NO. 87-473 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1988 

L. R. BRETZ, 

Plaintiff and Appellant, 

-vsMILAN R. AYERS, MILAN R. AYERS, Personal 

Representative of the Estate of YVONNE 

AYERS, SHIRLEY M. BROWN, RICHARD C. PACHEK, 

ZOLLIE KELMAN, GEORGE L. CAMPANELLA, et al. 

Defendants and Respondents. 

APPEAL FROM: District Court of the Ninth Judicial District, 

In and for the County of Pondera, 

The Honorable R.D. McPhillips, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

L. R. Bretz, Pro Per, Billings, Montana 

For Respondent : 

Conklin, Nybo & LeVeque; William Conklin, Great Falls, 

Montana 

Graybill, Ostrem, Warner & Crotty; George R Crotty, 

Great Falls, Montana 

Anderson, Beatty & Lee; Drawer D, Shelby, Montana 

Douglas Anderson, County Attorney, Conrad, Montana 

William Sherman, Conrad, Montana 

Submitted on Briefs: April 7, 1988 

Decided: May 24, 1988 

Filed: MAY 2 4 1988" 

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

the Court. 

Plaintiff, L. R. Bretz, appeals the decision of the 

Ninth Judicial District Court, Pondera County, to convert 

defendants', Milan R.. Ayers; Milan R. Ayers, personal 

representative of the Estate of Yvonne Ayers; Shirley M. 

Brown; Richard C. Pachek; Zollie Kelman; George L. 

Campanella; George R. Crotty, Jr. ; Ayers Oil and Gas, Inc. ; 

Paul A. Fink; Evelyn Kelman; Sidney Kelman; Sol Berkowitz; 

John F. Pachek; Kenneth K. Knight; Lynn M. Seelye; Gene D. 

Todd; Eugene S. Hufford; William N. Walden; Russel Walden; 

World Wide Petroleum and Exploration Co.; Roger F7. Kornder; 

The Village Bank; Petrox Petroleum Co.; Graybill, Ostrem, 

Warner & Crotty; Jerry Joy; Pati J. O'Reilly; ~unkermier, 

Clark, Stevens, & Campanella; and Thornton G. Dewey 

[defendants], motions to dismiss on a quiet title action into 

a summary judgment for the defendants. We affirm. 

The following issues are raised on appeal: 

1. Whether the District Court erred when it converted 

motions to dismiss, Rule 12 (b) (6) , M.R.Civ.P., into motions 

for summary judgment, Rule 56, M.R.Civ.P.? 

2. Whether the District Court erroneously made findings 

of facts contrary to the evidence? 

3. Whether the District Court erred when it dismissed 

this action with prejudice? 

On July 25, 1973, Milan R. Ayers and Thornton G. Dewey 

formed an equal partnership for purposes of dealing in oil, 

gas and other-minerals. The partnership agreement specifically stated that the "partnership and Dewey's relationship 

thereto remain as secret and silent as possible, and that 

business affairs he carried on in the name of MILAN R. AYERS 
.... " On January 21, 1980, Ayers acquired for the partnership, but in his own name, a 320 acre oil and gas lease 

located in Pondera County, known as the Aakre lease. Ayers 

and Dewey dissolved their partnership on December 22, 1980. 

Neither the partnership agreement nor the dissolution of the 

partnership agreement were recorded. 

The plaintiff-appellant, Bretz, brought this action in 

July, 1985, to quiet title to a 21.875% working interest in 

the Aakre lease. Bretz claims part of this interest by 

relying upon an assignment of 97% of Dewey's supposed 21.875% 

working interest. Bretz recognizes that defendant Shirley M. 

Brown received an interest in the Aakre lease, but argues 

that she did not receive the entire interest to the lease, 

but rather only Ayers' 50% interest. Bretz argues that the 

partnership agreement, which gave each partner equal rights 

in the management of the partnership, and the dissolution of 

the partnership agreement between Ayers and Dewey established 

that Dewey was an owner of record of 50% of the Aakre oil and 

gas lease. Bretz further argues that even though the 

partnership agreement and the dissolution agreement were not 

recorded, the defendants knew of Dewey's 50% interest and 

therefore had the requisite notice that would bar the 

defendants from purchasing Dewey's 50% interest from Ayers. 

The defendants brought motions to dismiss under Rule 

12 (b) (6) , M.R.Civ.P. In response to these motions to dismiss, Bretz attached eleven documents to his brief opposing 

those motions to dismiss and argued the contents of those 

documents throughout his brief. The District Court deemed 

the defendants' motions to dismiss as motions for summary 

judgment and found that Bretz's quiet title action is barred 

by the statutes of limitations set forth in §5 70-19-401 and 

-402, MCA. Bretz appeals. 
The first issue raised on appeal is whether the District 

Court erred by converting defendants' motions to dismiss 

under Rule 12(b)(6) into motions for summary judgment? Bretz 

alleges that summary judgment was not appropriate in this 

instance because he was not given reasonable opportunity to 

present all material pertinent to the case and further that 

genuine issue of material fact exists. We disagree. 

The applicable rule in this instance is Rule 12(b), 

M.R.Civ.P., which states: 

[ilf, on a motion asserting the defense numbered 

(6) to dismiss for failure of the pleading to state 

a claim upon which relief can be granted, matters 

outside the pleading are presented to and not 

excluded by the court, the motion shall be treated 

as one for summary judgment and disposed of as 

provided in Rule 56, and all parties shall be given 

reasonable opportunity to present all material made 

pertinent to such motion by Rule 56. 

The language found in Rule 12 (b) and 12 (c) addressing converting the respective motion to dismiss and motion for 

judgment on the pleadings into a motion for summary judgment 

are identical. Likewise, the result is identical when matters beyond the pleadings are presented and considered by the 

court. In both cases, the motion shall be treated as one for 

summary judgment and disposed of as provided in Rule 56. See 

Clayton by Murphy v. Atlantic Richfield Co. (Mont. 1986), 717 

P.2d 558, 560-61, 43 St.Rep. 717, 719; Matthews v. Glacier 

General Assurance Co. (1979), 184 Mont. 368, 375, 603 P.2d 

232, 236-37. 

In this instance, Bretz attached eleven documents to his 

brief opposing defendants' motions to dismiss. The record 

reveals that the court considered these documents and did 

nothing to exclude any material presented to it. The court 

thus converted the motions to dismiss into motions for summary judgment. Bretz did not appear for the oral hearing and 
now claims that he did not have a reasonable opportunity to 

present material pertinent for a motion for summary judgment. 

This Court has not previously considered when a party 

has a reasonable opportunity under Rule 12(b) to present 

material pertinent for a motion for summary judgment, 

however, the Court of Appeals for the Ninth Circuit addressed 

this issue in Grove v. Mead School Dist. No. 354 (9th Cir. 

1985), 753 F.2d 1528. In Grove, the plaintiff submitted 

matters outside the motion to dismiss and invited 

consideration of them by the court. The court held that a 

formal notice that the court intended to treat a motion to 

dismiss as a motion for summary judgment was unnecessary 

under these circumstances because the party is "fairly 

apprised" that the court will look beyond the pleadings. 

Grove, 753 F.2d at 1532-33. Likewise, Bretz himself 

introduced the extra documents and invited a consideration of 

them by the court. Bretz thus was "fairly apprised" that the 

court could treat the motions to dismiss as motions for 

summary judgment. We hold that in this case Bretz, by his 

own actions, had a reasonable opportunity to, and did, 

present pertinent material to the court. 

Bretz also argues that genuine issue of material fact 

exists because he contends that all defendants knew of the 

partnership, its dissolution, and the agreement between Ayers 

and Dewey regarding Dewey's interest in the lease. In ordering summary judgment for the defendants, the District Court 

first recognized that a lessee's interest in an oil and gas 

lease constitutes an interest in real property, Stokes v. 

Tutvet (1958), 134 Mont. 250, 255, 328 P.2d 1096, 1099; Rist 

v. Toole County (1945), 117 Mont. 426, 428-29, 159 P.2d 340, 

343; Willard v. Federal Surety Co. (1932), 91 Mont. 465, 472, 

8 P.2d 633, 635, and that under §§ 70-19-401 and -402, MCA, a 

quiet title action to real property cannot lie unless "the 
plaintiff, his ancestor, predecessor, or grantor was seized 

or possessed of the property in question within 5 years 

before the commencement of the action" (Emphasis added.) 

Section 70-19-401, MCA. The District Court then found that 

Dewey, and thus Bretz, were complete strangers to the record 

title of the Aakre oil and gas lease and thus barred by the 

statutes to bring a quiet title action. 

In making this finding, the court first noted that 

possession of an oil and gas lease is established only by 

undertaking oil and gas operations upon the land covered by 

such lease, see Lehfeldt v. Adams (1956), 130 Mont. 395, 400, 

303 P.2d 934, 937, and that Bretz never alleged and no evidence exists that either Dewey nor himself ever undertook oil 

and gas operations under the Aakre lease. The court next 

examined whether Bretz or his predecessor in interest, Dewey, 

were seised of the oil and gas lease within the five-year 

period required by the statutes. As the court recognized, 

"seisin" is defined by this Court as "perfect and complete 

title." Stephens v. Hurly (1977), 172 Mont. 269, 274, 563 

P.2d 546, 549-50. The court found that both Dewey and Bretz 

were complete strangers to the record title of the Aakre oil 

and gas lease and thus were not seised of the lease. The 

court based this finding on paragraphs 4 and 6 of the dissolution agreement. Paragraph 4 of the dissolution agreement 

states: 

Milan R. Ayers shall have and own, and Thornton G. 

Dewey hereby sells, conveys, assigns, and transfers 

unto Milan R. Ayers subject to the provisions of 

paragraph 6 hereof, all of his interest in and to, 

all of the remaining oil and gas properties of the 

partnership in the State of Montana not being 

sold . . . , which oil and gas properties shall 

include . . . those oil and gas properties generally set forth and described on exhibit C [the Aakre 

oil and gas lease was set forth in exhibit C]. As 

part of the consideration therefor, Ayers agrees to 
assume and to pay and all remaining debts of 

the partnership arising from the oil and gas operation in Montana . . . and Ayers hereby specifically 

agrees to hold Dewey free and harmless from any and 

all damages, loss, or expense of any kind 

whatsoever which Dewey might suffer from 

non-payment of said debts by Ayers. 

Paragraph 6 of the same agreement states: 

Ayers hereby covenants and agrees with Dewey to 

give, grant, and assign to Dewey 3 of any interest 

retained by Ayers in the properties discribed [sic] 

on exhibit C, provided, however, that in the case 

of a working interest retained by Ayers, Dewey's 4 

interest therein shall be converted to a "carried 

working interest," carried free of all costs in the 

ratio of 4 to 1.. . . 

The court found that paragraph 4 of the dissolution agreement constituted a present conveyance by Dewey to Ayers of 

all of Dewey's interest in the partnership's oil and gas 

properties, and that paragraph 6 constitutes an executory 

promise to convey the described interest in the future. The 

court concluded that neither Dewey nor Bretz were seised of 

the oil and gas lease within the five-year period as required 

by the statutes. The court thus entered summary judgment for 

the defendants. 

We hold that the District Court accurately accounted for 

the facts and applied the appropriate law. Paragraph 4 of 

the dissolution agreement clearly indicates that Dewey 

conveyed all of his right, title, and interest in the 

partnership assets to Ayers. Paragraph 6 merely imposes upon 

Ayers, at some time in the future, an obligation to convey to 

Dewey a small "carried working interest" of any interest 

Ayers might retain in the property. Bretz's argument that 

the defendants knew of the partnership between Ayers and 

Dewey, its dissolution, and any supposed interest Dewey held 

is irrelevant, since Ayers did not retain the Aakre lease and 
Dewey did not retain a 21.875% interest in the Aakre lease. 

The District Court correctly found that no genuine issue of 

material fact existed and properly entered summary judgment 

for the defendants. 

The second issue Bretz raises on appeal is whether the 

District Court erroneously made findings of facts contrary to 

the evidence. Bretz argues that the District Court overlooked the language in the dissolution agreement, specifically paragraph 6. According to Bretz's interpretation of the 

dissolution agreement, Dewey conveyed all his 50% interest to 

Ayers in paragraph 4 and Ayers reconveyed a 50% interest to 

Dewey in paragraph 6. 

As we have noted above, the District Court carefully 

examined the partnership and dissolution agreements. The 

court made findings of facts consistent with the language of 

the dissolution agreement. When interpreting a contract, the 

contract "must receive such an interpretation as will make it 

lawful, operative, definite [and] reasonable . . . ," 

S 28-3-201, MCA, and "[rJepugnancies in a contract must be 

reconciled, if possible, by such an interpretation as will 

give some effect to the repugnant clauses, subordinate to the 

general intent and purpose of the whole contract." Section 

28-3-204, MCA. Bretz's interpretation would render both 

paragraphs meaningless, since the effect of his 

interpretation would nullify each paragraph and place each 

party in their original 50-50 position. Such an 

interpretation of the two paragraphs is repugnant and not 

favored by our statutes. In finding that paragraph 4 of the 

dissolution conveyed a present interest and paragraph 6 

constituted an executory promise to convey the described 

interest in the future, the District Court interpreted these 

paragraphs of the dissolution agreement so as to give effect 
to both paragraphs. We thus hold that the District Court 

made findings of facts consistent with the evidence. 

The third issue raised by Bretz on appeal is whether the 

District Court erred when it dismissed this action with 

prejudice. Bretz contends that when a statute of limitations 

is the basis for dismissing an action, then the action should 

not be dismissed with prejudice when the passage of time 

obviates the defense. Rretz thus argues that even if the 

District Court correctly found that his predecessor in title, 

Dewey, did not have "constructive seisen" for five years 

prior to filing the complaint, he nonetheless should have 

been entitled to refile and start again. 

Bretz's basic contention is not applicable in this 

instance. As previously noted, $ 70-19-401, MCA, requires 

that Bretz or Dewey be possessed or seised of the Aakre lease 

within five years before the commencement of the action. The 

District Court found, and the record and evidence supports, 

that neither Bretz nor his predecessor in interest, Dewey, 

were seised of the Aakre lease at the time Rretz brought the 

quiet title action or at any time prior to the bringing of 

the action. The mere passage of time will not cure this 

defect and thus bars Bretz from refiling a quiet title 

action. If Bretz, however, obtained title to an interest in 

the lease in the future through a new assignment executed by 

someone having title and his new title was not recognized, 

Bretz could then commence a new action to quiet title. But 

that is not the case here. We hold that under the present 

set of facts the District Court did not err when it dismissed 

this action with prejudice. P 

We affirm. 
//chief Justice 

Justices 

4. *