No. 13405
I N T E SUPREME COURT O THE STATE O M N A A
H F F OTN
1977
JACK KEARNS,
P l a i n t i f f and R e s p o n d e n t ,
McINTYRE CONSTRUCTION COMPANY, a c o r p o r a t i o n
and S. BIRCH I N C . , a c o r p o r a t i o n ,
D e f e n d a n t s and A p p e l l a n t s .
A p p e a l from: D i s t r i c t C o u r t o f t h e Second J u d i c i a l D i s t r i c t ,
Honorable Arnold Olsen, Judge p r e s i d i n g .
C o u n s e l o f Record:
For Appellants:
J a r d i n e , S t e p h e n s o n , B l e w e t t and Weaver, G r e a t F a l l s ,
Montana
A l e x a n d e r B l e w e t t a r g u e d , Great F a l l s , Montana
For Respondent:
C o r e t t e , S m i t h a n d Dean, B u t t e , Montana
K e n d r i c k S m i t h a r g u e d , B u t t e , Montana
Submitted: March 1 7 , 1977
Decided :'JUL 2 8 1977
Filed:
< j i 2,~,-, ~'971
Mr. Justice Gene B. Daly delivered the Opinion of the Court:
Defendants appeal from the final judgment of the district
court, Silver Bow County. The district court, sitting without a
jury, found for plaintiff and decreed that plaintiff recover from
defendants the full amount of plaintiff's alleged damages, $9,160.01,
with interest, plus costs in the amount of $19.40.
Plaintiff brought this action to recover money damages
for injuries purportedly caused by defendants to plaintiff's real
and personal property. The injuries occurred on a ranch near
Melrose, Montana, owned by plaintiff. A portion of the ranch was
condemned by the State of Montana for the purpose of constructing
a highway. Defendants, acting in a joint venture, contracted with
the State Department of Highways, to construct the new highway.
To complete its highway construction contract, it was necessary
for defendants to obtain quantities of gravel and borrow (earth
taken from one location to be used for fill at another location).
Defendants entered into two written contracts with plain-
tiff. The first contract, executed on May 17, 1972, hereinafter
referred to as the gravel agreement, gave defendants the right to
remove rock, gravel, sand and earth from plaintiff's land for the
price of 4$ per ton. The contract specified: (1) The area on
plaintiff's land from which these materials were to be taken, ( 2 )
granted defendants the right of ingress and egress to remove these
materials, and (3) that defendants could extract as much gravel
material from plaintiff's property as they deemed necessary to
satisfy their construction needs, with a required minimum quantity
of 110,000 tons.
The second contract, apparently executed on May 16, 1972,
hereinafter referred to as the borrow agreement, gave defendants
the right to remove borrow material, consisting of rock, gravel,
silt, sand and earth, from a specified tract of plaintiff's land
for the price of 26 per cubic yard. The contract granted defendants
the right of ingress and egress to extract as much borrow material
as defendants deemed necessary to satisfy their construction needs.
Defendants, as additional consideration, agreed to provide the
services of land scrapers, levelers and rippers for a specified
period of time.
This action was commenced on September 4, 1974, when
plaintiff filed his original complaint. The original complaint
sought to recover money damages in the amount of $16,611.90, plus
costs. Subsequent to the filing of the original complaint, plain-
tiff and defendants settled certain claims which were asserted.
On March 21, 1975, plaintiff filed an amended complaint, recog-
nizing and acknowledging defendants had paid to plaintiff the sum
of $3,295.90, and sought further money damages in the following
amounts :
"6 .
"That in addition to the amount of $288.00
due from Defendants to Plaintiff as alleged in
Paragraph 5, there are other sums due by reason
of damages caused by Defendants to Plaintiff as
follows:
"a. Defendants have failed to restore
the Plaintiff's fields where they were cut
down and damaged by Defendants' trucks;
"b. Defendants damaged a crossing-pipe
belonging to Plaintiff when a fuel truck
got stuck;
"c. Defendants cut, removed, and de-
stroyed a 12" irrigation pipe 40' long, and
in attempting to repair the irrigation line
made an improper installation resulting in
leaking of the irrigation pipeline and
causing dirt, gravel, and rocks to fill in
said pipeline.
"d. Defendants failed to put gravel on
the ditch road as agreed.
"e. Defendants failed to do repair work
on the lane as agreed.
"f. Defendants damaged 43 acres of land
because Defendants created a situation
where Plaintiff was unable to shut off
irrigation water on said lands which will
require disking, harrowing, and seeding.
"g. Defendants in connection with
backsloping failed, neglected, and re-
fused to do the same in a careful and
prudent manner to the Plaintiff's damage
for necessary backsloping, repair of
fences, and installing drainage facilities.
"h. Defendants carelessly and negli-
gently shut off, or failed to supply,
water for hay production to Plaintiff's
damage.
"And that all of said acts of the Defendants were
to the Plaintiff's additional damage in the amount
of $9,258.68."
Subsequent to the filing of the amended complaint, defen-
dants effected discovery through written interrogatories and
plaintiff's deposition. On April 9 , 1975, defendants filed a
motion to dismiss. The trial court record fails to disclose any
ruling by the district court on this motion.
On April 21, 1975, defendants answered plaintiff's
amended complaint. Defendants' answer generally denied plaintiff's
allegations yet admitted defendants' past indebtedness to plain-
tiff in the amount of $9,611.90, subject to an offset in the
amounts of $6,316.00, which comprised the cost of installing 350
feet of irrigation pipe at $12.00 per lineal foot, and $2,116.00,
the cost for land leveling services performed by defendants.
Defendants further denied any indebtedness alleged in paragraph 6 ,
subsections (a), ( b ) , (c), (f), ( g ) , and (h) of plaintiff's
amended complaint since those claims were barred by the statute
of limitations, section 93-2607(2), R.C.M. 1947.
On November 12, 1975, defendants filed a motion for summary
judgment pursuant to Rule 56, I4.R.Civ.P. Briefs were submitted
in support of and in opposition to defendants' motion for summary
judgment. On January 9, 1976, the district court issued its order
summarily denying defendants' motion. The district court failed
to file any opinion or memorandum in support of its order denying
defendants' motion for summary judgment.
On January 19, 1976, plaintiff filed a motion to amend
his amended complaint. The motion specifically sought amendment
of subsections (a), (b), (c), (f), (g) and (h) of paragraph 6 of
the amended complaint. The district court heard the motion to
amend the amended complaint on the morning of trial, January 26,
1976. Defendants objected to any amendment of the amended complaint
on the grounds the original complaint and the first amended com-
plaint sought recovery on a tort theory and not on a contract
theory, which was the effect of the proposed amendments. Defendants
contended the purpose of the amendments was to overcome the obstacle
of the statute of limitations, the basis for defendants' motion
for summary judgment. Plaintiff resisted defendants' objections
on the grounds the doctrine of implied provision of written con-
tracts and the doctrine of third-party beneficiary contracts
supported the motion to amend.
On January 26, 1976, this cause went to trial on the
legal theories set forth in the amended complaint, as further
amended by the motion to amend. At the conclusion of trial, both
parties submitted proposed findings of fact and conclusions of
law. On May 6, 1976, the district court entered judgment in
favor of plaintiff, decreeing that plaintiff recover $9,160.01,
with interest accruing on item (g) ($667.00) from October 1, 1973,
while interest on all other items ($8,493.01), was to accrue
"from at least October, 1972, (some of the Items having been in
May and June of the same year)". The amount sought as damages in
subsection (b) of paragraph 6 is excluded from the judgment, defend-
ants having voluntarily paid the sum of $98.67 to plaintiff.
In its findings of fact and conclusions of law the district
court held the gravel and borrow agreements, when reasonably
construed and interpreted, contained the implied obligation that
defendants were to use reasonable care in working in and upon
plaintiff's ranch; to leave the ranch premises in good condition;
and to refrain from unreasonably damaging plaintiff's land. The
district court concluded defendants had breached express contracts,
implied contracts and third-party beneficiary contracts, entitling
plaintiff to full recovery for his damages.
Defendants present five issues for review:
1. Whether the district court erred when it failed to
grant defendants' motion for summary judgment?
2. Whether the district court erred when it permitted
plaintiff to amend his previously amended complaint on the day of
trial?
3. Whether there was sufficient evidence to support the
district court's findings of fact, conclusions of law and judgment?
4. Whether the district court erred in entering findings
of fact, conclusions of law and judgment in plaintiff's favor on
particular claims when there were no pleadings to support such
findings, conclusions and judgment?
5. Whether the district court erred in its rulings on
the admissibility of the following evidence:
a) Admitting into evidence a letter from plaintiff's
counsel to defendants' counsel which specified the alleged damages
and their respective estimated monetary worth.
b) Allowing plaintiff's testimony adopting the estimates
embodied in the letter.
c) Admitting into evidence a copy of a written estimate
of damages when the preparer of the estimate was not present in
court during the trial.
d) Allowing plaintiff's testimony adopting the written
estimate of damages.
e) Allowing plaintiff to testify to an estimate of
damages, the estimate was in the form of an out-of-court oral
statement by a third party, and allowing plaintiff's testimony
adopting the estimate.
f) Admitting par01 evidence to alter the terms of the
gravel and borrow agreements.
Defendants inittally contend the district court erred in
denying defendants' motion for summary judgment on the claims
asserted in subsections (c), (£1 and (h) of paragraph 6 of the
amended complaint. Defendants' grounds for seeking summary judg-
ment were: (1) The pleadings, answers to interrogatories and
plaintiff's deposition failed to establish that the claims set
forth in subsections (c), (f) and (h) were based upon any breach
of an agreement or contract, but were plead in tort; (2) the
alleged damages were not incurred within two years of the filing
of the action; (3) the claims were barred by section 93-2607(2),
R.C.M. 1947, which provides:
"Two-year limitation. Within two years:
"2. An action for injury to or for waste or
trespass on real or personal property; provided
that, when the waste, trespass or injury is
committed by reason of underground work upon any
mining claim or seismic exploration, location,
spacing, drilling, equipping, producing, or other
operation related to exploration or production of
oil, gas, water, geothermal, or other minerals,
the cause of action shall not be deemed to have
accrued until the discovery by the aggrieved
party of the facts constituting such waste,
trespass, or injury."
Defendants argue plaintiff's amended complaint, answers
to defendants' interrogatories, and deposition all establish
there was no genuine issue of material fact to be determined as
to the claims presented in these subsections and defendants were
entitled to judgment on these claims as a matter of law. Rule 56,
M.R.Civ.P., provided in pertinent part:
" (c) * * * The judgment sought shall be rendered
forthwith if the pleadings, depositions, answers
to interrogatories, and admissions on file show
that there is no genuine issue as to any material
fact and that the moving party is entitled to
judgment as a matter of law."
See Harland v. Anderson, Mont. , 548 P.2d 613, 33 St.Rep.
363, for a discussion of summary judgment under Rule 56, M.R.Civ.P.
The first amended complaint fails to specify the claims
asserted in subsections (c), (f) and (h) are based on a contract
theory of recovery. The plain meaning of the language would indi-
cate that recovery was sought for the tortious or negligent acts
of defendants. The first specific indication plaintiff sought
recovery based upon a contract theory is found in plaintiff's
motion to amend the amended complaint. However, these secondary
amendments cannot be considered when reviewing the merits of
defendants' motion for summary judgment, since they were filed
subsequent to the district court's summary ruling denying defendants'
motion for summary judgment.
Defendants refer to plaintiff's answers to defendants'
interrogatories and the deposition of plaintiff in support of
their contention the statute of limitations is a bar to the claims
in subsections (c), (f) and (h). Plaintiff stated there was no
contract between plaintiff and defendants for the installation of
irrigation pipeline (item (c) of paragraph 6). Plaintiff's answers
to defendants' interrogatories and the deposition of plaintiff
established there was no contract between plaintiff and defendants
upon which plaintiff could base his claim for flood damage to hay
fields and the loss of hay production (items (f) and (h) of
paragraph 61, but that plaintiff was seeking recovery on the theory
defendants had negligently controlled the source of irrigation
waters during construction. Plaintiff's answers to defendants'
interrogatories further established the damages allegedly caused
by defendants occurred in May or June of 1972, more than two years
prior to the filing of plaintiff's original complaint.
After a careful review of the district court record, we
find the pleadings, depositions, answers to interrogatories and
admissions show there was no genuine issue of material fact and
defendants were entitled to judgment as a matter of law on the
claims asserted in subsections (c), (£1 and (h) of paragraph 6 of
the amended complaint. Accordingly, the portion of the district
court judgment decreeing that plaintiff recover damages in the
amounts of $1,553.65 for item (c), $1,417.00 for item ( 5 ) and
$3,000.00 for item (h) is vacated and the claims dismissed.
Defendants' second issue attacks the district court's
granting of plaintiff's motion to amend the amended complaint on
the morning of trial. Defendants contend the amendments "changed
the issues to be tried from those of negligence to those of con-
tract" and resulted in defendants having to prepare an entirely
different defense.
Rule 15, M.R.Civ.P., provides:
"Rule 15. Amended and supplemental pleadings.
"(a) AMENDMENTS. A party may amend his
pleading once as a matter of course at any time
before a responsive pleading is served or, if the
pleading is one to which no responsive pleading
is permitted and the action has not been placed
upon the trial calendar, he may so amend it at any
time within 20 days after it is served. Otherwise
a party may amend his pleading only by leave of
court or by written consent of the adverse party;
and leave shall be freely given when justice so
requires. A party shall plead in response to an
amended pleading within the time remaining for
response to the original pleading or within 10
days after service of the amended pleading, which-
ever period may be the longer, unless the court
otherwise orders." (Emphasis added.)
Defendants cite McGuire v. Nelson, 162 Mont. 37, 42, 508
P.2d 558, for the proposition a plaintiff is denied the right to
amend his complaint when the amendments materially change the
theory of recovery and prejudice defendant by denying defendant
sufficient time for preparation of a defense. McGuire held:
"Although Rule 15 (a) M.R.Civ.P., establishes
that leave to amend shall be freely granted,
amendments should not be allowed where the
theory presented by the amendments is totally
inapplicable to the case * * * " . 162 Mont. 42
In McGuire plaintiff initially sought recovery on a negli-
gence theory. Shortly before trial plaintiff sought to amend his
complaint seeking recovery on a breach of warranty theory. This
Court reversed the district court and denied plaintiff leave to
amend his complaint because of the basic inconsistency between a
negligence action and a breach of warranty action and the prejudice
incurred by defendant as a result of the amendments.
The facts in the present action do not present a case of
substantial prejudice incurred by defendants. The motion to amend
the amended complaint was filed on January 19, 1976, one week
prior to the date of trial, and defendants were duly notified of
plaintiff's intent to amend. The effect of the amendments was
to change the basis of recovery on particular claims from tort to
contract. However, some of the claims had previously been plead
on the theory of recovery based on contract and no additional facts
or agreements between the parties were interjected by the amendments
Defendants' recourse to any prejudicial effect from the late filing
of the amendments was to seek a continuance for the purpose of
preparing their case. The trial record fails to disclose any
motion by defendants for a continuance and the element of surprise
is clearly absent. See Mitchell v. Mitchell, Mont . , 545
P.2d 657, 33 St.Rep. 73.
Therefore, we hold the district court's granting of plain-
tiff's motion to amend the amended complaint was not an abuse of
discretion.
ÿ he third and fourth issues challenge the sufficiency of
the pleadings and the evidence the district court relied upon in
its findings of fact, conclusions of law and judgment. The function
of this Court is to determine whether there is sufficient evidence
to support the district court's findings and those findings will
not be set aside unless there is a clear preponderance of evidence
against them. Crncevich v. Georgetown Recreation Corp., 168 Mont.
113, 541 P.2d 56, 32 St.Rep. 963; Cope v. Cope, 158 Mont. 388,
493 P.2d 336. The judgment of the district court must be sustained
if substantial evidence, viewed in the light of a theory found in
the pleadings, supports the judgment. Hagerty v. Hall, 135 Mont.
276, 340 P.2d 147; State ex rel. Bottomly v. Johnson, 116 Mont. 483,
154 P.2d 262.
Defendants contend the district court erred when it based
its findings of fact, conclusions of law and judgment for the
claims asserted in subsections (a), (d), (e) and (g) on breach of
implied contracts, express contracts and third-party beneficiary
contracts. Defendants argue (1) the bases for recovery relied upon
by the district court were not plead by plaintiff, and (2) the
district court erred when it allowed plaintiff to recover on the
concurrent bases of breach of implied and express contracts.
We note the effect of the amendments to the amended com-
plaint was to conform the basis for recovery on items (a) and (g)
to that of items (d) and (e) previously plead in contract. We
find no deficiency in the final amendments which would deny re-
covery on the grounds of a failure to plead recovery in contract.
Furthermore, there is no clear preponderance of evidence conflict-
ing with the district court's findings of fact, conclusions of law
and judgment on these items. Plaintiff testified as to the value
of his real and personal property, before and after the alleged
damages. These are facts within plaintiff's knowledge and are
clearly admissible testimony. Dooling v. Bright-Holland Co.,
152 Mont. 267, 448 P.2d 749. Estimates of damage repair costs,
prepared by third parties, were likewise submitted to the district
court in support of the award.
Defendants' fifth issue challenges the district court's
rulings on the admissibility of evidence. Our discussion is
premised upon defendants having made timely and specific objections
to each item of evidence raised on review.
The first item of admitted evidence which defendants object
to is the letter from plaintiff's counsel to defendants' counsel
which specified the alleged damages and their respective estimated
monetary worth. Defendants also object to plaintiff's testimony
adopting the written estimate of damages embodied in the letter.
Plaintiff's counsel offered the letter into evidence on the grounds
the letter represented a list of estimated damages, prepared by
plaintiff with the aid of plaintiff's son, an engineer, and sub-
mitted to plaintiff's counsel who transferred the computations to
the letter dated March 21, 1975 and mailed to defendants' counsel.
Although defendants' counsel cross-examined plaintiff on
the subject of the estimate of damages embodied in the letter,
defendants failed to introduce any evidence rebutting either the
authenticity or the materiality of the computations. plaintiff
may testify as to the value of his real and personal property,
before and after the alleged damages as these are facts within
plaintiff's knowledge. We fail to find defendants were substantially
prejudiced when the district court admitted the letter into evidence.
The second item of evidence admitted by the district court
and challenged by defendants is a copy of a written estimate for
the repair and replacement of irrigation pipeline. p his estimate
pertains to item (c) of the amended complaint and our holding vacating
the portion of the district court judgment decreeing that plaintiff
recover damages for item (c) renders any further discussion in that
area moot.
The third item of evidence admitted by the district court
and objected to by defendants is plaintiff's testimony adopting a
third party's out-of-court oral statement estimating damages as to
item (dl, defendants' alleged failure to gravel plaintiff's ditch
road. Plaintiff testified he based his estimate of damages upon
an estimate computed by Eugene Camel, an engineer for Montana
Department of Highways. Mr. Camel testified during the course of
the trial, subsequent to plaintiff's testimony, and defendants were
afforded sufficient opportunity to examine the witness. Defendants
failed to examine Mr. Camel on this subject and failed to introduce
evidence contradicting plaintiff's testimony. We find no error
in the district court's ruling admitting this testimony.
The last item of evidence objected to by defendants is
purported parol evidence, in the form of oral statements made by
third parties and admitted into evidence through plaintiff's testi-
mony. Defendants contend the oral statements altered the terms
of the gravel and borrow agreements and these "varied terms" were
the basis for the district court allowing plaintiff to recover on
items (a) and (g) of paragraph 6 of the amended complaint. Upon
reviewing the transcript of the trial proceedings, in particular
those sections cited in appellants' brief, we note the absence of
any specific objection on the grounds the evidence introduced
violates the provisions of the parol evidence rule. his Court
has repeatedly held that claimed error must be raised in the dis-
trict court and may not be urged for the first time on appeal.
Pickett v. Kyger, 151 Mont. 87, 439 P.2d 57; Bower v. Tebbs, 132
Mont. 146, 314 P.2d 731.
We hold that portion of the district court judgment
decreeing that plaintiff recover damages in the amounts of $1,553.65
for item (c); $1,417.00 for item (f); and $3,000.00 for item (h) is
vacated and the claims dismissed. The balance of the district
court judgment is affirmed.
Justice
F e Concur:
7
-
,
v h i e f Justice