NO. 93-527 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

BECKY BEE BLAKELY, Trustee for Blakely 

Farms, a Wyoming Trust, 

Plaintiff and Appellant, 

v. 

REIDAR E. KELSTRUP and 

DELORES J. KELSTRUP, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Larry W. Moran, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Eric Rasmusson, Boulder, Montana 

For Respondents: 

Terry Schaplow, Bozeman, Montana 

Filed: 

Submitted on Briefs: September 8, 1994 

Decided: October 13, 1994 
Chief Justice J. A. Turnage delivered the Opinion of the Court. 

Becky Bee Blakely, as trustee for Blakely Farms, a Wyoming 

trust, appeals from a decision of the District Court for the 

Eighteenth Judicial District, Gallatin County. That court 

dismissed, without prejudice, her complaint for forcible detainer, 

ejectment, wrongful occupation, and reentry. We vacate and remand 

for further proceedings consistent with this Opinion. 

The issue is whether the District Court erred in dismissing 

the complaint. 

In 1976, Yolanda Blakely entered into a contract for sale of 

real estate in Gallatin County, Montana, to Reidar and Delores 

Kelstrup, husband and wife. The total purchase price was $220,000. 

Blakely acknowledged payment by the Kelstrups of $40,000 of this 

amount upon execution of the contract. Under the contract, the 

Kelstrups were to pay the remainder of the purchase price in yearly 

installments of $13,000 on January 5 of each year. 

In November 1988, the District Court awarded Blakely judgment 

of $26,000 for annual payments due but not paid on the contract in 

January of 1987 and 1988. The court also ruled that the parties 

had agreed to an increased interest rate on the contract. However, 

the court decreed that the annual payment would remain at $13,000 

and the increased rate of interest would be included in a balloon 

payment at the end of the contract. 
In April 1993, Blakely assigned her interest in the contract 

to her daughter, Becky Bee Blakely, trustee for Blakely Farms. 

Becky Bee immediately filed this action against the Kelstrups. The 

complaint alleged that the Kelstrups defaulted on the contract by 

failing to make the payment due on January 5, 1990. It further 

alleged that in June 1990 Blakely gave the Kelstrups notice of 

default, and on December 30, 1991, Blakely gave the Kelstrups a 

three-day notice to vacate the property, with which the Kelstrups 

did not comply. The complaint stated the Kelstrups have defaulted 

on the contract and that they, "by fraud, force, or by menaces and 

threats of violence unlawfully hold and keep possession of the 

Property." The complaint also included counts charging the 

Kelstrups with wrongful and unlawful ouster and ejectment, and 

wrongful occupation of the property pursuant to 5 27-1-318, MCA. 

The relief requested included forfeiture of any interest held by 

the Kelstrups in the property. 

Reidar Kelstrup died in May 1993. In August of that year, the 

District Court granted Delores Kelstrup's motion to dismiss the 

complaint. In a memorandum explaining the ruling, the court 

stated: 

In event of [the Kelstrups'] default under the contract 

involved in this matter, [Blakelyl's exclusive remedy is 

to foreclose [her] interest in a mortgage foreclosure 

proceeding. The action brought by [Becky Bee] is not the 

remedy which the contract provides, and therefore must be 

dismissed. 
Becky Bee appeals. 

Did the District Court err in dismissing the complaint? 

Our standard of review in an equity case such as this one is 

set forth at 5 3-2-204(5), MCA: 

[Tlhe supreme court shall review all questions of fact 

arising upon the evidence presented in the record, 

whether the same be presented by specifications of 

particulars in which the evidence is alleged to be 

insufficient or not, and determine the same, as well as 

questions of law, unless for good cause a new trial or 

the taking of further evidence in the court below be 

ordered. 

Under this Court's equitable jurisdiction, "[w]e have a duty to 

determine all of the issues of [the] case and to do complete 

justice." Peterson v. Montana Bank of Bozeman (1984), 212 Mont. 

The contract between Blakely and the Kelstrups provided: 

In the event that [the Kelstrups] shall be in 

default in making any payment of principal or interest as 

herein specified . . . or shall fail in other respects to 

keep and perform the covenants and agreements herein 

contained for a period of thirty (30) days, then in that 

event, [Blakely] shall be entitled to declare [the 

Kelstrups] in default under the terms of this contract by 

giving [the Kelstrups] written notice by registered mail, 

which notice shall state the particulars in which [the 

Kelstrups] are in default, and unless [the Kelstrups] 

shall cure such default within ninety (90) days from the 

date of mailing this notice, then in that event, the 

whole amount of the balance of the purchase price of said 

property shall thereupon become due and payable at the 

option of [Blakely], and the equity of [the Kelstrups] in 

said real estate may be foreclosed and their interest in 

said real estate sold under foreclosure proceedings 

applicable to the foreclosure of mortgages; or [Blakelyl 
shall, at her option, be released from all obliaation in 

law or equitv to convev said pro~ertv and rthe Kelstrupsl 

shall forfeit all ricfht thereto, and all improvements and 

payments made hereunder shall be taken and considered as 

rent and liquidated damaaes and as a part of the consideration for enterina into this aareement. [Emphasis 

added. ] 

The contract clause underlined above plainly states that 

forfeiture of the Kelstrups' interest in the property is available 

as an alternative to foreclosure as a remedy for default, at 

Blakelyts option. Therefore, we conclude the District Court erred 

in ruling that foreclosure was the exclusive remedy allowed under 

the contract between Blakely and the Kelstrups. 

In their briefs on appeal, the parties argue whether the 

causes of action which were pled in the complaint may be applied to 

these facts. In the absence of rulings on these matters by the 

District Court, we decline to address those issues at this time. 

However, it appears to the Court that the provision of 5 28-1- 

104, MCA, concerning relief from forfeiture may apply to this case. 

In pursuit of our duty to do complete justice in equitable matters, 

we provide the following discussion on the applicability of that 

statute. 

Section 28-1-104, MCA, provides: 

Whenever by the terms of an obligation a party thereto 

incurs a forfeiture or a loss in the nature of a forfeiture by reason of his failure to comply with its provisions, he may be relieved therefrom upon making full 

compensation to the other party, except in case of a 

grossly negligent, willful, or fraudulent breach of duty. 
In discussing this statute, which has been a part of the law of 

Montana since 1895, this Court has stated: 

The intention of the law under this statute is that a 

forfeiture should not be needlessly enforced. The courts 

have established that as the policy of the law in the 

absence of statute. The rule as it has found expression 

in court decisions generally is that both in law and in 

equity forfeitures are abhorred. 

Yellowstone County v. Wight (l944), 115 Mont. 411, 417-18, 145 P.2d 

516, 518. A contract which requires forfeiture in case of default 

does not divest a court of equity of its power to relieve a party 

from the consequences of his default. Sharp v. Holthusen (1980), 

189 Mont. 469, 474, 616 P.2d 374, 377. 

The briefs filed with this Court and the pleadings filed in 

the District Court establish that, in addition to their $40,000 

down payment, the Kelstrups made at least eleven annual payments on 

the contract with Blakely, in the amount of $13,000 each. This 

payment of a substantial portion of the contract price mitigates 

against forfeiture and supports the application of 5 28-1-104, MCA, 

to this case. See Kovacich v. Metals Bank and Trust Co. (1961), 

139 Mont. 449, 365 P.2d 639 (a party seeking application of 5 28-1- 

104, MCA, must set forth facts which will appeal to a court of 

equity). 

Before a party will be granted relief from forfeiture under 

5 28-1-104, MCA, the party must offer to make full compensation 

under the contract and the claim for relief from forfeiture must be 
pled as an affirmative defense. Masser Cattle Co., Inc. v. Reese 

(1985), 216 Mont. 22, 699 P.2d 87. It appears these two requirements also have been met in this case. First, Becky Bee has not 

refuted Kelstrupls assertion that she has offered to make full 

payment on the contract but that this offer has been rejected. 

Second, the Kelstrupsl answer to the complaint against them 

included an affirmative defense that Itplaintiff seeks a forfeiture 

of a real estate contract, which is disallowed by law." 

Finally, in determining whether 5 28-1-104, MCA, should be 

applied to this case, findings must be made as to whether the 

Kelstrups' failure to comply with the contract terms constituted a 

"grossly negligent, willful, or fraudulent breach of duty." 

Ponderosa Pines Ranch, Inc. v. McBride (1982), 197 Mont. 301, 303, 

642 P.2d 1050, 1052. The record has not been developed on this 

issue. 

We hold that the District Court must specifically address the 

issue of forfeiture and the application of 5 28-1-104, MCA, to this 

case. We vacate the order of dismissal entered by the District 

Court and remand for further proceedings consistent with this 

Opinion. 
We concur: 
October 13. 1994 

CERTIFICATE OF SERVICE 

I hereby certify that the following certified order was sent by United States mail, prepaid, to the 

following named: 

Eric Rasmusson 

Attorney at Law 

P.O. Box 587 

Boulder, MT 59632 

Terry Schaplow, Esq. 

Attorney at Law 

1700 West Koch, Suite 11 

Bozeman, MT 59715 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF MONTANA