Agrilease, Inc. v. Gray

• Decision Date: 12 July 1977
• Docket Number: No. 13495,13495
• Citation: 566 P.2d 1114,173 Mont. 151
• Parties: AGRILEASE, INC., Plaintiff and Appellant, v. Thelma GRAY, Defendant and Respondent. Thelma GRAY, Third Party Plaintiff and Respondent, v. AGRILEASE, INC., Third Party Defendant and Appellant.
• Court: Montana Supreme Court

Page 1114

566 P.2d 1114

173 Mont. 151

AGRILEASE, INC., Plaintiff and Appellant, v. Thelma GRAY, Defendant and Respondent.

Thelma GRAY, Third Party Plaintiff and Respondent, v. AGRILEASE, INC., Third Party Defendant and Appellant.

No. 13495.

Supreme Court of Montana.

Submitted May 23, 1977.

Decided July 12, 1977.

Hutton, Sheehy & Cromley, Billings, John C. Sheehy, argued, Billings, for appellant.

David W. DePuy, argued, Livingston, for respondent.

HARRISON, Justice.

This appeal from the district court, Park County, arises from a judgment where two causes of action were consolidated for trial and tried by a jury. Agrilease, Inc. is plaintiff in one action and third party defendant in the other. Thelma Gray is defendant in one action and third party plaintiff in the other. Agrilease appeals in both cases.

In February 1974, Thelma Gray, a rancher along the Yellowstone River, south of Livingston, Montana, contracted with Agrilease, Inc. of Billings, Montana, for a pumping and irrigation system designed to take water from the Yellowstone River and to raise it over 100 feet to undeveloped land for the purpose of raising alfalfa. The original contract was for $34,235.00. Thereafter changes requiring extra work and material ultimately raised the total cost to $42,559.29. Gray made two payments on the contract $15,000 on February 26, 1974; and $7,500 on May 31, 1974. No other payments were made.

Thelma Gray owned water rights of approximately 1,000 miner's inches out of the Yellowstone River. The plan was for a pumping system that would take 500 inches of water out of the river to be used to irrigate previously undeveloped land. Mr. Bick, acting for Agrilease, placed a purchase order with Worthington Vertical Pump Corporation on February 21, 1974, for a pump that would pump and raise some 4,000 gallons per minute to the lands to be irrigated. He requested shipment by May 21, but the company in its acknowledgement of the order gave September 13 as the delivery date for the pump. The pump did not arrive until late October when it was installed. Gray testified and was supported by witnesses who worked on the ranch, that Bick assured her he would have the system installed and working before June 1, 1974. Bick denies this and testified he did everything he could to get the pump by June 1, but due to the Arabian oil crisis of 1973 industrial goods were hard to get, went up in price, and he had problems of supply, shipment and delivery.

The testimony clearly shows Gray indicated to Bick she planned to break up and plant some 85 acres of previously undeveloped land to raise alfalfa. In fact, that was the reason for the project and Bick to get the contract surveyed the land for ditches and leveling. He was aware the land was plowed, planted and harvested. Due to the failure of the pump to arrive on time for the 1974 hay crop, the harvest was a disaster. The crop burned up in May and June and only 70 tons were realized, when 155 to 160 tons were anticipated if irrigation had been available. Even the 70 tons would not have been possible, except Bick furnished a small pump to get some water to the acreage. He testified it cost him more than $5,000 to do this to assist Gray. In addition Gray testified she lost pasture in 1974, due to the failure of the pump to arrive and she had to purchase hay that year.

To establish the pumping system Bick had to build a retaining wall near the river and to provide inlets from the lower part of the wall into two sumps or wet walls into which the Worthington pump was to be inserted to remove water from the river and out into the pipeline and then into the ditches. Approximately 2,200 feet of 12 inch pipeline was to be used.

Although the contract was signed in February and orders were placed for the pump and the pipe in February, Bick did not start construction of the retaining walls until early May. This proved to be a bit late for as usual in the spring the river rises rapidly and in 1974 there was an unusually heavy run-off. Bick testified he built a dike five times, the water coming over each time, to get retaining wall footings and foundations established.

The steel pipe arrived in late April, the motor to drive the pump came in May, the sump installation was finished in late August, all too late to be of much help to the 1974 crop.

The pump arrived and was installed and was attached to the pipe already in place in October. Bick tested the operation of the pumping system in the presence of Mrs. Gray and her employees and no problems were found with the system at that time.

The contract called for a final payment upon the completion of the installation of the system and it being put into operation. It was completed in late October but Gray made no payment then or after that date, although she admits it was due. Statements were sent monthly thereafter and no protests were head from Gray. To protect itself Agrilease, Inc. filed a mechanic's lien against Mrs. Gray's ranch in the amount of $20,059.29.

In May 1975, Bick was called to the ranch to start the system working. After starting up it seemed to work, so he shut it off and then started it up when a "Murphy switch", a safety device broke and had to be removed and taken to Billings. This was not replaced until June 15, 1975. Thereafter, early in July a vibration developed and on August 7 or 8, Bick removed the pump from its well and found the strainer surrounding the suction end of the pump had collapsed, and a rock had entered and lodged in the impeller. Bick agreed to take the pump to his shop in Billings but asked Gray to pay off the balance of the contract, or at least $10,000. She agreed but did not pay, so Bick refused to go ahead with the repairs. He took the pump and its motor and held them in his shop.

As a result Gray alleged a loss of the 1975 hay crop. Bick alleged the system would have worked without the "Murphy switch", but that made little difference to the finding of the jury. The issue of negligence in not screening the inlets to the sump pump was submitted to the jury and it found against Bick.

A judgment awarded Agrilease, Inc. damages against Mrs. Gray in an amount of $20,059.29; and an award for Mrs. Gray against Agrilease in the sum of $22,397 or a net amount to Mrs. Gray of $2,337.71.

Appellant Agrilease, Inc. raises several issues on appeal:

1. Did the court err in amending the verdict form, over objection, and submitting to the jury after instructions were settled, an issue of damages to the pump, when such damages were not plead, were not based on evidence and were not covered by jury instructions?

2. Did the court err in submitting to the jury, over objections, the issue of damages for the loss of the hay crop for the year 1974, where the only evidence of the market value of the hay crop was based on gross market value, without deducting the cost of production and marketing such crop?

3. Is Agrilease, Inc. entitled to interest on the unpaid balance of the contract as a matter of law?

4. Did the court err in allowing the jury to consider an offset to the Agrilease claim for the payment of the Linville (subcontractor under Agrilease) lien in excess of $2,139.36?

Issue 1. This issue concerns amendment of the verdict form after all instructions had been settled. The posture of the case was that both sides had rested, the instructions were settled, and Agrilease, Inc. had offered a verdict form for submission to the jury. At that point counsel for Gray moved the court to amend the verdict form, so the jury could make specific findings on several additional issues. One amendment allowed permitted the jury to award a sum for damages to the pump and the jury awarded $4,799 damages. At the time the trial judge allowed the amendment he noted: "There was no proof in there at all as to what it would cost to repair it."

We agree and find the court erred in allowing this amendment. Here, the complaint set forth seven counts; none covered the cost of repair to the pump or the damages to the pump. No effort was made to prove the cost of repair or that the pump or the system sustained any loss in market value by virtue of the damaged pump. The sole evidence as to the value of the pump appears from Agrilease's exhibit, the purchase order, indicating a cost of $4,000. There was nothing in the record for the jury to base a market value on, due to the damage to the pump or the cost of repair. No instructions were given on the cost to repair the pump, nothing supports the $4,747 figure.

Gray argues there was evidence the pump cost $4,000; that it was badly damaged and the cost to repair it would be at least $4,000. Gray cites as authority to amend a verdict form the case of Smith v. Jacobsen, 224 Or. 627, 356 P.2d 421. Neither this case nor cases later citing it as authority for amending pleadings allowed an amendment at this stage of the case. Dorr v. Janssen, 233 Or. 505, 378 P.2d 999; Beard v. Beard, 232 Or. 552, 376 P.2d 404, 406; Eck v. Market Basket, 264 Or. 400, 505 P.2d 1156. In Beard the Oregon Court noted:

"* * * amendment is allowed with reasonable liberality, particularly where the matter covered by the amendment is sufficiently brought to the notice of the adversary in the original pleading and during the trial so that he can be prepared to meet the issue." 376 P.2d 406.

That is not the case before us. Here, Gray did not move to amend her pleadings to conform to the evidence, rather she moved to amend the verdict form to include an issue relating to damages to the motor caused by negligence. The holding of this Court in Lovely v. Burroughs Corp., 165 Mont. 209, 217, 527 P.2d 557, controls:

"Damages may properly be awarded when they serve to compensate the plaintiff for detriment proximately caused by the defendant. Section 17-301, R.C.M. 1947. Before an award can be made, the damages must be clearly ascertainable in both their nature and origin. Section 17-302, R.C.M. 1947. Damages which...