author: MR. JUSTICE GULBRANDSON

text:
    In re the MARRIAGE OF MARTHA HELEN HOCKADAY, Petitioner and Respondent, and HUGH W. HOCKADAY, Respondent and Appellant.
    No. 88-514.
    Submitted on Briefs April 6, 1989.
    Decided June 1, 1989.
    773 P.2d 1217.

      M. Dean Jellison, Kalispell, for respondent and appellant.
    Bruce McEvoy, Warden, Christiansen, Johnson & Berg, Kalispell, for petitioner and respondent.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

Hugh Hockaday, the husband, appeals the division of property mandated in the final dissolution of marriage decree entered by the Eleventh Judicial District Court, Flathead County. Martha Hockaday, the wife, filed a cross-appeal requesting the correction of numerous factual and mathematical errors in the District Court’s findings of fact and conclusions of law. We affirm the District Court’s valuation of those marital properties disputed by appellant and the method employed by the court to equitably distribute the property. We remand the case, however, for a correction of various errors, more specifically enumerated herein, and for an alteration of the final judgment as deemed necessary by the District Court to assure the equitable division of the marital estate after correction of these enumerated errors.

The husband raised the following issues on appeal:

1. Did the District Court fail to make a reasonable valuation of the family home, Lots 32, 33 and Lot 37, and of Hockaday Reproductions, Inc. ?

2. Did the District Court err in failing to determine the net worth of the marital estate prior to ordering a division of the estate property?

3. Did the District Court err in awarding Lot 37 to the wife after erroneously finding that the husband owned the property even though his mother held title to the Lot?

The wife raised the following issues on cross-appeal:

1. Did the District Court err by valuing the husband’s premarital debt to Montana Forest Products at two different amounts in two different findings of fact?

2. Did the District Court err in valuing the husband’s debt to Valley Bank of Kalispell at $15,000 when the evidence indicated the debt was approximately $4,000?

3. Did the District Court err in finding that the husband had incurred a premarital alimony debt to a former spouse but then failed to include this debt in its evaluation of assets and debts existing at the time of the parties’ marriage?

4. Did the District Court err by failing to include the total $13,834.30 value of improvements to Lots 32 and 33 in Finding No. 24, a finding detailing the value of the marital estate at the time of the hearing?

5. Did the District Court err, after reimbursing the wife for all other inheritance expended for marital purposes, in failing to reimburse her for those life insurance policy benefits amounting to $1,916 which she inherited but similarly expended during the marriage?

Hugh and Martha Hockaday were married on March 17, 1979. On December 12, 1984, the wife filed a petition for dissolution of their marriage and for equitable division of the marital estate. The parties made several attempts at reconciliation after 1984, but these attempts failed. Thereafter, a hearing on the petition was held on December 14 and 15, 1987. On July 8, 1988, the District Court issued its findings of fact, conclusions of law and final decree dissolving the marriage and dividing the marital property.

The court’s division of the marital property was made after its consideration of the length of the marriage, the occupation of each, their respective employment histories and the future employment and income opportunities for each in light of their age, health and skills. The court noted that the husband worked in construction, building first log homes and then, docks and retaining walls when the market for home construction slowed. His good health would allow for his continued work within the field of construction. Further, as an only child, he stood to inherit property and money when his elderly mother died.

The court noted that the wife, on the other hand, did not have this potential future expectancy of inheritance income as both her parents had already died. Moreover, the court recognized that the wife had a limited potential for future job advancement and salary increases in her present occupation as a legal secretary. She had been employed as a special education administrator in Hardin, Montana and had been working toward her doctorate in the field prior to her marriage. She had a promising chance for job advancement within that field. After she married and moved to the Flathead Valley area, however, she was unable to find employment within this field of expertise. She then worked as a homemaker, helping raise her husband’s two children from a prior marriage, and at various odd jobs. She had often helped her husband in his construction business. The court noted that the wife would be unable to return to her prior profession within the field of education, after her nine-year absence from the field, without further schooling and a recertification.

The court also based its division of the marital estate upon a consideration of the amount of property each party brought to the marriage and of the value of the marital estate at the time of dissolution. Based on the evidence elicited at the dissolution hearing, the court determined the assets and debts of each party at the time of their marriage and the value of the marital estate at the time of the hearing, excluding the amount of inherited or gifted property received by each party during the marriage. These evaluations detailed in Findings Nos. 23, 24, and 25 are summarized as follows:

Marital Inheritance Premarital Estate During Assets/(Debts) Value Marriage HUSBAND
Lot 39/residence $85,000 $153,617
Koonce Contract Income 28,500 18,000
Lots 32/33 N/A $18,760
Lot 37 N/A 16,540
1975 Chevy truck 500
Tractors 4.000 4.000
Sawmill/Tools 7,500 7,500
Artwork-Bronzes 4.000 4.000
Quarter horses 2,200 2,200
Household/Furnishings 7.000 7.000
Mortgage on home (28,500) (18,000)
Valley Bank (5,000) (15,000)
Montana Forest Bank (900)
Alimony ( )
TOTALS: $104,300 $163,317 $35,300
Premarital AssetsZ(Debts) Marital Estate Value Inheritance During Marriage
WIFE
Arlee Acreage 4.400
North Fork Acreage 5.400
1974 Ford Truck 4,500
Library 500 500
Stock 2,044
Money Life Ins. Cash Value 500
Teacher’s Retirement 3,388
Household/Furnishings 4,220 4,220
Life Ins. Benefits/from Father N/A $ 1,916
Loans/from Mother N/A 15,219
Kalispell Lot N/A 10,000
Lot 2AA Note N/A 57,000
Mobile Home N/A 12,800
Jeep N/A 1,000
First Natl’/Whitefish, MT (1,100)
Little Horn State Bank (2,631)
TOTALS: $21,221 $4,720 $97,935
MUTUAL ACQUISITIONS
Lots 32/33-Improvements $3,955
Lot 37-Improvements 10,000
Two Trucks 2,100
1978 Cadillac 2,500
Hockaday Reproductions 20,000
Stock/So. Cal. Electric 100
Jewelry 850
Note Receivable/His Son 1,000
Danny on Prints 200
TOTALS: $40,705
Total Marital Estate: $208,742
(excluding inheritance)
Total Premarital Estate: —125,521
(Husband=104,300)
(Wife=21,221)
Increased value of Marital Estate: =83,221
Reimbursement to Wife for Expended inheritance: —29,053.30
Remaining Increase in Marital Estate: $54,167.70 (Divided Equally)

As is apparent from the foregoing chart, a substantial amount of the wife’s inherited monies and premarital assets had been sold and/ or spent during the course of the marriage. The court thus awarded $29,053.30 of the increased value of the marital estate to the wife to reimburse her for the $15,219 loaned by her mother to meet marital expenses, and later subtracted from the wife’s inheritance amount, and for the additional $13,834.30 in improvements to Lots 32/33 which the court generally traced to the wife’s inheritance and liquidated premarital assets. This reimbursement effectively insured that the wife received a return of all her inheritance, except the $1,916 in life insurance benefits from her father’s estate. The court then divided the value of the remaining increase in the marital estate equally between the two.

Each party was awarded the total value of their respective premarital assets and the increased value of the marital estate as apportioned by the court. Because of the husband’s greater future income potential, the court determined that equity demanded also awarding the wife the value of the majority of her inheritance. Because many of the wife’s premarital assets had been sold during the marriage, the court determined that Lots 32, 33 and 37, which constituted the sum of the husband’s advance inheritance, would have to be given to the wife to comprise her total. The award of Lots 32 and 33 also served to guarantee the wife’s continued right to reside on these lots in her mobile home, a residence she established after her husband obtained a court order expelling her from the family home. The husband retained Lot 39 and the family home.

The husband appealed from the court’s valuation and division of the marital estate.

I. CHALLENGES TO THE COURT’S VALUATIONS

Appellant challenges the District Court’s valuation of several pieces of property. We will review these alleged valuation errors and reverse the District Court’s valuation and subsequent property division only upon a showing that the court acted arbitrarily or clearly abused its discretion so as to create a substantial injustice. In re Marriage of Hall (Mont. 1987), [228 Mont. 36,] 740 P.2d 684, 686, 44 St.Rep. 1321, 1323. This standard of proof for reversal is necessarily high because a district court has broad discretion when valuing and distributing property in a dissolution action. In re Marriage of Stewart (Mont. 1988), [232 Mont. 40,] 757 P.7d 765, 767, 45 St.Rep. 850, 852. The court’s valuation need only be reasonable in light of competent evidence submitted. In re Marriage of Milesnick (Mont. 1988), [235 Mont. 88,] 765 P.2d 751, 755, 45 St.Rep. 2182, 2187.

Appellant’s first challenge is to the valuation of Lot 39 at $153,617 at the time of dissolution. He contends this valuation is unreasonable and amounts to an abuse of discretion by the District Court. This value reflects an increase of $68,617 from the $85,000 value assigned by the court to the Lot at the time of marriage. The husband asserts that this increase is erroneous as Lot 39 was worth $125,000 at the time of the marriage and it did not appreciate in value during the marriage.

The District Court based its valuation of Lot 39 on the wife’s testimony, which the court concluded generally was more credible than the husband’s. Her testimony regarding the value of the Lot was supported by the Flathead County Treasurer’s valuation of the property. The husband, on the other hand, offered no concrete evidence in support of his valuation.

The extensive improvements made during the marriage to the family home, located on Lot 39, provide a further illustration of the increased value of the property. These improvements included a remodeled kitchen and bathroom, new carpeting and linoleum upstairs, construction of an outside deck and driveway, and the installation of a large garden and landscaped yard. The parties also converted the unfinished basement of the home into a bathroom, den, bedroom, study area, family room with rock fireplace, and a fruit room, thereby doubling the living area of the home. Evidence of these extensive improvements and the valuation by the county and by the wife indicate that the District Court’s valuation was reasonable. We therefore conclude that the court’s valuation of Lot 39 was not arbitrary nor the product of an abuse of discretion.

Appellant’s second challenge is to the court’s valuation of Lots 32 and 33 at $18,760, a value which included $17,789.30 in improvements made during the marriage. Appellant asserts this valuation unreasonably placed the value of Lots 32 and 33 at the time of marriage at $971.

The District Court’s findings of fact, when viewed as a whole, indicate that the court valued Lots 32 and 33 at the time of dissolution not at a total $18,760, but rather at $18,760 plus the value of improvements, or $36,549.30. Finding No. 25 placed the base value of the Lot at the time it was gifted to the husband at $18,760. Finding No. 24 recognized $3,955 in improvements attributable to the joint efforts of both parties. Finding No. 27 recognized an additional $13,834.30 in improvements to the Lots arising from the investment of monies directly traceable to the wife’s inheritance or liquidated premarital assets. The sum of these findings, $36,549.30, is consistent with the testimony of both the husband and the wife, the county’s valuation of the property, and the bills submitted for improvements made to the Lots. We therefore hold that the court did not act arbitrarily or abuse its discretion when it valued Lots 32 and 33.

The District Court admittedly utilized an oftentimes confusing methodology for valuing the various properties and for attributing the value to the entitled party. Moreover, the District Court failed to apply this methodology in a consistent manner; the court failed to include that portion of the $13,834.30 attributable to the wife’s inheritance monies in its Finding No. 25, which detailed the wife’s inherited property, or on the other hand, to include that portion attributable to her premarital assets in Finding No. 24, which detailed the value of those items benefiting the marital estate, excluding inheritance monies. We direct the court to correct this omission upon remand.

Appellant’s third challenge is to the District Court’s valuation of Lot 37 at $16,540, a value which appellant contends included $10,000 worth of improvements made during the marriage. Again, we hold that the value of the Lot stated in Finding No. 25, listing inheritance values, did not include the value of improvements made during the marriage. The court valued the lot at the time of dissolution at the sum of the $16,540 value at the time it was gifted and the $10,000 in improvements made during the marriage.

Appellant failed to show that either of these two values were arbitrary. The wife’s testimony and the Flathead County Treasurer’s valuation of the property support the court’s $16,540 valuation of the unimproved lot. The court cited to the wife’s testimony and to the turn-around in profits from the orchard as support for its valuation of the improvements made to Lot 37 at $10,000. The orchard went from a non-profitable orchard with a loss of approximately $4,500 in 1980, at the beginning of their marriage, to a productive orchard capable of producing a net profit of $3,000 — $4,000. This improvement can be attributed to the increased care of the orchard and to the addition of a combination of 125 new cherry, peach and apricot trees on Lots 37 and 38, as well as favorable weather conditions. In light of this evidence, we hold that the court’s valuation of the property and improvements on it did not amount to a clear abuse of discretion.

Appellant lastly challenges the court’s valuation of Hockaday Reproductions, Inc., a business venture commenced to market and sell a limited number of art prints of paintings done by the husband’s father, a well-known local artist. The court valued the parties’ 50% share of the corporation at $20,000. Yet, appellant contends that those remaining unsold prints would not sell without a great expenditure of time and money, and thus they were worth only the value of the paper on which they were printed.

We hold that the court’s valuation of the parties’ share of Hockaday Reproductions was not arbitrary. Both parties testified that 250 sets of prints were created by an initial $3,000 investment. Enough prints were sold, roughly twenty sets of prints at the retail price of $175 for a set of five prints (or at $40 for each individual print), to recover the initial investment by all parties to the venture. The potential income available from the remaining approximately 230 sets at this retail price could total $40,240. Although the husband asserted that a substantial amount of time and money would be necessary to market and sell the remaining prints, he failed to provide any evidence or estimates of this monetary amount. In light of all the evidence the court’s estimated valuation of the parties’ 50% share in Hockaday Reproductions at $20,000 appears reasonable, and we hold that the court did not abuse its discretion in so valuing the corporation’s worth.

II. NET WORTH OF THE MARITAL ESTATE

Appellant contends that the District Court erroneously failed to determine the net worth of the marital estate. This determination is required prior to a division of the property, and appellant contends the court abused its discretion when it failed to make such a determination.

Indeed, this Court has previously held that a district court must determine the net worth of a marital estate prior to division of the estate. Schultz v. Schultz (1980), 188 Mont. 363, 365, 613 P.2d 1022, 1024. This determination of net worth is necessary before a court may equitably apportion all the property and assets belonging to the parties as is required by § 40-4-202, MCA. The court need not, however, precisely detail the parties’ net worth in one finding. Rather, the findings as a whole must be sufficient to allow for the determination of the parties’ net worth. In re Marriage of LeProwse (1982), 198 Mont. 357, 362, 646 P.2d 526, 529.

We hold that the findings as a whole generally were sufficiently detailed and exhaustive. The findings, however, contain several errors which prevent an accurate determination of the parties’ net worth. We order these errors corrected upon remand. Specifically, the District Court erroneously awarded the entire value of Lot 37 to the wife despite the fact the husband’s mother holds title to the property. The husband had only a limited equity, by virtue of a few payments credited to him under a contract for deed, in the property at the time of dissolution. The District Court only may award that equity acquired by the husband in the property. We therefore direct the court to make further findings as to the exact amount of equity acquired by the husband in the Lot at the time of the dissolution and to make all necessary corrections to the relevant findings, notably to Findings Nos. 15(b), 25 and 36, and to the distribution of the marital estate as deemed necessary in light of these corrections.

We also direct the court to address the following errors raised by cross-appellant. We note the cross-appellant filed a notice to amend the findings to allow the District Court to correct these errors, but the court was unable to address these errors before the notice of appeal was filed. First, the findings erroneously listed the husband’s debt to Montana Forest Products at two differing values: Finding No. 7(j) listed the debt at $700, while Finding No. 23 listed the same debt at $900. Second, Findings Nos. 24 and 30 list the debt owed to Valley Bank at $15,000 (while Finding No. 23 mentions a $5,000 debt), even though both parties concede, and the testimony at the dissolution hearings indicates, that the debt owed was only $4,000. Third, the court considered and listed the premarital debts of both parties in Finding No. 23, yet it failed to list the amount of the recognized alimony debt owed by the husband. Fourth, as previously mentioned in Section I above, the court failed to include the $13,834.30 in improvements made to Lots 32 and 33 either in Finding No. 24 or 25. The fifth allegation of error by cross-appellant, that the court erred in failing to reimburse the wife for the expended $1,916 in inheritance monies, is without merit. The court need not assure the return of all the wife’s inheritance, it need only equitably divide the property. The final property division, after correction of the above-mentioned errors, would appear to be equitable.

We affirm the District Court’s valuations, but remand this case for correction of the above-mentioned errors and for redistribution of the marital estate as deemed necessary by the District Court, in light of these corrections, to assure an equitable property division.

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


source: Caselaw Access Project

author: MR. JUSTICE WEBER

license: Public Domain

text:
    DANIEL SCYPHERS, Claimant and Respondent, v. H&H LUMBER, Employer, and State Compensation Insurance Fund, Defendant and Appellant.
    No. 88-573.
    Submitted on Briefs April 20, 1989.
    Decided June 1, 1989.
    774 P.2d 393.
    Jeff Hedger and Crowley Law Firm, Billings, for defendant and appellant.
    Thomas J. Lynaugh, Billings, for claimant and respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

The State Compensation Insurance Fund appeals a decision by the Workers’ Compensation Court. Mr. Daniel Scyphers was injured in an industrial accident on November 21, 1986 and was awarded temporary total disability benefits. In April of 1987, Mr. Scyphers petitioned the Workers’ Compensation Court for recalculation of his temporary total disability rate. This matter was submitted on briefs to the examiner, who granted a recalculation of Mr. Scyphers’ rate. The Workers’ Compensation Court affirmed this decision, and the State Compensation Insurance Fund appeals. We affirm.

The issue presented for our review is whether the three cents per mile paid to a long haul truck driver as per diem is “wages” for purposes of fixing workers’ compensation benefits.

The claimant in this case, Mr. Scyphers, worked for H & H Lumber Co. as a long haul truck driver. His hauls often put him on the road for two or three weeks at a time.

On November 10, 1985, H & H Lumber began compensating its long haul drivers at the rate of fourteen cents per mile, plus three-cents-per-mile “per diem.” Prior to this time, the drivers did not receive a per diem amount. Rather, each driver was required to keep records of expenses on the road, such as meals and lodging, which were later reimbursed by the company. Mr. Harding, president and general manger of H & H Lumber, testified by deposition that it is no longer necessary for drivers to keep these records. Under the new arrangement, the drivers are not reimbursed for meals or lodging, but are simply paid the per diem amount. The company pay schedule which effectuated this change listed both the fourteen cent and the three cent amounts under the heading, “wages.”

H & H Lumber pays its long haul drivers with two checks. One check, reflecting the fourteen-cents-per-mile compensation, has taxes and social security withheld. The second check, representing the three-cents-per-mile per diem amount, has no deductions withheld. Mr. Harding testified that the three cent figure was chosen by him because the IRS has approved of this amount as a per mile per diem expense reimbursement. It is also significant that H & H Lumber pays its short haul drivers, who work locally, seventeen cents per mile, plus a flat daily rate of $15. Mr. Harding explained that the short haul drivers do not register as many miles in a day because they stop to make deliveries; therefore, they are given the additional compensation of the flat daily rate.

In reviewing a decision of the Workers’ Compensation Court, the standard of review is to determine whether substantial credible evidence exists to support the findings and conclusions of the Workers’ Compensation Court. Stangler v. Anderson Meyers Drilling Co. (Mont. 1987), [229 Mont. 251,] 746 P.2d 99, 101, 44 St.Rep. 1944, 1947. Findings of fact are not clearly erroneous if they are supported by substantial credible evidence. Tenderholt v. Travel Lodge Intern. (Mont. 1985), [218 Mont. 523,] 709 P.2d 1011, 1013, 42 St.Rep. 1792, 1794.

Where the testimony in the lower court was presented solely by deposition, this Court is free to examine the findings of the court more closely, as this Court is in the same position as the Workers’ Compensation Court in assessing the evidence. Stangler, 746 P.2d at 101-02. In the present case all testimony was presented by deposition, thus the broader standard of review applies.

The definition of “wages” under the Workers’ Compensation Act is set out in § 39-71-116(20), MCA (1985), and provides:

“ ‘Wages’ means the average gross earnings received by the employee at the time of the injury for the usual hours of employment in a week, and overtime is not to be considered. Sick leave benefits accrued by employees of public corporations, as defined by subsection (16) of this section, are considered wages.”

Montana has not previously considered whether “wages,” as this term is applied to Workers’ Compensation benefits, includes a “per diem” type of compensation. The Workers’ Compensation Court determined that the statute defining wages simply contemplates that any gross earnings are wages, and does not allow for any artificial distinctions. The court found that the employer, by paying the short haul driver in one method, and the long haul driver in another method, had created two distinct wage classifications which “bear little relationship to the definition of wages in the Act.” The Workers’ Compensation Court suggested that tax considerations may have motivated this arrangement, but that the Act does not provide for this type of differentiation. The Workers’ Compensation Court then determined that the per diem amount paid to Mr. Scyphers should be included in his wages.

We agree with the analysis of the Workers’ Compensation Court. Under the statute, “wages” simply means gross earnings. We agree with the conclusion of the Arizona Supreme Court in Hobbs v. Industrial Commission (1975), 23 Ariz. App. 422, 533 P.2d 1159, 1160-61, that how the parties may have treated a per diem amount for tax purposes is not determinative regarding Workers’ Compensation benefits. In determining what constitutes gross earnings, other courts have applied the “real economic gain” rule. Ridgway v. Board of Ford County Com’rs (1987), 12 Kan.App.2d 441, 748 P.2d 891; Gonzales v. Mountain States Mut. Cas. Co. (1986), 105 N.M. 100, 728 P.2d 1369. Blake Stevens Const. v. Henion (Utah 1985), 697 P.2d 230; Moorehead v. Industrial Commission (1972), 17 Ariz. App. 96, 495 P.2d 866. Under this analysis, the critical distinction is whether a payment was actually a reimbursement for employment-related expenses or whether it constituted real economic gain to the employee. We approve of this analysis, as stated by Professor Larson in his treatise on workers’ compensation:

“In computing actual earnings as the beginning point of wage-basis calculations, there should be included not only wages and salary but any thing of value received as consideration for the work, as, for example, tips, bonuses, commissions, and room and board, constituting real economic gain to the employee.” (Emphasis added.)

2 A. Larson, The Law of Workers’ Compensation § 60.12 (1987).

In the present case, the testimony demonstrates that the three-cents-per-mile per diem was not actually reimbursement for Mr. Scyphers’ out-of-pocket employment-related expenses, but rather constituted real economic gain to Mr. Scyphers. Mr. Scyphers testified that when he was traveling on a long haul he slept in the sleeper compartment of his truck. While he ate meals on the road, this expense certainly continued after he was laid off; that is, his meal expense was not tied exclusively to his job. The per diem amount was not reimbursement for expenses such as truck repairs. These types of expenses were either charged to the company credit card, or reimbursed to Mr. Scyphers when he presented a receipt for the repair.

Mr. Scyphers testified that he simply used the proceeds from both checks for living expenses. He was not required to prove any actual employment-related expenses in order to receive the per diem amounts, and Mr. Harding stated that the employees could use the money to buy groceries, or anything else. The evidence supports Mr. Scyphers’ assertion that the three-cents-per-mile per diem was gross earnings in this case and should properly be included in his wages. We have concluded that the three cents per mile constituted real economic gain to Mr. Scyphers. We affirm the decision of the Workers’ Compensation Court.

Affirmed.

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


author: MR. JUSTICE HARRISON

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. DAVID ARTHUR DePUE, Defendant and Appellant.
    No. 88-591.
    Submitted on Briefs April 6, 1989.
    Decided June 1, 1989.
    774 P.2d 386.
    C.F. MacKay, Anaconda, for defendant and appellant.
    Marc Racicot, Atty. Gen., Kathy Seeley, Asst. Atty. Gen., Helena, Christopher G. Miller, County Atty., Deer Lodge, for plaintiff and respondent.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

This appeal arises from a conviction entered in the Third Judicial District Court, Powell County, the Honorable Ted L. Mizner presiding. Following a bench trial, defendant was found guilty of aggravated assault and now appeals. We affirm.

Myron Cunningham, the victim, was a prisoner at the Montana State Prison in Deer Lodge, Montana. On August 17, 1987, as he walked through the prison yard, Mr. Cunningham was struck in the eye allegedly by defendant, David DePue. Initially believing the injury to be minor, Mr. Cunningham reported to the infirmary doctors that he had been hit in the eye with a baseball. Later in the evening, Mr. Cunningham informed doctors that someone had struck him, but refused to identify his assailant. On August 21, 1987, upon learning the injury would result in the loss of his eye, Mr. Cunningham identified defendant as the assailant.

Based upon the assault allegations, defendant was placed on temporary lock-up status within the maximum security unit. In compliance with the Inmate Rules and Guidelines, prison officials conducted a reclassification hearing. Essentially, the hearing gives an inmate notice of the reason he is being moved to another part of the prison. At the outset of the hearing, prison official Tom Forsyth commented to defendant that charges may be filed. Immediately, defendant responded “[f]or what? I only used my fist.” Thereafter, officials instructed defendant not to volunteer any information. The hearing proceeded without defendant having been read his Miranda warnings. Miranda v. Arizona (1966), 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694.

At trial, defendant moved to suppress all testimony concerning the incriminating statement, claiming the statement was made in violation of his Miranda rights. After hearing the disputed testimony and oral arguments by both parties, the District Court denied the motion, concluding defendant’s statement was not made in response to any “interrogation.” Thereafter, the District Court heard evidence, including the testimony of the victim, conflicting statements of two other prison inmates, and medical testimony of the infirmary physician. On August 23, 1988, the District Court entered judgment finding defendant guilty of aggravated assault.

The defendant presents two issues for our review:

1. Did the District Court err when it allowed testimony concerning the defendant’s incriminating statement made during the reclassification hearing prior to the defendant being informed of his Miranda rights?

2. Did sufficient evidence exist to convict defendant of the offense of aggravated assault?

At trial, the District Court admitted the testimony of Tom Forsyth, a prison official present during defendant’s reclassification hearing. Mr. Forsyth testified that defendant, after learning that charges may be filed as a result of the alleged assault, immediately remarked “[f]or what? I only used my fist.” This comment was made prior to a reading of Miranda guarantees. Defendant contends the statement was improperly admitted into evidence during his criminal trial and in violation of his privilege against self-incrimination.

Miranda requires an individual “taken into custody or otherwise deprived of his freedom by the authorities in any significant way and is subjected to questioning,” be notified of “his right of silence and . . . assure[d] that the exercise of the right will be scrupulously honored . . .” Miranda, 384 U.S. at 478-79, 86 S.Ct. at 1630, 16 L.Ed.2d at 726. We do not question the fact that defendant was in custody when the incriminating statement was made. State v. Dannels (Mont. 1987), [226 Mont. 80,] 734 P.2d 188, 44 St.Rep. 472. Rather, we examine defendant’s assertions of “interrogation.”

The Defendant argues our decision in State v. Harris (1978), 176 Mont. 70, 576 P.2d 257, controls the outcome of the present appeal. In Harris, prison officials discovered a knife in a cell shared by inmates Harris and Hendricks. A formal disciplinary hearing was scheduled and each inmate was provided a lay-advisor to assist in the hearings. During Hendricks’ hearing, Harris made incriminating statements in response to questions asked by the lay-advisor. These statements were later used against Harris during a criminal trial. On appeal of his conviction, we found the constitutional guarantees announced in Miranda applicable:

“[T]he prison disciplinary hearing was conducted by prison officials for the purpose of ascertaining inmate responsibility for prison offenses punishable under the Inmate Rules and Guidelines. No notice of potential criminal prosecution was announced to Harris until after he uttered the incriminating statements at Hendricks’ disciplinary hearing. The constitutional guarantees of the Fifth Amendment, . . . cannot be subverted under the guise Harris knowingly and voluntarily uttered the incriminating statements.”

Harris, 576 P.2d at 258.

Defendant’s reliance upon Harris is misplaced. The cited case concerned statements elicited from questions asked during a formal prison disciplinary hearing. In the instant case, no questions were asked defendant, and testimony at trial indicated that prison officials seldom make inquiries of the inmates regarding alleged incidents. Rather, the hearings simply give notice and determine future placement within the prison.

In State v. Ryan (1979), 182 Mont. 130, 595 P.2d 1146, we found that statements made by defendant prior to his arrest were not the product of custodial interrogation. In Ryan, four police officers arrived at defendant’s home to execute a search warrant. The warrant authorized the officers to search Ryan’s home for various firearms which defendant had earlier reported stolen and for which he had received insurance compensation. Upon reading a copy of the warrant, defendant told the officer, “[w]ell, you guys have got me anyway. I will just show you where the guns are at.” Ryan escorted the officers to his bedroom, and pointed at the closet, and said, “[t]he guns are in there.” When the officers began, checking the serial numbers on the various weapons, defendant told them that there was no sense in writing them down because he had altered them after submitting the burglary report. Thereafter, the officers placed Ryan under arrest and read defendant his Miranda warnings. On appeal, we found that “[w]here the entire situation was free from any coercion or deprivation of freedom of action by the law enforcement officers and the statements were not the result of interrogation, the requirements of Miranda were not applicable.” Ryan, 595 P.2d at 1149, citing Oregon v. Mathiason (1977), 429 U.S. 492, 97 S.Ct. 711, 50 L.Ed.2d 714.

As was pointed out in Miranda, a confession which is truly voluntary is not foreclosed from evidence because the statement was made before the person confessing had been warned of his rights:

“[A]ny statement given freely and voluntarily without any compelling influences is, of course, admissible in evidence. The fundamental import of the privilege while an individual is in custody is not whether he is allowed to talk to the police without the benefit of warnings and counsel, but whether he can be interrogated . . . Volunteered statements of any kind are not barred by the Fifth Amendment and their admissibility is not affected by our holding today.” Miranda, 384 U.S. at 478, 86 S.Ct. at 1630, 16 L.Ed.2d at 726. Defendant was not questioned at the reclassification hearing. We find defendant’s statement was a voluntary statement outside the application of Miranda,

Next, we turn to defendant’s second claim. Our standard of review when presented with a challenge to the sufficiency of the evidence is “[w]hether, after reviewing 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 (Mont. 1987), [226 Mont. 208,] 734 P.2d 1216, 1217, 44 St.Rep. 593, 595, citing Jackson v. Virginia (1979), 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560, 573; State v. Rodriguez (Mont. 1981), [_ Mont. _,] 628 P.2d 280, 38 St.Rep. 578F. This standard gives responsibility to the trier of fact to “[r]esolve conflicts in the testimony, to weigh the evidence, and to draw reasonable inferences from basic facts to ultimate facts.” Jackson, 443 U.S. at 319, 99 S.Ct. at 2789, 61 L.Ed.2d at 573.

Defendant contends the evidence presented at trial was insufficient to support a conviction. Defendant argues that the conviction is based solely on the word of a convicted felon, and for this reason, we should view Mr. Cunningham’s testimony with distrust. However, we decline to engaqe in a battle over the credibility of witnesses. Rather, the credibility of witnesses and the weight assigned to their testimony is left to the trier of fact. State v. Green (1984), 212 Mont. 20, 685 P.2d 370. Of the three inmates testifying, the District Court chose to accept the victim’s testimony.

At trial, Mr. Cunningham testified to the ill will which existed between himself and defendant prior to the assault, including an earlier threat. Additionally, Mr. Cunningham stated that after he was hit in the eye, he saw defendant hide something in his pocket, giving Mr. Cunningham the indication that he had been struck with some sort of an instrument.

Besides the victim’s testimony, other evidence supports the conviction. Dr. Ridgeway testified that the injury resulted from a rupture of the orbit of the left eye. While Dr. Ridgeway stated that a large foreign object embedded in the seam of a baseball could have caused the injury, nonetheless, he doubted that the arc of a thrown ball could have penetrated deep enough, making a baseball an unlikely mechanism. Finally, we view defendant’s incriminating statement made during the reclassification hearing strong evidence to support his conviction.

Affirmed.

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


author: MR. JUSTICE McDONOUGH

text:
    FRANK MITCHELL and Evelyn Mitchell, Plaintiffs and Respondents, v. LYLE BOYER and Minnie Boyer, Defendants and Appellants.
    No. 89-54.
    Submitted on Briefs April 20, 1989.
    Decided June 1, 1989.
    774 P.2d 384.
    Jeffrey H. Langton, Hamilton, for defendants and appellants.
    Brian L. Delaney, Mulroney, Delaney & Scott, Missoula, for plaintiffs and respondents.
   MR. JUSTICE McDONOUGH

delivered the Opinion of the Court.

This appeal involves an agreement to purchase land located near Corvallis, Montana. Defendants Lyle and Minnie Boyer (Boyers) appeal from the judgment of the District Court of the Fourth Judicial District, Ravalli County, granting recision of the agreement. The Court awarded plaintiffs Frank and Evelyn Mitchell (Mitchells) damages based on the down payment, earnest money and escrow payments made; amounts expended for improvements to the property; and prejudgment interest at an annual interest rate of ten percent from a date thirty days after Mitchells initially offered to rescind the agreement. We affirm.

Boyers present two issues for review:

1. Did Mitchells’ reliance on the innocent misrepresentations of Lyle Boyer constitute negligent reliance, barring the remedy of rescission?

2. Did the District Court err in finding that Lyle Boyer’s misrepresentations gave rise to a breach so material as to excuse Mitchells’ duty of performance and rescind the contract?

The property at issue in this case was originally part of a larger tract belonging to David and Clara Leicht. In 1978, the Leichts sold two parcels of their land to the Tices, who are not parties to this suit. Lyle Boyer was the real estate agent involved in that sale. At some point after the sale had been negotiated, but before the deeds to the property had been delivered, a disagreement arose between the Leichts and the Tices as to what would constitute allowable use of the parcels. The end result of this disagreement was that the parcel here at issue was subjected to a restrictive covenant, duly recorded in the Ravalli County Clerk and Recorder’s Office at Book 148, page 117, which; a) prohibited subdividing the parcel into more than three lots, b) restricted use of the property to agricultural purposes and c) provided that no more than two houses with attendant outbuildings could be built on the parcel. This covenant was to remain in force for as long as the Leichts continued to hold any interest in their remaining property, which bordered the parcel.

Soon after this initial transaction took place, the Tices subdivided the parcel into three lots. Tices then sold two of the lots to the Boyers under a contract for deed. The description of the property in the contract executed by the Tices and the Boyers refers to it as being part of Orchard View Estates, and subject to restrictions “as contained in Book 148 Deeds, page 117.” However, at the end of the contract, in a paragraph entitled “Miscellaneous”, the contract states that the restrictions will be lifted when the Leichts no longer own any interest in the property that is the subject of the contract. In other words, the restrictions will be lifted when the Tices pay off their obligation as purchasers of the parcel from the Leichts.

Boyers then listed the lots they had just purchased as being for sale. The Mitchells saw an advertisement for the lots in a newspaper, contacted the Boyers and set up an appointment to view the property. At this appointment, the Mitchells indicated their interest in the property, and asked about terms. Lyle Boyer told the Mitch-ells that basically they would pay a sum to the Boyers and then assume Boyers’ interest in the contract for deed with the Tices. At the end of ten years, the Mitchells would make a balloon payment. The Mitchells related to Lyle Boyer their plan to further subdivide the lots, if necessary, in order to raise money to make the balloon payment. He told them of the building restrictions, and indicated that the restrictions would be lifted as soon as the Tices paid off their obligation to the Leichts, which he estimated would happen in the near future. Based on these discussions, the Mitchells entered into an agreement to purchase the Boyers’ interest.

For reasons that are not relevant here, the Leichts became concerned about how the land they had sold was being developed. In early 1986, they contacted an attorney, who sent a letter to lot owners, including the Mitchells, describing the restrictions and noting that they would not be lifted while the Leichts remained on their adjacent property. Upon receiving the letter, the Mitchells discussed the matter with the attorney who wrote the letter, the attorney who had closed their purchase of Boyers’ interest, and their own attorney. They contacted the Boyers, but apparently were unsuccessful in attempting to work things out. Mitchell’s attorney offered to rescind the contract, but the Boyers were unwilling to do so.

The Mitchells filed a complaint against the Boyers on April 23, 1987. According to the complaint, Lyle Boyer had misrepresented the duration of the restrictions, and the Mitchells agreed to purchase the property in reliance on those misrepresentations. Count One of the complaint alleged that Lyle Boyer’s actions amounted to negligent misrepresentation, Count Two alleged actual or constructive fraud, and Count Three alleged mutual mistake. All three counts sought basically the same measure of damages: recision of the contract, return of moneys paid out by the Mitchells for the property, and their costs and attorney’s fees incurred in the action.

The case was tried to the District Court, sitting without a jury. On July 18, 1988, the court issued its Findings of Fact, Conclusions of Law, and Judgment. The court held in favor of the Mitchells on Count One. The court found that Boyer’s misrepresentations had been made innocently, but were negligent in that as a real estate agent, he should have known they were false. This appeal followed.

This case is in equity. As a result, the scope of our review is set by statute, and is very broad. Under § 3-2-204, MCA, this Court reviews all questions of fact and law in equity cases and makes its own determination based on that review. In this case, the District Court held Boyers liable for Lyle Boyer’s negligent misrepresentations. On appeal, Boyers assign error to this ruling. Their first argument asserts that the Mitchells’ reliance on those misrepresentations was in itself negligence, which precluded the court’s award of recision. Our review of the case shows that we need not address Boyers’ arguments. In fact, Boyers’ first argument points to a resolution to this case that present itself prominently in the record. Irrespective of any negligence, this is a case of mutual mistake.

A mutual mistake occurs when, at the time the contract is made, the parties share a common misconception about a vital fact upon which they based their bargain. Carey v. Wallner (Mont. 1986), [223 Mont. 260,] 725 P.2d 557, 43 St.Rep. 1706. Such a mistake is a proper ground for recision. Section 28-2-1711, MCA; Wallner, 725 P.2d at 561. It was very important to the Mitchell’s when they considered buying these lots from the Boyers that they have the option to subdivide the lots in order to make the scheduled balloon payment. According to Boyers’ contract with the Tices, the restrictions on subdividing and building would be removed once the Tices finished paying the Leichts for the parcel out of which the Boyers’ lots were carved. Lyle Boyer related this to the Mitchells.

Lyle Boyer testified at trial that his representations to the Mitch-ells honestly reflected his impression of the restrictions. He had not been privy to the negotiations that resulted originally in the restrictions being placed in the deeds, and had never been informed as to their content beyond the language found in the contract between the Boyers and the Tices. He further testified that he did not discover the truth about the restrictions until 1986, when he read the letter written by the Leichts’ attorney. The Mitchells testified that because Lyle Boyer was a real estate agent, they assumed that his representations were accurate and truthful. It is therefore apparent that the Boyers and the Mitchells were both mistaken at the time the contract was made; they were laboring under a common misconception about when the restrictions would be removed. Recision was therefore proper.

We affirm the decision of the District Court.

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


text:
    MARIE MELLEM, Claimant and Appellant, v. KALISPELL LAUNDRY & DRY CLEANERS, Employer, and State Compensation Insurance Fund, Insurer and Respondent.
    No. 89-66.
    Submitted on Briefs April 27, 1989.
    Decided June 1, 1989.
    774 P.2d 390.

      Allan M. McGarvey, McGarvey, Heberling, Sullivan and McGarvey, Kalispell, for claimant and appellant.
    Steven J. Shapiro, Chief Legal Counsel and Charles Adams, Legal Counsel, Div. of Workers’ Compensation, Helena, for insurer and respondent.
   MR. JUSTICE McDONOUGH

delivered the Opinion of the Court.

This appeal concerns the requirements for perfecting an appeal to the Montana Workers’ Compensation Court under the terms of the Montana Occupational Disease Act (MODA). Marie Mellem appeals from the court’s order dismissing her appeal for failure to comply with the jurisdictional requirements of MODA. We reverse and remand with instructions.

Mellem presents three issues for review:

1. Did Mellem fail to perfect an appeal to the Workers’ Compensation Court because her request for rehearing was denominated “Statement of Exceptions”?

2. Did the Workers’ Compensation Court abuse its discretion by dismissing Mellem’s appeal without granting leave to seek rehearing and later application for appeal?

3. Has Mellem been denied due process of law by the procedural errors of the Division of Workers’ Compensation and the Workers’ Compensation Court?

Mellem was employed by a Kalispell laundry from 1981 until 1986. She suffers from severe chronic obstructive pulmonary disease along with chronic pneumonia. Mellem alleges that her lung problems are due in part to her exposure to certain fumes and particles while employed at the laundry. She filed a claim for occupational disease benefits with the State Compensation Insurance Fund, which denied liability. Mellem’s claim was then referred to the Division of Workers’ Compensation, which in turn referred her to a member of the Occupational Disease Panel for medical examination.

Based on the report of the medical examination, the Division issued an order stating its preliminary determination that Mellem would not be entitled to benefits. Mellem then requested a hearing before the Division, which was held before a Hearing Examiner. After reviewing the record of Mellem’s claim, the Hearing Examiner issued his Findings of Fact, Conclusions of Law and Order, finding Mellem not entitled to occupational disease benefits. This document also contained a paragraph entitled “Notice”, which reads in part as follows:

“You are hereby notified that you have the right to file exceptions and to present briefs and oral argument to the Administrator of the Division of Workers’ Compensation who will decide whether or not to adopt or modify the foregoing Proposed Order.”

According to Mellem’s brief to this Court, her counsel contacted the Division to verify that the “exceptions” procedure was the same as the “rehearing” procedure required by § 39-72-612, MCA, and was informed that it was in fact the same.

Mellem then filed a Statement of Exceptions with the Division. The Administrator of the Division reviewed the Hearing Examiner’s Findings of Fact, Conclusions of Law and Order, as well as the record of Mellem’s claim. He then issued a Final Order, which again concluded that Mellem was not entitled to benefits. The Final Order reads in part:

“This Final Order is signed by the Administrator of the Division of Workers’ Compensation under the authority of Section 39-72-202, MCA. Any party in interest may appeal this order to the Workers’ Compensation Court as provided in Sections 39-71-2401 and 39-72-612, MCA.”

Mellem thereafter filed an appeal with the Workers’ Compensation Court. The court determined that it lacked jurisdiction to hear Mellem’s appeal. According to the Court, Mellem had not perfected an appeal, because she had failed to request a rehearing before the Division as required by § 39-72-612, MCA. The court thus felt “compelled, sua sponte, to dismiss” Mellem’s appeal, which it did. This appeal followed.

The Workers’ Compensation Court began its discussion by reciting the basis of its jurisdiction under MODA, which is defined by § 39-72-612, MCA. The court noted the specific requirement in § 39-72-612(1), MCA, that in order to perfect an appeal, “the appealing party must request a rehearing before the division.” According to the court, a careful review of the record failed to disclose such a request by Mellem.

The Workers’ Compensation Court was correct in that its jurisdiction is statutorily defined in § 39-72-612, MCA, and that the record in Mellem’s case does not conform strictly to that statute. There is no document entitled “Request for Rehearing” to be found in the file. However, the reason for the absence of such a request appears on the face of the two Division orders quoted above. The court noted that the record of this case showed “some confusion over procedures before the Division.” The court cited as examples the improper labeling of orders issued by the Division, which contained instructions for procedures not discussed in MODA. The court concluded that these variations were in form only, and did not affect Mellem’s entitlement to an appeal. We disagree.

This situation has not been addressed by this Court under MODA. However, we have held in similar situations under the statute of limitations in the Workers’ Compensation Act that where misstatements by an employer or insurer prevent a claimant from filing a Workers’ Compensation claim in a timely fashion, or mislead the claimant into believing that no claim can or need be filed, the doctrine of equitable estoppel applies to toll the limitation period and allow filing of the claim. Davis v. Jones (1983), 203 Mont. 464, 661 P.2d 859. The doctrine is equally applicable to the facts in this case, as is the maxim “No one can take advantage of his own wrong.” Section 1-3-208, MCA.

There are essentially six elements to equitable estoppel:

“1. There must be conduct — acts, language, or silence — amounting to a representation or a concealment of material facts. 2. These facts must be known to the party estopped at the time of his said conduct, or at least the circumstances must be such that knowledge of them is necessarily imputed to him. 3. The truth concerning these facts must be unknown to the other party claiming the benefit of the estoppel, at the time when it was acted upon by him. 4. The conduct must be done with the intention, or at least with the expectation, that it will be acted upon by the other party, or under such circumstances that it is both natural and probable that it will be so acted upon .... 5. The conduct must be relied upon by the other party, and, thus relying, he must be led to act upon it. 6. He must in fact act upon it in such a manner as to change his position for the worse

Davis, 661 P.2d at 861 (quoting Lindbolm v. Employers’ Liability Assurance Corp. (1930), 88 Mont. 488, 494, 795 P. 1007, 1009).

As to the first element, the conduct at issue here is reflected in the language of the Division’s orders. The Hearing Examiner’s order stated that Mellem could file exceptions with the Division. Mellem’s counsel asserts that he contacted the Division to confirm that the “exceptions” procedure was the same as the “rehearing” procedure, and was told that it was in fact the same. While this statement is not disputed in the Division’s brief to this Court, assuming it to be untrue does not negate the Division’s conduct. It is apparent from the face of the Division Administrator’s Final Order that the Division considered a request for rehearing to have been made.

The second element of estoppel is also present. Knowledge of the proper procedures under MODA can certainly be imputed to the Division. The third element is evident from the course of conduct of Mellem’s attorney and the Division. Mellem’s attorney could not have known that the Division did not treat an exceptions procedure as a rehearing procedure, especially given the Division’s continued conduct as if proper procedures were being followed.'The fourth element is evident from the fact that the Division’s conduct took the form of orders. There was clearly an expectation that Mellem’s counsel would act in accordance with those orders. The fifth and sixth elements are self-evident. This opinion is the result of Mellem’s detrimental reliance on the Division’s conduct.

The Division cannot now be heard to argue that Mellem’s counsel was on notice of the statutory requirements for perfecting an appeal to the Workers’ Compensation Court, and therefore at fault for the appeal’s dismissal. The Division is estopped from doing so by its own actions. Taking that position also violates the maxim quoted above.

We therefore reverse the decision of the Workers’ Compensation Court dismissing Mellem’s appeal, and remand with instructions to return the case to the Division to afford Mellem the opportunity to perfect her appeal in accordance with § 39-72-612, MCA.

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


author: MR. CHIEF JUSTICE TURNAGE

text:
    MISSOULA RURAL FIRE DISTRICT, Plaintiff and Appellant, v. CITY OF MISSOULA, Defendant and Respondent. MISSOULA RURAL FIRE DISTRICT, a political subdivision of the State of Montana, et al., Plaintiffs and Appellants, v. CITY OF MISSOULA, a municipal corp., Defendant and Respondent.
    No. 88-558.
    Submitted May 1, 1989.
    Decided June 2, 1989.
    775 P.2d 209.
    Howard Toole argued, Missoula, for plaintiff and appellant.
    Jim Nugent argued, City Atty., Missoula, for defendant and respondent.
   MR. CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

In 1974, a permanent injunction was issued against the City of Missoula and in favor of the Montana Rural Fire District (MRFD), barring the City from annexing any lands outside city limits which were situated within the MRFD. The injunction remained in effect until 1988 when the District Court, Fourth Judicial District, ordered the injunction dissolved on motion of the City. The District Court reasoned that the legislature significantly changed the annexation laws through the 1979 amendment. With the change of the statutory law, the injunction was no longer valid. The District Court found that under the present law the City can use its discretion in choosing one of several annexation methods without requiring detraction of land it wishes to annex from the MRFD. MRFD appeals this order. We affirm.

The issues on appeal are:

1. Whether the 1974 injunction was properly dissolved by the District Court.

2. Whether the case affirming the 1974 injunction, MRFD v. City of Missoula (1975), 168 Mont. 70, 540 P.2d 958, was impliedly overruled by the legislature.

3. Whether the 1979 amendment of annexation laws has nullified the 1974 injunction.

4. Whether current Montana municipal annexation laws require, prior to inception of annexation, that land proposed for city or town annexation be first successfully detracted from a rural fire district regardless of the statutory method of city or town annexation used.

On October 10, 1974, the District Court permanently enjoined the City of Missoula “from attempting any annexation procedure of whatever kind or character for any land within the boundaries of Missoula Rural Fire District.” In MRFD v. City of Missoula (1975), 168 Mont. 70, 540 P.2d 958, we affirmed the 1974 injunction.

A 1974 Act (Planned Community and Development Act of 1973, §§ 11-514 through 11-526, RCM (1947); § 7-2-4701, et seq. MCA, (1979)), required extensive planning for growth in cities. One provision prohibited annexation of land that had been within a fire district for more than ten years at the time of proposed annexation. In 1977, the legislature provided for limited annexation of lands within the rural fire district only after detraction from the fire district. After 1977 if a single landowner wanted land annexed, that landowner could send written notice to the fire district requesting detraction from the fire district for the purpose of having the land annexed.

In 1979 the Montana legislature made significant changes to the municipal annexation laws. The 1979 Legislature divided the annexation methods, stating that annexation through detraction from the fire district is independent from other annexation methods. City of Missoula annexed some areas within the MRFD subsequent to 1979 without detracting the land to be annexed from the fire district.

In 1987, the Missoula City Council scheduled public hearings to receive public comment as to whether the City should annex 230 parcels of real property which were already connected to the City’s municipal water system. MRFD sued the City to prevent these annexations based upon the 1974 injunction. The City applied to have the injunction dissolved or modified based on the 1979 changes. The District Court originally dismissed the motion. The court, however, ordered on July 28, 1988, that the injunction be dissolved. The District Court relied on the 1979 legislative changes and considered each method of annexation to be separate and distinct from the others.

The main issue to be addressed is whether land proposed for city or town annexation must be first successfully detracted from a rural fire district prior to inception of annexation, for every statutory method of city or town annexation. In the alternative, is detraction from the rural fire district necessary for only one of several possible methods of annexation? If so, then the 1974 injunction was properly dissolved by the District Court.

On October 10, 1974, the District Court permanently enjoined the City of Missoula from annexing land without first seeking detraction from the rural fire district within which the land was located. In 1975, this Court affirmed the order of the District Court in MRFD v. City of Missoula, supra. In that case, we stated that the legislature considered the annexation laws to be discriminatory and caused indiscriminate growth patterns. We acknowledged that although the legislature did not repeal these prior discriminatory annexation laws, it did provide in § 11-525 RCM (1947):

“In so far as the provisions of this act are inconsistent with the provisions of any other law, the provisions of this act shall be controlling. The method of annexation authorized in this act shall be construed as supplemental to and independent from other methods of annexation authorized by state law.”

The act referred to in § 11-525, RCM, is the “Planned Community Development Act of 1973,” which provided that

“no part of the area may be included within the boundary, as existing at the inception of such attempted annexation, of any fire district organized under any of the provisions of chapter 20, Title 11, if the fire district was originally organized at least 10 years prior to the inception of such attempted annexation.”

Section ll-519(2)(d), RCM (1947). The annexation amendment prohibited any annexation of land by the city which had been within a fire district for more than ten years at the time of the proposed annexation, regardless of the type of annexation proposed. Thus, MRFD could prevent any growth of the municipality where rural fire district lands were located.

The legislature made limited annexation possible in 1977 by way of detraction under §§ 11-514 through 11-525, RCM.

In 1979, the legislature made two significant changes in municipal annexation laws. First, § 11-403, RCM (1947) was expanded. Section 11-403 provided the ways in which annexation could take place. Prior to 1979, a city could freely annex contiguous areas of land, any lands to be used for manufacturing purposes, provided that the owners of such land agree, and any wholly surrounded parcels of land. The 1979 amendment separated each of the types of annexation provided for in § 11-403, into separate statutes. The statutes now provide:

“Title 7, Chapter 2, Part 42 — addition of territory enjoining any incorporated city;
“Title 7, Chapter 2, Part 43 — annexation of contiguous land to an incorporated city;
“Title 7, Chapter 2, Part 44 — annexation of contiguous government land;
“Title 7, Chapter 2, Part 45 — annexation of wholly surrounded land;
“Title 7, Chapter 2, Part 46 — annexation by petition from the council or legislative body of the municipality (7-2-4601(2)); from 50% of the resident freeholder electors (7-2-4601(3) (a) (i)); or from the owner or owners of each parcel of property in the territory to be annexed (7-2-4601 (3) (a) (ii));
“Title 7, Chapter 2, Part 47 — the planned community development act of 1973, annexation with the provision of services, subsequent to detraction.”

The second change made by the 1979 Legislature was to delete the first sentence of § 11-525, RCM (1947), which, cited above, provided that in cases of annexation, if there was conflict among statutes, then detraction controlled. The language of § 7-2-4718, MCA, which replaced § 11-525, RCM (1947), now states:

“Construction. (1) The method of annexation authorized in this part is independent from other methods of annexation authorized by state law.
“(2) The governing body of the municipality to which territory is proposed to be annexed, may in its discretion select one of the annexation procedures in parts 42 through 47 that is appropriate to the circumstances of the particular annexation. The municipal governing body must then follow the specific procedures prescribed in the appropriate part.” (Emphasis supplied).

In summary, the 1979 Legislature deleted the sentence of § 11-525, RCM, which provided that the Planned Community Development Act controlled. Moreover, the language providing that the detraction statute was “supplemental to” the other methods of annexation, was also deleted. Finally, the city was left with discretion over the method of annexation to be used. Each statutory method of annexation is now separate and distinct from all other methods. That method of annexation requiring detraction (Title 7, Chapter 2, Part 47) is independent from the other methods of annexation.

The legislature further exhibited its intent to make separate and distinct the annexation methods by stating that:

“When the proceedings for annexation of territory to a municipality are instituted as provided in this part, the provisions of this part and no other apply, except where otherwise explicitly indicated.” Sections 7-2-4204(1), -4304(1), -4408(1), -4505(1), and -4609(3), MCA. Therefore, not only did the legislature delete the language that Part 47 detraction method superseded all others, but it also explicitly stated that each annexation method was independent from all the other annexation methods.

After considering these statutory changes, the District Court found that the annexation laws were separate and independent from each other. According to the District Court decision, it is not equitable nor practical to require the City to conform to laws which have been superseded by virtue of recent amendment. The court also based its opinion on State ex rel. Hilands Golf Club v. City of Billings (1982), 198 Mont. 475, 478, 647 P.2d 345, 346, in which this Court, in dicta, concluded that the 1979 amendment created eight methods of annexation which were separate and distinct. In support of this conclusion, the majority opinion looked to the language of § 7-2-4204(2), MCA, which grants discretion to the municipality in choosing a type of annexation method.

Appellant, Missoula Rural Fire District, bases its arguments on the statutory changes in 1977, not the 1979 amendments. MRFD contends that the City can annex areas within the fire district only after detraction from the district, pursuant to Title 7, Chapter 2, Part 47. According to appellant, the 1977 Legislature attempted to alleviate the cumbersome method of annexation by allowing an easy method of for single ownership parcels. Section 7-33-2127, MCA. Also after 1977 under §§ 7-33-2122 and 7-33-2123, property owners, with a majority of signatures, could petition for detraction of the land. Regardless of the 1979 amendment, appellant asserts that under any circumstances, detraction is still necessary. Laws which govern fire districts control all methods of annexation.

Respondent, on the other hand, contends that the 1979 amendment made independent each statutory method of annexation. Therefore, according to respondent, only Title 7, Chapter 2, Part 47, requires detraction from the fire district prior to annexation. The seven other methods of annexation (Parts 42 through 46) do not require detraction.

Appellant’s argument stems from the legislature’s concern that with society’s move from rural to urban areas, sufficient services be provided to the growth areas in the cities. The rural fire districts have provided and presently provide services to outlying areas of the cities and towns of Montana. The legislature’s concern that services be provided with annexation of new areas was specifically addressed in § 11-518, RCM (1977). It was necessary under the old statute to prepare a report providing the long-range plans for development of services. The plan was presented at a public hearing. The residents of the proposed area to be annexed and residents of the municipality were allowed to be heard at the hearing. Section 11-520, RCM. The decision of the governing body of the municipality was also subject to court review. Section 11-522, RCM.

Even though the 1979 Legislature provided alternative means of annexation separate and distinct from the detraction method of annexation, it nevertheless carefully planned for the provision of services for newly annexed areas. Each current statutory method of annexation, separate and independent from the Part 47 detraction method, requires that the municipality provide services for newly annexed areas. For example, § 7-2-4610, MCA, requires:

“Provision of Services. In all cases of annexation under current Montana law, services will be provided according to a plan provided by the municipality as specified in 7-2-4732, except:
“(1) as provided in 7-2-4736; and
“(2) in first-class cities, where otherwise mutually agreed upon by the municipality and the freeholders of the area to be annexed.” Section 7-2-4732 mandates that there be a long-range plan of at least five years providing for police protection, fire protection, garbage collection, and street maintenance. Parts 42 through 45 have provisions identical to § 7-2-4610. Therefore, the initial concern of the legislature in 1974 to provide for the planning of long-range services was responded to in the 1979 statutory changes.

The 1979 statutory amendment creates methods of annexation which are separate and independent of each other. We hold that the 1979 statutory amendment renders the 1974 injunction no longer valid or applicable and MRFD v. City of Missoula was statutorily overruled. The District Court properly held that the 1979 legislative changes allow the City to annex real property by certain statutory provisions without detraction prior to annexation.

Affirmed.

MR. JUSTICES HARRISON, SHEEHY, GULBRANDSON, WEBER and McDONOUGH and THE HONORABLE THOMAS A. OLSON, District Judge, sitting for MR. JUSTICE HUNT concur.


text:
    STATE OF MONTANA, Plaintiff and Respondent, v. DENNY DEAN SHAW, Defendant and Appellant.
    No. 88-594.
    Submitted May 11, 1989.
    Decided June 2, 1989.
    775 P.2d 207.

      John S. Forsythe, Forsyth, for defendant and appellant.
    Marc Racicot, Atty. Gen., Robert F.W. Smith, Asst. Atty. Gen., Helena, Keith D. Haker, County Atty., Miles City, for plaintiff and respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

The defendant, Denny Shaw, appeals his conviction from the District Court of the Sixteenth Judicial District, Custer County. Following a jury trial, the defendant was found guilty of felony theft and burglary and was sentenced to 10 years at the Montana State Prison. We reverse.

The defendant’s brief presents seven issues for our review. Since we conclude that reversible error has been committed with respect to one of those issues, the remaining six will not be discussed. We consider whether it was error to allow the State to impeach a defense witness by asking if he had been convicted of a crime and asking him to disclose what crimes he had committed in view of Rule 609, M.R.Evid.

On July 21, 1987, John Helm of Miles City, contacted the Custer County Sheriff’s Office to report the theft of a skill saw, some tools, a .22 caliber rifle, two cameras, and miscellaneous groceries. He later reported that a rototiller was missing as well. On August 5, 1987, an anonymous woman called the Custer County Sheriff’s Office to report that groceries stolen from the Helm residence were taken to the James Carpenter residence by Mike Johnson.

Mike Johnson later gave a statement to the Custer County Deputy Sheriff concerning the offenses. Johnson stated that the Helm burglary was suggested by Lorna Kidd at a drinking party attended by Lewis Carpenter, Rose Carpenter, Carol Carpenter Johnson and Gary Johnson. The evidence established that the defendant was not present at that party. Mike Johnson, his brother Gary, and his wife Carol then traveled to a bar where they met a person named Danny or Denny Shaw. Mike Johnson testified that he and Denny Shaw had committed the burglary.

No physical evidence was presented by the State linking the defendant to the crime. Prior to trial, several of the State’s witnesses were shown pictures of Denny Shaw, whom they identified as the man who committed the burglary with Mike Johnson. At trial, those witnesses identified the defendant with varying degrees of certainty.

During the defendant’s presentation of his case, a bar owner was called to testify that it was not the defendant who sold him the .22 rifle which was allegedly the same rifle stolen from the Helm residence. The bar owner’s testimony was corroborated by another defense witness, Charles Schoonover, who was at the bar the night the gun was brought in. Mr. Schoonover testified that he wasn’t sure who brought the gun into the bar, but that it was not the defendant. He testified that he had known the defendant for ten to fifteen years.

On cross examination of Mr. Schoonover the State engaged in the following inquiry:

“Q. Have you ever been convicted of a crime?
“Mr. Christi: Your Honor, I’m going to object to that question. I don’t believe it’s within the scope of cross-examination.
“Mr. Corbin: I believe that has to be within the scope, Your Honor.
“The Court: It’s cross-examination. Overruled.
“Q. (by Mr. Corbin) Have you?
“A. Yeah.
“Q. What crime?
“A. Intimidation.
“Q. Any other crimes?
“A. Assault.
“Q. Anything involving guns?
“A. Intimidation.”

The defendant argues that the foregoing cross-examination is impermissible as a method of impeachment under Rule 609, M.R.Evid., which states:

“For the purpose of attacking the credibility of a witness, evidence that he has been convicted of a crime is not admissible.”

The State argues that the introduction of such evidence was harmless error because Mr. Schoonover’s testimony merely corroborated that of the bar owner and added nothing to the defendant’s case. Despite the substance of the witness’ testimony, this Court will not condone prosecutorial conduct which is in clear violation of Rule 609, M.R.Evid. We note that generally, it is the defendant who objects to the introduction of other crimes evidence. See State v. Just (1979), 184 Mont. 262, 602 P.2d 957; State v. LaVe (1977), 174 Mont. 401, 571 P.2d 97; State v. Heine (1976), 169 Mont. 25, 544 P.2d 1212; State v. Jensen (1969), 153 Mont. 233, 455 P.2d 631. In that circumstance, such evidence is inadmissible unless it falls within an exception of Rule 404(b), M.R.Evid.

“Other crimes, wrongs, acts. Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show that he acted in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident.”

Mr. Schoonover’s testimony as to his crimes failed to reveal a motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident. As a result the evidence was not admissible as an exception under Rule 404(b), M.R.Evid.

The record fails to disclose any appropriate reason for the State’s inquiry as to the prior criminal conduct of Mr. Schoonover. Clearly it was not something inadvertent in nature, as the defendant’s attorney objected to the question but was overruled by the trial court. We conclude that the intention on the part of the State was to discredit the witness by showing that he had been engaged in crimes of intimidation and assault, and that the intimidation crime involved guns. We further conclude that the aim on the part of the State was to improperly impugn the character of the defendant and thereby suggest a greater likelihood of guilt of the crimes with which he was charged. We will not tolerate this intentional and significant evasion of our rules.

We conclude that the prosecution’s inquiry clearly was improper under Rule 609, M.R.Evid., and that none of the exceptions stated in Rule 404(b), M.R.Evid. applied. We hold that it was reversible error for the District Court to allow this testimony.

The judgment of conviction is reversed and the case is remanded for new trial.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, HUNT, SHEEHY and McDONOUGH, and THE HONORABLE JOSEPH B. GARY, District Judge, sitting for MR. JUSTICE GULBRANDSON concur.


author: MR. JUSTICE SHEEHY

text:
    IRVIN “BUZZ” BUSKIRK, Plaintiff and Appellant, v. ADELINE NELSON, et al., Defendants and Respondents.
    No. 88-348.
    Submitted on Briefs March 23, 1989.
    Decided June 6, 1989.
    774 P.2d 398.

      Goldstein Law Firm, Mort Goldstein, Havre, for plaintiff and appellant.
    Smith, Walsh, Clarke & Gregoire, Joseph P. Gilligan, Great Falls, for defendants and respondents.
   MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

Irvin Buskirk appeals from a summary judgment entered on April 27, 1988 in the District Court, Twelfth Judicial District, Hill County, against Buskirk and in favor of defendants Adeline Nelson and Donald Nelson.

Because we determine that genuine issues of material fact existed in the cause on which the District Court purported to make findings of fact, we hold that the entry of summary judgment in this cause was improper, reverse and set aside summary judgment, and remand the cause to the District Court for further proceedings.

On January 13, 1983, Buskirk was helping Donald Nelson install a garage door opener on a garage door owned by Adeline Nelson. Adeline is the mother of Donald Nelson. After the door opener was installed, it is alleged that an object flew loose from the door and struck Buskirk in his left eye. Buskirk received immediate medical attention and subsequently incurred substantial expense in relation to medical treatment of his eye. As far as the record now reveals, he may have lost the sight of that eye.

Adeline Nelson was insured under a home owner’s policy issued by Farmer’s Insurance Exchange, a unit of Farmer’s Insurance Group. Buskirk made a claim under the policy for the injuries he received to his eye.

On February 2, 1983, a claims agent for Farmers, Tim McConville, met with Buskirk at his home in Havre, Montana. The claim was discussed but no settlement was reached. McConville again visited Buskirk on March 15, 1983. It appears that as a result of that meeting, Buskirk signed a release which if valid would have the legal effect of discharging Donald and Adeline Nelson from all of Buskirk’s claims. Buskirk’s contentions respecting that release will be set out below.

Eventually Buskirk brought suit against Donald and Adeline Nelson and the other defendants on September 27, 1984. The Nelsons, through their insurer, filed an answer to the complaint on November 20, 1984. In the answer, as a fourth defense, it is alleged that Bus-kirk had released and discharged the Nelsons.

During the course of litigation, the Nelsons moved for summary judgment. The court granted the summary judgment on April 27, 1988. In doing so the District Court made findings of fact. We find that the District Court made findings where contested and genuine issues of material fact existed in the cause. We set them out below.

The indented portions are the findings made by the District Court:

“1. When the draft was presented to Buskirk, McConville explained that the amount was being paid as a final settlement as to any claims Buskirk had against the Nelsons.”

Buskirk’s affidavits show that he contends that McConville represented to him that the $1,500 was an advance payment on his claim against the Nelsons and that more money would be forthcoming.

“2. McConville explained to Buskirk that he would also be entitled to $500 representing the limits of the medical payments provision of the Nelson policy given the medical expenses he incurred following the accident. McConville explained that the draft for $500 was to be issued out of the Billings claims office and that Buskirk would receive that check in several days.”

Buskirk claims that when he received the check for $500, it confirmed the statement made to him by McConville that he would be receiving payments in the future as he understood the arrangement with McConville. The deposition of McConville taken during discovery, cited by respondents as supporting the District Court’s finding, does not show that the $500 was explained to Buskirk as being a payment under the medical payments coverage. There appears to be no evidence on which to base the finding. Also Buskirk claims otherwise.

“3. At the same meeting, McConville presented Buskirk a document entitled ‘Release in Full of All Claims and Rights.’ Buskirk looked at the document and signed his name on the signature line at the bottom. McConville witnessed the signature of Buskirk and also signed the release agreement.”

Buskirk contends that at the time the release was presented to him, he was told that it was a paper presented for his signature so that McConville’s bosses would know that McConville was in contact with Buskirk. Buskirk claimed that the instrument he signed was 3” x 8Vi” which is not the size of the release.

Buskirk also claims that because of his injured eye, he could not read at the time the instrument was presented to him, and that he did not read it when he signed his name. He contends he signed the instrument because of the representations by McConville that he would receive partial payments, for which a draft was presented to him in the sum of $1,500 at the same time, and that the release instrument was simply proof for the insurance company that Mc-Conville was doing his job.

“4. On March 16, 1983, Buskirk asked his wife, Clarice Buskirk to read the wording on the backside of the draft for the $1,500 given the small print. The wording on the $1,500 draft expressly provided:

“ ‘Endorsement of this draft constitutes a release or covenant not to sue of all claims, known or unknown, the undersigned has or may have against the payor, their principals, agents, successors and assigns and insurance carriers.

“ ‘The release and covenant not to sue shall not destroy and or otherwise aifect the rights of persons on whose behalf this payment is made, or persons that may claim to be damaged by reason of the accident other than the undersigned, to pursue any legal remedies they may have against the undersigned or any other persons.

“ ‘However, if this draft is a payment under Workman’s or Worker’s Compensation, Medical Payments, Guaranteed Benefits, No Fault or similar coverage, Advance Payments, Minor settlements or Comprehensive or Collision Losses, endorsement of this draft shall constitute a receipt only.’

“5. Buskirk endorsed the back of the draft for $1,500 and deposited the money in the bank. Buskirk refuses to tend the money back to Farmer’s Insurance.”

What the District Court omits in this finding, is that when Clarice read the language on the back of the draft to her husband, Buskirk, their testimony is that they became concerned about the language and that they underlined those portions on the reverse of the draft which would indicate that the $1,500 was for a receipt only. Thus the draft itself indicates the following underlining of the last paragraph:

“However, if this draft is a payment under Workman’s or Worker’s Compensation, Medical Payments, Guaranteed Benefits, No Fault or similar coverage, Advance Payments, Minor settlements or Comprehensive or Collision Losses, endorsement of this draft shall constitute a receipt only.”

It was when the Buskirks underlined the draft that Buskirk endorsed it and deposited the money in the bank, whether Buskirk “refuses” to tender the money back to Farmer’s Insurance may be irrelevant. The insurer claims that in order to get a rescission, the draft amount must be tendered.

“6. After March 15, 1983, Buskirk made no efforts to contact Mc-Conville or any other claims representative of Farmer’s Insurance as to the settlement of the claim. Farmer’s had no notice of alleged claim until suit was filed.”

Contravening this finding are the contentions of Buskirk following the receipt of the second payment of $500. Buskirk inquired of Donald Nelson, and of Nelson’s insurance agent, concerning additional payments that Buskirk understood he would receive in the future. His testimony and affidavits show that when he made inquiries of the insurance agent, he was led to believe that the insurance company was “working on his claim” and that he would be receiving more advance payments and an offer of final settlement. He was informed that the company was waiting to learn whether or not he would be able to recover his sight in his injured eye.

In addition to the foregoing findings, the District Court also found as a conclusion of law that Buskirk was guilty of laches in waiting to sue until 18 months had passed because he had not made any further contact with the insurer in that period.

This is a case where the District Court adopted verbatim the proposed findings of fact and conclusions of law that were submitted by the attorney representing the insurer and the Nelsons. The court clearly fell into error when in adopting such proposals, the court constituted itself as a trier of factual issues, rather than determining as a judge whether under Rule 56, Montana Rules of Civil Procedure, any genuine issues of material fact existed. It is clear that such issues do exist.

The parol evidence rule is codified in Montana, § 28-2-905, MCA. Under that statute, evidence outside the terms of the written agreement is admissible when the validity of the agreement is the fact in dispute, or if it is evidence to explain an intrinsic ambiguity or to establish illegality or fraud. The language on the face of the $1,500 draft, purporting to be a release, but which is also a receipt in certain situations is indeed an ambiguity and Buskirk’s testimony is admissible in support of his claim of ambiguity, or to establish illegality or fraud, or to dispute the validity of the release. Brown v. Merrill, Lynch, Pierce, Fenner and Smith, Inc. (1982), 197 Mont. 1, 640 P.2d 453.

This Court has stated that summary judgment was not “intended nor can it be used as a substitute for existing methods in the trial of issues of fact . . .” Hull v. D. Irvin Transport Ltd. (1984) 213 Mont. 75, 690 P.2d 414, 417; Kober and Kyriss v. Stewart and Billings Deaconess Hospital (1966), 148 Mont. 117, 122, 417 P.2d 476, 479. The purpose of a motion for summary judgment is to determine whether any issues of material fact exist, and whether the moving party is entitled to judgment as a matter of law. Rule 56(c), Montana Rules of Civil Procedure; Cereck v. Albertson’s, Inc. (1981), 195 Mont. 409, 637 P.2d 509.

Because in this case the District Court determined issues of fact on a motion for summary judgment, reversal of the summary judgment is necessary.

There are other issues raised in this case which require a comment. The admissibility of the release in this case is in issue. On discovery, Farmer’s produced what appears to be a photocopy of a carbon copy of the original of the release. The original of the release was not produced by the insurer. Under Rules 1001, 1002, 1003 of the Montana Rules of Evidence, a copy of a writing kept in the regular course of business copied from another writing is admissible to the same extent as an original unless a genuine question is raised as to the authenticity of the original, or if under the circumstances it would be unfair to admit the duplicate or copy in the regular course of business in lieu of the original, or if a specific statute otherwise requires admissibility. We determine that whether the original of an instrument is authentic is a different question from whether an authentic original instrument was entered into by fraud or mistake. Unless, therefore, in this case Buskirk disputes the authenticity of the original, a true copy would be admissible. The original, of course, is the best evidence of the instrument, if it is available. Reversed and remanded.

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


text:
    KENNETH CIOTTI and Jordanella Ciotti, Plaintiffs and Respondents, v. ROBERT HOOVER, Diane Hoover, John Gerletti, and Jennifer Hendrix, Defendants and Appellants.
    No. 88-365.
    Submitted on Briefs March 2, 1989.
    Decided June 6, 1989.
    774 P.2d 406.
    Timothy J. Lape, Poison, for defendants and appellants.
    Thomas Alan Kragh, Rosscup & Kragh, Poison, for plaintiffs and respondents.
   MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

The appeal of the defendant John Gerletti from a judgment entered in the District Court of the Twentieth Judicial District, Sanders County, concerns the necessity of appointing three referees in a partition action as required by statute. Because we find the statute was not followed in the District Court, we reverse the judgment and remand for further proceedings.

There are four issues for review by this Court as follows:

1) Did the District Court err by not appointing three (3) referees as mandated by §§ 70-29-202(1) and (2), MCA, before partitioning the land into three parcels?

2) Did the District Court err by finding that none of the defendants objected to the appointment of a single referee instead of three referees?

3) Did the District Court err by finding that the defendants waived their rights to the appointment of three referees?

4) Did the District Court err by finding that Judge Henson’s order dated July 16, 1984 was in full force and effect?

The parties entered into a contract for deed with Leonard and Peggy Smith for the purchase of 200 acres in Sanders- County, Montana. At the time of the purchase, there were three couples; the Ciottis, the Hoovers and the Gerlettis. The Gerlettis have since divorced. The parties are tenants in common, each paying an equal part of the purchase price. The property has been paid for in full and the Smith’s are no longer parties to this action.

On May 18, 1983, the Ciottis filed a complaint for partition of the land because they were seeking financing and the bank would not lend on a mortgage without all the owners signing for the loan. The defendants, the Hoovers and Gerlettis were not personally served with the summons and complaint. Service was attempted by publication despite the Ciottis knowledge of the whereabouts of the defendants who resided out of state. In October, 1983, a default judgment was entered against the defendants. On July 16, 1984, an order was issued by Judge John S. Henson based on the default which ordered that the property be partitioned, that Hilman Hanson be appointed referee to partition the property and that the referee submit his report dividing the property to the District Court. On October 10, 1984, Judge Henson signed an order confirming the referee’s report and an amended order confirming the report was signed December 17, 1984.

On April 11, 1985, the defendants filed a motion to set aside the judgment based upon lack of service and notice. On May 24, 1985, Judge C. B. McNeil signed an order vacating the default judgment and declaring the orders of October 10, 1984 and December 17, 1984 void because the District Court was without jurisdiction to issue the default judgment and subsequent ordérs.

On June 13, 1985, the defendants filed an answer to the original complaint. One year later, the Ciottis filed a motion for an order to partition the land, for the appointment of a single referee, that Hilman Hansen be appointed as that referee and for confirmation of Hanson’s report which was previously submitted to the court. The motion was set for hearing July 8, 1986.

Prior to the hearing, the parties met for a settlement conference. The Ciottis and Gerlettis each made a proposal for settlement. There is some disagreement about which proposal was agreed upon. John Gerletti contends that the only unresolved item was the cost to have the land surveyed but it appears that he wanted five acres which abutted the creek on the property that had been fenced by the Ciottis. The settlement conference failed and the matter was set for trial on December 21, 1987. Gerletti made a motion to compel compliance with the settlement agreement and it was decided that the motion would be treated as a counterclaim at trial.

Trial was held on December 21, 1987 with only the Ciottis and John Gerletti appearing. Findings of fact, conclusions of law and judgment for partition were entered on March 1, 1988 denying Gerletti’s counterclaim and partitioning the land into three parcels. No referees were appointed prior to the partitioning of the land. Post-trial motions were filed by Gerletti addressing the appointment of referees and the court entered amended findings of fact, conclusions of law and judgment for partition on April 22, 1987. Again, no referees were appointed. Finding of fact No. 13 incorporates the July 16,1984 order which appoints Hilman Hanson as the single referee, however the parties never consented to the appointment of a single referee. Additional post-trial motions regarding the appointment of referees were filed by Gerletti and denied. This appeal followed.

I

1) Did the District Court err by not appointing three (3) referees as mandated by §§ 70-29-202(1) and (2), MCA before partitioning the land into three parcels?

2) Did the District Court err by finding that none of the defendants objected to the appointment of a single referee instead of three referees?

3) Did the District Court err by finding that the defendants waived their rights to the appointment of three referees?

The first three issues regarding § 70-29-202, MCA, governing the partitioning of property and the appointment of referees will be addressed as one. Sections 70-29-202(1) and (2) provide in part, as follows:

“. . . upon requisite proofs being made, it [the court] must order a partition according to the respective rights of the parties as ascertained by the court and appoint three referees . . .
“(2) The court, with the consent of the parties, may appoint a single referee instead of three referees in the proceedings under the provisions of this chapter, and the single referee, when thus appointed, has all the powers and may perform all the duties of the three referees.” (Emphasis added.)

The interpretation of this statute, insofar as it concerns the appointment of referees, has not been an issue before this Court until now, most likely because the language of the statute is clear and does not leave any discretion whatsoever to the District Court. An action for partition is a special statutory proceeding. Hurley v. O’Neill (1905), 31 Mont. 595, 79 P. 242, 243. “We must therefore look to the statute for the authority to bring the action and for the procedure to be followed both in bringing the action and after it is instituted.” (Emphasis added.) Lawrence v. Harvey (1980), 186 Mont. 314, 607 P.2d 551, 555, quoting Hurley, supra, 79 P. at 243.

The statute provides that unless the parties consent to the appointment of a single referee, three referees must be appointed. This was not done, therefore the District Court erred. The respondents contend this error was harmless error and that had three referees been appointed, the result would have been the same. This argument is pure speculation. We do not know what three referees might have done because three referees were not appointed under the mandatory language of the statute.

The District Court, in its findings of fact Nos. 17, 18, 19, and 20, finds that the defendants did not object to the appointment of a single referee until post-trial motions. First, it is not a matter of objecting to the appointment of a single referee, it is a matter of consent which the defendants did not give. Second, these findings simply are not supported by the record. The defendant first objected at the July 8, 1986 hearing on plaintiff’s motion dated June 13, 1986 which requested an order partitioning the property, the appointment of Hilman Hanson as the single referee, and for an order confirming Hanson’s report filed in the proceedings which were set aside for failure to make proper service. The defendant objected again when answering a renewed motion by the plaintiffs dated August 31, 1987 requesting the appointment of Hilman Hanson as the single referee. The defendant also objected at the December 21,1987 trial when the report by Hanson prepared for the void proceedings was introduced into evidence.

Based upon the court’s finding that the defendant did not object, the court found that this supposed failure constituted a waiver of the defendant’s right to have three referees appointed by the court. This is clearly error. If consent for a lesser number is not given, the statute states the court must appoint three referees.

II

4) Did the District Court err by finding that Judge Henson’s order of July 16, 1984 was in full force and effect?

It is fundamental to our system of law that the court rendering a decision in any particular case, have jurisdiction over the parties. Jurisdiction is power, that is, the authority to render a judgment. The District Court realized this when it vacated the first proceeding on the grounds that jurisdiction did not exist.

“It is elementary that when the judgment roll upon its face shows that the court was without jurisdiction to render the particular judgment, its pronouncement is in fact no judgment. It cannot be enforced. No right can be derived from it. All proceedings founded upon it are invalid and ineffective for any purpose.” (Emphasis added.)

Apple v. Edwards (1949), 123 Mont. 135, 140-141, 211 P.2d 138.

The District Court, in its findings recognized the invalidity of the default judgment issued October 4, 1983 and voided two of the resulting orders, but then states that the July 16, 1984, order was in full force and effect. This is not correct. The whole prior proceeding is void, not just parts of it. As a result, the July 16, 1984, order cannot be the basis for the appointment of a single referee. Otherwise the clearly stated requirements of § 70-29-202, MCA, are not given effect. Reversed and remanded for further proceedings in accordance with this opinion.

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