Fillbach v. Inland Construction Cor

No. 13907
IN THE SUPREME COURT OF THE STATE OF MONTANA
1978
EDWIN R. FILLBACH, DALE FILLBACH,
d/b/a FILLBACH & SONS,
Plaintiff and Respondent,
INLAND CONSTRUCTION CORPORATION, INLAND
DEVELOPMENT CORPORATION OF MONTANA; BIG
SKY OF MONTANA, INC., et al.,
Defendants and Appellants.
Appeal from: District Court of the Eighteenth Judicial District,
Honorable Frank E. Blair, Judge presiding.
Counsel of Record:
For Appellants:
Brown, Pepper and Komrners, Bozeman, Montana
William L. Pepper argued, Bozeman, Montana
For Respondent :
Bolinger and Wellcome, Bozeman, Montana
G. Page Wellcome argued, Bozeman, Montana
Submitted: April 27, 1978
Decided: b-F 7 1978
Filed: 2 . ;gT@
Mr. Justice Daniel J. Shea delivered the Opinion of
the Court.
Defendant Big Sky of Montana, Inc., appeals from a
judgment of the District Court, Gallatin County, foreclosing
a mechanic's lien in favor of plaintiffs, Edwin R . Fillbach,
individually, and d/b/a Fillbach and Sons.
Big Sky of Montana, Inc., (hereinafter Rig Sky) is the
developer of a condominium project on land it owns near
Bozeman, Montana. Inland Construction Corp. was the general
contractor for the project. In early 1974, plaintiff Fillbach
submitted a bid for painting and drywall work on the project's
Glacier condominiums. Plaintiff's bid was accepted by the
general contractor.
Plaintiff and his crew began working on the project,
but due to various construction problems not attributable to
plaintiff, the project was delayed and expected completion date
was extended. In September 1974, the general contractor
determined the project would have to be expedited and added
several men to plaintiff's crew for that purpose. Thereafter,
plaintiff had difficulty meeting his expenses, due in part to
the expanded crew which had been assigned to him.
The general contractor promised other subcontractors
increases in their contract prices because of the construction
delays, but the parties dispute whether plaintiff was promised
such an increase. Plaintiff contends his contract was reneg-
otiated to a cost-plus basis, but Big Sky contends plaintiff
was not promised the increase given the other subcontractors
because he was not meeting his contract obligations. plaintiff
did receive regular contract payments, but he did not receive
any increase over the contract price specified in his bid.
I n J a n u a r y 1975 t h e g e n e r a l c o n t r a c t o r began con-
t r o l l i n g t h e money p a i d t o p l a i n t i f f f o r d i s b u r s e m e n t t o
h i s employees, s u b c o n t r a c t o r s and s u p p l i e r s . P l a i n t i f f was
t e r m i n a t e d from t h e p r o j e c t on February 1 2 , 1975, a f t e r
t e l l i n g t h e g e n e r a l c o n t r a c t o r he would need a d d i t i o n a l money
t o complete h i s work. P l a i n t i f f r e c e i v e d a check i n t h e amount
of $457.64 on t h e day of h i s t e r m i n a t i o n . Accompanying t h a t
check was a l i e n w a i v e r p r i n t e d on a form p r o v i d e d by t h e
general contractor. Such l i e n w a i v e r s were p r o c u r e d a t t h e
i n s i s t e n c e of Big Sky from a l l s u b c o n t r a c t o r s a s t h e y w e r e
p a i d f o r work performed o r l a b o r f u r n i s h e d on t h e p r o j e c t .
P l a i n t i f f e x e c u t e d 37 s u c h w a i v e r s upon r e c e i p t of a p p r o x i m a t e l y
3 1 c h e c k s d u r i n g t h e p e r i o d from J a n u a r y 1 6 , 1974 t o F e b r u a r y
1 4 , 1975.
A f t e r h i s t e r m i n a t i o n , p l a i n t i f f demanded payment he
a l l e g e d was due under t h e c o n t r a c t a s r e n e g o t i a t e d t o t h e
cost-plus standard. He d u l y p e r f e c t e d a m e c h a n i c ' s l i e n a g a i n s t
Big Sky f o r t h e b a l a n c e due under t h a t c o n t r a c t and b r o u g h t
the present action. Named a s d e f e n d a n t s were t h e g e n e r a l
c o n t r a c t o r , Big Sky, and s e v e r a l p a r t i e s c l a i m i n g an i n t e r e s t
i n Big S k y ' s p r o p e r t y . I n l a n d Development C o r p o r a t i o n of
Montana, t h e a s s i g n e e of I n l a n d C o n s t r u c t i o n ' s i n t e r e s t , was
l a t e r joined a s a p a r t y defendant.
The c a u s e was t r i e d b e f o r e t h e D i s t r i c t Court s i t t i n g
without a jury. Big Sky was t h e o n l y d e f e n d a n t i n v o l v e d i n
t h i s appeal t o appear. I n l a n d C o n s t r u c t i o n C o r p o r a t i o n and
I n l a n d Development C o r p o r a t i o n d e f a u l t e d and t h e o t h e r p a r t i e s '
i n t e r e s t s were d e t e r m i n e d . O A p r i l 8 , 1977, t h e D i s t r i c t
n
Court e n t e r e d f i n d i n g s of f a c t and c o n c l u s i o n s of law and
judgment i n p l a i n t i f f ' s f a v o r . The D i s t r i c t Court found
p l a i n t i f f ' s l i e n a g a i n s t Big Sky t o be i n t h e amount of
$43,693.94. Plaintiff was awarded that amount, plus costs
and attorney's fees in the amount of $21,000. Following
denial of its motions to amend and make additional findings
of fact and conclusions of law and for a new trial, Big Sky
appealed.
Two issues are presented for review: (1) whether
the District Court erred in limiting the scope of the lien
waivers to the money received as each such waiver was executed,
and (2) whether the District Court abused its discretion in
awarding a $21,000 attorney's fee.
The first issue concerns the interpretation of the
lien waivers signed by plaintiff. Each such waiver was
prepared on the following form:
"RECEIPT AND WAIVER OF MECHANICS' LIEN RIGHTS
N.B. It is important that the following directions
be closely followed as otherwise the receipt WILL
NOT BE ACCEPTED.
1. This is a LEGAL INSTRUMENT and must be executed
accordingly by officers of corporations and by
partners of co-partnerships.
2. It is important that ALL the blanks be completed
and that the AMOUNT PAID BE SHOWN.
3. If payment is not in full to date, so state,
SHOW UNPAID BALANCE, and strike out last three lines.
4. A receipt similar to this or legal waiver of
lien rights will be required for all plumbing,
heating and plastering material, etc.
5. NO ERASURES OR ALTERATIONS MUST BE MADE.
(date)
The undersigned acknowledges having received payment
of from in full payment of
all by the undersigned delivered
or furnished to (or performed at)
and for value received hereby waives all riqhts which
may have been acquired by the undersigned to file
mechanics' liens against said premises for labor,
skill, or material furnished to said premises prior
to the date hereof.
The District Court's Finding of Fact VII states:
"That on each occasion when the plaintiff
would receive payment for work performed and
materials furnished, he would sign a lien
waiver which lien waiver was solely limited to
the amount of money received at that particular
time and such lien waiver did not in any way
prevent the plaintiff from filing and foreclosing
a mechanic's lien for all amounts not covered
by the specific lien waivers which were required
by the Inland Corporations for each payment
which they made to the plaintiff; that this
manner of proceeding was requested by the
defendant Big Sky of Montana, Inc., and the
Inland Corporations were paid an overhead
margin and a profit margin on all amounts which
they paid to their subcontractors."
The thrust of Big Sky's argument is that the above
finding is contrary to the evidence. In this regard Big Sky
first contends the Receipt and Waiver of Lien Rights clearly
provides for a general walver of lien rights as to all labor
and materials supplied prior to the date any such instrument
is signed. Big Sky further contends the District Court should
not have allowed testimony which had the effect of varying
the terms of the instrument.
In an "Opinion of the Trial Court" which accompanied
its decree, the District Court indicated the above finding
was based on "oral evidence found true by the Court." That
evidence consisted of the testimony of plaintiff and Roger
West, the project manager for Inland Construction during the
time plaintiff worked at the condominium site. The District
Court relied on two statutory exceptions to the parol evidence
rule, sections 93-401-13 and 93-401-17, R.C.M. 1947, in admitting
the challenged testimony.
Section 93-401-13(2) provides in part that parol
evidence is admissible:
"2. Where the validity of the agreement is
the fact in dispute. But this section does not
exclude other evidence of the circumstances under
which the agreement was made, or to which it
relates, as defined in section 93-401-17,
or to explain an extrinsic ambiguity or
to establish illegality or fraud. * * * "
Section 93-401-17 provides:
" * * * For the proper construction of an
instrument, the circumstances under which
it was made, including the situation of
the subject of the instrument, and of the
parties to it, may also be shown, so that
the judge be placed in the position of
those whose language he is to interpret."
Absent an ambiguity which would require parol
testimony to explain, the lien releases cannot be varied,
contradicted or altered by parol evidence. Larson v.
Burnett, (1972) 158 Mont. 421, 427, 492 P.2d 921, 925. Here,
however, the circumstances of the parties, their real purpose
in executing and receiving the instruments is subject to
interpretation and may be proved by parol testimony. See,
Thisted v. Country Club Tower Corp., (1965) 146 Mont. 87, 96,
Roger West negotiated and administered all the contracts
entered into by Inland Construction with its subcontractors
for the condonimiurn project. He was the only person called as
a witness by either side who was familiar with Inland's opera-
tions and procedures. He testified:
"Q. Now, these lien releases that we've heard
testimony about, what were these used for? And
there is a whole series of them here, Mr. West.
A. Well, in order to get a payment from Big
Sky we'd produce a like amount of dollar lien
releases from subcontractors.
"Q. Were -- So each time any subcontractor
sought payment from you, you would take a lien
release? A. Oh, definitely.
Q.And did you understand when these were taken
that whoever the claimant was or whoever was
going to work for you had the right to come
to you, and they were entitled to additional
money at some future time; and they were only
signing this lien release for that specific
purpose? A. Yes.'"
West's testimony was uncontradicted. Big Sky offered
no evidence tending to show either Inland Construction or
plaintiff intended each lien release to operate as an absolute
waiver of all pre-existing lien rights. In the District
Court, as here, Big Sky relied on the language of the Receipt
and Waiver of Mechanic's Lien Rights. Big Sky cites cases
from other jurisdictions which have given such lien releases
a general scope and effect, but none of those cases involve
a factual situation similar to that of the present case. The
course of dealings between the parties clearly indicated that
they regarded the lien waivers to be releases only as to the
amounts they received at the time of signing the lien waivers.
Here, plaintiff's operation was disrupted from the
start. He was beset by difficulties and delays for which he
bore no responsibility. He incurred expenses and was com-
pelled to work under conditions not contemplated at the time
he submitted his bid. Other subcontractors received increases
over their contract prices as a result of similar problems
and were apparently able to avoid the financial squeeze
plaintiff found himself in. Plaintiff testified he did not
receive such increases even though an Inland representative
had promised them to him. West testified plaintiff's increases
were to be held back "until the end of the contract because
he was having trouble at that time taking care of his contract
obligations."
When he signed the lien release upon receipt of a check
in the amount of $457.64 on February 12, 1975, plaintiff had
not received all the money owing under either the original
contract or the contract as renegotiated to a cost-plus basis.
Under the circumstances and in light of the testimony presented
to the District Court, it is clear plaintiff did not then intend
to waive his rights with regard to amounts he had not received
by that time. The District Court did not err in ruling
plaintiff retained lien rights for money owing to him despite
his execution of any of the series of lien releases under these
circumstances.
Big Sky's final issue challenges the District Court's
award to plaintiff of $21,000 in attorney's fees. The amount
awarded corresponds to the amount requested by plaintiff in
his complaint. Apparently plaintiff and his counsel entered
into a contingent fee arrangement which provided for such an
attorney's fee.
No testimony was presented as to the reasonableness
of the fee awarded, nor was evidence of any kind offered to
support the $21,000 amount. At trial, the parties entered into
the following oral stipulation:
"[plaintiff's counsel]: And, counsel, may
it be stipulated that the court may award a
reasonable attorney's fee in the prevailing
side without the necessity of introducing
specific testimony as to the value of it?
"[Big Sky's counsel]: So stipulated."
In State Highway Commission v. Marsh, (1978) -
Mont. , 575 P.2d 38, 35 St.Rep. 105, 110, 111, this
Court stated:
"The reasonableness of the attorney fee
claimed must be shown by evidence. Rauser
v. Totson Irrigation District, supra. A
contingent fee contract is not controlling
in demonstrating the reasonableness of any
attorney fee. [citing cases] An award
of attorneys fees must be based on a hearing
allowing for oral testimony, the introduction
of exhibits, and an opportunity to cross
examine in which the reasonableness of the
attorney fees claimed is demonstrated."
Marsh did not involve a stipulation as is present
here, but its reasoning nevertheless is applicable. The focus
is on the reasonableness of the fee awarded, even when there
is a stipulation. From our review of the record, we do
not see an evidentiary basis justifying such a fee.
This was a one-day trial, involving little discovery,
in which one of the two principal defendants defaulted. While
parties may, of course, waive their right to introduce evidence
as to attorney's fees through stipulation, this Court is not
thereby bound to accept the reasonableness of the fees awarded.
The basis for the fee must appear in the record.
Finally, plaintiff asks this Court to increase the
amount awarded him from $43,693.94 to $63,172.93. The $63,172.93
is what the District Court found Inland Construction owed
plaintiff; the $43,693.94 reflects a reduction in that amount
by a set-off applied by the District Court. In his complaint
plaintiff sought $63,172.93. That amount was based on a
"statement of receipts and disbursements" prepared by an account-
ant from figures supplied by plaintiff. At trial plaintiff
revealed he had failed to provide the accountant with checks
totalling approximately $19,500 received during January and
February of 1975.
Big Sky argued in the District Court that the $19,500
should be applied to plaintiff's receipts and reduce the amount
owing proportionally. At that time plaintiff's counsel agreed,
and in his proposed findings of fact and conclusions of law he
used the lower figure as the amount owing on the lien foreclosure
against Big Sky. Those findings were adopted by the District
Court .
Plaintiff now contends his earlier interpretation was
incorrect. He asserts the checks received in 1975 "passed
through" his account and cannot properly be included in the
computation of the balance owing under his contract with Inland
Construction. Big Sky contends the District Court's judgment
should not be increased, arguing the 1975 checks should be
included as money received by plaintiff under the contract.
We note plaintiff does not present this matter in the
form of a cross-appeal from the District Court's judgment.
Nor did he except to or move to amend the findings of fact
in the District Court. The question is raised for the first
time on appeal, and under these circumstances it is improperly
raised. See Mittelstadt v. Buckingham, (1971) 156 Mont. 407,
414, 480 P.2d 831, 835.
The judgment of the District Court is affirmed as to
the amount owing under the lien foreclosure and reversed as
to the award of attorney fees. The cause is remanded to the
District Court for a hearing to determine reasonable attorneys
fees to plaintiff.
WE CONCUR:
Chief Justice
Mr. Justice John C. Sheehy concurs in part and dissents
in part:
While ordinarily the broad language used in the lien
waivers involved here would serve to release the real
property from any claim of lien, there are special circumstances
existing here which require the resu-lt reached in the
foregoing Opinion. I concur that the written lien waivers
were not effective to release fully the real property, but
for reasons differing somewhat from those expressed in the
Opinion.
Big Sky of Montana had contracted with Inland as its
general contractor to build the condominiums here involved.
Inland had taken bids and entered into agreements with
subcontractors for specified amounts depending on the amount
of work to be done or material to be supplied by the respective
subcontractors.
Fillbach, as a subcontractor, was given to understand his
work of painting and drywall construction was to be completed
by July 1, 1974. However, Big Sky, for reasons of its own,
delayed the starting date. When Big Sky did give the go-
ahead, the subcontractors found there were changed weather
conditions, a strike, and i~flatedcosts which required renegotiation
of their agreements. This occurred because the subcontractors,
particularly Fillbach, were not able to start their jobs
until August 1974. Inland, on the basis of an increased
allowance from Big Sky, gave all its subcontractors, except
Fillbach, increased contractual amounts. With Fillbach,
there was an unwritten understanding he would receive additional
compensation when he had completed his work.
Fillbach had contemplated using 4 men, himself and his
son for the labor involved. However, Inland intruded in this
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sphere and in effect took over the management of Fillbach's
job by sending in as many as 8 additional persons (because
the weather was closing in) as painters. These extra workers
went on Fillbach's payroll, and the periodic payments he was
receiving from Inland (which in turn billed Big Sky) were
insufficient to meet his obligations. Fillbach began to
lose ground financially.
Inland's deal with Big Sky was that Inland would be
reimbursed periodically by Big Sky for Inland's payments to
the subcontractors, plus 12 percent overhead and 8 percent
profit. This deal was the reason Inland required the execution
of lien waiver forms with each payment to Fillbach. There
were some 37 of these lien waivers executed by Fillbach in
return for checks. Thus, all the parties established a
course of dealing whereby Fillbach each time, to receive his
neriodic payment, executed a lien waiver form, which Inland
delivered to Big Sky so Inland could get pald. In no case
did Big Sky pay Inland more than required by the amount of
money expressed on the lien waiver form. The lien waiver
forms were just that--printed forms on which each time,
the date, the amount of money paid and the signature of
Fillbach was entered. This is the reason District Court
construed the lien waiver forms to be merely receipts for
money paid and nothing more, for that is what they were; and
Big Sky was fully aware of this under its arrangements with
Inland and all the subcontractors. In fact, when Fillbach's
financial trouble began to emerge, Inland not only controlled
the employees, but delivered checks to Fillbach's suppliers
as co-payees on the checks. Thus, there were no possible
lien claimants except Fillbach for the work done by Fillbach.
From this it appears the District Court was correct in
determining 31 checks supporting 37 typed lien waivers for
the exact amount of the checks "tell us that the lien
-12-
waivers were for the amount only set forth in the waivers."
Under this arrangement for payment by Big Sky no detri-
ment can be shown to have been suffered by Big Sky if the
lien waivers are regarded for what they were, receipts for
the amounts stated. Big Sky thereupon paid Inland only
those amounts, plus the 20 percent agreed on between Inland
and Big Sky. Further, Big Sky is not in the situation of an
owner who contracts a building for a specified amount, which
he pays and later finds the builder has not paid suppliers
or subcontractors. In relying on the lien waivers here, Big
Sky was paying out only the amounts shown to have been paid
by Inland. In establishing that course of dealing, Big Sky
itself treated the lien waivers only as receipts and waivers
for the amounts stated. Significantly, not a single witness
from Big Sky appeared to dispute this. By tabulating its own
records, Big Sky at any time could have determined Fillbach
had not been fully paid. Fillbach in his claim has given
Big Sky full credit for monies he received from Inland. It
would be a gross inequity in these circumstances, if the
form language on the lien waivers was to be used to prevent
Fillbach from being paid the full contract amount for his
completed job.
Moreover, the lien waiver forms are invalid as full and
final waivers, because there is no consideration to support
them. The amount paid Fillbach under each lien waiver
instrument is the exact amount set forth in the form. The
District Court was correct in construing each lien waiver to
extend only to the dollar amounts paid. Big Sky has not been
damaged in any respect beyond these amounts.
In Giammarino v. J. W. Caldeway Construction Company
i ,,d
'
@5Lismx? 1934), 72 S.W.2d 159, the lien claimant, a subcon-
tractor, had a plastering work contract in the amount of
-13-
$550. After completion of the work, the general contractor
gave the lien claimant a check for $250 in part payment, in
return for which the lien claimant executed a document in
which he waived any and all lien rights to which he was
entitled. The check which claimant had received was returned
unpaid upon presentation to the contractor's bank. Meanwhile,
the owner of the property, when the claimant's waiver was
exhibited to him, paid the general contractor $250 in reliance
thereon. In the claimant's action to establish a lien, the
owner interposed the waiver as a release. The trial court allowed
the owner a credit for the $250 paid the general contractor
on the strength of the waiver, but gave claimant judgment for the
balance of $300, together with interest, and impressed a
lien on the property. The Missouri Supreme Court affirmed
staying :
"Appellants insist here that the Court
below erred in adjudging respondent
entitled to a mechanic's lien against
their property because respondent
waived his right to such lien by
executing a lien waiver before mentioned.
It is manifest, however, that such
lien waiver was ineffective, for want
of any consideration to support it, except
insofar as the appellants in reliance
upon such lien waiver, made payment
to the construction company. 40 C.J.
314, 340. Since the court allowed
appellants credit for the payment of
$250 made by them to the construction
company, they have no grounds for complaint
on account of such lien waiver." 72 S.W.
2d at 160.
That decision was reaffirmed in Missouri in the case of
,+,
#
St. Louis Flexicore, Inc. v. Lintzenich ( W k s - s e u r i 19671, 414
S.W.2d 787, 790. In that case, the Missouri Court said:
"However sharp may be the distinction between
waiver and estoppel in other areas of the
law, it is apparent that as applied in recent
mechanic's lien cases, such defenses have
been regarded as virtually synonymous. Instead,
the courts have examined the equities
of the situation in light of the facts,
and have allowed or denied the lien
according to the circumstances involved.
"As those cases demonstrate, the converse
of that principle is likewise true. That
is, the invalidity of the lien waiver may
be successfully asserted by the lien
claimant if the owner or other person
interested has not paid out money or
otherwise changed his position to a
detriment in reliance upon the waiver.
That is the situation in the instant
case. It is undisputed that plaintiff
did not receive full consideration for
the lien waiver it executed .. ."
In United States v. Shea-Adamson Company (U.S.D.C.
Minn. 1937), 21 F. Supp. 831, the trial court refused to
recognize an executed lien waiver unsupported by consideration.
Not to be forgotten is the undisputed evidence also
shows Big Sky is holding back from Inland the sum of $115,000.
Although this case was not tried on that theory, that amount
represents a fund against which Fillbach in this case could
have sought the impression of an equitable (not a contractual)
lien and under the law have been successful. Swinerton and
Walberg Company v. Union Bank (Cal. 1972) , 101 Cal. Rptr.
For these reasons I concur Fillbach is entitled to
recover judgment against defendants, including Big Sky. I
must however, respectfully dissent from the majority opinion
with respect to attorneys fees and the problem of the
"pass-through" expenses.
First, with regard to attorneys fees. The Opinion puts
the District Court in error for following a perfectly normal
and proper procedure in the trial of a cause--accepting a
stipulation agreed to by the parties and within the power of
the parties to make.
Under the stipulation, the parties waived the factual
' ,. 1 I
requirements Of Crncevich -(1975), 168 Mont. 113, 541 P.2d
56 and its related cases and placed in the discretion of
District Court the determination as to what the reasonable
attorney fee should be.
"Stipulations are recognized by courts
generally, and may govern in procedural
matters so long as counsel do not thereby
attempt to confer jurisdiction where none
exists, or where jurisdiction has therefore
been lost, or to determine thereby questions
of law or the validity of statutory pro-
visions, or to affect rights other than
those existing between the parties to the
suit in which the stipulation is filed;
thev mav BO SO - - as to waive statutorv
A L L - -
far *
provisions or irregularities." Hale et al.
v. ~elgradeCo.,Ltd., et al. (1925), 75
Mont. 99, 104, 242 P. 425, 426.
By statute, an attorney has the authority to bind his
client in any steps in an action or proceeding by his agree-
ment filed by the clerk or entered upon the minutes of the
court. Section 93-2101, R.C.M. 1947.
This stipulation had a double edge. If plaintiff had
not prevailed in this case, he would have been subject to
an award of attorneys fees aqainst him under the reciprocity
statute. Section 93-8601.1, R.C.M. 1947.
The stipulation had a worthy purpose: otherwise the
court would have been required to take evidence from both
parties as to the value of their services. Most attorneys
find such evidence somewhat embarassing and in fact, self-
serving. It has not been unusual for attorneys to stipulate
that the court, which has some expertise in the field of the
value of attorneys' services rendered, fix the fees without
the necessity of presenting such evidence. When however,
attorneys agree to such a procedure, they should be bound by
the result. Here, appellant, having made such a stipulation,
now wants out. The Opinion lets him out. In doing so, the
Opinion ignores the time-honored appellate rule where the
underlying evidence is absent from the record, the reviewing
court will not inquire as to whether the evidence was sufficient
to sustain the finding of the court, since under appellate
rules, error or prejudice will not be presumed. Valier-Montana
Land and Water Company v. Ries (1940), 109 Mont. 508, 97 P.2d
584; mbeuzn-e Mercantile Company v. Bonds (1944), 115 Mont.
464, 145 P.2d 827. Instead, the Opinion, without a record, in
effect determines the awarded fee was unreasonable. The result
is a prolongation of the litigation, for which as I have said the
District Court is not at fault, and the rule that a party is
bound by his stipulation has not been followed. Lewis v.
Lambros (1920), 58 Mont. 555, 194 P. 152.
This Court, in theory at least, is supervisor of the
legal profession in this State. As such, it should not be
blind to the rates being charged for legal services at the
present. Lawyers with corporate clients are charging rates up
to $75 per hour for their services. Some of the better attorneys
are charging more. Lawyers' fees have climbed to these heights
because (a) there is galloping inflation going on, (b) the
costs of doing business are higher than Everest, and (c) after
the lawyer has paid his costs and expenses of staying in business,
his net income is still subject to state and federal income
taxes.
There are no tax shelters over a lawyer's income for
services. It is all hung out, ready for shearing at a full
40 percent or more for the support of the government, including
this Court.
It is because hourly rates for attorneys have climbed so
high that a substantial portion of our populace is unable to
afford attorneys, and in effect would be denied access to the
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court were it not for the contingent fee system. One imagines
what would have happened in this case, if plaintiff had
walked into his lawyer's office and said, "I've got a problem.
The defendant owes me money and won't pay. I want you to
-
represent me to collect, and if you are successful, I will
pay you at your hourly rate for one day of trial, when we
collect." In that case, plaintiff would still be looking
for an attorney. It is about time some court speaks up about
the advantages the contingent fee system offers to people
who otherwise cannot afford litigation to claim their rights.
The objection to the contingent fee system seems to be the
lawyer might make a profit. Yet who is not in business to
make a profit? Without the profit incentive, we would have
nothing of the advantages of the economic system we so
fondly refer to as "free enterprise". A lawyer is as entitled
to profit as anyone else. The laborer is worthy of his
hire.
Moreover, the value of the plaintiff attorney's services
in this case appear from the face of the record. This was not
an easy case. Plaintiff's attorney picked a narrow legal path
to follow. On one side was a swamp, and on the other, quicksand.
The swamp was the line of authority which holds unless there
is an ambiguity in a written contract, par01 evidence at variance
therewith is not admissible. The quicksand was the case law
which holds a written agreement means what it says. The value
of the attorney's services here can not be computed in terms of
time, unless we are going to reduce the status of the attorney
profession to keeping records of "billable time".
Finally, we should observe the purpose of section 93-8614,
R.C.M. 1947, (which is itself a reciprocity statute) providing
for attorneys fees in the foreclosure of mechanic's liens. The
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obvious intent of the legislature in making such provision
is that a material man, laborer or subcontractor working on
property and enhancing its value who must sue to collect the
value of material or services is entitled to be made whole.
If it is reasonable that in order to make such collection he
must because of financial straits enter into a contingent
fee contract with a competent attorney, then the contingent
fee contract itself is reasonable in the circumstance. The
District Court is entitled to consider that necessarily-incurred
costs to the material man or contract in determining proper
attorney fees. That is precisely what the District Court did
in this case. Justice is not achieved if after the case is
over, the contractor counts his net award and is still perhaps
15 percent short of what he should have received under his
contract in the first place. He will then have received 85
percent justice, but the remaining 15 percent is injustice.
Second, with respect to the "pass-through" expenses.
There is a philosophical and legal inconsistency in an opinion
which on the one hand sends attorney fees back to the District
Court because there is no record to sustain the attorney fees,
but on the other hand refuses to send back the question of the
pass-through expenses because there is no record to sustain such
expenses. Ideally, what is sauce for the goose should be sauce
to the gander.
There appears to me to be substance to plaintiff's claim
that the $19,500 which the District Court reduced from his
claim because of checks received by plaintiff were in Fact "pass-
through" expenses which did not serve to reduce the amount due
plaintiff on his rontract with defendant. Since we are sending
the case back anyway, and since our objective in any event should
be to achieve justice to the fullest extent, I see no reason why
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the question of "pass-through" expenses should not also be
returned for review, to make certain a proper decision has
been made. Otherwise, I suspect, plaintiff will have difficulty
understanding the fine quillets of the law that prevent him
from receiving his claim of $19,500, but deny him his full
attorney ' s fee.
I dissent from the majority opinion on these points.
Mr. Chief Justice Frank I. Haswell dissenting:
I would reverse the judgment of District Court.
The majority find the intentions of the parties that
each lien waiver signed by plaintiff released only the amounts
he received at the time of signing. This finding is based
upon the testimony of plaintiff (subcontractor) and Roger
West (an employee of the general contractor).
In my view the judgment cannot stand for at least three
reasons: (1) the testimony of plaintiff and Roger West is not
admissible in evidence; (2) the clear and unambiguous language
of the lien waiver cannot be altered or modified by an oral
agreement to the contrary; and (3) plaintiff subcontractor is
estopped from asserting his claim here by the reliance of the
owner (Big Sky) on the general lien waiver.
A contract is to be construed to carry out the intentions
of the parties at the time of contracting, if such intentions
are ascertainable. Section 13-702, R.C.M. 1947; Tribble v.
Reely (1976), Mont. , 557 P.2d 813, 33 St.Rep. 1160.
If the contract is ambiguous on its face as to the intentions
of the contracting parties, parol evidence can be used to
ascertain the parties' intentions. McNussen v. Graybeal (1965),
146 Mont. 173, 405 P.2d 447; Lehrkind v. McDonnell (1915), 51
Mont. 343, 153 P. 1012. But where the language of a contract
is clear and explicit that language governs its interpretation.
Section 13-704, R.C.M. 1947. As previously stated by this Court:
"This Court when called upon to interpret the
terms of contracts has held that where the
terms of the contract are clear and unambiguous
the Court will not allow parol evidence.
(Citations omitted.)" Kielmann v. Mogan (1970),
156 Mont. 230, 235, 478 P.2d 275.
When a contract is reduced to writing, the intentions of
the parties are to be determined by reference to the language
employed by them and where the language used is clear, certain
and unambiguous, oral testimony may not be resorted to.
Section 13-705, R.C.M. 1947; Merritt v. Merritt (1974), 165
Mont. 172, 526 P.2d 1375; Safeco Ins. Co. v. Munroe (1974),
165 Mont. 185, 527 P.2d 64.
While parol evidence is admissible to determine the object
of the parties in executing and receiving an instrument, this
rule was subject to limitations and clarifications. McCaull-
Dinsmore Co. v. Stevens (1921), 59 Mont. 206, 194 P. 213.
"The rule, however, is subject to the qualifi-
cation that the purpose thus disclosed must not
be inconsistent with the express terms of the
instrument, for if the parties have clearly
stated their purpose in the instrument itself
no extrinsic evidence will be received to vary
or contradict it. . ."
32A C.J.S. Evidence
In this case the parties clearly expressed their purpose
in the Receipt and Waiver of Mechanics' Lien Rights. Their
clear and explicit purpose as expressed by the language of
this instrument was to waive any and all pre-existing lien
rights up to the date the instrument was signed. The testimony
of plaintiff and Roger West contradicted this express purpose
and should have been excluded. The parties are bound to the
terms of the written lien waiver and cannot contradict or vary
its terms by parol evidence.
In finding of fact No. VII, the District Court held the
lien waivers were solely limited to the amount received at that
time and that waivers did not foreclose plaintiff from an
action to foreclose a mechanics' lien for all amounts in excess
of those received. The District Court in this finding went on
to say ". . . that this manner of proceeding was requested by
the defendant Big Sky of Montana, Inc." In my view the record
is barren of any evidence to support this finding. On the
contrary, the record supports a finding that owner (Big
Sky) was a stranger to this agreement between the subcontractor
and the general contractor.
The oral agreement between subcontractor and general
contractor is unenforceable. The written lien waivers cannot
be modified by any oral agreement between plaintiff and Inland
Construction Company, the general contractor. A contract in
writing can only be modified or altered by another contract in
writing or by an executed oral agreement. Section 13-907,
R.C.M. 1947; Ikovich v. Silver Bow Motor Co. (1945), 117 Mont.
268, 157 P.2d 785. Here, there is neither a written agreement
modifying the lien waivers nor an executed oral agreement.
In my view, plaintiff subcontractor is estopped from
asserting his claim in this suit by the reliance of the owner
(Big Sky) on the general lien waiver. The general rule has
been stated in this language:
"A subcontractor .
. . is estopped to assert
a lien where the owner has settled with the
contractor or made payments to the contractor
.,
. . in reliance on the subcontractor's . . .
receipt for the amount due him, his statement
that he has been paid by the contractor, his
representation that he will not look to the
owner for payment of work performed or materials
furnished, . . ."57 C.J.S. Mechanics' Liens
8230, p. 804.
Here, Big Sky made its payments to the general contractor
because the general contractor presented lien waivers signed by
the subcontractor to it. Big Sky did not know the language
of these waivers had been contradicted by an oral agreement
between the subcontractor and the general contractor. The
subcontractor cannot, at this late date, assert that he signed
a written general waiver of his lien rights, but his intent
was not to waive those rights.
In effect, the majority is obligating the owner of the
condominium project, Big Sky, to pay the excess amounts claimed
by the subcontractor under a course of dealings between
the general contractor and plaintiff subcontractor to extract
monies from the owner Big Sky. I do not believe this Court
should condone such a scheme.
For the foregoing reasons, I would reverse the judgment
of the District Court and enter judgment for the defendant.
..............................
Chief Justice