Bauer v. Cook ( 1978 )

No. 13889
IN THE SUPREMF: COURT OF THE STATE OF MONTANA
1979
B. J. BAUER, JR.,
d/b/a BAUER CONSTRUCTION COMPANY,
Plaintiff and Respondent,
JAMES DAVID COOK and DIETA MARIA COOK,
husband and wife,
Defendants and Appellants.
Appeal from: District Court of the Fourth Judicial District,
Honorable Jack L. Green, Judge presiding.
Counsel of Record:
For Appellants:
Tipp and Hoven, Missoula, Montana
Thomas W. Frizzell argued, and Raymond P. Tipp
argued, Missoula, Montana
For Respondent:
Skelton and Knight, Missoula, Montana
Robert Skelton argued, Missoula, Montana
Submitted: February 2, 1979
Filed: JUN
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
This is an appeal from a judgment of the District
Court, Missoula County, foreclosing a mechanic's lien on a
dwelling house and directing defendants to pay the lien-
holder's costs and attorney fees.
In January 1975, James and Dieta Maria Cook contacted
Blaisus J. Bauer, Jr., a building contractor, for the
purpose of discussing the construction of a dwelling house
on property located in Missoula County, Montana. Bauer, who
had been in the construction business since 1971 and had
built approximately thirty houses in that time, agreed to
build the home. On February 19, 1975, the parties entered
into a contract whereby Bauer agreed that the proposed house
would be "turn-key" complete within ninety days after commence-
ment of work. The Cooks agreed to pay Bauer in the following
manner :
"A. 2 0 % of cost upon completion of floor.
"B. 2 0 % of cost upon completion of framing,
roofing and exterior windows & doors.
"C. 2 0 % of cost upon completion of rough
wiring, plumbing & heating.
"D. 20% of cost upon completion of sheet
rock and texturing.
"E. 2 0 % of cost upon completion . . ."
The contract plans and specifications were presented to
the Western Federal Savings and Loan Association of
Missoula, Montana, for approval of a loan to finance the
construction. The loan was approved and an account
opened whereby the funds were to be disbursed in accordance
with the contract and Western Federal's disbursement in-
structions, which required that all disbursement requests
be approved and signed by the Cooks and a loan officer.
Bauer began construction immediately. Upon com-
pletion of the floor, a building inspector for Western
Federal inspected the work and approved a disbursement
of $8,301.33 to Bauer. The Cooks also approved the dis-
bursement. Upon completion of the framing, roofing, and
exterior windows and doors, a similar procedure took place.
Then, on April 1, 1975, after the building inspector had
inspected the rough wiring, plumbing, and heating, and
approved the disbursement, Dieta Cook refused to sign the
disbursement request. Mrs. Cook refused to give her signature
because she felt Bauer had not performed his part of the
contract. A handwritten "Statement of Understanding" was
given to Bauer by the Cooks, demanding that thirty-one
items be completed before the disbursement request would
be signed. Bauer explained to the Cooks that he could not
continue construction without the funds, but Mrs. Cook
refused to change her position.
On April 4, 1975, Bauer ceased work and did not return
to the construction site. Thereafter, four days later, he
filed and perfected a mechanic's lien in the office of
the Clerk and Recorder, Missoula County, under the provisions
of section 45-501, et seq., R.C.M. 1947, now section
71-3-501, et seq. MCA. Bauer claimed the Cooks owed him
$8,300 for labor and materials. This amount was reduced
to $3,000 after the Cooks paid $5,300 to various materialmen.
A suit to foreclose on the lien was filed April 22,
1975. Trial was commenced without a jury, in District Court,
Missoula County on April 19, 1976. Three days later,
due to calendar restrictions, the District Court ordered
that the trial would be continued indefinitely. On December
9, 1976, the parties agreed to submit the case to the court
without further testimony. The District Court entered
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findings of fact, conclusions of law and judgment of
foreclosure on March 24, 1977. Bauer was awarded $3,000
as foreclosure of the mechanic's lien and $1,000 as
reasonable attorney fees.
On appeal, the Cooks have raised two issues:
1. Did Bauer abandon the project for which he had
contracted, thereby rendering his filing of the mechanic's
lien improper?
2. Did the District Court err in failing to reduce
Bauer's recovery under the lien due to his defective
performance of the contract?
The general rule in Montana is that a mechanic's
lien arises only upon completion (or substantial completion)
of the contracted work. Western Plumbing of Bozeman v.
Garrison (1976), 171 Mont. 85, 556 P.2d 520. However,
the general rule does not apply if the laborer or material-
man has been prevented from completing the work by the
breach of the owner or a third party. Intermountain Electric,
Inc. v. Berndt (1974), 164 Mont. 67, 518 P.2d 1168.
In the case on appeal the alleged breach occurred
when the Cooks refused to sign the disbursement request
which had been presented to them by Bauer. The Cooks con-
tend (1) under the circumstances, their refusal to sign
did not constitute a breach of contract, and (2) if they
did breach the contract, Bauer was nonetheless unjustified
in abandoning the contract.
In Gramrn v. Insurance Unlimited (1963), 141 Mont. 456,
378 P.2d 662, we said:
"The rule is stated in Corbin on Contracts,
§ 946, as follows:
"'The non-payment of an installment of money
when due will always create a right of action
for that money, but it will not always be a
total breach.'
"Thus, it depends upon the particular
facts of each case whether or not non-
payment of an installment is a total
breach enabling the contractor to cease
work, or whether it is merely a partial
breach entitling the contractor to sue for
the partial breach, but not permitting
him to abandon the contract."
The District Court concluded that Bauer completed
the rough wiring, plumbing and heating on or about April
1, 1975, and that the building inspector examined the work
and approved the disbursement of $8,300 to Bauer, but Dieta
Cook refused to sign the disbursement request.
In reviewing findings of fact in a civil action tried
by the District Court without a jury, this Court is confined
to determining whether there is substantial credible evidence
to support those findings. Hornung v. Estate of Lagerquist
(1970), 155 Mont. 412, 473 P.2d 541. Although conflicts
may exist in the evidence presented, it is the duty and
function of the trial judge to resolve such conflicts.
His findings will not be disturbed on appeal where they
are based on substantial though conflicting evidence.
Fausett v. Blanchard (1969), 154 Mont. 301, 463 P.2d 319,
Finally, in determining whether the trial court's findings
are supported by substantial evidence this Court must view
the evidence in the light most favorable to the prevailing
party. Hellickson v. Barrett Mobile Home Transport, Inc.
(1973), 161 Mont. 455, 507 P.2d 523.
The record here contains the testimony of the sub-
contractors who installed the rough wiring, plumbing, and
heating prior to the inspection and approval of the work
by the employee of the lending institution. We find that
the District Court's findings are based on substantial
evidence. Since the installment payment was due, the
Cook's refusal to sign the disbursement request constituted
a breach of contract. The remaining question then is,
did the refusal to sign under these facts constitute
a total breach of the parties' agreement, thereby
justifying Bauer's abandonment of the contract?
In Gramm, this Court upheld the District Court's
foreclosure of the mechanic's lien because the underlying
contract provided that the ability of the contractor
to continue work was dependent upon prompt payment by the
owner. In addition, the contract stated that time was of
the essence. However, in Berndt, involving substantially
the same question, we found nothing in the record to suggest
the
that / contractor's failure to make a payment actually
the
prevented , subcontractor-lienholder from completing the
!
work. There was no evidence to indicate that the sub-
contractor was entitled to demand any money from the
contractor at the time it submitted a bill, nor was there
any proof that prompt payment by the contractor and time
were of the essence to completion of the work. Finally,
because the subcontractor did not go to the homeowners
and ask them for payment of the bill or ask them if they
wanted the work completed, we concluded the subcontractor
had willfully and voluntarily abandoned the contract before
there had been substantial performance of its terms.
In Bauer's case, the agreement required the house
to be "turn-key" complete within ninety days of commencement
of work. Proof that time was of the essence is found in
Bauer's testimony:
"Mrs. Cook and Jim Cook and myself discussed
the fact that I wanted 120 days to build the
house because I felt it was the kind of house
that needed 120 days, but they were living
in a motel and speed was of very major importance
and so I, against my wishes, agreed to put it
on 90 days . . ."
Despite their desire to take possession of the house
within ninety days of commencement of construction, the
Cooks requested numerous changes in the plans and
specifications of the house. Those changes included
repositioning the house on the foundation, relocating
certain bay windows, putting additional beams in the
living room, enlarging the overhang on the back of the
roof, extending a gable five feet and repositioning the
kitchen cabinets. Also, the back wall had to be torn
out for a new kitchen window, and the framing of the
interior of the house was delayed considerably due to the
Cooks' indecision concerning the size and type of fireplace
that would be installed.
Upon discovering that the Cooks did not intend to
sign the disbursement request until he complied with the
thirty-one demands contained in the "Statement of Under-
standing", Bauer approached the Cooks on several occasions,
explained that he could not continue his work without the
funds, and requested that they sign the disbursement
request. When it became clear that the Cooks were not
going to sign the document, Bauer abandoned the construction
site and filed a mechanic's lien to protect his interests
in the work done and materials furnished.
Having determined that substantial evidence exists
in the record upon which the District Court could reasonably
conclude that the Cooks breached the contract, we now hold
that due to the aforementioned circumstances the refusal
to sign the disbursement request constituted a total breach
of the contract which prevented Bauer from continuing con-
struction and justified abandoning the jobsite. The mechanic's
lien was properly filed and foreclosed.
The District Court's findings of fact, conclusions
of law, and judgment make no mention of the Cooks' counter-
claim for defective performance. This Court adhers to the
doctrine of implied findings which states that where a
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court's findings are general in terms, any findings not
specifically made, but necessary to the judgment, will be
implied. Ballenger v. Tillman (1958), 133 Mont. 369, 324
P.2d 1045. However, where as here, the trial court has not
entered judgment on a claim, nor made a general finding on
such claim from which reasonable implications can be made,
we cannot say that the claim is with or without merit.
Similar circumstances arose in Claver v. Rosenquist (1972),
160 Mont. 4, 499 P.2d 1235, in which the Court said:
.
". . we hold that the district court should
have entered findings of fact, conclusions
of law and judgment determining the issues
raised by defendant's counterclaims ...
No findings, one way or the other, were
entered by the district court on these counter-
claims, and no mention was made of any of the
counterclaims in the district court's judgment.
We hold that the district court should have
made findings concerning these issues and
entered judgment accordingly."
We cannot imply from the District Court's judgment of
foreclosure that the Cook's counterclaim for defective
performance was necessarily without merit.
In conclusion, the judgment of foreclosure is affirmed,
but the cause is remanded to the District Court for entry of
findings of fact, conclusions of law and a judgment dis-
posing of the issues raised in the counterclaim.
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We Concur: