No. 12931 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1975 

MAURICE CRNCEVICH and 

NANCY L. CRNCEVICH, 

Plaintiffs and Respondents and 

Cross-Appellants, 

GEORGETOWN RECREATION CORPORATION 

and EDWARD D. DUNN, 

Defendants and Appellants. 

Appeal from: District Court of the Third Judicial District, 

Honorable James D. Freebourn, Judge presiding 

Counsel of Record : 

For Appellants : 

Radonich and Reardon, Anaconda, Montana 

John N. Radonich argued and Tim W. Reardon argued, 

Anaconda, Montana 

For Respondents: 

Hennessey and Winston, Butte, Montana 

McKeon and Skakles , Anaconda, Montana 

Gregory J. Skakles argued, Anaconda, Montana 

Submitted : September 12, 1975 

~ecided : 02.7 - , 

Filed : ' I?' 
Mr. Justice Wesley Castles delivered the Opinion of the Court. 

This is an appeal from a judgment in an action for 

collection of a promissory note and for damages arising under 

a contract for deed rendered by the district court, third judicial district, Deer Lodge County, Judge James D. Freebourn presiding without a jury. Respondents cross-appealed the district 

court's denial of attorney's fees and of damages to the property 

involved in the transaction. 

In the summer of 1966 the respondents, Maurice L. and 

Nancy L. Crncevich, negotiated the sale of a certain property 

known as the Brown Derby, a bar, motel and restaurant located 

near Georgetown Lake for $72,800. The negotiations were between 

the Crnceviches and the appellant, Edward D. Dunn. At the conclusion of the negotiations the latter signed a $20,000 promissory note on August 8, 1966, a buy and sell agreement on August 

15, 1966, and a contract for deed for deed for $52,800 on September 15, 1966. The buy and sell agreement and the contract 

for deed were signed by appellant as attorney-in-fact for a 

Georgetown Recreation Corporation. This corporation by appellant's own admission was never formed and was used only to hide 

his involvement in this transaction. 

One additional fact to this transaction was that the 

respondents did not own all the land on which the Brown Derby 

was situated. Approximately 1.9 acres was leased from the U.S. 

Forest Service. Both the buy and sell agreement and the contract 

for deed referred to this problem. The buy and sell agreement 

stated that the " * * * Sellers [respondents] have been reliably 

informed that the Forest Service is ready, willing, and able to 

trade other lands in exchange for a patent to the portion not 

owned * * *." (Emphasis added) Both the buy and sell agreement 

and the contract for deed contained provisions that would give 
appellant his expenses in effecting this trade. 

Possession of the Brown Derby was transferred and a 

third party, William Montgomery, began managing the operation. 

Montgomery also made payments on the note to the respondents 

through a Mr. Andre and payments on the contract for deed to 

the escrow agent, the Flint Creek Valley Bank in Philipsburg, 

during 1966 and 1967. The payments on both note and contract 

for deed became delinquent in 1968 resulting in a meeting between appellant, respondent and Montgomery and a $1,200 payment 

on the note. After this 1968 meeting, appellant and Montgomery 

worked out an arrangement whereby Montgomery transferred 35% of 

each days receipts to appellant in an effort to keep the payments on the note and contract for deed current. Despite this 

effort the payments again became delinquent although appellant 

did make regular interest payments on the note until the Brown 

Derby was vacated in September 1972. In the summer of 1972 respondents made another demand for payment in a meeting with 

Montgomery and received $2,000. Finally a shortage of money 

forced Montgomery to close and vacate the Brown Derby. Respondents' relatives went into possession of the Brown Derby operating 

it from November 1972 until respondents, who had returned from 

California, took over in October 1973. 

Montgomery had also been unsuccessful in effecting a 

trade of land with the Forest Service between 1966 and 1972. Instead a Mrs. Hartley had obtained the Forest Service lease for 

the 1.9 acres where the Brown Derby was located. She had then 

traded some other property which she owned to the Forest Service 

for title to the 1.9 acre Brown Derby parcel. 

This action was commenced December 20, 1972, seeking the 

amounts due and owing under the note and contract for deed, taxes, 

attorney's fees and special damages from appellants. At the time 
of trial the balance owing on the note plus interest was $17,723.83 

plus $60,176 owing on the contract for deed. Respondents amended their complaint at trial before District Judge James D. Freebourn to ask in the alternative for specific performance of the 

contract for deed or return of the land plus damages and expenses 

incurred, for breach of contract for failure to procure the Forest 

Service land, and in the alternative for relief because the appellants were guilty of anticipatory breach of contract. 

On June 28, 1974, judgment was entered for the respondents 

awarding $17,723.83 on the note and $35,000 for breach of contract 

with respect to the 1.9 acres of Forest Service land. On August 

29, 1974, Judge Freebourn amended his judgment awarding respondents " * * * $22,723.83 plus whatever is required to correct title 

to the land in dispute herein not to exceed $35,000. * * *" 

Appellant has appealed that judgment to this Court and 

respondents challenge the district court's denial of attorney's 

fees and denial of damages and costs of repairing the Brown Derby. 

These issues are presented for review: 

I. Did the district court err in finding the appellant 

liable for the balance and interest due on the promissory note 

which he executed? 

2. Was it error for the district court to refuse to 

grant respondents attorney's fees? 

3. Was it error for the district court to fail to award 

respondents the cost of repairing the Brown Derby and the cost 

of replacing various items which were part of the Brown Derby? 

As to appellant's liability on the note the district 

court specifically found: 

"That the Plaintiffs [respondents] and Defendant 

Edward D. Dunn [appellant] entered into negotiations for the purchase of the Brown Derbv * * * 

these negotiations culminated in three iGstruments-- 

a promissory note of Auqust 8, 1966; a Buy and 
for Deed of September 15, 1966. 

"That the Georqetown Recreation Corporation was 

nonexistent * * * and that Edward D. Dunn was 

the party responsible on these instruments. 

"That the promissory note of August 8, 1966, 

was qiven as a down payment for the purchase of 

the Brown Derby, and the entire principal and 

interest is now due and owinq on such note in the 

sum of Seventeen Thousand Seven Hundred Twenty-Three 

and 83/100 ($17,723.83) Dollars." (Emphasis added) 

Appellant argues that the district erred because the 

promissory note was part of a single transaction and that since 

the respondent elected to recover the land rather than specific 

performance under the contract for deed, there can be no recovery 

on the note. 

On appeal this Court must inquire only as to whether 

there is substantial credible evidence to support such a finding 

by the district court. See Richardson v. Howard Motor,Co. 163 

Mont. 347, 351, 516 P.2d 1153; State Highway Comrn. v. West Great 

Falls Flood Control and Drainage District, 155 Mont. 157, 468 P.2d 

753, and Spencer v. Robertson, 151 Mont. 507, 445 P.2d 48, and 

cases cited therein. 

To determine the intention of the parties as to the independence of these instruments the district court had this evidence before it: 

(1) The note was signed by appellant and makes no reference to any other instrument. It was executed on August 8, 

1966, in the amount of $20,000 at 7% interest. (2) The contract 

for deed makes no reference to the note. It was executed on 

September 15, 1966, in the amount of $52,800 at 7% interest. 

(3) The escrow instructions at the Flint Creek Valley Bank in 

Philipsburg made no reference to the note. (4) Both parties 

acknowledged the note was intended as a down payment. (5) Appellant took special pains to insure that respondents received all 
interest payments on the note up until September 1972, while 

showing no such concern for the payments under the contract 

for deed. We conclude that this amounts to sufficient credible 

evidence and that appellant's argument fails. 

Appellant advanced an alternative argument that a novation 

occurred during the meeting between respondents, appellant, and 

Montgomery in the summer of 1968 that released him from liability 

on the note. It appears however, that appellant failed to submit a proposed finding to the district court to the effect that 

respondents had agreed to release him from liability on the note 

and to substitute Montgomery in appellant's place. Hence appellant cannot cite the district court for error based on a finding 

which he has not requested. See Mahoney v. Lester, 118 Mont. 551, 

556, 168 P.2d 339 and cases cited therein; Bissell v. Bissell, 

129 Mont. 187, 199, 284 P.2d 264. 

Appellant also argued that the district court's findings 

were erroneous because it found appellant liable on the note as 

a surety or guarantor of the Georgetown Recreation Corporation. 

We are frankly bewildered by this claim since the district court 

specifically found that the Georgetown Recreation Corporation 

was a nonexistent fiction. Therefore we find no basis for appellant's argument and disregard it. 

As to the cross appeal by respondents for reasonable 

attorney fees provided for in the promissory note, we are particularly concerned with respondents' failure to present any proof 

to the district court on this issue. While no Montana case speaks 

directly to the case where the terms of a promissory note provide 

for the award of reasonable attorney's fees in case of a suit 

on the note, this Court did set forth the following criteria for 

the award of attorney's fees in the early case of Forrester & 

MacGinniss v. B. & M. Co., 29 Mont. 397, 409, 74 P. 1088: 
"The authorities are unanimous in holding 

that the plaintiffs are entitled to recover 

a reasonable attorney fee, and for the purpose 

of determining the amount of such fee the following rule has been laid down: 'The circumstances 

to be considered in determining the compensation 

to be recovered are the amount and character of 

the services rendered, the labor, time and trouble 

involved, the character and importance of the 

litigation in which the services were rendered, 

the amount of money or the value of property to 

be affected, the professional skill and experience called for, the character and standing in 

the profession of the attorneys. * * * The result 

secured by the services of the attorneys may be 

considered as an important element in determining 

their value.'" 

Clearly this rule is based on the assumption that evidence 

will be introduced to the trial court. 

To be sure there is a split among the states as to the 

need for proof of a reasonable attorney's fee when one is contracted for or appears on the face of a note. See 18 A.L.R.3d 

733, 736, 740. But in contested cases we are inclined to follow 

those states requiring the introduction of proof from which a 

reasonable fee may be determined. To award a fee in such a case 

without proof would be to disregard the fundamental rules of 

evidence. An award of fees, like any other award, must be based / 

on competent evidence. See Lyle v. Lyle, (Fla. 1964) 167 So.2d 

256, 257. Furthermore the proper determination of a legal fee 

is central to the efficient administration of justice and the 

maintenance of public confidence in the bench and bar. See 

Baruch v. Giblin, 122 Fla. 59, 164 SQ. 831, 833. Because of 

respondents' failure of proof the award of fees was properly 

denied. 

Respondents also find error in the district court's 

failure to award damages and costs to respondents for repairs 

and replacement of equipment connected with the Brown Derby. In 

reviewing the Judge's findings we need only determine whether 

there is substantial evidence to support them and we will not 
reverse such findings unless there is a clear preponderance of 

evidence against such findings. See Cope v. Cope, 158 Mont. 

388, 493 P.2d 336; Smith v. Krutar, 153 Mont. 325, 457 P.2d 459, 

and Spencer v. Robertson, 151 Mont. 507, 445 P.2d 48. We do not 

find the evidence clearly preponderates against the district 

court's finding. Respondents offered expert testimony based 

on inspection of the premises one day before trial and almost 

18 months after Montgomery vacated. This expert had no knowledge of the Brown Derby's condition in September 1972 or of 

its condition in 1966 leaving more than a little doubt as to its 

probative value. Even respondents' own testimony as to missing 

items was based on a view made sometime after the Brown Derby 

had been vacated in September 1972. Respondents' cross appeal 

on this issue cannot succeed based on the weak proof which they 

offered to the district court. 

One portion of the district court's award, Judge Freebourn's amended judgment of August 29, 1974, granting respondents 

" * * * whatever amount is required to correct title to the land 

in dispute herein, not to exceed $35,000. * * *" (Emphasis added) 

does trouble this Court. The land in dispute is about 1.9 acres 

in size, yet the only mention in the record concerning its $35,000 

value was a reference to Mrs. Hartley's proposed selling price 

for a 35-40 acre parcel which contained the disputed 1.9 acres. 

This is obviously insufficient proof upon which to base the award, 

and therefore we must reverse that portion of the judgment and 

remand that portion of the judgment to the district court for 

more further proceedings if necessary. Such proceedings must be 

initiated by the respondent here within thirty days of remittitur 

or shall be deemed abandoned. 

Finally we address ourselves to a few technical corrections of Judge Freebourn's finding of fact and amended judgment. 
Respondents' findings of fact VII and VIII are stricken to 

conform to Judge Freebourn's conclusion that no costs for repairs or damages for missing equipment etc. be awarded. Judge 

Freebourn's amended judgment of August 29, 1974, is also corrected 

to allow respondents to recover $17,723.83 in order to conform 

to his denial of attorney's fees to the respondents. 

The district court's judgment is affirmed. 

We concur: 

................................ 

chief Justice