No. 81-319
I N THE SUPREME COURT OF THE STATE OF MONTANA
1983
EDWARD ROBERTUS & TIM ROBERTUS,
d / b / a ROBERTUS BROTHERS, a p a r t n e r s h i p ,
P l a i n t i f f s and Respondents,
-vs-
ROBERT CANDEE
Defendant and A p p e l l a n t .
1 from D i s t r i c t Court of t h e S i x t e e n t h J u d i c i a l D i s t r i c t ,
I n a n d f o r t h e County o f Rosebud,
The 1.Ionorable A. B. M a r t i n , J u d g e p r e s i d i n g .
Counsel of Record:
For Appellant:
J o h n S . F o r s y t h e , F o r s y t h , Montana
For Respondents:
Crowley, Haughey, Hanson, Toole & D i e t r i c h ,
B i l l i n g s , Montana
S u b m i t t e d on B r i e f s : June 30, 1983
Decided: August 2 5 , 1983
---
Clerk
Mr. Justice Frank B. Morrison, Jr. delivered the Opinion
of the Court.
Defendant Candee appeals from judgment following trial
without jury in the Sixteenth Judicial Court, Rosebud County,
in this action arising from the lease of Candee's ranchland
by Robertus Brothers.
In February of 1977, Robertuses orally agreed with
Candee to lease 850 acres of broken land from Candee at $20
per acre ($17,000), to be paid for in three installments.
They also agreed that Robertuses would lease about 1,250
acres of unbroken prairie land from Candee, break it and farm
it at their own expense, with Candee receiving a one-quarter
share of the crop, and Robertuses retaining the right to
three or four crop years.
The final lease payment of $8,000 on the 850-acre tract
was due August 1, 1977; Robertuses did not pay it. Their
crop had not been good and they alleged that the oral
agreement allowed them to waive the $8,000 payment in the
event of crop failure. Those crop proceeds properly went to
Robertuses.
In fall of 1977, a dispute arose as to the rental to be
paid on the 1,250-acre tract. The parties attempted to
renegotiate the lease of this tract and a possible buyback by
Candee was discussed. At that time 1,000 acres had been
broken, 680 acres disked, and 320 acres planted in wheat on
the 1,250-acre parcel, all at the expense of the Robertus
Brothers. Because of the renegotiations, the Robertus
Brothers stopped planting and by the time they learned the
buyback had fallen through, it was too late to plant any more
wheat.
In March of 1978, Candee informed Robertuses that they
could no longer enter his land and terminated both lease
agreements. Candee harvested and sold the wheat on the 1,250
acres, netting and keeping $26,180.59.
Robertuses brought suit against Candee on the theory of
unjust enrichment and quantum meruit, alleging that Candee
benefited from their ground-breaking and farming due to his
wrongful eviction of them from the 1,250-acre tract. Candee
counterclaimed as to the unpaid $8,000 on the 850-acre tract.
Evidence taken included the enhanced value of the
newly-broken prairie land, the cost of production and the
value of the wheat.
The District Court held there were two separate oral
leases, one on the 1,250-acre tract, and one on the 850-acre
tract. The court held that though the lease on the
1,250-acre tract was unenforceable, Candee had been unjustly
enriched in the amount of $55,000. This amount included the
increased land value, a three-quarter share of the wheat
crop, and/or the value of the work, seed and fertilizer
supplied by Robertuses. Candee was to pay interest from
March 8, 1978, the day he notified Robertuses they were not
to enter his land. The court also held that Robertuses owed
Candee the final $8,000 payment on the 850-acre tract.
Candee appeals the $55,000 award to Robertuses.
Robertuses do not cross-appeal, but ask for reversal of the
$8,000 award to Candee if this Court changes the District
Court's findings pursuant to Rule 14, M.R.App.Civ.P.
We will modify the award.
Defendant Candee raises four issues on appeal:
1. Whether plaintiffs are entitled to damages under the
theory of unjust enrichment.
2. Whether the District Court awarded a correct measure
of damages.
3. Whether plaintiffs are entitled to interest prior to
judgment .
4. Whether there is substantial evidence in the record
to support the value of the ground-breaking work.
Defendant first argues that unjust enrichment is not an
applicable theory. The trial court found that in this case
the Statute of Frauds precluded plaintiffs from suing on the
lease. Where the labor or money of a person has been
expended in a permanent improvement which enriches the
property of another, under an oral agreement which cannot be
enforced under the Statute of Frauds, that person is entitled
to an award for the amount by which such improvements
unjustly enriches the property. Smith v. Kober (Neb. 1922) ,
189 N.W. 377; Restatement of the Law, Contracts 2d 5375.
However, it is not necessary to reach the question of
whether this agreement is within the Statute of Frauds. For,
where one party repudiates a contract or breaches it by
non-performance, the injured party may seek restitution of
the unjust enrichment whether the Statute of Frauds applies
or not. Gregory v. Peabody (Wash. 1928), 270 P 825;
Restatement of the Law, Contracts 2d 5373; Epleveit v.
Solberg (1946), 119 Mont. 45, 57, 169 P.2d 722, 729. By
defendant's own admission, the plaintiffs were not required
to farm the 1250-acre tract during any particular season.
Thus the trial court was correct in concluding that the
defendant breached and terminated the lease by his actions in
March of 1978. There is no question that plaintiff may seek
restitution for the unjust enrichment conferred upon the
breaching and repudiating defendant in this case.
The second issue raised by the defendant has merit.
Defendant argues that the trial court improperly awarded
guantum meruit damages for plaintiffs' investment in breaking
ground on the 1,250-acre tract, - damages for the v-alue of
and
the improvement to the property. Both measures cannot
properly be awarded.
It is not clear, from the District Court's findings of
fact and conclusions of law, how the $55,000 award was
determined. However, it is apparent that the Court awarded a
composite of enhanced land value, custom work, fixed costs
and/or crop value.
The theory of unjust enrichment requires that a person
who has been unjustly enriched at the expense of another must
make restitution to the other. Restatement of the Law,
Restitution 1 Tulalip Shores, Inc. v. Mortland (1973), 9
Wash. App. 271, 511 P.2d 1402; 66 Am.Jur.2d Restitution and
Implied Contracts (53 (1973). The measure of this equitable
restitution interest is either the quantum meruit value of
plaintiff's labor and materials -
or the value of the
enhancement to the defendant's property. Restatement of the
Law, Contracts 2d S371; 12 Williston, Contracts 51480. To
award both would be to give double damages.
In this case the quantum meruit measure of damages would
be the market rate for the custom work of ground breaking,
fertilizing and planting and the cost of fertilizer and seed.
Such measure was found by the trial court to be $29,479.61.
The enhancement measure would be the net value of the
unharvested crop ($26,180.59) together with the increased
value in the 1,000 acres attributable to the ground breaking.
There may be cases where the enhancement to the
defendant's property will be far less than the quantum meruit
value of the plaintiff's efforts. For example, where the
improvement did not enhance the value of the property but did
result in a pecuniary saving to the defendant, the
enhancement measure would not reflect the unjust enrichment.
Conversely, there may be cases where the value of the
enhancement greatly exceeds the cost of the improvement, as
in this case.
Thus the rule has evolved that the proper measure of
damages in unjust enrichment should be the greater of the two
measures. Restatement of Law, Contracts 2d 5371 comment b;
12 Williston, Contracts 51480.
We adopt this rule. But this rule must be tempered with
the idea that it is only so much of the enrichment which is
unjust that may be awarded the plaintiff. Madrid v. Spears
(10th Cir. 1957), 250 F.2d 51, 54. For example, the cost of
surveying a tract of land into lots may be $5,000, while the
total value of the subdivided lots may be $50,000 greater
than the undivided tract. The landowner is justly entitled
to the majority of the increase in value for his risk, idea,
decision making and development activity. He is only
unjustly enriched to the extent that the unpaid surveyor
contributed to or caused the increase.
In this case the 1,000 acres of broken ground
experienced an increase in market value of as much as
$168,000, while the cost of all labor and materials used in
the ground breaking was no more than $29,479.61. Part of the
increase in value of the property is attributable to the
property owner's risk and decision making in a real estate
investment, part is attributable to other improvements to the
property and part is attributable to plaintiffs' ground
breaking. But it is only the latter part that the defendant
is not entitled to, for which he has been unjustly enriched.
It would be very difficult to determine exactly how much
of the $168,000 increase is attributable to the ground
breaking. However, in an activity such as ground breaking
where all of the cost of the activity directly results in the
improvement, the reasonable cost of the activity will give a
court of equity a fair indication of the enhancement value
attributable to such activity. Acc. Madrid v. Spears (10th
Cir. 1957), 250 F.2d 51, 54.
In this calculation we will use the figures in
plaintiffs' exhibit 11, which were found by the trial court
to be the cost of plaintiffs' activities. Since all of the
disking and tooling with the exception of the fertilizing and
seeding directly resulted in improvement to the property, the
cost of the gound breaking appears to be as follows:
Disking 680 ac. 3 times 2,040 ac.
320 ac. 1 time 320
2,360 ac. @ 6.23 = $14,702.80
Tool bar 320 ac 3 times 960 ac. @ 3.91 = $ 3,753.60
Based on this calculation we will assume that the value
of the enhancement to the defendant's property attributable
to the ground breaking activity is also $18,456.40. In
addition, the plaintiffs improved defendant's property to the
extent of the value of the unharvested wheat crop, which the
trial court found to be $26,180.59. We conclude that the
total unjust enrichment as measured by the enhancement to
defendant's property is equitably valued at $44,636.99. As
this amount is greater than the $29,479.61 quantum meruit
measure of unjust enrichment, it is the proper award in this
case.
Defendant next challenges the prejudgment interest
award. The applicable statute is section 27-1-211, MCA, which
provides for recovery of interest where a person is "entitled
to recover damages certain or capable of being made certain
by calculation." In this case there was no ascertained or
ascertainable amount where the plaintiff sought, in a court
of equity, restitution for an unquantified measure of unjust
enrichment. The trial court erred in awarding prejudgment
interest .
Finally defendant argues there is insufficient evidence
to support the value of the ground breaking work found by the
trial court. Only insofar as the value of the ground
breaking work was used to approximate the enhancement in
property value attributable to such work does this question
remain an issue.
The trial court found plaintiffs' work to be fairly
valued by the plaintiffs' expert using a computer calculation
based on the type of equipment used, the number of acres
involved and the number of applications of the equipment to
the acreage, all of which were testified to at trial.
Defendant challenges the finding, contending that the
foundation for the data and method was insufficient, the
assumptions used in the calculation were based on conflicting
evidence, and the calculation improperly includes a measure
of prof it.
Defendant's arguments are unpersuasive. This Court will
not overturn findings of fact supported by substantial
evidence. Toeckes v. Baker (1980), Mont . , 611
P.2d 609, 37 St.Rep. 948; Morgen & Oswood Const. Co. v. Big
Sky of Montana (1976), 171 Mont. 268, 275, 557 P.2d 1017,
1021.
Where a trial court's findings are based upon
substantial though conflicting evidence they will not be
disturbed on appeal unless there is a clear preponderance of
evidence against such findings. Cameron v. Cameron (1978),
179 Mont. 219, 587 P.2d 939.
The trial court properly considered the plaintiffs'
expert testimony and exhibits which were based on assumptions
in evidence. The profit margin incorporated into the
calculation is also proper since the cost of services for
purposes of unjust enrichment is the market value of
replacement services including the profit earned by those
rendering the service. In this case, the actual cost of the
labor to the plaintiff is irrelevant except as it
demonstrates the replacement cost of such labor on the
market.
Pursuant to Rule 14 of the Montana Rules of Appellate
Civil Procedure, plaintiffs ask this Court to review the
trial court's award of $8,000.00 plus interest to the
Defendant on the 850-acre lease. Plaintiffs did not
cross-appeal this ruling and therefore the judgment cannot be
reviewed. Although Rule 14 provides for review by
cross-assignment of error, this does not eliminate the
necessity for cross-appeal by a respondent who seeks review
of rulings on matters separate and distinct from those sought
to be reviewed by appellants. Johnson v. Tindall (1981),
Mont . , 635 P.2d 266, 38 St.Rep. 1763; Francisco
v. Francisco (1948), 120 Mont. 468, 470, 191 P.2d 317, 319.
The trial court found that the 850-acre lease was
separate from the 1,250-acre lease. Therefore, a challenge
to the amount owing on the separate lease raises an issue
which is clearly separate and distinct from the issues raised
on appeal by defendant.
The judgment and award in this cause is vacated and this
case is remanded to the District Court with instruction to
enter judgment in accordance with this opinion.
W e concur:
s,&~,&w 4,
Chief JusYick