author: JUSTICE BARZ

text:
    In re the MARRIAGE OF KENNETH JONES, Petitioner and Appellant, and RITA ANN “GOBERT” JONES, Respondent and Cross-Appellant.
    No. 89-429.
    Submitted on Briefs Dec. 21, 1989.
    Decided March 19, 1990.
    788 P.2d 1351.
    See also 97 B.R. 36.
    Arthur D. Agnellino, Missoula, for petitioner and appellant.
    Paul Neal Cooley, Missoula, for respondent and cross-appellant.
   JUSTICE BARZ

delivered the Opinion of the Court.

Kenneth Jones, petitioner, appeals from the June 13, 1989 decision by the District Court of the Fourth Judicial District, Missoula County, finding that he must pay maintenance to Rita Ann Gobert Jones, respondent, in the amount of $500 per month commencing June 1989 and ending May 1991; $300 per month through May 1991 for the $8,000 in unpaid child support and maintenance; and $500 per month commencing in June 1991 until the unpaid child support and maintenance are paid off. Respondent cross-appeals, arguing that the District Court erred by failing to grant respondent’s trial motions; by modifying the original maintenance order dated July 21, 1988; and by incorrectly determining the amount of unpaid child support and maintenance. Affirmed and remanded for proceedings consistent with this opinion.

The essential issue raised by petitioner on appeal is whether the District Court abused its discretion by denying petitioner’s motion to modify the court’s July 21, 1988 order awarding spousal maintenance to respondent.

On cross-appeal, respondent raises the following issues:

1. whether the District Court erred by failing to grant respondent’s trial motions;

2. whether the District Court erred in not granting respondent’s motion to dismiss petitioner’s motion for modification of spousal maintenance; and

3. whether the District Court erred in setting forth the amount of unpaid maintenance and child support as $8,000.

Kenneth and Rita Jones were married approximately twenty-seven years before they dissolved their marriage on January 15, 1985. The decree of dissolution reserved all other issues, including the property disposition, until a subsequent date. On December 5, 1986, the court issued its findings of fact, conclusions of law and judgment. In its conclusions of law, the District Court concluded that the parties have joint custody of the minor child, with Rita as the custodial parent; that Kenneth have reasonable visitation rights; and that Kenneth continue to pay $150 per month in child support and pay for all necessary health costs for the child. The court also divided the marital property and awarded Rita one-half of this property for the sum of $43,594. The property division was a money judgment against Kenneth and the court ordered that the parties sign all necessary documents to accomplish this division of property.

Kenneth subsequently appealed the December 5, 1986 property settlement order to this Court. This Court affirmed the District Court in its opinion of In re Marriage of Jones (1987), 229 Mont. 128, 745 P.2d 350. Kenneth then filed a petition for Chapter 7 bankruptcy relief in the United States Bankruptcy Court for the District of Montana on April 29, 1988. Kenneth listed Rita and the amount of her December 5, 1986 property settlement of $43,594 as a dis-chargeable debt.

In light of Kenneth’s petition for Chapter 7 bankruptcy relief, Rita filed a motion for spousal maintenance with the District Court on June 14, 1988. On July 21, 1988, after the bankruptcy court had terminated the automatic stay, the District Court issued an order granting temporary maintenance to Rita in the amount of $650 per month until November 12, 1988, at which time the court noted that child support would cease as a result of the child reaching age eighteen. The court then found that Kenneth would be able to afford $800 per month in maintenance beginning in December 1988. The court also found Kenneth in contempt on January 24, 1989 and March 24, 1989 for failing to pay the court ordered maintenance and child support payments.

On May 22, 1989, Kenneth filed a motion for modification of spousal maintenance after the bankruptcy court discharged Rita’s $43,594 property judgment. The District Court entered an order dated June 13, 1989, finding in pertinent part that Kenneth owed $8,000 in unpaid child support and maintenance as of June 1989; that Rita was entitled to $500 per month in maintenance commencing June 1989 and ending May 1991; that Kenneth must pay the $8,000 arrears at the rate of $300 per month until June 1991 and thereafter at the rate of $500 per month until the remaining balance of the arrears is paid in full; and that failure to pay the ordered amounts may result in Kenneth once again being cited for contempt. Kenneth appeals and Rita cross-appeals from this June 13, 1989 order.

The essential issue raised on appeal is whether the District Court abused its discretion by denying Kenneth’s motion to modify the court’s July 21, 1988 order awarding spousal maintenance to Rita.

On appeal, this Court must determine whether the District Court abused its discretion by issuing its modification order dated June 13, 1989. We will not disturb a district court’s order when it is based on substantial credible evidence and no abuse of discretion is shown. In re Marriage of Cole (Mont. 1988), [234 Mont. 352,] 763 P.2d 39, 41, 45 St.Rep. 1965, 1967-68; In re Marriage of Loegering (1984), 212 Mont. 499, 510, 689 P.2d 260, 266.

In its findings of fact, the District Court found in pertinent part that Rita had been receiving $337.35 a month since June 1988 for her one-half interest in the Washington real estate contract and that this amount was not part of the bankruptcy estate, but was considered at the time of the 1986 decree as part of the marital estate to be awarded to Kenneth if he paid the December 5, 1986 property judgment; that Rita had received $4,048.20 from the Washington real estate contract, which was used to defray her attorney fees; that Rita still had a balance of over $6,000 in attorney fees to pay; that the December 5, 1986, property judgment was discharged in bankruptcy, leaving Rita with approximately $24,650.90 less administrative expenses and no assurances as to when and how she would receive this money; that Kenneth asserted no new facts besides the payments to Rita from the bankruptcy court to justify a modification of maintenance; and that assuming Kenneth paid the $43,594 due and owing and also assuming a ten percent interest rate, Rita would now have the benefit of approximately $54,492 in the bank and would also receive approximately $5,449.92 per year interest or $454 per month indefinitely on this amount. The court also found, however, that under the present status she will receive only $674 per month until 1994, less any administrative expenses, and she will not have the benefit of any money in the bank. On the other hand, the court found that Kenneth had a monthly income of $1,910, a late model car, and $20,000 equity in a ten acre parcel and homesite near Florence, Montana. The court concluded that it had originally awarded an uneven amount of property in lieu of maintenance, but that the original justification for not awarding maintenance is no longer present; that the award of maintenance is appropriate in light of the parties unequal future earning power; that the prospects for re-educating Rita and/or job possibilities in her present capacity is limited and her ability to earn surplus income is unlikely. The court then incorporated its July 21, 1988 findings of fact and conclusions of law into the order and determined that maintenance was equitably required in the amount of $500 per month for twenty-four months; and that the $8,000 arrearage shall be paid at the rate of $300 per month until June 1991 when Kenneth shall then pay Rita $500 per month until the remaining balance of the arrearage is paid in full.

In light of the above, we hold that the District Court did not abuse its discretion in awarding Rita maintenance. Substantial credible evidence exists to support the District Court’s order.

Kenneth nonetheless sets forth “arguments” that he was penalized by the District court for using proper bankruptcy procedures in discharging his original debt of $43,594 to Rita and that the District Court erred in evaluating the amount of assets available to Rita from the bankruptcy estate and therefore ordered an excessive maintenance award. We find no merit in either of these arguments. Furthermore, we find ludicrous Kenneth’s argument that he had “fixed expenses of approximately $1,900 long before he had any obligation to pay maintenance to [Rita].” Kenneth cites his marriage to his current wife, his subsequent purchase of his $85,000 farm house, and the subsequent birth of his two children by his current wife and her child by a previous marriage as events that took place “years before the July 21, 1988 maintenance order was entered.” Merely because the final order regarding the property disposition and Rita’s entitlement to maintenance was not issued until June 13, 1989, does not lessen Kenneth’s existing obligation to his former wife and family. After nearly twenty-seven years of marriage, Kenneth’s obligation to Rita and their children existed “long before” his obligation to his current wife and their children and her child by a previous marriage. Kenneth has possibly taken on more than he can afford by purchasing an $85,000 home and a late model car, and by remarrying and having more children. However, since his obligation to his first wife and children existed long before his obligation to his subsequent wife and children, Kenneth will not be allowed to shun these first obligations by merely acquiring new obligations.

The District Court did not overlook Kenneth’s newly acquired obligations, but properly considered the new obligations in light of his original obligations and awarded maintenance accordingly. Contrary to what Kenneth asserts, the court properly followed § 40-4-203, MCA, which sets out the standards and factors that the court must consider when awarding maintenance.

The first issue Rita raises on cross-appeal is whether the District Court erred by failing to grant her trial motions.

The District Court issued an order on July 21, 1988, granting Rita $650 per month in maintenance and $150 per month in child support through November, 1988, at which time the minor child would have reached the age of eighteen. The court also ordered that commencing in December 1988, Kenneth pay $800 per month in maintenance. The order then stated that

“Upon receiving notice from either party that the Bankruptcy Court has made a final finding with regards to [Rita’s] judgment, the Court will consider reduction or elimination of maintenance due to recovery of [Rita’s] debt in whole or in part. Otherwise, maintenance will continue until further order of the Court.”

The bankruptcy court subsequently issued a judgment and Kenneth then filed a motion for modification of spousal maintenance with the District Court.

On June 6, 1989, a hearing was held before the District Court regarding Kenneth’s motion or modification of spousal maintenance. On cross-appeal, Rita apparently argues that she made a motion in limine in conformance with § 40-4-208(2)(b)(i), MCA. The record, however, reveals that Rita objected to Kenneth addressing anything other than evidence that would show a substantial change of circumstances that would permit the court to consider Kenneth’s motion for modification of spousal maintenance. The court overruled the objection.

In light of the court’s statement in its July 21, 1988 order, the order was temporary in nature. Under these circumstances, the court was not required to limit the hearing to evidence pertaining only to proving that a substantial change of circumstances occurred. Kenneth had already established the District Court’s requirement of sending notice to the District Court that the bankruptcy court had made a final finding regarding his petition for chapter 7 bankruptcy relief. The District Court therefore was entitled to hear all of the relevant testimony regarding maintenance so as to determine whether Rita was entitled to maintenance and if so, the proper amount. The District Court properly overruled Rita’s objection.

Rita also argues under this issue that the District Court erred by denying Rita’s motion to dismiss Kenneth’s motion for modification of spousal maintenance because he failed to provide evidence. Contrary to what Rita asserts and as stated above, the District Court properly heard all relevant evidence before it determined, in light of the factors set forth in § 40-4-204, MCA, that Rita was entitled to spousal maintenance and the amount thereof. The court therefore did not err by not granting Rita’s motion and by determining that Rita was entitled to $500 per month in maintenance from June 1989 through May 1991.

The second issue Rita raises on appeal is whether the District Court erred in not granting Rita’s motion to dismiss Kenneth’s motion for modification of spousal maintenance.

Rita argues that the July 21, 1988 order is unassailable because of the lapse of time for an appeal. The District Court clearly indicated in its July 21, 1988 order that it was a temporary order and subject to revision upon a final judgment from the bankruptcy court. Upon receiving a final judgment from the bankruptcy court, Kenneth properly filed a motion for modification of spousal maintenance pursuant to § 40-4-208, MCA, on May 22, 1989. As stated above, the court then properly considered all relevant evidence and modified the maintenance accordingly in its June 13, 1989 order. The District Court therefore did not err in denying Rita’s motion to dismiss Kenneth’s motion for modification of spousal maintenance.

The last issue raised on appeal by Rita is whether the District Court erred in setting forth the amount of unpaid maintenance and child support as $8,000.

Rita argues that Kenneth owes $9,818.33 in arrearage plus legal interest. Upon reviewing the record, we find evidence supporting the conclusion that Kenneth currently owes $9,840.06 in unpaid child support and maintenance. In particular, the record supports the following amounts of unpaid child support and maintenance:

Pre-June 13, 1988 child support arrearage $ 2,250.00
June 1988 maintenance: ($650/month x 18 days) $ 390.06
July 1988 to November 1988 maintenance: ($650/month x 5 months) $ 3,250.00
July 1988 to November 1988 child support: ($150/month x 5 months) $ 750.00
December 1988 to May 1989 maintenance: ($800/month x 6 months) $ 4,800.00
$ 11,440.06

The court granted Kenneth $1,600 credit which would leave a balance of $9,840.06 in arrears plus legal interest. The amount in dispute is apparently the $2,250 in the pre-June 13, 1988 unpaid child support. However, considering the absence of sufficient findings of fact on this issue, we must remand the case to the District Court to determine the proper amount of unpaid child support and maintenance.

Rita also contends that she is entitled to damages and attorney fees in light of Rule 32, M.R.App.P. Rule 32, M.R.App.P. provides:

“If the Supreme Court is satisfied from the record and the presentation of the appeal in a civil case that the same was taken without substantial or reasonable grounds, such damages may be assessed on determination thereof as under the circumstances are deemed proper.”

When a reasonable ground for an appeal exists, a respondent is not entitled to recover damages under Rule 32, M.R.App.P. Searight v. Cimino (Mont. 1988), 230 Mont. 96, 102, 748 P.2d 948, 952, [45 St.Rep. 46, 52;] Erdman v. C & C Sales, Inc. (1978), 176 Mont. 177, 184, 577 P.2d 55, 59. In the present case, the question of whether the District Court abused its discretion by denying Kenneth’s motion for modification of spousal maintenance was reasonably in issue. In addition, Rita also contends that under Rule 11, M.R.Civ.P., she is entitled to her attorney fees and costs. We find no basis for Rita asserting this issue on appeal.

Affirmed and remanded for proceedings to determine the proper amount of unpaid child support and maintenance.

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


source: Caselaw Access Project

author: JUSTICE WEBER

license: Public Domain

text:
    JOSEPHINE M. DIEMERT, Petitioner and Appellant, v. STATE OF MONTANA, DEPARTMENT OF LABOR AND INDUSTRY, and Montana Deaconess Medical Center, a Montana corp., Respondent and Respondent.
    No. 89-415.
    Submitted on Briefs Jan. 11, 1990.
    Decided March 20, 1990.
    788 P.2d 1355.

      Daniel Donovan, Lawrence A. Anderson, Great Falls, for petitioner and appellant.
    David A. Scott, Dept, of Labor & Industry, Helena, Neil E. Ugrin and Nancy P. Cory, Great Falls, for respondent and respondent.
   JUSTICE WEBER

delivered the Opinion of the Court.

Appellant, Josephine Diemert, filed a petition for judicial review of an unemployment claim she had against the Department of Labor and Industry (“DLI”) and the Montana Deaconess Medical Center (“Deaconess”), in the District Court for the Eighth Judicial District, Cascade County. On December 12, 1986, DLI moved to dismiss the petition for judicial review based on failure to prosecute, pursuant to Rule 41(b), M.R.Civ.P.

On December 17, 1986, the District Court issued an order setting a hearing for the motion to dismiss and scheduled it for January 29, 1987. On December 31, 1986, DLI withdrew its motion to dismiss. Nonetheless, the District Court entered an Order of Dismissal on January 6, 1987. However, neither party was served with notice of the order and consequently proceeded as though the matter was pending. Diemert appeals. We reverse.

The sole issue for our review is whether the District Court erred in dismissing the case?

This action initially arose as a wrongful discharge action after appellant was fired from her job at Deaconess for allegedly slapping a patient. She was also denied unemployment benefits. She filed her complaint on October 24, 1985. On December 12, 1986, DLI moved to dismiss for failure to prosecute, pursuant to Rule 41(b), M.R.Civ.P. On December 31, 1986, DLI withdrew its motion to dismiss based on an agreement between counsel for appellant and Deaconess that this claim would be held in abeyance until resolution of a companion case. However, on January 6, 1987, the District Court entered an Order of Dismissal. Neither party was served with notice of the dismissal. Then, on January 13, 1988, the District Court, ignoring its own Order of Dismissal, held a hearing regarding disputed discovery. Both parties proceeded with discovery unaware of the purported dismissal. Finally, in May, 1989, counsel for respondent discovered the Order of Dismissal while reviewing the District Court file. Appellant then moved for relief from the January 6, 1987, order pursuant to Rule 60, M.R.Civ.P.

The court ordered a hearing to be held on appellant’s motion on June 29, 1989. The hearing date was postponed until July 27, and then until September 14. However, the hearing was never held, and the District Court did not act on the motion. The motion was deemed denied under Rule 60(c). Appellant filed this appeal from the District Court’s dismissal.

In it’s December 12, 1986, motion to dismiss for failure to prosecute, DLI relied on Rule 41(b), M.R.Civ.P., which states:

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

Rule 41(b) further provides that unless otherwise specified, a dismissal under this subsection operates as an adjudication upon the merits. DLI maintained that appellant had taken no action to move the case forward since October 24, 1985. Deaconess did not join in DLI’s motion.

We first point out that Rule 41(b) provides the District Court no basis for a discretionary dismissal after the motion to dismiss had been withdrawn. Thus, since DLI withdrew it’s motion one week before the District Court’s purported Order of Dismissal, the dismissal was not authorized under Rule 41(b). We have reviewed the record and found no other basis for dismissal.

Under Rule 60(b), M.R.Civ.P., the District Court may relieve a party or his legal representative from a final order or proceeding for mistake or inadvertence, or any other reason justifying relief from the operation of the order. Deaconess maintains that appellant’s motion to vacate the dismissal was not timely made, and thus the dismissal was proper. We disagree. Rule 60(b) sets forth specific time periods in which a motion shall be made. In this case none of the time periods were met. However, the last sentence of Rule 60(b) is controlling here.

Rule 60(b) provides:

“The motion shall be made within a reasonable time . . . and for [mistake, inadvertence, surprise, or excusable neglect] when a defendant has been personally served, whether in lieu of publication or not, not more than 60 days after the judgment, order or proceeding was entered or taken . . . This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding, or to grant relief to a defendant not actually personally notified as may be required by law . ...” (Emphasis added.)

First of all, appellant was not notified of the January 6, 1987, order. In fact, both parties proceeded with the case as if DLI’s motion had been denied. The District Court even held a discovery hearing in January, 1988, one year after its purported dismissal. When counsel for Deaconess discovered the purported Order of Dismissal in the trial court file in May of 1989, appellant, pursuant to Rule 60, moved for relief within 30 days from the date of such discovery.

We conclude that the District Court’s Order of Dismissal pursuant to Rule 41(b) was either a mistake or inadvertent as contemplated by Rule 60(b), and that the appellant was not . actually personally notified, so she was entitled to relief under that rule. We hold that the District Court erroneously refused to set aside the Order of Dismissal. We therefore set aside the Order of Dismissal and remand this case for further proceedings consistent with this opinion.

CHIEF JUSTICE TURNAGE and JUSTICES HARRISON, Mc-DONOUGH and SHEEHY concur.


author: JUSTICE McDONOUGH

text:
    EMCASCO INSURANCE COMPANY, Plaintiff and Respondent, v. DUSTIN O. WAYMIRE and Julia A. Waymire, Defendants and Appellants.
    No. 89-471.
    Submitted on Briefs Feb. 9, 1990.
    Decided March 20, 1990.
    788 P.2d 1357.
    Brad L. Arndorfer, Arndorfer Law Office, Billings, for defendants and appellants.
    James L. Jones and Robert L. Sterup, Dorsey & Whitney, Billings, for plaintiff and respondent.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Defendant Dustin and Julia Waymire appeal the judgment of the Thirteenth Judicial District Court, Yellowstone County, in a case involving a claim under a fire insurance policy. The District Court, sitting without a jury, entered judgment in favor of the plaintiff, Emcasco Insurance Company (Emcasco), relieving Emcasco from all obligations to pay the Waymires any amount under the policy of insurance, on the grounds that the Waymires concealed, misrepresented, or omitted material facts when applying for the policy and they intentionally caused the fire destroying the property. We affirm.

The Waymires raise the following issues on appeal:

(1) Is there substantial credible evidence to support the District Court’s finding that the Waymires were responsible for causing the fire that destroyed the insured premises?

(2) Is there substantial credible evidence to support the District Court’s finding that appellants concealed, misrepresented or omitted material facts in applying for the policy of insurance on their former home?

The District Court made the following findings of fact: The Waymires were the owners of a residence located at 3511 Bitteroot Drive, Billings, Montana. The Waymires purchased a fire insurance policy from Emcasco insuring their residence in the amount of $95,000.00, personal property in the amount of $76,000.00, loss of use in the amount of $19,000.00, and other structures in the amount of $9,500.00, along with other additions such as cleanup costs as contained in the policy. The Waymires had intermittently insured the residence with Emcasco from May 1, 1984 until the time of the fire.

The policy in question was issued in June of 1986. The agent who filled out the application for this policy testified that Mr. Waymire apparently misrepresented his loss history because the agent specifically noted that there were no previous losses listed on that application and that Mr. Waymire had reviewed and signed it. Actually, the Waymire’s had two prior fire losses at the same location — one in July 1979, the other in September 1980 — both involving the burning of a mobile home. Emcasco’s agent, its underwriter, and its expert witness, all testified that Emcasco never would have issued the policy if it had known of the Waymire’s prior losses.

On the night of May 30, 1987, the Waymire residence at 3511 Bitteroot Drive was damaged by fire. At the time, the Waymires lived in the residence with their two sons, Jeffrey, age 27, and David, age 28. Mr. Waymire and his sons had built the log home, a garage, a barn, and a gun shop on the premises. Mr. Waymire is an electrician by trade but has not been regularly employed in that field since 1983.

Instead, Mr. Waymire and sons ran a wholesale firearms business out of their home at 3511 Bitteroot Drive. The business was primarily a mail-order business with sales generated through ads in a firearms publication called Shotgun News. Consequently, the Waymires usually had a large inventory of firearms on hand on their property, which they stored primarily in the gunshop, although they kept some, particularly their personal firearms, in their family residence. To finance this business, Mr. Waymire borrowed $61,800.00 from Valley Credit Union on June 26, 1985, secured by a trust indenture on the property. The note called for payments of $959.00 a month and a balloon payment on July 1, 1990. A second loan from the credit union secured by another trust indenture subsequently raised this monthly obligation to approximately $1,400.00. Mr. Waymire also purchased a substantial portion of his gun inventory on credit from his supplier, Interarms. At the time of the fire, he owed Inter-arms $29,028.18.

Several days prior to the fire, the Waymires removed Mrs. Way-mire’s Lowrey organ, a family heirloom, from the home and delivered it to a repairman who had serviced it before at the Waymire residence. The repairman had offered to examine it at the Waymire home but testified that Mr. Waymire “insisted” on bringing it to him. In 25 years, this was the only local customer to have done this. Also, on the day of the fire, the two Waymire sons left town for a gun show in Lewistown, Montana, taking most of the family’s personal gun collection, usually kept in the house, with them, as well as other guns kept in the gunshop. Also on the morning of the fire, one of the Waymire sons purchased two “jerrycans” of diesel fuel, allegedly for the family tractor, and left them outside the gunshop. At 5:00 on the evening of the fire, Mr. and Mrs. Waymire left the premises for the evening to travel to Roberts, Montana to visit a hunting guide about planning a future trip. They took the family dog with them. They were gone at the time that the fire started around 10:00 p.m. and returned sometime after 11:00 p.m.

After the fire, investigators found one of the jerrycans in the basement of the remains of the house. They also discovered that an apparent burglary had allegedly been committed the same evening of the fire. The lock to the gun shop had been broken with a pick found nearby and several of the the less expensive items from the gun inventory were missing. However, the most valuable items in the inventory were not taken. Thirteen guns were taken from the shop valued at $70.00 each and two at $135.00 each. The Waymires apparently left the house unlocked, because two rifles belonging to each of the Waymire sons and valued at $650.00 each were allegedly stolen from the home and there was no evidence indicating a break-in. During the investigation Mr. Waymire stated that it was his belief that the alleged burglars took one of the fuel cans and set fire to the house after the burglary. Investigators also found what they believed may have been the remains of some type of timing device commonly used to delay the ignition of arson caused fires.

The Waymire’s had twice listed the home for sale without success and one week before the fire had the property appraised.

The District Court also found that the Waymire’s firearms business was causing the family serious cash flow problems. At the time of the fire, the Waymires were two months behind on one of the loans on their home and one month behind on another. Their debts at the time of the fire totaled $113,397.00. Thus, the District Court found that the Waymires had a financial motive to cause the fire. Their potential recovery from the policy was $171,000.00 plus loss of use up to $19,000.00. The insurance payment would also terminate their monthly obligations of nearly $1,400.00 to their credit union. After the fire the Waymires would still own the land, three buildings, and the business inventory, free and clear of all debts.

Emcasco’s expert, Chriss Rallis, a trained fire investigator, concluded that the fire was incendiary in nature and deliberately set due to (1) the rapid ignition and spread of the fire, (2) the presence of “accelerant” pour patterns on some of the wood recovered from the debris, (3) the presence of a fuel can in the debris which Mr. Waymire told him did not belong in the house, (4) evidence that one of the doors to the house was unlocked, (5) the fact that two prize guns were not found in the debris, and (6) the fact that Mr. Way-mire told him that he thought that the fire had been deliberately set, in conjunction with the burglary. Mr. Rallis further testified that the circumstances surrounding the fire were consistent with common characteristics of insurance fraud fires and inconsistent with other types of fires such as pyromaniac, revenge, or vandalism fires.

Furthermore, Terry Jesse, a detective with the Yellowstone County Sheriff’s office with eleven years of experience and extensive training in the investigation of burglaries testified that in his opinion the burglary was simply staged to draw attention away from the arson.

The District Court concluded that there was a reasonable basis for Emcasco’s denial of the claim and such denial was in good faith. The Court further concluded that Mr. Waymire was barred from recovering under the policy because he concealed, misrepresented, or omitted material facts in his application, and because “the evidence establishes the Defendants were responsible for causing the fire.” The Waymire’s now appeal.

First, we note that this case was decided by the trial judge sitting without a jury. The trial judge observed the demeanor of the witnesses and is in a better position to judge their credibility than a reviewing court, thus “[w]e will not substitute our judgment for that of the trier of fact, but rather will only consider whether substantial credible evidence supports the findings and conclusions,” Spraggins v. Elvidge (1982), 199 Mont. 155, 159, 647 P.2d 859, 861, quoting Cameron v. Cameron (1978), 179 Mont. 219, 228, 587 P.2d 939, 945. “Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.” Rule 52(a), M.R.Civ.P.

The insurance policy issued to the Waymires specifically excluded coverage to insureds who deliberately set fire to their own property with the intent to destroy it. This principle is also pervasive in the common law, and has been consistently recognized by this Court. See e.g. Britton v. Farmer’s Ins. Group (1986), 221 Mont. 67, 721 P.2d 303; Mountain West Farm Bureau Ins. Co. v. Girton (1985), 215 Mont. 408, 697 P.2d 1362; St. Paul Fire & Marine Ins. Co. v. Cumiskey (1983), 204 Mont. 350, 665 P.2d 223; Hier v. Farmers Mutual Fire Ins. Co. (1937), 104 Mont. 471, 67 P.2d 831, 110 A.L.R. 1051. Arson for insurance fraud may be established by circumstantial evidence. Mountain West, 697 P.2d at 1364. Emcasco had the burden of proving by a preponderance the following elements:

(1) the incendiary nature of the fire;

(2) that the insureds had a motive for setting the fire, and

(3) surrounding circumstantial evidence implicating the appellants in setting the fire or causing it to be set. Britton, 721 P.2d at 317; Silva v. Fire Ins. Exchange (D. Mont. 1986), 647 F.Supp. 1397, 1400.

We conclude that there was substantial evidence to support the trial judge’s finding that the Waymires intentionally caused the fire which destroyed their home. The evidence that the fire was incendiary in nature was overwhelming and essentially uncontested.

We also conclude that Emcasco offered substantial evidence that the Waymires had a financial motive for setting the fire due to cash flow problems in their gun business and the specter of a balloon mortgage payment. In their brief the Waymires contend that the District Court’s finding No. 27 concerning the adjusted gross income (A.G.I.) of the Waymires for the years 1982-1987 is clearly erroneous, in that it compares gross income and taxable income figures instead of adjusted gross income figures. The Waymires argue that a correct comparison would not indicate a decrease in their income and a corresponding financial motive for arson. A simple review of the Waymires’ tax returns for these years (plaintiff’s exhibits 25-30) indicates that the figures cited by the District Court are the appropriate adjusted gross income figures. These figures also demonstrate a significant decrease in the Waymires’ income over this period. Thus, there is no merit in this contention.

Finally, Emcasco also offered substantial surrounding circumstantial evidence that the Waymires’ intentionally set or caused the fire to be set: (a) the fire occurred at night after dark; (b) the insureds were away from the premises at the time of the fire; (c) an accelerant was used; (d) the accelerant was made available on the premises by the insureds; (e) the property had been for sale without success; (f) valuable and sentimental personal property was removed from the premises prior to the fire; and (g) the insureds were experiencing financial difficulty and payments on the mortgages on the property were a significant expense to the insureds. See e.g. Mountain West, 697 P.2d at 1364. “The arson scheme fit the insurance arsonist profile and was incompatible with other arson profiles such as revenge or vandalism.” Mountain West, 697 P.2d at 1364. Substantial evidence supports the conclusion that the Waymires intentionally caused the destruction of their home.

Having concluded that substantial evidence supports the trial judge’s finding that the Waymires intentionally caused the loss of their home and that the District Courts findings are not clearly erroneous, we need not address the other issue raised by the appellants. The judgment of the District Court is AFFIRMED.

JUSTICES HARRISON, HUNT, BARZ and WEBER concur.


author: JUSTICE SHEEHY

text:
    In re the MARRIAGE OF LOIS A. MANNIX, a/k/a Lois Austin, Petitioner and Respondent, and RALPH E. MANNIX, JR., Petitioner and Appellant.
    No. 89-480.
    Submitted on Briefs Feb. 15, 1990.
    Decided March 27, 1990.
    788 P.2d 1363.
    Byron W. Boggs, Missoula, for petitioner and appellant.
    Kerry N. Newcomer, Geiszler & Newcomer, Missoula, for petitioner and respondent.
   JUSTICE SHEEHY

delivered the Opinion of the Court.

Appellant Ralph E. Mannix Jr. (Mannix) appeals the order issued by the Fourth Judicial District Court, Missoula County, granting Lois A. Mannix, now Lois Austin (Austin), interest on the sum of $5,050.00. The District Court ordered Mannix to pay Austin interest from January 20, 1982, to August 8, 1989, on a $5,050.00 principal obligation created by the parties’ Property Settlement and Custody Agreement. Mannix now appeals the District Court order. We affirm.

Mannix’s issue on appeal can be summarized as follows:

Did the District Court err by awarding Austin interest on a debt created by the parties’ property settlement agreement?

Austin and Mannix were married on November 28, 1964. On August 20, 1981 they were granted a legal separation. The parties entered into a Property Settlement and Custody Agreement on January 20, 1982, as part of a Joint Petition for Dissolution. On January 21, 1982, the District Court issued a final decree, incorporating the parties’ Property Settlement and Custody Agreement. The property settlement provided that Mannix pay $5,050.00 to Austin for her interest in a Deer Lodge residence. The payment was due upon sale of the property.

After the dissolution of the marriage, Mannix never listed the property for sale or made the $5,050.00 payment to Austin. According to the record, Mannix allegedly either rented or loaned the premises to relatives and made no attempt to sell it. Despite demands by Austin for payment, Mannix refused to make the payment provided by the Agreement and Decree to Austin.

In September of 1988, Austin filed a petition with the District Court, in which she requested, among other things, payment of the $5,050.00, recovery of interest on that amount from January 20, 1982 and her attorney fees. Mannix responded denying any obligation to pay the principal sum. He claimed that since the property had never been listed for sale and that payment was due upon sale, the $5,050.00 payment was not due Austin.

Subsequently, Austin served Mannix with a number of interrogatories and requests for production to establish Mannix’s ability to pay the $5,050.00 during the years after the dissolution of the marriage. Although Mannix admitted that the residence had never been offered for sale, he refused to answer Austin’s other discovery requests and refused to comply with orders compelling discovery. On March 16,1989, the District Court ordered immediate payment of $5,050.00 due Austin, and awarded Austin her attorney’s fees and costs. On April 11, 1989, Mannix paid the $5,050.00 and attorney’s fees as ordered by the District Court.

The District Court also ordered a hearing to determine, among other things, whether Austin was entitled to interest on the $5,050.00 and on what date such interest would commence if allowable. The District Court found, on August 8, 1989, that “Ralph E. Mannix Jr., shall pay to Lois Austin interest on $5,050.00 at the rate of 10% per annum from January 20, 1982, the original date of judgment, to the date of this order . . . Mannix now appeals the District Court’s August 8th order awarding interest to Austin.

I

Did the District Court err by awarding Austin interest on a debt created by the parties’ property settlement agreement?

An obligation arises either from the contract of the parties or by operation of law. Section 28-1-102, MCA. In this case, the obligation arose under contract, i.e., the parties’ Property Settlement Agreement. The contract clause in the Agreement at issue in this case stated the following:

“1. It is agreed that Ralph E. Mannix, Jr., shall purchase the interest of Lois A. Mannix [Austin] in said property for the sum of FIVE THOUSAND FIFTY and no/100 DOLLARS ($5,050.00). Said payment shall be made upon sale of the house. [Emphasis added.]

“2. Should any action be commenced to enforce, modify or interpret any provision contained herein, the Court, as a cost of suit, shall award a reasonable attorney’s fee to the successful party.”

This language requires Mannix to purchase. Austin’s interest in the Deer Lodge residence for $5,050.00. Payment, according to the Agreement was to be delayed until the sale of the house. Austin contends the Agreement clearly contemplated the residence would be offered for sale; however, the obligation and the amount of money due Austin were fixed at the time of the Agreement. This obligation was incorporated as part of the Final Decree dissolving the parties’ marriage.

In contrast, Mannix contends Austin’s right to receive the $5,050.00 occurred upon the sale of the house. We disagree with Mannix, and adopt the District Court finding that Austin’s right to receive the $5,050.00 occurred on January 21, 1982, the date of the Final Decree. The District Court’s Decree of January 21, 1982, vested in Austin the right to receive payment of the $5,050.00. Even though the payment was to be paid in the future, i.e., upon the sale of the house, the right to that money vested on the day the court entered the Final Decree.

Clearly Mannix is obligated to pay interest on the $5,050.00 he owes Austin. Rule 54(a), M.R.Civ.P. states “A judgment is the final determination of the rights of the parties in an action or proceeding and as used in these rules includes a decree ...” The 1982 Decree in this case was the final determination of the rights of the parties, and therefore a Judgment. Rule 54(a), M.R.Civ.P. Under the Decree or Judgment, Mannix became obligated to pay Austin $5,050.00 in 1982. As we have stated in In re the Marriage of Knudson (1981), 191 Mont. 204, 208, 622 P.2d 1025, 1027, once a person is liable for a money judgment, and payment is not made, the person entitled to the judgment is further entitled to a fair rate of interest. According to § 25-9-205, MCA, interest is payable at a rate of 10% per annum. Section 25-9-205, MCA, applies to judgments in marital dissolution cases, such as this one, where the decree is silent about interest. In re the Marriage of Martens (1981), 196 Mont. 71, 76, 637 P.2d 523, 526; Williams v. Budke (1980), 186 Mont. 71, 79, 606 P.2d 515, 519. Accordingly, we adopt the District Court finding that Mannix owes Austin interest on the $5,050.00 obligation, at a rate of 10% per annum. However, the interest awarded should be paid for the period from January 20, 1982 through April 11, 1989, instead of August 8, 1989, as ordered by the District Court.

Despite this clear obligation to pay interest to Austin, Mannix argues that Austin’s right to receive the $5,050.00 did not vest on a “particular day” as specified under the statute for prejudgment interest. Section 27-1-211, MCA. Section 27-1-211, MCA, provides:

“Right to interest. Every person who is entitled to recover damages certain or capable of being made certain by calculation and the right to recover which is vested in him upon a particular day is entitled to recovery interest and thereon from that day . . .”

Mannix’s reliance on § 27-1-211, MCA, is inappropriate in this case, since the issue here concerns “post judgment” interest, rather than prejudgment interest under § 27-1-211, MCA.

Accordingly, we affirm the District Court’s order, and award Austin attorney’s fees and costs incurred in this appeal to be fixed by the District Court.

JUSTICES HARRISON, WEBER, HUNT and McDONOUGH concur.


author: JUSTICE HARRISON

text:
    In the MATTER OF R.B. a/k/a R.K. and R.J.K., Youths in Need of Care.
    No. 89-464.
    Submitted on Briefs Feb. 15, 1990.
    Decided March 22, 1990.
    788 P.2d 1361.

      John Keith, Great Falls, for áppellant.
    Marc Racicot, Atty. Gen., Jennifer M. Anders, Asst. Atty. Gen., Helena, Patrick L. Paul, County Atty., Tammy Plubell, Deputy, Barbara Bell, Great Falls, for respondent.
   JUSTICE HARRISON

delivered the Opinion of the Court.

Appellant appeals an order of the Eighth Judicial District, Cascade County, Montana, terminating her parental rights regarding R.B.K. and R.J.K. We affirm.

Appellant raises a single issue for review: Did the District Court err in its findings that the treatment plan was unsuccessful?

On December 16, 1987, the District Court adjudged R.B.K., then age four, a youth in need of care and it adjudged R.J.K., born January 8, 1988, a youth in need of care on January 26, 1988. In the order declaring R.J.K. a youth in need of care, the District Court found that appellant had failed to address the abuse or neglect of R.B.K. and had not taken any steps to learn adequate parenting skills. Further, the District Court found that appellant had refused to seek prenatal care, or to adequately provide for her new baby in terms of food, clothing, or shelter.

The two cases were consolidated. On February 29, 1988, the District Court approved a treatment plan upon which all parties had agreed. The treatment plan set a three-month completion date. The Department of Family Services filed a petition for permanent legal custody of R.B.K. and R.J.K. on September 20, 1988 alléging the following:

“The proposed treatment plan has not been complied with by [the mother] and has not been successful, in that:

“1. The psychological evaluation by Ken Collenborne stated ‘characterlogical [sic] defects are deeply ingrained and chronic in nature and it is unlikely that psychotherapeutic intervention will be of much benefit in bringing about significant change.’ Ken Collenborne recommended that [the mother] not regain custody of her children, if ever, until she completed a rigorous treatment program which included intensive psychotherapy sessions. [The mother] has not initiated any type of psychotherapy services.

“2. [The mother] did attend 8 Parents Anonymous sessions as required pursuant to the treatment plan, but did not benefit from the sessions because she has maintained a strange sense of denial.

“3. [The mother] did attend 8 parenting classes at St. Thomas Child and Family Services, but again did not actively participate in the classes and did not demonstrate a desire to improve her parenting skills.

“4. [The mother] moved to Monarch, Montana, which made her involvement in the Supportive Friends Program logistically unfeasible.

“5. [The mother] has been unwilling to develop a cooperative relationship with her social worker and has been extremely negative from the time the Department of Family Services intervened in the case.

“Further, [the mother] has failed to maintain communication with social worker even after the social worker requested her to do so.”

The District Court held hearings on three occasions, December 7, 1988, January 25, 1989, and April 13, 1989. In addition to appellant’s testimony, the District Court heard testimony from Kenneth Collenborne, a clinical psychologist, the children’s foster mother, the children’s pediatrician, the various social workers involved in the case, the leaders of the support group and parenting class appellant attended, and several other persons who had observed appellant with her children. On June 8, 1989, the District Court terminated appellant’s parental rights finding that appellant had not initiated the long-term psychotherapy she needed to treat her emotional and personality disorder. Further, although appellant had complied with the treatment plan’s requirement that she attend parenting classes and support groups, appellant’s behavior and ability to parent did not improve as a result, rendering the treatment plan unsuccessful. The District Court also found that the emotional or mental condition causing her parental unfitness was unlikely to change within a reasonable time.

In relation to youths in need of care, § 41-3-609, MCA, sets forth the following criteria for termination of parental rights:

41-3-609(1)(c) the child is an adjudicated youth in need of care and both of the following exist:

“(i) an appropriate treatment plan that has been approved by the court has not been complied with by the parents or has not been successful; and

“(ii) the conduct or condition of the parents rendering them unfit is unlikely to change within a reasonable time.”

The State must show by clear and convincing evidence that the statutory criteria have been met. Matter of J.L.S. (Mont. 1988), [234 Mont. 201] 761 P.2d 838, 840, 44 St.Rep. 1842, 1845. We will not reverse a district court’s decision regarding findings of fact if those findings are supported by substantial credible evidence. Matter of A.H. (Mont. 1989), [236 Mont. 323,] 769 P.2d 1245, 1247, 45 St.Rep. 395, 397.

Appellant challenges the District Court’s finding that she refused to participate in a long-term therapy program as recommended by Ken Collenborne. At the hearing, appellant testified that she had contacted the mental health center on several occasions and that she was told that she had been put on a waiting list. However, appellant ignores the substantial credible evidence in the record that appellant had never initiated contact with the mental health center and that she was not on a waiting list. We reject appellant’s contention.

Also disputed is the District Court’s conclusion that appellant’s existing mental or emotional condition was unlikely to change within a reasonable time. Appellant contends that the District Court relied upon the testimony of Ken Collenborne to reach its conclusion. But, Ken Collenborne’s testimony cannot support that finding, appellant asserts, because he spent only 35 minutes with appellant and did not observe her interacting with her children. However, the record discloses that Mr. Collenborne based his testimony not only on the actual time he spent with appellant, but also on the results of psychological tests he administered. He testified that appellant’s personality disorder was deeply ingrained and that appellant would have to make a genuine commitment to change in order to modify her behavior. Contrary to appellant’s contention, the evidence of appellant’s unwillingness or inability to modify her behavior comes not from Mr. Collenborne, but from the social workers supervising appellant’s case and the leaders of the parenting class and support group she attended. Substantial credible evidence exists in the record to support a finding that appellant is unwillingly or unable to make the necessary effort to change her behavior so that she can adequately parent R.B.K. and R.J.K.

In summary, the District Court found that the State met its burden of proof under § 41-3-609(1) (c), MCA. Substantial credible evidence in the record supports that decision. We affirm the District Court.

JUSTICES BARZ, SHEEHY, HUNT and McDONOUGH concur.


author: CHIEF JUSTICE TURNAGE

text:
    CITY OF BILLINGS, Plaintiff and Respondent, v. THOMAS LAYZELL, Defendant and Appellant.
    No. 89-328.
    Submitted on Briefs Oct. 13, 1989.
    Decided March 13, 1990.
    Rehearing Denied May 1, 1990.
    789 P.2d 221.

      Thomas Layzell, Missoula, pro se.
    Russell Fagg, City Atty., Billings, for plaintiff and respondent.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Thomas Layzell appeals his conviction and sentence following a jury trial in the Billings City Court and a de novo bench trial in the Thirteenth Judicial District Court, Yellowstone County, for failure to obey a stop sign and failure to obey a red light. We affirm in part and reverse in part.

ISSUES

Though the appellant’s pro se brief is less than pellucid as to the issues on appeal, the following is a fair representation of the questions presented by his arguments.

1. Does the record contain sufficient evidence to uphold the appellant’s conviction for disobeying a traffic control signal and disobeying a stop sign?

2. Did the City Court violate the appellant’s right to freedom from excessive bail under U.S. Const. Amend. VIII and Art. II, Sec. 22, Mont. Const., by knowingly setting bail in excess of appellant’s ability to pay?

3. Did the City Court punish the appellant in violation of his due process and equal protection rights under U.S. Const. Amend. XIV, § 1, and Art. II, §§ 4 and 17, Mont. Const., by setting bail which guaranteed pretrial detention and a trial date for sixty-five days after arrest?

4. Did the City Court and District Court violate the indigent appellant’s right to counsel under U.S. Const. Amend. VI, and Art. II, Sec. 24, Mont. Const., by refusing to appoint counsel even though the appellant spent thirty days in pretrial detention?

5. Did the District Court err in failing to credit thirty days of pretrial detention against the appellant’s sentence as required by § 46-18-403(2), MCA (1987)?

FACTS

Billings police ticketed Thomas Layzell on February 11, 1987, for failure to observe a traffic light. He refused to appear before Billings City Court Judge Donald E. Bjertness and was arrested on November 27. The City Court released Layzell with an order to appear on December 4 but he again failed to comply, on January 5, 1988, Billings police issued Layzell a second ticket for rolling through a stop sign. Layzell again refused to present himself to the court, and, on March 28, 1988, city police arrested him on warrants for both tickets.

As a result of his arrest, Layzell faced two months of incarceration in the Yellowstone County Detention Facility without having been convicted of any crime and without representation by an attorney. On Layzell’s arrest, the City Court set bail at $300, knowing that Layzell had only $47. The court then calendared trial for May 31, 1988, sixty-five days after arrest. The court denied Layzell’s request for court-appointed counsel reasoning that the traffic offenses would not result in a jail term. The court also denied Layzell’s several requests for reduced bail.

Layzell contends that the pretrial incarceration had a disastrous effect on his life. He states that he lost the only job he had been offered for a long while. As a result, he faced eviction from his apartment and confiscation of his personal property. Out of desperation he went on a hunger strike.

After thirty days in jail, Layzell obtained the help of Montana Legal Services and filed a writ of habeas corpus in state district court. During the hearing on April 26, the city prosecutor informed Layzell that his trial had been advanced thirty days to May 3. The habeas corpus court heard the parties’ testimony and ordered Layzell’s immediate release on his own recognizance.

Trial on the traffic tickets was held before a six-person, city court jury. The jury found Layzell guilty on both counts, and the court imposed the maximum fine of $300 plus $256 in court costs. Layzell appealed to the District Court for a de novo bench trial. The District Court denied his request for a court-appointed attorney and found him guilty on both counts. The court fined Layzell $100 on each count plus a $10 surcharge.

THE TRAFFIC TICKETS

The appellant disputes the testimony on which he was convicted. In criminal cases,

“[o]ur standard of review when presented with a challenge to the sufficiency of the evidence is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.”

State v. McDonald (1987), 226 Mont. 208, 210, 734 P.2d 1216, 1217 (Citation and quotations deleted.)

The police officers who issued the traffic tickets testified that they were present during the violations and ticketed Layzell after observing his failure to stop for the traffic signal and stop sign. While Layzell may disagree with the officers’ testimony, a rational trier of fact could have relied on their statements in finding him guilty.

EXCESSIVE BAIL

That bail may not be excessive is a fundamental, constitutional principle. U.S. Const. Amend. VIII; Art. II, Sec. 22, Mont. Const. To insure that bail is not excessive, the Montana courts are constrained in setting bail by the eleven factors listed in § 46-9-301, MCA. Within these restrictions, the amount of bail is left to the sound discretion of. the trial court and will be upheld if reasonable. State v. Lance (1986), 222 Mont. 92, 105, 721 P.2d 1258, 1267.

A $300 bail for these two traffic offenses is not excessive in the present circumstances; it equals the maximum allowable fine. See § 61-8-711(2), MCA. The record indicates that the City Court had sufficient reason to believe that Layzell would not appear for trial. Three times Layzell failed to appear in City Court to answer these same charges, Layzell had no substantial ties to the community; he owned no property, was unemployed,, and had few friends and no relatives in Montana. When arrested he told the City Court in forceful language that he believed the charges were spurious.

PRETRIAL PUNISHMENT

The appellant is correct in asserting that the City Court may not set bail which effectively guarantees pretrial detention as a means of punishing an indigent defendant. The purpose of bail is to honor the presumption of innocence while ensuring the defendant’s presence at trial. Section 46-9-101, MCA; Bell v. Wolfish (1979), 441 U.S. 520, 536-37, 99 S.Ct. 1861, 1872-73, 60 L.Ed.2d 447, 467; State v. Seybert (1987), 229 Mont. 183, 185, 745 P.2d 687, 688. To punish a defendant prior to an adjudication of guilt is a violation of his right to due process. Bell, 441 U.S. at 535, 99 S.Ct. at 1872, 60 L.Ed.2d at 466. To incarcerate a defendant solely because of his indigence is a violation of the defendant’s right to equal protection. See Tate v. Short (1971), 401 U.S. 395, 398-99, 91 S.Ct. 668, 671, 28 L.Ed.2d 130, 133.

The courts have long recognized the tension between the criminal defendant’s right not to be punished prior to an adjudication of guilt and the state’s interest in assuring a criminal defendant’s presence at trial. The framers of our constitutions attempted to balance these conflicting interests by providing a right to reasonable bail. That balance, however, becomes difficult to maintain when the rights of indigent defendants are placed on the scales. Justice William O. Douglas has spoken eloquently on this dilemma when considering the right to bail pending appeal:

“This traditional right to freedom during trial and pending judicial review has to be squared with the possibility that the defendant may flee or hide himself. Bail is the device which we have borrowed to reconcile these conflicting interests. The purpose of bail is to insure the defendant’s appearance and submission to the judgment of the court. It is assumed that the threat of forfeiture of one’s goods will be an effective deterrent to the temptation to break the conditions of one’s release.

“But this theory is based on the assumption that a defendant has property. To continue to demand a substantial bond which the defendant is unable to secure raises considerable problems for the equal administration of the law. We have held that an indigent defendant is denied equal protection of the law if he is denied an appeal on equal terms with other defendants, solely because of his indigence. Can an indigent be denied freedom, where a wealthy man would not, because he does not happen to have enough property to pledge for his freedom?

“It would be unconstitutional to fix excessive bail to assure that a defendant will not gain his freedom. Yet, in the case of an indigent defendant, the fixing of bail in even a modest amount may have the practical effect of denying him release. The wrong done by denying release is not limited to the denial of freedom alone. That denial may have other consequences. In the case of reversal, he will have served all or part of a sentence under an erroneous judgment. Imprisoned, a man may have no opportunity to investigate his case, to cooperate with his counsel, to earn the money that is still necessary for the fullest use of his right to appeal.”

Bandy v. United States (1960), 81 S.Ct. 197, 197-198, 5, L.Ed.2d 218.

In some cases, Justice Douglas’s “other consequences” may precipitate a spiraling burden on both the defendant and the state. The defendant who is held in pretrial detention because he is indigent loses any opportunity for gainful employment. Because he cannot earn money, he cannot pay his fines or his bills. He may lose whatever property he owns in inadequate attempts to satisfy creditors. When he is in jail, the state must bear the cost of maintenance and detention. When he is released, he may become an even greater burden on the state’s social services. It is difficult to see how the state’s interest in prosecuting two traffic tickets outweighs the burden imposed on the state and on the defendant by pretrial detention.

Though not addressing the issue of pretrial detention on failure to make bail, the United States Supreme Court has held that a state’s interest in collecting traffic fines does not outweigh the equal protection rights of indigents. In Williams v. Illinois, the Supreme Court struck down the application of an Illinois statute which required indigents to work off fines for petty theft at $5.00 per day when the resulting incarceration exceeded the maximum permissible jail sentence under the state’s petty theft statutes. Williams (1970), 399 U.S. 235, 242, 90 S.Ct. 2018, 2023, 26 L.Ed.2d 586, 593-94. In Tate v. Short, the Court relied on Williams to strike down a Texas statute which required indigents to work off traffic fines through incarceration at a municipal prison farm even though the substantive traffic statutes did not allow jail sentences. Tate (1971), 401 U.S. 395, 397, 91 S.Ct. 668, 670, 28 L.Ed.2d 130, 133. The principle in Williams and Tate is the same; incarceration solely on the basis of indigence is unconstitutional. If equal protection for indigents applies to defendants convicted of a crime, it should also apply to indigents who have not been found guilty of anything. See Allen v. Burke (E.D. Va. June 4, 1981), No. 81-0040 Civ. 28, 1981 WL 15186.

The rule of Williams and Tate will not prevent incarceration of indigents in every case. A court may have no reasonable alternative to detaining defendants who cannot make bail. Williams and Tate, however, place a heavy burden on the court to search for the least oppressive means.

The present record indicates that City Court Judge Bjertness not only failed to look for the least oppressive means, but instead used the opportunity in a wholly inappropriate exercise of judicial power to punish the appellant. Having determined that Layzell would not make bail, the court set an excessively late trial date, in effect sentencing the appellant to a sixty-five-day jail term prior to conviction for any crime. We are aware of the busy calendars faced by the municipal courts. However, we find it incredible that in over two months the court could find no time in which to try these simple traffic violations. We note the remarkable coincidence between Layzell filing habeas corpus proceedings on April 22 and three days later the City Court’s sudden discovery of an opening in its calendar. Even the one month Layzell actually spent in jail is inexcusably excessive.

We are aware that Layzell made the City Court’s task difficult. He refused to appear for trial, provoked the court with verbal abuse, and generally resisted reasonable and expeditious settlement of the charges. Obstinance, however, is not a waiver of constitutional rights. If anything, it is a warning that increased vigilance is required. It most definitely is not justification for the use of judicial power to incarcerate the appellant at the court’s personal whim.

We would overturn Layzell’s conviction but for one reason; during the entire duration of his incarceration, Layzell held the keys to his own cell. At the habeas corpus hearing, Layzell testified that he never inquired into the possibility of satisfying his bail through any friend, relative or surety company. Lt. Ross, commander of the detention facility, testified that Layzell could have obtained a sufficient surety bond for $50. When arrested, Layzell had $47 and change. By failing to even attempt to procure the difference, Layzell assured his continued incarceration. In technical terms, Layzell lacks standing to challenge the constitutionality of the City Court’s acts because his own unwillingness to borrow three dollars caused his injury.

The recalcitrance of both the appellant and the City Court transformed these two routine traffic tickets into significant constitutional questions. Layzell acted with the apparent intention of provoking the City Court into violating his constitutional rights. The court played into Layzell’s hands by using pretrial detention as punishment. While we soundly condemn the court’s actions, we will not find a constitutional violation when the appellant intentionally created and prolonged the incident.

APPOINTMENT OF COUNSEL

Montana law gives the courts discretion to appoint counsel for indigent, misdemeanor defendants when appointment would serve the interests of Justice. Section 46-8-101(3), MCA. That discretion is restricted to defendants who will not lose their physical liberty. See State v. City Court of Billings (1982), 203 Mont. 443, 453, 662 P.2d 276, 281. When the statute under which the defendant is convicted provides for incarceration, refusal to appoint counsel precludes imposition of a jail sentence. Scott v. Illinois (1979), 440 U.S. 367, 373-74, 99 S.Ct. 1158, 1162, 59 L.Ed.2d 383, 389.

Here the City Court and District Court denied a court-appointed attorney on the grounds that Layzell would not be sentenced to jail. The courts complied with this restriction by imposing only fines. Nothing in their decisions violates the restrictions under which appointment of counsel may be refused.

Layzell argues that the time he spent in jail awaiting trial deprived him of his liberty, thereby requiring court-appointed counsel. This Court and the United States Supreme Court have not yet recognized a right to counsel solely on the basis of pretrial incarceration. Because the appellant could have ended that incarceration, we decline to establish a new constitutional rule in this case.

CREDIT FOR TIME SERVED

Layzell also argues that the District Court’s failure to credit his thirty days of pretrial detention against his $200 fine was a violation of his constitutional rights. The United States Supreme Court has not yet addressed this issue. The federal courts are greatly divided over whether, and in what circumstances, Williams and Tate give indigents a constitutional right to credit for pretrial detention. See Johnson v. Riveland (10th Cir. 1988), 855 F.2d 1477, 1483-84 n.7 (collecting cases). We do not find it necessary to decide this difficult issue in the present case. The District Court’s failure to comply with the Montana statutes is sufficient to reverse the appellant’s sentence.

The Montana statute in effect at the time provided:

“Any person incarcerated on a bailable offense who does not supply bail and against whom a fine is levied on conviction of such offense shall be allowed a credit of $10 for each day so incarcerated prior to conviction, except that in no case shall the amount so allowed or credited exceed the amount of the fine.”

Section 46-18-403(2), MCA (1987) (Emphasis added.)

The statutory language is mandatory. It requires the District Court to give credit for pretrial detention accrued because the defendant did not make bail. Layzell’s thirty-day pretrial detention is more than sufficient to discharge his fine.

We affirm the traffic convictions, reverse the sentence, and remand for resentencing in accordance with this opinion.

JUSTICES HUNT, SHEEHY, McDONOUGH and BARZ concur.


text:
    KITCHEN KRAFTERS, INC., Plaintiff and Respondent, v. EASTSIDE BANK OF MONTANA, Defendant, Counter-claimant and Appellant, EASTSIDE BANK OF MONTANA, Third Party Plaintiff, v. ROBERT W. SCHELL; Mary Ann Clary, formerly, Mary Ann Schell, former wife of Robert W. Schell; State of Montana, Employment Security Division, Department of Labor and Industry, et al., Third Party Defendants.
    No. 88-518.
    Submitted Dec. 12, 1989.
    Decided March 20, 1990.
    Rehearing Denied April 24, 1990.
    789 P.2d 567.

      Ward E. Taleff argued, Alexander, Baucus & Linnell, Great Falls, for defendant, counterclaimant, and appellant.
    Maxon Davis argued, Cure, Borer & Davis, Great Falls, for plaintiff and respondent.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Defendant, Eastside Bank of Montana (Bank) appeals from a jury verdict rendered in the Eighth Judicial District, Cascade County in favor of the plaintiff Kitchen Krafters, Inc. (Kitchen Krafters). We reverse.

The issues on appeal are:

1) Whether Kitchen Krafters’ claims are barred by the statutes of limitations.

2) Whether Kitchen Krafters claims are supported by substantial evidence.

3) Whether the District Court erred in instructing the jury on causation.

The facts of this case are complicated. In early 1973, Arnold Wirtz (Wirtz) and Don Morris (Morris) of Kitchen Krafters contacted Robert Schell (Schell) about purchasing- commercial property in Great Falls, Montana located on 25th Street North. At the initial meeting, a price of $40,000 was settled upon. Approximately one week later, Wirtz and Morris were contacted by Bruce Miller (Miller) of the Bank to review a draft of a proposed contract for deed and escrow agreement naming the Bank as escrow on the property. The contract for deed had been prepared by Schell’s attorney. Morris and Wirtz were unrepresented.

At the meeting, Wirtz and Morris learned that Schell and the Bank had negotiated a separate transaction concerning the property. The Bank loaned Schell $30,000 which was secured by a trust indenture on the property. The escrow agreement specified that payments made by Kitchen Krafters would be distributed to the Bank as payments on Schell’s underlying trust indenture with the balance going to Schell. The exact wording is as follows:

“Special instructions, if any, in addition to the foregoing: In the event Buyers prepay an additional $5,000.00 on or before July 1, 1973, upon such payment there shall be credited against principal an additional $2,000.00. to-wit: upon payment of additional $5,000.00 principal on or before July 1, 1973, Buyers shall be credited with $7,000.00 payment; if said $5,000.00 payment made on or before July 1, 1973, this special payment instruction becomes automatically void and canceled.

“3. Payments made hereunder are to be distributed as follows:

“Applied first to monthly payments under Trust Indenture dated March 29, 1973, running to Eastside Bank of Montana wherein Sellers are Grantors; balance of payments remitted to Sellers.

“4. Terms of prepayment privilege are as follows: (If no such privilege, so state)

“Full prepayment privileges, interest to cease on amounts prepaid; but prepayment shall not excuse subsequent monthly payments.”

On July 9, 1973, Kitchen Krafters exercised this option and made the prepayment. Although the payment was made beyond the July 1 deadline contained in the escrow agreement, the parties executed a waiver and authorized the Bank to accept the payment which was applied to the contract principal. The Bank did not apply this payment to Schell’s note secured by the trust indenture, however. Instead the $5,000 was given to Schell who never applied the money to his debt. Kitchen Krafters was never advised that this payment was not applied to Schell’s note.

As a result of the prepayment, the Bank sent Kitchen Krafters a revised amortization schedule which shortened the number of monthly payments from 180 to 125. The amount due monthly remained the same. Schell’s repayment schedule under his trust indenture remained the same. As a result, Kitchen Krafters was amortizing its contract for deed at a much faster rate than Schell’s debt on his trust indenture.

Finally, in either 1980 or 1981, the president of the Bank called Kitchen Krafters and notified them that because the prepayment had not been applied to Schell’s trust indenture, the property would not be fully released until that underlying obligation was paid. Kitchen Krafters then contacted Schell who confirmed that he had not applied the prepayment to the Bank’s note. He also stated that he was financially unable to meet the obligation. In 1982 Schell filed a petition in bankruptcy that was subsequently dismissed by the bankruptcy court.

Subsequently, Kitchen Krafters experienced a number of setbacks. In September of 1981 Wirtz, who managed the sales and business end of Kitchen Krafters, quit and went into direct competition. Kitchen Krafters continued to meet its obligations under the contract for deed. On December 23, 1982, Kitchen Krafters attempted to pay the Bank, as escrow, the balance due on the contract. This final payment was contingent upon a demand made by Kitchen Krafters that the trust indenture be released. Under this condition the Bank refused to accept the payment and the trust indenture was not released.

Kitchen Krafters filed suit against the Bank on February 8, 1983 seeking damages for breach of the covenant of good faith and fair dealing, constructive fraud, failure to disclose and negligent misrepresentation. Both parties amended their pleadings on. March 18, 1985. On April 4, 1985, the bank filed a revised amended answer, counterclaim and a third-party complaint seeking to foreclose the trust indenture.

Trial commenced on June 20, 1988. The Bank’s motion for summary judgment, based upon the statute of limitations defense, was denied as was its motion for a directed verdict. On June 28, 1988, the jury returned a verdict in favor of Kitchen Krafters for $285,000. The District Court entered judgment accordingly and this appeal followed.

I

The Bank maintains that each of Kitchen Krafters claims are barred by the statute of limitations. As stated earlier, Kitchen Krafters brought its lawsuit, which is based in tort, alleging four causes of action — breach of the covenant of good faith and fair dealing, constructive fraud, negligent misrepresentation and breach of a duty to disclose. We hold that there is not substantial evidence to support the allegation of constructive fraud and negligent misrepresentation. This holding will be discussed in greater detail later in this opinion. However, as a result of this conclusion we will only analyze the statute of limitations issue in regard to the remaining two causes.

Each side presents differing theories on how the statute of limitations should be applied. The Bank relies upon the discovery doctrine to argue that Kitchen Krafters’ claims are barred. According to this theory, the applicable statute of limitations begins to run once the plaintiff knew or should have known that a cause of action exists. According to the Bank, a dispute exists as to when Kitchen Krafters discovered the discrepancy between the amortization on the trust indenture and the contract for deed. The Bank maintains that it notified Kitchen Krafters of the discrepancy in January of 1980. Kitchen Krafters, on the other hand, maintains that it was notified a year later, in January of 1981.

The dispute, it is argued, should have been submitted to the jury. If the 1980 date is determined to be the date of discovery then all of Kitchen Krafters’ claims would be time barred. The allegations of breach of the implied covenant of good faith and fair dealing and the duty of disclosure are both general tort claims which are subject to a three year limitation. See § 27-2-204(1), MCA; Tynes v. Bankers Life Co. (1986), 224 Mont. 350, 730 P.2d 1115. Therefore, using the Bank’s analysis, because Kitchen Krafters’ claims were not brought until February of 1983, each of its claims would be barred if the 1980 date of discovery is accepted.

Kitchen Krafters, for its part, argues that the discovery doctrine is inapplicable to the case. Instead, they maintain that their cause of action was brought as soon as they could validly assert their claim. According to their argument, they could not bring a lawsuit until their cause of action fully accrued. In order for the cause of action to accrue, they must have sustained an injury. They did not sustain an injury until Eastside refused to release the trust indenture. This refusal occurred in December of 1982, and Kitchen Krafters filed its lawsuit in February of 1983. Therefore, they filed their cause of action well within the statute of limitations.

We agree with Kitchen Krafters’ argument insofar as it is applied to the claim of breach of the duty to disclose. However, we disagree with this argument as applied to the bad faith claim.

Section 27-2-102, MCA, states:

“(1) For purposes of statutes relating to the time within which an action must commenced:

“(a) & claim or cause of action accrues when all elements of the claim or cause exist or have occurred, the right to maintain an action on the claim or cause is complete and a court or other agency is authorized to accept jurisdiction of the action.

“(2) Unless otherwise provided by statute, the period of limitation begins when the claim or cause of action accrues. Lack of knowledge of the claim of cause of action, or its accrual, by the party to whom it has accrued does not postpone the beginning of the period of limitation.”

As the language of this statute makes clear, the statute of limitations does not begin to run until all elements of a cause of action are in existence. For example, in a negligence action the plaintiff must prove four elements:

1) Existence of a duty

2) Breach of the duty

3) Causation

4) Damages.

Thornock v. State, 229 Mont. 67, 745 P.2d 324 (1987). If these elements are not in existence, the plaintiff could not successfully bring a cause of action base upon negligence. Therefore, although one may be able to establish the existence and breach of a duty, he cannot successfully assert his cause of action until he has sustained an injury, Heckam v. Northern Pacific Railroad (1933), 93 Mont. 363, 20 P.2d 258.

Kitchen Krafters’ claim based upon breach of the duty to disclose is based upon the fiduciary relationship between it and the Bank created by the escrow agreement. As an escrow agent, the Bank owed a fiduciary duty to Kitchen Krafters. 3 C.J.S. Agency § 271. This relationship conferred upon Eastside the duty to make full disclosure of all material facts relevant to the agency. 3 Am.Jur.2d, Agency § 211. Kitchen Krafters maintains that under this duty the Bank should have notified them of the problems surrounding the financial arrangement.

Successful assertion of a cause based upon a breach of a fiduciary duty, like a negligence action requires the plaintiff to prove that he has suffered an injury. 3 Am.Jur.2d, Agency § 337. No injury occurred until the Bank refused to release the trust indenture. Therefore, Kitchen Krafters’ cause of action based upon nondisclosure did not accrue until that time. Kitchen Krafters’ claim was filed less than three months following this refusal. It was filed within the applicable statute of limitations.

Kitchen Krafters argue that the cause of action alleging the tort of breach of the implied covenant of good faith and fair dealing is not barred. Similar to the cause of action described above, it bases this argument on the fact that it did not sustain an injury until Eastside refused to release the trust indenture.

Assuming there is a cause of action, we disagree with this argument. Kitchen Krafters theorizes that the breach of the implied covenant occurred when the Bank failed to properly apply the $5,000 prepayment to Schell’s trust and when it subsequently failed to disclose this misapplication. Using this theory, it is apparent that the claim of bad faith flowed directly from the Bank’s purported breach of contract. Therefore it is necessary to determine when Kitchen Krafters had a right to maintain an action for breach of the escrow agreement.

A breach of contract is a legal wrong independent of actual damage. A failure to show actual damages and the resulting inference that none were sustained does not defeat the cause of action. Sutherland on Damages Vol. I § 11 (3rd Edition 1903). An action for breach of contract, then does not require that the plaintiff sustain any damages. Jacobs Sultan Co. v. Union Mercantile Co. (1895), 17 Mont. 61, 42 P. 109. In light of these principles, it has long been recognized that the statute of limitations runs from the time of the breach and not from the time of injury, or in the case of fraudulent concealment, from the time of discovery. Williston on Contracts at § 2025C.

The alleged breach of contract, in this case, occurred in 1973, when the Bank purportedly misapplied the $5,000 prepayment. The statute of limitations began to run at this time. Since the tort of bad faith arose (for the purpose of this discussion we are assuming that the establishment of the tort of the implied covenant of good faith and fair dealing is retroactive to this time period) directly from the terms of the escrow contract, the statute applicable to it began running at the same time the alleged breach of the .escrow agreement occurred. We base this conclusion on reasoning of the Supreme Court of Illinois which has held that when a tort arises directly out of a contractual relationship, the statute of limitations commences to run at the time the contract is breached. Stevens v. O’Bryant (1979), 74 Ill.App.3d 239, 30 Ill.Dec. 170, 392 N.E.2d 935; West American Ins. Co. v. Sal E. Lobiance & Son Co. Inc. (1977), 69 Ill.2d 126, 12 Ill.Dec. 893, 370 N.E.2d 804. Two reasons are given for this rule:

“First, the breach itself is actionable and it encourages the party to act within [the period of limitations] of an actionable breach rather than to delay until damages increase. The rule also recognizes that plaintiff has chosen to deal with the defendant and that a contract may be stated in terms to minimize losses from defective performance.”

Aetna Life and Casualty Co. v. Sal E. Lobiance & Son Co. Inc. (1976), 43 Ill.App.3d 765, 2 Ill.Dec. 454, 457, 357 N.E.2d 621, 624. This rule is in keeping with the general principles of contract law and the theories behind the covenant of good faith and fair dealing, which is an implied provision contained within certain contracts. If the statute of limitations begins to run at the time of breach of an express contractual term, then for the sake of consistency, we hold that this same general rule should apply equally to implied covenants.

The tort of bad faith is subject to a three year statute. Tynes v. Bankers Life Co. (1986), 224 Mont. 350, 730 P.2d 1115. As stated earlier, Kitchen Krafters did not file its case until 1983. The cause of action alleging bad faith is, therefore, barred.

II

We must next determine whether Kitchen Krafters’ claims are supported by substantial evidence. We will not reverse the findings of a jury unless they are not supported by substantial evidence. Green v. Wolff (1962), 140 Mont. 413, 372 P.2d 140, 427. Substantial evidence is defined as that evidence that a reasonable mind might accept as adequate to support a conclusion. Although it may be based upon weak and conflicting evidence, in order to rise to the level of substantial evidence it must be greater than trifling or frivolous. Christensen v. Britton (Mont. 1989), [240 Mont. 393,] 784 P.2d 908, 46 St.Rep. 2223. In short, where a verdict is based upon substantial evidence which from any point of view could have been accepted by the jury as credible, it is binding upon this Court although it may appear inherently weak. Batchoff v. Craney (1946), 119 Mont. 157, 172 P.2d 308.

Four theories of recovery were submitted to the jury — breach of the covenant of good faith and fair dealing, constructive fraud, negligent misrepresentation, and breach of the duty to disclose. We have found that the bad faith claim is barred by the statute of limitations. Therefore, we need only consider the remaining three theories relative to substantial evidence. We begin our analysis with the constructive fraud claim.

In order to sustain a claim of constructive fraud, Kitchen Krafters must present substantial evidence to prove that the Bank committed a “breach of duty which without fraudulent intent gains an advantage to the person in fault or anyone claiming under him by misleading another to his prejudice or to the prejudice of anyone claiming under him. Section 28-2-406, MCA.

There is no evidence presented by Kitchen Krafters supporting the conclusion that the Bank’s actions resulted in any advantage to “it or anyone claiming under it.” The claims against the Bank are based upon the allegation that it wrongfully gave Kitchen Krafters’ $5,000 prepayment to Schell rather than applying it to the trust indenture. The Bank incurred no advantage through this act. Any benefit was gained by Schell, who was merely a party to the escrow. He could not be regarded as one “claiming under” the Bank. We therefore hold that the jury’s determination that Eastside was liable for constructive fraud is not supported by substantial evidence, there being no evidence of an essential element.

The third theory submitted to the jury was negligent misrepresentation. Kitchen Krafters argues that the Bank was negligent when it led them to believe that all payments made into escrow would be applied to the underlying trust indenture. We disagree.

In State Bank of Townsend v. Maryann’s Inc. (1983), 204 Mont. 21, 664 P.2d 295, we adopted the definition of negligent misrepresentation as provided in Restatement (Second) of Torts § 552.

Proof of negligent misrepresentation requires the plaintiff establish that:

a) the defendant made a representation as to a past or existinq material fact;

b) the representation must have been untrue;

c) regardless of its actual belief, the defendant must have made the representations without any reasonable ground for believing it to be true;

d) the representation must have been made with the intent to induce the plaintiff to rely on it;

e) the plaintiff must have been unaware of the falsity of the representation; it must have acted in reliance upon the truth of the representation and it must have been justified in relying upon the representation;

f) the plaintiff, as result of its reliance, must sustain damage.

As the first element indicates, the false representation must relate to a fact already in existence. This did not occur in this case. The evidence indicated that the Bank told Kitchen Krafters that all of its payments would dovetail with those due on the trust indenture. This evidence does not indicate that the Bank misrepresented any existing facts. This statement only became in possible error when the Bank later allegedly failed to properly apply the $5,000 prepayment. Kitchen Krafters cannot, therefore, successfully assert a cause of action based upon negligent misrepresentation because it fails to establish the first element. Accordingly, the jury’s findings on this issue are not supported by substantial evidence.

The final issue submitted to the jury required it to determine whether the Bank breached a special duty of disclosure. For guidance on this issue, we refer to § 551 of the Restatement (Second) of Torts which states:

“Section 551. Liability for nondisclosure

“(1) One who fails to disclose to another a fact that he knows may justifiably induce the other to act or refrain from acting in a business transaction is subject to the same liability to the other as though he had represented the nonexistence of the matter that he has failed to disclose, if, but only if, he is under a duty to the other to exercise reasonable care to disclose the matter in question.”

The elements contained in this section are met by the facts of this case. As an escrow, the Bank was an agent who owed a fiduciary duty to both Kitchen Krafters and Schell in all matters affecting the escrow relationship. First Fidelity Bank v. Matthews (1984), 214 Mont. 323, 692 P.2d 1255. Furthermore in its capacity as an agent, the Bank had duty to make full disclosure to its principals of all material facts relevant to the agency. 3 Am.Jur.2d Agency § 211. The evidence submitted supports the contention that this duty was breached.

The Bank possessed the amortization schedules for the contract for deed and the trust indenture. The jury could find that based upon this knowledge and its fiduciary duty, it should have disclosed the payment discrepancy to Kitchen Krafters in a timely manner. Also a finding could be had that through the Bank’s failure to disclose this information, Kitchen Krafters was induced to rely upon the representation that the trust indenture was being amortized at the same rate as the contract for deed. By the time the Bank finally disclosed this payment discrepancy, it was too late for Kitchen Krafters to do anything to remedy the situation because Schell was insolvent and had filed for bankruptcy. We hold there is substantial evidence to support a verdict rendered against the Bank in this cause.

Ill

The Bank argues that the District Court erred in its instructions to the jury on causation. The Bank is contending the lower court erred by instructing on the substantial factor test and failed to instruct on proximate cause. We agree that the lower court erred in failing to instruct on proximate cause.

The legal principles surrounding the element of causation have been set forth in Young v. Flathead County (1988), 232 Mont. 274, 757 P.2d 772, [45 St.Rep. 1047]. This case succinctly sets forth the law on this subject as it has been developed in Montana. Therefore, we review the legal principles set forth in Young.

In determining whether a defendant’s breach of duty caused a plaintiff’s injury, one must conduct a two-tiered analysis. First, one must determine whether the defendant’s actions were the cause-in-fact of the plaintiff’s damages. Causation in fact can be established in one of two ways. Normally, the “but-for” test is used. Under the “but-for” test, causation in fact is established simply by proving that the plaintiff’s injury would not have occurred “but for” the defendant’s illegal conduct. Young, 757 P.2d at 777. Stated differently, the defendant’s conduct is a cause of an event if the event would not have occurred but for that conduct; conversely, the defendant’s conduct is not a cause of the event if the event would have occurred without it. Prosser and Keeton on Torts (5th Edition) § 41.

The “but for” rule serves to explain the great majority of cases. However, there is one type of situation in which it fails. If two causes concur to bring about an event, and either one of them, alone, would have been sufficient to cause the identical result, some other test is needed. In response to this problem, the courts have developed the “substantial factor test.” Young, 757 P.2d at 777.

The substantial factor test originated in the Minnesota case of Anderson v. Minneapolis, St. Paul & Sault Ste. Marie Ry. Co. (1920), 146 Minn. 430, 179 N.W. 45. In this case, the defendant negligently started a fire which combined with other fires of unknown origin and destroyed the plaintiff’s property. Each of the fires, by itself, had the ability to destroy the property.

In this type of situation, the “but for” test was impossible to satisfy because, as previously stated, any of the fires, acting alone, could have destroyed the plaintiff’s property. The court, however, refused to absolve the defendant of liability on the ground that the identical harm would have occurred without his negligent act. Such a result would prevent the plaintiff from realizing any recovery. Therefore, the courts have uniformly held that a defendant’s conduct is a cause of an event if it was a material element and a substantial factor in bringing it about, Prosser and Keeton on Torts (5th Edition) § 41. In short, this rule dictates that a defendant will not be absolved from liability simply because the conduct of one or more others would have been sufficient to produce the same result. If his actions are a substantial factor in causing the plaintiff’s injury, the defendant will be held liable.

As the above discussion demonstrates, cause-in-fact is determined in one of two ways — either through the “but for” test or the “substantial factor” test. Once either one of these tests is satisfied, the plaintiff has established that the defendant’s conduct was the cause in fact of his injury. It is now incumbent upon him to move to the second tier of the causation analysis and prove that the defendant’s conduct proximately caused his damages.

The laws of physics and Sir Isaac Newton tell us that there are causes and effects which continue into eternity. Therefore, in both a philosophical and a real sense, the consequences of a wrongful act can extend in time for years — perhaps beyond the defendant’s lifetime. For this reason, the courts have found that sole reliance upon cause-in-fact analysis is undesirable. At some point within the chain of causation, the law must intervene and absolve the defendant from liability. Thelen v. City of Billings (Mont. 1989), [238 Mont. 82,] 776 P.2d 520, 46 St.Rep. 1108. It was this policy consideration which led to the development of “proximate” or “legal” cause.

Proximate cause is normally analyzed in terms of foreseeability. Simply stated, one is only liable for consequences which are considered to be reasonably foreseeable. Prosser and Keeton at § 43. If the consequences of one’s wrongful act are not reasonably foreseeable, then it follows that it was not proximately caused by that act. Using this analysis, one must look forward through the chain of causation in order to determine whether the events which occurred were foreseeable. If they were, the element of proximate cause is satisfied and liability will attach. Prosser and Keeton, at § 43.

We must now apply this causation analysis to this case in order to determine whether the District Court’s instructions to the jury were proper. The jury was instructed on causation as follows:

“Instruction No. 13.

“A legal cause of the damage is a cause which is a substantial factor in bringing it about.

“Instruction No. 14.

“The defendant’s conduct is a cause of the damage if it helped produce it and if the damage would not have occurred without it.”

Instruction No. 13, although improperly worded, was correctly given. It is improperly worded due to the fact that the adjective “legal” is used before the word “cause.” Legal cause is synonymous with proximate cause. Young v. Flathead County (Mont. 1988), 232 Mont. 274, 757 P.2d 772, 45 St.Rep. 1047. This instruction is an instruction on the substantial factor test which is part of causation-in-fact, not proximate cause. Therefore the word legal should be removed in order to prevent confusion between proximate cause and cause-in-fact.

The facts of this case require that the court instruct the jury on whether the Bank’s conduct was a substantial factor in bringing about Kitchen Krafters’ damages. Kitchen Krafters alleged that the Bank’s failure to properly apply the $5,000 payment caused it to sustain monetary damages through the loss of its business. The Bank, in reply, has argued that this misapplication did not cause Kitchen Krafters damages. It argues that Kitchen Krafters’ loss of business was caused instead by outside factors such as a poor economy.

Kitchen Krafters acknowledges that the poor economy contributed to its demise. However, it steadfastly maintains that the Bank’s conduct combined with these outside influences and as a result was a substantial factor in bringing about its injuries. On remand the jury should be presented with a substantial factor instruction in order to determine whether the results of the Bank’s conduct concurred with other events to cause Kitchen Krafters’ collapse.

Instruction No. 14 is nothing more than a recitation of the “but for” test. The jury had already been instructed on causation-in-fact through the substantial factor instruction. Therefore, Instruction No. 14 was superfluous. Moreover, this instruction cannot take the place of an instruction on proximate cause. In order to be properly instructed on proximate cause, the jury must be directed to look forward through the chain of causation, and to determine whether events which occurred subsequent to Eastside’s wrongful act were foreseeable. A proper instruction on proximate cause should be worded as follows:

“In order for the defendants negligence (failure to disclose) to be the proximate cause of the plaintiff’s injury, it must appear from the facts and circumstances surrounding the accident [the nondisclosure] that the defendant as an ordinarily prudent person, could have foreseen that the plaintiff’s injury would be the natural and probable consequence of the wrongful act.”

Kitchen Krafters maintains that the Bank’s actions caused the break up of the corporation. According to their argument, Wirtz left the corporation as a direct result of Eastside’s failure to release the Schell trust indenture. This may be true. However, this occurrence may or may not have been a reasonably foreseeable consequence of the Bank’s actions. If this event was foreseeable, the Bank could be liable for the damages sustained as a result of his departure. If it was not foreseeable, then this consequence should be regarded as a superseding intervening event which breaks the chain of causation as to any damages as a result of his leaving. In this circumstance the Bank cannot be held liable for damages resulting from Wirtz’s departure.

Due to the failure to instruct the jury on causation, this case is reversed and remanded for a new trial. Kitchen Krafters is entitled to assert, as a cause of action, breach of the duty to disclose. Reversed and remanded with instructions to conduct proceedings consistent with this opinion.

CHIEF JUSTICE TURNAGE and JUSTICES HARRISON, BARZ, HUNT and SHEEHY and the HON. THOMAS A. OLSON, District Judge, sitting for JUSTICE WEBER concur.