NO. 81-193
IN THE SUPREME COURT OF THE STATE OF MONTANA
1981
PETER McPHERSON,
Plaintiff, Respondent and Cross-Appellant,
VS .
TERRY KERR and MOUNTAIN LOGS,
Defendants and Appellants.
Appeal from: District Court of the Fourth Judicial District,
In and for the County of Ravalli
Honorable Jack L. Green, Judge presiding.
Counsel of Record:
For Appellants:
Law Firm of Gerald D. Schultz, Hamilton, Montana
For Respondent:
Larry Persson and Richard A. Weber, Jr., Hamilton, Montana
Submitted on briefs: July 30, 1981
Decided: November 25, 1981
Filed: B O V 2 5 1982'
Mr. Justice John C. Sheehy delivered the Opinion of the Court.
This is an appeal and cross-appeal from a judgment in
the Fourth Judicial District, Ravalli County. After a
hearing without jury, the District Court awarded a joint and
several judgment against the defendants in the sum of $6,000.72,
plus costs. Defendant Terry Kerr does not appeal.
McPherson originally brought this action against Mountain
Logs and Terry Kerr to recover damages he suffered as a
result of an accident involving his semi-trailer in Idaho on
December 7, 1978.
The facts, as found by the District Court, are set
forth below.
McPherson had an ownership or leasehold interest in a
1961 flatbed trailer which he used in his business of hauling
farm products and, occasionally, log homes. He acquired his
interest in the trailer in 1976. At that time, the trailer
was valued at $5,500. On the date of the accident, the
trailer was worth $4,000. In November 1978, McPherson left
his trailer in the possession of Mountain ~ogs--the~istrict
Court concluded that this arrangement constituted a loan for
use. McPherson and Mountain Logs agreed that Mountain Logs
was to use the trailer for the sole purpose of hauling one
load of logs to Sun Valley, Idaho. This trip was completed
without difficulty.
Subsequently, without the knowledge or consent of
McPherson, and against his expressed directions, Mountain
Logs made arrangements for defendant Terry Kerr to transport
a load of logs to California using McPhersonls trailer. On
December 7, 1978, McPhersonls trailer, loaded with logs,
left for California. The trailer was towed by a semi-
tractor owned by Kerr and driven by Gerald Long, an employee
of Kerr. While in transit, an accident occurred on Lost
Trail Pass in Idaho. Long was killed, Kerr's tractor was
demolished, and McPherson's trailer sustained repairable
damages of $2,252.60. The accident and resulting damage to
McPherson's trailer was proximately caused by the negligence
of Gerald Long. Soon after the accident the trailer and the
remnants of the tractor were towed to Missoula at the request
of an adjuster for Kerr's insurance carrier. The towing
bill for McPherson's trailer was $1,100.00. Storage charges
accumulated at the rate of $5.00 per day and on the day of
trial, the storage bill totaled $2,370.
Soon after the accident, McPherson attempted to have
the trailer released from storage so that repairs could be
commenced but was unable to meet the requirement that he
first pay the towing and storage charges. The trailer
therefore remained in storage and McPherson's trucking
operation was temporarily shut down. McPherson purchased a
similarly equipped trailer in the early part of February
1979. The District Court concluded that McPherson acted
with reasonable diligence to mitigate his damages by procuring
occasional hauling jobs, and by replacing the damaged trailer
as soon as possible. It concluded further that due to his
financial situation, it was impossible for him to further
mitigate his damages and the law would not require him to
perform an impossibility.
The District Court originally found that during the two
months between the date of the accident and the purchase of
a new trailer, McPherson had suffered a loss of earnings in
the amount of $3,500. This loss, along with the costs of
towing, storage, and repair, was included in the total
damages awarded to McPherson. On reconsideration, however,
the District Court reduced the award of damages for lost
earnings from $3,500 to $350.
Mountain Logs presents the following issues for review:
1. Is Mountain Logs liable for loss of earnings and
storage charges for property damaged as a result of the
delivery to Kerr when such damages were at least partially
incurred by McPherson's financial inability to remove his
trailer from storage?
2. Is Mountain Logs liable for the towing of McPherson's
property to storage when the towing was ordered done by
defendant Kerr, a third party, to whom the property had been
misdelivered?
McPherson, c r o s s - a p p e l l a n t , p r e s e n t s a third issue:
3. Did the District Court err in amending its judgment
to reduce the award of lost earnings to McPherson from
$3,500 to $350?
We hold, with regard to the first issue, that rllountain
Logs is liable for the storage costs and the lost earnings
sustained by McPherson.
In its brief, Mountain Logs admits liability for all
damages proximately caused by its mishandling of McPherson's
trailer. It then cites section 70-6-204, MCA, for the
proposition that its liability is limited to $4,000, the
value of the trailer. The District Court held that khis
was a loan for use and we see no reason to disturb the
District Court's holding. Section 70-6-204, MCA, therefore,
does not apply. The proper measure of damages in this case
is found in section 27-1-317, MCA, which states:
"For the breach of an obligation not arising from
contract, the measure of damages, except where
otherwise expressly provided by this code, is the
amount which will compensate for all detriment
proximately caused thereby, whether it could have
been anticipated or not."
Mountain Logs contends, however, that even if section
27-1-317, is controlling, McPhersonls recovery, at least
for towing, storage, and repair charges should be limited to
the value of the trailer. Mountain Logs also contends that
McPherson's recovery for lost earnings should not include
time lost due to his financial inability to remove the
trailer from storage and make repairs. These assertions are
based primarily on Spackman v. Ralph M. Parsons Company
(1966), 147 Mont. 500, 414 P.2d 918; Stahl v. Farmer's Union
Oil Company of Richland (1965), 145 Mont. 106, 399 P.2d 763.
These cases are distinguishable.
In Stahl, 399 P.2d at 768, this Court stated that the
limitation of total damages to the value of the property was
proper under the "odd fact situation" presented in that
case. Stahl does not, however, establish an ironclad rule
that recovery is limited to the value of the damaged or
destroyed property.
Spackman, the plaintiff was suing to recover for
damages suffered as a result of the flooding of his basement
with raw sewage. Those portions of Spackman relied upon by
Mountain Logs deal primarily with valuation of property. The
value of the McPhersonls trailer is not questioned on
appeal. Furthermore, there was nothing in Spackman comparable
to the towing and storage charges present in the case at
bar. Spackman, therefore, does not require that McPherson's
damages be limited to the value of the trailer.
In Spackman, this Court stated:
"As for the issue of compensatory damages, the
question is always a difficult one. In tort
actions, the wrongdoer is liable, in general,
for any injury which is the natural and probable
consequence of the wrong. These may include both
the direct and indirect, but reasonably probable,
results of the wrong. Where damage to property
is concerned, the purpose of awarding damages
is to return the party injured to the same, or as
nearly possible the same, condition as he enjoyed
before the injury to his property. The injured
party is to be made as nearly whole as possible--
but not to realize a profit. Compensatory damages
are designed to compensate the injured party for
actual loss or injury--no more, no less." 414
P.2d at 921.
Spackman also establishes the extent of the injured
party's duty to mitigate his damages:
"The duty to reduce or mitigate damages is a
positive one upon the injured person, but it
has limits. The test is: What would an ordinary
prudent person be expected to do if capable,
under the circumstances? . . ."414 P.2d at 921.
The District Court found that McPherson could not remove his
trailer from storage because he was financially unable to
pay the $1,100 towing charge. The trailer remained in
storage at the rate of $5.00 per day until the trial.
The District Court concluded that McPherson acted with
reasonable diligence to mitigate his damages. We agree with
the District Court. No reasonable man could be expected to
expend $1,100 which he doesn't have to mitigate an injury
for which he is not responsible. McPherson is entitled to
the storage fees awarded by the District Court.
Stahl, supra, establishes the rule which governs McPherson's
right to recover lost earnings. Stahl states: "[tlhe
general rule on damages is that the owner can recover for
being deprived of the use of a damaged vehicle only for the
period of time reasonably necessary in making repairs." 399
P.2d at 767. McPherson purchased a replacement trailer
approximately two months after the date of the accident.
This action can be considered "repair" within the context of
Stahl. The District Court concluded that McPherson replaced
the trailer as soon as possible under the circumstances and
we see no reason to disturb that conclusion.
Mountain Logs argues that two months was an unreasonably
long time to make repairs or find a replacement. It maintains
that one month would have been sufficient time. Consequently,
Mountain Logs believes it should be liable for only one
month of storage fees and one month of lost earnings. There
is support for this position in Stahl, 399 P.2d at 768, and in
Cuddy v. United States (1980), 490 F.Supp. 390, 392, where
Judge Russell Smith writes: "[Iln determining the length of
time reasonably necessary to repair an item, the time lost
because of the inability of the owner to pay for repairs or
replacement cannot be counted. [citing Stahl]." By this
opinion, we overrule that portion of Stahl which declares
that recovery cannot be had for damages which accrue as a
result of the injured party's financial inability to mitigate
damages. We adopt, instead, the California rule stated in
Valencia v. Shell Oil Co. (1944), 23 Cal.2d 840, 147 P.2d
"The duty to minimize damages does not require
an injured person to do what is unreasonable or
impracticable, and, consequently, when expenditures
are necessary for minimization of damages, the
duty does not run to a person who is financially
unable to make such expenditures." 147 P.2d at 561.
We now arrive at the second issue: whether Mountain
Logs is liable for the towing charge. This issue presents a
unique problem because defendant Kerr, the only other person
who could possibly be liable for the towing bill, does not
appeal from the judgment of the District Court.
Mountain Logs contends that it should not have been
held jointly and severally liable for the towing charge. It
maintains that when Kerr's insurance adjuster arranged for
the towing, his actions became an intervening cause which
enlarged McPherson's damages through no fault of Mountain
Logs. Mountain Logs apparently believes either that the
towing was unnecessary or that it could have been accomplished
in a less expensive manner. It is contended, therefore,
that Kerr alone should be liable for the $1,100 towing bill.
Mountain Logs' notice of appeal, filed October 31,
1980, indicates that appeal is being taken only from that
portion of the judgment relating to storage charges. (No
issue is raised by respondent as to the effect of a partial
notice of appeal.) We must assume, therefore, that defendant
Kerr, who, incidentally, appeared pro se, was not informed
by the notice of appeal of Mountain Logs' intention to
challenge its responsibility for the towing charge. The
issue is not properly before this Court and therefore, the
District Court's finding of joint and several liability must
stand.
The third and final issue concerns the District Court's
decision to reduce the damages for lost earnings from $3,500
to $350. As indicated earlier in this opinion, McPherson is
entitled to recover lost profits for two months--the time
reasonably required by him to repair or replace his trailer.
The District Court reduced its award without making any new
findings of fact. The only difference between the original
findings and the amended findings is two numbers: the lost
earnings figure and the total recovery figure. The only
explanation for the change is found in the transcript of the
hearing on the motion to amend the judgment. From that
record, it appears that the change was made on the basis of
Cuddy v. United States, supra, which construes Stahl,
supra. As indicated earlier, our opinion in this case
overrules part of Stahl, and for this reason, Cuddy is not
applicable here.
Based on this opinion, we affirm the District Court's
award to McPherson of towing, storage, and repair costs. We
remand the case to the District Court, however, with instructions
to reinstate the original award of $3,500 for lost earnings.
/ Justice (I
We Concur: