No. 13018

I N THE SUPREME COURT OF THE STATE Oh' M N A A OTN

1975

GYKION CONSTKUCTION CO . , .TNC. , P l a i n t i f f and R e s p o n d e n t ,

-vs -

KOBEKT J . SANDERS,

D e f e l ~ d a n tand A p p e l l a n t .

Appeal from: D i s t r i c t Court of t h e Eleventh J u d i c i a l D i s t r i c t , Honorable R o b e r t Sykes, J u d g e p r e s i d i n g .

Counsel of Record:

For Appellant :

H. James Oleson a r g u e d , K a l i s p e l l , Montana

F o r Respondent:

Hash, J e l l i s o n and O ' B r i e n , K a l i s p e l l , Montana Kenneth E. O ' B r i e n a r g u e d , K a l i s p e l l , Montana

Submitted: September 8 , 1975

Decided : 2:; 2 0 Filed : I c. e, M r . J u s t i c e Gene B . Daly d e l i v e r e d t h e Opinion o f t h e C o u r t .

T h i s i s a n a p p e a l from a judgment o f t h e d i s t r i c t c o u r t ,

F l a t h e a d County, i n f a v o r o f p l a i n t i f f Gyrion C o n s t r u c t i o n Co., I n c . i n t h e amount o f $1,200.

On F e b r u a r y 1 7 , 1971, t h e r e s i d e n c e of d e f e n d a n t R o b e r t J. Sanders s u f f e r e d e x t e n s i v e f i r e damage. Sanders' insurance

a g e n t proceeded t o a d j u s t t h e l o s s . In view o f t h e c o l d w e a t h e r

and t h e need f o r immediate r e p a i r o f t h e r e s i d e n c e , t h e a d j u s t o r

contacted p l a i n t i f f , a c o n t r a c t o r , w i t h t h e consent of Sanders.

On F e b r u a r y 1 8 , 1971, Gyrion began r e s t o r a t i o n work on t h e Sanders home. S a n d e r s t e s t i f i e d t h a t he was u n d e r t h e i m p r e s s i o n t h a t Gyrion had been h i r e d by t h e a d j u s t o r , b u t t h e d i s t r i c t c o u r t found t h a t S a n d e r s , by a l l o w i n g Gyri-on t o b e g i n work on h i s home, had

i n f a c t h i r e d Gyrion.

A t t h e t i m e o f t h e f i r e t h e Sanders home was i n s u r e d f o r a maximum $20,000 f i r e l o s s . Because t h e e x t e n t o f damage t o t h e home was unknown u n t i l t o r n down, no e s t i m a t e s were made o r r e -

quested. A t t h e t i m e Gyrion was employed a l l p a r t i e s b e l i e v e d t h e e n t i r e c o s t o f r e p a i r would b e under t h e maximum f i r e l o s s

coverage. Gyrion a g r e e d t o r e p a i r t h e f i r e damage on t h e b a s i s

o f c o s t of l a b o r and m a t e r i a l s p l u s 15%. It a l s o a g r e e d t h a t Sanders c o u l d perform work on t h e r e s i d e n c e and be c r e d i t e d by

Gyrion f o r t h a t work.

Sanders t e s t i f i e d t h a t a s work p r o g r e s s e d h e informed

Gyrion n o t t o exceed t h e $20,000 l i m i t . Gyrion d e n i e d t h i s .

The d i s t r i c t c o u r t made no f i n d i n g on S a n d e r s ' a l l e g e d g e n e r a l l i m i t a t i o n o f c o s t , b u t d i d f i n d t h a t p r i o r t o t h e p a i n t i n g of t h e p r e m i s e s Sanders had n o t i f i e d Gyrion t h a t any p a i n t i n g s h o u l d b e done by Gyrion o n l y i f t h e p a i n t i n g would come w i t h i n t h e maximum c o v e r a g e o f t h e p o l i c y . The r e p a i r work was completed on about A p r i l 30, 1971. During t h e period of r e p a i r i n g t h e home Sanders on s e v e r a l o c c a s i o n s , t o g e t h e r w i t h h i s w i f e , requested information a s t o t h e amount and c o s t of t h e r e p a i r s . However Gyrion f a i l e d t o f u r n i s h any itemized l i s t o r accounting of expenses u n t i l November 1971. A d r a f t from t h e i n s u r a n c e c a r r i e r i n t h e amount of $20,000 was d e l i v e r e d t o Sanders i n June 1971, who immediately endorsed i t and d e l i v e r e d i t t o Gyrion. When Gyrion f i n a l l y d i d send t h e b i l l , i t exceeded t h e maximum i n s u r a n c e coverage ($20,000) i n t h e amount of $4,284.69. Sanders was c r e d i t e d w i t h t h e sum of $939.55 f o r l a b o r performed by him, and was a l s o given c e r t a i n o t h e r u n s p e c i f i e d c r e d i t s , l e a v i n g a b a l a n c e claimed by p l a i n t i f f of $2,914.71, a s due and owing over and above t h e $20,000 i n s u r a n c e coverage. The d i s t r i c t c o u r t found on a quantum meruit b a s i s t h a t p l a i n t i f f was e n t i t l e d t o $1,200 a s t h e r e a s o n a b l e v a l u e of t h e p a i n t i n g , and c o s t s . Defendant a p p e a l s and p l a i n t i f f c r o s s a p p e a l s . A p o r t i o n of t h e d i s t r i c t c o u r t ' s opening s t a t e m e n t and

response by both counsel d e f i n e s t h e i s s u e t r i e d t o t h e c o u r t : ''THE COURT: k A k The i s s u e t o be determined h e r e ; 4b ; is whether o r n o t any work done i n excess of t h e i n s u r a n c e coverage was by agreement and understanding of t h e p a r t i e s t o b e covered by t h e f i r s i n s u r a n c e maximum l i m i t s , o r i f any a d d i t i o n a l amount was t o b e paid by t h e Defendant. N w i s t h a t a c o r r e c t statement o of t h e i s s u e s ? O'BRIE'N: Your Honor, 1 b e l i e v e t h a t i s a c o r r e c t statement of t h e i s s u e s a s we d i s c u s s e d them, I b e l i e v e , i n Chambers, t h a t t h e r e i s no q u a r r e l a s t o t h e amount of work t h a t was done, t h e i s s u e i s whether o r n o t t h e Defendant was l i a b l e t o pay for i t o r whether t h e r e was a $20,000 l i m i t on t h e sum t h e P l a i n t i f f was t o r e c e i v e . "MR. OLESON: That i s c o r r e c t , w i t h what M. 0 ' ~ r i e n u s t r j stated. "THE COURT: Very w e l l , l e t t h e r e c o r d show and on t h a t b a s i s , c a l l your f i r s t w i t n e s s . I t A p o r t i o n of t h e c o u r t ' s f i n d i n g of f a c t No. 3 , f i n d s :

h hat p l a i n t i f f agreed t o r e p a i r s a i d home from t h e f i r e l o s s on t h e b a s i s o f c o s t of l a b o r and m a t e r i a l s p l u s 15%.I ' I t s f i n d i n g of f a c t .No. 7 . s t a t e s : II That p r i o r t o i n s t a l l a t i o n of c e r t a i n bathroom f i x t u r e s , and p r i o r t o t h e p a i n t i n g of s a i d premises, t h e defendant had n o t i f i e d t h e p l a i n t i f f t h a t any p a i n t i n g should be done by t h e p l a i n t i f f only i f t h e same would come w i t h i n t h e maximum coverage of s a i d p o l i c y . 11 The c o u r t ' s f i n d i n g No. 1 2 s e t s f o r t h : hat t h e b i l l i n g exceeded t h e maximum i n s u r a n c e coverage i n t h e amount of $4,284.69. That defendant was c r e d i t e d w i t h t h e sum of $939.55 f o r work and l a b o r performed a s c a r r i e d on p l a i n t i f f ' s r e c o r d s . That i n a d d i t i o n t h e r e t o , defendant was given c e r t a i n o t h e r c r e d i t s , l e a v i n g a b a l a n c e claimed by t h e p l a i n - t i f f of $2,914.71 a s due and owing, and t h e amount over and above t h e maximum $20,000 f i r e l o s s coverage. 1' The d i s t r i c t c o u r t then made t h e s e conclusions of law: "2. That i n view of t h e circumstances, p l a i n t i f f and defendant d i d n o t have an e x p r e s s o r implied con- t r a c t f o r any d e f i n i t e amount, n o r could any such c o n t r a c t have been e n t e r e d i n t o . "3. That a l l c o s t s i n excess of p o l i c y l i m i t s were f o r r e a s o n a b l e and necessary m a t e r i a l s and l a b o r ; b u t t h a t t h e p l a i n t i f f i s e n t i t l e d t o be paid on a quantum meruit b a s i s . That t h e defendant would be u n j u s t l y e n r i c h e d i f he were permitted t o enjoy t h e r e s u l t of a l l of such s e r v i c e s and l a b o r without paying a reasonable and n e c e s s a r y sum f o r same. That a r e a s o n a b l e v a l u e of t h e p a i n t i n g on a quantum meruit b a s i s i s t h e sum o f $2,139.55. That defendant i s e n t i t l e d t o t h e work and l a b o r performed by t h e de- fendant f o r p l a i n t i f f of $939.55, l e a v i n g an amount due and owing p l a i n t i f f by defendant of t h e sum of $1,200." The p a r t i e s a g r e e t h a t p l a i n t i f f proceeded t o work under a c o s t p l u s c o n t r a c t f o r m a t e r i a l and l a b o r p l u s 15%. The d i s t r i c t c o u r t s o found i n i t s f i n d i n g No. 3. Then, t h e c o u r t found i n i t s f i n d i n g N o . 7 t h a t p l a i n t i f f had been n o t i f i e d by defendant n o t t o do t h e p a i n t i n g i f i t would i n c r e a s e t h e c o s t i n excess of p o l i c y limits. The c o u r t f u r t h e r found i n i t s f i n d i n g N o . 12 t h a t defendant had been given a l l c r e d i t s due him by p l a i n t i f f ' s r e c o r d s and r e - duced t h e b i l l i n g from $4,284.69 t o $2,914.71. The amount $2,914.71 was i n excess of t h e p o l i c y l i m i t . The c o u r t ' s conclusion of law No. 2 seems t o s a y , i n view of t h e i s s u e being t r i e d , t h a t t h e r e was no top amount on t h e c o s t plus contract. The l a s t phrase of conclusion of law No. 2, a s t o t h e p o s s i b i l i t y of such a c o n t r a c t , seems t o b e s u r p l u s a g e a s i t would c e r t a i n l y have been p o s s i b l e t o r e s t r i c t t h e c o n t r a c t t o a t o t a l sum of $20,000. Conclusion of law No. 3 f l i e s i n t h e f a c e of t h e f i n d i n g s of t h e c o u r t . W cannot apply quantum meruit t o a l l c o s t s e i n excess of t h e i n s u r a n c e coverage because i t has been determined t h a t t h e p a r t i e s have a c o n t r a c t [ c o s t p l u s 15%] w i t h no agreed upper l i m i t . W e cannot now imply a c o n t r a c t by law. A recovery II on t h e t h e o r y of quantum meruit (which simply means a s much a s he deserves") i s based on a c o n t r a c t implied i n law o r q u a s i - contract. The o b l i g a t i o n i n such a c o n t r a c t a r i s e s n o t from consent of t h e p a r t i e s b u t from t h e law of n a t u r a l j u s t i c e and e q u i t y , and i s based on t h e d o c t r i n e of u n j u s t enrichment. Brown v. Thornton, 150 Mont. 150, 156, 432 P.2d 386. The t r i a l c o u r t found i n i t s f i n d i n g No. 7 , t h a t p l a i n t i f f was s p e c i f i c a l l y i n s t r u c t e d by defendant n o t t o p a i n t t h e premises i f t h e c o s t would overrun t h e $20,000 i n s u r a n c e coverage. There can be no c o n t r a c t implied by law a s t o t h e p a i n t i n g , under t h e p r e s e n t f i n d i n g s of t h e t r i a l c o u r t . W a r e unable t o determine from t h e r e c o r d b e f o r e t h i s e Court t h e amount, excluding t h e painting, of t h e g e n e r a l c o n t r a c t overrun which should be p a i d i n f u l l by defendant. The r e c o r d does n o t r e v e a l whether o r n o t t h e $939.55 p l u s $330.43 c r e d i t s given t o defendant by p l a i n t i f f should p r o p e r l y b e a p p l i e d t o reduce t h e c o s t of p a i n t i n g o r t h e g e n e r a l c o n s t r u c t i o n c o n t r a c t , o r b o t h . Therefore we cannot reform t h e judgment h e r e . The judgment of t h e d i s t r i c t c o u r t i s r e v e r s e d w i t h i n s t r u c t i o n s t o r e c a l c u l a t e t h e amount of t h e judgment i n con- formity with t h i s opinion. This may be done by a h e a r i n g by t h e d i s t r i c t c o u r t o r a new t r i a l , whichever i n t h e d i s c r e t i o n of t h e

W Concur: e

Chief J u s t i c e