                                    No.    13064

          I N T E SUPREME C U T O THE STATE O M N A A
               H           OR    F           F OTN

                                        1976



R. P. MATZINGER, d /b /a MATZINGER ELECTRIC,

                            P l a i n t i f f and A p p e l l a n t ,

        -vs    -
REMCO, I N C . ,   a Utah Corporation,

                            Defendant and Respondent.



Appeal from:       D i s t r i c t Court of t h e Eighteenth 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 of Record:

       For Appellant:

               tandoe and Gary, Bozeman, Montana
               Joseph B. Gary argued, Bozeman, Montana

       For Respondent :

               Berg, Angel, Andriolo and Morgan, Bozeman, Montana
               Charles F. Angel argued, Bozeman, Montana
               C a r l T. Smith, Ogden, Utah



                                             Submitted:             March 1, 1976
                                                               -.
                                                                .
                                                Decided :-J?
           -

Filed :
M r . J u s t i c e Gene B . Daly delivered t h e Opinion of t h e Court.


           This appeal i s from a judgment entered by 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, s i t t i n g without a j u r y .

           Remco I n c . , and Matzinger E l e c t r i c entered i n t o a w r i t t e n

subcontract agreement providing Matzinger was t o f u r n i s h necessary

m a t e r i a l s and l a b o r f o r a sixty-one u n i t apartment complex and

laundry b u i l d i n g , known a s t h e "Village Apartments" being con-

s t r u c t e d by Remco i n Bozeman, Montana.              The p r i c e f o r t h e work by

Matzinger pursuant t o t h i s subcontract was $46,000.                      F i n a l payment

was t o be made 30 days a f t e r completion of t h e p r o j e c t .             This con-

t r a c t was signed by t h e p a r t i e s on January 15, 1973 and work

started shortly thereafter.

           The p r o j e c t was completed f o r f i n a l i n s p e c t i o n by October 1,

1973.      A s of January 1, 1974 Remco had paid Matzinger $41,440.

O January 3, 1974 Matzinger f i l e d a mechanic's l i e n on t h e a p a r t -
 n

ment complex f o r $23,538.27 claimed due f o r t h e balance owed                       under

t h e subcontract plus e x t r a s and modifications claimed t o have been

ordered by ~ e m c o ' spersonnel.          This l i e n was r e l e a s e d i n May,

1974 a f t e r Remco paid Matzinger t h e sum of $4,560 t h e balance

owed     under t h e subcontract and placed an a d d i t i o n a l $11,400 i n

escrow with a l o c a l t i t l e company pending t h e outcome of l i t i g a t i o n

of t h i s m a t t e r .

           Matzinger claims he i s e n t i t l e d t o payment f o r e x t r a work

performed f o r Remco n o t contemplated by t h e p a r t i e s a t t h e time

t h e c o n t r a c t was signed.    This claim includes work a l l e g e d l y author-

ized by Thomas Haggerty, Remco's job superintendent i n Bozeman, and

by Robert Richins, p r o j e c t superintendent, who commuted t o t h e

Bozeman s i t e from Remco's S a l t Lake C i t y headquarters one o r two
days each week during construction.

       Specifically Matzinger claimed extra compensation due for

these items:

       1)    Installation of weatherproof outlets on apartment

building ;

       2)    Air conditioner outlet installation;

       3)    Temporary lights installed for night watchmen after

a fire at project during construction;

       4 Hook-up of water well pump for use during construction
        )
and for repair of boilers;

       5)    Wiring for electric sign in front of project;

       6) Installation of ground lights in area;
       7) Furnishing hoods for kitchen ranges in each apartment;
       8 Wiring of outlets for soft drink dispensers;
        )
       9) Wiring of swimming pool building not included in
original plan;

       10)    Pool furnace and venting system wiring;

       11)    Grounding system for pool;

       12)    Installation of additional outlets beyond those
contemplated in the contract in order to comply with local and

national electrical code standards;

       13)    Installation of additional phone conduit omitted from

the original plans and specifications;

       14)    Lowering of bathroom overhead fixtures and fans after
installation upon discovery plumbers were unable to install plumbing
according to plans;

       15) Move of main electrical service from the exterior of

building after installation to an interior closet to accommodate

Montana Power Company plan alteration regarding location of power
transformer pad; and

           16)    Miscellaneous items n o t covered by c o n t r a c t and done

by Matzinger a t request of Remco's supervisory personnel.

These e x t r a items t o t a l a claimed amount of $13,181.71, i n a d d i t i o n

t o t h e amount due under t h e c o n t r a c t .

          A l e t t e r was s e n t t o Matzinger by Richins, t h e p r o j e c t

superintendent, on January 4 , 1974, d i s c u s s i n g t h e claim and noting

Remco's w i l l i n g n e s s t o pay t h e amount claimed f o r a m a j o r i t y of

t h e items.      Remco's p o s i t i o n i n t h e l e t t e r was t h a t r e l o c a t i o n of

t h e e l e c t r i c a l s e r v i c e panel and movement of bathroom c e i l i n g

f i x t u r e s was n e c e s s i t a t e d by Matzinger's f a i l u r e t o coordinate h i s

work with t h e o t h e r subcontractors.                The l e t t e r a l s o i n d i c a t e d

Remco's opinion t h a t any e x t r a expense incurred i n i n s t a l l a t i o n

of telephones was covered by t h e c o n t r a c t and must be borne by

Matzinger.        Remco's agent s t a t e d he would r e q u i r e a d d i t i o n a l informa-

t i o n regarding t h e expenses of wiring and grounding t h e pool and

pool b u i l d i n g before any claims f o r such work would be allowed.

I n t o t a l , Remco conceded i t would pay $5,485.25 plus whatever was

determined t o be e q u i t a b l e f o r work done on t h e pool, i n r e t u r n

f o r t h e r e l e a s e of t h e mechanic's l i e n .

          The d i s t r i c t c o u r t found Matzinger was e n t i t l e d t o t h e

$1,245 claimed f o r i n s t a l l a t i o n of t h e a i r - c o n d i t i o n e r o u t l e t s

and t o $847 f o r t h e weatherproof o u t l e t s .              The c o u r t held a l l

o t h e r claims were covered by t h e o r i g i n a l c o n t r a c t between t h e

parties.       The court a l s o disallowed Matzinger recovery of any

a t t o r n e y f e e s f o r recovery on t h e mechanic's l i e n .             Matzinger's

recovery was a l s o reduced by $1173.75, t h e amount t h e d i s t r i c t

c o u r t found t o be due a s an allowance on l i g h t f i x t u r e s t o Remco.

M t z i n g e r appealed.
 a
       The primary issue is: Whether a written contract such as

was entered into between the parties here, may be amended or modified

by oral agreement?

       Section 13-907, R.C.M. 1947, provides:

       "A contract in writing may be altered by a contract in
       writing, or by an executed oral agreement, and not other-
       wise. 11

       Section 13-727, R.C.M. 1947, defines an executed contract:

       "An executed contract is one, the object of which is
       fully performed. All others are executory."

The parties agree the work for which extra compensation is sought

was performed as claimed by Matzinger.   This work was done for the
benefit of Remco and enhanced the value of the finished apartment

complex. The disagreement between the parties is in regard to
compensation for this extra work.   This Court in Dalakow v. Geery,

132 Mont. 457, 464, 465, 318 P.2d 253, summarized the law in

Montana and said:

       "Roberts v. Sinnott, 55 Mont. 369, 177 Pac. 252, is
       strikingly similar to the present case.

      "That case involved a written contract to furnish
      certain materials and perform the work necessary for the
      erection of a dwelling. The plaintiff-contractor brought
      action upon the original agreement and each of twenty-five
      oral contracts supplemental thereto.   The original contract
      contained a stipulation that no charges for extra work
      would be allowed unless ordered in writing, so the defendant
      contended there could be no recovery on the oral agreements.
      But this court * * * said:
          "'The provision of the contract above was manifestly
      intended for the protection and benefit of the owner,
      and no reason can be suggested why it might not be waived.
      The authorities are quite uniform in holding that, not-
      withstanding such a provision, the parties may make subse-
      quent independent oral agreements which, when executed,
      have the effect of modifying the original contract, and
      the rule has been recognized in this jurisdiction.'
      "In Roberts v. Sinnott, supra, it will be noted that
      defendant did not in effect execute his part of the
      agreement, i.e. payment. This court however did not
      deny that an oral modification had been effected merely
      because of that fact.
       "I*   s
             .    *
               in cases where there is adequate consideration
       for the oral modification and the party relying thereon
       has fully performed, the written contract will be enforced
       as modified whether or not the other party has fully per-
       formed on his part. * * *. "
                                  '
See: Gramrn v. Insurance Unlimited, 141Mont. 456, 378 P.2d 662;

Jenson v. Olson, 144 Mont. 224, 395 P.2d 465; Webber v. Killorn,

66 Mont. 130, 212 P. 852.

       In drafting the subcontract, Remco chose to insert the

provision:       "CONTRACT TO INCLUDE THE FOLLOWING BUT NOT LIMITED TO:"

This language, when viewed in light of the district court finding

of the existence of some oral changes and additions to the con-

tract, requires a finding of the existence of oral modifications

to the subcontract. Matzinger is entitled to recovery for work
performed pursuant to such modifications and must not be barred from

receiving just compensation.

      Having determined Matzinger is entitled to enforce the
contract as modified by the oral change orders and requests for

additions by Remco's personnel, the next problem to determine

is the amount of compensation due under the modified contract. The

letter written by Mr. Richins, the supervisor and agent of Remco,
is useful in this regard. The district court admitted the letter

in evidence, subject to Remco's objection on the ground it consti-
tuted an offer of compromise, rather than an admission of a fact.
4 Wigmore, Evidence, 1061, p. 33 (Chadbourn rev. 1972) , notes :
       "Whether an offer to settle a claim by a partial
       or complete payment amounts to an admission of the
       truth of the facts on which the claim is based, and
       is therefore receivable in evidence, is a question
       which has given rise to prolonged discussion and to
       varied but often unsatisfactory attempts at explanation.
       "The solution is a simple one in its principle, though
       elusive and indefinite in its application; it is merely
       this, that a concession which is hypothetical or conditional
       only can never be interpreted as an assertion representing
       the party's actual belief, and therefore cannot be an
        admission; and conversely, an unconditional
        assertion is receivable, without any regard to the
        circumstances which accompany it.1 I

See: Continental Oil Co. v. Bell, 94 Mont. 123, 21 P.2d 65;

Magelssen v. Atwell, 152 Mont. 409, 451 P.2d 103.
        A review of Richins' letter to Matzinger shows no denial

of liability and no argument as to whether the work was performed

on a majority of the items claimed.   In fact, most of the items

are acknowledged as valid and the amount billed is accepted as

fair. Those items for which payment was denied by Remco may
have been covered by the original contract, as asserted.

        Resolution of the question of validity of the various claims

for which Remco accepted no liability because it alleges they are

covered by the contract is left to the district court at a rehearing

of the matter.    From a review of the record, this Court cannot
determine (1) to what extent the district court considered the

letter, and (2) what evidence was considered in the district court
finding that all items claimed were covered by the contract. Addi-

tionally, the bill for the pool building wiring requires a final
review for determination of the fairness and acceptability of

r at zinger' s claim.
        Finally, the district court denied Matzinger any recovery
of,attorney fees in prosecution of his mechanic's lien foreclosure.

Section 93-8614, R.C.M. 1947, provides:
        "In an action to foreclose any of the liens.provided
        for by sections 45-501 and 45-512 and sections 45-1001
        to 45-1003, the court must allow as costs the money paid
        for filing and recording the lien, and a reasonable
        attorney's fee in the district and supreme courts * * *."
        (Emphasis added.)

Under the mandatory language of this statute and this Court's

determination as to the merits of Matzinger's claim under the oral
modifications,he is entitled   to recover the reasonable attorney

fees incurred in the course of this litigation as he received

an affirmative judgment.

      This case is remanded to the district court for a new

trial in conformity with this Opinion.




We Concur:




Hon. Robert Boyd, District Judge,
sitting for Chief Justice James
T. Harrison.
