                                      No.     13381

                I N THE SUPREME COURT O THE STATE O F M N A A
                                       F               O T N

                                            1977



PRUDENTIAL FEDERAL SAVINGS AND L A e t a l . ,
                                O N
                                P l a i n t i f f and R e s p o n d e n t ,
           -vs-
GLENN McDOUGALL e t a l . ,
                        D e f e n d a n t s and R e s p o n d e n t s ,
           -vs-
BUILDING AGENCIES, I N C . ,           a corporation,

                                T h i r d - P a r t y Defendant and A p p e l l a n t .



Appeal from:         D i s t r i c t Court of t h e F i f t h J u d i c i a l D i s t r i c t ,
                     IJonorable James D. F r e e b o u r n , J u d g e p r e s i d i n g .

C o u n s e l o f Record:

     For Appellant:

           Robert P.        Ryan a r g u e d , B i l l i n g s , Montana

     For Respondents:

           McCaffery, P e t e r s o n and Murray, B u t t e , Montana
           W. D . Murray, J r . a r g u e d , B u t t e , Montana
           C h e s t e r L l o y d J o n e s a r g u e d , V i r g i n i a C i t y , Montana



                                              Submitted:           J u n e 6 , 1977

                                                 Decided:         4UG 2 1917

Filed:
           \!I6 ,j    $n
Xr.     d h i e i J u s ~ i c e!>aul G . H a t f i e l d d e l i v e r e d t h e Opinion of t h e
Court     .
         3 u i l d i n g Agencies, I n c .   ,   a p p e a l s from a judgment of t h e

d i s t r i c t c o u r t , Madison County, f o r $2,858.40 p l u s a t t o r n e y f e e s

o f $250 and c o u r t c o s t s , and f o r a d d i t i o n a l a t t o r n e y f e e s of

$250 adjudged upon a t h i r d p a r t y complaint.

         Defendants McDougall a r r i v e d i n S h e r i d a n , Montana from

Xegina, Saskatchewan, February 3 , 1967, and purchased a l o g

house s o u t h of Sheridan.

         I n J u l y 1967, t h e y were c o n t a c t e d by a salesman f o r B u i l d i n g

Agencies, I n c .        The s o l i c i t a t i o n by t h e Agencies' agent was t o

r e f u r b i s h t h e e x t e r i o r of t h e log home by c o a t i n g i t w i t h a p l a s t i c

~ o a t i n g a r r y i n g t h e t r a d e name of Tex-Cote.
             c

         O J u l y 26, 1967, McDougalls and Agencies e n t e r e d i n t o an
          n

~ g r e e r n e n t t o apply t h e c o a t i n g a s s p e c i f i e d f o r t h e agreed sum of

32,850 w i t h $50 p a i d i n advance.

         As a p a r t of t h e agreement Agencies was t o s e c u r e f i n a n c i n g ,

which i t d i d , through P r u d e n t i a l F e d e r a l Savings and Loan Associa-

tion.         On August 7 , 1967, McDougalls signed a n o t e , t h e s u b j e c t

$21:   t h i s a c t i o n , running t o Agencies i n t h e amount of $2,998.80

t o be p a i d i n 96 monthly i n s t a l l m e n t s of $45.50, commencing October

7 , 1-967.       Agencies immediately a s s i g n e d t h e n o t e t o P r u d e n t i a l

~11dP r u d e n t i a l i s s u e d i t s payment t o Agencies i n t h e amount of

j2,800.

         The work was completed by Agencies w i t h i n a few days and

Xcihugalls made t h e f i r s t $45.50 payment on October 1 2 , 1967.

Payments were made each month t h e r e a f t e r u n t i l January 1969, when

~ n i y
      $23. was p a i d ; March 1 0 , 1969 when $20 was p a i d ; March 20

when $20 was p a i d ; (oddly enough, according t o t h e e x h i b i t r e c e i v e d
~t t r i a l ,      his $40 was c r e d i t e d t o reduce p r i n c i p a l ) ; on May

26, 1969, $20 was p a i d and c r e d i t e d t o i n t e r e s t and t h e f i n a l

payment of $20 was p a i d on June 1 8 , 1969, c r e d i t e d t o i n t e r e s t

f o r a b a l a n c e owing on June 1 8 , 1969 of $2,684.71.

       During t h e time January 1969 t o a t l e a s t May 25, 1969,

Waneta McDougallls response t o P r u d e n t i a l ' s r e q u e s t s f o r payment

was t h a t t h e McDougalls were having f i n a n c i a l problems b u t "we

s h a l l g e t t h e s e p a i d a s soon a s p o s s i b l e . "

       She t e s t i f i e d she complained of c r a c k i n g and p e e l i n g of

t h e c o a t i n g t o P r u d e n t i a l , and P r u d e n t i a l on J u l y 9 , 1969, wrote

McDougalls t h a t P r u d e n t i a l was "going t o g e t i n touch w i t h t h e

d e a l e r r e g a r d i n g h i s workmanship."           The t r i a l judge found t h a t

w i t h i n a y e a r a f t e r a p p l i c a t i o n Agencies' work proved improperly

performed.

       I n t h e agreement of J u l y 26, 1967 Agencies agreed t o perform

much p r e p a r a t o r y work.        I n Agencies1 b r i e f t h i s i s s e t o u t :

                "The c o n t r a c t c a l l e d f o r e x t e n s i v e p r e p a r a t i o n of
       t h e log s u r f a c e s , i n c l u d i n g s a n d b l a s t i n g , s i l i c o n e w a t e r -
       p r o o f i n g , s e a l e r c o a t and o t h e r measures and t h e n a f i n a l
       c o a t o f Tex-cote, a p l a s t i c m a t e r i a l .

            'I*         **
                       Tex-Cote1 s f u l l g u a r a n t e e , w i t h u n d e r l i n i n g
       added, r e a d s :

                '"This i s t o c e r t i f y t h a t t h e Tex-Cote a p p l i e d
       on che above p r o p e r t y i s hereby g u a r a n t e e d f o r a
       t e n year p e r i o d a g a i n s t f l a k i n g , chipping o r p e e l i n g .
       This g u a r a n t e e i s t o be i n f o r c e f o r a p e r i o d of t e n
       y e a r s from t h e r e g i s t r a t i o n d a t e (Date of A p p l i c a t i o n )
       and f u l l m a t e r i a l replacement s h a l l be made should t h i s
       replacement be n e c e s s a r y a s a r e s u l t of a d e f e c t i n
       t h i s product o n l y .        **  >k

                 !f'.   *   i;* I
                             '

              "Building Agencies warranted t h e workmanship.                                     The
       c o n ~ r a c t u a l r o v i s i o n ( u n d e r l i n i n g added) r e a d s :
                           p

             " ' ( 1 ) Tex-Cote i s guaranteed by Textured Coating             -
       o f Americar,, I n c . and no warranty o r g u a r a n t y i s made
       by B u i l d i n g Agencies, I n c . ~ u i l d i n g ~ e n c i e ;I,n c does
                                                          ~                                   .
       warrant t h e workmanship f o r a p e r i o d of one year from t h e
          d a t e o f completion o f che work. The warranty
        o f workmanship i s e x p r e s s l y l i m i t e d t o c o r r e c -
        t i o n of t h e work which w i l l be done promptly
        a f t e r w r i t t e n n o t i c e of d e f e c t i v e work i s r e c e i v e d
        b y B u i l d i n g Agencies, I n c . B u i l d i n g Agencies,
        I n c . s h a l l have no l i a b i l i t y f o r c o n s e q u e n t i a l
        damages, o r any o t h e r l i a b i l i t y n o t h e r e i n expressed.           I :I



        McDougalls r e f u s e d f u r t h e r payments a f t e r June 18, 1969

a s s i g n i n g a s t h e i r reason Agencies' f a i l u r e t o perform t h e work

and l a b o r s e t o u t i n t h e a g r e e m e n t . i n a s a t i s f a c t o r y manner.

        P r u d e n t i a l f i l e d s u i t a g a i n s t McDougalls on December 1 8 ,

1969.      McDougalls answered and f i l e d a t h i r d p a r t y complaint

a g a i n s t B u i l d i n g Agencies, I n c .    The t h i r d p a r t y complaint and

sunimons t h e r e o n was served on Agencies' p r e s i d e n t January 1 4 ,

1971.

        S h o r t l y t h e r e a f t e r Waneta McDougall r e t u r n e d home t o f i n d

a "machine" i n h e r yard.              According t o h e r testimony she d i d n o t

know who i t belonged t o o r why i t was t h e r e .                   She c a l l e d t h e

s h e r i f f t o have i t towed away.            She l a t e r l e a r n e d t h e machine

belonged t o Agencies and was t h e r e t o p a t c h up t h e work.                        Her

u n c o n t r a d i c t e d testimony was: "He s a i d i t was t o p a t c h up t h e j o b ,

i s h i s words.''       She r e f u s e d .

        The m a t t e r went t o t r i a l b e f o r e t h e c o u r t w i t h o u t a j u r y .

i i t e r testimony, t h e c o u r t g r a n t e d summary judgment t o P r u d e n t i a l

d g a i n s t McDougalls i n t h e amount of $2,858.40 p l u s $250 a t t o r n e y

feds and c o s t s .

        T h e t r i a l c o u r t f u r t h e r found:

        'x   ** t h a t t h e Defendants, GLENN and WANETA McDOUGALL,
        have judgment a g a i n s t t h e T h i r d P a r t y Defendant, BUILDING
        b~GENCIES, N C . , a s f o l l o w s :
                     I

                   " ( I ) For t h e sum of Two Thousand E i g h t Hundred
        4 1 i i t y Eight and 40/100 D o l l a r s ($2858.40) p l u s Two
        qundred F i f t y D o l l a r s ($250.00) and Court c o s t s a s
        provided f o r i n t h e Judgment a g a i n s t t h e Defendants
        [McDougalls ] above.
               ' ( 2 ) For a t t o r n e y f e e s i n t h e amount of Two
        HuriilreJ F i f t y D o l l a r s ($250.00) . ' I

        '[he i s s u e s on a p p e a l a r e :

        (1) \&ether Agencies' warranty l i m i t e d t o " c o r r e c t i o n of
the work", l i m i t s t h e remedy of t h e purchaser t o c o r r e c t i o n

aP t h e work o n l y ?

        (2)      Can t h e purchaser p r e v e n t c o r r e c t i o n of t h e work and

chen r e f u s e payment on t h e c o n t r a c t p r i c e on t h e ground t h e

work i s u s e l e s s and t h e r e i s a f a i l u r e of c o n s i d e r a t i o n ?

        Both p a r t i e s a g r e e t h a t Agencies warranted t h e work.

        Agencies p r e s e n t e d no testimony.             McDougallsl e x p e r t t e s t i -

f i e d t h a t i n May 1970 he i n s p e c t e d t h e house and t h e c o a t i n g was

d e t e r i o r a t i n g and coming o f f ; t h a t t h e " u n d e r p a r t of i t showed

t h e b u i l d i n g had n o t been p r o p e r l y prepared f o r t h e product t o

adhere t o i t .       +C   **   Due t o f o r e i g n m a t t e r underneath t h e product

i s g e n e r a l reason f o r i t n o t adhering t o t h e b u i l d i n g " .                Further,

i n h i s o p i n i o n , p r o p e r p r e p a r a t i o n was n o t done   --   TI   - Jc
                                                                                        k     M y there

w a s o t h e r f o r e i g n m a t t e r , p a i n t , g r e a s e o r something t h a t had

n o t been c l e a n e d o f f s o t h a t p a i n t d i d n o t adhere t o i t and i t

j u s t came o f f i n b i g f l a k e s and I assume t h a t t h a t was due t o

some f o r e i g n m a t t e r b e i n g underneath t h e c o a t i n g . "

        Agencies r e l i e s on s e c t i o n 878-2-719,           R.C.M.         1947, Montana's

Uniform Commercial code, a s t o whether t h e agreement may l i m i t

t h e b u y e r ' s remedy and c i t e s M t . S t a t e s T e l . & T e l . Co. v . D i s -

t r i c t Court, 160 Mont. 443, 503 P.2d 526 a s a u t h o r i t y f o r i t s

c o n t e n t i o n . See a l s o :   Whitaker v. Farmhand, I n c . ,                         Mont   .
                                                                                                     -
                                                                                                     9



          P.2d              3          S t .Rep.          , No.     13228, handed down

by t h i s Court on August 2 , 1977                      , and    cases c i t e d therein.
       The problem h e r e i s that no such i s s u e i s p r e s e n t e d .

       The t r i a l judge found,based upon t h e o n l y evidence p r e s e n t e d ,

and t h i s Court f i n d s i t t o be s u b s t a n t i a l and c r e d i b l e , (McGuire

v. American Honda Company,                           Mont   .          Y              P.2d                   Y



34 S t . Rep. 632), t h a t Agencies warranted and guaranteed i t s

work and t h e work was improperly performed.                               Further, a l l the

dtidence i n t h e record i n d i c a t e s f a i l u r e t o properly prepare

t h e l o g s u r f a c e was t h e cause of t h e Tex-Cote c o a t i n g t o c h i p ,

f l a k e , and p e e l .     T h e r e f o r e , t h e q u e s t i o n of l i m i t a t i o n of

remedies i n t h e c o n t r a c t i s n o t p r e s e n t e d on t h i s a p p e a l .             The

cause of t h e d e f e c t was t h e b r e a c h of t h e e x p r e s s warranty.

       As t o whether Waneta McDougall prevented performance, a g a i n

a l i i s t h e evidence i s t h a t she d i d n o t .                ~ c ~ o u g a l l expert
                                                                                        s'

t e s t i f i e d i t would be n e c e s s a r y t o c l e a n t h e b u i l d i n g and c o a t

i t w i t h a primer and s e a l e r and t h e n r e p a i n t .               These a r e t h e

e x a c t t h i n g s Agencies agreed t o do i n t h e o r i g i n a l agreement and,

according t o t h e o n l y testimony p r e s e n t e d , i t d i d n o t do.                       There

i s no testimony Agencies i n 1971 agreed t o s t a r t over and re-do

t h e job.     Therefore t h a t i s s u e f a i l s .            M i t c h e l l v. C a r l s o n ,

132 Mont. 1, 313 P.2d 717.

       As a secondary i s s u e t h e amount of t h e judgment i s q u e s t i o n e d .

The p r a y e r of P r u d e n t i a l was f o r $2,684.71,                i n t e r e s t , c o s t s and

attorney fees.              Summary judgment was g r a n t e d .               N a p p e a l was
                                                                                o

t a k e n from t h e summary judgment.                   P l a i n t i f f s t a t e s a balance

of $2,684.71 a s of June 1 8 , 1969.                      From t h e p l e a d i n g s , n o t amended,

t h e most t h a t could be awarded would be $2,684.71 p l u s i n t e r e s t .

       There was no testimony a s t o a t t o r n e y f e e s i n t h e s u i t by

P r u d e n t i a l a g a i n s t McDougalls, and t h e r e i s no p l e a d i n g o r e v i -

dence of a t t o r n e y f e e s by McDougalls a g a i n s t Agencies.                        Compton v .
A1cor11, -----               Mont   .      , 557   P.2d 292, 33 St.Rep.           118.5; F i r s t
S e c u r i t y Bank of Bozeman v. Tholkes,                         IvIon t   .       547 P.2d 1328,

33 St.Rep. 341.

          T h e r e f o r e , t h e judgment of t h e t r i a l c o u r t i s a f f i r m e d a s

modified.                The judgment f o r P r u d e n t i a l a g a i n s t McDougalls s h a l l     >
                                                                                                       a
                                                                                                       .




b e i n t h e amount of $2,684.71, w i t h i n t e r e s t from June 1 8 , 1969

t o Yarch 1 9 , 1976, t o g e t h e r w i t h i n t e r e s t a t 6% on t h i s amount

i l r ~ r i lp a i d .

          Judgment s h a l l be e n t e r e d i n t h e same amount a g a i n s t t h i r d

p a r t y defendant B u i l d i n g Agencies, I n c .



                                                                                                A

                                                       Chief J u s t i c e
