Case Title: FULTON v CLARK

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1975-08-06T00:00:00Z

Document:
No. 12989 I N T H E S U P R E M E C O U R T O F T H E STATE O F MONTANA JOHN E. FULTON, H A R O L D C, S C H W A R T Z and DELOIT R. WOLFE, P l a i n t i f f s and Respondents, SPENCE C L A R K and JAMES A, COLLIER, Defendants and Appellants. Appeal from: D i s t r i c t Court of the Fourth J u d i c i a l D i s t r i c t , Honorable E. Gardner Brownlee, Judge presiding. Counsel of Record: For Appellants : Tipp and Hoven, Missoula, Montana Vernon Hoven appeared, Missoula , Montana Frederick S , Prince, Jr. argued, S a l t Lake City, Utah For Respondents: Garlington, Lohn & Robinson, Missoula, Montana Lawrence F. Daly argued, and Sherman V. Lohn, appeared, Missoula, Montana Filed : 6 i,,! G 6 - - - - - - - -- - Submitted: June 23, 1975 M r . J u s t i c e Frank I. Haswell delivered the Opinion of the Court. Defendant General Partners appeal from a summary judgment granted p l a i n t i f f Limited Partners i n an action f o r declaratory judgment. The d i s t r i c t court of Missoula County held t h a t the General Partners a r e not e n t i t l e d a s a matter of law t o a $60,000 fee f o r services rendered i n renovating and improving t h e Holiday Village Shopping Center. The d i s t r i c t court granted a personal judgment i n favor of the Limited Partners against one of the General Partners, Spence Clark. P l a i n t i f f s John F. Fulton, Harold C. Schwartz and Deloit R. Wolfe entered i n t o a limited partnership agreement on April 1, 1968, with General Partners Spence Clark and James A. Collier, doing business a s Financial Management Service, covering opera- t i o n of the Holiday Village Shopping Center i n Missoula, Montana. The b r i e f s indicate t h a t Spence Clark has since succeeded t o the i n t e r e s t of James A. Collier. Under the terms of t h e limited partnership agreement, the General Partners were responsible f o r the management of the shopping center; the Limited Partners had no r i g h t t o p a r t i c i p a t e i n the management of the business. The General Partners received a 5% c a p i t a l i n t e r e s t a s consideration f o r t h e assumption of the r e s p o n s i b i l i t i e s of managing and operating the partnership properties and the l i a - b i l i t y assumed. A l l losses i n excess of t h e c a p i t a l accounts of the limited partnership were the sole l i a b i l i t y of the General Partners. In addition, Paragraph l l ( a ) of the limited partnership agreement provides: "* * * The General Partners s h a l l receive a reasonable management fee f o r services a c t u a l l y rendered by them * * *." During t h e l i f e of the partnership Clark paid himself an annual management f e e equaling 5% of the gross proceeds of t h e partnership properties. These payments a r e not i n dispute. In 1971, Clark determined the gross and n e t r e n t a l s of the business could be substantially increased by building a new s t o r e i n the shopping center f o r Albertson's grocery and leasing t h e old Albertson's space t o Skagg's Drug Center. From 1971 through 1973, Clark worked a t putting t h i s plan i n t o e f f e c t . H e negotiated new leases with Albertson's and Skagg's; super- vised and coordinated the design and construction of the new f a c i l i t i e s ; refinanced the existing f i r s t mortgage; and, ob- tained financing f o r the new construction project . lark' s e f f o r t s resulted i n increasing the gross r e n t a l s from $1,685,000 t o $2,700,000. As compensation f o r these services performed from 1971 through 1973, Clark paid himself a management fee of $60,000. This fee was i n addition t o the fee of 5% of the partnership's gross proceeds which he charged annually f o r normal management duties. P l a i n t i f f s objected t o the $60,000 f e e and f i l e d a complaint f o r declaratory judgment asking the d i s t r i c t court t o construe t h e terms of t h e limited partnership agreement and t o order Clark t o return t h e $60,000. P l a i n t i f f s claimed the defendant's course of conduct since 1968 of charging only a 5% management f e e limited t h e fee t h a t could be charged t o 5% of the gross r e n t a l s . Defendant answered by claiming t h a t a l l fees received were reasonable f o r services actually rendered and t h a t there was no agreement o r a l o r written, express o r implied, limiting t h e management fees t o 5% of the gross r e n t a l s . O n December 30, 1974, the d i s t r i c t court granted p l a i n t i f f s summary judgment, finding t h a t Clark was not e n t i t l e d t o a f e e f o r services rendered r e l a t i n g t o long t e r m renovation and i m - provement of the Holiday Village Shopping Center. The judgment i s a personal judgment i n favor of p l a i n t i f f s against Clark. The controlling issue on appeal i s whether o r not summary judgment f o r p l a i n t i f f s was error. W e hold it was, vacate the judgment, and remand t o the d i s t r i c t court f o r t r i a l . Rule 56(c), M.R.Civ.P., s t a t e s t h a t summary judgment s h a l l be rendered only i f : "* * * the pleadings, depositions, answers t o i n t e r r o g a t o r i e ~ ~ a n d admissions on f i l e show t h a t there i s no genuine issue a s t o any material f a c t and t h a t the moving party is e n t i t l e d t o a judgment a s a matter of law. 11 The question t o be decided on a motion f o r summary judgment i s whether there i s a genuine issue of material f a c t and not how t h a t issue should be determined; the hearing on the motion i s n o t a t r i a l . ~ a t t e u c c i ' s Super Save v. Hustad Corp., 158 Mont. The party moving f o r summary judgment has the burden of establishing the absence of any i s s u e of material f a c t . Beierle v. Taylor, 164 Mont. 436, 524 P.2d 783, 31 St. Rep. 554. In Kober & Kyriss v. Stewart, 148 Mont. 1 1 7 , 121, 417 P.2d 476, t h i s Court c i t e d 6 ~ o o r e ' s Federal Practice, Para. he courts hold t h e movant t o a s t r i c t standard. To s a t i s f y h i s burden the movant must make a showing t h a t i s q u i t e c l e a r what the t r u t h i s , and t h a t ex- cludes any r e a l doubt a s t o t h e existence of any genuine issue of material f a c t . "'Since it i s not the function of the t r i a l court t o adjudicate genuine factual issues a t t h e hearing on the motion f o r summary judgment, i n ruling on the motion a l l inferences of f a c t from the proofs proffered a t the hearing must be drawn against t h e movant and i n favor of the party opposing t h e motion. And the papers supporting movantfs position a r e closely scrutinized, while the opposing papers a r e indulgently treated, i n determining whether the movant has s a t i s f i e d h i s burden. I I 1 I f there i s any doubt as t o the propriety of a motion f o r summary judgment, it should be denied. Kober & Kyriss v. Stewart, supra. The only way the d i s t r i c t court could properly grant summary judgment t o t h e p l a i n t i f f s here i s by determining t h a t the agreement on i t s face prohibits t h e $60,000 f e e a s a matter of law. Any other basis outside the four corners of the agree- ment document, involves disputed questions of f a c t precluding summary judgment. The i n t e n t of the p a r t i e s t o prohibit such payment must be determined from the written agreement alone, i f possible. Section 13-705, R.C.M. 1947. I f the language of the agreement i s c l e a r and e x p l i c i t the language must govern i t s interpretation. Section 13-704, R.C.M. 1947. A plain reading reveals t h e agree- ment gives the General Partners a 5% c a p i t a l i n t e r e s t a s con- sideration f o r assuming t h e r e s p o n s i b i l i t i e s of managing and operating t h e business and assuming l i a b i l i t y beyond t h a t of t h e Limited Partners. In addition t o t h i s 5% c a p i t a l i n t e r e s t Paragraph l l ( a ) of the agreement provides: I 1 The General Partners s h a l l receive a reasonable management f e e f o r servides a c t u a l l y rendered by them JC 9 : ik." In d i s t r i c t court p l a i n t i f f s claimed (1) an executed o r a l agreement and (2) the defendant's course of conduct since 1968 of charging only a 5% management f e e modified the agreement and prohibited t h e $60,000 fee. O n appeal p l a i n t i f f k argue t h a t the reasonable management f e e s e t f o r t h i n Paragraph l l ( a ) of the limited partnership agreement i s limited t o routine management services and does not apply t o long term developmental services. There is no d i s t i n c t i o n i n the terms of the agreement between services f o r long range renovation and improvement and day t o day routine management services. To determine i f the agreement precludes management fees f o r long range services, the d i s t r i c t court must inquire a s t o the conduct of the p a r t i e s and a s t o the existence and substance of the alleged o r a l agree- ment. Whether there was an executed o r a l agreement, a s w e l l a s whether t h e conduct of the p a r t i e s modified the written agreement, a r e material questions of f a c t bearing on the i n t e n t of the parties. The court while considering the motion f o r summary judgment cannot go outside the agreement t o determine the i n t e n t of the contracting p a r t i e s a s t h i s involves disputed questions of material fact. Summary judgment is usually inappropriate where the intent of the contracting parties is an important considera- tion. Kober h Kyriss v. Stewart, supra; 6 ~oore's Federal Practice, Para. 56.17[41.-11. Plaintiffs have not met their burden of establishing the absence of any issue of material fact. Their arguments clearly show that genuine factual issues do exist. We do not here decide where the merits of this controversy lie, nor which parties should ultimately prevail. We simply hold that a trial is necessary to resolve disputed issues of fact. The summary judgment is vacated and set aside. The cause is remanded to the district court for trial. Justice Ye Concur: . . , Chief Justice