author: JUSTICE McDONOUGH

text:
    KELLY DANIELS, individually and d/b/a A. ABLE TRADING COMPANY, Plaintiff and Respondent, v. JOHN DEAN, STEVE BOLINGER, HAROLD LAKE and MARY LAKE, Defendants and Appellants.
    No. 92-023.
    Submitted on briefs Apr. 30, 1992.
    Decided June 16, 1992.
    49 St.Rep. 535.
    253 Mont. 465.
    833 P.2d 1078.

      For Defendants and Appellants: John C. Schulte, Missoula.
    For Plaintiff and Respondent: T.K. Botsford, Missoula.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

This is an appeal from a judgment of the Fourth Judicial District, Missoula County. The District Court awarded Kelly Daniels (Daniels), $45,765.65 in compensatory and punitive damages and attorney fees for defendants’ breach of Daniels’ commercial lease; for mahcious and intentional defamation of Daniels; and for tortious and intentional interference with Daniels’ commercial lease. Judgment was entered jointly and severally against all defendants. Defendant John Dean (Dean) filed an appeal which was dismissed upon his own motion. Defendants Harold Lake and Mary Lake (Lakes) filed this separate appeal. We affirm in part and reverse in part.

The Lakes raise four issues for our review which shall be addressed as follows:

I. Did the District Court err by allowing the initial show cause hearing to be treated as a full and final trial on the issues?

II. Did the District Court err by finding Harold Lake and Mary Lake jointly and severally liable?

III. Did the District Court err by imposing punitive damages for defamation of Daniels and for the tortious interference with Daniels’ rights under the commercial lease?

IV. Did the District Court err by awarding Daniels free rent through September, 1993?

Kelly Daniels operates a second hand store in premises he leased from Ben Bematz. A written lease for the premises extended through September, 1993. In January, 1991, Steve Bolinger, John Dean and Harold Lake met with Bematz and Daniels to discuss the purchase of the property and Daniels’ lease. Bolinger, Lake and Dean expressed their desire that Daniels leave his leased premises so that the building could be used to open a service area for a used car business operated by Dean and Bolinger. Negotiations to have Daniels vacate his lease failed.

John Dean, Steve Bolinger, Harold Lake, and Mary Lake, pm-chased the property from Bematz, as tenants in common, on January 11,1991. The contract for deed specifically provides that purchase of the property is subject to Daniels’ existing commercial lease. A copy of the lease and an addendum to the lease were attached to the contract for deed. Harold Lake read the contract for deed prior to closing and agreed to all that it contained. Dean was authorized to manage the property and the lease with Daniels and presented himself to Daniels as representing the owners of the property.

Contrary to the existing lease agreement, on January 11, 1991, Dean delivered a thirty day eviction notice to Daniels ordering him off the premises without cause. Daniels refused to vacate. Thereafter, despite available parking elsewhere on the premises, Dean’s son and an employee of Dean began to park vehicles immediately in front of Daniels’ store obstructing entrance to the store and utilizing parking otherwise available to Daniels’ customers. There is evidence that Dean’s son and an employee repeatedly threw gravel from their car tires against the storefront window where Daniels customarily displayed antique furniture outside.

Daniels’ February rent check was returned to Daniels with a note demanding that he vacate the property by February 11, 1991. Dean advised Daniels that he would never accept any rent payment from him. On or about February 12,1991, Harold Lake was on the property making measurements and pointing to the spot where a garage door was to be cut into the wall of Daniels’ store. Harold Lake had knowledge of both the intention to cut the hole in the wall and the refusal of Daniels’ rent. Lake testified that he would not have entered the deal had he known Daniels would remain. Further, he testified he was unwilling to tolerate Daniels having the right to remain on the property.

About February 15,1991, there was a confrontation in the parking lot. Daniels’ testified that Dean and others swore at him and threatened to kill him if he refused to vacate. There is evidence that Dean’s son, employees of Dean and others continually gathered near the front of Daniels’ store to threaten, frighten and harass Daniels and his patrons.

Following the parking lot confrontation, Dean removed the thermostat from Daniels’ store and Daniels’ heat was cut off. When the owners refused to provide heat, Daniels attempted to heat his store with electric space heaters. Dean filed a complaint with the Missoula Fire Department alleging that Daniels’ use of the heaters was hazardous and that he was attempting to burn down the building. Following investigation, no charges were brought. Dean also filed a complaint with the Missoula City building inspector.

After another parking lot confrontation Dean filed a criminal complaint against Daniels alleging that he was armed and threatening Dean. A Missoula County sheriff’s deputy responded and frisked Daniels in his store in front of his customers. After further investigation the officer apologized to Daniels and left taking no further action. Following another confrontation with Dean, Daniels was notified by the United States Post Office that he was accused of stealing Dean’s mail.

On February 20,1991, Dean filed an action injustice court seeking to evict Daniels. Despite Dean’s refusal to accept rent, default notices were sent to Daniels for failure to pay March and April rent. On March 12, 1991, Daniels filed this action in District Court. Dean dismissed the justice court action so that all matters could be adjudicated in the District Court suit. On May 9 and 14, 1991, an evidentiary hearing was held on Daniels’ application for an order to show cause. At the conclusion of the hearing, upon the court’s inquiry, counsel stipulated that the hearing be considered the trial on the merits and be submitted to the court for final adjudication.

I.

The Lakes contend that it was error for the District Court to suggest the submission of the matter for final adjudication at such an early stage of the lawsuit. They further suggest that the District Court improperly urged counsel to so stipulate. It is the Lakes’ contention that they should not be bound by the stipulation of their attorney because they were not informed and as a result have lost “substantial and fundamental rights” such as a right to discovery and to trial by jury.

The record provides the following discourse relevant to this issue:

The Court: Could I see counsel at the bench, please? (Whereupon, a discussion took place at the bench)
The Court: Very well. For the record, will counsel stipulate that this matter may be considered a trial on the merits? I think we have covered everything that it would be possible to bring out in a trial, and I can’t see anything that we have missed that would add to this case one way or the other. But it’s up to you gentlemen if we — if you want to have a further hearing on it, we may do so. And what is your desire?
Mr. Botsford (counsel for Daniels): Your Honor, I can so stipulate for the Plaintiff, and we’ve represented what our damages are, if that’s acceptable to the Court.
The Court: Very well. And Mr. Modine?
Mr. Modine (counsel for Dean and Lake): I would stipulate to the determination of this as an evidence for the trial as well.

Section 37-61-401, MCA, provides in part:

Authority of Attorney. (1) An attorney and counselor has authority to:

(a) bind his client in any steps of an action or proceeding by his agreement filed with the clerk or entered upon the minutes of the court and not otherwise;

We have held that a party is bound to stipulations made by counsel entered in open court. Counts v. Chapman (1979), 180 Mont. 102, 589 P.2d 151. We further note the stipulation here is entered upon the minutes of the court. In Counts, we rejected appellant’s contention that she should not be bound to a stipulated waiver of rights because she did not have the opportunity to discuss it with her attorney beforehand.

We conclude that when the stipulation was entered by Lakes’ attorney, the Lakes voluntarily waived any right to discovery, jury trial or any other rights they claim to have lost. We further conclude there is no proof the court improperly “urged” the parties to stipulate to submission of the matter for final adjudication. The District Court is affirmed.

II.

The District Court in conclusion of law number XIV held: Defendants are jointly and severally liable for the respective actions of their fellow Defendants (Defendants, John Dean, Steve Bolinger, and Harold Lake) and are jointly and severally liable as principals of an agency relationship created by the Defendants, or as subsequently ratified with respect to the actions and conduct set forth in Conclusions No. XII above.

Conclusion No. XII delineates the previously described acts committed by the defendants against Daniels. The Lakes argue there is no substantial evidence that either of them had knowledge of, planned or personally took any action towards Daniels.

Section 28-10-602, MCA, provides:

Principal’s responsibility for agent’s negligence, omissions, and wrongs. (1) Unless required by or under the authority of law to employ that particular agent, a principal is responsible to third persons for the negligence of his agent in the transaction of the business of the agency, including wrongful acts committed by such agent in and as a part of the transaction of such business, and for his willful omission to fulfill the obligations of the principal.

(2) A principal is responsible for no other wrongs committed by his agent than those mentioned in subsection (1) unless he has authorized or ratified them, even though they are committed while the agent is engaged in his service.

The Lakes do not dispute the court’s conclusion that there existed a principal and agent relationship between the named defendants. Instead, they contend that the evidence fails to prove that they were personally responsible, authorized, or ratified any of the wrongful conduct alleged in Daniels’ complaint.

Whether or not the Lakes were personally responsible for any of the wrongful acts towards Daniels, or whether they authorized or ratified Dean’s actions is a question of fact. Findings of fact will not be set aside unless clearly erroneous, and due regard will be given the opportunity of the trial court to judge of the credibility of the witnesses. Rule 52(a), M.R.Civ.R A finding is clearly erroneous if it is not supported by substantial evidence, if the court misapprehended the effect of the evidence or if after review of the record the Court is left with a firm conviction that a mistake has been committed. Interstate Production Credit v. DeSaye (1991), [250 Mont. 320,] 820 P.2d 1285, 48 St.Rep. 986.

After careful review of the record, we conclude the finding that Mary Lake is jointly and severally liable is not supported by substantial evidence. The only evidence in regard to Mary Lake is that she signed papers that were put before her and Daniels’ testimony that she never communicated, harassed or interfered with Daniels in any manner. We conclude the District Court erred in holding Mary Lake liable and reverse on this point.

In regards to Harold Lake, there is a lack of evidence that he was personally responsible or directly authorized Dean’s actions; however, there is substantial evidence that he did ratify the wrongful acts. Ratification of an agent’s actions requires the occurrence of three elements: (1) acceptance by the principal of the benefits of the agent’s acts, (2) with full knowledge of the facts and (3) circumstances or an affirmative election indicating an intention to adopt the unauthorized arrangement. Moore v. Adolph (1990), 242 Mont. 221, 223, 789 P.2d 1239, 1241. Safeco Ins. Co. v. Lovely Agency (1982), 200 Mont. 447, 453, 652 P.2d 1160, 1163.

Harold Lake testified that it was important to him that Daniels vacate his lease, that he was unwilling to tolerate Daniels remaining on the property and that he would not have entered the deal had he thought Daniels would remain. Harold Lake clearly accepts the benefits of Dean’s attempts to induce Daniels to vacate the lease satisfying the first element of ratification.

There is substantial evidence that Harold Lake was on notice that Daniels’ lease did not expire until September, 1993 and that Daniels did not intend to leave early. Furthermore, there is substantial evidence that Harold lake expected that Daniels could and would be induced to vacate his leasehold. We conclude Harold Lake had full knowledge of the facts such that the second element of ratification is met.

The third element requires that Harold Lake was aware of the circumstances surrounding Daniels’ lease. The record demonstrates that he was aware of the fact that Dean would and did refuse to accept rent from Daniels. It further shows that he was aware that the thirty day eviction notice was sent despite the lease agreement. Furthermore Harold Lake was aware of and testified to the importance that was attached to getting Daniels to vacate.

We conclude that the three elements of ratification are present in the instant case. The District Court’s conclusion that Harold Lake is jointly and severally liable is affirmed.

III.

The District Court concluded that Daniels was defamed by the false claims made to the Missoula County Sheriff’s Office, the Missoula Fire Department, the Missoula City building inspector, and the United States Post Office and that such defamation was slanderous per se. The court further concluded that the defamation was done with malice and intent to harm and awarded Daniels $10,000 in punitive damages. An additional $25,000 in punitive damages was awarded for “malicious and intentional actions in tortiously interfering with Plaintiff’s valid lease and addendum”.

The Lakes argue that there is a distinction between compensatory and punitive damages such that one may be jointly and severally liable for the acts of his agent leading to compensatory damages but that in order to extend liability for punitive damages there must be clear and convincing evidence that each separate defendant acted with actual malice. Authority is cited from other jurisdictions for the proposition that principals should not be vicariously liable for punitive damages due to the intentional misconduct of an agent unless there is proof of fault on part of the principal.

As discussed above, we conclude that Harold Lake ratified Dean’s wrongful attempts to induce Daniels to vacate and under § 28-10-602, MCA, is liable for damages. We find no authority to support Lakes’ contention that in the absence of a showing of actual malice on the part of the principal, § 28-10-602, MCA, applies exclusively to compensatory damages. Section 28-10-602, MCA, by its own language holds a principal liable for the wrongs of an agent which have been ratified. The statute does not limit liability to wrongs other than intentional and malicious acts resulting in an award of punitive damages.

Next, the Lakes argue that the award of punitive damages is erroneous under the law as defined by this Court in Story v. City of Bozeman (1990), 242 Mont. 436, 791 P.2d 767. In Story, we held generally that in the great majority of contracts, breach of the implied covenant of good faith and fair dealing is a breach of contract where only contract damages are due. Tort type damages may only be available in contracts where a “special relationship” exists or for traditional contract related torts such as fraud, fraudulent inducement, and tortious interference with a contract. We agree with the Lakes that under the Story criterion, a special relationship does not exist that would entitle Daniels to punitive damages for breach of the implied covenant of good faith and fair dealing.

However, the District Court did not award punitive damages for breach of the implied covenant. Punitive damages were awarded for the separate and independent torts of defamation and tortious interference with Daniels’ lease. The Lakes argue and Daniels concurs that generally interference can give rise to tort liability only when one interferes with a contract to which one is a stranger. Phillips v. Montana Education Association (1980), 187 Mont. 419, 610 P.2d 154.

In Bolz v. Meyers (1982), 200 Mont. 286, 651 P.2d 606, we addressed a similar circumstance wherein we concluded that a person could be hable for breach of a contract to which they were a party and also be liable for the tort of intentional interference. We noted a distinction between the defendants’ actions which not only breached the contract but also separately and distinctly by their outrageous nature tortiously interfered with the business relations between the plaintiff and his customers. Bolz v. Meyers (1982), 200 Mont. 286, 651 P.2d 606; Houser v. City of Redmond (1978), 91 Wash. 2d 36, 586 P.2d 482, 485. We have also affirmed an award of punitive damages against a defendant for breach of a duty to assign a lease, separate and distinct from the subject matter and issue of breach of the lease itself. Moore v. Hardy (1988), 230 Mont. 158, 748 P.2d 477.

A prima facie case of interference with contractual or business relations requires: (1) intentional and willful acts, (2) calculated to cause damage to the plaintiff in his or her business, (3) done with the unlawful purpose of causing damage or loss, without justifiable cause on the part of the actor, and (4) actual damages and loss must result. Bolz, 200 Mont. at 295, citing Bermil Corp. v. Sawyer (Fla.App.3rd Cir. 1977), 353 So.2d 579. The proven facts of this case establish that the defendants not only breached the implied covenant of good faith and fair dealing, thereby breaching the contract and entitling Daniels to contract damages; but also went further and tortiously interfered with Daniels’ business relationships with his customers entitling him to punitive damages.

The District Court’s conclusion that intentional and malicious interference had occurred was correct and it is immaterial what reasons the court gave for the conclusion. Bolz, 200 Mont. at 295, 296, citing Fergus County v. Osweiler (1938), 107 Mont. 466, 86 P.2d 410; 120 A.L.R. 1457; Johnstone v. Sanborn (1960), 138 Mont. 467, 358 P.2d 399. The District Court award of punitive damages is affirmed.

IV.

The District Court awarded Daniels free rent for the remainder of his lease term. The conclusion was based on the theory that the defendants were estopped from claiming any rent from Daniels because of their previous refusal of rent. The measure for damages for breach of a contract is the compensatory amount for all of the detriment proximately caused by or likely to result therefrom in the ordinary course of things. Weinberg v. Farmer State Bank of Worden (1988), 231 Mont. 10, 752 P.2d 719. There is no legal basis for the court’s award of free rent as an element of compensatory damages. There is no change in position of the parties regarding future rents entitling Daniels to such relief. The District Court is reversed on this point.

Affirmed, reversed and remanded to the District Court for entry of judgment in conformance with this opinion.

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


source: Caselaw Access Project

author: JUSTICE WEBER

license: Public Domain

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. MICHAEL THOMAS STEWART, Defendant and Appellant.
    No. 91-295.
    Submitted May 4, 1992.
    Decided June 23, 1992.
    49 St.Rep. 540.
    253 Mont. 475.
    833 P.2d 1085.

      For Defendant and Appellant: Martin R. Studer; and James H. Goetz, Goetz, Madden & Dunn and Martin R. Studer, Bozeman.
    For Plaintiff and Respondent: Marc Racicot, Attorney General, Michael Wellenstein, Assistant Attorney General, Helena; and Scott B. Spencer, County Attorney, Libby.
   JUSTICE WEBER

delivered the Opinion of the Court.

A jury from the Nineteenth Judicial District Court, Lincoln County, convicted the defendant, Michael Thomas Stewart (Stewart) of theft, attempted theft, and forgery. Stewart appeals. We affirm in part and reverse in part.

The issues raised for review are restated as follows:

(1) Did the District Court abuse its discretion by limiting the scope of Stewart’s cross-examination of Mitchell Hicks (Hicks)?

(2) Did the District Court prejudice Stewart’s defense by excluding testimony offered by Arlene Peterson (Peterson) to impeach Hicks?

(3) Did the District Court abuse its discretion by allowing the State to introduce a previously undisclosed tape-recording to impeach Roger Kensler (Kensler) on rebuttal?

(4) Was Stewart denied his right to effective assistance of counsel?

Stewart, former police chief of Troy, Montana, was convicted on three separate charges; theft, attempted theft and forgery. The theft charge in this case involves Stewart’s attempt to obtain clear title on a 1978 Ford Bronco by depriving the Federal Deposit Insurance Corporation (FDIC) of its lien on the vehicle. The count of attempted theft arises from Stewart submitting a fraudulent claim to the Highway Department for window damage to the Bronco which he alleged occurred in a highway construction area. Finally, the forgery count is based on Stewart signing Hicks’ name on a statement Stewart submitted to the Highway Department in connection with the fraudulent window damage claim.

In 1985, Stewart financed a 1978 Ford Bronco through the Yellowstone State Bank of Lander, Wyoming. When the Yellowstone State Bank failed, the FDIC succeeded to the ownership of the lien on Stewart’s Bronco. At trial, Tom Bales (Bales), owner of Bales Auto Acres of Lander, Wyoming, testified that he agreed to assist Stewart in improperly obtaining clear title to the vehicle. Although Bales admitted he never stored the vehicle; in November 1989, he falsified a storage bill, and filed a storage lien on the Bronco. Because the lien exceeded the value of the vehicle, FDIC released its hen on the Bronco. Bales received a clear certificate of title, and transferred title to Hicks. Hicks then transferred title to Stewart at Stewart’s request.

Hicks testified that he never negotiated with Stewart for the purchase of the vehicle. In addition, Hicks testified he had no knowledge that Bales placed the title in his name until Stewart came to Hicks and directed him to transfer the document into Stewart’s name.

Next, the State presented evidence that Stewart submitted a false claim to the Highway Department in November 1989. Stewart claimed a rock struck the vehicle’s rear window as he drove the Bronco on Highway 2 below a construction blast area. Stewart stated that Hicks was a passenger in the Bronco at the time the rock struck the vehicle. At trial, Stewart maintained his story that a rock from the blast area had cracked the vehicle’s window. However, he testified the damage actually occurred in June or July 1989, not November 1989.

Hicks, on the other hand, testified that no damage ever occurred to the vehicle while he was a passenger; and that the vehicle’s window was already broken in May 1989, when Hicks first met Stewart. In addition, Hicks testified that in a previous conversation, Stewart had stated that the construction on Highway 2 presented a prime opportunity for submitting a false claim to the Highway Department.

Finally, the State presented evidence that Stewart forged Hicks’ name on a statement he submitted to the Highway Department in connection with the glass damage claim. Stewart testified that he signed Hicks’ name to the statement with Hicks’ permission. Hicks denied giving Stewart permission to write his signature on the statement.

I

Did the District Court deny Stewart’s right to confrontation and abuse its discretion by limiting the scope of Stewart’s cross-examination of Mitchell Hicks?

Hicks, a former reserve law enforcement officer in Troy, Montana, disclosed information to the Lincoln County Sheriff’s Department which led to Stewart’s arrest. Thereafter, Roger Kensler, Mayor of Troy, suspended Hicks. Consequently, Hicks brought a wrongful discharge suit against the city.

At trial, the District Court denied Stewart’s attempt to introduce the details of this wrongful discharge suit. Stewart contends this lawsuit established bias and motive for Hicks to fabricate his testimony. Thus, the court improperly limited his cross-examination.

Admissibility of evidence is within the sound discretion of the trial court and will not be reversed absent abuse of discretion. State v. Hall (1990), 244 Mont. 161, 169, 797 P.2d 183, 188. While evidence establishing bias or a witness’s motive to fabricate is properly admissible; here, the lower court determined evidence of a separate civil action between Hicks and the city established neither bias nor motive to fabricate. Stewart has failed to persuade this Court that the District Court abused its discretion.

Next, Stewart claims this restriction on cross-examination denied him his right to confrontation guaranteed by the Sixth Amendment to the United States Constitution, and Article II, Section 24 of the Montana Constitution. This Court has previously held that limiting the scope of cross-examination does not necessarily violate an accused’s right to confrontation. Sloan v. State (1989), 236 Mont. 100, 104-105, 768 P.2d 1365, 1368. Here, we conclude the court properly restricted Stewart’s cross-examination of Hicks based on the limited probative value of the testimony.

We hold the District Court did not abuse its discretion or violate Stewart’s right to confrontation by limiting Stewart’s cross-examination of Hicks.

II

Did the District Court prejudice Stewart’s defense by excluding testimony offered by Peterson to impeach Hicks?

Hicks testified that he never negotiated with Stewart to purchase the Bronco, and never authorized Stewart to forge his signature on the damage claim. Further, Hicks testified that he had never discussed either of these matters with Arlene Peterson.

Later during the trial, Stewart called Ms. Peterson to impeach Hicks’ testimony. Peterson testified that she had discussed these matters with Hicks, and that Hicks had authorized Stewart to sign his name to the damage claim. However, on the basis of hearsay, the court prohibited Peterson from testifying Hicks had informed her that he was negotiating with Stewart for the purchase of the Bronco. Stewart contends Peterson’s testimony was evidence of a prior inconsistent statement by a prosecution witness, and thus proper impeachment. Rule 801(d)(1)(A), M.R.Evid.

The State contends that the court’s exclusion of this testimony is harmless error. We disagree. Here, the record reveals that the State’s case rested largely on the testimony presented by Hicks. Thus, the lower court’s exclusion of testimony presented to impeach Hicks was prejudicial to Stewart’s defense and an abuse of discretion.

We hold the exclusion of Peterson’s testimony prejudiced Stewart’s defense. We reverse on this issue.

Ill

Did the District Court abuse its discretion by allowing the State to introduce an undisclosed tape-recording for impeaching Kensler on rebuttal?

At trial, Roger Kensler denied that Hicks was suspended for disclosing information leading to Stewart’s arrest. On rebuttal, the State impeached Kensler’s testimony by introducing a previously undisclosed tape-recording. On the tape, Kensler indicated that Hicks was suspended for blowing the whistle on Stewart. Stewart contends the court should have excluded this tape due to the State’s failure to disclose the tape prior to trial under § 46-15-322, MCA. Stewart further contends the recording was irrelevant and improperly admitted under Rule 403, M.R.Evid., because its prejudice outweighed any probative value. We disagree.

First, the State did not violate § 46-15-322, MCA, by failing to disclose the tape. Section 46-15-322, MCA (1989), states in part:

..., the prosecutor shall make available to the defendant ... the following material and information within his possession or control:
(a) a list of the names and addresses of all persons whom the prosecutor intends to call as witnesses in the case-in-chief, together with their relevant written or recorded statements;...

Here the tape recording was used to impeach testimony of Kensler, a defense witness. Thus § 46-15-322(a), MCA, does not require disclosure. Next, as impeachment evidence, the tape was relevant and probative, although it did not support the criminal charges against Stewart. Finally, the tape did not contain exculpatory evidence which required disclosure under § 46-15-322(e), MCA.

We hold the court did not abuse its discretion in allowing the State to introduce a previously undisclosed tape to impeach Kensler on rebuttal.

IV

Was Stewart denied his right to effective assistance of counsel? To sustain a claim of ineffective assistance of counsel, defendant must show deficient performance which so far prejudiced the defense that it deprived the defendant of a fair trial. Strickland v. Washington (1984), 446 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674. Stewart claims four instances of ineffective assistance of counsel.

First, Wilfred and Faye Palmer, owners of a body shop in Troy, Montana, testified that prior to his negotiations with Bales, Stewart solicited a fraudulent damage estimate from them for the purpose of filing a mechanic’s lien on the Bronco. Stewart claims this is “other crimes” evidence. As such his attorney was deficient in failing to object, and its admission deprived Stewart of a fair trial.

Next, Stewart contends defense counsel failed to object when the prosecutor asked Hicks about an alleged sexual relationship between defense witness Loretta Hingley and Stewart. Further, defense counsel failed to object when, without basis, the prosecutor asked Stewart if he abused juveniles during arrest. Stewart claims these comments were highly inflammatory and prejudicial and deprived Stewart of a fair trial.

We disagree. Here, testimony from Wilfred and Faye Palmer was properly admitted, not as evidence of other crimes, but as part of the corpus delicti in Stewart’s continuing scheme to defraud the FDIC of its lien on the Bronco. Next, testimony regarding the sexual relationship between Stewart and Hingley was properly admissible to show Hingley’s motive to testify falsely. Finally, the prosecutor’s question insinuating Stewart abused juveniles in custody was irrelevant to the crimes charged. In all above cited instances, we find that defense counsel’s failure to object did not prejudice Stewart’s defense, nor deprive Stewart of a fair trial.

The final instance of ineffective assistance of counsel claimed by Stewart involves defense counsel’s failure to object to inappropriate remarks made by the prosecutor during closing arguments. A portion of the State’s closing argument is set out below:

And remember, ladies and gentlemen, these sorts of cases are tough. Public officials, which Mike Stewart was, should have the public’s highest respect and regard and they shouldn’t be doing illegal things. They shouldn’t be involved in trying to steal things like and make false claims. They shouldn’t be involved in making false claims because more than anything, it destroys the public trust.
You want a crooked cop, this is a crooked cop and he was caught. And the only way that you, we can stop this is for you to render a proper verdict in this case.
If you, with the evidence before you, say to this man, you are not guilty, you are saying go out and be a crooked cop, we like crooked cops.
And the only message that you can say, it is overwhelming that he is that. He is a thief. And he is a liar. And the verdict that you should render on what you have heard in these sorts of cases based on what you have heard here is you are guilty of theft on the Bronco Mr. Stewart, he is Mr. Stewart, Mr. Stewart, you are a crook. You are guilty. (Emphasis added.)

This Court discussed improper comments by the prosecution in State v. Musgrove (1978), 178 Mont. 162, 582 P.2d 1246. That case involved an interpretation of Disciplinary Rule No. 7-106(0, adopted in 1973. Rule No. 7-106(0(4) provided in part:

In appearing in his professional capacity before a court, a lawyer shall not:
(4) Assert his personal opinion as to the justness of a cause, as to the credibility of a witness, as to the culpability of a civil litigant, or as to the guilt or innocence of an accused; but he may argue, on his analysis of the evidence, for any position or conclusion with respect to the matter stated herein.

There we held that it is highly improper for a prosecutor to express a personal opinion as to the defendant’s guilt or innocence. We stated:

It is well for attorneys to remember that while in closing argument, they may argue and comment upon the law of the case in the instructions, as well as upon the evidence of the case .... [However, that permission is limited.] ... It is enough to say that in most instances, it is highly improper for an attorney in final argument to characterize the testimony of a witness as lies or the party or a witness himself as a liar.

Musgrove, 178 Mont. at 172, 582 P.2d at 1253. In 1985, subsequent to the Musgrove case, we adopted the present Rules of Professional Conduct. As they apply to this particular question, Rule 3.4 provides in part:

A lawyer shall not:
(e) in trial, allude to any matter that the lawyer does not reasonably believe is relevant or that will not be supported by admissible evidence, assert personal knowledge of facts in issue except when testifying as a witness, or state a personal opinion as to the justness of a cause, the credibility of a witness, ... or the guilt or innocence of an accused',... (Emphasis supplied.)

We conclude the Rule stated in Musgrove is as viable under the new Rules of Professional Conduct as it was under the old Code of Professional Responsibility. Here, the prosecutor stated his personal opinion on the credibility of the witnesses as well as the guilt of the accused. Clearly this is improper.

Because we are reversing on other grounds, we do not find it necessary to decide whether the statements by the prosecutor were so prejudicial as to deprive Stewart of a fair trial. However, because of the concern by all members of the Court with regard to this type of prejudicial and improper statement, we have carefully reviewed the closing argument. We recognize this case is somewhat unusual in that a great deal of the evidence submitted by the State was directly contradicted by evidence submitted by the defense. It was the task of the jury to determine which testimony and evidence was the more believable. As a result, it undoubtedly was proper for the prosecution to comment on the contradictions and conflicts in the testimony. To that extent, the conduct of the prosecution was appropriate. However, the prosecution went far beyond the boundaries of appropriate comments by the prosecution.

Unfortunately this is not the first case to come before the Court in recent months in which the prosecution has yielded to the temptation to make unfair and prejudicial comments to a jury. We direct this comment to all prosecutors: stop the expression of a personal opinion as to the credibility of a witness or the guilt or innocence of a defendant.

Reversed and remanded for further proceedings consistent with this opinion.

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


author: JUSTICE WEBER JUSTICE HUNT

text:
    IN THE MATTER OF D.S., H.S., R.S., R.S., J.S., R.S., AND K.S., Youths in Need of Care.
    No. 91-264.
    Submitted on briefs Feb. 6, 1992.
    Decided June 25, 1992.
    49 St.Rep. 552.
    253 Mont. 484.
    833 P.2d 1090.

      For Appellant: Thomas A. Dooling, Dooling Law Office, Dillon.
    For Respondent: Marc Racicot, Attorney General; Jennifer Anders, Assistant Attorney General, Helena; Thomas R. Scott, County Attorney, and Andrew P. Suenram, Attorney, Dillon.
   JUSTICE WEBER

delivered the Opinion of the Court.

The Montana Fifth Judicial District Court, Beaverhead County, terminated the parental rights of James K. Streckert and Ida E. Streckert (Streckerts), the natural parents of D.S., H.S., R.S., R.S., J.S., R.S., and K.S. Streckerts appeal. We affirm.

The issues raised on appeal are restated as follows:

1. Did the District Court deny the Streckerts due process by taking judicial notice of collateral proceedings and incorporating findings from the temporary custody proceeding into its order terminating the Streckerts’ parental rights?

2. Did the State meet the statutory criteria for terminating Streckerts’ parental rights under § 41-3-609, MCA?

In October 1989, the Department of Family Services (DFS) received complaints of educational neglect from school officials due to the Streckert children’s excessive absences. In November 1989, the DFS received reports of possible sexual abuse, and petitioned the court for temporary investigative authority. The Streckerts were unrepresented at this hearing in December 1989, wherein the District Court appointed guardians ad litem, for the children and granted the DFS temporary investigative authority. On March 22, 1990, the court heard the State’s petition for temporary custody of the Streckert children, and granted DFS temporary custody. The court ordered D.S. removed to foster care with the other children remaining in the Streckert home. The Streckerts were not represented at this hearing. In April 1990, the court approved the treatment plan proposed by the DFS. The Streckerts refused to sign the plan. Further, evidence from the final hearing reveals that the Streckerts failed to comply with the plan.

After working with the Streckerts for over ten months, the State of Montana, through the DFS had petitioned the court to terminate the parental rights of appellants James and Ida Streckert on February 13, 1991. The court conducted a hearing on this petition March 15, 20 and 21,1991. Court appointed counsel represented the Streckerts during the termination hearing.

The facts set forth in this opinion are summaries of the testimony presented in the course of the final termination hearing, wherein the Streckerts were represented by counsel. Dr. Richard Thomas, a licensed professional counselor testified that the oldest boy, D.S., was sexually abusing his younger siblings, and that the Streckerts were aware of this abuse yet did not accept the seriousness of D.S.’s sexual activities. Marjorie Montrose, the primary social worker, presented testimony that the Streckerts did not appreciate the impact this sexual abuse had on the younger children and failed to intervene. Further, both Thomas and Montrose testified that the Streckerts did not effectively participate in the treatment of D.S. or the other children. They missed scheduled meetings and when present they did not constructively use the counseling sessions. Streckerts used these sessions to air grievances with the DFS rather than address their problems.

Deputy Sheriff William Briggs testified D.S. was stealing bicycles, and then dismantling, reassembling and repainting the bikes in the shop behind the Streckert house. The Streckerts refused to acknowledge or address the thievery by D.S. In addition, Deputy Briggs caught R.S., shoplifting. He testified that Mr. Streckert “giggled” when he learned of the thievery of R.S, one of his younger children.

Neighbors, law enforcement, and social workers all testified that the Streckerts’ house was filthy. Women from the local church attempted to work with Mrs. Streckert to improve her housekeeping skills, and a neighbor testified that she laundered the Streckerts’ clothes for a month. Despite this encouragement, Mrs. Streckert made no attempt to keep the house habitable. Mrs. Streckert worked neither out of the home nor in the home; rather, she spent her days watching television. Mr. Streckert’s former employer testified that Mr. Streckert was a “first rate” mechanic. Nonetheless, Mr. Streckert chose not to work and depended on the church to pay his rent.

Montrose testified that although the Streckerts made no improvement in their home as required by the plan, in her opinion the habitability of the home was not as important as the negative emotional and psychological influence that the Streckerts had on their children.

Uncontradicted testimony demonstrated the inability of the Streckerts to learn parenting skills. R.S.’s teacher testified that she kept food at school to feed R.S. The Streckerts’neighbor testified that she fed the Streckert children daily. The children’s clothes as well as the children themselves were filthy. The foster parents of the five younger children testified that when they were placed into foster care, the children were unaccustomed to bathing, that they had an eighth of an inch of “greasy, scaly, cruddy stuff on their hair” which took over a week of bathing to wash out. The younger boys were hungry when they arrived. The children were unaccustomed to eating with utensils and did not know how to brush their teeth. In addition, the physician examining the children after they were placed with foster parents testified that R.S. needed dental care, suffered from a severe ear infection which blocked his hearing, and had untreated speech problems. A neighbor testified that the Streckerts treated their children with animal medication.

Social workers Montrose and Riley testified that despite the DFS’s efforts, Streckerts refused to comply with the treatment plan. This testimony was confirmed by Dr. Thomas who testified that in his opinion the treatment plan was appropriate, and that the Streckerts failed to comply. Thomas testified that the Streckerts’ behavior was both inappropriate and manipulative. Further, he concluded that any continued treatment would be detrimental to the children. Finally, he testified that it was in the best interest of the children to permanently separate them from their parents.

Social workers Montrose and Riley testified that even if the Streckerts engaged in long term treatment, it was unlikely that they would successfully complete the treatment plan. They further testified that any further delay in permanent placement would be detrimental to the children. Accordingly, they recommended immediate termination of parental rights. The Streckerts denied all evidence presented by the State; however, the court specifically found their continued denial was not credible.

On April 1, 1991, the District Court terminated the Streckerts’ parental rights. In its findings, the District Court took judicial notice of the two collateral proceedings and incorporated the findings from the temporary custody proceeding into its termination order. The Streckerts appeal from this order terminating their parental rights.

I

Did the District Court deny the Streckerts due process by taking judicial notice of collateral proceedings and incorporating findings from the temporary custody proceeding into its order terminating the Streckerts’ parental rights?

This Court has previously determined that due process requirements are satisfied when the State appoints counsel prior to termination hearings. Matter of M.F. J.F. & R.W. (1982), 201 Mont. 277, 286, 653 P.2d 1205, 1209-1210. Likewise, we have held that due process does not require appointment of counsel for parents during temporary custody hearings. Matter of T.C. & R.C. (1989), 240 Mont. 308, 314-315, 784 P.2d 392, 395-396. Thus, the State was not required to provide Streckerts with counsel at the proceeding granting the DFS temporary investigative authority or the hearing granting the DFS temporary custody of the Streckert children.

In its final order the District Court took judicial notice of these prior proceedings and incorporated findings from the temporary custody hearing into its order terminating parental custody. A district court should not take judicial notice of a hearing at which parties were not represented by counsel. Normally the taking of such judicial notice would violate the due process rights of the parties. Matter of M.F., J.F. & R.F., 201 Mont. at 286, 653 P.2d at 1209-1210.

While the District Court was incorrect in taking judicial notice of prior proceedings and incorporating those findings into its final order, we conclude that the due process rights of the Streckerts were not violated. It was unnecessary for the District Court to make any reference to the temporary custody proceedings. All of the extensive findings of the District Court in connection with its final order terminating parental rights are supported by evidence submitted in the course of the final hearing. There was no necessity to refer back to collateral proceedings at which the Streckerts were not represented. We emphasize that the District Court should not have made any attempt to incorporate the temporary custody hearing matters, at which, the Streckerts were unrepresented, into the proceedings which resulted in the termination of parental rights. However, where the evidence presented, without objection, substantiates all of the findings and conclusions of the District Court in its order terminating parental rights, we conclude there has been no denial of due process as to the Streckerts.

We hold that due process was not denied to the Streckerts by the District Court’s reference to the collateral proceedings and incorporation of findings from the same.

II

Did the State meet the statutory criteria for terminating Streckerts’ parental rights under § 41-3-609, MCA?

Section 41-3-609, MCA, states in part:

(1) The court may order a termination of the parent-child legal relationship upon a finding that any of the following circumstances exist...
(c) the child is an adjudicated youth in need of care and both of the following exist:
(i) an appropriate treatment plan that has been approved by the court has not been complied with by the parents or has not been successful; and
(ii) the conduct or condition of the parents rendering them unfit is unlikely to change within a reasonable time ....

The District Court determined that the State proved the termination criteria under § 41-3-609, MCA, by clear and convincing evidence. We will not set aside the trial court’s findings unless they are clearly erroneous. Rule 52(a), M.R.Civ.R

First, the Streckerts assert that the court used vague criteria within the Montana statute to terminate custody. Next, they contend that the court based its decision on an intolerance of Streckerts’ religious beliefs and the Streckerts’ inability to provide their children with middle class luxuries. Finally, they claim the court had insufficient evidence from which to determine the Streckerts were “unfit” parents.

These allegations are not supported in any manner by the record in this case. On the contrary, the court’s finding that the Streckerts are unfit parents is supported by the testimony of all witnesses at the final hearing save the testimony of James and Ida Streckert themselves. Here, the record shows that D.S., H.S., R.S., R.S., J.S., R.S., and K.S. were adjudicated youths in need of care, that the Streckerts had not complied with the court approved treatment plan, and that the Streckerts’ conduct causing the problem could not be rectified within a reasonable time.

We hold that the State met the statutory criteria necessary to terminate Streckerts’ parental rights under § 41-3-609, MCA.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES HARRISON and McDonough concur.

JUSTICE HUNT

dissenting:

I dissent. Today the decision by the Court effectively sanctions a violation of an individual’s due process rights by the State. It is flatly wrong for the District Court to incorporate judicial notice of temporary custody hearings, where counsel is not present or mandatory, into its final order terminating parental custody rights. To do so, and prevent the parents from having the right to counsel, is to create the grave risk of an erroneous decision. In reaching its conclusion, the majority sadly forsakes a fair adjudication of the rights of all the persons, both parents and children. A parental termination case merits the utmost protection of the parents’ rights to be adequately represented. The court should not use the evidence against the parents to judge the legitimacy of their interest based on hearing without counsel. In attempting to justify what appears to be a proper and just conclusion, the majority is led into unconstitutional methods to reach its ends.

The majority contends the violation of due process is negligible in its effect because the evidence supports its conclusion, and is thus permissible. The violation of the Streckerts’ right to counsel should not be swept under the analysis of the evidence, nor should it be dismissed as negligible. Substantiality of evidence has never been an adequate reason to sustain a violation of an individual’s right to counsel. The majority writes, “[njormally the taking of such judicial notice would violate the due process rights of the parties.” The use of the word “normally” makes the right to due process appear arbitrary and contingent on social norms proscribed only by the majority today. This has never been the case. The review of a due process violation should be an unequivocal constant which is not subject to erratic determination based on norms. At times, the Court has committed itself to a balance test, concluding, for example, that a violation may be outweighed by compelling state interests. The Court’s discretion to forego that analysis today goes beyond permissible limits. Even in the shadow of evidence supporting the majority’s conclusion, a violation of the due process rights of an individual should never be sanctioned.

I would remand this case to the District Court for findings of fact, conclusions of law, and order based on procedures that afford the parents due process so that there is no sanction of a violation of an individual’s due process rights by the State.

JUSTICES GRAY and TRIEWEILER concur in the foregoing dissent.


author: JUSTICE McDONOUGH JUSTICE TRIEWEILER

text:
    MACK FINANCIAL CORPORATION, Plaintiff and Respondent, v. JOSEPH A. TEZAK and MARJEAN TEZAK, d/b/a TEZAK CONCRETE AND CONSTRUCTION, Defendants and Appellants.
    No. 91-040.
    Submitted on briefs Mar. 12, 1992.
    Rehearing Denied July 30, 1992.
    Decided June 29, 1992.
    49 St.Rep. 556.
    253 Mont. 492.
    834 P.2d 396.

      For Defendants and Appellants: Mark David Hoffman, Jones & Hoffman, Virginia City.
    For Plaintiff and Respondent: Terry J. MacDonald and Paul C. Meismer, Garlington, Lohn & Robinson, Missoula.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

This is an appeal from a jury trial and judgment of the Fifth Judicial District, Madison County. Mack Financial Corporation (Mack) filed a complaint against Joseph and Marjean Tezak and their construction company (hereinafter Tezak) for repossession, sale and a deficiency judgment on cement trucks Tezak was purchasing under a retail installment contract. Tbzak counterclaimed that Mack fraudulently induced surrender of the trucks and then disposed of the trucks contrary to an agreement of the parties and contrary to the Uniform Commercial Code. The District Court denied Tbzak’s motion for summary judgment, allowing the issue of whether Tbzak received reasonable notice of sale, as required under § 30-9-504 MCA, to go to the jury. The District Court further denied Tezak’s request that the jury be instructed that Mack had violated the Uniform Commercial Code. The jury verdict was in favor of Mack. Tbzak appeals and we affirm.

The issues for our review are:

I. Did the District Court err by denying Tbzak’s motion for summary judgment, on the issue of liability, for failure to give reasonable notice of sale of repossessed collateral in violation of § 30-9-504(3)(a), MCA?

II. Did the District Court err by failing to instruct the jury that Mack failed to give reasonable notice of the sale and that therefore the jury must consider damages including lost profits suffered by Tbzak?

Tbzak purchased, under separate installment contracts, two cement trucks from Mack. Tbzak experienced financial difficulties and the contracts were consolidated and repayment schedules were renegotiated on several occasions. Tbzak’s inability to keep his payments up to date finally culminated in Mack filing this action. There is no dispute that Tbzak was delinquent in payment of the agreement and that the trucks themselves were collateral for the agreement.

After the action was filed, Tbzak indicated to Mack that he was considering challenging service of process and form of the summons. Immediately preceding a show cause hearing, set for April 19, 1983, the attorneys for the parties discussed the service problem and made an agreement. Under the agreement, Tazak was to deliver the trucks and voluntarily submit to jurisdiction. Mack agreed to provide Tezak 10 day notice of any sale of the cement trucks. A stipulation was drafted by Mack’s attorney and forwarded to Tezak. The stipulation included only the terms of voluntary appearance in the action and delivery of the trucks but failed to mention the portion of the agreement relating to notice of sale. The stipulation was never executed or filed.

On or about May 4,1983, Tezak received notice from Mack, dated April 28,1983, that the trucks would be sold on or after May 12,1983 at private sale. Tezak contacted Mack’s attorney at that time, Gary Walton (Walton). There is a factual dispute regarding what ensued. Tezak contends Walton told him that he should “ignore and disregard” the notice. Mack contends that the instruction to ignore or disregard was conditioned upon execution of the stipulated agreement.

On June 23,1983, Tezak received a second 10 day notice of private sale, this time from Walton. However, the trucks had actually been sold on June 15th and 18th, 1983, respectively. Tezak contends that because the April 28, 1983 notice was void and the June 23, 1983 notice came after the trucks were actually sold, Mack failed to provide reasonable notice of sale as required by law. At trial, at the close of testimony, Tezak moved for summary judgment, alleging there existed no factual dispute regarding Mack’s failure to provide notice prior to sale. Although Tezak referred to his motion as one for summary judgment, it was actually a motion for a directed verdict and we treat it as such.

Section 25-7-302, MCA, provides:

Where, upon the trial of an issue by a jury, the case presents only questions of law, the judge may direct the jury to render a verdict in favor of the party entitled thereto.

The test commonly employed to determine if the evidence is legally sufficient to withdraw cases and issues from the juiy is whether reasonable men could draw different conclusions from all the evidence. If only one conclusion is reasonably proper, then the directed verdict is proper. Cremer v. Cremer Rodeo Land and Livestock Co. (1979), 181 Mont. 87, 592 P.2d 485. Evidence introduced by the plaintiff Mack, will be considered in a light most favorable to plaintiff and as proving whatever it tends to prove. Cremer 181 Mont. at 91.

Section 30-9-504, MCA, provides in part:

Secured party’s right to dispose of collateral after default — effect of disposition.
(3) (a) ... Unless collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, reasonable notification of the time and place of any public sale or reasonable notification of the time after which any private sale or other intended disposition is to be made shall be sent by the secured party to the debtor if he has not signed after default a statement renouncing or modifying his right to notification of sale. [Emphasis added]
Section 30-9-504, MCA, clearly requires that a secured party must provide the debtor reasonable notification of the time after which repossessed collateral will be privately sold. Mack contends that the April 28, 1983 notice does provide adequate notice of private sale in conformity with the statute.

The dispositive issue for our review is whether or not Walton’s instruction to Tfezak, to disregard the April 28, 1983 notice, was conditioned upon execution of the stipulated agreement. In other words, if Walton’s instructions to disregard were conditioned upon execution of the stipulated agreement, Tezak’s failure to execute the stipulation precludes him from disregarding the April 28,1983 notice. If, however, the instruction was unconditional, Tfezak properly disregarded the April 28, 1983 notice, and was entitled to re-notice. The June 23, 1983 notice was not provided prior to sale of the trucks and therefore would not fulfill the mandate of § 30-9-504, MCA.

Tfezak testified that he was instructed by Walton to disregard the April 28, 1983 notice without any reference to the imposition of any conditions. Attorney Walton also appeared as a witness at the trial. We note the following excerpt from his testimony:

Q. What did you discuss with Mr. Tfezak in regard to that notice? A. I told Mr. Tfezak that as far as I was concerned, he should — I don’t know if I used the word ignore but I told him that he should disregard that notice of private sale. And I did so with the understanding that Mr. Gilbert (Tfezak’s attorney) was going to execute the stipulation that had already been sent to him.
Q. So it was your understanding that if Mr. Gilbert signed the stipulation and filed it, you would be willing to renotice the sale? A. Right.
Transcript of Proceedings, Volume IV, page 13.
On cross examination, Walton was asked and provided:
Q.... is it your position that the April 28 notice was invalid in light of your instruction to Joe Tezak to ignore it?
A. Well, I think it depends on whether they had followed through with the stipulation in June, which they did not.
Transcript of Proceedings, Volume IV, page 25.

We conclude that reasonable men could draw different conclusions from the above evidence and inferences therefrom. There remains a factual issue regarding whether or not the instruction to disregard was conditional. A directed verdict is appropriate when there only remain questions of law. Section 25-7-302, MCA. We further conclude that the April 28, 1983 notice, standing alone, provides reasonable notice of sale within the meaning of § 30-9-504, MCA. The District Court was not in error for submitting the case to the juiy for resolution. Furthermore, the District Court did not err by refusing to give an instruction that required the juiy to find that Mack had failed to give reasonable notice. In light of the jury verdict in favor of Mack, we need not address the issue of damages raised by Tezak. The District Court is affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES GRAY and WEBER concur.

JUSTICE TRIEWEILER

dissenting:

I dissent from the opinion of the majority.

In the event that collateral is sold at a private sale, § 30-9-504, MCA, requires reasonable notification of the time after which the private sale will be conducted.

In this case, notice was given that a private sale would be conducted sometime after May 12, 1983. However, the attorney for the party which issued the notice advised the debtor to disregard it. Therefore, the notice was void and no subsequent notice was provided prior to the sale of the collateral.

The majority concludes that a jury could find that the attorney’s advice to disregard the notice was conditioned upon the execution of a stipulation by the debtor’s attorney. However, there was no such testimony by the creditor’s attorney. He testified that “I told him he should disregard that notice of private sale.” He also testified that he gave that advice “with the understanding that Mr. Gilbert [Tezak’s attorney] was going to execute the stipulation.” However, there is no indication in either Walton’s testimony or Tezak’s testimony that Walton’s understanding was communicated to Tfezak. Tfezak gave the following testimony:

A. And he told me to disregard that notice. He said, “don’t pay any attention to it. It should not have been sent to you. Just disregard it.” He said that our deal was, nothing has changed. We went through this private sale and auctions all over again, went through it all over again.

He said, “that’s the way it will be. And any documentation you get from Mack Finance, just ignore it. This is between us.” So I did ignore it. And I came home and called Mr. Gilbert and told him that I guess it was sent in error. I just forgot about it.

Tezak’s recollection was consistent with Walton’s testimony to the effect that he felt that any notice should have come from him. During cross-examination he testified as follows:

Q. And after Joe Tezak talked to you about that notice, is it true that you told him to ignore or disregard, or something to that effect, the notice itself?

A. That’s right. I felt that the notice should come from our office. The majority’s conclusion that Walton conditioned waiver of the notice upon execution of a stipulation is not only unsupported by the direct testimony, it is inconsistent with Walton’s subsequent actions. On June 20, 1983, he sent a letter to Joseph Tezak in which he affirmatively advised Tezak that he had until July 1, 1983, in which to redeem his collateral. The letter stated:

You have not less than ten (10) days from the date of this notice of private sale and until July 1, 1983, in which to redeem the collateral by paying the balance and costs in full. If full payment is not received by that date, you are hereby notified that Mack Financial Corporation will offer the collateral for sale at a private sale to be held on or after July 1,1983.

If Walton intended the previous waiver of notice to be conditioned on execution of a stipulation which had never been executed, why was it necessary to send an additional notice? And why did he affirmatively represent that Tezak had until July 1 by which to redeem his collateral? Why is Tezak being bound by a notice which even the creditor’s attorney did not consider effective?

The fact is that the creditor’s attorney represented one thing to the debtor and unbeknownst to him, the creditor was doing something else. These facts, and this Court’s holding, comply with neither the spirit nor the letter of the statutoiy notice requirements in the Uniform Commercial Code.

Under these circumstances, the defendant was entitled to a directed verdict on the issue of whether he had received adequate notice pursuant to § 30-9-504, MCA.

It should be noted that the plaintiff waived its right to recover a substantial deficiency prior to the trial in this case. Whether, under § 30-9-507, MCA, defendant was entitled to damages over and above the value of that deficiency has not been decided by the majority opinion and I, therefore, express no opinion on that issue.

I would reverse the District Court’s order denying defendant’s motion for a directed verdict on the issue of liability. I express no opinion whether under these circumstances, plaintiff would have been entitled to an award of damages.


text:
    KATHLEEN HUGHES, Claimant and Appellant, v. DEPARTMENT OF LABOR AND INDUSTRY/STATE COMPENSATION MUTUAL INSURANCE FUND, Defendants and Respondents.
    No. 91-471.
    Submitted on briefs Apr. 23, 1992.
    Decided June 30, 1992.
    49 St.Rep. 568.
    253 Mont. 499.
    833 P.2d 1099.

      For Claimant and Appellant: Richard J. Pyfer, Small, Hatch, Doubek & Pyfer, Helena.
    For Defendants and Respondents: Leo S. Ward, Browning, Kaleczyc, Berry & Hoven, Helena.
   JUSTICE WEBER

delivered the Opinion of the Court.

The Montana Worker’s Compensation Court (WCC) upheld an order by the Montana Department of Labor and Industry (Department) which denied claimant, Kathleen Hughes (Ms. Hughes), recovery for medical care and wage loss benefits under Montana’s Occupational Disease Act §§ 39-72-101 et seq., MCA. Ms. Hughes appeals. We affirm.

The issues raised by the claimant are restated as follows:

1. Did the WCC correctly determine that Ms. Hughes’ medical condition was not proximately caused by her employment?

2. Did the WCC correctly reject claimant’s contention that the Department’s findings of fact were clearly erroneous?

Ms. Hughes suffers from a severe form of atopic dermatitis. The record includes medical reports from several specialists who have evaluated and treated Ms. Hughes for this condition from 1983 to the present, including internists, dermatologists and the dermatology departments at Mayo Clinic in 1988, the University of Oregon in 1987 and the Virginia Mason Clinic in 1986.

In deposition testimony, Ms. Hughes’ treating dermatologist stated that he treated Ms. Hughes for her dermatitis from October 1983 to November 1989. In 1983, during this examination, Ms. Hughes indicated that she was suffering from a “flare-up” in her skin condition which had begun in September 1983. The doctor stated that her condition was aggravated by changes in temperature, dust and air flow. He also testified that when he examined the claimant in 1989, she was totally disabled due to her illness. Finally, he testified that Ms. Hughes was able to minimize her disease through aggressive care and by remaining inside her home in a controlled environment.

Ms. Hughes testified she began working as an investigator for the Montana Department of Labor and Industry in October 1983, and began traveling for the Department in February or March 1984. Ms. Hughes stated that she suffered from localized incidents of dermatitis prior to her employment as an investigator, and that she began having serious problems with her skin in 1986. Ms. Hughes stated she suffered a severe “flare-up” of the disease in 1986 after conducting an audit at a talc mine. She describes her condition as getting progressively worse after that time culminating in dermatitis coupled with staph infection which covered approximately ninety percent of her body.

In April 1988, the atopic dermatitis rendered her unable to work. At that time she began treatment with her current treating physician, Harry S. Etter, M.D. Dr. Etter hospitalized the claimant and referred her to the Mayo Clinic for evaluation and aggressive treatment.

In a 1989 report submitted as evidence, Dr. Etter writes that Ms. Hughes has a twenty year history of severe atopic dermatitis which had significantly worsened since 1986. Dr. Etter testified that Ms. Hughes remains totally disabled by this condition because of the aggressive treatment schedule required to control the disease. He also testified that environmental conditions such as temperature changes, dust and wind aggravated her medical condition. Finally, Dr. Etter testified that prior severe outbreaks of dermatitis did not increase Ms. Hughes’ susceptibility to outbreaks currently or in the future.

Ms. Hughes submitted a claim for benefits under Montana’s Occupational Disease Act. The insurer did not accept liability under the Act. Thus, pursuant to § 39-72-602(2)(a), MCA, the Department directed Ms. Hughes to a member of the medical panel for examination. Lance Hinther, M.D., a board certified dermatologist, examined the claimant. On May 9,1990, Dr. Hinther issued a report consistent with the analysis of Ms. Hughes’ treating physicians. The report stated:

Atopic dermatitis is a disease that is intrinsic to the patient and not caused by her occupation. It is possible that environmental conditions such as fluctuations in temperature and humidity can significantly aggravate the degree and involvement of the skin condition.
Although atopic dermatitis is aggravated by the patient’s job exposures, it is an condition that would be present even without her prior work history.
In summary, Kathleen Hughes has atopic dermatitis, a skin condition which is not work caused but is occupation aggravated ...

Neither party requested a second medical examination.

On November 14, 1990, both parties presented their arguments to the Department’s hearings examiner. On April 19,1991, the Department issued an order denying Ms. Hughes’ claim for occupational disease benefits. This order was reviewed and affirmed by the WCC on September 3, 1991. The WCC found the Department correctly applied the statute on proximate cause. It further found the Department’s findings were supported by substantial evidence in the record. Ms. Hughes appeals from this WCC ruling.

I

Did the WCC correctly determine that Ms. Hughes’ medical condition was not proximately caused by her employment?

Ms. Hughes claims that although she suffered from dermatitis prior to working as an investigator for the Labor Department, the unusual travel requirements of the job aggravated her medical condition to the point of disability.

Section 39-72-102(10), MCA defines occupational disease as “harm, damage or death ... arising out of or contracted in the course and scope of employment ...” Section 39-72-408, MCA, defines proximate cause under Montana’s Occupational Disease Act. It states in part that occupational diseases arise out of the employment only if: “(4) the disease does not come from a hazard to which workmen would have been equally exposed outside of the employment; and (5) the disease is incidental to the character of the business and not independent of the relation of employer and employee.”

Here, Ms. Hughes contends her medical condition was aggravated by environmental factors incidental to her employment. Those environmental factors include extensive travel in heated or air conditioned vehicles which exposed the claimant to temperature fluctuations, air flow, dust and wind resulting in aggravation of her medical condition.

The State Compensation Mutual Insurance Fund (State Fund) contends that Ms. Hughes’ employment did not proximately cause her medical condition under § 39-72-408, MCA. We agree that Ms. Hughes cannot satisfy the proximate cause standards.

In this case, the medical reports support the WCC’s findings. First, the claimant’s condition is intrinsic to her and not caused by her occupation. Further, the environmental factors aggravating her condition are not indigenous to her employment. Rather temperature fluctuations, air flow, wind and dust are common to everyone. Finally, there is no evidence in the record which connects her prior outbreaks during employment with the outbreaks she currently suffers. In deposition testimony Dr. Etter stated that her prior outbreaks of dermatitis did not make Ms. Hughes more susceptible to future outbreaks. We affirm the WCC’s conclusion that Ms. Hughes’ illness does not arise out of the course and scope of her employment and is not an occupational disease.

Finally, Ms. Hughes contends she is entitled to recovery under the Act’s aggravation statute, § 39-72-706, MCA, which states in part:

If an occupational disease is aggravated by any other disease or infirmity not itself compensable or if disability or death from any other cause not itself compensable is aggravated ... by an occupational disease, the compensation payable under this chapter must be reduced and limited to such proportion only of the compensation that would be payable if the occupational disease were the sole cause of the disability or death as such occupational disease as a causative factor bears to all the causes of such disability or death.

This section limits the insurer’s liability to the proportion of the disability caused by an occupational disease. It requires either an occupational disease aggravated by a non-compensable illness or injury or a non-compensable injury or illness which is aggravated by an occupational disease. In this case, the WCC determined that the claimant is not suffering from an occupational disease. Rather, the claimant has an intrinsic non-compensable disease which is aggravated by environmental factors not specific to the claimant’s former occupation.

We conclude that § 39-72-706, MCA, does not create a cause of action for an aggravation of a pre-existing condition unless the pre-existing condition is an occupational disease or the aggravation itself is an occupational disease. Accordingly, § 39-72-706, MCA, does not apply in this instance.

We hold that the WCC correctly determined that Ms. Hughes’ medical condition was not proximately caused by her employment.

II

Did the WCC correctly reject claimant’s contention that the Department’s findings of fact were clearly erroneous?

The WCC upheld the hearings examiner’s findings of fact. In reviewing the findings of the Department of Labor and Industry, § 39-72-612(2), MCA, states in part that the WCC may overrule the Department’s determination if the determination is: “clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record ....” Here the WCC found the Department’s determination was supported by substantial evidence in the record. We agree that the record supports the Department’s findings. Further, the WCC used the proper standard of review.

We hold that the WCC properly rejected claimant’s contention that the Department’s findings of fact were clearly erroneous.

Affirmed.

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


author: JUSTICE TRIEWEILER

text:
    IN RE THE MARRIAGE OF BONITA TAHIJA, Petitioner and Respondent, and DANIEL TAHIJA, Respondent and Appellant.
    No. 91-477.
    Submitted on briefs Mar. 5, 1992.
    Decided June 30, 1992.
    49 St.Rep. 571.
    253 Mont. 505.
    833 P.2d 1095.

      For Respondent and Appellant: Deirdre Caughlan, Dunlap & Caughlan, Butte.
    For Petitioner and Respondent: Mark A. Vucurovich, Henningsen, Vucurovich & Richardson, Butte.
   JUSTICE TRIEWEILER

delivered the opinion of the Court.

On January 15,1991, Bonita Tahija petitioned the Second Judicial District Court in Silver Bow County to dissolve her marriage to respondent Daniel Tahija. On August 15, 1991, the District Court dissolved her marriage, distributed the marital estate, and assigned all marital debts to Daniel, including all attorney fees. The District Court provided for the custody and support of the children, and awarded Bonita maintenance of $350 per month, plus payment of tuition and expenses for the next five years or until she completed her degree program and obtained full-time employment. On September 5, 1991, pursuant to Dan’s Motion for Reconsideration, the District Court entered Amended Findings of Fact, Conclusions of Law and a Final Decree. The Amended Findings increased the temporary maintenance to a specific award of $600, deleted the provision for payment of “fees and educational expenses,” and deleted reference to maintenance for up to five years. From that judgment, Dan appeals. We affirm in part and reverse in part.

The issues are:

1. Did the District Court err when it adopted Bonita’s plan of joint custody?

2. Did the District Court err when it awarded Bonita $600 per month for maintenance?

3. Did the District Court err when it divided the marital property and debt?

4. Did the District Court err when it granted Bonita’s request for attorney fees?

Daniel and Bonita Tahija were married on July 19, 1980. Their marriage was dissolved on August 15, 1991. Both are 37 years old. They have two children, whose ages at the time of the dissolution were six and eight. Bonita has a high school education, but was unemployed outside the home during most of the marriage. She is currently unemployed and living in subsidized housing with the two children. Dan earns $41,460 a year as an accountant at Montana Power. Dan and Bonita received $4000 each from the sale of their home.

In its amended findings of fact and conclusions of law, the District Court adopted a joint custody plan, awarded $607 per month to Bonita for child support, and required Dan to maintain health insurance coverage for the children. It assigned the marital debt of $7308 to Dan, divided the marital property equally, and awarded temporary maintenance in the amount of $600 per month to Bonita.

I.

Did the District Court err when it adopted Bonita’s plan of joint custody?

“On appeal, this Corut will not disturb a visitation schedule ordered by the District Court when it is supported by substantial credible evidence.” In re Marriage of B.H.J. (1988), 233 Mont. 461, 463, 760 P.2d 753, 754. Dan contends that no evidence supports the District Corut’s Finding of Fact No. 15 which states:

The following plan for the promotion of the joint custody agreement and visitation schedule, has been adopted, and accepted by the parties, as being in the best interests of the minor children.
[Emphasis added.]

The trial transcript confirms that both parties believed at the hearing that a joint custody plan could be agreed upon. However, the parties proposed findings of fact, and the record, indicate that a plan was not agreed upon. The District Court adopted Bonita’s proposed plan which varies from Dan’s proposed plan by providing less visitation than Dan requested. While the District Court erred in finding that the visitation plan was adopted and accepted by both parties, its adoption of Bonita’s proposed plan was within its discretion.

Dan cites no authority for his contention that the court must state reasons for adopting one proposed plan over another. Rule 52(a), M.R.Civ.R, provides that:

The court may require any party to submit proposed findings of fact and conclusions of law for the court’s consideration and the court may adopt any such proposed findings or conclusions so long as they are supported by the evidence and law of the case.

Dan contends that the findings were entered without regard to “many of the basic issues raised by him, without reading his proposed Findings or in direct contravention of the evidence.” The standard of review for the adoption of a party’s proposed findings is the same as findings prepared by the court. In re Marriage of Jacobson (1987), 228 Mont. 458, 743 P.2d 1025. “Error occurs only when the proposed findings are relied upon to the exclusion of proper consideration of the facts and the failure to exercise independent judgment.” Jacobson, 743 P.2d at 1029.

Dan did not object to the custody plan in his motion for reconsideration. In fact, Dan stated in his brief supporting the motion for reconsideration that he had no objection to the arrangement for custody which had been in effect since the parties separated on an informal basis. Failure to object may have led the District Court to believe that Dan found the court’s previous plan acceptable.

At the hearing, Dan recognized that Bonita’s plan varied from his proposed plan, but acknowledged that he has had no trouble with access to the children, and that a mutual agreement on visitation could occur without the court imposing its schedule. In addition, at the hearing the parties acknowledged that the visitation plan was a formula plan and was not set in stone. The court also noted that if the parties could not work out a plan it would set a plan. The plan itself recognizes that the schedule is flexible.

We conclude that the lower court did address the issues raised by Dan in his motion for reconsideration. The District Court’s findings are supported by substantial evidence, and are not clearly erroneous.

Dan also contends that adoption of the plan has reduced his access to his children by several weeks per year and is contrary to the best interests of the children. While it is true that the adopted plan did not grant the additional weeks of visitation that Dan requested, the plan is still reasonable and within the District Court’s discretion.

This Court has held that a visitation schedule providing visitation on alternate weekends, alternate holidays, one evening per week, and two weeks in the summer is reasonable. In re Marriage of Alt (1985), 218 Mont. 327, 708 P.2d 258. Here, the District Court’s visitation schedule is more generous than the one approved in that case, and Dan has failed to show that the adopted visitation schedule is unreasonable. The joint custody plan is affirmed.

II.

Did the District Court err when it awarded Bonita $600 per month for maintenance?

Maintenance is within the broad discretion of the District Court and may not be set aside unless the court’s clear err constitutes an abuse of discretion. See In re Marriage of Schenk (1984), 213 Mont. 310, 692 P.2d 6.

Under § 40-4-203(1), MCA, a court may award maintenance only if it finds that the spouse seeking maintenance “(a) lacks sufficient property to provide for his reasonable needs; and (b) is unable to support himself through appropriate employment....”

Section 40-4-203(2), MCA, provides that determining an award’s amount and length entails considering all relevant facts, including:

(a) the financial resources of the party seeking maintenance, including marital property apportioned to him, and his ability to meet his needs independently, including the extent to which a provision for support of a child living with the party includes a sum for that party as custodian;
(b) the time necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment;
(c) the standard of living established during the marriage;
(d) the duration of the marriage;
(e) the age and the physical and emotional condition of the spouse seeking maintenance; and
(f) the ability of the spouse from whom maintenance is sought to meet his needs while meeting those of the spouse seeking maintenance.

The District Court concluded that $600 per month maintenance is “appropriate given that [Bonita] lacks sufficient property to provide for her reasonable needs and is currently unable to support herself through appropriate employment while caring for her minor children.” Apart from the proceeds from the sale of the home, all the property Bonita received was non-income producing. See Marriage of Edwards (1985), 215 Mont. 512, 699 P.2d 67.

This Court has held that “appropriate employment” must be determined with relation to the standard of living achieved by the parties during the marriage. In re Marriage of Madson (1978), 180 Mont. 220, 224-25, 590 P.2d 110, 112. The District Court found that the parties enjoyed a high standard of living. Additionally, the District Court found that Dan “has a substantially higher expectation of acquiring future income from present employment when compared to [Bonita’s] present opportunity to acquire future income.” Regardless of whether they enjoyed a high or “comfortable” standard of living, as Dan contends, it is apparent that Bonita is in need of temporary maintenance so that she may acquire an education which will enable her to find appropriate employment.

Dan asserts that the District Court ignored § 40-4-203(2)(f), MCA, requiring consideration of the obligor spouse’s ability to meet his own needs and pay maintenance. We stated in In re Cole (1988), 234 Mont. 352, 358, 763 P.2d 39, 43, that the husband’s ability to pay is not a deciding factor in determining the propriety of a maintenance award. While it is an element, it is not always the determining factor.

However, the District Court properly considered Dan’s ability to pay. Dan’s take home pay, minus monthly expenses, maintenance, and child support leaves him with a small monthly surplus. This does not include a calculation of how maintenance payments will benefit Dan for income tax purposes. Thus, the District Court did not “fail utterly to consider Dan’s ability to pay.”

A review of the record confirms that the District Court’s order of $600 maintenance per month is supported by substantial credible evidence and by proper consideration of the statutory factors.

Additionally, Dan maintains that there is no evidence in the record to support an award for five years when Bonita only requested four years. While we find that evidence in the record supports temporary maintenance for five years as ordered in the District Court’s initial findings of fact and conclusions of law on August 15,1991, it appears that the District Court’s amended findings of fact and conclusions of law set no specific time period for temporary maintenance. Therefore, we remand this case to the District Court for the purpose of establishing a specific period for temporary maintenance.

in.

Did the District Court err when it divided the marital property and debt?

The standard of review for division of marital property is whether the District Court abused its discretion. In re Marriage of Skinner (1989), 240 Mont. 299, 304, 783 P.2d 1350, 1353.

Dan was ordered to pay marital debts in the amount of $7308. He contends that proceeds from the sale of the parties’ home should have been applied to satisfy that debt.

The District Court’s consideration of those statutory factors provided for in § 40-4-202, MCA, is illustrated in the following portion of its memorandum explaining its amended order:

The award of maintenance and division of assets in this matter are properly considered together, maintenance of $600.00 per month and an award of an equitable division of the property has been made. The Court is fully aware that the assets of the marriage have been divided equally while the debts of the marriage are to be the sole responsibility of the Respondent. The proportion of the division of the marital estate in this instance recognizes the Respondent’s greater earning capacity and opportunity to acquire future income and assets. Section 40-4-202, M.C.A., requires the Court to consider the opportunity of the parties for future acquisition of capital assets and income. “Opportunity” is a broad word that includes the capacity of the parties to earn future income ....
It is also the opinion of this Court that Petitioner has made significant and substantial contributions to the property acquired during marriage in her capacity as housewife and mother and that the temporary award of maintenance is in lieu of a larger portion of the marital estate. It is also noted that Petitioner’s contributions as a homemaker have been a substantial factor in facilitating the maintenance of the home. [Italics added.]

After reviewing the record we hold that the District Court did not abuse its discretion in the division of the property and debts.

IV.

Did the District Court err when it granted Bonita’s request for attorney fees?

Abuse of discretion is the standard of review for an award of attorney fees. Jacobson, 743 P.2d at 1029. Section 40-4-110, MCA, allows a court to award reasonable attorney fees “after considering the financial resources of both parties.” The District Court properly considered the financial resources and burdens of both parties when it determined that Bonita was entitled to attorney fees. We hold that the District Court did not abuse its discretion when it awarded attorney fees to Bonita.

Finally, Dan contends, and Bonita agrees, that his contributions to the Montana Power Benefit Accounts which were made prior to the parties’ marriage should not have been divided as part of the marital estate. We agree.

We affirm the judgment of the District Court with the exception of its allocation of the benefit accounts.

This case is remanded to the District Court for determination of the proper division of the benefit accounts, determination of the maximum duration of maintenance, and the entry of judgment consistent with this opinion.

Affirmed in part, reversed in part, and remanded.

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