thus 

created. In the abscence of this showing, his equity does 

not arise.'' The District Court ordered Hagerott's lien 

expunged from the record and awarded Collins attorney's fees 

for time spent on litigating removal of the lien but awarded 

Hagerott $10,000 on the basis of quantum meriut. Hagerott 

appealed and a cross-appeal was filed by Collins. 

Hagerott raises three issues on appeal: 

(1) Did the District Court err in awarding Hagerott 

only $10,000 in architectural fees based upon quantum 

meruit? 

(2) Did the District Court err in holding Hagerott's 

lien agains Collins' real property invalid and expunging it 

from the record? 

(3) Did the District Court err in the amount of 
attorney's fees awarded to Collins? 

Initially, Hagerott asserts the District Court erred 

in awarding him only a $10,000 fee based upon quantum 

meruit. Collins contends the contract between the parties 

did not entitle Hagerott to any fee. 

The District Court correctly held that Hagerott was 

entitled to an architectural fee based upon quantum meruit. 

However, the amount of the architectural fee found by the 

District Court to be appropriate is not supported by the 

record. In its finding of fact the District Court stated at 

Finding number 38: "[alt the time his services were 

terminated, [Hagerott] had approximately 600 hours of time 

in the project. The hourly charge for his time in 1978 

through 1980 was $30 per hour. However, even though 

[Hagerott] spent this number of hours, he is only entitled 

to a lesser amount [$10,000] due to the value of his 

services to the project." In Robertus v. Candee (Mont. 

1983), 670 P.2d 540, 40 St.Rep. 1391, this Court defined 

quantum meruit as the market value for the work done by the 

plaintiff. In this case, the quantum meruit amount would be 

the market value of the services rendered based upon the 

number of hours spent on the project. The evidence 

established the reasonable amount per hour and the number of 

hours expended. The evidence was incorporated into Finding 

number 38 by the District Court. There was no evidence to 

show any lesser value. In reviewing the District Court's 

order, this Court may not substitute its judgment for that 

of the District Court, but must determine if there was 

substantial evidence to support the District Court's 

findings. Bagnell v. Lemery (Mont. 1983), 657 P.2d 608, 40 
St.Rep. 58. Substantial evidence is evidence which: 

". . . will convince reasonable men and 

on which such men may not reasonably 

differ as to whether it establishes the 

Plaintiff's case and if all reasonable 

men must conclude that the evidence does 

not establish such case then it is not 

substantial evidence. The evidence may 

be inherently weak and still be deemed 

substantial." Olson v. Westfork 

Properties, Inc. (1976), 171 Mont. 154, 

557 P.2d 821. 

The value of Hagerott's services could be measured 

only by the number of hours and the reasonable value of 

those hours as indicated by the evidence. The District 

Court's award of $10,000 in quantum meruit was not supported 

by substantial evidence. Since the District Court found $30 

per hour for 600 hours to be appellant's fee and there was 

no evidence to the contrary, that portion of the District 

Court's order awarding Hagerott $10,000 is vacated, and the 

cause is remanded to the District Court for the purpose of 

entering judgment for Hagerott in the amount of $18,000. 

Next, Hagerott argues that the District Court erred in 

holding that the lien filed against the property of Collins 

was invalid. The District Court stated that the lien was 

invalid because the services Hagerott provided did not 

enhance the value of the property. The pertinent statute to 

this issue is Section 71-3-501 MCA, which provides: 

"Who may have lien. 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, structure, 

bridge, flume, canal, ditch, aqueduct, 

mining claim, coal mine, quartz lode, 

tunnel, city or town lot, farm, ranch, 

fence, railroad, telegraph, telephone, 

electric light, gas, or waterworks or 

plant or any improvements, upon complying 

with the provisions of this part, for his 
work or labor done or material, 

machinery, or fixtures has a lien upon 

the property upon which the work or labor 

is done or material is furnished." 

In arguing that the statute allowed Hagerott to file a 

valid lien, Hagerott relies on the language of this Court's 

decision in Caird Engineering Works v. Seven-up Gold Mine 

Co. (1941), 111 Mont. 471, 111 P.2d 267. In Caird, this 

Court said that when the legislature used the term 

"architect" in the lien statute it did not mean that the 

architect's actual labor must be done upon the premises and 

structure being erected for a lien to arise. Rather, this 

Court in Caird said the term "architect" as used in the lien 

statute means architectural services as they are usually 

performed. Caird, supra, 111 Mont.498. However, the 

situation in Caird is distinguishable from the facts in this 

case. In Caird, the architect provided services that 

contributed to structural improvement and, thus, enhancement 

of the property. In the present case, no enhancement 

occurred and therefore a lienable interest did not arise. 

Several other jurisdictions have also held that a lien does 

not arise absent some tangible improvement of the property. 

See, e.g., Construction Engineering Co. v. Village Shopping 

Center, Inc. (La.App. 1964), 168 So.2d 826; Clark v. Smith 

(Wisc. 1940), 290 N.W. 592. 

Hagerott argues the situation in the present case is 

analogous to the facts in O'Hara v. Architects Hartung and 

Association (Ind. 1974), 326 N.E.2d 283, in which the court 

agreed with the general proposition that there must be the 

erection of a building for an architect's lien to arise, but 

qualified the proposition by stating that "[i] t is not 

always necessary to show that the material went into the 
building. Circumstances in a given case may be such that 

the owner of the building is estopped from invoking the 

general rule. " 

Estoppel is a principle of equity. Cremer v. Cremer 

Rodeo Land and Livestock Co, (1979), 181 Mont, 87, 592 P.2d 

485. Equity will grant relief sought when in view of all 

the circumstances to deny it would permit one of the parties 

to suffer a gross wrong at the hands of the other party who 

brought about the condition. Hostetter v. Inland 

Development Corp. of Montana (1977), 172 Mont. 167, 561 P.2d 

1323. Estoppel is not favored and will only be sustained 

upon clear and convincing evidence. Tribble v. Reely 

(1976), 171 Mont. 201, 557 P.2d 813. In the case at bar, 

there were insufficient findings to create an estoppel 

situation based upon clear and convincing evidence. 

Finally, Hagerott argues the District Court erred in 

the amount of attorney's fees awarded Collins. The District 

Court ordered Hagerott to pay those attorney's fees that 

related to removal of the lien. We find from the agreed 

statement of proceedings stipulated to by both parties on 

September 15, 1983, and the time and expense sheet submitted 

by Collins' counsel, that the District Court awarded 

$3,851.25 in attorney's fees for the removal of the invalid 

lien under Section 71-3-124, MCA. No award of attorney's 

fees was made for trial time, post trial briefs or costs. 

The fixing of attorney's fees is largely within the 

discretion of the District Court and will not be disturbed 

absent a clear abuse of that discretion. Carkeek v. Aver 

(Mont. 1980), 613 P.2d 1013, 1015, 37 St.Rep. 1274, 1276. 

We find there was substantial evidence to support the award 
of attorney's fees. 

Affirmed in part, vacated in part, and remanded to the 

District Court for entry of amended judgment in accordance 

with this opinion. / 

We concur: 

Chief Justice 

Justices 
tqr. Chief Justice Frank I. Haswell, concurring and 

dissenting: 

I concur with the discussion and holding on Issues 2 

and 3. I dissent from the discussion and holding on Issue 1. 

The vice in holding that the architect is entitled to 

an award of $18,000 for his services based on quantum meruit 

is that there is no evidence that this is the market value of 

his services. The figure of $18,000 is simply a mechanical 

calculation of the number of hours he spent multiplied by the 

rate he charged per hour. This does not necessarily equal 

market value. The District Court recognized this and awarded 

only $10,000 which itself is an arbitrary figure not supported by substantial credible evidence. 

I would vacate the $18,000 award and remand for further 

proceedings to establish the market value of the architect's 

services. 

7~4 J, a.&t..ubtq Chief Justice 

Mr. Justice Frank l3. Morrison, Jr., dissents and will file a 

written dissent later.