author: JUSTICE HUNT JUSTICE SHEEHY,

text:
    MPH COMPANY and Tropic Industries, Plaintiffs and Respondents, v. IMAGINEERING, INC., and Bill R. Williams, defendants and Appellants.
    No. 89-279.
    Submitted Dec. 12, 1989.
    Decided May 16, 1990.
    792 P.2d 1081.

      W. Corbin Howard, Billings, for defendants and appellants.
    Pierre L. Bacheller, Billings, for plaintiffs and respondents.
   JUSTICE HUNT

delivered the Opinion of the Court.

The District Court of the Thirteenth Judicial District, Yellowstone County, found defendant, Imagineering, Inc., liable for breach of contract and breach of implied warranty. The court entered judgment in favor of plaintiff, MPH Company, in the amount of $193,663 plus interest. Imagineering appeals. We reverse.

The sole issue raised on appeal is whether the contract entered into by the parties was illegal under the laws of Montana and therefore unenforceable.

Defendant and appellant, Imagineering, Inc., is a Nevada corporation engaged in the design and manufacture of electronic video machines. Plaintiff and respondent, MPH Company, is a joint venture comprised of Sam McDonald, Jr., Paul Pendergrass and Ronald Harding, all of Billings, and Joe Goott of Salt Lake City. Goott is also the president of Tropic Industries, a Utah corporation.

In January, 1984, MPH and Tropic entered into a contract with Imagineering wherein Imagineering agreed to design and manufacture an electronic Poker All Keno machine. This machine was to be the electronic version of the table game developed and patented by Joe Goott. A detailed description of the table game can be found in our decision Goott v. State, 630 P.2d 232, 38 St.Rep. 1037 (Mont. 1981). In Goott, we found that, although the game possessed some of the characteristics of poker, it was essentially a variation of keno. We held that the game was illegal under the Montana Card Games Act (then codified at secs. 23-5-301 through -332, MCA). On remand, the District Court declared that the game was legal under the Bingo and Raffles Law (then codified at secs. 23-5-401 through -431, MCA.

The contract specified that the electronic version of Poker All Keno was to be a single-player, stand-up video game designed with a reset key to allow the player to cash in his accumulated credits. The image projected on the screen was to be the same as that found on the Poker All Keno table layout. The game would be played by positioning a chip on the layout by means of four separate directional buttons. Once the player made his selection, he would place a bet by either inserting coins or pushing the “bet” button. After placing his bet, the player would start the game by pushing the “start” button. The start button would activate a card selection device, which was a bowl-shaped container with a spinning wheel in the bottom and 52 pockets around the periphery, each pocket representing a different card from a standard deck of cards. From the “pocket” selections of the last game, six balls would be dumped into the bowl. The spinning wheel would continue to randomly bounce the balls around until each found a pocket. As each ball entered a pocket, it would close a switch, sending information to the computer. The computer would then display the selected betting squares on the screen. After the sixth ball found its pocket, the computer would compute the results of the best possible poker hand by using 5 out of the 6 selected cards. It would then display the results on the screen by calculating the total winnings and advancing the credit meter accordingly.

The parties encountered a variety of problems with the machines and were forced to modify the contract on several occasions. In December, 1984, a prototype was delivered to MPH in Billings. MPH found the machine acceptable and ordered 20 units in kit form for assembly in Billings. MPH subsequently increased the order to 24 machines, also in kit form.

That December, Imagineering contacted the Nevada gaming authorities, who told the company that the machine would be illegal in Montana because it incorporated certain components that enabled the game to be played for cash. These illegal components included devices to display the last credits cleared, coin out meters and cancel credit switches, also known as reset keys. After consulting with the Nevada authorities, Imagineering discussed the problem with MPH. Imagineering agreed to send the machines to MPH in Montana without the illegal parts but with wiring and circuitry designed to accommodate the components should MPH wish to install them itself.

After shipping the games, Imagineering sent employees to Montana to explain the assembly of the machines to technicians hired by MPH. While in Montana, the Imagineering employees showed the MPH technicians how to install the electrical components that Imagineering had refused to install in Nevada. In fact, Imagineering furnished extra parts for this purpose, although it appears that the parts were available on the general market and could have been found in any Radio Shack store.

The kits were delivered in March, 1985. They were assembled in April of that year and subsequently installed in bars in Billings, Great Falls and other locations in Montana. The machines placed in the Montana bars were equipped with components permitting them to be played for cash.

Although the machines worked in the lab, they did not operate properly in the electronically “dirty” environment of the local drinking establishments. Among other problems, the machines frequently registered unearned credits. Fearing that they would have to pay out more in cash winnings than the machines were bringing in, the bar owners asked MPH to remove the games from their establishments.

Imagineering sent several technicians to Montana in an attempt to cure the problem. The technicians were unsuccessful in their endeavors, and in May and June, 1985, MPH pulled the games out of the taverns.

MPH and Tropic instituted suit against Imagineering and its president, Bill R. Williams, alleging breach of contract, breach of warranty, fraud and bad faith. Imagineering and Williams defended on the basis that the contract was illegal and therefore unenforceable.

Tropic’s claims were dismissed with prejudice. Later, the remaining parties stipulated to dismissal of all claims against Williams as well as MPH’s claims of fraud and bad faith against Imagineering.

In lieu of trial, MPH and Imagineering submitted the case to the District Court based on the record and a set of stipulated facts. The parties stipulated that the video machines contained design defects rendering them commercially unacceptable and constituting a breach of contract.

The District Court found that the machines were in compliance with Montana law at the time the contract was to be performed and that the contract, as amended, was legal and enforceable. The court entered judgment in favor of MPH in the amount of $193,663 plus pre-judgment interest of $79,354. The principal represented funds expended by MPH in satisfaction of the contract.

Imagineering argues that the electronic Poker All Keno machines contemplated by the parties were illegal slot machines because they were intended to be and actually were played for cash. We agree that Montana statutes and interpretive case law prohibited the type of gambling devices for which the parties contracted and that the machines were, at best, unlawful slot machines.

The Montana Constitution prohibits gambling unless specifically authorized.

“All forms of gambling, lotteries, and gift enterprises are prohibited unless authorized by acts of the legislature or by the people through initiative or referendum.”

Art. HI, sec. 9, Mont. Const. (1972).

At the time the parties entered into and performed the contract in question, Montana law prohibited the possession or operation of slot machines. Section 23-5-104, MCA (1983) (amended 1989 and renumbered sec. 23-5-153). A slot machine was defined in sec. 23-5-101(1), MCA (1983) (amended 1989 and renumbered sec. 23-5-112(29)), as follows:

“[A] machine operated by inserting a coin, token, chip, trade check, or paper currency therein by the player and from the play of which he obtains or may obtain money, checks, chips, tokens, or paper currency redeemable in money.”

In 1974, the legislature enacted the Montana Card Games Act, ch. 293, sec. 1, 1974 Mont. Laws 727, and the Bingo and Raffles Law, ch. 294, sec. 1, 1974 Mont. Laws 731. The Montana Card Games Act authorized certain enumerated card games, including poker. Section 23-5-311, MCA, (1983) (amended 1989). The authorized card games could be played for cash. Sections 23-5-302, MCA, (1983) (repealed 1989) and 23-5-312, MCA, (1983) (amended 1989). At the time the parties entered into the contract, the Bingo and Raffles Law authorized playing bingo for prizes of tangible personal property only. The law expressly forbade bingo prizes of cash or other intangible personal property. Section 23-5-412, MCA, (1983) (amended 1985 and 1989). In 1976, this Court considered the legality of electronic keno games under the Bingo and Raffles Law. In Treasure State Games, Inc. v State, 170 Mont. 189, 551 P.2d 1008 (1976), we upheld the legality of electronic keno under these laws, concluding that electronic keno machines were merely the mechanical simulation of the lawful game of bingo. We did not consider whether such machines could be legally played for cash prizes.

In 1981, Joe Goott, one of the members of MPH, brought a declaratory judgment action in the Silver Bow County District Court, seeking to have the table version of Poker All Keno declared lawful. The District Court held that the game was lawful under the Card Games Act. On appeal, we reversed, reasoning that Poker All Keno was a “casino-type of banking game” that pitted players against the house rather than against each other, an activity that the legislature did not intend to authorize when it enacted the Card Games Act. Goott, 630 P.2d at 234, 38 St.Rep. at 1039. On remand, the District Court held that Poker All Keno was legal under the Bingo and Raffles Law, which left the game subject to the prohibition against cash prizes.

The following year, we were presented with the opportunity to determine the legality of live keno games. In Gallatin County v. D & R Music and Vending, Inc., 201 Mont. 409, 412, 654 P.2d 998, 1000 (1982) (Gallatin I), we held that live keno came within the statutory definition of the game of bingo and was therefore legal under the Bingo and Raffles Law. MPH claims that Gallatin I also authorized the playing of keno for cash because the stipulated description of keno presented by the parties described the amount of cash paid for winning the game. It appears, however, that the question of whether the game was legally played for cash prizes was not presented to this Court. Rather, the issue in Gallatin /was whether the game of keno conformed with the legal description of binngo under Sec. 23-5-402(1) (A), MCA (1981) (repealed 1989). Because we did not, in Gallatin I, discuss the legality of playing keno for cash, it cannot be said that the case authorized such activity. In fact, Gallatin I could not possibly have legalized playing keno or any other form of bingo for cash when Sec. 23-5-412, MCA, as it stood in 1982 expressly proscribed such activity.

Any question that Gallatin I permitted playing electronic keno for cash prizes was clarified by the legislature’s amendment to sec. 23-5-412, MCA, in April, 1985, the same time that the Poker All Keno machines that form the basis of this action were being assembled and placed in bars in Montana. The statute was amended to read as follows:

“Bingo prizes may be paid in either tangible personal property or cash, except that a prize must be paid in tangible personal property if the same is played on a player-operated electronic video game machine. ” (Emphasis added).

Section 23-5-412, MCA (enacted April 12, 1985). Thus, while the amended statute authorized cash prizes for live bingo games, it continued to prohibit prizes of intangible personal property for electronic versions of the game.

In February, 1984, shortly after the parties entered into the contract for the manufacture of Poker All Keno machines, this Court decided Gallatin County v. D & R Music and Vending, Inc., 208 Mont. 138, 676 P.2d 779 (1984) (Gallatin II). Using much the same reasoning as that employed in Goott, we held that electronic poker machiunes were not authorized under the Montana Card Games actt. We held that electronic poker machines were slot machines, which Sec. 23 5-101, MCA (1983), Expressly barred.

In 1985, the legislature passed the Video Draw Poker Machine Control Law, Ch. 720, sec. 1, 1985 Mont. Laws 1649. While this act legalized video draw poker machines and authorized playing those machines for cash prizes, it did not authorize playing Poker All Keno for cash. Instead, the law was expressly limited to machines offering the game of draw poker. Section 23-5-606(4), MCA (1985) (amended 1987 and repealed 1989). Poker All Keno, which possessed elements of both the game of poker and the game of keno, was not draw poker as that game was defined in sec. 23-5-606(4), MCA (1985). Thus, the passage of the Video Draw Poker Machine Control Law did not legalize the electronic version of Poker All Keno.

It is clear from the statutes and the case law that, at the time the parties entered into and performed the contract, Montana law forbade playing Poker All Keno for cash prizes. Goott prohibited the table version of the game under the Montana Card Games Act. Gallatin II, which banned electronic draw poker games, emphasized the holding in Goott, i.e., that forms of gambling that pitted a player against the house, whether the games were live or mechanical, were not permitted under the Card Games Act. Although the Video Draw Poker Machine Control Act overruled the holding in Gallatin II by legalizing electronic draw poker machines, the act did not authorize Poker All Keno machines.

Assuming that electronic Poker All Keno machines were legal under the Bingo and Raffles Law, the game could still not be played legitimately for cash. Gallatin /, while holding that electronic keno was a lawM game, did not authorize playing the game for cash prizes, nor could it have done so in the face of the express statutory prohibition against such activity. Furthermore, the 1985 amendment of sec. 23-5-412, MCA, specifically provided that electronic versions of bingo could be played only for prizes of tangible personal property.

In light of the above discussion, we must conclude that, at the time the parties entered into and performed the contract, Poker All Keno machines played for cash prizes were not authorized under either the Montana Card Games Act, the Video Draw Poker Machine Control Law or the Bingo and Raffles Law. Consequently, the machines were slot machines as defined in sec. 23-5-101(1), MCA (1983).

Section 28-2-701(1), MCA, provides that a thing or an act is not lawful if it is ‘ ‘contrary to an express provision of law. ’ ’ Slot machines were expressly prohibited by sec. 23-5-104, MCA (1983), at the time the parties entered into and performed the contract. Therefore, Poker All Keno machines, because they were slot machines, were unlawful under Montana law.

“Where a contract has but a single object and such object is unlawful, whether in whole or in part, ... the entire contract is void. ’ ’ Section 28-2-603, MCA. “The object of a contract is the thing which it is agreed on the part of the party receiving the consideration to do or not to do.” Section 28-2-601, MCA. In the present case, the object of the contract was the design and manufacture of Poker All Keno machines. Because the machines were unlawful, the entire contract was void.

A party to an illegal contract may not use the courts of this state to enforce the agreement.

“No principle of law is better settled than that a party to an illegal contract cannot come into a court of law and ask to have his illegal objects carried out, nor can he set up a case in which he must necessarily disclose an illegal purpose as the groundwork of his claim .... The law, in short, will not aid either party to an illegal agreement. It leaves the parties where it finds them. Therefore neither a court of law nor a court of equity will aid the one in enforcing it, or give damages for a breach of it, or set it aside at the suit of the other, or, when the agreement has been executed in whole or in part by the payment of money or the transfer of other property, land its aid to recover it back.” (Emphasis added.)

Glass v Basin & Bay State Mining Co., 31 Mont. 21, 33, 77 P. 302, 305 (1904) (quoting 9 D. Lawson, Cyclopedia of Law and Procedure 546). Accord McPartlin v. Fransen, 199 Mont. 143, 146-47, 648 P.2d 729, 730-31 (1982); McManus v. Fulton, 85 Mont. 170, 182-83, 278 P. 126, 131 (1929).

At oral argument, MPH advanced the theory that the parties’ modification of the contract changed the agreement from an illegal to a legal contract. MPH argued that because the Poker All Keno machines shipped to Montana by Imagineering did not include the components enabling them to be played for cash, the machines were legal under Montana law.

We reject this argument for two reasons. First, “[t]he object of the contract must be lawful when the contract is made ....” Section 28-2-602, MCA. The original object of the contract was the design and manufacture of a Poker All Keno machine that could be played for cash prizes. Therefore, the object was not lawful when the contract was made.

Second, although Imagineering may have shipped lawful machines, it appears that the contract was not fully performed at that point. Imagineering sent employees to Montana to oversee the assembly,of the machines and to show MPH’s technicians how to install the parts that would enable the machine to be played for cash. These actions constitute a common scheme or plan to use the machines for illegal purposes within this state. When the general scheme of the contracting parties is to bring about unlawful results, the contract is unenforceable. See 15 Williston on Contracts secs. 1752 and 1755 (3d ed. 1972).

The parties originally planned to manufacture and design illegal gambling machines for use within the state of Montana. The parties did not deviate from the original object of the contract even though the manufacturer shipped lawful machines into this state. The end product — a Poker All Keno machine that could be played for cash prizes — was also the original object of the contract. As the object of the parties was to manufacture and market an unlawful slot machine, the contract was illegal. Neither party may come into The judgment of the District Court is reversed.

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

JUSTICE SHEEHY,

dissenting:

I dissent on three grounds: 1) That at all times herein there was confusion, even among county attorneys, as to the application of law to video-electronic keno machines; 2) The contract here for the manufacture of the machines is severable from any illegality; and 3) Principles of restitution allow recovery here.

Confusion in the Law

In Treasure State Games, Inc. v. State (1976), 170 Mont. 189, 551 P.2d 1008, this Court held that electronic bingo and keno machines were lawful in Montana under the Bingo and Raffle Law of 1974. At that time, sec. 23-5-412, MCA, provided:

‘ ‘Bingo prizes [including keno] must be in tangible personal property only and not in money, cash, stocks, bonds, evidences of indebtedness, or other intangible personal property and must not exceed the value of $100 for each individual award ....”

Under this statute, no CASH prizes could be granted winners of any bingo or keno games, whether live, player-operated or electronic.

The question of the legality of keno came before this Court again in Gallatin County v. D & R Music and Vending, Inc. (1982), 201 Mont. 409, 654 P.2d 998 (Gallatin I). There this Court upheld the validity of keno as it is operated in most of the Montana establishments at the present time. The numbers are selected at random from numbered ping pong balls blown into a tube. This Court said that such a device was in accord with the Bingo and Raffle Law of 1974 and issued mandamus requiring the appropriate officers to issue licenses for the keno machines. Noteworthy in that case, however, is the opinion of Justice Daniel J. Shea, who, specially concurring, noted that it was common knowledge in the state that such keno is played with the expectation that a player would receive Money if he won. Justice Shea pointed out that even though sec. 23-5-412, as above quoted, was in effect, the county attorneys did not prosecute any establishment for paying cash to the winners as a matter of general policy.

This was the state of the law when in early 1985, the plaintiff MPH Company contracted with Bill R. Williams and Imagineering, Inc. for the manufacture of video keno machines. The only theoretical difference between the machines contracted for and the usual version of keno is that the proposed machines would be operated by a single player and the numbers would be flashed on a video screen. The contract was entered into and was to be performed in the early months of 1985.

From the date of Justice Shea’s special concurrence, in December of 1982, until 1985, nothing was done to amend the Bingo and Raffle Law so as to provide that cash would be paid on keno games in this state. Under any objective test, the 1985 and 1987 sessions of the Montana legislature were among the worst in our state history. It is a strange but true fact that the worse a legislature is the more Acts it will pass relating to the same subject.

In 1985, the legislature passed Ch. 465, Laws of Montana (1985), which became sec. 23-5-412, MCA, and which has now been repealed. That statute, as passed in 1985, read as follows:

“Bingo prizes may be paid either in tangible personal property or cash, except that a prize must be paid in tangible personal property if the game is played on a player-operated video game machine.” (Italics supplied.)

It is important to note the change that the 1985 amendment to sec. 23-5-412, MCA, made with respect to its former version. Whereas formerly no cash prizes could be legally awarded for the playing of bingo (and therefore keno), after the amendment, prizes could be paid in cash except only for player-operated video game machines. Thus, in the same establishment, a keno game which was operated by ping pong balls could merit cash prizes, but a player-operated video keno machine in the same premises, could not legally award cash prizes.

Yet, the same 1985 legislature passed a law making valid video draw poker machines (which is a “video game machine”), and allowing the players of such machines to draw their winnings in cash. Chapter 720, Laws of Montana (1985). Except that the draw poker and keno games are different in design, there is no real gambling distinction between a video poker game and a video keno game, or for that matter a video bingo game. They are all “video game machines.”

Was there considerable confusion about the legality of video keno machines at the time of this contract? There certainly was. We need look no further than the finding of District Judge G. Todd Baugh in this case:

“... The court finds that the machines were legal and in compliance with Montana law at the time the contract was to be performed and that the contract, as amended, is therefore enforceable.”

The only feature of the machines manufactured in this case upon which the majority may hinge their decision is that the machines had been modified after manufacture to provide for the payment to winners in cash. The modification involved a print-out which would show the number of game credits to which the winner was entitled. The credits could be paid off by the owner of the machines for the value of goods instead of cash, which would be legal without doubt. It was the eventual establishments that paid these credits in cash.

Severability of the Contract

There is no law of which we have been made aware here that prohibited Imagineering, Inc. from manufacturing the machines in Utah and transporting them to Montana for acceptance by the buyer. The fact is that the machines could not be used for any purpose. They were defective. They did not work. They were inoperable legally or illegally. Imagineering, Inc. admits the deficiencies, and acknowledges in this case that insofar as its performance was concerned, it breached the contract.

“Where an agreement or obligation is incidentally, indirectly, or remotely connected with an illegal transaction, it will generally be enforced if it is supported by an independent consideration so that the plaintiff does not require the aid of the illegal transaction to make out his case. Even though the parties to an action have been engaged in a transaction either malum in se or prohibited by law, if the cause of action between them is disconnected from the illegal act and is founded upon a distinct and collateral consideration, and the plaintiff is not obliged to resort to the illegal agreement or transaction in order to maintain the suit, the illegality of the formal transaction will not impair or bar the right to maintain the suit.”

17 Am.Jur.2d 590, 591, Contracts, sec. 219.

The legality or illegality of the eventual use of the machines, if they had been properly manufactured, should not be an issue in this case. If a hardware store sold on credit to a customer a gun which the customer later used to shoot somebody, the hardware store can still collect on its bill though the gun was used for an illegal purpose. The situation is no different here. The contract, to the extent that it existed between these parties, was legal.

Restitution

The 1987 session of the legislature also busied itself concerning electronic video gambling games. It amended sec. 23-5 402, MCA, to include a definition of a video keno machine as one where the winner could receive cash. Ch. 652, Laws of Montana (1987). The 1987 legislature again defined a “keno machine” by amending sec. 23-5-602, MCA, to include electronic video keno machines where the player could receive cash winnings.

In the circumstances, principles of restitution apply here. Restatement (Second) of Contracts sec. 198 provides:

“A party has a claim in restitution for performance that he has rendered under or in return for a promise that is unenforceable on grounds of public policy if:
“(a) He was excusably ignorant of the facts or of legislation of a minor character, in the absence of which the provision would be enforceable, or
“ (b) He was not equally in the wrong with the promisor. ’ ’ (Emphasis added.)

The parties in this case testified that they thought their machines were legal. The district judge thought they were legal. The minor character of the illegality, that is that the prizes should be paid in values of personal property rather than by cash when video keno machines were used, is obvious when one considers the number of other legal gambling devices or machines which paid off in cash, particularly including live and video keno. In sheer numbers of situations, the public policy was to award cash prizes.

The minor character of the illegality is further demonstrated that in 1989 the legislature adopted the Video Gaming Machine and Control Law, secs. 23-5-602, et seq. Under the new law, video draw poker and keno machines are described, provision is made for their licensing, cash winnings are allowed, and instead of the top $100 per game cash winnings formerly permitted, the top limit now is $800 cash per game for a video keno machine, sec. 23-5-608, MCA, and the payment must be in cash!

Section 198 of the Restatement (Second) of Contracts is particularly applicable here. The purported issue of illegality is whether the winner in using the machines, if they worked, could get cash, or receive the value in goods. Legislative enactments before and after the contract in this case demonstrate the minor character of the difference that relates to illegality. The investors in this case should not take the hit. We ought to promote a better business climate in this state by protecting in-state entrepreneurs from phony defenses.

I would affirm the District Court.


source: Caselaw Access Project

author: JUSTICE HARRISON JUSTICE SHEEHY,

license: Public Domain

text:
    ROBERT C. TURTAINEN and Mari G. Turtainen, Plaintiffs and Appellants, v. H. RANDOLPH POULSEN, Defendant and Respondent.
    No. 89-507.
    Submitted on Briefs March 29, 1990.
    Decided May 22, 1990.
    792 P.2d 1089.

      Stephen R. McCue, Harrison Loendorf & Poston, Helena, for plaintiffs and appellants.
    Dale E. Reagor, Luxan & Murfitt, Helena, for defendant and respondent.
   JUSTICE HARRISON

delivered the Opinion of the Court.

This case is an appeal from a grant of summary judgment by the First Judicial District Court, Lewis and Clark County, Montana, in a real estate contract dispute. We affirm.

Appellants raise two issues for review:

1. Did the District Court err in finding appellants’ claims barred by the doctrine of res judicata and the compulsory counterclaim rule?

2. Were appellants not required to assert their counterclaims for fraud and other related causes of action in respondent’s earlier injunction action because the District Court proceeded with the injunction action on a summary basis?

On September 28, 1984, appellants purchased a lot in Mountain Heritage Tracts, Lewis and Clark County, from respondent who owned and lived on an adjoining lot. Respondent conveyed the property to appellants by warranty deed which included a number of restrictive covenants. On June 21, 1985, respondent filed a lawsuit against appellants seeking through an injunction to enforce the restrictive covenants. Specifically, respondent sought an injunction forbidding appellants from living on the premises in a trailer for a period in excess of twelve months and from engaging in certain nuisance-type activities such as leaving garbage on the premises and racing up and down the property with a motorcycle. At trial, the only issue before the court related to the trailer which the court decided in respondent’s favor by issuing the requested injunction.

On September 16, 1986, appellants sued respondent over the September 28, 1984 contract for sale of the property. Appellants alleged that respondent had made various false representations to them that induced them to enter into the contract. The most harmful alleged misrepresentations were the following: (1) a representation that appellants could live in a trailer on the premises for an indefinite time; (2) that appellants were not informed of the presence of buried utility lines on their land; (3) appellants were told that an access road did not encroach on their land; (4) that the water system serving the land would be owned by a non-profit corporation; and (5) that the property was approved for FHA financing. Appellants’ complaint alleged that respondent’s false representations constituted fraud, unfair business practices, constructive fraud, negligent misrepresentation, breach of warranty of habitability and fitness for a particular purpose and breach of the implied covenant of good faith and fair dealing.

Respondent moved for summary judgment arguing essentially that the previous lawsuit barred appellants’ claims, either through the doctrine of res judicata or the compulsory counterclaim rule. The District Court agreed. It found that the trailer issue was res judicata because whether the appellants could live on the premises in a trailer was specifically litigated in the previous lawsuit. Further, the District Court ruled that appellants’ other claims were barred by the compulsory counterclaim rule because those claims were logically related to the contract for sale of the land which formed the basis of the previous lawsuit between the parties.

Rule 13(a), of Montana Rules of Civil Procedure governs compulsory counterclaims. In pertinent part Rule 13(a) provides:

‘ ‘A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim ...”

Rule 13(a)’s mandate regarding compulsory counterclaims avoids needless multiplicity of suits. The rule “insures that only one judicial proceeding is required to settle all matters determinable by the facts or law and to bring all logically related claims into a single litigation.” First Bank v. Fourth Judicial Dist. Court (1987), 226 Mont. 515, 521, 737 P.2d 1132, 1135-36, citing Julian v. Mattson (1985), 219 Mont. 145, 148, 710 P.2d 707, 709.

Appellants contend that the instant action does not arise out of the same transaction or occurrence as the previous lawsuit because the previous lawsuit related to appellants’ conduct after the parties entered into the contract for sale of the property. The instant action, however, relates to respondent’s conduct prior to the contract. Thus, appellants assert that the claims do not arise from the same aggregate of operative facts necessary to satisfy the logical relationship test. See Springs v. First Nat'l Bank of Cut Bank (D. Mont. 1986), 647 F.Supp. 1394. We disagree.

Plainly, both lawsuits arose out of the same aggregate of operative facts, the creation and execution of the contract for sale of land from respondent to appellants. The respondent filed the initial suit to enforce the contract. The timing of the disputed conduct in the first suit does not overshadow the fact that the sale of the property constitutes the underlying transaction which generated the dispute. At that time, appellants should have counterclaimed any claim they had concerning alleged misrepresentations respondent made that led to the creation and execution of the contract.

Appellants mistakenly rely on Citizens State Bank v. Duus (1969), 154 Mont. 18, 459 P.2d 696, as support for their contention that these two lawsuits relate to different transactions, or in other words that the appellants’ claims were permissive counterclaims in relation to the first lawsuit. However, Citizens State Bank readily distinguishes itself from the instant case. In ruling that the counterclaim at issue in Citizens State Bank was permissive we stated:

‘ ‘This rendition illustrates that the claim and counterclaim involved different contracts, entered into at different dates between different parties, and further that the chattel mortgage securing the notes in the original action covered personal property located in Hamilton, Montana, whereas the real estate mortgage covered real property located in Darby, Montana. The original action was for non-payments of promissory notes and to foreclose a chattel mortgage while the cross-complaint and counterclaim was an action in tort. The measure of computation of damages thus, would be materially different. Obviously neither the issues of fact or law are the same and further, the same evidence would not support or refute defendants’ claim and counterclaim. Thus, the counterclaim cannot be said to arise out of the transaction or occurrence surrounding plaintiff’s claim based on the two promissory notes and chattel mortgage.”

Citizens State Bank, 459 P.2d at 702. To the contrary, the claims in the instant case and the claims in the previous lawsuit relate to the creation and execution of a single contract relating to the same property and involving the same parties.

Although appellants argue that the two lawsuits require different proof, identical evidence is not required for compulsory counterclaims. First State Bank, 737 P.2d at 1136. All that is required is that the claims be logically related. Appellants’ claims logically relate to respondent’s claims because they arise out of a single transaction, the sale of land.

Appellants further contend, citing Citizens State Bank as authority, that a counterclaim for legal relief can not be compulsory if the plaintiff’s suit seeks equitable relief, as did respondent’s initial lawsuit. Citizens State Bank does not support that contention. At most, Citizens State Bank stands for the proposition that defendants who interpose a permissive counterclaim for legal relief into an equitable suit are not entitled to a jury trial on the permissive counterclaim. Rule 13, M.R.Civ.P. makes no distinction between legal and equitable counterclaims or suits, but only between compulsory and permissive counterclaims. The general rule mandated by Rule 13(a), M.R.Civ.P. is that if a defendant’s counterclaim is compulsory it must be pled regardless of whether the plaintiffs suit is legal or equitable in nature. If not pled, the compulsory counterclaim will be barred.

Next, appellants assert that their claim regarding FHA financing did not exist at the time they filed their answer in the initial suit, on July 24, 1985. They argue that they did not verify that FHA financing was unavailable until 1986. The District Court specifically noted that appellants’ interrogatory answers revealed that they had been turned down for FHA financing in May and June of 1985. Thus, appellants had notice prior to filing their answer that problems with FHA financing existed. Interrogatory answers reveal that appellants were also turned down for FHA financing in 1986 and in 1987. However, appellants do not argue that the District Court erroneously determined that they had knowledge of problems with FHA financing prior to filing their answer. Thus we reject appellants’ contention. We hold that Rule 13(a), M.R.Civ.P. bars appellants’ nontrailer-related claims because the claims are compulsory and should have been pled in the initial suit.

Appellants also assert that the District Court erred in finding that appellants’ claim regarding the trailer was res judicata. We disagree.

“The doctrine of res judicata is firmly established to stand for the proposition that a party should not be able to relitigate a matter that that party has already had the opportunity to litigate, and the public policy that there must be some end to litigation.” (Citation omitted; emphasis in original.)

First Bank, 737 P.2d at 1134. The following four criteria must be met before the res judicata doctrine will apply:

“(1) the parties or their privies must be the same; (2) the subject matter of the action must be the same; (3) the issues must be the same, and must relate to the same subject matter; and (4) the capacities of the persons must be the same in reference to the subject matter and to the issues between them. ’ ’

First Bank, 737 P.2d at 1135.

Appellants contend that the issue relating to the trailer is different in the instant case than the issue litigated earlier. The first lawsuit decided the issue of whether respondent made any representations regarding covenant No. 9, the trailer covenant, that constituted a waiver or estoppel of his right to enforce the contract. However, in the instant case the different issue is whether respondent defrauded appellants by exercising his legal right to enforce covenant No. 9 after representing to them prior to the sale that he would not do so. We fail to see a meaningful distinction between the two “issues.” The second issue is merely another way of focusing on alleged statements respondent made prior to the sale regarding how long appellants could occupy a trailer on the property. The first lawsuit resolved that exact issue in respondent’s favor. If appellants did not raise some particular claim for damages regarding the trailer dispute in the first lawsuit, they cannot do so now because they clearly had an opportunity to do so at that time. We hold that appellants’ claim regarding the trailer is res judicata.

Appellants’ second issue apparently relates to an exception to Rule 13(a), M.R.Civ.P. which appellants argue applies when the District Court proceeds on a summary basis in the initial suit. We will not address this issue. Appellants did not raise this issue before the District Court and we will not consider the issue for the first time on appeal. Wyman v. Dubray Land Realty (1988), 231 Mont. 294, 299, 752 P.2d 196, 200.

We affirm the District Court.

CHIEF JUSTICE TURNAGE and JUSTICES BARZ, WEBER and McDonough concur.

JUSTICE SHEEHY,

concurring specially:

When this State in 1961 adopted its Rules of Civil Procedure to comport with the Federal Rules of Civil Procedure, it adopted the advances that had been made in procedure in the federal system to that time.

One of the casualties in the adoption of our Rules of Civil Procedure was the change of perception of the right to a counterclaim. Under former statutes, a counterclaim was defined as one which tended, in some way, to diminish or defeat the plaintiffs recovery. See section 9138, R.C.M. (1935). Because of that definition, this Court denied a counterclaim in Cook-Reynolds Company v. Wilson (1923), 67 Mont. 147, 150, 214 P. 1104, where plaintiff brought action to enjoin the defendant from interfering with plaintiffs harvesting operations, the defendant answered, claiming a share of the crop according to the terms of a contract constituting a counterclaim for the value of his share. Because of the counterclaim definition, this Court held the counterclaim was not allowable for two reasons, one, the action being for an injunction and the counterclaim seeking an affirmative judgment, the counterclaim did not in any matter tend to diminish or defeat plaintiffs recovery; and two, the cause of action which defendant attempted to make the basis of the counterclaim was not in existence at the time of the commencement of the action.

What Poulsen got in the first action brought in Lewis and Clark County was an injunction restraining the plaintiffs from certain activities on the described real property. The claims the plaintiffs now attempt to assert in their independent action would not tend to defeat or diminish, in some instances, the injunction obtained in the first action. Nevertheless, because compulsory counterclaims must now be pleaded under our present Rules of Civil Procedure, even though an injunctive order is here involved, the plaintiffs should have counterclaimed for all causes of action then in existence arising out of the same occurrence or transaction.

On another matter, I trust that the reader will not take the dicta in the majority opinion regarding Citizens State Bank v. Duus (1969), 154 Mont. 18, 459 P.2d 696, as anything more than dicta. In a proper case, I am not sure that the holding in Citizens State Bank respected the right to a jury trial is now in accord with the state of the law. The distinction between legal and equitable causes of action has been abolished in this State and any cause of action, legal or equitable, is now denominated a “claim” against which a compulsory or permissive counterclaim may be made. The right of trial by jury is under our State Constitution inviolate, and if a counterclaim comprised a cause of action which would formerly entitle the counterclaimant to a jury trial, the counterclaimant cannot be deprived of that right because the counterclaim is against a cause which formerly was recognized in equity. The federal cases conclude that there is no waiver of a jury trial even when a permissive counterclaim is filed. Thermo-Stitch, Inc. v. Chemi-Cord Processing Corp. (5th Cir. 1961), 294 F.2d 486. In any event, the right to a jury trial can be preserved under Rule 13(i) of the Montana Rules of Civil Procedure, whereby the Court can order separate trials of any claims, cross-claims, or counterclaims. Thus, the right to a jury trial can be preserved.

JUSTICE HUNT agrees and joins in the special concurrence of JUSTICE SHEEHY.


author: JUSTICE McDONOUGH

text:
    GREGORY KRAFT, Claimant and Appellant, v. FLATHEAD VALLEY LABOR & CONTRACTORS, Employer, and State Compensation Insurance fund, Defendant and Respondent.
    No. 89-425.
    Submitted on Briefs April 5, 1990.
    Decided May 24, 1990.
    792 P.2d 1094.

      John H. Bothe, Bothe & Lauridsen, Columbia Falls, for claimant and appellant.
    Norman C. Peterson, Asst. Atty. Gen., Helena, for defendant and respondent.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Claimant, Gregory Kraft, appeals the judgment of the Workers’ Compensation Court which denied him benefits for carpal tunnel syndrome. The lower court found that claimant failed to carry his burden of proving that a compensable claim existed. We reverse and remand.

The sole issue is:

Whether the Hearing Examiner’s finding that the claimant’s carpal tunnel condition is not a compensable injury under the Workers’ Compensation Act is supported by substantial evidence.

The claimant, Mr. Kraft, was 29 years old at the time of trial. He has spent a substantial portion of his career working in various lumber mills. In 1982, Mr. Kraft was employed by Lumber Enterprises in Bozeman, Montana. While in employment for that company, he suffered a carpal tunnel condition to his right wrist. This injury was incurred due to the repetitive nature of Mr. Kraft’s work, which consisted of working on a machine called the green chain. In order to relieve the pressure on his right wrist, which resulted from the condition, Mr. Kraft underwent surgery. After approximately eight weeks he returned to work at Lumber Enterprises, and drove a forklift.

In 1985, Mr. Kraft began working at F.H. Stoltze Land and Lumber Company in Columbia Falls, Montana, as a contract laborer for Flathead Valley Labor Contractors. He was initially assigned to pull dry chain, which required that he pull approximately 1,500 boards an hour as they came through the trim saws. Mr. Kraft worked the dry chain constantly over an 8 to 9 hour shift five days a week.

By October of 1986, both of Mr. Kraft’s wrists began to bother him. The pain in his wrists gradually increased until March of 1987. At that time, he was given the option of transferring to a clean up position. In order to bring some relief to his wrists, Mr. Kraft exercised that option. The job change reduced his wrist pain, however, the pain has remained basically the same since that change.

Although the clean up job brought relief to Mr. Kraft’s wrists, it exacerbated a prior back injury. In June of 1987, he was offered a full time position with Stoltze. As a result, he underwent a physical examination. Mr. Kraft failed this examination because of back problems (congenital scoliosis) and, therefore, was not hired. He continued to work clean up crew as a contract laborer. However, as time went on his back condition worsened and he was finally forced to quit on July 23, 1987.

Following Mr. Kraft’s termination of work he was treated by Dr. Paul Ruttle on July 28, 1987, for his complaints of low back and bilateral wrist pain. It was eventually determined that his wrist pain was caused by bilateral carpal tunnel syndrome.

Mr. Kraft filed a claim with the Division of Workers’ Compensation on July 20, 1987 In that claim, he sought compensation for his wrists and his back. The Division disputed the claim, and the matter was heard by the Workers’ Compensation Court on June 1, 1988. The Hearing Examiner found that as to the carpal tunnel condition, Mr. Kraft failed to carry his burden of proving that a compensable claim existed. He also found that although Mr. Kraft had suffered an injury in the form of microtraumas to his low back, the condition was not compensable under the Workers’ Compensation Act, but was more properly brought under the Occupational Disease Act.

Mr. Kraft filed a motion for rehearing. The motion was denied. He filed a Notice of Appeal and appealed only that portion of the judgment dealing with the carpal tunnel condition.

Findings of the Workers’ Compensation Court will not be overturned if there is substantial evidence to support them. Steffes v. 93 Leasing Co. Inc. (1978), 177 Mont. 83, 580 P.2d 450. However, findings and conclusions of the lower court “may not stand where there is a clear preponderance of the evidence against such findings or conclusions when viewed in the light most favorable to the prevailing party.” Hert v. J.J. Newberry (1978), 178 Mont. 355, 359, 584 P.2d 656, 658.

The facts of this case do not support the lower court’s conclusion that Gregory Kraft’s carpal tunnel condition was not a compensable injury under the Workers’ Compensation Act. See sec. 3971-101, et seq. The Hearing Examiner found that when Kraft began working at the Stoltze mill in 1986, he was not experiencing any problems with his wrists. Following his assignment to the dry chain, Mr. Kraft began to experience pain in both wrists, however. Eventually, he switched to the clean up crew, because he felt that the job would be easier and would help him avoid repetitive grasping motions which aggravated his condition. Following this job change, Mr. Kraft experienced relief from the symptoms of his carpal tunnel condition.

These findings are bolstered by the testimony of Dr. John V. Stephens, who treated Mr. Kraft for both his back and his wrist injuries. Dr. Stephens testified that the carpal tunnel condition was probably caused by Mr. Kraft’s job duties on the dry chain. He further testified that due to Mr. Kraft’s prior right carpal tunnel condition, he was predisposed to suffer the same condition in his left wrist. None of this evidence was effectively rebutted by the defense.

The defense maintains that Kraft failed to prove that his injuries were the result of job related activities. Instead, they assert that the condition may have arisen from Kraft’s fly-fishing activities which involve the same basic wrist motion as that performed on the dry chain. This contention fails, however, in light of Kraft’s unrebutted testimony that he hadn’t fished during his employment at Stoltze. He further testified that he utilized his right hand when he did fish, and therefore, this activity could not possibly have caused the condition in his left wrist.

The Hearing Examiner used as a basis of his conclusion that Kraft did not prove his case, the facts that “he did not report an injury to his wrists, he did not miss work because of wrist pain, and he did not notify his employer of wrist pain from his work.” He used as further support for his judgment Kraft’s testimony that despite the discomfort and pain in his wrists, he could still do the work on the dry chain better than anyone else at the mill. The defense maintains that these facts are sufficient to uphold the judgment of the lower court.

We disagree. These facts have no relevance to the central issue at trial. That issue was:

Did Gregory Kraft sustain a compensable injury while employed at Stoltze Land and Lumber?

In order to affirmatively answer this question, Kraft need only prove that: (1) he was an employee of Stoltze; (2) he received an injury; and (3) that his injury arose out of and in the course of his employment. See sec. 39-71-407, MCA; Wirta v. North Butte Mining Co. (1922), 64 Mont. 279, 210 P. 332. Mr. Kraft’s unrebutted testimony, together with that of his doctor clearly establish the fact that he suffered an injury as defined by the law in effect at the time he was employed at Stoltze Lumber.

This Court has stated, on many occasions, that the law in effect on the date of injury is controlling. See Young Motor Company v. Division of Workers’ Comp. (1985), 219 Mont. 1, 710 P.2d 58. Therefore, in order to determine whether Mr. Kraft’s condition is an injury, as that term was defined during the period he worked on the dry chain, we consult the statutes in effect during that period of time. Mr. Kraft worked the dry chain from approximately December of 1985 until he was forced to quit in March of 1987. The statute in effect during that time period defined injury as:

“(1) a tangible happening of a traumatic nature from an unexpected cause or unusual strain resulting in either external or internal physical harm and such physical condition as a result therefrom and excluding disease not traceable to injury, except as provided in subsection (2) of this section ... sec. 39-71-119(1), MCA (1985).”

The statute states two elements which must be present in order to prove an injury: “(1) a tangible happening of a traumatic nature; and (2) that this is the cause of the physical harm.” Wise v. Perkins (1983), 202 Mont. 157, 656 P.2d 816. In Hoehne v. Granite Lumber Company (1980), 189 Mont. 221, 615 P.2d 863, we held that a tangible happening need not be a single isolated event, but rather could result through “a chain of accidents or incidents, i.e. stacking of lumber on a daily basis. ’ ’ Mr. Kraft has proven that his wrist condition fits under this definition of injury. His testimony revealed that his wrists only began to bother him following his employment on the dry chain. Moreover, the testimony of his doctor taken as a whole established the causal relationship between the activity and Kraft’s carpal tunnel syndrome.

The conclusion of the Workers’ Compensation Court is not supported by substantial evidence. Moreover, as stated earlier, the uncontested facts presented by this case fully establish that Mr. Kraft sustained a compensable injury. Accordingly, this case is reversed and remanded to the lower court for further proceedings in accordance with this opinion.

JUSTICES HARRISON, BARZ, SHEEHY and WEBER concur.


author: JUSTICE HARRISON

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. FREDERICK ROD WEBB, Defendant and Appellant.
    No. 89-143.
    Submitted on Briefs April 5, 1990.
    Decided May 24, 1990.
    792 P.2d 1097.
    Donald L. Shaffer, Libby, James A. Manley, Poison, for defendant and appellant.
    Marc Racicot, Atty. Gen., Patricia Schaeffer Jordan, Asst. Atty. Gen., Helena, Scott B. Spencer, Co. Atty., Lincoln County, Libby, for plaintiff and respondent..
   JUSTICE HARRISON

delivered the Opinion of the Court.

Defendant Frederick Webb was convicted of criminal sale of dangerous drugs in the Nineteenth Judicial District, Lincoln County. Defendant appeals, alleging several errors by the District Court, including improper admission of expert opinion testimony. We reverse and remand.

Defendant presents several issues for review. Only the following issue will be addressed, however, since it is controlling and we find the District Court erred:

Did the District Court improperly allow opinion testimony by a deputy sheriff, as to the meaning and conclusions to be drawn from a tape-recorded conversation?

This case arose out of an undercover drug investigation conducted in Lincoln County, Montana during the summer of 1988, which resulted in the prosecution of a number of persons for sale of dangerous drugs. As part of the investigation the Lincoln County Sheriff’s Department hired Mike Hewson to purchase narcotics as an undercover agent. The Sheriff’s Department provided surveillance for Hewson, who would set up a deal and then contact either Detective Donald Bernall or Detective Klint Gassett of the Sheriff’s Department to obtain backup.

On the morning of June 27, 1988, Hewson went to the home of Vicki LaCoss in Libby. Hewson had met with Detective Gassett who gave Hewson five $20 bills for a drug buy and made sure Hewson was wearing a transmitter wire. Gassett monitored the activity from a vehicle parked some distance from LaCoss’s home.

When he arrived at the LaCoss residence, Hewson, who had never been there before, found Vicki LaCoss and her three-year-old daughter watching television. A short while later the defendant arrived, introductory pleasantries were exchanged, and defendant and Vicki LaCoss began playing cribbage, continuing an on-going competition. Hewson remained at the LaCoss residence for a short time. During this time, the State alleges a drug transaction took place where defendant sold Hewson a gram of methamphetamine (“Crank”) for $90 and Hewson gratuitously shared some of the drug with Vicki LaCoss for her part in setting up the deal. As he was leaving the house, Hewson read the license plate number of defendant’s blue van into the surveillance transmitter and Officer Gassett ran a check which revealed the van belonged to the defendant. Hewson later met with Officer Bernall to give him the drugs.

On September 14, 1988, defendant was arrested and charged by information with two counts. The first count was dismissed, but the second count, charging defendant with the sale of dangerous drugs, was tried to a jury in Lincoln County on February 22-24, 1989. The State’s version of what transpired on June 27, 1988 differs greatly from defendant’s version. Hewson testified that he had met LaCoss once before and had, by a telephone call, made prior arrangements to complete a drug buy at LaCoss’s home on the morning of June 27. LaCoss testified that she had not invited Hewson to her home that morning nor had she made prior arrangements for a drug transaction. LaCoss also stated she had not invited defendant to her house on the morning of June 27. Defendant said he had come to LaCoss’s home to inquire if she was still planning a dinner party for that evening.

Hewson testified that he bought a ‘ ‘bindle’ ’ containing one gram of crank from defendant for $90 and that Hewson and LaCoss then went to a back area of the house where he gave LaCoss some of the drugs. Hewson also testified that there was some discussion between him and the defendant regarding the sale of the crank.

LaCoss’s version of the transaction differs significantly from Hewson’s testimony. LaCoss testified that Hewson brought the drugs to her house; that there was no conversation regarding a drug transaction in defendant’s presence; that defendant never saw or was in any way involved in any drug transaction; and that she and Hewson shared drugs in a back area of her house out of defendant’s presence.

Defendant testified there was no drug transaction nor was any money exchanged in his presence. Defendant also testified he did not see any drugs in the house nor was he aware that Hewson and LaCoss shared drugs in another part of the house on June 27.

A tape, recorded by surveillance, of the activities at the LaCoss home on June 27, 1988 was introduced into evidence and played for the jury. Different versions of the recorded conversation transcribed by the State and the defense were also introduced. On rebuttal, the State called Officer Gassett who was permitted, over defendant’s objection, to give his opinion regarding the meaning of certain parts of the conversation on the tape.

On February 24, 1989, the jury returned a verdict of guilty from which defendant now appeals.

Did the District Court improperly allow opinion testimony by a deputy sheriff, as to the meaning and conclusions to be drawn from a tape-recorded conversation?

Much of the electronic surveillance tape recording was unintelligible. Neither the State’s nor the defendant’s transcribed version of the tape makes any mention of drugs or any sort of drug transaction. The State, however, contended at trial that parts of the conversation alluded to a drug transaction. In an effort to support the contention the State offered the testimony of Officer Gassett, the detective who monitored the June 27 events at the LaCoss home by electronic surveillance.

Officer Gassett was allowed to give his opinion as to the significance of certain parts of the recorded conversation between Hewson, LaCoss, LaCoss’s three-year-old daughter, and the defendant:

“Q. And that is transcribed as Mike Hewson or we waited for him, Vicki LaCoss?
“A. Uh-huh.
“Q. Then there is a thing by [the daughter]. Then Mike Hewson, are you waiting for him. Vicki LaCoss, uh-huh.
“Q. Okay. Does that sound to you like conversations that would tie into a drug deal?
“A. Yes, sir.
“Q. And why is that?
“A. Waiting for in my opinion, they are waiting for delivery of the drug or whoever is going to bring it over.
“Q. And it says, Rick Webb says, yes, I kind of thought that you would like that. Now, is that consistent? Does that mean anything to you or do you feel that has any significance?
“A. I feel that it has significance.
“Q. What is that?
“A. In that they are talking about the price and reference to crank; what he paid, $90.00, comes out usually a lot of times, you pay $100.00 for it.
“Q. So you thought of that as being a significant reference to price and in what regard meaning what?
“A. It is cheaper than expected.
“Q. Okay. Now, when we listened to the tape and listened to the tape, it appeared there was people talking at that time?
“A. Yes, sir.
“Q. And were they talking loudly, softly or what?
“A. Softly.
“Q. And is there any significance to people talking real softly in relation to drug deals?
“A. Yes, sir.
“Q. What is that?
“A. In that lots of times in most times that I have been involved with drugs and when they get down to actually talking about the drugs, it doesn’t matter where they are at, how may people there are present, they tend to talk in soft, low tones, not loud.
“Q. Okay. And is there any significance to people at the point of the transaction talking softly and low tones of voice?
“A. I think this is when, yes.
“Q. And why is that?
“A. I think this is where the drugs is being exchanged.
“Q. And then there is another thing at 55 [referring to tape recorder counter number] then, [the daughter], and then 58 Mike Hewson, thank you?
“A. Yes, sir.
“Q. Does that have any significance to you?
“A. Yes, sir.
“Q. What is that?
“A. In that the crank, one gram of crank cost $100.00. I had given Mike $100.00 in five twenties and this part here relates that Rick had given him $10.00 for $90.00 for the crank after Mike paid a hundred dollars.
“Q. Referring to anything in making the statement saying thank you other than what we are talking about here?
‘ ‘A. No, he would have been receiving the $10.00 back from Mike in my opinion.
“Q. They have transcribed as Rick Webb saying that is a good one, Vicki and how did the State transcribe that one?
“A. From Mike Hewson and a good one, Rick.
“Q. Okay. Now, the jury will have to ultimately decide who is saying what. What is your opinion as to what is being said?
“A. A good one, Rick.
“Q. By who?
“A. By Mike Hewson.
“Q. Would that have any significance?
“A. Yes.
“Q. And what would that be?
“A. That would be that at this point, he has looked at his drugs or at the crank and the bindle and in my opinion he is saying that it is good.
“Q. Is that consistent with what was going on or should have been going on?
“A. Yes.
“Q. Is that consistent with what Mike Hewson said went on?
“A. Yes, sir.
“Q. Now, first, there is a specific tone of voice that everybody uses in this conversation; is that correct?
“A. Yes.
“Q. You listened to the tape and everybody was using a voice intonation; is that right?
“A. Yes, sir!
“Q. You know what I am talking about?
“A. I believe so.
“Q. Voices go up and down and change depending on who they are responding to; is that right?
“A. Yes.
“Q. And these particular conversations especially about Woodsy was, had a very specific voice coloration; is that right?
“A. Yes, sir.”

The State does not maintain on appeal that Officer Gassett testified as an expert witness in this matter, nor would his testimony qualify under Rule 702 of the Montana Rules of Evidence, since no scientific, technical or other specialized knowledge was necessary to assist the trier of fact in understanding the evidence. The State does argue, however, that Officer Gassett’s testimony is admissible pursuant to Rule 701, M.R.Evid. The rule sets forth two guidelines to be met in order for opinion testimony to be given by lay witnesses:

“If the witness is not testifying as an expert, his testimony in the form of opinions or inferences is limited to those opinions or inferences which are (a) rationally based on the perception of the witness and (b) helpful to a clear understanding of his testimony or the determination of a fact in issue.” Rule 701, M.R.Evid.

We find that the testimony of Officer Gassett regarding the significance of certain parts of the tape recording fails subsection (b) of Rule 701, M.R.Evid., in that his opinion testimony is not “helpful to a clear understanding of his testimony or the determination of a fact in issue. ’ ’ No language peculiar to drugs or drug deals was used in the tape-recorded conversation. The jury was capable of understanding the plain language of the conversation without the aid of Officer Gassett’s opinion testimony. Where terms are capable of being understood by the layman, and where the jury is capable of interpreting the language or slang involved, lay witness opinion testimony is improper, as is the lay witness’s conclusion or interpretation of the conversation. See, United States v. Marzano (7th Cir. 1976), 537 F.2d 257; Deloach v. United States (D.C. Cir. 1962), 307 F.2d 653. We reverse and remand.

CHIEF JUSTICE TURNAGE and JUSTICES BARZ, SHEEHY and McDonough concur.


author: CHIEF JUSTICE TURNAGE

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. DANNY WALTER CHATRIAND, Defendant and Appellant.
    No. 89-524.
    Submitted on Briefs April 12, 1990.
    Decided May 24, 1990.
    792 P.2d 1107.

      Dan Yardley, Yardley & Yardley, Livingston, for defendant and appellant.
    Marc Racicot, Atty. Gen., Paul Johnson and John Connor, Asst. Attys. Gen., Helena, Neis Swandal, Co. Atty., Livingston, for plaintiff and respondent.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Danny Walter Chatriand appeals his conviction of felony sale of dangerous drugs (cocaine) and felony possession of dangerous drugs (marijuana). The case was tried to a jury in the District Court of the Sixth Judicial District, Park County. We affirm.

The sole issue on appeal is whether the District Court erred in denying Chatriand’s motion to suppress evidence seized from his house pursuant to a search warrant.

In November 1988, Livingston police officers raided the home of Chatriand and Gina Richtmyer. They arrested the couple under an arrest warrant relating to sales of drugs to an informant at the home. After Chatriand and Richtmyer were taken to jail, the police officers searched the home pursuant to a search warrant. They found bags of marijuana, scales, a hypodermic syringe, and two papers identified as records of drug transactions.

At an omnibus hearing in March 1989, Chatriand’s counsel moved to suppress the evidence seized from the home. A briefing schedule was set, with a hearing date “to be set after briefs received.” After the parties filed their briefs, the court deemed the matter submitted instead of setting it for hearing. On May 11, 1989, it filed an order denying the motion to suppress. The defense moved to vacate the denial and to set the matter for hearing as was originally indicated in the omnibus order.

The motion to vacate was heard on May 19, 1989. The court vacated its order denying the suppression motion, following which the parties and the court discussed whether another hearing was necessary so that the defense could present testimony in support of its motion to suppress. The court suggested that the defense dictate into the record the substance of what its witnesses would say. The proposed testimony, as explained by the defense, would be that no search warrant was left at defendant’s house. The State stipulated to that testimony, but asked to be allowed to submit a legal memorandum. Defense counsel also was to submit a brief. For the convenience of witnesses, they agreed that if a suppression hearing was necessary, it would be held immediately prior to trial.

On the day of trial, following empanelment of the jury, defense counsel renewed the motion to suppress. Noting that the matter had been briefed, the court denied the motion. Defense counsel objected that no hearing had been held. The court asked the nature of the testimony which would be presented at such a hearing. The defense answered that witnesses would testify that no search warrant was left at the house. The court again denied the motion. Trial then proceeded, resulting in Chatriand’s conviction.

Did the District Court err in denying Chatriand’s motion to suppress evidence seized from his home pursuant to a search warrant?

Chatriand argues that failure to display the search warrant or to leave a copy of it at his home violated his substantial rights. Although one of the officers testified that he left a warrant at the home, the State is willing to assume, for the sake of this argument as it did for the argument below, that no warrant was displayed to Chatriand or left at the home.

The defense points out that another district court, in Gina Richtmyer’s trial, held that the evidence seized pursuant to this search warrant should be suppressed. But, as the defense acknowledges, that ruling is not controlling here.

Under sec. 46-5-103, MCA, a search and seizure is not illegal if irregularities in the procedure do not affect the substantial rights of the accused. Illinois, from whose criminal code most of Montana’s was derived, including sec. 46-5-103, MCA, has held that, absent a showing of prejudice, failure to leave a copy of a search warrant at the place searched does not invalidate the search. People v. McCullum (1975), 33 Ill.App.3d 451, 338 N.E.2d 248, 250-51, AFF’D, 66 Ill.2d 306, 5 Ill.Dec. 836, 840, 362 N.E.2d 307, 311. As a general rule, statutes which require peace officers to exhibit or deliver a copy of the search warrant at the place to be searched are viewed as ministerial only, and failure to comply with such statutes does not void an otherwise valid search. 2 W. LaFave Search and Seizure sec. 4.12(a) (1987). We adopt that rule.

Chatriand has not made a showing of prejudice to him as a result of failure to display or leave a copy of the search warrant at his home. He has not shown that the search might not have occurred or might have been less intrusive had the warrant been shown to him or left at the house. Moreover, the defense was provided with a copy of the warrant well before trial and has made no objection to its form.

Chatriand also argues that failure to hold an evidentiary hearing on the matter of suppression violated his constitutional rights. As noted in the facts set forth above, the parties stipulated to the facts which would be relevant to the grounds raised for suppression of the evidence — namely, that no copy of the search warrant was left at the home. Chatriand never raised any additional grounds for objecting to the search. We affirm the conclusion of the District Court that under these circumstances, no hearing was required and the evidence seized in the search was admissible.

Affirmed.

JUSTICES HARRISON, BARZ and WEBER concur.

JUSTICE McDONOUGH, specially concurs in the result.