text:
    ANTHONY W. KENDALL, Plaintiff and Appellant, v. THE STATE OF MONTANA, and the University of Montana, and Carrol Krause, Commissioner of Higher education, and James V. Koch, as President of the University of Montana, Defendants and Respondents.
    No. 87-522.
    Submitted on Briefs March 3, 1988.
    Decided April 5, 1988.
    752 P.2d 1091.

      Anthony W. Kendall, Red Lodge, pro se.
    LeRoy H. Schramm, Montana University System, Helena, for defendants and respondents.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

The District Court for the Thirteenth Judicial District, Carbon County, granted defendants’ motion for change of venue to Missoula County. We reverse and remand.

The issue is whether venue for this action against the State of Montana and the University of Montana is properly found in Carbon County, where the plaintiff resides.

Plaintiff Mr. Kendall attended the defendants’ law school in Missoula, Montana, from 1982 to 1985. He paid, under protest, certain required fees for attendance at the school. He believes these fees were collected in violation of Section 10-2-311, MCA. That statute grants free fees and tuition to all honorably discharged persons who served with the United States forces in any of its wars and who were bona fide residents of Montana when they entered the service. Mr. Kendall has negotiated the return of all but approximately $1,000 of the amount he paid to the University and brings this action to recover the remaining amount.

Mr. Kendall is now a resident of Red Lodge, Carbon County, Montana. He brought this suit in that county under Section 25-2-126(1), MCA:

“The proper place of trial for an action against the state is in the county in which the claim arose or in Lewis and Clark County. In an action brought by a resident of the state, the county of his residence is also a proper place of trial.”

The University of Montana moved for a change of venue to Missoula County. In granting the motion the District Court made the following analysis:

“Defendants have presented convincing evidence that this Court should consider the University System a separate entity from the State of Montana for the purpose of determining venue. This being the case, it is clear that the proper place of venue is Missoula County. The contracts between the parties were entered into in Missoula County, the benefits of the contracts were received in that County, and the University is located in Missoula County.”

From that order, Mr. Kendall appeals.

Is venue for this action against the State of Montana and the University of Montana properly found in Carbon County, where the plaintiff resides?

The general rule is that the proper place for trial of a civil action is the county in which the defendant resides. Section 25-2-118, MCA. However, there are numerous exceptions to this rule, including the exception in Section 25-2-126(1), MCA, for actions in which the State is defendant. The University argues that Section 25-2-126(1), MCA, means that a resident of the State of Montana may sue the State in the county where he resided at the time the cause of action accrued. It therefore asserts that the proper place for trial of this action under this statute is Missoula, where Mr. Kendall resided as a student.

Since the words “when the cause of action accrued” are absent from Section 25-2-126(1), MCA, we look to the purpose of the statute for guidance on whether they should be implied. This Court has stated that the purpose of this statute is to afford citizens a practical and inexpensive forum for suits against the State and that such statutes are to be liberally construed in favor of private litigants. Petersen v. Tucker (Mont. 1987), [228 Mont. 393,] 742 P.2d 483, 484, 44 St.Rep. 1625, 1627-28. The implied language suggested by the University would frustrate both of these principles. We decline to read into the statute the limitation suggested by the University.

The University next argues that there is no plain cause of action against the State in this matter. That argument goes, as Mr. Kendall states, to the heart of his complaint. Whether the State is properly a party will not be considered by this Court on an appeal of a motion for change of venue. Petersen, 742 P.2d at 484. The University’s related argument that it may be sued separately from the State is irrelevant as long as the State remains in the lawsuit. Under Section 25-2-117, MCA, a county which is a proper place of trial for any one of the defendants is proper for all defendants, subject to the court’s power to order separate trials.

The University’s third argument is based on Mr. Kendall’s failure to allege in his complaint that he resides in Carbon County. The University cites the rule that the right of a defendant to a change of venue is determined by the condition of the pleadings as they exist at the time the defendant makes its appearance in the case. Johnson v. Clark (1957), 131 Mont. 454, 460-61, 311 P.2d 772, 776. Mr. Kendall signed the complaint “A. W. Kendall, P.O. Box 67, Red Lodge, Montana 59068.” His affidavit that he had resided in Carbon County since October 1985 was before the court when it ruled on the change of venue motion. The court, in its order, found that Mr. Kendall is a resident of Carbon County. We conclude that the failure of the complaint to state in its body that Mr. Kendall is a Carbon County resident is not fatal.

We hold that under the plain meaning of Section 25-2-126(1), MCA, Carbon County, the county of Mr. Kendall’s residence, is a proper venue for this action. We reverse the order granting change of venue and remand this cause to the District Court for the Thirteenth Judicial District for further proceedings.

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


source: Caselaw Access Project

author: MR. JUSTICE McDONOUGH

license: Public Domain

text:
    ILENE COX and Eleanor Dunn, Plaintiffs and Appellants, v. GILBERT MYLLYMAKI, Evan H. Gray, and Eugene Myllymaki, Defendants and Respondents.
    No. 87-288.
    Submitted on Briefs Feb. 4, 1988.
    Decided April 6, 1988.
    752 P.2d 1093.

      Kelly A. Jenkins, Helena, George Richardson, Richardson and Richardson, Butte, for plaintiffs and appellants.
    John F. Iwen, Great Falls, for defendants and respondents.
   MR. JUSTICE McDONOUGH

delivered the Opinion of the Court.

Plaintiffs appeal the decision of the District Court of the Eighth Judicial District, Cascade County, granting defendant’s motion to dismiss for failure to prosecute pursuant to M.R.Civ.P. 41(b).

The plaintiffs filed their complaint in the underlying cause on July 30, 1984. The first defendants were served on August 15, 1984. The defendants filed an answer October 31, 1984 and filed an amended answer five days later. In September 1984, plaintiff Cox, who along with Dunn was named as an heir in Lempi Matilla’s will, filed for appointment as special administrator for the estate of Lempi Matilla. Matilla was the most recent decedent and sole heir of William Matilla, whose estate is the subject of the underlying cause. The underlying cause involved alleged improprieties in the documentary transfer of William Matilla’s land and alleged subsequent fraud in the administration of Lempi Matilla’s estate. Cox’s petition was denied by the probate court, so she appealed the decision to the Montana Supreme Court. The Supreme Court upheld the probate court on May 9, 1986. See In the Matter of the Estate of Lempi Matilla, Deceased (Mont. 1986), [221 Mont. 262,] 718 P.2d 343, 43 St.Rep. 797. The defendants filed their motion to dismiss for want of prosecution under M.R.Civ.P. 41(b) on December 29, 1986. On May 18, 1987 the District Court granted defendants’ motion to dismiss for failure to prosecute.

The issue on appeal is whether the District Court committed reversible error when it granted the defendants’ motion to dismiss for failure to prosecute pursuant to M.R.Civ.P. 41(b). We reverse.

Rule 41(b), M.R.Civ.P., governs the dismissal of a claim for failure to prosecute.

“For failure of the plaintiff to prosecute or to comply with these rules or any order of court, a defendant may move for dismissal of an action or of any claim against him.”

The granting of a motion to dismiss for failure to prosecute will not be overturned unless there is an abuse of discretion. “It is within the discretion of the trial court to dismiss an action if it has not been prosecuted with reasonable diligence. It is presumed that the trial court acted correctly and its decision will not be overturned without a showing of an abuse of discretion.” Cremer v. Braaten (1968), 151 Mont. 18, 19-20, 438 P.2d 553, 554.

However, a judge’s discretion is not unlimited and it must be remembered that courts “exist primarily to afford a forum to settle litigable matters between disputing parties. (Citations omitted)” Brymerski v. City of Great Falls (1981), 195 Mont. 428, 431, 636 P.2d 846, 848. The factors to be weighed when determining whether a district court has abused its discretion include: “. . . the plaintiff’s diligence, the trial court’s need to manage its docket, the danger of prejudice to the party suffering the delay, the availability of alternate sanctions, and the existence of warning to the party occasioning the delay.” Hamilton v. Neptune Orient Lines, Ltd. (9th Cir. 1987), 811 F.2d 498, 499.

One factor, the plaintiff’s diligence, is a balance of unreasonable delay, prejudice to the defendant, and the existence of excuse for delay. Where there is unreasonable delay, prejudice to the defendant is presumed and the plaintiff must show an excuse for the inactivity. The burden shifts when a reasonable excuse is presented. Timber Tracts, Inc. v. Fergus Electric Cooperative, Inc., (Mont. 1988), [231 Mont. 40,] 45 St.Rep. 415, [753] P.2d [854]. A reasonable excuse is one that is not frivolous “. . . where a plaintiff has come forth with an excuse for his delay that is anything but frivolous, the burden of production shifts to the defendant to show at least some actual prejudice.” Nealy v. Transportation Maritima Mexicana, S.A. (9th Cir. 1980), 662 F.2d 1275, 1281. The plaintiffs present the excuse that they were pursuing a collateral action. Plaintiff Cox was attempting to be appointed special administrator of the Lempi Matilla estate, which would have affected her position in this underlying action. This excuse accounts for much of the delay and is not frivolous. The burden then shifts and defendants have not demonstrated any actual prejudice. “A weak excuse may suffice if there has been no prejudice; an exceedingly good one might still do even when there has been some.” Nealy, 662 F.2d at 1280 quoting Larios v. Victory Carriers, Inc., (2nd Cir. 1963), 316 F.2d 63, 67.

Two other important factors, the availability of alternative sanctions and the existence of a warning to the party causing the delay were not considered in this case. The granting of a dismissal pursuant to Rule 41(b) is more difficult to sustain when there is no warning and no exploration of possible alternative sanctions. Hamilton, 811 F.2d at 500. In view of all these considerations there was an abuse of discretion by the trial court. Reverse.

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


author: MR. JUSTICE HUNT MR. JUSTICE SHEEHY,

text:
    JOHN E. WRIGHT, Plaintiff and Appellant, v. STATE OF MONTANA, Michael Greely, Attorney General of the State of Montana; Ray Houghton, City of Bozeman, a Municipal corporation; and Edward Malone, Defendants and Respondents.
    No. 87-403.
    Submitted on Briefs Feb. 18, 1988.
    Decided April 6, 1988.
    752 P.2d 748.

      J. David Penwell, Bozeman, for plaintiff and appellant.
    Leanne M. Schraudner, Lilly, Andriolo and Schraudner, Bozeman, G. Curtis Drake, Keller, Reynolds, Drake, Sternhagen and Johnson, John Maynard, Tort Claims Div., Helena, for defendants and respondents.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

This is an appeal from an order by the District Court, Eighteenth Judicial District, Gallatin County, granting summary judgment in favor of respondents. We affirm.

Appellant’s issue on appeal restated is:

Did the District Court err in granting summary judgment for all defendants when there existed a material issue of fact?

On January 20, 1984, plaintiff John Wright was arrested for violations of Section 45-8-101, MCA, disorderly conduct, and Section 45-6-203, MCA, criminal trespass, while attempting to renew his expired Montana driver’s license at the Licensing Bureau offices in Bozeman. Wright entered the Bureau offices in midmorning with the intention of renewing his expired license. He was first waited upon by examiner Rena Knapp, who informed him that because his license was past 90 days expired, he was required to pass a complete driving examination before being issued a new license. Wright took and successfully passed the written exam and then was required by Knapp to fill out the standard application form called a DL-40. The form he filled out contained a clause that required the disclosure of his Social Security number. Although Montana law no longer mandates the use of a Social Security number, many of the old forms are still being used. Either Knapp or examiner Ray Houghton asked him what his number was. He indicated he did not wish to disclose his Social Security number and there is testimony that he replied by saying, “Hell, no.” Additional testimony indicates he was given a random number.

At this point, examiner Houghton took over the application of Wright. After apparently completing the rest of the form, Wright left the office and returned with the vehicle he wished to use for the driving portion of the exam. Before he left he was advised by Houghton to be sure to bring back adequate proof of insurance.

Wright returned but with what Houghton thought to be inadequate proof of insurance, and he refused to allow Wright to finish the exam because an examiner is prohibited from getting into a vehicle without adequate proof of insurance. A loud argument ensued and ended when Wright called Houghton a “horse’s ass”. Houghton then told Wright not to come back that day as he would not be waited upon further. Wright left, attempting to slam the office door as he went. Wright did return later that day and tried to use an office phone restricted to office business only. Having several customers and not wanting a disturbance, Houghton called the police and Wright was arrested after refusing the police officer’s request to leave. He was taken to the detention center, booked, and released on bail. The next Monday, Wright returned to the Bureau office, showed adequate proof of insurance and was given the driving portion of the exam by Houghton. He passed and was given a new driver’s license. All charges were later dismissed. It should be noted that Wright’s renewed license does not contain his Social Security number.

Wright brought suit for false arrest and other claims against the State of Montana, Houghton, City of Bozeman and the arresting officer, Ed Malone. All defendants filed a motion for summary judgment which was granted July 29, 1987. In its order, the District Court noted the lack of any evidence submitted in opposition to the motion and found no material issue of fact existed. Plaintiff appeals.

Appellant argues that the court ignored the existence of two issues of fact at the time it entered summary judgment. First, appellant disputes whether there was probable cause to arrest and second, whether Wright was arrested because he was required to give his Social Security number as a condition precedent to obtaining his driver’s license. We will address the second issue first.

The standard of review for an order for summary judgment is the same as that used by the District Court under Rule 56, M.R.Civ.P. Mayer Bros. v. Daniel Richard Jewelers, Inc. (Mont. 1986), [223 Mont. 397,] 726 P.2d 815, 816, 43 St.Rep. 1821, 1822. If the record does not show an issue of material fact exists the movant is entitled to summary judgment as a matter of law. Rule 56(c), M.R.Civ.P.

The burden of proof requirements for summary judgment have been set forth by this Court on innumerable occasions. The initial burden is on the party seeking summary judgment. Once that burden is met the party opposing the motion must present evidence substantial and material enough to raise a genuine issue of fact. B.M. By Berger v. State (Mont. 1985), [215 Mont. 175,] 698 P.2d 399, 401, 42 St.Rep. 272, 274.

Further, we have stated that a party opposing a motion for summary judgment may not rest upon his pleadings but has an affirmative duty to bring forth sworn testimony or affidavits which show a genuine issue. Mere allegations are insufficient to raise a genuine issue of fact. Mayer Bros., 726 P.2d at 817; B.M. By Berger, 698 P.2d at 401; Conboy v. State (Mont. 1985), [214 Mont. 492,] 693 P.2d 547, 551, 42 St.Rep. 120, 125.

The appellant presented no evidence to the District Court in opposition of respondent’s motion for summary judgment. No affidavits were filed. Wright’s own deposition was not filed until a month after the court’s judgment. The court need not consider untimely filed documents in proceedings for summary judgment. Marcus Daly Memorial Hospital v. Borkoski (Mont. 1981), [_ Mont. _,] 624 P.2d 997, 1000, 38 St.Rep. 322, 325.

Appellant argues that a negotiation session between the parties transcribed by a court reporter can be considered by the District Court. We hold that because this is not sworn testimony the District Court need not consider it in proceedings for summary judgment.

The relevant depositions in the District Court file are all consistent on the point of wright’s Social Security number. Both Knapp and Houghton testified that Wright was not required to use his Social Security number and was in fact assigned a random number. There is no opposing evidence that shows he was forced to use his Social Security number. That number is not on his driver’s license. Knapp’s, Houghton’s and Malone’s depositions are consistent in showing that the conflict arose over Wright’s lack of proof of insurance. Even if Wright’s deposition showed an inconsistency it was not before the court and cannot be considered. The appellant failed to carry his burden and the District Court made its decision accordingly.

Appellant also argues that whether officer Malone had probable cause to arrest Wright is a question of fact which the appellant is entitled to present to a jury. The general rule is that where the facts are undisputed the question of whether an arrest was legal or illegal becomes a question of law for the court. 32 Am.Jur.2d False Imprisonment, Section 96.

Since no material fact exists the respondents were entitled to summary judgment as a matter of law. We therefore affirm the District Court’s order for summary judgment.

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

MR. JUSTICE SHEEHY,

dissenting:

In Hamlet’s soliloquy, one of the “whips and scorns” which led the great Dane to consider whether death was better than life was “the insolence of office.” In those few words, the Bard managed to express the aggravations and futilities pressed on any of us when public officials vent their sour stomachs in performing their duties. The authority to wear a badge or to wield a pen in power over others seems to fuel in us a sense of mastery, and not of service. It is a common failing, and all of us public servants succumb to it at some point.

It is an insolence of office in us to disregard the rule of iaw applicable to a summary judgment in this case. That rule is that a summary judgment does not lie where there are genuine issues of material fact.

This Court assumes without question that the version of incidents propounded by the public officers in this case is the only version. It ignores the opposite version posed by the plaintiff, that he went to a public building to renew his driver’s license; that his Social Security number was demanded; that he later produced proof of insurance but that the examiner refused to issue him a license that day, and told him to return on the following Monday; and that the examiner called the police and had him arrested; that the charges against him were disorderly conduct and criminal trespass; and that both of these charges were later dismissed. In short, he went to a public building for a driver’s license and wound up handcuffed and led off to the police station.

The real question in this case is whether there was probable cause for Wright’s arrest. If his arrest was groundless, he has a cause of action against the perpetrators. Neither the District Court nor this Court addresses that question. The deposition testimony of Rena Knapp is strong evidence that his arrest was groundless. She describes how the examiner (without any authority to do so) told Wright not to return for his license that day.

When Wright returned, with his proof of insurance, the examiner immediately, without exchanging a word with Wright, telephoned for the police. Rena Knapp describes the interval until the policeman came as no shouting and no threatening by Wright. When the policeman came and asked what the problem was, the examiner said that Wright had been asked to leave, and would not, and that the examiner wanted Wright out of the office; “that he would no longer be helped that day.” There appears no justification for refusal to help Wright on that day, since he had paid for his license, successfully taken the written exam, and had insurance papers which entitled him to a test drive. For reasons of his own, it appears the patrolman was punishing Wright. Without any struggle or tumult, Wright was handcuffed and taken out of a public building where he had a right to be, and groundlessly charged with crimes.

There are in this case genuine issues of material fact, and summary judgment was improper. I would reverse.


author: MR. JUSTICE HARRISON

text:
    GYPSY-HIGHVIEW GATHERING SYSTEM, INC., A Montana corporation, Defendant and Appellant, v. The MONTANA DEPARTMENT OF STATE LANDS, Plaintiff and Respondent.
    No. 87-556.
    Submitted on Briefs March 3, 1988.
    Decided April 6, 1988.
    Rehearing Denied April 26, 1988.
    753 P.2d 317.

      Selden S. Frisbee, Cut Bank, for defendant and appellant.
    Tommy H. Butler, Helena, for plaintiff and respondent.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

Gypsy-Highview Gathering System, Inc. (hereafter GypsyHighview) appeals the granting of summary judgment to the Department of State Lands (hereafter department), which forces Gypsy-Highview to relinquish State of Montana oil and gas lease Number 17,092-75 located in Teton County, Montana. GypsyHighview claims the summary judgment of the Ninth Judicial District Court is void since it contains no findings of fact or conclusions of law and also claims only the Board of Land Commissioners, not the department, can cancel the lease. We affirm.

Gypsy-Highview was the assignee of an oil and gas lease on school trust land in Teton County entered into December 2, 1975. The term of the lease was for ten years and as long after that as the lease produced commercial quantities of oil and gas. Commercial quantities were never produced from the lease, although some 100 gallons were produced while testing a well during the primary term of the lease. Gypsy-Highview has never paid any royalties on the lease. The department notified Gypsy-Highview on November 18, 1986 that its lease was terminated and that it had ten days under A.R.M. 26.3.214 to request a hearing on the termination. No such request was made until December 4, 1986, which the department denied as not being timely.

The department sued on February 17, 1987 seeking a recordable instrument from Gypsy-Highview surrendering the lease. The department requested a summary judgment under Rule 56(c), M.R.Civ.P., while Gypsy-Highview moved to dismiss under Rule 12(b), M.R.Civ.P. The District Court heard arguments on October 16, 1987 and granted summary judgment to the department on October 21. The court ordered Gypsy-Highview to furnish a recordable instrument surrendering the lease and to inform the department of its selection of an appraiser in connection with the appraisal of the pipe and equipment.

Gypsy-Highview argues first that the court’s summary judgment is improper since it provides no findings of fact or conclusions of law. Rule 52(a), M.R.Civ.P., however, specifically states that findings and conclusions are unnecessary in Rule 56 motions as long as the court’s order . . specifies] the grounds therefor with sufficient particularity as to apprise . . . the appellate court of [its] rationale ...” Recent decisions echo the principle that findings and conclusions are not required for Rule 56(c) summary judgment. See, Simmons v. Jenkins (Mont. 1988), [230 Mont. 429,] 750 P.2d 1067, 45 St.Rep. 328, 334; Lewis v. Department of Revenue (1984), 207 Mont. 361, 375, 675 P.2d 107, 114; Downs v. Smyk (1979), 185 Mont., 16, 19, 604 P.2d 307, 309.

As mentioned above, the absence of genuine questions of material fact and the determination of whether the moving party is entitled to judgment is the appropriate standard of review. Sevalstad v. Glaus (Mont. 1987), [227 Mont. 117,] 737 P.2d 1147, 1148, 44 St.Rep. 930, 932. The department meets that burden by showing that the lease had never produced commercial quantities of oil and gas, that Gypsy-Highview personnel could point to no more than 100 gallons of production from the lease, and that the lease agreement provides that it shall end after ten years if no commercial quantities were being produced. The lease terms speak for themselves and under them no question of fact is presented and the department is entitled to a surrender of the lease.

Gypsy-Highview’s other argument is that its lease was not canceled properly since the department notified Gypsy-Highview of the cancellation. Gypsy-Highview claims that the terms of the lease provide only the Board of Land Commissioners with the authority to terminate the lease. Paragraph 19 of the lease reads:

“It is understood and agreed that the lessor [State of Montana] hereby reserves the right to declare this lease forfeited and to cancel the same through the State Board of Land Commissioners upon failure of the lessee to fully discharge all the obligations provided herein, after written notice from said Board . . .”

Section 77-1-301, MCA, however, empowers the department to lease and manage state lands as directed by the Board of Land Commissioners. The Board has delegated such duties to the Commissioner of State Lands and the department, subject only to review by the Board. In this case, the Board reviewed the matter but never overrode the department’s action.

In Jeppeson v. Department of State Lands (1983), 205 Mont. 282, 667 P.2d 428, this Court upheld summary judgment for the department when it, not the Board of Land Commissioners, gave notice to the lessee of grazing land that his lease had expired due to his failure to make timely rent payments. Summary judgment was held to be proper since the lease was canceled by operation of law when the rent was unpaid, not by the actions of the department. Jeppeson, 667 p 2d at 430. The same is true in this case — the lease expired because of Gypsy-Highview’s failure to produce commercial quantities of oil and gas during the primary term, not because of the department’s actions. Since the lands granted to the state by the federal government for the support of public schools constitute a trust, the department has a fiduciary duty to manage them for the state’s utmost advantage. Jeppeson, 667 P.2d at 431. The uncontroverted evidence shows that the department in this case canceled a lease because of lack of production of oil and gas. It does not appear that the court erred by granting summary judgment.

Affirmed.

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


author: MR. CHIEF JUSTICE TURNAGE

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. SUSAN KAY BROWN, Defendant and Appellant.
    No. 87-338.
    Submitted March 1, 1988.
    Decided April 7, 1988.
    752 P.2d 204.

      Conde F. Mackay, Public Defender, Anaconda, for defendant and appellant.
    Mike Greely, Atty. Gen., Helena, Kathy Seeley, Asst. Atty. Gen., Christopher Miller, Co. Atty., Deer Lodge, for plaintiff and respondent.
   MR. CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Defendant Brown appeals her bench conviction in the Third Judicial District, Powell County. She was found guilty of conspiring to violate Section 45-7-307, MCA, by delivering a pistol to her husband, David Lee Brown, who was an inmate in the Montana State Prison. On June 10, 1987, defendant was sentenced to ten years in the Montana Women’s Correctional Center. We reverse and remand.

The parties raise the following issues for our review:

1. Did the District Court properly admit David Lee Brown’s suicide note into evidence as an exception to hearsay under Rules 803(24) and 804(b)(5), Mont.R.Evid.?

2. Did the District Court properly admit an informant’s testimony into evidence as an exception to hearsay under Rule 801(d)(2)(E), Mont.R.Evid.?

3. Does sufficient evidence support the conviction?

In early September 1986, David Lee Brown asked a prison trustee, David Edwards, to help him smuggle a pistol into Montana State Prison. The trustee informed the prison investigator, Robert Mc-Nally, about the plan. McNally advised Edwards to go through with the plan but deliver the pistol to McNally.

According to the plan, Edwards would be on a lawn-mowing detail outside the prison compound. Defendant Brown would then drive past Edwards and throw a waterproof package containing a pistol and a bottle of whiskey into the open field. Edwards would pick up the package, place it under the cowling of his lawnmower and bring it through the guard station into the prison compound. Edwards would then deposit the package in a water barrel near the vehicle maintenance area. David Lee Brown worked in the maintenance area and would retrieve the package at a convenient moment.

The delivery failed. On September 14, 1986, at the planned time and place, defendant Brown drove her blue Oldsmobile station wagon past Edwards with the window rolled down. According to Edwards, as the defendant passed him, she shook her head “no” and then nodded up and down. She proceeded to the prison visitors’ lot and parked the car. She then entered the prison and visited David Lee Brown.

Later that same night, David Lee Brown told Edwards that his wife did not throw the package out because the nearby guard tower was manned. Prior to September 14, 1986, the guard tower had been unmanned while it was being rebuilt.

David Lee Brown planned another delivery time and method for September 17, 1986. The new plan called for defendant Brown to leave the package under the seat of her car with the door unlocked. Edwards would go to the prison visiting room and receive a signal from David Lee Brown indicating which seat the package was under. Edwards would then go to the parking lot and remove the package.

The second delivery also failed. On September 17, 1986, Edwards went to the visiting room and observed David Lee Brown, defendant Brown and her son. David Lee Brown looked at Edwards and shook his head “no.” Edwards then informed McNally about the signal. McNally advised Edwards to proceed to the parking lot and check Brown’s car. All four doors of the car were locked. The following day, David Lee Brown told Edwards that the delivery had been delayed because defendant Brown might also get some marijuana and would “bring everything at one time.”

The third delivery was set up for September 19, 1986. On that day Edwards went to the visiting room at the planned time and observed David Lee Brown, defendant Brown and her son. David Lee Brown signaled that the package was under the driver’s seat. Edwards proceeded to the parking lot. Defendant Brown’s car was parked in the prearranged place. The door on the driver’s side was unlocked. Edwards found the package under the driver’s seat and removed it.

Edwards then transferred the package to the rear floor of Mc-Nally’s car which was parked nearby. Edwards locked the car and reported to McNally. McNally and the local sheriff went to Mc-Nally’s car and retrieved the package. They opened the package but neglected to check it for fingerprints. The package contained a bottle of whiskey, a loaded .22 caliber revolver and a dozen extra cartridges. Defendant Brown was arrested in the prison visiting room.

David Lee Brown was placed in maximum security. On the morning of September 21, 1986, he was found dead and hanging by the neck in his cell. He left a suicide note for defendant Brown, stating that he would never see her again and that he was “sorry for getting you involved with my troubles.”

Issue 1. Suicide Note

The State admits that the suicide note was not written in furtherance of the conspiracy. However, the State contends that the note implicates Brown and was admissible as an exception to hearsay under Rule 804(b)(5), Mont.R.Evid. Rule 804(b)(5) states: “Other exceptions. A statement not specifically covered by any of the foregoing exceptions but having comparable circumstantial guarantees of trustworthiness.”

The State argues that the trustworthiness of the suicide note is supported by David’s knowledge of his impending suicide. In the note, David wrote that he never meant for defendant Brown “to get hurt.” He continued: “It is alright what ever you told them or signed on me . . . you just did what I asked you to do for you loved me.” The State further argues that the trustworthiness is supported by David’s attempts to exculpate defendant Brown. David wrote: “Mr. Weer: Please let my wife go. First time she ever done anything wrong. It was all my fault.” The State concludes that David had no reason to lie when he wrote the note and therefore the note is trustworthy.

We review this issue under the guidelines of Rule 102, Mont.R.Evid., which states: “These rules shall be construed to secure . . . promotion of growth and development of the law of evidence to the end that the truth may be ascertained and proceedings justly determined.” Any admission of hearsay must be reconcilable with the policy expressed in Rule 102.

The language and rationale of Rule 804(b)(5) is identical to its companion, Rule 803(24), Mont.R.Evid. Rule 804 applies when the declarant is unavailable; Rule 803 applies when the availability of the declarant is immaterial. The first twenty-three exceptions of Rule 803 and the first five exceptions of Rule 804 codify common and well-recognized exceptions to the hearsay rule.

However, the list of exceptions is not closed. The residual exceptions of Rule 804(b)(5) and Rule 803(24) provide for new and unanticipated situations which demonstrate a trustworthiness within the same spirit of the specifically stated exceptions. State v. Lapier (Mont. 1984), [208 Mont. 106,] 676 P.2d 210, 212, 41 St.Rep. 203, 206.

The rationale behind a residual exception was first expressed in Dallas County v. Commercial Union Assurance Co. (5th Cir. 1961), 286 F.2d 388. In Dallas, an unsigned newspaper article written fifty years earlier was admitted as an exception to hearsay. The article described a fire in the local courthouse while it was under construction. Although the article did not fit into any recognized exception, it was admitted because it was probative of structural weakness in the courthouse. The article also possessed an adequate guarantee of trustworthiness because a newspaper would probably not falsely report a courthouse fire. Dallas was cited by the United States Senate when Congress was drafting the Federal Rules of Evidence.

When the Montana Advisory Commission on the Rules of Evidence considered Rules 803 and 804, it believed the residual exceptions should allow room for “growth and development” of the law of evidence in the area of hearsay. The Commission stated: “The adoption of this exception changes existing Montana law to the extent that it allows the court to admit hearsay because an equivalent guarantee of trustworthiness exists even though there is no specific exception allowing it.” Commission Comments on Rule 803(24), Mont.R.Evid. The residual exceptions of Rules 803 and 804 are consistent with the policy expressed in Rule 102.

However, the residual exceptions are not broad licenses for trial judges to admit hearsay statements that do not fall within the established exceptions of Rule 803 and 804. The residual exceptions should be used sparingly, and only in exceptional circumstances. The trial judge should exercise no less care, reflection and caution than prior courts did in establishing the recognized exceptions.

In the instant case, the suicide note was not admissible. It did not qualify as a recognized exception. Nor was it a “new and unanticipated situation” requiring “growth and development” of hearsay law, because suicide notes predate the rules of evidence by many years.

Furthermore, any hearsay statement logically must tend to prove the proposition for which it is offered. “Unless evidence naturally and logically tends to establish a fact in issue, it is not admissible.” Britton v. Farmers Ins. Group (Mont. 1986) [221 Mont. 67,] 721 P.2d 303, 315, 43 St.Rep. 641, 654. The suicide note fails on this point. The note contained no direct statement implicating Susan Brown. The note does not mention the pistol, the plan, or the delivery. The most potentially damaging sentence merely read: “First time she ever done anything wrong.” At most, the note infers some possible role in the conspiracy. We find that such speculation does not rise to a sufficient “guarantee of trustworthiness” under Rules 803(24) and 804(b)(5).

Alternatively, the State contends that the note was admissible as a statement against interest under Rule 804(b)(3), Mont.R.Evid. We do not agree. A statement against interest must expose the declarant to liability. David Lee Brown hanged himself soon after he wrote the note and surely was not in fear of criminal prosecution.

The State argues that even if the note was erroneously admitted, the error was harmless and not prejudicial because Brown’s conviction was supported by other evidence. We find that the error was not harmless. The note contributed significantly to the State’s case. The admission of the note affected the substantial rights of Brown and prejudiced her defense.

In conclusion, we hold that the note was not admissible. We- reverse on this issue and need not address the merits of Issues 2 and 3.

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


author: MR. JUSTICE GULBRANDSON

text:
    ANTHONY E. BROWN, Plaintiff and Appellant, v. RICHARD JENSEN, Verlin L. Fossum, Stan Reep, William Seay, Larrie Smith, James Haughen, Winfield Ostwald, Loye H. Ashton, Carl R. Larson, George Everson, and Eldin R. Johnson, jointly and severally, Defendants and Respondents.
    No. 87-024.
    Submitted on Briefs Feb. 25, 1988.
    Decided April 11, 1988.
    753 P.2d 870.

      Patrick F. Flaherty, Flaherty, Lord and Winner, Great Falls, for plaintiff and appellant.
    Debra D. Parker, Murphy, Robinson, Heckathorn and Phillips, P.C., Kalispell, Fred Rathert, Bjella, Neff, Rathert, Wahl and Eiken, P.C., Williston, N.D., for defendants and respondents.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

Anthony E. Brown (Brown) appeals from the order of the Lincoln County District Court granting summary judgment to defendants Jensen et al. (Williston Group) and assessing Rule 11 M.R.Civ.P., sanctions against Brown and his attorney, Patrick F. Flaherty (Flaherty). We affirm.

Brown brought this action in February of 1986 to have a partition order in Lincoln County District Court Cause No. DV-82-94 set aside or declared void. The alleged fraudulent actions of defendants Jensen et al. in obtaining the order of partition in Cause No. DV-82-94 was the basis for the relief sought in Brown’s complaint. Jensen et al. reside in Williston, North Dakota, and are referred to as the “Williston Group.”

Lincoln County District Court Cause No. DV-82-94 involved a partition action brought by the Williston Group against Brown with regard to approximately eighty-three acres of land located in Lincoln County and known as “Throops Lake.” Brown had acquired an option to purchase the Throops Lake property for $15,000, but did not have the money to purchase the property by the option deadline. On January 31, 1982, Brown conveyed his option on the Throops Lake property to the Throops Lake Lumber Company of Williston, North Dakota. Throops Lake Lumber Company’s shareholders were the Williston Group and Brown. The Williston Group then contributed more than $250,000 toward the purchase of the Throops Lake property. Shortly after Brown and the Williston Group acquired Throops Lake, a disagreement between the parties prompted Brown to deny the Williston Group access to the property.

On May 27, 1982, the Williston Group instituted the partition action in Lincoln County District Court. On June 1, 1982, Brown filed a Chapter 11 bankruptcy petition in the Montana District of the United States Bankruptcy Court. The bankruptcy court issued a stay of the Montana District Court proceedings that was later lifted by stipulation of counsel.

Brown originally appeared with the assistance of an attorney in the partition action and later appeared pro se. The District Court conducted a hearing, found the parties to be tenants in common, and on April 5, 1983, ordered that the “Throops Lake” property be partitioned by sale. Brown did not file an answer to the Williston Group’s complaint until after the District Court’s order of partition. A court appointed referee sold the “Throops Lake” property on May 17, 1983, at public auction to the Williston Group, they being the only qualified bidders present at the auction. Brown was present at the auction and received $15,000 as his share of the partition sale proceeds. Brown also executed a quit claim deed in favor of the Willis-ton Group on the day of the partition sale.

On February 6, 1986, nearly three years after the District Court’s order of partition in Cause No. DV-82-94, Brown requested that the case be reopened. The District Court noted that Brown had made no showing of excusable neglect and refused to reopen the action.

On February 8, 1986, Brown filed this independent action in Lincoln County District Court to have the judgment in the partition action vacated on the basis of the Williston Group’s alleged fraud in obtaining the judgment. The Williston Group moved for summary judgment and requested that they be awarded attorneys’ fees and costs pursuant to Rule 11, M-R.Civ.P. Both parties submitted affidavits and the District Court conducted a summary judgment hearing on October 6, 1986. In its order of December 8, 1986, the District Court found the following to be undisputed facts:

“[Brown] stipulated, while Lincoln County Cause No. DV-82-94 was still pending, that the automatic stay in bankruptcy be lifted and the bankruptcy judge so ordered. After the automatic stay was lifted the Honorable Robert Holter, Judge of the District Court, Lincoln County, Montana, ordered Throops Lake partitioned and sold. Following the Court ordered sale of Throops Lake, [Brown] accepted his share of the sale proceeds, released the referee conducting the sale from all liability, and executed a quit claim deed in favor of the defendants. [Brown] did not, at any time, appeal the judgment ordered by Judge Holter, but rather commenced the instant action, seeking relief from the judgment, after more than two years had elapsed from the date Throops Lake was sold.”

From these undisputed facts, the District Court made the following conclusions:

“Viewing all of the files and affidavits presented herein in the light most favorable to [Brown], reasonable minds could only conclude that no extrinsic fraud was perpetrated upon the Court so as to justify relieving the plaintiff from the judgment rendered in Lincoln County Cause No. DV-82-94. The Court accordingly finds that there is no genuine issue of material fact, and that [the Williston Group] is entitled to judgment as a matter of law.
“The Court further finds that plaintiff, Anthony E. Brown, and his attorney, Patrick Flaherty, knew, or would have known after reasonable inquiry, that the complaint in this action was not well grounded in fact or in law. The Court has taken judicial notice of other actions filed by [Brown] against these same defendants, namely Lincoln County Cause No. DV-85-23, and United States District Court Cause No. CV-85-037-M, as well as [Brown’s] attempt to reinstate Lincoln County Cause No. DV-82-94, which was denied in February of 1986. The Court has taken further judicial notice of Lincoln County Cause No. DV-85-188, in which Attorney Flaherty is representing plaintiffs Marc Flora and Steve Neustrom in an action against most of the defendants named in this action. In view of the multiple lawsuits previously filed against the defendants, the proceedings held in Lincoln County Cause No. DV-82-94, wherein [Brown] had his day in court, reasonable minds could only conclude that the instant action was interposed by [Brown] and his attorney in order to harass the defendants or to cause unnecessary delay or needless increase in the cost of litigation.”

The District Court entered summary judgment in favor of the Williston Group with costs to be taxed against Brown. The District Court also awarded reasonable expenses of litigation, including attorneys’ fees, as Rule 11, M.R.Civ.P., sanctions against Brown and Flaherty, jointly and severally. The Williston Group’s total award is $13,746.16. Brown and Flaherty appeal from the District Court’s judgment and raise the following three issues for our review:

1. Did the District Court err in granting the Williston Group’s motion for summary judgment and specifically in concluding that no genuine issue of material fact exists?

2. Did the District Court err in imposing Rule 11, M.R.Civ.P., sanctions against Brown and his attorney, Patrick Flaherty?

3. Is the Rule 11, M.R.CÍV.P., award of attorneys’ fees and expenses of litigation unreasonable and excessive?

Brown relies on two statutes as authority for setting aside the judgment in the partition action. The first statute, Section 26-3-105, MCA, provides as follows:

“Any judicial record may be impeached by evidence of a want of jurisdiction in the court or judicial officer, of collusion between the parties, or of fraud in the party offering the record in respect to the proceedings.”

The Williston Group claims that this statute is a rule of evidence and merely sets forth the circumstances under which a judicial record may be impeached. We agree. Section 26-3-105, MCA, does not provide for the remedy Brown seeks and the statute does not apply to the circumstances of this case.

Brown also relies on Rule 60(b), M.R.Civ.P., as authority for setting aside the order of partition in the earlier action. Rule 60(b), in pertinent part, provides the following:

“On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons:
it
“This rule does not limit the power of the court to entertain an independent action to relieve a party from judgment, order, or proceeding, or to grant relief to a defendant not actually personally notified as may be required by law, or to set aside a judgment for fraud upon the court.”

The last sentence of the above statute preserves a district court’s power to entertain a separate equity suit to set aside a judgment. Selway v. Burns (1967), 150 Mont. 1, 8, 429 P.2d 640, 644. This power to grant relief from a judgment in equity is inherent in the district court and does not depend upon statute. Bullard v. Zimmerman (1930), 88 Mont. 271, 277, 292 P. 730, 732. It is this equity power that Brown seeks to invoke in this action.

The fraud for which relief may be granted in equity actions such as this is extrinsic, or collateral, fraud rather than intrinsic fraud. In Re Marriage of Witbart (Mont. 1985), [216 Mont. 178,] 701 P.2d 339, 342, 42 St.Rep. 725, 728. It makes no difference whether such extrinsic fraud is actual or constructive. Cure v. Southwick (1960), 137 Mont. 1, 8-9, 349 P.2d 575, 579. We have defined extrinsic fraud as that fraud which effectively prevented the unsuccessful party from presenting his or her case fully. Pilati v. Pilati (1979), 181 Mont. 182, 189, 592 P.2d 1374, 1378; Minter v. Minter (1936), 103 Mont. 219, 230, 62 P.2d 233, 236. In Minter, this Court noted the following with respect to the distinctions between extrinsic and intrinsic fraud:

“The acts for which a judgment or decree may be set aside or annulled have reference only to fraud which is extrinsic or collateral to the matter tried by the court, and not to fraud in the matter on which judgment was rendered.
“[T]he acts for which a court of equity will on account of fraud set aside or annul a judgment or decree, between the same parties, rendered by a court of competent jurisdiction, have relations to frauds, extrinsic or collateral, to the matter tried by the first court, and not to fraud in the matter on which the decree is rendered.” [Citations omitted.]
“Public policy demands that there should be an end to litigation, and therefore the courts look with a jealous eye upon suits which have for their object setting aside a judgment at law . . . Neither perjured testimony nor false or fraudulent allegations used in obtaining a judgment is a ground for equitable intervention in a suit to attack the judgment, unless the perjury or fraud was collateral to the questions examined and determined in the former proceeding.”

Minter, 62 P.2d at 236.

Brown contends that the distinction between intrinsic and extrinsic fraud is difficult to ascertain and for that reason this Court should reverse the District Court and allow trial on the merits. While we recognize that allegations of fraud must be carefully scrutinized on a case-by-case basis, we do not believe that the distinctions between extrinsic and intrinsic fraud are so elusive as to warrant trial in every case.

In his complaint, Brown alleges that the Williston Group’s fraudulent acts and statements “are too voluminous to set forth in their entirety.” Brown then proceeds to list seven particular allegations which he now contends constitute extrinsic fraud. Summarized, these allegations are as follows:

“1. The Williston Group represented that they were tenants in common with Brown in the partition action when in fact they were partners and joint venturers.
“2. Certain members of the Williston Group testified in the partition action that they were only interested in the Throops Lake property for their personal recreational purposes and that no other obligations, rights, contracts, relationships, or liabilities existed between the Williston Group and Brown.
“3. The above testimony deceived the judge in the partition action into entering an order of partition in favor of the Williston Group.
“4. The Williston Group concealed a contract agreement and withheld essential information from the judge in the partition action.
“5. The Williston Group’s attorney in the partition action had a conflict of interest in that his former partner had once represented Brown. The attorney, in his capacity as Lincoln County Attorney, also authorized the Lincoln County Sheriff’s office to transport members of the Williston Group to the airport.
“6. The Williston Group never had any intention of performing the contract with Brown to develop the Throops Lake property into a resort and in fact concealed their true motives and intentions which were to obtain the property for their personal recreational use.
“7. The Williston Group’s attorney represented to the Williston Group that he could exert influence on the bankruptcy judge and trustee, and the district court judge in the partition action to obtain ‘special favors.’ ”

We have reviewed the record in this matter with reference to the above allegations to determine whether there exists a genuine issue of material fact regarding the existence of extrinsic fraud as previously defined. As we have stated on numerous occasions, summary judgment should be granted where there is no genuine issue of material fact. Rule 56(c), M.R.Civ.P. Brown must come forward with evidence of a genuine issue of material fact after the Williston Group met its initial burden of establishing the lack of same. Pretty on Top v. Hardin (1979), 182 Mont. 311, 315, 597 P.2d 58, 60.

Brown’s first allegation regarding the nature of the parties’ relationship in the property involves a defense that he should have raised in the partition action. This allegation would only entitle Brown to relief in this action if it were shown that he, through no negligence or fault of his own, was prevented from offering the defense by the extrinsic fraud of the Williston Group. 49 C.J.S. Judgments Section 372 at 741-742. Brown has failed to show a genuine issue of material fact with regard to this allegation. In addition, our review of the record in this action and the record of Cause No. DV-82-94 leads us to believe that such a defense is not meritorious. Brown directs our attention to a memorandum filed by the Williston Group in the partition action which he alleges precluded him from presenting his defenses in that action. We have reviewed the memorandum and note that nothing contained therein precluded Brown from advancing available defenses had he chosen to do so.

The remainder of Brown’s allegations, if true, are not properly classified as extrinsic fraud for which relief might be granted. These allegations of fraud pertain to the very matters the District Court considered in ordering a partition of the Throops Lake property. Brown’s second, third and fourth allegations intimate that members of the Williston Group perjured themselves, falsified pleadings, and generally withheld the truth from the District Court. The record does not support these allegations of perjury and concealment nor do such allegations, if supported by the record, constitute extrinsic fraud in this case. Moser v. Fuller (1938), 107 Mont. 424, 430, 86 P.2d 1, 3 (citing U.S. v. Throckmorton (1878), 98 U.S. 61, 25 L.Ed.2d 93); Minter, 62 P.2d at 236.

Brown contends in his sixth allegation that the Williston Group concealed their true intentions and that they never intended to work with Brown on his dream of building a resort area. However, it is evident from the record in Cause No. DV-82-94 that the Williston Group made no effort to conceal their intentions to use the Throops Lake property for personal recreational purposes and in fact, as early as February 1, 1982, informed Brown that they would like to buy his interest in the property for that purpose. The correspondence upon which Brown relies to substantiate his seventh allegation does not present any evidence of wrongdoing on the part of the trustees, judges, or the Williston Group’s attorney in the partition action. Even if substantiated, the fifth and seventh allegations are not material to this litigation and do not present any genuine issue of material fact.

It is evident that Brown fully participated in Cause No. DV-82-94 and was not prevented from presenting his case fully by the Willis-ton Group or its attorney. Accordingly, we hold that the District Court correctly granted the Williston Group’s motion for summary judgment.

We note that the Williston Group plead the defense of laches in its answer to Brown’s complaint and presented this defense as an independent grounds for a grant of summary judgment in its favor. The District Court chose not to address the laches issue and chose instead to address the factual and legal insufficiencies of Brown’s case. On appeal, the Williston Group reasserts the laches defense and contends that Brown’s allegations are barred by the doctrine of laches.

An independent action in equity to set aside a judgment allegedly obtained by fraud is subject to the defense of laches. Pilati, 592 P.2d at 1376. Brown waited nearly three years before filing this suit to set aside the order partitioning the Throops Lake property. While we are inclined to agree with the Williston Group that Brown’s action is barred by laches, we need not address this issue in light of our determination that the District Court was correct in concluding that there exists no genuine issue of material fact. The Williston Group also asserts two other grounds (statute of limitations and failure to establish a meritorious defense to the partition action) for affirming the District Court which need not be addressed by this Court for the above-stated reason.

Brown’s second issue questions the District Court’s application of Rule 11, M.R.Civ.P., sanctions to the circumstances of this case. Rule 11, in pertinent part, provides the following:

“Every pleading, motion, or other paper of a party represented by an attorney shall be signed by at least one attorney of record in his individual name, whose address shall be stated.
“The signature of an attorney or party constitutes a certificate by him that he has read the pleading, motion, or other paper; that to the best of his knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for an improper purpose, such as to harass or to case unnecessary delay or needless increase in the cost of litigation.
“If a pleading, motion, or other paper is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney’s fee.”

Brown contends that the District Court abused its discretion in awarding Rule 11 sanctions to the Williston Group. Brown’s primary basis for this contention is that the underlying action was well grounded in fact and law. Our holding with respect to Brown’s first issue in this appeal suggests otherwise.

We recently set forth the standard of review with regard to Rule 11 sanctions in the case of Searight v. Cimino (Mont. 1988), [230 Mont. 96,] 748 P.2d 948, 45 St.Rep. 46:

“The current Rule 11, M.R.Civ.P. is virtually identical to the federal rule. Sanctions under this rule have rarely been imposed in Montana resulting in little case law. Federal authority indicates that the duty of the lawyer is to investigate both as to law and fact before filing a motion. The standard is that of reasonableness under the circumstances. [Citation omitted.] Because the rule mandates sanctions if violated, the duty of the appellate court is to review de novo the legal question of whether the specific conduct in question violated the rule. [Citations omitted.]”

Searight, 748 P.2d at 951-952. We will not reverse an award of Rule 11 sanctions if such an award is justified under that rule or under the district court’s inherent equity powers. State ex rel. Sorenson v. Roske (Mont. 1987), [229 Mont. 151,] 745 P.2d 365, 368, 44 St.Rep. 1854, 1857.

We hold that the award of Rule 11 sanctions was proper in this case. As the District Court noted, Brown and his attorney have instituted a plethora of lawsuits aimed directly or indirectly at the Williston Group with regard to the Throops Lake property. In one such lawsuit instituted by Brown in Federal District Court, the Honorable Judge Russell E. Smith noted the following with regard to the amended complaint drafted by Flaherty on Brown’s behalf:

“The amended complaint is the most irresponsible pleading that I have seen in my twenty years as a trial judge. [The amended complaint] names thirty-three defendants, some of them in dual capacities. After 24 pages of allegations, the first amended complaint contains twenty separate claims for relief. [Additions ours.]”

After dismissing the majority of the claims, Judge Smith granted Brown leave to file an amended complaint on two claims and went on to state:

“I have heretofore indicated that, in my opinion, [Brown’s] complaint was recklessly drawn. I have not imposed [Rule 11] sanctions. I will have them in mind as I examine any amended pleadings which are filed and if it would appear that antitrust claims are made against any defendant without reasonable cause, I will not hesitate to impose sanctions. Plaintiff’s lawyers should consult Rule 11 of the Federal Rules of Civil Procedure. [Additions ours.]”

In this case, Brown’s complaint is replete with allegations of fraud, misrepresentation, deceit, bad faith, malice, concealment, perjury, conspiracy, and collusion. None of the allegations are grounded in fact nor do the allegations forward any legal theory upon which relief could be granted. Brown again argues that the distinctions between intrinsic and extrinsic fraud are so difficult to ascertain that he was reasonable and justified in bringing this action. Again, we disagree. Reasonable inquiry on the part of Brown and his attorney would have revealed the factual and legal insufficiencies of this action.

The trustee in Brown’s bankruptcy action found Brown’s claims against the Williston Group to be so “burdensome and of no value to the [bankruptcy] estate” that he abandoned the claims to Brown. We agree with the District Court that “reasonable minds could only conclude that the instant action was interposed by plaintiff and his attorney in order to harass the [Williston Group] or to cause unnecessary delay or needless increase in the cost of litigation.” Accordingly, we hold that Rule 11, M.R.Civ.P. sanctions in the form of reasonable attorneys’ fees and costs of litigation were properly awarded to the Williston Group in this case.

In his final issue, Brown contends that the amount of attorneys’ fees and costs awarded to the Williston Group as Rule 11 sanctions is unreasonable and excessive. The District Court conducted a hearing to determine the amount of the award on August 5, 1987. At that hearing, Robert M. Carlson, a Montana attorney, testified as to the reasonableness of the Williston. Group’s attorneys’ fees and costs. Brown presented no evidence of unreasonableness other than his attorney’s statements that the fees and costs were excessive . . . In making the award, the District Court considered the complexity of the case and the nature and amount of services rendered. The District Court also noted that the eleven defendants had “elected to join forces and retain only two attorneys, rather than each retaining separate counsel.” The amount of the award in this case was discretionary with the District Court. Shors v. Branch (Mont. 1986), [221 Mont. 390,] 720 P.2d 239, 246, 43 St.Rep. 919, 927. We will not disturb the amount fixed absent a showing that the District Court “acted arbitrarily or has committed a clear abuse of discretion.” In Re the Marriage of Hall (Mont. 1987), [228 Mont. 36,] 740 P.2d 684, 686, 44 St.Rep. 1321, 1323. Brown and Flaherty have failed to carry their burden of showing that the District Court acted arbitrarily or abused its discretion. Accordingly, as to all matters presented by this appeal, the District Court’s judgment is affirmed.

Affirmed.

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


text:
    In the Matter of the MENTAL HEALTH OF S.J., Respondent and Appellant. In the MATTER OF T.F., Respondent and Appellant.
    No. 87-391, 87-537.
    Submitted on Briefs March 3, 1988.
    Decided April 11, 1988.
    753 P.2d 319.
    Allen Smith, Jr., Mary Gallagher, Warm Springs, for respondents and appellants.
    Mike Greely, Atty. Gen., Helena, Robert F. Smith, Asst. Atty. Gen., Ted O. Lympus, Co. Atty., Kalispell, for the State.
   MR. CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

S. J. and T. F. appeal separate orders of the Eleventh Judicial District Court, Flathead County, involuntarily committing appellants to Warms Springs State Hospital.

On February 23, 1988, we granted the State’s motion to consolidate the appeals of S.J. and T.F. Neither party disputes the facts surrounding this appeal.

On August 8, 1987, appellant S.J. was detained pursuant to a mental health hold. Section 53-21-129, MCA. On August 8 and again on August 10, 1987, a psychologist, Dr. Mary K. Kunde, examined S. J. and determined that S.J. was seriously mentally ill but not a danger to herself or others. On August 12, 1987, Dr. Kunde again evaluated S.J. and found S.J. to be seriously mentally ill and “unable to protect her life or health in the community.” Dr. Kunde recommended involuntary commitment. Subsequently, the State filed a petition for involuntary commitment.

On August 13, 1987, S.J.’s court-appointed attorney, Robert B. Allison, and S.J.’s friend, Gary G. Doran, waived S.J.’s right to a formal court hearing. Section 53-21-119, MCA. The District Court, after considering Dr. Kunde’s evaluation and the above-mentioned written waiver, found S.J. to be seriously mentally ill and ordered her involuntarily committed to Warm Springs State Hospital.

On October 26, 1987, appellant T.F. was also detained pursuant to a mental health hold. Section 53-21-129, MCA. on October 27, 1987, Dr. Kunde evaluated appellant and determined that T.F. was not seriously mentally ill and did not appear to be an imminent threat of danger to herself or others.

On October 28,1987, T.F. was again detained pursuant to a mental health hold. Dr. Kunde evaluated appellant and determined that T. F. was seriously mentally ill and appeared to be an imminent threat of danger to herself. Dr. Kunde recommended involuntary commitment. Subsequently, the State filed a petition for involuntary commitment.

On October 29, 1987, the District Court appointed Robert B. Allison attorney for appellant and Patrick D. Sherlock friend of appellant. Sections 53-21-116 and -122, MCA. Subsequently, Allison and Sherlock waived T.F.’s right to a formal hearing. Section 53-21-119, MCA. On October 30, 1987, the District Court, after considering Dr. Kunde’s evaluations and the written waiver, found T.F. seriously mentally ill and involuntarily committed T.F. to the Warm Springs State Hospital.

On appeal, T.F. and S.J. alleged the District Court committed procedural errors which require the reversal of their respective involuntary commitment orders. We agree.

Additionally, appellants raise two constitutional issues. Because we are reversing on statutory grounds, we decline to address appellants’ constitutional claims. Taylor v. Taylor (1975), 167 Mont. 164, 168, 537 P.2d 483, 485.

Previously, we held that Montana’s civil commitment laws are to be strictly followed. In the Matter of T.J.F. (Mont. 1987), [229 Mont. 473,] 747 P.2d 1356, 1357, 44 St.Rep. 2145, 2146; In the Matter of the Mental Health of R.J.W. (Mont. 1987), [226 Mont. 419,] 736 P.2d 110, 113, 44 St.Rep. 770, 774. The statutes at issue, Section 53-21-119 and Section 53-21-127, MCA, provide in pertinent part:

“53-21-119. Waiver of rights. (1) A person may waive his rights, or if the person is not capable of making an intentional and knowing decision, these rights may be waived by his counsel and friend of respondent acting together if a record is made of the reasons for the waiver. The right to counsel may not be waived. The right to treatment provided for in this part may not be waived.
“(2) The right of the respondent to be physically present at a hearing may also be waived by his attorney and the friend of respondent with the concurrence of a professional person and the judge upon a finding supported by facts that:
“(a) the presence of the respondent at the hearing would be likely to seriously adversely affect his mental condition; and
“(b) an alternative location for the hearing in surroundings familiar to the respondent would not prevent such adverse effects on his mental condition. [Emphasis added.]
“53-21-127. Post-trial disposition.
“[2(c)] . . . The court shall consider and shall describe in its order what alternatives for treatment of the respondent are available, what alternatives were investigated, and why the investigated alternatives were not deemed suitable. The court shall enter into the record a detailed statement of the facts upon which it found the respondent to be seriously mentally ill. [Emphasis added.]”

Appellants allege and the State of Montana concedes the following procedural errors: (1) The District Court failed to make a record of appellants’ waivers of a formal hearing, Section 53-21-119, MCA, and (2) the District Court failed to make a record of its finding of serious mental illness.

Appellants also allege the District Court erred when it failed to make a record: (1) that appellants were served with notice of the pending civil commitment proceedings, Sections 53-21-114, -115, and -121, MCA; (2) that appellants appeared at an initial appearance and were advised of their rights, Section 53-21-122, MCA; (3) that Gary G. Doran was appointed friend of respondent, S.J., Section 53-21-122, MCA; (4) that Dr. Mary Kunde was a certified “professional person”, Section 53-21-105, MCA; and (5) that Dr. Kunde examined appellants and submitted a written report, Section 53-21-123, MCA.

The State contends that establishment of a contemporaneous record is not required by Sections 53-21-105, -106, -114, -121, -122 and -123, MCA. Therefore, an evidentiary hearing is necessary to establish violations, if any, of these statutes. We agree with the State’s contention that a contemporaneous record is not required by these statutes. However, the District Court is required to note in its order of involuntary commitment that appellants have received the benefit of all applicable statutory and constitutional rights. In the case at bar, the record is bare of whether appellants received the benefits of these rights.

Therefore, we reverse the order of the District Court and order the District Court to make a contemporaneous record as required by Sections 53-21-119(1) and (2) and 53-21-127(2)(c), MCA. Additionally, we remand this cause and order the District Court to determine the validity of appellants’ contested allegations of procedural errors and so indicate in its findings and order.

Reversed and remanded.

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


author: MR. JUSTICE HUNT

text:
    ZIMMER-JACKSON ASSOCIATES, INC., Plaintiff and Appellant, v. DEPARTMENT OF LABOR AND INDUSTRY, and Sam Austin, Defendants and Respondents.
    No. 87-397.
    Submitted on Briefs March 11, 1988.
    Decided April 13, 1988.
    752 P.2d 1095.

      Stephen R. McCue, Harrison, Loendorf and Poston, P.C., Helena, for plaintiff and appellant.
    David Scott, Helena, for Dept, of Labor.
    William J. O’Connor, II, Dunaway, O’Connor and Moe, Billings, for Sam Austin.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

This is an appeal from the Order of the District Court, First Judicial District, County of Lewis and Clark affirming the decision of the Board of Labor Appeals which held that the defendant/respondent was an employee of plaintiff/appellant for purposes of unemployment insurance.

We affirm.

The issues on appeal, restated, are:

1. Did the District Court err when it affirmed the Board’s decision holding that respondent’s commissions from appellant were wages for purposes of unemployment insurance tax?

2. Did the District Court err when it affirmed the Board’s decision holding that respondent’s relationship with appellant satisfied the test pursuant to Section 39-51-203(4), MCA, (1983), sometimes referred to as the ABC test, therefore classifying him as an employee for purposes of unemployment insurance tax?

By letter of January 31, 1986, the Montana Department of Labor and Industry, Unemployment Insurance Division, determined that Zimmer-Jackson Associates, Inc. (ZJ) must report Austin’s services to the Division and must pay unemployment insurance tax on those services. A hearing was held before an appeals referee of the Department who made findings of fact and concluded that Austin was an employee and not an independent contractor for purposes of the unemployment insurance tax. On appeal the Board of Labor Appeals adopted the findings of fact and decision of the referee as its own. Upon petition for judicial review the District Court affirmed the decision of the Board.

The appellant, ZJ is a distributor of medical equipment in seven western states including Montana. It is an independent agent of Zimmer USA (Zimmer) which manufactures medical equipment. From 1977 to 1985, respondent Austin was a sales associate for ZJ based in Billings and covering most of Montana. Austin was responsible for selling ZJ goods to various hospitals and clients in his area. The selling procedure for ZJ sales associates is uncomplicated. When an associate makes a sale, the order is sent to ZJ who then sends it to Zimmer. The equipment is sent to the customer who pays Zimmer directly. Both ZJ and the associate receive a percentage from the sale. The sales associate’s commission is based upon a percentage of the associate’s total sales as payment is received by Zimmer.

Austin maintained a Billing’s office where he employed a secretary. As with all ZJ associates, a base rent was paid by ZJ on the office and phone. Basic office equipment was also provided by ZJ. The base amount is determined by the ZJ Board of Directors. Any expenses above that amount are the responsibility of the associate. An associate can hire support personnel such as a secretary providing that the position is approved by ZJ. The particular person hired is not required to be approved. While the salary is negotiated between the associate, ZJ and the secretary, ZJ pays that salary.

The territory covered by any one associate is set by ZJ. Modifications may be made at the associate’s request. This was done in Austin’s case when he complained about the geographical size of his Montana territory. Consequently ZJ allowed him to give up a portion of this territory for which he was compensated $8,000.00 in exchange for his part in developing the territory and for the loss of possible future commissions from that portion of the territory.

An associate usually must comply with any contracts directly between his or her client and ZJ or Zimmer. An associate is allowed to sell below the contract price but may not sell above it. An associate is also allowed to make separate contracts with his or her clients. Any contract of this type had to be sent to Zimmer for approval. A contract that conflicted with Zimmer contracts was sent back to be redone by the associate. Efforts were always made to resolve the conflict.

Austin did a limited business with other companies for instrument sharpening. ZJ discouraged working for competitive companies but tolerated it as long as Austin’s sales goals were met. Appellant disputes the finding by the referee that if an associate failed to meet his goals he would be fired unless he agreed to give up selling competitive products.

The standard of review the District Court must follow derives from Section 39-51-2410(5], MCA, which states:

“In any judicial proceeding under 39-51-2406 through 39-51-2410, the findings of the board as to the facts, if supported by evidence and in the absence of fraud, shall be conclusive and the jurisdiction of said court shall be confined to questions of law. Such action and the questions so certified shall be heard in a summary manner and shall be given precedence over all other civil cases except cases arising under the workers’ compensation law of this state.”

The operation of this statute has been well discussed in previous cases. When reviewing a decision of the Board of Labor Appeals, the District Court must treat the findings of the Board as conclusive if they are supported by substantial evidence and are absent fraud. Gypsy Highview Gathering System v. Stokes (Mont. 1986), [221 Mont. 11,] 716 P.2d 620, 623, 43 St.Rep. 595, 598; Kirby Co. of Bozeman v. Employment Sec. (1980), 189 Mont. 1, 5, 614 P.2d. 1040, 1042-3. This Court is held to the same standard when reviewing a Board of Labor Appeals decision. Gypsy Highview, 716 P.2d at 623. We must determine whether the District Court committed an abuse of discretion by affirming the Board’s decision. Standard Chem. Mfg. Co. v. Employment Sec. (1980), 185 Mont. 241, 247, 605 P.2d 610, 613.

The pertinent statute defining employment is Section 39-51-203(4), MCA (1983).

“(4) Service performed by an individual for wages is considered to be employment subject to this chapter unless and until it is shown to the satisfaction of the department that:
“(a) such individual has been and will continue to be free from control or direction over the performance of such services, both under his contract and in fact;
“(b) such service is either outside the usual course of the business for which such service is performed or that such service is performed outside of all the places of business of the enterprise for which such service is performed; and
“(c) such individual is customarily engaged in an independently established trade, occupation, profession, or business.”

Appellant asserts as its first issue that Austin’s commissions did not constitute “wages” and, as such, his services do not fall within the purview of the above statute. Instead, appellant argues, Austin’s commissions were netted with his expenses to create “profits.” Austin’s self-employed status, arguably, is bolstered by his tax returns of 1982-85 showing he paid self-employment tax.

Wages, for the purpose of unemployment insurance, are defined by Section 39-51-201(19)(a), MCA (1983), as meaning “all remuneration payable for personal services, including commissions and bonuses and the cash value of all remuneration payable in any medium other than cash.” This Court had the opportunity to address this issue in St. Regis Paper Co, Etc. v. Unemployment Comp. Com’n (1971), 157 Mont. 548, 487 P.2d 524. There we cited with approval National Trailer Convoy, Inc. v. Undercofler (1964), 109 Ga.App. 703, 137 S.E.2d 328 in which the Georgia Supreme Court held, interpreting an identical statute, that because of the obvious existence of an independent contractor relationship between the parties no “wages” existed and therefore the ABC test did not apply. This Court also stated that although the statute is discretionary, it should not be so distorted as to cover relationships that are truly independent in nature. But, there is no such distortion in this case. Although we discuss it in greater depth below, we cannot say that there is an obvious independent contractor relationship here and therefore no wages as required by Section 39-51-203(4), MCA. Austin received commissions on all Zimmer goods he sold. Section 39-51-203(4), MCA, plainly states that commissions are wages. Therefore Austin was receiving wages as defined in the statute and the ABC test must be applied. His tax treatment of these wages is not relevant.

Appellant, next and lastly, contends that none of the three tiers of the ABC test were met and specifically complains that its rights were prejudiced because the District Court failed to find facts which were requested. We disagree.

In order for a service to be deemed employment all three standards of Section 39-51-203(4), MCA, (1983) must be met. Pat Griffin Co. v. Employment Security Com’n (1974), 163 Mont. 529, 533, 519 P.2d 147, 150 (Citing St. Regis, 487 P.2d at 525); Standard Chem., 605 P.2d at 612. As stated above the statute must be applied reasonably. Standard Chem., 605 P.2d at 612; St. Regis, 487 P.2d at 525.

Tier “A” of this three part test requires that an individual be free from control over the performance of his services. Section 39-51-203(4)(a), MCA. We have recognized that this is the most important factor in determining employment relationships and have often used the common law test for determining employment status in conjunction with the statute on this point. See Kirby Co. of Bozeman, 614 P.2d 1040; Standard Chem., 605 P.2d 610. The right of control figures most prominently in both tests. Standard Chem., 605 P.2d at 613.

The District Court relied upon the finding that Austin was required to have his sales contracts reviewed and approved by Zimmer and that ZJ determined the base amount paid for Austin’s office rent and phone charges and Austin’s secretary. It also relied upon the finding that Austin would have been fired if he were selling competitive products and his sales dropped below expected goals. ZJ contends that this finding is clearly erroneous and not supported by substantial evidence. The finding stems from the following exchange at the hearing between the appeals referee and the owner of ZJ concerning a sales associate who was selling competitive products:

“MARONICK: One question, Mr. Jackson. If he were not to do that, if he continued to sell both, Zimmer and the other, what action would you take, what’s the agreement?
“JACKSON: The agreement is, if his sales fall below a certain level then I would probably terminate his relationship with us. If he could keep them at a high level, I wouldn’t cut my nose off to spite my face.”

The appeals referee found that:

“. . .if the Associate were selling competitive products and could maintain enough sales such selling would be permitted. If however, the competitive products were being sold and goals were not met the Associate would be fired if he insisted on continuing to sell the other products.”

This Court fails to find any inconsistency between this finding and the owner’s statement. The finding flows directly from the testimony given.

Appellant voices its dissatisfaction over the Board’s failure to make certain findings, specifically that Austin was on the Board of Directors of ZJ; that Austin incurred business expenses; that Austin has made a separate claim for reimbursement of his expenses; that Austin paid self-employment tax from 1982 to 1985; that Austin’s sales of products and services for other companies was directly competitive with ZJ’s business; that Austin received no sales technique training from ZJ; and that Austin was not required to make periodic sales reports aside from year-end letters projecting expected sales for the coming year.

Although such findings would have made this issue a closer case, the findings actually made are sufficient to establish an employer-employee relationship. The evidence need not be a preponderance but only substantial and it is irrelevant that there may be substantial evidence for the opposition. Gypsy Highview, 716 P.2d at 623, citing Jordan v. Craighead (1943), 114 Mont. 337, 343, 136 P.2d 526, 528. Therefore we agree with the District Court’s conclusion that ZJ had the right of control over Austin.

Part “B” of the ABC test requires that the nature of an individual’s services falls outside the usual course of the employer’s business or that the services be performed outside the place where employer’s business is carried on in order for him to avoid the label of employee.

First the Court notes that this is a little discussed provision that has been done away with by the 1987 legislature. See Section 39-51-203(4), MCA, (1987) in conjunction with Section 39-51-201(14), MCA, (1987).

Appellant argues that the relationship between Austin and ZJ can be analogized to automobile dealerships and fast food restaurant franchises and that an affirmance of the District Court on this point would result in classifying owners of these dealerships and franchises as employees. The District Court agreed with the appeals referee that:

“Without a sales force, Associates, the employer would have no units distributed upon which or from which their income is generated. Not only is the Associate in the normal course of the Employer’s business, distribution of medical products, it is essential to that process.”

The relationship in this case cannot be likened to that of a franchisor and its franchisee because an individual who works as a sales agent does not obtain the degree of license or privilege that an individual who is given a franchise has. A franchise is a property right that implies more of an independence of business operations between the franchisee and the main company than exists between a sales agent and his supplier. We see no abuse of discretion in the District Court’s adoption of the appeal referee’s finding.

The last element of the ABC test requires that the individual be customarily engaged in an independently established trade or occupation. In Standard Chem we adopted several criteria from other jurisdictions with similar statutes to help us decide whether livestock product sales agents were employees or independent contractors hired by the manufacturer. See Standard Chem., 605 P.2d at 614-15. Some of the relevant criteria include: (1) worker’s authority to hire subordinates, (2) worker’s ownership of equipment, (3) liability for a preemptory termination of the business relationship, (4) ability of worker to survive the termination of a particular service relationship, and (5) worker’s ability to engage in activity without hindrance from anyone implying a “proprietary interest.”

After review of the record we conclude that this test was also met. Austin could not provide for a secretary without ZJ’s prior approval of the position. His office equipment was owned by ZJ. Although he did some slight business with other companies, Austin could not survive the termination of his relationship to ZJ. As discussed above, he was controlled by ZJ in many aspects of his activities.

There has been no finding regarding liability for preemptory termination but in view of the other findings above it is unnecessary.

There is sufficient evidence to find that all three standards of the ABC test have been met. Accordingly, we hold that the District Court did not abuse its discretion in affirming the Board of Labor Appeal’s determination that Austin was an employee of ZJ. Affirmed.

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


text:
    DEBRA LANE, Plaintiff and Respondent, v. LARRY DUNKLE, Defendant and Appellant.
    No. 87-501.
    Submitted on Briefs March 3, 1988.
    Decided April 14, 1988.
    753 P.2d 321.

      Lloyd E. Hartford, Billings, for defendant and appellant.
    Jerrold L. Nye, Nye and Meyer, P.C., Billings, for plaintiff and respondent.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

Defendant/appellant Larry Dunkle (Dunkle) appeals from an order of the Thirteenth Judicial District Court awarding plaintiff/respondent Debra Lane (Lane) $2,857.42 for conversion of her commission and expense checks and $25,000 in punitive damages. We affirm.

We are presented with the following issues:

1. Was there sufficient evidence to submit plaintiff’s conversion theory to the jury?

2. Whether the District Court erred in entering judgment awarding punitive damages?

Debra Lane initially associated with Globe Life and Accident Insurance Company (Globe) on April 16, 1984 under the terms and conditions of an Independent Agent’s Contract. Dunkle, who was manager of the Billings’ Globe office from March, 1984, through June, 1985, was Lane’s supervisor. Lane worked as an insurance salesperson for Globe and was paid according to initial sales and “commissions on renewals” meaning she was paid after premiums of previous policies were paid by policy holders.

Globe issued three commission checks payable to Lane on April 16, May 13, and June 4, of 1985. Globe also previously issued a fourth check in Lane’s name for $100 to offset her expenses while she was training in Livingston, Montana. She endorsed this check over to Dunkle upon assurances by Dunkle that her expenses would be paid on the trip and any excess would be reimbursed at the following Monday morning meeting. Lane never received any money at this juncture and in fact paid Dunkle an additional $86. At trial, Dunkle testified that he forged Debra Lane’s signature on the three commission checks, cashed them, and never informed Lane that he had the money.

Dunkle argues Lane’s employment at Globe terminated prior to April of 1985 and therefore she was not entitled to the commissions. The record shows Lane received formal written termination from Globe on June 28, 1985. Dunkle was informed by superiors to formally terminate Lane and he drafted this letter on June 27, 1985.

Lane originally filed a complaint on July 8, 1985. The complaint was amended March 31, 1987. In addition to the claim of conversion, Lane alleged the following: sexual harassment; threats of physical harm and injury causing emotional distress; that Dunkle forced her to use illegal and unethical methods in the sale of insurance; constructive discharge and intentional and negligent infliction of emotional distress. A three-day jury trial commenced on June 29, 1987 and the jury returned a verdict in favor of Lane on the grounds of conversion only on July 1, 1987. The jury granted damages in the amount of $617.42 plus interest for an award totaling $2,857 plus $25,000 punitive damages. Dunkle motioned for a directed verdict at the close of Lane’s case and motioned for judgment notwithstanding the verdict at the end of trial. The District Court denied the motion for directed verdict at trial and the motion for judgment not withstanding verdict in an order dated August 19, 1987 and it is from this order that Dunkle appeals.

Dunkle initially argues Lane failed to prove conversion because she did not prove she was legally entitled to the proceeds of the commission checks after April 1, 1985. Lane testified that she was employed full time as a bookkeeper at a different business after April 1, 1985 and that she did not sell a policy after this date. Dunkle claims the terms of the Independent Agent contract Lane signed control. This contract, in paragraph 5, specifically provides:

“The deferred and renewal commissions set forth in the Commission Schedule shall be payable on the 20th of the month succeeding the month in which the premium is received by the Company provided that the Agent is representing the Company on that date, and it is expressly agreed by the Agent and the Company that such deferred and renewal commissions are non-vested and entitlement thereto by the Agent automatically terminates with the termination of this Contract . . .”

Because Lane admitted she was not an active agent as of April 20, 1985, and because this clause specifically requires the agent represent the company, Dunkle argues she had no “ownership” interest in the commission checks and could not establish conversion.

Conversion requires ownership of property, a right of possession, and unauthorized dominion over the property by another resulting in damages. Farmers State Bank v. Imperial Cattle Co. (Mont. 1985), [218 Mont. 89,] 708 P.2d 223, 227, 42 St.Rep. 1419, 1424; Gebhardt v. D.A. Davidson & Co. (1983), 203 Mont. 384, 389, 661 P.2d 855, 858. See also, 18 Am.Jur.2d Conversion, Section 2, pp. 146-147 (1985).

The evidence presented in this case shows the jury was presented with sufficient evidence to determine Dunkle committed conversion. The three commission checks were issued by Globe and made payable to Debra Lane. These checks were regular renewal commission checks that the agent, Lane, was entitled to upon renewal of policies earlier sold .by her. The jury could therefore find Lane had a property ownership interest in the checks.

In addition to paragraph 5 set forth above, Globe Independent Agent contracts included, in paragraph 11, the following statement in regard to termination:

“This contract may be canceled by either party upon the written notice to the last known address of the other party . . .” (Emphasis added.)

Lane received Dunkle’s written notice on June 28, 1985. Dunkle also informed the State Insurance Commissioner that Lane was terminated June 28, 1985. This further supports a jury finding that Lane had an ownership interest in the checks if issued prior to the termination letter. Additionally, Helen Clark, who was the secretary in charge of disbursing the checks to all the agents testified that “[f]rom when they went to work until I issued the termination sheet, I always considered that the agent was still with Globe.”

Dunkle testified to and admitted in the Agreed Statement of Facts that he forged Lane’s endorsement on the checks and that he cashed these checks without Lane’s knowledge. Dunkle did not inform Lane that he had the money. The jury could find by these facts that Dunkle exercised unauthorized dominion over the money resulting in damages to Lane.

The standard we use in reviewing denials of motions for directed verdicts only requires substantial evidence in the record supporting the finding of the jury. Gunnels v. Hoyt (Mont. 1981), [_ Mont. _,] 633 P.2d 1187, 38 St.Rep. 1492. This is the same standard used to determine sufficient evidence to support the jury’s verdict on a motion notwithstanding the verdict. “We review the evidence in a light most favorable to the prevailing party. We will reverse only where there is a lack of substantial evidence to support the judgment . . .” Funk v. Robbin (Mont. 1984), [212 Mont. 437,] 689 P.2d 1215, 1218, 41 St.Rep. 1848, 1850; see also, Kleinsasser v. Superior Derrick Service, Inc. (Mont. 1985), [218 Mont. 371,] 708 P.2d 568, 569, 42 St.Rep. 1662, 1664. In Kleinsasser, supra, 708 P.2d at 570, we stated:

“The ‘substantial evidence’ test variously expressed allows reversal only if there is a complete absence of probative facts to support the verdict (Griffel v. Faust (Mont. 1983), [205 Mont. 372,] 668 P.2d 247, 249, 40 St.Rep. 1370, 1372), ... or if there is a complete absence of any credible evidence in support of the verdict (Barmeyer v. Montana Power Company (Mont. 1983), [202 Mont. 185,] 657 P.2d 594, 597, 40 St.Rep. 23, 25).”

Reversal on the grounds expressed by Dunkle cannot be granted due to the substantial, credible evidence presented upon which the jury could base its verdict in regard to conversion. The District Court did not err in denying Dunkle’s motion for a directed verdict or motion for judgment notwithstanding the verdict.

Dunkle next contends the District Court erred in accepting the jury’s award of punitive damages because the claim should be considered one for breach of contract. Dunkle contends since Lane “elected to affirm the express contract by suing for all commissions, monies and earnings stolen and/or wrongfully withheld and any penalty that may be allowed by law for breach of contract” that she should not be entitled to punitive damages. Section 27-1-220, MCA (1987).

The trial court appropriately instructed the jury on punitive damages and Dunkle failed to object. It is uncontroverted that a party cannot raise an issue on appeal that was not objected to at the trial level as Lane appropriately points out. Clark v. Norris (Mont. 1987), [226 Mont. 43,] 734 P.2d 182, 188, 44 St.Rep. 444, 450. The jury was instructed on conversion. The instruction allowed the jury to grant actual damages.

An additional instruction stated the jury could grant punitive damages if it found actual damage was suffered and oppression or malice was present. The jury received definitions of malice and oppression in the instructions. Section 27-1-221, MCA (1985), provides for punitive damages when malice or oppression are found by the jury just as instructed in this case. Bollinger v. Hollingsworth (Mont. 1987), [227 Mont. 454,] 739 P.2d 962, 964, 45 St.Rep. 1228, 1231. The submitted instructions were based on Section 27-1-221, MCA, that allowed presumed malice. In 1987, the Legislature amended this statute to allow punitives upon proof, by clear and convincing evidence, of actual malice or oppression. Section 27-1-221, MCA (1987). However, this change is immaterial in this case.

The jury was properly instructed as to the awarding of punitive damages and could infer either malice or oppression by Dunkle. Dunkle’s breach of contract argument on this appeal is not supported by the evidence nor the jury verdict. Dunkle was found liable for commission of conversion. It is hornbook law that conversion is a tort. Prosser and Keeton on Torts, Section 15, pp. 89-107, (1984).

We have held that punitive damages may be awarded where the nature of the wrong complained of and injury inflicted goes beyond merely violating the rights of another and is found to be willful and malicious. Safeco Ins. Co. v. Ellinghouse (Mont. 1986), [223 Mont. 239,] 725 P.2d 217, 227, 43 St.Rep. 1689, 1701. The evidence shows Dunkle exercised a habit of depriving agents of checks specifically drafted in the agent’s name. The jury could find this was an abuse of authority. In Dunfee v. Baskin-Robbins, Inc. (Mont. 1986), [221 Mont. 447,] 720 P.2d 1148, 1155, 43 St.Rep. 964, 972, this Court looked with favor upon an instruction that stated oppression was defined as “an act of . . . excessive use of authority” stating “an act is oppressively done if done in a way or manner which violates the right of another person with unnecessary harshness or severity as by misuse or abuse of authority or power.” The award of punitive damages, $25,000, does not appear to be “grossly disproportionate” to his acts and therefore the result of passion or prejudice. Safeco, supra, 725:P.2d at 227.

For the foregoing reasons, the District Court did not err in denying Dunkle’s motion for a directed verdict and judgment notwithstanding the verdict.

Affirmed.

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