Fillbach v. Inland Const. Corp.

• Decision Date: 09 September 1978
• Docket Number: No. 13907,13907
• Court: Montana Supreme Court
• Parties: Edwin R. FILLBACH, Dale Fillbach, d/b/a Fillbach & Sons, Plaintiff and Respondent, v. INLAND CONSTRUCTION CORPORATION, Inland Development Corporation of Montana, Big Sky of Montana, Inc., et al., Defendants and Appellants.

Page 1274

584 P.2d 1274

178 Mont. 374

Edwin R. FILLBACH, Dale Fillbach, d/b/a Fillbach & Sons, Plaintiff and Respondent, v. INLAND CONSTRUCTION CORPORATION, Inland Development

Corporation of Montana, Big Sky of Montana, Inc.,

et al., Defendants and Appellants.

No. 13907.

Supreme Court of Montana.

Submitted April 27, 1978.

Decided Sept. 9, 1978.

Brown, Pepper & Kommers, William L. Pepper argued, Bozeman, for defendants and appellants.

Bolinger & Wellcome, Page Wellcome argued, Bozeman, for plaintiff and respondent.

SHEA, Justice.

Defendant Big Sky of Montana, Inc., appeals from a judgment of the District Court, Gallatin County, foreclosing a mechanic's lien in favor of plaintiffs, Edwin R. Fillbach, individually, and d/b/a Fillbach and Sons.

Big Sky of Montana, Inc., (hereinafter Big Sky) is the developer of a condominium project on land it owns near Bozeman, Montana. Inland Construction Corp. was the general contractor for the project. In early 1974, plaintiff Fillbach submitted a bid for painting and drywall work on the project's Glacier condominiums. Plaintiff's bid was accepted by the general contractor.

Plaintiff and his crew began working on the project, but due to various construction problems not attributable to plaintiff, the project was delayed and expected completion date was extended. In September 1974, the general contractor determined the project would have to be expedited and added several men to plaintiff's crew for that purpose. Thereafter, plaintiff had difficulty meeting his expenses, due in part to the expanded crew which had been assigned to him.

The general contractor promised other subcontractors increases in their contract prices because of the construction delays, but the parties dispute whether plaintiff was promised such an increase. Plaintiff contends his contract was renegotiated to a cost-plus basis, but Big Sky contends plaintiff was not promised the increase given the other subcontractors because he was not meeting his contract obligations. Plaintiff did receive regular contract payments, but he did not receive any increase over the contract price specified in his bid.

In January 1975 the general contractor began controlling the money paid to plaintiff for disbursement to his employees, subcontractors and suppliers. Plaintiff was terminated from the project on February 12, 1975, after telling the general contractor he would need additional money to complete his work. Plaintiff received a check in the amount of $457.64 on the day of his termination. Accompanying that check was a lien waiver printed on a form provided by the general contractor. Such lien waivers were procured at the insistence of Big Sky from all subcontractors as they were paid for work performed or labor furnished on the project. Plaintiff executed 37 such waivers upon receipt of approximately 31 checks during the period from January 16, 1974 to February 14, 1975.

After his termination, plaintiff demanded payment he alleged was due under the contract as renegotiated to the cost-plus standard. He duly perfected a mechanic's lien against Big Sky for the balance due under that contract and brought the present action. Named as defendants were the general contractor, Big Sky, and several parties claiming an interest in Big Sky's property. Inland Development Corporation of Montana, the assignee of Inland Construction's interest, was later joined as a party defendant.

The cause was tried before the District Court sitting without a jury. Big Sky was the only defendant involved in this appeal to appear. Inland Construction Corporation and Inland Development Corporation defaulted and the other parties' interests were determined. On April 8, 1977, the District Court entered findings of fact and conclusions of law and judgment in plaintiff's favor. The District Court found plaintiff's lien against Big Sky to be in the amount of $43,693.94. Plaintiff was awarded that amount, plus costs and attorney's fees in the amount of $21,000. Following denial of its motions to amend and make additional findings of fact and conclusions of law and for a new trial, Big Sky appealed.

Two issues are presented for review: (1) whether the District Court erred in limiting the scope of the lien waivers to the money received as each such waiver was executed, and (2) whether the District Court abused its discretion in awarding a $21,000 attorney's fee.

The first issue concerns the interpretation of the lien waivers signed by plaintiff. Each such waiver was prepared on the following form:

"RECEIPT AND WAIVER OF MECHANICS' LIEN RIGHTS

N.B. It is important that the following directions be closely followed as otherwise the receipt WILL NOT BE ACCEPTED.

1. This is a LEGAL INSTRUMENT and must be executed accordingly by officers of corporations and by partners of co-partnerships.

2. It is important that ALL the blanks be completed and that the AMOUNT PAID BE SHOWN.

3. If payment is not in full to date, so state, SHOW UNPAID BALANCE, and strike out last three lines.

4. A receipt similar to this or legal waiver of lien rights will be required for all plumbing, heating and plastering material, etc.

5. NO ERASURES OR ALTERATIONS MUST BE MADE.

(date)

The undersigned acknowledges having received payment of from in full payment of all by the undersigned delivered or furnished to (or performed at) and for value received hereby waives all rights which may have been acquired by the undersigned to file mechanics' liens against said premises for labor, skill, or material furnished to said premises prior to the date hereof.

By "

The District Court's Finding of Fact VII states:

"That on each occasion when the plaintiff would receive payment for work performed and materials furnished, he would sign a lien waiver which lien waiver was solely limited to the amount of money received at that particular time and such lien waiver did not in any way prevent the plaintiff from filing and foreclosing a mechanic's lien for all amounts not covered by the specific lien waivers which were required by the Inland Corporations for each payment which they made to the plaintiff; that this manner of proceeding was requested by the defendant Big Sky of Montana, Inc., and the Inland Corporations were paid an overhead margin and a profit margin on all amounts which they paid to their subcontractors."

The thrust of Big Sky's argument is that the above finding is contrary to the evidence. In this regard Big Sky first contends the Receipt and Waiver of Lien Rights clearly provides for a general waiver of lien rights as to all labor and materials supplied prior to the date any such instrument is signed. Big Sky further contends the District Court should not have allowed testimony which had the effect of varying the terms of the instrument.

In an "Opinion of the Trial Court" which accompanied its decree, the District Court indicated the above finding was based on "oral evidence found true by the Court." That evidence consisted of the testimony of plaintiff and Roger West, the project manager for Inland Construction during the time plaintiff worked at the condominium site. The District Court relied on two statutory exceptions to the parol evidence rule, sections 93-401-13 and 93-401-17, R.C.M.1947, in admitting the challenged testimony.

Section 93-401-13(2) provides in part that parol evidence is admissible:

"2. Where the validity of the agreement is the fact in dispute. But this section does not exclude other evidence of the circumstances under which the agreement was made, or to which it relates, as defined in section 93-401-17, or to explain an extrinsic ambiguity or to establish illegality or fraud. * * * "

Section 93-401-17 provides " * * * For the proper construction of an instrument, the circumstances under which it was made, including the situation of the subject of the instrument, and of the parties to it, may also be shown, so that the judge be placed in the position of those whose language he is to interpret."

Absent an ambiguity which would require parol testimony to explain, the lien releases cannot be varied, contradicted or altered by parol evidence. Larson v. Burnett (1972) 158 Mont. 421, 427, 492 P.2d 921, 925. Here, however, the circumstances of the parties, their real purpose in executing and receiving the instruments is subject to interpretation and may be proved by parol testimony. See Thisted v. Country Club Tower Corp. (1965) 146 Mont. 87, 96, 405 P.2d 432, 436-37.

Roger West negotiated and administered all the contracts entered into by Inland Construction with its subcontractors for the condominium project. He was the only person called as a witness by either side who was familiar with Inland's operations and procedures. He testified:

"Q. Now, these lien releases that we've heard testimony about, what were these used for? And there is a whole series of them here, Mr. West. A. Well, in order to get a payment from Big Sky we'd produce a like amount of dollar lien releases from subcontractors.

"Q. Were So each time any subcontractor sought payment from you, you would take a lien release? A. Oh, definitely.

" * * * So

"Q. And did you understand when these were taken that whoever the claimant was or whoever was going to work for you had the right to come to you, and they were entitled to additional money at some future time; and they were only signing this lien release for that specific purpose? A. Yes."

West's testimony was uncontradicted. Big Sky offered no evidence tending to show either Inland Construction or plaintiff intended each lien release to operate as an absolute waiver of all pre-existing lien rights. In the District Court, as here, Big Sky relied on the language of the Receipt and Waiver of Mechanic's Lien Rights. Big Sky cites cases from other jurisdictions which have given such lien releases a general scope and effect, but none of those cases involve a factual situation similar to that of the present case. The course of dealings...