text:
    ACE M. WOODS, Plaintiff and Appellant, v. PAMELA A. HOULE, Sean Duke, Defendants and Respondents.
    No. 88-350.
    Submitted on Briefs Oct. 27, 1988.
    Decided Dec. 14, 1988.
    766 P.2d 250.

      Ace M. Woods, Wisconsin Rapids, Wis., pro se.
    James A. Manley, Poison, for defendants and respondents.
   MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

In this case, the District Court, Twentieth Judicial District, Lake County, entered summary judgment in favor of Pamela A. Houle, granting her an easement for a roadway over lands owned by Ace M. Woods, trustee. The District Court judgment held that Pamela A. Houle held an easement by prescription, an easement by implication and an implied easement by way of necessity. We affirm the District Court on its findings of an easement by prescription, and reverse its holding that Pamela A. Houle established an easement by implication or an implied easement by way of necessity.

The District Court determined that defendant, Sean Duke, had not appeared in the action, made no claim to any easement over Woods’ land, and judgment of dismissal was entered as to him. No issue involving Sean Duke is presented on this appeal.

Pamela Houle owns Lot 12, Block 6, Safety Bay Villa Sites, near Flathead Lake in Lake County, Montana. Her home is located on the lot, built on a cliff. Ace M. Woods, trustee, is the owner of Lot 11, which abuts and is immediately south of Lot 12. Because of the cliff, the driveway to the Houle home on Lot 12 curves to the south, crossing a part of Lot 11. This is the only road into the Houle household.

Prior to 1969, both Lots 11 and 12 were owned by Ace M. Woods and Margaret N. Woods. Subsequent deeds, affecting the road, may be listed as follows:

1969 Ace M. Woods and Margaret N. Woods deeded Lot 12 to Charles Barthrop. Six months following the deed, Charles Barthrop married Pamela Houle.
1970 Charles Barthrop and Pamela built the home on the cliff on Lot 12, and the roadway access, part of which crossed Lot 11.
1972 Ace M. Woods and Margaret N. Woods deeded Lot 11 to Ace M. Woods, as trustee for relatives. At the time of this transfer, the road crossing Lot 11 to Lot 12 was in apparent and regular use. During the period October, 1971, through January, 1976, title to Lot 12 was held by D. J. Barthrop and others, but our record does not show a deed.
1976 Charles K. Barthrop and Pamela Houle were divorced. At that time, they held the property in joint ownership. Eventually, out of the marital dissolution, Pamela Houle, by quit claim deed in 1976, became the sole owner of Lot 11.
1983 Ace M. Woods, trustee, erected a barricade, blocking access to Lot 12. Pamela Houle removed the barricade from the roadway in question.
1983 — 1984 Counsel for Ace M. Woods and Pamela Houle made cross-claims as to the right of Houle to use the roadway.
1987 Quiet title action commenced.

Ace M. Woods filed an action to quiet the title to Lot 11, in 1987, naming as defendants Pamela A. Houle and Sean Duke. The quiet title action placed in issue the easement claimed by Houle to use the roadway over Lot 11. Pamela Houle claimed the right to use the road under three theories: prescriptive easement, easement implied by reservation and easement by necessity.

PRESCRIPTIVE EASEMENT

The person who holds legal title to the real property is presumed to have been possessed thereof within the time required by law, and the occupation of that property by any other person is deemed to have been under and in subordination of the legal title unless it appears that the property has been held in possession adversely to such legal title for five years before the commencement of the action. Section 70-19-404, MCA.

To establish a prescriptive easement, the party claiming the right must “show open, notorious, exclusive, adverse, continuous and uninterrupted use of the easement claimed for the full statutory period.” Graham v. Mack (Mont. 1984 [1985]), [216 Mont. 165,] 699 P.2d 590, 595, 41 St.Rep. 2521, 2525, citing Thomas v. Barnum (1984), 211 Mont. 137, 684 P.2d 1106.

In support of a Rule 56, M.R.Civ.P. motion for summary judgment, Pamela Houle filed affidavits which recited facts that would fulfill the requirements for a prescriptive easement. It thereupon became the duty of Ace M. Woods, trustee, not to rest upon mere allegations or denials, but to respond by affidavit or otherwise, setting forth specific facts showing there was a genuine issue of material fact for trial. Rule 56, supra.

None of the deeds among the various parties listed above made any mention of the easement for the roadway utilized by Pamela Houle. The responses of Ace M. Woods to the affidavits filed by Houle are to the effect that the roadway was used by permission or indulgence of the owners of Lot 11, and not be possession adverse to them.

When Ace M. Woods took over the ownership of Lot 11 in 1972, the roadway over Lot 11 had been in existence for about two years. The use of the roadway, if adverse, had not yet ripened into a prescriptive easement because the statutory time period had not passed. Nothing in the record indicates that Ace M. Woods, orally or by other action, either granted permission, or prevented the use of the roadway until the erection of the barricade in 1983. It was the burden of Ace M. Woods to show that the use was permissive:

“In our view, the logical inference is that Stringham began his use under a claim of right. In the absence of any evidence on the subject, the presumption under the circumstances shown here would be that Stringham held under a claim of right and not by license of Gardner, and the same is true as to the successors in interest of each. In order to overcome that presumption, thereby saving its title from the encumbrance of an easement, the burden is on the defendant to show that the use was permissive ...”

Groshean, et al. v. Dillmont Realty Company (1932), 92 Mont. 227, 239-240, 12 P.2d 273, 275.

See also Rathbun v. Robson (1983), 203 Mont. 319, 661 P.2d 850; Stamm v. Kehrer (Mont. 1986), [222 Mont. 167,] 720 P.2d 1194, 43 St.Rep. 1143.

Under the facts of this case, Pamela Houle was under no duty to communicate by word of mouth to Ace M. Woods or his predecessors in interest, that she was using the roadway under a claim of right and adversely to them. Groshean, supra, 92 Mont. at 241, 12 P.2d at 276.

Woods’ contention in this case is that Charles Barthrop, D. K. Barthrop, and others were all relatives, and that their use of the roadway must have been permissive. Aside from conclusory allegations to that effect, we are left in the dark by Woods as to when and by whom permission, as distinguished from adverse user, was granted for the roadway. Woods failed to establish a genuine issue of material fact, and accordingly, we affirm the decision of the District Court, granting summary judgment to Pamela Houle on her claim of easement by prescription.

IMPLIED EASEMENT BY RESERVATION

The District Court further granted summary judgment to Pamela Houle on her claim of an easement by implication. On the facts here, we must reverse that holding.

Courts are reluctant to find easements by implication for the reason that such an action results in depriving a person of the use of his property by imposing a servitude by mere implication. Goeres v. Lindey’s, Inc. (Mont. 1980), [190 Mont. 172,] 619 P.2d 1194, 1197, 37 St.Rep. 1846.

Implied easements must rest upon an implied intent of the parties gathered from the circumstances surrounding the conveyance. Pioneer Mining Company v. Bannack Gold Mining Company (1921), 60 Mont. 254, 264, 198 P.2d 748; Graham v. Mack, supra. The claimed easement must be so apparent that it is discoverable upon reasonable inspection. Pioneer Mining Company, supra. Pamela Houle may have met those requirements, but she failed in other essentials. To create an easement by implication from a preexisting use imposed on one part of the property for the benefit of another party, unity of title at the time of the severance thereof is required. 25 Am.Jur.2d 443 Easements, Section 29. When A. M. Woods and Margaret N. Woods deeded the property to C. K. Barthrop, the road was not in existence. When A. M. Woods and Margaret N. Woods in 1972 deeded Lot 11 to Ace M. Woods, the road was in existence, but there was no longer unity of title of the two lots in the grantors. Thus, in Graham v. Mack, supra, 699 P.2d at 596, we held that an easement by implication could not be established because “the first element, unity of ownership, would not be met.”

Accordingly, we reverse the summary judgment granting Pamela A. Houle an easement by implication. On this issue, Ace M. Woods is entitled to summary judgment based on his cross-motion under Rule 56.

EASEMENT BY WAY OF NECESSITY

In like manner, the District Court granted summary judgment in favor of Pamela A. Houle for an easement by way of necessity. Again, we reverse.

In Graham v. Mack, supra, this Court, speaking of easements by way of necessity, said:

“There are two basic elements (1) unity of ownership; and, (2) strict necessity. The necessity must exist at the time the unified tracts are severed. (Citing authority.) The way granted must be over the grantor’s land and never over the land of a third party or stranger to the title (citing authority) and finally there must be strict unity of ownership.”

699 P.2d at 596.

None of the requirements for a way of necessity are met here. The evidence in this case is that the way of necessity does not give access to Pamela A. Houle from her land to a public road. Rather, the encroachment on Lot 11 goes from one part of Lot 12 to another part of Lot 12, passing over Lot 11. In that situation, no way of necessity can be created. Boumhoff v. Lochhaas (Mo. 1923), 253 S.W. 762. Indeed in this case, it appears that the road, after leaving the property of the parties must traverse another mile and a half to get to a public road, over the properties of third parties. Under Graham v. Mack, supra, a way of necessity may not exist in that situation. 699 P.2d at 597.

Finally, a way of necessity is incompatible with a prescriptive right for the same easement. A prescriptive right never accrues in a way of necessity as long as the necessity continues. Hanna v. Means (Fla.App. 1975), 319 So.2d 61, 64.

Again, summary judgment on this issue in favor of Pamela A. Houle is reversed and Ace M. Woods is entitled to summary judgment on his cross-motion under Rule 56.

SUMMATION

We affirm the summary judgment granted by the District Court, finding a prescriptive easement over the lands of Ace M. Woods to serve the dominant ownership of Pamela Houle. We reverse the District Court’s judgments of easements by implication and by way of necessity, and direct the entry of summary judgments in favor of Ace M. Woods on those issues. No costs to either party.

MR. JUSTICES McDONOUGH, WEBER, HUNT and GULBRANDSON concur.


source: Caselaw Access Project

author: MR. JUSTICE HARRISON MR. JUSTICE SHEEHY,

license: Public Domain

text:
    STATE OF MONTANA, Plaintiff and Appellant, v. MARCELLA BURKE, Corwin Roth, Defendants and Respondents.
    No. 88-48.
    Submitted Sept. 20, 1988.
    Decided Dec. 15, 1988.
    766 P.2d 254.
    Mike Greely, Atty. Gen., Clay R. Smith argued, Asst. Atty. Gen., Helena, Larry J. Nistler, County Atty., Poison, for State.
    James E. Handley argued, Poison, for Roth.
    Rebecca T. Dupuis, Poison, for Burke.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

This case comes on appeal from the District Court of the Twentieth Judicial District, Lake County, Montana, the Honorable C. B. McNeil, presiding. The District Court dismissed revocation proceedings which resulted from a suppression of evidence. At the time of this appeal, defendant Roth had completed his probation period.

Marcella Burke and Corwin Roth pleaded guilty to criminal sale of dangerous drugs on February 4, 1987. Judgments dated March 4, 1987, were entered imposing deferred imposition of sentence under various conditions for six years as to Burke and one year as to Roth. Five probation conditions are germane to this case:

“1. That the Defendant be placed under the jurisdiction of the Adult Probation and Parole Division of the State of Montana Department of Institutions and he [she] comply with all of the terms and conditions established by said Division.

“2. That the Defendant is prohibited from using or possessing any drugs of any kind, unless under the direct supervision of a physician.

“4. That the Defendant submit to blood, breath, or urine tests, without warrant, at the request of his [her] probation officer or law enforcement officers, upon reasonable cause.

“5. That Defendant submit to search of his [her] person, premises or vehicle, without warrant, at the request of his [her] probation officer of law enforcement officers, upon reasonable cause.

“6. That the Defendant obtain such drug and/or alcohol counseling and/or treatment as deemed advisable by his [her] probation officer.”

Neither defendants adhered to the requirements of contacting their respective probation officers nor obtaining alcohol and drug counseling.

On September 3, 1987, at approximately 11:00 p.m., Officer Bruce Phillips of the Lake County Sheriffs Department observed Burke in the parking lot of the Diamond Horseshoe Bar. Phillips watched various persons leave the bar, walk to Burke’s automobile, and then return to the bar. After requesting assistance, Phillips drove toward the Burke vehicle. He exited his car, approached Burke, and requested she exit her car. Phillips detected the smell of marijuana on Burke’s breath and saw Zig-Zag cigarette papers on the vehicle’s front seat. He then leaned into Burke’s vehicle from the driver’s side and opened the ashtray, finding the remnant of a smoked marijuana joint. Phillips contacted Burke’s probation officer, David Weaver, requesting permission to continue the vehicle search. In addition to granting permission, Weaver also instructed Phillips to take Burke into custody for a possible probation violation. On further search, Phillips discovered two baggies containing marijuana in a soft-drink carton on the passenger front seat area.

After completion of the vehicle search, Phillips again contacted Weaver, obtaining permission to search Burke’s residence. Residents of the home included Burke, Roth and four children. Phillips and three county officials conducted the search which revealed marijuana and various drug paraphernalia. Roth was arrested for possible probation violations at Weaver’s direction. This third contact between Phillips and Weaver occurred at approximately 12:35 a.m.

On September 4, 1987, Weaver and Ron Alsbury, Roth’s probation officer, issued written authorization to the Lake County Sheriff to arrest and hold Burke and Roth for possible probation condition violations. At this time, Weaver requested a urinalysis of Roth, who indicated his specimen would “come back dirty.” Results revealed both marijuana and cocaine use. Prior to release, a similar test was performed on Burke. Likewise, the results indicated marijuana and cocaine use.

Burke and Roth posted bond and were released September 9, 1987. At the District Court’s direction, each met with their probation officers in the latter’s office. During Burke’s meeting with Weaver, Burke admitted using marijuana. Roth also admitted to his probation officer his use of marijuana. In a follow-up meeting on September 14, 1987, Alsbury advised Roth of his Miranda rights and stated that the urine samples indicated both marijuana and cocaine use. Roth admitted to snorting cocaine, but denied injecting it intravenously. However, on September 28, 1987, Roth told Alsbury he had shot cocaine “a couple of times.” Reports of probation condition violations were filed with respect to Burke and Roth on September 14, 1987.

Burke and Roth filed separate motions to dismiss or alternatively, to suppress evidence, arguing the probationary conditions were invalid under State v. Fogarty (1980), 187 Mont. 393, 610 P.2d 140. Relying on the Fogarty decision, the District Court concluded the searches were unlawful because the vehicle search “was initiated by the arresting officer and not initiated at the special request and direction of the Defendant’s parole officer.” The residence search was held invalid because it was warrantless. Further, the court suppressed admissions and urinalysis results as the “fruits of the poisonous tree.”

The State urges this Court to overrule the Fogarty decision in light of the United States Supreme Court ruling, Griffin v. Wisconsin (1987),_U.S._, 107 S.Ct. 3164, 97 L.Ed.2d 709, holding that the warrantless search of a probationer’s home, pursuant to Wisconsin regulation replacing the standard of probable cause by “reasonable grounds,” satisfied the Fourth Amendment. Alternatively, appellant alleges the good faith exception to the warrant requirement and the inapplicability of the exclusionary rule to probation revocation hearings. We find the reasoning of Griffin persuasive and therefore need not reach the merits of appellant’s alternative arguments.

The Griffin Decision

In Griffin v. Wisconsin, supra, the defendant was convicted of a state law weapons offense. The weapon was discovered by his probation officer’s supervisor during a warrantless residence search. The search was conducted pursuant to a Wisconsin regulation which allowed,

“[A]ny probation officer to search a probationer’s home without a warrant as long as his supervisor approves and as long as there are ‘reasonable grounds’ to believe the presence of contraband — including any item that the probationer cannot possess under the probation conditions.”

Griffin, 107 S.Ct. at 3166. The search was based on information received by the supervisor from a police officer “that there were or might be guns in [the probationer’s] apartment.” Griffin, 107 S.Ct. at 3166.

The Supreme Court concluded the search of Griffin’s home satisfied the demands of the Fourth Amendment because “it was carried out pursuant to a. regulation that itself satisfies the Fourth Amendment’s reasonableness requirement under well established principles.” Griffin, 107 S.Ct. at 3167. Continuing, the Court noted that although a warrant is usually required to carry out a search, “we have permitted exceptions when ‘special needs, beyond the normal need for law enforcement, make the warrant and probable-cause requirement impracticable.’ ” Griffin, 107 S.Ct. at 3167.

“A State’s operation of a probation system, like its operation of a school, government office or prison, or its supervision of a regulated industry, likewise presents ‘special needs’ beyond normal law enforcement that may justify departures from the usual warrant and probable cause requirements.”

Griffin, 107 S.Ct. at 3168. Restrictions on a probationer are meant to assure that the probation serves as a period of genuine rehabilitation and that the community is not harmed by the probationer’s conditional liberty status.

“These same goals require and justify the exercise of supervision to assure that the restrictions are in fact observed . . . Supervision, then, is a ‘special need’ of the State permitting a degree of impingement upon privacy that would not be constitutional if applied to the public at large.”

Griffin, 107 S.Ct. at 3168.

This special need is equally applicable to the State of Montana. In conjunction with the need for supervision, a degree of flexibility must also be accorded the probation officer. The probation officer acts upon a continued experience with the probationer, with knowledge of the original offense, and with the probationer’s welfare in mind. Because of his expertise, we view the probation officer in a far superior position to determine the degree of supervision necessary in each case.

This expertise would be rendered meaningless if a warrant requirement were imposed prior to a probationary search. The independent magistrate, rather than the probation officer, would ultimately make supervisory decisions. In addition, the delay associated with obtaining a warrant plus the greater evidentiary burden would, we believe, substantially inhibit the effectiveness of the probation system.

“[T]he probation agency must be able to act based upon a lesser degree of certainty than the Fourth Amendment would otherwise require in order to intervene before a probationer does damage to himself or society. The agency, moreover, must be able to proceed on the basis of its entire experience with the probationer, and to assess probabilities in the light of its knowledge of his life, character and circumstances.”

Griffin, 107 S.Ct. at 3171. Thus, the special needs of the probation system strongly militate toward the “reasonable grounds” standard.

Under the Department of Institutions administrative rules, a probationary search may be conducted without a warrant upon reasonable cause:

“20.7.1101(11): Search a person or property. The probationer/parolee while on probation or parole if so ordered by the sentencing court, shall submit to a search of his person, automobile, or place of residence by a probation or parole officer, at any time of the day or night, with or without a warrant upon reasonable cause as may be ascertained by a probation/parole officer.” (Emphasis added.)

The critical language reflects the recognition that the court, viewing the circumstances individually, may see a need to impose a condition otherwise invalid to the public at large. Such a condition was believed to be necessary in the instant case.

The facts involved in Griffin are distinguishable from those in the present case in one notable respect: namely, the intervention of police officers. This particular aspect, respondent argues, should render the United States Supreme Court decision inapplicable. However, the unique circumstances of probation enforcement in Montana counsel against such result. Montana is primarily a rural state. Because of its size and small population, probation officers are often responsible for a number of counties within their districts. It would be an untenable position, therefore, to require constant and individual supervision of every probationer. Our probation system would be unworkable, absolutely crippled, if police were not available to assist probation officers.

Nor can we demand police officers to be deaf, dumb, and blind in their observations of probationers. We,,see situations where the probation officer, for one reason or another, is not available to direct the actions of the police. Such lack of direction should not amount to a fortuitous event for the probationer, enabling him to escape punishment for probation violations. Instead, we encourage cooperation and communication between police and probation officers. Police cooperation with probation officers is to be encouraged as an important aid to effective administration of the probation system. Cooperation will not interfere with the final determination as to whether or not a revocation petition is to be presented to the district court. This discretion remains with the probation officer.

While acknowledging the State’s interest in supervising probationers, respondents contend a greater interest exists in protecting the privacy rights of innocent third parties who are involved in the life of the probationer.

“A search of a probationer’s home cannot avoid invading the privacy of those with whom he may be living, whether they be immediate family, other relatives, or friends. Probationary status does not convert a probationer’s family, relatives and friends into ‘second class’ citizens.”

State v. Fogarty (1980), 187 Mont. 393, 411, 610 P.2d 140, 151. Upon this language, respondents urge this Court to uphold the warrant requirements for residence searches. The assertion ignores the situation surrounding conditional liberty status.

It is undisputed that a probationer has a reduced privacy interest. Morrissey v. Brewer (1972), 408 U.S. 471, 92 S.Ct. 2593, 33 L.Ed.2d 484. Indeed, the judgment imposing a deferred sentence is a form of contract between the court and the probationer, eliminating privacy expectations: the probationer is aware that his activities will be scrutinized. To impose a warrant requirement for residential searches, on the basis of rights enjoyed by persons not on probation, would artificially raise a probationer’s privacy interest to a level inconsistent with conditional liberty status. The probation officer must be able to supervise the probationer, and upon his judgment and expertise, search the probationer’s residence or cause it to be searched.

We do not ignore the interests of third parties involved in a residential search. The search should be permitted only if there is an underlying factual foundation justifying the search; and the search should not be used as an instrument of harassment or intimidation.

Remand Instructions

We expressly overrule State v. Fogarty (1980), 187 Mont. 393, 610 P.2d 140. The District Court’s order of December 14, 1987, is reversed.

This case is remanded to the District Court for further proceedings consistent with this opinion.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES WEBER, GULBRANDSON and McDONOUGH concur.

MR. JUSTICE SHEEHY,

dissenting:

As the only remaining Justice from the majority in State v. Fogarty, supra, I dissent to overruling that case. Fogarty is a balanced decision which, contra to the position of the state, preserved the state’s interest in supervision of parolees and yet looked at the rights of others who might be involved. This decision is absolutist, something we avoided in Fogarty.

MR. JUSTICE HUNT concurs in the foregoing dissent of MR. JUSTICE SHEEHY.


author: MR. JUSTICE GULBRANDSON

text:
    MARGIE P. COOK, Floyd A. Brower, Norma Yount and Norma Yount as Personal Representative of the Estate of Wilbur J. Yount, Plaintiffs and Appellants, v. FERGUS ELECTRIC COOPERATIVE, INC., a Montana corporation, Defendant and Respondent.
    No. 88-270.
    Submitted on Briefs Nov. 3, 1988.
    Decided Dec. 15, 1988.
    765 P.2d 1138.

      Floyd A. Brower, Roundup, for plaintiffs and appellants.
    Herndon, Hartman, Sweeney & Halverson, Donald R. Herndon, Billings, for defendant and respondent.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

This is an appeal from the Tenth Judicial District, Fergus County, Montana, of that court’s order dismissing plaintiff’s for failure to prosecute, pursuant to Rule 41(b), M.R.Civ.P. We affirm.

This case and a companion case, Timber Tracts, Inc. v. Fergus Electric Cooperative, Inc. (Mont. 1988), [231 Mont. 40,] 753 P.2d 854, 45 St.Rep. 415, (Timber Tracts) arose from plaintiffs’ claim that the defendant had agreed to extend electrical service to plaintiffs’ properties at no cost. Subsequent to the alleged agreement, the bylaws of the electrical co-op were changed to provide that fees would be charged for extending said electrical service. As a result of the change, plaintiffs in the instant action and in Timber Tracts filed suit seeking enforcement of the alleged agreement. The Timber Tracts case was filed in Fergus County on June 16, 1981, the instant case was filed in Musselshell County on October 31, 1983.

Defendant Fergus Electric Cooperative, Inc. (Fergus) moved for dismissal of both actions on June 3, 1987 for failure to prosecute, pursuant to Rule 41(b), M.R.Civ.P. Subsequent to a hearing on July 1, 1987, the Timber Tracts case was dismissed by the District Court in an order issued August 27, 1987. This Court affirmed that dismissal in an opinion issued March 3, 1988. The hearing on the motion to dismiss in the instant case was held on August 11, 1987, and a memorandum opinion was issued on April 26, 1988, dismissing the action pursuant to Rule 41(b), M.R.Civ.P.

Plaintiffs filed their notice of appeal on May 23, 1988. Pursuant to a stipulation between the parties at the hearing on August 11, 1987, the District Court file for the Timber Tracts case was incorporated into the District Court file for the instant case. Because of that stipulation to include the Timber Tracts file, we find it necessary to examine the course of litigation from the filing of the Timber Tracts complaint in 1981.

The factual basis upon which this Court affirmed the dismissal of the Timber Tracts case is summarized on page 855 of that opinion:

“The plaintiff conducted a minimal amount of preparation for litigation in the six years and two months that this cause was alive. It issued one set of interrogatories to defendant in December 1981 (five and one-half months after it filed its complaint), the taking of the deposition of Clovis W. Rader on November 17, 1981 (five months after filing the complaint); and took that deposition on December 4, 1981 (five and one-half months after the filing of the complaint); it noticed the taking of depositions of seven current and former directors of the defendant-corporation on January 8, 1982 (nearly seven months after filing its complaint) but never took their depositions; it argued against defendants motion for a protective order on January 14, 1982 (seven month after filing its complaint) but never filed the post-hearing brief after having demanded the opportunity to file briefs. Consequently no decision ever issued on the defendant’s protective order.”

Timber Tracts, 753 P.2d at 855. This Court noted that the defendant submitted three sets of interrogatories, two in 1981, which the plaintiff answered in 1981, and a third set issued on February 8, 1982, which the plaintiff failed to answer until January 11, 1984. After that point in time, plaintiff took no further action in pursuit of its claim until defendant filed a motion to dismiss. The defendant moved for a dismissal of the Timber Tracts case for lack of prosecution on December 31, 1985, but no hearing was held on that motion due to the illness of Floyd Brower, plaintiff corporation’s president and attorney. Defendant renewed its motion for dismissal on June 3, 1987.

In the instant case, plaintiffs filed their complaint on October 31, 1983, and then moved for substitution of judge on February 7, 1984, from Judge Rapkoch to Judge Ettien. No further action was taken until plaintiffs filed a motion for extension of time to file an answer brief on June 23, 1987, after the motion for dismissal had been filed. It should also be noted that during the prosecution of the two cases, Timber Tracts, Inc. was in Chapter 11 Bankruptcy proceedings from October, 1985 to February 27, 1987, and that Floyd Brower was in Chapter 11 Bankruptcy proceedings from February, 1986 to October 28, 1986.

The sole issue presented for review is: Did the District Court abuse its discretion in granting defendant’s motion to dismiss plaintiffs’ action for failure to prosecute and in dismissing the case with prejudice?

Rule 41(b), M.R.Civ.P., has been interpreted as providing that a defendant may request involuntary dismissal of a civil action where a plaintiff fails to exercise due diligence, absent a sufficient showing of excuse, in bringing his or her case to trial. Shackleton v. Neil (1983), 207 Mont. 96, 101, 672, P.2d 1112, 1115. No precise rule or formula sets forth what period of inactivity is necessary to find a failure to prosecute. The question has been left to the discretion of the district court, and the court’s decision will not be disturbed absent a clear abuse of discretion. See, Timber Tracts, 753 P.2d at 856, and cases cited therein.

The district court’s decision, however, is not without limit, the court must “balance judicial efficiency against the plaintiffs right to meaningful access to the judicial system.” Timber Tracts, 753 P.2d at 856. The court must also balance plaintiffs reasonable excuse, where it finds unreasonable delay, against the prejudice caused to the defendant by the delay. However, if the court finds unreasonable delay exists, the law presumes an impairment of the defendant’s defenses. Shackleton, 672 P.2d at 1115, citing Peters v. Newkirk (Mont. 1981), [_Mont._,] 633 P.2d 1210, 1212, 38 St. Rep. 1526, 1528.

Plaintiffs contend their pursuit of this case was prejudiced when they were unable to actively pursue the Timber Tracts case, the companion case, because of the lack of a ruling on the motion for protective order. As in Timber Tracts, we find this contention is without merit. The court did not rule on the motion because plaintiff asked for an opportunity to submit a post hearing brief which he then failed to submit. Plaintiffs contend that most of the discovery necessary to bring this case to a conclusion was developed through the Timber Tracts case and that including that discovery in this case absolved plaintiffs of the lack of discovery conducted in this case. Regarding this contention, we note that no discovery had been conducted in the companion case after January, 1984. If the discovery had been completed, plaintiffs had a duty to pursue the prosecution and bring the case to trial. If discovery was not complete, it was their duty to see steps were taken to ensure it was conducted. Rule 41(b), M.R.Civ.P. The plaintiffs pursued neither course of action, showing the court no indication of their desire to bring the case to trial. Plaintiffs also contend that they were forced to employ various attorneys of record on the case at various times for various reasons causing them hardship and delay. As to plaintiffs’ problems with their various attorneys being an excuse for failing to diligently prosecute the case, we cite to Diversified Realty, Inc. v. Holenstein (Mont. 1986), [222 Mont. 263,] 721 P.2d 752, 43 St. Rep. 1249, where this Court stated:

“Although Diversified, as it suggests, may have been the victim of inadvertence and mistake on the part of its numerous attorneys, it was still at least partially responsible for the progress of its case over an eight year period. Diversified cannot obtain relief, however unintentional, from its own lack of concern over such an extended period of time.”

Diversified Realty, 721 P.2d at 755. we find even less justification for the lack of progress in this case because one of the plaintiffs is an attorney and his law firm is listed as counsel of record.

Plaintiffs, further claim that the automatic stay orders issued under Chapter 11 Bankruptcy proceedings for plaintiff Brower precluded their ability to proceed in this case. We note plaintiffs admit they were mistaken in this belief as the Bankruptcy proceedings on behalf of plaintiff Brower did not preclude pursuit of this action. Further, even after the Chapter 11 plan was filed and any automatic stay order effectively lifted, plaintiffs took no action for seven months before defendant filed its motion to dismiss.

Lastly, plaintiffs contend that the District Court’s failure to issue an order in response to defendant’s motion to compel discovery, which was filed on December 31, 1985, caused the delay. Examining the record regarding this contention we find the motion to compel was submitted to obtain written answers to interrogatories and requests for production; the answers were over 28 months late at that date. Plaintiffs failed to object to the motion or submit an answer brief. Rule II, of the Montana Uniform District Court Rules, (1985), then in effect, provided that an adverse party’s failure to file an answer brief constitutes an admission that the motion is well-taken. We hold that when the plaintiffs conceded the motion was well-taken, yet failed to provide the requested discovery, they cannot then claim that they were hampered by the court’s failure to rule on the motion. Even if they were in fact hampered, they failed to take any of the steps available which would have brought the matter to the court’s attention. We also note that had the court ruled on the motion to compel, it would have been within its discretion to dismiss the case at that time, for plaintiffs’ failure to serve timely answers to the interrogatories and requests for production pursuant to Rule 37(d), M.R.Civ.P. See, Dassori v. Roy Stanley Chevrolet Co. (Mont. 1986), [224 Mont. 178,] 728 P.2d 430, 43 St. Rep. 2113.

Having examined all the excuses put forward by plaintiffs and finding no clear error on the part of the District Court, we affirm its decision.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, SHEEHY and HUNT concur.


author: MR. JUSTICE McDONOUGH MR. JUSTICE HUNT,

text:
    STATE OF MONTANA, Plaintiff and Appellant, v. JAMES ROBERT HOUCHIN, Defendant and Respondent.
    No. 88-295.
    Submitted on Briefs Oct. 6, 1988.
    Decided Dec. 15, 1988.
    765 P.2d 178.
    Susan Loehn, County Atty., Libby, Scott B. Spencer, Deputy County Atty., Mike Greely, Atty. Gen., Helena, for plaintiff and appellant.

      David W. Harman, Libby, for defendant and respondent.
   MR. JUSTICE McDONOUGH

delivered the Opinion of the Court.

This appeal involves alleged conspiracy to commit deliberate homicide, a felony. The State of Montana appeals from the order of the Nineteenth Judicial District, Lincoln County, denying the State’s motion to file an information direct against James Robert Houchin (Houchin). We reverse.

The State presents one issue on appeal: whether the defense of impossibility exists in conspiracy cases.

During the course of an undercover fish and game investigation, a man named Kenneth DeBoer told an undercover agent he could arrange to have a person killed if the agent so desired. The agent investigated this statement and found that DeBoer could arrange for the services of a “hit man” to do a requested killing. The agent later told DeBoer he did in fact wish to have a man killed, and arranged a meeting with DeBoer and the hit man.

The agent, DeBoer and Houchin were present at the meeting. The agent surmised from what was said and done that Houchin was the hit man. The agent gave DeBoer a photograph and description of a man he said he wanted killed. The State and Houchin agree that the man to be killed was fictitious. Upon reaching agreement that the killing would be done, the agent gave DeBoer $5,000 for the “job.” DeBoer and Houchin were arrested shortly after the meeting.

Houchin was charged by complaint with conspiracy to commit deliberate homicide, a felony. The State asked the District Court for leave to file an information direct against Houchin and filed an affidavit in support of its request. The court denied the State’s request, holding that because the man to be killed was fictitious, the defense of impossibility applied. This appeal followed.

Conspiracy is defined in Montana by § 45-4-102, MCA:

“A person commits the offense of conspiracy when, with the purpose that an offense be committed, he agrees with another to the commission of that offense. No person may be convicted of conspiracy to commit an offense unless an act in furtherance of such agreement has been committed by him or by a coconspirator.”

The State points out in its brief that the defense of impossibility as it relates to this statute has not been addressed in Montana case law. Houchin’s argument to the District Court was based largely on statutory language. Houchin argued, and the court agreed, that he could not have conspired to commit deliberate homicide because § 45-5-102, MCA, defines deliberate homicide in terms of causing the death of a human being. A human being is defined in § 45-2-101(27), MCA, as a person who has been born and is alive. Because the man to be killed was fictitious, Houchin concluded, he did not come within the definition of a human being, which precluded a conspiracy to make him the victim of deliberate homicide. We disagree.

The crime of conspiracy as defined above requires the presence of two elements: (1) a knowing and purposeful agreement to commit an offense, and (2) an act in furtherance of the agreement. The actual commission of the offense that is the object of the conspiracy is not required. See, e.g., Iannelli v. U.S. (U.S. 1975), 420 U.S. 770, 95 S.Ct. 1284, 43 L.Ed.2d 616, (the essence of conspiracy is an agreement to commit an unlawful act); 16 Am.Jur.2d Conspiracy § 3 (in conspiracy law, the focus is primarily on the purpose of the conspirators); Comment, Conditional Objectives of Conspiracy (1985), 94 Yale L.J. 895, (the function of conspiracy law is not to punish offenders for what they do, but for what they agree to do).

Moreover, the State notes that Montana’s conspiracy statute is derived from Illinois law, and Illinois cases can be used as a guide to its interpretation. Cases from Illinois hold conspiracy to be a crime separate and distinct from the act that is the object of the conspiracy. Its gravamen is an agreement to accomplish an unlawful purpose. People v. Brouilette (1968), 92 Ill.App.2d 168, 236 N.E.2d 12; People v. Peppas (1962), 24 Ill.2d 483, 182 N.E.2d 228. The focus of our inquiry is thus the agreement to do the act.

The defense of impossibility can take two forms: legal and factual. Legal impossibility exists when the contemplated act, if committed, would not be an offense. Factual impossibility exists when the contemplated act is an offense, but it cannot be carried out due to facts unknown to the conspirators. The majority rule is that impossibility of either kind is no defense to conspiracy. See, W. LaFave & A. Scott, Substantive Criminal Law (1986), § 6.5 at 90-93.

However, the language of Montana’s conspiracy statute appears to contemplate the defense of legal impossibility by requiring that the plan be for the purpose of committing an “offense.” The Criminal Law Commission comments to § 45-4-102, MCA, state that a defense would be available to conspiracy if the act that was the object of the conspiracy was not an offense. If the contemplated act were not an offense, then the first element of conspiracy would be missing; the conspirators’ agreement would not be for the purpose of committing an offense.

While legal impossibility is contemplated by § 45-4-102, MCA factual impossibility is inconsistent with the statute. As we stated above, the focus of conspiracy law is the agreement. The actual commission of the offense is immaterial if the elements of conspiracy are present. We therefore hold that legal impossibility is a defense to conspiracy, but factual impossibility is not.

This is a case of factual impossibility. While the intended victim of the deliberate homicide was fictitious, there appears to be a basis for proving the elements of conspiracy. Based on the undercover agent’s observations, Houchin arguably participated in a knowing and purposeful agreement to commit deliberate homicide. He was present at the meeting where the agreement was reached, and indications were that he was the hit man. When DeBoer accepted the $5,000 payment, an overt act in furtherance of the agreement was committed. The fact that the homicide could not have been carried out is immaterial.

We hold the District Court was incorrect in denying the State’s request on the basis of impossibility. We reverse, and remand with instructions to the court to allow the State to file an information direct against Houchin.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, WEBER and GULBRANDSON concur.

MR. JUSTICE HUNT,

dissenting.

I dissent. There are some disturbing things about this case including the majority’s reliance on formalistic distinctions between legal and factual impossibilities — distinctions that should have been thrown out of our jurisprudence long ago. I find just as disturbing the fact that a Fish and Game undercover agent, investigating poaching and trafficking in parts of illegally-taken game, learns about a “hit man” in the area. The Fish and Game agent arranges for the hit man to eliminate a tax man who is apparently causing some tax problems for the agent. Pure fiction!

But aside from all of that, the District Judge correctly distinguished the Montana “attempt” statute from the “conspiracy” statute. The attempt statute provides that an accused may be convicted of a crime even though the crime is impossible to commit. The conspiracy statute, on the other hand, provides that an accused must act with “the purpose that an offense be committed.” Section 45-4-102(1), MCA. The conspiracy statute thus requires that the crime conspired to must be possible to commit.

Montana statute § 45-5-102, MCA, states that deliberate homicide is the causing of the death of a human being. A human being is defined as a person who has been born and is alive. It is impossible to kill a person who does not exist, or is already dead. It is also impossible to conspire to kill a non-person.

In this case, the victim of the alleged conspiracy did not exist. Therefore, no offense has been committed. I would affirm the District Court Judge.

MR. JUSTICE SHEEHY concurs in the foregoing consent.


author: MR. JUSTICE HUNT

text:
    ROLAND AHMANN and Nancy Ahmann, Plaintiff and Appellant, v. AMERICAN FEDERAL SAVINGS AND LOAN ASSOCIATION, Defendant and Respondent.
    No. 87-515.
    Submitted on Briefs Sept. 15, 1988.
    Decided Dec. 16, 1988.
    766 P.2d 853.

      Small, Hatch, Doubek & Pyfer, John C. Doubek, Helena, for plaintiff and appellant.
    Gough, Shanahan, Johnson & Waterman, Michael S. Lattier, Helena, for defendant and respondent.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

The plaintiffs below, Roland and Nancy Ahmann, appeal a jury verdict in favor of the defendant, American Federal Savings and Loan Association, and an order of the District Court of the First Judicial District, Lewis and Clark County, denying their motions for mistrial, judgment notwithstanding the verdict and new trial. American Federal cross appeals. We affirm.

The Ahmanns raise the following issues on appeal:

1. Were there irregularities during the jury deliberations that materially affected the substantial rights of the plaintiffs such that they were denied a fair trial?

2. Did substantial evidence exist to support the jury verdict?

3. Did the District Court err by instructing the jury that American Federal’s actions had to be “the” proximate cause of the plaintiffs’ injuries?

4. Did the District Court err by instructing the jury that the plaintiffs’ injuries must have been foreseeable from American Federal’s conduct?

5. Did the District Court err by submitting the comparative negligence theory to the jury?

6. Did the District Court err by instructing the jury that plaintiffs had not made any claim that American Federal had breached its contract with them?

7. Did the District Court err by instructing the jury that a party may waive the benefit of a contract when, in another jury instruction, the trial court instructed that the action was not based upon contract?

8. Did the District Court err by allowing testimony of the plaintiffs’ net worth?

American Federal, on cross appeal, raises the following issues:

1. Did the District Court erroneously instruct the jury on the definition of bad faith?

2. Did the District Court err by refusing to instruct the jury on comparative bad faith?

In 1985, Dave Bird, a Helena contractor, approached Roland Ahmann about the possibility of constructing a house for profit. Ahmann, a real estate broker and part owner of a Helena real estate agency, agreed to employ Bird to build a house on land he owned located along the south hills of Helena. The Ahmanns planned to put both the new house and the home they already owned on the market. Whichever house did not sell would be kept as the family residence. Any profits from the sale of the south hills home would be split with the contractor Bird.

Bird drew up specifications for the house and Ahmann submitted them to American Federal Savings and Loan as part of the application process for home construction loan. American Federal approved a $120,000 loan on September 5, 1985.

The construction loan was disbursed by the “direct pay” method. Bills incurred in construction would be approved by Ahmann. After approval, the bills would be submitted to American Federal. American Federal would then draft checks to cover the bills. The checks would be made out to either Bird, Ahmann or the creditor. On occasion, Bird would bypass Ahmann and take the bills directly to American Federal. In those instances, American Federal would call Ahmann for his approval.

Construction on the house commenced prior to the approval of the loan by American Federal. On August 13, 1985, Ahmann wrote a draft on his American Federal checking account to pay a $7,000 bill for concrete work completed during this time. Ahmann gave the check to Bird to deliver to Berrigan. Instead, Bird forged Berrigan’s endorsement and cashed the check at American Federal. The forgery was not discovered until late November or early December, 1985.

Unfortunately, the Berrigan forgery was not the only instance of Bird’s dishonesty. There were three other occasions when construction loan disbursements did not reach their intended creditors. These conversions took place about the same time the Berrigan forgery was discovered.

As a result of Bird’s forgeries and conversion of funds, liens were placed on the new home, the Ahmanns were forced to expend funds over and above the original cost estimate, and the house was finally sold at a loss. In addition, Ahmann was never repaid a $14,000 personal loan he made to Bird.

In April, 1986, Roland and Nancy Ahmann filed a complaint against American Federal, alleging that the savings and loan acted negligently and in bad faith in cashing the Berrigan check. The Ahmanns claimed that, had American Federal informed them of the Berrigan forgery, they would not have proceeded with the loan application nor would they have retained Bird as general contractor in the construction of the south hills home. They also claimed that they would not have made the personal loan of $14,000 to Bird if they had been informed of the forgery.

In addition, the Ahmanns alleged that American Federal acted negligently and in bad faith in the handling of the construction loan. They claimed that American Federal breached its duty to them by failing to conduct inspections of the building project, improperly distributing the loan monies and failing to obtain lien waivers.

The Ahmanns also claimed that they were slandered by an employee of American Federal. The District Court directed a verdict in favor of American Federal on this issue.

A four-day trial was held from August 31 through September 4, 1986. The 12-person jury found in favor of the defendant, American Federal. The Ahmanns moved for a mistrial, new trial and judgment notwithstanding the verdict. The District Court denied the motions. The Ahmanns filed this appeal.

American Federal filed a cross-appeal.

I.

The Ahmanns first contend that their motions for new trial and mistrial should have been granted in light of alleged irregularities in the jury proceedings. To support their motions in the District Court, the Ahmanns submitted an affidavit of one of the jurors. In the affidavit, the juror alleged that, during deliberations, the jury members were confused about the issue of proximate cause. The juror also testified that when she asked the bailiff whether the jurors could talk to the judge about their questions, she was informed that they could only communicate with the court in writing. The juror further testified that the bailiff told her that the judge probably would not consider the jury’s questions until the next day- or after the trial was completed.

To refute the alleged irregularities, American Federal filed an affidavit of the bailiff. In her affidavit, the bailiff denied that she told the juror that the judge would not consider any questions until the next day or until the end of the trial.

Montana law allows a new trial if an irregularity exists in the proceedings of the court or jury that materially affects the substantial rights of the aggrieved party. Section 25-11-102(1), MCA. The Ahmanns contend that the alleged statements of the bailiff constitute an irregularity in the proceedings which denied them a fair trial. They argue that the bailiff’s remarks misled the jury, preventing clarification of the proximate cause issue.

It has long been the rule that juror affidavits that delve into the thought processes of the jury are inadmissible to support the granting of a new trial. Rule 606(b), M.R.Evid.; State Bank of Townsend v. Maryann’s, Inc. (1983), 204 Mont. 21, 29, 664 P.2d 295, 299. Thus, the affidavit presented in this case was not properly submitted to show jury confusion over the issue of proximate cause. Charlie v. Foos (1972), 160 Mont. 403, 409, 503 P.2d 538, 541.

The question arises, however, whether the juror’s affidavit was admissible to show an irregularity in the jury proceedings occasioned by the bailiff’s alleged remark that the judge would not immediately entertain questions. In Rasmussen v. Sibert (1969), 153 Mont. 286, 293, 456 P.2d 835, 839, we held that juror affidavits were inadmissible to show irregularities in the proceedings under subsection (1) of the statute governing grounds for new trial, § 25-11-102, MCA.

Rasmussen, however, may be distinguished from the present case. In Rasmussen, affidavits were submitted to support a motion for new trial based on alleged irregularities in the court proceedings. The affidavits were introduced to show that testimony regarding the defendant’s ownership of insurance was heard by the jury and affected the outcome of the verdict. We stated that affidavits of counsel, court personnel and potential witnesses on retrial were permissible, but that affidavits of jurors were not. Rasmussen, 153 Mont. at 293, 456 P.2d at 839.

The instant case may be distinguished from Rasmussen in two ways. First, in Rasmussen, the affidavits contained references only to the thought processes of jurors. The juror affidavit in the present case, however, contains not only statements regarding the inner workings of the minds of the jurors, it also contains an allegation of an inappropriate statement by the bailiff. The bailiff’s alleged remark may be considered an outside influence that may have prevented the jury from seeking clarification of legal issues. Rule 606(b), M.R.Evid., allows evidence of outside influence of the jury.

Second, in Rasmussen, the alleged irregularities occurred in the courtroom in the presence of the judge, court reporter and counsel. Juror affidavits were not needed to show the fact of an irregularity in the proceedings. The only purpose served by the introduction of the Rasmussen affidavits was to show that the jury indeed heard the testimony regarding defendant’s insurance and that the jurors considered that testimony during their deliberations.

In contrast, only the affiant juror and the bailiff were privy to the alleged conversation in the instant case. Only those two individuals have personal knowledge of what was said. It would be irrational to hold, as American Federal urges, that the bailiffs affidavit is admissible while the juror’s is not. To the contrary, we hold that juror affidavits are admissible to show grounds upon which a new trial may be granted when the juror has personal knowledge of an alleged irregularity in the proceedings and the only other individual who has personal knowledge of the facts surrounding the irregularity is the individual who committed the alleged infraction.

We emphasize that only the facts upon which the alleged irregularities are based are admissible. Any allegations regarding the inner workings of the jury deliberations are inadmissible. We will not approve future attempts to combine allegations of fact with allegations of juror thought processes.

Although we find that portions of the juror affidavit were admissible, we do not hold that the District Court erred in its denial of the Ahmanns’ motions for new trial or mistrial. We will not disturb the District Court’s failure to grant a new trial or mistrial unless the evidence is clear and convincing that the trial court erred. Easterday v. Canty (Mont. 1986), [219 Mont. 420,] 712 P.2d 1305, 1307, 43 St.Rep. 60, 63; Schmoyer v. Bourdeau (1966), 148 Mont. 340, 343, 420 P.2d 316, 317-18.

The evidence is not clear and convincing that the District Court erred in its decision to deny the Ahmanns’ notions. Even if the bailiff did tell the juror that the judge would not consider questions until the next day or after trial, a fact which the bailiff denies, the rights of the plaintiffs were not substantially affected. The bailiff did not prevent the jurors from asking questions of the judge. She did not refuse to bring them back into court or to deliver questions to the judge. Any influence the alleged remark may have had on the jury did not affect the rights of the Ahmanns. We affirm the District Court on this issue.

II.

Next, the Ahmanns contend that the evidence presented at trial is insufficient to support the jury verdict in favor of American Federal. We do not agree.

When examining a claim of insufficient evidence, this Court will not reweigh the evidence. It is the province of the jury to determine the weight and credibility of the proof presented. Our job at the appellate level is simply to determine, by reviewing the facts in the light most favorable to the party in the action below, whether the verdict is supported by substantial credible evidence. Weinberg v. Farmers State Bank of Worden (Mont. 1988), [231 Mont. 10,] 752 P.2d 719, 721-22, 730, 45 St.Rep. 391, 392, 404-05.

The Ahmanns’ first cause of action charged that American Federal acted negligently and in bad faith by cashing the $7,000 check on which Dave Bird had forged the endorsement of the payee, Berrigan Construction. The jury found that the Berrigan check had been paid in full by Bird and that neither American Federal’s actions in cashing the check nor its checking account practices proximately caused any of the additional damages claimed by the Ahmanns.

American Federal acknowledged that it improperly cashed the Berrigan check. Montana law provides that a financial institution that negligently handles a negotiable instrument is liable for the face amount of the instrument. The applicable statute reads as follows:

“The measure of damages for failure to exercise ordinary care in handling an item is the amount of the item reduced by an amount which could not have been realized by the use of ordinary care, and where there is bad faith it includes other damages, if any, suffered by the party as a proximate consequence.”

Section 30-4-103(5), MCA.

American Federal would have been liable for the entire $7,000 had it not been repaid by Dave Bird. Testimony adduced at trial and exhibits introduced into evidence showed that Bird did in fact repay the $7,000. Although American Federal had negligently handled the draft, substantial credible evidence exists by which the jury could determine that the savings and loan was not liable for any of the $7,000 because, due to Bird’s repayment of the funds, the Ahmanns did not suffer a loss.

In order to hold American Federal liable for any amount beyond the fact value of the check, the Ahmanns were required to show that the savings and loan acted in bad faith and that its actions proximately caused the damages claimed by the Ahmanns. Section 30-4-103(5), MCA. The jury found that American Federal’s handling of the check did not proximately cause the Ahmanns’ damages. It did not reach the question of bad faith. Therefore, we need only determine whether substantial credible evidence exists to support the jury’s finding of lack of proximate cause.

The premise of the Ahmanns’ claim appears to be that American Federal’s failure to discover and inform them of the Berrigan forgery proximately caused economic, emotional and physical damages. They argued that, if they had known of the forgery, they would not have continued to employ Bird as their contractor, nor would they have made him a personal loan of $14,000.

Substantial credible evidence exists by which the jury could reject these claims. The teller who cashed the check testified that Bird presented her with the draft with Bill Berrigan’s endorsement. Bird explained that Berrigan had asked him to cash the check in order to pay some of Berrigan’s creditors. The teller believed Bird’s story and, although she refused to give him cash, issued four cashier’s checks to the purported creditors. The cashier’s checks listed Berrigan as remitter.

The teller did not suspect that the Berrigan endorsement was a forgery, nor did anyone else at American Federal. Therefore, an investigation of the endorsement by American Federal did not take place. Three months later, the concrete supplier who was to have been paid from the proceeds of the Berrigan check contacted Roland Ahmann to demand payment. When Ahmann asserted that he had already paid him, the supplier took the canceled check to Berrigan. Berrigan denied the endorsement was his.

Ahmann then checked with American Federal’s customer service department. He did not, however, indicate that he believed that the check had been forged. He instead told customer service that he wanted to trace the money. American Federal researched the matter and informed Ahmann that the check had been cashed and four cashier’s checks had been issued. Ahmann said he would take care of the matter from that point.

At no time did Ahmann inform American Federal’s customer service or loan department that he suspected that the draft had been forged. Furthermore, even after learning of the forgery, Ahmann continued to do business with Bird and continued to authorize Bird’s requests. These facts constitute substantial evidence upon which the jury could have determined that American Federal was not responsible for the damages incurred by the Ahmanns.

The record also indicates that American Federal’s failure to inform the Ahmanns of the forgery might not have prevented the $14,000 personal loan. Bird’s request for such a loan should have alerted the Ahmanns that their contractor’s credit was not good. The Ahmanns made the loan anyway. When the loan came due in November, 1985, Bird attempted to repay it with a personal check on an account with insufficient funds. Ahmann refused to take the check. Bird assured him he would pay the money shortly. He never did.

Although Bird did not repay the loan, Ahmann continued to do business with him. He retained Bird’s services as general contractor. He continued to approve bills allegedly incurred in the course of construction. Substantial evidence exists to indicate that Ahmann himself, rather than American Federal, proximately caused his own damages.

The Ahmanns’ second cause of action charged that American Federal acted negligently and in bad faith in overseeing the construction loan. The Ahmanns claimed that American Federal’s acts and omissions proximately caused cost overruns in the construction of the house, as well as liens to be placed on the building, forcing them to sell the uncompleted project at a loss. They further claimed that American Federal’s actions caused a disruption in Roland Ahmann’s business, resulting in a loss of income and profits. In addition, the Ahmanns alleged that American Federal’s miscarriage of its duties in overseeing the loan caused the Ahmanns considerable emotional and physical distress. The jury, however, did not find in accordance with the Ahmanns’ claims. The 12-person panel found that American Federal’s supervision of the construction loan did not proximately cause the alleged injuries.

Viewed in the light most favorable to American Federal, substantial evidence exists to support the jury verdict. While the record shows that American Federal’s handling of the loan did not proceed smoothly at all times, the Ahmanns failed to show that American Federal’s actions caused their damages. Moreover, the record reveals that Ahmann himself had a hand in the confusion surrounding the loan disbursements by failing to inform .the loan officer of the Berrigan forgery and neglecting to reveal that Bird had directly paid him $3,000 of the converted funds, money Ahmann knew came from the construction loan.

Furthermore, substantial evidence supports American Federal’s theory that the real cause of the Ahmanns’ damages was the unrealistically low cost estimate for the building project. Bird’s estimate of the cost to complete the house was $122,800, yet the appraisal completed in order to have a construction loan approved indicated a construction cost of $166,000. Ahmann took no other bids for the project. He instead relied on Bird, believing that Bird could complete the job cheaply.

Unfortunately, the project ended up costing more than the Ahmanns had anticipated. The Ahmanns, however, failed to prove that American Federal caused these cost overruns or any other damages. We hold that substantial evidence supported the jury’s verdict that American Federal’s supervision of the construction loan did not proximately cause the damages suffered by the Ahmanns.

III.

The Ahmanns raise several arguments regarding jury instructions. They first maintain that the trial court erred in submitting the following instruction to the jury:

“Before you reach the issue of whether defendant’s conduct was negligent, you must determine and decide first whether defendant’s conduct was the proximate cause of any injuries which plaintiffs may have suffered. If you find that defendant’s conduct was not the proximate cause of any injuries suffered by plaintiffs, you may not find defendant negligent. (Emphasis added.)”

The Ahmanns argue that the presence of the article “the” before the words “proximate cause” improperly required the jurors to find that American Federal was the sole cause of their injuries.

We need not consider the merits of the Ahmanns’ contention as their argument is raised for the first time on appeal. During the settlement of instructions, the Ahmanns did indeed object to the above instruction. Their objection, however, was premised on the instruction’s redundancy. There was no objection made to the instruction’s wording.

Rule 51, M.R.Civ.P., in pertinent part provides:

“Objections made [to proposed instructions] shall specify and state the particular grounds on which the instruction is objected to and it shall not be sufficient in stating the ground of such objection to state generally the instruction does not state the law or is against the law, but such ground of objection shall specify particularly wherein the instruction is insufficient or does not state the law, or what particular clause therein is objected to. (Emphasis added.)” We will not consider a challenge to an instruction based upon a reason that was not raised in the court below. Reno v. Erickstein (1984), 209 Mont. 36, 46, 679 P.2d 1204, 1209.

IV.

The Ahmanns’ second claim of error in the jury instructions centers on the instruction regarding foreseeability. The Ahmanns argue on appeal that this instruction was improper because 1) the words “proximate cause” were once again preceded by the article “the;” and 2) an instruction on foreseeability in an action of this kind is improper.

As with the preceding instruction, the Ahmanns’ argument regarding the presence of the article “the” is raised for the first time on appeal. Hence, this argument is not properly before the Court and we need not examine it further.

In the District Court, the Ahmanns objected to the proposed instruction on the grounds that foreseeability was not an element of their cause of action. After the objection, the court modified the instruction. The Ahmanns, however, did not renew their objection. By failing to object to the modified instruction, the Ahmanns did not properly preserve their objection for appeal. Therefore, we need not discuss the merits of their claim.

V.

The Ahmanns also contend that the District Court erred in submitting an instruction on comparative negligence to the jury. They argue that comparative negligence is irrelevant when one party stands as a fiduciary to another.

The Ahmanns confuse legal theories. In their complaint and pretrial order, they alleged that American Federal negligently, recklessly and in bad faith breached its obligations to them. They did not claim any breach of fiduciary duty. At trial, they made some attempt to show the existence of a fiduciary relationship. However, no instructions regarding fiduciaries were submitted to the jury, nor did the special interrogatories in the jury verdict refer to a fiduciary duty. The Ahmanns do not appeal the omission of such instructions or interrogatories.

Under the circumstances, we cannot find that the breach of a fiduciary duty was a claim in the present case. Therefore, we need not discuss whether the issue of comparative negligence may properly be submitted to the jury when a plaintiff bases his claim both on negligence and breach of fiduciary duty.

VI.

The Ahmanns next maintain that the District Court erred in instructing the jury that the plaintiffs had not made any claim that American Federal breached its contract with them. The instruction of which the Ahmanns complain reads as follows:

“Plaintiffs have not made claim that defendant breached its contract with them. Plaintiffs have based their case against defendant on the legal theories of negligence, gross negligence, and bad faith. Therefore, you may not award any damages for breach of contract in this action.”

The Ahmanns argue that the instruction improperly misled the jury into believing that it could not refer to the parties’ construction contract to determine whether there was a basis upon which tort liability could be imposed.

We do not agree with the Ahmanns’ contention. The instruction at issue was submitted in an attempt to clarify the fact that, because the Ahmanns based their claims solely on tort theories, damages could not be awarded for breach of contract. The instruction in no way prevented the jury from considering whether American Federal’s deviations from the written contract, if any, constituted negligence or bad faith. The District Court did not err in issuing this instruction to the jury.

VII.

In their final argument regarding jury instructions, the Ahmanns contend that the District Court’s instruction regarding waiver of contract benefits served only to confuse the jury. They argue that, in light of the instruction on breach of contract, an instruction regarding waiver of contract benefits was improper.

Once again, we will not examine the merits of the Ahmanns’ arguments. During the settlement of jury instructions the Ahmanns objected to the proffered instruction, contending that there was no evidence of waiver. They did not argue that the instruction was confusing. Because their objection on appeal differs from their objection in the court below, we will not consider this issue further. Rule 51, M.R.Civ.P.

VIII.

The Ahmanns argue that the introduction of evidence of their net worth was impermissible. They assert that the highly prejudicial nature of this information outweighed its probative value, and, therefore, should not have been allowed into evidence in accordance with Rule 403, M.R.Evid.

The admissibility of evidence is largely within the discretion of the district court. We will review a question of admissibility only in a case of manifest abuse. Cech v. State (1979), 184 Mont. 522, 531-32, 604 P.2d 97, 102.

In the instant case, the Ahmanns sought considerable damages for emotional distress. They claimed that the actions of American Federal caused them financial hardship, leading to the deterioration of Roland Ahmann’s well being. The introduction of evidence regarding net worth was admitted to show the effect of the financial loss on Roland Ahmann’s state of mind. The trial court did not abuse its discretion in allowing this evidence.

IX.

On cross appeal, American Federal raises issues regarding jury instructions on bad faith. Because we affirm the jury verdict in the District Court, there is no need to discuss American Federal’s contentions.

Affirmed.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, WEBER and McDONOUGH concur.


author: MR. JUSTICE McDONOUGH

text:
    DONALD BINDRIM, JR., Plaintiff and Appellant, v. UNIVERSITY OF MONTANA, Defendant and Respondent.
    No. 88-309.
    Submitted on Briefs Oct. 27, 1989.
    Decided Dec. 16, 1988.
    766 P.2d 861.
    Christopher Daly, Missoula, for plaintiff and appellant.
    Leroy Schramm, Helena, for defendant and respondent.
   MR. JUSTICE McDONOUGH

delivered the Opinion of the Court.

Donald Bindrim, Jr., (Bindrim) appeals from the order of the District Court of the First Judicial District, Lewis and Clark County, granting summary judgment in favor of the University of Montana (UM). We affirm.

Bindrim’s issue on appeal is: Did the District Court err in granting Defendant’s Motion for Summary Judgment?

Bindrim enrolled at UM in September of 1984 to pursue a Bachelor of Arts degree in Education with an emphasis in Music. He had previously attended East Texas State University and the University of Texas at Arlington, where he had taken courses with this same objective in mind. Bindrim attended three regular academic quarters plus two summer session courses at UM, and performed secondary school practice teaching in the fall of 1985.

Bindrim has two disputes with UM. First, Bindrim asserts that UM contradicted its own catalog by requiring him to take the “piano function exam” in order to pass Music 217, a course required for graduation. Bindrim registered to take Music 217 during the spring quarter of 1985. According to Bindrim, the university catalog in effect at that time made no mention of the piano function exam as a requirement for passing the course. He maintains that he first heard of the requirement in April of 1985, after the course had already begun. Bindrim did not take the piano function exam, and therefore received an I (incomplete) for the course. For reasons that are disputed by the parties, Bindrim did not take the exam within one year of receiving the I, and under UM academic rules the I automatically became an F.

Second, Bindrim asserts that UM officials reneged on assurances that his coursework from the Texas institutions would satisfy all of his Education coursework requirements. Bindrim contends that the School of Education at UM initially told him he would not need to take further Education courses, but needed only to fulfill student teaching requirements listed in the catalog. A letter sent by the School to Bindrim in 1986 stated that university records’ indicated he needed to take additional Education courses in order to graduate.

Bindrim filed suit against UM on August 13, 1986. He alleged breach of implied contract, breach of implied covenant, misrepresentation, educational malpractice and equitable estoppel. After some discovery by both sides, UM filed a motion for summary judgment. For purposes of the motion, the parties assumed that all the facts Bindrim alleged were true. The District Court granted UM’s motion, and this appeal followed.

The standard for review of a summary judgment is the same as that used by the trial court. In order for summary judgment to issue, the movant must show that there is no genuine issue as to all facts that are material in light of the substantive principles entitling the movant to judgment as a matter of law. Frigon v. Morrison-Maierle, Inc. (Mont. 1988), [233 Mont. 113,] 760 P.2d 57, 45 St.Rep. 1344.

The District Court’s decision and our review are guided by the following rule of law:

“[T]he courts will not interfere with the discretion of school officials in matters which the law has conferred to their judgment, unless there is a clear abuse of that discretion, or arbitrary or unlawful action, . . .”

State ex rel. Ingersoll v. Clapp (1928), 81 Mont. 200, 216, 263 P. 433, 437. This same rule was followed more recently by this Court in State ex rel. Bartlet v. Pantzer (1971), 158 Mont. 126, 489 P.2d 375, and is in accord with the rule ennunciated by the United States Supreme Court in Regents of the University of Michigan v. Ewing (1985), 474 U.S. 214, 106 S.Ct. 507, 88 L.Ed.2d 523. The discretion vested in UM is the core “substantive principle” entitling UM to summary judgment as to all of Bindrim’s claims. The inquiry in this appeal is thus whether UM abused that discretion.

Bindrim’s first claim alleged breach of an implied contract with UM. According to Bindrim, the contract provided that he would receive a degree if he paid his tuition and satisfied the academic requirements found in the school’s catalog, as modified by the assurances of the School of Education. He maintains that UM breached this contract by adding the piano function examination to those requirements set forth in the catalog, and requiring him to take additional Education courses after telling him initially that he would not be required to do so.

Bindrim did not fulfill his duties under the contract he alleges, and therefore was not entitled to a degree. Under the contract terms alleged by Bindrim, successful completion of specified courses and a specified number of student teaching hours were conditions precedent to receiving his degree. See, 17 Am. Jur. 2d, Contracts §§ 321 and 361. Music 217 and Music 236 were among the courses so specified, and Bindrim failed them both. He also failed to complete the student teaching requirement.

Furthermore, the contract as alleged also contains the following language found in the catalog:

“The right is reserved to change any of the rules and regulations of the University at any time, including those relating to admission, instruction, and graduation. The right to withdraw curricula and specific courses, alter course content, change the calendar, and to impose or increase fees similarly is reserved. All such changes are effective at such times as the proper authorities determine and may apply not only to prospective students but also to those who already are enrolled in the University.”

There has been no showing that UM abused its discretion in setting the criteria contained in the catalog or reserving the right to change those criteria. We affirm the District Court’s ruling on this issue.

Bindrim’s second claim asserts breach of the covenant of good faith and fair dealing implied in his contractual relationship with UM. The obligation imposed by the covenant of good faith and fair dealing is to act reasonably. Nicholson v. United Pacific Insurance Co. (Mont. 1985), [219 Mont. 32,] 710 P.2d 1342, 42 St.Rep. 1822. This Court has held that the minimal requirement for a breach of the covenant is arbitrary, capricious or unreasonable conduct by the defendant that exceeded the plaintiff’s justifiable expectation of reasonableness. Noonan v. First Bank Butte (Mont. 1987), [227 Mont. 329,] 740 P.2d 631, 44 St.Rep. 1124.

Bindrim’s justifiable expectation of reasonableness here was that upon fulfillment of the academic requirements set by UM and payment of all requisite fees, he would be awarded a Bachelor’s degree in Education. Again, Bindrim did not fulfill the requirements for the degree even as he would have them characterized.

We have held that the absence of a breach of contract can be a good indication that the defendant did not act unreasonably. Nordlund v. School District No. 14 (Mont. 1987), [227 Mont. 402,] 738 P.2d 1299, 44 St.Rep. 1183; Shiplet v. First Bank of Livingston, Inc. (Mont. 1988), [234 Mont. 166,] 762 P.2d 242, 45 St.Rep. 1816. We held above that UM did not breach the contract alleged, and Bindrim has made no other showing of an abuse of discretion by UM that exceeded his justifiable expectation. We affirm the District Court’s ruling on this issue.

The District Court ruled that Bindrim’s remaining claims — misrepresentation, equitable estoppel and educational malpractice — had no legal or factual bases. It is not necessary to pass on the legal foundation of these claims at this time, because the District Court was correct in that the facts do not support them. As with Bindrim’s claims of breach of contract and breach of the covenant of good faith and fair dealing, these claims are based on the same two factual allegations. According to Bindrim, were it not for UM’s actions in changing the content of Music 217 and “reneging” on its waiver of Education course requirements, he would be entitled to the degree he sought. The record shows this to be untrue.

The facts that emerge from all of Bindrim’s claims as being material to UM’s entitlement to summary judgment are: (1) Bindrim was required to complete the requirements found in the university’s catalog as modified by the assurances given by the School of Education and (2) he did not do so. The examination given in Music 217 or the number of Education courses required are immaterial in light of Bindrim’s failure to complete the requirements found in the contract as he alleges it. There is therefore no issue of material fact as to UM’s entitlement to summary judgment. Bindrim simply was not entitled to a degree, and cannot claim damages from UM for his failure to obtain one.

We affirm the ruling of the District Court.

MR. JUSTICES HARRISON, WEBER, SHEEHY and GULBRANDSON concur.


text:
    T.M. DAVIDSON, Conservator of the Estate of George Nelson, a/k/a George E. Nelson, Plaintiff and Respondent, v. D.H. HANSEN RANCH, INC., a Montana Corporation, Defendant and Appellant.
    No. 88-412.
    Submitted Nov. 17, 1988.
    Decided Dec. 16, 1988.
    766 P.2d 258.
    O’Toole & O’Toole, Loren J. O’Toole, Plentywood, for defendant and appellant.
    Mclntee & Whisenand, Terry R. Lorenz, Williston, N.D., for plaintiff and respondent.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

Defendant, as the defaulting purchaser of property under a contract for deed, appeals on order of the District Court of the Fifteenth Judicial District, Sheridan County, awarding the surplus proceeds from a foreclosure sale to the foreclosing plaintiff. We reverse and remand.

The sole issue raised upon appeal is whether the District Court erred in giving the foreclosing party, whose debt has been paid in full, the surplus proceeds from the foreclosure sale?

On February 12, 1981, D. H. Hansen Ranch, Inc. (Hansen) executed a contract for deed, thereby agreeing to purchase a tract of land for $92,000 from George and Edna Nelson. Hansen contracted to pay this purchase price in twenty annual installments of $9,200. These annual payments, which included interest at the rate of 10% per annum, became due on December 1, 1981, and on the first of December of each succeeding year until paid in full. Hansen failed to make any payment on the contract for the years 1981 through 1986.

The contract stated that in the event both George and Edna died before full payment on the contract, the remaining balance due would be excused and the contract considered paid in full. Although Edna died in 1985, George survived. George was adjudged incapacitated, however, and a conservator appointed in that same year. Following his appointment, the conservator served a notice of default on the contract upon the defendant. The defendant failed to cure the default within thirty days as required in the notice. Consequently, the conservator elected to rescind the contract and to bring an action to recover possession of the premises through foreclosure.

On October 1, 1987, the District Court Judge granted plaintiff’s motion for partial summary judgment, and a judgment was subsequently entered rescinding the contract for deed and authorizing a foreclosure upon the contracted property. The amount of debt owing by the defendant remained in issue with defendant contending that plaintiff had waived any right to payments for 1981 through 1984.

On February 3, 1988, plaintiff moved for summary judgment on this remaining issue. The court held that the parties had not effected a modification of the contract and all payments designated in the contract remained due and owing. Consequently, the court granted summary judgment and ordered a public auction of the foreclosed property.

On May 12, 1988, the sheriff auctioned off the property for $175,000. The sheriff deposited a surplus of $6,106.41 with the court after subtracting auction costs and the amount owed to plaintiff for principal, interest, costs and attorney fees. No other lienors have a claim to this surplus.

Plaintiff filed a motion requesting that all surplus proceeds from the sale be awarded to him. The court granted this motion on July 22, 1988. Defendant appeals from this grant of the surplus to the conservator of the estate of George Nelson.

In defense of the distribution of the surplus to him, the conservator contends that § 71-1-225, MCA, governing the distribution of surplus proceeds from a sale, is clear and unambiguous. The statute, which mandates that the court give surplus proceeds to the one entitled to them, simply raises a factual issue of entitlement to be determined by the District Court. Respondent contends the facts, that Hansen failed to make any payments on the property while inhabiting it and that George Nelson is an incapacitated elderly man in need of the funds from the sale of the property, support the court’s determination that Nelson’s estate was entitled to the surplus.

At the outset, we note that this is an action at law and not an action in equity because the parties are seeking only a monetary judgment. See, e.g., Reagan v. Aiken (1891), 138 U.S. 109, 11 S.Ct. 283, 34 L.Ed. 892. We therefore need determine who is entitled by statute to the surplus proceeds as a matter of law. Section 71-1-225, MCA, states only that:

“If there be surplus money remaining after the payment of the amount due on the mortgage, lien, or encumbrance, with costs, the court may cause the same to be paid to the person entitled to it. . . (Emphasis added.)”

This statutory language fails to clearly dictate who is entitled to surplus sale proceeds. We thus must look to other means to determine the legislative intent of the statute. Missoula Co. v. American Asphalt, Inc. (Mont. 1985), [216 Mont. 423,] 701 P.2d 990, 992, 42 St.Rep. 920, 922.

Previous Montana case law has interpreted statutes relating to surplus proceeds as requiring any surplus to be paid to the mortgager if no other liens remain on the property. State v. District Court (1926), 76 Mont. 143, 150, 245 P. 529, 532. Other state and federal courts have similarly held that the purchaser of property under a mortgage or deed is entitled to any surplus proceeds resulting upon foreclosure. E.g., Wartell v. Novograd (1927), 48 R.I. 296, 137 A. 776; Soderberg v. King County (1896), 15 Wash. 194, 45 P. 785. One legal encyclopedia has similarly stated that:

“Subject to the rights of other lienors or claimants, surplus proceeds of a mortgage foreclosure sale generally go to the owner of the equity of redemption.”

C.J.S.2d Mortgages § 799 (1949); see also 55 Am.Jur.2d Mortgages § 930 (1971).

The weight of existing law indicates that the defendant, as the defaulting purchaser under the contract for deed, was entitled to the surplus proceeds. Moreover, we take notice of the fact that defendant redeemed the property at the full sale price plus interest, although not until after the District Judge had already rendered his final judgment in the case. Given the weight of existing law, we hold that the District Court abused its discretion when it awarded the surplus proceeds from the sale of the foreclosed property to the foreclosing plaintiff rather than to the defendant.

We reverse and remand for judgment in accordance with this opinion.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, WEBER and HUNT concur.