author: JUSTICE TRIEWEILER JUSTICE HUNT

text:
    FEDERAL DEPOSIT INSURANCE CORPORATION, as RECEIVER OF FIRST SECURITY BANK OF ANACONDA, Plaintiff and Respondent, v. NORTHERN MONTANA GAS COMPANY, Defendant and Appellant.
    No. 94-556.
    Submitted on Briefs December 14, 1995.
    Decided December 28, 1995.
    52 St.Rep. 1276.
    908 P.2d 1357.
    274 Mont. 371.

      For Appellant: Kenneth E. O’Brien, Hash, O’Brien & Bartlett, Kalispell.
    For Respondent: Ward E. Taleff, Alexander, Baucus, Taleff & Paul, Great Falls.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

First Security Bank filed a complaint in the District Court for the Ninth Judicial District in Toole County in which it sought to recover amounts allegedly owed by Northern Montana Gas Company to Montana Pacific Oil & Gas Company (MOPOG) based on well head purchase contracts which Northern allegedly breached. Northern’s answer included defenses in which it claimed a right to offset against any recovery obtained by the bank the amount of judgments entered in its favor against First Security’s assignor, MOPOG. After a trial, the court concluded that the Federal Deposit Insurance Corporation (FDIC), as the bank’s receiver, was entitled to damages and that none of the judgments could be setoff against FDIC. Northern appeals that order. We reverse the court’s conclusion that the judgments may not be used to setoff the bank’s damage award and affirm the court’s award of damages to FDIC.

We restate the issues on appeal as follows:

1. Did the District Court err when it concluded that Northern could not offset any of its claims against MOPOG against the amounts claimed by First Security Bank pursuant to an assignment from MOPOG?

2. Was the District Court’s award of damages to FDIC supported by substantial evidence?

FACTUAL BACKGROUND

In June 1983, Oil International (01), entered into several well head purchase contracts (WPCs) to purchase natural gas from Montana Pacific Oil & Gas Company (MOPOG). In 1984, appellant, Northern Montana Gas Company (Northern), purchased a gas sweetening plant from 01 and as part of this agreement, 01 assigned to Northern all of its right, title and interest in and to the WPCs. According to the terms of the WPCs, Northern agreed to pay MOPOG $1.50 per thousand cubic feet (mcft) of gas supplied. Adjustments in price were to be made according to a formula provided for in the contract.

As part of the purchase, 01 also assigned to Northern all of its right, title, and interest in and to a November 1982 gas purchase contract between 01 as seller and Montana Power Company (MPC) as buyer. This contract had a term of twenty years and provided that MPC would pay the lesser of $3.25 per mcft, as adjusted for inflation, or the maximum lawful price pursuant to the Natural Gas Policy Acts and applicable regulations. The contract did not require MPC to purchase OI’s total production ability.

In July 1985, MPC advised Northern that it had elected to purchase the minimum quantity of gas required by the contract which would in turn reduce the purchases Northern made from its suppliers such as MOPOG. In October 1985, MPC reduced the price it paid Northern for gas to $3.00 per mcft and began to reduce the amount of gas it purchased from Northern. As a result, Northern “renegotiated” the terms of the MPC contract and Northern and MPC signed a new contract in October 1985. The new contract provided that MPC would pay $3.00 per mcft instead of the $3.25 per mcft agreed upon in the 1982 gas purchase contract.

After Northern and MPC reached their agreement, Northern reduced the price paid to the suppliers, including MOPOG, by $0.25, down to $1.25 per mcft. This adjustment was not in compliance with the WPC with MOPOG which also provided that the seller (MOPOG) had thirty days, after receipt of Northern’s statement of gas purchased, to protest the computations underlying those statements. Any statement not protested within that period was deemed correct. While a factual dispute exists as to whether MOPOG protested the decrease, MOPOG did continue to supply Northern with gas. And, in April 1986, Northern made a second reduction in the price paid to suppliers, this time down to $0.40 per mcft.

On April 27, 1988, MOPOG assigned all of its rights and interests in the WPCs to First Security Bank of Anaconda (First Security). The assignment provided First Security with any rights or claims based upon the WPCs, but First Security did not assume MOPOG’s liabilities. In 1989, Northern and MOPOG entered a “standstill” agreement pursuant to which MOPOG agreed to delay action against Northern for breach of the WPCs while Northern pursued an action against MPC. Subsequently, Northern received a summary judgment against MPC.

First Security filed a complaint against Northern, based on its assignment from MOPOG, on February 7, 1991. In that complaint, which was filed in Toole County, First Security sought to recover amounts allegedly owed by Northern to MOPOG based on the WPCs which were entered into in 1983. Specifically, First Security claimed that Northern breached its contract with MOPOG when it refused to pay the agreed amount for gas delivered.

In June 1991, Gary McDermott, Northern’s president, assigned to Northern a judgment that he had recovered against MOPOG for accounting services that he had performed for that company (McDermott judgment). The McDermott judgment was for the amount of $23,087.49, plus interest from September 1987.

On November 29, 1991, Northern filed a two-count complaint in Flathead County against MOPOG. In the first count, Northern alleged that it had sustained damages based on the defendant’s failure to certify wells from which it produced the gas which was the subject of the WPC between MOPOG and Northern. In the second count, it alleged that it had sustained damages because MOPOG failed to make agreed repairs to the natural gas processing plant that Northern had purchased from 01.

On January 28, 1992, the Flathead County District Court entered judgment for Northern in the amount of $200,211.67 based on the allegations in Count I, and in the amount of $131,825.40 based on the allegations in Count II.

On July 15, 1992, Northern filed its answer to the bank’s Toole County complaint. As its third defense, it alleged a right to offset against any recovery obtained by the bank the amount of the McDermott judgment. This defense was based on the terms of § 27-1-502, MCA. For its fourth defense, Northern claimed a right pursuant to the same statute to offset the total judgment entered in its favor in Flathead County on January 28, 1992.

The case was tried by the court without a jury on October 14, 1992. No findings or conclusions were made by the District Court until nearly two years later on October 11, 1994. At that time, the District Court made findings and conclusions based on those submitted by FDIC which had been appointed as the bank’s receiver and substituted as plaintiff.

The District Court concluded that pursuant to Rule 13(a), M.R.Civ.R, Count I of Northern’s Flathead County claim against MOPOG arose out of the same transaction which was the basis for First Security’s complaint (the WPCs) and was a compulsory counterclaim which should have been filed but was not, and therefore, that it was barred.

The District Court then concluded that the McDermott claim against MOPOG which had been assigned to Northern, and Northern’s claim which formed the basis for Count II of its Flathead County action, did not arise from the same transaction, and therefore, were not compulsory counterclaims. However, the District Court concluded that because First Security Bank took an assignment from MOPOG of its rights under the WPC without assuming its liabilities, these other obligations (Count II and the McDermott claim) could not be offset against the bank.

The District Court also concluded that the McDermott judgment and Count II of the Flathead County judgment could not be setoff against FDIC because to do so would violate the terms of 12 U.S.C. § 1823(e) which invalidates agreements adversely affecting the assets of a bank unless the agreement is in writing. However, on appeal, FDIC, which made that argument to the District Court, concedes that “the FDIC was mistaken in asserting 12 U.S.C. § 1823(e) as a defense to the Northern counterclaims and the district court erred in finding that 12 U.S.C. § 1823(e) was applicable to this case.”

Finally, the Court found that MOPOG protested the price reductions imposed by Northern, that the WPCs were still in force, and that both Northern and MOPOG continued to operate under the terms of the WPCs. It concluded that Northern breached the WPCs and awarded damages of $255,861.13 to FDIC.

ISSUE 1

Did the District Court err when it concluded that Northern could not offset any of its claims against MOPOG against the amounts claimed by First Security Bank pursuant to an assignment from MOPOG?

We review a district court’s conclusions of law to determine whether the court’s interpretation and application of the law is correct. Jim’s Excavating Serv. Inc. v. HKM Assoc. (1994), 265 Mont. 494, 501, 878 P.2d 248, 252.

The District Court concluded that Count 1 was barred because it constituted a compulsory counterclaim which was not raised. It also concluded that even though the McDermott judgment and Northern’s claim which formed the basis for Count II of its Flathead County action were not compulsory counterclaims, the claims could not be offset against the bank because First Security took an assignment from MOPOG of its rights under the WPC without assuming its liabilities.

Northern has never claimed that the bank assumed the obligations of MOPOG, or that the bank would be liable to it for the full amount owed to Northern by MOPOG pursuant to the Flathead County judgment and the McDermott judgment. What Northern claims is that pursuant to § 27-1-502, MCA, it has a right to offset against any claim by MOPOG any amounts that it was owed by MOPOG, whether or not those obligations arose out of the same transaction; and that, pursuant to § 27-1-503, MCA, its right to offset could not be defeated when MOPOG assigned its claim to the bank and when that claim was ultimately asserted by FDIC.

Section 27-1-502, MCA, provides as follows:

When cross-demands have existed between persons under such circumstances that if one had brought an action against the other a counterclaim could have been set up, the two demands shall be deemed compensated so far as they equal each other and neither can be deprived of the benefit thereof by the assignment or death of the other.

We conclude that when read in the context of § 27-1-502, MCA, “cross-demands” necessarily refers to claims between the parties. Section 27-1-503, MCA, provides as follows:

In the case of an assignment of a thing in action, the action by the assignee is without prejudice to any setoff or other defense existing at the time of or before notice of the assignment, but this section shall apply only to the extent not otherwise provided for in the Uniform Commercial Code.

MOPOG assigned its rights pursuant to the WPC to First Security on April 27,1988. At that time, its obligation which formed the basis for Counts I and II of Northern’s Flathead County action (failure to certify wells and make agreed upon repairs to the plant Northern purchased from OI) already existed and Northern was entitled to assert that obligation as a basis for setoff. Therefore, pursuant to § 27-1-503, MCA, Northern’s right to do so survived the assignment MOPOG made to First Security. However, at the time of the MOPOG assignment, McDermott had not yet assigned his judgment against MOPOG to Northern, and therefore, the bank did not take its assignment from MOPOG subject to setoff by Northern for that judgment.

The District Court concluded that pursuant to Rule 13(a), M.R.Civ.P., Northern’s claim in Count I, arose out of the same transaction which was the basis for First Security’s complaint (the WPCs) and was a compulsory counterclaim which should have been filed but was not, and therefore, that it was barred. However, Northern did not have a counterclaim against First Security since the bank did not assume the producer’s obligations. Therefore, Count I was not a compulsory counterclaim.

The District Court also concluded that the McDermott judgment against MOPOG which had been assigned to Northern, and Northern’s claim which formed the basis for Count II of its Flathead County action (failure of MOPOG to make agreed repairs to Northern’s gas plant), did not arise from the same transaction, and therefore, were not compulsory counterclaims. However, the District Court concluded that because First Security took an assignment from MOPOG of its rights under the WPC without assuming its liabilities, these other obligations (Count II and the McDermott claim) could not be offset against the bank. The District Court relied on the general rule that in the absence of an express assumption of liability an assignee is not liable for an assignor’s obligation.

The District Court’s holding fails to recognize the difference between a counterclaim for affirmative relief and a defense which simply seeks to reduce the plaintiff’s recovery dollar-for-dollar based on a defense that could have been asserted against the assignor. As noted in Nancy’s Product, Inc. v. Fred Meyer, Inc. (Wash. App. 1991), 811 P.2d 250, 253:

[W]hen setoff is asserted against an assignee, it diminishes or defeats the assignee’s claim, although the assignee has no liability in excess of the amount sued on. Such avoidance of liability is in the nature of a defense, as distinguished from a counterclaim which is a demand for affirmative relief.

Further support for this proposition is found at 6 Am. Jur. 2d Assignments § 102 (1963), which provides:

In an action on a claim assigned, the assignee is ordinarily subject to any setoff or counterclaim available to the obligor against the assignor and to all other defenses and equities which could have been asserted against the chose in the hands of the assignor at the time of the assignment.

See also Pacific N.W. Life Ins. Co. v. Turnbull (Wash. Ct. App. 1988), 754 P.2d 1262, 1267.

The difference between an affirmative claim for relief and a defense based on setoff is also illustrated by the follow passage from Corbin on Contracts:

A counterclaim, set-off, or recoupment, arising out of the same transaction as that by which the claim of the assignee was itself created, is usable against the assignee in precisely the same cases that it would be so usable if it were operative as a complete defense. Its operation against the assignee is not affected by the fact that some of the events creating it occurred after the assignment or even after notice of the assignment. The transaction on which the assignee depends is itself a sufficient warning to him that counterclaims may grow out of that transaction requiring an adjustment of remedies. It is therefore thought just to require him to bear the risk that such counterclaims will be used in reduction or total extinction of his own claim. This does not mean that the counterclaim against the assignor is enforceable also as a counterclaim against the assignee; it is not so enforceable unless the assignee himself undertook the duty of performance and has been guilty of a breach. But the counterclaim, set-off, or recoupment is as effective in reducing the assignee’s remedy as it would have been in reducing the assignor’s remedy if he were the plaintiff.

4 Arthur L. Corbin, Corbin on Contracts § 896, at 596 (1951) (emphasis added).

While Corbin refers to setoff based on the same transaction, § 27-1-502, MCA, does not limit setoff to claims arising out of the same transaction. It refers only to counterclaims which “could have been set up,” in the same action. Pursuant to Rule 13(b) and (c), M.R.Civ.P., any claim that Northern had against MOPOG could have permissibly been set up as a counterclaim if MOPOG had sued Northern for breach of the WPC. Therefore, pursuant to § 27-1-503, MCA, Northern’s right to offset survived the assignment by MOPOG to the bank.

FDIC also fails to recognize the difference between an assignee’s liability for an assignor’s contract breaches and the right of an obligor to offset the assignor’s obligations against the assignee’s claim pursuant to § 27-1-502, MCA. It relies on Bottrell v. American Bank (1989), 237 Mont. 1, 773 P.2d 694, and Advance Indust. Fin. Co. v. Western Equities, Inc. (Cal. Ct. App. 1959), 343 P.2d 408, and asserts that setoff requires mutuality and that mutuality requires that the offsetting debts be due to and from the same persons in the same capacity. However, Bottrell is inapposite because it was based solely on the common law right to setoff mutual demands between mutual debtors and creditors. That case had nothing to do with §§ 27-1-502 and -503, MCA, which expressly provide that the right to setoff survives an assignment of one of the party’s rights. If we were to agree with FDIC’s contention, there could never be setoff when one of the original parties assigned his or her rights. More importantly, that conclusion would render meaningless the language in § 27-1-502, MCA, that “neither [party] can be deprived of the benefit thereof [setoff] by the assignment or death of the other.” It would also render meaningless that language in § 27-1-503, MCA, which provides that “[i]n the case of an assignment of a thing in action, the action by the assignee is without prejudice to any setoff or other defense existing at the time of or before notice of the assignment....”

A setoff does require mutuality:

In order to be mutual the cross demands set up ordinarily must be shown to belong individually to defendant, with a corresponding right to sue for them in his individual name, and defendant, as a general rule, cannot set off a demand on which he is not entitled to sue in his own name ....

80 C.J.S. Set-off and Counterclaim § 48 (1953); see also 20 Am. Jur. 2d Counterclaim, Recoupment, and Setoff § 74 (1965). In other words, all mutuality requires is that the defendant have a right to assert the claim against the plaintiff or its assignor which forms the basis for setoff.

Montana’s law concerning the assignment of contracts has nothing to do with Northern’s statutory right to offset its judgment against MOPOG against any recovery by FDIC based on an assignment from MOPOG.

For these reasons, we conclude that Northern was entitled to offset part of its claim pursuant to the plain terms of §§ 27-1-502 and -503, MCA. We affirm the District Court’s conclusion that the McDermott judgment against MOPOG, which was assigned to Northern, could not be offset against FDIC’s recovery because Northern did not have the right to enforce that judgment against MOPOG at the time that MOPOG assigned its rights to First Security. We reverse the District Court’s judgment which held that Northern could not offset the amount due pursuant to Counts I and II of its Flathead County action ($200,211.67 and $131,825.40 plus interest) because pursuant to § 27-1-502, MCA, Northern had a right to offset these amounts against any claim by MOPOG, and pursuant to § 27-1-503, MCA, the right to offset that amount survived the assignment by MOPOG of its rights to First Security.

ISSUE 2

Was the District Court’s award of damages to FDIC supported by substantial evidence?

We review a district court’s findings of fact to determine whether they are clearly erroneous. Rule 52(a), M.R.Civ.P.; Brown v. Tintinger (1990), 245 Mont. 373, 377, 801 P.2d 607, 609. We review a district court’s conclusions of law to determine whether the court’s interpretation and application of the law is correct. Jim’s Excavating Serv., Inc. v. HKM Assoc. (1994), 265 Mont. 494, 501, 878 P.2d 248, 252.

Northern asserts that the District Court should not have awarded damages according to the WPCs because the “renegotiated” contract Northern signed with MPC on October 1, 1985, terminated the WPCs, because MOPOG failed to object to the monthly settlement statements, and because MOPOG acquiesced to the price changes which bars MOPOG from pursuing its claim. We conclude that there is evidence in the record which contradicts each of Northern’s contentions.

A review of the record reveals that the 1985 contract did not terminate the WPCs. The WPC provided that it would become effective on the date OI and MOPOG signed the contract, “and shall continue in effect until the MPC Contract (dated 1982) terminates by its own terms.” The MPC contract provided that it would continue for twenty years and “thereafter from year to year until cancelled by one (1) year’s written notice.” Also, Northern’s president testified at trial that the WPCs were never terminated and the MOPOG president testified that he was not advised that the WPCs were terminated. Moreover, Northern failed to state that the WPCs were terminated in its letter which advised MOPOG of the 1985 contract.

The evidence also contradicts Northern’s assertion that MOPOG failed to properly object to the monthly settlement statements and therefore acquiesced in the price reductions. Letters and testimony reflect that MOPOG did not acquiesce to the price reductions. For example, on April 14, 1986, the MOPOG president sent a letter to Northern’s president in which he stated that the price reduction did not conform to the WPCs. Also, on October 8, 1986, the MOPOG counsel wrote Northern and complained about the price reductions and identified the amounts of underpayments. Finally, the language of the WPC contradicts Northern’s contention that because MOPOG did not object to the monthly settlement statements it is exonerated. The WPC only required that MOPOG object to the accuracy of the statements provided by Northern; the objection requirement did not relate to Northern’s unilateral reductions in the price paid.

A review of the record reveals substantial evidence to support the District Court’s findings that the WPCs were still in force, that MOPOG protested the price reductions, and that both Northern and MOPOG continued to operate under the terms of the WPCs. We also conclude that the court’s finding is not clearly erroneous.

We hold that the court did not err when it concluded that Northern breached the WPCs when it failed to calculate the price per mcffc in accordance with the WPCs and that FDIC was entitled to damages based on the WPCs.

We remand to the District Court for entry of judgment consistent with this opinion, including any offset to which Northern Montana Gas Co. is entitled pursuant to Part One of this opinion.

CHIEF JUSTICE TURNAGE, JUSTICES GRAY, LEAPHART and ERDMANN concur.

JUSTICE NELSON did not participate in this decision.

JUSTICE HUNT

dissenting.

I dissent. A “set-off’ is an equitable defense which in this case was used to reach a potentially inequitable result.

Additional facts not provided by the majority opinion are necessary to fully understand this case.

MOPOG’s problems began when MPC drastically lowered the amount it paid for gas. While it previously had paid Northern $3.00 per mcffc. for gas, in 1986 it began to pay Northern at the rate of only $1.85 per mcft. Northern passed this drastic price cut on to its suppliers, reducing the amount it paid to MOPOG from $1.25 per mcft. to $0.40 per mcft. MOPOG contested this reduction in writing, but continued to provide Northern with gas. Two years later, MOPOG defaulted on various security agreements, and First Security stepped in.

Northern subsequently sued MPC for breach of contract, and agreed to a “standstill” arrangement with MOPOG pending the outcome of that litigation. Following summary judgment in its favor, Northern received a settlement from MPC in the amount of $1.7 million. Although testimony at trial indicated that the calculations used in reaching the settlement included certain amounts for damages to Northern’s suppliers, to date none of the settlement money has been disbursed to MOPOG’s successor in interest.

The Flathead County judgment obtained by Northern against MOPOG also needs to be explained in greater detail. MOPOG ceased to exist as a corporate entity in December 1989. In February 1991, FDIC, as MOPOG’s successor in interest, sued Northern in Toole County for breach of contract. Northern was duly served with notice of the lawsuit. Nine months later, and nearly two years after MOPOG was dissolved, Northern filed suit against MOPOG in Flathead County for breach of the same contracts which were the basis of FDIC’s Toole County suit against it.

Northern admittedly made no attempt to contact any of MOPOG’s former officers or directors to inform them of the Flathead County suit. Not surprisingly, MOPOG did not appear. Northern subsequently received a judgment in excess of $332,000 by default, without the merits ofits claims ever having been addressed. Northern then filed an answer in the Toole County case, asserting that, pursuant to § 27-1-502, MCA, its Flathead County judgment must be used to offset FDIC’s damages.

Section 27-1-502, MCA, was first enacted in 1867, and since that time has never been construed or interpreted by any case in Montana. The statute is not a model of clarity. To remind, § 27-1-502, MCA, reads:

Survival of counterclaim — death or assignment. When cross-demands have existed between persons under such circumstances that if one had brought an action against the other a counterclaim could have been set up, the two demands shall be deemed compensated so far as they equal each other and neither can be deprived of the benefit thereof by the assignment or death of the other.

This statute provides the circumstances under which a set-off is created. If Party Ahas an existing demand for a given amount against Party B, and Party B also has an existing demand for a given amount against Party A, the amounts will be deemed to be “set-off’ to the extent that they are equal. This interpretation it bolstered by Black’s Law Dictionary, which provides that “[w]here a person against whom a demand is made by another, in his turn makes a demand against the other, these mutual demands are called ‘cross demands.’A‘set-off’ is a familiar example.” Black’s Law Dictionary 375-76 (6th ed. 1990). The statute provides for three events in a particular order: the existence of the cross-demands, the existence of the set-off, and then the assignment, which will not affect the existing set-off. The statute does not contemplate a situation, as here, where the set-off follows an assignment of all rights but no liabilities, and the assignor has ceased to exist.

Northern cannot hold FDIC responsible for the actions of MOPOG because neither FDIC nor First Security assumed MOPOG’s liabilities. Therefore, had Northern brought its claims as a counter-suit in FDIC’s Toole County case, it could not have prevailed. Instead, it obtained a judgment by default in another court, then brought that judgment back to Toole County to minimize the amount of damages collectible by FDIC. This limits the amount FDIC may recover and, therefore, is a breach of contract liability created by MOPOG but imposed upon MOPOG’s successor in interest. While there is a real legal difference between a counterclaim and a “set-off,” in this case it is a matter of mere semantics and cannot justify a result which otherwise would not be permitted.

Even assuming arguendo that I agreed with the majority’s interpretation of § 27-1-502, MCA, this Court does not have sufficient facts before it to conclusively determine that the statute is applicable in this case. The statute clearly states that a set-off is allowed “[w]hen cross-demands have existed. ...” (Emphasis added.) Whether they must exist before the assignment or before the cause of action is not clear. Either way, in this case it cannot be determined with certainty when, if ever, cross-demands were made.

Both parties allege they were damaged by breach of contract, and both can pinpoint with some certainty when they allege the breach occurred. The record does not reflect, however, when each party contacted the other and made a specific demand to recover an amount allegedly owed. The statute requires an actual demand.

This requirement for an actual demand is reasonable, as is a statutory interpretation which places the “demand” before the assignment. A demand from Northern would have put MOPOG on notice of the dispute and of what Northern felt was owed to it. It further would have given MOPOG an opportunity to contest the validity of the demand. We cannot say with certainty that this occurred. If a demand were not made until after the assignment took place, it would be directed at an incorrect party (the innocent assignee instead of the one who caused the damage).

The majority glosses over this point by noting that, if Northern was in fact damaged, its right to recover began at the time it was damaged; that is, when the contract was breached. Concededly, this was before the assignment and the filing of the Toole County suit. However, § 27-1-502, MCA, does not refer to a “right to recover,” it refers to demands. Without the existence of cross-demands, the statute is inapplicable. Since it cannot be determined from the existing record when, if ever, cross-demands were made, it is unclear how the majority can so confidently hold that § 27-1-502, MCA, applies.

By utilizing this rather obscure statute and obtaining a default judgment against a defunct party, Northern is attempting to minimize the damages it must pay to MOPOG’s successor in interest without regard to what amount may justly be owed. This cannot be considered an equitable result.

For these reasons, I would affirm the decision of the District Court.


source: Caselaw Access Project

author: JUSTICE LEAPHART JUSTICE ERDMANN

license: Public Domain

text:
    LLOYD S. TILLETT and ABBIE TILLETT, husband and wife; WILLIAM E. TILLETT; and JOHN P. TILLETT; and LATAHNA ENTEL, Plaintiffs and Respondents, v. NIKKI A. LIPPERT and ROBERT R. TILLETT, as CO-PERSONAL REPRESENTATIVES OF THE ESTATE OF ROYCE E. TILLETT; MARIAN J. TILLETT; NIKKI A. LIPPERT as PERSONAL REPRESENTATIVE OF THE ESTATE OF KENNETH LIPPERT; NIKKI A. LIPPERT; et al., Defendants and Appellants.
    No. 95-187.
    Submitted November 21, 1995.
    Decided January 8, 1996.
    53 St.Rep. 1.
    275 Mont. 1.
    909 P.2d 1158.

      For Appellants: Karl Knuchel, Attorney at Law, Livingston (argued).
    For Respondents: Leonard H. Smith (argued), Bruce A. Fredrickson; Crowley, Haughey, Hanson, Toole & Dietrich, Billings.
   JUSTICE LEAPHART

delivered the Opinion of the Court.

Defendants appeal from the Findings of Fact, Conclusions of Law and Judgment of the Montana Thirteenth Judicial District Court, Carbon County, partitioning real property and awarding compensatory and punitive damages against the estate of Kenneth Lippert. We affirm.

We restate the issues raised on appeal as follows:

1. Did the District Court err in modifying the partition recommendation of the referee?

2. Did the District Court err in awarding compensatory and punitive damages for assault against the Estate of Kenneth Lippert?

BACKGROUND

This case arises out of an acrimonious dispute between two branches of the Tillett family. The parties to this action are all members of the extended Tillett family and were all cotenants of approximately 240 acres in Carbon County, Montana, known as the “home place.”

On February 27, 1991, plaintiff Latahna Entel was driving a vehicle along established roads on the “home place.” Kenneth Lippert brandished, pointed and eventually discharged a loaded rifle at Latahna hitting her vehicle. At trial, Latahna claimed Kenneth’s actions caused her apprehension of bodily injury and emotional distress.

Plaintiffs filed a complaint, seeking to partition the “home place,” to quiet title, to obtain injunctive relief, and to recover damages for assault arising out of the February 27, 1991 incident. On June 19, 1991, the District Court entered Findings of Fact, Conclusions of Law and a Preliminary Injunction. The Preliminary Injunction restrained the parties from harassing each other, from restricting access to the “home place,” and prohibited the Lipperts from engaging in additional construction activities outside the “construction area.” The District Court noted that it was “very much aware of the volatile nature of the relationship that ... exist[ed] between the two family factions involved in this action.” During the pendency of this action, and while the Preliminary Injunction was in effect, appellants continued to exclude respondents from portions of the “home place” in violation of the Preliminary Injunction.

To assist the District Court in equitably dividing the property, and by stipulation of the parties, the court appointed Dennis Warren as the single referee to recommend the partition of the “home place.” The order appointing the referee stated that “the final report of the referee shall not be binding on the Court.” In December 1992, Warren submitted a proposed Certificate of Survey to the court. He did not submit a report. Neither respondents nor appellants agreed with the Certificate of Survey proposed by Warren, accordingly, the partition action proceeded to trial.

Following a bench trial, the district judge personally toured the premises to be partitioned. The district judge found that the physical partition proposed by Warren was not an equitable partition because the proposed partition did not provide respondents access to their federal lease land located north of the “home place.” Accordingly, to equitably partition the property and to provide respondents access to the federal lease land, the District Court found a more equitable partition line for the northern boundary and directed that the line on the proposed Certificate of Survey be changed. The court also directed that a survey be made to obtain accurate legal descriptions of the partitioned parcels of property.

The District Court further found that Kenneth Lippert’s conduct was outrageous and done with actual malice, and awarded both compensatory and punitive damages. The appellants filed a motion for a new trial and the District Court denied that motion. Thereafter, the appellants filed the instant appeal.

1. Did the District Court err in modifying the partition recommendation of the referee?

After hearing the evidence and touring the property, the district judge concluded that Warren’s proposed partition was inequitable. In order to equitably divide the “home place,” the district judge modified the northern boundary of the proposed partition to give respondents access to adjoining federal lease land.

In reviewing a district court’s findings of fact in a partition action the applicable standard of review is whether the findings are clearly erroneous. Troglia v. Bartoletti (1994), 266 Mont. 240, 244, 879 P.2d 1169, 1171; Kravik v. Lewis (1984), 213 Mont. 448, 453, 691 P.2d 1373, 1375. Afinding is clearly erroneous when, although there is evidence to support it, a review of the record leaves the court with the definite and firm conviction that a mistake has been committed. Troglia, 879 P.2d at 1171.

Appellants argue that it was not within the district judge’s discretion to modify the boundaries suggested by the referee. Appellants rely on DeHaan v. Gallatin-Madison Ranch (1991), 250 Mont. 304, 308, 820 P.2d 423, 426, for the proposition that the report of the referee is to be rejected only for reasons that would justify the reversal of a jury’s verdict. In DeHaan, this court cited Ivins v. Hardy (1950), 123 Mont. 513, 518, 217 P.2d 204, 206 (Ivins ID for this proposition. See also Ivins v. Hardy (1958), 134 Mont. 445, 454, 333 P.2d 471, 475, cert. denied, 359 U.S. 1001, 79 S.Ct. 1141, 3 L.Ed.2d 1031 (1959) (Ivins III). We note that both Ivins cases, as well as DeHaan, borrow their holding that the referee’s report should be rejected only for reasons that would justify the reversal of a jury’s verdict from cases dealing with attorney discipline. Ivins III, 333 P.2d at 475 (citing In re McCue (1927), 80 Mont. 537, 261 P. 341; In re Lunke (1919), 56 Mont. 226, 182 P. 126). These disciplinary cases were not partition actions, nor did they apply the statute now codified at § 70-29-212, MCA.

Our holdings in Ivins II, Ivins III, and DeHaan, are contrary to § 70-29-212, MCA. Pursuant to § 70-29-212, MCA, the court may “confirm, change, modify, or set aside the report.” As is clear from the statute, the district court has discretion in reviewing or adopting the report of the referee. Accordingly, we overrule Ivins II, Ivins III, and DeHaan insofar as they hold that a referee’s report is to be rejected by the district court only for reasons that would justify the reversal of a jury’s verdict.

In the present case, referee Warren did not submit a report to the court as envisioned by § 70-29-211, MCA. This statute requires referees to:

make a report of their proceedings, specifying therein the manner in which they executed their trust and describing the property divided and the shares allotted to each party with a particular description of each share.

Rather, he submitted only a proposed Certificate of Survey. Thus, it is clear from the record that there was no report for the District Court to either affirm, adopt or reject. Accordingly, it is unnecessary for this Court to determine whether there was substantial evidence to support a referee’s report.

Partition is an equitable action in which the court has great flexibility in fashioning appropriate relief for the parties. Frame v. Frame (1987), 227 Mont. 439, 443, 740 P.2d 655, 658. Here, in the order appointing the referee, the district judge stated that he would not be bound by the report of the referee. Then, after hearing the testimony of the parties and reviewing the referee’s proposed partition, the district judge toured the property before issuing his Findings of Fact, Conclusions of Law and Judgment. The goal of a partition action is to divide the property so as to be fair and equitable and to confer no unfair advantage on any of the cotenants. Frame, 740 P.2d at 658. Here, the District Court’s findings are not clearly erroneous and there is substantial evidence in the record to support the District Court’s partition of the property. The District Court was acting well within its discretion, pursuant to § 70-29-212, MCA, when it modified the referee’s proposed partition.

2. Did the District Court err in awarding compensatory and punitive damages for assault against the Estate of Kenneth Lippert?

In its Findings of Fact and Conclusions of Law Re: Assault and Battery and Malicious Destruction of Property, the District Court found that Kenneth Lippert’s actions in pointing and shooting a loaded gun at Latahna Entel were irresponsible and outrageous. Latahna testified that Kenneth Lippert approached her vehicle, pointed the gun at her and fired seven shots at the wheels and tires. He then told her “get the hell out of there, Latahna, you’ve had it now” and ordered her out of the vehicle. The court awarded money for the damage to the vehicle as well as compensatory damages for the assault. In reviewing a district court’s findings of fact, we determine whether they are clearly erroneous. Columbia Grain Int’l v. Cereck (1993), 258 Mont. 414, 417, 852 P.2d 676, 678. From the record, it is clear that there is substantial credible evidence to support the District Court’s award of compensatory damages.

In addition, the court found that Kenneth Lippert’s conduct was “outrageous and done with actual malice” and that his conduct should be punished and an example made thereof in order to discourage others from engaging in similar conduct in the future. Accordingly, the District Court awarded punitive damages in the amount of $5,000 against the Estate of Kenneth Lippert. The Lippert estate contends that the punitive damage award should be reversed since Mr. Lippert died before the trial and, thus, no punitive purpose will be served by assessing his estate with punitive damages.

The question of whether punitive damages can be awarded against the estate of a deceased tortfeasor is one of first impression in the State of Montana. We note that, of the states that have addressed this issue, the majority have decided against awarding such damages. See Hofer v. Lavender (Tex. 1984), 679 S.W.2d 470 (setting forth a comprehensive analysis of the various state court decisions as of 1984); see also Jay M. Zitter, Annotation, Claim for Punitive Damages in Tort Action as Surviving Death of Tortfeasor or Person Wronged, 30 A.L.R.4th 707, 710-11 (1984). The Supreme Court of Wyoming recently held that public policy is not served by permitting recovery of punitive damages against the estate of a deceased tortfeasor since, once he is dead, he can no longer be punished and “punitive damages no longer have the desired effect.” Parker v. Artery (Wyo. 1995), 889 P.2d 520, 525 (citing Jaramillo v. Providence Washington Ins. Co. (N.M. 1994), 871 P.2d 1343, 1351) (citations omitted). However, in light of Montana’s survival act and dual pinpose punitive damage statute, we reject the reasoning of those courts which have disallowed punitive damages against the estates of deceased tortfeasors.

At common law, a cause of action for assault and battery abated upon the death of a party. In Montana, that common law rule has, however, been abrogated by statute. Section 27-1-501(1), MCA, provides that a cause of action or defense does not abate because of the death of a party. Rather, it survives and may be maintained by his representatives. It is well recognized in Montana that in a tort action, the death of the defendant does not abate the action. Simonson v. White (1986), 220 Mont. 14, 19-20, 713 P.2d 983, 986. Accordingly, there is no question but that the plaintiff’s cause of action for assault survived the death of Kenneth Lippert. The question then becomes: was the award of punitive damages in addition to compensatory damages consistent with the policy of the State of Montana as expressed in statutory and case law?

It is clear from the statutory authorization that punitive damages serve a dual purpose in Montana. Section 27-1-220, MCA, provides:

Punitive Damages — when allowed. (1) Except as otherwise expressly provided by statute, a judge or jury may award, in addition to compensatory damages, punitive damages for the sake of example and for the purpose of punishing a defendant.

The plain language of the statute indicates that punitive damages serve two purposes: (1) to set an example, and (2) to punish the wrongdoer. The decisions of this Court further support the conclusion that punitive damages serve not only to punish, but also to set an example to the public for purposes of deterrence. Fitzgerald v. Western Fire Ins. Co. (1984), 209 Mont. 213, 215, 679 P.2d 790, 793; Miller v. Watkins (1982), 200 Mont. 455, 469, 653 P.2d 126, 132-33. Punitive damages should not be in excess of the “amount necessary adequately to punish the defendant and serve as an example to it and others.” Dees v. American Nat’l Fire Ins. (1993), 260 Mont. 431, 448, 861 P.2d 141, 151 (citing Safeco Ins. Co. v. Ellinghouse (1986), 223 Mont. 239, 255, 725 P.2d 217, 227 (emphasis added)).

Obviously, as far as meting out punishment is concerned, Kenneth Lippert is now beyond the jurisdiction of this temporal Court. That fact, however, does not obviate the exemplary function of a punitive damage award. In requiring Kenneth Lippert’s estate to respond in punitive damages, the District Court has chosen to send a message to the public at large that intimidation through the brandishing and discharging of firearms will not be tolerated.

We hold that, in Montana, punitive damages serve both to punish and to set an example. We reject the argument that punitive damages cannot be assessed against the estate of a deceased party. Whether it is appropriate to assess punitive damages against the estate of a deceased tortfeasor for purposes of setting an example is a question for the trier of fact to weigh in its deliberations.

Affirmed.

JUSTICES TRIEWEILER, HUNT and NELSON concur.

JUSTICE ERDMANN

dissenting.

I concur with the Court’s holding in Issue 1. However, I dissent from the majority’s holding in Issue 2 that the District Court did not err in awarding punitive damages against the Estate of Kenneth Lippert. However reprehensible Mr. Lippert’s conduct, under the plain language of § 27-1-220, MCA, and the rationale of a majority of jurisdictions which have examined this issue, punitive damages are not awardable against a tortfeasor’s estate.

The majority has chosen to follow the reasoning of a very narrow minority — four out of thirty-one jurisdictions — to impose punitive damages on a tortfeasor’s estate. See 98 Dick. L. Rev. 329, 333 (1994). The majority proclaims it has made an example of Kenneth Lippert in that one cannot escape punishment through death. Surely one who is not deterred by our criminal laws from engaging in outrageous conduct would likewise not be deterred by an award of punitive damages on his estate. Lohr v. Byrd (Fla. 1988), 522 So. 2d 845, 847. When through death the tortfeasor is not punished, the general deterrent effect is diminished. Hofer v. Lavender (Tex. 1984), 679 S.W.2d 470, 478 (Spears, J., dissenting).

In the majority decision, this Court suggests that Montana’s survival act and dual purpose punitive damage statute distinguish Montana from those jurisdictions which do not allow an award of punitive damages against an estate of a tortfeasor. This suggestion is inappropriate given that many of the courts which have disallowed such punitive damages have survival acts and dual purposes behind an award of punitive damages as well. Nevada’s state statutes allow for an award of punitive damages for “sake of example and by way of punishing the defendant.” Nev. Rev. Stat. § 42.010. Nevertheless, in Allen v. Anderson (Nev. 1977), 562 P.2d 487, 489, its Supreme Court held that punitive damage claims do not survive the death of a tortfeasor.

The majority cites specifically to the Wyoming Supreme Court’s decision in Parker v. Artery (Wyo. 1995), 889 P.2d 520, 525, where the Wyoming court chose not to impose punitive damages on an estate. Wyoming does not have a statute stating the purposes behind punitive damages, however, the state does have a survival act which provides that causes of action for injuries to person and property survive the death of a wrongdoer. Wyo. Stat. § 1-4-101. Even so, the Wyoming court denied punitive damages in a personal injury action against an estate because “[p]ublic policy is not served by permitting the recovery of punitive damages against the estate of a deceased tortfeasor.” The Wyoming court recognized that "[t]he purpose of punitive damages is to punish the tortfeasor and deter that person from repeating the wrongful act in the future; [therefore], the reason for awarding punitive damages ceases to exist with the death of the tortfeasor.” Parker, 889 P.2d at 525.

Florida also has a survival statute which provides that “[n]o ... action shall die with the person.” Fla. Stat. ch. 46-021. The Florida Supreme Court, however, rejected the imposition of punitive damages on a decedent’s estate stating that

[separation of the “punitive” and “exemplary” aspects of [an award for punitive damages] is unjustified because general deterrence logically depends upon the perception of punishment suffered by the wrongdoer. When the punishment is diffused and unjustly inflicted upon the innocent, through a doctrine analogous to attainder, the deterrent effect is frustrated. It is unrealistic to suppose that such awards deter other prospective tortfeasors, especially if the criminal laws fail to do so.

Lohr, 522 So. 2d at 846 (quoting Byrd v. Lohr (Fla. Dist. Ct. App. 1986), 488 So. 2d 138, 139).

Alaska’s Supreme Court took similar notice of its state’s survival statute which explicitly provided that plaintiff’s causes of action survive against a defendant’s estate. Doe v. Colligan (Alaska 1988), 753 P.2d 144 (referring to Alaska Stat. § 09.55.570). The court, however, denied an award of punitive damages based on the purposes behind such an award. The court concluded that

[t]he concomitant goal of general deterrence depends significantly upon the punishment function of an award of punitive damages. Since the deceased tortfeasor cannot be punished, the general deterrent effect becomes speculative at best and thus, in our view, falls short of furnishing a justifiable ground for an award of punitive damages against the tortfeasor’s estate.

Doe, 753 P.2d at 146.

New Mexico’s Legislature adopted a jury instruction which provided that punitive damages are awarded for punishment of the defendant as well as the deterrence of others. Regardless, the state’s supreme court declared that the deterrent effect of punitive damages on others is inextricably tied to the punishment of the tortfeasor. “If the tort-feasor cannot be punished, it follows that there can be no general deterrence.” State Farm Mut. Auto. Ins. v. Maidment (N.M. App. 1988), 761 P.2d 446, 449.

The Kansas courts have acknowledged the dual purpose of punitive damages in spite of no statutory language specifically stating those purposes. In Fehrenbacher v. Quackenbush (D. Kan. 1991), 759 F. Supp. 1516, 1521 (citing Wisker v. Hart (Kan. 1988), 766 P.2d 168), a federal district court acknowledged that while punitive damages are awarded to punish the wrongdoer, the ultimate purpose of punitive damages is to restrain and deter others from the commission of similar wrongs. Nevertheless, the court concluded that Kansas law does not permit an award of punitive damages against the estate of a wrongdoer when it “would vicariously punish the heirs of the wrongdoer and would not serve to deter potential tortfeasors.” Fehrenbacher, 759 F. Supp. at 1521-22. In this case, the majority has failed in its attempt to distinguish the rationale and reasoning of the majority of jurisdictions which have considered this issue.

The majority cites to the Texas Supreme Court’s holding in Hofer for its reasoning that a dual purpose for punitive damages is a sufficient reason to distinguish itself from the majority of jurisdictions refusing to impose punitive damages on an estate. See Hofer, 679 S.W.2d at 475. The Hofer court predicates its decision on case law which provides that punitive damages have a purpose other than that of punishment and deterrence. Texas recognizes an award of punitive damages to compensate the plaintiff for remote losses such as inconvenience and attorney fees. Hofer, 679 S.W.2d at 474. The purpose of such compensation is not linked to the exemplary punishment of the defendant as is the purpose of deterrence. This Court, in Reintsma v. Lawson (1986), 223 Mont. 520, 525, 727 P.2d 1323, 1326, refused to award attorney fees and costs under the guise of punitive damages even though the Court determined that a punitive damage award was proper. It is therefore not appropriate for this Court to follow the reasoning in Hofer.

Moreover, the majority has ignored the plain language of the punitive damage statute and the legislature’s use of the conjunctive “and.” “[A] judge or jury may award ... punitive damages for sake of example and for the purpose of punishing a defendant.” Section 27-1-220, MCA (emphasis added). The conjunctive “and” is used when the legislative intent is that all requirements must be fulfilled in order to comply with the statute. Sutherland Stat. Const. § 21.14 (5th ed). The purpose of such an award is for both the punishment of the tortfeasor and deterrence of all others by example. Even if the majority is correct in its determination that an award of punitive damages against an estate will act as a deterrent, Kenneth Lippert is simply beyond temporal punishment and the dual requirements of § 27-1-220, MCA, cannot be met.

While under the plain language of the statute it is unnecessary to resort to the legislative history of § 27-1-220, MCA, a review of that history reflects the legislature’s intent to preclude the award of punitive damages against estates. In discussing HB 363, which enacted the predecessor of § 27-1-220, MCA, the House Judiciary Committee acknowledged that “[p]unitive damages, being personal to the defendant, do not usually survive such defendant.” 49th Cong. (1985), H. R. Jud. Comm. (Feb. 12), Exh. A-pg 4 (exhibit prepared and submitted by Rep. John Cobb). Although the statute was later amended, the language pertinent to this case was not changed.

Furthermore, a plain reading of § 27-1-220, MCA, provides that punitive damages are appropriate when the “defendant is found guilty of actual malice.” In this case, the tortfeasor is dead and the defendant is the estate. The estate was not found guilty of any malice. Therefore, according to § 27-1-221, MCA, punitive damages against an estate would be inappropriate.

Certainly, deterrence is a legitimate purpose for an award of punitive damages. Nevertheless, it is the court’s punishment of the tortfeasor which is the deterrence and no court can punish the dead. If the legislature had intended that punitive damages were to be awarded against estates, they could have easily so specified. In this opinion, we have usurped the role of the legislature and improperly legislated a major policy change. Under the majority’s holding the innocent heirs are punished for the behavior of the deceased tortfeasor. I would reverse the District Court’s holding awarding punitive damages for assault against the Estate of Kenneth Lippert.

CHIEF JUSTICE TURNAGE and JUSTICE GRAY join in the foregoing dissenting opinion.


author: JUSTICE ERDMANN

text:
    IN RE ESTATE OF MICHAEL WILLIAM GOICK, Deceased.
    No. 95-228.
    Submitted on Briefs December 7, 1995.
    Decided January 9, 1996.
    53 St.Rep. 12.
    275 Mont. 13.
    909 P.2d 1165.

      For Appellants: Dan L. Spoon and Patrick J. McHugh, Reep, Spoon & Gordon, Missoula.
    For Respondent: Keith A. Maristuen, Bosch, Kuhr, Dugdale, Martin & Kaze, Havre.
    Guardian Ad Litem: David G. Rice, Attorney at Law, Havre.
   JUSTICE ERDMANN

delivered the opinion of the Court.

This is an appeal of an order of the Seventeenth Judicial District Court, Blaine County, granting summary judgment in favor of Barbara Goick, appointing Barbara as a supervised personal representative of decedent Michael Goick’s estate, approving the distribution agreement between Barbara and the decedent’s children, and denying appellants’ motion to compel settlement of the case. We affirm.

We restate the issues as follows:

1. Do the appellants, decedent’s mother, brother, and sister, lack standing to appeal?

2. Did the District Court err when it granted summary judgment in Barbara’s favor concluding that she was the surviving spouse for purposes of intestate succession?

3. Did the District Court err when it appointed Barbara as personal representative of decedent’s estate?

4. Did the District Court err in denying the appellants’ motion to compel settlement of the case?

5. Is Barbara entitled to an award of attorney fees and costs related to this appeal?

FACTS

Michael and Barbara Goick were married in 1981 and the marriage produced three children. In December 1990, Michael filed a petition for dissolution. A hearing in the dissolution proceeding was scheduled for April 25, 1991. At that hearing, Michael and Barbara agreed to all issues except the division of household goods, which the parties were to settle within two weeks. The District Court Judge then had the parties present sufficient evidence to support a decree of divorce.

Following the hearing, the judge was apparently asked whether Barbara and Michael were divorced and he responded that they were. The parties were unable to agree on the division of the household goods and, on December 25, 1991, Barbara filed a motion to divide personal property of the marriage. In the motion, she stated her understanding was that the marriage had been dissolved on April 25, 1991, by the District Court. On December 19,1991, the District Court Judge wrote a memorandum to the attorneys informing them that it was his understanding the parties had refused to sign the settlement agreement negotiated at the April 25 hearing and that he intended to hold the parties to that agreement. On January 7,1992, Michael’s attorney filed an application for withdrawal of attorney to which Michael consented. No further proceedings occurred in the divorce action and no final decree or order was issued. Michael died on November 30, 1992. Two days after his death, Barbara moved to dismiss the divorce proceeding for the reason that Michael had died. On December 3, 1992, an order was issued dismissing the divorce action.

On December 7, 1992, Barbara filed a petition for adjudication of intestacy, determination of heirs, and appointment of personal representative (PR). In the petition, she claimed she was the surviving spouse and was entitled to an appointment as PR. Michael’s mother, brother, and sister (the appellants) filed an objection to the petition, claiming Barbara was not the surviving spouse, but rather the ex-wife of Michael. The court appointed a guardian ad litem for the children. Barbara filed a motion for summary judgment asking the court to determine that she was the surviving spouse of Michael. The appellants filed a motion for summary judgment asking the court to find that Barbara was not Michael’s surviving spouse.

Subsequent to the summary judgment motion being decided, the attorneys for Barbara and the appellants, and the guardian ad litem, reached an oral settlement agreement on the telephone. That agreement was never written or signed by the parties. On August 2,1994, the appellants filed a motion to compel a settlement, claiming that a binding agreement had been reached in the telephone conference. Barbara and the guardian ad litem objected to the motion because the oral agreement had never been approved by the parties. On October 24, 1994, the District Court issued an order denying the appellants’ motion to compel settlement. The appellants filed a motion for reconsideration, which was denied.

On January 27, 1995, a distribution agreement was entered into between Barbara and the children through their guardian ad litem as the only potential heirs of Michael. A notice of distribution agreement was filed, and the appellants filed an obj ection to the agreement. The District Court approved the agreement on March 21, 1995. The appellants filed a motion asking the court to reconsider the distribution agreement, and the court ordered oral argument. On April 4, 1995, following the hearing, the District Court issued an order granting Barbara’s motion for summary judgment on the issue of her status as a surviving spouse, approving the distribution agreement, and appointing Barbara as a supervised personal representative. From that order and the denial of their motion to compel settlement, appellants appeal.

ISSUE 1

Do the appellants, decedent’s mother, brother, and sister, lack standing to appeal?

Barbara claims the appellants have no standing to appeal. The record does not support Barbara’s contention that she objected to the appellants’ standing in District Court. However, as we noted in Grossman v. Dept. of Natural Resources and Conservation (1984), 209 Mont. 427, 437, 682 P.2d 1319, 1324, objections to standing cannot be waived. Therefore, Barbara is not precluded from raising this defense for the first time on appeal. See Stewart v. Board of County Comm’rs (1977), 175 Mont. 197, 204, 573 P.2d 184, 188.

The appellants have appealed three separate issues to this Court and it is necessary to examine their standing as to each issue. A party aggrieved may appeal an order. Rule 1, M.R.App.P. To be aggrieved, a party must have an interest in the subject matter of the litigation which is injuriously affected by the order. Holmstrom Land Co. v. Newlan Creek Water Dist. (1979), 185 Mont. 409, 425, 605 P.2d 1060, 1069 (citing Estate of Stoian (1960), 138 Mont. 384, 357 P.2d 41).

Appointment of Barbara as PR

Barbara contends that appellants were not heirs to the estate, and so, they could not be injured by Barbara’s appointment as PR. The appellants claim they have standing because they are creditors of the estate. In fact, Michael’s mother, Wanda Goick, is the only appellant who filed a creditor’s claim against the estate. As a creditor, Wanda has priority for appointment as PR if Barbara is determined to be ineligible. See § 72-3-502, MCA. Section 72-3-503, MCA, provides that creditors can object to the appointment of a PR. Wanda objected to Barbara’s appointment as PR, and for that reason she has standing to appeal the appointment. Michael’s brother and sister are neither creditors nor heirs of the estate, and therefore, they have no standing to appeal her appointment as PR. See Olson v. Dept. of Revenue (1986), 223 Mont. 464, 469-70, 726 P.2d 1162, 1166.

Enforcement of Distribution Agreement

The appellants raise the issue of whether enforcement of the distribution agreement was in error and Barbara argues that they lack standing to challenge the agreement. Under this agreement, Barbara agreed to receive a distribution of one-third of the estate, and the children agreed, through their guardian ad litem, to receive two-thirds of the estate which will be administrated by a corporate trustee.

The distribution agreement provided that Barbara and the children’s guardian ad litem agreed

to enter into a private agreement among successors as to distribution of an estate, pursuant to Section 72-3-915, MCA, in order to settle the litigation in the probate matter pending in Blaine County District Court and to provide for a different distribution than provided under the laws of intestacy.

Section 72-3-915(1), MCA, provides as follows:

Subject to the rights of creditors and taxing authorities, competent successors may agree among themselves to alter the interests, shares, or amounts to which they are entitled under the will of the decedent or under the laws of intestacy in any way that they provide in a written contract executed by all who are affected by its provisions. The personal representative shall abide by the terms of the agreement subject to his obligation to administer the estate for the benefit of creditors, to pay all taxes and costs of administration, and to carry out the responsibilities of his office for the benefit of any successors of the decedent who are not parties.

The appellants are not successors to the estate and so they are not proper parties to an agreement distributing the estate. They have no legal interest in the distribution of Michael’s estate. Furthermore, Wanda’s interests as a creditor of Michael’s estate are completely provided for by statute.

A party has no standing where there is no personal stake in the outcome of the controversy. Northern Border Pipeline Co. v. State (1989), 237 Mont. 117, 129, 772 P.2d 829, 836 (citing Olson, 726 P.2d at 1166). The appellants have no personal stake in the validity of the agreement. We therefore conclude that the appellants have no standing to claim the distribution agreement was improper. Accordingly, the issue of whether the District Court erred in approving the distribution agreement is not properly before us.

Enforcement of Oral Settlement Agreement

Barbara contends the contested oral settlement agreement was a distribution of the estate to which appellants have no interest. Accordingly, she argues they have no standing to appeal the court’s denial of a motion to enforce this agreement. The appellants, however, were parties to the contested settlement agreement and the agreement named Wanda as co-PR and awarded her a percentage of the estate in excess of what she would receive as a creditor. The appellants are directly affected by the validity of the agreement and thus have standing to appeal this issue. See Holmstrom, 605 P.2d at 1069.

ISSUE 2

Did the District Court err when it granted summary judgment in Barbara’s favor concluding that she was the surviving spouse for purposes of intestate succession?

Wanda, as the sole appellant with standing to litigate this issue, claims that both Barbara and Michael considered themselves divorced and in the April 25, 1991, hearing the District Court Judge informed the parties that they were divorced, even though no final order was ever issued. The District Court held a hearing on this issue in the probate proceeding and concluded that a divorce decree cannot be based on an oral agreement. The court further concluded that Barbara was the surviving spouse for purposes of intestate succession and granted summary judgment in her favor.

The standard we use to review a district court’s grant of summary judgment is the same as that used by the district court in applying Rule 56, M.R.Civ.P. Bruner v. Yellowstone County (1995), 272 Mont. 261, 263, 900 P.2d 901, 903. Summary judgment is appropriate where there are no issues of material fact and the moving party is entitled to judgment as a matter of law. Bruner, 900 P.2d at 903.

Section 72-2-103(2)(c), MCA (1991), provides that “a person who was a party to a valid proceeding concluded by an order purporting to terminate all marital property rights” is not a surviving spouse of decedent. Wanda claims the April 25,1991, proceeding conveyed and implied that Barbara and Michael were divorced, thereby “purporting” to terminate all marital property rights. Wanda contends that according to § 72-2-103(2)(c), MCA (1991), Barbarais not a surviving spouse for the purposes of intestacy.

There was no divorce decree or order issued from the April 25, 1991, proceeding, nor was a final settlement even reached as to all marital property rights. Recently, in In re Marriage of Simms (1994), 264 Mont. 317, 871 P.2d 899, we concluded that an oral settlement agreement is not binding on a judge. Whatever settlement was reached in the April 25, 1991, proceeding was merely an oral agreement between the parties and cannot be considered the equivalent of an order where no final order was issued. Accordingly, Barbara’s status as a surviving spouse was not terminated pursuant to § 72-2-103(2)(c), MCA (1991).

Wanda further contends principals of equitable estoppel prevent Barbara from claiming that she is the surviving spouse in regard to Michael’s estate when she has held herself out as being divorced from Michael for over one and one-half years prior to his death. Equitable estoppel requires that:

T. There must be conduct — acts, language, or silence — amounting to a representation or a concealment of material facts. 2. These facts must be known to the party estopped at the time of his said conduct, or at least the circumstances must be such that knowledge of them is necessarily imputed to him. 3. The truth concerning these facts must be unknown to the other party claiming the benefit of the estoppel, at the time when it was acted upon by him. 4. The conduct must be done with the intention, or at least with the expectation, that it will be acted upon by the other party, or under such circumstances that it is both natural and probable that it will be so acted upon. ... 5. The conduct must be relied upon by the other party, and, thus relying, he must be led to act upon it. 6. He must in fact act upon it in such a manner as to change his position for the worse, in other words, he must so act that he would suffer a loss if he were compelled to surrender or forego or alter what he has done by reason of the first party being permitted to repudiate his conduct and to assert rights inconsistent with it. ...’

Davis v. Jones (1983), 203 Mont. 464, 467, 661 P.2d 859, 861 (quoting Lindblom v. Employers’ Liab. Assur. Corp. (1930), 88 Mont. 488, 494, 295 P. 1007, 1009).

In this instance, equitable estoppel would have required that Barbara’s representation that they were divorced was made with the intention or expectation that Michael would act upon the representation. It would also require that Michael relied to his detriment upon the representation and that he not be aware that the divorce was not final. Both parties refused to sign the settlement negotiated at the April 25, 1991, hearing. Michael’s attorney for the divorce action testified that Michael did not believe the divorce was final and that Michael insisted upon going to trial. This testimony was uncontradicted. It follows that Michael was aware that the divorce was not final and did not act to his detriment even if Barbara was found to have intentionally misrepresented the facts concerning the status of the divorce.

We conclude that Barbara is not estopped from claiming she and Michael were not divorced. The record is clear that no divorce decree or order was ever issued. We therefore conclude that the District Court did not err in holding that Barbara was the surviving spouse for purposes of intestate succession and granting summary judgment in her favor.

ISSUE 3

Did the District Court err when it appointed Barbara as personal representative of decedent’s estate?

Wanda’s position is that Barbara should not have been appointed PR because she has obvious conflicts of interest over the estate in regard to the children’s interests. She argues that Barbara’s claim to the estate is directly adverse to that of the children’s because the children would receive the entire estate if not for Barbara’s self-interest. For that reason, Wanda contends that Barbara cannot act as a fiduciary of the estate for the benefit of the children. The District Court ordered that Barbara be named PR under the court’s supervision and that she not take any substantive action without the court’s approval.

We review the appointment of a personal representative according to § 72-3-502, MCA, to determine whether a district court has correctly interpreted the law. Estate of Peterson (1994), 265 Mont. 104, 110, 874 P.2d 1230, 1233. If a PR has not been named under will and there are no devisees, the decedent’s surviving spouse has priority for appointment. Section 72-3-502, MCA.

As stated in Issue 2, Barbara is Michael’s surviving spouse for purposes of intestate succession. Accordingly, she has priority for appointment over Michael’s other heirs, the public administrator, and any creditor. See § 72-3-502, MCA. Her appointment was agreed to by the children through their guardian ad litem. Therefore, the District Court was correct when it determined Barbara had priority for appointment. Furthermore, the children’s interests are protected in this situation through the court ordered supervision of the estate’s administration. We conclude that the District Court did not err in appointing Barbara as PR of Michael’s estate.

ISSUE 4

Did the District Court err in denying the appellants’ motion to compel settlement of the case?

The appellants assert that the settlement agreement reached over the phone by the parties’ attorneys was an enforceable agreement. Barbara contends that the agreement was merely a tentative oral agreement reached by the attorneys and subject to the parties’ approval. The District Court found that counsel agreed to the settlement with the consent of the parties, but concluded the agreement was insufficient to bind the parties in this action.

We review a District Court’s conclusions of law to determine 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.

Section 37-61-401(1), MCA, provides that an attorney has the authority to bind his client when the agreement has been “filed with the clerk or entered upon the minutes of the court and not otherwise.” The settlement agreement in this instance was not filed with the clerk nor was it entered upon the minutes of the court. Furthermore, the object of the oral agreement was to distribute Michael’s estate. Distribution agreements are required, pursuant to § 72-3-915(1), MCA, to be in writing. While the appellant’s attorney memorialized the agreement in a letter dated June 2, 1994, that letter included terms not agreed upon over the phone. Barbara did not consent to these terms and so the letter did not constitute a written agreement. See § 28-2-102, MCA.

We therefore conclude that the oral agreement was not binding on the parties and hold that the District Court did not err in denying the appellants’ motion to compel settlement of the case.

ISSUE 5

Is Barbara entitled to an award of attorney fees and costs related to this appeal?

Barbara claims this appeal is without merit and is mean spirited in nature. Accordingly, she contends she is entitled to an award of attorney fees pursuant to Rule 32, M.R.App.P.

Rule 32, M.R.App.P., states that:

If the supreme court is satisfied from the record and the presentation of the appeal in a civil case that the same was taken without substantial or reasonable grounds, such damages may be assessed on determination thereof as under the circumstances are deemed proper.

While we cannot be aware of appellants’ motive in bringing this appeal, a review of the record demonstrates that the issues raised were based on reasonable grounds. We therefore conclude Barbara is not entitled to an award of attorney fees.

JUSTICES NELSON, TRIEWEILER, HUNT and LEAPHART concur.


text:
    BROOKS B. BARNES, by and through his Guardian Ad Litem, DOUGLAS A. BARNES, and JUDY K. BARNES, Plaintiffs and Appellants, v. UNITED INDUSTRY, INC., Defendant and Respondent.
    No. 94-386.
    Submitted on Briefs November 16, 1995.
    Decided January 10, 1996.
    53 St.Rep. 17.
    275 Mont. 25.
    909 P.2d 700.

      For Appellants: Robert L. Stephens, Jr., R. L. Stephens, Ltd., and Terry L. Seiffert, Attorney at Law, Billings.

      For Respondent: Earl J. Hanson, Hanson, Roybal, Lee & Todd, Billings.
   JUSTICE ERDMANN

delivered the Opinion of the Court.

This is an appeal from a judgment based upon a jury verdict in the Thirteenth Judicial District Court, Yellowstone County, and the court’s rulings on admission of evidence, the granting of a directed verdict in favor of United Industry, Inc., on punitive damages, and the denial of Brooks B. Barnes’request for post-trial relief. We affirm.

We restate the issues as follows:

1. Did the District Court err in not granting a new trial for alleged improper statements in final argument where no objection was made?

2. Did the District Court err in granting United’s motion for a directed verdict on the issue of punitive damages?

3. Did the District Court err in not granting a new trial based on the refusal to admit a photograph exhibit taken nine days after the accident occurred and a letter from Barnes’ attorney to United written four days after the accident?

4. Did the District Court err in not granting a new trial based on the jury’s finding that Barnes suffered no future loss of earning capacity?

5. Did the District Court err in not granting a new trial based on the inadvertent failure to instruct on the standard of care of a bicyclist?

6. Did the District Court err in denying Barnes’ motion for additur?

FACTS

On September 6, 1990, Barnes, then age fifteen, was riding his bicycle along the sidewalk next to the Transwestern I building in Billings. The Transwestern I building is an office building owned by United and was being refurbished at the time of the accident. Barnes rode his bicycle into a plastic pipe that had been placed on and across the sidewalk by United’s employee to allow for the watering of the grass. Barnes hit the pipe and fell from his bike breaking both of his wrists. There was no barricade in place at the time of the accident.

Barnes has incurred several surgeries to his wrists, including plastic surgery to correct a resulting deformity in both arms. Despite his injuries, Barnes graduated with honors from high school and received a scholarship to Marquette University where he is pursuing a degree in journalism. He currently attends the University’s communication school and, although he types his own papers, he is required to rest after forty minutes of typing due to pain in his wrists. Barnes also testified that the injuries have limited his routine everyday activities as well as his recreational activities.

Barnes asked for both compensatory and punitive damages. The case was tried to a twelve-person jury. At the conclusion of Barnes’ case in chief, the District Court granted a directed verdict on the issue of punitive damages in favor of United. The remainder of the case was submitted to the jury and the jury found Barnes thirty percent negligent and United seventy percent negligent. The jury awarded Barnes $89,641 which the court reduced to $62,763.

At trial, Barnes offered into evidence two pictures. One was of the accident scene the day after the accident and the other was of the accident scene nine days later. The court admitted into evidence the first picture but refused the second.

During closing arguments, the attorney for United admitted liability but also referenced the action of third parties that may have contributed to the accident — the subcontractors who apparently removed the sidewalk barriers without notifying United.

Before the jury was dismissed, Barnes offered an instruction on the standard of care that a bicyclist must follow. The District Court inadvertently did not give the instruction to the jury.

Following trial, Barnes filed a motion for additur to increase the jury verdict from anywhere between $45,000 to $75,000. The District Court did not grant the motion for additur.

Barnes filed a motion for new trial citing the above grounds as well as the jury’s refusal to award any damages for future loss of earning capacity. The District Court denied Barnes’ requests for a new trial.

From the court’s denial of post-trial relief, grant of a directed verdict, refusal of evidence, and the jury’s verdict, Barnes appeals.

ISSUE 1

Did the District Court err when it denied Barnes a new trial for alleged improper statements in final argument where no objection was made?

Barnes contends that in its final argument United admitted liability but then argued that its employees were unaware that the barricade had been removed. United then made an alleged improper inference that there was third-party liability of some sort on the part of the contractor for failing to advise United of the removal of barricades from the sidewalk. Barnes asserts that a new trial is warranted where improper statements are made in closing arguments. See Kuhnke v. Fisher (1984), 210 Mont. 114, 683 P.2d 916. In the District Court’s memorandum, Barnes’ request for a new trial was denied because Barnes

did not object to any portion of the final argument submitted by [United’s] counsel. Therefore, assuming that some portion of [United’s] counsel’s argument was improper, [Barnes] waived any objections he may have had to the content of defense counsel’s argument.

In Reno v. Erickstein (1984), 209 Mont. 36, 679 P.2d 1204, we held that failure to make a timely objection to alleged improper statements of counsel in closing argument constitutes a waiver. A party loses his right to appeal an alleged err where an objection to that error was waived. Whiting v. State (1991), 248 Mont. 207, 221, 810 P.2d 1177, 1187. The record sets forth no objection to the content of United’s final argument nor any request for corrective action. We therefore conclude that the District Court did not err when it denied Barnes a new trial for alleged improper statements in final argument where there was no objection to the statements.

ISSUE 2

Did the District Court err in granting United’s motion for a directed verdict on the issue of punitive damages?

At the conclusion of Barnes’ case in chief, the District Court granted United’s motion for directed verdict on the issue of punitive damages. The District Court, however, failed to set forth any findings as to why it did not allow punitive damages. Nevertheless, this Court will affirm a district court’s grant of a directed verdict if the court’s conclusion is correct regardless of the reasons given. Riley v. American Honda Motor Co. (1993), 259 Mont. 128, 131, 856 P.2d 196, 198 (citing Laurie v. M. & L. Realty Corp. (1972), 159 Mont. 404, 408, 498 P.2d 1192, 1194). We review a directed verdict in light of the evidence most favorable to the party against whom the verdict was directed. LaVelle v. Kenneally (1974), 165 Mont. 418, 529 P.2d 788.

Barnes claims punitive damages should have been assessed upon United because of United’s malicious acts. Punitive damages may be awarded when the defendant is found, by clear and convincing evidence, to be guilty of actual malice. Section 27-1-221(1), (5), MCA.

A defendant is guilty of actual malice if he has knowledge of facts or intentionally disregards facts that create a high probability of injury to the plaintiff and ... deliberately proceeds to act with indifference to the high probability of injury to the plaintiff.

Section 27-1-221(2), MCA. Barnes alleges United placed the pipe over the sidewalk and left it there for a period of two weeks in wanton and willful indifference to the hazard the pipe created for pedestrians and bicyclists.

United contends there was no evidence presented that showed the employee who laid the pipe across the sidewalk acted in conscious or blatant disregard of the high probability of injury to Barnes, or that the employee deliberately proceeded to act in indifference to the high probability of injury to Barnes. The employee testified that the barricade was in place when he initially laid the pipe on the sidewalk and every time he moved the pipe thereafter. Barnes produced no evidence to the contrary.

In Niles v. Big Sky Eyewear (1989), 236 Mont. 455, 460, 771 P.2d 114, 117, overruled on other grounds by Sacco v. High Country Independent Press (1995), 271 Mont. 209, 229, 896 P.2d 411, 423, we held punitive damages were not appropriate where the plaintiff had not presented a prima facie case including clear and convincing evidence of all elements required under § 27-1-221, MCA. In order to render a defendant liable for exemplary damages, plaintiff must allege and prove something more than mere negligence. Gagnier v. Curran Const. Co. (1968), 151 Mont. 468, 480, 443 P.2d 894, 901.

In the present case, Barnes did not produce any evidence to contradict the testimony of United’s employee. Accordingly, Barnes is not entitled to an award of punitive damages. Therefore, we hold that the District Court did not err in granting United’s motion for a directed verdict on the issue of punitive damages.

ISSUE 3

Did the District Court err in not granting a new trial based on the refusal to admit a photograph exhibit taken nine days after the accident occurred and a letter from Barnes’ attorney to United written four days after the accident?

At trial, Barnes moved to introduce two photos into evidence. The first photo was of the accident scene the day after the accident and the second photo was of the same scene nine days later. The District Court allowed the first photo into evidence but did not allow the second because it found the second photo was not relevant to the conditions at the time of the accident.

The District Court has broad discretion to determine the admissibility of evidence, and we will not disturb the court’s ruling absent a manifest abuse of discretion. King v. Zimmerman (1994), 266 Mont. 54, 65, 878 P.2d 895, 902.

In Lindberg v. Leatham Brothers, Inc. (1985), 215 Mont. 11, 24, 693 P.2d 1234, 1243, we held that a district court’s exclusion of evidence was proper where the evidence consisted of a photograph that “does not tend to prove, disprove, or support any material fact in the case ... [and is] irrelevant and repetitive.” The second photograph depicted an accident scene nine days after the accident. The District Court correctly concluded that the photograph was not relevant to the conditions existing at the time of the accident.

Barnes also attempted to introduce the photograph as evidence that United took no action to remove the pipe or replace the barricade after the accident thus contending that the photograph was relevant to the issue of punitive damages. In addition, Barnes offered into evidence a letter his attorney wrote to United four days after the accident. The letter generally advised United of the accident. Barnes argued that the letter was evidence of further notice to United of the accident and that United acted maliciously in not removing the pipe or replacing the barricade after receiving such notice. The District Court reserved ruling on the picture and the letter’s admissibility for purposes of punitive damages until after Barnes’ case in chief.

In Issue 2, we affirmed the District Court’s directed verdict on the issue of punitive damages. Once a determination is made that punitive damages are not allowed, evidence pertaining to them should be excluded. Ryan v. Ald, Inc. (1965), 146 Mont. 299, 303, 406 P.2d 373, 375. Therefore, the District Court properly refused the photograph exhibit and the letter for purposes of punitive damages as well.

The decision to grant or deny a new trial is within the sound discretion of the trial judge and will not be disturbed absent a showing of manifest abuse of that discretion. Baxter v. Archie Cochrane Motors, Inc. (1995), 271 Mont. 286, 288, 895 P.2d 631, 632. We conclude that the District Court properly refused the photograph exhibit taken nine days after the accident occurred and the letter Barnes’ attorney sent to United. We therefore conclude that the court did not abuse its discretion in not granting a new trial.

ISSUE 4

Did the District Court err in not granting a new trial based on the jury’s finding that Barnes suffered no future loss of earning capacity?

Barnes presented several expert witnesses who testified to the effect the injury had on Barnes’ future earnings. United offered no testimony on this issue, but rather relied upon its cross-examination of Barnes’ witnesses. The jury, upon instruction that it could disregard any testimony from any expert, found Barnes’ injury would not result in future loss of earnings. Barnes claims on appeal that there was a lack of substantial evidence to support the jury’s findings and that the District Court erred in not granting a new trial.

We review a jury’s verdict to determine if there is substantial credible evidence in the record to support it. Barthule v. Karman (1994), 268 Mont. 477, 485, 886 P.2d 971, 976. Substantial evidence is “more than a scintilla, but ... less than a preponderance, of evidence.” State v. Shodair (1995), [273 Mont. 155], 902 P.2d 21, 26. We have held that it is not the function of this Court to agree or disagree with a jury’s verdict. Schulke v. Gemar (1994), 264 Mont. 184, 188, 870 P.2d 1378, 1380. If conflicting evidence exists, we do not retry a case because the jury chose to believe one party over another. Simchuk v. Angel Island Community Assn. (1992), 253 Mont. 221, 229, 833 P.2d 158, 163.

Barnes introduced testimony of expert witnesses as evidence of his future earning capacity. The credibility and weight to be given these expert witnesses is within the province of the jury and not of this Court. See Hagen v. Dow Chemical Co. (1993), 261 Mont. 487, 494, 863 P.2d 413, 418.

Barnes’ orthopedic surgeon, Dr. Hansen, testified on behalf of Barnes that Barnes’ injury could inhibit full growth potential of bones in his wrist and he would therefore be susceptible to further injury. Dr. Hansen further testified that Barnes’ had an estimated five to fifteen percent permanent impairment of the function in his wrists. Nevertheless, Dr. Hansen testified during cross-examination that if surgery was successful Barnes would be physically capable of performing the duties necessary for a career in journalism.

Barnes also called Dr. Adair, an economic analyst, as an expert witness. Under direct examination, Dr. Adair testified that as a result of this injury Barnes’work life will be decreased by 12.9 years, he will incur a 15 percent reduction of productivity, and he will have to endure a substantial increase in insurance premiums. During cross-examination, Dr. Adair conceded that Barnes would not be affected by increased insurance premiums if Barnes is provided health insurance through his work place. Additionally, Dr. Adair testified that if Barnes became a successful journalist and did not require any additional commitment of resources over and above what any other journalist would require Barnes would not suffer any loss of earning capacity.

Barnes argues that Brockie v. Omo Construction (1994), 268 Mont. 519, 887 P.2d 167, is controlling in this case. Brockie was killed in an automobile accident involving a sign owned by Omo Construction. His estate brought a survivorship action against Omo Construction. The jury awarded zero dollars in survivorship damages despite the fact that the evidence and stipulations established funeral and medical expenses and a loss of future earning capacity for the remainder of Brockie’s life expectancy. This Court, citing Putman v. Pollei (1969), 153 Mont. 406, 457 P.2d 776, and Rudeck v. Wright (1985), 218 Mont. 41, 709 P.2d 621, reversed the jury verdict and remanded for a new trial on survivorship damages, finding that the evidence establishing survivorship damages was either stipulated to or offered without contradiction.

Brockie, Putman, and Rudeck are clearly distinguishable from the present case. All of those cases involved survivorship claims brought by estates where the evidence as to survivorship damages was uncontested. In this case, although Barnes suffered injuries to his wrist, he was able to successfully complete high school and attend college. There was conflicting testimony as to the effect of this injury on his future earnings and we will not retry the case because the jury chose to believe one party over another. Simchuk, 833 P.2d at 163.

In reference to the experts’ testimony, the jury was instructed that it was not bound by the opinion offered and that it should determine what weight to give the testimony. We conclude that there was substantial credible evidence in the record to support the jury’s finding that Barnes suffered no future loss of earning capacity.

A District Court’s grant or denial of a motion for a new trial will not be disturbed absent a showing of a manifest abuse of discretion. Baxter, 895 P.2d at 632. In the instant case, the District Court showed no abuse of discretion because there was sufficient evidence to support the jury’s verdict. We therefore conclude that the court did not err in denying Barnes’ request for a new trial.

ISSUE 5

Did the District Court err in not granting a new trial based on the inadvertent failure to instruct on the standard of care of a bicyclist?

At trial, Barnes offered Plaintiff’s Instruction No. 15 which was the standard of care for a bicyclist. United did not object to the instruction and it was accepted by the District Court. In the recap of the instructions, however, Plaintiff’s Instruction No. 15 was not referenced. One of Barnes’ attorneys noticed the omission but did not make an objection or bring the omission to the court’s attention.

Barnes moved the District Court for a new trial based on this omission. The District Court denied Barnes’ motion because Barnes did not object nor did he request any curative actions, and therefore, Barnes’ objection was untimely. Further, the court held that even if the objection was timely, the lack of the instruction did not prejudice Barnes. The court pointed out that the standard had been referred to in other instructions and that this instruction was merely a more detailed version of the standard of care for a bicyclist. We will not disturb a district court’s denial of a motion for new trial absent a showing of manifest abuse of discretion. Baxter, 895 P.2d at 632.

The District Court’s omission of the instruction was an inadvertent act of the court and not a refusal of the instruction. This omission was an irregularity in the proceedings of the court. In Franck v. Hudson (1962), 140 Mont. 480, 373 P.2d 951, we stated:

Along line of cases in this state has established the rule that when a party fails to make a timely objection to an irregularity in the proceedings of the court... then the irregularity is waived.

Franck, 373 P.2d at 953-54 (citing Herren v. Hawks (1961), 139 Mont. 440, 365 P.2d 641). Barnes’ counsel disclosed, in an affidavit to the court, that he became aware of the omission during the court’s reading of the instructions. According to the record, Barnes did not bring the omission to the court’s attention. Therefore, Barnes waived any objection to the court’s omission of the jury instruction. It follows that the District Court did not abuse its discretion in denying a new trial.

We hold that the District Court did not err when it denied a new trial based on the inadvertent failure to instruct on the standard of care of a bicyclist.

ISSUE 6

Did the District Court err in denying Barnes’ motion for additur? Barnes moved the District Court for an order granting additur in the amount of $45,000 to $75,000. The District Court denied Barnes’ motion and stated:

[Barnes’] Motion for Additur has no merit. In Bohrer v. Clark (1978), 180 Mont. 233, 590 P.2d 117, the Court expressly held that the trial Court had no authority to add to a jury’s verdict. That case has not been overruled and represents the law of this State, as of this date. Therefore, this Court, even if it were sympathetic to [Barnes] argument, could not grant [Barnes’] Motion for Additur.

Barnes argues that this Court should overturn the rule stated in Bohrer because it is inconsistent for a court to be allowed to decrease a jury verdict but not to increase the same.

This Court, in Bohrer, adhered to the reasoning in State Highway Commission v. Schmidt (1964), 143 Mont. 505, 391 P.2d 692, where we discussed the issue of a district court’s right to increase a jury verdict. Bohrer, 590 P.2d at 121. A grossly inadequate verdict should not be permitted to stand. In that instance, however, both parties are entitled to a new trial whereby a jury can properly access liability and damages. To have the court award increased damages would effectively deny the right to a trial by jury. In decreasing a jury verdict, the court awards an amount within the amount awarded by the jury. Accordingly, a court’s decrease of a verdict is founded in law while a jury’s verdict is an award based on the facts. Schmidt, 391 P.2d at 695 (citing Dimick v. Schiedt (1935), 293 U.S. 474, 486, 55 S. Ct. 296, 301, 79 L. Ed. 603).

Barnes contends that since Article II, Section 26, of the Montana Constitution permits parties to waive their rights to a jury trial, the rationale of Schmidt is no longer valid. Barnes’ contention is unsound because a party’s right to a jury trial is secured regardless of whether the party chooses to waive that right. See Mont. Const, art. II, § 26. The analysis in Schmidt remains persuasive, and therefore, we affirm the rule stated in Bohrer. We conclude that the District Court correctly interpreted that rule of law, and therefore, the court did not err in denying Barnes’ motion for additur.

CHIEF JUSTICE TURNAGE, JUSTICES NELSON, HUNT and LEAPHART concur.