Title: MCNULTY v BEWLEY CORP

State: montana

Issuer: Montana Supreme Court

Document:

No. 14354
IN THE SUPREME COURT OF THE STATE OF MONTANA
1978

DONALD MeNULTY and DIANA
MeNULTY, husband and wife,

Plaintiffs and Respondents,

‘THE BEWLEY CORPORATION,
a Montana Corporation,

Defendant and Appellant.

 

Appeal from: District Court of the Nineteenth Judicial
District,
Honorable Robert M. Holter, Judge presiding.

 

Counsel of Recor
For Appellant:
Williams & Sverdrup, Libby, Montana
For Respondents:

Fennessey, Crocker & Harman, Libby, Montana

Submitted on briefs: December 13, 1978

Decided: JUN 18 1979
rinea: SUN 18 1979
Me, Justice Daniel J, Shea delivered the Opinion of the Court.

Defendant appeals from a judgment of the Lincoln County
District Court awarding the plaintiffs $400 per month as
reasonable compensation for 20 months work as managers

of the Silver spur Bar and Lounge.

‘The basic facts are not in dispute. Defendant, The Bewley
Corporation, is a Montana corporation whose principle asset
is the Silver Spur Bar and Lounge of Troy, Montana, During
the period involved in this appeal (1971-1972), the Bewley
corporation was wholly owned by Tex and Bernice Bewley,
husband and wife. Bernice Bewley served as president of the
corporation and Tex Bewley was listed as its vice president.

‘The plaintiffs in this action are Donala McNulty and
Diana (Bewley) McNulty, husband and wife. Diana McNulty is
the daughter of Tex and Bernice Bewley.

‘The Bewley Corporation entered into a contract to
purchase the Silver Spur Bar and lounge in 1967. Thereafter,
the corporation did not take an active part in operating the
Silver Spur; instead, its officers, Tex and Bernice Bewley,
hired a number of individuals to manage the bar and keep the
Liquor license active. The various managers were allowed to
keep ali revenues from the bar over and above certain fixed

cost:

 

In April 1971, Tex and Bernice Bewley discharged the
married couple who had been managing the Silver Spur. They
then approached their daughter, Diana McNulty, and her

husband, Donald McNulty, and asked them to take over the

 

Silver Spur's management. When the Bewleys first approached
the McNultys, Diana McNulty was employed by St. Regis Paper

co.

 

ning a salary of $334 per month; Donald McNulty was
employed with a plumbing contractor, earning approximately

$7,000 to $8,000 per year.

 
After sone initial reluctance, the MeWultys agreed to
manage the Silver Spur. Diana Mewulty quit her job with st.
Regis Paper so she could devote her full time to the operation
of the bar. It was agreed that the MeNultys would be compensated
for their services by retaining all bar revenue in excess of
operating and fixed costs. It was also agreed that the
Mettultys would manage the bar until the Revleys obtained new
managers, or until the place could be sold.

After managing the bar for approximately six sonths,
the MeWultys became totally dissatisfied with their duties
and compensation; they informed the Bewleys that they wanted
to be replaced innediately. the Sewleys, however, were
unable to find any replacenents, so they offered to give the
MoNaltys 498 ownership in the business if the MoNultys would
agree to manage the Silver Spur for an additional two years.
The MeWultys rejected this offer, but nonetheless, they
renained as managers until the en of Novenber 1972, an
additional fourteen months. The McNultys testified that
they stayed because the Bevleys indicated that things would
be made “right” with the MeWultys if they renained until
replacements could be found.

In Novenber 1972, the Bevleys hired a man naned Neil
Tanorie as replacement manager. The Bevleys never offered
to make things “right" with the MeWultys, which prompted the
present action.

on January 22, 1976, Donald and Diana McNulty filed a
complaint in the District Court, Lincoln County seeking to
recover $8,000 for wages due plaintiffs for work and services
performed as managers of the Silver Spur/Lounges On Apr
1, 1977, defendant filed its anaver denying any liability to
Diana or Donald Mewulty. The matter vas tried before the District
court, sitting without a jury, on November 2, 1977.

on Decenber 14, 1977, the District Court entered findings

of fact, conclusions of law and judgment in favor of the

 
McNuitys. The judgment ordered the cornoration/pay $7,052.50
to the Motultys as back wages, attorney fees and costs of
suit. the corporation's motion for @ new trial was thereafter
denied and this appeal followed.

The parties stipulated to submit the case to this Court
without oral argusent.

The defendant's contentions are: (1) that the court
erred when it adnitted testimony relating to certain representa~
tions made by Tex Bewley: (2) that the court erred when it
awarded the plaintiffs “reasonable compensation” for the
services they performed at the Silver Spur; and (3) that the
court erred when it avarded attorney fees pursuant to section
39-3-214 MCA (formerly section 41-1306, R.C.M. 1947).

Defendant, first contends that the court violated the
Goad man's statute (formerly section 93-701-3(4), R.C.M. 1947)
by allowing Diana and Donald MeWulty to testify to @ conversation
they had with Tex Bewley before his death. Defendant also
contends the evidence was hearsay.

We note that Montana has abolished its archaic dead
man's statute by adopting the new Montana Rules of Evidence.
Rule 601, Mont.R.Bvid. provides: “(a) General rule competency.
Every person is competent to be a witness except as otherwise
provided in these rules."

‘The new Nontana Rules of Evidence remove the Limitations
which formerly attached to testimony about transactions or
oral communications with persons who die before trial.
under the now Rules, such testinony is admissible, subject,
of course, to cross-exanination to establish the weight to
be afforded to the testinony. Accordingly, under Rule 601,
Mont .R.Evid., the MoNultys were competent to testify about

the representations made by Tex Bewley.

 
‘The testimony concerning Tex Bewley's representations
is not barred as hearsay. Rule 801, Mont.R.Evid. provides:

*. . . A statement is not hearsay if: . . . The
statement is offered against a party and is...

a statement by his agent or servant’ concerning” a
matter within the scope of his agency or employ-
ment, made during the existence of that relationship.
rete Gmphaais ade’)

 

Here, Tex Bowley, as the vice-president of Bewley Corporation,
was an agent of that corporation. There is no question that

he made the statements while he was acting within the scope

of his agency relationship. Therefore, the testimony cannot

be classified as hearsay.

Defendant next asserts insufficiency of the evidence to
support the court's conclusion that = contract for reasonable
wages was implied by Law because of plaintiffs’ performance
of such services, Here we must agree in part. The District
court's conclusion is not fully supported by the record and
accordingly, the judgnent as to the amount of wages must be
noaities.

in Keith v. Kottas (1946), 119 Mont, 98, 101, 172 P.24
306, this court stated:

mere cannot be an express and implied contract

for the same thing existing at the same tine.

it is only when parties do not expressly agree

that ‘the Law inposes and raises a promise.” No

SETS bhatt" addeasys = SPSS

under Keith, if an express contract has been entered into
by the parties, the District court cannot alter the terns of
that express agreement. In the present case, the uncontroverted
testimony shows that there was an express agreenent in existence
between the Bewleys and McNultys during the first six sonths
of the management relationship. Diana MeNulty, Donald McNulty
and Bernice Bewley all testified that the parties understood
that the MeWultys would retain whatever money remained from
the bar revenues after operating and fixed costs had been paid.

“5
 

‘this understanding was tantamount to an express agreenent
fixing the compensation to be paid the McNultys during the
first six months of the arrangement. Therefore, the District
Court could not impose an implied contract for the first six
months of the arrangement. The judgment in favor of the
plaintiffs must therefore be reduced by $2,400 (6 x $400 per
month) «

There is sufficient evidence, however, supporting the
Metultys' right to compensation for their final fourteen
months as managers of the Silver Spur.

A change in the parties relationship took place on oF
about October 1, 1971 (6 months into the arrangement). At
that time the Mctultys became dissatisfied with the arrangement
and asked the Bewleys to find immediate replacements. The
Bewleys, unable to find a replacenent, enticed the plaintiffs
to remain as managers for an additional fourteen months.

‘he McNultys stayed because the Bewleys made repr

 

tations:

that things would be made "right". Here the contract wé

 

implied as evidenced by the conduct of the parties, Cartwright

 

v. Joyce (1970), 155 Mont. 478, 473 P.2a 515.
‘he representations made by the Bewleys were sufficient
to revoke the original express contract and give rise to an

implied contract for reasonable compen:

 

tion. This implied

contract was in existence for the final fourteen months of

 

the McNultys' term as managers. Accordingly, that portion
of the judgment awarding the MeNultys $5,600 (14 x $400 per
month) must be affirmed.

befendant's final claim of error is that the court
erred in avarding $700 in attorney fees to the MeNultys

because they cannot be classified as "employees" as defined

 

by section 39-3-201(3) MCA (formerly section 41~1301(3) (¢),
R.C.M. 1947). We £ind the attorney fees were properly
awarded.

Section 393-214 MCA (formerly section 41-1306, R.C.M

1947), provides:

 
“Whenever it shall become necessary for the
employee to enter or maintain a suit at law for
he Pecovery oF collection of wages due as
Provided for by this part, then such judgment
shall include a reasonable attorney's fee in
favor of the successful party, . . (Emphasis
added.)

 

 

It is clear that the plaintiffs initial status as
managers of the Silver Spur was changed to that of employees
in early October 1972. From that point on, the McNultys
were employees of defendant corporation, i.e., they were
persons who worked for another for hire. Clearly, therefore,
they were entitled to reasonable attorney fees after they
successfully prosecuted their wage claim against defendant.

For the foregoing reasons, the judgnent of the District
Court is reduced by $2,400. Otherwise, the judgment is
affirmed.

Costs on appeal are awarded to plaintiffs.

 

We Concur:

Darah oho Pent ws0 0

Chief Justice