Title: PARROTT v HELLER

State: montana

Issuer: Montana Supreme Court

Document:

No. 13373 I N THE S U P R E M E COURT O F T H E STATE O F MONTANA 1976 DEWEY I. PARROTT, H A R O L D M. PARROTT, MANILA B. McGUIRE, a/k/a M A N I L A B. PARROTT, and D A L E SCHNEIDT, Executor of the Estate of Zula M. Schneidt, P l a i n t i f f s and Appellants, VERN H E L L E R and GRACE HELLER, husband and wife, Defendants and Respondents. Appeal from: D i s t r i c t Court of the Fourteenth Judicial D i s t r i c t , Honorable Nat Allen, Judge presiding. Counsel of Record: For Appellants : Peterson and Hunt, Billings, Montana Richard J. Hunt argued, Billings, Montana For Respondents: Johnson and Foster, Lewistown, Montana Robert L. Johnson argued, Lewistown, Montana Submitted : October 12, 1976 Decided : DEC 13 I s m Mr. Justice Gene B. Daly delivered the Opinion of the Court, This is an appeal by plaintiffs from a judgment of the district court, Wheatland County, dismissing their complaint for forfeiture under a contract for deed. These facts are not in dispute: On December 12, 1966, defendants Vern and Grace Heller purchased the property involved on a contract for deed from one Irven L. Parrott. The contract called for a total consideration of $56,766.51. A $7,000 down payment was made, defendants assumed an existing mortgage in the amount of $3,533.03 and agreed to pay the sum of $3,000 annually plus 6% interest per annum on the unpaid principal. The install- ment payments were to be made on December 15, beginning with the year 1967 and continue until the entire contract was paid. Defendants made payments approximately on schedule for the years 1967, 1968, 1969 and 1970. However, they failed to make the payments due December 15, 1971 and December 15, 1972. As a result on January 17, 1973, plaintiffs, successors to Irven Parrott's interest in the contract, agreed with defendants to amend the contract in an effort to clarify the default provision. At the time the amendment was executed, defendants paid the sum of $10,045.55, making the contract payments current to December 15, 1972. When the payment scheduled for December 15, 1974, was again not made on schedule, defendants on December 21, 1974, were served with a notice of default. Defendants then issued a check for the installment payment but that check was not honored by the payee bank. The check was never paid. P l a i n t i f f s f i l e d a complaint for forfeiture of the contract on March 26, 1975. Prior t o t r i a l , on September 4, 1975 defendants tendered a certified check t o the escrow agent bank i n f u l l payment of the unpaid contract principal and interest. Counsel for de- fendants was advised prior t o tender that the escrow agent bank would receive the funds but they would not be applied t o the contract pending mutual agreement of the parties or order of the court. Following t r i a l of the action, the d i s t r i c t court j udgmen t relieved defendants of default and allowed them t o redeem the property. A s a basis for its judgment, the d i s t r i c t court found failure t o pay was not due t o gross negligence or any w i l l f u l o r fraudulent breach of duty and payment of the entire contract balance was made within a reasonable time a f t e r service of notice of default. Plaintiffs appeal. The sole issue presented on appeal i s whether the d i s t r i c t court erred i n finding defendants' default was not due t o any grossly negligent, willful or fraudulent breach of duty. Section 17-102, R.C.M. 1947, provides: "Whenever, by the terms of an obligation, a party thereto incurs a forfeiture, o r a loss i n the nature of a forfeiture, by reason of h i s failure t o comply with i t s provisions, he may be relieved therefrom, upon making f u l l compensation t o the other party, except i n case of a grossly negligent, willful, o r fraudulent breach of duty." P l a i n t i f f s contend the record does not support the r e l i e f from forfeiture granted by the d i s t r i c t court under section 17-102. W e believe it does. This particular statutory section has been the source. of much l i t i g a t i o n i n Montana. See: 19 Montana Law Review 50 (1957). I n numerous cases the s t a t u t e has been construed t o provide a person with r e l i e f from forfeiture, "in any case where he s e t s forth facts which appeal t o the conscience of a court of equity." Greenup v. United States, 239 F.Supp. 330,332, Kovacich v. Metals Bank & Trust Co., 139 Mont. 449, 451, 365 P.2d 639; Blackfeet Tribe v. Klies Livestock Company, . 160 F.Supp. 131. This Court i n Yellowstone County v. Wight, 115 Mont. 411, 417, 145 P.2d 516, said: "Section 8658, Revised Codes [now section 17-102,R.C.M. : 19471 was enacted for the benefit of obligors whose failure t o punctually perform would result i n loss t o them i n the matters i n respect t o which they have con- tracted. The intention of the legislature i n enacting the s t a t u t e was that it should be operative and that it should be given f u l l force and effect when the circumstances i n any case gave it application. The intention of the law under t h i s statute i s that a forfeiture should not be needlessly enforced. The courts have established that as the policy of the law i n the absence of statute. The rule as it has found expression i n court decisions gener- a l l y is that both i n law and i n equity forfeitures a r e abhorred. * * *I' Mont . See: Lester v. J & S:.Investment Company, 9 - P.2d , 133 St. Rep. 1104, decided November 23, 1976. Here, the dishonored check was for approximately $4,600 but a t the t i m e it was presented for payment defendants only had slightly more than $3,000 i n their checking account. Defendants cited crop failures and inability t o collect from t h e i r debtors as reasons for the shortage. The record also discloses various attempts by defendants t o secure the necessary funds from other sources. ~ e f e n d a n t Vern Heller tried t o secure a loan from a Harlowton bank and from the Federal Land Bank Association, H i s efforts were not successful because of a judgment against de- fendants' property. Prior t o issuing a check for the annual payment both defendants secured employment off t h e i r ranch t o help meet the obligation, Vern Heller worked long hours on construction and Grace Heller worked a s a housekeeper i n the local hospital. , Defendants were finally able t o make the accelerated payment on the contract only when Vern Heller's brother reached a financial position where he could advance them sufficient money on an open note. \ In summary, the record discloses that defendants made good f a i t h efforts t o raise the necessary money i n time for the installment payment but because of temporary circumstances outside their control were unsuccessful u n t i l Vem Heller's brother was able t o a s s i s t . Once defendants did secure the necessary funds, the entire contract balance plus interest, was promptly tendered t o p l a i n t i f f ' s escrow agent. The facts of t h i s action present a clear case for applica- tion of section 17-102, R.C.M. 1947. The judgment of the d i s t r i c t court i s afiirmed. Justice /.-' Judge, si&ing for Justice Wesley Castles.