Court Opinion

ID: 9542142
Source: CourtListenerOpinion
Date Created: 2023-08-07 16:31:28.566003+00
Date Added: 2024-06-11T15:03:04.220366
License: Public Domain

*383MR. JUSTICE SHEEHY
concurs in part and dissents in part:
While ordinarily the broad language used in the lien waivers involved here would serve to release the real property from any claim of lien, there are special circumstances existing here which require the result reached in the foregoing Opinion. I concur that the written lien waivers were not effective to release fully the real property, but for reasons differing somewhat from those expressed in the Opinion.
Big Sky of Montana had contracted with Inland as its general’ contractor to build the condominiums here involved. Inland had taken bids and entered into agreements with subcontractors for specified amounts depending on the amount of work to be done or material to be supplied by the respective subcontractors.
Fillback, as a subcontractor, was given to understand his work of painting and dry wall construction was to be completed by July 1, 1974. However, Big Sky, for reasons of its own, delayed the starting date. When Big Sky did give the go-ahead, the subcontractors found there were changed weather conditions, a strike, and inflated costs which required renegotiation of their agreements. This occurred because the subcontractors, particularly Fillbach, were not able to start their jobs until August 1974. Inland, on the basis of an increased allowance from Big Sky, gave all its subcontractors, except Fillbach, increased contractual amounts. With Fillbach, there was an unwritten understanding he would receive additional compensation when he had completed his work.
Fillbach had contemplated using 4 men, himself and his son for the labor involved. However, Inland intruded in this sphere and in effect took over the management of Fillbach’s job by sending in as many as 8 additional persons (because the weather was closing in) as painters. These extra workers went on Fillbach’s payroll, and the periodic payments he was receiving from Inland (which in turn billed Big Sky) were insufficient to meet his obligations. Fillbach began to lose ground financially.
Inland’s deal with Big Sky was that Inland would be reimbursed periodically by Big Sky for Inland’s payments to the subcontrac*384tors, plus 12 percent overhead and 8 percent profit. This deal was the reason Inland required the execution of lien waiver forms with each payment to Fillbach. There were some 37 of these lien waivers executed by Fillbach in return for checks. Thus, all the parties established a course of dealing whereby Fillbach each time, to receive his periodic payments, executed a lien waiver form, which Inland delivered to Big Sky so Inland could get paid. In no case did Big Sky pay Inland more than required by the amount of money expressed on the lien waiver form. The lien waiver forms were just that — printed forms on which each time, the date, the amount of money paid and the signature of Fillbach was entered. This is the reason District Court construed the lien waiver forms to be merely receipts for money paid and nothing more, for that is what they were; and Big Sky was fully aware of this under its arrangements with Inland and all the subcontractors. In fact, when Fillbach’s financial trouble began to emerge, Inland not only controlled the employees, but delivered checks to Fillbach’s suppliers as co-payees on the checks. Thus, there were no possible lien claimants except Fillbach for the work done by Fillbach. from this it appears the District Court was correct in determining 31 checks supporting 37 typed lien waivers for the exact amount of the checks “tell us that the lien waivers were for the amount only set forth in the waivers.”
Under this arrangement for payment by Big Sky no detriment can be shown to have been suffered by Big Sky if the lien waivers are regarded for what they were, receipts for the amounts stated. Big Sky thereupon paid Inland only those amounts, plus the 20 percent agreed on between Inland and Big Sky. Further, Big Sky is not in the situation of an owner who contracts a building for a specified amount, which he pays and later finds the builder has not paid suppliers or subcontractors. In relying on the lien waivers here, Big Sky was paying out only the amounts shown to have been paid by Inland, Big Sky itself treated the lien waivers only as receipts and waivers for the amounts stated. Significantly, not a single witness from Big Sky appeared to dispute this. By tabulating its own records, Big Sky at any time could have determned Fillbach had *385not been fully paid. Fillbach in his claim has given Big Sky full credit for monies he received from Inland. It would be a gross inequity in these circumstances, if the form language on the lien waivers was to be used to prevent Fillbach from being paid the full contract amount for his completed job.
Moreover, the lien waiver forms are invalid as full and final' waivers, because there is no consideration to support them. The amount paid Fillbach under each lien waiver instrument is the exact amount set forth in the form. The District Court was correct in construing each lien waiver to extend only to the dollar amounts paid. Big Sky has not been damaged in any respect beyond these amounts.
In Giammarino v. J. W. Caldewey Construction Company (Mo.App.1934), 72 S.W.2d 159, the lien claimant, a subcontractor, had a plastering work contract in the amount of $550. After completion of the work, the general contractor gave the lien claimant a check for $250 in part payment, in return for which the lien claimant executed a document in which he waived any and all lien rights to which he was entitled. The check which claimant had received was returned unpaid upon presentation to the contractor’s bank. Meanwhile, the owner of the property, when the claimant’s waiver was exhibited to him, paid the general contractor $250 in reliance thereon. In the claimant’s action to establish a lien, the owner interposed the waiver as a release. The trial court allowed the owner a credit for the $250 paid the general contractor on the strength of the waiver, but gave claimant judgment for the balance of $300, together with interest, and impressed a lien on the property. The Missouri Supreme Court affirmed saying:
“Appellants insist here that the Court below erred in adjudging respondent entitled to a mechanic’s lien against their property because respondent waived his right to such lien by executing a lien waiver before mentioned. It is manifest, however, that such lien waiver was ineffective, for want of any consideration to support it, except insofar as the appellants in reliance upon such lien waiver, made payment to the construction company. 40 C.J. 314, 340. *386Since the court allowed appellants credit for the payment of $250 made by them to the construction company, they have no grounds for complaint on account of such lien waiver.” 72 S.W.2d at 160.
That decision was reaffirmed in Missouri in the case of St. Louis Flexicore, Inc. v. Lintzenich (Mo.App.1967), 414 S.W.2d 787, 790. In that case, the Missouri Court said:
“However sharp may be the distinction between waiver and estoppel in other areas of the law, it is apparent that as applied in recent mechanic’s lien cases, such defenses have been regarded as virtually synonymous. Instead, the courts have examined the equities of the situation in light of the facts, and have allowed or denied the lien according to the circumstances involved.
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As those cases demonstrate, the converse of that principle is likewise true. That is, the invalidity of the lien waiver may be successfully asserted by the lien claimant if the owner or other person interested has not paid out money or otherwise changed his position to a detriment in reliance upon the waiver. That is the situation in the instant case. It is undisputed that plaintiff did not receive full consideration for the lien waiver it executed * * *.” In United States v. Shea-Adamson Company (U.S.D.C.Minn.1937), 21 F.Supp. 831, the trial court refused to recognize an executed lien waiver unsupported by consideration.
Not to be forgotten is the undisputed evidence also shows Big Sky is holding back from Inland the sum of $115,000. Although this case was not tried on that theory, that amount represents a fund against which Fillbach in this case could have sought the impression of an equitable (not a contractual) lien and under the law have been successful. Swinerton and Walberg Company v. Union Bank (1972), 25 Cal.App.3d 259, 101 Cal.Rptr. 665.
For these reasons I concur Fillbach is entitled to recover judgment against defendants, including Big Sky. I must however, respectfully dissent from the majority opinion with respect to attorneys fees and the problem of the “pass-through” expenses.
*387First, with regard to attorneys fees. The Opinion puts the District Court in error for following a perfectly normal and proper procedure in the trial of a cause — accepting a stipulation agreed to by the parties and within the power of the parties to make.
Under the stipulation, the parties waived the factual requirements of Crnevich v. Georgetown Recreation Corp. (1975), 168 Mont. 113, 541 P.2d 56 and its related cases and placed in the discretion of District Court the determination as to what the reasonable attorney fee should be.
“Stipulations are recognized by courts generally, and may govern in procedural matters so long as counsel do not thereby attempt to confer jurisdiction where none exists, or where jurisdiction has therefore been lost, or to determine thereby questions of law or the validity of statutory provisions, or to affect rights other than those existing between the parties to the suit in which the stipulation is filed; they may go so far as to waive statutory provisions or irregularities.” Hale et al. v. Belgrade Co., Ltd. et al. (1975), 75 Mont. 99, 104, 242 P. 425, 426.
By statute, an attorney has the authority to bind his client in any steps in an action or proceeding by his agreement filed by the clerk or entered upon the minutes of the court. Section 93-2101, R.C.M. 1947.
This stipulation had a double edge. If plaintiff had not prevailed in this case, he would have been subject to an award of attorneys fees against him under the reciprocity statute. Section 93-8601.1, R.C.M. 1947.
The stipulation had a worthy purpose: otherwise the court would have been required to take evidence from both parties as to the value of their services. Most attorneys find such evidence somewhat embarrassing and in fact, self-serving. It has not been unusual for attorneys to stipulate that the court, which has some expertise in the field of the value of attorneys’ services rendered, fix the fees without the necessity of presenting such evidence. When however, attorneys agree to such a procedure, they should be bound by the result. Here, appellant, having made such a stipulation, now wants *388out. The Opinion lets him out. In doing so, the Opinion ignores the time-honored appellate rule where the underlying evidence is absent from the record, the reviewing court will not inquire as to whether the evidence was sufficient to sustain the finding of the court, since under appellate rules, error or prejudice will not be presumed. Valier-Montana Land and Water Company v. Ries (1940), 109 Mont. 508, 97 P.2d 584; Sherburne Mercantile Company v. Bonds (1944), 115 Mont. 464, 145 P.2d 827. Instead, the Opinion, without a record, in effect determines the awarded fee was unreasonable. The result is a prolongation of the litigation, for which as I have said the District Court is not at fault, and the rule that a party is bound by his stipulation has not been followed. Lewis v. Lambros (1920), 58 Mont. 555, 194 P. 152.
This Court, in theory at least, is supervisor of the legal profession in this State. As such, it should not be blind to the rates being charged for legal services at the present. Lawyers with corporate clients are charging rates up to $75 per hour for their services. Some of the better attorneys are charging more. Lawyers’ fees have climbed to these heights because (a) there is galloping inflation going on, (b) the costs of doing business are higher than Everest, and (c) after the lawyer has paid his costs and expenses of staying in business, his net income is still subject to state and federal income taxes.
There are not tax shelters over a lawyer’s income for services. It is all hung out, ready for shearing at a full 40 percent or more for the support of the government, including this Court.
It is because hourly rates for attorneys have climbed so high that a substantial portion of our populace is unable to afford attorneys, and in effect would be denied access to the court were it not for the contingent fee system. One imagines what would have happened in this case, if plaintiff had walked into his lawyer’s office and said, “I’ve got a problem. The defendant owes me money and won’t pay. I want you to represent me to collect, and if you are successful, I will pay you at your hourly rate for one day of trial, when we collect.” In that case, plaintiff would still be looking for an attorney. *389It is about time some court speaks up about the advantages the contingent fee system offers to people who otherwise cannot afford litigation to claim their rights. The objection to the contingent fee system seems to be the lawyer might make a profit. Yet who is not in business to make a profit? Without the profit incentive, we would have nothing of the advantages of the economic system we so fondly refer to as “free enterprise”. A lawyer is as entitled to profit as anyone else. The laborer is worthy of his hire.
Moreover, the value of the plaintiff attorney’s services in this case appear from the face of the record. This was not an easy case. Plaintiff’s attorney picked a narrow legal path to follow. On one side was a swamp, and on the other, quicksand. The swamp was the line of authority which holds unless there is an ambiguity in a written contract, parol evidence at variance therewith is not admissible. The quicksand was the case law which holds a written agreement means what it says. The value of the attorney’s services here can not be computed in terms of time, unless we are going to reduce the status of the attorney profession to keeping records of “billable time”.
Finally, we should observe the purpose of section 93-8614, R.C.M. 1947, (which is itself a reciprocity statute) providing for attorneys fees in the foreclosure of mechanic’s liens. The obvious intent of the legislature in making such provisions is that a material man, laborer or subcontractor working on property and enhancing its value who must sue to collect the value of material or services is entitled to be made whole. If it is reasonable that in order to make such collection he must because of financial straits enter into a contingent fee contract with a competent attorney, then the contingent fee contract itself is reasonable in the circumstance. The District-Court is entitled to consider that necessarily-incurred costs to the material man or contract in determining proper attorney fees. That is precisely what the District Court did in this case. Justice is not achieved if after the case is over, the contractor counts his net award and is still perhaps 15 percent short of what he should have received under his contract in the first place. He will then have *390•received 85 percent justice, but the remaining 15 percent is injustice.
Second, with respect to the “pass-through” expenses. There is a philosophical and legal inconsistency in an opinion which on the one hand sends attorney fees back to the District Court because there is no record to sustain the attorney fees, but on the other hand refuses to send back the question of the pass-through expenses because there is no record to sustain such expenses. Ideally, what is sauce for the goose should be sauce to the gander.
There appears to me to be substance to plaintiff’s claim that the $19,500 which the District Court reduced from his claim because of checks received by plaintiff were in fact “pass-through” expenses which did not serve to reduce the amount due plaintiff on his contract with defendant. Since we are sending the case back anyway, and since our objective in any event should be to achieve justice to the fullest extent, I see no reason why the question of “pass-through” expenses should not also be returned for review, to make certain a proper decision has been made. Otherwise, I suspect, plaintiff will have difficulty understanding the fine quillets of the law that prevent him from receiving his claim of $19,500, but deny him his full attorney’s fee.
I dissent from the majority opinion on these points.