                                       No. 11727

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

                                          1972



A T A LIFE AND CASUALTY C M A Y
 EN                      O PN
and DAVID MILLER,

                                 P l a i n t i f f s and Respondents,



THE STAN-CRAFT CORPORATION and STAN YOUNG,

                                 Defendants and Appellants.



Appeal from:         D i s t r i c t Court o f t h e Eleventh J u d i c i a l D i s t r i c t ,
                     Honorable Robert C. Sykes, Judge p r e s i d i n g .

Counsel of Record:

         For A p p e l l a n t s :

                Richard P. Heinz argued, Polson, Montana.

         For Respondents:

                Murphy, Robinson, Heckathorn and P h i l l i p s , K a l i s p e l l ,
                 Montana.
                I. James Heckathorn argued, K a l i s p e l l , Montana.



                                                Submitted:          A p r i l 17, '1972

                                                   Decided:     L/Ui- 1 8 1972
Filed:     jU( 1 $ +jYib?
                 .
Mr. Justice Gene B. Daly delivered the Opinion of the Court.
        Appeal has been taken from the district court of the
eleventh judicial district of the State of Montana, in and for
the County of Flathead, following the entry of a judgment to
recover the value of a certain twenty-seven foot sailboat, Corus
11, which was destroyed by fire on March 9, 1966 while in the

possession of the defendants for storage and repairs.
        The complaint alleges defendants' negligence in the
course of a bailment.   Plaintiff Aetna Life and Casualty Company,
sought damages of $4,500, the amount it had paid the owner, David
Miller, under subrogation rights contained in an insurance policy.
Plaintiff, David Miller, sought damages for the boat's value in
excess of the amount paid him by the insurance company.
        Defendants, Stan-Craft Corporation and its agent Stan
Young, denied negligence in the care and storage of the subject
of the bailment and relied upon a showing of an exercise of ordi-
nary care for the preservation of the subject of the bailment.
Defendant, Stan-Craft Corporation, also made a counterclaim upon
an open account for services, storage and repairs rendered the
plaintiff, David Miller, from August 8, 1965 through February 1,
1966.
        The case was tried before the court without a jury on
March 25, 1969, and judgment was entered on May 7, 1969.   The
district court found that the defendant, Stan-Craft Corporation,
was negligent as a bailee and such negligence was the proximate
cause of the total loss of the bailed boat.   The court found
that at the time of the loss of the boat, the said boat was of
a reasonable value of $6,250.   Judgment was entered for the plain-
tiff, Aetna Life and Casualty Company, in the amount of $4,500,
together with a judgment for plaintiff, David Miller, in the
amount of $1,750, subject to a setoff in the amount of $1,278
in favor of defendant, Stan-Craft Corporation, on its counter-
claim for repairs and dockage.   The defendant, Stan Young, was
found to be not negligent and was given judgment to recover his
costs from the plaintiffs.   After denial of defendants' motion
for a new trial this appeal was taken.
        DeEendantshavepresented three issues on appeal which are
as follows:
        1. The district court erred in applying the doctrine
of res ipsa loquitur under the circumstances of the fire which
occurred in this case.
        2.    The district court erred in finding that appellant,
Stan-Craft, was negligent in that the record is devoid of any
evidence of negligence or of any compelling presumption to be
drawn from the circumstances of the fire which destroyed plain-
tiff Miller's boat.
        3.    That the district court erred in awarding damages in
excess of the amount Stan-Craft had reason to suppose the Miller
boat to be worth in the absence of being informed by Miller of
the worth claimed by him at the inception of the bailment or prior
to its loss by fire.
        Plaintiff, David Miller, delivered his sailboat to the
defendants for repairs and dockage and it was destroyed by fire
of undetermined origin during the course of the bailment.   Miller
argued successfully in the district court that he made out a prima
facie case by establishing the delivery of the article by bailor
to bailee and the subsequent failure of bailee to redeliver said
article upon demand.   Defendants argue that the law raises a
presumption of negligence or other fault of bailee in his failure
to redeliver the bailed article, which presumption shifts the
burden of going forward with the evidence to the bailee; that
such burden is met on the part of the bailee by a showing of loss
of the bailed article by fire occurring under circumstances con-
sistent with the observance of due care by the bailee or by proof
of the observance of ordinary care in the custody of the subject
of the bailment, although the exact cause of the fire be unknown;
that where such burden of going forward with the evidence is met
by the bailee, the bailor has the burden of establishing negli-
gence in the keeping of the thing bailed by a preponderance of
the evidence; and that negligence may not be established by spec-
ulation or conjecture.
        Defendants' chief contention is that proof of the obser-
vance of ordinary care or freedom from fault does not require
proof to a certainty of the exact cause of the fire where such
cause honestly cannot be known.   Defendants contend that the distict
court erred in applying the doctrine of res ipsa loquitur to the
facts of this case in that the fire which occurred was not so un-
usual an occurrence that it must be said to have occurred only
because someone was negligent, and that the circumstances surround-
ing the occurrence do not reasonably establish negligence except
by mere speculation or conjecture.
       On review of the record we find the district court did
not apply the doctrine of res ipsa loquitur to this case.   In
the district court's memorandum supplementing its findings and
conclusions we note that the court simply made the notation:
       "It is the Court's.opinion that the destruction
       of the Sloop by a fire of undetermined origin
       resulted in a finding against the defendant
       corporation. The result is very similar to a
        case of Res ipsa loquitur, due to the fact
        that the defendant corporation had plaintiff's
        property in its sole possession, under full
        control, for a legal consideration, and the
        resulting fire occurred under the circumstances."
        It remains the basic law of Montana that when goods are
placed in the hands of a bailee in good condition and are returned
in a damaged state or not at all, in an action by the bailor against
the bailee, the law will presume negligence on the part of the
latter and imposes upon him the burden of showing that he exercised
such care as was required by the nature of the bailment.    Shrop-
shire v. Sidebottom, 30 Mont. 406, 76 P. 941; Montana Leather Co.
v. Colwell, 96 Mont. 274, 30 P.2d 473.
        The degree of care required of a depositary for hire is
stated in section 20-302, R.C.M. 1947 and cited in Shropshire
and Rice Oil Co. v. Atlas Assurance Company, 102 F.2d 561 (Mont.):
        "A depositary for hire must use at least
        ordinary care for the preservation of the
        thing deposited."
        In Shropshire it is noted carefully that the bailee is
not to be considered an insurer of the bailed articles in the
absence of a special contract, however the law will presume neg-
ligence on the part of the latter, and will impose upon him the
burden of showing that he exercised such care as was required by
the nature of the bailment.
        Defeddants' urge this Court that such evidence as was
produced at the trial constituted proof of due care which defend-
ants argue has satisfied their burden of proof and that plain-
tiffs have not sustained the ultimate burden to prove the allega-
tions in their complaint.     Defendants have recited the evidence
produced before the district court regarding the operation of
the boat repair shop, cleaning procedures, wiring and heating
arrangements, and storage of supplies, all of which are offered
to show the exercise of due care on the part of defendants.
        The record discloses that on the day of the fire, March
9, 1966, one of defendants' employees, Jim Namen had been the
only person working in the shop.   He apparently had not been
painting or using any type of solvent, but rather had been draft-
ing full-size boat plans.   When Namen finished his work for the
day, he went home leaving the shop unlocked and unattended.     Ap-
proximately one-half hour after Namen left, the fire was dis-
covered in the shop.
        The plaintiffs point out there were flammable subskances
such as gasoline and paint thinner in open cans in the work area
of the shop and that a portion of the floor had been swept leaving
a pile of chunks of wood, sawdust, grease and rags which had been
used and discarded.    It was also noted that the use of cigarettes
was permitted although their use was cautioned and instructions
were given regarding the use of fire extinguishers.
       Admittedly, the cause of the fire remains a mystery to
both parties as it did to the district court.     However, viewing
the record of the evidence produced before the district court,
the court found that the defendants were negligent based upon the
same record we have reviewed.   Viewing the evidence and the appli-
cable law we find that the defendants did not measurably meet
the burden of proof which was placed upon them.
        The circumstances of this case bear a marked similarity
to the facts of the bailment set out in Shropshire regarding the
loss of two bailed horses from bailee's pasture.    In Shropshire
this Court stated:
        "There is nothing in this pleading nor in the
         evidence by which the defendant attempts to
         excuse himself from making delivery by reason
         of the 'act of God' or of 'the public enemy.'
         The question of negligence is a question of
         fact to be passed upon by the jury. The evi-
         dence in this case relative to the character
         of the defendant's fence is sufficient to
         sustain a finding by the jury that the pasture
         of the defendant in which these horses were
         turned was not wholly inclosed by 'a good and
         sufficient fence;' and a pasture which is not
         wholly inclosed is not inclosed at all within
         the meaning of the law. (Citing cases.)"
         Here the evidence which bailee introduced did not over-
come the presumption of negligence imposed by the law as judged
by the trier of the facts.    The bailee introduced evidence to
show that the fire probably did not start as a result of de-
fective wiring or a defective stove but does not show sufficient
exercise of due care with regard to use of gasoline, solvents,
paint thinner and disposable scraps which taken together in any
combination might produce a situation of combustible ignition
including the very act of sweeping.    In addition, the existence
of cigarette use and the circumstances of open and unguarded prem-
ises were unrebutted.    When all evidence by both parties is
considered in light of the presumption, we find that there is
sufficient credible evidence to support the findings of the trial
court.
         Defendants' third issue testing the amount of damages
questions the district court's assessment in its finding that
the reasonable value of the boat was $6,250.    In the absence of
any communicated statement of the value of the boat we look to
section 20-208, R.C.M.   1947, which states:
         "The liability of a depositary for negligence
         cannot exceed the amount which he is informed
         by the depositor, or has reason to suppose,
         the thing deposited to be worth." (Emphasis added.)
         The district court heard opinion testimony of both parties
which varied from $3,500 to $7,500.    The court found the
reasonable value to be $6,250, a determination of fact which
this Court will not disturb.   Necessarily, based on opinion
testimony, there was conflict in the evidence which the court
heard and upon which its determination was made.     In reviewing
the record we find that there was sufficient credible evidence
to support the judgment.   Breen v. Ind. Acc. ~ o a r d ,150 Mont.
463, 436 P.2d 701; Davis v. Davis.        Mont   .    , 497 P.2d     315,
29 St.Rep. 65; Goggans v. Winkley,        Mont   .    ,   495 P.2d 594,
29 St.Rep. 217.
        The judgment of the district court is affirmed.



                                   Associate Justice
   concur :
