author: MR. JUSTICE HARRISON MR. JUSTICE SHEEHY,

text:
    DANIEL J. FELSKA and Adolph L. Solvie, Plaintiffs, World Realty Ltd., Kadon Management co., Ltd, York Ventures, Ltd., Helund Forest Consultants, Ronald Edward Little, Donald John Henry Williamson, et al., Plaintiffs/Intervenors and Appellants, v. BRIAN GEORGE GOULDING, and all other person, unknown, claiming or who might claim any right, title, estate or interest in or lien or encumbrance upon the real property described in the complaint, adverse to the plaintiff's title thereto, whether such claim or possible claim be present or contingent, Defendants and Respondents.
    No. 88-548.
    Submitted May 9, 1989.
    Decided July 19, 1989.
    776 P.2d 530.

      Ben Berg, Jr., argued, Berg, Stokes, Tollefsen & Hayes, Bozeman, for plaintiffs/intervenors and appellants.
    J. Robert Planalp argued, Landoe, Brown, Planalp & Kommers, Rodney Schwasinger argued, Bozeman, for defendants and respondents.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

This case comes on appeal from the Eighteenth Judicial District, Gallatin County, the Honorable Joseph B. Gary presiding. The District Court quieted title in the plaintiffs, purchasers of certain real property in Bozeman, Montana. Previously, the property had been held by a group of investors (hereinafter referred to as the co-owners) from British Columbia, Canada, each of whom held their respective interests as tenants in common. In addition to the quiet title determination, the District Court awarded defendant Goulding a portion of the sale proceeds in proportion to his initial capital investment. We affirm in part, reverse in part and remand for further proceedings.

In December, 1977, Brian George Goulding and other co-owners acquired the real property, personal property, fixtures, furniture, liquor license and other business assets of the Inn of Bozeman (Inn). The parties entered into an agreement for the purpose of setting forth the rights and obligations with respect to their interest in the Inn. Specific provisions of the agreement will be discussed later in this opinion.

In December, 1983, citing financial difficulties, the co-owners decided to list the property for 'sale. Throughout the following year, meetings were held during which the co-owners discussed prospective sales and financial problems of the Inn. Goulding or his attorney, Michael Karton, attended most of these meetings.

Between December, 1984, and March 9, 1985, Goulding lived in the Philippines with his family. Goulding did not leave a forwarding address with the other co-owners, nor his instructions with his attorney regarding a potential sale of the Inn.

On January 3, 1985, fourteen of the sixteen co-owners entered into an agreement with plaintiffs for the sale of the Inn. The co-owners attempted to contact Goulding through his attorney and sent by registered mail letters informing him of the majority decision to sell the property. In accordance with the terms of the co-owners’ 1977 agreement, Goulding was informed that his consent would be “deemed” given if written objection to the sale was not received within ten days. (Thereafter, the co-owners petitioned the Supreme Court of British Columbia for an order authorizing appellant Williamson to sign on Goulding’s behalf. However, all parties agree the order is void for lack of jurisdiction.)

On March 20, 1985, after returning from the Philippines, Goulding visited his attorney and was given a copy of the sale agreement and the registered letter. Goulding did not respond to the letter. However, on April 3, 1985, Goulding attended a meeting of the co-owners. At that meeting the sale documents were signed by all co-owners except Goulding, who abstained. Two days later, Goulding sent a letter to the co-owners setting forth his objections to the sale.

Plaintiffs initiated a quiet title action against Goulding, alleging Goulding’s claimed ownership interest in the Inn created a cloud on their title. Goulding counterclaimed, stating the co-owners had no authority to transfer his ownership interest in the Inn. Goulding additionally claimed plaintiffs had recorded the deed intentionally and with knowledge of his interest in the property, and thereby depreciated his interest. Later, the other co-owners of the Inn filed a complaint in intervention.

On December 3, 1987, the Honorable Joseph B. Gary entered judgment in favor of the plaintiffs. The District Court found the agreement between the co-owners required majority vote for the complete sale of the property. Alternatively, the court ruled Goulding impliedly consented to the sale because he failed to give written objection. Finally, in original Conclusion of Law No. 8, the court ordered that upon delivery of the deed to plaintiffs, all monies in deposit due and owing to Goulding shall be delivered by the escrow agent to Goulding.

By order of March 8, 1988, the District Court amended its Findings to include the following:

“Finding No. 13. During the negotiations for the sale of the principle assets it was necessary that additional capital be infused in the corporation for operating expenses. A Motion was passed at the meeting of December 8, 1983, at which the Defendant Goulding was not present, that any advance of capital would be considered as a loan at the interest rate of twenty-five percent (25%) or at U.S. Prime rate plus six/nine percent (6/9%) and that a legal opinion was to be obtained as to whether this was enforceable. No legal opinion was ever obtained and the net effect of this Motion as shown by the evidence would be to completely wipe out the equity of all of the original investors in the business and all monies remaining on hand would be paid to those persons advancing funds.
“That the effect of wiping out all original investors was done without notice to the members of the partnership that this would be the result taken at the meeting and would amount to an inequitable result and contrary to due process of law.
“14. That any investments made after the December 14, [sic] 1983 meeting by the members of the partnership should be treated as capital investments and added to each partner’s original capital account so that the monies remaining in escrow at this time be paid out pro rated share on all capital accounts.”

Conclusion of Law No. 8 was amended to conform to the new findings and reads as follows:

“That upon the delivery of the Deed to Felska and Solvie by either Goulding or a referee appointed by the Court to execute a deed, that all monies in deposit at Security Title Insurance Company shall be distributed to the members of the partnership in proportion of their original investments plus any infusion of capital following the December 14, [sic] 1983 meeting. Said payments following that meeting constitute a capital investment and not a loan.”

On April 13, 1988, co-owners moved for relief under Rule 60(b)(2), M.R.Civ.P., from the March 8, 1988 order, seeking to admit a legal opinion written December 9, 1983, which discussed the legality of the 25% interest on loans. On April 18, 1988, the District Court denied the motion without opinion.

On June 28, 1988, the District Court entered judgment and decreed the plaintiffs fee owners of the real property. Further, the court ordered that all monies held in escrow be distributed to the partners in proportion to their original investments plus any infusion of capital.

Upon Goulding’s motion to amend for a definite amount due him, the District Court, on August 8, 1988, ordered that he should receive 10.26% of all net proceeds of disposition or $25,163.70, together with interest from the date of sale, plus 10.26% of all other assets which arose out of the operation and sale of the Inn.

The following issues are raised on appeal:

1. Did the District Court err when it quieted title in the plaintiffs?

2. Did the plaintiffs and co-owners slander Goulding’s title?

3. Did the District Court err when it adopted Findings Nos. 13 and 14 and Conclusion of Law No. 8, in which it determined the advances made after December, 1983 were capital investments rather than loans and wherein it awarded a money judgment?

4. Did the District Court err when it denied the co-owners’ Rule 60(b)(2), M.R.Civ.P., motion?

Our scope of review is such that we may consider the contract language independently. SAS Partnership v. Schafer (1982), 200 Mont. 478, 653 P.2d 834. Generally, contract ambiguities are questions of fact. S-W Co. v. Schwenk (1977), 176 Mont. 546, 568 P.2d 145. However, the determination of whether or not an ambiguity exists is one of law, freely reviewable by this Court. SAS Partnership; Martin v. United States (9th Cir. 1981), 649 F.2d 701; United States Fidelity and Guaranty Co. v. Newman (9th Cir. 1981), 656 F.2d 457.

The entire case focuses upon the 1977 agreement entered into between the 16 co-owners. Therefore, a review of the significant contract provisions is in order:

“15. . . . Voting shall be by hand, with each Co-Owner having one vote, unless otherwise demanded by any Co-Owner, in which case voting shall be according to the equities of the Co-Owners in the Inn. All decisions shall be by majority vote unless otherwise specified in this Agreement. (Emphasis added.)

“RESTRICTIONS OF TRANSFER:

“16. No Co-Owner shall assign, or otherwise dispose of, all or any part of his interest in the Inn unless such Co-Owner:
“A. has obtained the prior written consent of the other Co-Owners; or
“B. has first offered his interest in the Inn to the other Co-Owners
“17. No Co-Owner shall mortgage, pledge, charge or otherwise encumber all or any part of his interest or restrict the transferability of his co-ownership interest unless:
“A. such Co-Owner has obtained the prior written consent of the other Co-Owners; and
“B. the holder of such mortgage, pledge, charge encumbrance or other restriction agrees to be bound to and with the other Co-Owners and to grant to the other Co-Owners the rights of first refusal and options to purchase hereby granted amongst and between the Co-Owners, pursuant to the terms of this Agreement.

BORROWING PROVISIONS:

“21. The Co-Owners shall borrow from time to time all the sums of money required in connection with the carrying on of the Inn, upon the security of the assets of the Inn to the extent possible. The approval of all Co-Owners shall be acquired when establishing lines of credit or financing with any banks or other financial institutions or private lenders.

“LOANS BY CO-OWNERS:

“22. If at any time a Co-Owner shall properly determine that, in order to protect or preserve any of the properties or other assets of the Inn, additional funds are required to meet the current cash requirements of the Inn and the same are not available from sources already available to the Co-Owners, then any such Co-Owner may, but shall not be obligated to, advance such funds to the Inn or pay such funds to third parties for the benefit of the Inn . . . Any such advances or payments shall during their existence bear interest at a rate determined by the Manager.

“DISTRIBUTION OF DISTRIBUTABLE FUNDS:

“28. . . . Distributable funds shall be distributed as follows:
“A. Firstly, in repayment of the principal and accrued interest under each temporary loan, if any, to the Inn pursuant to Paragraph 22 hereof which remains unpaid, with all amounts being applied firstly to accrued interest and the balance to principal, and, if more than one such loan remains unpaid, then on a pro rata basis;
“B. Secondly, the balance if any shall be distributed to the Co-Owners in accordance with their respective interests.
“29. In the event that the Co-Owners agree to sell all or any portion of the interest or properties of the Inn, then in such event, the net proceeds of such sale (except for the amounts thereof required to be paid to any liabilities) shall be deemed to be distributable funds and shall be distributed in accordance with the provisions of the aforesaid. (Emphasis added.)

“IMPLIED CONSENT:

“37. In any instance under this Agreement in which the consent or approval of a CoOwner [sic] to any proposed action already approved by a majority of the Co-Owners is required, such consent or approval shall be deemed to have been given unless written objection to such proposed action, setting out the grounds for such objection, is sent by such objecting Co-Owner to the General Manager within ten (10) days after receipt of a written request for such consent or approval.”

An ambiguity exists when a contract is subject to two interpretations. In such an instance, parol testimony may be used to ascertain the parties’ intent. S-W Co., 568 P.2d at 147.

“However, intent of the parties is only looked to when the agreement in issue is not clear on its face . . . Where the contractual language is clear and unambiguous on its face, it is this Court’s duty to enforce the contract as drafted and executed by the parties.” (Citations omitted.)

Monte Vista Co. v. Anaconda Co. (Mont. 1988), [231 Mont. 522,] 755 P.2d 1358,1362, 45 St.Rep. 809, 814; citing Glacier Campground v. Wild Rivers, Inc. (1978), 182 Mont. 389, 597 P.2d 689. It is fundamental when reviewing contractual disputes that we are required to read the entire contract together and give effect to every part, if reasonably practicable. Section 28-3-202, MCA.

The 1977 agreement is silent concerning the specific vote required for the full sale of the property. However, the agreement mandates unanimous co-owner consent for one owner’s sale or encumbrance of his individual interest and, in connection with the regular business activities, the establishment of lines of credit and financing with banks or financial institutions. Goulding argues that because unanimous consent is required of these activities, unanimous consent must, also be required for the sale of the business. In support of his position, Goulding points to comments made during meetings that “the sale agreement requires the signatures of Messrs. Otto and Goulding, both of whom are unwilling to sign” and statements regarding the co-owners’ need for “powers of attorney executed by all partners to sell the motel.” Further, Goulding contends the void British Columbia court order indicates that the co-owners believed unanimous consent was necessary to effect a full sale of the business.

The District Court found the contract language clear and unambiguous and therefore rejected Goulding’s attempt to introduce extrinsic evidence. We agree.

While the contract does not specifically address the vote required to effect a full sale, the absence of that specific language does not render the contract ambiguous. First, the provisions requiring unanimous consent address specific circumstances, unrelated to the sale in issue. Because the unanimous consent provisions are definite, we refuse to stretch their applicability. Additionally, the parties contemplated the full sale of the business, as evidenced by Paragraph 29, which discusses the distribution of proceeds in the event of a sale. More importantly, however, the agreement states that all decisions are to be determined by majority vote, unless otherwise specified. We interpret this provision to limit the instances which require unanimous consent, because it indicates the co-owners’ intent to maintain majority vote for all other decisions.

When a contract is clear and unambiguous, this Court must enforce the agreement as written by the parties. We conclude that Paragraph 15, which allows for majority vote, governs the sale of the property.

The District Court concluded that Goulding’s letter of April 5, 1985, did not specifically object to the sale, as required under Paragraph 38 of the agreement. Rather, Goulding expressed concern over management problems, the repayment of loans to various co-owners, amounts held in escrow, and legal questions of warranties. Because we uphold the sale on other grounds, we need not address the matter. However, we state simply that it is clear to this Court that Goulding did not act promptly to protect his interest in the Inn.

Next, Goulding contends that because the co-owners maintained their interests as tenants-in-common, a majority vote of the co-owners is ineffective to divest him of his property. However, Paragraph 38 of the agreement provides:

The Co-Owners shall and will sign such further and other papers and documents, shall cause such meetings to be held and do and cause to be done and perform such further and other acts or things that may be necessary or desirable from time to time in order to give full effect to this Agreement and each and every part hereof.” Further, Paragraph 42 states:

“Any decision of the Co-Owners made in the manner herein before described shall be fully and faithfully carried out by all Co-Owners as if all Co-Owners had unanimously consented to such decision, and all Co-Owners shall execute such documents and things as may be necessary or advisable for the full carrying out of the true intent of such decision.” (Emphasis added.)

The agreement is sufficient to control the rights of the various co-owners. Hence, by signing the agreement, Goulding expressly agreed to abide by all decisions rendered by the majority. We conclude Goulding is required to comply with the will of the majority.

In light of the above, Goulding’s slander of title counterclaim against the plaintiffs must necessarily fail. In First Security Bank v. Tholkes (1976), 169 Mont. 422, 427, 547 P.2d 1328, 1331, we defined slander of title as “[o]ne who maliciously publishes false matter which brings in question or disparages the title to property, thereby causing special damage to the owner . . .” See, 50 Am.Jur.2d, Libel and Slander, § 541. Since we upheld the sale and rejected Goulding’s claimed interest in the property, plaintiffs’ actions were not slanderous.

Next, we consider the apportionment of funds addressed in the District Court’s amended order of March 8, 1988. Based on plaintiffs’ Exhibit 2, a summary of investments and advanced funds at 10% and 12% interest rates, the District Court found that “ [t]he net effect of allowing interest on the advancements after the December 8, 1983 payments, ... is to completely wipe out all the original investors and giving all of the remaining assets to those persons that advanced monies.” The court concluded the equitable manner of disbursing the funds would be to add the contributions to the original capital investment of the respective co-owners and distribute the funds on a pro rata basis.

The standard of review for a case in equity is that the judgment of the trial court is presumed correct, and all legitimate inferences will be drawn to support this presumption. This Court’s inquiry into the evidence is limited to whether the findings of the trial court are clearly erroneous. Rule 52, M.R.Civ.P.; and Citizens State Bank v. Bossard (Mont. 1987), [226 Mont. 75,] 733 P.2d 1296, 44 St.Rep. 468. With this standard in mind, we review the evidence, dividing our discussion into post- and pre- December, 1983 advancements.

The co-owners contend the evidence indicates an intent to treat the advancements as loans with an accrued interest, not as capital investments. We agree in part. The evidence supports a loan designation for the post-December, 1983, advancements. First, in his letter of April 5, 1985, Goulding acknowledged the monies advanced were loans. The record indicates Goulding objected to an interest rate of 59%, but stated that a “usual bank rate is reasonable.”

Second, Paragraph 22 of the agreement provides for loans, at a rate of interest determined by the manager, by the various co-owners of the Inn, if necessary to protect or preserve the assets. Paragraphs 28 and 29 provide for distribution of sale proceeds first to the repayment of principal and accrued interest, and thereafter the balance to the co-owners according to respective shares.

Third, minutes of the co-owners’ meetings indicate complete discussions took place regarding the poor financial condition of the Inn. During these meetings, management requested additional funds for the Inn which included an interest rate commensurate with the risk and a repayment preference upon distribution of the sale proceeds. However, it is not clear what rate of interest the parties contemplated: (25%; 6%/9% over U.S. prime; or the “highest legal rate”). Nor is it clear what reasonable rate could be applied. We leave these specific questions to the District Court upon remand.

The District Court’s findings related solely to advancements made after December, 1983. However, plaintiff’s Exhibit 2 indicates that the co-owners contributed funds in January 1982 and 1983. In addition, the co-owners expressed a desire to retroactively designate these monies as loans, as evidenced by the minutes of their December 8, 1983, meeting:

“MOTION: All funds contributed after the initial investment accrue interest at U.S. Prime rate plus 6%/9% and that this interest should be paid out monthly.
“All monies advanced since that time should be secured, if possible, and be treated as loans from partners.
“Interest accrued on funds contributed before December 31, 1983, be treated as a portion of the partners[’] loans.” (Emphasis added.)

Neither party presented argument regarding these funds. The District Court must make specific findings regarding the pre-December, 1983, advancements by determining the legality of the retroactive designation of these funds as loans.

We conclude the co-owners’ final issue regarding the District Court’s denial of the Rule 60(b)(2) motion, is moot.

Upon remand, the District Court may give the evidence whatever weight it deems appropriate.

Affirmed in part, reversed in part and remanded for proceedings consistent with this opinion.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES McDON-OUGH, GULBRANDSON and WEBER concur.

MR. JUSTICE SHEEHY,

dissenting:

I dissent and would affirm the District Court in total.

This case is an example of the minor investors ganging up on one of the two largest investors by passing resolutions in his absence which in effect take away his investment and leave nothing of the net proceeds in which the larger investor will participate. Judge Gary saw through this obvious raid on the net proceeds and refused to agree. I would affirm Judge Gary.

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


source: Caselaw Access Project

author: MR. JUSTICE HUNT

license: Public Domain

text:
    ROY WEIBLE, Plaintiff and Appellant, v. RONAN STATE BANK, Defendant and Respondent.
    No. 88-526.
    Submitted on Briefs April 6, 1989.
    Decided July 19, 1989.
    776 P.2d 837.
    Michael F. Bailey, Joseph M. Goldman Law Offices, Missoula, for plaintiff and appellant.
    Sam E. Haddon, Boone, Karlberg & Haddon, Missoula, Ingraham Law Office, Ronan, for defendant and respondent.
   MR. JUSTICE HUNT

Plaintiff Roy Weible appeals from an order of the Twentieth Judicial District Court, Lake County, dismissing his complaint against defendant Ronan State Bank. We affirm.

The dispositive issue raised on appeal is as follows:

Were the claims asserted by Weible in his complaint based solely on a tort action for injury to or trespass on property, and, as such, barred by a two-year statute of limitations?

Beginning in 1973, Roy Weible and his wife, Alta Weible, executed several new and renewal promissory notes to Ronan State Bank. As collateral securing the performance of the notes, the Weibles executed and delivered to the Bank an assignment of their buyers’ interest in certain real property, a mortgage upon that property and a security agreement covering personal property.

As of September 9, 1985, the promissory notes were in default. The Bank initiated an action to obtain judgment upon the notes and a decree of foreclosure of the real property. On May 28, 1986, a hearing on the Bank’s motion for summary judgment was held, at which time counsel for the Weibles stipulated to the summary judgment and agreed no defenses could be raised. The formal judgment and decree of foreclosure was entered on August 4, 1986.

On June 3, 1986, after the hearing on summary judgment but prior to the entry of judgment, agents of the Bank entered onto Roy Weible’s real property and removed farm machinery used as collateral in the personal property security agreement. On August 3, 1988, more than two years after the removal of the machinery, Weible filed a complaint against the Bank and Stedje Brothers, Inc., alleging that the Bank breached the security agreement by failing to give ten days notice prior to seizure of the farm machinery as required by the agreement, trespassing upon his property and wrongfully removing the equipment. On August 5, 1988, Weible filed an amended complaint, dropping Stedje Brothers as a defendant.

In response to the complaint, the Bank filed a motion to dismiss. After a hearing, the District Court granted the Bank’s motion on the grounds that Weible’s claims were barred by the statute of limitations, the doctrine of res judicata and the compulsory counterclaim rule.

On appeal, Weible contests each of the grounds upon which the District Court based its determination. We will not discuss the res judicata and compulsory counterclaim questions, however, because the statute of limitations issue is dispositive of the appeal.

Weible argues that the District Court erred in concluding that the action against the Bank was barred by the statute of limitations. The District Court held that Weible’s complaint rested solely on the tort theories of trespass on and injury to real and personal property, and, therefore, the complaint was barred by § 27-2-207, MCA, the two-year statute of limitations pertaining to actions involving injury to property. Weible argues that his complaint was also based on breach of the security agreement, and, therefore, the action was governed by § 27-2-202(1), MCA, the eight-year statute of limitations pertaining to actions involving breach of a written contract.

In determining which statute of limitations applies, the court will look to the substance of the complaint. If the gravamen of the action rests strictly on tort theories, the statute of limitations pertaining to torts will apply. Likewise, if the gravamen of the action rests strictly on contract theories, the statute of limitations pertaining to contracts will apply. Castillo v. Franks (1984), 213 Mont. 232, 239, 690 P.2d 425, 428; Quitmeyer v. Theroux (1964), 144 Mont. 302, 311, 395 P.2d 965, 969. If the gravamen of the action is such that it may rest either in tort or contract, the injured party may elect the theory he will pursue and the statute of limitations governing the elected theory will apply. Unruh v. Buffalo Bldg. Co. (Mont. 1981), [_ Mont. _,] 633 P.2d 617, 618, 38 St.Rep. 1156, 1158. If doubt exists as to the gravamen of the action, the longer statute of limitations will apply. Thiel v. Taurus Drilling Ltd. 1980-II (1985), 218 Mont. 201, 212, 710 P.2d 33, 40.

In his amended complaint, Weible alleged the following:

“That on or about the 3rd day of June, 1986, Defendant Ronan State Bank through two (2) of its acting agents . . . trespassed upon the farm property of Plaintiff’s and wrongfully removed the Plaintiff’s farm machinery.
“[T]he security agreement . . . states that a ten (10) day notice shall be given to the party in default to surrender the collateral at a mutually agreed time and place. That the Defendant Ronan State Bank breached this security agreement in trespassing upon Plaintiff’s property and wrongfully removing his farm machinery. This was done before final judgment was made and entered in the real property foreclosure and done without the required notice to the party in default.
“Defendant Ronan State Bank willfully and maliciously trespassed upon Plaintiff’s farm property and with willful and malicious intent, wrongfully removed Plaintiff’s farm machinery. This was done in an oppressive way and/or manner which violated the rights of Plaintiff with unnecessary harshness and/or severity as Defendant Ronan State Bank misused and abused their [sic] authority and power when they [sic] breached the security agreement.”

Weible argues that these allegations set out a breach of contract action. Indeed, viewed in the light most favorable to Weible, the complaint does allege a breach of the security agreement for failure to give notice. However, the injuries claimed as a result of the breach of contract — the trespass and wrongful removal of farm machinery — constitute tort theories of action. Although the injuries to Weible may have originated in breach of contract, the acts causing his damages sound in tort. Therefore, the gravamen of the action is in tort, not contract, and the tort statute of limitations applies. Quitmeyer, 144 Mont, at 311, 395 P.2d at 969.

A two-year statute of limitations governs actions arising from trespass to and conversion of property. Section 27-2-207, MCA. The injury in question occurred on June 3, 1986. The complaint was filed in August, 1988 — over two years later. The action is barred by the two-year statute of limitations.

Affirmed.

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


author: MR. JUSTICE GULBRANDSON MR. JUSTICE SHEEHY,

text:
    MICHAEL PERETTI, Henri Hodnik, et al., Plaintiffs and Respondents, v. The STATE OF MONTANA; The Board of Public Education and its members, Defendant and Appellant.
    No. 88-499.
    Submitted June 20, 1989.
    Decided July 19, 1989.
    Rehearing Denied Aug. 11, 1989.
    777 P.2d 329.

      Marc Racicot, Atty. Gen., John Paulson argued, Asst. Atty. Gen., Helena, for defendant and appellant.
    Williams Law Firm, Richard Ranney argued, Missoula, for plaintiffs and respondents.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

Defendants appeal from the final judgment of the Fourth Judicial District Court of Missoula County awarding the fourteen plaintiffs a sum total of $2,479,916 in damages. This judgment was based upon the District Court’s earlier grant of partial summary judgment in favor of the plaintiffs on the issue of liability. The court ruled that the State was liable for a breach of implied contract caused by the premature termination in 1977 of the Aviation Technology Program at the Missoula Technical Center. We reverse.

The issues presented for review:

1. Did the District Court err in granting partial summary judgment in favor of plaintiffs on the issue of liability?

2. Did the District Court err in determining the measure and amount of damages to be awarded plaintiffs?

In the fall of 1976, plaintiffs enrolled in the Aviation Technology Program at the Missoula Technical Center (Center). This Center is one of five such post-secondary vocational education centers financed by state appropriations. Permissive county levies may supplement State financing. The Board of Public Education (Board) retains overall control over the budget and curriculum of each center.

In 1977, the legislature appropriated $7,042,721 in funding for the five centers, a reduction of $819,388 from the 1975 biennial legislative appropriation. This reduction entailed a cutback in vocational programs. After consideration of various alternatives, the Board decided to eliminate the Aviation Technology Program (Program) because it had the highest cost per student of all the programs offered at the Center and because it would affect fewer students (approximately 30 to 45 students) than a cut in many other programs.

In June of 1977, the Board notified those sixteen students at the Center who had already successfully completed one year of the integrated two-year program, that they would be unable to complete the second year of training because the program was being discontinued. The students thereafter filed suit alleging breach of the State’s implied contract to provide a two-year, six-quarter course of study which would prepare them for a career as a commercial pilot. As alleged by the students, the “Career Pilot Program” detailed in the Training Course syllabus was designed as a two-year integrated whole, with completion of course work and flight training more than sufficient to meet minimum FAA requirements and to qualify students for employment as commercial pilots and certified flight and ground instructors. Plaintiffs also alleged that this breach summarily deprived them of liberty and property interests without due process of law.

Plaintiffs initially filed suit in federal district court for damages allegedly resulting from the premature termination of the Program. See Peretti v. Montana (D. Mont. 1979), 464 F.Supp. 784. The Ninth Circuit Court of Appeals, however, subsequently held the State of Montana had not consented to suit in federal court and the Eleventh Amendment therefore precluded district court jurisdiction over the suit. Montana v. Peretti (9th Cir. 1981), 661 F.2d 756. Plaintiffs then filed suit in the Fourth Judicial District Court of Missoula County.

The parties agreed to bifurcate the issues of liability and damages. The issue of liability was then submitted on cross-motions for summary judgment; the parties stipulated that the court could render a decision on these cross-motions based upon its consideration of an agreed statement of facts and the exhibits and transcript from the earlier federal court trials.

On July 12, 1985, the District Court ruled that an implied contractual relationship existed between the parties which entitled plaintiffs to an opportunity to complete the Program’s six-quarter training period and to receive a diploma upon completion. The court held that the State breached its implied contract with the students when it prematurely terminated the Program. The court thus granted partial summary judgment in favor of plaintiffs, finding defendants liable for those damages resulting from this breach.

The State requested and received a certification of the partial summary judgment as final under Rule 54(b), M.R.Civ.P., so it could then file an interlocutory appeal prior to resolution of the issue of damages. The State, however, subsequently decided not to initiate an appeal until after judgment on the issue of damages.

The issue of damages was later tried without a jury. On July 15, 1988, the court issued its Findings of Fact, Conclusions of Law, Opinion and Order awarding damages to each of the fourteen plaintiffs who were deposed and presented evidence of their damages. The court held that those seven students not engaged in a career as pilots (hereinafter “the non-pilots”) received no financial benefit from the one-year aviation training. The court thus concluded that the detriment suffered by these non-pilots equaled the losses they incurred in attending the one-year aviation program (reliance damages) plus the lost expectancy of their bargain. The court then multiplied the total amounts expended in 1977 to attend one year of the Program by an inflation index of 1.9 to arrive at the 1988 equivalency of the total amount of damages incurred by the non-pilots in reliance on the implied contract. The total amounts awarded to each non-pilot ranged from a low of $193,940 to a high of $237,979.

The damages awarded those seven students who went on to become pilots, on the other hand, equaled the increased average cost of alternate training, the average lost income caused by the average one-year delay in beginning a career as pilots, and the value of the employment benefit lost by lack of a degree from a school with a formal integrated two-year pilot training program. The total awarded to each pilot, after consideration of the 1.9 inflation index, amounted to $147,350. The court dismissed the claims of the two students who presented no evidence of damage.

Defendants thereafter filed this appeal from the final judgment of the District Court.

The State contends that the District Court erred in holding it liable for breach of an implied contract since the State has not clearly and unambiguously waived its sovereign immunity as to implied contract actions. Absent such a clear waiver, allege appellants, the State may not be sued in its own courts.

We recognize that the modern trend among the states favors a diminution of those sovereign immunity protections available to the states. The Colorado case of Evans v. Board of County Comm’rs of El Paso County (1971), 174 Colo. 97, 482 P.2d 968, provides a striking rationale for this latent trend toward abolishing many forms of sovereign immunity previously recognized:

“The monarchical philosophies invented to solve the marital problems of Henry VIII are not sufficient justification for the denial of the right of recovery against the government in today’s society. Assuming that there was sovereign immunity of the Kings of England, our forbears [sic] won the Revolutionary War to rid themselves of such sovereign prerogatives.”

Id. at 969.

Montana similarly has endorsed this trend toward diminishing sovereign immunity protections, as evidenced by the 1972 constitutional abolishment of the State’s sovereign immunity as to all actions involving injuries to a person or property. As stated in the 1972 Montana Constitution, Article II, § 18:

“The state, counties, cities, towns, and all other local governmental entities shall have no immunity from suit for injury to a person or property, except as may be specifically provided by law by a % vote of each house of the legislature.”

While Art. II, § 18 diminishes sovereign immunity protections previously available to the State, it does not abolish all sovereign immunity. This Court has previously held that the waiver found in Art. II, § 18 extends only to tort actions, and not contract actions, involving injuries to a person or property. LeaseAmerica Corp. of Wis. v. State (Mont. 1981), [191 Mont. 462,] 625 P.2d 68, 71, 38 St.Rep. 398, 403. By interpreting Art. II, § 18 as applying only to tort actions, this Court effectuated the intent to prevent a constitutional waiver of sovereign immunity as to contract actions, an intent expressed by Constitutional Convention Delegate Habedank:

“. . . I think there are many instances where there may be some governmental employees [who] do some things in connection with contractual fields that we try to stick the government for where there is a good reason to maintain our governmental immunity in those situations.”

Montana Constitutional Convention, Vol. V, at 1761. Moreover, this interpretation comports with the principle that any waiver of a State’s sovereign immunity must be strictly construed. Storch v. Board of Directors of E. Mont. Region Five Mental Health Center (1976), 169 Mont. 176, 179, 545 P.2d 644, 646, citing 72 Am.Jur.2d, States, Etc., § 121.

Finding no waiver of sovereign immunity for contract actions in the Constitution, we next turn to an examination of the statutes for such a waiver, because a state cannot be sued in its own courts without its plain and specific consent to suit either by constitutional provision or by statute. See, e.g., Heiser v. Severy (1945), 117 Mont. 105, 158 P.2d 501; State ex rel. Freebourn v. Yellowstone County (1939), 108 Mont. 21, 88 P.2d 6. Read by itself, § 18-1-404, MCA, appears to provide just such an unambiguous and specific waiver of the State’s immunity as to all contract actions, express and implied alike. Section 18-1-404(1), MCA, reads:

“The state of Montana shall be liable in respect to any contract entered into in the same manner and to the same extent as a private individual under like circumstances, except the state of Montana shall not be liable for interest prior to or after judgment or for punitive damages.” (Emphasis added.)

This individual statutory provision, however, may not be read and properly understood in a vacuum. Rather, it must be read and construed in such a manner “as to insure coordination with the other sections of an act.” Hostetter v. Inland Dev. Corp. of Mont. (1977), 172 Mont. 167, 171, 561 P.2d 1323, 1326; see also Barney v. Board of R.R. Comm’rs (1932), 93 Mont. 115, 129, 17 P.2d 82, 85 (requiring a court to consider all statutes in their entirety relating to the matter at issue).

The meaning of § 18-1-404, MCA, is ambiguous when read in conjunction with the other provisions in part 4, specifically § 18-1-401, MCA. Section 18-1-404, MCA, appears to waive sovereign immunity as to both express and implied contracts, yet § 18-1-401, MCA, expressly grants district courts jurisdiction only over express contract actions. As stated in § 18-1-401, MCA:

“The district courts of the state of Montana shall have exclusive original jurisdiction to hear, determine, and render judgment on any claim or dispute arising out of any express contract entered into with the state of Montana or any agency, board, or officer thereof.” (Emphasis added.)

Because these two above-mentioned statutes, when read together, render the plain meaning of each ambiguous, we turn to the legislative history of each to determine the legislative intent, and thereby the proper statutory construction of each provision. See, e.g., Thiel v. Taurus Drilling Ltd. 1980-11 (1985), 218 Mont. 201, 710 P.2d 33.

These two statutory provisions were first enacted by the 34th Legislature in 1955. They were enacted as part of Chapter 138, which was entitled “An Act Permitting Actions on Express Contracts Against the State of Montana and Describing the Practice and Procedure Therefor.” 1955 Laws of Montana, Ch. 138. The title provides a clear indication that the legislature intended only to waive the State’s sovereign immunity as to express contracts. As stated in Dept. of Revenue v. Puget Sound Power & Light Co. (1978), 179 Mont. 255, 263, 587 P.2d 1282, 1286, the title of an act is presumed to indicate the legislature’s intent with regard to the provisions contained therein. See also Barney, 17 P.2d at 85 (stating the title of an Act “is indicative of the legislative intent and purposes in enacting it”). Because the legislature intended only to waive the State’s immunity as to express contracts, as is readily apparent from the title, we hold that § 18-1-404(1), MCA, does not subject the State to liability on implied contracts. Having concluded thus, we find that the District Court erred in finding the State liable on a breach of implied contract theory and in then awarding damages.

The students also included arguments throughout their brief which were based on contentions that the “premature termination” of the program violated their constitutional right to due process, the State’s duty to deal fairly and in good faith with its citizens, and the State’s express contract to provide a two-year integrated program. The liability and damages imposed by the District Court and appealed by the State, however, were based only on the determination that the State breached an implied contract. The students did not contend by way of cross-appeal that the District Court erred in failing to base its judgment on these other constitutional and express contract theories. We therefore will not consider the potential merits and effect of these other theories on the issues of liability and damages.

The orders of the District Court finding the State liable and awarding damages are reversed and we remand to the District Court for entry of judgment for the defendants.

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

MR. JUSTICE SHEEHY,

concurring in part and dissenting in part:

I dissent from that portion of the majority opinion which finds state immunity to exist here on two grounds: (1) this case involves an express, and not an implied contract; (2) the legislature intended to waive sovereign immunity as to any contract.

In the fall of 1976, the plaintiffs enrolled in the Career Pilot Program in the Department of Aviation Technology at the Missoula Technical Center, one of five state-designated post secondary vocational education centers. The program was advertised and represented by the state as a six quarter program, extending to two years.

Before making their decision to enroll in the aviation technology program,-the students received a brochure describing it and the Missoula Technical Center’s catalogue of course offerings. After enrolling, they received a detailed outline of the program, including two full years of classes. The brochures and outlines plainly contained full representation by the state that the program was being offered for six quarters and would not be terminated. The students relied on these documents, and on various statements from their instructors throughout the first year in enrolling in the course and continuing in the course.

The plaintiffs first brought this case in the federal court, and the decision in favor of the plaintiffs in that court was appealed to the Court of Appeals for the Ninth Circuit. The opinions in Peretti v. State of Montana (D. Mont. 1979), 464 F.Supp. 784. The decision was reversed not because it was incorrect, but because the Ninth Circuit Court felt that it had no jurisdiction, in this case, of the cause against the state. What is important to this case is that in a reply brief filed in the Court of Appeals for the Ninth Circuit, pp. 9, 10, the state admitted:

“While the District Court found an ‘implied contract’ as the result of the solicitation contained in Exhibits 1, 2, and 3, it could have just as easily found ‘express contract’ as that term is defined in § 28-2-103 which provides in pertinent part:
“ *. . . an express contract is one the terms of which are stated in words . . . ’ ”

I would hold that an express contract existed here.

But even if the contract is regarded as one arising from implication, the statute waiving state immunity, § 18-1-404(1), MCA, provides:

“The state of Montana shall be liable in respect to any contract entered into in the same manner and to the same extent as a private individual under like circumstances . . .”

In an exercise of nimble sophistry, the majority determined that the word “any” excludes implied contracts. One has to be fast to keep up with this Court.

The finding that an implied contract is involved here, and that immunity does not extend to implied contracts violates the policy of this state set forth in § 20-30-101(1), MCA, as follows:

“It is the policy of this state to encourage and enable its citizens to obtain and receive an education commensurate with their abilities and desires. It is recognized that institutions offering post secondary education, vocational, and professional instruction perform a useful and necessary service to the citizens of this state in achieving this objective. It is found that certain institutions have either by unscrupulous, unfair, and deceptive practices or through substandard instruction deprived the citizens of this state of education opportunity and subjected them to financial loss.”

In the light of our public policy, in which class of educators shall we place the state of Montana?

I concur in part as to the damages awarded. They should have been individualized and not generalized. I would remand only for the purpose of adjusting the damages based on the individual losses.

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


author: MR. JUSTICE SHEEHY

text:
    CAROLINE ANN BROWN and Harley LeRoy Brown, Petitioners, v. DISTRICT COURT OF THE SEVENTEENTH JUDICIAL DISTRICT FOR THE STATE of Montana, In and For the COUNTY OF BLAINE, and the Honorable Leonard Langen, a Judge thereof, Respondents.
    No. 88-487.
    Submitted on Briefs Dec. 14, 1988.
    Decided July 19, 1989.
    Rehearing Denied Aug. 25, 1989.
    777 P.2d 877.
    Frisbee, Moore, Stufft & Olson, and Jayne Mitchell, Cut Bank, for petitioners.
    Mike Greely, Atty. Gen., Helena, Clay Smith, Helena, and Donald Ranstrom, County Atty., Chinook, for respondents.
    Leonard Langen, District Judge, Chinook, pro se.
   MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

The United States Supreme Court in Rice, Director, Department of Alcoholic Beverage Control of California v. Rehner (hereafter Rice v. Rehner) (1983), 463 U.S. 713, 103 S.Ct. 3291, 77 L.Ed.2d 961, decided that Congress, by enacting 18 U.S.C. § 1161, gave states the power to regulate within their borders the possession and sale of liquor by Indian persons in Indian country through the licensing provisions of the states. Our case here answers the further problem: whether such liquor regulation by the states includes the power to enforce state criminal statutes against Indian persons for violations of state law relating to the possession or the sale of liquor within Indian country. We hold here that under Rice v. Rehner, and the applicable federal statute, Montana can, and does, have the power to punish by criminal proceedings in its state courts violations of state liquor laws occurring within its borders by Indian persons in Indian country. Because of our holding, we deny the petition for a writ of supervisory control from this Court, and dismiss these proceedings.

In Rice v. Rehner, the pivotal case here, Rehner was a federally licensed Indian trader who operated a general store on the Pala Reservation in San Diego, California. The Pala Tribe had adopted a tribal ordinance permitting the sale of liquor on the reservation, providing that the sales conformed to state law. Rehner sought from the state an exemption from its law requiring a state license for retail sale of liquor for off-premises consumption. When she was refused an exemption, Rehner filed suit seeking a declaratory judgment that she was not required to obtain a license from the state and an order directing that liquor wholesalers could sell to her without her state license. The federal district court granted the state’s motion to dismiss, ruling that Rehner was required to have a state license under 18 U.S.C. § 1161. The Court of Appeals reversed the district court, holding that § 1161 did not confer jurisdiction on the states to require liquor licenses. (9th Cir. 1982), 678 F.2d 1340. On writ of certiorari, the United States Supreme Court, as above noted, reversed the Court of Appeals, holding that California may properly require Rehner to obtain a state license in order to sell liquor for off-premises consumption.

As noted by the dissent in Rice v. Rehner, the United States Supreme Court rested its conclusion on three propositions. 463 U.S. at 738,103 S.Ct. at 3305 (Blackmun, J., dissenting). First, the Supreme Court asserted that “tradition simply has not recognized sovereign immunity or inherent authority in favor of liquor regulation by Indians.” Second, the Supreme Court found a “historical tradition of concurrent state and federal jurisdiction over the use and distribution of alcoholic beverages in Indian country.” Third, the Supreme Court concluded that Congress “authorized . . . state regulation over Indian liquor transactions” by enacting 18 U.S.C. § 1161.

The principal argument of the petitioners (hereafter Brown or Browns) is that Rice v. Rehner held only that the states could require Indians transacting liquor business on the reservation to purchase a state liquor license. They argue that Rice v. Rehner did not, however, and could not, confer on the state criminal jurisdiction over liquor offenses committed by Indians on the reservation, contending that criminal jurisdiction over Indians can only be conferred upon the states by Congress with the express consent of the tribe. They argue that Montana has not been given such a grant of criminal jurisdiction.

The facts in this case parallel somewhat the facts in Rice v. Rehner. This action arises from an information filed in Blaine County District Court, charging Harley LeRoy Brown and Caroline Ann Brown with the felony offense of sale and possession of beer and wine without a license in violation of Montana’s statute, § 16-6-301(1), MCA. Caroline Ann Brown is an enrolled member of the Fort Belknap Tribal Community of the Assiniboine and Gros Ventre Tribes. Harley LeRoy Brown is an Indian person residing on the Fort Belknap Reservation and is the husband of Caroline Ann Brown and the head of an Indian family. The Browns operate a small grocery store at Hays, Montana, selling groceries, as well as beer and wine. At the time of the alleged offense, they claim they had a valid tribal and federal license authorizing them to sell beer and wine. The District Court, however, noted that the Browns had not obtained from the tribe such a liquor license.

On January 6, 1988, the Blaine County Attorney caused a state search warrant to be issued from the Blaine County Justice Court. Law enforcement officials attempted to execute the Blaine County search warrant on the reservation; but were told by the chief tribal judge of the Fort Belknap Tribal Court that the search warrant was invalid because the state had no jurisdiction on the reservation. Apparently, the state officers then caused an action to be filed in Tribal Court charging the Browns with criminal violations of tribal ordinances relating to the sale and display of liquor on the reservation. Under the charges filed in the Tribal Court, a search warrant was issued from that Court under which evidence was seized from the grocery store at Hays, Montana; and transported to Blaine County District Court. The evidence was not taken to the Tribal Court and it is contended that the tribal search warrant was not served upon Caroline Ann Brown, from whose possession the evidence was seized. Following the seizure and transport of the evidence, the Tribal Court action was dismissed. State court charges were filed against the Browns on February 4, 1988, after the Tribal Court action was dismissed.

On April 6, 1988, Browns moved to dismiss the charges against them on grounds that the Montana State District Court did not have criminal jurisdiction over Indians who allegedly committed crimes within the exterior boundaries of the reservation. The defendants further moved to quash the search warrant and suppress the evidence seized under the Tribal Court search warrant, which evidence had been transferred to the state court.

On August 6, 1988, the District Court denied both the motion to dismiss and the motion to quash. In denying the motion to dismiss, the District Court relied on Rice v. Rehner particularly. Thereupon, the petitioners filed their application for a writ of supervisory control or other appropriate writ from this Court to review the issue of jurisdiction, and the issue of whether the evidence should be suppressed.

Under Title 18 U.S.C. §§ 1154, 1156, 3113, and 3488, introduction of liquor, possession thereof, dispensing thereof or transporting the same is forbidden in Indian country. As noted in Rice v. Rehner, 463 U.S. 722, 103 S.Ct. at 3297, Congress imposed complete prohibition of liquor on Indian lands in Indian country in 1832 and “these prohibitions are still in effect subject to suspension, conditioned on compliance with state law and tribal ordinance.” The United States Supreme Court derived that statement from the provisions of Title 18 U.S.C. § 1161, which follow:

“The provisions of 1154, 1156, 3113, 3488 and 3618 of this title shall not apply within any area that is not Indian country nor to any act or transaction within any area of Indian country provided such act or transaction is in conformity both with the laws of the state in which such act or transaction occurs and with an ordinance duly adopted by the tribe having jurisdiction over such area of Indian country . . .” (Emphasis added.)

Plainly, under the language of § 1161, two things are necessary to remove the federal prohibition against liquor in Indian country: (1) conformity with the laws of the state in which the transaction occurs; and, (2) an ordinance duly adopted by the tribe having jurisdiction over the area of Indian country. In this case, the Fort Belknap Indian Community adopted its Tribal Ordinance No. 3-74 in 1974, which regulates liquor transactions on the reservation under the jurisdiction of the Fort Belknap Indian community “provided that such introduction, sale or possession is in conformity with the laws of the state of Montana.”

The principal argument of Brown in this case is that Rice v. Rehner was a civil case, which only held that Indians transacting a liquor business on the reservation must purchase a state liquor license; and that it did not give state courts criminal jurisdiction over Indians who commit liquor offenses on the reservation. Brown contends that criminal jurisdiction over Indians can only be conferred upon the states by Congress by the express consent of the tribe. 18 U.S.C. § 1162. They contend that Montana has not been given such a grant of criminal jurisdiction.

Such an interpretation would be a narrow construction of 18 U.S.C. § 1161 and would overlook the specific reference in Rice v. Rehner that Congress has also historically permitted concurrent state regulation through the “imposition of criminal penalties on those who supply Indians with liquor, or who introduce liquor into Indian country.” 463 U.S. at 726, 103 S.Ct. at-3299. The interpretation ignores also the obvious determination in Rice v. Rehner that the state was entitled to effective regulation of liquor, the Supreme Court saying:

“The historical tradition of concurrent state and federal jurisdiction over the use and distribution of alcoholic beverages in Indian country is justified by the relevant state interests involved. See [State v.] Confederated Tribes, supra, [447 U.S. 134] at 156, 65 L.Ed.2d 10, 100 S.Ct. 2069 [2082 (1980)]. Rehner’s distribution of liquor has a significant impact beyond the limits of the Pala Reservation. The state has an unquestionable interest in liquor traffic that occurs within its borders, and this interest is independent of the authority conferred on the states by the Twenty-first Amendment. Crowley v. Christiansen, 137 U.S. 86, 91, [11 S.Ct. 13, 15, 34 L.Ed. 620] (1890). Liquor sold by Rehner to other Pala tribal members or to nonmembers can easily find its way out of the reservation and into the hands of those whom, for whatever reason, the state does not wish to possess alcoholic beverages, or to possess them through a distribution network over which the state has no control. This particular ‘spillover’ effect is qualitatively different from any ‘spillover’ effects of income taxes or taxes on cigarettes. ‘A state’s regulatory interest will be particularly substantial if the state can point to off-reservation effects that necessitate state intervention.’ New Mexico v. Mescalero Apache Tribe, 462 U.S. 234, 76 L.Ed.2d 611, 103 S.Ct. 2378 (1983).”

Rice v. Rehner, 463 U.S. at 724, 103 S.Ct. at 3298.

In this case, the district judge particularly noted the “spillover” effect, remarking that the state’s regulatory interest was substantial because the Brown grocery was located on Montana State Highway No. 66, a state-maintained, two-lane paved highway, carrying non-Indian traffic from Billings, Montana, to the south; to Harlem, Montana, to the north. Moreover, Rice v. Rehner recognized that “it cannot be doubted that the state’s police power over liquor transactions within its borders is broad enough to protect the same Congressional decision in favor of the state” [by allowing removal of the prohibition against liquor on reservations from transactions that conform both with the laws of the state and with a tribal ordinance]. 463 U.S. at 731, 103 S.Ct. 3302.

The second principal argument made by Brown is that the Fort Belknap community has preempted the field by asserting exclusive jurisdiction over liquor offenses on the reservation. In support, they point to the criminal prosecution ordinances adopted by the tribe which provide procedures in the tribal courts for crimes committed on the reservation. They also point to Resolution No. 71-88, adopted by the tribal community on April 6, 1988, after the institution of the criminal action in this case. Resolution No. 71-88 declared in effect that its previously adopted ordinance allowing the use and sale of alcoholic beverages on the reservation did not cede or authorize jurisdiction within the reservation to the state of Montana.

For these contentions, the Browns rely on State of Wisconsin v. Big John (1987), 140 Wis.2d 322, 409 N.W.2d 455; and upon the federal decisions in U.S. v. Cowboy (10th Cir. 1982), 694 F.2d 1228; U.S. v. Johnson (9th Cir. 1980), 637 F.2d 1224; and U.S. v. Allen (8th Cir. 1978), 574 F.2d 435.

State v. Big John, supra, has no application in this cause because it involved the state’s attempt to regulate the use of boats in Wisconsin, an activity well within the traditional area of Indian tribal sovereignty. Rice v. Rehner specifically pointed out that the regulation of liquor on reservations was not within the inherent or historical tribal sovereignty. The federal cases likewise do not support Brown in this case. U.S. v. Allen, supra, involved an assault by an Indian against other Indians on a reservation and has no connection with the interpretation of Indian liquor laws except that the parties were drinking when the assault occurred. U.S. v. Johnson, supra, held that offenses by an Indian against an Indian are subject to the jurisdiction of the Tribal Courts if not covered by the Major Crimes Act, in a case construing the federal Juvenile Delinquency Act. U.S. v. Cowboy, supra, held that the tribal courts had concurrent jurisdiction with the federal courts over Indians who offend 18 U.S.C. § 1154 (dispensing liquor). No state statutes were involved and the court there did not pass upon the application of state criminal laws under 18 U.S.C. § 1161.

The state district court in this case rejected the preemption argument pointing to the language in Rice v. Rehner, which said:

“. . . Our examination of § 1161 leads us to conclude that Congress authorized, rather than preempted state regulation over Indian liquor transactions.”

463 U.S. at 726, 103 S.Ct. at 3299.

Again, the District Court noted from Rice v. Rehner:

“It is clear then that Congress viewed § 1161 as abolishing federal prohibition, and as legalizing Indian liquor transactions as long as those transactions conformed both with tribal ordinances and state law. It is also clear that Congress contemplated that its absolute, but not exclusive power, to regulate Indian liquor transactions would be delegated to the tribes themselves and to the states, which historically shared concurrent jurisdiction with the federal government in this same area . . .”

463 U.S. at 728, 103 S.Ct. at 3300.

We agree with the District Court that preemption has not occurred here. In sum, we hold that when Congress decided to allow the end of prohibition of liquor on reservations in certain cases, it did so under the conditions that state law and tribal ordinances would regulate liquor transactions in Indian country. If we were to interpret 18 U.S.C. § 1161 as permitting only state licensing of liquor transactions on Indian reservations, but not the power to enforce the same, the state would be powerless to effectuate the intent of Congress that such liquor transactions on reservations be “in conformity with state law.”

Rice v. Rehner, supra, was decided by a divided court, but its majority holding clearly implies that state criminal laws relating to liquor transgressions apply to offenses committed by Indians in Indian country. We so hold.

With respect to the second portion of Browns’ petition for writ in this cause asking us to direct the suppression of the evidence seized under the tribal search warrant, we find this issue to be premature because Browns have a clear remedy by appeal. The order denying suppression of the evidence is interlocutory and in such case a writ of supervisory control from this Court is not obtainable.

The application for writ of supervisory control is denied and these proceedings dismissed.

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


author: MR. JUSTICE HUNT MR. JUSTICE GULBRANDSON,

text:
    In re the MARRIAGE OF SYLVIA GAY JOHNS, Petitioner and Appellant, and WILLIAM J. JOHNS, Respondent and Respondent.
    No. 88-527.
    Submitted on Briefs May 11, 1989.
    Decided July 24, 1989.
    776 P.2d 839.
    Henningsen, Purcell, Vucurovich & Richardson, Mark A. Vucurovich, Butte, for petitioner and appellant.
    W.M. Hennessey, Butte, for respondent and respondent.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

Sylvia Johns, petitioner, appeals from the property distribution mandated in the dissolution of marriage decree entered by the District Court of the Second Judicial District, Silver Bow County. We affirm.

The issues raised on appeal are:

1. Whether sufficient evidence supported the District Court’s valuation of the parties’ real property.

2. Whether the District Court adequately determined the parties’ net worth.

Sylvia and William Johns were married on September 11,1965. On June 12, 1987, wife filed a petition for dissolution of the marriage and for the equitable distribution of the marital estate. A hearing was held on April 15, 1988, which dissolved the marriage and reserved all other issues. On July 25, 1988, the District Court issued its findings of fact and conclusions of law and decree dividing the marital property.

When dividing the martial property, the District Court considered several factors as required under § 40-4-202, MCA. The factors were enumerated in the court’s findings of fact and conclusions of law as follows: the duration of the marriage, real and personal property acquired during the marriage, the age of the parties, the employment and pension plans of each, the IRA accounts of each, the wife’s inheritance, a debt on the family home, a debt for their adult daughter’s wedding, and miscellaneous property. The District Court noted that in addition to wife having a higher monthly net income than husband, wife’s pension plan had a present value in excess of $24,000 while husband’s pension plan had only a future potential value of $247 per month upon retirement. Although it is unclear from the record how the valuation of the pensions was made, the parties did not raise the specific issue.

Upon consideration of the parties’ assets, the District Court decreed that each party retain as their separate property their IRA accounts, pension plans, deferred savings and motor vehicles. The family home valued at $40,000 was awarded to husband conditioned on payment of a $2,000 debt remaining on the home as well as a $2,300 debt incurred on the parties’ adult daughter’s wedding. The court also considered wife’s inheritance and decreed that it should be wife’s sole property. In addition, wife was awarded miscellaneous property. The District Court stated, in comment to its findings, that the distribution was practical, equitable and in the best interests of both parties.

The first issue raised on appeal is whether sufficient evidence supported the District Court’s valuation of the parties’ real property. Specifically, wife argues that the family home awarded to husband in the distribution was undervalued by the District Court at $40,000.

Both parties employed qualified appraisers to give expert opinions as to the present value of the home. The deposition testimony of both appraisers was introduced as evidence in court. Wife’s appraiser valued the home at $56,000 while husband’s appraiser valued it at $40,000. The District Court accepted the $40,000 appraisal and explained in its findings that it accepted husband’s appraisal because the value was more realistic for a one-bedroom home. Wife argues that there was no justification for the valuation and thus, the District Court abused its discretion.

The District Court’s findings of fact must be viewed as a whole. In re the Marriage of Hockaday (Mont. 1989), [237 Mont. 413,] 773 P.2d 1217, 46 St.Rep. 910. The standard of review in a distribution case is that where the District Court based its distribution of marital assets on substantial credible evidence, it will not be overturned absent a clear abuse of discretion. In re the Marriage of Stewart. (Mont. 1988), [232 Mont. 40,] 757 P.2d 765, 767, 45 St.Rep. 850, 852; In re the Marriage of Watson (Mont. 1987), [227 Mont. 383,] 739 P.2d 951, 954, 44 St.Rep. 1167, 1170. We will not reverse the District Court on a property distribution determination without such a showing. See In re the Marriage of LeProwse (1982), 198 Mont. 357, 362, 646 P.2d 526, 529. Moreover, the District Court has far reaching discretionary powers when valuing property for distribution. The valuation need only be reasonable in the light of the evidence submitted. In re Marriage of the Milesnick (Mont. 1988), [235 Mont. 88,] 765 P.2d 751, 755, 45 St.Rep. 2182, 2187; In re the Marriage of Luisi (Mont. 1988), [232 Mont. 243,] 756 P.2d 456, 459, 45 St.Rep. 1023, 1026.

In the present case, the District Court predicated its $40,000 valuation on the expert testimony of an appraiser. We held in Milesnick, 765 P.2d at 755, that expert testimony is a reasonable premise for which the District Court may base a valuation. Wife, however, argues that she too presented expert testimony that the home had a value of $56,000 and that there was no rationale given by the court for its $40,000 valuation. However, in Milesnick, 765 P.2d at 755, we stated:

“When confronted with conflicting evidence, the court must use its fact-finding powers to determine which evidence is more credible . . . . Unless there is a clear preponderance of the evidence against the District Court’s valuation, its findings, where based on substantial though conflicting evidence, will not be disturbed on appeal.”

The District Court’s $40,000 valuation of the parties’ home was reasonable in light of the testimony presented and the rationale set forth in the District Court’s findings. There was no abuse of discretion.

The second issue raised on appeal is whether the District Court adequately determined the parties net worth. Specifically, wife alleges that the determination was improper since the District Court considered wife’s $30,000 inheritance as her property in the distribution.

The net worth of a marital estate must be determined prior to division of the estate. In re the Marriage of Shultz (1980), 188 Mont. 363, 365, 613 P.2d 1022, 1024. In determining the net worth, the District Court must make complete findings and include all assets and liabilities. In re the Marriage of Dirnberger (Mont. 1989), [237 Mont. 398,] 773 P.2d 330, 46 St.Rep. 898.

In this case, the District Court set forth wife’s $30,000 inheritance in its findings of fact as a marital asset. In Dirnberger, we held that the District Court was required to take inheritance into consideration when dividing marital assets. In fact, the Court may have erred had it not made such a consideration. In re the Marriage of Alt (1985), 218 Mont. 327, 334, 708 P.2d 258, 262. We hold that the District Court properly considered wife’s inheritance when it determined the parties net worth.

Affirmed.

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

MR. JUSTICE GULBRANDSON,

dissenting.

I respectfully dissent.

The majority sets forth correctly the duty imposed upon a trial judge to determine the net worth of a marital estate prior to entry of a decree dividing said estate. However, the majority has ignored the fact that the net worth was not determined in this case, and there is no adequate basis for this Court to review the property division. Specifically, I am unable to determine if the trial judge correctly characterized wife’s $24,000.00 deferred savings plan as a better pension plan than husband’s vested pension plan of $247.00 a month upon retirement, where there was no testimony regarding ages of the parties or costs of a comparable annuity.

I would remand for additional net worth findings and reconsideration of the treatment of wife’s inheritance, which was found to be wife’s sole property, but was treated as marital property for division purposes.


author: MR. JUSTICE GULBRANDSON

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. MAURICE FITZGERALD, Defendant and Appellant.
    No. 88-572.
    Submitted on Briefs June 30, 1989.
    Decided July 24, 1989.
    776 P.2d 1222.
    Allen Beck, Billings, for defendant and appellant.
    Marc Racicot, Atty. Gen., John Paulson, Asst. Atty. Gen., Helena, Harold Hanser, County Atty., Brent Brooks, Deputy County Atty., Billings, for plaintiff and respondent.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

Defendant appeals his conviction in the District Court for the Thirteenth Judicial District, Yellowstone County, of four counts of sexual intercourse without consent. We affirm.

The issues are:

1. Did the District Court violate the defendant’s right of confrontation by limiting his cross-examination of the victim named in Count I of the information?

2. Did the District Court err in admitting evidence of other crimes or wrongs as to Count II of the information?

Defendant was charged with four counts of sexual intercourse without consent, each count alleging a separate incident and a different victim. After a five-day jury trial, he was found guilty on all four counts and sentenced to a prison term of 40 years on each count, the terms to be served concurrently. He appeals on issues relating to two of the four counts against him. He argues that the errors relating to those two counts tainted the entire case.

I.

Did the District Court violate the defendant’s right of confrontation by limiting his cross-examination of the victim named in Count I of the information?

Count I of the information alleged an incident of sexual intercourse without consent on October 4, 1987, from 12:00 to 1:30 a.m. The victim testified at trial as follows: During the late evening hours of October 3, 1987, she was at the Machine and Pool Palace in Billings, Montana, with her roommate Collette. Defendant, to whom she had been introduced before, asked her to go outside and talk with him. When they were outside, the defendant stated that he wanted to move his car across the street, and asked the victim to get in the car so that they could continue their conversation. She did so. Instead of driving across the street, the defendant drove to a deserted industrial area and stopped. He refused her requests to take her back to the Machine and Pool Palace. He then fondled her and forced her to perform oral sex. Afterwards, the defendant dropped the victim off near her home and threatened to get revenge if she told anyone.

The victim waited for her roommate Collette to get home, told Collette what had happened, and decided to make a police report. On the way to the police station, the two stopped at Collette’s boyfriend’s house and at the house where the defendant was staying. During both brief stops, the victim remained in the car.

Defendant attempted to elicit from the victim on cross-examination that Collette was a prostitute and that her “boyfriend” was actually her pimp. The defense’s theory was that the victim was also a prostitute, that the acts between the defendant and the victim were consensual, and that the victim fabricated the rape story so that she would not have to face her pimp with no earnings for the evening. The District Court refused to allow this line of questioning. The Sixth Amendment to the United States Constitution provides that a criminal defendant shall enjoy the right “to be confronted with the witnesses against him.” The Montana Constitution also guarantees the right of the criminally accused to meet the witnesses against him face to face. Art. II, § 24, Mont. Const. Defendant argues that in the absence of physical evidence or other evidence corroborating the victim’s testimony, his proposed line of questioning was relevant to the victim’s veracity and essential to his right of confrontation.

Section 45-5-511(4), MCA, provides:

“No evidence concerning the sexual conduct of the victim is admissible in prosecutions under this part except:
“(a) evidence of the victim’s past sexual conduct with the offender;
“(b) evidence of specific instances of the victim’s sexual activity to show the origin of semen, pregnancy, or disease which is at issue in the prosecution.”

Neither of the two statutory exceptions applies in this case.

This Court has considered whether the restrictions codified at § 45-5-511(4), MCA, deny a defendant his constitutional right to confront witnesses. State v. Higley (1980), 190 Mont. 412, 621 P.2d 1043. There the Court stated that the “rules limiting inquiry into sexual conduct of the victim are essential to preserve the integrity of the trial and to prevent it from becoming a trial of the victim,” and found no denial of a defendant’s rights in these limitations. Higley, 621 P.2d at 1050-51.

Defendant maintains that the line of questioning he wishes to pursue is permissible under State v. Anderson (1984), 211 Mont. 272, 686 P.2d 193. In that case, this Court stated that:

“[d] espite the general policy against sordid probes into a victim’s past sexual conduct, we conclude that the policy is not violated or circumvented if the offered evidence can be narrowed to the issue of the complaining witness’ veracity.”

Anderson, 686 P.2d at 200. (Citation omitted.) In Anderson, the offered evidence was that the child victim had made a prior false charge of sexual assault. The Court concluded that the trial court correctly excluded this evidence as unduly prejudicial compared to its value probative of the victim’s truthfulness, under Rule 403, M.R.Evid. Anderson, 686 P.2d at 201.

In the present case, although the defense argues that the testimony about prostitution would go toward the victim’s veracity and motivation to fabricate a rape story, we conclude that the District Court did not err in ruling that the prejudicial effect of that testimony on the credibility of the victim would outweigh its probative value. As the State points out in its brief, the defense did not offer any witnesses, other than possibly the defendant, who could testify that the victim and Collette were prostitutes. It did not offer testimony that the victim had solicited defendant to engage in sexual intercourse for money. Further, even if it were proven that the victim was a prostitute, that would not have proven consent. We hold that the District Court did not violate the defendant’s right of confrontation by refusing to allow the desired cross-examination.

II.

Did the District Court err in admitting evidence of other crimes or wrongs as to Count II of the information?

Count II of the information alleged that at about 11:00 p.m. on November 4, 1987, the defendant knowingly had sexual intercourse without consent with the second victim. The victim testified at trial as follows:

She had lived with the defendant off and on from January 1986 until July 1987. In August 1987, a son was born to them. She allowed the defendant to visit his son from time to time. At about 11:00 p.m. on November 4, 1987, the defendant came to the victim’s house claiming he had brought some diapers for the baby. The victim allowed defendant in. When she learned that he did not have diapers or wish to see his son, she asked him several times to leave. He pretended to do so, but then came back and tried to force her to perform oral sex. She struggled until she heard the baby crying. Then she gave up and told him to “get it over so I can go see my son.” Defendant forced vaginal intercourse.

Defendant threatened the victim that if she reported the incident, he would come to get her. She went into the bedroom to tend the baby and stayed there until the defendant left the house at about 6:00 a.m. The victim reported the incident to the police about a month after it happened. She stated that she delayed in telling anyone because of the defendant’s threats and because she feared no one would believe her, given her former relationship with the defendant.

On direct examination, the State elicited testimony from this victim about previous physical assaults which the defendant had committed against her. She testified about incidents in May 1986, March 1987, and July 1987. The defendant objected to the admission of this testimony on the grounds that the assaults were not similar to the crime charged here. The State successfully argued that this evidence was relevant to the issue of consent and showed that the victim had good reason to be afraid of the defendant.

In general, evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person. Rule 404(b), M.R.Evid. Such evidence may be admissible for other purposes, however. Id.

In State v. Just (1979), 184 Mont. 262, 269, 602 P.2d 957, 961, this Court set forth a four-factor test to determine whether evidence of other crimes or acts is admissible in a criminal prosecution. The factors are:

1. Similarity of crimes or acts;

2. nearness in time; and

3. tendency to establish a common scheme, plan, or system; and

4. the probative value of the evidence is not substantially outweighed by the prejudice to the defendant.

Defendant argues that the other crimes in this case, a series of domestic assaults, are not similar to the crime charged. He asserts that the evidence of the assaults should not have been admitted.

However, as the State argues, the other crimes on which testimony was permitted were similar to the offense charged in several particulars. They were crimes by the defendant against the same victim. They all occurred in the victim’s home. They all followed arguments between the defendant and the victim in which the defendant was angry about some perceived slight. We conclude that the District Court did not abuse its discretion in allowing the testimony about prior physical assaults of the victim in Count II.

The defendant has not appealed any issues relating to the remaining two counts on which he was found guilty. Because we have con-eluded that the defense has not shown reversible error, we need not consider whether such error tainted the trial on those two counts.

Affirmed.

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


text:
    In re the MARRIAGE OF ROYCE A. BOS, Plaintiff and Respondent, and JERAL L. BOS, Defendant and Appellant.
    No. 88-423.
    Submitted on Briefs June 16, 1989.
    Decided July 24, 1989.
    776 P.2d 841.
    Hash, O’Brien & Bartlett, C. Mark Hash, Kalispell, for defendant and appellant.
    Royce A. O’Brien, Tacoma, pro se.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

Jeral L. Bos (husband) appeals from the distribution mandated in the dissolution of marriage decree entered by the District Court of the Eleventh Judicial District, Flathead County. We affirm.

The issue raised on appeal is whether the District Court properly distributed the marital estate when it considered a lump sum Workers’ Compensation disability award.

Royce (wife) and Jeral (husband) Bos were married on October 27, 1973. On February 13, 1986, wife filed a petition for dissolution of the marriage and for the equitable distribution of the marital estate. A hearing on the matter was held on June 2, 1987. On February 18, 1988, the District Court entered its findings of fact and conclusions of law and decree dissolving the marriage and dividing the marital property. The findings of fact and conclusions of law were twice amended.

When dividing the marital property, the District Court considered several facts pursuant to § 40-4-202, MCA. Among the facts considered was a lump sum Workers’ Compensation award paid to husband which is the subject of this appeal.

On January 9, 1978, husband was injured while working as a carpenter in Whitefish, Montana. On December 26, 1985, the Workers’ Compensation Division approved a final settlement that resulted in a net award of $35,219.59. From that amount, husband paid $26,039.55 in marital obligations and the remainder on living expenses.

Upon distribution of the marital estate wife received property with a net value of $24,608.25 and husband received property with a net value of $24,037.69. Husband argues that the District Court erred in the distribution because the marital estate would have had a lesser net value had husband’s Workers’ Compensation award not been applied to reduce marital debts. We disagree.

In In re the Marriage of Jones (Mont. 1987), [229 Mont. 128,] 745 P.2d 350, 44 St.Rep. 1834, we held that where a lump sum Workers’ Compensation award of husband was commingled in a marital account and later used to reduce marital debts, such was includable in the marital estate. Further, we upheld the District Court’s determination that wife was entitled to one-half of the marital estate notwithstanding the reduction of marital debts by application of husband’s benefits.

In the present case, as in Jones, husband received a Workers’ Compensation award in which the funds were used to reduce marital debts. In applying the funds to reduce the marital debt, husband placed the funds in the marital estate thus, commingling the funds.

Where the District Court based its distribution of marital assets on substantial credible evidence, it will not be overturned absent a clear abuse of discretion. In re the Marriage of Stewart (Mont. 1988), [232 Mont. 40,] 757 P.2d 765, 767, 45 St.Rep. 850, 852. In light of our holding in Jones, there was no abuse of discretion.

Affirmed.

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