text:
    STATE OF MONTANA, Plaintiff and Respondent, v. WALTER CASSELL, Defendant and Appellant,
    No. 95-567.
    Submitted on Briefs July 25, 1996.
    Decided December 30, 1996.
    53 St.Rep. 1459.
    280 Mont. 397.
    932 P.2d 478.

      See C.J.S. Criminal Law § 941.
    For Appellant: William F. Hooks, Appellate Defender, Helena.
    For Respondent: Joseph P. Mazurek, Attorney General, Patricia J. Jordan, Assistant Attorney General, Helena; Dennis Paxinos, Yellowstone County Attorney, Billings.
   JUSTICE NELSON

delivered the Opinion of the Court.

Following a plea of guilty in the District Court of the Thirteenth Judicial District, Yellowstone County, defendant Walter Cassell was convicted of deliberate homicide. Cassell appeals the District Court’s denial of his motion to suppress his confession. We affirm.

We address the following issue on appeal:

Did the District Court err in denying Cassell’s motion to suppress his confession?

Factual and Procedural Background

On the morning of November 19, 1994, the Laurel Police Department and the Yellowstone County Sheriff’s Department were notified that a body had been found in a dumpster behind the 500 block of Birch Avenue in Laurel. The investigation revealed that the victim, John Formo, had been drinking with Cassell and several other individuals the previous night at a house located at 506 Birch Avenue when an argument and fight ensued. Formo was stabbed 16 times and severely beaten. His body was then dragged from the house and placed in the dumpster.

The police detained Cassell for questioning along with the other individuals who were inside the house. Cassell was transported to the Laurel Police Department where he was subjected to three custodial interrogations. Cassell incriminated himself in the second and third interrogations.

On November 25, 1994, Cassell was charged by information with the offense of deliberate homicide, a felony. He entered a plea of not guilty and counsel was appointed to represent him. On July 20,1995, defense counsel filed a motion to suppress the statements made by Cassell during the interrogations on the grounds that Cassell’s right against self-incrimination under the Fifth Amendment of the United States Constitution and Article II, Section 25 of the Montana Constitution had been violated. A hearing on Cassell’s motion was held on August 25, 1995. Four days later, the District Court entered written findings of fact and conclusions of law denying Cassell’s motion.

On August 30, 1995, Cassell executed an Acknowledgment of Waiver of Rights and entered a plea of guilty to the offense as charged. Cassell specifically reserved his right to appeal the denial of his motion to suppress his confession and to withdraw his guilty plea if he prevails in the appellate courts. On November 2,1995, the District Court sentenced Cassell to 100 years in Montana State Prison on the offense of deliberate homicide with an additional 10 years for the use of a weapon. The sentences are to run consecutively.

Discussion

Did the District Court err in denying Cassell’s motion to suppress his confession?

In his motion to suppress, Cassell asserted that he was not advised of his rights as mandated by Miranda v. Arizona (1966), 384 U.S. 436, 86 S.Ct. 1602,16 L.Ed.2d 694. Cassell also contended that he did not waive his constitutional right against self-incrimination, that he was intoxicated at the time he made the statements and that he was intimidated into making the statements. After hearing testimony from the law enforcement officers who conducted the interrogations as well as Cassell, the District Court determined that Cassell was advised of his Miranda rights prior to his statements and that his constitutional rights were not violated in that respect. Moreover, the court determined that Cassell’s statements were voluntary and were not coerced or taken at a time when he was impaired by intoxication to such a degree that would have precluded him from understanding his rights.

The standard of review of a district court’s denial of a motion to suppress is whether the court’s findings of fact are clearly erroneous, and whether those findings were correctly applied as a matter of law. State v. Williams (1995), 273 Mont. 459, 462, 904 P.2d 1019, 1021 (citing State v. Flack (1993), 260 Mont. 181, 188, 860 P.2d 89, 92). A finding of fact is clearly erroneous if it is not supported by substantial evidence, if the district court misapprehended the effect of the evidence, or if this Court has a definite and firm conviction that the district court made a mistake. State v. Loh (1996), 275 Mont. 460, 475, 914 P.2d 592, 601 (citing State v. Hermes (1995), 273 Mont. 446, 449, 904 P.2d 587, 589).

. The Fifth Amendment to the United States Constitution guarantees that no person “shall be compelled in any criminal case to be a witness against himself. ...” Similarly, Article II, Section 25 of the Montana Constitution provides that “[n]o person shall be compelled to testify against himself in a criminal proceeding.” In Miranda, the United States Supreme Court stated that the privilege against self-incrimination is fulfilled “only when the person is guaranteed the right ‘to remain silent unless he chooses to speak in the unfettered exercise of his own will.’ ” Miranda, 384 U.S. at 460, 86 S.Ct. at 1620, 16 L.Ed.2d at 715 (citing Malloy v. Hogan (1964), 378 U.S. 1, 8, 84 S.Ct. 1489, 1493, 12 L.Ed.2d 653, 659).

An individual may waive his Fifth Amendment rights only if the waiver has been made voluntarily, knowingly and intelligently. Miranda, 384 U.S. at 444, 86 S.Ct. at 1612, 16 L.Ed.2d at 707. See also State v. Allies (1979), 186 Mont. 99, 109, 606 P.2d 1043, 1049. The voluntariness of a'confession is largely a factual question to be determined by taking into account the totality of the circumstances under which the confession was made. Loh, 914 P.2d at 601 (citing State v. Mayes (1992), 251 Mont. 358, 376, 825 P.2d 1196, 1208). The totality of the circumstances includes several factors: the defendant’s age and level of education; the interrogation technique used by the police; whether the defendant was advised of his or her Miranda rights; the defendant’s prior experience with the criminal justice system and police interrogation; the defendant’s background and experience; and the defendant’s demeanor, coherence, articulateness, and capacity to make full use of his or her faculties. Loh, 914 P.2d at 601-02. We also stated in Loh that

a confession or admission extracted by any sort of threat or violence, by the exertion of any improper influence, or by any direct or implied promises, however slight, has the potential for being involuntary.

Loh, 914 P.2d at 602 (citing State v. Phelps (1985), 215 Mont. 217, 224, 696 P.2d 447, 451).

Section 46-13-301(1), MCA, authorizes a motion to suppress any confession or admission given by a defendant on the basis that the statement was involuntary. Furthermore, at a hearing concerning the merits of a motion to suppress, the State has the burden of proving, by a preponderance of the evidence, that the confession or admission was voluntary. Section 46-13-301(2), MCA.

The State concedes that Cassell was in custody at the time of the interrogations and that the officers had a duty to inform Cassell of his Miranda rights. Cassell was first interrogated at 12:40 pm on November 19, 1994, only one or two hours after he had been taken into custody. Detective George Jensen and Undersheriff Jay Bell conducted the interrogation. At the hearing on his motion to suppress, Cassell testified that he was not advised of his Miranda rights during this interview. However, both Jensen and Bell testified that Jensen informed Cassell of his Miranda rights by reading the advisement of rights from a card Jensen had in his possession. The officers also testified that they informed Cassell that they were conducting a criminal investigation. They obtained the correct spelling and pronunciation of Cassell’s name and asked him if he had any questions about his rights and whether he would like to have an attorney present.

Jensen and Bell testified that Cassell indicated he understood his rights and was willing to talk. Jensen testified that he obtained Cassell’s permission to tape-record the remainder of the interview. Jensen did not have Cassell acknowledge on tape that he had been informed of his rights before Jensen conducted the 5-minute question and answer session. At the conclusion of this interview, Cassell was taken out and placed in a holding area. Jensen testified that he did not have Cassell sign a written waiver of rights as it was not common practice in Yellowstone County to do so.

Cassell was brought back into the interrogation room at 2:48 pm that same day. Jensen and Bell were again present. Jensen testified that he asked Cassell if he would like his rights read to him again, but Cassell stated that he understood what his rights were. Jensen informed Cassell that his statement was not consistent with what the other individuals present at the time of the murder had told them. After 5 or 10 minutes of conversation, Cassell gave permission to again be recorded.

Cassell testified that during this second interview, the officers told him that Montana had a death penalty and if Cassell cooperated they would see if they could get him 110 years rather than hanging. Jensen testified that one of the people he interviewed that day, possibly Cassell, had asked him if Montana was a death penalty state and he responded that it was but that application of the death penalty would be determined by others.

After the tape recorder was turned on, Jensen conducted a 3-min-ute question and answer session with Cassell. However, Jensen did not affirm on the tape that Cassell had been advised of his rights. It was in this second interview that Cassell incriminated himself.

At noon the following day, Jensen and Officer Rosenberg of the Laurel Police Department interviewed Cassell. Jensen testified that he again advised Cassell of his Miranda rights by reading the warnings from a card prior to the interview. Jensen testified that Cassell objected to having his statement recorded this time but that Cassell did go over his previous statement. Cassell later claimed that he denied the officers’ request for another interview, hence there was no third interview.

Cassell contends on appeal that the District Court erred in denying his motion to suppress because the State failed to prove by a preponderance of the evidence: that the officers properly advised him of his Miranda rights; that the officers obtained a knowing, intelligent and voluntary waiver of his constitutional right against self-incrimination; or that he voluntarily gave any statement.

Cassell relies on State v. Grey (1995), 274 Mont. 206, 907 P.2d 951, for the proposition that law enforcement officers must record a defendant’s waiver of his rights. Cassell contends that the State’s failure of proof is “most evident in its willful refusal to record or otherwise preserve some record of the alleged advisement of the Miranda warnings. ...”

Grey is factually distinguishable from the instant case. In Grey, the Miranda warnings were inadequately given. Moreover, the law enforcement officers used impermissible tactics, including lying and deception, to obtain Grey’s confession. Additionally, there was no clear evidence that Grey waived his rights. Here, while the giving of the warnings and the waiver were not tangibly recorded, the trial court observed the witnesses and found that the warnings were adequately given and waived and that no impermissible tactics were used.

Law enforcement officers should be encouraged to preserve a tangible record of advising defendants of their rights and a defendant’s waiver of those rights. To the extent that they do not, that failure will be viewed with distrust. We declined in Grey, however, to require that interviews be tape recorded. How the record is preserved is still up to the law enforcement officers. Grey did not set out a rule of exclusion, but a guideline for weighing evidence. Here the law enforcement officers established to the court’s satisfaction that the Miranda warnings were properly given and that no impermissible tactics were used and that under the totality of the circumstances the confessions were voluntary. That is all that is required. The fact that the warnings and waiver were not preserved tangibly, even if viewed with distrust, does not terminate the inquiry, if the court is satisfied from all the available evidence, that the State’s burden of proof was met.

Based on the totality of the circumstances, we conclude that Cassell’s statements were made voluntarily and that his waiver of his Fifth Amendment rights was made knowingly, intelligently and voluntarily. Cassell was 43 years old at the time of the interrogations and he had a lengthy police record. Thus, he was familiar with the criminal justice system and police interrogation methods. None of the three interrogations were overly long and no threats were made. Moreover, as the District Court pointed out, the answers given by Cassell to the questions asked of him in the taped interviews were appropriate to the questions, thereby refuting Cassell’s argument that he was too intoxicated to understand what was happening.

Accordingly, we hold that the District Court did not err in denying Cassell’s motion to suppress his confession.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES HUNT and ERDMANN concur.

JUSTICE TRIEWEILER

specially concurring.

I concur with the result of the majority opinion for two reasons. First, the interrogation of Walter Cassell was done prior to the issuance of our decision in State v. Grey (1995), 274 Mont. 206, 907 P.2d 951. Second, even the Grey decision did not require that Miranda advice be tape recorded. However, I see no reason why Miranda warnings and a suspect’s consent to interrogation should not be recorded when the means to so do are readily availáble, and therefore, write separately to indicate that, in the future, I would require either a written waiver of a defendant’s right to remain silent, or a record of the Miranda advice that was given to that person and his or her response.

In this case, Cassell was interviewed on three separate occasions. Portions of two interviews were recorded, including his incriminating statements. However, for some reason, when he was advised of his rights pursuant to the Fifth Amendment to the United States Constitution during the first interview, and when he was reminded of those rights during the second interview, the recorder had not been turned on. Therefore, there is no record that Cassell was informed of his rights, and there is no record that he waived those rights.

The investigating officers contend that Cassell was advised of his rights and did waive them, but that that part of the conversation was not recorded because during that time they were establishing rapport with the suspect. Cassell denies that he was given any warning, and denies that he waived his rights. The trial court, and this Court on review, are required to speculate about what actually transpired, based on the relative credibility of the witnesses to the conversation. It is no secret that law enforcement will nearly always win that contest. Therefore, they have no incentive to record that part of the conversation, and it follows, they have little incentive to actually give the required advice.

On the other hand, assuming the advice was given, that it was understood, and that the rights were waived, why not record the conversation and avoid the inevitable challenge to the admission of confession? That simple practice would have saved time for the prosecuting attorney, the defense attorney, the trial court, and this Court because it would have established with certainty that Cassell’s statement was either voluntary or that it should be suppressed, in compliance with the Constitution, as applied in Miranda v. Arizona (1966), 384 U.S. 436, 86 S.Ct. 1062, 16 L.Ed.2d 694.

The majority correctly concludes that when a defendant moves to suppress a confession or admission on the basis that it was involuntary, the State has the burden to prove, by a preponderance of the evidence, that the confession or admission was voluntary. Section 46-13-301(2), MCA. The majority then notes that the voluntariness of a confession is largely a factual question which must be resolved by taking into account the totality of the circumstances surrounding the confession, and lists six factors to be considered. Three of those six factors include: (1) the interrogation technique used by the police; (2) whether the defendant was advised of his or her Miranda rights; and (3) the defendant’s demeanor and capacity to make full use of his or her faculties. The problem is that, in this case, as in Grey, we have no direct knowledge of any of those three factors. The trial court, and this Court, are required to speculate about all three factors by trying to weigh the relative credibility of the people involved in the interrogation. Such an unreliable process is inexcusable when it is unnecessary because a means of absolute verification was readily available.

In Grey, we stated that:

We do hold, that, in the context of a custodial interrogation conducted at the station house or under other similarly controlled circumstances, the failure of the police officer to preserve some tangible record of his or her giving of the Miranda warning and the knowing, intelligent waiver by the detainee will be viewed with distrust in the judicial assessment of voluntariness under the totality of circumstances surrounding the confession or admission. That is all the more so where the evidence demonstrates that, as here, the police officer made a conscious decision not to secure a written waiver or otherwise preserve his giving of the Miranda warning and the detainee’s waiver on the premise that to do so would alert the accused to exercise his rights and, thus, jeopardize the interrogation.

Grey, 274 Mont, at 214, 907 P.2d at 956.

The excuse given for not recording Cassell’s waiver of his Fifth Amendment rights is equally inadequate. In this case, his interrogators wanted to establish a rapport with him. However, that apparently having been accomplished, nothing prevented them from obtaining an acknowledgment from Cassell, once the recorder had been turned on, that he had been advised of his rights and had waived them. Certainly, that kind of acknowledgment could not have been any more disturbing to him than being asked during a tape recorded interview whether he committed deliberate homicide.

This is now the second case in which we have dealt with the issue of whether it is necessary to record Miranda warnings and Fifth Amendment waivers, where feasible. I would conclude, as the Minnesota Supreme Court did in State v. Scales (Minn. 1994), 518 N.W.2d 587, that following two such admonitions, further refusal to record custodial interrogations is unreasonable and should result in suppression of any incriminating statements made during those interrogations. In that case, after issuing two previous warnings, that Court stated that:

[W]e hold that all custodial interrogation including any information about rights, any waiver of those rights, and all questioning shall be electronically recorded where feasible and must be recorded when questioning occurs at a place of detention. If law enforcement officers fail to comply with this recording requirement, any statements the suspect makes in response to the interrogation may be suppressed at trial. The parameters of the exclusionary rule applied to evidence of statements obtained in violation of these requirements must be decided on a case-by-case basis. Following the approach recommended by the drafters of the Model Code of Pre-Arraignment Procedure, suppression will be required of any statements obtained in violation of the recording requirement if the violation is deemed “substantial.” This determination is to be made by the trial court after considering all relevant circumstances bearing on substantiality, including those set forth in § 1503(2) and (3) of the Model Code of Pre-Arraignment Procedure. If the court finds a violation not to be substantial, it shall set forth its reason for such finding. The rule and the remedy will apply prospectively from the date of the filing of this opinion.

Scales, 518 N.W.2d at 592-93 (footnote omitted).

When the means is available, as it was in this case, there is no practical justification for the State’s failure to record a custodial interrogation. By its failure to do so, it jeopardizes the prosecution by risking suppression of incriminating statements which have been legally obtained. Just as importantly, it makes any determination that detainees have been illegally questioned virtually impossible. Neither outcome is acceptable when the means to avoid it is readily available.

Therefore, in the future, I will follow the rule from Scales and vote to suppress all criminal admissions made during custodial interrogations when there is neither a written waiver of the detainee’s rights, nor an electronic record of the State’s advice and the detainee’s response, assuming it is feasible to do one or the other.

For these reasons, I specially concur with the majority opinion.

JUSTICE HUNT joins in the foregoing concurring opinion.


source: Caselaw Access Project

author: JUSTICE NELSON JUSTICE TRIEWEILER

license: Public Domain

text:
    MARTIN “DOC” BASTA, Plaintiff and Appellant, vs. CRAGO, INC., d/b/a PRINTING CENTER, a Montana corporation, Defendant and Respondent.
    No. 96-030.
    Submitted on Briefs July 18, 1996.
    Decided December 31, 1996.
    53 St.Rep. 1464.
    280 Mont. 408.
    930 P.2d 78.

      See C.J.S. Master and Servant § 48.
    For Appellant: John F. Lynch, Lynch & Chisholm, Great Falls.
    For Respondent: Lon T. Holden, Jardine, Stephenson, Blewett & Weaver, Great Falls.
   JUSTICE NELSON

delivered the Opinion of the Court.

This is an appeal from the Eighth Judicial District Court, Cascade County. Following a hearing, the District Court granted Defendant Crago’s motion for summary judgment. From this judgment, Plaintiff Basta appeals. We affirm.

The sole issue raised on appeal is whether the District Court erred when it concluded that Basta and Crago did not enter into a written contract of employment for a specific term for the purposes of § 39-2-912(2), MCA (1991).

FACTUAL AND PROCEDURAL BACKGROUND

Defendant Crago, Inc. (Crago) operates a locally-owned general printing business known as the Printing Center located in Great Falls, Montana. Craig Barber (Barber) is the president, chief executive officer and the only shareholder of the business. Therefore, Barber is Crago’s agent. Plaintiff Martin ‘Doc” Basta (Basta) worked at a different local printing shop in Great Falls from 1971 until Barber hired him to work as shop foreman at the Printing Center in March 1992.

In December 1991, Barber contacted Basta about hiring him to work for the Printing Center. Over the next two months, Barber sent Basta two letters and a memorandum concerning their employment negotiations. The memorandum, dated January 23,1992, referred to “Terms of employment” and was signed by Barber. The memorandum set forth several items including medical insurance coverage, vacation time, a salary and bonus figure for the first year of employment, a salary and undetermined bonus system for the second year of employment, and a description of the employment position and responsibilities. Barber sent the memorandum to Basta with a letter explaining that the memorandum was a “written copy of what we had talked about previously” and requesting that Basta contact Barber so that they could discuss Basta’s starting date. On March 1, 1992, Basta began working at the Printing Center.

Barber had hired Basta to perform the shop foreman duties that Barber had performed previously. Barber planned for Basta to take over Barber’s old duties so that Barber could attend to matters concerning expansion of the business. However, Barber’s plans were not realized and the economic conditions of the business declined. In response to this economic decline, Barber determined that the payroll must be reduced. Consequently, he discharged Basta on February 26, 1993, and one other employee.

On February 23, 1994, Basta filed his complaint, alleging that he had been wrongfully discharged without good cause pursuant to § 39-2-904(2), MCA (1991). Crago answered and denied the allegations of Basta’s complaint. Crago then moved for summary judgment, alleging that Basta’s discharge was for good cause. To support the motion, Crago submitted an affidavit indicating that Basta was terminated from employment due to financial stresses within the corporation, a legitimate business reason. The District Court initially denied Crago’s summary judgment motion. However, Crago filed a motion for reconsideration. Initially, Basta opposed Crago’s motion for reconsideration. However, Basta ultimately conceded that Crago’s motion should be granted and requested leave to file an amended complaint. On September 6, 1995, the District Court granted both Crago’s motion for reconsideration and Basta’s motion for leave to file an amended complaint.

Basta’s amended complaint set forth two claims: 1) breach of contract and 2) breach of the implied covenant of good faith and fair dealing. Crago answered and denied the allegations. Thereafter, Crago filed a Motion for Summary Judgment Concerning the Amended Complaint. Crago alleged that the parties never entered into a written contract for a specific term, and, therefore, Basta’s claims were barred by Montana’s Wrongful Discharge From Employment Act, § 39-2-901, et seq., MCA (1991). After reviewing the briefs and considering the testimony of Basta and the arguments of counsel at the hearing on the motion, the District Court granted Crago’s motion for summary judgment on December 12,1995. It is from this judgment that Basta appeals.

STANDARD OF REVIEW

Our standard of review for an appeal from an order granting summary judgment is de novo. Motarte v. Northern Montana Joint Refuse Disposal Dist. (1995), 274 Mont. 239, 242, 907 P.2d 154, 156. We review the order granting summary judgment using the same evaluation as did the district court, based on Rule 56, M.R.Civ.P. Motarte, 907 P.2d at 156. Our inquiry is set out as follows:

The movant must demonstrate that no genuine issues of material fact exist. Once this has been accomplished, the burden then shifts to the non-moving party to prove, by more than mere denial and speculation, that a genuine issue does exist. Having determined that genuine issues of fact do not exist, the court must then determine whether the moving party is entitled to judgment as a matter of law. We review the legal determinations made by a district court as to whether the court erred.

Bruner v. Yellowstone County (1995), 272 Mont. 261,264-65,900 P.2d 901, 903 (citations omitted).

In the case before us, Basta has not raised an issue concerning any genuine issues of material fact. Instead, Basta only raises the legal issue whether Basta and Crago entered into a written contract of employment for a specific term. Accordingly, we review the District Court’s conclusion that Montana’s Wrongful Discharge From Employment Act (the Act) bars Basta’s breach of contract and breach of covenant claims under § 39-2-913, MCA (1991), because the parties did not enter into a written contract of employment for a specific term as required by § 39-2-912(2), MCA (1991), to determine if the court was legally correct.

DISCUSSION

Did the District Court err when it concluded that Basta and Crago did not enter into a written contract of employment for a specific term for the purposes of § 39-2-912(2), MCA (1991)?

Basta contends that he and Barber entered into a written contract of employment for a specific term, and, therefore, the Act does not bar his claims for breach of contract and breach of implied covenant of good faith and fair dealing. Crago responds that Barber and Basta did not enter into a written contract of employment for a specific term, and, therefore, the Act does bar Basta’s claims. We conclude that the District Court correctly determined that the parties did not enter into a written contract of employment for a specific term, and that the court properly granted Crago’s motion for summary judgment.

The Act provides that “no claim for discharge may arise from tort or express or implied contract.” Section 39-2-913, MCA (1991). We have determined that the plain meaning of “claim for discharge” is simply “those claims for damages caused by an asserted wrongful discharge.” Beasley v. Semitool, Inc. (1993), 258 Mont. 258, 261, 853 P.2d 84, 86. Therefore, not all tort or contract claims are barred by § 39-2-913, MCA (1991), merely because they arise from employment. Beasley, 853 P.2d at 86. Rather, only those tort or contract claims which are “for discharge” will be barred by § 39-2-913, MCA (1991). Beasley, 853 P.2d at 86.

In the present case, Basta bases both his breach of contract and breach of covenant claims on his discharge. First, Basta alleges that Crago violated the contract with Basta “by virtue of terminating [Basta] on February 26, 1993. ...” Second, Basta alleges that Crago violated its obligation to act in good faith with Basta “in that termination was false and dishonest in fact.” By virtue of this language contained in Basta’s amended complaint, we conclude that both claims are “completely and inextricably intertwined with and based upon” Basta’s discharge. See Beasley, 853 P.2d at 87. Consequently, Basta’s claims are “claims for discharge” and will be barred under § 39-2-913, MCA (1991), unless one of the exemptions to the Act applies.

The exemptions to the Act are set forth as follows:

39-2-912. Exemptions. This part does not apply to a discharge:

(1) that is subject to any other state or federal statute that provides a procedure or remedy for contesting the dispute. Such statutes include those that prohibit discharge for filing complaints, charges, or claims with administrative bodies or that prohibit unlawful discrimination based on race, national origin, sex, age, handicap, creed, religion, political belief, color, marital status, and other similar grounds.
(2) of an employee covered by a written collective bargaining agreement or a written contract of employment for a specific term. [Emphasis added.]

The issue raised on appeal is whether the parties entered into a written contract of employment for a specific term. If they did, Basta’s claims are exempted from the Act pursuant to § 39-2-912(2), MCA (1991), and will not be barred under § 39-2-913, MCA (1991). If not, Basta’s “claims for discharge” are preempted by the Act pursuant to § 39-2-913, MCA (1991), and will be barred.

In order for the exemption under § 39-2-912(2), MCA (1991), at issue here, to apply, there must be (a) a written contract and (b) this contract must be for a specified term. Under the plain language of the statute, if either the contract is not in writing or it is not for a specified term, then the exemption does not apply, and Basta’s claims will be barred. Without so deciding, we will simply assume for purposes of this appeal that Crago’s memorandum to Basta was a written contract and that Basta’s employment was therefore governed by a written contract. We make this assumption because our determination that, regardless, the contract was not for a specified term, is dispositive.

At best, the memorandum simply states Basta’s proposed salary for the first two years of his employment. In fact, nothing in the memorandum sets out a specific term, whether for two years or more. The memorandum not only fails to specify a termination date; it does not even designate a hiring date. Indeed, at the time Basta received the memorandum, the parties were still negotiating Basta’s starting date. This is evidenced by the letter Barber sent with the memorandum wherein Barber asked Basta to call him to discuss Basta’s starting date.

Moreover, Basta’s testimony at the summary judgment hearing held on November 6, 1995, shows that he was unclear as to what the parties had actually agreed would be the “specific term” of Basta’s employment:

Q: [Mr. Lynch, Basta’s attorney] Now, does that agreement [referring to the memorandum] — it—what are the terms of that agreement? Without reading it, I mean, you know, how long was your employment with him to be?
A: [Basta] When we first talked about this and came out with this, he said I would be with him for at least five years. ... And he told it in front of me and my wife, hell, I would be there for five years. He had no plans of me going anywhere, that he was going to keep me employed. So, then he came up with this “I’ll start you at this, and after a year I’ll start you at this figure, and if my business progresses, you’ll progress.”
Q: And let me ask you this. That agreement doesn’t say anything— how many years does that agreement cover?
A: Two years.
Q: Okay. Was there — when you got that agreement, was there any discussion about the five years?
A: Yes, there was. Like I say, he said it’s good for five years. Or longer. He just said, “I’m not going to let you go.” I just took the man for his word. I didn’t think I’d have to get a written contract or anything else. He says, “I’m going to do this for you the first year and second year. And you’re going to be with me.” I trusted him.. And I thought, you know, this is a good way for me to go. It’s what I like to do is to get shops going. So I didn’t say, ‘Well, okay, you’ve got to write up a five-year agreement or a two-year agreement” or anything. What he wrote down here I took to be a good agreement, that he would face up to it as a man.
Q: But what did you understand that agreement to be, as far as how long? That written agreement?
A: Two years.
Q: And why is that?
A: Because that’s all he did. He told me if — because it has down the first year I’ll get so much and the second year I’ll get so much. And he signed it. I didn’t know I’d have to have it notarized or anything else. Or that I’d have to sign it.
Q: Did he say in the cover letter or that agreement that if there was any disagreement with it on your part, that you would work it out?
A: Yes. That’s what it says.
Q: And did you disagree with it?
A: No, I did not. I accepted what he had written down here and gave to me.
Q: And did you feel that that was your agreement, what was written down?
A: Yes, I did.

After reviewing Basta’s testimony, it is apparent that while Basta regarded the memorandum as covering the first two years of his employment, he anticipated that his employment with Crago would last for “at least five years.” However, nothing in the evidence supports the conclusion that the parties agreed to either a two-year or a five-year employment term. Rather, the evidence supports the conclusion that the parties failed to agree to any specific term of employment at all; there was simply no meeting of the minds on the term of Basta’s employment — whether it was two years, five years or longer. Therefore, based on the uncertain nature of both Basta’s testimony and the memorandum, we conclude that the parties did not enter into a contract of employment “for a specific term.”

Basta also alleges that Crago violated the implied covenant of good faith and fair dealing and Basta seeks damages for emotional distress. As we stated above, Basta’s claims are not exempted from the Act under § 39-2-912(2), MCA (1991), because the parties did not enter into a written contract of employment for a specific term. Therefore, § 39-2-913, MCA(1991), controls and Basta’s tort claim for breach of implied covenant of good faith is barred. Furthermore, under the Act, Basta cannot seek damages for emotional distress. Section 39-2-905(3), MCA (1991). See also Dagel v. City of Great Falls (1991), 250 Mont. 224, 238, 819 P.2d 186, 194.

In sum, we conclude that Basta and Crago did not enter into a written contract of employment “for a specific term.” Therefore, Basta’s contract and covenant claims are not exempted from the Act pursuant to § 39-2-912(2), MCA (1991). Accordingly, we affirm the District Court’s conclusion that Basta’s breach of contract and breach of implied covenant of good faith and fair dealing are barred by the Act pursuant to § 39-2-913, MCA (1991).

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES GRAY and ERDMANN concur.

JUSTICE TRIEWEILER

dissenting.

I conclude that the parties did enter into a written contract of employment for a specific term within the meaning of § 39-2-912(2), MCA (1991), and therefore, dissent from the majority opinion.

Martin “Doc” Basta worked for Advanced Litho Printing Shop in Great Falls for twenty-one years until he was induced to leave that employment with a written promise from Craig Barber, owner and operator of the Printing Center, that he would be employed on more favorable terms at that business for at least two years. However, less than one year after he began work for Barber, he was told that the Printing Center could not afford him and his employment was terminated.

Section 39-2-912(2), MCA (1991), provides that the Wrongful Discharge from Employment Act found at §§ 39-2-901 to -915, MCA, does not preclude a person covered by a written contract of employment for a specific term from enforcing the terms of the employment contract.

Section 28-2-102, MCA, sets forth the necessary elements of a contract. It provides as follows:

It is essential to the existence of a contract that there be:

(1) identifiable parties capable of contracting;
(2) their consent;
(3) a lawful object; and
(4) a sufficient cause or consideration.

The document which was submitted to Basta after being prepared and signed by Craig Barber, and which is relied on by Basta as a “written contract of employment for a specific term” provided as follows:

January 23, 1992
TO: Doc Basta
FROM: Craig Barber
RE: Terms of employment
INSURANCE, The Printing Center will pay medical insurance for you and your wife.
VACATION & DAYS OFF 3 weeks paid vacation plus 5 days off as needed.
1ST YEAR $35,000 a year salary plus a bonus not to exceed $1,000 if predetermined goals are met.
2ND YEAR $36,000 a year salary with a bonus system, (to be determined)
POSITION & RESPONSIBILITIES Position: Working Foreman
Camera
Shooting
Stripping
Training
Route & schedule jobs.
Quality control.
Employee supervision and training.
Involvement in customer relations as needed.
Assisting with the transition from conventional camera work to computer.
Other duties as need arises
I hope that you .find this agreeable and as we had discussed. Sincerely,
/s/ Craig Barber
Craig Barber

The document obviously included identification of the parties, the consent of Craig Barber, a lawful object, and sufficient consideration. There is no question presented regarding the capacity of either party to contract; Barber simply contends, and the District Court agreed, that because Basta had not signed the agreement, his consent had not been provided, and therefore, the agreement was incomplete. The District Court gave the following rationale for its decision:

The Court found quite credible the Plaintiff’s testimony, that he left a good job in reliance upon the Defendant’s offer of employment for a term of at least two years, but that offer had to be finalized into a “written contract of employment for a specific term,” if it is to take the Plaintiff’s case outside the parameters of the Wrongful Discharge Act. Testimony presented by the Plaintiff established that the Plaintiff accepted the Defendant’s offer by leaving his prior employment and beginning work with the Defendant, but his acceptance was not in writing as presented to the Court, but an acceptance based on performance. Unless both the offer and acceptance is finalized in the form of written contract, it does not appear to be exempted from the requirements of the Wrongful Discharge Act. Section 39-2-912, MCA (1991).

I disagree. When Basta actually went to work for Barber and fully performed, according to the terms of the contract, from March 1, 1992, until he was terminated on February 26,1993, he accepted the terms proposed by Barber by performing his responsibilities set forth in the contract. Section 28-2-503, MCA, provides for acceptance in the following manner:

(1) Performance of the conditions of a proposal or the acceptance of the consideration offered with a proposal is an acceptance of the proposal.
(2) A voluntary acceptance of the benefit of a transaction is equivalent to a consent to all the obligations arising from it, so far as the facts are known or ought to be known to the person accepting.

Based on Basta’s acceptance by performance of the contract terms proposed by Barber, I conclude that there was a completed contract of employment for a specific term and that all essential terms of the contract were in writing. I would conclude that, when the employer has set forth the conditions of employment in a written document which includes the term of employment and is signed by the employer, the requirements of § 39-2-912, MCA (1991), have been satisfied. The purpose, after all, of that section’s requirement that there be a written contract is to protect the employer by limiting his employee’s remedies to the provisions of the Wrongful Discharge From Employment Act, unless it can be documented that the employer offered him or her something greater than the Act’s protections. Here, there is no question about the terms of employment which were offered by the employer. Therefore, the requirements of § 39-2-912(2), MCA (1991), have been satisfied.

However, based on Basta’s testimony to the effect that he felt Barber had committed to a term greater than two years during their conversations, the majority concludes that the contract in question does not provide for a specific term. I disagree again.

The written contract, which is set forth in this opinion, provides for a first year and a second year. It provides for the salary to be paid dining each year, and a bonus to be determined at a later date. Based on the plain language in the contract, it provided for a minimum term of two years employment.

At most, the term of employment in defendant’s proposed written contract is unartfully drawn and leaves some question about whether the term was to extend beyond two years. However, as we have repeatedly held, the author of a written agreement should not be able to avoid liability for performance of that agreement based on ambiguities which are his or her own creation. Those ambiguities are to be construed in favor of the party who did not draft the agreement. See, e.g., Topco, Inc. v. State (1996), 275 Mont. 352, 360, 912 P.2d 805, 810; Mueske v. Piper, Jaffray & Hopwood, Inc. (1993), 260 Mont. 207, 216,859 P.2d 444,449-50; St. Paul Fire & Marine Ins. Co. v. Cumiskey (1983), 204 Mont. 350, 363, 665 P.2d 223, 229.

For these reasons, I would reverse the order of the District Court and remand to that court for further evidence regarding any defenses Barber might have to Basta’s contract claim.

JUSTICES HUNT and LEAPHART join in the foregoing dissenting opinion.


author: JUSTICE LEAPHART JUSTICE TRIEWEILER

text:
    JACK G. PLETCHER, Petitioner and Appellant, v. MONTANA DEPARTMENT OF REVENUE, Respondent and Respondent.
    No. 96-398.
    Submitted on Briefs November 7, 1996.
    Decided December 31, 1996.
    53 St.Rep. 1470.
    280 Mont. 419.
    930 P.2d 656.
    See C.J.S. Taxation § 1092.

      For Appellant: James M. Ramlow; Kaufman, Vidal & Hileman, Kalispell.
    For Respondent: Deborah Harten, Tax Counsel, Special Assistant Attorney General, Montana Department of Revenue, Helena.
   JUSTICE LEAPHART

delivered the Opinion of the Court.

The Montana Department of Revenue (Department) assessed taxes, interest and penalty against the appellant, Jack G. Pletcher (Pletcher), for Montana income earned from his employment in Alaska during the years 1982 through 1992. Pletcher appealed the assessment to the State Tax Appeal Board (STAB), which ruled that he was a resident of Montana for income tax purposes during that period of time. Pursuant to the Montana Administrative Procedure Act, Pletcher then requested judicial review of the STAB ruling in the Eleventh Judicial District Court. He appeals from the District Court ruling that he was a resident of Montana for income tax purposes. We affirm the decision of the District Court.

Factual Background,

The facts as they were developed by the Department’s hearings examiner and again by STAB are as follows:

Pletcher was employed by Udelhoven Oilfield System Services, Inc. on the Alaska North Slope from September, 1981 to October, 1992. During that period of time, Pletcher lived and worked in Alaska, visiting his wife and children in Columbia Falls, Montana, during regularly scheduled leave periods.
Pletcher’s Alaska work for Udelhoven was full time. Within a few years he assumed managerial responsibilities for Udelhoven. Udelhoven supplied general contracting services, including construction and maintenance for ARCO and British Petroleum facilities on the Prudhoe Bay and Kuparuk River “reservations” on the Alaska North Slope. Pletcher supervised as many as 100 employees at a time and took charge, from 1986 to 1989, of Udelhoven’s entire North Slope operations. From 1989 to 1992, he acted as its senior project manager.

STAB concluded that Pletcher’s presence in Alaska was not for the purpose of taking on a series of “temporary” jobs.

He was in fact a permanent employee, for employment purposes, working the same periods, shifts, and hours as other employees of this company .... The Board agrees with [Pletcher] that he was not taking on some seventy to eighty separate “temporary” jobs for the same employer at the same location over an eleven year period.

Prior to 1982, Pletcher lived in Columbia Falls, Montana, with his wife and children and filed Montana resident income tax returns. During his decade of employment in Alaska, Pletcher made regular trips to Montana to stay with his family in Columbia Falls. These trips, with one exception, never exceeded more than two and one-half weeks. He continued in this routine until Udelhoven’s North Slope operations terminated in 1992. In September, 1991, while on a visit to Montana, Pletcher purchased a Montana nonresident fishing license.

Pletcher spent the majority of his time in Alaska. He had a permanent apartment unit for his private residence and storage on the North Slope. Pletcher was assigned his own company vehicle and oilfield identity cards which were required in place of an Alaska driver’s license.

During his eleven years of employment in Alaska, Pletcher filed federal income tax returns, but did not file Montana income tax returns on his Alaska earnings, having been advised by his accountant that Montana returns were not required. Pletcher did not pay state income tax on his Alaska earnings because Alaska does not levy such a tax. In November of 1991, the Montana Department of Revenue sent an inquiry letter to Pletcher requesting that he file returns for the years 1985 through 1990 or explain why he had not filed those returns. Pletcher responded by explaining that he had been absent from Montana for more than half of each of those years, had earned all of his income outside of Montana, and had declared himself a nonresident on a Montana conservation license earlier that year.

In January of 1992, Pletcher filed 1985 through 1990 Montana income tax returns jointly with his wife. The returns listed Pletcher as a part-year resident of Montana. Subsequently, Pletcher filed amended returns for those years showing his filing status as married, filing separately, nonresident. He filed similar nonresident returns for the years 1983, 1984, and 1991. The Department adjusted all of the returns to reflect full-year residence status and assessed Montana income taxes, interest and penalties accordingly.

Standard of Review

The District Court was called upon to determine whether STAB’s conclusion of law that Pletcher was subject to Montana state income tax on his earnings in Alaska was correct. Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470,803 P.2d 601. Likewise, we review the district court’s interpretation to determine whether it correctly applied the law. Isaak v. Smith (1993), 257 Mont. 176, 848 P.2d 1014 (overruled on other grounds).

The issue presented for our resolution is as follows:

Did the District Court err by finding that, although Pletcher was a full-time, permanent employee in Alaska, he was still liable for payment of Montana income taxes on his Alaska wages because he still maintained a domicile in the state of Montana?

Discussion

Resolution of this appeal hinges on a determination as to whether Pletcher, during the years that he worked in Alaska, was a resident of Montana under the provisions of § 15-30-101(16), MCA, which states:

(16) “Resident” applies only to natural persons and includes, for the purpose of determining liability to the tax imposed by this chapter with reference to the income of any taxable year, any person domiciled in the state of Montana and any other person who maintains a permanent place of abode within the state even though temporarily absent from the state and who has not established a residence elsewhere.

Pletcher contends that the finding by the Department and STAB that he was permanently employed in Alaska on a full-time basis inescapably leads to the conclusion that his absence from Montana was not “temporary” and thus he does not fit within the § 15-30-101(16), MCA, definition of a “resident” subject to tax. We reject Pletcher’s contention that permanent employment out of state necessarily translates to permanent absence from the state.

Section 15-30-101(16), MCA, clearly provides that “resident” includes all other persons who have a “permanent place of abode” in the state of Montana. The Department’s regulations define “permanent place of abode” as a dwelling place permanently maintained in Montana which he habitually uses as his home. ARM 42.15.104. The agency’s interpretation of a statute governing its operations is entitied to deference from this Court. Department of Revenue v. Kaiser Cement Corp. (1990), 245 Mont. 502, 803 P.2d 1061.

Although Pletcher maintained permanent employment in Alaska, the record is clear that he came to his home in Columbia Falls when he did not have to work. Columbia Falls was the home he established before he went to Alaska and is the home in which his wife and family continued to reside in his absence.

Section 1-1-215(1), MCA, provides that a residence is where a person remains when not called elsewhere for labor or other special or temporary purposes and to which he returns in seasons of repose. Further, one’s domicile is not lost until another is gained. ARM 42.15.102(1), provides as follows:

A domicile, once established, continues until abandoned and anew one acquired. A change in domicile is accomplished only by a union of act and intent. There must be intent to change one’s domicile, actual removal, and acquisition of a new domicile. Domicile is not changed by temporary absence or by absence for a special or particular purpose.

In the present case, although Pletcher worked in Alaska, his ties to Alaska were strictly work-related. The record does not evidence any intent on the part of Pletcher to change his domicile from Montana to Alaska. Pletcher and his wife continued their ownership of the home and farm at Columbia Falls and his wife and family remained on the farm throughout the entire period. Pletcher kept his Montana driver’s license all eleven years he was in Alaska and his name remained with his wife’s name on certain Montana bank accounts.

Section 15-30-132, MCA, provides “[i]f a resident obtains employment outside the state, income from such employment is taxable in Montana.” When this statutory provision is read in conjunction with § 15-30-101(16), MCA, it is clear that the legislature meant to tax residents of this state who work outside the state but maintain a domicile or residence in the state of Montana. Pletcher’s contention that he can maintain his domicile within the state of Montana and hold down permanent employment outside the state of Montana free of Montana taxation would defeat this clear legislative intent.

The legislative intent is further buttressed by the provisions of § 1-1-215, MCA, which provide:

Residence — rules for determining. Every person has, in law, a residence. In determining the place of residence the following rules are to be observed:

(1) It is the place where one remains when not called elsewhere for labor or other special or temporary purpose and to which he returns in seasons of repose.
(2) There can only be one residence.
(3) A residence cannot be lost until another is gained.
(6) The residence can be changed only by the union of act and intent.

The record indicates that Montana was the state in which Pletcher remained when he was not called elsewhere for labor and to which he returned in seasons of repose. We also note that during tax years 1983,1984 and 1986, Pletcher claimed money spent on airline tickets to Alaska as away-from-home business expenses.

The Department relies on a decision from the Minnesota Supreme Court, Manthey v. Commissioner of Revenue (Minn. 1991), 468 N.W.2d 548. The Minnesota Supreme Court concluded that Manthey was a Minnesota taxpayer because he had maintained significant ties with Minnesota while working in Alaska. While he was employed in Alaska, Manthey supplied financial support for his wife and two children in Minnesota; he maintained his Minnesota driver’s license; owned, licensed and registered vehicles in the state of Minnesota; purchased resident hunting licenses in the state of Minnesota; purchased and maintained rental property; and kept joint checking accounts in Minnesota. Manthey, 468 N.W.2d at 549.

Pletcher’s argument is even less compelling than Manthey’s in that Manthey had established stronger ties to the state of Alaska; he obtained an Alaska driver’s license; performed jury duty in Alaska; joined fraternal organizations, registered and licensed his car and trailer in Alaska; purchased Alaska resident hunting and fishing licenses and purchased Alaskan real estate. Manthey, 468 N.W.2d at 549. Pletcher, on the other hand, cannot make any of these claims. Although he did register to vote in Alaska, he did not do so until 1992, some nine months after the Montana Department of Revenue questioned his residency status. Furthermore, he never did exercise his right to vote in Alaska. Pletcher’s purchase of a non-resident conservation and fishing license in Montana in September of 1991 was approximately two months prior to the Department’s inquiry into his tax returns.

We hold that the District Court correctly interpreted the phrase “temporarily absent from the state” as it is used in § 15-30-101(16), MCA, as modifying persons domiciled in the state of Montana and who maintain a permanent place of abode in Montana. Pletcher’s permanent employment in Alaska does not equate to permanent absence from the state. The record supports the finding that Pletcher has maintained a permanent abode in Montana to which he has returned when he is not working in Alaska. Accordingly, the decision of the District Court is affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES ERDMANN, HUNT, NELSON and GRAY concur.

JUSTICE TRIEWEILER

dissenting.

I dissent from the majority’s conclusion that Jack G. Pletcher was a resident of Montana for purposes of income tax liability during the years 1982 through 1992. In order to arrive at that conclusion, the majority has necessarily had to extract a portion of the applicable residency statute and completely ignore the remaining language in the same statute.

The only relevant definition of “residency,” for purposes of determining whether Pletcher was a resident during the years at issue, is the definition found in Montana’s Income Tax Code at § 15-30-101(16), MCA. That section provides that:

“Resident” applies only to natural persons and includes, for the purpose of determining liability to the tax imposed by this chapter with reference to the income of any taxable year, any person domiciled in the state of Montana and any other person who maintains a permanent place of abode within the state even though temporarily absent from the state and who has not established a residence elsewhere.

(Emphasis added.)

The majority opinion uses “domiciled” and “person who maintains a permanent place of abode” interchangeably. “Domicile” is not otherwise defined in the majority opinion. Therefore, the discussion in the dissent is limited to the conclusion on which the majority’s decision is based. That conclusion is that: “Section 15-30-101(16), MCA, clearly provides that ‘resident’ includes all other persons who have a ‘permanent place of abode’ in the state of Montana.”

The majority completely ignores the remainder of the definition which further limits residency to those who are “temporarily absent from the state” and have “not established a residence elsewhere.” (Emphasis added.) In other words, if Pletcher was located in Alaska permanently, or if he had established residency in Alaska, it makes no difference that he had a permanent place of abode in Montana.

In spite of this plain language, neither the Department of Revenue’s hearing examiner, the State Tax Appeal Board, the District Court, nor the majority, have even considered the residency requirements for Alaska, or whether Pletcher satisfied those requirements. An examination of Alaska’s residency requirement leads to the conclusion that Pletcher clearly was a resident of Alaska. Alaska Stat. § 01.10.055 (1983) provides as follows:

(a)A person establishes residency in the state by being physically present in the state with the intent to remain in the state indefinitely and to make a home in the state.
(b) A person demonstrates the intent required under (a) of this section
(1) by maintaining a principal place of abode in the state for at least 30 days or for a longer period if a longer period is required by law or regulation; and
(2) by providing other proof of intent as may be required by law or regulation, which may include proof that the person is not claiming residency outside the state or obtaining benefits under a claim of residency outside the state.
(c) A person who establishes residency in the state remains a resident during an absence from the state unless during the absence the person establishes or claims residency in another state, territory or country, or performs other acts or is absent under circumstances that are inconsistent with the intent required under (a) of this section to remain a resident of this state.

Pletcher satisfied all the requirements for residency in the state of Alaska. He was employed there for over ten years on a full-time basis. He had a permanent apartment there (private homes were not available). He spent seven to eight months per year in Alaska during this entire time, and visited his family in Columbia Falls during only those brief periods when he was granted leave. His permanent return to Montana had not been planned. It occurred because his employer’s operations terminated in 1992. In the terms of the statute, he was physically present in the state with the intent to remain in the state indefinitely, as demonstrated by the fact that his principal place of abode was in that state for more than thirty days, and other than a brief period during 1983, he did not claim residency outside of the state for purposes of obtaining benefits.

The State Tax Appeal Board (STAB) specifically found that:

It is clearly recognized that Mr. Pletcher was not in Alaska for temporary employment purposes. He was in fact a permanent employee, for employment purposes, working the same periods, shifts, and hours as other employees of this company, according to the evidence that has been presented to the Board. The Board agrees with the taxpayer that he was not taking on “some seventy to eighty separate ‘temporary’jobs for the same employer at the same location over an eleven year period.”

Therefore, based on the STAB’s own finding, Pletcher was not out of the state temporarily.

The majority completely ignores those parts of § 15-30-101(16), MCA, which link residency in Montana to a “temporary absence” from the state, and which exclude from residency those persons who have established a residence elsewhere.

Instead, the majority discusses those factors set forth in § 1-1-215(1), MCA; § 42.15.102(1), ARM, which describes how a new domicile is acquired; and the Minnesota Supreme Court’s decision in Manthey v. Commissioner of Revenue (Minn. 1991), 468 N.W.2d 548.

Those factors for determination of residency which are set forth in § 1-1-215(1), MCA, are irrelevant. Residency for purposes of income tax liability is specifically defined in Montana’s Tax Code at § 15-30-101(16), MCA.

The discussion at § 42.15.102(1), ARM, regarding the method for changing domicile, sheds no light on the issue before the Court because domicile is not defined, and if it is being used interchangeably with residency, it is clear that Pletcher changed his domicile by intending to do so and actually removing himself from Montana and acquiring a new domicile. Furthermore, as is apparent from the previous discussion, his absence from this state was by no means temporary.

Finally, the Minnesota Supreme Court’s decision in Manthey is irrelevant to the discussion in this case because that decision was not based on a statutory definition of residency similar to the Montana Tax Code’s definition, by which we are bound.

The majority also attaches some significance to the fact that during tax years 1983,1984, and 1986 Pletcher claimed that the money spent on airline tickets to Alaska were “away-from-home business expenses.” That fact has no significance. Presumably, the tickets provided round-trip transportation, and since Pletcher owned a sheep ranch in Montana, the travel would have been business related regardless of which location he considered his home.

I conclude that to recover income taxes from persons whose sole source of income is derived outside the state of Montana, the Department of Revenue must prove that that person is temporarily absent from the state and has not established residency elsewhere. In this case, it was clearly established that Pletcher was permanently absent from the state and had established a residence elsewhere. Therefore, I dissent from the majority opinion. I would reverse the judgment of the District Court.


author: JUSTICE LEAPHART

text:
    IN RE THE MARRIAGE OF MICHAEL JOSEPH DOYLE, Petitioner and Respondent, and JANICE LOUISE DOYLE, Respondent and Appellant.
    No. 96-401.
    Submitted on Briefs November 14, 1996.
    Decided December 31, 1996.
    53 St.Rep. 1475.
    280 Mont. 429.
    929 P.2d 886.

      See C.J.S. Divorce § 589.
    For Appellant: Michael Sol; Sol & Wolfe, Missoula.
    For Respondent: Darel Graves, Attorney at Law, Hamilton.
   JUSTICE LEAPHART

delivered the Opinion of the Court.

Appellant, Janice Louise Doyle (Janice), appeals from the decision of the Twenty-first Judicial District Court denying her motion to set aside the property settlement agreement she entered into with Michael Joseph Doyle (Michael). We affirm in part, reverse in part, and remand for rehearing.

We restate the issues as follows:

1) Did the District Court err in denying J anice’s motion to set aside the parties’ 1993 Property Settlement Agreement because the motion was not filed within 60 days of the final Decree?
2) Did the District Court err by awarding attorney fees without first conducting a hearing?

BACKGROUND

Michael and Janice were married in 1964 and their marriage was dissolved in 1993. During the marriage, Michael was employed as a rancher while Janice worked as a bank teller, housewife, cosmetologist, and helped on the ranch on a daily basis. At the time of the dissolution, Michael and Janice were 50 and 48 years old, respectively.

In 1993, Michael and Janice executed a Property Settlement and Separation Agreement (Agreement). The Agreement was drafted by Michael’s attorney. Despite repeated suggestions by Michael’s counsel, both orally and in writing, that she obtain legal advice, Janice chose not to seek legal counsel or appear at the hearing to approve the Agreement. Under the Agreement Janice received 110 acres of bare land, her car, various personal belongings and was assigned over $40,000 in debt. In return, Michael received a total of 560 acres of land, all of the machinery and equipment, the cattle heard, a $19,000 Treasury certificate and was assigned $35,000 in debt. The Agreement expressly allows modification only upon written consent or upon a finding of unconscionability and requires the district court to award attorney fees, as a cost of suit, to the successful party in any action to “enforce, modify, or interpret” the Agreement. The District Court approved the Agreement, incorporated the Agreement into the decree, specifically ordered each party to perform the Agreement, and granted final dissolution of the marriage.

Nearly two years after the District Court’s 1993 Judgment, Janice filed a motion to set aside and vacate the decree of dissolution and rescind the Agreement on grounds that Michael made misrepresentations as to values of the property, how much of Janice’s property was under the flood plain, and whether his property was encumbered by a life estate. Although the motion was vague regarding its procedural grounds, it was treated as an independent action pursuant to the residual clause of Rule 60(b), M.R.Civ.P After Michael and Janice filed briefs and affidavits in support of their arguments, the District Court entered its Opinion and Order denying Janice’s motion. In addition to denying Janice’s motion, the District Court, without first conducting a hearing, awarded Michael attorney fees in excess of $4,400. Janice appeals both the District Court’s decision denying her motion to set aside and vacate the decree of dissolution and rescind the Agreement, and the District Court’s decision to award attorney fees without conducting a hearing.

STANDARD OF REVIEW

Both issues before this Court deal with the District Court’s conclusions of law. The standard of review of a district court’s conclusions of law is whether the court’s interpretation of the law is correct. Carbon County v. Union Reserve Coal Co. (1995), 271 Mont. 459,469, 898 P.2d 680, 686; see also Kreger v. Francis (1995), 271 Mont. 444, 898 P.2d 672.

DISCUSSION

1) Did the District Court err in denying Janice’s motion to set aside the parties’ 1993 Property Settlement Agreement because the motion was not filed within 60 days of the final Decree?

Since Janice’s motion was filed more than 60 days after entry of the decree, grounds one through three of Rule 60(b) are precluded from consideration, and grounds four through six do not pertain to her motion. Accordingly, the District Court analyzed the motion under the residual clause of Rule 60(b). The residual clause of Rule 60(b), M.R.Civ.P., provides:

This rule does not limit the power of a corut to entertain an independent action to relieve a party from a judgment, order, or proceeding, or to grant relief to a defendant not actually personally notified as may be required by law, or to set aside a judgment for fraud upon the court.

This residual clause allows for three separate avenues of relief including: lack of personal notification, fraud upon the court, and an independent action for extrinsic fraud. See Rule 60(b), M.R.Civ.P; In re Marriage of Miller (1995), 273 Mont. 286, 291, 902 P.2d 1019,1022 (citing Salway v. Arkava (1985), 215 Mont. 135, 140, 695 P.2d 1302, 1305). The District Court held that Janice was not entitled to relief under the residuál clause of Rule 60(b), M.R.Civ.P. We agree.

Janice argues that, under a broad application of Rule 60(b), M.R.Civ.P., misrepresentations on the part of Michael qualify Janice for relief under the residual clause. Since lack of personal notification was not raised by Janice, we will only address whether Michael’s actions constituted a fraud upon the court or whether Janice has an independent action for extrinsic fraud.

Fraud upon the court only involves that species of fraud which subverts or attempts to subvert the integrity of the court itself, or fraud perpetrated by officers of the court so that the judicial machin-. ery cannot perform in an impartial manner. Filler v. Richland County (1991), 247 Mont. 285, 289, 806 R2d 537, 539. Fraud upon the court is limited to only the most egregious conduct, including bribery of a judge or member of the jury; fabrication of evidence in which an attorney has been implicated; or the employment of counsel to influence the court. Filler, 806 P.2d at 539. This Court has repeatedly held that fraud between the parties is not fraud upon the court. Marriage of Miller, 902 P.2d at 1022; Wise v. Nirider (1993), 261 Mont. 310,316, 862 P.2d 1128, 1132; Traders State Bank of Poplar v. Mann (1993), 258 Mont. 226, 236, 852 P.2d 604, 610. Even if Janice’s claims that Michael misrepresented resale values and facts as to flood plains are true, that cannot be characterized as a fraud upon the court.

Finally, none of Michael’s actions can be characterized as extrinsic fraud. Montana follows the general rule that the fraud must be extrinsic, as opposed to intrinsic, to support an independent action for fraud under the residual clause of Rule 60(b), M.R.Civ.P. Marriage of Miller, 902 P.2d at 1022 (citing Filler, 806 P.2d at 539). Extrinsic fraud has been defined as some intentional act or conduct by which the prevailing party has prevented the unsuccessful party from having a fair submission of the controversy. Marriage of Miller, 902 P.2d at 1022 (citing Salway, 695 P.2d at 1306). Extrinsic fraud is collateral to the matters tried by the court, but does not include fraud in the matters on which the judgment was rendered. See Salway, 695 P.2d at 1306 (citing Hall v. Hall (1924), 70 Mont. 460,467, 226 P. 469, 471). In Ellis v. Schwank (Wash. 1950), 223 P.2d 448, the Washington State Supreme Court found extrinsic fraud was present where a son of the plaintiff’s alleged father had destroyed written statements and wills acknowledging plaintiff was his daughter. Ellis, 223 P.2d at 449. The court explained that since the son destroyed evidence that the father’s daughter (the plaintiff) was also entitled to part of the father’s estate, the plaintiff had been denied an opportunity to present at trial all of the rights and defenses to which she was entitled. Ellis, 223 P.2d at 449. The son’s actions had prevented the plaintiff from having a fair submission of the controversy and were collateral to probating the will.

In the instant case, Janice’s claims of fraud relate to assets set forth in the Agreement, which, in turn, was incorporated into the 1993 Judgment. Although the asset values were not set forth in the Agreement, all assets were disclosed. Therefore, none of Janice’s claims can be characterized as extrinsic fraud.

Accordingly, we conclude that none of the claims set forth by Janice allow the 1993 Judgment to be set aside. We affirm the District Court’s decision denying Janice’s motion to set aside the 1993 Judgment.

2) Did the District Court err by awarding attorney fees without first conducting a hearing?

Section 40-4-110, MCA, grants the district court discretion to award attorney fees and costs in certain domestic relation cases. In re Marriage of Malquist (1994), 266 Mont. 447, 454, 880 P.2d 1357, 1361 (citing In re Marriage of Dzivi (1991), 247 Mont. 165, 167-68, 805 P.2d 567, 569). Section 40-4-110, MCA, provides:

40-4-110. Costs — attorney’s fees. The court from time to time, after considering the financial resources of both parties, may order a party to pay a reasonable amount for the cost to the other party of maintaining or defending any proceeding under chapters 1 and 4 of this title and for attorney’s fees, including sums for legal services rendered and costs incurred prior to the commencement of the proceeding or after entry of judgment. The court may order that the amount be paid directly to the attorney, who may enforce the order in his name.

In interpreting this section, this Court has required that a petitioning party must make a showing of necessity before the district court awards attorney fees. In addition, the award must be reasonable and based upon competent evidence. Marriage of Malquist, 880 P.2d at 1362 (citing In re Marriage of Barnard (1990), 241 Mont. 147, 154, 785 P.2d 1387, 1391; In re Marriage of Laster (1982), 197 Mont. 470, 479, 643 P.2d 597, 602; Wilson v. Bean (1981), 192 Mont. 426, 427-28, 628 P.2d 287,289). Before a court can determine reasonableness, it must conduct a hearing allowing for the introduction of exhibits, oral testimony and the opportunity for cross-examination. Marriage of Malquist, 880 P.2d at 1362 (citing Marriage of Barnard, 785 P.2d at 1391). Finally, an award of attorney fees will not be reversed if supported by substantial evidence. Marriage of Barnard, 785 P.2d at 1391-92.

In the instant case, the District Court awarded Michael a total of $4,450.75 in attorney fees. In its opinion and orders dated October 19,1995, and March 6,1996, the District Court ordered Janice to pay Michael’s reasonable attorney fees. The District Court ordered Michael to submit an affidavit of attorney fees and costs. Based solely on affidavits submitted by Michael, the District Court determined that a fee of $4,450.75 was reasonable.

The award of attorney fees in this case was not made pursuant to § 40-4-110, MCA, but rather pursuant to a provision in the Agreement which provided:

Should any action be commenced to enforce, modify, or interpret any provisions contained herein, the Court, as a cost of suit, shall award a reasonable attorney’s fee to the successful party.

Nonetheless, we hold that an evidentiary hearing as to reasonableness is a prerequisite to an award of fees whether they be pursuant to statute or contract. A hearing allowing for the introduction of exhibits, oral testimony and an opportunity for cross-examination affords parties an opportunity to present competent evidence in support of their claims. Marriage ofMalquist, 880 R2d at 1362. Here, the District Court’s failure to conduct such a hearing was reversible error. We remand this case to the District Court for a hearing on the issue of reasonable attorney fees.

Accordingly, we affirm the District Court’s decision denying Janice’s motion to set aside the Property Settlement and Separation Agreement. We reverse the District Court’s award of attorney fees, and remand for a hearing on that issue.

CHIEF JUSTICE TURNAGE, JUSTICES HUNT, TRIEWEILER and GRAY concur. '


text:
    HERN FARMS, INC., a Montana Corporation, Plaintiff and Appellant, v. THE MUTUAL BENEFIT LIFE INSURANCE COMPANY, a New Jersey Corporation, Defendant and Respondent.
    No. 96-405.
    Submitted on Briefs December 12, 1996.
    Decided December 31, 1996.
    53 St.Rep. 1478.
    280 Mont. 436.
    930 P.2d 84.

      See C.J.S. Mortgages § 505.
    For Appellant: Thomas M. Welsch; Poore, Roth & Robinson, Butte; Urban L. Roth, Attorney at Law, Poison.
    For Respondent: Dirk A. Williams; Church, Harris, Johnson & Williams, Missoula; Robert J. Phillips; Phillips & Boyer, Missoula.
   JUSTICE LEAPHART

delivered the Opinion of the Court.

The United States Court of Appeals for the Ninth Circuit, has certified to this Court the following two questions:

1. Under § 25-13-902(2), MCA (no longer effective after June 30, 1996), is a seller of foreclosed agricultural land required to offer the land to the immediately preceding owner under the same terms and conditions contained in a third party offer the seller finds acceptable?
2. Under § 25-13-902(2), MCA (no longer effective after June 30, 1996), is a seller of foreclosed agricultural land required to offer the land to the immediately preceding owner for cash equal to the present value of a third party offer the seller finds acceptable?

We answer the first question in the negative; as to the second, the seller can either sell to the preceding owner on the same terms and conditions as the time/price offer or it can offer to sell for the time/price offer discounted to present value.

For purposes of submitting the two certified questions to this Court, the following facts are taken from the Ninth Circuit’s Certification Order dated June 20, 1996:

In 1985, Hern Farms, Inc. mortgaged a farm to the Mutual Benefit Life Insurance Company to secure payment of a $1.8 million promissory note. Hern Farms defaulted on the note. Mutual Benefit instituted foreclosure proceedings in the District Court for the Twentieth Judicial District for the State of Montana. Judgment was entered in favor of Mutual Benefit in April 1988, a sheriff’s sale was held, and Mutual Benefit purchased the property. In the summer of 1990, Mutual Benefit agreed to sell the farm to Lake Seed Company for $1.1 million over 25 years, and to finance $900,000 of the purchase price at 9.5% per annum, with an adjustment to the market interest rate on August 1, 2000. The present value of Lake Seed’s offer was less than the offer’s face value of $1.1 million.
By the terms of Mont. Code Ann. § 25-13-902, when Mutual Benefit determined Lake Seed’s offer was acceptable, it was required to make a “good faith offer” to sell the land to Hem Farms for “the same price” Lake Seed had offered. On July 2, 1990, Mutual Benefit sent a letter notifying Hern Farms that a sale was planned and that Hem Farms could exercise its right of first refusal by paying Mutual Benefit $1.1 million cash within 60 days. Hern Farms asserted it had the statutory right to purchase the property under the same terms and conditions offered to Lake Seed, and asked Mutual Benefit to reveal the terms of the proposed sale. Mutual Benefit refused. Hem Farms then sued in the District Court for the Second Judicial District of the State of Montana, alleging Mutual Benefit had violated Mont. Code Ann. § 25-13-902 and seeking to enjoin the sale.
Mutual Benefit removed the suit to the Butte Division of the United States District Court for the District of Montana. Judge Paul Hatfield conducted a hearing September 18, 1990 on Hern Farms’ motion for a preliminary injunction. At the hearing, Mutual Benefit’s counsel summarized the findings of Thomas Copley, an accountant who calculated the present value of Lake Seed’s offer at $1,043,957.73. Hern Farms claims that several days later, it orally offered $1,050,000 for the property, but Mutual Benefit rejected the offer.
The district court denied the preliminary injunction on October 5, 1990, and Mutual Benefit gave Hern Farms until October 11, 1990 to exercise its right of first refusal by paying Mutual Benefit $1.1 million in cash. Hern Farms declined, saying it was unwilling to pay more than the present value of Lake Seed’s offer. Mutual Benefit subsequently sold the property. Because the sale mooted Hern Farms’ prayer for injunctive relief, the district court granted partial summary judgment for Mutual Benefit. Both parties then moved for summary judgment on the remaining claims. The district court granted summary judgment for Mutual Benefit on April 14, 1995, holding Mutual Benefit had complied with the statute when it offered the land to Hern Farms for the face value of Lake Seed’s offer. Hern Farms timely appealed. [Footnotes omitted.] The certified questions present a question of statutory interpreta-

tion. At issue is Montana’s moratorium statute, § 25-13-902, MCA (no longer effective after June 30, 1996), which provides as follows:

(1) A holder of foreclosed agricultural land shall, when leasing such land or any portion thereof to a third party, make a good faith offer to lease the land or portion thereof to the immediately preceding owner if such owner has financial resources and farm management skills and experience to assure a reasonable prospect of success in the proposed farming operation. The offer to lease land to the immediately preceding owner must be upon the same terms and conditions offered by a third party that are acceptable to the lessor. .
(2) A holder of foreclosed agricultural land shall, when selling such land or any portion thereof to a third party, make a good faith offer to sell the land or portion thereof to the immediately preceding owner for the same price offered by a third party that is acceptable to the seller.
(3) An offer to lease to the immediately preceding owner is required each time the foreclosed agricultural land is leased to a third party, except that once the immediately preceding owner fails to meet the terms of a lease offer, the right to meet future offers is extinguished and no offer to lease is required. An offer to.sell to the immediately preceding owner is required only the first time the property is sold to a third party.
(4) An offer sent by certified mail to the name and address filed by the immediately preceding owner under 25-13-904 is a good faith offer.
(5) This section does not apply to foreclosed agricultural land if such land is owned by the state pursuant to The Enabling Act (Act of February 22,1889, Ch. 180, 25 Stat. 676). (Terminates June 30, 1996-sec. 6, Ch. 472, L. 1987.)

When Mutual Benefit Life (MBL) acquired the Hem farm through foreclosure, a right of first refusal accrued in Hern Farms to repurchase the farm from MBL for the same price offered by a third party that was acceptable to MBL.

In June of 1990, MBL received an acceptable time/price offer from Lake Seed Company to purchase the farm on the following terms: $1.1 million payable as follows: $200,000 down at closing and the balance of $900,000 at 9.5% per annum over twenty-five years with principal payments of $40,000 annually, the first to be due in August, 1994 and with the possibility of an interest rate adjustment on August 1, 2000. Receipt of this offer triggered MBL’s duty under the moratorium statute to extend a good faith offer to sell to Hem Farms for the “same price” offered by Lake Seed Company.

The question presented is whether “same price” when applied to a contract for a term of years means a cash equivalent of the total principal paid over the term of the contract; a cash payment equal to the present value of the total principal payout; or an extension of credit financing through a time/price offer on the same terms and conditions as those offered to a third party.

We note that subsections (1) and (2) of the moratorium statute use different wording. Subsection (1) requires a holder of foreclosed land who proposes to lease the land to offer to lease the land to the immediately preceding owner “upon the same terms and conditions offered by a third party that are acceptable to the lessor.”

Subsection (2), on the other hand, requires the holder of foreclosed land, when selling such land, to offer to sell to the immediately preceding owner “for the same price offered by a third party. ...” In addressing the first question certified to us, we attach significance to the fact that subsection (1), which pertains to leases, requires the “same terms and conditions” while subsection (2), which pertains to sales, does not apply that same qualification. The role of the Court in interpreting statutory language is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted or to omit what has been inserted. Section 1-2-101, MCA; Goyen v. City of Troy (1996), 276 Mont. 213, 221, 915 P.2d 824, 829. Since the legislature required that leases be offered to the preceding owner on the “same terms and conditions” but did not specifically impose that same requirement with regard to sales of the property, there.is no expression of legislative intent requiring that a sale be offered to the preceding owner on the “same terms and conditions.” Accordingly, we hold that § 25-13-902(2), MCA, does not require the holder of foreclosed land, who has received an offer to purchase the land, to offer the land to the immediately preceding owner under the “same terms and conditions” contained in the third party time/price offer.

That then brings us to the question as to what is required by the moratorium statute when it imposes an obligation to sell to the preceding owner at the “same price?” MBL contends that it satisfied its obligation by offering the property to the preceding owner for the cash price it would receive from the third party buyer; that is, the total of the principal payments it would receive over the course of the 25-year contract. Although it is agreed that the present value of Lake Seed’s offer is less than the face value of the time/price offer of $1.1 million, MBL argues strenuously that “price” means “price;” that nothing in the definition of “price” requires a reduction to present value. Hem Farms contends that “same price” means a sum of money or its present value equivalent.

In interpreting a statute, the prime consideration must be defining the objectives the legislature sought to achieve. Montana Wildlife Federation v. Sager (1980), 190 Mont. 247,264,620 P.2d 1189, 1199. The legislative intent is to be ascertained, in the first instance, from the plain meaning of the words used. Boegli v. Glacier Mountain Cheese Co. (1989), 238 Mont. 426, 429, 777 P.2d 1303, 1305. If the intent of the legislature can be determined from the plain meaning of the words used in the statute, the plain meaning is controlling and the Court need not go further and apply any other means of interpretation. Phelps v. Hillhaven Corp. (1988), 231 Mont. 245,251, 752 P.2d 737, 741. In the case sub judice, it is clear from the face of the moratorium statute, § 25-13-902, MCA, that the legislature intended that the preceding owner be afforded the opportunity to reacquire the property, but only on the condition that the seller of the foreclosed property be placed in no worse a position than it would have been had it accepted the third party offer. In light of that intent, we rej ect MBL’s contention that “price” means the cash equivalent of the total principal payments MBL would receive from the third party buyer over the course of the 25-year time/price offer. Such an interpretation would put MBL in a better position than under the time/price installment contract with the third party buyer since MBL would have immediate use of the $1.1 million to invest at a higher interest rate.

Noticeably absent from MBL’s argument is any substantive discussion of the meaning of the word “same” as it modifies “price” in the moratorium statute. The statute requires that the seller offer the property for a price which is the “same” or the equivalent of the price offered to the third party. Same means identical, equal, equivalent, Black’s Law Dictionary, 1341 (6th ed. 1990). As any banker or financial advisor would attest, $1.1 million paid over a period of 25 years simply is not the “same” as or equivalent to $1.1 million in cash paid at closing. We hold that there are two methods by which the seller can achieve equivalency and thereby honor the preceding owner’s right of first refusal without placing itself in a worse position. MBL can offer to sell to Hern Farms at the same time/price offer of $1.1 million and on the same terms and conditions; that is, $200,000 down at closing with the balance of $900,000 paid over a 25-year contract at 9.5% per annum. In the alternative, if MBL does not wish to assume the risk of extending credit to Hern Farms through a time/price offer, it can offer to sell to Hern Farms for the $1.1 million price, discounted to present value, payable in full at closing.

In summary, we hold that § 25-13-902, MCA, does not require MBL to offer the property to Hern Farms on the same terms and conditions offered to the third party buyer. Thus we answer the first certified question in the negative. As to the second question, we hold that the statutory requirement that the seller of the foreclosed property offer the property to the preceding owner at the “same price” means that the seller has two options. It can either sell to the preceding owner on the same terms and conditions as the time/price offer or it can offer to sell for the time/price offer discounted to present value.

The statute does not contain a formula for determining present value. Thus, if the parties are unable to agree as to present value, the court will have to entertain expert financial testimony and make a judicial finding as to present value.

CHIEF JUSTICE TURNAGE, JUSTICES NELSON, TRIEWEILER, ERDMANN, GRAY and HUNT concur.