Title: SEVEN SEAS IMPORT-EXPORT v HANDEE

State: montana

Issuer: Montana Supreme Court

Document:

No. 79-52 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981 SEVEN SEAS IMPORT-EXPORT & MERCANTILE, INC. , a Mont. Corp. , Plaintiff and Appellant, HANDEE FOODS, INC., a Mont. Corp., and FREDERICK W. KRIEGER, Individually, Defendants and Respondents. .1 from: District Court of the Fourth Judicial District, In and for the County of Missoula, The Honorable James B. Wheelis, Judge presiding. Counsel of Record: For Appellant: Raymond W . Brault, Helena, Montana For Respondent : Tipp, Hoven & Skjelset, Missoula, Montana Submitted on Briefs: October 9, 1980 Decided : JAB 1 4 m a Filed: JAR 1 4 T P i r M r . J u s t i c e Gene B. Daly delivered the Opinion of t h e Court. Seven Seas Import-Export & Mercantile, Inc., appeals a summary judgment granted by the 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 , Missoula County, the Honorable James B. Wheelis presiding, i n favor of Handee Foods, Inc., and Frederick W. Krieger. On August 25, 1978, a p p e l l a n t f i l e d s u i t a l l e g i n g t h r e e claims f o r r e l i e f . Each claim was based on a c o n s t a b l e ' s s a l e , on May 29, 1974, of goods l e f t a t a warehouse owned by Handee Foods, Inc., and rented t o Raymond B r a u l t , p r e s i d e n t of Seven Seas Import-Export & Mercantile, Inc. B r a u l t rented a p o r t i o n of t h e warehouse from respon- d e n t i n 1973. H e apparently needed t h e space t o s t o r e s p e c i f i e d types of f i b e r g l a s s i n s u l a t i o n t o be used i n t h e c o n s t r u c t i o n of metal buildings. Appellant a l l e g e s t h a t i n March 1974 it became neces- s a r y t o terminate t h e r e n t a l agreement with Handee Foods t o allow a p p e l l a n t ' s performance on c e r t a i n o t h e r c o n t r a c t matters o u t s i d e t h e state. Seven Seas a t t h i s t i m e was i n a r r e a r s i n r e n t a l payments amounting t o approximately $896. Appellant f u r t h e r a l l e g e s t h a t B r a u l t wrote t o respon- dent, advising it of t h e s i t u a t i o n and giving respondent a q u a n t i t y of t h e i n s u l a t i o n s t o r e d i n t h e warehouse equal i n wholesale p r i c e t o t h e amount of r e n t owing. The balance of t h e i n s u l a t i o n was then a l l e g e d l y s o l d by a p p e l l a n t t o various o t h e r business concerns which w e r e t o l d they could o b t a i n t h e i r r e s p e c t i v e q u a n t i t i e s a t respondent's warehouse. Respondent was a l l e g e d l y informed of the o t h e r pur- chasers and was t o r e l e a s e the i n s u l a t i o n when they came t o pick it up. Appellant contends, however, respondent refused t o r e l e a s e t h e i n s u l a t i o n , l a i d claim t o t h e e n t i r e t y of t h e s t o r e d i n s u l a t i o n , and then improperly s o l d it, r e t a i n i n g t h e proceeds. ~ e s p o n d e n t , by way of answer, denied being contacted by B r a u l t as t o h i s need t o terminate t h e r e n t a l agreement; denied accepting any q u a n t i t y of i n s u l a t i o n a s payment of a p p e l l a n t ' s r e n t ; denied being informed of t h e sale of t h e balance of t h e i n s u l a t i o n t o o t h e r business concerns; and denied t h a t any purchasers came t o pick up t h e i r r e s p e c t i v e q u a n t i t i e s . Respondent then admits s e l l i n g t h e i n s u l a t i o n s t o r e d i n i t s warehouse f o r nonpayment of r e n t by a p p e l l a n t . A f t e r the complaint was f i l e d , a p p e l l a n t served various i n t e r r o g a t o r i e s on respondent. Respondent, i n answering them, revealed t h a t the i n s u l a t i o n was s o l d on May 29, 1974, t o Handee Foods, Inc., t h e h i g h e s t bidder, f o r $2,424.55. Respondent a l s o s t a t e d t h a t t h e s a l e was conducted pursuant t o s e c t i o n 71-3-1203, MCA, by a constable f o r the J u s t i c e Court a t respondent's warehouse. The s a l e w a s a d v e r t i s e d by posting n o t i c e on May 16, 1974, i n f i v e p u b l i c places i n Missoula County. Respondent a l s o served i n t e r r o g a t o r i e s on a p p e l l a n t . However, they w e r e never answered. N o sanctions w e r e re- quested by respondent, and, thus, the i n t e r r o g a t o r i e s w e r e n o t p a r t of the record submitted on t h e motion f o r summary j udgmen t . Respondent f i l e d i t s motion f o r summary judgment on March 23, 1979. A hearing on the matter w a s held on ~ p r i l 9, 1979, a f t e r which t h e D i s t r i c t Court granted t h e motion, finding t h a t a l l claims brought by a p p e l l a n t w e r e barred by a p p l i c a b l e s t a t u t e s of l i m i t a t i o n . A t t h e t i m e t h e ~ i s t r i c t Court made i t s decision, t h e submitted record included t h e complaint, answer, respondent's answers t o i n t e r r o g a t o r i e s , and an a f f i d a v i t , f i l e d t h e day of t h e hearing, s t a t i n g t h a t F. ~ i c k Baker had purchased a q u a n t i t y of i n s u l a t i o n from a p p e l l a n t b u t was denied access t o t h e goods by respondent. Appellant moved t o vacate t h e c o u r t ' s order on June 8, 1979. However, counsel f a i l e d t o note t h e matter f o r hear- ing. A f t e r r e c e i p t of t h e motion t o vacate, respondent served on a p p e l l a n t a n o t i c e t h a t t h e motion was deemed denied pursuant t o Rule 59, M.R.Civ.P., i n t h a t it had n o t been noted o r heard within t e n days of s e r v i c e a s required. Summary judgment was entered on December 1 6 , 1980, and Seven Seas appeals. Appellant r a i s e s numerous c o l l a t e r a l contentions on appeal. The s o l e matter a t i s s u e , however, i s whether t h e D i s t r i c t Court was proper i n finding t h a t a p p e l l a n t ' s c l a i m s a r e barred by t h e s t a t u t e s of l i m i t a t i o n and, therefore, proper i n granting respondent's motion f o r summary judgment. I n determining whether the period of l i m i t a t i o n has expired i n a given case, it i s necessary t o examine two p o i n t s i n time. F i r s t , when the d i d t h e cause of a c t i o n which gave rise t o the s u i t accrue? Second, when was t h e a c t i o n commenced? Engine Rebuilders, Inc. v. Seven Seas Impor t-Expor t & Mercantile (198 0 ) , Mont. , 615 P.2d 871, 37 St.Rep. 1406. Rule 3 , M.R.Civ.P., provides t h a t a c i v i l a c t i o n is commenced upon t h e f i l i n g of t h e complaint. I n t h i s in- stance, t h e s u i t w a s i n i t i a t e d on August 26, 1978. A s t o when t h e cause of a c t i o n accrued and t h e l i m i t a - t i o n period thus s t a r t e d t o run, it i s necessary t o examine t h e p a r t i c u l a r b a s i s and t h e o r i e s upon which a p p e l l a n t seeks r e l i e f . A s a b a s i s f o r h i s cause of a c t i o n , a p p e l l a n t a l l e g e s i n i t s complaint t h a t respondent took improper c o n t r o l over t h e i n s u l a t i o n s t o r e d i n i t s warehouse; s o l d it without a u t h o r i t y and then r e t a i n e d the proceeds. I n a s s e r t i n g t h i s cause of a c t i o n , a p p e l l a n t makes a c l a i m f o r recovery f i r s t on a theory t h a t a c o n s t r u c t i v e t r u s t was e s t a b l i s h e d whereby respondent, a s t r u s t e e , held the i n s u l a t i o n and t h e proceeds therefrom f o r t h e b e n e f i t of appellant. Appellant then a s s e r t s a second theory of recovery, sounding i n t o r t (conversion), contending t h a t respondent s o l d t h e i n s u l a t i o n a t an improperly conducted sale and, thus, i s l i a b l e f o r t h e value of t h e goods. Appellant f i n a l l y contends, a s a t h i r d claim f o r r e l i e f , t h a t due t o t h e w i l l f u l and wanton d i s r e g a r d of i t s r i g h t s , it i s e n t i t l e d t o exemplary damages. Upon review of a p p e l l a n t ' s complaint, it i s apparent t h a t t h e a l l e g e d improper a c t i v i t y giving rise t o appel- l a n t ' s claim of recovery occurred on o r p r i o r t o t h e d a t e respondent had t h e i n s u l a t i o n sold, May 29, 1974. Conse- quently, over f o u r years have passed between the a c c r u a l of t h e cause of a c t i o n and t h e commencing of s u i t . Appellant contends t h a t , i n determining when t h e cause of a c t i o n accrued, w e should n o t look t o t h e d a t e t h e i n s u l a - t i o n w a s s o l d b u t t o t h e d a t e a p p e l l a n t made a demand f o r t h e r e t u r n of those goods, J u l y 19, 1978. Appellant b a s i s t h i s argument on an a l l e g a t i o n t h a t it w a s without knowledge of t h e sale u n t i l it made a demand f o r t h e r e t u r n of t h e i n s u l a t i o n . I n r e j e c t i n g a p p e l l a n t ' s argument, we note t h a t when a c o u r t i s presented with a motion f o r summary judgment, i t must r e l y on the submitted pleadings, depositions, answers t o i n t e r r o g a t o r i e s and admissions on f i l e , together with any supporting a f f i d a v i t s , i n formulating i t s r u l i n g on t h e motion. Rule 56 (c) , M.R.Civ.P. The D i s t r i c t Court w i l l n o t be held i n e r r o r on the b a s i s of documents n o t before it a t t h e t i m e it renders i t s decision. Baylor v. Jacobson (1976), 170 Mont. 234, 552 P.2d 55. I n t h i s i n s t a n c e t h e a l l e g a t i o n of lack of knowledge, demand and then r e f u s a l t o r e t u r n t h e goods was n o t r a i s e d i n t h e complaint, t h e answer, t h e i n t e r r o g a t o r i e s o r i n any a f f i d a v i t properly before t h e c o u r t a t t h e t i m e summary judgment was granted. The a l l e g a t i o n , t h e r e f o r e , w i l l n o t be considered on appeal a s a b a s i s f o r reversing t h e D i s - t r i c t C o u r t ' s r u l i n g . I n passing, w e acknowledge t h a t a p p e l l a n t attempts t o support t h i s i s s u e on i t s motion t o vacate with an a f f i d a v i t and copy of a "demand" served on respondent. Appellant, however, f a i l e d t o note t h e motion f o r any consideration o r adjudication; f u r t h e r , it has f a i l e d t o demonstrate t h a t t h i s information was unavailable p r i o r t o t h e D i s t r i c t C o u r t ' s granting of t h e summary judgment. Upon reviewing t h e submitted record properly before t h e Court, even i n a l i g h t most favorable t o a p p e l l a n t , w e must conclude t h a t a p p e l l a n t ' s cause of a c t i o n accrued p r i o r t o o r on May 29, 1974, t h e d a t e of t h e a l l e g e d improper s a l e . Consequently, f o u r y e a r s expired between a c c r u a l and com- mencement of the a c t i o n . Section 27-2-207, MCA, provides: "Tort a c t i o n s involving property. Within 2 y e a r s i s t h e period prescribed f o r t h e com- mencement of an a c t i o n f o r : " (2) taking, d e t a i n i n g , o r i n j u r i n g any goods o r c h a t t e l s , including a c t i o n s f o r t h e s p e c i f i c recovery of personal property;" Clearly, a p p e l l a n t ' s claim sounding i n t o r t i s barred by t h i s two-year s t a t u t e of l i m i t a t i o n . I t could be argued t h a t s e c t i o n 27-2-204, MCA ( s t a t u t e of l i m i t a t i o n f o r general t o r t a c t i o n s ) , i s applicable. However, t h i s s e c t i o n only extends t h e l i m i t a t i o n t o t h r e e years, and, thus, a p p e l l a n t ' s a c t i o n i s s t i l l properly barred. I n regard t o a p p e l l a n t ' s claim of c o n s t r u c t i v e t r u s t , t h e a l l e g e d o b l i g a t i o n ( t h a t respondent held the i n s u l a t i o n o r proceeds therefrom i n t r u s t ) i s one implied by law and n o t founded upon a w r i t t e n instrument. A s t o such an i m - p l i e d o b l i g a t i o n , s e c t i o n 27-2-202 (3) , MCA, provides : "Actions based - on c o n t r a c t - o r o t h e r o b l i g a t i o n . . . . " ( 3 ) The period prescribed f o r t h e commencement of an a c t i o n upon an o b l i g a t i o n o r l i a b i l i t y , o t h e r than a c o n t r a c t , account, o r promise, n o t founded upon an instrument i n w r i t i n g i s within 3 years. Therefore, a p p e l l a n t ' s claim under a theory of c o n s t r u c t i v e t r u s t i s a l s o barred. A s t o t h e claim f o r p u n i t i v e damages, s i n c e t h e under- l y i n g cause of a c t i o n i s barred, t h e recovery of exemplary damages i s barred a s well. The d e c i s i o n of t h e District Court t h a t a p p e l l a n t ' s a c t i o n i s barred by a p p l i c a b l e s t a t u t e s of l i m i t a t i o n i s proper a s based upon t h e record submitted a t the time of its r u l i n g . The summary judgment is affirmed. W e concur: Chief ~ u k t i c e - 4 a&, / J u s t i c e s This cause was submitted p r i o r t o January 5, 1981.