No. 12564
I N T E SUPREME C U T OF THE STATE O M N A A
H OR F OTN
1974
INTERMOUNTAIN ELECTRIC, I N C . ,
P l a i n t i f f and A p p e l l a n t ,
WILLIAM R. BERNDT and BARBARA A . BERNDT,
husband and w i f e , GEORGE A . STUBLAR,
J O H N GARDNER, d /b /a GARDNER CONSTRUCTION
and T O A C. HAGGERTY,
HMS
Defendants and Respondents.
Appeal from: D i s t r i c t Court of t h e Eighteenth J u d i c i a l D i s t r i c t ,
Honorable W . W. L e s s l e y , Judge p r e s i d i n g .
Counsel of Record :
For Appellant :
Drysdale, McLean & S c u l l y , Bozeman, Montana
James A. McLean argued, Bozeman, Montana
For Respondents :
Berg, 0 ' Connell , Angel and Andriolo , Bozeman, Montana
Charles F. Angel argued, Bozeman, Montana
Landoe and Gary, Bozeman, Montana
Submitted: January 15, 1974
Decided : J~E$1
1974
Filed: @6 1 5 t974
Mr. J u s t i c e Frank I . Haswell d e l i v e r e d t h e Opinion of t h e C o u r t .
This a c t i o n involves an attempted foreclosure of a
mechanic's l i e n a g a i n s t a homeowner by a n e l e c t r i c a l s u b c o n t r a c -
tor. The d i s t r i c t c o u r t of G a l l a t i n County, Hon. W. W. L e s s l e y ,
d i s t r i c t judge, s i t t i n g w i t h o u t a j u r y , e n t e r e d f i n d i n g s of f a c t ,
c o n c l u s i o n s of law and judgment f o r t h e d e f e n d a n t homeowners.
On September 8 , 1971, William R . B e r n d t and B a r b a r a A.
B e r n d t , husband and w i f e , e n t e r e d i n t o a w r i t t e n agreement w i t h
Component Development P r o d u c t i o n C o r p o r a t i o n a s c o n t r a c t o r f o r
t h e c o n s t r u c t i o n of a d w e l l i n g house f o r a p r i c e of $21,800. The
agreement and s p e c i f i c a t i o n s provid9d t h a t t h e c o n t r a c t o r would
f u r n i s h a l l l a b o r and s u p p l y a l l e l e c t r i c a l w i r i n g , a t t a c h e d f i x -
t u r e s , and e l e c t r i c a l h e a t , and s p e c i f i c a l l y p r o v i d e d t h a t t h e
c o n t r a c t o r would n o t have a r i g h t t o s u b l e t , t r a n s f e r o r a s s i g n
t h e c o n t r a c t o r any p a r t t h e r e o f ' w i t h o u t t h e p r i o r w r i t t e n c o n s e n t
of t h e homeowners.
I n J a n u a r y , 1972, p l a i n t i f f - s u b c o n t r a c t o r , Intermountain
E l e c t r i c , I n c . e n t e r e d i n t o a v e r b a l agreement w i t h t h e c o n t r a c t o r
f o r i n s t a l l a t i o n of e l e c t r i c a l s e r v i c e and e l e c t r i c a l h e a t i n t h e
house b e i n g c o n s t r u c t e d by t h e c o n t r a c t o r . The d i s t r i c t c o u r t
found t h a t t h e s u b c o n t r a c t o r made no i n q u i r y a s t o whose house
was b e i n g c o n s t r u c t e d o r a s t o t h e e x t e n t o r l i m i t s of t h e con-
t r a c t o r ' s authority. The s u b c o n t r a c t o r d e a l t e x c l u s i v e l y w i t h
the contractor. The homeowners were n o t informed of t h i s a g r e e -
ment n o r d i d t h e y c o n s e n t i n w r i t i n g o r v e r b a l l y .
On J a n u a r y 1 7 , 1972, an employee of t h e e l e c t r i c a l sub-
c o n t r a c t o r began i n s t a l l i n g t h e e l e c t r i c a l s e r v i c e i n t h e o w n e r ' s
house. The equipment was o r i g i n a l l y b i l l e d t o t h e c o n t r a c t o r .
About t h e f i r s t p a r t o f F e b r u a r y t h e employee s u b m i t t e d a b i l l t o
t h e c o n t r a c t o r f o r t h e work done and m a t e r i a l s s u p p l i e d up t o
t h a t t i m e and a t t e m p t e d t o c o l l e c t from t h e c o n t r a c t o r . However,
the contractor communicated to the subcontractor's employee
that it was broke. On February 4, 1972, the subcontractor
left the job when it was only 40% completed. When the sub-
contractor was unable to obtain money from the contractor, he
did not seek out the owners and ask them for payment, nor did he
ever try to find the homeowners and ask if they wanted him to
complete the electrical work.
The homeowners made payments of approximately $15,000
to the contractor under their agreement; these payments were made
in approximately $5,000 installments, the last being made on
December 3 , 1971. The contractor has never requested any addi-
tional monies from the homeowners. After the contractor went
broke the homeowners had to take over the completion of the dwell-
ing house, and in so doing expended in excess of $8,000 in com-
pleting items called for by the plans and specifications in their
agreement with the contractor. In addition thereto, the home-
owners incurred a bill in the amount of $2,038.05 to Service
Electric of Bozeman, Montana, to complete the installation of
electrical service and electrical heat that had been voluntarily
abandoned by the subcontractor. When the homeowners employed
Service Electric to complete the electrical work, they had not
learned the identity of subcontractor.
After being unable to collect against the contractor, the
electrical subcontractor filed a mechanic's lien against the
1947.
owneSpursuant to section 45-501, et seq., R.C.M. / This lien
forclosure action resulted. Plaintiff joined George J. Stublar,
the mortgagee of said property; Thomas C. Haggerty and John
Gardner, d/b/a Gardner Construction, lienholders, as defendants
in this action in addition to the homeowners. The contractor,
Component Development Production Corporation was joined as third-
party defendant.
Following trial on this foreclosure action, the district
court made findings of fact, conclusions of law and granted
judgment in favor of the homeowners. The basis of the district
court's action was that there was no contract, express or implied,
nor any consensual or contractual authority running from the
homeowners to the electrical subcontractor upon which to base a
mechanic's lien. In addition, the court concluded that the sub-
contractor was not entitled to a lien because it wilfully and
voluntarily abandoned its work before there had been substantial
performance of its agreement with the contractor. This appeal
by the subcontractor followed.
The underlying issue upon appeal is whether under the
facts the subcontractor has a valid lien against the homeowner.
We answer in the negative.
The controlling statute is section 45-501, R.C.M. 1947,
which provides in pertinent part:
"Every mechanic, miner, machinist, architect, fore-
man, engineer, builder, lumberman, artisan,
workman, laborer, and any other person, performing
any work and labor upon, or furnishing any material,
machinery, or fixture for, any building * * * upon
complying with the provisions of this chapter,
for his work or labor done, or material, machinery
or fixtures furnished, has a lien upon the property
upon which the work or labor is done or material
is furnished."
Plaintiff disputes the district court's conclusion of
law on the basis that section 45-501, R.C.M. 1947, does not require
a contract to create a mechanic's lien. It contends that all that
is required is the performance of labor or the furnishing of
materials. The lien is created by an implied agency vested in
the general contractor. Green Plbg. & Heating Co. v. Morris,
144 Mont. 234, 395 P.2d 252; Merrigan v. English, 9 Mont. 113,
As pointed out in Glacier State Electric Supply v. Hoyt,
152 Mont. 415, 451 P.2d 90, there is an implied agency vested
in the general contractor. This does not abrogate, however,
the necessity of the requirement that in addition to furnishing
materials and labor, there must be a contract, express or implied,
by the owner of the property before there can be a valid lien.
See also Dewey Lumber Co. v. McQuirk, 96 Mont. 294, 30 P.2d 475.
The subcontractor further argues that although substantial
performance is necessary, there is an exception which allows a
lien to a subcontractor who has failed to complete the work be-
cause of the prime contractor's failure to pay. 57 C.J.S.
Mechanic's Liens, §113(b). It is the homeownersf position, on
the other hand, that one cannot successfully assert a mechanic's
lien upon property where there has only been part performance or
a lack of substantial performance of the work for which the party
claims the lien. 53 Am Jur 2d, Mechanic's Liens, 851; Fidelity
Savings & L. Assfn of Port Arthur v. Baldwin, 416 S.W.2d 482
(Texas 1967).
"Where there has been only a part performance of
the contract by a materialman, it seems clear that
he cannot assert a mechanic's lien for the materials
furnished." 53 Am Jur 2d, Mechanic's Liens, 851.
Under certain circumstances the materialman may be granted
a lien under the exception to the general rule that the contracted
work must be completed. In those instances, however, it is usually
the case where the materialman has substantially completed his
work; or that he was prevented from completing his work by the
breach of the owner or a third party. Fontaine v. Storrie, 45
P.2d 361, 7 C.A.2d 104; green berg,^. M a m h , 167 N.Y.S. 102, 101
Misc. 18, aff'd. 170 N.Y.S. 1083, 184 App.Div. 890. For the sub-
contractor to fall within the exception it must prove that the
contractor's failure to pay was a substantial breach of the con-
tract preventing completion of the work.
The rule as to breach of contract is stated in Corbin
on Contracts, 8946, 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."
This Court said in Gramm v. Insurance Unlimited, 141
Mont. 456, 461, 378 P.2d 662:
" * * * it depends upon the particular facts of
each case whether or not non-payment of an install-
ment 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."
In G r a m this Court affirmed the district court's finding of a
total breach entitling the contractor to a lien where prompt
payment by the owner and time was of the essence. Unlike G r a m ,
there is nothing in the record to suggest that the contractor's
failure to pay actually prevented the subcontractor from complet-
ing the work. In fact there is no evidence to indicate that the
subcontractor was entitled to or had any right to demand any money
from the contractor on the first of February when it submitted
the bill to the contractor. Nor was there any proof that prompt
payment by the contractor and time was of the essence to completion
of the work.
The subcontractor's employee testified that he sent a
billing-for materials and labor to the contractor on the first of
February. No such bill, however, was ever sent to the homeowners
although he knew who the house was being constructed for. When
the contractor did not come forth with the money, the subcontractor
did not go to the homeowners and ask them for payment of the bill,
nor did he ever ask them if they wanted the electrical work com-
pleted. Instead, he voluntarily removed all tools from the premises,
leaving behind materials delivered, and abandoned his work--40%
completed.
This Court, in Fausett v. Blanchard, 154 Mont. 301, 305,
463 P.2d 319, in affirming a judgment foreclosing certain liens
on mining claims, stated:
"In reviewing equity cases, although all evi-
dence is examined, the trial court will not be
reversed if there is substantial evidence which
would justify an inference supporting the judg-
ments." (Citations omitted.)
There is substantial evidence in the present case to
support the district court's judgment denying a mechanic's lien
to the subcontractor for the reason that the subcontractor wilfully
and voluntarily abandoned the installation of electrical services
before there had been substantial performance of its agreement
with the contractor.
We affirm the judgment of the district court.
Justice