Idaho Lumber, Inc. v. Buck

• Citation: 109 Idaho 737,710 P.2d 647
• Decision Date: 03 December 1985
• Docket Number: No. 14155,14155
• Parties: IDAHO LUMBER, INC., a corporation, Plaintiff-Respondent-Cross-Appellant, v. Orland C. BUCK, Defendant-Appellant-Cross-Respondent.
• Court: Court of Appeals of Idaho

Page 647

710 P.2d 647

109 Idaho 737

IDAHO LUMBER, INC., a corporation, Plaintiff-Respondent-Cross-Appellant, v. Orland C. BUCK, Defendant-Appellant-Cross-Respondent.

No. 14155.

Court of Appeals of Idaho.

Dec. 3, 1985.

Jack G. Voshell of Voshell & Wright, Idaho Falls, for defendant-appellant-cross-respondent.

Edward W. Pike and Franklin N. Smith of Albaugh, Smith, Pike, Smith & Anderson of Idaho Falls, for plaintiff-respondent-cross-appellant.

ON DENIAL OF PETITION FOR REHEARING THIS OPINION SUPERCEDES PRIOR OPINION ISSUED MAY 30, 1984, WHICH IS WITHDRAWN.

SWANSTROM, Judge.

Clyde Walker contracted with Idaho Lumber, Inc., to remodel a building and to construct a parking lot on property leased by Walker from Orland Buck. With a substantial sum still owing on the remodeling contract, Walker defaulted on both the contract and the lease. Idaho Lumber filed a contractor's lien and brought suit against Walker and Buck to foreclose it. Idaho Lumber also sought recovery against Buck on a theory of quasi-contract for unjust enrichment. Walker was dismissed from the action after filing for bankruptcy and obtaining a discharge of his debt to Idaho Lumber. Following trial, the district court held that Buck was unjustly enriched, to the extent of $20,025, by the labor and materials supplied by Idaho Lumber. Buck appealed. Idaho Lumber, dissatisfied with the amount of the judgment, cross-appealed. We affirm the district court's judgment in part, vacate in part and remand.

The parties raise several issues on appeal which can be summarized as three: (1) whether the contractor's lien is enforceable against Buck; (2) whether Idaho Lumber was a real party in interest as to all of its claim; and (3) whether Buck was unjustly enriched and, if so, the amount thereof.

The following are the pertinent facts. Orland Buck owned a former funeral home which he used solely as his residence. Clyde Walker approached Buck with a proposition for Buck to renovate or to join with Walker in renovating the home for use as a restaurant. After Buck decided against participating in the venture, Walker resolved to do it on his own. Accordingly, he obtained a ten-year lease for the property from Buck. Among other things, the lease provided for a fixed rent during the first five years. The monthly rental would then be adjusted to correspond with the change in the Cost of Living Index. Walker was also given the duty to maintain the property and:

6. Lessee shall have the right at its own expense from time to time during the lease term to improve or alter the demised premises in the following manner: To improve and remodel the building on the premises so as to create a first quality restaurant and dining room, including construction and installation of kitchens, serving areas, reception areas, dining room and related fixtures; to remodel and install additional sewers and utility services necessary to the construction of a restaurant; to level and pave necessary parking areas and remove grass, shrubs and trees where necessary; to construct and install advertising signs and materials; to construct additions and buildings to the present building on the demised premises.... Lessee shall be permitted within thirty (30) days after the expiration or sooner termination of this lease to remove any fixtures or improvements made by it, which can be removed without material damage to the demised premises; provided, that it will repair any damage to the premises caused by such removal and provided that all other alterations, improvements, additions or fixtures and any such fixtures or improvements nor removed within said thirty (30) day period shall become the property of the Lessor without compensation to the Lessee and shall be surrendered with the premises....

Finally, Walker was given the option, during the first five years of the lease, to purchase the leased property plus two other lots for $160,000.

Buck introduced Walker to Arthur Johnson, the owner of Idaho Lumber. Johnson prepared an estimate of $38,043.51 for the remodeling job. It is unclear whether Buck ever saw the estimate or the plans which were drawn up, but Walker did tell Buck that he expected to spend approximately $40,000. Construction began and Walker soon began making changes in the plans. Although Buck visited the site, it was clear that Walker had complete control over the work that was done. In the end, the total cost of the remodeling came to more than $106,000. Walker paid some $66,000 of that cost before he defaulted. ¹ Idaho Lumber then filed its lien against Buck's property.

In the suit to foreclose its lien, Idaho Lumber alternatively alleged the right to recover against Buck under a theory of quasi-contract for unjust enrichment. Following trial, the district court found that Idaho Lumber could not enforce its contractor's lien against Buck under the circumstances of the case. However, the district court did find that Buck had been unjustly enriched by the labor and materials supplied by Idaho Lumber. The district court therefore initially entered judgment for Idaho Lumber in the amount of $21,275 against Buck.

Buck moved for a new trial, charging that the district court improperly found he had been unjustly enriched. The district court treated it as a motion to open its judgment, take additional testimony, amend findings of fact and conclusions of law, and direct entry of a new judgment. I.R.C.P. 59(a)(7). The motion was granted. Before further testimony was taken, however, Buck moved to amend his answer and cross-claim. He expressed a desire to add a new defense, that Idaho Lumber was not the real party in interest with regard to approximately $15,000 of its claim. This motion was denied. Finally, Buck's motion for a new trial was denied, but by a stipulation and order the judgment was decreased from $21,275 to $20,025. Buck appealed from the judgment against him. Idaho Lumber cross-appealed, contending that the district court erred in finding against it on the lien theory and that the district court miscalculated the amount by which Buck was unjustly enriched. We will first discuss whether Idaho Lumber's contractor's lien is enforceable against the interest of the landlord Buck.

I. CONTRACTOR'S LIEN

The district court held that, under the facts of this case, Idaho Lumber could not enforce its contractor's lien against Buck. In its cross-appeal Idaho Lumber challenges this holding, arguing that under certain circumstances, a lessor's interest in real property may be subject to a contractor's lien for improvements made by the lessee. The right to such a lien is permitted by I.C. § 45-501:

Every person performing labor upon, or furnishing materials to be used in the construction, alteration or repair of any ... building ... has a lien upon the same for the work or labor done or professional services or materials furnished, whether done or furnished at the instance of the owner of the building ... or his agent....

Idaho Lumber contends that Walker was an agent of Buck and therefore the lien can be enforced against him. The district court, however, found that no agency relationship existed between Buck and Walker.

Ordinarily, where there is conflicting evidence on the question whether a lessee is agent of the owner, the question becomes one of fact, and not one of law. Clark v. Gneiting, 95 Idaho 10, 501 P.2d 278 (1972); Adkison Corporation v. American Building Company, 107 Idaho 406, 690 P.2d 341 (1984). Where the question depends upon the construction of an undisputed, unambiguous written lease, and its legal effect, the question becomes one of law as to whether the terms of the instrument constituted the lessee the owner's agent. 53 AM.JUR.2d, Mechanics' Liens § 132 at 654 (1970). Where, as here, the question of agency turns on the acts and conduct of the parties, as well as upon the provisions of a written lease, the issue is a mixed one of fact and of law. As to the factual questions, unless the district court's findings are clearly erroneous, we will not disturb them on appeal. I.R.C.P. 52(a). As to whether the district judge determined the correct legal effect of the written lease and whether he applied correct legal principles to the facts, as found by him, we exercise free legal review.

We commence our analysis in this case with this general principle: "[A] tenant is not the 'agent' of the landlord, for the purpose of [I.C.] § 45-501, merely by virtue of a lessor-lessee relationship." Christensen v. Idaho Land Developers, Inc., 104 Idaho 458, 459, 660 P.2d 70, 71 (Ct.App.1983). See also Bunt v. Roberts, 76 Idaho 158, 279 P.2d 629 (1955). The burden of proving agency rests upon the party asserting it. Transamerica Leasing Corp. v. Van's Realty Co., 91 Idaho 510, 427 P.2d 284 (1967).

Initially, we are required to determine what is meant by our lien statute in referring to work done or materials furnished "at the instance of the owner of the building ... or his agent." It is clear that the owner's knowledge and acquiescence in the improvements are not sufficient to justify charging his interest with a lien. "The improvement must have been 'requested' by the owner of the land." Gem State Lumber Co. v. Union Grain & Elevator Co., 47 Idaho 747, 749-50, 278 P. 775, 776 (1929), citing Parker v. Northwestern Investment Co., 44 Idaho 68, 75, 255 P. 307, 309 (1927). ² Accord Interiors Contracting Inc. v. Navalco, 648 P.2d 1382 (Utah 1982). However, where the lease or a contract of purchase requires the lessee (or vendee) to make certain improvements, then the lessee (or vendee) is said to become the agent of the owner, and in those cases the interest of the owner as well as the interest of the lessee or vendee will become subject to the lien. See e.g. Boise Payette Lumber Co. v. Sharp, 45 Idaho 611, 264 P. 665 (1928) (contract of sale required vendees to construct barns); Gem State Lumber Co. v. Union Grain & Elevator Co., supra (lease required lessee to ...