United Pac. Ins. Co. v. Martin & Luther General Contractors, Inc., 3644

• Decision Date: 16 June 1969
• Docket Number: No. 3644,3644
• Citation: 455 P.2d 664
• Parties: UNITED PACIFIC INSURANCE COMPANY, Appellant (Third-Party Defendant below), Williamette Construction Company, Appellant (Defendant below), et al., (Defendants below), Jackson Hole Ski Corporation, Appellant (Defendant and Third-Party Plaintiff below), v. MARTIN AND LUTHER GENERAL CONTRACTORS, INCORPORATED, et al., Appellees (Plaintiffs below).
• Court: Wyoming Supreme Court

Page 664

455 P.2d 664

UNITED PACIFIC INSURANCE COMPANY, Appellant (Third-Party Defendant below) Williamette Construction Company, Appellant (Defendant below), et al (Defendants below), Jackson Hole Ski Corporation, Appellant (Defendant and Third-Party Plaintiff below), v. MARTIN AND LUTHER GENERAL CONTRACTORS, INCORPORATED, et al., Appellees (Plaintiffs below).

No. 3644.

Supreme Court of Wyoming.

June 16, 1969.

Kline, Tilker & Lynch, Cheyenne, and Kobin & Meyer, Portland, Or., for appellant, United Pac. Ins. Co.

David Norman Burns, Jackson, for appellants, Willamette Const. Co. and Jackson Hole Ski Corp.

Hufsmith & Gowen, Jackson, and Nordhaus & Moses, Albuquerque, N. M., for appellee, Martin and Luther General Contractors, Inc. Richard E. Day, of Wehrli & Williams, Casper, for appellee, First Nat. Bank of Casper.

Robert N. Chaffin, U. S. Atty., and Leroy V. Amen, Asst. U. S. Atty., District of Wyoming, for appellee, United States of America.

Before GRAY, C. J., and McINTYRE, PARKER, and McEWAN, JJ.

Mr. Justice PARKER delivered the opinion of the court.

In July 1963 Willamette Construction Company was engaged by Jackson Hole Ski Corporation, owner, to construct an aerial tramway and chairlift facility on its property and that of the United States at Jackson, Wyoming. Subsequently, by a complaint filed March 10, 1965, Martin and Luther General Contractors, Inc., ¹ sought personal judgment against Willamette for $111,511.77 and requested that such sum be decreed a lien upon property pursuant to a mechanics' lien theretofore filed on real property of the owner-corporation. Willamette, answering for itself and the owner, admitted that Martin and Luther had supplied work and material on some of the property involved for the aerial and work trams but put in issue the allegations of the validity of the lien and presented certain affirmative defenses, setoffs, and counterclaims, which in essence alleged that Martin and Luther did not complete its contract; caused expensive and extensive delays which increased costs tremendously; failed to notify Willamette of expenses; failed to pay its bills as it had agreed; failed to build the construction as planned and that work performed had been done in an unworkmanlike manner; unreasonably allowed liens to be placed against the property of the owner; was careless and negligent in the handling of the construction; and knowingly allowed conflicting work to interfere with the construction of the aerial and work trams, and sought damages because of various alleged breaches of Martin and Luther's contract for the Jackson work and the willful breach of an agreement to enter into a joint-venture contract for the construction of a tram at Sandia Mountain, New Mexico, having intentionally made use of Willamette's special skills and knowledge in the engineering and design of the tram.

During the pleading stages certain claims of those who had supplied Martin and Luther were injected by counterclaims; separate suits on matters of that nature were filed; and United Pacific Insurance Company, which had indemnified Jackson against liens, was made a party to the main suit. Additionally, Martin and Luther filed a suit against Willamette and one of its managers for libel. All of the mentioned matters were consolidated for trial, and after extensive hearings the court entered judgment:

1. For Martin and Luther against Willamette in the sum of $69,187.50 and interest at 7 percent from January 1, 1965.

2. For Tom and John Lamb against Martin and Luther for $7,598.49 with interest at 7 percent from January 1, 1965.

3. For Interstate Helicopters, Inc., against Martin and Luther for $21,166.65 with interest at 7 percent from January 1, 1965.

4. Impressing the judgments mentioned in paragraphs one and two above as concurrent liens on the property.

5. Dismissing Martin and Luther's libel claim against Willamette.

6. Dismissing Willamette's counterclaims against Martin and Luther.

7. Ruling that United take nothing on its cross-complaint against Martin and Luther.

8. Ruling for United on its cross-complaint against Willamette in the sum of $610,332.15, together with interest at 7 percent, computed upon the sum of $541,144.65, from January 1, 1965.

9. Giving judgment for Jackson against United for $69,187.50, plus interest at 7 percent from January 1, 1965.

10. Ordering that the claims of Cy Tjomsland d/b/a Dubois Electric, Richard Equipment, Inc., and Teton Crane and Transport Co., be severed from the consolidated case, that additional evidence be taken thereon, and that the trial on such claims continue.

From this judgment, Willamette and Jackson have appealed, alleging:

(a) The trial court erred in overlooking the duty of Martin and Luther's making every effort possible to minimize costs.

(b) The trial court erred in finding the reasonable value of the work performed by Martin and Luther in two respects, first, the standards which the court applied to determine such reasonable values were erroneous, and second, the court completely overlooked uncontroverted evidence concerning the reasonable value of what work was actually performed by Martin and Luther.

(c) The trial court either erred, was in total abuse of its judicial discretion, or inadvertently overlooked the substantial claim of Willamette against Martin and Luther for reimbursement of expenses of the breach of a joint venture agreement for the construction of the Sandia tram.

(d) The trial court erred in severing certain claims so that they might still be made the subject of a lien claim against property of the owner and thereby vicariously against Willamette under its duty to protect the property.

United Pacific has also appealed from the judgment of the trial court, urging:

(1) Martin and Luther is not within the class of persons entitled to the special benefits of the mechanics' and builders' lien statute.

(2) The court erred in refusing to invalidate the lien claim of Martin and Luther despite its findings that there were gross overstatements of the account knowingly made.

(3) Where nonlienable items are included in the lien demand and are so commingled so as not to be separable, the entire lien is invalidated.

(4) Martin and Luther failed to sustain its burden in proving the reasonable value of its lien, and the court therefore erred in setting the amount.

(5) The court erred in including many items which are nonlienable under § 29-4, W.S.1957, C.1967.

(6) The inclusion of the amount of the claim of Interstate in the decree of foreclosure was error.

(7) Prejudgment interest is not recoverable on an unliquidated lien.

(8) The court erred in allowing the Lambs' lien in whole or in part in that it contained items of a lienable and nonlienable nature which could not be readily separated.

ERRORS CHARGED BY WILLAMETTE AND JACKSON

Duty to Minimize Costs

Although Willamette and Jackson charge that the court erred in overlooking the duty of Martin and Luther to make every possible effort to minimize costs, this criticism can scarcely be taken seriously since the memorandum opinion stated, 'Martin & Luther had a duty at all times to minimize costs,' with which observation we unreservedly agree. It follows that these appellants must have intended to say that the court failed to apply the maxim which it pronounced and gave less than adequate consideration to various items which were improper or which were overcharges. A list of these is attached to the brief but we deem it unessential to analyze or discuss such entries at this time since they deal with the situation negatively while the next charge of error approaches the claimed improprieties of the judgment from a positive aspect by saying that an unreasonable value was placed on the work performed. The net result of any determination would be the same regardless of whether it was reached by inclusion or exclusion, and we therefore consider the matters together.

Unreasonable Value

These appellants argue that the court erred in finding the reasonable value of Martin and Luther's work in that the applied standards were wrong and further that the court completely overlooked pertinent uncontroverted evidence. Their argument is that in order for claimant to establish entitlement to a lien it was obliged to show it had actually improved the value of the property, the value of the lien being the reasonable value by which such improvements benefited the property citing Kaiser Aluminum & Chemical Sales, Inc., v. Hartford Accident & Indemnity Co., W.D.Mo., 117 F.Supp. 471, and Barker & Stewart Lumber Co. v. Marathon Paper Mills Co., 146 Wis. 12, 130 N.W. 866, 36 L.R.A.,N.S., 875. A careful analysis of these cases discloses no support for appellants' position therein. Of interest, however, are the following Missouri cases:

'* * * There is no contractual relationship between him (subcontractor) and the landowner. The landowner has never agreed to pay the subcontractor anything and is not personally indebted to him. It is only by reason of the mechanic's lien statute that the property may be subjected to the payment of the lien claim. In this situation the lien is not necessarily for the contract price but is only for the reasonable value of the labor and materials furnished. Kling v. Railway Construction Co., 7 Mo.App. 410.' (Emphasis supplied.) Mississippi Woodworking Company v. Maher, Mo.App., 273 S.W.2d 753, 755.

'* * * generally * * * where the contract for construction of the building is for a sum in gross, the items of work and materials need not be filed; but these rulings do not apply where work has been done at the instance of a contractor. * * * The reason is, that where the contract is with the owner for a round sum of money, he can need no itemized account; but where the contract of the workman, though for a round sum, is not with the owner, but with a subcontractor, the contractor cannot bind the building for more than the materials furnished on the...