Intermountain Elec., Inc. v. Berndt

• Decision Date: 15 February 1974
• Docket Number: No. 12564,12564
• Parties: INTERMOUNTAIN ELECTRIC, INC., Plaintiff and Appellant, v. William R. BERNDT et al., Defendants and Respondents.
• Court: Montana Supreme Court

Page 1168

518 P.2d 1168

164 Mont. 67

INTERMOUNTAIN ELECTRIC, INC., Plaintiff and Appellant, v. William R. BERNDT et al., Defendants and Respondents.

No. 12564.

Supreme Court of Montana.

Submitted Jan. 15, 1974.

Decided Feb. 15, 1974.

Drysdale, McLean & Scully, Bozeman, James A. McLean, argued, Bozeman, for plaintiff and appellant.

Berg, O'Connell, Angel & Andriolo, Bozeman, Charles F. Angel, argued, Bozeman, Landoe & Gary, Bozeman, for defendants and respondents.

HASWELL, Justice.

This action involves an attempted foreclosure of a mechanic's lien against a homeowner by an electrical subcontractor. The district court of Gallatin County, Hon. W. W. Lessley, district judge, sitting without a jury, entered findings of fact, conclusions of law and judgment for the defendant homeowners.

On September 8, 1971, William R. Berndt and Barbara A. Berndt, husband and wife, entered into a written agreement with Component Development Production Corporation as contractor for the construction of a dwelling house for a price of $21,800. The agreement and specifications provided that the contractor would furnish all labor and supply all electrical wiring, attached fixtures, and electrical heat, and specifically provided that the contractor would not have a right to sublet, transfer or assign the contract or any part thereof without the prior written consent of the homeowners.

In January, 1972, plaintiff-subcontractor, Intermountain Electric, Inc. entered into a verbal agreement with the contractor for installation of electrical service and electrical heat in the house being constructed by the contractor. The district court found that the subcontractor made no inquiry as to whose house was being constructed or as to the extent or limits of the contractor's authority. The subcontractor dealt exclusively with the contractor. The homeowners were not informed of this agreement nor did they consent in writing or verbally.

On January 17, 1972, an employee of the electrical subcontractor began installing the electrical service in the owner's house. The equipment was originally billed to the contractor. About the first part of February the employee submitted a bill to the contractor for the work done and materials supplied up to that time and attempted to collect from the contractor. However, the contractor communicated to the subcontractor's employee that it was broke. On February 4, 1972, the subcontractor left the job when it was only 40% completed. When the subcontractor was unable to obtain money from the contractor, he did not seek out the owners and ask them for payment, nor did he ever try to find the homeowners and ask if they wanted him to complete the electrical work.

The homeowners made payments of approximately $15,000 to the contractor under their agreement; these payments were made in approximately $5,000 installments, the last being made on December 3, 1971. The contractor has never requested any additional monies from the homeowners. After the contractor went broke the homeowners had to take over the completion of the dwelling house, and in so doing expended in excess of $8,000 in completing items called for by the plans and specifications in their agreement with the contractor. In addition thereto, the homeowners incurred a bill in the amount of $2,038.05 to Service Electric of Bozeman, Montana, to complete the installation of electrical service and electrical heat that had been voluntarily abandoned by the subcontractor. When the homeowners employed Service Electric to complete the electrical work, they had not learned the identity of subcontractor.

After being unable to collect against the contractor, the electrical subcontractor filed a mechanic's lien against the owner pursuant to section 45-501 et seq., R.C.M.1947. This lien foreclosure action resulted. Plaintiff joined George J. Stublar, the mortgagee of said property; Thomas C. Haggerty and John Gardner, d/b/a Gardner Construction, lienholders, as defendants in this action in addition to the homeowners. The contractor, Component Development Production Corporation was joined as third-party defendant.

Following trial on this foreclosure action, the district court made findings of fact, conclusions of law and granted judgment in favor of the homeowners. The basis of the district court's action was that there was no contract, express or implied, nor any consensual or contractual authority running from the homeowners to the electrical subcontractor upon which to base a mechanic's lien. In addition, the court concluded that the subcontractor was not entitled to a lien because it wilfully and voluntarily abandoned its work before there had been substantial performance of its agreement with the contractor. This appeal by the subcontractor followed.

The underlying issue upon appeal is whether under the facts the subcontractor has a valid lien against the homeowner. We answer in the negative.

The controlling statute is section 45-501, R.C.M.1947, which provides in pertinent part:

'Every mechanic, miner, machinist, architect, foreman, engineer, builder, lumberman, artisan, workman, laborer, and any other person, performing any work and labor upon, or furnishing any material, machinery, or fixture for, any building * * * upon complying with the provisions of this chapter, for his work or labor done, or material, machinery or fixtures furnished, has a lien upon the property upon which the work or labor is done or material is furnished.'

Plaintiff disputes the district court's conclusion of law on the basis that section 45-501, R.C.M.1947, does not require a contract to create a mechanic's lien. It contends...