Little Horn State Bank v. Schessler-Miller Ready Mix

No. 83-52
I N TI-IE SUPRE?E COURT O THE STATE O t.IOPJTANA
F F
1934
LITTLE HORN STATE BANK,
a banking c o r p o r a t i o n ,
P l a i n t i f f and X e s p o n d e n t ,
SCHESSLER-MILLER R A Y M I X ,
E D et al.,
D e f e n d a n t s and A p p e l l a n t s .
APPEAL FROfiI: D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e County o f C a r b o n ,
The H o n o r a b l e C h a r l e s Luedke, J u d g e p r e s i d i n g .
COUNSEL O RECORD:
F
For Appellants :
Herman Law F i r m ; L a r r y D. Ilernan f o r S c h e s s l e r - M i l l e r
Ready Mix, L a u r e l , Montana
Roy J o h n s o n f o r Peavey S u p p l i e s , B i l l i n g s , Montana
For Respondent:
D o u g l a s Freeman, H a r d i n , Montana
S u b m i t t e d on B r i e f s : January 2 6 , 19Rd
Decided: Jane 1 4 , 1984
-
Clerk
Mr. Justice Daniel J. Shea delivered the Opinion o: the
f
Court.
Schessler-Miller Ready Mi, Lnc., and Garcia Cement
Company appeal an order of the Carbon County District Court
denying their motion to reconsider and amend a summary
judgment entered against them holding their mechanics' liens
invalid.
Although the two companies raise three issues relating
to the validity of their mechanics' liens, the issue in
essence is whether a lien claimant who asserts in an
affidavit that the cont.ents of the lien are true has
fulfil-led the statutory requirements of section 71-3-511,
YCA, that an affidavit verify that the amount claimed is "a
just and true account after allowing all credits."
The lien claimants argue: first, that section 71-3-511,
MCA, prescribes no particular form for a mechanic's lien;
second, that the notice of lien does not have to contain the
language "a just and true a-ccount;" and third, that their
liens are sufficient on which to base a charge of periury,
under Saunders Cash-Way Lumber v. Herrick and Brown (1978),
1-79 Mont. 233, 587 P.2d 947. We reverse the trial court and
order the liens reinstated.
On November 16, 1978, Ronald D. Kohl and Mary Lou Kohl
borrowed $59,000, at 10 percent interest, from Little Horn
State Bank of Hardin, Nontana. The Kohls gave the Rank a
promissory note for the loan, and executed a mortgage on
property described. as "Tract C, Certificate of Survey No.
993, Carbon County, Montana" as security. The note came due
on June 1, 1979, but the Kohls failed to pay the note.
Tn 1979 and 1980, the Kohls contracted with the various
defendants to build a house on their property. It is not
clear from the record whether a house was ever completed, but
the defendants all filed mechar.icsl liens in 1980. BY
statute (section 71-3-502 (4), MCA) a mechanic's lien has
priority over a previously filed mortgage.
On May 26, 1981, the Eank filed a complaint to foreclose
on the mortgage, because the note was still unpaid. The
Rank claimed as due the $59,000 note, plus interest from
November 16, 1978 to May 22, 1981 ($16,058.46), totaling
$75,058.46. The Bank notified the Kohls and the lien holders
of record that it intended to foreclose on the mortgage and
to quiet title in the Bank's name.
The Kohls failed to respond, and the court entered
default judgment against them. The Eank moved for summary
judgment against Schessler-Miller, Garcia Cement, and Peavv
Building Supplies, arguing that the liens of these companies
were invalid, the effect of which gave priority to the Bank's
mortgage.
Schessler-Miller's I ien is in the amount of $1,061.97,
Garcia Cement's lien is for $1,957.00, and Peavy Supplies'
two liens totaled $13,388.36. The three companies and the
Bank stipulated that the only issue to be decided by the
trial court was whether the affidavits of the three
companies' mechanics' liens were sufficient to satisfy the
statutory requirements for a valid lien.
The trial court held that Peavy Building Supplies' liens
were val-id and that the Bank has not appealed. However, the
trial court also held that Schessl-er-Miller and Garcia's
liens were invalid because they did not verify that the
amount due was a net amount.
Although a valid mechanic's lien has priority over any
mortgage on the property, section 71-3-502 (4), MCA, to
perfect the lien, a lien claimant must follow the procedures
of section 71-3-511, MCA. The disputed. requirement is in
section 71-3-511(1). It states that a lien claimant must file
a "just and true account of the amount due him, after
allowing all credits, containing a correct description of the
property . . . verified by affidavit . . ."
The mechanics' liens of Schessler-Miller and Garcia
consisted of a statement of the amount owing, real property
description, names of the owners, the dates of completion,
and a signed affidavit that the facts in the lien were true
and within the knowledge of the affiant. The lien of
Schessler-Miller stated a precise indebtedness " a.
n
indebtedness of $1,061.97," and the lien of Garcia a-lso
stated a precise indebtedness "an indebtedness of $1,957.00."
However, the two mechanics' liens did not contain language
referring to the account as a just and true account.
Implicit in a statement of an amount due and owing is
that it is a net amount, after accounting for all debits and
credits. To verify the account as a net account a lien
cla.imant is not required. to use the statutory words "just and
true account . . . after al-lowing credits." The purpose of
the statute is to give notice to the public and property
owner that a mechanic's lien has been filed for a certain
amount and on specifi-c property. Clearly, the liens of the
lien claimants here sive the required notice to the public
and to the property owner.
The third issue is whether the lien claimants' liens are
valid under the standard set forth in Saunders Cash-Way
Lumber v. Herrick a.nd Brown (1978), 179 Mont. 233, 587 ~ . 2 d
947. Under Saunders, the affidavit verifying the amount due
must be sufficient on which to base a periury charge if the
statement. is fa.1-se. In holding that the I-ien claimants'
statements did not meet this test, the trial court stated:
". .
. it is apparent that in neither the
announcement of the amount of indebtedness set
forth in the notice nor in the statement of account
attached as Exhibit 'A' has the lien claimant made
any commitment that the figures given represent 'a
just and true account of the amount due him, after
allowing all credits ...
Although the affidavit
is one upon which perjury could be assigned, it is
not so assignable as to all of the necessary
elements of the lien."
In Saunders we upheld the trial court's denial of a
mechanic's lien because the affidavit conditioned the truth
of the lien on the affiant's knowledge, information and
belief, and therefore it did not constitute a statement under
oath by a person who had personal knowledge of the facts. In
Saunders, the affiant would not have been subject to a
perjury charge if the amcunt due failed to reflect payments,
and therefore we held that the affidavit was insufficient.
The language of the statute itself is sufficient to put
potential lien claimants on notice that the amount they claim
as due must be correct, that is, it must be a net amount.
Section 71-3-511(1, MCA, provides that the affidavit must
set forth ". . . a just and true account . . . after allowing
all credits . . ." It does not say that these statutory
words must be incanted in the body of the a.ffidavit
supporting the filing of a mechanic's lien.
As we ha-ve held, implicit in any lien claim is a belief
that the amount claimed is a net amount, and that such
statement of amount owed will subject a lien claimant to a
charge of perjury. The affidavits of Schessler-Miller and
Garcia clearly meet the standard of Saunders. They swore
that they knew the contents of the lien, that the facts were
true, and that the a.ffiant had personal knowledge concerning
the facts stated. It can be determined from reading the
liens that the amounts stated are net amounts, and that the
affiants believed those amounts to be net amounts.
Therefore, the liens have met the perjury standard and are
valid.
The District Court order granting summary judgment in
favor of the Bank is reversed.
We Concur:
/
Justices