Jadwin v. Kasal

• Decision Date: 07 May 1982
• Docket Number: No. 81-677.,81-677.
• Citation: 318 NW 2d 844
• Parties: Sandra JADWIN, etc., Plaintiff, v. Paul A. KASAL, et al., etc., Respondents, Federal Land Bank of Saint Paul, Respondent, Kump Lumber, Inc., Appellant.
• Court: Minnesota Supreme Court

318 N.W.2d 844 (1982)

Sandra JADWIN, etc., Plaintiff, v. Paul A. KASAL, et al., etc., Respondents, Federal Land Bank of Saint Paul, Respondent, Kump Lumber, Inc., Appellant.

No. 81-677.

Supreme Court of Minnesota.

May 7, 1982.

Grundhoefer & Neuville and Thomas M. Neuville, Northfield, for appellant.

Peter Kasal, Hutchinson, for Paul A. Kasal, et al.

Thomas M. Loftus, Prior Lake, for Federal Land Bank of Saint Paul.

Considered and decided by the court en banc without oral argument.

OPINION

PETERSON, Justice.

This appeal in an action to foreclose a mechanics lien arises out of the construction of a home for respondents Paul and Carol Kasal. Sandra Jadwin commenced this action to foreclose a mechanics lien against the Kasals, joining as defendants the Federal Land Bank of St. Paul (bank) and Kump Lumber, Inc. (Kump). Jadwin's claims were settled before trial, so the issues litigated were those arising out of Kump's cross-complaint against the Kasals for the balance due on building materials supplied by Kump and out of the bank's prayer that the amount, validity and priority of all liens and encumbrances be adjudged.

Kump challenges the judgment of the trial court on four counts, contending that: (1) the trial court erred in its valuation of Kump's lien, (2) the trial court abused its discretion in denying Kump's motion to amend its cross-complaint, (3) the award of $500 attorney fees to Kump was so inadequate as to constitute an abuse of discretion and (4) the trial court erred in concluding that the bank's mortgage interest was prior and superior to Kump's mechanics lien. The bank appeals from the trial court's denial of contractual attorney fees.

Paul Kasal obtained a blueprint from Ray Getting, a Kump employee, early in 1978 and proceeded to take bids and arrange for financing of his new home. On April 12, 1978, Getting gave Kasal an estimate on behalf of Kump for lumber and various other building materials. This estimate totaled $25,628.30, including tax and credit for a 20% contractor's discount. Shortly thereafter, Kasal and Getting met for the purpose of reducing this estimate. By down-grading the quality of certain materials and agreeing to supply other materials himself, Kasal lowered the estimate to $20,626.60.

Kasal took the amended estimate figures and estimates from other subcontractors to the Federal Land Bank of St. Paul to negotiate financing. A mortgage commitment of $52,000 was issued by the bank on June 30, 1978, and a construction agreement, setting forth the specifications upon which the loan was conditioned, was executed on July 1, 1978.

Upon receiving the mortgage commitment, Kasal instructed Kump to begin delivery of building materials. The record does not reveal the exact date that visible improvement to the land began, but it could be no later than July 13, 1978, the date of Kump's first delivery of materials to the site. The mortgage, however, was not executed until August 16, 1978. It was recorded 2 days later.

Numerous changes in the construction plans were made as the house was being built. Kasal concedes that some of the changes were authorized by him and estimates that the cost of these changes was $8,534. Kasal admitted at trial that it is "very possible" his estimate leaves out some changes that were not covered in the original Kump estimate.

Kump asserts that all materials supplied to the construction site were authorized by Kasal. By totaling the invoices reflecting all deliveries, Getting determined that $34,475.67 of materials were supplied, or $13,849.07 above the Kump estimate.

In addition to the $5,315.07 discrepancy in the amount of "extras" for which each party would hold Kasal responsible, the parties dispute whether the deletion of a screen porch from the original plans entitled Kasal to a credit of $1,500.

1. The trial court, working with conflicting testimony and inconsistent documentary evidence,¹ treated the amended Kump estimate as establishing a base price, adopted Kasal's testimony with regard to the value of "extras" and declined to recognize the $1,500 credit for the screen porch. The trial court's findings of fact with respect to the formation and terms of the contract "are entitled to the same weight as those of a jury and will not be reversed unless manifestly and palpably contrary to the evidence." Malmin v. Grabner, 282 Minn. 82, 86, 163 N.W.2d 39, 41 (1968). See also Brekken v. Holien, 289 Minn. 95, 182 N.W.2d 717 (1970). Furthermore, where it is contested whether all items claimed in the lien statement are lienable, the burden is properly upon the party seeking the lien to clearly segregate the items and their value at the trial. Pittsburgh Plate Glass Co. v. Brown, 152 Minn. 325, 188 N.W. 569 (1922). Viewing the evidence in the light most favorable to the Kasals, we conclude that the evidence supports the trial court's findings.

The written estimate is not signed by the parties, is clearly marked "Estimate" and fails to state how long the quoted prices are guaranteed, but there is evidence that it was to be the last word as to the construction materials contemplated by it. The parties knew that the estimate would be used to obtain financing. The meeting between Kasal and Getting to reduce the estimate indicates that Kasal relied on the estimate and that the total cost was of critical importance to him. The copy of the estimate received by Kasal did not contain the unit prices of the materials but only the total cost of the house. Thus, only Kump was in a position to monitor whether the cost of the house was staying within budget. Cf. Carlson v. Maughmer, 168 N.W.2d 802, 804-05 (Iowa 1969) (where owners were led to believe during construction that costs were staying within budget, trial court finding that estimate established contract price would be affirmed). Kump never told Kasal that the estimate was not a reliable measure of cost until after the last materials were delivered.

With respect to modifications made after the initial estimates, the trial court reasonably relied on Kasal's less precise, but more usable, cost estimates for those changes. Kump presented no clear evidence to rebut Kasal's calculations. The omission from Kasal's calculations of taxes and certain materials that may have been overlooked is adequately compensated for by the trial court's refusal to deduct the alleged savings from deleting the screen porch.

The trial court's valuation of the mechanics lien at $21,713.32 plus 8% interest is affirmed.²

2. Kump maintains that the 20% contractor's discount enjoyed by Kasal was conditioned on buying materials exclusively from Kump and paying for materials within 30 days. Kump did not revoke the discount during the construction period, at the time it filed its statutory lien statement, or in its original cross-complaint. In its request for admissions Kump still did not dispute the applicability of the discount. Only after the trial court permitted Kasal to put the value of unpaid materials in issue (after Kasal had apparently admitted Kump's valuation) did Kump move to amend its complaint to add back 20% of the total list price.

Kump argues that the motion to...