No. 79-52 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

SEVEN SEAS IMPORT-EXPORT & MERCANTILE, 

INC. , a Mont. Corp. , 

Plaintiff and Appellant, 

HANDEE FOODS, INC., a Mont. Corp., and 

FREDERICK W. KRIEGER, Individually, 

Defendants and Respondents. 

.1 from: District Court of the Fourth Judicial District, 

In and for the County of Missoula, The Honorable 

James B. Wheelis, Judge presiding. 

Counsel of Record: 

For Appellant: 

Raymond W. Brault, Helena, Montana 

For Respondent : 

Tipp, Hoven & Skjelset, Missoula, Montana 

Submitted on Briefs: October 9, 1980 

Decided : JAB 14 ma 

Filed: JAR 1 4 TPir 
Mr. Justice Gene B. Daly delivered the Opinion of the Court. 

Seven Seas Import-Export & Mercantile, Inc., appeals a 

summary judgment granted by the District Court of the Fourth 

Judicial District, Missoula County, the Honorable James B. 

Wheelis presiding, in favor of Handee Foods, Inc., and 

Frederick W. Krieger. 

On August 25, 1978, appellant filed suit alleging three 

claims for relief. Each claim was based on a constable's 

sale, on May 29, 1974, of goods left at a warehouse owned by 

Handee Foods, Inc., and rented to Raymond Brault, president 

of Seven Seas Import-Export & Mercantile, Inc. 

Brault rented a portion of the warehouse from respondent in 1973. He apparently needed the space to store 

specified types of fiberglass insulation to be used in the 

construction of metal buildings. 

Appellant alleges that in March 1974 it became necessary to terminate the rental agreement with Handee Foods to 

allow appellant's performance on certain other contract 

matters outside the state. Seven Seas at this time was in 

arrears in rental payments amounting to approximately $896. 

Appellant further alleges that Brault wrote to respondent, advising it of the situation and giving respondent a 

quantity of the insulation stored in the warehouse equal in 

wholesale price to the amount of rent owing. The balance of 

the insulation was then allegedly sold by appellant to 

various other business concerns which were told they could 

obtain their respective quantities at respondent's warehouse. 

Respondent was allegedly informed of the other purchasers and was to release the insulation when they came to 

pick it up. Appellant contends, however, respondent refused 

to release the insulation, laid claim to the entirety of the 
stored insulation, and then improperly sold it, retaining 

the proceeds. 

~espondent, by way of answer, denied being contacted by 

Brault as to his need to terminate the rental agreement; 

denied accepting any quantity of insulation as payment of 

appellant's rent; denied being informed of the sale of the 

balance of the insulation to other business concerns; and 

denied that any purchasers came to pick up their respective 

quantities. Respondent then admits selling the insulation 

stored in its warehouse for nonpayment of rent by appellant. 

After the complaint was filed, appellant served various 

interrogatories on respondent. Respondent, in answering 

them, revealed that the insulation was sold on May 29, 1974, 

to Handee Foods, Inc., the highest bidder, for $2,424.55. 

Respondent also stated that the sale was conducted pursuant 

to section 71-3-1203, MCA, by a constable for the Justice 

Court at respondent's warehouse. The sale was advertised by 

posting notice on May 16, 1974, in five public places in 

Missoula County. 

Respondent also served interrogatories on appellant. 

However, they were never answered. No sanctions were requested by respondent, and, thus, the interrogatories were 

not part of the record submitted on the motion for summary 

j udgmen t . 

Respondent filed its motion for summary judgment on 

March 23, 1979. A hearing on the matter was held on ~pril 

9, 1979, after which the District Court granted the motion, 

finding that all claims brought by appellant were barred by 

applicable statutes of limitation. At the time the ~istrict 

Court made its decision, the submitted record included the 

complaint, answer, respondent's answers to interrogatories, 
and an affidavit, filed the day of the hearing, stating that 

F. ~ick Baker had purchased a quantity of insulation from 

appellant but was denied access to the goods by respondent. 

Appellant moved to vacate the court's order on June 8, 

1979. However, counsel failed to note the matter for hearing. After receipt of the motion to vacate, respondent 

served on appellant a notice that the motion was deemed 

denied pursuant to Rule 59, M.R.Civ.P., in that it had not 

been noted or heard within ten days of service as required. 

Summary judgment was entered on December 16, 1980, and 

Seven Seas appeals. 

Appellant raises numerous collateral contentions on 

appeal. The sole matter at issue, however, is whether the 

District Court was proper in finding that appellant's claims 

are barred by the statutes of limitation and, therefore, 

proper in granting respondent's motion for summary judgment. 

In determining whether the period of limitation has 

expired in a given case, it is necessary to examine two 

points in time. First, when the did the cause of action 

which gave rise to the suit accrue? Second, when was the 

action commenced? Engine Rebuilders, Inc. v. Seven Seas 

Impor t-Expor t & Mercantile (198 0) , Mont. , 615 

P.2d 871, 37 St.Rep. 1406. 

Rule 3, M.R.Civ.P., provides that a civil action is 

commenced upon the filing of the complaint. In this instance, the suit was initiated on August 26, 1978. 

As to when the cause of action accrued and the limitation period thus started to run, it is necessary to examine 

the particular basis and theories upon which appellant seeks 

relief. 
As a basis for his cause of action, appellant alleges 

in its complaint that respondent took improper control over 

the insulation stored in its warehouse; sold it without 

authority and then retained the proceeds. In asserting this 

cause of action, appellant makes a claim for recovery first 

on a theory that a constructive trust was established whereby 

respondent, as trustee, held the insulation and the proceeds 

therefrom for the benefit of appellant. 

Appellant then asserts a second theory of recovery, 

sounding in tort (conversion), contending that respondent 

sold the insulation at an improperly conducted sale and, 

thus, is liable for the value of the goods. 

Appellant finally contends, as a third claim for relief, 

that due to the willful and wanton disregard of its rights, 

it is entitled to exemplary damages. 

Upon review of appellant's complaint, it is apparent 

that the alleged improper activity giving rise to appellant's claim of recovery occurred on or prior to the date 

respondent had the insulation sold, May 29, 1974. Consequently, over four years have passed between the accrual of 

the cause of action and the commencing of suit. 

Appellant contends that, in determining when the cause 

of action accrued, we should not look to the date the insulation was sold but to the date appellant made a demand for 

the return of those goods, July 19, 1978. Appellant basis 

this argument on an allegation that it was without knowledge 

of the sale until it made a demand for the return of the 

insulation. 

In rejecting appellant's argument, we note that when a 

court is presented with a motion for summary judgment, it 

must rely on the submitted pleadings, depositions, answers 
to interrogatories and admissions on file, together with any 

supporting affidavits, in formulating its ruling on the 

motion. Rule 56 (c) , M.R.Civ.P. The District Court will not 

be held in error on the basis of documents not before it at 

the time it renders its decision. Baylor v. Jacobson (1976), 

170 Mont. 234, 552 P.2d 55. 

In this instance the allegation of lack of knowledge, 

demand and then refusal to return the goods was not raised 

in the complaint, the answer, the interrogatories or in any 

affidavit properly before the court at the time summary 

judgment was granted. The allegation, therefore, will not 

be considered on appeal as a basis for reversing the District Court's ruling. 

In passing, we acknowledge that appellant attempts to 

support this issue on its motion to vacate with an affidavit 

and copy of a "demand" served on respondent. Appellant, 

however, failed to note the motion for any consideration or 

adjudication; further, it has failed to demonstrate that 

this information was unavailable prior to the District 

Court's granting of the summary judgment. 

Upon reviewing the submitted record properly before the 

Court, even in a light most favorable to appellant, we must 

conclude that appellant's cause of action accrued prior to 

or on May 29, 1974, the date of the alleged improper sale. 

Consequently, four years expired between accrual and commencement of the action. 

Section 27-2-207, MCA, provides: 

"Tort actions involving property. Within 2 

years is the period prescribed for the commencement of an action for: 

" (2) taking, detaining, or injuring any goods 

or chattels, including actions for the specific 

recovery of personal property;" 
Clearly, appellant's claim sounding in tort is barred by 

this two-year statute of limitation. 

It could be argued that section 27-2-204, MCA (statute 

of limitation for general tort actions), is applicable. 

However, this section only extends the limitation to three 

years, and, thus, appellant's action is still properly 

barred. 

In regard to appellant's claim of constructive trust, 

the alleged obligation (that respondent held the insulation 

or proceeds therefrom in trust) is one implied by law and 

not founded upon a written instrument. As to such an implied obligation, section 27-2-202 (3) , MCA, provides : 

"Actions based - on contract - or other obligation. 

... 

"(3) The period prescribed for the commencement 

of an action upon an obligation or liability, 

other than a contract, account, or promise, not 

founded upon an instrument in writing is within 

3 years. 

Therefore, appellant's claim under a theory of constructive 

trust is also barred. 

As to the claim for punitive damages, since the underlying cause of action is barred, the recovery of exemplary 

damages is barred as well. 

The decision of the District Court that appellant's 

action is barred by applicable statutes of limitation is 

proper as based upon the record submitted at the time of its 

ruling. The summary judgment is affirmed. 
We concur: 

- Chief ~uktice 

4 a&, / 

Justices 

This cause was submitted prior to January 5, 1981.