Case Title: DOLSEN COMPANY v IMPERIAL CATTLE C

Citation: 

Docket Number: 79-092

State: montana

Court: Montana Supreme Court

Date: 1981-03-04T00:00:00Z

Document:
NO. 79-92 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981 THE DOLSEN COMPANY, Plaintiff and Appellant, VS. THE IMPERIAL CATTLE CO., A Montana Corporation, JAMES EDMISTON and PHILLIS EDMISTON, et al., Defendants and Respondents. Appeal from: District Court of the Eleventh Judicial District, In and for the County of Flathead. Honorable James Salansky, Judge presiding. Counsel of Record: For Appellant: Moare and Doran, Kalispell, Montana For Respondents: Christopher B.Swartley, Missoula, Montana George Harris, Missoula, Montana Filed: MflP 4 -- - - - - Submitted on briefs: December 17, 1980 Decided :MAR 4 - 1981 Clerk Mr. J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion of t h e Court. T h i s is an appeal by Dolson, p l a i n t i f f , a f t e r an a d v e r s e judgment of t h e F l a t h e a d County D i s t r i c t Court. I n 1 9 7 3 t h e I m p e r i a l C a t t l e Company ( I m p e r i a l ) e n t e r e d i n t o seven l e a s e agreements w i t h t h e Dolson Company ( D o l s o n ) , a Washington c o r p o r a t i o n , f o r t h e l e a s e of d a i r y c a t t l e . Approximately 520 d a i r y cows were t r a n s f e r r e d t o I m p e r i a l . Two of t h e seven l e a s e s were concluded p r i o r t o t h e s e t t l e m e n t n e g o t i a t i o n s which u n d e r l i e t h i s a c t i o n . A l l b u t one of t h e r e m a i n i n g f i v e l e a s e s were p e r s o n a l l y g u a r a n t e e d by d e f e n d a n t s L i l l i t h u n and Edmiston, p r i n c i p a l s i n t h e I m p e r i a l C a t t l e Company. D u r i n g 1974 I m p e r i a l s u f f e r e d m a j o r f i n a n c i a l r e v e r s e s and n o t i f i e d Dolson i n October of t h a t y e a r t h a t it would be unable t o f u r t h e r perform on any of t h e remaining f i v e l e a s e s . The p a r t i e s p r o c e e d e d t o n e g o t i a t i o n s , a g r e e i n g t o a "Possession Agreement." By t h e terms of t h a t agreement Dolson would reassume p o s s e s s i o n of t h e d a i r y c a t t l e and then s e l l them. I t was agreed t h a t I m p e r i a l would be l i a b l e f o r any d e f i c i e n c y owing a f t e r its account was c r e d i t e d with t h e proceeds of t h e s a l e . The agreement was signed by t h e p a r t i e s a t a meeting i n Missoula, Montana, on October 18, 1974. A l l p a r t i e s were r e p r e s e n t e d by counsel. Pursuant t o t h e agreement, Dolson s o l d t h e d a i r y cows t o t h e h i g h e s t f i n a n c i a l advantage of I m p e r i a l . Dolson t h e n tendered an accounting and r e q u e s t e d from I m p e r i a l payment o f t h e d e f i c i e n c y . A l l p a r t i e s c o o p e r a t e d i n t h e l i q u i d a t i o n of t h e d a i r y herd. I n March 1975 Dolson's g e n e r a l manager met w i t h d e f e n d a n t L i l l i t h u n i n Ronan, Montana. A t t h a t meeting L i l l i t h u n d i d n o t d i s p u t e t h e e x i s t e n c e of t h e d e f i c i e n c y b u t d i d t a k e i s s u e w i t h t h e amount owing. L i l l i t h u n f u r t h e r i n d i c a t e d t h a t defendant Edmiston was s o l e l y l i a b l e f o r t h e d e f i c i e n c y . A f t e r t h e Ronan meeting Dolson prepared and forwarded t h e n o t i c e of d e f i c i e n c y . Another meeting was arranged i n which a l l p a r t i e s would be p r e s e n t . With t h e e x c e p t i o n of d e f e n d a n t L i l l i t h u n , a l l par t i e s were p r e s e n t w i t h counsel a t a May 23, 1975, meeting i n Spokane, Washington. A t t h i s meeting Dolson was advised t h a t I m p e r i a l , and a l l p r i n c i p a l s of I m p e r i a l , were i n s o l v e n t . Dolson was informed t h a t d e f e n d a n t L i l l i t h u n was near bankruptcy and t h a t d e f e n d a n t Edmiston was defending an a c t i o n on c e r t a i n l o a n s from t h e P r o d u c t i o n C r e d i t A s s o c i a t i o n i n v o l v i n g h u n d r e d s o f thousands of d o l l a r s . S e t t l e m e n t d i s c u s s i o n s a t t h e Spokane meeting began a t $100,000, s u b s t a n t i a l l y less t h a n t h e $142,000 d e f i c i e n c y computed by Dolson. Defendants were c l e a r l y i n no p o s i t i o n t o n e g o t i a t e a t t h e $100,000 f i g u r e , and t h e number was reduced t o $65,000 and t h e n t o $55,000. A t t h e S p o k a n e m e e t i n g d e f e n d a n t E d m i s t o n f i r s t mentioned t h a t he owned a p a r c e l of r e a l p r o p e r t y i n K a l i s p e l l , Montana, which might be used t o p a r t i a l l y s a t i s f y t h e d e f i c i e n c y . D o l s o n ' s a t t o r n e y s t e s t i f i e d t h a t t h e p r o p e r t y was r e f e r r e d t o by d e f e n d a n t E d m i s t o n a s a "commercial, downtown p i e c e of p r o p e r t y . " Edmiston a l s o r e p r e s e n t e d t o Dolson t h a t t h e p r o p e r t y was worth $45,000 and t h a t t h e p r o p e r t y had r e c e n t l y been a p p r a i s e d a t t h a t f i g u r e by James C h r i s t i a n , f a t h e r of a t t o r n e y Cal C h r i s t i a n , who r e p r e s e n t e d d e f e n d a n t L i l l i t h u n . Counsel f o r Edmiston informed Dolson t h a t he was a c q u a i n t e d w i t h t h e e l d e r C h r i s t i a n , knew of h i s e x p e r i e n c e i n t h e r e a l e s t a t e f i e l d , knew t h a t he was a c o m p e t e n t a p p r a i s e r and t h a t , i f a n y t h i n g , t h e a p p r a i s a l would be c o n s e r v a t i v e . A t t h e c o n c l u s i o n of t h e Spokane meeting, Dolson advised d e f e n d a n t s t h a t it would a g r e e t o a s e t t l e m e n t of $55,000 cash and advised d e f e n d a n t Edmiston t h a t he should use t h e K a l i s p e l l p r o p e r t y a s c o l l a t e r a l i n s e c u r i n g t h e n e c e s s a r y f i n a n c i n g . On J u l y 23, 1975, a meeting took p l a c e i n K a l i s p e l l , Montana. P r e s e n t a t t h i s meeting were Robert Dolson and h i s a t t o r n e y , James G i l l e s p i e ; d e f e n d a n t E d m i s t o n and h i s a t t o r n e y , Milton Datsopoulos; and a t t o r n e y Cal C h r i s t i a n , r e p r e s e n t i n g I m p e r i a l C a t t l e Company and d e f e n d a n t L i l l i t h u n , who was a g a i n a b s e n t . Once more t h e K a l i s p e l l p r o p e r t y was d i s c u s s e d a s p o s s i b l e s a t i s f a c t i o n of t h e d e f i c i e n c y d e b t . I t was a g a i n r e p r e s e n t e d a s having a v a l u e of $45,000, a s confirmed by t h e r e c e n t a p p r a i s a l . Robert Dolson expressed h i s d e s i r e t h a t any s e t t l e m e n t c o n s i s t of cash. The p a r t i e s d i s c u s s e d a t o t a l monetary s e t t l e m e n t of $55,000, a f i g u r e which was reduced t o $52,500 w i t h $7,500 i n i t i a l l y w i t h q u a r t e r l y payments t o be made t h e r e a f t e r of $2,500 u n t i l t h e d e b t was e x t i n g u i s h e d . The o u t s t a n d i n g b a l a n c e was t o be secured w i t h t h e K a l i s p e l l p r o p e r t y . F i n a l l y , Dolson was t o r e c e i v e a copy of t h e p r o p e r t y d e s c r i p t i o n , t i t l e i n s u r a n c e ( o r o t h e r proof of c l e a r t i t l e ) and a copy of t h e C h r i s t i a n a p p r a i s a l confirming t h a t t h e t r a c t was worth $45,000. T h i s was D o l s o n ' s o n l y p r e s e n c e i n K a l i s p e l l u n t i l t h e s e t t l e m e n t w a s s i g n e d . H e and h i s attorney flew into Kalispell on the morning of July 23 and left that afternoon. The Kalispell property was not identified to them, nor did Dolson request to see it. After the Kalispell meeting, negotiations were continued by telephone and correspondence. On October 13, 1975, Dolson agreed to accept the Kalispell property. From defendants Lillithun and Imperial, Dolson was to receive $7,500 in cash. On October 31 Robert Dolson went to Missoula and to Kalispell to execute the settlement. He accepted from Imperial a $7,500 promissory note, payable at 8 percent per annum, and guaranteed by defendant Lillithun. Defendant Edmiston tendered a warranty deed for the Kalispell property. Dolson traveled from Missoula to Kalispell and obtained the signature of defendant Edmiston. While in Kalispell, Dolson contacted a local realtor, John Ming, for the purpose of listing his newly acquired property. He met Ming at the property site. Dolson's brief describes the Edmiston property, which was represented as being conserva- tively valued at $45,000, as follows: ". . . consist[ing] of slightly over one acre of undeveloped ground situated directly between a Pacific Power & Light substation and the railroad tracks in Kalispell, Montana. While there was a narrow corridor leading from Center Street along and behind the substation to the property, the property itself had no frontage upon any Kalispell street. At its closest point to 'downtown Kalispell', the property was five blocks distant. " Ming informed Dolson that he had no interest in accepting a listing on the property and that he could not imagine who would be interested in the property with the possible exception of Pacific Power & Light, the adjacent landowner. Ming t e s t i f i e d t h a t when he examined t h e p r o p e r t y i n October 1975, t h e v a l u e of t h e t r a c t was about $7,500. Upon r e t u r n i n g t o Yakima, Washington, Dolson engaged MIA a p p r a i s e r , Wayne N e i l . N e i l a p p r a i s e d t h e p a r c e l a t between $1,250 t o $8,900, dependent upon t h e r e s o l u t i o n of u n c e r t a i n t i e s r e g a r d i n g a c c e s s . N e i l agreed w i t h r e a l t o r John Ming t h a t a c c e s s was s o l i m i t e d , approximately s i x t e e n f e e t of passageway, t h a t a commerical use of t h e p r o p e r t y was v i r t u a l l y precluded. N e i l ' s c o n c l u s i o n was t h a t t h e l a n d would h a v e a u s e c l a s s i f i c a t i o n o f " l o w - l e v e l i n d u s t r i a l . " T h a t c l a s s i f i c a t i o n i s o n e o f t h e m o s t u n t e n a b l e and unmarketable c l a s s i f i c a t i o n s e x i s t i n g w i t h r e s p e c t t o commercial p r o p e r t y . A t t r i a l it was r e v e a l e d t h a t Robert Dolson had n o t seen t h e p r o p e r t y p r i o r t o t h e e x e c u t i o n of t h e s e t t l e m e n t agreement. I t was a l s o e s t a b l i s h e d t h a t a l t h o u g h Dolson had an e x t e n s i v e b u s i n e s s background, he was n o t experienced i n r e a l e s t a t e . Defendants i n t r o d u c e d a S t a t e Department of Revenue a p p r a i s a l which e s t a b l i s h e d t h a t f o r p r o p e r t y t a x purposes, t h e t r a c t was worth $33,450, o n l y about $11,500 l e s s t h a n Edmiston's r e p r e s e n t a t i o n s . N e i t h e r d e f e n d a n t L i l l i t h u n nor a t t o r n e y s C h r i s t i a n or Datsopoulos had e v e r seen t h e p r o p e r t y , and a l l denied having any knowledge of its value beyond t h e r e p r e s e n t a t i o n s of defendant Edmiston and t h e C h r i s t i a n a p p r a i s a l . The f o l l o w i n g i s s u e s a r e r a i s e d on appeal: 1. Whether Dolson is e n t i t l e d t o r e s c i s s i o n because of d e f e n d a n t s ' m i s r e p r e s e n t a t i o n s a s t o t h e n a t u r e and v a l u e of t h e p r o p e r t y ? 2. Whether there was substantial credible evidence to support the District Court judgment; whether the District Court properly disposed of the issues; and whether the District Court's conclusions of law were supported by its findings of fact? Appellant maintains that the settlement agreement should be rescinded because of respondents' misrepresenta- tions as to the value and nature of the Kalispell property. We do not agree. This Court has long adhered to the rule that statements of opinion are preeminently subject to the common-law doctrine of caveat emptor. See Ray v. Divers (1925), 72 P l l o n t . 513, 234 P. 246. Statements as to the value of property are generally considered declarations of opinion and will not constitute a proper basis for rescission. 37 Am.Jur.2d Fraud and Deceit, S 119 at 164. Courts are continually confronted with the dilemma of determining to what lengths a vendor of property may go in "talking up" his merchandise--where does "traders talk" end and actionable fraud begin? Clearly, the line between opinion and fact is an especially fine line for the District Courts to draw when representations are made regarding the value of property. The common law provides reasonable protection to purchasers against fraud and deceit. However, it does not go to the romantic length of offering indemnity against the adverse consequences of folly and indolence or a careless indifference to information which would enlighten the purchaser as to the truth or falsity of the seller's assertions as to value. In such an instance, every person r e p o s e s a t h i s own p e r i l i n t h e f a c e of a n o t h e r ' s o p i n i o n when he has ample o p p o r t u n i t y t o e x e r c i s e informed judgment. "Simplex commendatio non o b l i q a t . " 2 Kents Comm. 485. W e emphasize, however, t h a t it is s i n g u l a r l y w i t h i n t h e province of t h e D i s t r i c t Court t o determine whether f r a u d has been p e r p e t r a t e d on an innocent p u r c h a s e r . The D i s t r i c t Court is i n t h e b e s t p o s i t i o n t o weigh t h e f a c t o r s involved, a s s e s s t h e c r e d i b i l i t y of w i t n e s s e s , and conclude whether t h e s t a t e m e n t s r e g a r d i n g v a l u e c o n s t i t u t e f a c t o r o p i n i o n . I n r u l i n g t h a t t h e D i s t r i c t C o u r t ' s d e c i s i o n must be g i v e n g r e a t credence i n t h i s c a s e , we r e a f f i r m our d e c i s i o n i n Lumby v. Doetch ( 1 9 7 9 ) , Mont. , 600 P.2d 200, 36 St.Rep. 1684, wherein we found t h a t t h i s Court must view t h e evidence i n a l i g h t most f a v o r a b l e t o t h e p r e v a i l i n g p a r t y and presume t h e c o r r e c t n e s s of t h e D i s t r i c t C o u r t ' s judgment. F i n d i n g s of f a c t s h a l l n o t be s e t a s i d e u n l e s s c l e a r l y e r r o n e o u s . R u l e 5 2 ( a ) , M.R.Civ.P. A l t h o u g h c o n f l i c t s may e x i s t , such t h a t t h e evidence t e n d s t o show t h a t r e p r e s e n t a t i o n s a s t o v a l u e c o n s t i t u t e both o p i n i o n and f a c t , it is t h e d u t y and f u n c t i o n of t h e t r i a l c o u r t t o make a r e s o l u t i o n of t h e c a s e one way or t h e o t h e r . That c o u r t ' s reasoned and t h o u g h t f u l d e t e r m i n a t i o n t h a t t h e v e n d o r ' s s t a t e m e n t s a s t o t h e v a l u e of t h e p r o p e r t y were o p i n i o n , n o t d e c l a r a t i o n s of f a c t , w i l l n o t be d i s t u r b e d where its d e c i s i o n was based on s u b s t a n t i a l evidence. See Kostbade v. Buckingham ( 1 9 7 9 ) , Mont. , 595 P.2d 1149, 36 St.Rep. 129. I t is n o t a proper f u n c t i o n of t h i s Court t o exchange our opinion f o r t h a t of t h e D i s t r i c t Court, even i f we might have reached a d i f f e r e n t c o n c l u s i o n . I n accord, P o r t e r v. P o r t e r ( 1 9 7 0 ) , 155 Mont. 451, 473 P.2d 538. Our review must now examine t h e evidence t o determine whether t h e D i s t r i c t Court exceeded its d i s c r e t i o n i n t h e r e s o l u t i o n of t h i s c a s e . Reviewing t h e evidence i n a l i g h t most f a v o r a b l e t o t h e p r e v a i l i n g p a r t i e s , w e conclude t h a t t h e r e i s s u b s t a n t i a l c r e d i b l e e v i d e n c e s u p p o r t i n g t h e c o u r t ' s judgment, t h a t t h e c o u r t p r o p e r l y disposed of t h e i s s u e s , and t h a t t h e c o u r t ' s c o n c l u s i o n s o f law were supported by its f i n d i n g s of f a c t . Robert Dolson is n o t f i n a n c i a l l y naive. To t h e c o n t r a r y , he is an a b l e and s u c c e s s f u l businessman. H i s r e l a t i o n s h i p t o d e f e n d a n t s c a n o n l y b e c o n s i d e r e d a d v e r s a r i a l t o t h e e x t e n t t h e i r r e s p e c t i v e p o s i t i o n s r e p r e s e n t competing i n t e r e s t s . These two f a c t o r s , Dolson's b u s i n e s s acumen and h i s r e l a t i o n s h i p t o d e f e n d a n t s , weigh h e a v i l y a g a i n s t t h e p r o p o s i t i o n t h a t d e f e n d a n t s ' took u n f a i r a d v a n t a g e of D o l s o n when d e c l a r i n g t h e v a l u e o f t h e p r o p e r t y . I f indeed Dolson r e l i e d upon t h e r e p r e s e n t a t i o n s of d e f e n d a n t s a s t o t h e v a l u e of t h e p a r c e l , w e s e e no reason why t h e D i s t r i c t Court would have been o b l i g e d t o condone s u c h i m p r u d e n c e by a l l o w i n g r e s c i s s i o n o f t h e agreement. Helena Adjustment Co. v. C l a f f i n ( 1 9 2 6 ) , 75 Mont. 317, 243 P. 1063; s e e a l s o , Williams v. J o s l i n ( 1 9 6 5 ) , 65 Wash.2d 696, 399 P.2d 308 ( r e l i a n c e must be r e a s o n a b l e ; purchaser may n o t r e l y on r e p r e s e n t a t i o n s when t h e i r t r u t h can be r e a d i l y d e t e r m i n e d ) . Even a t t h i s p o i n t i n t h e c a s e , t h e r e can be no ready and a c c u r a t e d e t e r m i n a t i o n of t h e v a l u e of t h e p r o p e r t y amid t h e c o n f l i c t i n g o p i n i o n s found i n t h e r e c o r d . R e a l t o r Ming a l l e g e s t h e p r o p e r t y is worth $7,500. Appraiser N e i l b e l i e v e s t h e p a r c e l is worth a.s much a s $8,900. The S t a t e of Montana Department of Revenue determined t h e v a l u e of t h e p r o p e r t y t o be $33,450 w i t h a t a x a b l e v a l u e of $22,000. F i n a l l y , w e have t h e o p i n i o n of James C h r i s t i a n t h a t t h e p r o p e r t y is worth $45,000. S u r e l y t h e f a c t s of t h i s c a s e exemplify t h e reasoning behind t h e r u l e t h a t s t a t e m e n t s a s t o t h e v a l u e of p r o p e r t y a r e n o t grounds f o r r e s c i s s i o n . I t is r e a s o n a b l e t o e x p e c t t h a t i n a s i t u a t i o n such a s t h i s vendors would a t t a c h t h e h i g h e s t p o s s i b l e v a l u e t o t h e p r o p e r t y . Indeed, it would be unreasonable t o assume o t h e r w i s e , and p u r c h a s e r s who r e l y on such r e p r e s e n t a t i o n s proceed a t t h e i r own r i s k . On October 31, 1975, Robert Dolson was i n K a l i s p e l l t o o b t a i n t h e s i g n a t u r e s of t h e Edmistons and conclude t h e p r o v i s i o n s of t h e s e t t l e m e n t agreement. Only a f t e r complete e x e c u t i o n of t h e agreement d i d Dolson examine what he had accepted. The r e c o r d d i s c l o s e s no reason why Dolson d i d n o t view t h e p r o p e r t y b e f o r e he formalized t h e agreement. S i n c e he chose t o a c c e p t t h e p r o p e r t y s i g h t unseen, when he had ample o p p o r t u n i t y t o examine t h e s u b j e c t of h i s b a r g a i n , Dolson c a n n o t now be heard t o complain t h a t he was u n f a i r l y misled. W e c o n c u r w i t h t h e D i s t r i c t C o u r t f i n d i n g t h a t D o l s o n ' s f o l l y was h i s own. The D i s t r i c t C o u r t ' s f i n d i n g t h a t r e s c i s s i o n would be improper i n t h i s c a s e is supported by s u b s t a n t i a l evidence, and t h e c o u r t ' s f i n d i n g s of f a c t a r e amply s u p p o r t i v e of its l e g a l c o n c l u s i o n s . Accordingly, we a f f i r m . n We concur; Justices