Robertus v. Candee, 81-319

• Decision Date: 13 October 1983
• Docket Number: No. 81-319,81-319
• Citation: 40 St.Rep. 1391,205 Mont. 403,670 P.2d 540
• Parties: Edward ROBERTUS & Tim Robertus, d/b/a Robertus Brothers, a partnership, Plaintiffs and Respondents, v. Robert CANDEE, Defendant and Appellant.
• Court: Montana Supreme Court

Page 540

670 P.2d 540

205 Mont. 403

Edward ROBERTUS & Tim Robertus, d/b/a Robertus Brothers, a partnership, Plaintiffs and Respondents, v. Robert CANDEE, Defendant and Appellant.

No. 81-319.

Supreme Court of Montana.

Submitted on Briefs June 30, 1983.

Decided Aug. 25, 1983.

Rehearing Denied Oct. 13, 1983.

John S. Forsythe, Forsyth, for defendant and appellant.

Crowley, Haughey, Hanson, Toole & Dietrich, Billings, for plaintiffs and respondents.

MORRISON, Justice.

Defendant Candee appeals from judgment following trial without jury in the Sixteenth Judicial Court, Rosebud County, in this action arising from the lease of Candee's ranchland by Robertus Brothers.

In February of 1977, Robertuses orally agreed with Candee to lease 850 acres of broken land from Candee at $20 per acre ($17,000), to be paid for in three installments. They also agreed that Robertuses would lease about 1,250 acres of unbroken prairie land from Candee, break it and farm it at their own expense, with Candee receiving a one-quarter share of the crop, and Robertuses retaining the right to three or four crop years.

The final lease payment of $8,000 on the 850-acre tract was due August 1, 1977; Robertuses did not pay it. Their crop had not been good and they alleged that the oral agreement allowed them to waive the $8,000 payment in the event of crop failure. Those crop proceeds properly went to Robertuses.

In fall of 1977, a dispute arose as to the rental to be paid on the 1,250-acre tract. The parties attempted to renegotiate the lease of this tract and a possible buyback by Candee was discussed. At that time 1,000 acres had been broken, 680 acres disked, and 320 acres planted in wheat on the 1,250-acre parcel, all at the expense of the Robertus Brothers. Because of the renegotiations, the Robertus Brothers stopped planting and by the time they learned the buyback had fallen through, it was too late to plant any more wheat.

In March of 1978, Candee informed Robertuses that they could no longer enter his land and terminated both lease agreements. Candee harvested and sold the wheat on the 1,250 acres, netting and keeping $26,180.59.

Robertuses brought suit against Candee on the theory of unjust enrichment and quantum meruit, alleging that Candee benefited from their ground-breaking and farming due to his wrongful eviction of them from the 1,250-acre tract. Candee counterclaimed as to the unpaid $8,000 on the 850-acre tract. Evidence taken included the enhanced value of the newly-broken prairie land, the cost of production and the value of the wheat.

The District Court held there were two separate oral leases, one on the 1,250-acre tract, and one on the 850-acre tract. The court held that though the lease on the 1,250-acre tract was unenforceable, Candee had been unjustly enriched in the amount of $55,000. This amount included the increased land value, a three-quarter share of the wheat crop, and/or the value of the work, seed and fertilizer supplied by Robertuses. Candee was to pay interest from March 8, 1978, the day he notified Robertuses they were not to enter his land. The court also held that Robertuses owed Candee the final $8,000 payment on the 850-acre tract.

Candee appeals the $55,000 award to Robertuses. Robertuses do not cross-appeal, but ask for reversal of the $8,000 award to Candee if this Court changes the District Court's findings pursuant to Rule 14, M.R.App.Civ.P.

We will modify the award.

Defendant Candee raises four issues on appeal:

1. Whether plaintiffs are entitled to damages under the theory of unjust enrichment.

2. Whether the District Court awarded a correct measure of damages.

3. Whether plaintiffs are entitled to interest prior to judgment.

4. Whether there is substantial evidence in the record to support the value of the ground-breaking work.

Defendant first argues that unjust enrichment is not an applicable theory. The trial court found that in this case the Statute of Frauds precluded plaintiffs from suing on the lease. Where the labor or money of a person has been expended in a permanent improvement which enriches the property of another, under an oral agreement which cannot be enforced under the Statute of Frauds, that person is entitled to an award for the amount by which such improvements unjustly enriches the property. Smith v. Kober (Neb.1922), 189 N.W. 377; Restatement of the Law, Contracts 2d Sec. 375.

However, it is not necessary to reach the question of whether this agreement is within the Statute of Frauds. For, where one party repudiates a contract or breaches it by non-performance, the injured party may seek restitution of the unjust enrichment whether the Statute of Frauds applies or not. Gregory v. Peabody (1928), 149 Wash. 227, 270 P. 825; Restatement of the Law, Contracts 2d Sec. 373; Epletveit v. Solberg (1946), 119 Mont. 45, 57, 169 P.2d 722, 729. By defendant's own admission, the plaintiffs were not required to farm the 1250-acre tract during any particular season. Thus the trial court was correct in concluding that the defendant breached and terminated the lease by his actions in March of 1978. There is no question that plaintiff may seek restitution for the unjust enrichment conferred upon the breaching and repudiating defendant in this case.

The second issue raised by the defendant has merit. Defendant argues that the trial court improperly awarded quantum meruit damages for plaintiffs' investment in breaking ground on the 1,250-acre tract, and damages for the value of the improvement to the property. Both measures cannot properly be awarded.

It is not clear, from the District Court's findings of fact and conclusions of law, how the $55,000 award was determined. However, it is apparent that the Court awarded a composite of enhanced land value, custom work, fixed costs and/or crop value.

The theory of unjust enrichment requires that a person who has been unjustly enriched at the expense of another must make restitution to the other. Restatement of the Law, Restitution Sec. 1; Tulalip Shores, Inc. v. Mortland (1973), 9 Wash.App. 271, 511 P.2d 1402; 66 Am.Jur.2d Restitution and Implied Contracts Sec. 3 (1973). The measure of this equitable restitution interest is either the quantum meruit value of plaintiff's labor and materials or the value of the enhancement to the defendant's property. Restatement of the Law, Contracts 2d Sec. 371; 12 Williston, Contracts Sec. 1480. To award both would be to give double damages.

In this case the quantum meruit measure of damages would be the market rate for the custom work of ground breaking, fertilizing and planting and the cost of fertilizer and seed. Such measure was found by the trial court to be $29,479.61. The enhancement measure would be the net value of the unharvested crop ($26,180.59) together with the increased value in the 1,000 acres attributable to the ground breaking.

There may be cases where the enhancement to the defendant's property will be far less than the quantum meruit value of the plaintiff's efforts. For example, where the improvement did not enhance the value of the property but did result in a pecuniary saving to the defendant, the enhancement measure would not reflect the unjust enrichment. Conversely, there may be cases where the value of the enhancement greatly exceeds the cost of the improvement, as in this case.

Thus the rule has evolved that the proper measure of damages in unjust enrichment should be the greater of the two measures. Restatement of Law, Contracts 2d Sec. 371 comment b; 12 Williston, Contracts Sec. 1480.

We adopt this rule. But this rule must be tempered with the idea that it is only so much of the enrichment which is unjust that may be awarded the plaintiff. Madrid v. Spears (10th Cir.1957), 250 F.2d 51, 54. For example, the cost of surveying a tract of land into lots may be $5,000, while the total value of the subdivided lots may be $50,000 greater than the undivided tract. The landowner is justly entitled to the majority of the increase in value for his risk, idea, decision making and development activity. He is only unjustly enriched to the extent that the unpaid surveyor contributed to or caused the increase.

In this...