Case Title: SUN DIAL LAND CO v GOLD CREEK RAN

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1982-05-17T00:00:00Z

Document:
No. 82-25 IN THE SUPREME COURT OF THE STATE OF MONTANA 1982 SUN DIAL LAND COMPANY, INC., Plaintiff and Respondent, VS. GOLD CREEK RANCHES, INC., RONALD A . JEROME a/k/a R. A. JEROME, and ROY A. JEROME, Defendants and Appellants. Appeal from: District Court of the Thirteenth Judicial District, In and for the County of Carbon Honorable Jack Shanstrom, Judge presiding. Counsel of Record: For Appellants: Radovich and Johnson, Billings, Montana For Respondent : Towe, Ball, Enright and Mackey, Billings, Montana Submitted: March 25, 1982 Decided: May 17, 1982 Filed: MAY 1 7 198g Clerk M r . Chief J u s t i c e Frank I. Haswell d e l i v e r e d t h e Opinion of t h e C o u r t . Defendants a p p e a l from t h e judgment of t h e District Court which gave p o s s e s s i o n of c e r t a i n p r o p e r t y to p l a i n t i f f . W e a f f i r m and assess damages of $500 a g a i n s t defendants f o r a f r i v - o l o u s a p p e a l . Rule 32, M. R.App.Civ. P. On December 3, 1974, d e f e n d a n t s Roy A. Jerome and Ronald A. Jerome ( R o y ' s s o n ) executed a p e n c i l agreement w i t h p l a i n t i f f s i g n e d by Edward Towe ( p r e s i d e n t ) which provided t h a t p l a i n t i f f Sun D i a l Land Company would o b t a i n f i n a n c i n g f o r t h e purchase of Grove Creek Ranches, I n c . n e a r B e l f r y , Montana. In r e t u r n t h e Jeromes were to pay p l a i n t i f f 30% o f a l l n e t e a r n i n g s from t h e sale or o p e r a t i o n of t h e ranch. On December 17, 1974, Sun D i a l purchased t h e ranch. On August 4, 1976, a formal c o n t r a c t was executed between Sun D i a l and d e f e n d a n t Gold Creek Ranches, I n c . , a c o r p o r a t i o n s e t up by t h e Jeromes. About 9,000 acres were t o be d i v i d e d up i n t o 20-acre p a r c e l s f o r sales as homesites . Defendants' planned s a l e s d i d n o t m a t e r i a l i z e , and p l a i n t i f f s e n t d e f e n d a n t s two d e f a u l t n o t i c e s , one on February 6, 1978, and a n o t h e r on December 31, 1978. On December 6 , 1979, d e f e n d a n t s f i l e d a c l a i m a g a i n s t Sun D i a l a l l e g i n g u s u r y and f r a u d and s e e k i n g to set a s i d e t h e formal c o n t r a c t of August 4, 1976, and r e i n s t a t e t h e p r i o r p e n c i l agreement of December 3, 1974. O n February 4, 1980, Sun D i a l f i l e d s u i t a g a i n s t t h e d e f e n d a n t s , a l l e g i n g t h e d e f e n d a n t s ' d e f a u l t and s e e k i n g judgment a g a i n s t d e f e n d a n t s f o r unlawful d e t a i n e r and r e s t o r a t i o n of t h e land t o Sun D i a l . T h e r e a f t e r a n involved series of p r o c e d u r a l maneuvering between t h e p a r t i e s followed which need n o t be recounted h e r e i n , e x c e p t to n o t e t h a t t h e cases were c o n s o l i d a t e d . On September 17, 1980, t h e D i s t r i c t Court set a t r i a l d a t e o f October 6 , 1980, and, a t t h e October 6 h e a r i n g , t h e p a r t i e s s i g n e d a s e t t l e m e n t agreement i n open c o u r t , t h e t h r u s t of which was t h a t d e f e n d a n t s were to pay to t h e p l a i n t i f f $1,320,424.33 w i t h i n t e r e s t , p l u s o v e r $150,000 i n c o n t r a c t payments and t a x e s b y October 6 , 1981 ( e x a c t l y one y e a r a f t e r t h e agreement was s i g n e d ) . I f t h e payment was n o t forthcoming on t h a t d a t e , defen- d a n t s agreed to e n t r y of judgment a g a i n s t them f o r immediate p o s s e s s i o n of t h e p r o p e r t y by p l a i n t i f f and a q u i t c l a i m deed, w h e r e i n d e f e n d a n t s r e l i n q u i s h e d a l l i n t e r e s t i n t h e p r o p e r t y , w a s p l a c e d i n escrow to be f i l e d i f t h e payment was n o t made. The s e t t l e m e n t agreement concluded w i t h t h e s t a t e m e n t t h a t " . . . no f u r t h e r h e a r i n g s h a l l be r e q u i r e d f o r t h e e n t r y of t h e judgment . . .I1 and r e c i t e d t h a t t h e s e t t l e m e n t agreement was to be t h e f i n a l r e s o l u t i o n of a l l d i s p u t e s between t h e parties i n t h e t w o law s u i t s . A s t h e payment d e a d l i n e approached, t h e r e was some com- m u n i c a t i o n between t h e p a r t i e s r e g a r d i n g an e x t e n s i o n b u t no p a p e r s were e v e r s i g n e d . On October 6 , 1981, t h e day t h e payment w a s d u e , d e f e n d a n t d e p o s i t e d $50,000 i n Towe's account which w a s r e j e c t e d . Because d e f e n d a n t s d i d n o t make t h e r e q u i r e d payments, on October 20, 1981 ( p u r s u a n t to t h e s e t t l e m e n t a g r e e m e n t ) , t h e c o u r t o r d e r e d t h a t t h e judgment f o r Sun D i a l ' s immediate p o s s e s s i o n of t h e p r o p e r t y and t h e q u i t c l a i m deed be r e l e a s e d t o Sun D i a l . The District Court signed t h e judgment a g a i n s t d e f e n d a n t s on October 26 (which was f i l e d on October 2 9 ) and t h e n e x t day (October 27) d e f e n d a n t s f i l e d a lis pendens and a " c r o s s - p e t i t i o n " a l l e g i n g m a l i c i o u s i n t e r f e r e n c e by p l a i n t i f f i n t h e n e g o t i a t i o n of t h e sale of t h e l a n d , and s e e k i n g to set a s i d e t h e s e t t l e m e n t agreement. Sun D i a l answered t h e " c r o s s - p e t i t i o n " and moved t o s t r i k e t h e l i s pendens on November 4, 1981, and a h e a r i n g on t h e motion was set f o r November 12. The p a r t i e s s t i p u l a t e d t h a t t h e " c r o s s - p e t i t i o n " would be t r e a t e d as combined motions f o r a new t r i a l , to alter or amend judgment and to set a s i d e t h e judgment. Hearings were h e l d on November 12 (Thursday) and November 1 5 ( S u n d a y ) , 1981. On November 23, t h e D i s t r i c t Court e n t e r e d f i n - d i n g s of f a c t and c o n c l u s i o n s of law which denied a l l of d e f e n d a n t s t motions and o r d e r e d t h a t Sun D i a l be e n t i t l e d to p o s s e s s i o n of t h e p r o p e r t y and s t r u c k d e f e n d a n t s ' lis pendens. The n e x t day d e f e n d a n t s f i l e d t h e i r n o t i c e of appeal from t h e judgment and were g r a n t e d a s t a y pending a p p e a l , upon t h e f i l i n g of $150,000 bond. Defendants posted t h e bond. P l a i n t i f f I s i s s u e s on a p p e a l can be s t a t e d as f o l l o w s : 1. Whether t h e Montana p o l i c y a g a i n s t f o r f e i t u r e p r e v e n t s p l a i n t i f f from r e c o v e r i n g t h e p r o p e r t y ; 2. Whether t h e d o c t r i n e of waiver o p e r a t e s a g a i n s t p l a i n t i f f ; 3 . Whether t h e d o c t r i n e of e s t o p p e l o p e r a t e s a g a i n s t p l a i n t i f f ; 4. Whether t h e District Court e r r e d i n adopting p l a i n t i f f I s f i n d i n g s of f a c t and c o n c l u s i o n s of l a w ( o f November With r e g a r d to t h e f i r s t i s s u e , a p p e l l a n t s argue t h a t t h e Montana s t a t u t e f o r r e l i e f from f o r f e i t u r e h a s been s a t i s f i e d . S e c t i o n 28-1-104, MCA, p r o v i d e s : " R e l i e f from f o r f e i t u r e . Whenever by t h e terms o f an o b l i q a t i o n a party t h e r e t o i n c u r s a f o r - f e i t u r e o r - a loss i n t h e n a t u r e of a f o r f e i t u r e b y r e a s o n of h i s f a i l u r e to comply w i t h its p r o v i s i o n s , he may be r e l i e v e d t h e r e f r o m upon making f u l l compensation to t h e o t h e r p a r t y , e x c e p t i n case of a g r o s s l y n e g l i g e n t , w i l l f u l , o r f r a u d u l e n t breach of duty." Appellants also argue t h a t Montana case law r e g a r d i n g f o r f e i t u r e s u p p o r t s t h e n u l l i f i c a t i o n of t h e s e t t l e m e n t agreement and a remand f o r a f u l l t r i a l , c i t i n g s e v e r a l cases i n c l u d i n g Montana W i l l i a m s Double Diamond vs. Royal V i l l a g e , I n c . ( 1980 ) , Mon t . , 607 P.2d 1120, 37 St.Rep. 421; P a r r o t t v. Heller ( 1 9 7 6 ) , 1 7 1 Mont. 212, 557 P.2d 819; and S-wAas- H o m e s Company v. North Si~-burbq~ ( 1 9 1 4 ) , 50 Mont. 108, 1 4 5 P. 2. T h i s c o n t e n t i o n is u t t e r l y devoid of m e r i t . How can d e f e n d a n t s f o r f e i t something t h e y n e v e r had? I t is undisputed i n t h i s case t h a t Sun D i a l bought t h e p r o p e r t y and t h u s ob- t a i n e d e q u i t a b l e t i t l e . In e v e r y case r e l i e d on by a p p e l l a n t s , t h e f o r f e i t u r e d i s c u s s i o n c e n t e r e d around t h e b u y e r ' s l o s s of payments. Here Sun D i a l , n o t d e f e n d a n t s , was t h e buyer and d e f e n d a n t s ' r e l i a n c e on t h e Montana cases is misplaced. See - The D e f a u l t C l a u s e -- i n t h e I n s t a l l m e n t Land C o n t r a c t ( 1 9 8 1 ) , 42 M0nt.L.R. 110, 117-25, and F o r f e i t u r e - o f Payments Under Land Purchase C o n t r a c t - i n Montana ( 1 9 5 7 ) , 1 9 M0nt.L.R. 50. A p p e l l a n t s f a r e no b e t t e r by r e l y i n g on s e c t i o n 28-1-104, MCA, which r e q u i r e s , as a c o n d i t i o n p r e c e d e n t to r e l i e f , t h a t d e f e n d a n t s t e n d e r f u l l compensation to Sun D i a l . It is undis- p u t e d h e r e t h a t under t h e terms of t h e s e t t l e m e n t agreement, d e f e n d a n t s were to pay t o Sun D i a l w i t h i n t h e y e a r , a sum i n e x c e s s of $1,300,000. D e f e n d a n t s ' d e p o s i t of $501000 i n Towe's a c c o u n t is a f a r c r y from t h a t . See Gamble-Skogmo, I n c . v . McNair R e a l t y Co. (D.C. Mont. 1 9 5 1 ) , 98 F.Supp. 440 ( f u l l compen- s a t i o n is r e q u i r e d f o r r e l i e f from f o r f e i t u r e ) . Moreover, a f o r f e i t u r e is an a f f i r m a t i v e d e f e n s e which w a s n o t a f f i r m a t i v e l y pleaded i n d e f e n d a n t s ' answer. It d o e s n o t even appear i n t h e l l c r o s s - p e t i t i o n l l . Accordingly, we need n o t c o n s i d e r t h i s i s s u e r a i s e d f o r t h e f i r s t t i m e on a p p e a l , Marcus Daly Memorial H o s p i t a l Corp. v. Borkoski ( 1981 ) , Mont. , 624 P.2d 997, 38 St.Rep. 322. A p p e l l a n t s n e x t contend t h a t Towe's a c t i o n s c o n s t i t u t e d a w a i v e r of h i s r i g h t s under t h e s e t t l e m e n t agreement because Towe l e d Roy Jerome t o b e l i e v e an e x t e n s i o n had been g r a n t e d . Appel- l a n t s t h e n s u g g e s t t h a t w e r e q u i r e Sun D i a l to send an addi- t i o n a l n o t i c e of d e f a u l t b e f o r e a l l o w i n g Sun D i a l to proceed w i t h t h e a c t i o n , c i t i n g Surburban H o m e s and Montana W i l l i a m s , s u p r a . A t no time d u r i n g t h e s e l e n g t h y p r o c e e d i n g s have Gold - 5 - Creek o r t h e Jeromes been under any misapprehension as to how much was due and owing on October 6, 1981. Indeed, Sun D i a l I s F e b r u a r y 6, 1978, l e t t e r to them s p e l l s o u t i n d e t a i l t h e o b l i g a - t i o n s of t h e p a r t i e s and i n t h e December 31, 1978, n o t i c e , t h e F e b r u a r y 6 l e t t e r was e n c l o s e d . W e r e f u s e t o r e q u i r e such a p o i n t l e s s act. A p p e l l a n t s n e x t a p p a r e n t l y argue t h a t Sun D i a l should n o t be allowed to e n f o r c e t h e s e t t l e m e n t agreement because of a n e s t o p p e l c r e a t e d by Towe's a c t i o n s . A p p e l l a n t s cite s e c t i o n 26-1-601 ( 3 ) , MCA, which p r o v i d e s : "Complete -- list o f c o n c l u s i v e presumptions. The f o l l o w i n g presumptions and no o t h e r s are deemed c o n c l u s i v e : " ( 3 ) whenever a p a r t y h a s , b y h i s own d e c l a r a t i o n , act, or o m i s s i o n , i n t e n t i o n a l l y and d e l i b e r a t e l y l e d a n o t h e r t o b e l i e v e a p a r t i c u l a r t h i n g t r u e and to act upon such b e l i e f , he can- n o t i n any l i t i g a t i o n a r i s i n g o u t of such d e c l a r a t i o n , act, o r omission be p e r m i t t e d to f a l s i f y it. . ." W e have r e c e n t l y s t a t e d w i t h r e g a r d to e s t o p p e l : " S i x e s s e n t i a l e l e m e n t s have been h e l d n e c e s s a r y to c o n s t i t u t e an e q u i t a b l e e s t o p p e l : "'(1) t h e r e must be conduct, acts, l a n g u a g e , or s i l e n c e amounting to a r e p r e s e n t a t i o n o r a con- c e a l m e n t of material f a c t s ; ( 2 ) t h e s e f a c t s must b e known t o t h e p a r t y estopped a t t h e t i m e of h i s conduct, or a t l e a s t t h e c i r c u m s t a n c e s must b e such t h a t knowledge of them is n e c e s s a r i l y imputed to him; ( 3 ) t h e t r u t h concerning t h e s e f a c t s must be unknown to t h e o t h e r p a r t y c l a i m i n g t h e b e n e f i t of t h e e s t o p p e l a t t h e t i m e it was a c t e d upon by him; ( 4 ) t h e conduct must b e done w i t h t h e i n t e n t i o n , or a t l e a s t w i t h t h e e x p e c t a t i o n , t h a t it w i l l be a c t e d upon by t h e o t h e r p a r t y , o r under t h e c i r c u m s t a n c e s t h a t it is b o t h n a t u r a l and p r o b a b l e t h a t it w i l l be so a c t e d upon; ( 5 ) t h e conduct must be r e l i e d upon b y t h e o t h e r p a r t y , and, t h u s r e l y i n g , he must b e l e d to act upon it, and ( 6 ) he must i n f a c t a c t upon it i n such a manner as to change h i s p o s i t i o n f o r t h e worse. "' Sweet v. Colburn School Supply ( 1 9 8 2 ) , Mont . , 639 P.2d 521, 524, 39 St.Rep. 1 6 8 , 1 7 2 - 7 3 . F i r s t of a l l , e s t o p p e l is an a f f i r m a t i v e d e f e n s e t h a t must be pleaded. Rule 8 ( c ) , M.R.Civ.P. W e w i l l n o t c o n s i d e r t h e i s s u e r a i s e d f o r t h e f i r s t time on a p p e a l . Borkoski, s u p r a . However, t h i s d e f e n s e is mentioned i n d e f e n d a n t s ' "cross- p e t i t i o n " . The t r i a l c o u r t found t h a t t h e r e was no e v i d e n c e sup- p o r t i n g a c l a i m of e s t o p p e l . W e a g r e e . Towe d i d n o t r e p r e s e n t t o d e f e n d a n t s t h a t t h e simple forwarding of $50,000 to h i s a c c o u n t was s u f f i c i e n t to extend t h e agreement and he d i d n o t i n t e n d or e x p e c t t h a t t h e defendantswould act on t h i s p u r p o r t e d r e p r e s e n t a t i o n . I n s t e a d he i n s i s t e d t h a t a w r i t i n g be executed r e g a r d i n g t h e e x t e n s i o n and t h i s was n e v e r done. A p p e l l a n t s f i n a l l y contend t h a t t h e D i s t r i c t Court e r r e d i n a d o p t i n g t h e f i n d i n g s of f a c t and c o n c l u s i o n s of law prepared b y Sun D i a l ' s a t t o r n e y . While it is t r u e t h a t we d i s a p n v e of t h i s p r a c t i c e , Tomaskie v. Tomaskie ( 1 9 8 1 ) , Mont. , 625 P.2d 536, 38 S t . Rep. 416, t h e y w i l l be upheld i f they are suf- f i c i e n t l y comprehensive and supported by t h e e v i d e n c e p r e s e n t e d , J e n s e n v. J e n s e n ( 1 9 8 1 ) , Mon t . - - , 631 P.2d 700, 38 St.Rep. 1109. Here t h e c o u r t ' s f i n d i n g s and c o n c l u s i o n s meet t h e above t e s t . Sun D i a l raises o t h e r i s s u e s i n r e s p o n s e t o a p p e l l a n t s 1 b r i e f b u t s i , n c e , i n o u r view, a p p e l l a n t s 1 c o n t e n t i o n s are meritless, w e w i l l n o t c o n s i d e r t h e a d d i t i o n a l i s s u e s r a i s e d by Sun D i a l . W e n o t e t h a t Gold Creek and t h e Jeromes have succeeded i n accomplishing what t h e y set o u t t o do, i.e. f o r e s t a l l i n g t h e e f f e c t of t h e judgment to g i v e them more t i m e to f i n d a b u y e r o f t h e p r o p e r t y or seek a n o t h e r s e t t l e m e n t w i t h p l a i n t i f f . Defendants have pursued t h i s a c t i o n through t h e appeal p r o c e s s and by t h e f i l i n g of t h e l i s pendens and t h e " c r o s s - p e t i t i o n " t h e d a y af t e r t h e judgment w a s s i g n e d . Obviously w i t h t h e -- lis pen- d e n s o f r e c o r d Sun D i a l could n o t remedy t h e s i t u a t i o n by con- veying or s e l l i n g t h e real e s t a t e . A l l t h e s e d e f e n d a n t s 1 a c t i o n s were done i n t h e f a c e of t h e language of t h e s e t t l e m e n t agreement, r e p e a t e d s e v e r a l times t h e r e i n , t h a t i f t h e payment d e a d l i n e was n o t m e t d e f e n d a n t s would r e l i n q u i s h p o s s e s s i o n of t h e l a n d immediately. T h i s agreement was to be t h e f i n a l r e s o l u - t i o n between t h e p a r t i e s . W e cannot condone such a c t i o n and abuse of t h e appeal p r o c e s s . Our c o u r t d o c k e t s are overcrowded as it is. T h e r e f o r e o n t h e day t h i s case is d e c i d e d , p l a i n t i f f s h a l l have judgment a g a i n s t defendants i n t h e amount of $500 damages f o r a f r i v o l o u s a p p e a l p u r s u a n t to Rule 32, M.R.App.Civ.P. Affirmed . Chief J u s t i c e