No. 84-395 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1985 

JOHN 0. HEINE and NANCY HEINE, 

Plaintiffs, Counter-Defendants 

and Appellants, 

JAMES C. SEIBERT, 

Defendant, Counter-Claimant and 

Respondent. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable Charles Luedke, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

Towe, Ball, Enright 6 Mackey, Billings, Montana 

For Respondent: 

Peterson, Schofield & Leckie, Billings, Montana 

Submitted on Briefs: July 11, 1985 

Decided: August 5, 1985 

Filed: AU6 5- f 985 

Clerk 
Mr. Justice William E. Hunt, Sr . , delivered the Opinion of 

the Court. 

John and Nancy Heine appeal a judgment of the 

Yellowstone County District Court which granted them 

liquidated damages, but denied them other damages in addition 

thereto, following the sale of a business to James Seibert, 

and Seibert's subsequent default in making payments to the 

Heines. Seibert, as buyer, filed a counterclaim, seeking an 

order that the Heines, as sellers, be held responsible for 

the accounts payable of the business, inasmuch as the sellers 

were entitled to the accounts receivable upon buyer's 

default. The District Court reimbursed the buyer for monies 

paid on behalf of the business, but denied his request for 

damages to his credit and business reputation, and 

intentional infliction of emotional distress. The buyer 

appeals the judgment on his counterclaim. 

Four issues are presented by this appeal. The first 

issue is whether the liquidated damages provision in the 

parties' contract also required the sellers to assume the 

accounts payable as part of those liquidated damages. The 

second is whether the District Court order overlooked and 

should have included a finding that the sellers were 

responsible for outstanding debts of the business incurred 

under the buyer's operation of the business. The third issue 

is whether the buyer was entitled to prejudgment interest at 

the contract rate on the accounts payable which he paid after 

he defaulted. The fourth issue is whether the buyer was 

entitled to an award for damage to his credit and business 

reputation and for intentional infliction of emotional 

distress. 
We affirm issues one, three 2nd four and remand issue 

two for further proceedings. 

On October 16, 1979, the sellers entered into a valid 

written contract with the buyer. The sellers sold a business 

known as Billings Sweeping Service to the buyer at a total 

purchase price of $155,000.00. The buyer put down 

$45,000.00, and agreed to pay $2,005.00 per month for ten 

years at 94% interest. After making several monthly 

payments, the buyer failed to make the payment in June 1980, 

and went into default. The sellers made an election, 

pursuant to the contract, to retake possession of the 

business, and to keep all the payments made to date, as 

liquidated damages for the buyer's breach of the contract. 

Those payments consisted of the $45,000.00 downpayment, and 

$16,000.00 paid in monthly installments, and the business was 

returned to the sellers on August 5, 1980. 

However, a problem arose when the buyer turned the 

business back over to the sellers. While they agreed that 

the assets of the business included the accounts receivable, 

they disagreed as to who should be liable for the accounts 

payable. The sellers took the position that because those 

debts were incurred by the buyer while he was operating the 

business as a sole proprietor, he alone should retain 

liability. The buyer argued the election to take the 

business as liquidated damages meant the sellers should take 

all the business, including assets and debts. 

The District Court determined that liquidated damages 

should consist of payments received, and return of the 

assets, and on that basis, it granted the buyer's motion for 

summary judgment. 
The first error the sellers assert is that the trial 

court should not have included the accounts payable in the 

liquidated. damages awarded to the sellers. The parties ' 

contract does not specifically establish which party should 

be liable for the accounts payable upon default and surrender 

of the business by the buyer and both parties acknowledge 

that fact. 

The written buy-sell agreement executed by the parties 

contains a default provisions which was used by the Heines in 

this case. They gave written notice and after the default 

remained uncured, the agreement was terminated and Seibert 

became obligated to surrender possession under the following 

provisions of the agreement: 

"In the event of such termination, Buyer will 

surrender possession of the business and all of its 

assets thereupon immediately and peaceably and 

execute such documents and instruments as Seller 

may require to evidence of record termination of 

this Agreement and of Buyer's interest in the 

business. In such case, Seller shal.1 be entitled 

to retain all payments made hereunder as liquidated 

damages for breach of this Agreement as rental for 

the use of the business." 

In addition, the District Court referred to paragraph 19 of 

the written agreement which provided: 

"19. Buyer agrees to fully pay and perform each, 

every and all of the covenants contained herein and 

further that he will operate & and maintain said 

business in a good and workmanlike manner rendering 

full, completG, and thorough services to each of 

its customers, and Buyer further agrees that he 

will not assign any of the Seller's present 

accounts or contracts and -- that all future accounts 

and contracts -- will be kept -- with the business during 

---- the term of this agreement." (Emphasis added.) 

The District Court pointed out that the Heines contended 

that under the above-described provisi-ons of the contract, 

they have a right to repossess all of the property including 

the accounts receivable but are not obligated to pay the 

accounts payable. The District Court pointed out that 
Seibert relied upon the same contract provisions to conclude 

that both accounts payable and receivable must go together 

and fall within the proper definition of "assets" and 

"accounts" and "contracts." The District Court received 

evidence at trial in addition to the written agreement. The 

District Court pointed out that the terms "assets," 

"accounts" and "contracts" are not words or concepts having a 

one-sided meaning but a-re generic terms which in many 

instances embrace both sides of a ledger since they involve 

not only rights but responsibilities. Based upon the 

evid-ence before it, the District Court concluded that as used 

in the agreement, "accounts" and "contracts" could very well 

actually be referring to customers of the business and the 

terms of service and payment relating to customers, but in no 

event could they be interpreted to mean that they refer to 

only one side of the asset-liability relationship. The court 

therefore concluded that Seibert correctly asserted that the 

accounts receivable and accounts payable are indivisible so 

that whichever party assumes one must also receive the other. 

The District Court concluded that, in summary, Seibert is 

entitled to judgment against the Heines for the amount of all 

the business accounts payable which he had paid from funds 

other than those coming from business accounts receivable, 

whether voluntarily paid or paid through enforcement measures 

exercised by creditors. 

We conclude there is substantial evidence in the record 

to support the findings and conclusions of the District 

Court, and therefore affirm the order of the District Court 

which provided that Seibert is entitled to judgment against 

the Heines for the amount of all of the business accounts 

pagra.ble which he had paid from funds other than those coming 
from the business accounts receivable. There was no error 

here. 

The second issue, one raised by the buyer, j.s whether 

the court should have made a finding that the sellers were 

responsible for approximately $3,300.00 in debts, still owed 

by Billings Sweeping Service, which debts were incurred 

during the buyer's operation of the business. That figure 

was discussed during the trial, but apparently was overlooked 

by the court in its order. Further, the sellers did not 

address the point in their reply brief. 

It is possible the trial court considered those debts as 

within its definition of the accounts payable. However, it 

is not the role of this Court to speculate on the trial 

court's intent. Therefore, we remand to the District Court 

for a clarification concerning the d-isposition of those 

outstanding debts. 

The third issue is whether Seibert should have been 

awarded prejudgment interest on the accounts payable which he 

paid after his default, pursuant to S 27-1-211, MCA. Seibert 

asserted the that the contractual rate of interest (9.5%), 

should apply. The District Court held, and correctly so, 

that prejudgment interest under that statute applies only to 

an award of damages, and that the award in this case to 

Seibert, was one of reimbursement, not damages. Section 

27-1-211, MCA, provides, in pertinent part: 

"Right to interest. Every person who is entitled 

to recover damages certain or capable of being made 

certain by calculation . . . is entitled also to 

recover interest thereon . . .I' 

Nor does § 27-1-212, MCA, apply: 

"When -- award of interest discretionary. In an 

action for the breach of an obligation not arising 

from contract and in every case of oppression, 

fraud, or malice, interest may be given . . . . " 
The monies Seibert paid in excess of the required amounts do 

not represent a breach of any obligation on the part of the 

Heines. 

Rather, the trial court noted that the applicable 

statute was S 31-1-106, MCA, which provides that for monies 

lent or due on any settlement of accounts, the legal rate of 

interest (6%) applied, and rendered judgment thereon. No 

error. 

In the fourth issue, the buyer asserts the court erred 

in denying him damages to his business and credit reputation. 

Again, the court correctly determined that the actions of the 

sellers, in refusing to release the accounts receivable or 

refusing to accept responsibility for the accounts payable, 

were pursued through the legal process, not through self-help 

measures. There was no basis to find. an intentional tort. 

The sellers sought a hearing resulting in an injunction to 

preserve the business pending a resolution of the dispute 

between the parties. The buyer did not appear at the 

hearing, and the injunction issued in the proper course. We 

do not see how the sellers' utilization of the legal process 

constitutes a basis for damages due to the buyer. We hold 

there is no error. 

We affirm the District Court's judgment, and remand for 

clarification of the $3,300.00 debt noted above. 

Affirmed as to issues one, three and four. Remanded as 

to issue two for clarification of the $3,300.00 debt. 

We Concur: 
f 

Chief Justice