text:
    ALLSTATE INSURANCE COMPANY, Plaintiff and Respondent, v. WILLIAM R. HANKINSON, Luke Hankinson Gerald Baasch, Gwen Grenfell, Defendants and Appellants.
    No. 91-026.
    Submitted on briefs June 6, 1991.
    Decided July 15, 1991.
    249 Mont. 237.
    815 P.2d 145.
    Darla J. Keck, Datsopoulos, MacDonald & Lind, Missoula, for defendants and appellants.
    Sherman V. Lohn and Susan P. Roy, Garlington, Lohn & Robinson, Missoula, for plaintiff and respondent.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

The District Court for the Fourth Judicial District, Missoula County, granted summary judgment to Allstate Insurance Company in this action for declaratory judgment as to automobile liability insurance coverage. We affirm.

The issue is whether the District Court erred in concluding that the insured, William Hankinson, did not give implied permission to his son, Luke Hankinson, to drive the Cloninger vehicle on July 30, 1988.

On July 30, 1988, a 1967 Buick driven by Luke Hankinson was involved in an automobile accident on U.S. Highway 200 east of Bonner, Montana. The vehicle was owned by Kathy Cloninger, whose son, Brian Young, had given his friend Luke Hankinson permission to drive the car. As a result of the accident, defendants Gerald Baasch and Gwen Grenfell were injured.

Luke Hankinson was an insured driver on his father’s insurance policy with Allstate Insurance Company (Allstate). In this action, Allstate seeks a declaratory judgment that it has no obligation to defend or indemnify Luke Hankinson for any claims by defendants Baasch and Grenfell arising out of the accident. In a previous appeal to this Court, the Court reversed a summary judgment in favor of defendants. The District Court had granted summary judgment on the basis that Luke Hankinson was driving the 1967 Buick with the owner’s permission. Allstate Ins. Co. v. Hankinson (Mont. 1990), [244 Mont. 1,] 795 P.2d 480, 47 St.Rep. 1380. This Court held that, under § 61-6-301, MCA, “the key issue for this case is whether Luke’s father gave him permission to drive the non-owned vehicle.” Allstate, 795 P.2d at 482.

On remand, Allstate and the defendants each filed with the court affidavits by Luke’s father, William Hankinson. The affidavit submitted by Allstate read as follows:

“1.1 am the named insured in Allstate Policy No. 020 960067. My son is Luke Hankinson.
“2.1 recall the day of the accident because the boys stopped by my house. Brian Young was driving the car. When I learned they were going on the Blackfoot road, which is a dangerous road, I asked who was driving. They said Brian was driving; I then told Brian to drive carefully because the road is dangerous.
“3. We had no discussion about Luke’s driving the car, and I never gave any permission, implied or express, to Luke to drive the car on July 30, 1988, and would not have given any permission.
“4. If I had known that Luke wished or intended to drive a car belonging to Kathy Cloninger, without her permission, I would not have given my permission.
“5. If I had known that Luke would be drinking alcohol on July 30, 1988, I would not have given my permission for him to drive and would have instructed him not to drive Kathy Cloninger’s vehicle or any other vehicle.”

The affidavit of William Hankinson submitted by defendants read as follows:

“1. That I am the named insured on the policy of insurance which is the subject of this declaratory judgment action.
“2. That I am the father of Luke Hankinson, who was also insured under my Allstate policy of insurance at the time of the accident.
“3. That I previously signed an Affidavit on the 25th day of July, 1990, for Allstate Insurance Co. which is true and accurate to the best of my knowledge and belief. That the following information is provided to supplement and to better understand the information provided in such Affidavit.
“4. That on the day of the accident, although I did inquire as to who was going to drive and asked Brian to drive carefully, I did not tell my son Luke that he could not drive.
“5. That I have not in the past restricted Luke’s driving of vehicles and Luke did not need to routinely seek my permission when he wanted to drive. For that reason, Luke could have reasonably believed that he had my implied permission to drive on the day of the accident.”

Allstate also filed an affidavit of Luke Hankinson, which read as follows:

“1.1 was the driver of a 1967 Buick belonging to Kathy Cloninger when an accident occurred on July 30, 1988.
“2. It is possible that I was not living at home on the day of the accident.
“3. My father never gave me any permission of any kind, implied or express, to drive the car belonging to Kathy Cloninger, and I had no belief that I had my father’s implied permission to drive the Cloninger car on the day of the accident.
“4. If my father had known that Kathy Cloninger had denied permission for my driving her 1967 Buick, he would not have allowed me to drive it.
“5. If my father had known that I would be drinking on July 30, 1988, he would have specifically denied me permission to drive Kathy Cloninger’s 1967 Buick or any vehicle on that day.”

Based on the affidavits, the court found that William Hankinson did not give express permission to Luke to drive the Cloninger car and that Luke denies that he thought he had implied permission to do so. The court granted summary judgment for Allstate. Defendants appeal.

The defendants cite two cases in support of their position that William Hankinson gave implied consent to his son Luke to drive the Cloninger vehicle. They argue that Allstate must provide insurance coverage and that they are entitled to summary judgment.

Defendants first cite Mountain West Farm Bureau v. Farmers Ins. (1984), 209 Mont. 467, 680 P.2d 330. In that case, Gerald McArthur, a friend of the son of the insured, had been given permission by the son to drive the vehicle “on many occasions.” At the time of the accident, the son of the insured was enjoying an early-morning breakfast in a restaurant while McArthur and another friend remained in the car. McArthur had obtained the keys in order to listen to the car radio, but the son of the insured had admonished him only to listen to the radio and not go anywhere. When a police officer approached the car and questioned the two occupants about a possible curfew violation, they locked the car doors and McArthur began backing out of the parking lot, running over the police officer in the process.

This Court held that there was implied permission to use the car because the facts did not establish an absolute revocation of permission to use the car and, as “a stronger reason,” there was testimony that McArthur never heard the admonishment not to go anywhere. Mountain West, 680 P.2d at 331. This Court also stated that “[a] complete and unreasonable departure from the intended use, or an intentionally dangerous and wrongful operation could support a ruling that the use was outside of the scope of permitted use as a matter of law.” Mountain West, 680 P.2d at 331.

The second case cited by defendants is Horace Mann Ins. v. Hampton (1989), 235 Mont. 354, 767 P.2d 343. In that case, a mechanic had possession of the insured vehicle so that he could overhaul the engine. He used the car when he went out drinking, and was in an accident. This Court held that Montana’s Mandatory Liability Protection Act, § 61-6-301, MCA, required that liability insurance continue in force to the minimum statutory requirement, because the mechanic initially obtained control and operated the vehicle with the permission of the owner. Horace Mann, 767 P.2d at 345-46.

The reasons for concluding that there was implied permission to drive the vehicles in Mountain West and Horace Mann are not present in this case. As indicated above, resolution of Mountain West was determined by the particular facts of that case, including permission by the insured “on many occasions” to drive the car in question. And here, unlike the situation in Horace Mann, there was no initial permission by William Hankinson for Luke to drive the Cloninger car, according to the affidavits submitted.

William Hankinson stated in his affidavit that he did not and would not have given Luke permission to drive the Cloninger car on the day in question. Luke stated in his affidavit that he believed his father would have denied him permission to drive the Cloninger vehicle on that day. We conclude that the District Court was correct in determining that there was no express or implied permission by William Hankinson for Luke to drive the Cloninger vehicle. We hold that the District Court did no err in granting summary judgment for Allstate.

Affirmed.

JUSTICES HARRISON, McDONOUGH, GRAY, HUNT, TRIEWEILER and WEBER concur.


source: Caselaw Access Project

author: JUSTICE McDONOUGH

license: Public Domain

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. MARVIN McLAIN, Defendant and Appellant.
    No. 90-342.
    Submitted on briefs May 24, 1991.
    Decided July 16, 1991.
    249 Mont. 242.
    815 P.2d 147.

      Marc Racicot, Atty. Gen., John Paulson, Asst. Atty. Gen., Helena, Larry J. Nistler, Lake County Atty., Robert S. Anderson, Deputy County Atty., Poison, for defendant and appellant.
    Rebecca T. Dupuis, Poison, for plaintiff and respondent.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Marvin McLain appeals from a jury verdict finding him guilty of sexual assault in violation of § 45-5-502, MCA. The District Court of the Twentieth Judicial District, Lake County, sentenced McLain to a term of twenty years with five years suspended. We affirm.

The issues submitted for review are:

1) Whether the defendant was denied his constitutional right to effective assistance of counsel;

2) Whether the District Court erred by allowing expert testimony that the victim was credible in her reporting of the sexual assault;

3) Whether there was sufficient evidence to support the conviction.

In August of 1989, nine year old D.L. lived with her mother at the Schultz Trailer Court in Pablo, Montana. The defendant, Marvin McLain (McLain) lived with his two children in a nearby trailer. Apparently, D.L. and McLain’s children were playmates. McLain’s children’s names are Amy, who was nine years old at the time, and Jonathan, who was five years old.

On the morning of August 22,1989, D.L.’s mother went to work at a local discount store. D.L. was left in the care of two house guests who were staying with D.L. and her mother. As usual, D.L. played all day long with Amy and Jonathan.

McLain had just gotten off of work from the saw mill where he worked the graveyard shift. He rested on his couch throughout the day while the children played. In the early evening hour the children began to bake sugar cookies at the McLain trailer. While the cookies were in the oven, the children began to have a pillow fight. According to D.L., McLain joined in the fight and began tickling and wrestling with the children. When Amy left momentarily to check on the cookies, D.L. was on the living room floor on her hands and knees. McLain was on top of her, also on his hands and knees. At this point McLain began touching D.L. on her right breast. The “touching” continued and he squeezed her breast several times and then touched her between her legs.

Later that evening, D.L.’s mother noticed that her daughter appeared very upset. D.L. asked to sleep in her mother’s bed and after being tucked in told her mother about the sexual assault perpetrated by McLain. D.L.’s mother then called the police and reported the incident.

After D.L. was interviewed by a state social worker, McLain was arrested and charged by information with sexual assault. The witnesses listed in the information included an “unknown” person from the Ronan Mental Health Clinic. Dr. Edward Trontel of Kalispell was then asked, by the state, to interview D.L. for the purpose of determining whether she was capable of making a credible report. On February 1, 1990, the State filed a motion seeking to substitute Dr. Trontel for the “unknown” witness. Defense did not object and this motion was granted.

Trial commenced on February 22,1990. At trial D.L. testified and related the story as set out above. McLain, for his part, denied touching D.L.’s breasts or vaginal area. He testified that he remembered the pillow fight but did not participate in it. He further testified that he caught Amy and D.L. smoking his cigarettes on that day and that he had informed D.L. that he was going to tell her mother. Amy was called as a rebuttal witness. She testified that she and D.L. had not gotten caught or gotten into any trouble for smoking cigarettes. She further testified that she saw her father touch D.L. between the legs.

Following trial, the jury returned a verdict of guilty as to the offense of sexual assault. On March 14, 1990, sentence was imposed and the judgment of the court rendered. This appeal followed.

I.

McLain maintains that he was not afforded his right to effective assistance of counsel and that his rights under the Sixth Amendment to the United States Constitution and Article II, Section 24 of the Montana Constitution were therefore violated. He asserts two deficiencies in his attorney’s performance: (1) that counsel failed to object to the State’s motion to substitute Dr. Trontel as a witness, and (2) that counsel failed to interview Dr. Trontel prior to trial.

The standard for reviewing claims of ineffective assistance of counsel is well established. In evaluating such claims, this Court applies the two prong test set forth in Strickland v. Washington (1984), 466 U.S. 668, 80 L.Ed.2d 674, 104 S.Ct. 2052. This test requires that a criminal defendant show (1) that his attorney’s performance was deficient and (2) that counsel’s deficient performance prejudiced the defense to a degree which denied the defendant a fair trial. State v. Boyer (1985), 215 Mont. 143, 695 P.2d 829. This test places a heavy burden upon a defendant who seeks to reverse a judgment on such grounds. Under Strickland, judicial scrutiny of counsel’s performance must be highly deferential and the reviewing court must indulge a strong presumption that counsel’s conduct falls within the wide range of reasonable professional assistance. Strickland, 466 U.S. at 689, 104 S.Ct. at 2065.

Failure to object to the adding of a name to the list of witnesses three weeks before trial under this circumstance is not deficient. Moreover, even if we assume that counsel’s performance was deficient when he failed to interview Dr. Trontel, it is by no means apparent that these deficiencies prejudiced McLain’s right to a fair trial. In order to prevail on this issue, McLain must show that a reasonable probability exists that but for his counsel’s deficient performance, the trial’s outcome would have been different. In light of the overwhelming evidence against him, McLain cannot make this showing.

Both D.L. and McLain’s daughter testified that he sexually assaulted D.L. Admittedly, D.L.’s testimony contained some discrepancies. The discrepancies mostly dealt with small details such as how many times he touched her or which hand he used when he fondled her breast. The inaccuracies contained in these statements do not weaken her testimony. On the whole the evidence presented against the defendant was overwhelming and, therefore, any failure to interview by McLain’s counsel concerning Dr. Trontel’s testimony could not have contributed to his conviction. There is no showing that Dr. Trontel’s testimony was a surprise or not anticipated.

II.

Defendant next argues that the District Court erred when it allowed Dr. Trontel to testify about whether D.L. was credible in her reporting of this event. Previously, we have held that expert testimony is admissible for the purpose of helping the jury to assess the credibility of a child sexual assault victim. Generally, such testimony is admissible when the child testifies at trial and the child’s credibility is brought into question. See State v. Harris (1991), [247 Mont. 405,] 808 P.2d 453, 48 St.Rep. 62; State v. Geyman (1986), 224 Mont. 194, 729 P.2d 475; State v. French (1988), 233 Mont. 364, 760 P.2d 86.

In the case now before us, both of these factors are present. As stated earlier, D.L., a nine year old, testified at McLain’s trial. During trial, McLain’s counsel tried to impeach her testimony by setting forth inconsistencies between her testimony and earlier statements made to investigators, psychologists and lawyers. Dr. Trontel, in his testimony, explained the reasons why such inconsistencies often occur in the context of child sexual abuse. He also gave some guidance which would help the lay jurors understand and judge D.L.’s testimony. His explanation and his testimony were given in accordance with the rules set down in Harris. We therefore find no reversible error on this issue.

III.

McLain maintains that the evidence presented at trial was insufficient to support his conviction for sexual assault. His argument is based upon the inconsistencies in the evidence and the State’s failure to show that his touching of the victim was for his sexual gratification.

In reviewing these types of questions, this Court has followed the rule set forth in Jackson v. Virginia (1979), 443 U.S. 307, 99 S.Ct. 2781, 61 L.Ed. 2d 560. This rule requires the reviewing court to determine “whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.” State v. Wilson (1981), [_Mont._,] 631 P.2d 1273, [38 St.Rep. 1020].

In this case, McLain argues that the evidence presented by the State was so inconsistent that no rational jury could have found him guilty. We disagree. As stated earlier, the alleged inconsistencies are inconsequential. They dealt with only small details of a stressful occurrence that involved a very young girl. There was no discrepancy involving any of the major aspects of the occurrence. In general D.L.’s testimony was consistent and believable. Furthermore it was supported, without any significant differences, by McLain’s daughter Amy.

McLain further contends that the evidence is not sufficient to support a finding that the touching of D.L. was for his sexual gratification. In State v. Gilpen (1988), 232 Mont. 56, 756 P.2d 445, we held that a defendant’s intent to gratify his sexual desire could be inferred from his conduct. Given the testimony that McLain pinched and stroked D.L.’s private areas several times, the jury’s inference of his intent was reasonable. Furthermore, there was testimony that McLain told D.L. not to tell her mother about his physical contact with her. This evidence lends further support to the jury’s verdict.

Affirmed.

CHIEF JUSTICE TURNAGE and JUSTICES TRIEWEILER, HARRISON, HUNT, GRAY and WEBER concur.


author: JUSTICE HUNT

text:
    In re the MARRIAGE OF WILLIAM A. BLASKOVICH, Petitioner and Respondent, and DUANNA F. BLASKOVICH, Respondent and Appellant.
    No. 90-595.
    Submitted on briefs April 25, 1991.
    Decided July 23, 1991.
    249 Mont. 248.
    815 P.2d 581.
    Douglas G. Skjelset, Skjelset Law Offices, Missoula, for respondent and appellant.
    Christopher Daly, Missoula, for petitioner and respondent.
   JUSTICE HUNT

delivered the opinion of the Court.

Respondent and appellant, Duanna F. Blaskovich, filed a motion to set aside a default decree of dissolution obtained by the petitioner and respondent, William A. Blaskovich, in the Fourth Judicial District Court, Missoula County. When the District Court failed to rule on the motion within 45 days, the motion was deemed denied. Duanna appeals. We reverse and remand.

The dispositive issue on appeal is whether the District Court erred in failing to set aside the default decree of dissolution and property settlement as void for lack of personal jurisdiction over Duanna due to insufficient service of process.

Duanna and William Blaskovich were married in Missoula on October 14, 1981. During the marriage, the parties acquired various items of property. They had no children.

On January 25, 1990, William filed a petition for dissolution. The following day at the office of William’s attorney, Duanna was shown a copy of the petition and an acceptance of service form, which she refused to sign. She informed William and his attorney that she would be moving to Roy, Utah. Later that day, she phoned the attorney to give him her Utah address, 5463 South 2775 West, as well as a post office box number.

On January 30, 1990, William sent the summons and petition to the sheriff of Weber County, Utah, the county in which the town of Roy is located. The papers were accompanied by a letter directing the sheriff to serve Duanna at 5563 South 2775 West in Roy, an address that differed from the one given him by Duanna by only one digit. Unable to locate Duanna because no such address coxald be found, the sheriff did not complete service and returned the papers to William.

William then forwarded copies of the petition and a notice and acknowledgment of service by mail form to Duanna’s post office box. In response, Duanna sent a letter to William, acknowledging that she had received “divorce papers” and refusing to sign any documents. At the hearing to set aside the defaxilt, Duanna claimed that the summons was not included with these papers.

On March 27,1990, the hearing on the dissolution was held. At the hearing, William claimed that he was amable to personally serve Duanna because she had supplied him with a “bogus” address. He told the court that he had then attempted service by mail but that Duanna had refused to sign the acknowledgment form. Based upon William’s assertion of due diligence in attempting personal service, as well as his assertion that Duanna had deliberately concealed her true address, the court found that Duanna’s reply letter constituted proof of constructive or substituted service. The court thereupon entered the defaxxlt dissolution and distributed the property of the parties.

Upon learning of the court’s ruling, Duanna filed a motion to set aside the decree under Rules 4D and 60(b), M.R.Civ.R The motion, filed -within 180 days after rendition of the decree, was timely under Rule 60(b), M.R.Civ.R

The court heard testimony but failed to rule on the motion until the 45-day jurisdictional time limit elapsed. The motion was therefore deemed denied. Nevertheless, the court issued an advisory opinion, stating that, although it had lost jurisdiction over the matter, it was of the opinion that the default judgment should be set aside for lack of personal jurisdiction over Duanna due to insufficient service of process. The court found that it was reasonable to infer that Duanna supplied William with a correct street address rather than a “bogus” and deliberately fraudulent address and that William made an error in transcribing the address when he asked the Weber County Sheriff to personally serve her. The court found that Duanna did not deliberately conceal her address and that William’s failure to personally serve her was due to his own error and lack of diligence.

Duanna now appeals.

Personal jurisdiction may be obtained only through strict compliance with the Rule 4D, M.R.Civ.P., which governs service of process. Sink v. Squire, 236 Mont. 269, 273, 769 P.2d 706, 708 (1989); Shields v. Pirkle Refrigerated Freightlines, Inc., 181 Mont. 37, 45, 591 P.2d 1120, 1125 (1979). When service is flawed, it “confer[s] no jurisdiction and the default judgment entered therein [is] void.” Shields, 181 Mont. at 45, 591 P.2d at 1125.

Personal service may be obtained outside of the state of Montana in the same manner provided for service within the state. Rule 4D(3), M.R.Civ.P. Thus, in conformity with Rule 4D(2)(a), M.R.CivR, a plaintiff may serve a competent adult who resides outside of this state by delivering a copy of the summons and complaint to her personally. A plaintiff may also serve a competent adult by sending a summons, complaint, and notice and acknowledgment of service through the mail, provided the defendant signs and returns the notice and acknowledgment form. Rule 4D(l)(b), M.R.CivR.

In the present case, William attempted to personally serve Duanna in accordance with Rule 4D(2)(a), M.R.Civ.P. Service could not be completed, however, because William gave the Weber County Sheriff the wrong address.

When personal service was ineffective, William attempted to serve Duanna by mail in accordance with Rule 4D(l)(b), M.R.Civ.P. Duanna admitted that she received the complaint and the notice and acknowledgment form. She contended, however, that William did not include the summons with the other papers.

If William failed to send the summons to Duanna, service was ineffective. However, even if William did send the summons with the other papers, the court did not have jurisdiction over her. Jurisdiction cannot be obtained simply by mailing a copy of the summons and complaint to the defendant. Service by mail is not complete until the notice and acknowledgment of receipt of summons is signed by the defendant. Rule 4D(l)(b)(iii), M.R.Civ.P. If the defendant refuses to sign and return the acknowledgment, the plaintiff is required to personally serve the defendant. Rule 4D(l)(b)(i), M.R.Civ.P.

The notice and acknowledgment received by Duanna provided as follows:

“You may complete the acknowledgment part of this form and return one copy of the completed form to the sender within 20 days after the date it was mailed to you as shown below.
“If you do not complete and return this form to the sender within 30 days after the date it was mailed to you as shown below, you may be required to pay any expenses incurred in serving a summons and petition in any other manner permitted by law.
“If you do complete and return this form, you must answer the Petition within 20 days after the date of signature which you place on the acknowledgment below. If you fail to answer the Petition within the foregoing 20 day period, judgment by default will be taken against you for the relief demanded in the Petition. (Emphasis added.)”

The acknowledgment informed Duanna, in conformity with Rule 4D(l)(b)(ii), M.R.Civ.P., that the only penalty she would suffer if she chose not to sign and return the acknowledgment would be liability for the costs of other methods of service of process. It further informed her that if she signed the acknowledgment and then failed to answer the petition, she would be in danger of default. It did not inform her that by sending a letter in which she explicitly refused to sign the acknowledgment she could also suffer a default.

Duanna acted within her rights when she refused to sign and return the acknowledgment of service. Although she had actual knowledge of the impending suit, actual knowledge without proper service is insufficient to confer jurisdiction.

Furthermore, William was not left without a method in which to achieve service. He could have served Duanna by publication under Rule 4D(5), M.R.Civ.P., or he could have undertaken further efforts to find her correct address in Utah.

William did not properly serve Duanna. Consequently, the District Court did not acquire personal jurisdiction over her and the default decree of dissolution is void.

Reversed and remanded for further proceedings consistent with this opinion.

CHIEF JUSTICE TURNAGE and JUSTICES GRAY, TRIEWEILER, McDONOUGH, WEBER and HARRISON concur.


author: JUSTICE WEBER

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. THOMAS TUMBLESON, Defendant and Appellant.
    No. 90-170.
    Submitted on briefs on May 31, 1991.
    Decided July 30, 1991.
    249 Mont. 253.
    815 P.2d 592.
    William Boggs, Missoula, Wendy Holton, Helena, for defendant and appellant.
    Marc Racicot, Atty. Gen., Carol E. Schmidt, Asst. Atty. Gen., Helena, Robert L. “Dusty” Deschamps III, Co. Atty., Fred Van Valkenburg, Deputy Co. Atty., Missoula, for plaintiff and respondent.
   JUSTICE WEBER

delivered the Opinion of the Court.

A jury trial was held in the District Court for the Fourth Judicial District, Missoula County, and defendant, Thomas Edward Tumbleson, was convicted of one count of felony theft and one count of misdemeanor theft. Defendant appeals. We affirm.

The sole issue for our review is whether the District Court erred by not instructing the jury, on its own motion, on the defense of consent as it relates to theft.

Defendant lived with his girlfriend, Donna Hatton (Ms. Hatton). Ms. Hatton testified she allowed defendant to use her car, a 1983 Chevrolet Citation, when defendant needed it.

On September 3, 1989, at approximately 1:00 p.m., Ms. Hatton allowed defendant to use her car to “go to the store”. Ms. Hatton testified she assumed defendant was going to a local store and “didn’t expect him to be gone real long”. When defendant had not yet returned by about 8:00 p.m., she went to the sheriff’s office to report that her car was stolen, including some art supplies that were in the car. Because it was the Labor Day holiday weekend, Ms. Hatton gave her statement but was told to return on Tuesday morning to speak with Detective Jackson. Subsequent to giving her statement, Ms. Hatton discovered other items missing, including her 19" Hitachi television. When she returned to the sheriff’s office on Tuesday morning, she reported the television set missing. Ms. Hatton testified that defendant had keys to both her car and the storage unit from which the television was taken and that the disappearance of the car and the television were probably connected.

Instead of going to a local store, defendant drove to Great Falls and two days later sold Ms. Hatton’s car to Steve Edwards and Anita Walraven for $800. Ms. Walraven paid $100 to defendant as a down payment and took possession of the car. She testified that she was unsure about when and how the title was going to be transferred to her.

On September 11, 1989, eight days after the defendant left Missoula with Ms. Hatton’s car, defendant telephoned her from Great Falls. When defendant learned from Ms. Hatton that she had reported her car stolen, he requested that she meet him in Great Falls to retrieve the car. When Ms. Hatton told defendant she was unable to do that, defendant informed her that he left the car with a friend. Defendant returned to Missoula and was on his way to Ms. Hatton’s house when he was arrested on September 12, 1989.

Defendant called Ms. Hatton from the jail to let her know where her car was and how to contact the people who had it. He also contacted Mr. Edwards. The next day, Mr. Edwards and Ms. Walraven turned the car over to the Cascade County Sheriff’s Department because they “believed that the car did not belong to the [defendant]”.

Defendant also informed Ms. Hatton that he had sold her television set at the Circle Square Pawn Shop in Missoula. Ms. Hatton relayed this information to Larry Jackson, a detective for the Missoula County Sheriff’s Department. Detective Jackson informed Ms. Hat-ton that her car had been turned in to the Cascade County Sheriff’s Office and that she could pick it up there.

Ms. Hatton testified as follows:

“Q. On this particular occasion did you give [defendant] permission to take the car to Great Falls?
“A. No, I didn’t.
“Q. Was in your mind that outside the scope of your authorized use of the car when he said he was going to take it to the store? [sic]
“A. Perhaps, but I feel that if I had known that he was there, I may not have filed this report as soon as I did.
“Q. And did you at any time give him permission to sell this car?
“A. No, I did not.”

Ms. Hatton further testified that she had never given defendant permission to sell her television.

Defendant was charged with one count of misdemeanor theft and one count of felony theft. The jury found him guilty on both counts. He was sentenced to 10 years in the Montana State Prison for the felony with 5 years suspended; and six months in the Missoula County Jail for the misdemeanor, with the sentences to run concurrently. He was also designated a dangerous offender for parole purposes. Defendant appeals.

Defense counsel did not offer an instruction on the defense of consent. However, on appeal defendant maintains that it was reversible error for the District Court to have failed to give such an instruction on its own motion. Defendant maintains that the sale of the car to Mr. Edwards and Ms. Walraven could be better construed as a conditional sale since the title was not transferred. He further argues that the record is clear that he made no attempt to keep his identity a secret in either the sale of the car or the television. He maintains that the fact that Ms. Hatton asked to have the charges dropped after his arrest is evidence that she consented to the sale of both the car and the television.

Section 45-2-211, MCA, provides (in part):

“(1) The consent of the victim to conduct charged to constitute an offense or to the result thereof is a defense.”

Defendant maintains that consent is a complete defense to theft. He contends that had an instruction on consent been given as it relates to theft, a rational trier of fact could have concluded that the sale of the television set was not beyond the scope of his authority. He maintains that because consent was raised by the evidence in this case, the District Court had an obligation to instruct on that issue regardless of the failure of defense counsel to request such an instruction. He relies on case law that supports the proposition that a district court has a duty to instruct the jury on every issue or theory having support in the evidence.

Instruction No. 10 as given to the jury included the following provisions of § 45-6-301(l)(c), MCA:

“(1) A person commits the offense of theft when he purposely or knowingly obtains or exerts unauthorized control over property of the owner and:
“(c) uses, conceals, or abandons the property knowing such use, concealment, or abandonment probably will deprive the owner of the property. (Emphasis added).”

The State urges that the jury, by a verdict of guilty, found beyond a reasonable doubt that defendant had exerted unauthorized control over the car and television at the time he sold them or attempted to sell them — in other words, he acted without the consent of the victim. The State maintains that when viewing the instructions as a whole, the jury was fully and fairly apprised of the elements of the crime and thus, the defense of consent.

Defendant incorrectly contends that consent was raised by the evidence in this case. A careful review of the record establishes a failure to present any evidence of consent on the part of Ms. Hatton to the conduct charged as the offense on the part of the defendant. We conclude that the District Court was under no obligation to instruct on a theory which had not been established by evidence.

We hold that the District Court did not err by not instructing the jury, on its own motion, on the defense of consent as it relates to theft.

Affirmed.

JUSTICES HUNT, GRAY, TRIEWEILER, and McDONOUGH concur.


text:
    STATE OF MONTANA, Plaintiff and Respondent, v. ROBERT EUGENE YOUNG, Defendant and Appellant.
    No. 90-383.
    Submitted June 4, 1991.
    Decided July 30, 1991.
    Rehearing Denied Aug. 30, 1991.
    249 Mont. 257.
    815 P.2d 590.
    Robert L. Stephens, Jr., argued, Billings, for defendant and appellant.
    Marc Racicot, Atty. Gen., Jennifer Anders, Asst. Atty. Gen., argued, Helena, John C. McKeon, Phillips County Atty., Malta, for plaintiff and respondent.
   JUSTICE HUNT

delivered the opinion of the Court.

Defendant Robert Eugene Young was found guilty of aggravated assault, a felony, by a jury sitting in the Seventeenth Judicial District Court, Phillips County. He appeals from that conviction.

We reverse.

The sole issue for review is whether the defendant’s right of confrontation was abridged when the District Court refused to grant immunity to a witness who invoked his Fifth Amendment privilege against self-incrimination before full cross-examination had been completed.

In the early morning hours of April 11, 1989, defendant Robert Young and friends, Loren Greene and Doug Simanton, were driving in Malta. They apparently had an exchange with the victim, Raymond Doney, Jr., and his friend, Curtis Horn, who were parked on the street in another truck.

Young then drove to a large parking lot called “Westside.” Doney and Horn arrived there shortly after the Young vehicle. Words were exchanged between the occupants of the two trucks and a gun that had been in Doneyb truck was fired. There is conflicting testimony as to who fired first, Young or Horn, but Doney was wounded.

Horn then drove the truck with Doney from the site of the assault, lost control of the truck, and wrecked. The two men were found by police and Doney was taken to Havre for treatment. Young was charged with attempted deliberate homicide and, alternatively, felony assault.

Horn was interrogated regarding the evening’s events on April 11 at 3 a.m., at 9 a.m., and again on April 19. At trial, defense counsel attempted to cross-examine Horn on certain statements from the interrogations. Cross-examination was completed on the first statement, but halfway through the cross-examination of the second statement, Horn invoked his Fifth Amendment privilege against self-incrimination and refused to answer. Defense counsel immediately requested immunity for Horn, but the court stated it did not think it had the power to grant immunity. Defense counsel then asked the prosecutor to request immunity. He declined and the witness was excused.

A jury found the defendant guilty of aggravated assault. The defendant moved for a judgment of acquittal notwithstanding the verdict, or a new trial, partially on grounds that Young had been denied his right to complete the cross-examination of Horn. The court denied the motion, stating that Horn’s direct testimony had in fact harmed, not helped, the State’s case, and that evidence through further cross-examination “would not have effected [sic] the jury’s verdict one iota.” This appeal ensued.

Was the defendant’s right of confrontation abridged when the District Court refused to grant immunity to a witness who invoked his Fifth Amendment privilege against self-incrimination before full cross- examination had been completed?

Article II, § 24, of the Montana Constitution provides that:

“In all criminal prosecutions the accused shall have the right to appear and defend in person and by counsel... to meet the witnesses against him face to face ...” Mont. Const. Art. II, § 24 (1972).

We have held that the right to confront witnesses is not abridged when the witness is available for cross-examination. State v. Pease, 222 Mont. 455, 724 P.2d 153 (1986). We emphasized the importance of cross-examination in State v. Charlo, 226 Mont. 213, 735 P.2d 278 (1987), by affirming the admission of out-of-court statements because the declarants were subsequently available for cross-examination. Charlo, 226 Mont. at 216, 735 P.2d at 280.

The district court judge is empowered to compel a witness to answer and to grant limited immunity in order to facilitate the examination process. Section 46-15-331, MCA, states in part:

“Before or during trial in any judicial proceeding, a justice of the supreme court or judge of the district court, upon request by the attorney prosecuting or counsel for the defense, may require a person to answer any question or produce any evidence that may incriminate him. If a person is required to give testimony or produce evidence in accordance with this section in any investigation or proceeding, no compelled testimony or evidence or any information directly or indirectly derived from such testimony or evidence may be used against the witness in any criminal prosecution.” Section 46-15-331, MCA.

When asked by defense counsel to grant immunity, the court responded that it did not think it had the power to do so. Not having the statutes at hand, counsel, in a desperate effort to retain the witness, asked the prosecutor to grant immunity. The prosecutor declined. Upon motion for new trial, the court stated that even if Horn had continued to testify, his further testimony would not have affected the jury verdict, and denied the motion.

The State concedes on appeal that further cross-examination would probably have forced Horn to incriminate himself on charges of perjury and assault. Having concluded that the Fifth Amendment was properly invoked initially, the State balances that privilege against the defendant’s right to cross-examine. It argues that further cross-examination would merely have been cumulative because Horn’s testimony to that point had established him as an unbelievable witness.

Young, however, contends that a number of critical inconsistencies could have been shown through Horn’s testimony which would have called into question the version of the story offered by the State. Young cites 14 damaging statements from Horn’s second interrogation on April 11, and 16 statements from the April 19 interrogation, for which no cross-examination was permitted. This material includes conflicting statements about who instigated the fight and who fired the rifle. Young maintains that the information was relevant to his attempted affirmative defense of justifiable use of force.

The 1972 Montana Constitution and subsequent cases analyzing the Confrontation Clause have made it abundantly clear that full cross-examination is a critical aspect of the right of confrontation. Pease, 222 Mont. 455, 724 P.2d 153; Charlo, 226 Mont. 213, 735 P.2d 278. When requested by the defendant to grant immunity to the witness, the District Court mistakenly concluded it did not have power to grant such immunity. Upon its subsequent review of the trial and transcript, the District Court concluded that the lack of full cross-examination had not prejudiced Young’s case because his testimony was extremely contradictory and the excluded testimony, at most, would have been cumulative. After a careful review of the record, we note that the evidence with regard to the altercation, including the firing of both a rifle and a pistol, were sharply in conflict. We are unable to conclude that the limitation on cross-examination did not have an adverse effect on the defendant’s case. We further conclude that full cross-examination in this case was a critical aspect of the defendant’s right of confrontation.

We reverse the conviction and remand for new trial.

CHIEF JUSTICE TURNAGE and JUSTICES HARRISON, GRAY, McDONOUGH, TRIEWEILER and WEBER concur.


author: JUSTICE GRAY

text:
    GBN, INC., Petitioner and Appellant, v. THE MONTANA DEPARTMENT OF REVENUE, Respondent and Respondent.
    No. 90-584.
    Submitted on briefs June 28, 1991.
    Decided August 1, 1991.
    249 Mont. 261.
    915 P.2d 595.

      Kenneth R. Neill, Larsen & Neill, Great Falls, for petitioner and appellant.

      Geralyn Driscoll, Dept, of Revenue, Helena, for respondent and respondent.
   JUSTICE GRAY

delivered the Opinion of the court.

Pursuant to § 15-2-303, MCA, GBN, Inc., (GBN) petitioned the District Court of the First Judicial District, Lewis and Clark County, for judicial review of a decision by the State Tax Appeal Board (STAB). STAB upheld the decision of the Department of Revenue which disallowed, in accordance with the Department’s interpretation of § 15-31-114(2)(b)(iv), MCA (1987)(recodified, but not substantively amended, as § 15-31-119(8), MCA (1989)), a net operating loss deduction from taxable income claimed by GBN on its corporate license tax return for its tax year ending March 31, 1988. The District Court affirmed the findings of fact, conclusions of law and order of STAB. From that judgment, GBN appeals. We affirm.

GBN raises the following issues on appeal:

1. Does § 15-31-114(2)(b)(iv), MCA (1987), expressly prohibit a deduction by the surviving corporation in a merger of corporations for net operating losses it sustained prior to the date of the merger?

2. Does § 15-31-114(2)(b)(iv), MCA (1987), unconstitutionally discriminate against the surviving corporation in a merger of corporations?

The factual circumstances giving rise to this appeal are not in dispute. During the corporate tax year ending March 31, 1988, GBN and Rock, Inc. entered into a merger, with GBN as the surviving corporation. Prior to the merger, GBN and Rock, Inc. sustained net operating losses of $39,546 and $100,127 respectively. After the merger, GBN, on November 16, 1988, filed under protest its state corporate license tax return for the corporate tax year ending March 31, 1988 and reported a tax liability of $6,038 and interest of $181. On its return, GBN claimed it was entitled to a net operating loss carry forward of $89,467 as a deduction from taxable income.

On November 28,1988, the Department of Revenue notified GBN that it had disallowed the deduction for net operating losses sustained by both GBN and Rock, Inc. The Department assessed GBN $7,185.51, which included a tax liability of $6,039 along with interest of $543.51 and a penalty of $603.

GBN sought and received an informal conference with the Department on May 17, 1989. By letter dated May 26, 1989, GBN was notified that the Department’s final decision in the matter was to disallow the deduction for net operating loss carry forward. On June 19, 1989, GBN appealed the Department’s final decision to STAB challenging the interpretation and constitutionality of § 15-31-114(2)(b)(iv), MCA (1987). STAB entered its findings of fact, conclusions of law and order on March 20, 1990. STAB affirmed the Department’s interpretation of § 15-31-114(2)(b)(iv), MCA (1987), as disallowing a deduction by the surviving corporation of the net operating losses sustained by the merged corporations prior to the date of the merger. STAB declined to address the constitutionality of the statute.

On May 11, 1990, GBN petitioned the District Court of the First Judicial District, Lewis and Clark County, to review STAB’s decision pursuant to the provisions of § 15-2-303, MCA. The matter was submitted on agreed facts. On October 23, 1990, the District Court rendered its decision and order affirming STAB’s findings of fact, conclusions of law and order. In addition, the District Court held that § 15-31-114(2)(b)(iv), MCA (1987), did not unconstitutionally discriminate against the surviving corporation of a corporate merger.

I.

Does § 15-31-114(2)(b)(iv), MCA (1987), expressly prohibit a deduction by the surviving corporation in a merger of corporations for net operating losses it sustained prior to the date of the merger?

Section 2-4-704, MCA, sets forth the statutory standards for judicial review of administrative decisions. This Court has interpreted § 2-4-704, MCA, to mean that an agency’s findings of fact are subject to a “clearly erroneous” standard of review while an agency’s conclusions of law will be upheld if the agency’s interpretation of law is correct. Steer, Inc. v. Dept. of Revenue (Mont. 1990), [245 Mont. 470,] 803 P.2d 601, 603, 47 St.Rep. 2199, 2200. GBN does not challenge STAB’s findings of fact. It asserts that STAB’s interpretation of § 15-31-114(2)(b)(iv), MCA (1987), is incorrect. That statute provides that:

“In the case of a merger of corporations, the surviving corporation shall not be allowed a net operating loss deduction for net operating losses sustained by the merged corporations prior to the date of merger. In the case of a consolidation of corporations, the new corporate entity shall not be allowed a deduction for net operating losses sustained by the consolidated corporations prior to the date of consolidation.”

GBN asserts that although the language of the statute refers to the merged corporations in the plural, the legislature could well have intended to prohibit loss carry forward for the disappearing corporation only. It argues that a plausible construction of the statute is that “merged corporations” refers only to the corporations which cease to exist after a merger.

The rules of statutory construction require the language of a statute to be construed according to its plain meaning. If the language is clear and unambiguous, no further interpretation is required. Boegli v. Glacier Mountain Cheese Co. (1989), 238 Mont. 426, 429, 777 P.2d 1303, 1305. Here, there is no basis for arguing legislative intent because the plain language of the statute clearly and unambiguously precludes pre-merger net operating loss deductions. The statute expressly prohibits the surviving corporation from carrying forward net operating losses incurred by the corporations prior to merger.

The application of the statute to GBN and Rock, Inc. exhibits the clarity of the legislature’s intent when enacting this provision:

“In the case of a merger of corporations [GBN and Rock, Inc.], the surviving corporation [GBN] shall not be allowed a net operating loss deduction for net operating losses sustained by the merged corporations [GBN and Rock, Inc.] prior to the date of the merger.”

Accordingly, we hold that the administrative agency’s interpretation of the statute was correct.

II.

Does § 15-31-114(2)(b)(iv), MCA (1987), unconstitutionally discriminate against the surviving corporation in a merger of corporations?

In addressing a constitutional challenge to any statute, the statute is presumed to be constitutional and the challenging party has the burden of establishing the statute’s unconstitutionality. Harper v. Greely (1988), 234 Mont. 259, 269, 763 P.2d 650, 656. If a doubt exists, it is to be resolved in favor of the legislation. Harper, 234 Mont. at 269, 763 P.2d at 656.

GBN asserts that § 15-31-114(2)(b)(iv), MCA (1987), violates the due process and equal protection clauses of the Montana and United States constitutions. It argues that no distinction exists which would justify a separate and different classification for merged corporations.

A general rule of taxation is that an item may constitute a deduction only when the legislature specifically establishes the deduction. Cyprus Mines Corp. v. Madison County (1977), 172 Mont. 117 118, 560 P.2d 1342, 1343. Therefore, tax deductions are not constitutionally mandated, but rather are a matter of legislative determination. Consequently, because the tax classification at issue in this case relates to the deductibility of certain net operating losses, which is strictly a matter of legislative determination, the proper test for the validity of the tax classification is the rational basis test. See Montana Stockgrowers Ass’n v. Dept. of Revenue (1989), 238 Mont. 113, 117, 777 P.2d 285, 288. A tax statute satisfies equal protection analysis under the rational basis test if (1) the tax classification is reasonable, not arbitrary; and (2) the statute applies equally to all who fall within the same classification. Lehnhausen v. Lakeshore Auto Parts Co. (1973), 410 U.S. 356, 360-64, 93 S.Ct. 1001, 1004-06, 35 L.Ed.2d 351, 355-58;Montana Stockgrowers, 238 Mont. at 117-18, 777 P.2d at 288-89.

In Montana Stockgrowers, this court reaffirmed that the legislature has the authority to create tax classifications and acknowledged judicial deference to the legislative determination establishing a particular tax classification. Quoting earlier cases, we stated:

“Equal protection of the law is seldom, if ever, obtained; and because of the very frailty of human agencies, the authorities all recognize the right of the legislative branch of government to make reasonable classifications of subjects, for property or occupation taxes * * * and if the classification is reasonable, and if all of the subjects within a given class are accorded the same treatment, the legislation cannot be said to deny to anyone within such class the equal protection of the law, even though the burden imposed upon him may be more onerous than that imposed upon a member of another class. ... (Emphasis in original.)”

Montana Stockgrowers, 238 Mont. at 118, 777 P.2d at 288-89.

Section 15-31-114(2)(b)(iv), MCA (1987), satisfies equal protection analysis. There are plausible policy reasons for legislative reluctance to allow the carry-over of tax deductions in mergers. Disallowing the carry-over of tax deductions prevents larger, profitable corporations from gaining a tax advantage by acquiring another corporation’s losses. In addition, it is reasonable to attribute to the legislature the intent to encourage the continued existence of smaller corporations which have less ability than do large corporations to take advantage of substantial tax shelters and other means of avoiding taxation. An apparent effect of the statute is to increase revenue to the State from the net operating losses that the merged corporations would have been able to deduct prior to the date of merger. However, the fact that the State receives increased revenue as a result of a reasonable tax classification does not affect the validity of the legislation.

GBN points to the statute’s deviation from federal tax law as a basis for the statute’s invalidity. Whether the net operating losses in question are deductible for federal purposes is irrelevant. Federal tax law does not preempt the area of state taxation; the fact that the Montana Legislature chooses not to classify an item in the same manner as Congress does not make the classification unreasonable. In Lazy JD Cattle Co. v. State Board of Equalization (1972), 161 Mont. 40, 46, 504 P.2d 287, 290, this Court recognized that the legislature enacted legislation governing net operating loss deductions without reference to federal law “in an effort to create a balanced, reasonable tax structure.”

With respect to the second prong of equal protection analysis, it is clear that § 15-31-114(2)(b)(iv), MCA (1987), applies equally to all entities falling within the same classification. The statute prevents all merged corporations from deducting pre-merger net operating losses.

We hold that § 15-31-114(2)(b)(iv), MCA (1987), does not unconstitutionally discriminate against the surviving corporation in a merger of corporations.

Affirmed.

CHIEF JUSTICE TURNAGE and JUSTICES HARRISON, HUNT, and McDONOUGH concur.


author: JUSTICE TRIEWEILER

text:
    THEORA A. WIGHT, Successor Trustee of the John Wight Irrevocable Trust, Plaintiff and Respondent, v. FRED GONZALES, a/k/a Frederico Gonzalez Cruz, a/k/a Federico Cruz Gonzales, a/k/a Fred C. Gonzales, a/k/a Frederico C. Gonzales; et al., Defendants and Appellant.
    No. 90-590.
    Submitted on briefs July 16, 1991.
    Decided August 12, 1991.
    249 Mont. 268.
    815 P.2d 598.

      Federico Cruz Gonzales, pro se.
    Donald R. Herndon, Herndon, Hartman, Sweeney & Halverson, Billings, for plaintiff and respondent.
   JUSTICE TRIEWEILER

delivered the opinion of the Court.

Plaintiff, Theora Wight, is a successor in interest to the original plaintiff in this suit, her deceased husband John Wight. Plaintiff commenced this quiet title action concerning real and personal property located in Shelby, Montana. Defendant, Fred C. Gonzales, and plaintiff both claimed a property interest in an unused oil refinery. The District Court for the Ninth Judicial District, Toole County, granted plaintiff’s motion for summary judgment. The District Court concluded that the plaintiff was the sole owner of the property in question, and awarded the plaintiff costs and fees totaling $2,116.06. From this judgment, the defendant appeals. We affirm.

The sole issue for review is whether the District Court granted summary judgment against the defendant without an opportunity for the defendant to be heard.

The following facts were deemed admitted and true because defendant failed to make a timely reply to plaintiff’s request for admissions submitted pursuant to Rule 36, M.R.Civ.P. All State Leasing v. Top Hat Lounge (1982), 198 Mont. 1, 649 P.2d 1250.

On August 21,1980, the parties entered into a written agreement for the renovation, operation, lease, and sale of an oil refinery in Shelby, Montana. The defendant was to lease the real property from the plaintiff for 120 months. At the conclusion of the lease, title would pass to the defendant. Similarly, the defendant was to purchase the personal property from the plaintiff and make the refinery operational.

However, the agreement was conditioned upon the defendant depositing $350,000 in a bank account. The Land Lease Agreement provided:

“3.1 It is a condition of this Agreement that the Purchaser deposit $350,000.00 to a bank or savings account in the State Bank of Shelby, Shelby, Montana, to be used for the rehabilitation of the refinery, within twenty days of the execution of the Agreement. If the money is not deposited, this Agreement would be null and void. (Emphasis added.)”

The defendant did not deposit the required $350,000 in the State Bank of Shelby. Nor did the defendant make any lease payments, improvements, or comply with the provisions of the Land Lease Agreement.

On October 1, 1980, plaintiff tendered a Bill of Sale to the defendant. This was to be effective only upon the deposit of the $350,000, and no consideration was ever paid. Nevertheless, without plaintiff’s permission or consent, defendant recorded the Bill of Sale with the Toole County Clerk and Recorder.

On or about January 9, 1981, defendant quitclaimed the property in question to Grand American Bank Trust. On March 13, 1981, Grand American executed a Grant Deed concerning the same property to Minerals Mining Corporation.

Plaintiff filed a complaint on June 24, 1985, claiming title to the personal property and improvements — including buildings, tanks, and equipment on the real property. Defendant answered and counterclaimed, claiming ownership of the property in question. Plaintiff’s complaint was later amended, pursuant to Rule 15(a), M.R.Civ.P., to quiet title to the real property. Defendant answered the amended complaint.

On February 22, 1990, plaintiff served her first combined interrogatories, request for production and requests for admission on defendant. Defendant failed to answer.

On September 24,1990, pursuant to Rule 56, M.R.Civ.P., plaintiff filed a motion for summary judgment. A hearing was scheduled for October 16, 1990. Plaintiff mailed notice of this hearing to the defendant. Defendant received this notice on October 1, 1990, as evidenced by Return Receipt of Mail.

At the hearing, defendant did not appear in person or through counsel. However, defendant did file a pro se brief opposing the motion. Defendant’s response was not accompanied by affidavits nor controverting evidence in any admissible form. The District Court, on October 23, 1990, granted plaintiff’s motion for summary judgment. The District Court concluded that plaintiff was the sole owner of all the property in question, and that the defendant had no right, title, or interest in the property.

Defendant was provided adequate notice and opportunity to oppose plaintiff’s motion for summary judgment. The notice requirement for a motion for summary judgment is established by Rule 56(c), M.R.Civ.P. The rule states that “[t]he motion shall be served at least 10 days before the time fixed for the hearing.” Here, plaintiff mailed notice of the October 16, 1990, hearing on September 24, 1990. Defendant received actual notice of the hearing on October 1, 1990, fifteen days before the scheduled hearing. Defendant requested no extension of time within which to respond. Under the provisions established by Rule 56(c), defendant was provided with an adequate opportunity to be heard but did not avail himself of that opportunity.

Accordingly, the order of the District Court granting plaintiff’s motion for summary judgment is affirmed.

CHIEF JUSTICE TURNAGE and JUSTICES McDONOUGH, GRAY and HUNT concur.


text:
    In the Matter of the PROPOSED DISCIPLINARY TREATMENT OF THE OCCUPATIONAL VETERINARIAN’S LICENSE OF JEFFREY C. PEILA, License No. 9302.
    No. 91-013.
    Submitted on briefs May 16, 1991.
    Decided July 9, 1991.
    Rehearing Denied Aug. 13, 1991.
    249 Mont. 272.
    815 P.2d 139.

      Charles F. Moses, Moses Law Firm, Billings, for appellant.
    Robert P. Verdón, Dept, of Commerce, Helena, for respondent.
   JUSTICE GRAY

delivered the Opinion of the Court.

The appellant, Dr. Jeffrey C. Peila, appeals from a judgment of the District Court of the First Judicial District, Lewis and Clark County, which affirmed a final order of the Board of Horse Racing, an agency of the Montana Department of Commerce. In its order, the Board granted summary judgment against the appellant and suspended his license to practice veterinary medicine at Montana racetracks for two years. It also fined him $1,000. We affirm.

We restate the issues raised by the appellant as follows:

1. Do the Board’s medication and veterinary regulations constitute a valid delegation of legislative authority?

2. Are the Board’s findings of fact supported by substantial evidence and are its conclusions of law correct?

3. Did the Board properly grant summary judgment?

The appellant is a licensed and practicing veterinarian, having been granted a license to practice veterinary medicine in clinics and as part of a farm or ranch practice by the Board of Veterinary Medicine, Montana Department of Commerce. In addition, prior to the commencement of the current proceedings, he held a separate license with the Board of Horse Racing permitting him to practice veterinary medicine on animals at race tracks in the State of Montana.

During the 1987 horse racing season, the pertinent regulations of the Board of Horse Racing read as follows:

“ARM 8.22.1401(18) Any traine[r], groom, owner, veterinarian, or other person found to be responsible for administering or permitting to be administered to any horse entered to be raced, any forbidden substance as shown by the test and/or analysis of the approved chemist shall be subject to a fine, suspension or both. No veterinarian shall be subject to any penalty for administering any substance insofar as he ... has informed the owner, trainer, or other person requesting the treatment of the name, dosage and probable effect of the medication used. (Emphasis added.)
“ARM 8.22.1501(11)Noperson shall improperly tamper or attempt to tamper with any horse in such a way as to affect his speed in a race, nor shall he counsel or in any way aid or abet such tampering. (Emphasis added.)”

On October 3, 1987, a horse named Mr. Squeaky Ruler raced at MetraPark Fairgrounds in Billings, Montana. After the race, the horse was subjected to a urinalysis examination pursuant to the rules of the Board of Horse Racing. The results of the examination revealed that Mr. Squeaky Ruler had a Schedule 5 narcotic painkiller called Buprenorphine in his system during the running of the race. As a result of this test, a license discipline contested case was instituted by the Board of Horse Racing against the appellant. On June 6,1988, the Board issued to the appellant a Notice of Proposed Action and Opportunity for Hearing (License Discipline). The Notice alleged that the appellant administered medications to Mr. Squeaky Ruler and two other racehorses without informing the owner, trainer or person requesting the treatment of the name, dosage, and probable effect of the medications used, in violation of ARM 8.22.1401(18). The Notice also alleged that the administration of the medications to the racehorses amounted to improperly tampering, or attempting to tamper, or abetting in the tampering, with a horse in such a way as to affect its speed in a race, in violation of ARM 8.22.1501(11). The Notice was subsequently amended in response to objections raised by the appellant to add the language “knowingly and intentionally” to reflect the appellant’s state of mind when he administered the medications.

On June 22, 1988, the appellant responded to the Notice by requesting a hearing before the Board and appropriate time for discovery. Thereafter, a hearing examiner was appointed to the case by the Board. The record shows that, on July 22,1988, as part of the discovery process, the appellant requested information from the Department of Commerce regarding witnesses, documentary evidence and scientific evidence that the Department claimed supported the allegations in the Notice. The Department responded to the discovery requests on August 2,1988.

On September 1, 1988, the appellant filed a motion for summary judgment setting forth the legal bases upon which dismissal of the proceedings should be granted. No action was taken on the motion at this time. Discovery continued; the Department noticed up the depositions of the appellant as well as two other veterinarians, Dr. James H. Bailey and Dr. Richard Richardson.

On March 18,1989, after the appellant was deposed but before Dr. Bailey and Dr. Richardson were deposed, the appellant filed a second motion for summary judgment. It set forth substantially the same grounds for dismissing the proceedings as contained in the appellant’s initial motion for summary judgment.

After Dr. Bailey and Dr. Richardson were deposed, the Department filed its own motion for summary judgment on June 27, 1989. The Department asserted that there were no genuine issues of material fact and that it was entitled to judgment as a matter of law regarding the offenses alleged in the Notice. Both parties briefed their motions for summary judgment and orally argued their positions to the hearing examiner on August 25, 1989. Thereafter, the hearing examiner issued proposed findings of fact, conclusions of law, and order granting summary judgment against the appellant. The appellant then submitted written objections to the hearing examiner’s ruling.

On November 30, 1989, the Board of Horse Racing heard oral argument by counsel for the parties. In an order dated February 9, 1990, the Board issued its findings, conclusions, and final order upholding the ruling of the hearing examiner. Specifically, the Board found that on October 3, 1987, the appellant injected the racehorse Mr. Squeaky Ruler with the drug Buprenorphine a few hours before the horse was to run in a race and that the appellant injected Mr. Squeaky Ruler and two other racehorses with the same drug on several other occasions. All three racehorses were trained by Don Lewis of Blackfoot, Idaho. It further found that each time the drug was administered, the appellant failed to inform the trainer of the name of the drug, the amount of dosage, or its probable effect on the horse. In addition, the Board found that the drug was administered with the intent to affect the speed and performance of the horses during their races. The Board concluded that the appellant administered the injections in violation of ARM 8.22.1401(18) and ARM 8.22.1501(11). The Board granted summary judgment against the appellant and suspended his license to practice veterinary medicine at Montana racetracks for two years. It also fined him $1,000.

On February 28,1990, the appellant petitioned the District Court of the Thirteenth Judicial District, Yellowstone County, for judicial review of the Board’s final order pursuant to the provisions of § 2-4-702, MCA. Shortly thereafter, the parties stipulated to a change of venue to the District Court of the First Judicial District, Lewis and Clark County. The District Court, after reviewing the record before the Board and the briefs and arguments of the parties, affirmed the Board’s findings of fact, conclusions of law and final order on November 14, 1990. The appellant’s subsequent motion to alter or amend the judgment was denied by the District Court on December 26,1990. This appeal followed.

I.

Do the Board’s medication and veterinary rules and regulations constitute a valid delegation of legislative authority?

The appellant contends that the Board’s medication and veterinary regulations are invalid because the statutes authorizing the Board to adopt rules and regulations governing horse racing, §§ 23-4-101 et seq., MCA, provide no standards or guidelines for the exercise of the authority sought to be delegated.

With respect to the validity of a delegation of power by the legislature to an administrative agency, this Court has stated as follows:

“If the legislature fails to prescribe with reasonable clarity the limits of power delegated to an administrative agency, or if those limits are too broad, its attempt to delegate is a nullity.
“On the other hand a statute is complete and validly delegates administrative authority when nothing with respect to a determination of what is the law is left to the administrative agency, and its provisions are sufficiently clear, definite, and certain to enable the agency to know its rights and obligations.”

Milk Control Board v. Rehberg (1962), 141 Mont. 149, 161, 376 P.2d 508, 515, citing Bacus v. Lake County (1960), 138 Mont. 69, 354 P.2d 1056.

In Bacus, the enabling statutes provided authority for county and district boards of health to enact rules and regulations “pertaining to the prevention of disease and the promotion of public health” over their areas of jurisdiction. In holding that the statutes constituted an invalid delegation of legislative authority, this Court stated:

“We do not believe that this provision is sufficiently definite to lay down proper standards for the guidance of the agency. What did the legislature mean by ‘prevention of disease and the promotion of public health’?
“Does this only mean that the boards of health can make quarantine regulations, or could they go so far as to prescribe a series of physical exercises for the populations within their areas for the promotion of public health? May these boards make rules and regulations concerning mental health, and birth control? ...”

Bacus, 138 Mont. at 79, 354 P.2d at 1061. We further stated that:

‘We recognize that there has been a relaxation of the requirement of specific standards and an allowance of more general standards for grants of power to administrative bodies in the area of police [power] regulation, including public health ... However, even in these areas we hold that there must be a more definite standard set out by the legislature than has been done in the case at bar.”

Bacus, 138 Mont. at 82, 354 P.2d at 1063.

In our view, the enabling statutes at issue in the present case are distinguishable from those held to be invalid in Bacus. Section 23-4-104, MCA, authorizes the Board to “adopt rules to govern race meets and the parimutuel system.” Unlike the statutes in Bacus, § 23-4-104, MCA, goes on to specify thirteen particular areas of the horse racing business which the legislature has determined to be in need of regulation. Those areas of regulation set forth in § 23-4-104, MCA, which are pertinent to the proceedings against the appellant include:

“(4) corrupt practices;
“(6) licensing of all personnel who have anything to do with the substantive operation of racing; [and]
“(8) the veterinary practices and standards which must be observed in connection with race meets;

These statutory provisions give the Board definite instructions as to what particular areas of the horse racing business require regulation; as such, they are sufficient to enable the Board to know its rights, obligations and duties. Accordingly, we hold that the Board’s medication and veterinary rules and regulations constitute a valid delegation of legislative authority.

In a related argument, the appellant contends that the enabling statutes and the Board’s regulations are unconstitutionally vague in that neither contain any provisions describing the “state of mind” required to establish a violation of any of the Board’s regulations. Citing State v. Austin (1985), 217 Mont. 265, 704 P.2d 55 and other authority, he maintains that the requisite state of mind must be contained in the regulations in order to provide notice of what type of conduct is prohibited and when the state of mind is not set forth, the regulation is “unworkable and unconstitutional.” We disagree.

State v. Austin, cited by the appellant, was a criminal case. Courts have uniformly treated disciplinary actions by administrative agencies as civil in nature. Pence v. Idaho State Horse Racing Comm’n (1985), 109 Idaho 112, 705 P.2d 1067, 1069 (citing cases). As the Idaho Court of Appeals stated in Pence, incidental resemblances and analogies to criminal proceedings do not alter the inherently civil nature of such administrative proceedings. Pence, 705 P.2d at 1069.

This Court addressed the question of vagueness in Rierson v. State (1980), 188 Mont. 522, 614 P.2d 1020. We stated that a statute violates due process for vagueness when the language used does not sufficiently define the required conduct and persons of common intelligence must necessarily guess at its meaning. Rierson, 188 Mont. at 526, 614 P.2d at 1023. General principles of statutory construction also apply to construction of administrative rules. State v. DeMille (1988), 7 Haw.App. 323, 763 P.2d 5.

The statutes and regulations pertinent to the present case are not unconstitutionally vague. The conduct prohibited is specifically and clearly stated in the pertinent regulations. ARM 8.22.1401(18) provides that:

“Any traine[r], groom, owner, veterinarian, or other person found to be responsible for administering or permitting to be administered to any horse entered to be raced, any forbidden substance as shown by the test and/or analysis of the approved chemist shall be subject to a fine, suspension or both. No veterinarian shall be subject to any penalty for administering any substance insofar as he... has informed the owner, trainer, or other person requesting the treatment of the name, dosage and probable effect of the medication used. (Emphasis added.)”

In addition, ARM 8.22.1501(11) states:

“No person shall improperly tamper or attempt to tamper with any horse in such a way as to affect his speed in a race, nor shall he counsel or in any way aid or abet such tampering. (Emphasis added.)”

Section 23-4-202(3), MCA, expressly provides that the Board may suspend or revoke any license issued by the Department of Commerce and assess a fine, not to exceed $1,000, against a licensee who violates any provisions of Title 23, Chapter 4, or any rule or order of the Board', in addition to the suspension or revocation and fine, the Board may forbid application for relicensure for a two-year period. The regulations enacted by the Board clearly define prohibited conduct to persons of common intelligence and the statute clearly sets out the sanctions for violation of Board regulations.

II.

Are the Board’s findings of fact supported by substantial credible evidence and are its conclusions of law correct?

Section 2-4-704, MCA, sets forth the statutory standards for judicial review of administrative decisions. This Court has interpreted § 2-4-704, MCA, to mean that an agency’s findings of fact are subject to a “clearly erroneous” standard of review while an agency’s conclusions of law will be upheld if the agency’s interpretation of law is correct. Steer, Inc. v. Dept. of Revenue (Mont. 1990), [245 Mont. 470,] 803 P.2d 601, 603, 47 St.Rep. 2199, 2200.

In his deposition, the appellant stated that he administered Buprenorphine to each horse in question on several occasions, always on the day of and prior to a race in which each horse was scheduled to run. He further stated that the drug was a painkiller sold under the name of Buprenex and that he administered it to Mr. Squeaky Ruler with the intent to relieve the horse of pain so that the horse would run “straighter and smoother” the way it normally did before becoming “mildly lame.” The appellant chose that particular drug because in his judgment it was a fairly mild drug and would not be detected in a urinalysis examination. By his own admission, the appellant did not inform the trainer of the name of the medication administered, its dosage, or the probable effect of the medication on the horse. In addition, documentation of the appellant’s bills to the trainer of the horses in question was also offered as evidence of his administration of the drug to the horses prior to their races.

This evidence is undisputed and is substantial and credible. Therefore, the Board’s findings of fact are not clearly erroneous.

The appellant contends that, even in light of this factual evidence, he did not violate any of the Board’s regulations. He contends that he cannot be held in violation of the Board’s regulations on the basis of medicating a racehorse before a race because under the regulations the trainer is absolutely responsible for the condition of any horse entered in a race (ARM 8.22.1401(8)); a veterinarian may medicate a racehorse with FDA approved drugs (ARM 8.22.1401(9) and (17)); and there are no time limitations relative to medication (ARM 8.22.1401(10)). We disagree.

The Board did not conclude that the appellant violated any of the regulations to which the appellant refers. The Board concluded that he violated ARM 8.22.1401(18), which requires the veterinarian to inform the owner, trainer or person requesting the treatment of the name of the medication, its dosage, and its probable effect on the horse, and ARM 8.22.1501(11), which expressly prohibits any person from tampering with a horse so as to affect its speed in a race. It is true that, under the regulations, a veterinarian may medicate a horse with an FDA approved drug at any time before a race. However, that medication may not affect the speed of the horse during the race. Given the appellant’s own admissions regarding the administration of the drug Buprenorphine to the horses in question, we hold that the Board correctly concluded that the appellant violated ARM 8.22.1401(18) and ARM 8.22.1501(11).

III.

Did the Board properly grant summary judgment?

The appellant contends that the Board improperly granted summary judgment in this case, arguing that there were material factual issues in dispute and that under the Montana Administrative Procedure Act (MAPA) he had the right to an evidentiary hearing. Procedural due process requires that parties be given reasonable notice and a reasonable opportunity to be heard; these due process requirements are reflected in MARA in §§ 2-4-601, and 2-4-612(1), MCA. Section 2-4-612(1), MCA, provides that “[opportunity shall be afforded all parties to respond and present evidence and argument on all issues involved.” (Emphasis added.) However, due process does not require development of facts through an evidentiary hearing when there are no material factual issues in dispute. Smith v. State Dept. of Revenue, CSED (Alaska 1990), 790 P.2d 1352, 1353. See also, K. Davis, 1989 Supplement to Administrative Law Treatise, § 12.10 at 332-34.

There were no material factual issues in dispute in the present case. The appellant’s own deposition testimony negated any material factual issues. In addition, the appellant himself moved for summary judgment, thereby acquiescing to a summary disposition of the proceedings. Moreover, the hearing on the motions for summary judgment afforded the appellant fair opportunity to contest the legal issues raised. Accordingly, we hold that the Board properly granted summary judgment under the circumstances of this case.

Affirmed.

JUSTICES TRIEWEILER, HARRISON, McDONOUGH and WEBER concur.


author: CHIEF JUSTICE TURNAGE JUSTICE TRIEWEILER,

text:
    SHERRODD, INC., Plaintiff and Appellant, v. MORRISON-KNUDSEN COMPANY, Schlekeway Construction Inc., COP Construction, Inc., and Safeco Insurance Company of America Defendants and Respondents.
    No. 90-347.
    Submitted on briefs May 16, 1991.
    Decided July 23, 1991.
    As Modified on Denial of Rehearing Aug. 22, 1991.
    249 Mont. 282.
    815 P.2d 1135.

      Loren H. Torkelson and Frank Richter, Richter & Torkelson, Billings, for plaintiff and appellant.
    Urban L. Roth and James A. Poore, Poore, Roth & Robinson, Butte, and W. Anderson Forsythe, Moulton, Bellingham, Longo & Mather, Billings, for defendants and respondents.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

This action arises out of a construction contract on which plaintiff Sherrodd, Inc., was a subcontractor. Sherrodd, Inc., appeals from a summary judgment entered for defendants by the District Court for the Thirteenth Judicial District, Yellowstone County. We affirm.

The issue is whether the entry of summary judgment for defendants was proper.

Sherrodd, Inc. (Sherrodd), is a family-owned Montana construction corporation. Sherrodd subcontracted with COP Construction (COP) to do certain earth-moving work involved in the construction of fifty family housing units in Forsyth, Montana, for the Army Corps of Engineers. COP itself was a subcontractor to the general contractors Morrison-Knudsen Company, Inc. (Morrison-Knudsen), and Schlekeway Construction, Inc. (Schlekeway). Safeco Insurance Company of America (Safeco) provided COP’s payment bond on the job.

Sherrodd contends that while its officer William Sherrodd was examining the building site in preparation for submitting a bid on this project, a representative of Morrison-Knudsen told him that there were 25,000 cubic yards of excavation to be performed on the job. It claims that its bid of $97,500 on the subcontract was made in reliance on that representation, based on $3.90 per cubic yard for 25,000 cubic yards. Morrison-Knudsen denies that its representative made any such statement to William Sherrodd.

Sherrodd’s bid, and, in turn, OOP’s bid including Sherrodd’s bid, were submitted and accepted. Sherrodd began work before a written contract was signed. While performing the earthwork, Sherrodd discovered that the quantity of work far exceeded 25,000 cubic yards.

The written contract between Sherrodd and COP provided that Sherrodd would perform earthwork in the quantity “LS” for the consideration of $97,500. The parties agree that the letters “LS” mean lump sum. Sherrodd contends that its officers signed the contract, even though by then they knew that the job involved more than 25,000 cubic yards of earthwork, because a COP officer threatened to withhold payment for work already done unless the contract was signed. Sherrodd further contends that the COP officer verbally represented that a deal would be worked out wherein Sherrodd would be paid more than the sum provided for in the contract. COP’s position is that it only agreed to assist Sherrodd in presenting a claim for additional compensation to the Army Corps of Engineers, based on differences in the moisture content of the soil from that stated in the bid proposal. That was done, but the claim was denied.

In its “Standard Subcontract Provisions,” the contract entered between Sherrodd and COP also provided that

’’the Subcontractor has, by examination, satisfied himself as to the ... character, quantity and kind of materials to be encountered ... No verbal agreement with any agent either before or after the execution of this Subcontract shall affect or modify any of the terms or obligations herein contained and this contract shall be conclusively considered as containing and expressing all of the terms and conditions agreed upon by the parties hereto. No changes ... shall be valid ... unless reduced to writing and signed by the parties hereto.”

Sherrodd was paid the $97,500 provided for in the contract, less approximately $9,750 for work left uncompleted. It brought this suit to set aside the price provisions in the contract and to recover quantum meruit plus tort damages. Its legal theories were fraud, both actual and constructive, and breach of the covenant of good faith and fair dealing. Defendants moved for summary judgment, which was granted based on the parol evidence rule regarding modification of written contracts.

Summary judgment is proper when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P. The District Court held that, under the parol evidence rule, Sherrodd could not introduce evidence of the alleged oral misrepresentations by either the Morrison-Knudsen representative or the COP officer. Therefore, it concluded that even taking the evidence in the light most favorable to Sherrodd, summary judgment for defendants was proper.

The parol evidence rule is codified in Montana statutes. Section 28-2-904, MCA, provides that:

“The execution of a contract in 'writing, whether the law requires it to be written or not, supersedes all the oral negotiations or stipulations concerning its matter which preceded or accompanied the execution of the instrument.”

Section 28-2-905, MCA, provides that when an agreement has been reduced to writing by the parties, there can be no evidence of the terms of the agreement other than the contents of the writing except when a mistake or imperfection of the writing is claimed or when the validity of the agreement is the fact in dispute.

Although it mentions mutual mistake in its brief to this Court, Sherrodd did not rely on that theory in the proceedings below, as evidenced in the pretrial order and in the District Court’s memorandum on the summary judgment. We will not consider on appeal a theory not raised at the trial court level. Morse v. Cremer (1982), 200 Mont. 71, 81, 647 P.2d 358, 363.

A further exception is made to the parol evidence rule when fraud is alleged. Section 28-2-905(2), MCA. However, that exception only applies when the alleged fraud does not relate directly to the subject of the contract. Where an alleged oral promise directly contradicts the terms of an express written contract, the parol evidence rule applies. Continental Oil Co. v. Bell (1933), 94 Mont. 123, 133, 21 P.2d 65, 67. Accord, Superior Oil Company v. Vanderhoof(D. Mont. 1969), 297 F.Supp. 1086.

Here, any reliance on the alleged fraudulent statement of the Morrison-Knudsen representative is contradicted by the terms of the written contract that Sherrodd has, “by examination, satisfied himself as to the ... character, quantity and kind of materials to be encountered.” The contention that the $97,500 covered only 25,000 cubic yards of earthwork contradicts the terms of the written agreement that all “negotiations and agreements” prior to the date of the contract are merged in the writing and that the work to be done is ‘lump sum.” We conclude that the parol evidence rule applies. Because the written agreement supersedes all previous oral agreements, the rule prohibits admission of any evidence of the representation by the Morrison-Knudsen representative.

Next we consider Sherrodd’s claim that COP officers induced Sherrodd officers to sign the contract with the promise that more money would be paid than the contract provided. Section 28-2-1602, MCA, provides that a written contract may be altered only by a subsequent contract in writing or by an executed oral agreement. Also, Sherrodd’s subcontract provided that “No changes ... shall be valid ... unless reduced to writing and signed by the parties hereto.” As the District Court noted, there is no allegation of a subsequent contract in writing, and if there had been an executed oral agreement to pay additional sums for the work, there would have been no reason for this lawsuit.

Because of the inadmissibility of Sherrodd’s evidence as to alleged misrepresentations, the claim of breach of the covenant of good faith and fair dealing also fails. There is no allegation of any violation of the express terms of the written contract, as would be required in this arms-length contract under our opinion in Story v. City of Bozeman (1990), 242 Mont. 436, 791 P.2d 767.

As we have stated,

“Commercial stability requires that parties to a contract may rely upon its express terms without worrying that the law will allow the other party to change the terms of the agreement at a later date.”

Baker v. Bailey (1989), 240 Mont. 139, 143, 782 P.2d 1286, 1288.

The parol evidence rule is the public policy of Montana and it is clearly established by statute and the decisions of this Court. If this public policy and rule is not upheld, contracting parties that include lawful provisions in written contracts would be under a cloud of uncertainty as to whether or not their written contracts may be relied upon. The public policy and law does not permit such uncertainty to occur.

We conclude that the compensation of Sherrodd is governed exclusively by the written contract and that Sherrodd’s claims are barred under the parol evidence rule. We hold that the District Court did not err in granting summary judgment for defendants.

Affirmed.

JUSTICES HARRISON, GRAY, McDONOUGH and WEBER concur.

JUSTICE TRIEWEILER,

dissenting:

I dissent from the opinion of the majority.

If the facts are as alleged by the plaintiff (and for purposes of this proceeding we must assume that they are), then the result of this case is that no party can be held accountable for its fraudulent conduct so long as it is in a sufficiently superior bargaining position to compel its victim to sign a document relieving it of liability.

The facts, as alleged by the plaintiff, offend any reasonable sense of fairness. No court should be so bound by a 58-year-old precedent that it cannot adapt to circumstances such as those presented in this case.

The plaintiff was informed by Lou Castino, the construction manager for Schlekeway and Associates, that the project he was being asked to bid on involved moving 25,000 cubic yards of dirt. It was based on that information that he submitted his bid. It was based on his bid that he was given an oral request to proceed with the work.

After commencing work on the project, plaintiff realized that the amount of earth that had to be moved greatly exceeded 25,000 cubic yards, and was actually more than twice that amount. He had conversations with representatives of both COP Construction and Schlekeway and Associates, during which it was agreed that the amount of work to be performed would be recalculated, and during which the defendants agreed to compensate plaintiff on the basis of the actual amount of work done, rather than the price which was originally agreed upon.

By May 22,1985, plaintiff had already been working on the project and had incurred substantial expenses and obligations to his own employees. He had not been paid for his work, and was still operating without a written agreement. It was on that date that he was requested by COP Construction’s superintendent to sign the written contract which the defendants now assert as a bar to his cause of action. He was advised that if he did not sign the agreement he would not receive the progress payment in the amount of $70,372.80 which was due. Without the progress payment he would not have been able to pay his current expenses and payroll.

He was further advised that he would not be bound by the terms of the written agreement, but that he would be paid for the actual work done at the rate of $3.90 per cubic yard.

Thereafter, the amount of earth work to be done was recalculated at approximately 50,000 cubic yards. On that basis, plaintiff tried to recover the full amount due, but payment was refused. Instead, the defendants raised the written agreement as a bar to any further payment to the plaintiff.

Because of the defendants’ failure to pay the plaintiff the additional $100,000 to $120,000 which they owed him, plaintiff’s business lost its ability to borrow money, lost its bonding, and was unable to complete additional contracts because of a lack of operating capital. Plaintiff was unable to bid on contracts that required bonding, and completely lost its ability to carry on business as it had in the past. As a direct result of the defendants’ failure to pay the amounts due, plaintiff was unable to continue in business as a construction company, which it had done for the previous 30 years.

If the plaintiff’s allegations are true, then defendant COP Construction Company’s conduct, at least, satisfies the elements of fraud. See Poulsen, et al. v. Treasure State Industries, 192 Mont. 69, 626 P.2d 822 (1981). COP’s employees represented to the plaintiff that he would be paid for the full amount of work done, regardless of the written terms of the contract. That representation was untrue and material, and COP’s superintendent either knew it was untrue or had no reason to believe that it was true. COP Construction intended that the plaintiff act in reliance upon that representation. Plaintiff did rely on it, and had no reason to believe that COP’s superintendent would mislead him. As a result, plaintiff has sustained the total loss of his business and substantial damages.

The majority has affirmed the dismissal of plaintiff’s claim based solely on the parol evidence rule found at § 28-2-904, MCA. That rule provides that a written agreement supersedes all oral negotiations which preceded or accompanied the execution of the instrument. Furthermore, § 28-2-905, MCA, provides that the terms of a written agreement cannot be proven by evidence other than what is contained in the written document.

However, an important exception is found at § 28-2-905(2), MCA, which provides, in relevant part, as follows:

“This section does not exclude other evidence of the circumstances under which the agreement was made or to which it relates... or other evidence to explain ... fraud.”

In addition, § 28-2-1611, MCA, provides as follows:

“When, through fraud or a mutual mistake of the parties or a mistake of one party while the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised on the application of a party aggrieved so as to express that intention, so far as it can be done without prejudice to rights acquired by third persons in good faith and for value.”

(Emphasis added.)

In this case, in spite of the exceptions to the parol evidence rule set forth by statute above, the majority has chosen to rely on this Court’s 58-year-old decision in Continental Oil v. Bell, 94 Mont. 123, 133, 21 P.2d 65, 68 (1933). In that case, this Court held that parol evidence of fraud was not admissible when the oral promise directly contradicts a provision of the written contract.

I would not follow this Court’s previous decision in Continental Oil for two reasons:

1. That decision made no specific reference to the statute which is controlling, and yet adds qualifications to the statute which were not included by the legislature. The legislature provided that parol evidence could be offered to establish that a contract was induced by fraud. It made no exception where evidence of the fraudulent oral agreement contradicted a term in the written agreement.

2. To follow the decision in Continental Oil creates a terrible injustice, rewards fraudulent parties who are in a superior bargaining position, and totally defeats the purpose for which the fraud exception was provided to the parol evidence rule.

Based on this decision, and our previous decision in Continental Oil, all that a fraudulent party needs to do in order to avoid accountability for fraudulent conduct is to obtain the signature of his defrauded victim on a written agreement.

The majority expresses concern that but for this decision general contractors would not be able to rely on written agreements with their subcontractors. However, general contractors who induce subcontractors to enter into a written agreement by fraudulent representations should find no security in the piece of paper which resulted from their culpable conduct. Furthermore, a justice system worth its salt should have equal compassion for Montana’s many subcontractors who, while operating without the benefit of legal advice, sign whatever is necessary in order to keep their operations afloat and their crews at work. When what they have signed results from an obvious misrepresentation and causes them the kind of substantial damages and hardship that have resulted in this case, those subcontractors are entitled to the protection of Montana’s laws and its courts.

For these reasons, I dissent from the majority opinion. I would reverse the judgment of the District Court and remand for a jury trial to determine the merits of the plaintiff’s claim. That is really all the protection that Montana’s general contractors need.

JUSTICE HUNT concurs in the foregoing dissent.