author: JUSTICE HUNT JUSTICE NELSON

text:
    WILLIAM H. RETTIG and PATRICIA A. RETTIG, Plaintiffs and Appellants, v. STEVE P. KALLEVIG and GAYLE L. KALLEVIG, Defendants and Respondents.
    No. 96-630.
    Submitted on Briefs January 23, 1997.
    Decided April 10, 1997.
    54 St.Rep. 307.
    282 Mont. 189.
    936 P.2d 807.

      See C.J.S. Easements § 36.
    For Appellants: Renee L. Coppock, Crowley, Haughey, Hanson, Toole & Dietrich, Billings.
    For Respondents: P. Bruce Harper, Harper Law Firm, Billings.
   JUSTICE HUNT

delivered the Opinion of the Court.

Appellants William H. Rettig and Patricia A. Rettig (Rettigs) appeal from the findings of fact, conclusions of law, and judgment entered by the Thirteenth Judicial District Court, Carbon County, determining that Rettigs had not established a prescriptive easement over real property owned by Steve P. Kallevig and Gayle L. Kallevig (Kallevigs).

We affirm.

We review whether the District Court erred in concluding that Rettigs did not establish a prescriptive easement over Kallevigs’ property because Rettigs’ use was permissive.

BACKGROUND

Rettigs and Kallevigs own adjoining parcels of real property in Carbon County, Montana. Rettigs purchased their parcel (the Rettig property) in 1983 from Jim Englert, and became neighbors with Kallevigs in 1994when Kallevigs purchased their parcel (the Kallevig property) from Mrs. Kallevig’s father, Edward DeRudder. Englert and DeRudder were neighbors for nearly fifteen years, and their history is an important part of this case.

The western border of the Kallevig property abuts a paved highway that runs in a north-south direction, passing through the nearby towns of Fromberg and Bridger. The Rettig property is to the east of the Kallevig property and does not abut the highway. Traditionally, the Rettig property was connected to the paved highway by one of two routes: via the Skunk Creek Road, a county road that runs along the northern border of the Rettig property, and via the Temple Road, a track across the Rettig property that eventually connects with the Skunk Creek Road.

In the early 1960s, DeRudder dug a silage pit on his property (later, the Kallevig property) and built a road connecting the silage pit and the paved highway. DeRudder erected a fence and gate at the junction of the silage pit road and the paved highway. With DeRudder’s express permission, Englert extended the road from the silage pit in an easterly direction over DeRudder’s property to his, Englert’s, property (later, the Rettig property). Englert graveled the road and installed a drainage pipe. After the road was constructed, Englert moved his mailbox from the junction of the highway and Skunk Creek Road to the junction of the highway and the silage pit road. DeRudder did not object to these actions.

This silage pit road provided Englert a more convenient access to the paved highway than did the Skunk Creek Road or the Temple Road. DeRudder allowed Englert to use the silage pit road, subject to his clearly expressed authority to revoke the permission should certain circumstances arise which would prompt him to do so. Englert understood that his use of the silage pit road was permissive.

In the early 1980s, Englert informed DeRudder of his intention of selling his property. DeRudder advised Englert that all prospective buyers be instructed that the use of the silage pit road was not a right but a privilege, based on DeRudder’s grant of permission.

Englert testified that when Rettigs, as prospective buyers, came to inspect the property, he informed them of the permissive nature of the use of the silage pit road. Rettigs denied that this statement was made. Englert explained during his testimony at trial that Rettigs asserted their belief that they could establish a right to use the road, and that this statement was made in response to his warning that the use of the road was permissive. Areal estate agent, Bill Huyser, testified that he was present during this conversation, that he heard the statements described by Englert, and that he himself informed Rettigs that the use of the silage pit road was permissive. The court found Englert’s testimony credible.

Rettigs purchased the property in 1983 and immediately began using the silage pit road as the primary access to their property. Rettigs often saw DeRudder as they drove the road, and they usually exchanged smiles and waves in passing. Rettigs were never informed directly by DeRudder that their use of the road was permissive.

While DeRudder maintained the section of the road from the highway to the silage pit, Rettigs maintained the section of the road from the silage pit to their property. Rettigs’ graveled the road, replaced the drainage pipe previously installed by Englert with a culvert, and put in a cattle guard. On particularly snowy days when the silage pit road was impassable without four-wheel drive, Rettigs parked their car on the road. Rettigs also placed their mailbox at the junction of the highway and the silage pit road. DeRudder did not object to any of these actions.

In 1985, Rettigs plowed under the Temple Road, placed a sprinkler system on the property, and converted the plowed under road to agricultural use. However, Rettigs did not remove the entry gates, the entry arch, or the road apron where their property joined the Skunk Creek Road. DeRudder testified that he had no knowledge that Rettigs had plowed under the Temple Road.

In 1994, DeRudder sold his property to his daughter and son-in-law, Kallevigs. Kallevigs informed Rettigs that they could no longer use the silage pit road, and in January, 1995, closed and locked a gate across the roadway at the point at which it connects to the paved highway. Rettigs filed suit seeking a judgment declaring that they held a prescriptive easement across Kallevigs’ property. After a non-juiy trial, the court entered judgment for Kallevigs, concludingthat aprescriptive easement had not been established and that use of the silage pit road was merely permissive. Rettigs appeal from this judgment.

STANDARDS OF REVIEW

In the recent case of Rafanelli v. Dale (1996), 278 Mont. 28, 924 P.2d 242, where we considered whether the district court erred in concluding that a prescriptive easement had been established, we explained the applicable standards of review:

We review a district court’s findings of fact to determine whether they are clearly erroneous, giving “due regard... to the opportunity of the trial court to judge of the credibility of the witnesses.” Rule 52(a), M.R.Civ.P. In determining whether a court’s findings of fact are clearly erroneous, we apply a three-part test:
First, the Court will review the record to see if the findings are supported by substantial evidence. Second, if the findings are supported by substantial evidence we will determine if the trial court has misapprehended the effect of evidence. Third, if substantial evidence exists and the effect of evidence has not been misapprehended, the Court may still find that “[A] finding is ‘clearly erroneous’when, although there is evidence to support it, a review of the record leaves the [CJourt with the definite and firm conviction that a mistake has been committed.”
Interstate Prod. Credit Ass’n v. DeSaye (1991), 250 Mont. 320, 323, 820 P.2d 1285, 1287 (citations omitted). We review conclusions of law to determine whether the district court’s interpretation of the law is correct. Public Lands Access Ass’n, Inc. v. Boone and Crockett Club Found., Inc. (1993), 259 Mont. 279, 283, 856 P.2d 525, 527.

Rafanelli, 924 P.2d at 245. We also explained that

[fit is within the province of the trier of fact to weigh the evidence and assess the credibility of witnesses and we will not second-guess those determinations. Moreover, we will uphold a district court’s findings when there is substantial evidence to support them even when there is also evidence supporting contrary findings.

Rafanelli, 924 P.2d at 245-46 (citations omitted).

DISCUSSION

Did the District Court err in concluding that Rettigs did not establish a prescriptive easement over Kallevigs’ property because Rettigs’ use was permissive?

A prescriptive easement is created by operation of law in Montana. Swandal Ranch Co. v. Hunt (1996), 276 Mont. 229, 233, 915 P.2d 840, 843. The party claiming the easement must establish “open, notorious, exclusive, adverse, continuous and uninterrupted use” of the claimed easement for the statutory five-year period. Public Lands Access Ass’n, Inc. v. Boone and Crockett Club Found., Inc. (1993), 259 Mont. 279, 283, 856 P.2d 525, 527 (citations omitted). However, because the theory of prescription is based on adverse use, a landowner may rebut a prescriptive easement claim by establishing that the use of the claimed easement was permissive. Rathbun v. Robson (1983), 203 Mont. 319, 322, 661 P.2d 850, 852.

That Rettigs’ use of the silage pit road was open, notorious, exclusive, continuous and uninterrupted is not disputed; prior to Kallevigs erecting the locked gate in 1995, Rettigs had used, with DeRudder’s knowledge, the silage pit road for some eleven years. However, the District Court concluded that Rettigs’ use of the silage pit road was permissive and therefore had not ripened into a prescriptive easement. Rettigs attack this conclusion on several grounds.

First, Rettigs claim that the court’s conclusion was erroneous because DeRudder never informed them that their use of the road was permissive. Second, Rettigs claim that the court’s conclusion was erroneous because, assuming Englert and Huyser informed them of the permissive use of the road (which Rettigs deny), the only way such information would have the effect of a grant of permission from DeRudder himself would be if DeRudder had issued written authority to Englert and Huyser to grant permission on his behalf. See § 28-2-903(l)(d), MCA (contract involving interest in real property must be in writing). There was no evidence that such a relationship was created. Third, Rettigs claim the court’s conclusion was erroneous because Englert’s permissive use of the road was not automatically transferred to Rettigs upon their purchase of Englert’s property. Rather, Rettigs argue that the nature of their use of the road must be evaluated upon its own merits, and that such an evaluation clearly reveals that their use was adverse to DeRudder’s ownership for the statutory period.

Kallevigs contend, essentially, that the fact that DeRudder did not directly, or, indirectly through Englert or Huyser, grant Rettigs permission to use the road is not dispositive here. Similarly, Kallevigs contend that Rettigs’ “transferred permission” argument is inapplicable. Rather, Kallevigs argue that the initial, undisputedly permissive nature of the road continued uninterrupted until that permission was revoked in 1995. In that respect, Kallevigs argue that the permissive nature of the use of the road was not dependent on DeRudder affirmatively granting Rettigs permission to use the road. Moreover, Kallevigs contend that DeRudder was neither prompted nor required to take any action to uphold the permissive nature of the use of the road, because Rettigs did not use the road in a substantially different manner than did Englert before them. The court’s findings and conclusions reflect Kallevigs’ argument, and are supported by substantial credible evidence.

The trial testimony of Englert and DeRudder clearly establishes that the use of the silage pit road was permissive from the moment construction of the road was completed. The record also shows that Englert, in building, maintaining, and using the road, graveled the road, installed a drainage pipe, moved his mailbox to the junction of the silage pit road and the paved highway, and used the road as his principal access to his residence. These activities manifested the use of the road permitted by DeRudder.

When Rettigs purchased the property, they used the silage pit road in much the same manner as did Englert. They used the road as their primary access to their residence. They replaced the drainage pipe with a culvert. They graveled the road. They placed their mailbox at the junction of the silage pit road and the paved highway. 'While Rettigs in some specific ways used the road differently than did Englert, as in installing a cattle guard and parking their car on the road on particularly snowy days, Rettigs’ overall use of the roadway was not inconsistent with the use initially permitted by DeRudder. In addition, Rettigs’ plowing under of the Temple Road, an event which Rettigs claim indicated their intent to use the silage pit road as their own, was done, according to testimony which the court found credible, without DeRudder’s knowledge. Finally, in light of the nature of Rettigs’ use of the road, consistent with the use initially permitted by DeRudder, Rettigs’ statement to Englert during purchase negotiations in the early 1980s that they believed they could establish a prescriptive easement (a statement apparently relayed to DeRudder) stands alone and ineffective as an indication to DeRudder of Rettigs’ intentions. Therefore, DeRudder was effectively without notice that Rettigs considered their use of the road adverse to his ownership rights, and was under no compulsion, legal or otherwise, to assert his right of ownership and clarify that use of the road was permissive only. “[A] landowner should not be forced to give up title to property without notice of the alleged adverse claim and the opportunity to know that his title is in jeopardy.” Amerimont, Inc. v. Gannett (1996), 278 Mont. 314, 924 P.2d 1326, 1333 (citations omitted).

In addition, transferred permission is not involved here; rather, the permissive use initially contemplated by DeRudder and Englert continued without substantial change, modification, or hesitation until 1995. Rettigs correctly assert that this Corut has held that permissive use is not transferable. Luoma v. Donohoe (1978), 179 Mont. 359, 363, 588 P.2d 523, 525. In Luoma, defendant argued that even if use of a trail over plaintiff’s property had been permissive in the past, the permissive nature of the use of the trail did not extend to him because permissive use is not transferrable. In explaining the non-transferability of permissive use, we stated that one who has received permission to use a road may not transfer a “limited personal right or hcense to use the road to any other person or persons.” Luoma, 588 P.2d at 525 (citing Cope v. Cope (1971), 158 Mont. 388, 493 P.2d 336). However, the rule regarding non-transferability of permissive use does not work to limit the landowner’s ability to permit whomever he wishes to use his land. Alandowner may, as here, determine that any owner of a particular parcel of property be allowed to use a roadway over his property; the identity of the permitted user may change without running afoul of the rule regarding non-transferability of permissive use.

Rettigs contend, however, that the permissive use originally contemplated by DeRudder did not extend to them because they were never informed by DeRudder, either directly or indirectly, that the use of the silage pit road was permissive. This contention is without merit. First, periodic, express grants of permission are not required to maintain the permissive character of the use of a road. “[I]f a use begins as a permissive use it is presumed to continue as such.” White v. Kamps (1946), 119 Mont. 102, 114, 171 P.2d 343, 349. Moreover, the relevant facts here, that use of the road by Englert and Rettigs was essentially the same, that DeRudder did not object to either Englert’s or Rettigs’ use, and that DeRudder intended that the use be permissive only, support a conclusion that Rettigs’ use of the road was pursuant to DeRudder’s implied permission. “[WJhere the use of a way by a neighbor was by express or implied permission of the owner ... continuous use of the way by the neighbor [is] not adverse and [does] not ripen into a prescriptive right.” Tanner v. Dream Island (1996), 275 Mont. 414, 425, 913 P.2d 641, 648 (citations omitted). Further, the court found credible the testimony that Englert and Huyser informed Rettigs of the permissive nature of the use of the road. While Englert’s and Huyser’s information did not, by itself, create a permissive use situation, it nevertheless indicated to Rettigs DeRudder’s characterization of the use of the road. And, as we have discussed, Rettigs’ use of the road was not inconsistent with DeRudder’s characterization.

Our review of the record leaves us with the firm conviction that the District Court’s findings of fact are supported by evidence and are not clearly erroneous, and that the court’s conclusions of law are correct. Based upon the witness testimony and other evidence before it, the court concluded that Rettigs’ use of the silage pit road was a continuation of the permissive use initially established by DeRudder and Englert. Based upon this conclusion, the court determined that Rettigs had not established a prescriptive easement. The court did not err.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES TRIEWEILER, REGNIER and LEAPHART concur.

JUSTICE NELSON

dissenting.

I respectfully dissent from the Court’s opinion in this case. I would hold that the Rettigs’ use of the road was adverse; that the Kallevigs failed in their burden to establish permissive use; and, thus, that the Rettigs did have a prescriptive easement over the Kallevigs’property.

As the Court’s opinion correctly states, a claim to an easement by prescription may be defeated by the landowner demonstrating that the claimant’s use was with the landowner’s permission. Rathbun v. Robson (1983), 203 Mont. 319, 322, 661 P.2d 850, 852. While the Court also correctly states that permissive use is not transferrable, Luoma v. Donohoe (1978), 179 Mont. 359, 363, 588 P.2d 523, 525, it then ignores that principle and the record in this case to reach the incorrect conclusion that “the permissive use initially contemplated by DeRudder and Englert continued without substantial change, modification, or hesitation until 1995.”

Contrary to this assertion, a substantial change did occur in that Englert sold his property to the Rettigs in 1983. Although Englert’s use of the road was with the express permission of DeRudder, the testimony at trial showed that the Rettigs and DeRudder never discussed the use of the road that crossed DeRudder’s property. Englert and Huyser testified that when the Rettigs, as prospective buyers, came to inspect Englert’s property, they informed the Rettigs that the easement was permissive. This, however, did not make the Rettigs’use of the road permissive. As we have already stated, Englert could not give someone else the right to permissively use DeRudder’s property; permission is not transferrable. Luoma, 588 P.2d at 525. Moreover, evenif DeRudder made Englert his agent to advise the Rettigs of DeRudder’s intent to make the Rettigs’use permissive (and there is absolutely no evidence that he did), the agency failed because it was not in writing. See §§ 28-2-903, 28-10-201 and 28-10-203, MCA; Palin v. Gebert Logging, Inc. (1986), 220 Mont. 405, 407, 716 P.2d 200, 202.

Regardless of Englert’s use of the roadway being permissive, such use could not, as a matter of law, nor was it in this case, as a matter of fact, transferred to the Rettigs. Rather, the Rettigs’ claim of prescriptive use of the roadway must stand or fall on its own. We must look strictly at the conduct between the Rettigs and DeRudder to determine whether the Rettigs established a prescriptive use or whether that claim was defeated by DeRudder’s grant of permission.

In this regard, it is undisputed that DeRudder did not expressly grant or deny permission for the Rettigs to use the roadway. Rather, DeRudder, at the most, merely acquiesced in the Rettigs’ use of the road. “Implied acquiescence is not the same as permission.” Cremer v. Cremer Rodeo Land and Livestock Co. (1981), 192 Mont. 208, 211, 627 P.2d 1199, 1201. Acquiescence means “passive conduct on the part of the owner of the servient estate consisting of failure on his part to assert his paramount rights against the invasion thereof by the adverse user. ‘Permission’ means more than mere acquiescence; it denotes the grant of a permission in fact or a license.” Cremer, 627 P.2d at 1201 (citations omitted). Clearly, DeRudder, by failing to assert his rights, merely acquiesced in the Rettigs’ use of the road and did not give the necessary “permission in fact or a license” that would be sufficient to defeat the Rettigs’ claim of adverse use.

Moreover, if Englert’s testimony was credible, as the District Court found and as Kallevigs argue, then as early as 1983, when the Rettigs negotiated for the purchase of their property, Englert put DeRudder on notice that the Rettigs claimed a prescriptive use of the road. Once that happened, DeRudder was obligated to take some affirmative action to advise or to show the Rettigs’ that their claim of adverse use was incorrect and that they were privileged to use the road over his property only with his permission. See Cremer, 627 P.2d at 1201. Without citing any supporting authority, the Court incorrectly holds that DeRudder “was effectively without notice that Rettigs considered their use of the road adverse to his ownership rights, and was under no compulsion, legal or otherwise, to assert his right of ownership and clarify that use of the road was permissive only.” That is not the record in this case, nor is it the law.

The Rettigs were under no duty to communicate to DeRudder that they were using the road under a claim of right, adverse to DeRudder. Warnack v. Coneen Family Trust (1996), 278 Mont. 80, 923 P.2d 1087, 1089 (citing Tanner v. Dream Island, Inc. (1996), 275 Mont. 414, 425, 913 P.2d 641, 648).

[Allthough the plaintiffs bear the burden of establishing that their claim is known to and acquiesced in by the owner, they need not specifically notify the servient landowners that they are using the easement under a claim of right.

Warnack, 923 P.2d at 1089. Moreover, the Rettigs’ open, notorious, and hostile acts (daily use of the road as the sole means of ingress to and egress from their property; treating the road as if it were their own by installing a cattle guard and a culvert and spreading gravel on the road; and never seeking DeRudder’s permission to use the road) were inconsistent with DeRudder’s title to the road and were more than sufficient to constitute notice to DeRudder. Lemont Land Corp. v. Rogers (1994), 269 Mont. 180, 185, 887 P.2d 724, 728.

The Court holds, again without citing any supporting authority, that a landowner may determine “that any owner of a particular parcel of property be allowed to use a roadway over his property; the identity of the permitted user may change without running afoul of the rule regarding non-transferability of permissive use.” This statement is in direct contradiction to the rule that permissive use is not transferrable and is incorrect.

Moreover, the Court states that “periodic, express grants of permission are not required to maintain the permissive character of the use of a road.” For this proposition the Court cites White v. Kamps (1946), 119 Mont. 102, 171 P.2d 343, wherein this Court held that a use is presumed to be permissive if it began as such. While it may be true that, as to the person given permission by the landowner to use the landowner’s property, permission does not have to be re-granted, that is not the case here. DeRudder’s grant of permission was to Englert only; DeRudder never granted permission to the Rettigs. The Court’s statement, thus, implies that Englerts permissive use was transferred to the Rettigs, contradictory to our later holding in Luoma.

The record establishes that the Rettigs proved all of the elements of a prescriptive easement. In fact, the Court’s opinion concedes that “Rettigs’ use of the silage pit road was open, notorious, exclusive, continuous and uninterrupted ... with DeRudder’s knowledge ... for some eleven years.” What is not proven, however, is that DeRudder ever defeated the Rettigs’ claim of prescription by showing that he had granted them permissive use of the road over his property. While the Kallevigs may have proved permissive use as between DeRudder and Englert, that permissive use, as a matter of law, did not transfer to the Rettigs, and the Kallevigs wholly failed in their burden to show any permissive use as between the Rettigs and DeRudder. Accordingly, I would hold that the District Court erred in finding that the Rettigs did not have a prescriptive easement over the road on the Kallevigs’ property.

I would reverse.

JUSTICE GRAY concurs in the foregoing dissent.


source: Caselaw Access Project

author: JUSTICE LEAPHART

license: Public Domain

text:
    JARED PRESTON, Plaintiff and Petitioner, v. THE MONTANA EIGHTEENTH JUDICIAL DISTRICT COURT, GALLATIN COUNTY, and THE HONORABLE THOMAS A. OLSON, PRESIDING JUDGE, Respondents.
    No. 97-014.
    Decided April 10, 1997.
    54 St.Rep. 312.
    282 Mont. 200.
    936 P.2d 814.

      See C.J.S. Discovery § 4.
   OPINION AND ORDER

JUSTICE LEAPHART

delivered the Opinion of the Court.

Petitioner Jared Preston, petitions this Court pursuant to Rule 17, M.R.App.P., to issue awrit of supervisory control and vacate the order of the Eighteenth Judicial District Court, Gallatin County, limiting the scope of discovery. We vacate the District Court’s order to the extent that it limits the scope of Preston’s discovery.

We consider the following issue and subissues in this Opinion and Order:

1. Is a writ of supervisory control appropriate in this case?
a. Did the District Court err in denying discovery of evidence of substantially similar injuries caused by the same design defect in other product models manufactured by the Defendant?
b. Did the District Court err in limiting discovery to the time period beginning with the manufacture of the N12 model roofing nailer and ending with the Plaintiff’s injury?

Factual and Procedural History

This request for a writ arises out of a products liability action in which Jared Preston alleges defective design of the N12 model pneumatic roofing nailer manufactured by Respondent Stanley-Bostich. Jared was working as a roofer with his brother and co-worker Jeremy Preston when the injury occurred. Jared was laying out shingles on a roof while Jeremy nailed the shingles in place using the N12 model nailer. Jared was on his knees and had bent over to retrieve a shingle blown out of place by the wind. Jeremy was standing behind Jared with the nailer in his hand. As Jared straightened up, he bumped the tip of the nailer causing it to discharge a nail into his head, causing him injury.

The complaint against Stanley-Bostich alleges design defect and alternative design, and requests punitive damages. Preston’s claims are based upon the fact that, prior to the development of the N12 model nailer, Stanley-Bostichhad designed, patented, manufactured, and marketed a safer “sequential-trip” trigger mechanism on most of its pneumatic nailers. The trigger mechanism on the N12 model nailer is known as a “contact-trip” mechanism, which is a spring loaded device on the tip of the nailer that engages when it is pressed against any surface. Once the trigger is depressed, the nailer will fire and continue to fire each time the tip comes into contact with an object.

Preston served Stanley-Bostich with discovery requests asking for information about the alternative design and information concerning injuries caused by the models not equipped with the alternative sequential-trip safety mechanism. Stanley-Bostich refused to provide any information pre-dating the manufacture of the N12, or any information concerning injuries caused by any model other than the N12.

Preston moved the District Court to compel discovery. The District Court granted the motion, but limited discovery to the N12 model nailer, and to the time period from the manufacture of the N12 to the date of Preston’s injury. Preston requested reconsideration of the restrictions imposed on the discovery. The District Court declined to reconsider. Preston asks this Court to issue a writ of supervisory control vacating the restrictions ordered by the District Court and compelling Stanley-Bostich to answer the discovery requests. Stanley-Bostich filed a response in which it argued the substantive merits of the District Court’s order but did not contest the procedural appropriateness of supervisory control in this case. In a March 18, 1997 order, we accepted original jurisdiction of the issue raised in Preston’s application for writ.

Discussion

1. Is a writ of supervisory control appropriate in this case?

This Court has recently clarified the standard for determining whether to exercise supervisory control. Plumb v. Fourth Jud. Dist. Court (1996), [279 Mont. 363], 927 P.2d 1011. Prior to Plumb, there existed two lines of authority which set forth the standard for our exercise of supervisory control. The more commonly used standard was that “ ‘supervisory control is appropriate where the district court is proceeding under a mistake of law, and in so doing is causing a gross injustice.’ ” Plumb, 927 P.2d at 1014 (citations omitted). This line of authority evolved from the decision in State ex rel. Whiteside v. District Court (1900), 24 Mont. 539, 63 P. 395, in which the Court held that one of the functions of supervisory control is to “enable this court to control the course of litigation in the inferior courts where these courts are proceeding within the jurisdiction, but by a mistake of law, or willful disregard of it, are doing a gross injustice, and there is no appeal, or the remedy by appeal is inadequate.” Whiteside, 63 P. at 400.

A second line of authority followed our decision in State ex rel. Racicot v. District Court (1990), 244 Mont. 521, 798 P.2d 1004, where we held that the exercise of supervisory control was appropriate upon the satisfaction of three circumstances. Plumb, 927 P.2d at 1015. The Racicot decision was subsequently interpreted to mean that all three circumstances must be present before supervisory control will be accepted. Plumb, 927 P.2d at 1015. In Plumb, we decided that there may be cases in which supervisory control is appropriate but which do not meet all three circumstances. Therefore, we held that “to the extent that the Racicot decision suggests that all three elements must be established before supervisory control is exercised, and to the extent that subsequent decisions have applied the test in that fashion, they are reversed.” Plumb, 927 P.2d at 1015. We therefore followed the Whiteside line of authority for determining when supervisory control is appropriate and noted that “this Court has followed the practice of proceeding on a case-by-case basis though we are careful not to substitute the power of supervisory control for an appeal.” Plumb, 927 P.2d at 1015 (citing State ex rel. Reid v. District Court (1953), 126 Mont. 489, 255 P.2d 693).

In Plumb, we held that the constitutionality of the statute in question was an appropriate issue to decide by supervisory control because the petitioner’s remedy of appeal was inadequate and the denial of a speedy remedy by supervisory control would be a denial of justice. We held that without the exercise of supervisory control “the course of discovery will be affected, the cost of preparation and trial will be affected, settlement by the parties will be rendered more difficult, and the value of any verdict will be questionable, meaning additional time and expense for a resolution of this issue by appeal and the inevitable subsequent litigation.” Plumb, 927 P.2d at 1016.

The present case involves a restriction on the discovery of information pertaining to a products liability case. This Court has, in prior decisions, addressed the propriety of supervisory control in the discovery context.

Where the exercise of supervisory control over discovery proceedings will thwart the purposes of the discovery rules contained in the Montana Rules of Civil Procedure and where the relator has an adequate remedy of appeal, this Court will not issue a writ. State ex rel. Guarantee Insurance Co. v. District Court (1981), 194 Mont. 64, 634 P.2d 648. In Guarantee Insurance we denied Guarantee’s request for a writ of supervisory control to avoid defeating the policy of speedy, inexpensive and just methods of discovery, because its application for writ was untimely, because it failed to exhaust available remedies in the district court, and because it had an adequate remedy by way of appeal in that it could ask for expenses of producing the documents as part of the judgment or on appeal. In Guarantee Insurance the district court had entered an order denying the defendant’s objections to interrogatories and directing it to comply with the discovery requests. Guarantee Insurance, 634 P.2d at 649. In discussing the policy considerations of accepting jurisdiction to review the discovery order, we held that allowing the defendant to contest the court’s order directing it to answer the interrogatories would “open a Pandora’s Box of abuses” of the discovery process. Guarantee Insurance, 634 P.2d at 651. We noted that accepting the writ in that case would defeat the purpose and goal of the Montana Rules of Civil Procedure to provide a speedy, inexpensive, and just method of discovering facts upon which each party’s right of action depends. Guarantee Insurance, 634 P.2d at 651.

In State ex rel. Burlington Northern R.R. Co. v. District Court (1989), 239 Mont. 207, 211, 779 P.2d 885, 888, we recognized this Court’s reluctance to grant writs in the context of discovery issues because of the interlocutory nature of a discovery order. Nonetheless, we noted the following two instances in which we had made an exception and had exercised supervisory control in discovery matters. B.N., 779 P.2d at 888.

In Kuiper v. District Court (1981), 193 Mont. 452, 632 P.2d 694 (Kuiper I), we issued a writ to determine whether the district court had properly granted a protective order in a products liability suit. The plaintiff had sought admissions from the defendant Goodyear Tire Company that certain documents in the plaintiff’s possession were genuine. The court denied the plaintiff’s request to compel the defendant to admit the genuineness of the documents and issued a protective order preventing the use of the documents on the basis that the documents fell within the protections of the attorney-client privilege and the work product rule. Kuiper I, 632 P.2d at 698. Because the protective order implicated the plaintiff’s free speech rights we accepted jurisdiction of the writ and ultimately reversed those parts of the protective order that prevented the use of documents not protected by the attorney-client privilege or the work product rule.

In a second case, Jaap v. District Court (1981), 191 Mont. 319, 623 P.2d 1389, this Court granted a writ because the district court had exceeded its authority by allowing defendant’s attorney to privately interview plaintiff’s physicians. In Jaap the district court’s order was vacated because the method of discovery was not authorized by the Montana Rules of Civil Procedure.

Having reviewed the precedents of Kuiper I and Japp, the Court in B.N. addressed the district court’s order compelling discovery of potentially privileged material. The district court had ordered the defendant to produce certain work product and had enjoined the defendant from engaging in further discovery until it complied with the discovery order. B.N., 779 P.2d at 887.

The defendant contended that if it were to disclose privileged material then “ 'the harm is complete and cannot be rectified on appeal.’ ” B.N., 779 P.2d at 888. This Court agreed that the potential harm which would be caused by the district court’s order could not be remedied by appeal and we held that the sanctions imposed on the defendant placed it at a significant disadvantage in litigating the merits of the case. We therefore exercised supervisory control and ultimately vacated that part of the district court’s order enjoining the defendant from engaging in further discovery. B.N., 779 P.2d at 894.

Our recent decision in Plumb sanctions the exercise of supervisory control in order to prevent a litigant from being placed at a significant disadvantage and to prevent unwarranted expenses and delays in the ultimate resolution of the litigation. Plumb, 927 P.2d at 1016.

We hold that a writ of supervisory control is appropriate in the instant case because, as explained below, the District Court is proceeding under a mistake of law which does a gross injustice to Preston by placing him at a significant disadvantage in litigating his case. Under the circumstances presented, remedy by appeal would be inadequate.

The District Court’s order restricts the scope of Preston’s discovery to information about the N12 model nailer only, and to information on the N12 model nailer from the time of manufacture to the date of Preston’s injury. Preston argues that the District Court is proceeding under a mistake of law in that information outside of the scope of the District Court’s order is discoverable pursuant to Rule 26(b)(1), M.R.Civ.R, which provides:

Parties may obtain discovery regarding any matter, not privileged, which is relevant to the subject matter involved in the pending action.... It is not ground for objection that the information sought will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.

Preston’s claims of personal injury are based on Stanley-Bostich’s alleged liability for defective design of its N12 model nailer. In particular, Preston is claiming that Stanley-Bostich is hable for its failure to implement a safer design for the nailer when Stanley-Bostich knew of the dangerous nature of the N12 model nailer and where an alternative design existed.

This Court has recognized a strong public policy in permitting broad discovery concerning defective and dangerous products to promote the public safety. See Kuiper I, 632 P.2d at 702. Other jurisdictions have also recognized a broad scope of discovery in products liability actions. See, e.g., Schaap v. Executive Industries, Inc. (N.D. Ill. 1990), 130 F.R.D. 384, 386; Kramer v. Boeing Co. (D.Minn. 1989), 126 F.R.D. 690, 692.

In determining whether the District Court has made a mistake of law in restricting discovery, we will examine the court’s discovery restrictions separately.

a. Did the District Court err in denying discovery of evidence of substantially similar injuries caused by the same design defect in other product models manufactured by the Defendant?

As previously stated, the District Court in this case limited discovery to injuries caused only by the N12 model nailer thereby excluding injuries caused by similar nailers with the same trigger mechanism. Rule 26(b)(1), M.R.Civ.P, provides that any information “reasonably calculated to lead to the discovery of admissible evidence” is discoverable. Additionally, this Court has recognized that evidence of other injuries caused by similar products is relevant and admissible. See Kuiper v. Goodyear Tire & Rubber Co. (1984), 207 Mont. 37, 56, 673 P.2d 1208, 1219 (Kuiper II); Krueger v. General Motors Corp. (1989), 240 Mont. 266, 274, 783 P.2d 1340, 1346. If evidence of other injuries is admissible then it must be discoverable as well, since any information tending to lead to admissible evidence is subject to discovery under Rule 26(b)(1), M.R.Civ.P.

In Kuiper II, the plaintiff was injured by an exploding multi-piece wheel rim manufactured by the defendant. The plaintiff introduced evidence of eighty-six injuries caused by the same type wheels and by other multi-piece wheels. Kuiper II, 673 P.2d at 1212. No evidence was introduced showing exactly how the other accidents occurred, nor the age or condition of the exploding wheels. On appeal, we held that the evidence of other injuries was admissible so long as the plaintiff showed substantial similarity. In offering guidance to the district court on retrial concerning the question of whether the evidence of other injuries and products was substantially similar so as to be admissible we stated:

A concerted effort should be made by that court to allow the admission of evidence of only those accidents where both the product and the circumstances surrounding the accident were similar to the case at bar.

Kuiper II, 673 P.2d at 1219. We noted for the court’s consideration that although we had determined in a previous opinion that information on similar injuries was discoverable, the rules of admissibility are different from the rules of discovery and, thus, district courts must make an independent inquiry regarding the admissibility of similar injuries. Kuiper II, 673 P.2d at 1218.

We stated further, in another decision, that the circumstances of other injuries need not be identical to be admissible. Krueger, 783 P.2d at 1346. In Krueger, the plaintiff removed the front drive line of a 1976 Chevrolet pickup equipped with a New Process Model 203 four-wheel drive transfer case. The vehicle rolled over the plaintiff leaving him a quadriplegic. Krueger, 783 P.2d at 1342. On appeal, this Court approved the admission of evidence of other accidents including one involving a Chrysler model and one in which the rear drive line was removed. The Court concluded that both incidents demonstrated the same roll-away characteristic that distinguished the defective product (the Chevrolet with the New Process Model 203 transfer case) from alternative designs. Krueger, 783 P.2d at 1346.

Stanley-Bostich contends that these cases illustrate that the other models of nailers about which Preston seeks information are not similar enough to the N12 model nailer to withstand the “similar injury” standard. Without necessarily agreeing with this contention we note that the standards referred to in the above-mentioned cases govern admissibility of evidence, not discovery of evidence. As we stated above, discovery requests are to be construed broadly in favor of disclosing any information tending to lead to admissible evidence. Whether that evidence is admissible is for the court to decide at trial, not for Stanley-Bostich to determine at the discovery stage of proceedings.

In another case in which Stanley-Bostich was the defendant in a products liability action concerning a model N16CT pneumatic nailer, and where Stanley-Bostich attempted to limit discovery of other accidents, a United States district court stated:

In the context of discovery of information relating to similar products, the defendant should not be the final arbiter of substantial similarity. Rule 26 provides that requests for information need only be calculated to lead to the discovery of admissible evidence. The standard for relevance under Rule 26 is less demanding than the standard for admissibility at trial [citation omitted].

Drabik v. Stanley-Bostich, Inc., (W.D. Mo. 1992) 796 F.Supp. 1271 (order compelling discovery).

A plaintiff in a products liability action must prove that the product was sold in a “defective condition unreasonably dangerous to a user....” Section 27-1-719(2), MCA. Evidence of injuries caused by similar models is relevant to both the “defect” and the “danger.” In the instant case, Preston is also suing for punitive damages. In order to prevail on his claim for punitive damages, he will have to prove that the defendant acted with indifference to the “high probability of injury to the plaintiff.” See § 27-1-221(2), MCA. Evidence of injuries caused by similar models is also relevant to this issue in that the existence of similar injuries tends to demonstrate the manufacturer’s knowledge of the “high probability of injury.”

Preston seeks discovery about various product models which utilize the same allegedly defectively designed contact-trip mechanism that caused Preston’s injury in this case. Evidence concerning similar models is commonly held to be discoverable when the different models contain the same alleged design defect. See Krueger, 783 P.2d at 1346; Jackson v. Firestone Tire and Rubber Co. (5th Cir.1986), 788 F.2d 1070, 1083; Schaap v. Executive Industries, Inc. (N.D. Ill. 1990), 130 F.R.D. 384, 387; Kramer v. Boeing Co. (D. Minn. 1989), 126 F.R.D. 690, 695. Because information of similar injuries caused by other models of nailers manufactured by Stanley-Bostich would be relevant to the issues of whether the design was unreasonably dangerous, whether Stanley-Bostich was aware of the danger, and whether Stanley-Bostich was aware of a viable, alternative design, we hold that it is reasonably calculated to lead to the discovery of admissible evidence under Rule 26(b)(1), M.R.Civ.P. Without information about models other than the N12 model, Preston is deprived of relevant evidence regarding models employing the alternative trigger design. The existence of an alternative design goes to the very heart of this products liability action. To preclude discovery of the alternative design in this manner would significantly disadvantage Preston’s ability to litigate his claim.

We hold that the District Court made a mistake of law in restricting discovery to the N12 model nailer only and that this mistake of law will significantly disadvantage Preston in litigating his claim as he is without the means to discover evidence that is not only relevant, but crucial, to his theory of the case.

b. Did the District Court err in limiting discovery to the time period beginning with the manufacture of the N12 model roofing nailer and ending with the Plaintiff’s injury?

The District Court’s time frame limitation prevents Preston from discovering evidence regarding the alternative design and evidence of similar injuries prior to Stanley-Bostich’s manufacture of the N12 model nailer in 1983, or dated after Preston’s injury on August 5,1991.

Preston argues that information as to similar injuries is reasonably calculated to lead to discovery of admissible evidence relating to unreasonably dangerous design, alternative design, and punitive damages. We agree. Preston argues that Stanley-Bostich designed the safer sequential-trip mechanism in the 1970s and made the decision to discontinue this alternative design in most of its main line nailers in 1973. The engineering and marketing decisions made in the 1970s are relevant to whether the contact-trip mechanism in the N12 model nailer was “unreasonably” dangerous. Furthermore, evidence of alternative designs is only admissible where the alternative design existed prior to, or concurrent with, the manufacture of the product in question. Krueger, 783 P.2d at 1345. Therefore, evidence of alternative designs available prior to the manufacture of the N12 model is not only relevant, but necessary, to Preston’s products liability claim and, therefore, the District Court is clearly proceeding under a mistake of law in precluding discovery of alternative design evidence predating the manufacture of the N12 model.

Evidence of prior injuries is also relevant to a punitive damage claim in that the plaintiff must show that the manufacturer had notice that its product was dangerous and caused injuries before it sold the product in question. In restricting discovery to injuries occurring after the manufacture date of the N12 model nailer, the court arbitrarily restricted information to injuries caused by only that nailer. The court’s order, in effect, requires that the product be the “same” rather than merely “similar.” We have already held that “similar injuries” includes injuries caused by similar products with the same design defect. In precluding discovery of facts occurring before the manufacture date of the N12 model nailer, the court impermissibly denied Preston access to information reasonably calculated to lead to discovery of admissible evidence on the issue of punitive damages.

Although evidence subsequent to the date of injury is not relevant to the alternative design issue, it is relevant to the unreasonably dangerous design element of Preston’s case. The fact that the same design defect continues to cause injuries is relevant to establishing the dangerousness of the product. See Jackson, 788 F.2d at 1084 (holding that under a strict liability theory, the dangerousness of a product may be proved as of any time prior to trial).

We hold that the District Court made a mistake of law in restricting discovery to the time period from the date of manufacture of the N12 model nailer to the date of Preston’s injury. If Preston is forced to proceed to trial without information which could reasonably lead to the discovery of admissible evidence which is crucial to the proof of his claim, he will be greatly disadvantaged in the litigation of his case.

Allowing the District Court’s discovery restrictions to stand in this case would not only unfairly disadvantage Preston but would defeat the purpose of the Rules of Civil Procedure in that it would require Preston to endure the time and expense of trial and an appeal before obtaining discoverable material essential to his case. We therefore vacate that portion of the District Court’s order that restricts discovery to injuries caused by the N12 model nailer only and to injuries occurring between the date of manufacture of the N12 model nailer and the date of Preston’s injury. We remand for further proceedings consistent with this Opinion and Order.

DATED this 10th of April, 1997.

CHIEF JUSTICE TURNAGE, JUSTICES HUNT, NELSON, REGNIER, GRAY and TRIEWEILER concur.


author: JUSTICE TRIEWEILER JUSTICE GRAY,

text:
    IN RE MARRIAGE OF JAMES WARREN DeCOSSE, Petitioner and Appellant, and DOROTHY ANN DeCOSSE, Respondent, Respondent, and Cross-Appellant.
    No. 96-118.
    Submitted on Briefs January 30, 1997.
    Rehearing Denied May 15, 1997.
    Decided April 15, 1997.
    54 St.Rep. 318.
    282 Mont. 212.
    936 P.2d 821.

      See C.J.S. Divorce § 544.
    For Appellant: Edmund P. Sedivy, Jr.; Sedivy, Bennett & White; Bozeman.
    For Respondent: Kent M. Kasting; Easting, Combs & Kauffman; Bozeman.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

James Warren DeCosse filed a petition for dissolution of his marriage to Dorothy Ann DeCosse in the District Court for the Eighteenth Judicial District in Gallatin County. Following a nonjury trial, the District Court entered its decree and judgment, in which it dissolved the parties’ marriage and divided their marital assets. James appeals the District Court’s valuation of his interest in the business by which he is employed. Dorothy cross-appeals the District Court’s refusal to consider her need for maintenance in the future, and the District Court’s refusal to award her attorney and expert witness fees. We reverse in part and affirm in part the judgment of the District Court and remand to that court for proceedings consistent with this opinion.

The following issues are presented by the parties:

1. Did the District Court err when it valued James’s interest in Gallatin Valley Furniture at $1,060,000 and ordered James to pay Dorothy $522,676 to equalize the marital property distribution?

2. Did the District Court abuse its discretion when it refused to reserve the issue of maintenance for future consideration dependent on Dorothy’s health?

3. Did the District Court abuse its discretion when it declined to award Dorothy attorney fees and costs which she incurred responding to James’s post-trial motions?

FACTUAL BACKGROUND

Dorothy and James DeCosse were married on July 14, 1973, and separated on May 26,1993. At the time of their marriage, James was the manager of his father’s business, Gallatin Valley Furniture, and owned thirty-five shares of stock in the company. When James’s father retired in 1985, Gallatin Valley Furniture entered into a series of redemption agreements with James’s father and mother. Pursuant to those agreements, each of James’s parents agreed to sell 1,640 shares of stock to the corporation at a price of $232 per share. The total cost was to be paid in installments. Final payment was due by June 28, 2000. In return, the remaining shareholders — who were James, and his sister and brother-in-law, Michelle and Dennis Cat-tin — agreed to several restrictions, including an agreement that the shareholders would not sell their shares, except to each other, until James’s parents were fully paid pursuant to the terms of the redemption agreements. In addition, the remaining shareholders executed irrevocable proxies with which James’s parents could liquidate the company in the event of any default in the redemption agreements.

The value of James’s parents’ stock was determined at the time of redemption by a certified public accountant, Wayne Neil. In valuing the stock, Neil used the income method of valuation, which is recommended by the American Institute of Certified Public Accountants for the valuation of closely held businesses. Pursuant to the income method, Neil weighted the average earnings of Gallatin Valley Furniture for the five years prior to redemption, giving the most recent year the greatest weight. He then applied both a high and low multiple for a return on investment consistent with reports in the National Home Furnishings Association Manual and multiplied it by the weighted average net equity of the business to establish normal earnings. By subtracting the normal earnings figure from the weighted average earnings figure, Neil calculated the excess earnings. Neil then applied a capitalization rate — the rate an investor would expect to receive for his risks in the company — and using both a low of fifteen percent and a high of twenty percent, produced a value for the goodwill of the company. When Neil added that figure to the total value of the net tangible assets of Gallatin Valley Furniture, he determined a high and low fair market value of the business. To determine the per-share value, he divided those figures by the number of outstanding shares of stock. Neil arrived at the final figure of $232 per share by taking the median of the high and low figures and applying a twenty percent minority shareholder discount.

In 1985, at the time James’s parents executed the redemption agreements, James owned 466 shares of Gallatin Valley Furniture stock, and Michelle and Dennis Cattin owned the remaining 466 shares. On Jeme 28, 1985, at the same time the redemption agreement was signed, James, Michelle, and Dennis entered into a shareholders’ agreement with Gallatin Valley Furniture. Pursuant to that agreement, J ames and Dennis were designated “shareholder-employees” and Michelle was designated a “shareholder.” The agreement provided that all transfers or other dispositions of corporate stock made during the lifetime or at the death of a shareholder were subj ect to restriction. Specifically, the agreement provided that if a shareholder-employee attempted a “restrictive transfer” or died, retired, or was disabled, the remaining shareholder-employee was given the first option to purchase the stock for the price and terms set forth in the agreement. The price per share was originally calculated at $230 per share, but the shareholders’ agreement provided that the shareholders would review the price each year. In addition, the agreement provided that if the shareholders failed to recalculate the price of the stock on a yearly basis, the corporation’s accountant would value the stock pursuant to the same method used to calculate the original stock price. The agreement established fifteen annual installments with an interest rate of ten percent as the terms of any purchase from one shareholder by another.

At each annual shareholders’ meeting from 1985 through 1994, Wayne Neil recalculated the fair market value of Gallatin Valley Furniture stock pursuant to the income method of valuation. Each year, the shareholders and directors of the corporation adopted the fair market value calculated by Neil. At their 1994 meeting, which occurred prior to the dissolution proceedings at issue in this case, Neil calculated the fair market value of the stock at $744.85 per share. At that time, James owned 521 shares of Gallatin Valley Furniture stock and Michelle and Dennis owned the remaining 521 shares.

At the dissolution proceedings in October 1994, Wayne Neil testified for James that pursuant to the income valuation method James’s share of the stock in Gallatin Valley Furniture was worth $388,066.85 prior to a minority shareholders’ discount. However, Dorothy’s business valuation expert, Martin Connell, testified that the value of James’s one-half interest in Gallatin Valley Furniture ranged from $1,171,026.50 to $1,373,544.00, depending on which of four methods of business valuation were employed. In his final report, Connell valued the business at $2,650,000. Connell therefore determined that James’s one-half share was equal to $1,325,000. Connell admitted at trial that he did not take the 1985 restrictive shareholders’ agreement into account in determining the fair market value of Gallatin Valley Furniture.

On May 9,1995, the District Court entered its findings of fact and conclusions of law. In its findings regarding James’s interest in Gallatin Valley Furniture, the court determined that “[t]he Shareholder’s Agreement has no application to these proceedings.” The court therefore accepted Connell’s valuation of Gallatin Valley Furniture, and held that James’s share of the company was $1,325,000 minus twenty percent for minority shareholders’ discount and lack of marketability. Accordingly, the court held that James’s share of Gallatin Valley Furniture was worth $1,060,000. The court awarded James his share of Gallatin Valley Furniture and ordered James to pay Dorothy the sum of $522,676 to equalize the property distribution. Based on its substantial monetary property cash award to Dorothy, the court determined that Dorothy would not be entitled to maintenance. The court further determined that each party would be responsible for his or her own attorney and expert witness fees.

ISSUE 1

Did the District Court err when it valued James’s interest in Gallatin Valley Furniture at $1,060,000 and ordered James to pay Dorothy $522,676 to equalize the marital property distribution?

This Court reviews the factual findings of a district court relating to the division of marital property to determine whether the court’s findings are clearly erroneous. In re Marriage of Danelson (1992), 253 Mont. 310, 317, 833 P.2d 215, 219. We review a district court’s conclusions of law relating to the division of marital property to determine whether those conclusions are correct. Marriage of Danelson, 253 Mont, at 317, 833 P.2d at 219-20.

On appeal, James maintains that the District Court’s findings of fact regarding the valuation of his interest in Gallatin Valley Furniture are clearly erroneous. Specifically, James asserts that the District Court erred when it refused to apply the 1985 shareholders’ agreement in its determination of the fair market value of his shares of stock in the company. James maintains that he has no interest in Gallatin Valley Furniture other than through his stock, which cannot be transferred or sold other than according to the terms of the shareholders’ agreement. Because the value of his stock is limited by that agreement to $310,453.48 for his 521 shares, James contends that the District Court’s valuation of his interest in the business at $1,060,000 is clearly erroneous.

This Court has addressed the issue of the effect of a restrictive shareholders’ agreement on the valuation of an interest in a closely held corporation on two occasions. In In re Marriage of Jorgensen (1979), 180 Mont. 294, 590 P.2d 606, we upheld a district court’s determination of the fair market value of stock in a closely held corporation at a price fixed by a restrictive shareholders’ agreement. We held:

In considering the range of values which the evidence offered, it is apparent the District Court did not abuse its discretion in fixing the value of the shares at... the amount decided upon by all the shareholders. This is especially applicable in view of the fact that any shareholder wishing to transfer the same is presently bound by the terms of the agreement. As long as the agreement is operative no shareholder can go upon the market and obtain more for his shares. Each shareholder is restricted to the price and to the purchasers set forth in the agreement.

Marriage of Jorgensen, 180 Mont, at 300, 590 P.2d at 610 (emphasis added). In addition, in In re Marriage of McLean (1993), 257 Mont. 55, 61, 849 P.2d 1012, 1015-16, we upheld a district court’s determination that one party’s interest in a law firm did not include the value of the goodwill of a partnership interest where that party had entered into a good faith agreement with the law firm to disclaim any interest in that goodwill. In neither case, however, were we faced with the situation, as here, in which the district court did not consider the effect of a negotiated shareholders’ agreement on a company’s value.

Amajority of jurisdictions holds that a restrictive agreement, while not conclusive evidence of the value of an interest in a closely held corporation, is a factor that must be considered by a trial court in the stock valuation process. See, e.g., In re Marriage of Micalizio (Cal. Ct. App. 1988), 199 Cal. App. 3d 662, 675-76; Stearns v. Stearns (Conn. 1985), 494 A.2d 595, 598; In re Marriage of Petterson (Minn. Ct. App. 1985), 366 N.W.2d 685, 688; Amodio v. Amodio (N.Y. 1987), 509 N.E.2d 936, 936-37; Poore v. Poore (N.C. Ct. App. 1985), 331 S.E.2d 266, 270; Buckl v. Buckl (Pa. Super. Ct. 1988), 542 A.2d 65, 70; Suther v. Suther (Wash. Ct. App. 1981), 627 P.2d 110, 113. In Amodio, the New York Court of Appeals held:

There is no uniform rule for valuing stock in closely held corporations....
... Whatever method is used, however, must take into consideration inhibitions on the transfer of the corporate interest resulting from a limited market or contractual provisions. If transfer of the stock of a closely held corporation is restricted by a bona fide buy-sell agreement which predates the marital discord, the price fixed by the agreement, although not conclusive, is a factor which should be considered.

Amodio, 509 N.E.2d at 936-37 (citations omitted) (emphasis added). In that case, the New York Court of Appeals held that the trial court properly disregarded the testimony of the plaintiff’s expert, who did not consider the restrictions set forth in the shareholders’ agreement in his analysis of the value of the corporate stock. Because the only other evidence of the corporation’s value was the stock price value set forth in the shareholders’ agreement, the New York Court of Appeals held that that value was conclusive as “the only evidence in the record of [the corporation’s) actual value.” Amodio, 509 N.E.2d at 937.

We agree that James’s only ownership interest in the Gallatin Valley Furniture business is represented by the stock which has been issued to him. Furthermore, so long as the existing shareholders’ agreement is in effect, James cannot transfer his stock for more than the price set forth in that agreement. Therefore, we hold that if the shareholders have employed an accepted method of valuation and there is no evidence that the valuation was undertaken in bad faith or for the purpose of avoiding marital or debtor/creditor responsibilities, there is a presumption that the valuation of stock set forth in a shareholders’ agreement is the real value of a shareholder’s interest in a closely held corporation.

In this case, Dorothy’s expert testified that he did not consider the 1985 shareholders’ agreement in any of the four methods he used to calculate the value of James’s interest in Gallatin Valley Furniture. Therefore, pursuant to the reasoning of Amodio, the only evidence before the District Court of the stock’s “actual value” was Neil’s valuation in the amount of $310,453.48. That value, negotiated in a good faith arms-length transaction, represents the price to which James would be limited should he attempt to transfer or sell his stock to satisfy the judgment against him. It also represents the amount that would have passed to James’s estate had he died while married to Dorothy during that period of valuation. See Marriage of Jorgensen, 180 Mont, at 300, 590 P.2d at 610.

Therefore, because the District Court accepted Dorothy’s expert’s valuation, which was prepared without reference to the 1985 shareholders’ agreement, and because the District Court refused to take that agreement into account when it valued James’s interest in the business, we hold that the District Court’s finding that James’s interest in Gallatin Valley Furniture was $1,060,000 is clearly erroneous. We remand this case to the District Court with instructions that James’s interest in Gallatin Valley Furniture should be valued at $310,453.48. We further instruct the District Court to equitably divide the parties’property and assets, pursuant to § 40-4-202, MCA, based on this valuation, and to reassess Dorothy’s need for maintenance in light of the corrected value of the marital estate and the manner in which it is redivided. Based on our holding that the District Court erred when it valued James’s interest in Gallatin Valley Furniture without reference to the pre-existing shareholders’ agreement, we do not reach Dorothy’s claim on cross-appeal that she is entitled to attorney fees she incurred in connection with this appeal.

ISSUE 2

Did the District Court abuse its discretion when it refused to reserve the issue of maintenance for future consideration dependent on Dorothy’s health?

We review a court’s award of maintenance or failure to award maintenance to determine whether the court abused its discretion. In re Marriage of Smith (1993), 260 Mont. 533,535,861 P.2d 189,190.

The District Court based its decision to deny maintenance on the following finding:

In view of the substantial assets being received, most of which are income-producing, this is not an appropriate case to award [Dorothy] separate maintenance. The distribution of the property coupled with her earnings, will enable [Dorothy] to maintain a reasonable standard of living. The court declines to keep the issue of future maintenance open, as requested by counsel for [Dorothy].

Although (prior to our decision regarding the valuation of James’s business interest), Dorothy did not dispute the court’s decision not to award her maintenance, she contends that the District Court erred when it failed to recognize that her ongoing health problems might necessitate a need for maintenance in the future. Dorothy maintains that, based on her health problems — which include neuromuscular damage, back problems, a benign tumor in her liver, and a chemical imbalance — the District Court should not have precluded her from requesting an award of maintenance in the future, depending upon complications which could arise in her health situation. We will consider this issue, even though the District Court has been instructed to reconsider its maintenance decision, because we do not know what the outcome of that reconsideration will be, and because, depending on the District Court’s decision, this issue may still be relevant.

Section 40-4-208, MCA, provides that a district court may, in certain instances, order a modification of a maintenance provision in a decree of dissolution. That section provides in relevant part:

(1) Except as otherwise provided in 40-4-201(6), a decree may be modified by a court as to maintenance or support only as to installments accruing subsequent to actual notice to the parties of the motion for modification.
(2) (a) Whenever the decree proposed for modification does not contain provisions relating to maintenance or support, modification. under subsection (1) may only be made within 2 years of the date of the decree.
(b) Whenever the decree proposed for modification contains provisions relating to maintenance or support, modification under subsection (1) may only be made:
(i) upon a showing of changed circumstances so substantial and continuing as to make the terms unconscionable;
(ii) upon written consent of the parties; or
(iii) upon application by the department of public health and human services, whenever the department of public health and human services is providing services under Title IV-D of the federal Social Security Act ....

In In re Marriage of Cooper (1985), 216 Mont. 34, 37, 699 P.2d 1044, 1046, we held:

A petition for modification with respect to maintenance must be considered by the District Court if it is filed within two years of the date the decree is rendered, regardless of whether the decree contains provisions for maintenance or whether maintenance payments are currently being paid. If two years has expired since the dissolution decree was rendered, modification is still possible when the decree contains a provision relating to maintenance. When maintenance payments are currently mandated under the decree, a modification petition must be considered by the District Court.

(Emphasis added.)

We conclude that a district court’s obligation to entertain a motion to modify its prior decision regarding maintenance is defined by statute and not by the decree for which modification is sought.

For example, pursuant to the District Court’s original decree of dissolution, entered December 1, 1995 — which did not contain a provision awarding Dorothy maintenance — Dorothy would have been able to petition that court for modification of its decision not to award maintenance until December 1, 1997, regardless of language to the contrary in the court’s findings of fact and conclusions of law. Section 40-4-208(2)(a), MCA. In light of this Court’s decision to remand this case to the District Court for reconsideration of marital property division and maintenance, however, that date is no longer applicable. If, on remand, the District Court reaffirms in its amended decree that Dorothy is not entitled to maintenance, Dorothy can still move for modification of maintenance within two years of the date of that amended decree, pursuant to § 40-4-208(2)(a), MCA. If, however, the District Court determines in its amended decree that Dorothy is entitled to maintenance, Dorothy will have an unlimited time in which to file her motion for modification of maintenance, pursuant to § 40-4-208(2)(b), MCA. In either case, the District Court will be required to entertain Dorothy’s motion for modification of maintenance, pursuant to § 40-4-208, MCA.

Therefore, to the extent that the District Court concluded it did not have to reconsider maintenance after the entry of its decree and judgment, we conclude that the court erred. However, in light of our resolution of Issue 1, and the fact that any future motion for modification is controlled by statute, we conclude that error was harmless.

ISSUE 3

Did the District Court abuse its discretion when it refused to award Dorothy attorney fees and costs she incurred in her response to James’s post-trial motions?

A district court’s decision to award or not to award attorney fees is largely discretionary. We . will not disturb a district court’s judgment related to the issue of attorney fees absent an abuse of that discretion. In re Marriage of Swanson (1986), 220 Mont. 490,496, 716 P.2d 219,223.

In this case, Dorothy contends that the District Court abused its discretion when it declined to award her attorney and expert witness fees which she incurred in order to respond to James’s post-trial motion to amend the District Court’s findings of fact and conclusions of law. Dorothy maintains that the District Court had authority, pursuant to § 40-4-110, MCA, to award her post-trial costs for James’s allegedly meritless motion to amend.

Section 40-4-110, MCA, provides:

The court from time to time, after considering the financial resources of both parties, may order a party to pay a reasonable amount for the cost to the other party of maintaining or defending any proceedings under chapters 1 and 4 of this title and for attorney’s fees, including sums for legal services rendered and costs incurred prior to the commencement of the proceedings or after entry of judgment. The court may order that the amount be paid directly to the attorney, who may enforce the order in his name.

(Emphasis added.) Pursuant to that section, the District Court is required to “consider □ the financial resources of both parties” when it decides whether costs and attorney fees should be awarded. In the underlying dissolution action in this case, the District Court concluded that:

Each party has been awarded substantial property interests some of which have significant future earning potential. Consequently, each party has the means, resources and ability to pay his/her own attomey’s/expert witness fees and costs without assistance from the other.

Although we conclude that the District Court did not abuse its discretion when it declined to award attorney fees and costs to Dorothy based on its division of property in its original decree, we do not know what the parties’ property or income will be following the amended decree, and therefore, hold that Dorothy is not precluded from raising the issue of attorney fees on remand so that it can be considered in light of the parties’ actual “financial resources.”

CONCLUSION

We reverse the District Court’s valuation of James’s interest in Gallatin Valley Furniture, and remand to that court for entry of judgment consistent with this opinion, and for redistribution of the parties’ marital assets and reevaluation of Dorothy’s need for maintenance, fees, and costs in light of this holding. In addition, we conclude that any future application or motion for modification of whatever decision the court makes regarding Dorothy’s need for maintenance is controlled by § 40-4-208, MCA, notwithstanding language to the contrary in the court’s decree or judgment.

CHIEF JUSTICE TURNAGE, JUSTICES HUNT and LEAPHART concur.

JUSTICE GRAY,

specially concurring.

I concur in the Court’s opinion on issues two and three and specially concur on issue one, regarding the valuation of James’ interest in Gallatin Valley Furniture. In that regard, I agree with our adoption of the Amodio rationale and, as a result, with our conclusion that Neil’s valuation of James’ interest was conclusive on the District Court because it was the only valuation in evidence which took the restrictive shareholders’ agreement into account.

I disagree, however, with the Court’s creation of a presumption that the valuation of stock contained in a shareholders’ agreement is the real value of a shareholder’s interest in a closely held corporation if the shareholders have employed an accepted method of valuation and there is no evidence that the valuation was undertaken in bad faith or for the purpose of avoiding marital or debtor/creditor responsibilities. I see no need for such a presumption in light of the fact that there is no uniform rule for valuing stock in closely held corporations. SeeAmodio, 509 N.E.2d at 936. So long as the valuation method used takes into consideration inhibitions on the transfer of such stock arising from limited marketability or restrictions in a shareholders’ agreement, there is no reason for this Court to give favored treatment to the valuation contained in the shareholders’ agreement by according it a presumption of “real value.”


author: JUSTICE GRAY JUSTICE LEAPHART,

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. EDWARD C. BEAUDRY, Defendant and Appellant.
    No. 96-453.
    Submitted on Briefs January 23, 1997.
    Decided April 15, 1997.
    54 St.Rep. 324.
    282 Mont. 225.
    937 P.2d 459.
    See C. J.S. Criminal Law § 1559.

      For Appellant: Lorraine A. Schneider; Simonton, Howe & Schneider, Glendive.
    For Respondent: Hon. Joseph P. Mazurek, Attorney General; Cregg Coughlin, Assistant Attorney General, Helena; John Huntley, Fallon County Attorney, Baker.
   JUSTICE GRAY

delivered the Opinion of the Court.

Edward C. Beaudry (Beaudry) appeals from the judgment entered by the Sixteenth Judicial District Court, Fallon County, on his guilty plea to the felony offense of possession of dangerous drugs, having reserved the right to appeal the court’s denial of his motion to suppress evidence. We affirm.

The issue on appeal is whether the District Court erred in denying Beaudry’s motion to suppress evidence discovered during a warrant-less search of his residence by his probation officer.

Beaudry was convicted of three counts of felony burglary, two counts of felony theft and one count of misdemeanor theft in 1993. He received a three-year deferred sentence, and was placed on probation, in February of 1994. Beaudry’s probation included conditions prohibiting him from using alcohol and using or possessing dangerous drugs and from entering bars. It also required him, upon “reasonable cause,” to submit to a warrantless search of his person, vehicle or residence by his probation officer.

John Hodge (Hodge) was Beaudry’s supervising probation officer. During the time leading up to the search ofBeaudry’s residence which is at issue in this case, Hodge learned of numerous probation violations, as well as additional potential violations, by Beaudry. Four urine samples taken from Beaudry in 1994 and 1995 indicated that he was using drugs. Beaudry admitted to Hodge on four occasions between March 8,1994 and June 22,1995 that he had consumed beer, and Hodge saw Beaudry at bars on two other occasions. In addition, Beaudry was charged with shoplifting in June of 1995, and subsequently pleaded guilty. Moreover, Hodge learned that Beaudry had stolen and pawned a .44 caliber handgun. Fallon County Sheriff Tim Barkley also informed Hodge that a second .44 caliber handgun had been stolen and that Beaudry was a suspect in that theft.

On October 24, 1995, Hodge conducted a warrantless search of Beaudry’s residence in Baker, Montana, with the aid of a law enforcement officer. Beaudry was not present at the time of the search and did not consent to it. Hodge discovered dangerous drugs during the search.

On November 21, 1995, the State of Montana (State) charged Beaudry with criminal possession of dangerous drugs, a felony. Beaudry pleaded not guilty to the charge.

Beaudry moved to suppress all evidence seized during Hodge’s warrantless search of his residence on the basis that the search violated his constitutional right to privacy and to freedom from unreasonable searches and seizures. The State acknowledged that the search was conducted without a warrant, but argued that Hodge had “reasonable grounds” to conduct the warrantless search. After an evidentiary hearing, the District Court made findings relating to the information Hodge possessed at the time of the search; those findings indicated that Hodge had evidence of drinking, drugs and theft by Beaudry. On that basis, the court determined that Hodge had reasonable cause to search Beaudry’s residence and denied Beaudry’s motion to suppress.

Beaudry subsequently withdrew his not guilty plea and pleaded guilty to the charged felony offense of criminal possession of dangerous drugs, reserving the right to appeal the denial of his motion to suppress. Thereafter, the District Court entered judgment, deferring imposition of sentence for one year subject to specified terms and conditions. Beaudry appeals.

Did the District Court err in denying Beaudry’s motion to suppress evidence discovered during a warrantless search of his residence by his probation officer?

We review a district court’s denial of a motion to suppress to determine whether the court’s findings of fact are clearly erroneous. We also review whether the findings were correctly applied as a matter of law. State v. Burchett (1996), 277 Mont. 192, 195-96, 921 P.2d 854, 856.

In this case, the District Court denied Beaudry’s motion to suppress based on facts and findings largely undisputed by Beaudry. Specifically, the District Court found that Beaudry’s conditions of probation included prohibitions against entering bars, using alcohol and using or possessing illegal drugs. The court also found that:

On June 22,1994, a sample of Mr. Beaudry’s urine tested positive for cannabinoids. On June 9,1995 a sample of Mr. Beaudry’s urine tested positive for cannabinoids. On June 9, 1995, Mr. Beaudry was charged with shoplifting. He subsequently plead guilty. On October 24,1995, Mr. Beaudry was charged with the theft of a .44 caliber revolver. He subsequently plead guilty. Prior to October 24, 1995, Mr. Beaudry had told [Hodge] on more than one occasion that if he were drinking or using [drugs] that he would shoplift or steal. His history appears to support that statement. Although as of the time of the search [Hodge] knew the .44 caliber revolver Mr. Beaudry had stolen from the Gun Runner Gunshop, had been pawned by Mr. Beaudry, Mr. Hodge also knew that law enforcement also had a report of a second stolen .44 caliber revolver in Baker. ...

The record also reflected that Hodge knew that Beaudry had consumed beer and been in bars on several occasions. Accordingly, the District Court determined that this underlying factual foundation

gave this probation officer sufficient grounds to believe that Mr. Beaudry was back to drinking and doing drugs and stealing to support those activities. It is not too big of [a] stretch to conclude that evidence of such activities would be found at Mr. Beaudry’s residence. The demonstrated, dynamic correlation of Mr. Beaudry’s thefts with his drug and alcohol use gave this officer reasonable cause to search his residence for evidence.

It is well-established in Montana that a probation officer may search a probationer’s residence without a warrant so long as the officer has reasonable cause for the search. Burchett, 921 P.2d at 856 (citations omitted). This “reasonable cause” standard, while substantially less than the probable cause standard required by the Fourth Amendment to the United States Constitution, results from the probationer’s diminished expectation of privacy and the probation officer’s superior position in determining what level of supervision is necessary to provide both rehabilitation of the probationer and safety for society. Burchett, 921 P.2d at 856 (citations omitted). “The probation officer must be able to supervise the probationer, and upon his judgment and expertise, search the probationer’s residence....” State v. Burke (1988), 235 Mont. 165, 171, 766 P.2d 254, 257.

As noted above, Beaudry does not challenge the bulk of the District Court’s findings. Indeed, he concedes that Hodge had reasonable cause to believe he had violated the conditions of his probation at various times during the twenty-month period immediately preceding the search. His sole contention is that there was an insufficient relationship between his activities and his residence to provide reasonable cause for Hodge’s warrantless search of the residence. We disagree.

For purposes relevant to the issue before us, the facts of the present case are similar to those we recently addressed in State v. Boston (1995), 269 Mont. 300, 889 P.2d 814, involving the warrantless search of a parolee’s residence and storage garage based on the lesser “reasonable grounds” standard required for such searches. There, parolee Monte Chalmers Boston was subject to a “reasonable cause” warrantless parole search identical to Beaudry’s condition of probation. See Boston, 889 P.2d at 815. Boston’s parole officer, John Kelly, became aware of evidence linking Boston to an arson fire at the National Center for Appropriate Technology and indicating Boston’s first-hand knowledge of an earlier arson fire at the Mormon Church. Boston, 889 P.2d at 815.

Kelly authorized a warrantless search of Boston’s residence. After learning that Boston rented a storage garage separate from his residence, Kelly authorized a search of the garage as well. Boston, 889 P.2d at 815.

Boston subsequently was charged with burglary, theft and arson. Boston, 889 P.2d at 815. He moved to suppress all evidence taken during the warrantless searches of his residence and storage garage. Relying on Kelly’s testimony about the circumstances surrounding his decision to authorize the searches, the district court determined that Kelly had reasonable cause to authorize the searches. Boston, 889 P.2d at 816.

On appeal, we reiterated the considerations underlying the “reasonable grounds” standard for warrantless searches by probation and parole officers, observing that probationers and parolees have conditional liberty and a reduced privacy interest. See Boston, 889 P.2d at 816-17 (citations omitted). Moreover, a probation or parole officer must be allowed to determine the supervision required and, “ ‘upon his judgment and expertise, search the probationer’s [or parolee’s] residence. ...’ ” See Boston, 889 P.2d at 817 (quoting Burke, 766 P.2d at 257). Kelly had evidence linking Boston to two arsons and, therefore, “Kelly clearly had reasonable grounds to suspect parole violations which justified the warrantless searches of Boston’s home and storage garage.” Boston, 889 P.2d at 817. We concluded that substantial evidence supported the district court’s “reasonable grounds” finding and affirmed the denial of Boston’s motion to suppress. Boston, 889 P.2d at 817.

Here, we are presented with a record of known, as well as reasonably suspected, probation violations by Beaudry. These undisputed facts, combined with Hodge’s expertise, continued experience with Beaudry and awareness of Beaudry’s established and admitted pattern of stealing and substance abuse, provided Hodge with reasonable grounds to believe he would find evidence of drug- or alcohol-related probation violations at Beaudry’s residence. Thus, as in Boston, we conclude that substantial evidence supports the District Court’s finding that Hodge had reasonable cause to search the residence.

Beaudry repeatedly posits that a relationship must exist between the facts constituting reasonable cause for the search and the place to be searched, citing to a number of cases from other jurisdictions which — on various factual scenarios — require such a relationship. He seems to argue from this starting point that some concrete set of parameters — some “bright line test” — has been, or must be, established against which the facts of each and every case involving a warrantless probation search under the “reasonable cause” standard can be measured with precision to determine whether the search is valid.

While our discussion above reflects our agreement with Beaudry that the facts justifying the search must bear some relationship to the place searched, that relationship exists in this case. Assuming that evidence of drug- or alcohol-related probation violations by Beaudry actually existed, what more — or even equally — likely place for it than at his residence? No case cited by Beaudry or located by this Court requires that evidence of probation violations be seen by the probation officer — or by any other person — at the probationer’s residence before a search of the residence can be upheld under the reasonable grounds test.

Furthermore, with regard to Beaudry’s implicit argument that a “bright line test” be applied to “reasonable cause” warrantless searches, the argument misperceives both the nature of the reasonable cause test and the rationale for the reasonable cause exception to the usual warrant requirement for a valid search. The reasonable cause test is, itself, a fact-driven test inasmuch as the search “should be permitted only if there is an underlying factual foundation justifying the search[.]” Burke, 766 P.2d at 257. Indeed, the reasonable cause standard is substantially similar to the “reasonable grounds” language contained in § 61-8-403(4), MCA, and we have indicated that determination of whether “reasonable grounds” exists is a finding of fact based on the totality of circumstances. See Anderson v. State Dept. of Justice (1996), 275 Mont. 259, 263, 912 P.2d 212, 214. In the context of a motion to suppress, the district court is the trier of fact and we review the district court’s findings under the clearly erroneous test. See Burchett, 921 P.2d at 856.

Moreover, the rationale for the reasonable cause exception to the usual Fourth Amendment warrant requirement is that the probation officer’s expertise and experience with the probationer puts the officer in a superior position to determine what level of supervision is necessary to provide rehabilitation to the probationer and safety for society. Burchett, 921 P.2d at 856. To establish an arbitrary rule of law setting a “floor” against which reasonable cause searches would be measured would negate the very considerations underlying the reasonable cause exception to the warrant requirement in the first instance. See Burchett, 921 P.2d at 856; Boston, 889 P.2d at 816-17; Burke, 766 P.2d at 256. Whether reasonable cause existed is, and must remain, primarily a fact-driven test to be determined by district courts on a case-by-case basis.

Having concluded above that substantial evidence supports the District Court’s finding that Hodge had reasonable cause to search Beaudry’s residence, we further conclude that the finding is not otherwise clearly erroneous and that the court’s findings were correctly applied as a matter of law. Accordingly, we hold that the District Court did not err in denying Beaudry’s motion to suppress.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES NELSON and REGNIER concur.

JUSTICE LEAPHART,

specially concurring.

I concur in the result reached in this case. However, I write separately to clarify what I believe is an important distinction in the context of probation searches. In addressing Beaudry’s argument that there must be a relationship between the violation alleged and the place to be searched, the Court states:

While our discussion above reflects our agreement with Beaudry that the facts justifying the search must bear some relationship to the place searched, that relationship exists in this case. Assuming that evidence of drug- or alcohol-related probation violations by Beaudry actually existed, what more — or even equally — likely place for it than at his residence?

In the above passage, the Court seems to hold that the necessary “relationship” exists between the alcohol related probation violations and the place to be searched, that is, the home. I query whether the alcohol related violations provide a sufficient “relationship” to justify a search of the home. As the Court points out, the probation officer knew, prior to conducting the search, that Beaudry had consumed beer and had been in bars on several occasions. Accordingly, he already had sufficient evidence to revoke Beaudry’s parole for alcohol consumption.

By way of example, if a probationer were to violate the conditions of his probation by leaving the state, that infraction would not, in my view, provide “reasonable cause” to search his home. The nature of the violation is such that it does not bear fruit necessitating a search. Likewise, one need not conduct a search of a probationer’s home to substantiate that he has been drinking in bars. There is no nexus between the offense and the place searched.

On the other hand, theft is an offense for which there is “fruit;” in this case, the second .44 caliber revolver which had been reported stolen in the Baker area. As the Court points out, a probation search must be based upon “reasonable cause.” State v. Burchett (1996), 277 Mont. 192, 195, 921 P.2d 854, 856. Further, “reasonable cause” for a probation search, like “reasonable grounds” for a traffic stop under § 61-8-403(4), MCA, is a finding based upon the totality of the circumstances. See Anderson v. State Dept. of Justice (1996), 275 Mont. 259, 263, 912 P.2d 212, 214. “Reasonable cause” is thus an objective rather than a subjective standard. Anderson, 912 P.2d at 214. Accordingly, although the probation officer did not specifically focus on the missing revolver as justification for his search, the probation officer’s knowledge of the second stolen revolver was one of many pieces of information comprising the “totality of circumstances” known to the officer. Knowledge of the missing revolver must be viewed as part of the larger collection of information which led the officer to believe that Beaudry was in violation of his probation, thus giving the probation officer reasonable cause to search Beaudry’s residence. See Oregon v. Gulley (Or. 1996), 921 P.2d 396, 401. I would find the requisite nexus in the fact that Beaudry had stolen one gun in the Baker area and that another .44 caliber revolver had been reported stolen. In light of the totality of the circumstances, the search was objectively reasonable.