Price Bldg. Service, Inc. v. Holms

• Decision Date: 04 January 1985
• Docket Number: No. 83-533,83-533
• Citation: 42 St.Rep. 84,214 Mont. 456,693 P.2d 553
• Court: Montana Supreme Court
• Parties: PRICE BUILDING SERVICE, INC., Plaintiff and Respondent, v. A.J. HOLMS, and Phyllis C. Holms, his wife, Allan G. Holms and Marilyn Holms, his wife, et al., Defendants and Appellants.

Page 553

693 P.2d 553

214 Mont. 456

PRICE BUILDING SERVICE, INC., Plaintiff and Respondent, v. A.J. HOLMS, and Phyllis C. Holms, his wife, Allan G. Holms and Marilyn Holms, his wife, et al., Defendants and Appellants.

No. 83-533.

Supreme Court of Montana.

Submitted on Briefs April 26, 1984.

Decided Jan. 4, 1985.

Datsopoulos, MacDonald & Lind; Edward A. Murphy, Missoula, for defendants and appellants.

Snavely and Phillips; Robert J. Phillips, Missoula, for plaintiff and respondent.

SHEA, Justice.

The defendants A.J. Holms, Phyllis C. Holms, Allan G. Holms and Marilyn Holms, who are the contract owners and lessors of land and a commercial building, and Harold Rhines, James L. Rhines, and Gloria Rhines, who are the lessees of land and a commercial building, known as Sound West, appeal a judgment of the Missoula County District Court foreclosing a mechanic's lien in favor of plaintiff, Price Building Service, the contractor who extensively remodeled the building on the land. Price Building Service (the contractor) cross-appeals from the judgment, the effect of which was to deny recovery for prejudgment interest and attorney fees. We affirm the judgment directing foreclosure of the mechanic's lien and reverse the judgment on interest and attorney fees, and remand for a determination of the interest and attorney fees.

Defendants raise five issues, the first two involving the technical sufficiency of the mechanic's lien. First, they contend that the lien is deficient because although it contains a legal description of the land, it fails to describe the building itself. Second, they contend the lien is deficient because it fails to correctly identify either the lessors or lessees as the owners of the property to which the lien attached. Third, the lessors contend that although the contractor was not a party to the agreement, the lessors agreed with the lessees to pay for improvements up to $25,000.00 and that the contractor cannot recover any more In April, 1973, under a contract for deed, the Holms purchased portions of several lots and a commercial building on those lots. Four months later, in August 1973, the Holms in turn leased this property and a building, to Harold Rhines and his son, James L. Rhines, and daughter-in-law, Gloria A. Rhines. The lease contained an option to purchase and also contained a stipulation that the Holms as lessors would pay the first $25,000.00 of anticipated remodeling expenses and the Rhines as lessees, would pay all remodeling expenses beyond $25,000.00. The building was to be extensively remodeled to house what is known as Sound West, a retail stereo equipment store. The parties, by oral contract, and without asking for a formal bid, employed Price Building Service to do the remodeling work.

from the lessor. Fourth, one of the lessees, Harold Rhines, contends that the trial court erred in holding that he and the other lessees were partners, and therefore that Rhines is liable as a partner. Fifth, the lessors argue that the trial court erred in refusing to admit for general evidentiary purposes two exhibits prepared with the objective of showing the actual value of the remodeling work performed by the contractor.

The contractor started work in late August, 1973, and finished it during the week ending January 2, 1974. Before the work was completed, the contractor became concerned over payment of the bill, and Harold Rhines assured the contractor that the bill would be paid when the remodeling was completed.

When the remodeling was completed the contractor submitted a bill for $55,579.12. Two months later, on March 26, 1974, after the lessors and lessees had not paid anything on the bill, the contractor filed a mechanic's lien on the property. In describing the property, in addition to the legal description, the lien referred to "... that certain building and improvements erected upon" the described property. In addition, along with the formal lien was filed a statement of account for "Sound West," the name of the business operating from the remodeled building.

Six or eight months after the contractor filed the mechanic's lien, the Holms paid $22,000.00 to the contractor, but that is all. In September, 1974, after the mechanic's lien had been filed, James L. and Gloria A. Rhines exercised their option to purchase the property, subject of course, to the contractor's mechanic's lien. They signed a contract for deed with the Holms. Harold Rhines, the father of James Rhines, provided the financing for James and Gloria Rhines to purchase the property.

The case finally went to trial on the lien foreclosure action, and the Holms and Rhines defended in part on the ground that the contractor had not performed according to requirements and therefore that the property was in some respects, defective. As part of the defense the Holms and Rhines offered in evidence two documents that consisted of construction estimates or bids prepared according to the remodeling plans, and figured in 1983 dollars, rather than in 1973 dollars when the remodeling was done. Witnesses who prepared those bids for purpose of trial testified that the bids did not include all of the materials and labor provided by the contractor in actually doing the remodeling. The defendants also did not lay proper foundation concerning the inflation rate between 1973 and 1983--a ten year span. The trial court refused one exhibit and admitted one for the limited purpose of showing the kind and quantity of materials necessary to perform the remodeling.

The trial court ordered foreclosure of the lien in the amount of $33,579.12, but also ordered this amount to be offset in the sum of $2,740.00 for defects in the contractor's performance. The judgment failed to include prejudgment interest and attorney fees, and attorneys for the contractor moved to amend the findings and conclusions to include these items. The trial court, however, failed to rule on this motion within the time requirements specified by Rule 59(d), M.R.Civ.P., and the motions were therefore deemed denied. Although The lessor's and lessee's first attack the validity of the mechanic's lien by contending that it failed to describe the building and instead merely described the land. But that is not the case. The lien specifically referred to the building on the land, and the evidence disclosed that only one building was on the land, the one on which the contractor performed the work. Clearly this would enable one familiar with the locality to point the building out as the one corresponding to the description contained in the lien. Under Varco-Pruden v. Nelson (1979), 181 Mont. 252, 593 P.2d 48, this was sufficient. Furthermore, under our holding in General Electric Supply Company v. Bennett, (Mont.1981) 626 P.2d 844, 38 St.Rep. 553, the statement of account filed with the lien, and referring to "Sound West," would leave little doubt as to the building referred to.

the trial court had no authority to do so because of the operation of Rule 59, the court amended the judgment to include prejudgment interest and attorney fees. For purposes of appeal we therefore treat the motion to amend the findings and conclusions as being denied, and we consider this issue as part of the contractor's cross-appeal.

The second attack on the validity of the lien is a contention that the contractor failed to correctly identify either the Holms or the Rhines as the owners of the property to which the lien attached. As this Court held in Blose v. Havre Oil and Gas Company (1934), 96 Mont. 450, 31 P.2d 738, it is important that the lien identify the name of the owner against whose property the lien is filed so that third parties examining the public records can find an encumbrance more easily. Here the lien referred to the Harrisons, from whom the Holms were buying the property, and to the Holms, the contract for deed purchasers. The Rhines did not have to be mentioned because at the time the lien was filed they had not yet exercised their option under the lease agreement with the Holms. The lien, in referring to the Harrisons and Holms as the owners of the property, was correct.

Third, Harold Rhines, as one of the lessees, contends he was not a partner in the Sound West enterprise, and that the trial court's finding that he was a partner, and therefore liable to the contractor on the remodeling contract, was in error. One may become a partner of a firm, as to the third persons, without intending to, by words spoken or written or by conduct, and thereby became liable to those who have in good faith given credit to the actual or apparent partnership. Montana Farm Service Co. v. Marquart (1978), 176 Mont. 357, 578 P.2d 315. During construction, when the contractor expressed concern over the payment of the bill, Harold Rhines personally assured him that the bill would be paid when the remodeling was completed. Harold Rhines also asked the contractor for personal notification by registered mail when the remodeling expenses exceeded $25,000.00. Further, Harold Rhines signed the lease and assumed its benefits and burdens, including a promise to pay for any remodeling costs exceeding $25,000.00. The contractor testified that Harold Rhines had notified him that the Rhines would be paying all expenses over $25,000.00. Whether or not Harold Rhines was technically a partner of James Rhines, his words and conduct reasonably led the contractor to believe he was, and the contractor therefore continued to remodel upon Harold Rhines' assurance of payment. As to the contractor, Harold Rhines was a partner, and therefore liable on the remodeling contract.

Fourth, the lessors and lessees contend the trial court erred in excluding two bids that were offered to prove that the contractor overcharged for materials and labor. The court ruled the bids were irrelevant because they lacked the proper foundation and were incomplete. The witnesses who prepared the bids admitted that the bids did not...