author: MR. JUSTICE HUNT

text:
    WILLIAM R. GETTER, Trustee for Getter Trucking, Inc., Profit Sharing Plan, Plaintiff and Respondent, v. MARTIN J. BECKMAN and Earlene H. Beckman, et al., Defendants and Appellants.
    No. 88-454.
    Submitted on Briefs Jan. 5, 1989.
    Decided March 7, 1989.
    Rehearing Denied March 30, 1989.
    769 P.2d 714.

      Martin J. Beckman and Earlene H. Beckman, Billings, pro se.
    Mark S. Werner, McNamer & Thompson, Billings, for plaintiff and respondent.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

The defendants, Martin J. Beckman and Earlene H. Beckman, appeal the decision by the District Court of the Thirteenth Judicial District, Yellowstone County, granting the plaintiff’s motion for partial summary judgment to quiet title to the property which is the subject matter of this case and to eject the defendants from the property. We affirm the District Court.

The following substantive issues are raised on appeal.

1. Whether the District Court erred in granting plaintiff’s motion for partial summary judgment to quiet title to the property which is the subject matter of this case and to eject the defendants from the property.

2. Whether the defendants had a right to a jury trial in a quiet title action.

On March 29, 1979, after following statutory procedures, the United States Internal Revenue Service (IRS) seized Martin and Earlene Beckman’s property to satisfy the Beckman’s unpaid federal income taxes. Notices of a sealed bid sale of the property was issued on April 26, 1979. Upon opening the sealed bids on June 20, 1979, the IRS sold the property to Getter, the high bidder. After passage of the 120-day redemption period, a deed for the property was issued by the IRS to Getter. The deed was recorded on November 21, 1979.

Beginning in 1977, the Beckmans filed a number of federal lawsuits, alleging that their tax was improperly assessed, the Sixteenth Amendment of the United States Constitution was invalid, and that their property was wrongfully seized. In each case, the United States District Court for the District of Montana dismissed the case in part because it lacked subject matter jurisdiction. The Ninth Circuit for the United States Court of Appeals affirmed each of the District Court’s rulings. In August, 1985, after the United States District Court granted Getter’s motion to quash the lis pendens filed by the Beckmans, Getter filed a motion for partial summary judgment against Beckmans in the District Court of the Thirteenth Judicial District to quiet title to the disputed property and for other additional relief.

On January 7,1987, the District Court granted Getter’s motion for partial summary judgment. More specifically, the court quieted title to the property in Getter in fee simple absolute; permanently enjoined the Beckmans from asserting any claim adverse to Getter’s ownership; declared that Getter is entitled to possession of the property and ejected the Beckmans; and ordered all lis pendens and other claims to title to the property filed or recorded in Yellowstone County by the Beckmans to be expunged from the files and records. The Beckmans appeal this order, raising the following substantive issues on appeal.

The first issue raised on appeal is whether the District Court erred in granting plaintiff’s motion for partial summary judgment to quiet title to the property which is the subject matter of this case and to eject the defendants from the property.

The party presenting the motion for summary judgment, Getter, has the initial burden of showing the lack of any genuine issue of material fact and that he is entitled to judgment as a matter of law. Gamble Robinson Co. v. Carousel Properties (1984), 212 Mont. 305, 312, 688 P.2d 283, 287. The District Court determined that Getter met this burden, therefore the burden shifted to the party opposing the motion, the Beckmans, to show that a genuine issue of fact does exist. Gamble Robinson Co., 212 Mont. at 312, 688 P.2d at 287. The District Court found that the Beckmans failed in meeting their burden and therefore granted Getter’s motion for partial summary judgment regarding the property in question. We affirm the District Court.

In defending against Getter’s quiet title action, the Beckmans argue that the IRS used powers not enumerated in the United States Constitution and that the IRS’s procedures are invalid because the IRS code is based upon the Sixteenth Amendment to the United States Constitution which was fraudulently verified. The Beckmans asserted this same or similar argument in a series of actions they filed between 1977 and 1982 before the United States District Court and the Ninth Circuit. Each time the United States District Court dismissed the Beckmans’ claims in part for lack of subject matter jurisdiction and each time the Ninth Circuit affirmed the dismissal. In these actions, the courts held that the Beckmans’ complaint is a claim for a tax refund and that under 26 U.S.C. § 7422(a) (1982) they lack jurisdiction over the matter until the Beckmans first exhaust their administrative remedies. See, e.g., Beckman v. I.R.S., 48 A.F.T.R.2d (P-H) No. 81-5138 (1981), aff’d, 685 F.2d 440, (9th Cir. 1982,) Beckman v. Getter Trucking, Inc. No. 82-263 (D. Mont. Feb. 15, 1984), aff’d, 753 F.2d 1080 (9th Cir. 1984).

This federal statute, 26 U.S. C. § 7422(a), upon which the federal courts relied provides that

“No suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessive or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Secretary, according to the provisions of law in that regard, and the regulations of the Secretary established in pursuance thereof (Emphasis added).”

Like the federal courts, Montana courts also do not have jurisdiction to determine whether the Beckmans were entitled to a refund and therefore whether their property was improperly seized to pay for the delinquent taxes in light of their allegations of the invalidity of the Sixteenth Amendment of the United States Constitution. Montana courts, however, do have the jurisdiction to quiet title to property located in Montana. Sections 70-28-101 through -113, MCA, address actions to quiet title to real estate generally and §§ 15-18-411 through -413, MCA, specifically address actions to quiet title to a tax deed.

The Beckmans’ property was seized in 1979, and after approximately ten years the title to this property is still not quieted. The Beckmans’ consistent failure to seek the proper administrative remedies to settle the initial issue of whether they are entitled to a tax refund and therefore whether their property was improperly seized in light of their allegations of the invalidity of the Sixteenth Amendment does not prevent this Court from affirming the District Court’s order quieting title to the property in question. While this Court does not have subject matter jurisdiction over the original issues, this Court is nonetheless required under Rule 202 (d)(1), M.R.Evid., to take judicial notice of federal statutes.

The applicable federal statute in this case is 26 U.S.C. § 6532(a) (1982). In particular, this statute provides that

“No suit or proceeding under section 7422(a) for the recovery of any internal revenue tax, penalty, or other sum, shall be begun . . . after the expiration of 2 years from the date of mailing by certified mail or registered mail by the Secretary to the taxpayer of a notice of the disallowance of the part of the claim to which the suit or proceeding relates.”

Federal district courts have strictly construed this statute of limitations, recognizing that such a statute relinquishes the United States’ sovereign immunity and therefore is considered jurisdictional and not subject to extensions. See Starkey v. United States (W.D. Ark. 1986), 635 F.Supp. 1007, 1009; Wyker v. Willingham (N.D. Ala. 1944), 55 F. Supp. 105, 106. A notice of the tax deficiency was sent to the Beckmans by certified mail on May 6, 1976. The two year statute of limitations bars the Beckmans from now bringing an administrative suit for a refund of taxes even if they chose, after over ten years, to seek the proper venue to bring their complaint. In the earlier federal cases, those courts dismissed the Beckmans’ suits because they had not first sought administrative relief, so that the federal courts had no jurisdiction. Whatever effect these federal cases may have, if any, as to res judicata, it is clear that the action in the state district court is bound by the statute of limitations. Accordingly, by taking judicial notice of 26 U.S.C. § 6532(a), we determine to affirm the District Court’s order quieting title to the property in question.

The Beckmans do not present any facts nor do they offer any legitimate contentions as to why this Court should not affirm the District Court’s order. We therefore affirm the District Court’s order granting Getter’s motion for partial summary judgment quieting title to the property in question, ejecting the Beckmans from the property, and granting other such relief as requested.

The second issue raised on appeal is whether the Beckmans are entitled to a jury trial in a quiet title action.

The Beckmans assert that the District Court violated their Seventh Amendment rights by not granting them a jury trial in this quiet title action. We disagree. In McGuiness v. Maynard (1983), 202 Mont. 484, 658 P.2d 1104, this Court held that actions to quiet title are actions in equity. In equity actions, a district court may impanel an advisory jury but is not required to do so. McGuiness, 202 Mont. at 490, 658 P.2d at 1107. Therefore, contrary to what the Beckmans argue, they are not entitled to a trial by jury in this action.

Affirmed.

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


source: Caselaw Access Project

author: MR. JUSTICE SHEEHY

license: Public Domain

text:
    JONATHAN B. SPRINKLE, Plaintiff, v. BURLINGTON NORTHERN RAILROAD COMPANY, Defendant and Third Party-Plaintiff, v. THE TIRE GUYS, d/b/a Tire-Rama, Third-Party Defendant.
    No. 88-485.
    Submitted Feb. 7, 1989.
    Decided March 7, 1989.
    769 P.2d 1261.
    Charles C. Dearden argued, Murphy, Robinson, Heckathorn & Phillips, Kalispell, for plaintiff.
    Gary M. Zadick argued, Ugrin, Alexander, Zadick & Slovak, Great Falls, for defendant.
    Poore, Roth & Robinson, Brendon J. Rohan argued, Butte, amicus curiae, for Glen Rehbein Excavating.

      Gough, Shanahan, Johnson & Waterman, Ronald Waterman argued, Helena, amicus curiae, for Kraus Const, and Riverside Const.
   MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

Honorable Jack D. Shanstrom, United States Magistrate, United States District Court for the District of Montana has certified for our decision under Rule 44, Montana Rules of Appellate Procedure, a question of law as follows:

“Plaintiff commences a negligence action against defendant #1. Defendant #1 in turn joins defendant #2 seeking contribution. Prior to trial, defendant #1 settles with the plaintiff in return for a general release of all claims, including claims against defendant number 2. Can defendant #1 continue its action for contribution against defendant #2 under Montana law?”

In connection with the certified question, agreed facts, stipulated to by the parties and approved by the Magistrate have been submitted. They are as follows:

“Plaintiff, Jonathan B. Sprinkle, was injured while in the course and scope of his employment with the defendant, Burlington Northern Railroad Company (BN). He commenced this action against BN pursuant to the Federal Employers’ Liability Act (FELA) 45 U.S.C. §§ 51, et seq., alleging negligence on the part of BN. BN subsequently joined Tire Guys, d/b/a Tire-Rama, as a third party defendant alleging negligence and seeking contribution pursuant to § 27-1-703, MCA.

“Before trial, BN settled with Sprinkle and received a general release of all claims, including claims, if any, against Tire Guys. BN is pursuing its claim for contribution against Tire Guys. Tire Guys has moved for summary judgment contending that BN no longer has a cause of action against it.”

We determine in this case that under Montana law as it existed and is pertinent to these facts, BN has no right of contribution against Tire Guys. The answer to the certified question therefor is, “no.”

All parties agree, including amici curiae, that there was no right of contribution between joint tortfeasors at common law, and that in Montana, a right to contribution, if any exists, must be found in statutory law. Consolidated Freightways Corporation of Delaware v. Osier (1979), 185 Mont. 439, 605 P.2d 1076. We are required then to examine the provisions of § 27-1-703, MCA, as it existed at the time here pertinent to determine if statutory law provides such right of contribution to BN:

“Section 27-1-703. Multiple defendants jointly and severally liable right of contribution (1) Whenever the negligence of any party in any action is an issue, each party against whom recovery may be allowed is jointly and severally liable for the amount that may be awarded to the claimant but has the right of contribution from any other person whose negligence may have contributed as a proximate cause to the injury complained of.

“(2) On motion of any party against whom a claim is asserted for negligence resulting in death or injury to person or property, any other person whose negligence may have contributed as a proximate cause to the injury complained of may be joined as an additional party to the action. Whenever more than one person is found to have contributed as a proximate cause to the injury complained of, the trier of fact shall apportion the degree of fault among such persons. Contribution shall be proportional to the negligence of the parties against whom recovery is allowed. Nothing contained in this section shall make any party indispensable pursuant to Rule 19, M.R.Civ.P.

“(3) If for any reason all or part of the contribution from a party liable for contribution cannot be obtained, each of the other parties against whom recovery is allowed is liable to contribute a proportional part of the unpaid portion of the noncontributing party’s share and may obtain judgment in a pending or subsequent action for contribution from the noncontributing party. (Emphasis added.)”

The foregoing statute was interpreted by us in State ex rel. Deere and Company v. District Court (1986), [224 Mont. 384], 730 P.2d 396. In Deere the plaintiff Robert Campbell was injured when a bulldozer manufactured by Deere unexpectedly moved backward and struck Campbell. At the time of the accident, the Deere tractor was being operated by Jim Lott, an employee of Wade’s Backhoe Service. Campbell initially sued both Deere and Wade’s Backhoe. Before Campbell’s complaint was served upon Wade’s Backhoe, Deere settled with Campbell for $25,000. Campbell signed a release of all claims against Deere and agreed in the release to indemnify Deere for any amount it might thereafter be required to pay as a joint tortfeasor. Campbell reserved in the release his right to pursue an action against Wade’s Backhoe. Campbell then proceeded forward with his negligence action against Wade’s Backhoe.

Wade’s Backhoe filed a third party complaint against Deere seeking indemnity and contribution. Subsequently Deere filed a motion for summary judgment relying on the release signed by Campbell. The District Court denied Deere’s motion for summary judgment. Deere then sought and was granted a writ of supervisory control before this Court.

In resolving the contribution issue in favor of Deere we explained as follows;

“In Montana, there is but one statute on the subject, the amended § 27-1-703, MCA, and from it we determine that a joint tortfeasor who settles with a claimant before judgment on the claim is entered in a district court is not subject to claims for contribution or indemnity from the nonsettling joint tortfeasors against whom judgment may be rendered. Even though the amended section does give a sued joint tortfeasor the right to bring in other joint tortfeasors as defendants in order to insure contribution, and even though the section states that the trier of fact is to determine the degree of negligence among each of the joint tortfeasors, the right of contribution under the amended statute is “proportional to the negligence of the parties against whom recovery is allowed.” Clearly that statutory language excludes a party against whom recovery is not allowed, e.g., a tortfeasor who has previously settled.

“Consequently, under amended § 27-1-703, there is no right of contribution under Montana law in favor of a joint tortfeasor or tortfeasors against whom judgment for the plaintiff is entered from other joint tortfeasors who have settled with the plaintiff prior to judgment. (Emphasis added.)”

730 P.2d at 402.

In Deere, the nonsettling joint tortfeasor, against whom the tort action remained, sought contribution from a settling tortfeasor before entry of judgment. (In using the term “joint tortfeasor” we intend to include the term “concurrent tortfeasor”). In this case the settling tortfeasor has taken a full release from the plaintiff which completely settles plaintiff’s claim against all tortfeasors, but seeks contribution for the settlement before judgment from the nonsettling tortfeasor. Regardless of the change in positions here as between the joint tortfeasors, the principle announced in Deere remains the same. The plaintiff’s case has ended and the nonsettling tortfeasor is not one “against whom recovery is allowed.” As we said in Deere, supra, that statutory language excludes from any duty of contribution a party against whom recovery is not allowed.

We have been consistent in following the principle set out in Deere. In North v. Bunday (1987), [226] Mont. [247], 735 P.2d 270, we held that our comparative negligence statute applies only to “those defendants who remain in the lawsuit, and not other possible tortfeasors who may have settled with the plaintiff before judgment was entered in the lawsuit.” 735 P.2d at 275. In Kuhnke v. Fisher (1987), [227] Mont. [62], 740 P.2d 625 relying on Deere, we said that under the contribution statute “[t]he general rule is that a settling party does not fall under ‘parties against whom recovery is allowed,’ as once a party settles with a plaintiff, he is no longer required to contribute.” 740 P.2d at 629.

In Sevalstad v. Glaus (1987), [227] Mont. [117], 737 P.2d 1147; we said:

“In Deere, we held that ‘a joint tortfeasor who settles with a claimant before judgment on the claim is entered in a district court is not subject to claims for contribution or indemnity from the nonsettling joint tortfeasors against whom judgment may be rendered. (Citations omitted.)’ Deere is controlling, not withstanding § 27-1-703, MCA, which gives a joint tortfeasor the right to bring in other tortfeasors in order to insure contribution.

“Accordingly, Glaus has no right of contribution against Neifert, since Neifert was dismissed with prejudice from the action brought by Sevalstad.”

737 P.2d at 1150.

BN contends that the legislature, in adopting § 27-1-703, MCA, intended to provide a right of contribution that would be consonant with the Uniform Contribution Among Tortfeasors Act (UCATA), although Montana has never adopted that act. The provisions of UCATA are not helpful however to BN. For one thing § 2(a) of UCATA provides that the “relative degrees of fault cannot be considered.” In other words, under UCATA, the fault of the respective defendants is not compared, but the right of contribution is based upon per capita rather than pro rata fault. UCATA was first proposed before the general adoption by the several states of comparative negligence law in tort cases. As a result those states that adopted UCATA have had to amend their statutes to account for the problems that arise out of comparative negligence. The usual result is that the states have abandoned UCATA as having no effect when comparative negligence is the rule. See, e.g., Bartlett v. New Mexico Welding Supply Inc. (App.1982), 98 N.M. 152, 646 P.2d 579; cert.den. 98 N.M. 336, 648 P.2d 794 (1982). For that reason, BN’s reliance upon Coniaris v. Vail Associates, Inc. (1978), 196 Colo. 392, 586 P.2d 224 is not instructive because it is based on Colorado’s UCATA. Kennedy v. City of Sawyer (1980), 228 Kan. 439, 618 P.2d 788 is also not pertinent, because it relates to an action for implied indemnity. Unlike contribution the rights to indemnity in Montana are set out in our statutes. Section 28-11-301 et seq. MCA.

We therefore hold that since, under the facts submitted, a recovery by the plaintiff against Tire Guys is not possible, a right of contribution for BN under § 27-1-703, MCA, does not exist. We therefore answer the certified question “No.”

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


author: MR. JUSTICE HARRISON

text:
    DENNIS SCHAUB, Claimant and Appellant, v. VITA RICH DAIRY, Employer, and State Compensation Insurance Fund, Defendant and Respondent.
    No. 88-462.
    Submitted on Briefs Feb. 9, 1989.
    Decided March 9, 1989.
    770 P.2d 522.
    John B. Whiston, Rossbach & Whiston, Missoula, for claimant and appellant.
    R. Scott Currey, Agency Legal Services Bureau, Helena, for defendant and respondent.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

This is an appeal from an order of the Workers’ Compensation Court, adopting the findings and conclusions of Hearing Examiner Robert Campbell. We reverse.

The claimant, Dennis Schaub, was employed by Vita-Rich Dairy in Havre, Montana. On October 15, 1984, claimant suffered an injury when a bag of flour fell from the stack he was unloading, pulling his arm and causing a burning sensation. Claimant immediately reported the accident to his shift supervisor, who indicated he would complete the necessary paperwork for filing a compensation claim. Despite numerous reminders from the claimant and the supervisor’s corresponding assurances, the claim for compensation was not filed.

The same day of the injury, claimant sought medical attention from Dr. J.E. Elliot. In turn, Dr. Elliot referred him to Mr. R. Don Tigny for physical therapy. Mr. Tigny noted claimant’s related “onset of pain in the neck and lower back area when lifting sacks of flour.” Claimant testified that as a result of the physical therapy, he experienced only minor pain and soreness for the next four months. However, claimant’s condition deteriorated after a few months, and he began to experience problems with his shoulder, neck and severe headaches.

In May, 1985, less than eight months after the injury, Mrs. Schaub contacted Ardele Kulbeck, the owner of Vita-Rich Dairy, to inquire whether the medical bills and prescriptions would be paid by workers’ compensation. Mrs. Kulbeck replied that the injury was not compensable. In November, 1985, Mrs. Kulbeck received a letter from the Division of Workers’ Compensation, advising her that the Division had received notice of a possible injury to claimant dated October 15,1984, and requesting she file an Employer’s First Report of Injury. The letter resulted from the filing of a medical bill by a health care provider. In response, Mrs. Kulbeck stated that the injury was not job related.

On April 21, 1986, claimant filed a claim for compensation. The Division rejected a requested waiver of the twelve month statute of limitations and denied compensation. At trial, Hearing Examiner Robert Campbell found the claimant barred from benefits by his failure to file a claim for compensation within twelve months of his injury. In addition, claimant did not meet the requirements of equitable estoppel necessary to waive the twelve month filing requirement. On August 2, 1988, the Workers’ Compensation Court adopted the Hearing Examiner’s findings and conclusions and entered judgment.

The sole issue on appeal is whether the doctrine of equitable estoppel should be applied to estop the defendant from asserting a statute of limitations defense. We believe the doctrine is applicable in the instant case.

Initially, we note the standard of review applied in workers’ compensation matters. As to questions of fact, we limit our examination to the record to determine if substantial credible evidence exists to support the court’s findings. Wassberg v. Anaconda Copper Co. (1985), 215 Mont. 309, 697 P.2d 909; Weigand v. Anderson-Meyer Drilling Co. (Mont. 1988), 758 P.2d 260, 45 St.Rep. 1138. However, if the issue is one of law, we are not so restricted in our review. “In such a case, the appropriate standard of review is simply whether the lower court’s interpretation of the law is correct. We are not bound by the lower court’s conclusion and remain free to reach our own.” Wassberg, 697 P.2d at 912. The instant case deals with an issue of law. We accept the following relevant findings of fact made by the lower court:

“11. Claimant, with the aid of his employers, had previously filed four workers’ compensation claims between 1977 and 1984. (Depo. of .claimant at 20-26.)

“12. The procedure at Vita Rich Dairy directed the claimant to report any injury to his foreman (Dan Schaub), and then to the plant supervisor (Rich Semans). Mr. Semans would go to the office and have the paperwork (Form 37 Employer’s First Report — Form 54 Claim for Compensation) prepared and brought to the claimant for his signature. (Depo. of claimant at 24.)

“13. The morning of the October 15, 1984 injury, the claimant testified that he notified his foreman (Dan Schaub) of the injury and was told to report it to plant superintendent (Rich Semans) also. (Depo. of claimant at 27.)

“14. Claimant reported the injury to Mr. Semans in the lunchroom that morning and was told, “OK, I’ll take care of it.” (Id.) Fellow employee (Kevin Christiansen) was in the lunchroom at the time and testified at the trial that he did hear the claimant tell Mr. Se-mans about the injury he had received that shift. (Trans, at 33, 36.) Mr. Christiansen denied telling Rich Semans earlier that he had no recollection of claimant’s statement to Mr. Semans. (Trans, at 36, 74.)

“15. Within three weeks, the claimant asked Mr. Semans three times if “it has been taken care of’ and his responses went from “I’ll take care of it,” to a sarcastic, “No, but I’ll do it. I’ll take care of it.” (Id. at 28.)

“16. Rich Semans testified by deposition and at trial that he had no recollection of a lunchroom conversation or reminders from the claimant to complete a claim for his injury in October, 1984. (Depo. of R.L. Semans at 22; Trans. at 77-78.)”

We disagree with the lower court’s application of the facts to the law. From our review, these facts speak of estoppel.

Section 39-71-601, MCA (1985), provides in pertinent part:

“Statute of limitations on presentment of claim waiver. (1) In case of personal injury or death, all claims shall be forever barred unless presented in writing to the employer, the insurer, or the division, as the case may be, within 12 months from the date of the happening of the accident, either by the claimant or by someone legally authorized to act for him in his behalf . . .”

While the provision is mandatory, it is not without exception. Through the years, this Court developed and continues to recognize an estoppel exception. See, Lindblom v. Employers’ Liability Assurance Corp. (1930), 88 Mont. 488, 295 P. 1007; Levo v. General-Shea-Morrison (1955), 128 Mont. 570, 280 P.2d 1086; Frost v. Anaconda Co. (1982), 198 Mont. 216, 645 P.2d 419. While certainly not a novel theory, Dean Larson explained its application in his oft-quoted treatise:

“A familiar defense to assertion of the bar of late claim is the plea that the lateness was the result of the employer’s assurances, misrepresentations, negligence or even deliberate deceptions . . .

“The commonest type of case is that in which a claimant. . . contends that he was lulled into a sense of security by statements of employer or carrier representatives that ‘he will be taken care of or that his claim has been filed for him or that a claim will not be necessary because he would be paid compensation benefits in any event.”

3A Larson, Workmen’s Compensation Law, § 78.45. This Court has seen fit to apply the doctrine only when the employer has taken some positive, affirmative action which either prevents the claimant from making a claim or leads him to reasonably believe he need not file such a claim. Ricks v. Teslow Consolidated (1973), 162 Mont. 469, 481, 512 P.2d 1304, 1311.

In Lindblom, we set forth the elements necessary to find an estoppel:

“1. There must be conduct — acts, language, or silence — amounting to a representation or a concealment of material facts. 2. These facts must be known to the party estopped at the time of his said conduct, or at least the circumstances must be such that knowledge of them is necessarily imputed to him. 3. The truth concerning these facts must be unknown to the other party claiming the benefit of the estoppel, at the time when it was acted upon by him. 4. The conduct must be done with the intention, or at least with the expectation, that it will be acted upon by the other party, or under such circumstances that it is both natural and probable that it will be so acted upon ... 5. The conduct must be relied upon by the other party, and, thus, relying, he must be led to act upon it. 6. He must in fact act upon it in such a manner as to change his position for the worse; in other words, he must so act that he would suffer a loss if he were compelled to surrender or forego or alter what he has done by reason of the first party being permitted to repudiate his conduct and to assert rights inconsistent with it.”

Lindblom, 295 P. at 1009.

Relying on the employer’s own policy, claimant gave proper notice to the supervisor. With the supervisor’s repeated assurances, claimant reasonably thought his claim would be promptly filed. This belief is aptly supported by the fact that on each of the four prior industrial accidents, the employer filed all the necessary papers to the Workers’ Compensation Division, including the Employer’s First Report of Injury and claimant’s Claim for Compensation. This fact remained undisputed throughout the testimony. Clearly, elements one, two and three of the Lindblom test were satisfied. Because the procedure was well established among both employees and management, it appears more than probable that the claimant would rely to his detriment upon his supervisor’s repeated assurances. Indeed, the claimant did not file a claim and was thereafter denied compensation. The final three criteria are met.

The order of the Workers’ Compensation Court adopting the findings and conclusions of Hearing Examiner Robert Campbell is hereby reversed and remanded for further proceedings consistent with this opinion.

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


author: MR. JUSTICE McDONOUGH

text:
    PHILLIP R. MORROW, INC., and Phillip Morrow, Plaintiffs and Appellants, v. FBS INSURANCE MONTANA — HOINESS LABAR, INC., a Montana corporation, Defendant and Respondent.
    No. 88-457.
    Submitted on Briefs Jan. 12, 1989.
    Decided March 9, 1989.
    Rehearing Denied April 3, 1989.
    770 P.2d 859.

      Holland & Hart, James M Ragain and Kyle Anne Gray, Billings, for plaintiffs and appellants.
    Gerald B. Murphy and T. Thomas Singer, Billings, for defendant and respondent.
   MR. JUSTICE McDONOUGH

delivered the Opinion of the Court.

This action from the Thirteenth Judicial District, Yellowstone County, for intentional interference with prospective economic advantage and intentional infliction of emotional distress, is before this Court for the second time. The first appeal involved the District Court’s decision to grant the motion for summary judgment made by respondent FBS Insurance Montana-Hoiness Labar, Inc., (FBS). We reversed. Morrow v. FBS Insurance (Mont. 1988), [230 Mont. 262,] 749 P.2d 1073, 45 St.Rep. 188. This appeal concerns the District Court’s decision to grant FBS’s motions for directed verdicts. The District Court decided that Morrow failed to present evidence to establish a prima facie case for either tort claim. We reverse on the interference claim and affirm on the claim for intentional infliction of emotional distress. The District Court further decided Morrow failed to come forward with facts sufficient to justify submission to the jury of his claim for punitive damages. We reverse the lower court on this issue.

The earlier opinion contains an extensive fact statement. Facts relevant to this appeal can be summarized as follows: Morrow, a plumbing contractor, alleged that FBS, acting as a bonding agent, prevented a general contractor from accepting his bid for a major mechanical subcontract. Fisher Construction, (Fisher), the general contractor involved, planned to submit a bid for the construction of a water plant. Morrow submitted a bid to Fisher for the mechanical portion of the job.

FBS had agreed to act as Fisher’s bonding agent, and requested at some point that Fisher back-bond major subcontractors. FBS would not agree to bond Morrow. Morrow was aware that FBS would not provide him a bond prior to Fisher’s award of the subcontract. Morrow told Fisher that a different bonding agent would bond his work for the subcontract.

Morrow and another subcontractor, Star Services, (Star), were the two low bidders for the mechanical subcontract. Fisher met with the two low bidders to discuss cost cutting measures to reduce Fisher’s bid on the entire project. Fisher awarded the subcontract to Star.

Morrow’s suit for interference alleged that personal dislike and prior financial dealings between Morrow and FBS motivated FBS to apply the pressure. FBS responded that it did not apply pressure on Fisher.

Dan Fisher and Alf Hulteng, agents of Fisher, testified that Star received the contract because they bid lower than Morrow. They also testified FBS did not pressure them to refuse Morrow’s bid. Morrow testified that Dan Fisher and Hulteng told him Star received the contract because FBS pressured Fisher.

Hulteng testified that it was possible he told Donna Morrow that FBS’s employee Kip Vanderverter disliked Morrows. Donna Morrow testified that Vanderverter once inquired whether FBS would be providing a bond for work done by Morrow in 1982. She stated that when she informed Vanderverter that Morrow would be bonding with another company, Vanderverter ended the conversation abruptly, and that she feared he had been angry.

A conflict in the evidence exists as to which subcontractor bid lowest. Hulteng testified that Morrow’s bid appeared lowest, but that he wanted to make sure Morrow had included costs for the clearwell piping portion of the job. Hulteng called Morrow and Morrow told Hulteng he included the clearwell costs in his bid. Hulteng testified that a scope sheet detailing the figures Morrow used to calculate his bid showed Morrow omitted the clearwell portion. Morrow testified his scope sheet did not show that he omitted the clearwell portion.

Morrow raises the following issues:

(1) Did the trial court err by granting FBS’s motion for a directed verdict on the claim of intentional interference with prospective economic advantage?

(2) Did the trial court err by granting FBS’s motion for a directed verdict on the claim of intentional infliction of emotional distress?

(3) Did the trial court err by ruling on the issue of punitive damages before submitting the case to the jury?

I.

The trial court concluded that the jury could consider testimony by Morrow that Hulteng and Dan Fisher told Morrow that FBS pressured Fisher only as impeachment evidence. Clearly, this is not the rule on prior inconsistent statements admitted under Rule 801(d)(1)(a) M.R.Evid.:

“Prior inconsistent statements traditionally have been admissible to impeach but not as substantive evidence. Under the rule they are substantive evidence.”

Commission Comments, Rule 801(d)(1)(a), M.R.Evid. This Court has previously agreed with the Commission on this point. State v. Fitzpatrick (1980), 186 Mont. 187, 606 P.2d 1343.

FBS argues that the District Court should be affirmed on other grounds. First, FBS argues that the trial court correctly distinguished Fitzpatrick because Morrow’s statement contains two hearsay declarations. Therefore, according to FBS, the trial court correctly excluded the testimony because the second statement does not come under any exception to the hearsay rule. We agree that Morrow’s statement arguably contains two statements. The testimony could be characterized as “Dan Fisher told me Kip Vanderverter told him, ‘don’t do business with Morrow’ ”. Under similar circumstances, this Court has held such statements to come under the proscriptions of Rule 805. The rule requires that each statement fall under an exception to the general prohibition of proof by hearsay. State v. Martinez (1980), 188 Mont. 271, 613 P.2d 974.

We disagree, however, that Rule 805 excludes the testimony. The trial court should have admitted the second statement as non-hearsay under Rule 801(c), M.R.Evid., because the statement constitutes a “verbal act”, in the sense that it goes to prove the operative facts of the alleged tort, i.e., pressuring Fisher. Weinstein comments on statements admitted under the verbal act doctrine as non-hearsay under Rule 801(c), as follows:

“Although Morgan objected that the phrase ‘verbal act . . . as commonly used, is less vague than res gestae only because it is couched in English, instead of Latin,’ commentators and courts today appear united in limiting the phrase to one particular aspect of nonhearsay utterances. It is applied, when as in the case of the defamation examples above, the utterance is an operative fact which gives rise to legal consequences.

“For instance, in Creaghe v. Iowa Home Mutual Casualty Co. [323 F.2d 981 (10th Cir. 1963)], plaintiff, who had recovered a judgment as yet unsatisfied against one Osborn in an earlier action stemming from an automobile accident, now brought an action against Osborn’s alleged insurer at the time of the accident. The insurer asserted that the policy had been canceled shortly before the accident. Its agent (W) testified to statements by Osborn (D) requesting cancellation. Plaintiff objected that this testimony was hearsay. The court disagreed: ‘The hearsay rule does not exclude relevant testimony as to what the contracting parties said with respect to the making or the terms of an oral agreement. The presence or absence of such words and statements of themselves are part of the issues in the case. This use does not require a reliance by the jury or the judge upon the competency of the person who originally made the statements for the truth of their content . . .”

4 J. Weinstein, M. Berger, Weinstein’s Evidence ¶ 801(c) [01] at 801-71-72 (1988) (Emphasis added.). An approximation of the application of this rule in a business interference claim may be found in Atlantic Building Systems v. Atlantic States Construction (1984), 172 Ga.App. 148, 322 S.E.2d 311. In Atlantic Building Systems, the plaintiff allegedly threatened to forgo paying a debt owed to a third party if the third party sold goods to the defendant. The defendant’s counterclaim alleged the threats constituted tortious interference. An employee of the third party testified to the declarations constituting the threats. The appeals court affirmed the decision to allow the testimony because the defendant introduced the declarations to prove its inability to purchase goods from the third party. The court relied on Georgia’s res gestae statute for authority in admitting the declarations. Atlantic Building Systems, 322 S.E.2d at 313.

Montana law requires that statements admitted under the res gestae rule be made under circumstances where reflection and fabrication are unlikely. State v. Collins (1978), 178 Mont. 36, 582 P.2d 1179. The statement must occur at the time the excitement of the circumstances motivated the utterance. State v. Fairburn (1959), 135 Mont. 449, 340 P.2d 157. The statements here do not meet these tests.

However, where the issue is the existence of statements, not the truth of the matters asserted within them, Montana recognizes the verbal act doctrine. Collins, 582 P.2d at 1183. Under the verbal act doctrine in Montana, statements may be admitted “for the purpose of establishing the fact that the words had been said by defendant.” Collins, 582 P.2d at 1183. Threats may constitute verbal acts. United States v. Stratton (2nd Cir. 1985), 779 F.2d 820, 830. The second set of statements in Morrow’s testimony go to proving the existence of statements made by Vanderverter. The existence of the statements constitutes the operative fact of this particular action. They are admissible to prove the existence of acts by Vanderverter to pressure Dan Fisher and Hulteng, not for the truth of matters asserted within them. See 6 J. Wigmore, Wigmore on Evidence § 1774 (Chadbourn Rev. 1976) (citing Caplan v. Caplan (1928), 83 N.H. 318, 142 A. 121, 124); and see Tocco v. Great Falls (Mont. 1986), [220 Mont. 221,] 714 P.2d 160, 43 St.Rep. 310. Thus, the statements may be properly admitted as non-hearsay evidence under Rule 801(c), M.R.Evid.

The lower court also relied on Rule 403, M.R.Evid., to exclude consideration of Morrow’s testimony ruling that the second hand nature of the testimony would mislead the jury, cause confusion, and result in unfair prejudice. The lower court held that these factors outweighed the probative value of the testimony.

Rule 403, M.R.Evid., allows an objection to admission of confusing and misleading evidence. Trial courts must balance the probative value of evidence against the possibility that the evidence will confuse or mislead the jury. Here, Morrow’s testimony is crucial to his case, therefore its probative value, for the purpose of applying Rule 403, M.R.Evid, is high. Wigmore comments that exclusion for confusion is an “extreme measure” not properly used:

“unless either the evidential material was necessarily and thoroughly objectionable or else was of minor utility and could be easily sacrificed; [moreover] nor should the exclusion be an absolute one, unless a conditional or temporary exclusion would not suffice for the purpose.”

6 J. Wigmore, Wigmore on Evidence § 1864 (Chadbourn Rev. 1976). The evidence here is in no sense thoroughly objectionable and its utility to Morrow is great. Therefore, it was not properly excludable under Rule 403, M.R.Evid.

The lower court also relied on Rule 602, M.R.Evid., to exclude Morrow’s testimony. The lower court apparently reasoned that Morrow had no personal knowledge of the matters he testified to in connection with the statements made by Dan Fisher and Hulteng. Rule 602, M.R.Evid., requires witnesses to have personal knowledge of matters embraced within their testimony. Morrow contends that the lower court erred because Rule 602:

“is subject to the hearsay rule. If a witness is testifying to what he heard he may do so unless what he heard is excluded under the hearsay rules of Article VIII. The witness’ testimony may even contain hearsay within hearsay. See Rule 805. There is no inconsistency between Rule 602 and the hearsay rules since the ‘matter’ he is testifying to is what he heard rather than the event described by the hearsay declarant.”

3 J. Weinstein & M. Berger, Weinstein’s Evidence ¶ 602 [01] at 602-04. On this point the Commission on Evidence agrees:

“The exceptions stated in Section 93-401-2 [superseded], opinions and hearsay, are intended to apply to this rule.”

Commission Comments, Rule 602, M.R.Evid. The Court in Stratton explained the rule in the context of statements alleged to be hearsay within hearsay:

“[A]ppellants misconceive the nature of the personal knowledge requirement, see Fed.R.Evid. 602, in the hearsay context. When A testifies that B told him of an event, A usually has personal knowledge only of B’s report. It is B who has personal knowledge of the event. Thus, the hearsay rules require that the declarant, B in our example, have personal knowledge of the events recounted, not that the witness have such personal knowledge. See United States v. Lang, 589 F.2d 92, 98 (2d Cir. 1978). Thus, Farber could have testified to Stratton’s report of the threats because the threats were within the personal knowledge of Stratton. Nor is there a hearsay within hearsay problem. Stratton’s report of threats to Farber, his chief assistant, is not hearsay because it is a statement of a co-conspirator in furtherance of the conspiracy, . . .”

Stratton, 779 F.2d at 829-30. We hold that the analysis from Stratton provides the correct holding on the interaction of the hearsay rules with the personal knowledge requirement as applied to the facts of this case. Thus, Rule 602, M.R.Evid., does not operate to exclude Morrow’s testimony.

The lower court also held that Rule 701, M.R.Evid., mandated exclusion of Morrow’s testimony. Rule 701 requires that opinions and inferences from the testimony of lay witnesses be rationally based on the witnesses’ perceptions, and that the opinions and inferences further a clear understanding of the witnesses’ testimony or the determination of the facts at issue. Rule 701, M.R.Evid.

Morrow argues that Rule 701 does not apply because Morrow’s testimony contains no opinions. FBS responds that the opinion at issue is whether acts of FBS constituted pressure on Dan Fisher or Hulteng to avoid awarding the subcontract to Morrow. FBS also contends that it is impossible to ascertain who of the witnesses formed the opinion that pressure existed.

Testimony in the record reveals that Dan Fisher and Hulteng had opinions as to what is meant when someone is “pressuring” another to do something in a particular manner. They also testified that FBS exerted no pressure to prevent hiring Morrow. These perceptions, as well as the perception introduced through Morrow’s testimony on the presence of pressure, may he properly admitted as questions concerning “various mental and moral aspects of humanity, such as disposition and temper, anger, fear, excitement, intoxication, veracity, general character, and particular phases of character, and other conditions and things, both moral and physical, too numerous to mention.” Commission Comments, Rule 701, M.R.Evid. (quoting State v. Trueman (1906), 34 Mont. 249, 85 P. 1024). Thus, no issue exists here under Rule 701, M.R.Evid.

The District Court also concluded that even if Morrow’s evidence were admissible, no prima facie case existed because Morrow failed to present evidence that FBS improperly interfered with selection of the subcontractor. Morrow argues the lower court erred because evidence demonstrated that Vanderverter pressured Fisher because he disliked Morrow. Morrow also argues that justification for interference must be pleaded under Rule 8(c) , M.R.Civ.P., as an affirmative defense citing Phillips v. Montana Education Association (1980), 187 Mont. 419, 610 P.2d 154.

In Phillips, plaintiff claimed defendant induced breach of an existing contract. Phillips, 610 P.2d at 156. This Court, in analyzing the tort, stated:

“Generally, an intentional interference with the existing contractual relations of another is prima facie sufficient for liability and the burden of proving that it is ‘justified’ rests upon the defendant.” Phillips, 610 P.2d at 157. This view accords with Prosser who comments:

“The early cases, with their emphasis upon ‘malice’, regarded proof of an improper motive as an essential part of plaintiff’s cause of action. As the tort became more firmly established, there was a gradual shift of emphasis, until today it is generally agreed that an intentional interference with the existing contractual relations of another is prima facie sufficient for liability, and that the burden of proving it is ‘justified’ rests with the defendant.”

W. Prosser, Law of Torts § 129 at 942 (4th ed. 1971). However, in Montana, a showing that the defendant acted without right or justification is part of the plaintiff’s prima facie case in an action for intentional interference with prospective business advantage. Bolz v. Meyers (1982), 200 Mont. 286, 651 P.2d 606. Affirmative defenses generally concern the pleading of matter outside the plaintiffs prima facie case. 2A J. Moore, Moore’s Federal Practice § 8.27 (2d ed. 1982). Morrow’s complaint alleged intentional interference with prospective business advantage. FBS answered generally denying the allegation. A general denial puts every material allegation in dispute. Thus, no issue under Rule 8(c), M.R.Civ.P., exists.

In the first opinion we stated that evidence from discovery created a material fact question on whether FBS acted improperly in allegedly interfering with the subcontract. Morrow, 749 P.2d at 1076. Similarly here, the jury could find from the evidence introduced at trial that FBS’s alleged actions were motivated without right or justification. In addition to evidence showing that FBS may have a “legitimate” financial interest in forcing Fisher to select certain subcontractors, evidence indicated FBS may have been motivated to avenge for imagined wrongs in previous dealings. Evidence also inferred that the alleged pressure could have been fueled by Vanderverter’s personal dislike of Morrows. The jury may or may not consider this to be weak evidence that FBS acted without privilege or justification in allegedly interfering. However, in granting a motion for a directed verdict, the evidence must be viewed in a light most favorable to the party opposing the motion. Nicholson v. United Pacific Ins. Co. (Mont. 1985), [219 Mont. 32,] 710 P.2d 1342, 42 St.Rep. 1822. Viewing the evidence in a light most favorable to Morrow, we hold that the evidence supports a prima facie case of intentional interference with prospective business advantage.

II.

We agree with the District Court that Morrow failed to make out a prima facie case for intentional infliction of emotional distress. This Court has yet to recognize the tort in Montana. Frigon v. Morrison-Maierle, Inc. (Mont. 1988), [233 Mont. 113,] 760 P.2d 57, 45 St.Rep. 1344. In Frigon we affirmed the District Court’s decision that no material fact question existed on plaintiffs claim for intentional infliction of emotional distress because the defendant’s actions in denying her a raise failed to amount to conduct beyond all possible bounds of decency. Frigon, 760 P.2d at 64. Thus, while we have yet to decide under what facts we will recognize the tort, we have at least decided some situations where we will not. No facts here demonstrate extreme and outrageous conduct. Thus, we affirm the District Court’s decision that Morrow did not make out a prima facie case for intentional infliction of emotional distress, and dismissal of the claim is appropriate. First Bank Billings v. Clark (Mont. 1989), [236 Mont. 195,] 771 P.2d 84, 46 St. Rep. 291.

III.

Our decision to remand for a new trial raises the issue of whether the lower court properly concluded Morrow failed to present evidence sufficient to submit his claim for punitive damages to the jury. The applicable portion of § 27-1-221(5), MCA (1985), provides for punitive damages for oppression where a defendant:

“intentionally causes cruel and unjust hardship by

“(a) misuse or abuse of authority or power; or

“(b) taking advantage of some weakness, disability, or misfortune of another person.”

Morrow argues that FBS knew that Morrow needed the subcontract to avoid financial ruin, and that the jury could find FBS intentionally took advantage of Morrow’s financial disability to cause cruel and unjust hardship on Morrow. We agree that under the above subsection Morrow presented sufficient evidence to go to the jury on this issue. We reverse for a new trial in accordance with this opinion.

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


text:
    DEPARTMENT OF REVENUE, State of Montana, Appellant, v. ESTATE OF MICHAEL D. DWYER, Respondent.
    No. 88-373.
    Submitted Feb. 9, 1989.
    Decided March 13, 1989.
    771 P.2d 93.
    R. Bruce McGinnis, Dept, of Revenue, Legal Affairs, Helena, for appellant.
    Robert T. O’Leary, Butte, for respondent.
   MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

We decide in this case that when the owner of real or personal property in Montana creates a joint tenancy in such property between himself and another or others, more than three years before his death, the tax levied by our state on the transfer of his joint tenancy interest upon his death is measured by his interest in the joint tenancy, one-half or other proper fraction under the written instrument creating the same. Section 72-16-303(2), MCA.

Thus, in this appeal, we affirm a like holding of the District Court of the Second Judicial District, Silver Bow County.

The facts are agreed to by the parties. Michael D. Dwyer was a resident of Butte, Montana, at the time of his death on February 5, 1985. His death terminated certain joint tenancies in real and personal property with David F. Cunningham, who is the deceased’s nephew, and of course, not a surviving spouse nor issue of the deceased.

The deceased was the sole owner of real property which he conveyed into joint tenancy with Cunningham and himself by a grant deed on November 25, 1981, which was recorded December 29, 1981. The deed created a joint tenancy between the deceased and Cunningham with the right of survivorship. Cunningham neither paid consideration in monies nor money’s worth for his interest in the property, nor made any contribution toward the acquisition of the property.

On October 30, 1979, out of funds completely and solely owned by the deceased, two joint bank accounts with the right of survivorship were created at Prudential Savings and Loan Association of Butte, Montana. The deceased and Cunningham were both authorized signators on the accounts. Cunningham did not deposit or withdraw any of the funds in the accounts prior to the time of Mr. Dwyer’s death.

Out of funds completely and solely owned by the deceased, on October 31, 1979, two joint bank accounts with right of survivorship were created at the Miner’s Bank of Montana, Butte, Montana. The deceased and Cunningham were both signators on the accounts. Cunningham did not deposit or withdraw any funds on the accounts prior to the time of Mr. Dwyer’s death.

David Cunningham, as personal representative of the Dwyer estate, filed a request for determination of state inheritance tax on September 16, 1985. The application showed a tax due in the amount of $1,917.00. The amount was calculated upon 50% of the value of the joint tenancy estate. The Department of Revenue issued a certificate showing a tax due in the amount of $6,458.04 based on the whole value of the estate. The personal representative paid the tax to prevent the accrual of interest, and to receive the 5% discount.

Cunningham sued in the District Court, Second Judicial District, Silver Bow County, for a proper determination of the inheritance tax due and payable upon the joint tenancy estate. The District Court ordered the Department of Revenue to recompute the amount of inheritance tax due from the surviving joint tenant, David F. Cunningham, based upon one-half of the value of the property passing on the deceased’s death. The Department appealed to this Court.

On appeal, the Department contends that the District Court erred as a matter of law in holding that § 72-16-303, MCA, does not provide for the taxation of the total value of the property passing to the surviving joint tenant when the joint tenancy property was not originally owned by the surviving joint tenant.

The legislature amended § 72-16-303, MCA, in 1977, and in 1979. The Department contends that prior to 1977, the inheritance tax on a joint tenancy interest passing to a surviving joint owner was one-half or other proper fraction of the joint property, unless the surviving joint tenant could show contribution. However, in 1977, the legislature limited the contribution rule to the circumstance when a surviving joint tenant was the spouse of a deceased, and in 1979, when the joint tenancy included issue of the decedent. Because the legislature added the following language to § 72-16-303, the Department contends the legislature changed the tax treatment for non-spouses and non-issue of the deceased from being taxed on one-half of the property to being taxed on the full value of the property unless it can be shown that the surviving joint tenant originally owned the property:

“. . . In all other cases, the full value of the property shall be taxable, except the portion thereof that originally belonged to the survivor and as to which the decedent had made no contribution; if the decedent had made a contribution to the ownership of such property, the amount of the contribution shall be taxable.”

The Department contends that the statute, as written, is unambiguous, but if ambiguous, under the rule of executive interpretation of statutory provisions, any doubt as to the construction of the statute is to be resolved in favor of the Department because its regulations relating to this statute adopted after 1977 require a tax levied on the full value of joint tenancy property where the survivor made no contribution to the value of the joint tenancy property when it was created. A.R.M. 42.35.232 - 42.35.234. The Department relies on cases holding that the contemporaneous construction placed on a statute by the officers chargeable with the duty of administering it is entitled to great weight. State v. King Colony Ranch (1960), 137 Mont. 145, 350 P.2d 841; State ex rel. Ebel v. Schye (1956), 130 Mont. 537, 305 P.2d 350; State ex rel. Erwin v. Warren (1950), 124 Mont. 378, 224 P.2d 142; In In re Wilson’s Estate (1936), 102 Mont. 178, 56 P.2d 733, 105 A.L.R. 367.

We set out in full the pertinent portions of § 72-16-301, MCA, as to the levy of the tax:

“72-16-301. Taxable transfers generally contemplation of death. A tax shall be and is hereby imposed upon any transfer of property . . . except as hereinafter provided:

“(3) when the transfer is of property made by a resident or by a nonresident when such nonresident’s property is within the state or within its jurisdiction by deed, grant, bargain, sale or gift made in contemplation of the death of grantor, vendor, or donor, or intended to take effect in possession or enjoyment at or after such death. Every transfer by deed, grant, bargain, sale or gift made within 3 years prior to the death of the grantor, vendor, or donor of a material part of his estate or in the nature of a final disposition or distribution thereof and without a fair consideration and money or money’s worth shall, unless shown to the contrary, be deemed to have been made in contemplation of death within the meaning of this section, but no such transfer by deed, grant, bargain, sale or gift made before such 3-year period shall be treated as having been made in contemplation of death . . .”

The following is the present language of § 72-16-303, with the 1977 amendment enclosed in parentheses and the 1979 amendment enclosed in brackets:

“Section 72-16-303, MCA. Joint estates transfer by right of survivorship taxable. (1) Whenever any property, however acquired, real or personal, tangible or intangible, including government bonds of the United States, is inscribed in co-ownership form, held by two or more persons in joint tenancy or as tenants by the entirety, or is deposited in any bank or other depository in the joint names of two or more persons and payable to the survivor or survivors of them upon the death of one of them, the right of the survivor or survivors to the immediate possession or ownership is a taxable transfer.

“(2) The tax is upon the transfer of decedent’s interest, one-half or other proper fraction, as evidenced by the written instrument creating the same, as though the property to which the transfer relates belonged to the joint tenants, tenants by the entirety, joint depositors, holders in co-ownership form, or persons, as tenants in common had been, for inheritance tax purposes, bequeathed or devised to the survivor or survivors by will, except such part thereof as may be shown to have originally belonged to the survivor and never to have belonged to the decedent when (the surviving joint tenant is a spouse) [or issue] of the decedent. In all other cases, the full value of the property shall be taxable, except the portion thereof that originally belonged to the survivor and as to which the decedent had made no contribution; if the decedent had made a contribution to the ownership of the property, the amount of the contribution shall be taxable.

“(3) This section shall not be construed to repeal or modify the provisions of 72-16-301(3). (Emphasis added.)”

In discussing the issues here, we ask the reader to assume that the discussion involves situations where the joint tenancies were created more than three years prior to the death of one of the joint tenants; that the decedent was the sole owner of the property at the time of the creation of each joint tenancy; and that no contribution to the property of the joint tenancy has been made by the surviving joint tenant.

The position of the Department and the effect of its regulations are that the full value of the property in the joint tenancies so created is taxable, irrespective of the language in § 72-16-301(3), MCA, that no such transfer made before such three year period shall be treated as having been made in contemplation of death. We cannot agree that such is the effect of the statutes involved, or was the intent of the legislature in making the amendments alluded to by the Department.

When a joint tenancy is created, whether in real or personal property or both, the joint interest is owned by the several persons in equal shares. Section 70-1-307, MCA. In the case of bank deposits held by joint tenants, however, the deposit, or any part thereof, may be paid by the bank to any of the persons named as joint tenants, without regard to equality of shares, and whether the other or others be living or not. Section 32-1-442, MCA. The bank is discharged by the receipt or acquittance of the person so paid.

When, during his lifetime, and at his death, the decedent and another or others, hold any estate property as joint tenants with the right of survivorship, §§ 70-20-105, -310, MCA, the interest of the decedents at the moment of his death passes to the survivor or survivors of the joint tenancy. The incidents of joint tenancy property at common law were a single estate in the property owned by two or more persons under one instrument or act of the parties, an equal right in all to share in the enjoyment of the property during their lives, and on the death of a joint tenant, descent of the property to the survivor or survivors. Hennigh v. Hennigh (1957), 131 Mont. 372, 309 P.2d 1022. The effect of our statutes which permits the creation of joint tenancies is to include all incidents of a joint tenancy estate at common law. First Westside National Bank of Great Falls v. Llera (1978), 176 Mont. 481, 580 P.2d 100.

On the death of a joint tenant, ownership of the joint tenancy property vests immediately in the survivor, so that the estate of a decedent does not include the joint tenancy property, nor is it subject to creditor’s claims for debts of a decedent. Montana’s tax statutes recognize this feature by providing especially for the determination of taxes on the termination of a joint tenancy by death where there is no other estate. Section 72-16-502, MCA, provides for a special procedure for tax purposes when a joint tenant dies leaving no property which requires the appointment of a personal representative.

Under Montana’s statutory law, a tax is imposed, subject always to exemptions and exceptions, upon the transfer by death of the person of any state property from a decedent to another by will or intestate laws. Section 72-16-301(1), (2), MCA. Without any argument, the transfer of the right to possession of the decedent’s property owned by him at his death is a taxable event. If, however, in his lifetime, the decedent within three years of his death has transferred ownership of his property in contemplation of his death, the full value of the property transferred is also taxable upon his death. Section 72-16-301(3), MCA. A transfer of ownership within three years of his death is deemed to be in contemplation of death, and thus the value thereof is fully taxable.

In the case before us, the joint tenancies were established by the decedent more than three years prior to his death. “No such transfer of ownership made before such three year period shall be treated as having been made in contemplation of death.” Section 72-16-301(3), MCA. Since there is a specific statutory direction in § 72-16-303(3), MCA, that the section shall not be construed to repeal or modify the provisions of § 72-16-301(3), the latter section must be given force and effect. The position of the Department robs that latter section of any force and effect.

We hold it is our plain duty when interpreting statutes relating to the same subject to give effect to all, if possible, consonant with the intent of the legislature. Section 1-2-101, MCA. Montana’s statutes do not provide a gift tax upon transfers of property made by a person during his lifetime except such gifts as are made in contemplation of death. The effect of the Department’s interpretation of the statutes is to impose a tax upon such transfers although not levied until the grantor’s or donor’s death, whether or not made in contemplation of death. We do not agree with the Department that under § 72-16-303(2), MCA, only wives and issue of the decedent may take advantage of the provisions of § 72-16-301(3), MCA, which excludes from taxation transfers not made in contemplation of death, or made more than three years before the death of the grantor. We hold in this case that one-half of the values of the joint tenancy estate only is taxable. The regulations of the Department which would require a contrary conclusion are inconsistent with statutory law, and thus have no effect. Section 2-4-305(6)(a), MCA.

Accordingly, we affirm the District Court.

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


author: MR. JUSTICE SHEEHY MR. JUSTICE GULBRANDSON,

text:
    RUTH M. COLE, and the Cole Ranch, Plaintiffs and Appellants, v. FLATHEAD COUNTY, a political subdivision of the State of Montana, et al., Defendants and Respondents.
    No. 88-407.
    Submitted on Briefs Dec 9. 1988.
    Decided March 13, 1989.
    771 P.2d 97.

      Patrick M. Springer, Kalispell, for plaintiffs and appellants.
    Ted 0. Lympus, Flathead County Atty., Jonathan B. Smith, Deputy County Atty., Kalispell, Samuel M. Warren, Worden, Thane & Haines, P.C., Missoula, for defendants and respondents.
   MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

Ruth M. Cole and the Cole Ranch appeal from an order of the District Court, Eleventh Judicial District, Flathead County, granting summary judgment against them on their claim against the county. The judgment was granted in part because the Coles had failed to file an answer brief opposing the motion within the time provided by Rule 2, Montana Uniform District Court Rules.

After the order for summary judgment was granted, Ruth M. Cole and the Cole Ranch (Coles) moved the District Court to reconsider its order and requested oral argument. The District Court denied the motion for reconsideration, relying in part on its local rule, which in effect denies oral argument on motions unless oral argument is specifically applied for with sufficient points to show the District Court that briefs alone are insufficient to advise it fully of the parties’ contentions.

This opinion treats of the interplay between Rule 56, M.R.Civ.P., Rule 2, Montana Uniform District Court Rules, and the local rule regarding oral argument. The issues for review are:

1. Whether the time provisions of Rule 2, Montana Uniform District Court Rules (MUDCR) are applicable to a motion for summary judgment under the provisions of Rule 56, M.R.Civ.P.;

2. Whether a party is entitled to rely upon the setting of a hearing for oral argument upon a motion for summary judgment; and,

3. Whether there is conflict between the Montana Uniform District Court Rules, the Montana Rules of Civil Procedure and the local Policies and Procedures of the Eleventh Judicial District Court, which relate to granting oral argument on motions before the District Court.

The facts of this appeal are primarily procedural and deal with the filing dates of the pleadings and the application by the District Court of the Uniform District Court Rules, its local policy and the Montana Rules of Civil Procedure.

The cases arises from the alleged tortious conduct by agents of Flathead County in connection with the criminal prosecution of the plaintiff, Ruth Cole, which resulted in a mistrial in the Flathead County Justice Court. The Flathead County Attorney chose not to retry the matter, and the charges were dismissed.

Motions for summary judgment were filed by the defendants on February 8, February 11, and February 19, 1988. These motions were granted on April 28, 1988, by the court, on the grounds that the plaintiffs had not filed a responsive brief to the motions within the ten days prescribed by Rule 2, MUDCR. On May 9, 1988, the plaintiffs filed a motion to set aside the order granting summary judgment to the defendants and requested oral argument. On June 6, 1988, the District Court denied the plaintiffs’ motion. Thereupon, this appeal followed.

I.

Are the time provisions of Rule 2, MUDCR, applicable to motions for summary judgment pursuant to Rule 56, M.R.Civ.P.?

The MUDCR became effective June 1, 1987. Rule 2, at issue in this case, is as follows:

“Rule 2. Motions.

“(a) Upon filing a motion or within five days thereafter, the moving party shall file a brief. The brief may be accompanied by appropriate supporting documents. Within ten days thereafter the adverse party shall file an answer brief which also may be accompanied by appropriate supporting documents. Within ten days thereafter, movant may file a reply brief or other appropriate responsive documents.

“(b) Failure to file briefs. Failure to file briefs may subject the motion to summary ruling. Failure to file a brief within five days by the moving party shall be deemed an admission that the motion is without merit. Failure to file an answer brief by the adverse party within ten days shall be deemed an admission that the motion is well taken. Reply briefs by movant are optional, and failure to file will not subject a motion to summary ruling.

“(c) Oral argument. The court may order oral argument sua sponte or upon application of a party.

“(d) When motion deemed submitted. Unless oral argument is ordered or unless the time is enlarged by the court, the motion is deemed submitted at the expiration of any of the applicable time limits set forth above without supporting briefs having been filed.

“If oral argument is ordered, the motion will be deemed submitted at the close of argument unless the court orders additional briefs, in which case the motion will be deemed submitted as of the date designated at the time for filing the final brief.

“(e) In the event of conflict, the Montana Rules of Civil Procedure shall control. Time computation shall be governed by Rule 6(a), M.R.Civ.P. (Emphasis added.)”

In this case, the defendants moved the court for summary judgment in their favor, pursuant to Rule 56(c), M.R.Civ.P. That rule is in accord with its federal counterpart, and with respect to subsequent procedures provides:

“Rule 56(c). Motion and proceedings thereon. The motion shall be served at least 10 days before the time fixed for the hearing. The adverse party prior to the day of hearing may serve opposing affidavits. The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. A summary judgment, interlocutory in character, may be rendered on the issue of liability alone although there is a genuine issue as to the amount of damages. (Emphasis added.)”

The purpose and effect in Montana of Rule 56, M.R.Civ.P. are well-settled. Its purpose is to dispose promptly of actions in which there is no genuine issue of fact. Silloway v. Jorgensen (1965), 146 Mont. 307, 406 P.2d 167. The formal issues presented by the pleadings are not controlling and the District Court must consider the evidentiary materials listed in Rule 56(c), and any other evidentiary matter to determine whether there exists a genuine issue of material fact. Hager v. Tandy (1965), 146 Mont. 531, 410 P.2d 447. Oral testimony at the hearing may properly be considered on motions for summary judgment. Citizens State Bank v. Duus (1969), 154 Mont. 18, 459 P.2d 696; Daniels v. Paddock (1965), 145 Mont. 207, 399 P.2d 740. If genuine issues of fact exist, an order deciding the fact issues on a motion for summary judgment is improper. Hull v. D. Irvin Transport (1984), 213 Mont. 75, 690 P.2d 414. We have held that a district court did not err by allowing defendants later to submit briefs and argue plaintiffs’ summary judgment motion when defendant’s counsel originally overlooked the motion. Todd v. Berner (1984), 214 Mont. 263, 693 P.2d 506.

Since the purpose of summary judgment is to encourage judicial economy by eliminating unnecessary trials, a grant of summary judgment is proper only where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. The movant has the burden of showing a complete absence of any genuine issue as to all facts considered material in light of the substantive principles that entitle the movant to a judgment as a matter of law, and all reasonable inferences that may be drawn from the offer of proof are to be drawn in favor of the opposing party. Cereck v. Albertsons, Inc. (1981), 195 Mont. 409, 637 P.2d 509.

Of course, when the record, as made by the movant, discloses no genuine issue as to any material fact, the burden then shifts to the party opposing the summary judgment motion to present evidence of a material and substantial nature raising a genuine issue of fact. Mayer Bros. v. Daniel Richard Jewelers, Inc. (Mont. 1986), [223 Mont. 397,] 726 P.2d 815, 43 St.Rep. 1821.

When all is said and done, the essential question for the District Court in deciding a motion for summary judgment either for the plaintiff or for the defendant is whether there exists a genuine issue of material fact. That inquiry does not admit of decision merely on a technical point, such as whether briefs have been filed on time.

We had a similar question before this Court, before the adoption of the MUDCR, in Krusemark v. Hansen (1980), 186 Mont. 174, 606 P.2d 1082. In that case, a local district court rule provided that if a reply brief had not been filed within a ten-day period, the motion was deemed well taken. Relying on the local rule, the District Court had granted summary judgment. On appeal, this Court said:

“Rule 56(c) contemplates that the adverse party can file opposing materials up to the day of the hearing. Since Rule 3 would deny this right to an adverse party who has not filed a timely brief, it cannot be applied to Rule 56 motions.

“Rule 3 is also inconsistent with the basic function of the trial court in reviewing motions for summary judgment. Rule 56 places the burden of proof on the moving party to establish the absence of any genuine issue of material fact. [Citing authority.] The court has a duty under Rule 56 to deny a motion for summary judgment when there is any doubt whether a factual question exists. [Citing authority.] Rule 3 undermines the court’s function to the extent that it deflects the court’s attention from considering whether factual disputes exist and directs it solely to the question of whether a reply brief has been filed within the ten day period permitted by Rule 3.” Krusemark, 606 P.2d at 1084.

The defendants in this case contend that Krusemark is not applicable because that case preceded the adoption of the MUDCR. However, the local rule considered in Krusemark is substantially the same as Rule 2, MUDCR, and the effect of application of Rule 2 is the same as the application of the local rule in Krusemark. Under Rule 2(e), MUDCR, in the event of conflict, the Montana Rules of Civil Procedure control. We hold therefore that the procedure to be followed on motions for summary judgment must conform to the provisions of Rule 56, M.R.Civ.P.

II.

We combine our discussion of the second and third issues raised by the plaintiffs, since both issues relate to oral argument and the necessity of a hearing in connection with a motion for summary judgment.

Rule 56(c) provides that when either a plaintiff or a defendant moves for summary judgment, “the motion shall be served at least ten dhys before the time fixed for the hearing.” Since, in this case, the last of the defendants’ motions for summary judgment was filed on February 29, 1988, and the District Court did not rule on the motions until April 28,1988, it is obvious that any party could have applied to the District Court for a hearing, although ordinarily the movant would undertake that responsibility. The parties, however, may have been deterred by the provisions of Policies and Procedures dated January 11, 1988, adopted by the presiding district judge. With respect to oral argument, that Policy stated:

“2. Oral argument. Although these rules (and our customs) have long permitted oral arguments, you will probably find it quite possible, and even surprisingly easy, to submit your arguments comprehensively and as persuasively as you can be through a brief, without the need to supplement the same in person, or to say again in open court what has been said well enough in your brief. Therefore, unless I am satisfied that oral argument would be beneficial (in which case I may call for it, sua sponte), my practice will be to discourage this occasionally wasteful use of the Court’s (and your) time, and to require full-fledged compliance with Rule 2(c) and (d), Uniform Rules. By “full-fledged,” I mean your application for leave to present oral argument must be couched in specific terms, to show me that briefs alone are insufficient to advise me fully of your client’s contentions and' all relevant points of law.”

The objective of Rule 2 of the foregoing local policy of the District Court is not unworthy. With respect to ordinary motions not involving Rule 56, the local policy undoubtedly serves to save the time of the court and to expedite decisions on motions. However, under Rule 56(c), a hearing is contemplated from which the district court will consider not so much legal arguments, but rather whether there exists genuine issues of material fact. Moreover, it is permissible under Rule 56 for the District Court to receive affidavits on the day of the hearing and to take oral evidence, as has been indicated above. In connection with oral argument on a Rule 56 motion under the federal counterpart, the Court of Appeals for the Ninth Circuit held in Dredge Corp. v. Penny (9th Cir. 1964), 338 F.2d 456, 461-462, as follows:

“Rule[s] 56(c), 78 and 83, read together, authorize district courts to provide by a rule that a party desiring oral argument on a motion for summary judgment must apply therefore, in the absence of which oral argument will be deemed to have been waived. Such a local rule was involved, and upheld, in Bagby v. United States [(8th Cir. 1952), 199 F.2d 233].”

In view of the language of Rule 56(c), and having in mind that the granting of such a motion disposes of the action on the merits, with prejudice, a district court may not, by rule or otherwise, preclude a party from requesting oral argument, nor deny such a request when made by a party opposing the motion unless the motion for summary judgment is denied. Even when a party is entitled to oral argument, as a general proposition there will be general circumstances when a court may properly terminate oral argument or even dispense with it and deem the right waived. 6 Moore’s Federal Practice, 56.145[1], at 56-193 (1988).

We hold, therefore, that unless the right to a hearing on a Rule 56 motion is specifically waived by all parties (and not waived simply by the failure to file briefs) either the movant or the adverse parties are entitled to a hearing under Rule 56 in the ordinary case. There may be an occasion when under the law and the facts adduced, the movant would be so clearly entitled as a matter of law to a summary judgment that a district court might by order dispense with the necessity of a hearing. That, however, is not the kind of order presented to us here.

In this case, the District Court made findings of fact in connection with its decision on summary judgment in which it “reviewed the record and the applicable law in a light most favorable to the plaintiffs (in the absence of their objection) . . . .” The District Court did conclude that by failing to file responsive briefs, the plaintiffs had admitted the defendants’ motions were well taken. Nowhere in the findings of fact or conclusions of law is there a statement that there is no genuine issue of material fact. Findings of fact and conclusions of law are unnecessary in decisions with respect to motions made under Rule 12, Rule 56 or any other motion except as provided in Rule 41(b), M.R.Civ.P. Eisemann v. Hagel (1971), 157 Mont. 295, 485 P.2d 703. A district court is required under Rule 52(a), M.R.Civ.P. in granting a motion under Rules 12 or 56 to specify the grounds therefore with sufficient particularity as to apprise the parties and the appellate court of the rationale underlying the ruling. This may be done in the body of the order or in an attached opinion. In that light, the findings here are insufficient.

Accordingly, the order granting summary judgment in favor of the defendants in this case is reversed and the cause is remanded for further proceedings.

MR. JUSTICES HARRISON, HUNT and McDONOUGH concur.

MR. JUSTICE GULBRANDSON,

dissenting.

Although I agree with most of the statements in the majority opinion regarding the use of Rule 56(c), M.R.Civ.P., I do not concur with the holding that, unless the right to a hearing on a Rule 56 motion has been specifically waived, either the movant or the adverse parties are entitled to a hearing.

In view of the long history of conforming the Montana Rules of Civil Procedure to the Federal Rules, both in enactment and in interpretation, I would look to the Federal practice and authorities for guidance in interpreting the interplay between Rule 2, M.U.D.C.R. and Rule 56(c), M.R.Civ.P.

Rule 2, M.U.D.C.R., for all practical purposes, has the same procedural effect as Rule 220-1 of the Rules of Procedure for the District of Montana. Rule 220-1 has been construed by the Federal Judges for the District of.Montana as not being inconsistent with Rule 56(c), F.R.Civ.P., and I would construe Rule 2, M.U.D.C.R., in the same manner.

Rule 2, M.U.D.C.R. , does not distinguish between the types of motions to which it applies, does not conflict with the provisions for the filing of affidavits, but does set a briefing schedule applicable to all motions and refers to time enlargement by the court.

In addressing concern whether a hearing is automatically triggered by the filing of a motion for summary judgment, the Ninth Circuit Court of Appeals in Dredge Corp. v. Penny, supra, held that “a district court may not, by rule or otherwise, preclude a party from requesting oral argument, nor deny such a request when made by a party opposing the motion unless the motion for summary judgment is denied” and further held that district courts may provide by rule that a party desiring oral argument must request the same or be deemed to have waived it. Although the Ninth Circuit Court prefers that oral argument be afforded on non-frivolous motions for summary judgment, Demarest v. United States (9th Cir. 1983), 718 F.2d 964, a Federal District Court’s failure to grant such hearing does not constitute error in the absence of prejudice. Fernhoff v. Tahoe Regional Planning Agency (9th Cir. 1986), 803 F.2d 979.

In my view, the presiding District Judge properly recognized that under Rule 56, the opposing party is not required to file an affidavit in opposition, or other material, and is still entitled to a denial of the motion for summary judgment where the materials on file are insufficient on their face or said materials demonstrate the existence of a genuine issue as to any material fact. Hamilton v. Keystone Tankship Corp. (9th Cir. 1976), 539 F.2d 684.

In my view, the District Judge did not apply Rule 2, M.U.D.C.R., and his local rule regarding oral argument, in a manner inconsistent with Rule 56, M.R.Civ.P.

The order appealed from states:

“This matter is before the Court on motions for summary judgment by several Defendants. The Defendants have all submitted briefs and supporting affidavits: Plaintiffs have wholly failed to respond or to request an extension of time in which to answer. Thus, pursuant to Rule 2, M.U.D.C.R., Plaintiffs are deemed to have admitted that the motions are well taken. The Court, having reviewed the record and the applicable law in a light most favorable to Plaintiffs (in the absence of their objection), now makes the following:” and thereafter is set forth detailed findings, perhaps not usual in summary judgment proceedings, but indicative of the thoroughness with which the District Judge considered all the material on file.

The findings as to defendants Omis Short and Tami Welch include the following:

“12. The Plaintiffs have raised no questions of material fact concerning their allegations against these Defendants.”

In addition, the District Judge, in ruling on plaintiff’s motion to set aside Findings, Conclusions, and Order, stated:

“Aside from Plaintiff’s tacit admission that the motions were well taken, the file, depositions, and Defendants’ motions for summary judgment failed to disclose any issues of material fact by which Plaintiff could sustain her cause of action.”

In view of the fact that plaintiff’s counsel made no response, for a period of two months, to the motion for summary judgment, I would affirm.


author: MR. CHIEF JUSTICE TURNAGE

text:
    DALE E. GUENTHER and Doris H. Guenther, Plaintiffs and Appellants, v. DONALD L. FINLEY and Pauline E. Finley, Defendants and Respondents.
    No. 88-433.
    Submitted on Briefs Feb. 9, 1989.
    Decided March 14, 1989.
    769 P.2d 717.
    Hedman, Hileman & Lacosta, Donald E. Hedman, Whitefish, for plaintiffs and appellants.
    Gary R. Christiansen, Kalispell, for defendants and respondents.
   MR. CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

The decision of the District Court of the Eleventh Judicial District was appealed by the plaintiffs Guenther from the jury verdict in favor of the defendants Finley denying the plaintiffs’ claim for trespass and damages. The Guenthers claim that the defendants’ dam caused water to back onto the property of the plaintiffs for a number of years, causing extensive damage to the land and destroying the habitability of plaintiffs’ home.

The issue is whether substantial credible evidence exists to support the jury verdict rendered in this case.

Plaintiffs bought .75 acre in 1962. Defendants purchased their property south of the plaintiffs’ property in July 1980. The two properties are adjacent to each other and divided by Elk Park Road, a Flathead County Road. Mooring Creek runs north to south through both properties. The county maintains a culvert which runs under the county road.

Baltrusch, an owner prior to the defendants Finley, constructed a dam on the property now owned by the defendants. The dam causes the water from Mooring Creek to back up onto defendants’ property.

Plaintiffs allege that the dam has caused the water to back onto their property upstream, causing a trespass. According to Guenthers, prior to the time that the dam was built on the Finleys’ property, the land owned by the Guenthers was appraised at $40,000 to $50,000 and was “the prettiest little place I ever saw.” Subsequently, though, the dam has caused flooding of the appellants’ land, creating swamp-like conditions and making the land and house completely uninhabitable. Some of the problems allegedly caused by the flooding are cattails that are out of control, problems with spiders and worms and mosquitoes, damage to the house from the proximity of the water, and a sewer-like smell.

Appellants contend that flooding occurred on their property in 1979, 1980, 1984, 1985, and 1986. In 1979 when the flooding occurred, Guenthers called the county complaining that the culvert was plugged with shale rock. The county cleaned out the culvert. In 1980, Guenther alleged that he called the owner of the property now owned by defendants, Baltrusch, to complain and the water problem thereafter disappeared. Appellants assumed that Baltrusch took some remedial action but did not follow up on their complaint and so do not really know.

In three of the next six years, appellants claim there was a flooding problem; however, they never went to the Finleys to speak with them. In 1985, the renter of the Guenther property had a problem with flooding and called the county to have the problem remedied. Not until April 8, 1986, did the Guenthers go directly to the Finleys, believing that the dam which had been in existence since 1980 could have been the cause of the flooding. At that time, Dale Guenther did not go to see defendants to discuss the issue but was found on the Finleys’ property by Donald Finley looking at the area near Elk Park Road. Upon confronting Guenther and his attorney, defendant was asked if the Finleys would buy the Guenthers’ property. Prior to this there had been no indication that .the spring flooding of Guenthers’ property was caused by the dam on the property owned by Finleys.

The dam, which was constructed in 1980, was not altered after the initial construction by Baltrusch. Nor were any changes or additions made by the Finleys.

The issue with which this Court is faced is whether there was substantial credible evidence from which the jury could make a proper determination in this case. We hold that there was such substantial credible evidence.

There is some, dispute as to what role the culvert played in the flooding of appellants’ property. The culvert is built off the ground. Respondents’ expert testified that the height of water on appellants’ land would have to reach a depth of 1.25 feet before it reached the bottom of the culvert allowing the water to drain. The culvert is eighteen inches in diameter. During the winter and spring the culvert easily dams with mud, muck, ice, gravel, shale, and silt. When the expert for the respondents observed the culvert, it was plugged to ten inches of the eighteen. In this respect, according to respondents, the culvert itself acts as a dam. Any water on the Guenthers’ property would have to reach the height of over 1.25 feet before it would drain from the property downstream to the Finleys’ property. Furthermore, the water level on the appellants’ property was .11 feet higher than on the respondents’ property when measurements were taken in 1986, making flooding of appellants’ property from respondents’ dam unlikely.

Appellants, on the other hand, contend that there is a difference of 2.45 feet between the top of the dam’s spillway and the bottom of the culvert. Naturally, therefore, any time that the water reaches the spillway, water will flood the appellants’ land by way of the culvert. In past years water has reached the spillway. Also, because the law of physics demands that “water seeks its own level,” the level of water on the Finleys’ property and the level of the water on the Guenthers’ property must be the same height. Therefore, any time that the water is dammed on the Finley property, raising the natural water level, the water is the same height on the Guenther property and the water is trapped on the Guenther property, creating a trespass.

The facts set forth by appellants, in their view, clearly show evidence of a trespass and damages. Restatement (Second) of Torts, § 158, properly sets out the elements of the tort of intentional trespass to real property:

“One is subject to liability to another for trespass, irrespective of whether he thereby causes harm to any legally protected interest of the other, if he intentionally (a) enters land in the possession of the other, or causes a thing or a third person to do so, or (b) remains on the land, or (c) fails to remove from the land a thing which he is under a duty to remove.”

We adopted Restatement § 158 in Branstetter v. Beaumont Supper Club, Inc. (Mont. 1986), [224 Mont. 20,] 727 P.2d 933, 43 St.Rep. 1981, relying also on the Restatement’s definition of “intent” “to denote that the actor desires to cause the consequences of his act, or that he believes that the consequences are substantially certain to result from it.” Branstetter, 727 P.2d at 935, 43 St.Rep. at 1983-1984, quoting Restatement (Second) of Torts, § 8A.

Because the dam was built before the Finleys purchased their property, it is clear that they did not intentionally cause any water to enter Guenthers’ land. Furthermore, the jury found that after reviewing the conflicting evidence, the Finleys were not liable for intentional trespass. Assuming arguendo that respondents caused the flooding of appellants’ land, there is still no showing that they recklessly or negligently caused the consequences which resulted in the flooding.

Restatement (Second) of Torts, § 165, states:

“One who recklessly or negligently, or as a result of an abnormally dangerous activity, enters land in the possession of another or causes a thing or third person so to enter is subject to liability to the possessor if, but only if, his presence or the presence of the thing or the third person upon the land causes harm to the land, to the possessor, or to a thing or a third person in whose security the possessor has a legally protected interest.”

The jury instruction adopted by the District Court was as follows:

“You are instructed that a person may be subject to liability for trespass if he enters land in the possession of the other, or causes a thing, such as water, to do so or fails to remove from the land a thing, such as water, which he is under a duty to remove.

“If you find that Defendants’ trespassed on Plaintiffs’ land then you must determine what damages, if any, have been sustained and award them an amount which will reasonably compensate them in accordance with these instructions.”

The foregoing instructions clearly discussed the Restatement application of reckless or negligent trespass.

After reviewing the evidence presented before them,' the jury found that there had been no trespass by the respondents and that consequently there were no damages. Upon motion by the appellants for a judgment NOV, the District Court denied the motion, relying on the findings of the jury.

While there may be some question whether the flooding of appellants’ land was caused by respondents, it is within the province of the jury to decide in whose favor the evidence lies. In the order of the District Court denying the motion for judgment NOV, Judge Erickson stated that the court was satisfied that the dam on the respondents’ property had the potential for flooding the appellants’ property if filled to the level of the spillway. However, the fact-finder found that there was no trespass here. Moreover, there was evidence that the prior flooding of appellants’ property may have occurred from the existence of blockage in the culvert. The jury decided that from the evidence offered they were not convinced that, the existence of respondents’ dam caused any damage to appellants.

In reviewing the judgment of the trier of fact, the standard of review is:

“where a fact issue or issues are presented before either a court sitting alone, or with a jury, and there is substantial evidence to support the findings of the court or the jury verdict, such findings or verdict are conclusive on appeal.”

Johnson v. St. Patrick’s Hospital (1968), 152 Mont. 300, 307, 448 P.2d 729, 732-733; Matter of Estate of Holm (1979), 179 Mont. 375, 588 P.2d 531; Big Sky Livestock, Inc. v. Herzog (1976), 171 Mont. 409, 558 P.2d 1107. There is substantial evidence here to support the jury verdict.

Affirmed.

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