Anderson v. Hobbs ( 1981 )

No. 81-97
IN THE SUPREME COURT OF THE STATE OF MONTANA
1981
LEN ANDERSON, d/b/a LEN ANDERSON
CONSTRUCTION COMPANY,
Plaintiff and Respondent,
NORMAN D. HOBBS, individually and NORMAN
D. HOBBS, d/b/a C. D. VENTURES,
Defendant and Appellant.
Appeal from: District Court of the Fifth Judicial District,
In and for the County of Beaverhead.
Honorable Frank Blair, Judge presiding.
Counsel of Record:
For Appellant:
Harrison, Loendorf and Poston, Helena, Montana
For Respondent:
Drysdale, McLean, Screnar & Cok, Bozeman, Montana
Submitted on briefs: August 27, 1981
Filed: gkc. - 'T [h!8;i
Clerk
Mr. Justice John Conway Harrison delivered the Opinion of
the Court.
This appeal arises from a contract for construction
on appellant's nursing home in Dillon, Montana. The parties
entered into the written agreement in January 1977, and the
work was completed sometime in the late summer of 1977.
Respondent filed a mechanics' lien against appellant's
property on October 19, 1977. After trial without a jury,
the District Court of the Fifth Judicial District upheld the
lien and issued a judgment for $15,687.92 plus interest and
attorney fees. This appeal followed.
In December 1976, at the request of appellant,
respondent, a general contractor doing business as Len
Anderson Construction Co., a sole proprietorship, began work
on Park View Acres in Dillon, Montana, a nursing home owned
by appellant, Norman D. Hobbs, doing business as C. D.
Ventures.
In January 1977 the parties entered into a written
contract whereby respondent would renovate the existing
fifty-four-bed facility of Park View Acres and add a fifty-
four-bed wing to the building. The contract provided appel-
lant would pay respondent all costs plus an eight percent
contractor's fee. Costs included all costs necessarily
incurred in the proper performance of work paid by the con-
tractor; all wages paid for labor in the direct employ of
the contractor; all salaries of contractor's employees; a
portion of reasonable transportation, traveling and hotel
expenses of the contractor, its officers and employees
incurred in the discharge of their duties; the cost of all
materials, supplies and equipment incorporated into the
work; all payments made by the contractor to subcontractors
for work performed according to subcontracts under this
agreement; and costs, including transportation and main-
tenance, of all materials, supplies, equipment, temporary
facilities and hand tools not owned by the workmen, which
are consumed in the performance of the work, and the costs
less salvage value on such items used but not consumed which
remained property of the contractor.
Respondent concluded construction on the project in
the summer of 1977. On October 19, 1977, respondent filed a
lien in the amount of $31,218.27. On the lien application
respondent stated his final day of performance on the
project was July 21, 1977. At trial respondent testified
his last full-time work on the project was in the middle of
August 1977. Respondent also introduced a "punch list"
prepared by appellant's employees and dated September 23,
1977. Respondent argued the "punch list" established the
last day respondent spent any time on the job was in
September. The costs claimed by respondent were supported
almost exclusively at trial by cancelled checks.
The District Court found the lien was filed within
the ninety-day period required by Montana statute. The
court also found respondent's lien valid and enforceable and
made the following determination of the amount owing:
Costs for Anderson's
out-of-pocket expenses. . . . . . .$150,362.72
Defendant's payments
to date for expenses. ....... 139,633.00
$ 10,729.72
Due Plaintiff for costs. ....... .$ 10,729.72
Contractor's fee as a portion
of 8% of contract and
total costs on contract . .... .$366,977.56
Contractor's fee equals 8%
of $366,977.56, for a
total of. .. .
. . ..
. ..... 29,358.28
Defendant's payment to date
for contractor's fee. . . . . . . . 12,600.00
Due Plaintiff for contractor's
fee ............... . $ 16,758.28
Total due to Plaintiff by
Defendant for costs ........ 10,729.72
Total due to Plaintiff by
Defendant for fees. . . . . . . . . 16,758.20
TOTAL. . . . . . . . . . . . . . . . . .$ 27,487.92
LESS THE FOLLOWING OFFSETS:
Liquidated damages. . . . . . . . . 8,000.00
Lumber from personal stock. . . . . 3,800.00
TOTALOFFSETS. . . . . . .$11,800.00
TOTAL DUE TO PLAINTIFF . . . . . . . . . $ 15,687.92
Four issues are before this Court:
1. Was the lien filed by respondent within the
statutory ninety-day period?
2. Are there gross and substantial exaggerations in
claims made which constitute fraud and void the filed lien?
3. Did the District Court err in failing to make
certain deductions to the amount of the lien?
4. Did the District Court err in determining in the
memorandum supporting its findings of fact and conclusions
of law that Exhibit K was inadmissible as hearsay?
To perfect a mechanics' lien it must be filed within
ninety days after material or machinery is furnished or work
or labor performed. Section 7-3-511(1), MCA. Appellant
argues there is no credible evidence on the record to
support the District Court's finding that the lien was filed
within the statutory period. Respondent filed the lien on
October 19, 1977, and on the lien stated the last work had
been done on July 21, 1977. Appellant claims that the last
work was performed by respondent on July 15, 1977, which was
when the nursing home opened. At trial, respondent testified
the date listed on the lien was incorrect and that, in fact,
h i s l a s t f u l l t i m e o n t h e j o b was i n t h e m i d d l e o f A u g u s t
and t h a t he r e t u r n e d i n S e p t e m b e r t o c o m p l e t e t h e p r o j e c t .
Respondent a l s o s u b m i t t e d i n t o e v i d e n c e a "punch l i s t " p r e -
p a r e d by a p p e l l a n t ' s employee c o n t a i n i n g t h e d a t e S e p t e m b e r
23.
The District Court found the lien had been filed
w i t h i n t h e n i n e t y - d a y p e r i o d and s p e c i f i e d r e s p o n d e n t ' s work
was c o m p l e t e d on A u g u s t 1 9 , 1 9 7 7 .
The s t a n d a r d of t h i s C o u r t on r e v i e w i s w h e t h e r t h e
D i s t r i c t C o u r t ' s f i n d i n g s and c o n c l u s i o n s a r e s u p p o r t e d by
s u b s t a n t i a l c r e d i b l e evidence. T o e c k e s v . Baker ( 1 9 8 0 ) , -
Mont . , 6 1 1 P.2d 609, 37 S t . R e p . 948. If substantial
evidence e x i s t s , t h i s Court w i l l n o t o v e r t u r n t h e D i s t r i c t
C o u r t . Schuman v . S t u d y Comm'n o f Y e l l o w s t o n e County ( 1 9 7 8 ) ,
176 Mont. 3 1 3 , 578 P . 2 d 291.
It is apparent from the record and the District
C o u r t ' s f i n d i n g s t h a t t h e c o u r t gave c o n s i d e r a b l e weight t o
r e s p o n d e n t ' s t e s t i m o n y a t t r i a l t h a t h i s l a s t f u l l - t i m e work
on t h e p r o j e c t was i n mid-August 1977. In its supporting
memorandum, t h e D i s t r i c t C o u r t c h o s e A u g u s t 1 9 , 1 9 7 7 , a s t h e
final date. The r e c o r d makes no m e n t i o n o f that specific
d a t e i n August. T h e r e f o r e , t h e f i n d i n g of August 19 c a n n o t
be a f f i r n e d . T h i s C o u r t w i l l , however, g i v e c r e d e n c e t o t h e
weight t h e D i s t r i c t Court obviously gave r e s p o n d e n t ' s t e s t i -
mony.
"The c r e d i b i l i t y and w e i g h t g i v e n t h e w i t n e s s e s ...
is n o t f o r t h i s Court t o determine. T h i s is a p r i m a r y func-
tion of a trial judge sitting without a jury; it is of
special consequence where the evidence is conflicting."
Hellickson v. B a r r e t t M o b i l e Home T r a n s p o r t , Inc. (1973),
161 Mont. 455, 459, 507 P.2d 523, 525. Where the evidence
indicates reasonable grounds for different conclusions, the
findings of the District Court will not be disturbed. Morgen
& Oswood Const. Co. v. Big Sky of Mont. (1976), 171 Mont.
268, 274, 557 P.2d 1017, 1021; Morrison v. City of Butte
(1967), 150 Mont. 106, 112, 431 P.2d 79, 83.
If respondent's last work on the project occurred any
time in August or September, the filing of the lien was
within the statutory ninety-day period. An exact date in
August or September, however, is necessary for an accurate
accounting of the $100-a-day offset allowed for late comple-
tion of the job. We therefore remand this matter for a
hearing to establish the exact date in August or September
on which respondent completed his full-time work on the job.
The next issue before us is appellant's contention
that respondent's claim contained such gross and substantial
exaggerations as to constitute fraud and invalidate the
lien.
Fraud must be plead affirmatively to be relied on as
a defense. Rule 8(c), M.R.Civ.P.; Ekestrand v. Wunder
(1933), 94 Mont. 57, 20 P.2d 622. In the case before us
fraud was not plead in either the original or the amended
answer. Therefore, it cannot now be argued as a defense to
the lien.
Appellant also claims the District Court erred in
failing to make reductions in the lien amount for three
items.
The first item appellant claims was erroneously
allowed by the District Court is $2,558.60 of the $7,000
claimed paid to Simkins-Hallin. Respondent submitted a
c a n c e l l e d check f o r $7,000 i n s u p p o r t of t h e S i m k i n s - H a l l i n
claim. However, t h e s t a t e m e n t on S i m k i n s - H a l l i n I n v o i c e No.
6988 i n d i c a t e s t h a t o f t h e $7,000, $4,441.40 was a p p r o p r i -
a t e d t o respondent's job i n D i l l o n . W therefore find there
e
is n o t substantial evidence to support the entire $7,000
claim and that the lien amount should be reduced by
$2,558.60.
To evaluate the second item appellant claims was
erroneously included by the D i s t r i c t Court, we m u s t f i r s t
consider the evidentiary issue before us. Appellant argues
t h e r e i s a d i s c r e p a n c y b e t w e e n t h e amount r e s p o n d e n t c l a i m e d
was p a i d t o M & M C o n c r e t e a n d t h e amount a c t u a l l y p a i d .
I n s u p p o r t of t h a t argument a t t r i a l , a p p e l l a n t p r e -
sented for admission i n t o evidence a t o t a l account and a
copy of invoices of t h e D i l l o n j o b w i t h Anderson C o n s t r u c -
t i o n from M & M Concrete. The document was p r e p a r e d by t h e
bookkeeper of M & M Co n c r e t e a t t h e d i r e c t i o n of t h e g e n e r a l
manager and at the request of appellant's counsel. The
a c c o u n t i n d i c a t e d a d i s c r e p a n c y b e t w e e n t h e amount r e c e i v e d
by M & M C o n c r e t e on the job and the amount respondent
c l a i m e d had been p a i d .
R e s p o n d e n t o b j e c t e d on t h e b a s i s t h e o f f e r e d e v i d e n c e
was hearsay and lacking proper foundation. The D i s t r i c t
C o u r t o v e r r u l e d t h e o b j e c t i o n and a d m i t t e d t h e e v i d e n c e a s
d e f e n d a n t ' s E x h i b i t K.
At t h e conclusion of the trial, t h e D i s t r i c t Court
issued findings of fact and conclusions of law with a
s u p p o r t i n g memorandum. The memorandum s t a t e d E x h i b i t K had
b e e n a d m i t t e d s u b j e c t t o r u l i n g a s t o i t s a d m i s s i b i l i t y on
t h e f i n a l s u b m i s s i o n o f t h e c a s e and t h a t on f u r t h e r r e v i e w ,
the court found it inadmissible as hearsay.
Appellant argues the District Court's af ter-the-fact
ruling on the admissibility of Exhibit K was prejudicial
because it precluded him from calling other witnesses or
otherwise presenting proof.
The transcript shows the court did not specifically
reserve judgment regarding Exhibit K. The court's statement
was: "Well, the objection is overruled and it will be
admitted. "
The court's later determination of Exhibit K as inad-
missible was, however, correct. The document was a statement
other than one made by the declarant while testifying at
trial and was offered to prove the truth of the matter as-
serted. As such, it was hearsay. Rule 801(c), M0nt.R.Evi.d.
Since the account statement was made, not in the ordinary
course of business of M & M Concrete but at the request of
appellant's counsel, it was not excepted from the hearsay
rule and was inadmissible. Rule 803(6), Mont.R.Evid.
While the District Court's final ruling on Exhibit K
was correct, the manner in which it was reached was proce-
durally irregular and resulted in substantial prejudice to
appellant. Had he been aware of the court's determination
or its reservation of judgment during the trial, appellant
could have presented and made available for cross-examina-
tion the witnesses who prepared the M & M Concrete account.
To allow the District Court's exclusion of Exhibit K to
stand in the face of such prejudice would be inherently
unjust. We therefore remand this matter for reconsideration.
The final item appellant claims was erroneously
included in the lien is that amount claimed for respondent's
personal wages as a carpenter. Appellant first argues that
because there was no mention of the possibility of a per-
sonal claim in this agreement between the parties and
respondent made no submission of such a charge to appellant
prior to this suit, that respondent is not entitled to the
claim.
In support of this argument, appellant cites Article
10, Paragraph 10.1.6, of the parties1 contract which states
as costs not to be reimbursed: "The cost of any item not
specifically and expressly included in the items described
in Article 9."
Article 9, Paragraph 9.1.1, however, specifies that
costs include "[wlages paid for labor in the direct employ
of the contractor. . ." Since wages for labor are expressly
included in the contract and there is no specific limitation
on who performs the labor, the contract did not preclude
Anderson from working on the project.
Appellant also argues the hourly compensation the
District Court allowed for Anderson's work was excessive and
unsupported by credible evidence.
The parties1 contract in Article 9 , Paragraph 9.1,
allows for reimbursement of costs necessarily incurred in
the proper performance of the work. It further provides
that "[sluch costs shall be at rates not higher than the
standard paid in the locality of the work except with prior
consent . . ."
At trial Anderson, a carpenter with twenty years1
exerience, testified he charged $18 an hour for his labor.
Of that amount, $14 was for his work as a skilled carpenter
and $4 for use of his tools. He testified the $14 amount
was b a s e d on c o s t s in the area for h i s work. No other
t e s t i m o n y was o f f e r e d by e i t h e r p a r t y r e g a r d i n g t h e v a l u e o f
t h e work o f a c a r p e n t e r o f A n d e r s o n ' s s k i l l .
Based on A n d e r s o n ' s unrebutted testimony, the Dis-
t r i c t C o u r t f o u n d t h a t t h e $14-an-hour wage p o r t i o n o f t h e
c h a r g e was r e a s o n a b l e . W agree.
e
The $4-an-hour charge f o r t h e use of Anderson's t o o l s
i s a n o t h e r m a t t e r , however. While Anderson t e s t i f i e d a s t o
w h a t t h e $4 was f o r , h e d i d n o t t e s t i f y o r p r o v i d e e v i d e n c e
of any kind i n d i c a t i n g what the f i g u r e was based on or
w h e t h e r i t was r e a s o n a b l e . W i t h o u t any s u p p o r t i n g e v i d e n c e
we are unable to uphold the District Court's judgment
a l l o w i n g $ 4 a n hour f o r t h e u s e o f t o o l s .
We remand this matter for a reaccounting of the
costs. A t t h e same t i m e , w e s u g g e s t a r e v i e w o f the calcu-
l a t i o n s i n t h e o r i g i n a l f i n d i n g s o f f a c t and c o n c l u s i o n s o f
l a w , s i n c e t h e r e a p p e a r s t o be a n a r i t h m e t i c e r r o r in the
computation of Anderson's out-of-pocket expenses.
Justices
Mr. Justice John C. Sheehy concurring:
I concur in the foregoing, but I also think the lien
filed in this case was timely under the facts.
Justice