MAXWELL v ANDERSON

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No. 14336 IN THE SUPREME COURT OF THE STATE OF MONTANA 1978 RAY C. MAXWELL, Plaintiff, Respondent and Cross-Appellant, G. C. ANDERSON, JR., and CAROLE J. ANDERSON, husband and wife, Defendants and Appellants. Appeal from: District Court of the Thirteenth Judicial District, Honorable Jack Shanstrom, Judge presiding. Counsel of Record: For Appellants: Ayers and Alterowitz, Red Lodge, Montana Michael G. Alterowit argued, Red Lodge, Montana For Respondent: Meglen, Murray and Bassett, Billings, Montana J. F. Meglen argued and Chares A. Murray, Jr. argued, Billings, Montana Submitted: December 19, 1978 Decided: MAR Filedr , 2, 19f9 2 8 1979 Mr. J u s t i c e Gene B . Daly d e l i v e r e d t h e Opinion of t h e C o u r t . T h i s a c t i o n i n v o l v e s t h e f o r e c l o s u r e of a m e c h a n i c ' s l i e n by r e s p o n d e n t Ray C. Maxwell on a house which h e cont r a c t e d t o b u i l d f o r a p p e l l a n t s Anderson. The D i s t r i c t C o u r t , T h i r t e e n t h J u d i c i a l D i s t r i c t , o r d e r e d t h e Andersons t o pay Maxwell, t h e c o n t r a c t o r , $15,038.88 on h i s l i e n and a t o t a l of $9,223.41 t o o t h e r s u p p l i e r s who a l s o h e l d l i e n s f o r m a t e r i a l s i n t h e house. I n a d d i t i o n , t h e D i s t r i c t Court o r d e r e d Andersons t o pay t h e c o n t r a c t o r ' s a t t o r n e y ' s f e e s i n t h e amount o f $3,500. From t h e f i n a l judgment, Andersons appeal. I n May 1976, G. C. Anderson, J r . , p r e p a r e d and e n t e r e d i n t o a w r i t t e n agreement w i t h Ray Maxwell t o have Maxwell b u i l d a house f o r t h e Andersons. The w r i t i n g , e n t i t l e d a " c o n s t r u c t i o n agreement," p r o v i d e d a r e c i t a t i o n of a n " e s t i m a t e d co c e i l i n g -s t of $46,500" and a l l o w i n g f o r a 1 0 p e r c e n t margin. During t h e c o u r s e of c o n s t r u c t i o n , Anderson r e q u e s t e d numerous changes o r a d d i t i o n s , which t o t a l e d i n c o s t some $14,157.40. The c o n s t r u c t i o n agreement p r o v i d e d t h a t Maxwell was t o be p a i d on a monthly b a s i s f o r h i s m a t e r i a l s and on a bi-weekly b a s i s f o r l a b o r . The c o n s t r u c t i o n proceeded n o r m a l l y and Andersons made t h e i r payments on s c h e d u l e u n t i l September 1 3 , 1976, when Mr. Anderson t o l d Maxwell h e d i d n o t have enough money t o make t h e n e x t payment. Maxwell c o n s i d e r e d h i m s e l f t e r - minated on t h e 1 7 t h o f September and withdrew h i s crew from the project. Anderson c o n t a c t e d Maxwell on t h e 23rd t o a r r a n g e h i s r e t u r n t o t h e j o b , b u t on t h e f o l l o w i n g day no workmen w e r e on t h e job. Maxwell f i l e d a m e c h a n i c ' s l i e n to p r o t e c t h i s i n t e r e s t and t h e m a t e r i a l s f o r which h e had n o t been p a i d . At trial Maxwell limited his proof to the issue of how much money he had put into the project by the time his lien was filed and the amount he had actually been paid. Following September 1976, three other business firms, Marchello Hardware, Sherwin Williams, and American Appliance Co., also filed liens on materials used on the project. By the pleadings, the parties had put into issue the question of which party, the Andersons or Maxwell, was responsible for this payment. (The American Appliance lien was included in Maxwell's lien, and Maxwell has acknowledged its payment prior to appeal.) At the conclusion of trial without a jury, the court entered the following conclusions and judgment: "1. Mr. Maxwell has filed a mechanic's lien in accordance with Section 45-502, Revised Codes of Montana, 1947, as amended. "2. The mechanic's lien was properly foreclosed and recovers the value of labor and material as set forth in the lien. "3. Mr. Maxwell substantially completed construction of the defendants' dwelling. "4. The defendants are legally responsible for additional liens and charges against the defendants, individually or against the property. "5. The term 'estimates' as used in the May 15, 1976, agreement does not limit the amount of money that the plaintiff may recover. "6. That the defendant, G. C. Anderson, is not entitled to any damages based on loss of wages. "7. That Mr. Maxwell is not a general contractor as a matter of law. "8. The plaintiff is entitled to reasonable attorneys' fees as provided by Section 93-8614, Revised Codes of Montana, 1947, as amended. "JUDGMENT "Pursuant to the foregoing Findings of Fact and Conclusions of Law, judgment is entered in plaintiff's favor as follows: " 1 . The d e f e n d a n t s s h a l l pay t o t h e p l a i n t i f f t h e sum o f F i f t e e n Thousand S i x Hundred T h i r t y - S i x and 38/100 D o l l a r s , ( $ 1 5 , 6 3 6 . 3 8 ) , minus t h e f o l l o w i n g s e t - o f f s , f o r a t o t a l o f F i f t e e n Thousand T h i r t y E i g h t a n d 88/100 D o l l a r s ( $ 1 5 , 0 3 8 . 8 8 ) : "a. "b. "c. "d. Bypass Valve----------$70.00 7.50 Correction of Wall----C o r r e c t i o n o f S t a i r w e l l 20.00 Correction of C r a w l S p a c e ---------------- 500.00 $597.50 " 2 . The d e f e n d a n t s s h a l l pay t o t h e p l a i n t i f f i n t e r e s t on t h e a b o v e amount from September 23, 1976, u n t i l t h e e n t i r e d e b t h a s b e e n p a i d i n f u l l . "3. That i n t h e e v e n t t h e defendants a r e unable t o pay t h e amount o f t h e judgment, t h e C o u r t s h a l l s u p e r v i s e t h e s a l e o f a n y and a l l a s s e t s o f d e f e n d a n t s which may b e h e l d t o s a t i s f y s a i d judgment. " 4 . T h a t p l a i n t i f f h a v e judgment a g a i n s t d e f e n d a n t s f o r any d e f i c i e n c y remaining i n t h e e v e n t t h e proc e e d s from t h e s a l e d o n o t s a t i s f y p l a i n t i f f ' s claim. " 5 . T h a t t h e d e f e n d a n t s pay a n y and a l l a d d i t i o n a l l i e n s against t h e property. " 6 . The d e f e n d a n t s s h a l l pay r e a s o n a b l e a t t o r n e y s ' f e e s i n t h e amount o f T h i r t y F i v e Hundred D o l l a r s ( $ 3 5 0 0 . 0 0 ) , a n d t h e p l a i n t i f f s h a l l pay t h e b a l a n c e o f F i f t e e n Hundred Two D o l l a r s ( $ 1 5 0 2 . 0 0 ) . " 7 . T h a t d e f e n d a n t s s h a l l pay a l l c o s t s o f s u i t . " A p p e l l a n t s p r e s e n t f i v e i s s u e s f o r r e v i e w by t h i s Court: 1. Is a l i e n h o l d e r e n t i t l e d t o judgment on h i s m e c h a n i c ' s l i e n without reference t o an estimated p r i c e s t a t e d i n t h e c o n t r a c t upon which t h e l i e n i s b a s e d ? 2. Is t h e d e f e n d a n t i n a l i e n f o r e c l o s u r e a c t i o n e n t i t l e d t o a d i r e c t e d v e r d i c t when t h e l i e n h o l d e r f a i l s t o show by t h e p a r t i e s ' c o n t r a c t t h a t h e w a s i n f a c t e n t i t l e d t o t h e amount o n which h e i n t e n d s t o f o r e c l o s e ? 3. Is a n award of a t t o r n e y ' s f e e s p r o p e r l y made when ( a ) t h e p r e v a i l i n g p a r t y f a i l e d t o p r e s e n t e v i d e n c e on f e e s i t s case-in-chief? and, ( b ) t h e l o s i n g p a r t y had no o p p o r t u n i t y t o c r o s s examine a s t o t h e amount o f f e e s i n v o l v e d ? 4. May a D i s t r i c t C o u r t p r o p e r l y o r d e r a p a r t y i n a l i e n f o r e c l o s u r e a c t i o n t o pay o f f l i e n s h e l d by o t h e r l i e n h o l d e r s who a r e n o t p a r t i e s t o t h e f o r e c l o s u r e ? 5. Is a n a p p e l l a n t e n t i t l e d t o a t t o r n e y ' s f e e s i n t h e e v e n t t h a t h e p r e v a i l s on a p p e a l ? The f i r s t two i s s u e s i n v o l v e t h e same b a s i c q u e s t i o n and c a n b e t r e a t e d a s one i s s u e . A p p e l l a n t s ' p o s i t i o n i s t h a t t h e maximum p r i c e t h e y c o u l d b e e x p e c t e d t o pay under t h e f a c t s i s t h e " t o t a l c e i l i n g c o s t " of $51,150 p l u s a d d i t i o n a l c o s t s f o r t h e i r a l t e r a t i o n s , amounting t o $14,157.40. Although a p p e l l a n t s do not s t a t e t h i s f i g u r e i n t h e i r b r i e f , it appears t h a t t h e t o t a l t h e y c o n s i d e r t h e m s e l v e s t o owe Maxwell under any c i r c u m s t a n c e i s $65,307.40. A p p e l l a n t s do n o t c o n s i d e r t h e m s e l v e s r e s p o n s i b l e f o r t h e payment of $9,223.41 t o o t h e r contractors. The D i s t r i c t C o u r t s p e c i f i c a l l y found t h e Andersons " l e g a l l y r e s p o n s i b l e f o r a d d i t i o n a l l i e n s and charges." Maxwell c o n t e n d s t h a t b e c a u s e h e c h o s e t o p r o c e e d under t h e l i e n s t a t u t e s , r a t h e r t h a n c o n t r a c t law, t h e l i e n law governs t h i s case. Under t h e a p p l i c a b l e l i e n law, h e con- t e n d s , h e i s e n t i t l e d t o a n e q u i t a b l e quantum m e r u i t f o r m a t e r i a l s and l a b o r p u t i n t o t h e p r o j e c t w i t h o u t r e g a r d t o any u n d e r l y i n g c o n t r a c t o r agreement. H e f u r t h e r argues t h a t , even i f t h e m a t t e r were t o b e d e c i d e d under c o n t r a c t law, t h e e s t i m a t e d p r i c e i n d i c a t e d i n t h e c o n s t r u c t i o n a g r e e m e n t would n o t a c t a s a l i m i t on t h e c o n t r a c t o r ' s recovery. The Montana m e c h a n i c ' s l i e n s s t a t u t e d o e s n o t s p e c i f i c a l l y s a y what r o l e t h e c o n t r a c t between t h e owner and l i e n h o l d e r p l a y s i n d e t e r m i n i n g t h e amount o f t h e l i e n . S e c t i o n 45-501, R.C.M. 1947, now s e c t i o n 71-3-501 MCA, simply provides: ... ... ... . . . "Every builder p e r f o r m i n g any work a n d l a b o r upon, o r f u r n i s h i n g any m a t e r i a l f o r , any b u i l d i n g upon complying w i t h t h e p r o v i s i o n s of t h i s c h a p t e r , f o r h i s work o r l a b o r furnished, has a l i e n alone, o r material upon t h e p r o p e r t y upon which t h e work o r l a b o r i s done o r material i s f u r n i s h e d . " ... While a n a g r e e m e n t i s n e c e s s a r y as a p r e r e q u i s i t e t o a l i e n ' s e x i s t e n c e , t h e r i g h t i s s t a t u t o r y and n o t d e p e n d e n t o n w h e t h e r t h e c o n t r a c t w i t h t h e owners of t h e p r o p e r t y i s w r i t t e n , o r a l , express o r implied. Nontana d e c i s i o n s a r e less c l e a r a s t o how t h e t o t a l c o n t r a c t p r i c e a f f e c t s t h e amount o f t h e l i e n . The p a r t i c u l a r q u e s t i o n r a i s e d by ap- p e l l a n t s h e r e was a d d r e s s e d i n S m i t h v . G u n n i s s ( 1 9 4 3 ) , 1 1 5 Mont. 362, 383-84, 1 4 4 P.2d 186, 193. I n Gunniss t h e owners had c o n t r a c t e d f o r work t o b e done on t h e i r home, b u t had n o t a g r e e d upon a t o t a l p r i c e . I n s t e a d , t h e owners had a g r e e d t o pay f o r t h e r e m o d e l i n g by s i g n i n g " a T i t l e One F e d e r a l Housing n o t e i n t h e amount d u e " a t t h e c o m p l e t i o n o f the project. Such n o t e s w e r e l i m i t e d t o $2500 by l a w . T h e r e f o r e , t h e owners a r g u e d t h a t t h e y had l i m i t e d t h e i r o b l i g a t i o n t o t h a t amount. The C o u r t n o t e d , however, t h a t t h e owners had been a p p r i s e d d u r i n g t h e r e m o d e l i n g t h a t t h e c o s t s w e r e g o i n g o v e r $2900 and t h a t t h e owners p e r m i t t e d t h e work t o c o n t i n u e beyond t h a t p o i n t . Thus, i t r u l e d t h a t t h e owners had a c q u i e s c e d i n a n abandonment o f t h a t c o n t r a c t provision. Gunniss i s n o t o u r c a s e on a l l p o i n t s b u t d o e s demons t r a t e t h a t under p r o p e r c i r c u m s t a n c e s a n award c a n b e made b a s e d on t h e r e a s o n a b l e c o s t of l a b o r and m a t e r i a l s f u r n i s h e d by t h e l i e n h o l d e r , i n d i s r e g a r d o f t h e o r i g i n a l contract. Maxwell i s i n a s t r o n g e r p o s i t i o n b e c a u s e he was b u i l d i n g under a n agreement drawn by t h e owner which w a s based on an " e s t i m a t e d " c o s t of m a t e r i a l and l a b o r f o r a certain structure. The e s t i m a t e d c o s t was f u r t h e r s u b j e c t t o a number o f v a r i a b l e s , i . e . , 10 percent o r i g i n a l e r r o r , owner p e r m i t t e d t o f u r n i s h a l l l a b o r p o s s i b l e t o h o l d down c o s t s and t h e a b s o l u t e r i g h t of t h e owner t o change p l a n s and s p e c i f i c a t i o n s a t w i l l . I n any e v e n t , o t h e r c o u r t s have d e t e r m i n e d e s t i m a t e d c o s t s t o mean: "The ' e s t i m a t e d c o s t ' o f a b u i l d i n g means t h e reasonable c o s t of a b u i l d i n g e r e c t e d i n accordance w i t h p l a n s and s p e c i f i c a t i o n s r e f e r r e d t o and n o t n e c e s s a r i l y t h e amount a g r e e d upon by t h e p a r t i e s An e s t i m a t e o r an o f f e r a c c e p t e d by d e f e n d a n t . i s e q u i v a l e n t of 'more o r l e s s ' and d o e s n o t p r e t e n d t o be based on a b s o l u t e c a l c u l a t i o n s . Use of 'To make a n e s t i m a t e ' t h e word p r e c l u d e s a c c u r a c y . o r d i n a r i l y means t o c a l c u l a t e r o u g h l y o r t o form a n o p i n i o n a s t o amount from i m p e r f e c t d a t a . See B e e l e r v . M i l l e r , Mo. App., 254 S.W.2d 986, 990, and a u t h o r i t i e s c i t e d ; 1 5 Words and P h r a s e s , ' E s t i m a t e ' , pp. 373-380; Black, Law D i c t i o n a r y ( F o u r t h Ed. 1 9 5 1 ) , 648; B a l l e n t i n e ' s Law D i c t i o n a r y ( T h i r d Ed. 1 9 6 9 ) , 420." Denniston and P a r t r i d g e Co. v . Mingus (Iowa 1 9 7 0 ) , 179 N.W.2d 748, 752-53. . . A p p e l l a n t s a d m i t t h a t a l l m a t e r i a l and l a b o r c l a i m e d by Maxwell were i n f a c t used i n t h e c o n s t r u c t i o n of t h e h o u s e , and t h a t a p p e l l a n t s changed t h e p l a n s many t i m e s d u r i n g construction. The D i s t r i c t C o u r t found that t h e owners " a c t e d i n d e p e n d e n t l y and f o r t h e i r own b e n e f i t when t h e y p u r c h a s e d m a t e r i a l and s e c u r e d s e r v i c e s from o t h e r c o n t r a c t o r s . " A p p e l l a n t s do n o t a t t e m p t t o show e v i d e n c e c o n t r a r y t o t h e D i s t r i c t Court's conclusion. They r e l y i n s t e a d upon t h e c o n t r a c t o r ' s f a i l u r e t o show a m o d i f i c a t i o n i n t h e c o n s t r u c t i o n agreement a l l o w i n g f o r a h i g h e r t o t a l p r i c e . In this kind of s i t u a t i o n , i t i s n o t necessary t o prove a modificat i o n o f t h e c o n t r a c t by Maxwell. "firm" c e i l i n g . The p a r t i e s n e v e r had a Therefore, t h e D i s t r i c t Court properly d e t e r m i n e d t h e v a l u e o f t h e l i e n which Maxwell h e l d on Andersons' house. A d d i t i o n a l l y , t h e f i n d i n g s of t h e D i s - t r i c t C o u r t on t h i s i s s u e were n e v e r c h a l l e n g e d by s u b s t a n - t i a l e v i d e n c e t o t h e c o n t r a r y and must s t a n d a f f i r m e d . Morrison v . C i t y of B u t t e ( 1 9 6 7 ) , 150 Mont. 106, 112, 431 P.2d 79. The r e m a i n i n g i s s u e s may be t r e a t e d summarily. First, a p p e l l a n t s c o n t e n d t h a t t h e D i s t r i c t C o u r t wrongly awarded Maxwell a t t o r n e y ' s f e e s b e c a u s e Maxwell f a i l e d t o p u t on e v i d e n c e of f e e s d u r i n g h i s c a s e - i n - c h i e f and b e c a u s e a p p e l - l a n t s were d e n i e d a n o p p o r t u n i t y t o cross-examine a s t o t h e i r reasonableness. A s t o t h e f i r s t objection, appellants focus primarily on t h e D i s t r i c t C o u r t ' s f a i l u r e t o o f f e r a n e x p l a n a t i o n f o r p e r m i t t i n g Maxwell t o reopen h i s c a s e - i n - c h i e f evidence of a t t o r n e y ' s f e e s . and p r e s e n t A p p e l l a n t s concede t h a t t h e m a t t e r of p e r m i t t i n g a l i t i g a n t t o r e o p e n h i s c a s e - i n - c h i e f i s p l a c e d w i t h i n t h e d i s c r e t i o n of t h e t r i a l c o u r t . 9 3 - 5 1 0 1 ( 4 ) , R.C.M. 1947, now s e c t i o n 25-7-301(4) Section MCA. They c o n t e n d , however, t h a t t h e y were i n j u r e d by t h e c o u r t ' s a c t i o n by t h e mere f a c t t h a t Maxwell was p e r m i t t e d t o p u t on e v i d e n c e and r e c e i v e d a n award. T h i s h a s n o t h i n g t o do w i t h t h e i n j u r y t h a t m i g h t r e s u l t from a d i s o r d e r l y p r e s e n t a t i o n of e v i d e n c e . N showing i s made t h a t a p p e l l a n t s were i n o j u r e d by t h e manner i n which t h e e v i d e n c e was p r e s e n t e d . While r e o p e n i n g a c a s e - i n - c h i e f may n o t be d e s i r a b l e , a more s u b s t a n t i a l showing of harm s h o u l d b e made b e f o r e t h i s i s declared reversible error. A s t o t h e second c o n t e n t i o n , t h e D i s t r i c t Court ordered Maxwell t o p r e s e n t a n i t e m i z e d s t a t e m e n t w i t h i n twenty d a y s , which h e d i d . Some two months l a t e r t h e D i s t r i c t C o u r t i s s u e d i t s f i n d i n g s , c o n c l u s i o n s , and judgment. Appellants c o u l d have o b t a i n e d a copy and e n t e r e d t h e i r o b j e c t i o n s a t any t i m e d u r i n g t h e i n t e r i m . They s h o u l d n o t now be p e r - mitted t o r a i s e the issue a s reversible error. Appellants' next i s s u e concerns t h e D i s t r i c t Court's j u r i s d i c t i o n t o o r d e r them t o pay d e b t s and l i e n s t o e n t i ties not parties t o the foreclosure action. The D i s t r i c t C o u r t d i d n o t o r d e r a p p e l l a n t s t o make payments of any s p e c i f i c sums t o s p e c i f i c b u s i n e s s e s . I n s t e a d , it found a p p e l l a n t s l e g a l l y r e s p o n s i b l e f o r o t h e r l i e n s and c h a r g e s and o r d e r e d g e n e r a l l y t h a t a p p e l l a n t s pay t h o s e . The i s s u e of o t h e r l i e n s and c h a r g e s a r o s e from t h e a c t i o n s of t h e p a r t i e s . Maxwell i n c l u d e d t h e l i e n o f A m e r i - c a n A p p l i a n c e Co. i n h i s amended l i e n . A p p e l l a n t s , on November 2 , 1977, s u b m i t t e d a motion t o amend t h e i r answer and c o u n t e r c l a i m . I n t h e i r amended c o u n t e r c l a i m t h e y a s k e d t h e D i s t r i c t C o u r t t o o r d e r Maxwell t o pay t h e d e b t s t o M a r c h e l l o Hardware and Sherwin W i l l i a m s Co. Thus, t h e p a r t i e s asked t h e D i s t r i c t C o u r t t o d e t e r m i n e which of them owed v a r i o u s s e p a r a t e b u s i n e s s e s and t h e r e b y s u b m i t t e d themselves t o i t s j u r i s d i c t i o n . On t h i s b a s i s t h e r e a p p e a r s no r e a s o n t o r e v e r s e t h e D i s t r i c t C o u r t ' s d e t e r m i n a t i o n of which p a r t y owes t h e s e o t h e r d e b t s . Appellants' l a s t i s s u e involves a t t o r n e y ' s fees. argument i s v e r y b r i e f on t h i s p o i n t . heir They n o t e f i r s t t h a t t h e y r e q u e s t e d r e a s o n a b l e a t t o r n e y ' s f e e s i n t h e i r answer and c o u n t e r c l a i m . Second, t h e y p o i n t t o t h e e v i d e n c e of a t t o r n e y ' s f e e s which t h e y p r e s e n t e d a t t r i a l . Third, they n o t e t h a t on A p r i l 1 5 , 1977, t h e y made a n o f f e r of judgment t o p l a i n t i f f , c o n d i t i o n e d upon p l a i n t i f f ' s p a y i n g o f f a l l t h e o t h e r m e c h a n i c ' s l i e n s which had been f i l e d on t h e house. T h e i r argument t h e n i s : "Given t h e f a i l u r e o f proof on t h e p a r t of Respondent, a s w e l l a s A p p e l l a n t s ' w i l l i n g ness t o s e t t l e t h i s matter e a r l y on, it i s submitted t h a t Appellants w e r e e n t i t l e d t o be awarded a t t o r n e y f e e s a s prayed f o r and t h a t t h e Supreme C o u r t s h o u l d e i t h e r o r d e r t h e payment of s u c h a t t o r n e y f e e s t o A p p e l l a n t s o r remand t h e i s s u e of a t t o r n e y f e e s t o t h e D i s t r i c t C o u r t f o r f u r t h e r t e s t i m o n y i n connection therewith. " S e c t i o n 93-8614, R.C.M. 1947, now s e c t i o n 71-3-124 NCA, e s t a b l i s h e s t h e p r i n c i p l e of when a t t o r n e y ' s f e e s a r e r e c o v e r a b l e on a l i e n f o r e c l o s u r e a c t i o n . They a r e r e c o v e r a b l e i n a r e a s o n a b l e amount " t o e a c h c l a i m a n t whose l i e n i s e s t a b l i s h e d " and " t o t h e d e f e n d a n t a g a i n s t whose p r o p e r t y a l i e n i s c l a i m e d , i f s u c h l i e n be n o t e s t a b l i s h e d . " The s t a t u t e makes a t t o r n e y ' s f e e s r e c o v e r a b l e t o t h e p r e v a i l i n g p a r t y . I f t h e d e f e n d a n t s , a p p e l l a n t s i n t h i s c a s e , do n o t win, t h e y a r e not e n t i t l e d t o attorney's fees. W concur: e Jpstices 4

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