Title: Heckman and Shell v. Wilson

State: montana

Issuer: Montana Supreme Court

Document:

487 P.2d 1141 (1971) HECKMAN AND SHELL, a Partnership, Plaintiff and Appellant, v. Frederick WILSON, Defendant and Respondent. No. 11926. Supreme Court of Montana. Submitted June 16, 1971. Argued August 11, 1971. *1142 Morrow, Nash & Sedivy, Bozeman, Edmund P. Sedivy argued, Bozeman, William J. Dee, Grangeville, Idaho, for plaintiff and appellant. Berg, O'Connell, Angel & Andriolo, Bozeman, Ben E. Berg, Jr. argued, Bozeman, for respondent. DALY, Justice. This is an action by plaintiff Heckman and Shell, a partnership, against Frederick Wilson, defendant, arising out of a cattle raising venture agreement. The cause was tried by the district court of Gallatin County, the Hon. Jack D. Shanstrom presiding, without a jury. From a judgment in favor of defendant the plaintiff appeals. Don Heckman, Vern Heckman, and Clarence P. Shell comprise a partnership, plaintiff herein, that manages cattle ranches in Idaho, Nevada and Montana. Defendant Frederick Wilson is a Spokane realtor who has periodically invested in cattle raising operations. The partnership leased the Flying D Ranch consisting of approximately 120,000 acres in Gallatin and Madison Counties, Montana, for a term extending from 1958 to 1968, to pasture and raise cattle. During the term of the lease Clarence Shell who had been in the cattle business most of his life, managed the Flying D Ranch. After December 1963, two herds of cattle were pastured on the Flying D Ranch, one belonging to the partnership, the other belonging to Frederick Wilson. This venture is the subject of this action. In 1963 Wilson arranged to purchase a herd of cattle located in a feed lot in Three Forks, Montana. The sale was contingent upon Wilson locating lands upon which to pasture the cattle. At noon on December 4, 1963, Wilson and one Zucker, who assisted Wilson in purchasing the herd, arrived at the Flying D Ranch and spent the remainder of the day with Shell viewing the ranch and discussing a pasture agreement. Late that afternoon Shell drove Wilson and Zucker to the Gallatin County airport. Shortly before departing Wilson and Shell executed an agreement prepared by Wilson's attorney. Several minor changes were made in the agreement, in pencil, by the parties. This agreement reads as follows: The parties operated pursuant to the agreement during 1964, starting with a base herd of 224 head. Wilson received 93 heifers as his share and paid $25 per head for winter feeding. Financial problems arose thereafter and several adjustments as to feed costs and the number of cattle to be pastured were agreed upon by the parties. During the winter of 1965, a portion of Wilson's calves was fed at the Three Forks feed lot. Wilson offered $25 per head for the cost of that feeding as provided in his contract, but was refused and the partnership threatened to impose an "agister's lien" for the feed lot cost and under such circumstances Wilson paid the feed lot price. In the summer of 1966, the partnership was advised by their accountant that the arrangement with Wilson was not producing a profit and was sustaining a loss under the current payment schedule. This was due in part to the large number of bulls, dry cows and young heifers which resulted in a lower calf production. The partnership offered to buy Wilson's cattle but he declined. In February 1967, the partnership members, their attorney and accountant met with Wilson in Grangeville, Idaho. Tentative agreement was reached relating to contract changes in regard to Wilson paying additional money for the feeding of the bulls, dry cows and young heifers and calves. The partnership also wanted the clause requiring proof of death by *1144 production of branded hides struck from the existing contract. Upon his return to Spokane Wilson had his attorney prepare a memorandum of proposed changes in the contract, but did not include any change in the proof of death clause. This document was forwarded on February 20, 1967 by Wilson's attorney to the partnership attorney, with instructions that it be executed by all of the parties. The evidence is in dispute between Shell and Wilson as it concerns the details of the transaction thereafter, but it was established that the document remained in Shell's possession and was never signed by the partnership. Shell claims it was taken on April 28th from Shell's wife, without his consent. Wilson testified he met Shell in the Belgrade Lounge on the 27th or 28th of April, 1967 and that Shell was drinking and no business was transacted; the following morning they met for breakfast; Shell gave Wilson his vehicle and instructed him to go to his home and get the unsigned document. The reason for not signing being the partnership wanted the proposed changes in the contract to include removal of the death loss clause. The cattle remained on the Flying D until the fall of 1968, when the contract terminated. The partnership billed Wilson for feeding nonproductive animals, but Wilson refused payment. Wilson also claimed loss for missing bulls, etc. Wilson's cattle were sold and the partnership threatened an "agister's lien" if $70,000 was not placed in escrow pending the settlement of accounts. This was done and the present suit brought in the district court for an equitable accounting. The partnership's complaint alleged as follows: Count I sought reformation of the agreement for fraud or mistake. Count II sought rescission of the agreement, but this count was dismissed as the agreement terminated before trial. Count III sought a dissolution of the agreement as a joint venture and requested an accounting. Counts IV, V, and VI alleged breach of the agreement for failure to make required payments for pasturing of the cattle, and sought damages in the sum of $60,269.80. Defendant brought two counterclaims based upon the cattle raising agreement: Count I alleged a failure to account for all cattle and bulls, and sought damages of $23,865. Count II alleged a failure to properly care for the cattle, and sought damages in the sum of $51,480. The court, sitting without a jury, entered findings of fact and the following conclusions of law: *1145 The partnership appeals from the final judgment and presents the following issues on appeal: 1. The trial court erred in failing to find that Heckman and Shell, a partnership, and Frederick Wilson agreed to operate as a joint venture, and are, therefore, bound to equitably account to each other. 2. The trial court erred in failing to find that the written agreement dated December 4, 1963, was modified by subsequent oral agreements and that Wilson must respond to the partnership for his failure to perform thereunder. 3. The trial court erred in failing to find that the written agreement between Wilson and the partnership dated December 4, 1963, was modified by a subsequent written agreement whereby Wilson must respond to Heckman and Shell for his failure to perform thereunder. 4. The trial court erred in failing to find that the agreement between Frederick Wilson and Heckman and Shell, a partnership, dated December 4, 1963, should be revised because of the fraud or mutual mistake of the parties or the mistake of Heckman and Shell, which Wilson knew or suspected. 5. The trial court judgment as a result was in error. Issue No. 1. Was the contract a joint venture and are the parties bound to equitably account to each other? The appellant partnership attempts to harmonize the contract here being considered with the guidelines this Court applied to joint ventures in Rae v. Cameron, 112 Mont. 159, 168, 114 P.2d 1060. In Rae the Court first declares it to be a matter of intent between the parties which is "determined in accordance with the ordinary rules governing the interpretation and construction of contracts." (Emphasis added.) The Court further said: And further, the relationship "`may be inferred from the conduct of the parties * * *.'" Appellant partnership attempts to use both guidelines to construe the written contract which is contradictory on its face. In the process they attempt to use parol evidence by Shell concerning a conversation had, when the contract was executed at the airport on December 4, 1963. This conversation concerned an agreement to modify at a future date, as experience would dictate, so that it would be mutually profitable. Following the appellant's argument this would, if so interpreted, modify the terms of the written contract and form a profit sharing joint enterprise. There is no merit in this argument. Appellant has no basis for converting the plain terms of this agistment contract into a profit sharing or loss bearing joint venture. The rule of statute, followed mandatorily throughout the body of contract law, is that the written contract supersedes all prior negotiations and precludes evidence that alters, contradicts, or amends its written terms. Section 13-607, R.C.M. 1947. In Davison v. Casebolt, 154 Mont. 125, 130, 461 P.2d 2, 5, this Court said: The only available theories accorded the appellant to reform this contract would lie in one of the exceptions to the parol evidence rule, under either mistake or fraud. However, before equity will intervene to correct an alleged mistake in a written instrument, the evidence of the mistake must be clear, convincing and satisfactory. Humble v. St. John, 72 Mont. 519, 234 P. 475. This standard has not been met by appellant partnership the members of which are experienced men in an area of endeavor *1146 in which they have had a lifetime association. Any statement made by Wilson to the effect that his belief that the agreement would be "mutually profitable" is devoid of misrepresentation of any nature before the law. In point is Barron v. Koenig, 80 Idaho 28, 324 P.2d 388, 394: There being no sustainable issue of fraud or mistake between the parties, the contract must be given full force and effect without regard to prior oral testimony attempting to vary the terms. The Rae case specifically requires "`a joint proprietary interest and a right of mutual control'". The contract places this interest in Wilson, in clear terms and there is no merit in appellant's argument on this point. In fact the conduct of the partnership throughout the operation of the agreement consistently evidences this understanding. Shell billed Wilson for transportation and veterinary costs for the herd. Additionally, twice appellant asserted an agister's lien against respondent's herd, during the term of the contract. The initial assertion of the lien was stated in appellant's letter of October 13, 1966 to Wilson: Again during the sale of the herd, the disbursal agreement offered in exchange for an escrow deposit contained the covenant: The legal explanation of the contractual relationship between the partnership and Wilson is an agistment agreement which follows the theory of bailment. 3 C.J.S. Animals § 16, p. 1107. The term agistment is characterized by an agreement in which one person agrees to care for and feed animals of another for a consideration, either at a named price or for the reasonable value of the services rendered. 3 C.J.S. Animals § 15, p. 1107; 4 Am.Jur.2d, Animals § 72, p. 320. Statutory authority and explanation of an agister's lien is found in section 45-1106, R.C.M. 1947. Noel v. Cowan, 80 Mont. 258, 260 P. 116; Engle v. Pfister, 127 Mont. 65, 257 P.2d 561. Issue No. 2. Was the written agreement of December 4, 1963, modified by subsequent oral agreements? In regard to this issue, appellant has alleged two additional modifications of the written agreement. The first oral modification was the oral agreement by the parties in December 1964, whereby the open heifers would require payments by Wilson of $25 per animal for winter feed and ten cents per day per animal for summer pasture. Respondent offered to make a partial payment of $2,803.58 on this obligation, but refused to make full payment of $7,051. The second modification of the original written agreement occurred at Grangeville, Idaho on February 1, 1967, at which time the parties agreed to adjust certain payments for feeding of dry cows, bulls, yearling heifers, and for the winter feeding of the respondent's share of the calves. It *1147 is alleged the only performance lacking here has been respondent's failure to pay. As we discussed under Issue No. 1, prior oral or contemporaneous statements will not be introduced in evidence to vary the terms of an express contract clear on its face and evidencing the accurate intention of the parties. Issue No. 3. Was the written agreement of December 4, 1963, modified by a subsequent written agreement? At the Grangeville, Idaho meeting on February 1, 1967, proposed modifications to increase the compensation from Wilson to the partnership were discussed and also a request was made by the partnership that the contract provision requiring them to furnish branded hides for dead animals be deleted. On February 20, 1967, a letter and proposed modifications was sent to the partnership attorney by Wilson's attorney with instructions that the modifications be signed by all parties. The modifications were never signed and the record discloses it was the refusal of Wilson to delete the clause requiring the furnishing of branded hides for dead animals by the partnership that prevented the execution. This nonaction of appellant represents a failure to accept an offer for written modification and thus no subsequent contention of adherence to it is valid. Section 13-907, R.C.M. 1947. In Ikovich v. Silver Bow Motor Co., 117 Mont. 268, 276, 157 P.2d 785, 789, this Court said: Of equal significance to the failure of acceptance is the failure of an adequate consideration to support the proposed modification. Although the attention of this Court is not addressed to the consideration of the proposed modification which was not accepted, the general rule regarding the requirement of consideration for modification of a contract is clearly stated in 17 Am.Jur.2d, Contracts § 462, p. 929. The written amendment simply proposed that the appellant continue to feed respondent's cattle for the remainder of the contract term at an increase in the price. This is nothing more than a promise to perform a previous, contractual obligation. Additionally, appellant would have Wilson give up his contract right as it concerned the hides of dead animals. Thus, any proposed consideration flows from the wrong party. As stated by this Court in Kovacich v. Metals Bank & Trust Co., 139 Mont. 449, 451, 365 P.2d 639, 640: Issue No. 4. Should the written agreement of December 4, 1963, be revised because of fraud or mistake? Here, again, the partnership complains that Wilson had superior knowledge of the cattle business and the fact that there were no provisions for feeding dry cows, bulls, yearlings, open heifers, and additions to the herd, was a fraudulent act on his part. The record does not sustain this argument. All parties seemed to be well acquainted with the cattle raising and feeding business. Shell had been doing this all his adult life. Further, the record reveals that Wilson was agreeable, without further consideration, to make adjustments after *1148 the Grangeville, Idaho conference, but the partnership refused. In Hein v. Fox, 126 Mont. 514, 520, 254 P.2d 1076, 1079, we said: From the evidence before the trial court and this Court, there was no evidence of fraud nor mistake beyond anything other than business judgment. Legal theories cannot be strained or aborted in order to extract men from their contractual commitments when they do not perform to their expectations. Upper Missouri G & T Elec. Coop. v. McCone Elect. Coop., Mont., 484 P.2d 741; Curry v. Hoven, Mont., 487 P.2d 295. Issue No. 5. This issue concerns the alleged error of the trial court's judgment and in view of our holdings on the other four issues, need not be discussed. Judgment is affirmed. JAMES T. HARRISON, C.J., and JOHN C. HARRISON, HASWELL and CASTLES, JJ., concur.