No. 95-430

IN THE SUPREME COURT OF THE STATE OF MONTANA

1996

GARY D. FINDLEY and CAROLYN FINDLEY,

husband and wife, formerly d/b/a

KINGS HILL YOUTH HOME (KHYH),

Plaintiffs and Appellants,

v.

MONTANA THIRTEENTH JUDICIAL DISTRICT

COURT, YELLOWSTONE COUNTY; YOUTH

COURT SERVICES. DIVISION OF THE

MONTANA JUDICIAL COURT, YELLOWSTONE

COUNTY,

Defendants and Respondents.

APPEAL FROM: District Court of the First Judicial District,

In and for the County of Lewis and Clark,

The Honorable Dorothy McCarter, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Patrick F. Flaherty, Great Falls, Montana

Steven T. Potts, Jardine, Stephenson, Blewett

& Weaver, P.C., Great Falls, Montana

For Respondent:

Dennis Paxinos, Yellowstone County Attorney,

Billings, Montana

Submitted on Briefs: June 17, 1996

Jl,ll,. 1 8 1996 Decided: July 18, 1996

Filed:

Clerk
Chief Justice J. A. Turnage delivered the Opinion of the Court.

Gary D. Findley and Carolyn Findley appeal a judgment of the

First Judicial District Court, Lewis and Clark County, denying

their contract claim against Youth Court Services of the Thirteenth

Judicial District Court (YCS) We affirm.

The issues are:

1 . Did the parties enter into a contract requiring YCS to pay

$41 per day or an otherwise reasonable amount in return for the

Findleys' services?

2. Did the District Court err in finding that Carolyn Findley

filled in the contract rate of $41 on October 4, 1985?

3 . Did the court err by finding that the Findleys' compensation was limited to sums paid by a non-party to the contract?

4 . Did the court err by concluding there was no evidence that

YCS ratified the contract?

5 . Did the court err by concluding that equitable estoppel

cannot apply to the facts of this case?

6 . Should this Court enter findings of fact and conclusions

of law in accordance with 5 3-2-204(5), MCA?

In 1984 and 1985, Gary and Carolyn Findley built and began

operating a foster home known as the Kings Hill Youth Home (KHYH)

in Meagher County near White Sulphur Springs, Montana. In

September 1985, YCS inquired with the Findleys about placing an

adolescent boy, B.I., as KHYH's first foster child. On October 2,

1985, YCS probation officer Warren Pearson took B.I. to KHYH to

meet with the Findleys concerning the potential placement.

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Gary Findley told Pearson that KHYH would need to charge $41

per day to care for B.I. The Findleys asked Pearson to sign a

written contract under which they would provide services to B.I.

and YCS would assure that they would be paid $41 per day. The

Findleys produced a form contract which included blank spaces for

the name of the child, the name of the party contracting with KHYH

for placement, and the rate of compensation for the placement.

Pearson testified that he signed the form contract before he

left KHYH that day only because Gary Findley insisted that Findleys

needed the form to show the "treatment team" that KHYH and YCS were

seriously considering a placement of B.I. The extent to which the

blanks on the form contract had been filled in was disputed. At

trial, Pearson testified that he signed a form contract which did

not contain a daily rate amount, a date, or other signatures. He

testified that he signed his name to a blank labeled "Representative/Title" and wrote in "Court Services" as the "Referring Agency"

on the form contract.

Pearson further testified that he explained to the Findleys

that YCS was responsible only for placement decisions for children

adjudicated as youth in need of supervision, and that the Montana

Department of Social and Rehabilitation Services (SRS) administered

reimbursement of foster care providers. He testified that he

repeatedly told the Findleys that he could not guarantee a daily

payment rate.

The Findleys testified that B.I.'s name, "13th Judicial

District Court Services" as the party contracting with KHYH, and

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11$411’ as the daily rate, had been filled in on the form contract

before Pearson signed it. The Findleys told Pearson they would

need several days to decide whether they could serve B.I. at KHYH.

Two days later, the Findleys decided to accept placement of

B.I. at KHYH. Carolyn Findley testified that after inserting the

date on the signed contract, she then mailed it to Pearson.

%.I. was adjudicated a youth in need of supervision and placed

at KHYH. When the Findleys submitted their first monthly bill for

foster care of B.I. to SRS, SRS informed them that the daily rate

for foster care services in Montana was $11.63. That daily rate

was paid to KHYH for services to B.I. through several years of

subsequent negotiations between the Findleys and SRS. B.I. stayed

with the Findleys for almost five years.

The Findleys brought this action in 1992 as a claim for

contract damages. One party defendant, SRS, obtained summary

judgment. Defendant Montana Thirteenth Judicial District Court

reached a settlement with the Findleys. YCS was the only remaining

defendant at the time of trial.

After hearing and reviewing the evidence submitted by the

Findleys and YCS, the District Court entered its findings,

conclusions, and order in favor of YCS. The court concluded that

the form contract signed by Pearson and Gary Findley was not

enforceable because it was substantially incomplete when the

parties signed it--neither the date nor the rate amount having been

filled in. From that judgment, the Findleys appeal.

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Issue 1

Did the parties enter into a contract requiring YCS to pay $41

per day or an otherwise reasonable amount in return for the

Findleys' services?

We will overturn a district court's findings of fact as

clearly erroneous only if the facts are not supported by substantial credible evidence, the district court misapprehended the

effect of the evidence, or we are left with a definite and firm

conviction that a mistake has been committed. Interstate Production Credit v. DeSaye (19911, 250 Mont. 320, 323, 820 P.Zd 1285,

1287. In reviewing conclusions of law, we determine whether the

district court's interpretation of the law was correct. Steer,

Inc. v. Department of Revenue (1990), 245 Mont. 470, 474-75, 803

P.2d 601, 603.

A contract is formed when: (1) identifiable parties capable

of contracting; (2) give their consent; (3) to a lawful object; and

(4) a sufficient cause or consideration is given. Section 28-2-

102, MCA. A contract must contain all its essential terms in order

to be binding. Riis v. Day (1980), 188 Mont. 253, 255, 613 P.2d

696, 697.

Pearson's testimony supports the finding that neither the date

nor the rate amount were filled in when he signed the contract.

The Findleys argue, however, that YCS subsequently consented to the

terms of the contract by remaining silent, accepting the benefits

of the contract, and allowing them to perform under it. They
maintain that an implied provision to make a reasonable payment

arose from Pearson's and YCS's conduct.

Pearson testified that he repeatedly informed the Findleys

that he was not able to authorize the expenditure of funds in any

amount for foster care of B.I. There was no indication that

Pearson in any way solicited the form contract; to the contrary, he

testified that he signed the incomplete form only at Gary Findley's

insistence to show the KHYH "treatment team" that there was a good

faith placement effort. Gary Findley ultimately admitted during

trial that he was aware that Pearson could not authorize any rate

of pay for the placement of B.I. He also admitted that he knew YCS

and Pearson were in charge of placement and SRS was responsible for

payment for the placement.

We conclude that the District Court's finding that neither the

date nor the rate amount was filled in when the parties signed the

form contract is not clearly erroneous. As discussed above, the

Findleys' theory that an implied provision arose is not persuasive

and was rebutted. Therefore, we hold that the District Court's

conclusion that no contract was formed is correct.

Issue 2

Did the District Court err in finding that Carolyn Findley

filled in the contract rate of $41 on October 4, 1985?

The Findleys assert there is no evidence in the record to

support the court's finding that

[t]wo days later, on October 4, 1985, the Findleys

decided that they would take [B.I.], and Carolyn filled

in the date of October 4, 1985, as well as the rate

amount of $41 a davL.1 [Emphasis supplied.1

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As discussed above, Pearson testified that neither the date nor the

daily rate amount were filled in when he signed the contract.

Carolyn Findley testified that she filled in the date on October 4.

The court apparently inferred that when Carolyn Findley filled in

the date, she also filled in the rate amount.

A trier of fact may make inferences from the evidence.

Section 26-l-501, MCA. Moreover, this finding was not essential to

the conclusion that no contract was formed between YCS and the

Findleys. We hold that the inclusion of this finding is not

reversible error.

Issue 3

Did the court err by finding that the Findleys' compensation

was limited to sums paid by a non-party to the contract?

The Findleys' characterization of this finding in the

statement of the issue is somewhat misleading. The court found

that "SRS simply had no authority, and in fact, did not, pay foster

homes more than the standard rate of $11.63 a day for each child."

The Findleys criticize this finding as extraneous.

The Findleys are correct that this finding, like the one in

Issue 2, is not essential to the court's decision. However, the

finding is clearly supported in the record, and we hold that it

does not represent reversible error.

Issue 4

Did the court err by concluding there was no evidence that YCS

ratified the contract?
"A contract which is voidable solely for want of due consent

may be ratified by a subsequent consent.'t Section 28-2-304, MCA.

In this case, the District Court concluded that "there is no

evidence that Pearson ratified the later addition of the rate

amount" to the form contract.

The Findleys point out that they have argued at least six

points as evidence that YCS ratified the contract: YCS received

the contract from the Findleys without objection and thereafter had

B.I. placed with the Findleys; Pearson observed that the Findleys

"delivered good service under the contract" and "performed their

duties;" and YCS never objected to the $41 rate to the Findleys or

anyone else--in fact, Pearson wrote to SRS and urged that the $41

rate be paid. The Findleys argue that while it may be proper for

the District Court to disregard their evidence, it was not proper

for the court to conclude that there was no evidence of ratification.

Ratification must be accomplished by one with the power to

ratify. No such power has been demonstrated on the part of YCS

under the facts of this case. The evidence offered by the Findleys

is not inconsistent with YCSls position that it had no authority to

agree to pay any amount for foster care services. Pearson's

promise to the Findleys "to do the very best I could with SRS to

secure the requested rate" did not commit any agency to pay the

requested rate. Nor did his support for the Findleys in their

efforts to obtain $41 per day for foster care commit any agency to

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pay that amount. None of the evidence offered by the Findleys

establishes consent by YCS to pay the rate they demanded.

We hold that the District Court did not err in concluding that

there was no evidence that YCS ratified the contract.

Issue 5

Did the court err by concluding that equitable estoppel cannot

apply to the facts of this case?

The elements of equitable estoppel are: (1) conduct amounting

to a representation or concealment of material fact; (2) these

facts were known to the party estopped at the time of the conduct,

or circumstances were such that knowledge is imputed; (3) the truth

was unknown to the party claiming the benefit of estoppel when that

party acted; (4) the conduct was done with the intention or the

expectation that it would be acted upon by the party claiming

estoppel or under such circumstances that it was both natural and

probable that it would be so acted upon; (5) the conduct was relied

upon by the party claiming estoppel, who was led to act upon it;

and (6) the party claiming estoppel relied upon the conduct so as

to change his position for the worse. Mellem v. Kalispell Laundry

(1989), 237 Mont. 439, 442, 774 P.2d 390, 392.

The District Court concluded that equitable estoppel did not

apply because the evidence established that the Findleys knew after

one month that they would be reimbursed only in the amount of

$11.63 per day for foster care of B.I. Instead of terminating

their foster care relationship with B.I., they continued for nearly

five years with no assurance that they would ever receive more than

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the standard rate for foster care. The court's conclusion

describes a failure of proof as to element 3 above. Nor did the

Findleys establish element 1, misrepresentation or concealment of

material fact, given the evidence that Pearson informed them from

the very beginning that he had no authority to commit to a payment

rate. We hold that the court did not err in concluding that the

Findleys cannot recover on a theory of equitable estoppel

Issue 6

Should this Court enter findings of fact and conclusions of

law in accordance with § 3-Z-204(5), MCA?

This argument by the Findleys hinges upon their contention

that the District Court made erroneous findings of fact and

conclusions of law. They contend that because this is an equity

case, this Court may substitute its own findings and conclusions

and thus eliminate the need for rehearing on remand.

Because we have upheld the rulings of the District Court under

all challenges here raised, we need not discuss this issue further.

We affirm the decision of the District Court.

We/concur: