author: CHIEF JUSTICE TURNAGE JUSTICE HUNT,

text:
    HELENA AERIE NO. 16, F.O.E., a Montana corporation, Plaintiff and Appellant, v. MONTANA DEPARTMENT OF REVENUE, Defendant and Respondent.
    No. 91-082.
    Submitted on briefs Sept. 24, 1991.
    Decided Dec. 3, 1991.
    48 St.Rep. 1050.
    251 Mont. 77.
    822 P.2d 1057.

      For Appellant: Chadwick H. Smith, Smith Law Firm, Helena.
    For Respondent: R. Bruce McGinnis, Department of Revenue, Helena.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Helena Aerie No. 16, F.O.E. (Eagles Club), brought this action for a declaratory judgment that its liquor license is transferable and assignable. On cross-motions for summary judgment, the District Court of the First Judicial District, Lewis and Clark County, ruled that the Department of Revenue (DOR) had properly classified the license as nontransferable and nonassignable and that this action is barred under any statute of limitations. The Eagles Club appeals. We reverse.

The issue is whether the Eagles Club holds a transferable and assignable license to sell alcoholic beverages and, if so, whether the Eagles Club may apply for and receive a nontransferable and nonassignable all-beverage license as a lodge of a recognized national fraternal organization under § 16-4-201(4), MCA.

The Eagles Club first obtained a beer license in 1934, pursuant to the Beer Act, Ch. 106, L. 1933. In 1937, the Eagles Club was granted a liquor license pursuant to the newly-enacted Retail Liquor License Act, Ch. 84, L. 1937. From 1934 to the present, the Eagles Club has renewed its liquor licenses annually.

In 1947, the legislature enacted a quota law limiting the number of beer and liquor licenses that could be issued in each city or town. Ch. 225 and 226, L. 1947. In 1949, nontransferable and nonassignable beer and liquor licenses granted to certain fraternal and veterans’ organizations were exempted from the quota system:

“the foregoing limitations shall not prevent the granting of nontransferable and nonassignable licenses to posts of nationally chartered veterans’ organizations, and lodges of recognized national fraternal organizations, which said national organizations have been in existence for five (5) years or more prior to January 1st, 1949. [Emphasis supplied.]

Ch. 164 and 165, L. 1949. The quota system and the exemption for licenses issued to veterans’ and fraternal organizations remain in effect today. Section 16-4-201, MCA.

On March 15, 1961, the Montana Liquor Control Board adopted its regulation 3-23, providing that beer and liquor licenses issued to fraternal and veterans’ organizations were not transferable or assignable. The regulation also provided that such organizations could sell liquor and beer only to bona fide members of the organization and their guests. The Benevolent and Protective Order of Elks, Helena Lodge No. 193, brought suit in the District Court of the First Judicial District, Lewis and Clark County, Cause No. 28,573, to challenge regulation 3-23. The District Court held that regulation 3-23 was “unlawful, unenforceable and of no force and effect whatever.” That decision was not appealed.

In 1975, the Montana Alcoholic Beverage Code replaced the Beer Act, the Liquor Control Act, and the Retail Liquor Act. The Code replaced the separate licenses previously required with a single all-beverage license. All renewal of licenses issued to the Eagles Club between 1975 and 1989 have been marked with the words “nontransferable and nonassignable as to ownership.”

In 1989, the attorney for the Eagles Club wrote the Chief of the Liquor Division Licensing Bureau at the DOR, stating that it appeared the “nontransferable and nonassignable” designation did not apply to the Eagles Club license. The Division stood behind that designation. In May 1990, the Eagles Club filed this action, seeking a declaratory judgment that the designation of its liquor license as nontransferable and nonassignable is contrary to the Fifth Amendment of the United States Constitution and Article II, Section 17, of the Montana Constitution.

On cross-motions for summary judgment, the District Court pointed out that the parties agree that there are no issues of material fact barring summary judgment under Rule 56, M.R.Civ.P. Because whether summary judgment should be granted is, under these circumstances, a question of law, our standard of review is whether the lower court’s determination is correct. Steer, Inc., v. Department of Revenue (1990), 245 Mont. 470, 474, 803 P.2d 601, 603.

The District Court held that the Eagles Club has been on notice since at least 1975 that the DOR considers its license to be nontransferable and nonassignable and that the time for commencing an action has long passed. But this is a declaratory judgment action, not an action for damages. The DOR’s notations on the Eagles Club licenses did not resolve the issue of the licenses’ transferability and assignability. More importantly, the Eagles Club has not applied for transfer of its liquor license and transfer has not been refused by the DOR. Only after the Eagles Club applies for transfer of its all-beverage license and the DOR refuses would any applicable statute of limitations begin to run. We conclude that no statute of limitations precludes this action.

The DOR argues that this action is barred by collateral estoppel as the result of the 1964 First Judicial District Court judgment in the Benevolent and Protective Order of Elks case. In that case, the District Court made a finding that the Eagles Club, which was a plaintiff in intervention in the lawsuit, is “the owner and holder of nonassignable retail beer and liquor licenses.” The DOR’s position is that the Eagles Club is bound by that finding. However, the regulation being challenged, regulation 3-23, itself provided that all licenses held by veterans’ and fraternal organizations were nontransferable. The District Court ultimately determined that regulation 3-23 was “unlawful and of no force and effect whatever.” We conclude that the existence of the above finding does not bar this action by collateral estoppel.

Furthermore, contrary to the position taken in the dissent, the issues in the two cases are different. The issue in Benevolent and Protective Order of Elks was the validity of the restriction in regulation 3-23 that fraternal organizations could sell liquor only to members and their guests. That is not the issue in the present case. As discussed in the dissent, one element of collateral estoppel is that the issue must be identical to an issue previously decided.

The DOR also asserts that the doctrine of laches bars the Eagles Club from bringing this action. Laches requires a showing that the passage of time has prejudiced the party asserting it or has rendered the enforcement of a right inequitable. Brabender v. Kit Mfg. Co. (1977), 174 Mont. 63, 67-68, 568 P.2d 547, 549. The DOR has made no showing that it has been prejudiced by the passage of time in this case. The DOR’s argument that if this action is allowed to proceed, other liquor license holders will suffer harm and the public will lose the protection of the quota system is not persuasive.

We now reach the central issue concerning the nature of the liquor license held by the Eagles Club. All licenses issued under the 1933 Montana Beer Act were transferable on application to the Board of Equalization. Ch. 46, Sec. 15, Extraordinary Legislation of 1933. All liquor licenses issued under the 1937 Retail Liquor License Act were “nontransferable except and only with the consent of the board.” Ch. 84, Sec. 8, L. 1937.

The DOR maintains that club licenses issued under the above statutes were transferable only to another club location. It argues that there was no need for transfer of ownership of a license in pre-quota days, because, at that time, there was no limit on the number of licenses issued. However, nothing in either the Beer Act or the Retail Liquor License Act said that a fraternal organization may transfer its liquor or beer license only to another location or, more importantly, only to another fraternal organization or club.

The 1947 legislation limiting the number of beer licenses and liquor licenses that could be issued in each city or town provided that “licenses already issued which are in excess of said limitations and which are of issue on the date of the passage and approval of this act, shall be renewable.” Ch. 225 and 226, L. 1947 (emphasis supplied). Chapters 164 and 165, L. 1949, in which the legislature adopted exemptions from quotas for licenses issued to veterans’ and fraternal organizations, said nothing about converting licenses previously issued to veterans’ and fraternal organizations to nontransferable and nonassignable licenses.

The DOR urges that we apply the principle of granting judicial deference to the interpretation given a statute by the executive agency charged with its enforcement. In this case, that executive agency is the DOR. Such deference is appropriate when the statute is ambiguous. Mont. Tavern Ass’n v. State, Dept. of Revenue (1986), 224 Mont. 258, 265, 729 P.2d 1310, 1316. That is not the case here.

We do not find it necessary to reach the constitutional issues raised because we conclude that the DOR’s classification of the Eagles Club liquor license conflicts with the applicable statutory authority. Under the statutes in effect at the time the beer and liquor licenses originally were granted to the Eagles Club, those licenses were transferable and assignable, subject to the requirement that approval must be obtained from the Board of Equalization for the transfer of any license. The Eagles Club licenses remained renewable under the 1947 quota law, and the restrictions on transferability of licenses issued to fraternal organizations under Ch. 164 and 165, L. 1949, do not apply. We hold that there has been no showing that the license held by the Eagles Club has lost its original characteristics of being transferable and assignable. We further hold that nothing has been shown that would prohibit the Eagles Club from selling or otherwise disposing of its current liquor license and then applying for a nontransferable and nonassignable all-beverage license pursuant to § 16-4-201(4), MCA.

The decision of the District Court is reversed, and the motion of the Eagles Club for summary judgment is granted.

JUSTICES HARRISON, McDONOUGH, WEBER, GRAY and TRIEWEILER concur.

JUSTICE HUNT,

dissenting.

I dissent. The majority should have affirmed the District Court because the statute of limitations has long since expired, and because appellant’s claim is barred by collateral estoppel and laches. In addition, the majority’s opinion undermines the DOR’s regulatory authority to restrict the sale and ownership of liquor licenses granted to it by the legislature.

I find the appellant’s claim that it had just recently discovered that its license was restrictive to be unconvincing. The Montana Alcoholic Beverage Code was enacted in 1975. Ch. 387, 1975, Mont. Laws 786. The code replaced separate beer and liquor licenses with a single all-beverage license. Under this statute, the code required these licenses to be displayed in a prominent area on the premises where the business was being conducted. Since at least 1975, and possibly as far back as 1950, the licenses issued to the Eagles Club received a stamp which stated that the license was nontransferable and nonassignable. Because the Eagles Club received and posted its restrictive license yearly, it was placed on notice that the DOR considered the license to be nontransferable and nonassignable.

With the exception of the tolling statutes, the longest statute of limitation allowed is ten years. Section 27-2-201(1), MCA. For the majority to grant a declaratory judgment on an issue that is at least 16, and perhaps 41, years old is alarming. This far exceeds any statute of limitation set forth in the code. The granting of this declaratory judgment will allow persons to assert antiquated claims with evidence that is stale due to the passage of time.

Appellant’s action is also barred by collateral estoppel.

“Collateral estoppel bars the relitigation of an issue where the issue is identical to an issue previously decided, a final judgment as to the issue has been rendered, and the party against whom the claim is advanced remains the same or is a privy of the earlier party.”

Matter of Unfair Labor Practice No. 38-80 (1986), 222 Mont. 172, 174-75, 720 P.2d 1181, 1182.

In 1964, when the Elks challenged the Montana Liquor Control Board’s adoption of Regulation 3-23, the Eagles Club joined the Elks as a plaintiff in intervention. The Eagles Club admitted in its answer to the counterclaim filed by the Liquor Control Board that it had a nontransferable, nonassignable license. In addition, the District Court adopted by reference to the Eagles Club’s proposed findings of fact that the club held a nontransferable, nonassignable license. It is clear from the pleadings and the District Court’s decision in the Elks case, that the Eagles Club had a nontransferable, nonassignable fraternal license and that the Eagles Club recognized this restriction. If the Eagles Club did not have a fraternal license, but rather had a general retail beer and liquor license which was transferable, it would not have been subject to the rule. Therefore, it would not have been necessary for the Eagles Club to enter the lawsuit as a plaintiff in intervention challenging the rule. Although the District Court declared the regulation unlawful and of no force and effect, its decision did not change the classification of licenses because classification of licenses was based upon statute and not upon the challenged regulation. All of the elements of collateral estoppel were met, and summary judgment should have been affirmed by this Court.

Appellant’s claim is also barred by laches. This Court has defined laches as:

“[A] creature of equity and means negligence in the assertion of a right. It exists where there has been a delay of such a duration as to render enforcement of the asserted right inequitable.”

Castillo v. Franks (1984), 213 Mont. 232, 241, 690 P.2d 425, 429.

The purpose of laches is to discourage stale claims. It allows the court to refuse to intervene in a case where the party asserting the claim has been negligent in prosecuting his rights. Laches is appropriate when a person is aware of his rights, yet fails to act. Johnson v. Estate of Shelton (1988), 232 Mont. 85, 90, 754 P.2d 828, 831.

Finally, the statute was sufficiently vague to grant the DOR judicial deference in the interpretation and implementation of liquor licensing law. For these reasons, I would affirm the District Court’s granting of summary judgment in favor of the DOR.


source: Caselaw Access Project

author: CHIEF JUSTICE TURNAGE

license: Public Domain

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. MICHAEL KNIGHT, Defendant and Appellant.
    No. 91-023.
    Submitted on briefs Oct. 24, 1991.
    Decided Dec. 3, 1991.
    48 St.Rep. 1060.
    251 Mont. 85.
    822 P.2d 99.

      For Appellant: Gary E. Wilcox, Attorney at Law, Billings.
    For Respondent: Marc Racicot, Attorney General, and Deanne L. Sandholm, Assistant Attorney General, Helena; Dennis Paxinos, County Attorney, Billings.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

A jury in the District Court for the Thirteenth Judicial District, Yellowstone County, found Michael Knight guilty of deliberate homicide and attempted deliberate homicide. Knight appeals. We affirm.

The issue is whether the jury was properly instructed on the lesser included offense of mitigated deliberate homicide.

This case arose from a drug deal gone sour. In January 1990, Knight and his long-time friend Donald Brey agreed to travel from Billings, Montana, to California, with the purpose of buying cocaine for resale in Montana. Brey had the necessary “connections” in California. They purchased the cocaine and financed the trip with $7,000 Knight had received from an insurance settlement. Knight and Brey agreed that Brey would sell the approximately four ounces of cocaine they purchased and that they would divide the profits from this venture.

Following the trip to California, Knight began having trouble reaching Brey. On the occasions when he did reach Brey, Brey told him that he could not yet pay him his share of the money because the cocaine was not selling as quickly as expected.

On February 11, 1990, Knight learned that Brey had moved from Billings to Laurel, Montana, about fifteen miles away. Knight was upset that Brey had not told him he was moving. A mutual acquaintance directed Knight to the house Brey was renting in Laurel, but Brey was not home. At about 10:00 p.m., Knight returned alone to Brey’s house in Laurel. Brey and his cousin Cody Puckett were in the garage working on a car. Knight kicked open a side door to the garage and confronted Brey about the money. When Brey put him off, Knight drew a handgun.

Knight’s trial testimony about what happened next differed from that of Puckett, who also testified at trial. Knight testified that Brey kicked his hand, causing the gun to go off in Brey’s face. Puckett testified that Knight fired the gun in Brey’s face. Brey died immediately. Knight further testified that he believed Puckett had a gun. He shot Puckett several times before fleeing the garage.

Knight surrendered to authorities the next day. He was charged with the deliberate homicide of Brey and the attempted deliberate homicide of Puckett, who survived wounds to bis leg, chest, and shoulder. The District Court sentenced Knight to 100 years in the Montana State Prison on each count plus ten additional years on each count for the use of a dangerous weapon.

The sole issue on appeal is whether the jury was properly instructed on mitigated deliberate homicide as a lesser included offense to deliberate homicide. Settlement of instructions began prior to Knight’s presentation of evidence in his defense. At that time, the State offered its proposed instruction 5A, which defined both deliberate homicide and mitigated deliberate homicide. The following exchange occurred:

“THE COURT: Any objections to 5A?
“[KNIGHT’S ATTORNEY]: If Your Honor please, if the Court concludes a mitigated deliberate is a lesser included, I at least do have an objection as to 5A the way it is now, if you’d like to hear that now.
“THE COURT: What is that?
“[KNIGHT’S ATTORNEY]: Well, Your Honor, we would take the position that with respect to 45-5-103(2), that on — and I realize that’s the statute as it now exists in the state of Montana. We’re taking the position that it is unconstitutional switching of the burden of proof to the defendant. That he’s put in a position to —
“THE COURT: Off the record.”
The court refused both parties’ instructions on lesser included offenses, stating that it would “pass” on instructions on that subject “until we find out what the evidence really is.”

After all of the evidence was presented, the court and counsel met again to settle the remaining jury instructions. The court proposed its own instructions on deliberate homicide and mitigated deliberate homicide. When asked if there were any objections to the instructions proposed by the court, Knight’s attorney replied,

“As far as I’m concerned, I put any objections I have on the record yesterday, most notably the one ” I believe it was State’s 15 or 15A “ concerning the burden of proof on mitigated deliberate, and I have no problems with the Court’s Instructions as redone.” [Emphasis added.] The comb’s proposed instructions were given to the jury.

The State emphasizes that Knight’s counsel specifically stated that he no longer had any objection to the instructions proposed by the court. Section 46-20-701(2), MCA, provides that a claim of error which was not objected to at trial may be noticed on appeal only if the claimed error affected jurisdictional or constitutional rights, was prejudicial as to the defendant’s guilt or punishment, and meets one of three additional requirements. Knight has not alleged that his claim of error meets any of those three requirements.

Knight maintains that he clearly placed on the record his objection to the statutory scheme on mitigated deliberate homicide and that this objection is retained. We conclude that, after the above exchanges during the settlement of jury instructions, any surviving objection is limited to the constitutionality of § 45-5-103(2), MCA. Therefore, the issue on appeal is limited. We will examine Knight’s arguments that under Montana’s statutes regarding the degrees of homicide, it is impossible for a jury to be able to consider mitigating evidence and that the defense of mitigated deliberate homicide as it is defined in Montana’s statute unconstitutionally shifts the burden of proof to the criminal defendant.

Section 45-5-102, MCA, provides that

“(1) A person commits the offense of deliberate homicide if:

“(a) he purposely or knowingly causes the death of another human being[.]”

Section 45-5-103, MCA, provides that

“(1) A person commits the offense of mitigated deliberate homicide when he purposely or knowingly causes the death of another human being but does so under the influence of extreme mental or emotional stress for which there is reasonable explanation or excuse. The reasonableness of such explanation or excuse shall be determined from the viewpoint of a reasonable person in the actor’s situation.

“(2) It is an affirmative defense that the defendant acted under the influence of extreme mental or emotional stress for which there was reasonable explanation or excuse, the reasonableness of which shall be determined from the viewpoint of a reasonable person in the actor’s situation. This defense constitutes a mitigating circumstance reducing deliberate homicide to mitigated deliberate homicide and must be proved by the defendant by a preponderance of the evidence.”

Knight points out that the customary method of instructing juries regarding consideration of lesser included offenses is to have the jury first consider the charged offense. If they do not find the defendant guilty beyond a reasonable doubt of the charged offense, then and only then are they to proceed to consideration of the lesser included offense. In this case, the elements of the charged offense, deliberate homicide, are 1) purposefully or knowingly, and 2) causing the death of another human being. The lesser included offense of mitigated deliberate homicide also has those two elements, plus a third element: 3) defendant acted under the influence of extreme mental or emotional distress for which there is reasonable explanation or excuse.

Knight is correct that this situation requires carefully drafted jury instructions. The jury must be informed that, if the defendant meets the burden of proving by a preponderance of the evidence that he acted under the influence of extreme mental or emotional distress for which there is reasonable explanation or excuse, they may find the defendant guilty of mitigated deliberate homicide, even though all the elements of deliberate homicide are present. We conclude, however, that nothing in the statutes restricts a jury from reaching consideration of mitigated deliberate homicide.

Under Montana’s statutes, mitigated deliberate homicide is a lesser included offense of deliberate homicide only if the defendant presents evidence that he acted under extreme mental or emotional stress for which there is a reasonable explanation or excuse. State v. Olivieri (1990), 244 Mont. 357, 360, 797 P.2d 937, 939. A statute requiring a defendant to prove by a preponderance of the evidence the presence of mitigating factors in support of an affirmative defense does not unconstitutionally shift the burden of proof to the defendant. Patterson v. New York (1977), 432 U.S. 197, 97 S.Ct. 2319, 53 L.Ed. 2d 281. The State

“is not required to prove the nonexistence of every fact which it is willing to recognize as an exculpatory or mitigating circumstance affecting the degree of culpability or the severity of the punishment. [Citations omitted.] The due process clause does not put the states to a choice between abandoning affirmative defenses ‘or undertaking to disprove their existence in order to convict of a crime which otherwise is within its constitutional powers to sanction ...’ ”

State v. Sorenson (1980), 190 Mont. 155, 161-62, 619 P.2d 1185, 1189, citing Patterson.

We hold that the above statutes do not prevent a jury’s consideration of mitigating evidence and that § 45-5-103(2), MCA, does not unconstitutionally shift the burden of proof to a criminal defendant.

Affirmed.

JUSTICES HARRISON, HUNT, TRIEWEILER, and WEBER concur.


author: JUSTICE HARRISON

text:
    YELLOWSTONE VALLEY ELECTRIC COOPERATIVE, INC., Plaintiff and Respondent, v. MONTANA POWER COMPANY, Defendant and Appellant.
    No. 91-374.
    Submitted on briefs Oct. 31, 1991.
    Decided Dec. 4, 1991.
    48 St.Rep. 1068.
    251 Mont. 91.
    822 P.2d 102.
    For Defendant and Appellant: Donald L. Harris, Crowley, Haughey, Hanson, Toole & Dietrich, Billings.
    For Respondent: Paul G. Olsen, Olsen & Christensen, Billings.

      For Amicus Curiae Montana Electric Cooperatives’ Association: Maxon R. Davis, Cure, Borer & Davis, P.C., Great Falls.
   JUSTICE HARRISON

delivered the Opinion of the Court.

This is an appeal from the Thirteenth Judicial District Court’s order permanently enjoining the Montana Power Company (MPC) from providing electricity to ZooMontana of Billings, Montana. Involved is the District Court’s interpretation of Montana’s Territorial Integrity Act. The Territorial Integrity Act was adopted in 1971 to aid in the resolution of disputes between electric utilities and electric cooperatives in the event a question arose over which company would provide electrical service to new customers. We affirm.

The appellant, MPC, raises the following issue:

Did the District Court err in enjoining MPC from providing electricity to ZooMontana under Montana’s Territorial Integrity Act?

This Court is revisited with a question thought long ago well buried by the passage of the 1971 Montana Territorial Integrity Act. For some twenty years, commencing with Sheridan County Elec. Coop. v. Montana-Dakota Util. Co. (1954), 128 Mont. 84, 270 P.2d 742, to Montana Power Co. v. Sun River Elec. Coop., Inc. (1971), 157 Mont. 468, 487 P.2d 307, this Court struggled with numerous cases between the privately-owned electric companies and the electric cooperatives in Montana. The Territorial Integrity Act, now codified as §§ 69-5-101 et seq., MCA, was enacted to settle and bring to an end these types of cases in the courts of Montana. Like many pieces of legislation, the Territorial Integrity Act was a product of compromise and seemed to serve that purpose for some twenty years between the time when the last case was before this Court and the present time with the instant case.

The underlying facts of this case are the following:

ZooMontana is a non-profit corporation formed to build and operate a zoo on property located just west of the city limits of Billings, Montana. Following years of fund raising, ZooMontana began the actual construction of the zoo by erecting the education building on its land. Eventually, ZooMontana intends to build a number of buildings and animal exhibits on the property. The construction was to proceed in stages as the funding permitted.

On May 3,1991, MPC officials met with Yellowstone Valley Electric Cooperative, Inc., officials (the Cooperative) to discuss a number of issues. During that meeting, MPC informed the Cooperative that ZooMontana had requested MPC to provide three-phase power for the education building. MPC stated it intended to supply the power because it had the right to do so under the Territorial Integrity Act of 1971. The Cooperative officials disagreed with MPC’s interpretation of the Act.

On May 8, 1991, the Cooperative’s general manager sent a letter to MPC which stated in part: “Our measurements show that our Cooperative’s electric facilities are closer to the proposed education building than MPCo’s.” There being no response to the letter, on May 24, 1991, MPC began extending its three-phase line to ZooMontana property. This construction was observed by a Cooperative official for nearly a week and when the line extension was completed to Zoo-Montana, the Cooperative, on May 30, 1991, obtained from the District Court an ex parte temporary restraining order and order to show cause which enjoined MPC from further construction of its facilities to ZooMontana.

The parties agree to the following: (1) that neither MPC nor the Cooperative would master meter the entire ZooMontana property at the entry point of each party adjacent to its respective three-phase service; (2) that ZooMontana property would utilize in excess of 400 kilowatts within two years and that the project eventually would use over 800 kilowatts; (3) that ZooMontana is a “commercial and industrial premises;” and (4) that the basic issue is the cost to each party of the three-phase line extension.

The District Court heard this matter in two hearings. After the first hearing it was agreed by both parties that the engineering firm of Schmidt, Smith and Rush (SSR Engineers, Inc.) would be appointed to determine the cost of the extension. SSR Engineers, Inc., submitted its report to the court dated June 14, 1991, wherein it set forth the estimated costs.

The District Court found in its Findings of Fact No. 7 as follows:

“7.Pursuant to Section 69-5-106(2) MCA, the parties agreed to an independent consultant engineer, SSR Inc. Engineers, to determine whether [the Cooperative] or MPC can extend its lines to the customer, ZooMontana, at the least cost. SSR’s report (Plaintiff’s Exhibit 3) was made with several presumptions and concluded that:
“(a) the cost to MPC to extend its three phase line prior [sic] from an extension of that line commenced by construction on May 24,1991, and restrained by [the District Court] by order dated May 31, 1991, to the education building is $24,136.43;
“(b) the cost to MPC to extend its three phase line from the ending point after the extension referred to in paragraph 7(a) to the education building is $14,622.46;
“(c) the cost to MPC to extend its three phase line to the Zoo-Montana property line is $16,319.49;
“(d) the cost to [the Cooperative] to extend its three phase line to the education building is $28,348.86;
“(e) the cost to [the Cooperative] to extend its three phase line to the ZooMontana property line is $6,092.45.”

The District Court in its Conclusions of Law Nos. 3 and 4 stated:

“3. Since the parties agree that the ZooMontana property is a commercial premises with a need of 400 kilowatts or larger within two years and since either party can extend its lines to the user without any cost for the extension, the issue is whether MPC as an electric utility is entitled to priority because it can under the statute ‘... extend its lines to such industrial or commercial premises at less cost to the electric utility ...’.
“4. Section 69-5-102(7) MCA. defines ‘premises’ as:
“ ‘Premises’ means a building, residence, structure, or facility to which electricity is being or is to be furnished; provided, that two or more buildings, structures, or facilities which are located on one tract or contiguous tracts of land and are utilized by one electric consumer for farming, business, commercial, industrial, institutional, governmental, or trailer court purposes shall together constitute one premises, except that any such building, structure, or facility, other than a trailer court, shall not, together with any other building, structure, or facility, constitute one premises if the electric service to it is separately metered and the charges for such service are calculated independently of charges for service to any other building, structure, or facility.”
“The premises of the ZooMontana property within the meaning of this statute is the property line of the property. For this reason the appropriate comparisons of cost for [the Cooperative] and MPC to extend their lines to the property line of ZooMontana are the costs referred to in paragraphs 7(c) and 7(e) of the Findings of Fact herein such costs being $16,319.49 to MPC and $6,092.45 to [the Cooperative]. Since the cost of extension of the lines to the premises is greater to MPC than [the Cooperative], [the Cooperative] is entitled to provide the electric power to ZooMontana.”

On appeal, MPC contends that the correct comparison to be made was MPC’s cost of extending the three-phase power extension to the education building in the amount of $24,136.43, as compared to the Cooperative’s cost to extend its power to the same building in the amount of $28,348.86. The Cooperative contends that the premises involved here is the entire ZooMontana property so that the cost comparison to be made is the cost of extending three-phase power to the ZooMontana property line. That comparison shows that MPC’s cost would be $16,319.49 as compared to the Cooperative’s cost of $6,092.45.

Section 69-5-102(7), MCA, defines premises as applicable in this case:

“ ‘Premises’ means a building ... to which electricity is being or is to be furnished; provided, that two or more braidings, structures, or facilities which are located on one tract ... and are utilized by one electric consumer for ... institutional... purposes shall together constitute one premises ... [with an exception for separate metering which is not here applicable].”

On this issue, the District Court’s Findings of Fact No. 8 is pertinent:

“8.The intent of ZooMontana is to utilize its entire parcel of property for development of its zoo for various buildings, parking areas, exhibits, displays and other uses. Although the education building would be the first place or building located within the total property for which three phase electric power may be needed such power will ultimately be required for the entire zoo ....”

There is no dispute between the parties as to the foregoing planned utilization of the entire parcel. Both parties utilize such future developments to arrive at the 400 kilowatts of power needed within two years and referred to in the statute.

We conclude that such facts establish that the District Court is correct in its conclusion that the premises for this purpose is the property line of the property and not the education building.

We therefore affirm the holding of the District Court that the appropriate cost comparison of the costs of $16,319.49 to MPC and $6,092.45 to the Cooperative; and since the cost of extension is greater to MPC than the Cooperative, the Cooperative is entitled to provide the electric power. We affirm the court’s order permanently enjoining MPC from providing electric power to ZooMontana.

Affirmed.

CHIEF JUSTICE TURNAGE and JUSTICES TRIEWEILER, HUNT, and WEBER concur.


text:
    ALLEN STUKER, Claimant and Appellant, v. STUKER RANCH, Employer and Respondent, and STATE COMPENSATION MUTUAL INSURANCE FUND, Insurer and Respondent.
    No. 91-192.
    Submitted on briefs Oct. 24, 1991.
    Decided Dec. 6, 1991.
    48 St.Rep. 1071.
    251 Mont. 96.
    822 P.2d 105.
    For Appellant: Donald R. Marble, Marble Law Office, Chester.
    For Respondent: Darcy M. Cmm, James, Gray & McCafferty, Great Falls.
   JUSTICE HARRISON

delivered the Opinion of the Court.

Claimant Allen Stuker (Stuker) appeals from an order and judgment of the Montana Workers’ Compensation Court. The Workers’ Compensation Court adopted the findings of fact and conclusions of law of the hearings examiner who deemed Stuker “partially permanently disabled” due to a torn biceps muscle. The court awarded Stuker $122.74 per week for 75 weeks under §§ 39-71-705 through -708, MCA (1985), along with attorney’s fees. We affirm.

We restate the issues presented by the claimant into a single issue: whether the Workers’ Compensation Court erred in its findings of fact and conclusions of law.

Stuker is a thirty-six-year-old male who graduated from Havre High School in 1972 and did not pursue additional schooling. He worked short-term jobs before entering the Army, including in a bakery as a helper, and in a department store as a custodian. In the Army he drove a truck with a special military driver’s license. He remained in the Army until 1976 and then returned to Havre. He worked a series of shortterm, often parttime jobs, including: driving a grain truck, serving customers as a clerk in a grocery store and filling orders for a company that distributed products such as potato chips. He also worked as a tire repairman for approximately ten months before being laid off. Stuker then became involved in various types of seasonal work including roofing houses and helping on his relatives’ ranches. The roofing operation began in 1980 when he submitted roofing bids to general contractors. In addition to roofing, Stuker began working for his uncle on the Stuker Ranch each year during March and April, beginning in 1983.

In March 1986 while working for his uncle on the Stuker Ranch, Stuker began to experience pain in his right shoulder after lifting hay bales but continued working anyway. In early April, 1986, while lifting an irrigation tarp, Stuker felt instant pain in the biceps muscle region of his right arm. Stuker thought he had hyperextended his arm; he treated it with a heating pad and continued to work until April 17,1986, the end of calving season. Stuker saw Dr. Kelly in late April about the injury; Dr. Kelly consulted with Dr. Luettjohann, who diagnosed Stuker’s problem as a torn biceps muscle. Stuker continued to see Dr. Luettjohann in 1986. A subsequent visit in 1987 and exploratory surgery in January 1987, revealed that Stuker sustained a ruptured biceps muscle.

In February 1987, Stuker worked for two different uncles performing ranching duties. Dr. Luettjohann had advised him he could return to work depending on his comfort level. Accordingly, he worked for the Stuker Ranch in March and April 1987 doing the night check on cattle. Here he monitored the cattle herd and assisted with the birthing of calves. Later he worked for his uncle Ira Hammond, for three or four weeks doing dry farming. Stuker plowed fields, planted grain and drove a truck and tractor. In both 1988 and 1989 Stuker again worked for Ira Hammond from January to May. Stuker also engaged in softball and fishing activities throughout the years. Stuker did not apply for any jobs other than farm jobs with his relatives. He stated that he preferred to work for his relatives. The record indicates the following income reported on Stuker’s tax returns:

Year Income from Roofing Total Income
1980 $337.00 $1,376.00
1981 $378.00 $ 404.00
1982 none none
1983 $860.00 $1,511.00
1984 $737.00 $1,683.00
1985 $441.00 $1,373.00

Stuker claims that as a result of the injury, he cannot lift more than twenty pounds on a consistent basis, and that he experiences headaches and numbness in his arm and fingers.

A Workers’ Compensation claimant can choose between two different types of awards. Walker v. Johnson (1978), 180 Mont. 405, 411, 591 P.2d 181, 184. According to the statutory scheme of 1985, Stuker could pursue a loss of earning capacity disability award under §§ 39-71-703, MCA (1985), or he could pursue an indemnity award under 39-71-705 through -708. A disability award is based on the “actual loss of earning capacity resulting from the injury,” whereas an indemnity benefit awards compensation for “possible loss of earning capacity in the future.” McAlear v. McKee (1976), 171 Mont. 462, 467, 558 P.2d 1134, 1137; citing Jones v. Glac. General Assurance Co. (1965), 145 Mont. 326, 400 P.2d 888. An indemnity benefit is “compensation regardless of earnings to compensate for possible loss of earning capacity in the future.” McAlear, 171 Mont. at 467, 558 P.2d at 1137; citing Jones, 145 Mont. 326, 400 P.2d 888.

Stuker elected to pursue an indemnity award under 39-71-705 through -708, MCA (1985). Section 39-71-706, MCA (1985), “[p]rovides for applying the percentage of disability in determining the number of weeks of compensation under the indemnity alternative, where injury is less than total loss of a scheduled member, or where the injury is a ‘whole man’ injury not scheduled.” McDanold v. B.N. Transport, Inc. (1984), 208 Mont. 470, 478, 679 P.2d 1188, 1192. This means that the permanent partial disability percentage is multiplied by the 500 week maximum to arrive at the number of weeks of payments. In the case at bar, the court arrived at a 15% disability percentage. Stuker elected to proceed under §§ 39-71-705 through -708, MCA (1985), and since Stuker’s injury is not among those specifically listed in §§ 39-71-705, MCA (1985), which imposes durational limitations, the correct calculation is as follows: 15% x 500 = 75 weeks. In the case at bar, the Workers’ Compensation Court used the proper method to calculate the duration of Mr. Stuker’s award.

The record indicates that in arriving at the 15% disability percentage the court considered the testimony of the experts, the claimant’s “age education, work experience, pain and disability, actual wage loss, and the loss of future earning capacity.” Hartman v. National Union Fire Insurance (1989), 236 Mont. 141, 145, 768 P.2d 1380, 1383; citing Flake v. Aetna (1977), 175 Mont. 127, 129, 572 P. 2d 907, 909. The court specifically addressed each of these factors as evidenced by its own statement in its Findings of Fact and Conclusions of Law:

“In calculating a permanent partial disability award under Section 39-71-705 through -708, MCA, this Court has considered the following factors in determining the claimant’s loss of earning capacity under that section. These factors include consideration of the actual wage loss, work experience, education, age, pain, and the 12 percent impairment rating of the whole person assigned by his treating physician.”

Accordingly, the hearings examiner addressed Stuker’s past work history and indicated that his pre-injury work record was extremely limited. This fact made it more difficult to establish the impairment of Stuker’s earning capacity and was adequately discussed. The court correctly refused to speculate what Stuker’s wages would have been had he actively sought employment, especially when the record indicates that Stuker’s work efforts were minimal. Stuker’s post-injury earning capacity indicates that he will earn more than he did in any of the five years prior to his injury.

The court also considered Dr. Luettjohann’s 12% impairment rating to the whole man based on the injury to Stuker’s right arm and the pain involved when exceeding his lifting capacity. The court acknowledged that Stuker cannot perform heavy labor but has “[flive approved occupations he can perform in his labor market.” The court stated that exceeding Stuker’s lifting capacity will cause him to experience pain which lasts thirty minutes or less. In total, the court made a finding that Stuker “is not suffering from such pain or disability that would reduce his earnings in the occupations approved as being within his physical capacity.” Finally, the court notes that Stuker is a young man of thirty-six and can obtain additional training by his own choice.

On appeal, we -will not overturn the findings of fact of the Workers’ Compensation Court if there is substantial credible evidence to support them in the record. Grenz v. Fire and Casualty of Connecticut (1991), [250 Mont. 323,] 820 P.2d 472, 475, 48 St.Rep. 967, 969; citing Kraft v. Flathead Valley Labor & Contr. (1990), 243 Mont. 363, 365, 792 P.2d 1094, 1095. The Workers’ Compensation Court’s conclusions of law will be upheld if the tribunal’s interpretation of the law is correct. Grenz, 820 P.2d at 745, 48 St.Rep. at 969; citing Steer, Inc., v. Dept. of Revenue” (1990), 245 Mont. 470, 474, 803 P.2d 601, 603. Clearly in the case at bar, the comb supported its findings of fact with substantial credible evidence and it made correct conclusions of law. Therefore, we will not disturb the court’s ruling.

Affirmed.

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


author: JUSTICE WEBER

text:
    FARM CREDIT BANK OF SPOKANE, a corporation, Successor by merger to The Federal Land Bank of Spokane, Plaintiff and Respondent, v. WILLERT MARK FAUTH and PATRICIA ANN FAUTH, husband and wife; and THOMAS FAUTH AND THERESA FAUTH, husband and wife, Defendants and Appellants.
    No. 91-298.
    Submitted on briefs Oct. 24, 1991.
    Decided Dec. 10, 1991.
    48 St.Rep. 1080.
    251 Mont. 101.
    822 P.2d 650.

      For Appellant: Matthew W. Knierim, Gallagher, Archambeault & Knierim; Robert Hurly, Glasgow.
    For Respondent: Gregory G. Murphy, Moulton, Bellingham, Longo & Mather, Billings.
   JUSTICE WEBER

delivered the Opinion of the Court.

This is a foreclosure action brought by Farm Credit Bank of Spokane (Farm Credit) against Willert Mark and Patricia Ann Fauth (Fauths) in the Seventeenth Judicial District Court, Valley County, Montana. The District Court granted summary judgment in favor of Farm Credit. Fauths appeals. We affirm.

We find the following issue determinative:

Did Farm Credit’s credit review committee properly review Fauths’ restructure application in compliance with the standards of Title 12 U.S.C. 2202(a)(2)?

November 17, 1982, the Fauths executed a promissory note to the Federal Land Bank of Spokane, a Farm Credit System lender governed by the Agricultural Credit Act of 1987, Title 12 U.S.C. 2001, et seq. Farm Credit is the successor by merger to Federal Land Bank of Spokane. This note was secured by a mortgage on real property located in Valley County. On February 18,1988, after failure to make payments, Farm Credit notified the Fauths that the distressed loan might be suitable for restructure under the Agricultural Credit Act. April 5, 1988, the Fauths filed a restructuring application. Tom Schmitt (Schmitt), a bank credit officer, denied the restructure proposal after consulting with the regional credit manager, Dennis Robinson.

Pursuant to Title 12 U.S.C. 2202(b)(2), the Fauths appealed this denial to Farm Credit’s credit review committee. The committee, chaired by Dennis Robinson, denied the Fauths’ proposal. Farm Credit then brought action to collect on the note and foreclose on the property.

The Act requires that Farm Credit System lenders consider borrower’s restructure proposals. If the proposal is declined, the debtor may appeal this decision to a credit review committee. Title 12 U.S.C. 2202(a)(2) provides guidelines for credit review committee membership:

“Membership. In no case shall a loan officer involved in the initial decision on a loan serve on the credit review committee when the committee reviews such loan.”

The Fauths contended that Robinson was “involved” in the initial denial of their application; thus, Farm Credit violated 2202(a)(2) when Robinson sat on the credit review committee. 12 U.S.C. 2202a(b)(3) provides:

“Limitation on foreclosure. No qualified lender may foreclose or continue any foreclosure proceeding with respect to any distressed loan before the lender has completed any pending consideration of the loan for restructuring under this section.”

After Farm Credit commenced foreclosure on November 29, 1988, it voluntarily selected a new committee and held a second review of the Fauths’restructure proposal. On November 30,1989, the Fauths’ April 5, 1988, restructuring application was again reviewed and denied.

September 12, 1990, on the Fauths’ motion, the District Court dismissed Farm Credit’s foreclosure action. Upon motion by Farm Credit, the District Court vacated its prior order on December 4,1990. It found that 2202a(b)(3) provided a limitation on enforcement rather than a condition precedent to the foreclosure action. It held that Farm Credit’s second credit review committee did cure the prior violation. The court ordered foreclosure on May 13, 1991. The Fauths appeal this judgment.

Did Farm Credit’s credit review committee properly review Fauths’ restructure application in compliance with the standards of Title 12 U.S.C. 2202(a)(2)?

The Fauths contend that Robinson was involved in the initial denial of the Fauths’ application, and therefore Farm Credit violated the restructure procedures mandated by Title 12 U.S.C. 2202(a)(2) when Robinson chaired the initial review committee. Farm Credit denies impropriety in the membership of the initial credit review committee. In the alternative, Farm Credit contends any defect in the initial process was cured by the bank’s second review of the application.

We note that 2202(a)(2) prohibits “loan officers” who are involved in the initial decision from serving on a credit review committee. Because we conclude that any deficiency in the credit review procedure was corrected by the subsequent committee review, we do not find it necessary to decide whether regional credit manager Robinson could be classed as a “loan officer” for this purpose.

In reaching that decision the committee was required to consider Title 12 U.S.C. 2202a(d)(1) which in pertinent part provides:

“In general. When a qualified lender receives an application for restructuring from a borrower, the qualified lender shall determine whether or not to restructure the loan, taking into consideration (A) whether the cost to the lender of restructuring the loan is equal to or less than the cost of foreclosure; (B) whether the borrower is applying all income over and above necessary and reasonable living and operating expenses to the payment of primary obligations;...”

The initial credit review committee denied the Fauths’ application on the ground that (1) the Fauths’ historical cash flow indicated a higher level of income available for debt service; (2) the Fauths were unwilling to pledge available real property as additional security; and (3) the application did not represent the least cost alternative to Farm Credit. The second committee denied the application of April 5,1988, for the same reasons.

The Fauths contend that Farm Credit acted in bad faith in scheduling the meeting of the second review committee. Because that contention is not supported in any manner by the record, it will not be considered. Next Fauths contend 2202a(b)(3) bars Farm Credit from initiating foreclosure proceedings before complying with the restructure procedures. Thus we should dismiss Farm Credit’s foreclosure suit which was filed prior to complying with 2202(a)(2).

Farm Credit contends that 2202a(b)(3), is a limitation on the enforcement of foreclosure rather than a condition precedent to filing a foreclosure action. Thus dismissal is not required when the court did not order foreclosure until after procedural requirements were met.

Section 2202a(b)(3), in substance provides that no lender “may foreclose or continue any foreclosure proceeding” before the lender has completed any pending consideration of a restructure plan. On April 5, 1988, the Fauths filed their initial restructure application. Loan officer Schmitt denied the restructure proposal and the Fauths’ appeal to the credit review committee was denied on September 8, 1988. Farm Credit then commenced foreclosure proceedings on November 29,1988. As a result of contentions that Robinson’s membership in the committee was inappropriate, Farm Credit selected a new committee which completed the second review on November 30, 1989. On December 4, 1990, the District Court concluded that the section provided a limitation on enforcement, that the action of the second review committee cured any violation, and granted Farm Credit’s motion for summary judgment. On May 13, 1991, the court ordered foreclosure of the mortgage.

We conclude that the District Court is correct in concluding that this code section did not require dismissal of the foreclosure. The initial committee credit review and the second committee credit review took place prior to the judgment of foreclosure. We therefore conclude there was no violation of Title 12 U.S.C. 2202a(b)(3), and we agree with the District Court’s holding that the second credit review committee cured any existing violation prior to foreclosure.

Finally the Fauths contend that Farm Credit should have considered the facts regarding restructuring as in existence on November 30, 1989, the date of review, rather than limiting review to the April 5, 1988, restructuring application.

In Federal Land Bank of St. Paul v. Asbridge (N.D. 1991), 474 N.W.2d 490, the borrower, in a foreclosure action, requested that the case be remanded in order for Asbridge to file an additional restructuring application with the bank. The North Dakota court denied remand holding that the Agricultural Credit Act did not command interminable efforts at restructuring. Rather, the court affirmed the foreclosure decree concluding that the bank fairly considered and refused Asbridges’ restructuring plan under the applicable federal courts. Asbridge, 747 N.W.2d at 494.

Likewise in this case, Farm Credit refused the Fauths’ restructure plan in accordance with the Agricultural Credit Act procedures. Section 2202a(b)(3), as applicable here, prohibited Farm Credit from continuing foreclosure until it had completed “any pending consideration of the loan for restructuring.” We conclude that the only pending application for consideration was the restructure application of April 5, 1988. Thus Farm Credit was not required to command interminable efforts at restructuring, consider any revised structure applications, or consider negotiations subsequent to April 5, 1988.

We hold Farm Credit’s review committee properly reviewed Fauth’s restructure application in compliance with the standards of Title 12 U.S.C. 2202(a)(2).

We affirm.

CHIEF JUSTICE TURNAGE and JUSTICES HUNT, MCDONOUGH, and GRAY concur.


author: JUSTICE TRIEWEILER JUSTICE HARRISON,

text:
    OWEN D. BUTLER and ERNA D. BUTLER, Plaintiffs and Respondents, v. JOHN V. GERMANN and BARBARA A. GERMANN, Defendants and Appellants.
    No. 91-072.
    Submitted on briefs June 28, 1991.
    Decided Dec. 12, 1991.
    48 St.Rep. 1083.
    251 Mont. 107.
    822 P.2d 1067.

      For Appellant: David L. Pengelly, Knight, Maclay & Masar, Missoula
    For Respondent: Jeffrey H. Langton, Hamilton.
   JUSTICE TRIEWEILER

delivered the opinion of the Court.

Owen and Ema Butler sought an injunction requiring John and Barbara Germann to repair damage to an irrigation ditch that runs through the Germanns’ property before delivering water to the Butler’s property. The District Court for the Fourth Judicial District in Ravalli County issued a preliminary injunction and, after a hearing, issued a permanent injunction, together with an award of damages, costs, and attorney’s fees. The Germanns appeal. We affirm.

The issues are:

1. Did the District Court err in ordering the Germanns to repair the ditch?

2. Did the District Court err in permanently enjoining the Germanns from obstructing, encroaching upon, disturbing, or otherwise impairing the Butlers’ ditch easement?

3. Did the District Court err in awarding the Butlers $2000 as damages?

4. Did the District Court err in awarding the Butlers attorney’s fees and costs incurred subsequent to the preliminary injunction?

The Butlers and the Germanns own adjacent tracts of land in Ravalli County. Both have appurtenant water rights. The Waddell Ditch, which flows northward through the Germanns’ property onto the Butlers’ property, supplies the water rights of both parties.

The Butlers have historically irrigated their property by temporarily damming the Waddell Ditch. This caused water to back up in the ditch and then overflow the downslope bank of the ditch, irrigating their land in a sheet or flood. Topographical factors make this the most efficient means of irrigating the land in question.

The Germanns moved onto their property in March 1988. Without consulting the Butlers, John Germann attempted to change the course and flow rate of the ditch on his property by digging it deeper and cleaning out sediment. He also bladed off from 12 to 18 inches of the downslope bank and used the dirt as fill in his barnyard.

On June 28, 1989, the Butlers filed a complaint and requested a preliminary injunction to restrain the Germanns from interfering with the ditch. The Butlers alleged that the Germanns’ modification of the ditch had reduced the water level in the ditch so far that the Butlers could no longer use it for sheet irrigation. They also claimed damages for a hay crop lost because of insufficient irrigation. The Germanns counterclaimed for damages allegedly due to flooding from the direction of the Butlers’ property.

After a hearing on June 28, 1989, the District Court granted a preliminary injunction ordering the Germanns to raise the banks of the ditch to allow sheet irrigation of the Butler property. The court appointed Fourth Judicial District Water Commissioner Thomas Gale as special master to monitor the Germanns’ repairs to the ditch.

Gale was satisfied with the adequacy of the Germanns’ repair efforts. The Butlers, however, were not. At the permanent injunction hearing, they presented expert testimony that although the repairs had restored the flow in the Waddell Ditch to the Butler property, the repaired ditch banks were leaky and unstable.

The District Court entered judgment for the Butlers. It ordered the Germanns to raise the ditch banks to a uniform height throughout their property and then line the repaired ditch with bentonite. The court also permanently enjoined the Germanns from further interference with the ditch, awarded $2000 in damages to the Butlers, and denied the Germanns’ counterclaim. The court then directed the Germanns to pay the Butlers’ costs and attorney’s fees.

I

Did the District Court err in ordering the Germanns to repair the ditch?

The fundamental purpose of any remedy is to return the plaintiff to his or her rightful position, “the position or state the party would have attained had the [wrong] not occurred.” See generally Billings Clinic v. Peat Marwick Main & Co. (1990), 244 Mont. 324, 345, 797 P.2d 899, 913. The Germanns rely on this principle in accusing the District Court of “overkill.” They suggest that the District Court was without power to require them to do more than restore the banks of the ditch to their former height, and they conclude that the District Court’s judgment will compel them to provide the Butlers with a much better ditch than they had before.

We disagree. The mere restoration of the height of the ditch banks to their former level did not restore the ditch to its former integrity. That much was clear from all the evidence that was offered.

John Germann testified that in May 1990, after he partially restored the lower ditch banks in compliance with the District Court’s preliminary injunction, the downslope bank of the ditch washed out close to the Butlers’ fence. He admitted that he had not sufficiently compacted the material with which he restored the bank and that this caused the washout. He also admitted that there was potential for further washouts throughout his property for the same reason.

Stanton Cooper, the general manager of the Butler property, testified that he was not satisfied with the Germanns’ partial repairs. He watched John Germann pile dirt back onto the downslope bank of the ditch. He testified that Germann used only a very thin layer of dirt and that water continued to seep through it, and that the seepage would continue unless the Germanns sealed the ditch.

It was his personal opinion that at the time of trial, the partially repaired banks were insufficiently stable to hold the significant surges of natural runoff which could be expected to flow through the ditch during certain seasons of the year. He testified that the banks, as they existed at the time of trial, would soften, allow further seepage, and eventually wash out. Specifically, he did not believe that in the long run the partially repaired banks were stable enough to hold water in the fashion that was necessary for the Butlers to continue their historical practice of sheet irrigation.

Darvin Titeca, the Butlers’ lessee, agreed that the Germanns’ repairs were inadequate. He was familiar with the Waddell Ditch as it existed on the Germann property before the Germanns disturbed it in 1989. He testified that the partially repaired lower banks of the ditch were 12 to 15 inches lower than they had been before the Germanns interfered with them. He was concerned that without a court order requiring the Germanns to elevate the banks further they could wash out. He believed that if the Germanns did not immediately restore the banks the Butlers’ hay crop would bum up again like it did in 1989. He explained that in 1989 after Germann disturbed the lower bank of the ditch, the Butler property did not receive sufficient water because it was all washing out over the destroyed lower bank on the Germann property.

Barry Dutton, a soil scientist and irrigation specialist retained by the Butlers, inspected the Germanns’ repairs and prepared a report which the District Court received into evidence. In large part, Mr. Dutton’s conclusions formed the basis for the District Court’s findings of fact. The relevant portion of that report stated as follows:

“The soil material Mr. Germann has used to build up his ditch banks [in compliance with the preliminary injunction] is classified under the USDA-SCS system as a sandy loam. This soil type is quite permeable to water and significant leakage can be expected through these newly-constructed banks. The banks will seal themselves to some degree over a 5-10 year period but will always leak to some degree in this soil.”

OPTIONS WHICH WOULD ALLOW MR. BUTLER TO IRRIGATE HIS FIELD IN THE HISTORIC FASHION

“*The most direct method for returning to pre-existing conditions would be for Mr. Germann to restore the ditch and banks to their original configuration. Banks should be 1-2 feet higher than the expected water level. They should be 3-4 feet thick on the downhill side and re-vegetated. Any construction activity will expose soils with high permeabilities which can be expected to suffer excessive significant leakage for 5-10 years and will always leak to some degree. Lining with bentonite, open-topped culvert or other material would prevent this problem. Bentonite should be used only under direction of SCS personnel or other qualified professionals] using SCS specifications. All ditch relocations and reconstruction should be surveyed for proper grade and bank height.

“* A second option is to have Mr. Germann build up the banks on his property to a greater height. Several important concerns must be satisfied for this to work satisfactorily. The banks must be of sufficient height and width (1-2 ft. above the expected water level and 3-4 feet thick on downhill side). The banks must be re-vegetated. Either significant leaks must be expected for a period of 5-10 years, or the ditch must be lined. All ditch relocations and reconstructions should be surveyed for proper grade and bank height.”

During his testimony, Mr. Dutton explained that he made his recommendations simply to insure continued flow through the ditch on the Germanns’ property and to avoid a problem with the ditch washing out in the future, thereby eliminating the flow of water to the Butlers’ property. None of these potential problems was a cause for concern before the Germanns destroyed the banks of the ditch.

Even the Germanns’ own expert, Andrew Fisher, testified that further restoration was necessary in order to guarantee the integrity of the restored ditch bank. Mr. Fisher, a civil engineer who specializes in water resources engineering, testified that for their own benefit he recommended to the Germanns that they strengthen the ditch bank in the area that had been disturbed. He agreed during testimony at trial that his recommendation was similar to the recommendation made by Mr. Dutton.

Specifically, Mr. Fisher recommended that the ditch banks be increased by a height of six to 12 inches throughout roughly a third of the length of the ditch on the Germann property. He agreed that there was legitimate concern about the stability of the banks where the soil had been recently replaced, and explained the problem as follows:

“The reason I recommended thickening was when I viewed it, the condition at the time I viewed it, the bank had been recently“it was recent construction, and I didn’t feel the soil had settled to a point where it was stable enough to withstand some higher flows. With higher flows, we’re not just talking elevation, there’s velocity, forces on the insides of the bank, you could get scouring on the bank from higher velocities.”

Mr. Fisher also agreed that good vegetative cover on the bank would help its stability, but that when he viewed the property the bank was mostly bare dirt. Tom Gale, the special master who initially found the Germanns’ restoration efforts adequate, testified that he did not disagree with Mr. Fisher’s opinion that the ditch banks on the Germanns’ property needed to be thickened through about a third of their length.

Based upon the testimony in this case the District Court had no choice other than to arrive at the decision that it reached. The District Court found as a fact that:

“[T]he banks of the Waddell Ditch which Mr. Germann supposedly restored are only of marginal height and that the soil used in the restoration process is a sandy loam that is quite permeable and will require 5-10 years to fully seal without lining. Mr. Dutton concluded in his report of May 13,1990, that the only way to solve the problems caused by Defendants without forcing Plaintiffs to modify their irrigation system and practices is to have the banks of the Waddell Ditch through Defendants’ property further heightened, thickened, and re-vegetated and lined.”

This finding of fact was fully supported by not only substantial evidence, but by the uncontroverted evidence offered at the time of trial. The Germanns did not restore the ditch to a condition where it could be considered reliable for future use. Once the Germanns disturbed the ditch, it was not sufficient merely to put the dirt back on the banks. Further repairs were necessary to restore the utility and safety of the ditch.

In civil bench trials, we will not overturn the trial court’s findings of fact unless they are “clearly erroneous.” Rule 52(a), M.R.Civ.P. We conclude that the District Court’s finding that further restoration was necessary to return the Butlers to their rightful position was not clearly erroneous. We hold that the District Court did not err in ordering the Germanns to make further repairs.

II

Did the District Court err in permanently enjoining the Germanns from obstructing, encroaching upon, disturbing, or otherwise impairing the Butlers’ ditch easement?

In its final judgment, the District Court issued the following permanent injunction:

“[A] permanent and perpetual injunction is hereby granted against Defendants and Defendants’ servants, agents, employees, and all other persons acting under the control, authority, or direction of Defendants, and they are hereby enjoined, restrained, and commanded from obstructing, encroaching upon, disturbing, or otherwise impairing Plaintiffs’ ditch easement, known as the Waddell Ditch, or from interfering with Plaintiffs’ rights to enter, inspect, repair, and maintain said ditch easement as allowed by law. The restoration-modification requirements of Section 2 of this Judgment are an exception hereto. In addition Defendants shall be privileged to repair or replace any existing culverts on their property as necessary with culverts of equal or greater capacity.”

We note at the outset that ditch encroachment is prohibited by statute in Montana. Section 70-17-112, MCA. Thus, the District Court’s injunction did not change the obligation that the Germanns already had under the law.

The Montana statute governing final injunctions provides:

“[A] final injunction may be granted to prevent the breach of an obligation existing in favor of the applicant where:
“(3)the restraint is necessary to prevent a multiplicity of judicial proceedings ....”

Section 27-19-102, MCA. The Butlers satisfied this statute at trial. The Germanns owed the Butlers an obligation to refrain from impairing the Waddell Ditch easement. See 70-17-112, MCA. There was sufficient evidence for the District Court to find that restraint was necessary in order to avoid further judicial proceedings which would present unnecessary expense to both parties.

The Germanns argue that the permanent injunction was unwarranted because they say they have no plans to interfere with the ditch in the future. We disagree. The issuance or refusal of an injunction is addressed to the discretion of the trial court. Frame v. Frameb (1987), 227 Mont. 439, 740 P.2d 655. Here the District Court found a likelihood of future interference by the Germanns with the Butlers’ ditch easement.

The record supports this finding by the District Court. At the hearing on the preliminary injunction, John Germann testified that he planned farther relocation of the ditch on his property in order to facilitate the construction of a fish pond. He did not retreat from this position at the hearing on the permanent injunction. It was clear from the testimony at the second hearing that Germann did not take the Butlers’ concerns seriously.

We hold that the District Court did not err in permanently enjoining any farther obstruction, encroachment, disturbance, or impairment of the Butlers’ ditch easement.

Ill

Did the District Court err in awarding the Butlers $2000 as damages?

Darwin Titeca, the Butlers’ lessee, testified that as the result of the damage to the ditch he was unable to irrigate and that he had to purchase winter fodder elsewhere at a cost of $2380. The Butlers then credited Titeca with $2000 on his lease payment. Titeca also testified that he believed the Butlers gave him a credit for services he performed for them while leasing the property and that he thought he was underpaid by $1000 to $1500.

From this, the Germanas conclude that the services were worth $1000, that the lease credit was for both the services and the replacement fodder, and that, therefore, the lost hay was only worth $1000. We believe the District Court could have reasonably inferred that Titeca meant he was underpaid by $1000 to $1500 even after the Butlers gave him a credit for the hay.

As we explained in Part I of this opinion, we will not overturn the trial court’s findings in a civil bench trial unless they are clearly erroneous. Rule 52(a), M.R.Civ.P. The court’s finding that the lease credit was for lost hay was not clearly erroneous. Accordingly, we hold that the District Court did not err in awarding the Butlers $2000 in damages.

IV

Did the District Court err in awarding the Butlers attorney’s fees and costs incurred subsequent to the preliminary injunction?

The statute prohibiting ditch encroachment authorizes an award of costs and attorney’s fees to the prevailing party in actions brought to enforce its provisions. Section 70-17-112, MCA. The Butlers prevailed below. Since we affirm that judgment, we necessarily conclude that the District Court did not err in awarding the Butlers their costs and attorney’s fees. Furthermore, because the Butlers have prevailed on appeal, we award them the costs and attorney’s fees they have incurred by reason of this appeal.

Affirmed.

CHIEF JUSTICE TURNAGE and JUSTICES HUNT, GRAY, WEBER, and McDONOUGH concur.

JUSTICE HARRISON,

dissenting.

I dissent. I view the facts of this case differently than the majority and would reverse the District Court’s judgment ordering Germanns to further reconstruct the portions of Waddell Ditch on their property.

I feel the District Court incorrectly found that Butlers were unable to obtain adequate irrigation water after Waddell Ditch was repaired by Germanns in 1989. According to Germanns, if Butlers were receiving adequate irrigation water after the 1989 repairs to the ditch, it is my view that the District Court erred by ordering Germanns to do further work on the ditch.

In actions tried without a jury we may not set aside findings of fact unless the findings are “clearly erroneous,” and we are required to give “due regard” to the opportunity of the trial court to judge the credibility of witnesses. Rule 52(a), M.R.Civ.R Findings of a district court are not clearly erroneous when based upon substantial credible evidence. Boylan v. Van Dyke (1991), 247 Mont. 259, 264, 806 P.2d 1024, 1027; Pare v. Morrison (1990), 241 Mont. 218, 222, 786 P.2d 655, 657.

Viewed in the light most favorable to the prevailing party, a district court’s decision must be reversed if its findings are not based upon substantial evidence and if a clear preponderance of evidence supports contradictory findings. Christensen v. Britton (1989), 240 Mont. 393, 401-02, 784 P.2d 908, 913. If the record shows that the same result would have been attained despite the error, an error by the trial court against the appellant is not grounds for reversal. Rule 14, M.R.App.P.

The District Court made the following finding:

“Plaintiffs’ lessee has since [1989 repairs to Waddell Ditch] encountered extreme difficulty in obtaining a sufficient flow of water through the Waddell Ditch to irrigate his downstream fields, resulting in a loss of hay production to the extent of approximately 25 tons.”

Butlers concede that the disputed finding is erroneous since Germanns’ 1989 repairs to Waddell Ditch restored sufficient water flow to permit irrigation of the Butler property in 1990. Butlers disagree, however, with Germanns’ assertion that the District Court’s order was based solely upon a misconception that water flow continued to be impeded at the time the trial was held and point to other findings supporting the District Court’s judgment.

Through my examination of the record and findings I feel that the District Court erred in finding that the flow of water through Waddell Ditch continues to be impeded. The District Court ignored the special master’s report that Germanns had complied fully with the District Court’s order.

The court followed the recommendations of the expert hired by Butlers, Barry Dutton, and ordered Germanns to elevate the lower bank of Waddell Ditch by one foot, to widen the banks to three feet at the top, compact the banks, revegetate the banks, and line the ditch with bentonite. Mr. Germann altered the ditch in 1989 because water was overflowing its low banks and blocking the entrance to his garage. Testimony did not indicate that the ditch had been lined. The law requires that the plaintiff be restored to the position he would have attained had the wrong not occurred. Billings Clinic v. Peat Marwick Main & Co. (1990), 244 Mont. 324, 345, 797 P.2d 899, 913. In this case, the District Court’s judgment, by ordering Germanns to build a better ditch than existed before Germanns bought the property, restored Butlers to a better position than they occupied before the wrong.

In addition, the court ignored the special master’s report that Germanns had restored Waddell Ditch and that water was flowing onto Butlers’ property in sufficient amounts to allow for irrigation. The special master was the District Court’s own appointee and Chief Water Commissioner of the Fourth Judicial District, Tom Gale. He visited the site on five occasions and took several photographs of the work in progress. Mr. Gale was fully qualified to judge the restoration of Waddell Ditch.

Finally, Butlers themselves concede that the District Court’s finding that Butlers continued to have difficulty obtaining sufficient water for irrigation was erroneous. I would reverse the portion of the District Court’s judgment ordering Germanns to further reconstruct the portions of Waddell Ditch on their property.


author: JUSTICE WEBER JUSTICE HARRISON

text:
    JOE R. LEE and FLOIE N. LEE, Plaintiffs and Appellants, v. O. M. SHAW, Personal Representative of the Estate of Fred Pelzman, Deceased, Defendant and Respondent.
    No. 91-132.
    Submitted on briefs July 25, 1991.
    Decided December 12, 1991.
    Rehearing Denied Jan. 16, 1992.
    48 St.Rep. 1110.
    251 Mont. 118.
    822 P.2d 1061.

      For Appellant: Patrick F. Hooks, Hooks Law Firm, Townsend.
    For Respondent: John P. Wuerthner, Wuerthner & Wuerthner; Kenneth R. Olson, Baiz & Olson, Great Falls.
   JUSTICE WEBER

delivered the Opinion of the Court.

Joe R. and Floie N. Lee appeal from the judgment of the District Court of the Ninth Judicial District, Teton County, which followed a bench trial in which the court concluded that the March 20, 1978, document was not an option but probably a right of refusal, and that because no notice of intent to sell was ever given to the plaintiffs, the right of first refusal did not come into effect. We affirm.

All parties concede that no notification of intent to sell was given by Fred Pelzman, or his estate, to the Lees. As a result, the sole issue is whether the March 20, 1978, document constituted an “option contract” or “a right of first refusal.”

Joe R. Lee and Floie N. Lee (the Lees) moved to the Teton County area in 1977 and became acquainted with Fred Pelzman (Mr. Pelzman), owner of an 800-acre ranch near Choteau. Mr. Pelzman, 79 years old at the time, had suffered a stroke and was unable to operate the ranch. In September of 1977, Lees began operating the ranch under a work-share agreement. Subsequently they operated under written leases, with the last lease ending on December 31, 1985.

This action for specific performance concerns two documents entered into by the parties in 1978. As found by the District Court, on February 15, 1978, Mr. Pelzman signed an agreement with Lees giving them “first option” to purchase the ranch for fair market value “when it becomes available for sale”. The agreement provided that “[o]ther offers being considered at that time must be in writing, signed by the party making the offer and presented to Joe R. and Floie N. Lee for final consideration”. The February 15,1978, agreement was not recorded.

The District Court also found that on March 20,1978, Mr. Pelzman and Lees entered into a second agreement, recorded in Teton County, giving Lees “first option” to purchase the ranch for $120,000 “upon or before my passing,” and omitting the language about other offers. According to Joe Lee, he gave Mr. Pelzman $10.00 nominal consideration at the time the agreement was signed. The agreement contained the condition that “the option holders will reside and maintain the said property until time of sale.” The agreement also stated that a “ledger of time and improvements will be kept for the purpose of reimbursement by the landowner.” Lees testified that the reason for the second agreement was that they wanted credit for capital improvements on the ranch paid for with their own funds. Lees also testified that Joe R. Lee drafted and dictated the March 20, 1978, document and Floie N. Lee typed it, using the February 15, 1978, document as a guide.

Following Mr. Pelzman’s death on May 18,1986, Lees notified the attorney for the estate of their intent to exercise their option to purchase the ranch. Their offer was refused. On September 20,1986, Lees filed this action to compel specific performance of the March 10, 1978, agreement.

I.

Did the March 20, 1978, document constitute an “option contract” or “a right of first refusal?”

Lees contend that the February 15, 1978, document comprised a “right of first refusal” and that the March 20, 1978, document constituted a valid “option” contract. The Pelzman estate maintains that the second document is not an option contract.

The District Court concluded that whether the second document was a right of first refusal or an option contract could not be determined from the face of the document because the wording was ambiguous. Employing the basic rule of construction that ambiguities are to be construed against the party who drafted the document, the District Court ruled that the document was a right of first refusal. The District Court reasoned that because neither Mr. Pelzman nor the Pelzman estate had ever given notice of intent to sell, the second document, as a right of first refusal, did not come into effect.

An option is a right acquired by contract by which the owner of property agrees with another person that he shall have the right to buy his property at a fixed price within a certain time. Miller v. Meredith (1967), 149 Mont. 125, 128-29, 423 P.2d 595, 597. The offer is continuing and irrevocable by the optionor, creating in the optionee a power to compel the owner to sell property at a stipulated price whether or not the owner wishes to sell. Klein v. Brodie (1975), 167 Mont. 47, 49, 534 P.2d 1251, 1252-53. When the optionee accepts the offer, a binding bilateral contract results which can be enforced by specific performance. Naylor v. Hall (1981), 201 Mont. 59, 67, 651 P.2d 1010, 1015.

A right of first refusal or “preemptive right” is closely related to an option, but “very dissimilar in the legal relations of the parties ... .” 1A Corbin on Contracts sec. 261, at 468 (1963). Aright of first refusal or preemptive right “does not give to the preemptioner the power to compel an unwilling owner to sell; it merely requires the owner, when and if he decides to sell, to offer the property first to the person entitled to the preemption, at the stipulated price.” Tribble v. Reely (1976), 171 Mont. 201, 206, 557 P.2d 813, 816 (emphasis added) (citation omitted).

Property subject to a preemptive right should adequately describe the property and the price must be stated or otherwise ascertainable. Klein, 167 Mont. at 50, 534 P.2d at 1253. Often the agreement requires the property owner to offer the property to the party holding the preemptive right at the same price agreed upon by the third party. See, e.g., Tribble, 171 Mont. at 204, 557 P.2d at 815 (lease provided that “in the event of sale, the Lessees shall have the first refusal under terms similar to that offered any third party”); 1A Corbin on Contracts § 261A, at 136-37 (Supp. 1991).

The language of the first agreement clearly indicated a right of first refusal, rather than an option contract:

“I, Fred Pelzman Sr. agree to give Joe R. and Floie N. Lee first option to purchase property I own in the above Legal Description for fair market value when it becomes available for sale. Other offers being considered at that time must be in writing, signed by the party making the offer and presented to Joe R. and Floie N. Lee for final consideration. Upon notification of intent to sell, a period of 45 days will be allowed for payment.” (Emphasis added).

Although this document contains the term “first option”, courts have generally read the instrument as a whole to determine whether the parties intended an option or a right of first refusal. See Straley v. Osborne (Md. App. 1971), 278 A.2d 64, 69. By indicating that the property would be offered to Lees “when it becomes available for sale,” by stipulating that the property would be sold at the current fair market value, and in supplying a legal description of the property, the first agreement satisfied the criteria for a right of first refusal.

The second agreement of March 20,1978, provided in pertinent part:

“I, Fred Pelzman Sr. agree to give Joe R. and Floie N. Lee first option to purchase property I own in the above Legal Description upon or before my passing for the sum of one hundred and twenty thousand dollars. It is agreed by the undersigned that the option holders will reside and maintain the said property until time of sale. A ledger of time and improvements will be kept for the purpose of reimbursement by the landowner. Upon notification of intent to sell, a period of 45 days will be allowed for payment.”

Lees’ attorney conceded that the insertion of the notification of intent to sell sentence at the end of the agreement admittedly created an ambiguity. The District Court concluded that the agreement was ambiguous on its face as it could be argued to be either an option or a right of first refusal and that because the Lees drafted the agreement, any ambiguity must be interpreted against them and in favor of the defendants. The rules of construction of a contract where ambiguity exists are summarized in Rumph v. Dale Edwards, Inc. (1979), 183 Mont. 359, 367, 600 P.2d 163, 168:

“An ambiguity exists when, taken as a whole, the contract’s wording or phraseology is reasonably subject to two different interpretations. Where the terms of an agreement are uncertain and ambiguous, parol evidence is admissible to prove the interpretation meant by the parties.” (Citation omitted.)

This agreement gives the legal description of the property and the purchase price which fulfills the first two requirements of both an option contract and a right of first refusal. In addition, the agreement sets a certain time, “upon or before my passing,” for the offer to be held open as required by an option. In contrast, the last sentence requires the giving of a notification of intent to sell and grants a period of 45 days for payment. In analyzing this agreement, we conclude that in substance it may be interpreted as follows:

“(a) At any time during his lifetime, Mr. Pelzman could have notified the Lees of his intent to sell - at that point, the Lees had an immediate right to purchase the property for $120,000 less elements under the ledger which may be deductible, with payment to be made within a period of 45 days.
“(b) In a similar manner, if Mr. Pelzman failed to give any such notification of intent to sell during his lifetime, there still was the opportunity for the legal representative of his estate to give notification to the Lees of intent to sell effective upon the date of Mr. Pelzman’s death. Again, had such notification of intent been given by the P.R. to the Lees, they had the right to purchase the property for the $120,000 less any credits as indicated by the agreement from the ledger, with payment to be made within 45 days from notification.”

As a result, we agree with the determination by the District Court that this agreement was not an option which was entitled to be enforced. Since no notice was given to the Lees either before or at the time of Mr. Pelzman’s death, and because 45 days elapsed following the death of Mr. Pelzman, we agree with the determination of the District Court that any right of first refusal did not come into effect.

We hold that the District Court’s conclusion that the second agreement constitutes a right of first refusal was correct for the above reasons.

Affirmed.

CHIEF JUSTICE TURNAGE and JUSTICES GRAY, HUNT, and McDonough concur.

JUSTICE HARRISON

dissenting.

I dissent. The issue in this case is whether the District Court erred in determining that the March 20, 1978, agreement was ambiguous on its face and constituted “a right of first refusal” rather than an option contract.

The Lees contend that the first agreement of February 15, 1978, comprised a “right of first refusal” and that the second agreement of March 20, 1978, was a valid “option” contract. In the view of the District Court, whether the second agreement was a right of first refusal or an option contract could not be determined from the face of the document because the wording was ambiguous. Employing the basic rule of construction that ambiguities are to be construed against the party who drafted the document, the District Court ruled that the document was a right of first refusal. The District Court reasoned that since neither Mr. Pelzman nor the Pelzman estate had ever given notice of intent to sell, the second agreement, as a right of first refusal, did not come into effect.

An option is a right acquired by contract “by which the owner of property agrees with another person that he shall have the right to buy his property, at a fixed price, within a certain time.” Miller v. Meredith (1967), 149 Mont. 125, 128-29, 423 P.2d 595, 597. The offer is continuing and irrevocable by the optionor, creating in the optionee a power to compel the owner to sell property at a stipulated price whether or not the owner wishes to sell. Klein v. Brodie (1975), 167 Mont. 47, 49, 534 P.2d 1251, 1252-53. When the optionee accepts the offer, a binding bilateral contract results which can be enforced by specific performance. Naylor v. Hall (1982), 201 Mont. 59, 67, 651 P.2d 1010, 1015.

A “right of first refusal” or “preemptive right” is closely related to an option, but “very dissimilar in the legal relations of the parties....” 1A Corbin on Contracts § 261, at 468 (1963). A right of first refusal requires the owner of property, when he or she decides to sell, to offer the property to the person holding the preemptive right. If the holder of the preemptive right declines the offer to buy the property, the owner may sell to anyone. Tribble v. Reely (1976), 171 Mont. 201, 206, 557 P.2d 813, 816.

Property subject to a preemptive right should adequately describe the property and the price must be stated or otherwise ascertainable. Klein, 167 Mont. at 50, 534 P.2d at 1253. Often the agreement requires the property owner to offer the property to the party holding the preemptive right at the same price agreed upon by the third party. See, e.g., Tribble, 171 Mont. at 204, 557 P.2d at 815 (lease provided that “in the event of sale, the Lessees shall have the first refusal under terms similar to that offered any third party”); 1A Corbin on Contracts § 261A, at 136-37 (Supp. 1991).

I feel the language of the first agreement clearly indicated a right of first refusal, rather than an option contract:

“I, Fred Pelzman Sr., agree to give Joe R. and Floie N. Lee first option to purchase property I own in the above Legal Description for fair market value when it becomes available for sale. Other offers being considered at that time must be in writing, signed by the party making the offer and presented to Joe R. and Floie N. Lee for final consideration. Upon notification of intent to sell, a period of 45 days will be allowed for payment.” [Emphasis added.]

By indicating that the property would be offered to the Lees “when it becomes available for sale,” by stipulating that the property would be sold at the current fair market value, and in supplying a legal description of the property, the first agreement satisfied the criteria for a right of first refusal.

The second agreement of March 20, 1978, provided:

“I, Fred Pelzman, Sr., agree to give Joe R. and Floie N. Lee first option to purchase property I own in the above Legal Description upon or before my passing for the sum of one hundred and twenty thousand dollars. It is agreed by the undersigned that the option holders will reside and maintain the said property until time of sale. A ledger of time and improvements will be kept for the purpose of reimbursement by the landowner. Upon notification of intent to sell, a period of 45 days will be allowed for payment.”

The second agreement fulfilled the first two requirements of both an option contract and a right of first refusal in that a legal description of the property was given and the price of $120,000 was fixed. In addition, the agreement revealed a certain time, “upon or before my passing,” for the offer to be held open, as required by an option.

Although the second agreement meets the criteria for an option, the use of the term “first option” and the inclusion of the sentence requiring a period of 45 days after notification for payment creates an ambiguity. Mr. and Mrs. Lee each testified that the sentence requiring a 45-day waiting period was inadvertently included in the second agreement by Mrs. Lee. An ambiguity exists when the wording of the contract is subject to two different interpretations. Parol evidence is admissible to prove the interpretation the parties intended. Proctor v. Werk (1986), 220 Mont. 246, 248, 714 P.2d 171, 172. “[I]n the construction of contracts, the courts may look not only to the language employed but to the subject matter and the surrounding circumstances and may avail themselves of the same light which the parties possessed when the contract was made.” Morning Star Enterprises v. R.H. Grover (1991), 247 Mont. 105, 111, 805 P.2d 553, 557.

When confronted with the term “first option,” courts have generally read the instrument as a whole to determine whether the parties intended an option or a right of first refusal. See Straley v. Osborne (Md. App. 1971), 278 A.2d 64, 69; but see Blau-Par Corp. v. Reliance Chemical Corp. (N.Y. App. Div. 3 1991), 565 N.Y.S.2d 910 (“first option” constitutes option; otherwise, adjective “first” rendered meaningless). For example, in Steen v. Rustad (1957), 132 Mont. 96, 313 P.2d 1014, this Court, relying on the intent of the parties as revealed by the “light of the entire instrument,” interpreted the words “first option to buy” as giving the holder an option rather than a right of first refusal. Steen, 132 Mont. at 102, 313 P.2d at 1018.

According to Pruner v. Brown (Va. 1976), 223 S.E.2d 890, although courts are evenly divided, the better view when the terms of the lease or agreement specify the purchase price and legal description of the property is that an absolute option is created by use of the word “first” with “right, option, or privilege.” Pruner, 223 S.E.2d at 892. Generally, the interpretation of the instrument as an option is more likely when the words “first option” are utilized than when the expressions “first privilege” or “first right” are employed. 1A Corbin on Contracts § 261A, at 486-89.

Instructive in interpreting the second agreement in the context of surrounding circumstances is a comparison with the terms of the first agreement, drafted about a month before the second agreement. In the second agreement we note the addition of a specific amount as the sale price, which according to Pruner is an indication of an option, rather than a right of first refusal. Moreover, had the parties intended the second agreement as a right of first refusal, it would seem reasonable that the parties would have included the identical phrase, “when it becomes available for sale,” to establish their intent to negotiate a right of first refusal. Instead, this phrase was omitted. Similarly, omission in the second agreement of the sentence requiring other offers to be presented to the Lees indicates that the parties did not intend the second agreement to comprise a right of first refusal.

Even though construction of the second agreement as an option is warranted, the contract contains a unique clause about the duration of the agreement, giving the Lees “first option to purchase property I own in the above Legal Description upon or before my passing.” As I read this passage, whether the second agreement is deemed a right of first refusal or an option, Mr. Pelzman’s death constituted an event giving the Lees the right to purchase the 800-acre ranch.

Taking into consideration the variations in wording of the first and second agreements and the phrasing of the second agreement, I would hold that upon the death of Mr. Pelzman, the Lees had the right to buy the 800-acre ranch property at the agreed upon price. The estate presents a number of arguments regarding contract and estate law to support its position. I will briefly address two of the more significant theories.

The estate asserts that the Lees are not entitled to specific performance because they failed to tender the purchase price and breached the option by failing to submit a ledger for reimbursement purposes as required by the contract. The second agreement stated that 45 days was allowed for payment after notification. The Lees promptly attempted to exercise the option on June 5,1986, two and a half weeks after Mr. Pelzman’s death, by a letter to Mr. Pelzman’s attorney. The attorney refused to recognize the validity of the option and denied the Lees’ second request to exercise their option to buy the property later that same month. It is my view that in light of the adamant refusal to recognize the Lees’ right to buy the property, neither the Lees’ failure to tender the purchase price nor their failure to present a ledger affects their right to specific performance since such actions on the Lees’ part would have been futile.

The estate also contends the second agreement failed to recite consideration for the option. Consideration is “[a]ny benefit conferred or agreed to be conferred upon the promisor by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered or agreed to be suffered by such person ... as an inducement to the promisor... .” Section 28-2-801, MCA. Mr. Lee testified that he gave Mr. Pelzman $10.00 as consideration for the option. We have held that nominal consideration is sufficient to create a valid contract and allow the equitable remedy of specific performance. Keaster v. Bozik (1981), 191 Mont. 293, 299, 623 P.2d 1376, 1380 (five dollars sufficient consideration). Although the $10.00 consideration was not recited in the contract as is preferable, the Lees’ promise in the second agreement to reside on and maintain the property until time of sale, as a detriment suffered by the Lees and a benefit to Mr. Pelzman, comprised adequate consideration. See Naylor v. Hall (1982), 201 Mont. 59, 651 P.2d 1010. In addition, “[a] written instrument is presumptive evidence of a consideration.” Section 28-2-804, MCA.

The fact that some terms in the option contract were not specifically expressed does not render it unenforceable. Absolute certainty in every detail is not a prerequisite for specific performance. Keaster, 191 Mont. at 302, 623 P.2d at 1381. I would hold that the Lees provided sufficient consideration for the option contract.

The judgment of the District Court should be reversed.

JUSTICE TRIEWEILER joins in the foregoing dissent of JUSTICE HARRISON.