KIRBY v KENYON-NOBLE LUMBER CO

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No. 13227 I N THE SUPREME COURT O THE STATE O M N A A F F OTN 1976 JACK KIRBY, P l a i n t i f f and A p p e l l a n t , - -vs KENYON-NOBLE LUMBER CO. , WILLIAM V. OGLE, FRED HOFFMAN, HERBERT C. TOPER and D I C K TEPEL, Defendants and Respondent, and HERBERT C. TOPEL, -VS P l a i n t i f f and Respondent, - JACK A. KIRBY and BARBARA A. KIRBY, Defendants and A p p e l l a n t s . Appeal from: D i s t r i c t Court o f t h e F i f t h J u d i c i a l D i s t r i c t , Honorable W. W. L e s s l e y , Judge p r e s i d i n g . Counsel o f Record: For A p p e l l a n t s : Drysdale, McLean and S c r e n a r , Bozeman, Montana Douglas Drysdale argued, Bozeman, Montana F o r Respondents: Berg, Angel, A n d r i o l o and Morgan, Bozeman, Montana Ben E. Berg argued, Bozeman, Montana Submitted: October 14, 1976 Decided : DEC 2 7 F i l e d : SEC 5.7 876 1976 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 of t h e Court. P l a i n t i f f J a c k Kirby appeals from a judgment of t h e d i s t r i c t c o u r t , G a l l a t i n County, awarding damages f o r breach of c o n t r a c t . Kirby a s s e r t s t h e judgment awarded i s inadequate and c o n f l i c t s w i t h t h e c o u r t ' s own f i n d i n g s and c o n c l u s i o n s . J a c k and Barbara Kirby (Kirby), e n t e r e d i n t o a c o n t r a c t w i t h Kenyon-Noble Lumber Co., Bozeman, Montana ( c o n t r a c t o r ) , on October 20, 1969 t o b u i l d a home on t h e i r p r o p e r t y n e a r Ennis, Montana. The c o n t r a c t o r ' s work was t o be completed on o r about December 1, 1969. The c o n t r a c t provided f o r Kirby t o pay $18,883.45 and t o f u r n i s h t h e excavation f o r t h e foundation and t o do t h e w i r i n g , plumbing, f l o o r c o v e r i n g , and p a i n t i n g . The c o n t r a c t o r was r e q u i r e d t o provide a l l m a t e r i a l s i n c l u d i n g w i r i n g m a t e r i a l and a l l l a b o r r e q u i r e d i n c o n s t r u c t i o n of t h e home. An employee of t h e c o n t r a c t o r , Fred Hoffman, began work on t h e home. From t h e s t a r t , Kirby complained about t h e q u a l i t y of Hoffman's work. The home was n o t f i n i s h e d by t h e December 1 d e a d l i n e , and i n January 1970, t h e c o n t r a c t o r removed Hoffman from t h e p r o j e c t and h i r e d Herbert and Dick Tope1 t o c o r r e c t d e f e c t s and complete t h e home and b r i n g i t w i t h i n minimum requirements of t h e FHA f o r t h e sum of $2,000. A f t e r Topels had worked on t h e house Kirby advised t h e c o n t r a c t o r t h a t Topels' work was n o t s a t i s f a c t o r y . I n March 1970, Kirby through counsel, informed t h e c o n t r a c t o r and Topels they were through, terminated t h e c o n t r a c t and h i r e d a l o c a l c a r p e n t e r t o c o r r e c t some of t h e minor d e f e c t s i n t h e home. 1970, Kirby moved i n t o t h e home. I n May Pursuant t o t h e c o n t r a c t , Kirby paid t h e c o n t r a c t o r $17,298 b u t d i d n o t make t h e f i n a l payment of $1,585.45- This a c t i o n was brought i n d i s t r i c t c o u r t t o recover damages f o r breach of t h e b u i l d i n g c o n t r a c t a g a i n s t t h e c o n t r a c t o r . I n a separate a c t i o n , Topels sought t o f o r e c l o s e a mechanic's l i e n f o r payment f o r l a b o r and m a t e r i a l used during t h e i r work on t h e Kirby home. The two a c t i o n s were c o n s o l i d a t e d f o r t r i a l and t h i s a p p e a l i s only from t h e amount of t h e award given Kirby a g a i n s t t h e c o n t r a c t o r , Kenyon-Noble Lumber Co. The t r i a l c o u r t found t h e c o n t r a c t o r breached h i s c o n t r a c t and t h a t t h e work done on t h e Kirby home was d e f e c t i v e . Numerous d e f e c t s i n t h e b u i l d i n g were l i s t e d i n t h e c o u r t ' s f i n d i n g s i n c l u d i n g : a roof which must be removed and r e p l a c e d t o be p r o p e r ; i n t e r i o r p a r t i t i o n s and e x t e r i o r w a l l s o u t of plumb; windows and doors improperly i n s t a l l e d and o u t of plumb; d e f e c t i v e foundation and improperly poured basement f l o o r w i t h d r a i n i n h i g h e s t p o i n t ; u n l e v e l c e i l i n g s and f l o o r s ; and crooked s i d i n g . The t r i a l c o u r t f u r t h e r found : "That by reason of t h e d e f i c i e n c i e s i n t h e c o n s t r u c t i o n and by t h e breach of c o n t r a c t on b e h a l f of Corporation and Ogle, and t h e i r n e g l i g e n t a c t s and omissions, t h e f a i r market v a l u e of t h e completed house was reduced t o t h e amount of TWO THOUSAND EIGHTY-FIVE DOLLARS AND EIGHTYFIVE CENTS ($2,085.85). Based on t h e s e f i n d i n g s , t h e c o u r t concluded: " P l a i n t i f f Kirby i s e n t i t l e d t o a Judgment a g a i n s t t h e Defendants Kenyon-Noble Lumber Company, William V . Ogle i n t h e sum of TWO THOUSAND EIGHTY-FIVE DOLLARS AND EIGHTY-FIVE CENTS ($2,085-85) t o g e t h e r w i t h i n t e r e s t thereolr from and a f t e r May 1, 1970." Kirby f i l e d e x c e p t i o n s t o t h e c o u r t ' s f i n d i n g s of f a c t and conclusions of law and a motion t o amend, which was denied by the t r i a l c o u r t . The findings of fact and conclusions of law of the district court leave no doubt the Kirby home was defective. The court's determination of the value of the completed structure is fully supported by evidence presented at trial. Kirby asserts the award of damages is grossly inadequate and has no basis in law or fact. Section 17-301, R.C.M. 1947, provides the measure of damages for breach of contract: "For the breach of an obligation arising from contract, the measure of damages, except where otherwise expressly provided by this code, is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things; would be likely to result therefrom." Although Montana codes specify damages for breaches of other types of contract, there is no express provision for damages in breach of construction contracts. In Mitchell v. Carlson, 132 Mont. 1, 7, 313 P.2d 717, the Court applied section 17-301 where a homeowner sued for damages as a result of a.poorly built home to establish the rule for damages to be awarded: "Applying the statutory rule of damages to this case it is apparent that plaintiffs will be compensated only for the 'detriment proximately caused' by the breach, viz., the cost of making the repairs necessary to complete the house in accordance with the parties' agreement." (Emphasis added.) The Mitchell rule was reaffirmed by this Court in Haggerty v. Selsco, 166 Mont. 492, 499, 534 P.2d 874. 11 Williston on Contracts, Third Edition, Section 1363, p.344, states the rule as: "Where the contractor fails to keep his agreement, the measure of the employer's damages, whether sought in an independent action or by recoupment or counterclaim, is always the sum which will put him in as good a position as if the contract had been performed. If the defect is remediable from a practical standpoint, recovery generally will be based on the market price of completing or correcting the performance, and this will generally be shown by the cost of getting work done or completed,by another person." (Emphasis added.) See: 5 Corbin on Contracts, 51089; Restatement, Contracts, $346; Anno. 76 ALR2d 805; Schmauch v. Johnston, 274 Or. 441, 547 P.2d The district court upon consideration of all the evidence presented determined the completed house to be worth only $2,085.85. The court's award of that amount as damages is neither logical nor does it meet the requirements set forth for an award in a case involving a breach of a building contract. This matter is remanded to the district court for a new trial on the issue of damages. r - q e Concur: f ief Justice . Robert C. ~y%es, District Judge, sitting "Tor Justice Wesley Castles.

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