No. 13620
IN THE SUPREME COURT OF THE STATE OF MONTANA
1977
CARL LAUTERJUNG,
Plaintiff and Appellant,
CARLTON J. JOHNSON,
Defendant and Respondent.
Appeal from: District Court of the Eighteenth Judicial
District,
Honorable W. W. Lessley, Judge presiding.
Counsel of Record:
For Appellant:
Vadala, Schwickert & Hanson, Kalispell, Montana
Randy Schwickert argued, Kalispell, Montana
For Respondent:
Brown, Pepper and Kommers, Bozeman, Montana
William L. Pepper arqued, Bozeman, Montana
Submitted: October 3, 1977
Decided: QEC 18 @fl
Filed: a ~ 2o$ IE~
Mr. Justice Frank I. Haswell delivered the Opinion of the Court.
This case concerns the interpretation and effect of a
partnership dissolution agreement entered into by appellant and
respondent. Appellant brought this action to recover damages
alleged to have been due him under the partnership dissolution
agreement. Respondent counterclaimed for the sum of $2,000.
The District Court entered judgment in favor of respon-
dent for the sum of $2,000 on the grounds that the agreement was
ambiguous and that the ambiguity should be construed against the
appellant in light of the fact that he prepared the agreement.
The District Court found that the damages claimed by
appellant were not of a type for which respondent agreed to be
responsible and were incurred prior to a final testing or inspec-
tion of certain work the partnership was obligated to perform.
The court concluded that respondent was only responsible for ex-
traordinary expenses of the partnership incurred subsequent to
the final testing or inspection. The court further concluded
that damages incurred by appellant subsequent to the said final
testing or inspection were not extraordinary and that appellant
owed respondent the sun of $2,00O,together with interest from
December, 1974.
Following the entry of judgment, appellant moved to amend
the findings of fact, conclusions of law and judgment. Appellant's
motion was denied and he now appeals to this Court.
In the summer, 1973, appellant and respondent entered into
an oral partnership agreement creating the Trails End Construc-
tion Company. The partnership was engaged in the business of con-
structing water, sewer and sanitary sewer lines. In November,
1973, the partnership entered into a contract with Rural Special
Improvement District No. 305 at Big Sky, Montana, to install a
sanitary sewer line. Respondent undertook the responsibility of
supervising all field work involved in installing the sewer
line. Appellant assumed the administrative and managerial duties
on behalf of the partnership.
The partnership began work on the sewer line in November,
1973. By April, 1974, the sewer line was approximately 92% com-
pleted. On April 13, 1974, appellant and respondent agreed to
dissolve their partnership and the agreement in question was signed.
Appellant prepared the dissolution agreement. Prior to the dis-
solution appellant had expressed concern with the quality of the
work on the Big Sky project.
Under the terms of the dissolution agreement, appellant
agreed to complete the construction of the sewer line and to pay
respondent the sum of $5,000. $3,000 of this amount was paid at
the time the agreement was signed and the remaining $2,000 was to
have been paid at the time the partnership received final payment
from Rural Special Improvement ~istrictNo. 305. The $2,000 pay-
ment was not made and is the basis for respondent's counterclaim.
The agreement provided as follows in regard to the com-
pletion of Rural Special Improvement District No. 305:
"It is further agreed that Lauterjung will be
solely responsible for all existing liabilities
of the partnership with the exception of Rural
Special Improvement District #305 located in
Gallatin and Madison Counties, Montana. With
regard to R.S.I.D. 305 it is agreed that Lauter-
jung will complete the work required on said
project but due to the fact that Johnson has
previously been primarily involved in the project
and due to the fact that there may be required a
testing of the installation involved in this pro-
ject; if such testing or inspection shows a de-
ficiency which results in expense which normally
would not have been incurred as a part of said
project, it is agreed that the parties shall share
such expense equally."
As a result of the continuing testing and inspection of
the project, deficiencies were revealed which allegedly resulted
in abnormal expenses totaling $15,791.64. Appellant demanded
one-half of this amount or $7,895.82 from respondent on March 22,
1975. Following respondent's failure to respond this action
was commenced.
Two issues are before this Court upon appeal:
(1) Whether the evidence supports the ~istrictCourt's
finding of fact and conclusion of law that the dissolution agree-
ment was ambiguous concerning the meaning of the terms "testing
or inspection".
(2) Whether the evidence supports the District Court's
findings of fact and conclusions of law that respondent's lia-
bility under the dissolution agreement was only for certain ex-
traordinary partnership expenses arising as a result of a final
testing or inspection.
This Court recently stated in Luppold v. Lewis,
Mont. , 563 P.2d 538, 540, 34 St.Rep. 227 (1977), that:
"When reviewing findings of fact and conclusions of
law of a district court, sitting without a jury,
this Court has repeatedly held such findings and
conclusions will not be disturbed if supported by
substantial evidence and by the law. Compton v.
Alcorn, 10nt
4 ., 557 P.2d 292, 33 St.Rep.
1186 (1976); Brady v. State Highway Cornm'n, 163
Mont. 416, 517 P.2d 738; Timerman v. Gabriel,
155 Mont. 294, 470 P.2d 528; Wash. Water Power Co.
v. Morgan Electric Co., 152 Mont. 126, 448 P.2d
683. When reviewing evidence it will be viewed
in the light most favorable to the prevailing
party in the district court, and the credibility
of witnesses and the weight assigned to their testi-
mony is for the determination of the district court
in a nonjury trial. (Citations omitted.) "
The crux of appellant's first issue is a determination of
whether that portion of the dissolution agreement dealing with the
testing and inspection of the Big Sky job is ambiguous. Appel-
lant specifically takes issue with the District Court's finding
that the phrase " * * * if such testing or inspection shows a de-
ficiency which results in expense which normally would not have
been incurred as a part of said project, it is agreed that the
parties shall share such expense equally" is ambiguous. Appellant
argues that the testing or inspection referred to is the interim
testing. Respondent, however, argues that his liability, if any,
arose as a result of a final testing of the project.
We find an abundance of substantial evidence in the record
which supports the District Court's finding of ambiguity. Appel-
lant's Exhibit W is a copy of the job specifications prepared for
1
the Big Sky job. A reading of these specifications clearly re-
veals that periodic tests and inspections as well as a final test
were contemplated. Several types of tests were required to be
performed at various stages in the construction. Appellant him-
self testified that his understanding of the term inspection meant
that the owner or his engineer had the right to inspect the mater-
ials and workmanship at any time during construction. It is clear
therefore that the dissolution agreement is ambiguous in regard
to defining which inspection triggered respondent's duty to share
the cost of modifications or corrections to the sewer line.
The core of appellant's second issue is a determination
of whether the District Court correctly ruled that respondent was
responsible for extraordinary partnership expenses arising as a
result of the final test or inspection only.
In cases of uncertainty as to the meaning of a contract
this Court has repeatedly followed the rule that the contract
should be interpreted most strongly against the party who caused
the uncertainty to exist. Section 13-720, R.C.M. 1947; Miller
v. Walter, 165 Mont. 221, 527 P.2d 240; Miller v. Meredith, ill
and Whitfield, 149 Mont. 125, 423 P.2d 595. Appellant drafted
the dissolution agreement so we must construe its terms most
strongly against him in determining the intent of the parties.
The District Court ruled that the parties intended that
appellant and respondent share the cost of modification or repair
of the sewer line which was required after final inspection.
Appellant's argument that the testing and inspection contemplated
by the parties was an interim testing simply was not accepted
by the District Court. Substantial evidence is found in the
record to support this ruling. Respondent testified concerning
his understanding of the dissolution agreement:
"Q. Did you have any discussions with the Plain-
tiff concerning the meaning of that language at
the time you signed it? A. I asked him about it
and he just clarified what I had already thought.
"Q. What were the substances of those discussions?
Just summarize it. A. Well, I asked him what it
meant and what it involved. And he said that we
had to do a lot of work after the final inspection.
He expected me to help him do half of it, which I
agreed to do.
"Q. Was it your understanding that he agreed to
finish the job? A. Yes.
"Q. And the words 'Testing and Inspection' used
in that paragraph, what did Mr. Lauterjung indicate
to you that they meant? A. Well, the testing and
final inspection before he sold it to Big Sky.
"Q. Did he state that to you? A. Yes. It has
been a long time, but I am positive it was."
Furthermore, on cross-examination, appellant himself ad-
mitted that:
"Q. he language 'testing', Mr. Lauterjung, that
implies a final testing; is that not correct? A.
Yes. I'
The judgment of the District Court is affirmed.
Justice