author: MR. JUSTICE SHEEHY

text:
    EARL W. ROADARMEL, Claimant and Respondent, v. ACME CONCRETE COMPANY, Employer, v. Royal Insurance Company, Defendant and Appellant.
    No. 88-482.
    Submitted on Briefs Feb. 16, 1989.
    Decided April 25, 1989.
    772 P.2d 1259.

      James G. Edmiston, III; Billings, for defendant and appellant.
    Donald E. White, W. Lee Stokes, Bozeman, for claimant and respondent.
   MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

Royal Insurance Company appeals from a judgment entered against it and in favor of claimant Earl W. Roadarmel in the Workers’ Compensation Court of the state of Montana, in and for the area of Butte. The court held that Roadarmel sustained a compensable injury under § 39-71-119, MCA, on September 18, 1986 and was entitled to temporary total disability benefits and medical benefits through December, 1987. Future entitlement to benefits after that date was not determined by the court. The court also awarded. Roadarmel reasonable costs and attorney fees pursuant to § 39-71-611, MCA. The insurer appeals from the judgment. We affirm.

Appellant Royal Insurance Company presents the following issues for review:

(1) Whether claimant proved, by a preponderance of the probative credible medical evidence (all of which was submitted by deposition) that his cardiac arrythmia (irregular heartbeats) were caused by an on-the-job exposure to the chemical Toluene.

(2) Whether claimant proved by a preponderance of the probative credible medical evidence (all of which was submitted by deposition) that he was totally disabled as a result of exposure to the chemical Toluene from September 18, 1986 through December, 1987.

(3) Whether the Workers’ Compensation Court erred by admitting into evidence over Defendant’s objection articles from medical journals and treatises as exhibits.

(4) Whether the Workers’ Compensation Court erred in determining that claimant’s witness, Samuel J. Rogers, Ph.D. qualified as an expert witness over defendant’s objection.

Roadarmel disagrees with Royal’s statement of issues (1) and (2) and frames those issues as follows:

(1) Whether the claimant proved by a preponderance of the evidence that he sustained an injury as a result of his employment with Acme Concrete Company.

(2) Whether the claimant proved by a preponderance of the evidence that he was totally disabled as a result of an injury suffered during the course of his employment with Acme Concrete Company.

Acme is enrolled in Compensation Plan II of the Montana Workers’ Compensation Act and is insured by Royal Insurance Company, the appellant.

The facts from which this claim arose are as follows: Earl Roadarmel was employed by Acme as a heavy equipment operator. He had worked on highway construction steadily since 1954. At the time of this injury he was 58 years old and in good health. Roadarmel was assigned the job of operating the curing bridge that sprayed a curing agent onto the newly-laid concrete highway. The machine bridged the entire width of the highway (40 to 50 feet) and was equipped with a hundred or more spray nozzles that sprayed the curing agent, a wax/resin, onto the cement. The nozzles plugged continuously because the curing agent was not liquid as it was supposed to be, but had solidified into a gel. To remedy the persistent plugging, Roadarmel had to get out of the cab, reach under the machine, unscrew the plugs, and unplug them by placing them in Toluene, a toxic chemical solvent. He would then wash off the nozzles and replace them and spray the cement until the nozzles needed to be unplugged again. At night, he removed each nozzle, washed it in Toluene and then replaced it the following morning. When he used the Toluene, it was not in its original barrel, but in a bucket which was refilled by a mechanic whenever Roadarmel needed more of it. Roadarmel was unaware that he was exposing himself to a virulent, toxic chemical. He did see the empty Toluene barrels in a heap with other barrels, but he did not see a warning on the barrels as to its toxicity. No one at Acme informed him of the danger he was being exposed to nor did anyone suggest that he wear protective clothing or a respirator to protect from inhaling the solvent.

There was a Material Safety Data Sheet concerning the Toluene provided to Acme by Exxon, the manufacturer, but not disclosed to Roadarmel. It contained the following language:

“A. Identification and Emergency Information . . . Product Appearance and Odor
“Clear water-white liquid. Aromatic hydrocarbon odor.
“B. Components and Hazard Information . . . Exposure limit for total product 100 ppm (378 mg/m3) for an 8-hour workday.
“. . . Approximate Concentration 100%
“C. Emergency and First Aid Procedures
“Eye Contact
“If splashed' into the eyes, flush with clear water for 15 minutes or until irritation subsides. If irritation persists, call a physician.
“Skin Contact
“In case of skin contact, remove any contaminated clothing and wash skin thoroughly with soap and water.
“Inhalation
“If overcome by vapor, remove from exposure and call a physician immediately. If breathing is irregular or has stopped, start resuscitation, administer oxygen, if available.
“E. Health and Hazard Information Variability Among Individuals.
“Health Studies have shown that many petroleum hydrocarbons and synthetic lubricants pose potential human health risks which may vary from person to person. As a precaution, exposure to liquids, vapors, mists or fumes should be minimized.
“Effects of Overexposure (signs and symptoms of exposure)
“High vapor concentrations (greater than approximately 1000 ppm) are irritating to the eyes and the respiratory tract, may cause headaches and dizziness, are anesthetic and may have other central nervous system effects.
“Nature of Hazard
“Prolonged or repeated skin contact with this product tends to remove skin oils possibly leading to irritation and dermatitis.
“Product contacting the eyes may cause eye irritation.”

No one gave Roadarmel any directions or warnings about the Toluene. Each day for seventeen days, a total of 177 hours, Roadarmel breathed the chemical. His sweatshirt and clothes were soaked with it by the end of the day. On one occasion, he placed the rag on which he wiped his hands into his back pocket. About half an hour later he felt the rag “burning back there.” He had a sense at that time that it was “powerful.” His work-toughened hands, accustomed to strenuous construction work, were no longer sensitive enough to feel the burning, but his sensitive buttocks area felt the burning sensation. After that realization, Roadarmel tried to keep his hands washed. This was almost impossible to do because there was seldom water on the site and the wax/resin covered everything. The curing bridge, which Roadarmel operated, worked just behind the finish crew. If Roadarmel got up close to that crew, they would tell him to get back because “it was too stinky for them.” However Roadarmel, who was in the smell all the time, really did not notice the smell and the fumes.

Another Acme employee, Glen Lingjerde testified that he worked on the Butte project and in Superior. He worked with the Toluene for about four weeks. Roadarmel took over Lingjerde’s job when he quit because of the effect the Toluene was having on him. Lingjerde also received no warnings and was not instructed to take precautionary measures with the solvent. He testified by deposition that prior to working on the curing bridge he had been in the best shape he’d ever been in, lifting weights several times a week and running several miles. He lost his appetite and went from 195 to 165 pounds. He suffered severe headaches, was sick to his stomach, experienced dizziness and light headedness when he worked with the Toluene. It became apparent to him, from the pattern of his headaches and dizziness, that his time spent on the curing bridge brought on these symptoms. On one particular day, Lingjerde had been much exposed to Toluene. On the drive home he spit out the car window. The spittle hit the side of his new Burgundy car. Later, when he wiped it off, the paint had been removed by the spittle. Lingjerde additionally testified that he had seen a Toluene barrel at Superior on which there was a warning that if the solvent came into contact with the skin, it must be flushed immediately. But, he said, there was no way to do this because “you get covered with the stuff” and there was no water on the site to wash with. Lingjerde then quit. His weight returned to normal and his headaches eventually stopped. He spit up for quite awhile afterward and could taste the Toluene.

About the last week of the curing job, September 18, 1986, Roadarmel became dizzy and light-headed. At night when he went to bed, “it seemed like [his] whole body was jumping” and often he could not sleep. About two weeks after the job was finished he went to the doctor in Whitehall because he did not feel well and his wife, who is an emergency medical technician, was unable to find his pulse. The doctor prescribed a medication, but the next day his heartbeat was even more rapid. The Whitehall doctor was out of town so Roadarmel went to the emergency room of a Bozeman hospital. The doctor there cardioverted respondent’s heart with electric shock to return it to a normal heartbeat. Since that time, Roadarmel has been on various medications and has undergone additional cardioversion.

Royal Insurance’s contention is that Roadarmel’s symptoms are not a result of his exposure to Toluene but are psychosomatic and a result of “cardiac neurosis” caused by “non-conventional” physicians. Royal claims that the “non-conventional” physicians whom Roadarmel consulted were the only doctors who testified that Roadarmel’s irregular heartbeat was caused by chemical exposure resulting in total disability.

Section 39-71-119, MCA (1985), defines “injury” or “injured” as

“(1) a tangible happening of a traumatic nature from an unexpected cause or unusual strain resulting in either external or internal physical harm and such physical condition as a result therefrom and excluding disease not traceable to injury, except as provided in subsection (2) of this section;

“(2) . . . Nothing herein shall be construed to exclude any other working person who suffers a cardiovascular, pulmonary, or respiratory disease while in the course and scope of his employment. (Emphasis added.)”

The medical evidence is that Roadarmel has become “sensitized” and will have a reaction whenever he encounters hydrocarbons, which could be while pumping gas, inhaling exhaust fumes, or simply encountering hydrocarbons which are profuse in the environment. It is possible that the arrythmias he experiences upon exposure could be fatal. He would not be able to work in the construction business again unless he wears a portable respirator.

The standard of review for decisions of the Workers’ Compensation Court is whether there was. substantial credible evidence to support the decision of the court. Shupert v. Anaconda Aluminum Co. (1985), 215 Mont. 182, 697 P.2d 436, However, where critical medical evidence is entered by deposition, this Court, although sitting in review, is in as good a position as the Workers’ Compensation Court to judge the weight of the testimony, as distinguished from oral testimony, where the trial court actually observes the character and demeanor of the witness on the stand. Brown v. State Compensation Ins. Fund (Mont. 1988), [231 Mont. 158,] 752 P.2d 171, 45 St.Rep. 508; Shupert v. Anaconda Aluminum Co. (1985), 215 Mont. 182, 188, 696 P.2d 436, 439; Hert v. J.J. Newberry Co. (1978), 178 Mont. 355, 360, 584 P.2d 656, 659.

A close scrutiny by this Court of the medical experts’ testimony contained in various depositions sustains the Workers’ Compensation Court’s decision that respondent’s exposure to Toluene rendered respondent chemical-sensitive. Roadarmel experienced dizziness, rapid heart rate, fainting and lightheadedness. He was treated by Whitehall and Bozeman physicians who were unable to control the cardiac arrythmias. He then saw medical doctors in Dallas, Denver, and Seattle. Each parties’ counsel has been able to cull from those experts’ depositions phrases which support their relative stances. However, the preponderance of the evidence shows that there is a magnitude of medical research and clinical research that demonstrates that Toluene causes the symptoms Roadarmel is experiencing. Much of the clinical data referred to by the experts concerns glue sniffers who suffer all of respondent’s symptoms in addition to memory loss. Glue contains Toluene.

Curt Kurtz, M.D., a 1962 graduate of Stritch Medical School in Chicago testified that it would be dangerous for Roadarmel to return to his occupation as a heavy equipment operator or to expose himself further to Toluene or similar solvents.

Samuel J. Rogers, Ph.D., an associate professor of chemistry at Montana State University, who teaches courses in biochemistry and toxicology explained the Poison Index Substance Information offered into evidence by Kenneth Kulig, M.D. Rogers said that Toluene invades an organ and disrupts the tissue structure ... in this case, probably the nervous system of the heart, and at that point, the tissue becomes more susceptible and sensitized to chemicals such as Toluene, solvents or adrenalin. The tissue is no longer able to withstand certain kinds of solvents and becomes sensitized. It reacts in an improper fashion to a normal cardiac stimulant like adrenalin.

William J. Daniell, M.D. testified that ventricular arrythmias are of particular concern because of risk of sudden death. Atrial arrythmias are of less potential, far less potential, for causing such death; but can be Associated with transient reduction and profusion of blood output and can produce symptoms of lightheadedness, chest discomfort, weakness and shortness of breath. Dr. Daniell said that the frequency of the episodes of arrythmia should decide whether or not Roadarmel could return to work. If Roadarmel were having arrythmias which reduce blood flow sufficiently to impair brain function or which impair his ability to perform, then he should not be operating heavy equipment where he could harm himself or other people. Dr. Daniell thought it very likely that Roadarmel had this arrythmic disorder prior to the onset of symptoms in September, 1986. This expert opinion does not relieve Royal of liability. The rule that the employer takes the employee as he finds him is well established. The fact that an employee was suffering from a pre-existing disease or disability does not preclude compensation if the disease or disability was aggravated or accelerated by an industrial injury which arose out of and in the course of employment. Gaffney v. Industrial Accident Board of Montana (1955), 129 Mont. 394, 287 P.2d 256.

Tim Adams, M.D. of Bozeman, advised the Workers’ Compensation Division on November 20, 1986 that the arrythmia was work related.

Kenneth Kulig, M.D. of the Rocky Mountain Poison Center in Denver, Colorado, is a physician and toxicologist who examined Roadarmel. He testified that one cannot predict which patients exposed to Toluene will develop arrythmias, and that not all deliberate abusers (glue and spray paint sniffers) of Toluene develop arrythmias. Because of this fact, he said, one can conclude that some patients are more sensitive to the cardiac effects of Toluene than others. He testified further that if he were Roadarmel’s employer he would be reluctant to re-expose him to Toluene to see if he develops another arrythmia. Dr. Kulig told of patients who were found unconscious or dead after Toluene abuse and said that it has to be assumed that the cause of death was cardiac arrythmia. Dr. Kulig believes that there is no medical reason why Roadarmel cannot go back to work; but, he believes that Roadarmel has a psychological reason for not going back to work. Roadarmel believes he may have a dizzy spell while he’s operating heavy equipment. But Dr. Kulig expressed the opinion that it does not really matter if the dizzy spell he fears has a physical cause or not. The result is the same — dizziness and possible fainting could occur.

James K. Vincent, M.D., a specialist in cardiovascular medicine in Billings, said that not only should Roadarmel avoid further exposure to Toluene but that from the information about the chemical everyone should avoid it.

As a consequence of our review of each physician’s deposition and after a thorough reading of all evidence submitted, we agree with the Workers’ Compensation Court that claimant Roadarmel has met his burden of proof by a preponderance of the evidence that there was a causal connection between his exposure to Toluene while operating the curing bridge and his subsequent cardiac arrythmias, dizziness, lightheadedness and fainting. This injury was a result of his employment with Acme Concrete Company.

As to whether or not Roadarmel is permanently totally disabled, the medical evidence and testimony presented by Roadarmel demonstrate that although the data sheet cautioned that the maximum time per day that a person should be exposed to Toluene was 8 hours, Roadarmel was exposed for 12 to 14 and sometimes 16 hours per day. As a result, he has become sensitized to Toluene. Dr. Daniell stated that Roadarmel must avoid exposure to degreasing agents, cleaning agents, paint, paint strippers, glues, adhesives, some plastics in the manufacturing phase, fiberglass construction and any other solvent. Some of the medical experts advise that he not operate heavy equipment because his physical symptoms may recur at anytime. His history of sudden onset of these symptoms could be fatal to him and those around him. For the foregoing reasons, all gleaned from the record, we reach the same conclusion that the Workers’ Compensation Court reached. Roadarmel is entitled to temporary total disability.

The final issue before this Court is whether the Workers’ Compensation Court erred in determining that claimant’s witness, Samuel J. Rogers, Ph.D. qualified as an expert witness over defendant’s objection.

The statutory provision in effect at the time of Roadarmel’s injury was § 39-71-2903, MCA, as follows:

“. . . the workers’ compensation judge is not bound by common law and statutory rules of evidence.”

Appellants arguments based on statutes governing the rules of evidence are not applicable to this cause. The Workers’ Compensation Court could hear even hearsay testimony. Krause v. Sears Roebuck & Co. (1982), 197 Mont. 102, 641 P.2d 458.

The judgment of the Workers’ Compensation Court is affirmed.

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


source: Caselaw Access Project

author: MR. CHIEF JUSTICE TURNAGE

license: Public Domain

text:
    WILLIAM GEORGE DOWNING and Marquerite M. Downing, Plaintiffs and Respondents, and Cross-Appellants, v. C. JOSEPH GROVER, George J. Grover and Hazel M. Grover, Defendants and Appellants.
    No. 88-319.
    Submitted on Briefs April 3, 1989.
    Decided April 26, 1989.
    772 P.2d 850.

      Garlington, Lohn & Robinson, Larry E. Riley, Missoula, for defendants and appellants.
    Recht & Greef, John D. Greef, Hamilton, for plaintiffs and respondents, and cross-appellants.
   MR. CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Plaintiffs (Downings) brought suit in the Fourth Judicial District, Ravalli County, seeking to establish a public road across defendants’ (Grovers) property allowing easy access to Downings’ property, or, in the alternative, a public or private prescriptive easement. The District Court, sitting without a jury, found that no public road existed, no public easement existed, but that a prescriptive easement had been established by Downings’ predecessors in interest prior to 1961. Both parties appeal the District Court judgment. The Downings still maintain that one or all of the roads in question are public roads or that the public has established prescriptive easements by adverse use. The Grovers argue that the record does not support a finding of any easement, public or private, across their property.

Thus, the issues on appeal are whether the District Court erred when it found that no public roads existed and when it concluded instead that a private easement had been established. We affirm in part and reverse in part.

The land in question is just west of Hamilton, Montana, generally described as T5N R2lW Lots 3, 4 and 9. The Grovers obtained their 800-acre tract of land in 1961. At that time, they put a gate across the road entering their property. They locked the gate, although they allowed access to those who asked. Next to the gate they erected a large wooden sign which read, “PRIVATE PROPERTY, NO TRESPASSING, PRIVATE ROAD.” They did not hear any protest on this conduct for twenty-six years until they were contacted in 1987 by the Downings regarding the possible existence of an easement. It is not disputed that access has been permissive since 1961; thus any easement must be established by Downings’ predecessors in interest prior to 1961.

The Downings obtained their 40-acre tract of land in 1965. The land is undeveloped and does not have any habited buildings on the premises. The Downings bought this property for $2,000 from Trudy Schatzer in 1965. They now wish to sell it for $90,000 conditioned on obtaining access.

The road which enters Grovers’ property is a dirt road which, right after crossing the Grovers’ property line, splits into two separate roads. One branch goes to the southside of Sawtooth Creek and the other crosses Sawtooth Creek on a one-lane wooden bridge and proceeds on the northside of Sawtooth Creek up to the Grovers’ house. Beyond the house, the road is presently indiscernible, although the trial testimony established that previously it had been traveled (prior to 1961) to proceed in a southwesterly direction to or near the old Welch cabin site, (long since burned down) which is now Downings’ property. To add to the confusion of establishing this road, directly to the north is another road now called Owings Lane Road. The testimony by all at trial generally conceded that all three of these roads are commonly referred to as Sawtooth Road or Sawtooth Creek Road.

Because of this great confusion, the District Court declined to find that a public road existed. The District Court is affirmed on that finding. Any finding of a public road based on this record would have been pure speculation. The documents from Ravalli County introduced in support of finding a public road were so ambiguous that they could have referred to any of these three roads, or all of them, because all roads bore the same name and roughly the same description. Likewise, the testimony of the residents was that all three roads had the same name. Such evidence is not sufficient to put a property owner on notice that his rights may be jeopardized unless he acts. As we stated in Parker v. Elder (Mont. 1988), [233 Mont. 75,] 758 P.2d 292, 45 St.Rep. 1305, absent use by the public over “the exact route claimed” for ten years, there is no public roadway.

For the same reason, the court declined to find that the public had established a prescriptive easement. The testimony of those who traveled the Sawtooth road revealed that they did not know which of the three roads was actually “Sawtooth Road.” Many of them traveled just the north branch but not the south branch. Many did not travel as far as the old Welch cabin site. Based on this record, the District Court is likewise affirmed in its denial of a public easement.

The court in Finding XXVI found that there was “credible evidence,of open, notorious, exclusive, adverse, continuous and uninterrupted use of the northside branch of the road for fifty years prior to 1961.” From that finding, it concluded that a private easement by prescription had been established. That finding is not supported by the record and is reversed.

I. Prescriptive Easements in Montana

A. ELEMENTS

The burden at trial on the party seeking to establish the prescriptive easement is to show

1) open

2) notorious

3) exclusive

4) adverse

5) continuous, and

6) uninterrupted use

of the easement claimed for the full statutory period. Clemens v. Martin (Mont. 1986), [221 Mont. 483,] 719 P.2d 787, 43 St.Rep. 994. The statutory period is five years. Section 70-19-401, MCA. All elements of prescriptive easement must be proved by a preponderance of the evidence or the claim will fail. Grimsley v. Estate of Spencer (1983), 206 Mont. 184, 670 P.2d 85. All elements must be proved in a case such as this because “one who has legal title should not be forced to give up what is rightfully his without the opportunity to know that his title is in jeopardy and that he can fight for it.” Grimsley, 670 P.2d at 92-93.

“Open and notorious” is defined as “a distinct and positive assertion of a right hostile to the rights of the owner and must be brought to the attention of the owner.” Poepping v. Neil (1972), 159 Mont. 488, 499 P.2d 319, 321. “Continuous” means “it is necessary to have use made often enough to constitute notice of the claim to the potential servient owner.” Powell & Rohan, Powell on Real Property, Vol. 3, § 413, pp. 34/124-34/126 (1987). “Uninterrupted” means “use not interrupted by the act of the owner of the land or by voluntary abandonment by the party claiming the right.” Scott v. Weinheimer (1962), 140 Mont. 554, 374 P.2d 91.

The plaintiff offered evidence regarding the use of the northside road from roughly 1918 through 1961. However, this Court concludes that it is unnecessary to discuss the elements and possible establishment of a private prescriptive easement. The record is replete with examples of Downings’ conduct and the conduct of Schatzer, his immediate predecessor in interest, which is wholly inconsistent with the existence of a private easement.

B. INCONSISTENT ACTS

Section 70-17-111, MCA, provides:

“. . . (3) A servitude is extinguished: by the performance of any act upon either tenement by the owner of the servitude or with his assent which is incompatible with its nature or exercise.”

That statute was construed in Morrison v. Higbee (1983), 204 Mont. 515, 668 P.2d 1025, where this Court stated, “even if Lewis Hughes’ testimony could be construed to indicate that his predecessors obtained a prescriptive easement, Hughes’ subsequent actions of asking permission to use the ditch and of signing the license agreement are incompatible with the nature of a prescriptive easement.” This Court went on to reverse the District Court finding in that case that a prescriptive easement existed.

In the instant case, Schatzer. acted inconsistently by establishing permissive use after Grover locked the gate. Plaintiff Downing acted inconsistently in at least three ways: (1) by telling others that he had no easement, (2) by continuing the permissive use established by Schatzer, and (3) and by withdrawing the claim at the close of the trial.

In his deposition plaintiff W. Downing stated that he has admitted to others that he has no easement. When he retreated from that position at trial, he was impeached by attorney Riley:

“Q. Okay. So the fact of the matter is that you told people you didn’t have an easement.
“A. Yes.
“Q. So from the time you purchased the property in 1965 until 1986 when you had a chance to sell it to Mr. Montgomery, no attorneys had told you you had an easement, the person you bought the property from didn’t tell you you had an easement, and you were telling people you didn’t have an easement, right?
“A. Yes.”

Downing further testified that he sought Grover’s permission to use the road, as Schatzer had done. Grover granted permission to use the road as far as the Grover house, but not beyond. Downing never used the road until 1987 when he drove up there in connection with this lawsuit.

In plaintiffs’ proposed findings of fact and conclusions of law dated November 3, 1987 (pretrial), they claimed a private easement by prescription.

After the trial, both parties submitted revised findings and briefs in support thereof. In their December 4, 1987 (post-trial) revised findings, plaintiffs dropped their claim of private prescriptive easement stating “insufficient evidence” as the reason. The brief in support of Downings’ findings, also dated December 4, 1987, admitted their position on private easement stating:

“4. HAVE THE PLAINTIFFS OR THEIR PREDECESSORS IN INTEREST ESTABLISHED AN EASEMENT BY PRESCRIPTION FOR THE USE AND BENEFIT OF PLAINTIFFS’ PROPERTY?
“There was insufficient evidence that the plaintiffs established a private easement by precription [sic].”

Assuming, arguendo, that a private easement had been established prior to 1961, any such easement has been extinguished, contrary to the District Court finding. It has been extinguished by many inconsistent acts — (1) Schatzer’s asking permission to use the road; (2) Downings asking permission to use the road; (3) Downings’ admissions of having no easement; (4) Downings’ withdrawal of the claim of a private prescriptive easement and (5) Grovers erecting and locking the gate in 1961. Grovers established statutory extinguishment by inconsistent acts, and Montana law supports that conclusion. Section 70-17-111(3), MCA; Higbee, supra.

II. Standard of Review

The standard of review for a judge sitting without a jury, pursuant to Rule 52(a), M-R.Civ.P., is that the court’s findings shall not be set aside unless clearly erroneous. Thus, when the District Court’s findings are based on substantial credible evidence, they are not clearly erroneous. Parker, supra. This record lacks substantial credible evidence to support a finding that Downings have a private prescriptive easement which is currently effective. On the contrary, Grovers have proven statutory extinguishment by inconsistent acts. The District Court is reversed on that issue.

The conclusion of law of the District Court that no public road was established or existed on the property of the defendants is affirmed.

The judgment of the District Court that plaintiffs have a private prescriptive easement across defendants’ property is reverséd.

MR. JUSTICES HARRISON, WEBER, GULBRANDSON, Mc-DONOUGH, HUNT and SHEEHY concur.


author: MR. JUSTICE HUNT

text:
    In the Matter of the ESTATE OF ANNA MARGARET CLARK, and Estate of Wallace Bradley Clark, Sr., Protected Persons.
    No. 88-380.
    Submitted on Briefs Dec. 16, 1988.
    Decided April 26, 1989.
    772 P.2d 299.
    Don A. Labar and Margaret M. Joyce Johnson, Church, Harris, Johnson and Williams, Great Falls, for appellant.

      Allin H. Cheetham, Fort Benton, Gary W. Bjelland, Great Falls, for respondent.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

Appellants, George Clark, Bertha Novelli and Marian Molnar, three of the five adult children of Anna Margaret and Wallace Bradley Clark, Sr. (Seniors), appeal from a decree of the District Court of the Twelfth Judicial District, Chouteau County, which, with exceptions, approved the accounting of the conservator of their parents’ estates. We reverse and remand for further proceedings.

The issues raised are as follows:

1. Did the District Court err in substantially approving the conservator’s first annual accounting?

2. Did the District Court properly scrutinize the conservator’s transactions with the protected persons?

3. Did the District Court err in determining that the protected persons were mentally competent?

In the 1970’s, Wallace Bradley Clark, Jr. (Brad), the youngest son of the Seniors, moved from Alaska to Montana to operate his parents’ 1,760-acre farm located near Geraldine. In 1977, the Seniors entered into a contract for deed with Brad whereby Brad agreed to purchase 800 acres of the farm for $160,000 at 6 percent interest. The contract provided for annual payments to be made from the net proceeds of one-third of the grain grown on the land.

At about the same time, Brad and the Seniors entered into a ten-year lease for the remaining 960 acres of the farm. The contract provided for the annual payment of a one-fourth share of all crop produced on the acreage under lease.

None of the other Clark children resided near the Seniors. The oldest son, George, had farmed in the Geraldine area until 1981, when he retired and moved to West Yellowstone. The remaining children, Bertha Novelli, Marian Molnar and Josephine Wilson, all resided in Alaska. Although the daughters and George did not live in the vicinity of the Seniors, the record indicates that they each visited their parents yearly.

During his visits, George became concerned that his parents were no longer capable of managing their financial affairs. In 1984, he discovered that his mother had overdrawn her checking account by writing checks to the grandchildren. In 1985, his father told him that he had signed some papers but didn’t know what they were. Upon investigation, George found that the Seniors had deeded one-half of the 960 acres of farmland to the five children. Further investigation revealed that the Seniors had given Brad full power of attorney over their affairs.

On April 25, 1985, George petitioned the District Court for the appointment of a conservator for the Seniors, both in their early 90s at the time. Concerned that Brad might be exercising undue influence over his parents, George nominated one L.C. Siebenaler, a disinterested party, as conservator. A hearing was held on the matter, during which the District Court interviewed the elderly couple. The court found that due to their advanced age and occasional forgetfulness, both parties were unable to manage their property and affairs effectively without assistance. Over George’s objection, the court appointed Brad as conservator, finding that it would be in the best interest of the Seniors if a family member held the position rather than someone they did not know. On June 11, 1985, Brad posted two bonds in the amount of $25,000 each. Letters of conservatorship issued.

On September 18, 1985, Brad filed an inventory and appraisement of the fair market value of the assets of the Seniors as of July 8, 1985. He failed to file his first annual accounting, however, until January 8, 1987. Shortly after filing the accounting, Brad filed an amended inventory and appraisement of assets. The amended inventory reflected a decrease of approximately $30,600 of the balance receivable from the 1977 contract for deed between Brad and the Seniors. Brad later testified that the original inventory showed both the principal and interest due and owing on the contract for deed; the amended version reflected only the principal. No reference to the $30,600 in interest Brad admittedly owed on the contract as of July 8, 1985, can be found on the amended inventory.

A hearing on the accounting was held on January 19, 1987, during which George filed written objections. Shortly thereafter, George filed additional exceptions, seeking to void certain transactions made by Brad, as well as a more detailed accounting, an audit of the estates and the removal of Brad as conservator.

A hearing to consider the objections was held on March 2, 1987. The court took testimony at that time but also granted Brad’s motion for a continuance to April 6, 1987, to allow Josephine Wilson, one of the Clark daughters, to appear and testify. After the hearing, the District Court issued an order that accepted and approved the first annual accounting.

George, Bertha and Marian moved the court to re-open the hearing on the accounting and to remove Brad as conservator. The District Court granted the motion and trial was held on August 17 and 19, 1987.

During the trial, Brad testified that in 1985 and 1986 he exchanged a series of checks with the Seniors, resulting in the forgiveness of approximately $70,566 in indebtedness Brad had accumulated under the contract for deed, including $30,600 in interest. In its order issued after the trial, the District Court voided these transactions, finding that they were of such magnitude as to endanger the Seniors’ welfare and that they violated § 72-20-203, MCA, the statute prohibiting a fiduciary from dealing with trust property for his own benefit. Appellants do not appeal from this part of the District Court order.

Brad also testified that his father had given him other gifts that were not reflected on the accounting, including $720 for grasshopper poison and the Seniors’ share of the 1985 crop, which amounted to approximately 700 bushels of winter wheat and 375 bushels of barley. Brad stated that his father had given him the Seniors’ share of the crop every year since 1981. According to Brad, his father intended to give him the farm. The contract for deed was executed only to avoid gift taxes. Therefore, Brad contended, when farming became less lucrative, his father no longer required him to pay under the contract. Brad also testified that he had taken out a $3,900 loan on the 1985 crop, putting all of the proceeds in his personal account and none in the Seniors, even though the Seniors owned a share of the crop under the contract and lease.

With the exception of the avoidance of the $70,566 in forgiven indebtedness mentioned above, the District Court once again approved the first annual accounting. The court found that the Seniors’ promised to give Brad the farm and gave him their share of the crop and other gifts in honor of that promise. The court also found that the Seniors were mentally competent and capable of handling their own affairs, though they had difficulty remembering their actions afterward. The court refused to remove Brad as conservator, continuing the question to the hearing on the second annual accounting, which Brad had not yet filed.

On April 18, 1988, George, Bertha and Marian filed a motion asking the District Court to either withdraw or amend its findings and conclusions. The movants sought a new trial in the alternative. The District Court failed to rule on the motion within 45 days. Hence, under Rule 59(d), M.R.Civ.P., the motion was deemed denied.

On Juné 24, 1988, George, Bertha and Marian appealed to this Court, seeking, among other things, the removal of Brad as conservator. This question was rendered moot when, on October 17, 1988, Brad resigned his position. Gary W. Bjelland, the conservator appointed in Brad’s stead, has joined as amicus curiae in the appeal of George, Bertha and Marian with respect to the remaining issues.

A conservatorship may be warranted when, due to advanced age, a person is unable to effectively manage his affairs and he owns property that is in danger of being wasted or dissipated unless proper management is provided. Section 72-5-409(2), MCA. The institution of a conservatorship grants the district court broad powers. The court may exercise all powers over the estate that a protected person could exercise if he were not under a disability, except the power to make a will. At all times, however, the court’s handling of the property must be for the benefit of the protected person. Section 72-5-421(3), MCA. The court may exercise these powers directly or through a conservator. Section 72-5-421, MCA. If a conservator is appointed, he must administer the estate as would the court if administering it directly, that is, for the benefit of the protected person.

The conservator is required to account to the District Court on an annual basis. Section 72-5-438, MCA. The District Court must carefully scrutinize the accounting, keeping in mind that it is the conservator, as trustee of the estate, who bears the burden of proving the proper disposition of the property under his control. Local Union No. 400 of the Internat’l Union of Operating Eng’rs v. Bosh (1986), 220 Mont. 304, 312, 715 P.2d 36, 41. The conservator must therefore keep meticulous accounts of his administration of the estate, accounting for “the source of every item of income and the purpose of every item of expense.” In re Allard (1914), 49 Mont. 219, 229, 141 P. 661, 665.

The record demonstrates that the first annual accounting filed by Brad Clark, the conservator in this case, was less than adequate. Other than a ledger listing drafts written on his father’s checking account, Brad failed to introduce any evidence to verify the accounting. He failed to submit bank statements reflecting opening and closing balances, deposits and withdrawals. He failed to produce receipts for purchases made on his personal credit card allegedly for the benefit of the Seniors. He failed to introduce gift and income tax returns filed by the Seniors.

Furthermore, Brad’s accounting was inaccurate and incomplete. He failed to account for grain held in storage at the opening of the conservatorship but sold subsequently. He failed to account for his gift from the Seniors’ of their share of the grain under the contract for deed and lease. He failed to account for interest due under the contract for deed. He failed to indicate either in the original inventory, the amended inventory or the accounting that the Seniors’ interest in the land under the 1977 contract for deed had been subordinated in 1983 to a Federal Land Bank mortgage that secured a $230,000 loan.

The purpose of the statutorily required annual accounting is to inform the court of the financial condition of the estate and to ensure that the conservator is managing the property for the benefit of the protected persons. In order to fulfill these purposes, the accounting must be accurate, complete and verifiable. The accounting filed by the conservator in this case is none of these. The District Court erred in accepting and approving it.

When the accounting proferred by the conservator is inadequate, the District Court may require the conservator to submit to a physical check of the estate. The physical check may be made in any manner specified by the court. Section 72-5-438(3), MCA. In this case, the appellants have requested an audit of the estate. Under the circumstances, an audit may be the best method by which to determine the estate’s financial condition. We therefore remand this case for an audit and rehearing.

The conservator acts as a fiduciary. As such, he is required to observe the stringent standards applicable to trustees. Section 72-5-423, MCA. Appellants argue that the District Court failed to measure Brad’s actions against these rigorous standards. Instead, the court excused Brad’s actions because he “was told he should handle his folks’ affairs just as he had prior to the institution of the conservatorship, and which he did without any advice to the contrary from his attorney.”

The purpose of a conservatorship is to preserve the property of the protected person. A conservator who profits to the detriment of his wards cannot be excused because he acted out of ignorance or because he acted in the same self-serving manner as he had prior to the institution of the trust. On remand, the District Court must more carefully scrutinize Brad’s administration of the estate. Any transactions in which Brad obtained an advantage must be presumed to be entered into by the Seniors without sufficient consideration and under undue influence. Section 72-20-208, MCA. Brad has the burden of proving that any transactions in which he obtained an advantage were for the benefit of the Seniors and that the Seniors freely entered into the transactions with full knowledge of the facts.

Appellants argue that the District Court improperly ruled that the Seniors were mentally competent from 1981 through the period of the first accounting. We agree. In order to prove that any transactions in which Brad obtained an advantage were entered into by the Seniors freely and with full knowledge of the facts, Brad must also prove that the Seniors were mentally competent. He failed to do so.

The institution of a conservatorship is not an adjudication of competency and has no effect on the protected person’s capacity. Section 72-5-421(5), MCA. The protected person is therefore presumed to have the capacity to contract with third parties.

When the protected person transacts with the conservator, however, the presumption shifts. Because the conservator is held to the utmost standard of good faith and fair dealing, he bears the burden of proving that the protected persons were at all times capable of understanding the nature of any transaction in which the conservator obtained a benefit.

In the instant case, the only evidence in favor of a finding that the Seniors were mentally competent comes from the testimony of the conservator himself. This testimony is refuted by at least two of the other children. Under the circumstances, we cannot say that the conservator met his burden of proof.

We reverse and remand for further proceedings in accordance with this opinion.

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


author: MR. JUSTICE McDONOUGH

text:
    WESTLAND ENTERPRISES, INC., and Vernon F. Taylor, Trustee, Plaintiffs and Respondents, v. BOYNE USA, INC.; Rural Improvement District #305 and its Directors, Jack Harper, John McCulley, and Raymond J. Tout; Gallatin County Commissioners, Ray White, Jane Jelinski and Wilbur Visser; and Madison County Commissioners, Marie McAlear, Bill Dringle and John Allhands, Defendants and Appellants.
    No. 87-465.
    Submitted on Briefs March 9, 1989.
    Decided April 27, 1989.
    772 P.2d 309.

      Kirwan & Barrett, Peter M. Kirwan, A. Michael Salvagni, County Atty., Duke Wolf, Deputy County Atty., Bozeman, Loren Tucker, County Atty., Virginia City, for defendants and appellants.
    Morrow, Sedivy & Bennett, Edmund P. Sedivy, Bozeman, for plaintiffs and respondents.
   MR. JUSTICE McDONOUGH

delivered the Opinion of the Court.

This appeal involves a dispute over contract terms granting use of a sewer system located at Big Sky, Montana. Defendants Boyne USA, et al. (Boyne) appeal from the judgment of the District Court of the Eighteenth Judicial District, Gallatin County. The District Court enjoined Boyne from allowing further connections to the system until the sewage facility had been expanded sufficiently to accommodate sewage from future real estate development contemplated by plaintiffs Westland Enterprises, et al. (Westland). The court also granted declaratory relief by quantifying the treatment capacity to be provided for Westland under the terms of the contract. We affirm in part and reverse in part.

Boyne presents six issues for review:

1. Were the District Court’s original Findings of Fact supported by the record?

2. Did the District Court have jurisdiction to make a de novo determination of the capacity and adequacy of the RID #305 Sewage Treatment Facility?

3. Was the District Court’s Order entered after the second trial supported by any findings of fact or evidence of record?

4. Did the District Court err in interpreting the contract at issue to require that RID #305 provide Plaintiffs with present unused sewage treatment capacity for their future development?

5. Does the contract at issue contain a condition precedent and, if so, have Plaintiffs performed the condition?

6. Is an injunction a proper remedy where the contract at issue could not be specifically enforced?

The record from the District Court in this case is lengthy. The facts are many, and some have been argued vehemently. There are also a number of parties involved. In the interests of keeping the discussion of the issues as simple as possible, the facts and the relationships among the parties will be summarized.

Boyne is the successor corporation to Big Sky of Montana, Inc., the entity which began development of the Big Sky ski resort, golf course and residential real estate near the ski area. For purposes of this appeal, all activities of Big Sky of Montana, Inc., prior to the takeover of the project by Boyne will be regarded as having been undertaken by Boyne. Westland is the creation of individual owners ■of land adjacent to the Big Sky resort for the purposes of developing that property. The contract at issue was signed by the individual landowners, but was for the benefit of Westland, and will therefore be treated as a contract between Boyne and Westland.

Big Sky is located in the mountains along the West Fork of the West Gallatin River. Due to the resort’s rural location, plans called for the building of a sewage treatment plant to serve the ski area, condominiums and other residential units associated with the resort. The best location for this plant was a site on Westland property. Boyne and Westland entered into a contract in 1971 whereby West-land conveyed approximately 21 acres of land to Boyne in exchange for the right to use the sewage facility. The contract reads in relevant part as follows:

“3. In consideration for the granting of this tract of land by the Grantors to Big Sky, Big Sky in turn agrees to allow the Grantors to connect with its sewer plant for the subsequent development of the adjacent lands of the Grantor [sic] with no charge to the Grantors by Big Sky for such connection and to further provide free sewage service as more particularly set forth below.
“4. Accordingly, simultaneously upon the execution of this agreement by all parties and as reciprocal consideration, the Grantors agree to convey by Warranty Deed, accompanied by evidence of unencumbered merchantable title through a memorandum of title, the legal title to the property described in Exhibit ‘A’. Big Sky in turn conveys to the Grantors upon the execution of this Agreement the right to connect to the sewer lines of Big Sky in order that the Grantors can utilize the said central tertiary sewer plant to be constructed by Big Sky and Big Sky further agrees to provide to the Grantors sewage treatment at no charge for up to one million gallons per year for twenty (20) years from and after the date use of Big Sky’s sewer system is commenced by the Grantors or by July 1, 1981, whichever is the sooner. Any useage [sic] by the Grantors over the said figure of one million gallons of sewage per year would be assessed against the Grantors at the same rate charged to other users of the plant. Big Sky reserves the right to refuse service to any user who is a successor of the Grantors who refuses to join any rural improvement district which may hereafter be created to own, operate and maintain the said sewer plant. After twenty (20) years from the date use commences by the Grantors under this agreement or July 1, 1981, whichever is the sooner, subsequent use by the Grantors of the sewer plant shall be subject to charge at the same rate charged for all other users.”

After this contract was signed, the plant was built and development of Big Sky proceeded. Several projects were connected to the treatment facility. Westland did not begin plans for development of its property until approximately 1982. An initial study drawn up by a consulting firm hired by Westland called for a hotel, golf course, condominiums and other recreational facilities. The calculated “population equivalency” of the development was 3,700, which would require treatment of 43 million gallons of sewage annually. Westland’s study indicated that Boyne’s treatment facility did not have sufficient capacity remaining to accommodate this much sewage.

The study results were submitted to defendant Rural Improvement District #305 (a quasi-public entity created at Boyne’s request to operate the treatment plant), along with the suggestion that steps be taken to expand the plant’s capacity. The District consented to accept the amount of sewage forecast by the plan, subject to certain conditions: “peak flow” from Westland’s development would be limited, eight more acres of Westland property would be conveyed to the District for expansion of the plant, and Westland would allow disposal of treated waste water on its property (by irrigating the proposed golf course).

Westland disagreed with Boyne as to its rights under the contract, which eventually resulted in Westland filing suit. Westland’s complaint contained three alternative prayers for relief. The first sought an injunction against Boyne and the District prohibiting further connections to the treatment plant until Boyne could show that it had the capacity to satisfy the needs of Westland’s planned development, and a declaration of the parties’ rights under the contract. The second alternative prayer sought rescission of the contract and return of the land to Westland. The third alternative prayer sought money damages for breach of contract.

After trial by the District Court sitting without a jury, the court issued its judgment on August 19, 1985. The court ruled: (1) the contract between Boyne and Westland was a valid and enforceable agreement; (2) Westland was entitled to use the facility for treatment of 43 million gallons of sewage per year as projected by its plan; (3) neither Westland nor its land could be assessed for.the costs of improvements to or enlargement of the treatment facility necessary to accommodate Westland’s use; (4) Westland was entitled to treatment of its first one million gallons of sewage per year without charge for the remainder of the 20-year period from July 1, 1981, to June 30, 2001; (5) Boyne and the District were enjoined from allowing any further connections to the treatment facility until projects were completed to expand the capacity of the facility to accommodate Westland’s projected sewage; (6) if Boyne determined that it would be impossible to complete any necessary expansion, Westland would be entitled to full rescission of the contract and return of the land in question; and (7) Westland was entitled to costs and disbursements.

Boyne moved for a stay of execution of the judgment pending an appeal to this Court, and the parties filed a Stipulation for Stay of Execution on September 30, 1985. The Stipulation stated terms for the stay agreed to by both sides. Most importantly, both parties agreed that paragraph two of the court’s judgment was valid and not subject to appeal. That paragraph reads:

“2. That by virtue of said agreement, PlaintifFs are entitled to the use of the storage capacity of the existing sewage facility and the next addition to the facility in an amount of 43 million gallons of sewage per year which, using a 60-gallon per person per day figure, would allocate a population equivalency of 3,700 for the development of the Plaintiffs’ lands.”

The court then entered an order conforming to the terms of the Stipulation.

Boyne brought its appeal to this Court, in the course of which a factual dispute arose between the parties as to what action was required of Boyne under the District Court’s judgment. We refused to hear the appeal due to the existence of the factual dispute, and remanded the case to the District Court. After a second trial, the District Court entered its Order finding that Boyne had not “completed any projects which have expanded the capacity of the sewer treatment facilities” and therefore had not satisfied the court’s August, 1985, judgment. This appeal followed.

While Boyne raises six issues on appeal, its arguments to this Court center on two portions of the District Court’s judgment: the quantification of rights in paragraph 2 of the judgment and the injunction requiring Boyne to expand the capacity of the treatment plant to accommodate Westland’s entitled use. There have been no serious arguments advanced concerning the court’s other holdings, which basically are corollary to these two main components.

As to the quantification of Westland’s right of use, the Stipulation for Stay of Execution controls. It is improper to raise an issue on appeal as to a question of law or fact after the parties have stipulated to that law or fact. In re Marriage of Prevost (Mont. 1987), [225 Mont. 116,] 731 P.2d 344, 44 St.Rep. 84. The language of the Stipulation states that paragraph 2 of the court’s judgment is not subject to appeal. The arguments put forth by both parties alleging withdrawal from the stipulation by their opponent are unconvincing. We therefore decline to address Boyne’s issues as they relate to the quantification of rights found in that paragraph. Westland has the judicially determined right to utilize the treatment facility to the extent of 43 million gallons of sewage per year. That right will be res judicata in any future dispute between these parties.

Boyne’s second challenge raises a novel issue. Injunctions are rarely used to enforce contract rights or prevent breaches, and applicable court decisions concerning the propriety of this tactic are scarce. However, the legislature has set forth statutory guidelines for the use of injunctions. An applicable guideline is found at § 27-19-103(5), MCA. Under this section, an injunction cannot be obtained “to prevent the breach of a contract the performance of which would not be specifically enforced.” A list of “obligations which cannot be specifically enforced” is found at § 27-1-412, MCA. At subsection (5), that list includes “an agreement the terms of which are not sufficiently certain to make the precise act which is to be done clearly ascertainable.”

In this case, Westland has alleged that its rights under the contract are not clear. Westland sought and obtained a quantification of its entitlement to use the treatment plant from the District Court. However, if Westland’s rights under the contract are unclear, then Boyne’s corresponding duties are equally unclear. Those duties have not been clarified in this action. Both parties admit that bargaining terms such as the amount of land required for the treatment plant and the scope of future developments were necessarily based on estimates and assumptions used by the engineers involved in designing the plant. During this action, both parties have hired engineering firms to produce reports concerning questions such as the capacity of the facility as it currently stands; how much of that capacity is in actual use; how much will be used by developments currently being built; and how much capacity, if any, must be added to the plant in order to accommodate Westland’s future needs. This evidence conflicts. Engineers for each party disagree on the answers to these questions and cast doubt upon the methods used to arrive at the answers given in the other party’s report.

The second trial in this case dealt with these questions, but failed to produce any real clarification. The arguments using the engineering evidence were directed toward Boyne’s allegation that it had satisfied the court’s prior judgment by taking more accurate measurements of the plant’s capacity and making certain repairs. The court held that Boyne had failed to satisfy the judgment because it had not “completed any projects which have expanded the capacity” (emphasis ours) of the facility. The precise acts to be carried out by Boyne cannot be ascertained from the contract itself or the record of this case. Nor have the parties argued on appeal that Boyne’s obligation has been or should be quantified. Section 27-1-412(5), MCA, thus forbids specific enforcement of that obligation. The court’s injunction requiring expansion of the plant to prevent a possible breach of contract by Boyne was improper.

By requiring that Boyne somehow build current capacity into the system for use that will not occur until some indefinite point in the future, the District Court appears to have sanctioned waste. There is evidence in the record to show that enlargements to the system constructed now could be useless (due to weed growth, rust, etc.) by the time Westland is ready to utilize it. Considering the embryonic status of Westland’s development plans, it is also possible that the chemistry and the mechanics used to treat sewage at Big Sky will have changed when the time to connect to the sewer system arrives.

The right granted to Westland on the face of the contract is that of connecting to Boyne’s sewer system. At Westland’s request, the District Court looked to extrinsic evidence to quantify the amount of sewage Westland could place in the system. When Westland wishes to exercise its right to connect, Boyne and the District must comply or be in breach of the contract. Until that time, no breach of this contract will have occurred, and adjudication of this question will be premature. 4 Corbin on Contracts § 943 (1951); see § 27-2-102, MCA. How Westland’s sewage will be accommodated is a concern for Boyne and the District to address. It was not a proper subject for an injunction.

We have held that the District Court’s quantification of rights was stipulated to by the parties, and is therefore binding. We have also held that the injunction was improperly granted. Given these holdings, we affirm those portions of the court’s judgment upholding the validity of the contract, quantifying Westland’s right to utilize the facility, forbidding assessment of Westland or its property for any costs of enlargement of the facility, affirming Westland’s right to free treatment of sewage in the amount of 1 million gallons per year for a 20-year period prescribed in the contract, and granting West-land costs and disbursements of $519.25. We reverse that portion of the court’s judgment enjoining Boyne from making further connections to the treatment facility until current capacity is built into the system for Westland’s future use, and remand the case for the District Court to strike paragraphs 5 and 6 from its judgment.

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


text:
    The NEW CLUB CARLIN, INC., d/b/a Big Daddy’s, John C. Alguire, and Terry L. McKay, individually and as partners transacting business under the name and style of Big Daddy’s, a Montana partnership, Plaintiffs and Appellants, v. The CITY OF BILLINGS, a Municipal Corporation organized and existing pursuant to the laws of the State of Montana, Allan Tandy, its Administrator, Eugene Kiser, its Chief of Police, the City of Billings Police Department, and the City Prosecutor’s Office, an administrative subdivision of the Municipal Corporation, Defendants and Respondents.
    No. 88-269.
    Submitted Nov. 15, 1988.
    Decided April 27, 1989.
    772 P.2d 303.

      Robert L. Stephens, Jr., Stephens Law Firm, Billings, for plaintiffs and appellants.
    David M. Rusoff, City Atty., Billings, for defendants and respondents.
   MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

In November and December, 1987, employees of Big Daddy’s bar were arrested for criminal violation of Billings city ordinance prohibiting nude dancing in establishments selling alcoholic beverages. The owners of the bar filed a complaint in January, 1988 requesting a preliminary injunction, declaratory judgment and damages. A hearing was conducted in the District Court, Thirteenth Judicial District, Yellowstone County on January 26, 1988. The District Court issued an order denying the injunction on February 26, 1988. Big Daddy’s filed a motion for reconsideration which was denied. This appeal followed. This Court set the cause for oral argument and heard the case on November 15, 1988. We affirm.

The issue is whether the District Court erred when it denied the appellant’s request for a preliminary injunction.

On November 6, 1987, Billings police officers arrested a barmaid and a male dancer for exposing their anal clefts in violation of Billings City Code § 3-304. A female dancer was also arrested for failure to remain on the platform while performing in violation of Billings City Code § 3-301. The assistant manager was also arrested for allowing the dancers and the barmaid to appear with their anal clefts exposed in violation of § 3-304(d). On December 4, 1987 a female dancer was arrested for exposing her anal cleft and the acting manager was arrested for allowing the exposure.

On December 17,1987 the defendants in the city court actions filed a motion to dismiss based on the ordinance’s unconstitutionality. The City Prosecutor and defense counsel stipulated to the facts. A briefing schedule was established by the city court. Upon failure to submit a brief, the defendants’ motion was denied and they were found guilty on the stipulated facts.

The New Club Carlin, Inc. d/b/a Big Daddy’s filed a complaint against the City of Billings requesting a preliminary injunction.

The defendants in the city court action, Krimheld Corley Knowles, Paul Dey, Robin Dey, Heidi Sue Sanderson, Melissa Keller and Jimmy Lee Laedeke, are not parties to the present case at bar.

I.

Did the District Court err when it denied the appellant’s request for preliminary injunction?

Montana law governing the issuance of a preliminary injunction is found at § 27-19-101, et. seq. M.C.A. Two sections of this law are particularly applicable to this case. The first, § 27-19-103(4), MCA, states:

“An injunction cannot be granted to prevent the execution of a public statute by officers of the law for the public benefit.”

This seems to resolve the situation. However, §§ 27-19-201(2) and (3), MCA, states:

“An injunction order may be granted (2) when it shall appear that the commission or continuance of some act during the litigation would produce a great or irreparable injury to the applicant; (3) when it shall appear during the litigation that the adverse party is doing or threatens or is about to do or is procuring or suffering to be done some act in violation of the applicant’s rights . . . .”

To overcome the Montana statute § 27-19-103(4), MCA, and well-settled case law that an injunction cannot be granted to prevent the execution of a public statute for the public benefit, Big Daddy’s must show irreparable injury or a violation of constitutional rights. State ex rel. Freebourn v. District Court (1929), 85 Mont. 439, 279 P. 234; 2 Am.Jur. 2nd Injunctions § 243.

Big Daddy’s asserts that the Billings ordinance is a violation of the First Amendment of the U.S. Constitution and Article II, § 7 of the Montana Constitution both providing the right to free speech. Big Daddy’s also claims irreparable damage in that it suffered business losses as a result of the enforcement of the ordinance against its employees.

The District Court held that money damages are not considered to be irreparable harm because recovery of money damages is available in an action at law without resort to equity, citing Boyer v. Kara gacin (1978), 178 Mont. 26, 31, 582 P.2d 1173, 1177; State ex rel. Keast v. Krieg (1965), 145 Mont. 521, 402 P.2d 405. We agree.

Whether or not the ordinance is a violation of constitutional rights is not properly before this Court. It was not Big Daddy’s, the corporation, which was directly effected by the enforcement of the ordinance. Those persons actually arrested and prosecuted for violation of the ordinance are the real parties in interest, Rule 17(a), M.R.Civ.P.

Rule 17(a), the real party in interest rule, mandates that “Every action shall be prosecuted in the name of the real party in interest.” Big Daddy’s interest in the enforcement of ordinances against its employees is monetary, not constitutional. It is the employees who were criminally prosecuted here and they are not parties to this action for injunction. The proper procedure for review on constitutional grounds of the city court action against the employees of Big Daddy’s would have been a review of the city court’s judgments of guilty in the District Court followed by an appeal to this Court. This was not done and those employees have let their right to appeal lapse. The judgments against them have become final.

Affirmed.

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


author: MR. JUSTICE McDONOUGII

text:
    RALPH M. HOLMAN, Plaintiff and Appellant, v. GEORGE G. HANSEN, Margaret E. Hansen, Rita M. Turley, Georgia L. Hansen, Chris M. Hansen, Vic G. Hansen and Michael J. Hansen, Defendants, Respondents and Cross-Appellants.
    No. 88-287.
    Submitted on Briefs April 6, 1989.
    Decided April 27, 1989.
    Rehearing Denied May 18, 1989.
    773 P.2d 1200.

      Richard F. Cebull, Anderson, Brown, Gerbase, Cebull, Fulton, Harman & Ross, Billings, for plaintiff and appellant.
    John T. Jones, Moulton, Bellingham, Longo & Mather, Billings, for defendants, respondents and cross-appellants.
   MR. JUSTICE McDONOUGII

delivered the Opinion of the Court.

This appeal involves a contract for deed to ranch property located near Big Timber, Montana. Plaintiff Ralph M. Holman (Holman), the buyer under the contract, appeals from the order of the District Court of the Sixth Judicial District, Sweet Grass County, granting summary judgment in favor of the sellers, George G. Hansen, et al. (Hansens). The order held Holman’s claims to be barred, and granted one of the two alternative remedies sought by Hansens. The court ordered that Holman would forfeit all payments made under the contract, and Hansens would retake possession of the premises, less a 40-acre tract described below. The court denied Hansens’ request for payment in full of the balance of the contract price. We affirm.

Holman presents two issues on appeal:

1. Whether the District Court improperly usurped Holman’s right to a jury trial by resolving questions of fact in its grant of summary judgment to Hansens?

2. Did the District Court err in granting Hansens’ motion for summary judgment on the grounds that Holman’s claim is barred by the applicable statute of limitations, waiver, estoppel and contract terms?

Hansens present one additional issue on cross-appeal:

Whether the trial court erred in ruling that Hansens could not elect the remedy of specific performance and obtain a judgment for the accelerated balance of the contract for deed, and that Hansens’ sole remedy was repossession of the ranch property and retention of the payments made by Holman.

The contract for deed at issue is dated January 1, 1982. The subject of the contract is approximately 2,800 acres of deeded land and assignment of a leasehold interest in another 1,120 acres. The purchase price is $950,000.00, paid with a $200,000.00 down payment and 20 annual installments of $88,132.76. The contract also provides that upon payment of $500,000.00 in principal and interest, Holman receives title to a 40-acre parcel within the ranch where a house and other improvements are to be built for Holman.

After execution of the contract, Holman took possession of the property, which he still retains. After the 1986 installment was made, more than $500,000.00 in principal and interest had been paid on the contract, and Holman received the deed to the 40-acre parcel. Holman failed to pay the 1987 installment. Pursuant to contract terms, Hansens sent Holman a Notice of Default, which gave him 40 days to pay the 1987 installment in full. Holman did not make the payment. Hansens then elected under the contract to accelerate the entire balance due, and sent a Notice of Acceleration to Holman. The notice gave Holman 90 days to pay all outstanding principal and interest under the contract. Holman did not do this, and filed suit against Hansens on January 30, 1987.

Holman’s complaint alleged fraud, breach of warranty, breach of the implied covenant of good faith and fair dealing, failure of consideration and breach of four separate contracts to make improvements on the property. Holman sought rescission, or in the alternative, reformation of the contract for deed, general and punitive damages for fraud, contract damages, costs and attorney’s fees.

Holman’s claims of fraud stem from his alleged intention to use the ranch property to pursue an outfitting business. While Holman’s primary profession was the operation of an iron and steel business, he had been licensed as an outfitter in Montana since 1957. According to Holman, he was contemplating the sale of his business in order to “retire” to the ranch to work full-time as an outfitter.

George Hansen was Holman’s main contact with the sellers. It was George Hansen who showed the ranch to Holman. According to the Complaint, George Hansen made misrepresentations to Holman by claiming that, among other things, an abundance of game and fish inhabited the property, only one small patch of noxious weeds was to be found on the entire ranch, 250 to 300 cow/calf pairs could be grazed on the land in season, and Hansen himself had paid $600,000.00 for the property approximately ten years earlier. According to Holman, these statements were false, Hansen knew they were false, and Holman relied on them in deciding to purchase the property.

In their answer, Hansens asserted a counter-claim alleging two counts; (1) Holman was in default on the contract for deed, which entitled Hansens to judgment for the entire balance of the purchase price, or in the alternative awarding forfeiture of all payments made and repossession of the property; and (2) the location of Holman’s 40-acre parcel rendered much of the ranch unusable by inhibiting access to it, therefore Holman’s warranty deed to the 40 acres should be declared void and quiet title granted to Hansens.

Hansens later moved for summary judgment. By its order of February 29, 1988, the District Court granted summary judgment, but permitted Holman to retain the 40-acre parcel together with an easement for access over existing roads. The court requested briefs detailing Hansens’ claim to the balance of the purchase price as opposed to forfeiture and repossession as provided for in the contract. By its Order of April 6, 1988, the court denied Hansens’ request for the contract balance and instead awarded forfeiture and repossession. This appeal followed.

I. Holman’s Appeal

Holman’s arguments on appeal center on the District Court’s holding that his fraud-based claims are barred by the applicable statute of limitations. The statute of limitations for fraud is found at § 27-2-203, MCA:

“The period prescribed for the commencement of an action for relief on the ground of fraud or mistake is within 2 years, the cause of action in such case not to be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud or mistake.”

According to Holman, he did not discover the facts constituting George Hansen’s fraud until 1985, less than two years before the complaint was filed.

The party asserting fraud is put on inquiry notice of the other party’s misdeeds, and must exercise ordinary diligence to discover the facts constituting the fraud. Yellowstone Conference of United Methodist Church v. D.A. Davidson (Mont. 1987), [228 Mont. 288,] 741 P.2d 794, 44 St.Rep. 1528; Gregory v. City of Forsyth (1980), 187 Mont. 132, 609 P.2d 248. Mere ignorance of the facts will not suffice to toll the statute of limitations.

“He must show that the acts of fraud were committed under such circumstances that he would not be presumed to have knowledge of them, it being the rule that if he has ‘notice or information of circumstances which would put him on inquiry which if followed would lead to knowledge, or that the facts were presumptively within his knowledge, he will be deemed to have actual knowledge of the facts.’ ”

Mobley v. Hall (1983), 202 Mont. 227, 232, 657 P.2d 604, 607 (quoting Kerrigan v. O’Meara (1924), 71 Mont. 1, 8, 227 P. 819, 822). As stated in Holman’s brief to this Court, “The gravamen of Mr. Holman’s complaint is that Hansen engaged in a continuing fraudulent concealment of facts that disallowed Mr. Holman from truly ascertaining the extent of the fraud.”

Holman thus relies on the doctrine of fraudulent concealment to toll the statute until 1985. Holman cites our definition of fraudulent concealment from E.W. v. D.C.H. (Mont. 1988), [231 Mont. 481,] 754 P.2d 817, 821, 45 St.Rep. 778, 783:

“Fraudulent concealment has been described as the employment of artifice, planned to prevent inquiry or escape investigation, and mislead or hinder acquisition of information disclosing a right of action.”

(quoting Monroe v. Harper (1974), 164 Mont. 23, 28, 518 P.2d 788, 790). We have previously held that in the context of non-malpractice negligence actions, invoking fraudulent concealment requires a showing of affirmative conduct by the defendant calculated to obscure the existence of the cause of action. Yellowstone, 741 P.2d at 798. Given our previous discussions of fraud, this rule applies with equal force to the case at hand.

Holman first contends that the District Court “usurped” his right to a jury trial by resolving questions of fact in order to grant summary judgment. According to Holman, numerous issues of material fact existed as to when he knew, or should have known, that Hansen defrauded him. He cites § 28-2-404, MCA; and Jenkins v. Hillard (1982), 199 Mont. 1, 647 P.2d 354, for the proposition that actual fraud is always a question of fact. While this is a correct statement of the law which would apply to the merits of this case, it sidesteps the threshold barrier of the statute of limitations.

Under § 27-2-203, MCA, whether there has been a “discovery” of facts sufficient to start the running of the statute of limitations is a question of law. Mobley, 657 P.2d at 607. Holman’s fraud claims were held to be barred under the statute of limitations because he discovered, or should have discovered by the use of his senses, the facts constituting the alleged fraud more than two years prior to the filing of this suit. This was a question of law. The court did not “usurp” Holman’s right to a jury trial.

Holman’s second argument asserts that Hansens are estopped from raising the statute of limitations as a defense because of George Hansen’s acts of fraudulent concealment. He relies on Keneco v. Cantrell (1977), 174 Mont. 130, 568 P.2d 1225, which he asserts is factually similar to this case. In Keneco, the plaintiff and the defendant were president and vice president, respectively, of a small corporation. The two men held all of the corporation’s stock. The plaintiff had been responsible for labor management and day-to-day operations, while the defendant had been responsible for bookkeeping and “business phases” of the corporation.

A disagreement arose as to the distribution of several issuances of corporate stock. The plaintiff confronted the defendant with his belief that he was not receiving his fair share of the stock. The defendant replied by assuring the plaintiff that it was a bookkeeping matter, the defendant knew what he was doing and things would be straightened out; i.e., the defendant would “make things right.” We concluded that the defendant’s assurances had lulled the plaintiff into a false sense of security, which had led to his failure to initiate suit before the statute of limitations had run. We held that the plaintiff had established the necessary elements of estoppel to prevent the defendant from raising the statute of limitations as a defense. The plaintiff relied on the defendant’s assurances (and presumably his superior bookkeeping knowledge) to his detriment.

Holman argues that he was likewise assured by George Hansen that the problems he complained of would be made right. Holman argues that Hansen concealed defects in the premises through these assurances, and lulled Holman into an equally false sense of security. However, necessary elements of estoppel we found present in Keneco are not present in this case.

In Keneco, we held that there had been conduct amounting to representation or concealment of material facts, and that the truth concerning these facts was unknown to the party claiming the benefit of the estoppel. In this case, Holman either knew or should have known the truth about the defects at issue here. In fact, the alleged assurances made by Hansen came in response to Holman’s complaints about the defects. Holman’s deposition testimony shows that by 1984, he had uncovered “a whole barrelful of problems just about any place you looked.” He had sufficient information about any alleged misrepresentations made by George Hansen during their negotiations to have stated to Hansen in 1984 that the ranch did not have “10 percent of the assets you claimed it had.”

Holman testified, and his counsel now argues, that George Hansen’s fraud was not “fully ascertainable” until the spring of 1985. While this argument places Holman’s fraud claims neatly within the statute of limitations, it does not mesh with the law set out above. Holman admitted that the alleged misrepresentations were “in part ascertainable” prior to 1985. His deposition indicates that some were apparent as early as 1983.

Holman has been licensed in Montana as an outfitter since 1957, and has owned other property in the Big Timber area for a number of years. His testimony shows his skill and experience in matters such as discerning the presence of game, the growth of noxious weeds and the average price of local real estate. Under the rules from the Yellowstone and Mobley cases, Holman was on inquiry notice, and was required to exercise ordinary diligence to discover the facts constituting the fraud alleged here. Holman noticed problems before 1985 and did in fact investigate them. He is therefore “deemed to have actual knowledge of the facts” under Mobley, and is unable to establish the elements of estoppel. Furthermore, Holman has failed to establish fraudulent concealment. There has not been a showing of conduct by George Hansen “calculated to obscure the existence of the cause of action” as required under Yellowstone. The defects being complained of were apparent to Holman. George Hansen may have attempted to placate Holman with assurances that all would be made right, but he did not obscure Holman’s cause of action. Holman’s fraud-based claims are barred by the statute of limitations.

Lastly, Holman argues that the District Court was in error when it determined that his claims of misrepresentation were barred by the independent investigation clause found in the contract. We need not address this argument, having held that these claims are barred by the statute of limitations.

We affirm the decision of the District Court on Holman’s appeal.

II. Hansens’ Cross-Appeal

The District Court relied mainly on the terms of the contract for deed in deciding Hansens’ counterclaim. Hansens were unable to convince the court that their alleged entitlement to the balance of the contract price overcame the contract’s forfeiture clause, which reads in relevant part:

“IT IS FURTHER MUTUALLY UNDERSTOOD AND AGREED by and between the parties hereto that said forty (40) days and ninety (90) days is a reasonable and sufficient notice to be given to the said Party of the Second Part in case of his failure to perform any of the covenants on his part hereby made and entered into, and shall be sufficient to cancel all obligations hereunder on the part of the said Parties of the First Part and fully reinvest them with all right, title and interest hereby agreed to be conveyed, and in case of such cancellation, the Party of the Second Part shall forfeit all payments made by him on this contract, and all his right, title and interest in all buildings or other improvements whatsoever, and such payments shall be retained by the said Parties of the First Part in full satisfaction and in liquidation of all damages by them sustained . . . (Emphasis added.)”

Hansens’ claim for the contract balance rested on this Court’s decision in Glacier Campground v. Wild Rivers, Inc. (1978), 184 Mont. 543, 597 P.2d 689. In Glacier, we held that a seller under a contract for deed could pursue a remedy other than forfeiture and repossession as long as the contract did not preclude the remedy sought or provide that forfeiture and repossession was the exclusive remedy for breach.

On cross-appeal, Hansens again assert their entitlement to seek specific performance (payment of the balance of the contract price) under the rule in Glacier. In response, Holman raises two arguments, one based on parol evidence and one based on the doctrine of election of remedies. We need not address the election of remedies issue, because parol evidence admissible on this claim establishes the intent of the parties to this contract that specific performance would not be available to the Hansens.

In Glacier, we allowed the seller to seek a remedy outside the contract in part because the forfeiture clause in that case was “on its face, ambiguous and uncertain” requiring recourse to rules of construction and extrinsic evidence to give it meaning. Glacier, 597 P.2d at 692. Hansens point out that the forfeiture clause in this case is very similar to that construed in Glacier, which by analogy should allow them to go outside the contract and seek specific performance.

We noted in Glacier that a primary rule of contract construction is to give effect to the mutual intent of the parties. Glacier, 597 P.2d at 692; see § 28-3-301, MCA. Hansens placed the imperfections in the forfeiture clause in issue by seeking an alternative remedy based on Glacier. We are therefore able to look to extrinsic evidence in order to discover the mutual intent of Holman and the Hansens. Section 28-2-905, MCA.

Holman placed two affidavits before the District Court, his own and that of the attorney representing him when the contract was negotiated, pointing out that George Hansen had requested a clause giving Hansens the right to seek specific performance. According to the affidavits, Holman rejected such a provision, and none was included in the contract. As the District Court stated in the explanatory comment to its order of April 6, 1988, these affidavits were not contradicted by Hansens. It is thus apparent that the mutual intent of these parties was that specific performance would not be a possible remedy under this contract. Hansens were precluded from pursuing that remedy.

We affirm the decision of the District Court.

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

MR. JUSTICE SHEEHY did not participate.


author: MR. JUSTICE WEBER

text:
    MINUTEMAN AVIATION, INC., Plaintiff and Appellant, v. M.R. SWEARINGEN, d/b/a Swearingen Aircraft Engine Service, Defendant and Respondent.
    No. 88-552.
    Submitted on Briefs March 2, 1989.
    Decided April 27, 1989.
    772 P.2d 305.

      Boone, Karlberg & Haddon, Sam E. Haddon, Missoula, for plaintiff and appellant.
    John 0. Mudd, Kelly M. Willis, Garlington, Lohn & Robinson, Missoula, for defendant and respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

Minuteman Aviation, Inc. brought an action against Mr. Swearingen d/b/a/ Swearingen Aircraft Services in the State of Montana, Fourth Judicial District, Missoula County. Mr. Swearingen, a resident of Oklahoma, moved to quash service or to dismiss for lack of personal jurisdiction. His motion to dismiss was granted, and Minuteman appeals. We reverse and remand.

The issue presented for our review is whether the defendant in this action can be subjected to personal jurisdiction in Montana.

Minuteman Aviation, Inc. (Minuteman) is a Montana corporation, whose operations include aerial crop spraying. Mr. Swearingen doing business as Swearingen Aircraft Engine Services (Swearingen), does business in the State of Oklahoma where Swearingen overhauls and repairs aircraft engines.

Affidavits were filed by both parties. In part the affidavits contradict each other. The uncontradicted portion of such affidavits shows that in March of 1987, Swearingen completely overhauled an aircraft engine for Minuteman. The repair work was done in Oklahoma. After installation in a Minuteman aircraft, the engine failed while the aircraft was used for crop spraying in Montana on April 5, 1987, and the aircraft crashed near Conrad, Montana. The affidavits further establish that at the request of FAA, Mr. Swearingen and one of his representatives came to Montana in May of 1987 to inspect the tear down of the engine in an attempt to determine the cause of the engine failure. The engine was returned by Minuteman to Swearingen in the State of Oklahoma for another repair. After repair, the engine was shipped back to Montana and placed in the aircraft. The engine failed again and the aircraft was taken out of service.

Minuteman filed suit in Montana against Swearingen, alleging negligence, breach of warranty and breach of contract. In response to the complaint Swearingen filed an affidavit and motion to quash or in the alternative to dismiss for lack of personal jurisdiction. In Mr. Swearingen’s affidavit he asserts facts which would defeat jurisdictional requirements. The president of Minuteman, Mr. Kenneth Mamuzich, then filed an affidavit in support of allegations made in the complaint regarding Swearingen’s contacts within the State of Montana. Mr. Swearingen then filed an opposing affidavit. After a hearing on the issues, the court granted Mr. Swearingen’s motion to dismiss.

Did the District Court err in granting defendant’s motion to dismiss for lack of personal jurisdiction?

Whether the State of Montana may claim personal jurisdiction over a nonresident defendant is a two-part inquiry. As stated in Simmons v. State (1983), 206 Mont. 264, 271-272, 670 P.2d 1372, 1376:

“For a Montana court to exercise jurisdiction over a nonresident defendant, two questions must be considered. (1) Does the nonresident defendant come within the provisions of Montana’s long-arm jurisdiction statutes; and (2) would exercise of long-arm jurisdiction over the nonresident comport with traditional notions of fair play and substantial justice. May v. Figgins (Mont. 1980), [186 Mont. 383,] 607 P.2d 1132, 37 St.Rep. 493; Haker v. Southwestern Ry. Co. (1978), 176 Mont. 364, 578 P.2d 724. See, generally, International Shoe Co. v. Washington (1945), 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95. If we find, as a matter of statutory construction, that the nonresident does not engage in any of the several activities enumerated in our long-arm statute, then our analysis ends and we must decline jurisdiction. However, even if the nonresident has done something which potentially confers jurisdiction, we must advance to the due process component which is ultimately determinative of the jurisdictional question.”

In accordance with the first inquiry, personal jurisdiction must initially be established pursuant to Rule 4B, M.R.Civ.P. The relevant portions of that statute provide:

“(1) Subject to jurisdiction. All persons found within the state of Montana are subject to the jurisdiction of the courts of this state. In addition, any person is subject to the jurisdiction of the courts of this state as to any claim for relief arising from the doing personally, through an employee, or through an agent, of any of the following acts:
“(a) the transaction of any business within this state;
“(b)the commission of any act which results in accrual within this state of a tort action.
“(e) entering into a contract for services to be rendered or for materials to be furnished in this state by such person; or
“(2) Acquisition of jurisdiction. Jurisdiction may be acquired by our courts over any person through service of process as herein provided; or by the voluntary appearance in an action by any person either personally, or through an attorney, or through any other authorized officer, agent or employee.”

While the plaintiff does not claim that Swearingen was “found within” Montana, it does contend that Swearingen transacted business within Montana and also committed acts which resulted in accrual of a tort action in Montana. As pointed out in Simmons, in order to exercise jurisdiction consistent with due process, it is necessary that an entity have had “minimum contacts” with the forum state so that requiring it to defend will not offend traditional notions of fair play and substantial justice. Simmons, 670 P.2d at 1377.

This Court has previously affirmed a three-part test in analyzing the due process component. In Simmons, 670 P.2d at 1378, we quoted the Ninth Circuit Court of Appeals in acknowledging the following test:

“ ‘If the nonresident defendant’s activities within a state are ‘substantial’ or ‘continuous and systematic,’ there is a sufficient relationship between the defendant and the state to support jurisdiction even if the cause of action is unrelated to the defendant’s forum activities. [Citations omitted.] If, however, the defendant’s activities are not so pervasive as to subject him to general jurisdiction, the issue whether jurisdiction will lie turns on the nature and quality of the defendant’s contacts in relation to the cause of action. In our circuit, we use the following approach in making this evaluation: (1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking its laws. (2) The claim must be one which arises out of or results from the defendant’s forum-related activities. (3) Exercise of jurisdiction must be reasonable. [Citations omitted.]’
“Inherent in this approach is the recognition that while a nonresident defendant may be found to have purposely availed itself of activities within a forum state, the exercise of jurisdiction may still be unreasonable.”

In the present case facts relevant to whether Mr. Swearingen can be subjected to personal jurisdiction in Montana are disputed. Both parties support their respective positions with an affidavit. By its affidavit Minuteman establishes that it became aware of Swearingen and his business through “Trade-a-Plane” magazine, subscription copies of which were received at Minuteman in Missoula, Montana. Minuteman also establishes by affidavit that Swearingen shipped the engine back to Montana after repair, knowing that it was to be used for crop spraying operations in Montana. Minuteman also asserts that Mr. Swearingen voluntarily came to Montana to inspect the engine after the crash and that at that time Mr. Swearingen reaffirmed his guarantee of the prior engine overhaul and requested the engine be sent back to Oklahoma for additional repair. Finally, Minuteman asserts that two torts occurred in Montana, each caused by Swearingen.

The facts sworn to by Mr. Swearingen in his affidavit are materially different. He states that he had not advertised in “Trade-a-Plane” magazine for seven years prior to 1987. He states that after the first engine repair, plaintiff instructed him to ship the engine to Texas to be installed in an aircraft which was being repaired there. He denies that he knew this engine was to he used by plaintiff in Montana. He asserts that his appearance in Montana to inspect the engine was not voluntary but was at the insistence of the FAA. Mr. Swearingen denies that he reaffirmed his guarantee while in Montana, stating rather that Minuteman contacted him in Oklahoma after he had returned. He states that he agreed to repair the engine in Oklahoma, but with no future guarantee. And finally, Swearingen asserts that the engine failures were caused by Minuteman’s own negligence. He states his belief that the FAA’s official report will indicate that the engine failure was due to negligent installation of a carburetor by Minuteman, causing the first failure. He asserts that the second failure was caused either by negligent maintenance by Minuteman or by third party sabotage. Swearingen thus denies that his actions caused the accrual of a tort in Montana.

In the present case there are conflicting facts relevant to both prongs of the jurisdictional inquiry. The conflicting facts asserted by the parties are material to whether personal jurisdiction may initially be found pursuant to the requirements or Rule 4B, M.R.Civ.P. The second inquiry, involving a due process analysis, also involves conflicting material facts. Minuteman asserts facts which could confer personal jurisdiction over Mr. Swearingen. In contrast, Mr. Swearingen asserts facts which could support a motion to dismiss for lack of personal jurisdiction. In this situation, the trial court cannot properly weigh the evidence through a “battle of affidavits.”

The Ninth Circuit Court of Appeals faced a similar impasse in Data Disc, Incorporated v. Systems Technology Associates, Inc. (9th Cir. 1977), 557 F.2d 1280. In that case the appellate court stated:

“Where affidavits are directly conflicting on material points, we do not see how it is possible for the district judge to ‘weigh’ the affidavits in order to resolve disputed issues. Except in those rare cases where the facts alleged in an affidavit are inherently incredible, and can be so characterized solely by a reading of the affidavit, the district judge has no basis for a determination of credibility.”

Data Disc, 557 F.2d at 1284.

Where material jurisdictional facts are disputed, the appropriate procedure is a preliminary hearing by the District Court pursuant to Rule 12(d), M.R.Civ.P. Data Disc, 557 F.2d at 1285; See also, Gatecliff v. Great Republic Life Ins. (1987), 154 Ariz. 502, 744 P.2d 29, 33. Additionally, the court has discretion to permit discovery to resolve factual issues. Data Disc, 557 F.2d at 1285; Wells Fargo & Co. v. Wells Fargo Express Co. (9th Cir. 1977), 556 F.2d 406, 430. Where the district court takes evidence at a preliminary hearing plaintiff must establish the jurisdictional facts by a preponderance of the evidence. Data Disc, 557 F.2d at 1285. In a situation where the jurisdictional facts are intertwined with facts involving the merits of the case, the district court may determine its jurisdiction in a plenary pretrial proceeding. Land v. Dollar (1947), 330 U.S. 731, 67 S.Ct. 1009, 91 L.Ed. 1209. See also 2A J. Moore, Moore’s Federal Practice § 12.07 (1987).

We conclude that a pretrial hearing is appropriate in the present case to resolve factual disputes which are material to the jurisdictional issue. The district court has discretion to allow discovery relevant to these issues. We reverse the order of dismissal and remand for further proceedings consistent with this opinion.

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