No. 81-422 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

BOB EIILLER, 

Plaintiff and Appellant, 

-VSBILL WATKINS and LAVONNE WATKINS, 

Defendants and Respondents. 

Appeal from: District Court of the Fourteenth Judicial District, 

Ih and for the County of Musselshell, The Honorable 

Nat Allen, Judge presiding. 

Counsel of Record: 

For Appellant: 

Leaphart Law Firm; C. W. Leaphart, Jr., Helena, 

Montana 

For Respondents : 

Susan Stearns, Lakewood, Colorado 

-- 

Submitted on Briefs: July i5, 1982 

Decided: September 30, 1982 

Filed: Sip 3 0 1982 
Mr. Justice Fred J. Weber delivered the Opinion of the 

Court . 

Bob Miller, plaintifi and appellant, brought this 

action in the District Court of the Fourteentl? Judicial 

District, t4usselshell County, to recover damages for breach 

of contract. Bill Watkins, defendant and respondent, pled 

the affirmative defense of accord and satisfaction for all 

counts of Miller's complaint. Watkins also filed a counterclaim against Miller for damages for breach of contract, 

unjust enrichment, malicious prosecution, and defamation. 

The District Court sitting without a jury found in favor of 

Watkins denying Miller relief on all counts except for a 

$1,500 payment due on one horse. The court awarded Watkins 

actual damages on the breach of contract for $23,000; actual 

damages in conjunction with the malicious prosecution of 

$30,000; actual damages for libel and slander in the amount 

of $25,000; and punitive damages in the amount of $50,000. 

Miller appeals. 

We affirm. 

The following issues will be discussed: 

(1) Nas substantial credible evidence presented at 

trial to support the findings of fact and conclusions of 

law? 

(2) Were the elements necessary to prove a malicious 

prosecution action present? 

(3) Was evidence presented to support the damage 

awards? 

Bill and LaVonne Watkins are husband and wife and 

jointly own and operate a public stable. Watkins handles 

all phases of the business concerning the horses, including 

the breeding, training, raising, racing and buying and 
sePllng of the horses. He owns several quality stallions 

which he keeps as studs for breeding purposes and he is a 

member in good standing of the American Quarter Horse Association (AQHA). 

Miller owns and operates a ranch near Jordan, Montana, 

in Garfield County, and is engaged in the business of 

raising horses. Prior to 1969, Miller owned many horses 

which were registered with the AQHA. However, in 1969, 

Mlller was suspended from the AQHA for life and lost the 

right to have his horses registered. In late 1968 or early 

1969, prior to his suspension, Miller transferred ownership 

of all of his registered quarter horses to two of his 

relatives, Dr. Purdom and Dr. Shreeves of California, and 

entered into a partnership agreement with them as a part of 

the transf er . 

Jackie Oakes, a/k/a Jackie Fleming, a/k/a Jackie 

Miller, who is currently known as Jackie Kerrick (Jackie 

Oakes), is a member of the AQHA and has not been suspended 

from membership therein. In 1972, Jackie Oakes and Miller 

became acquainted through various horse deals and soon 

thereafter entered into a partnershiparrangement for buying 

and selling horses. 

In 1972, Milier was experiencing difficulties with 

Drs. Purdom and Shreeves. He ended his partnership with the 

doctors and had the registration of all of the horses transferred to Jackie Oakes. It was at this time that Miller and 

Jackie Oakes entered into some type of a business arrangement regarding the ownership of the horses and their offspring, since Jackie Oakes could register horses with the 

AQHA. In 1971 or 1972, forty to fifty registered quarter 
horses were moved to Miller's ranch near Jordan. 

Prior to the year 1974, Jackie commenced residing with 

Miller, and the two parties held themselves out to the 

general public as man and wife, with each authorized to 

transact business for and on behalf of the other with regard 

to the horses. During the fall of 1974, Miller and Jackie 

took a trip to Watkins' ranch. Miller introduced Jackie as 

his wife and partner indicating that Jackie had full 

authority to transact business regarding the horses owned 

jointly by herself and Miller pursuant to her business 

relationship, as well as her personal relationship with 

Miller. During that meeting, Watkins entered into a 

contract with Miller and Jackie, by which Watkins would 

breed the Miller-Bakes mares with his stallions. The colts 

born of that arrangement would be registered quarter horses 

and would be split equally between Watkins and Miller-Oakes. 

The contract was renewed annually for three years and 

Miller-Oakes brought mares to the Watkins ranch in 1975, 

1976, and 1977. 

On October 8, 1974, the Cloverleaf brand, which was 

owned by Miller or by the Cloverleaf Land and Livestock 

Company, a Montana corporation, of which Miller was either 

the sole or majority shareholder, was transferred to Jackie 

Oakes and recorded in the Montana Brand Off ice. After the 

brand had been transferred to Jackie Oakes, various colts 

and yearlings were branded with the Cloverleaf brand. 

In the spring of 1975, pursuant to the breeding agreement, twenty-one head of Miller-Oakes mares were delivered 

to Watkins' ranch for the purpose of breeding. Several 

Miller-Oakes colts were either by the side of the mares at 
the time they were delivered or born at Watkins' ranch. 

Uuring the summer of 1975, all of the mares and all of the 

colts, wlth the exception of one which died at Watkins' 

ranch, were returned to Miller and/or Jackie Oakes. 

In the spring of 1976, a total of fourteen MillerOakes mares were delivered to Watkins' ranch for the purpose 

oi breeding. Some of the mares had colts by their side and 

some of the mares foaled during the summer of 1976. All of 

these colts were the result of the breeding of the 1975 

season and were "partnership colts" pursuant to the agreement of the parties. Fifteen Breeder's Certificates were 

issued by Watkins indicating that a total of fifteen colts 

had been born as a result of the 1975 breeding season. 

All of the Miller-Oakes mares and all of the partnership colts were returned to Miller and/or Jackie Oakes, with 

the exception of two of the partnership colts which were 

retained by Watkins as a distribution. One of these colts 

which was retained was the Wicked Felita colt. 

In the spring of 1977, a total of thirty Miller-Oakes 

mares were delivered to Watkins' ranch for breeding purposes. 3nce again, some of the mares had colts at their 

slde and others foaled at Watkins' ranch during the breeding 

season. During the summer of 1977, after having been bred, 

all of the mares with their colts (all colts being partnership colts) were returned to Miller's ranch in Jordan. 

The Miller-Oakes mares were not delivered to Watkins' 

ranch during the spring of 1978, as Watkins refused to 

continue breeding the mares for two reasons. First, he was 

dissatisfied with the failure to divide the colt crops 

pursuant to the agreement, and secondly, Miller and Oakes 
had failed to take the necessary steps to register the 

colts, thereby breaching their portion of the contract and 

rendering the colts less valuable. Further, by 1978, the 

Miller-Oakes partnership had disintegrated. Jackie was no 

longer residing with Miller and evidently was not a part of 

his business arrangements. Once Jackie was no longer a part 

of Miller's business, it was very doubtful that colts born 

from the breeding arrangements could ever be registered with 

the AQHA since Miller was suspended from that organization. 

Aside from the dispute over the splitting of the partnership colts, Miller also claimed that Watkins had purchased several horses from Miller-Oakes, and that Miller had 

never been compensated for the horses. Watkins on the other 

hand alleged accord and satisfaction by reason of payment in 

full in his answer with respect to each of these horses. In 

June 1978, Miller approached two brand inspectors alleging 

that Watkins had stolen these horses. The brand inspectors, 

together with Miller, approached the county attorneys in 

Musselshell and Fergus Counties, resulting in the filing of 

three criminal actions against Watkins for horse theft. 

Each of the criminal actions was dismissed with prejudice. 

As a result of Miller's complaint, Watkins counterciairned for malicious prosection, libel and slander, 

requesting actual and punitive damages. In addition, 

vdatkins claimed actual damages for failure to receive his 

share of the partnership colts, as well as for his expenses 

and actual damages in care, feeding and breeding of Miller's 

horses. 

I 

Was substantial credible evidence presented at trial 
to support the findings of fact and conclusions of law? 

Miller bases his argument on his contention that he 

and Watkins "are really two old horse thieves" and that 

neither can really be believed and that the third principal 

witness, Jackie Oakes, has an extremely unreliable memory 

and admits lying to the county attorney of Musselshell 

County. There was also testimony that some of the bills of 

sale were prepared as late as 1978 in a motel room. 

"This Court will not substitute its judgment for that of the trier of fact. We 

will consider only whether substantial 

credible evidence supports the findings 

and conclusions. Findings will not be 

overturned unless there is a clear preponderance of evidence against them, 

recognizing that evidence may be weak or 

conflicting, yet still support the findings. [Citation omitted.] The judgment 

of the trial court is presumed correct, 

and this Court will draw every legitimate 

inference to support that presumption." 

Jensen v. Jensen (1981), Mont . I 

629 P.2d 765, 768, 38 st.= 927, 930. 

In addition, evidence will be viewed in the light most 

favorable to the prevailing party: 

"When this Court reviews evidence, it 

will be viewed in the light most favorable to the party who prevailed in the 

District Court, and the credibility of 

witnesses and the weight assigned to 

their testimony is for the District Court 

In a nonjury trial." Parkhill v. Fuselier 

(1981)t Mon t . , 632 P.2d 1132, 

1135, 38=.~ep. 1424,1427. 

Rule 52(a), Fi.H.Civ.P., provides in part: 

"Findings of fact shall not be set aside 

unless clearly erroneous, and due regard 

shall be given to the opportunity of the 

trial court to judge the credibility of 

witnesses." 

Although there was conflicting testimony, we have 

reviewed the record and hold that there was sufficient 

credible evidence to support the findings of the District 
Court both in dismissing the plaintiff's claim and in ruling 

in favor of the defendant's counterclaim. 

11 

Were the elements necessary to prove a malicious 

prosecution action present? 

Watkins' counterclaim requested actual and punitive 

damages from Miller for the malicious prosection of criminal 

actions against him. To prove a malicious prosecution 

action against Miller, Watkins had the burden to show that: 

1. A criminal proceeding was instituted or continued 

by Miller against Watkins; 

2. The criminal proceedings were terminated in favor 

of Watkins; 

3. There was an absence of probable cause for the 

criminal proceedings; and 

4. There was malice or a primary purpose other than 

that of bringing a criminal to justice on the part of 

Miller. Orser v. State (19781, 178 Mont. 126, 135, 582 P.2d 

1227, 1232-1233; W. Prosser, The Law of Torts, S 119 at 835 

(4th ed. 1971). 

Criminal complaints filed against Watkins were as 

~ollows: 

1. Musselshell County--three counts ot theft 

(criminal action 1065) 

a. Murrietta Grey 

b. Wicked Felita colt 

c. Black Deckette 

2. Musselshell County--one count of theft (criminal 

action 1077) 

a. Bean's mare 
3. Feryus County--four counts of theft: 

a. Twig Deck gelding (sold by Watkins to Brad 

Hamlett) 

b. Pistol Bar gelding (sold by Watkins to Brad 

Hamlett) 

c. One gelding sold by Watkins to Oscar Walter 

d. One gelding sold by Watkins to Oscar Walter 

Criminal proceedings instituted or continued by Miller ----------- ------- 

against Watkins. 

Miller contends that he did not institute or continue 

proceedings against Watkins but that he merely gave brand 

inspectors information in an effort to cooperate with the 

authorities relative to the investigation and identified 

animals in possession of third parties which carried his 

brand. During the trial, Miller admitted going to the 

Musselshell County attorney and informing him that Watkins 

had stolen his horses and expecting that batkins would be 

charged with theft. Miller also contacted Jack Sedgwick, an 

investigator for the Montana Department of Livestock, and 

informed him and the Musselshell County sheriff that Watkins 

had his mare. 

We hold that Miller did institute and continue the 

criminal charges against Watkins. 

Termination in Watkins' favor. 

The next element in a malicious prosection action is 

termination of the proceedings in favor of the plaintiff. 

The lJlusselshel1 County and Fergus County complaints wers 

dismissed with prejudice for lack of a speedy trial. 

Miller contends that this type of dismissal is not in 

favor of Watkins because it does not reflect his innocence. 
In Lachner v. LaCroix (1980), 159 Cal.Rptr. 693, 695, 

602 P.2d 393, 395, the California Court stated: 

"It is not essential to maintenance of an 

action for malicious prosecution that the 

prior proceeding was favorably terminated 

following trial on the merits. However, 

termination must reflect on the merits of 

the underlying action. . . A dismissal 

for failure to prosecute . . . does reflect on the merits of the action . . . The reflection arises from that natural 

assumption that one does not simply 

abandon a meritorious action once instituted." (Underscoring added.) 

We agree with the California Court that a dismissal 

for lack of speedy trial does reflect on the merits of the 

case and can be considered as a termination in favor of 

Watkins. 

Probable Cause 

Probable cause has been defined as "a reasonable 

ground of suspicion, supported by circumstances sufficient 

to warrant an ordinary prudent man in believing the party is 

guilty of the offense. It includes an honest belief in the 

guilt of the accused, since the reasonable man will not 

prosecute another whom he does not believe to be guilty." 

Prosser, § 119 at 841. 

During the trial Niller admitted that he sold the 

Bean's mare and the Twig Deck gelding outright to Watkins. 

Miller knew that there was no basis for the Fergus County 

criminal complaint regarding the Twig Deck or for one count 

of criminal action 1077 regarding Bean's mare in Musselshell 

cou*ty. The other three geldings which comprise the Fergus 

County criminal action were sold to Watkins by Jackie Oakes. 

Watkins paid Jackie Oakes $750 for these three geldings and 

evidence presented at trial indicates that Miller knew about 

this transaction. Thus, there was no basis for the criminal 

I 
action in Fergus County. 

With regard to criminal action 1065 in Musselshell 

County, one count concerned Black Deckette, which Jackie 

Oakes traded to Watkins, and Miller knew of the trade. 

Another count in action 1065 concerned the Wicked Felita 

colt which Watkins took as a partial distribution of a colt 

crop and Miller received a colt from Toi Twist out of the 

same transaction. This division was made by Jackie Oakes. 

The final count of criminal action 1065 concerned 

Murrietta Grey. The evidence presented at trial indicated 

that Bob Miller knew and approved of the trade involving 

Murrietta Grey. From the testimony presented at trial, the 

District Court was justified in determining that there was 

no probable cause for Miller to institute these actions 

against Watkins, and further, no honest belief by Miller of 

the guilt of Watkins. 

Maiice as a Prerequisite 

The fourth element necessary in a malicious prosecution action is malice or a primary purpose other than that 

of bringing an offender to justice. In this case, there was 

a clear lack of probable cause for criminal proceedings as 

pointed out in the prior section. Malice can be inferred 

from want of probable cause. McGuire v. Armitage (1979), 

- Mont. - , 603 P.2d 253, 255, 36 St.Rep. 2142, 2145. In 

addition, Miller's testimony indicated that he was aware 

that one horse had been traded by Jackie Oakes, yet he told 

the county attorney of Musselshell County that the horse was 

stolen, fully expecting Watkins to be charged with theft. 

Sufficient evidence was presented to show malice and to 

conclude that Pliller's intent was not to bring an offender 
to justice. 

Was evidence presented to support the damage awards? 

The judgment of the District Court provides in part: 

"That the Court further finding the 

plaintiff liable to the defendants in the 

amount of Twenty-three Thousand and 

no/100 Dollars ($23,000.00) for actual 

damages for contract on twenty-three 

colts, Thirty Thousand and no/100 Dollars 

($30,000.00) for actual damages as a 

result of the malicious prosecution, 

Twenty-five Thousand and no/100 Dollars 

($25,000.00) actual damages for libel and 

slander, and Fifty Thousand and no/100 

Dollars ($50,000.00) punitive damages for 

intentional utterances; and 

"That the defendants having incurred 

necessary costs in the prosecution of 

this lawsuit in the amount of Six Hundred 

Twenty-seven and 14/100 Dollars 

($627.14); and 

"That the defendants being entitled to 

ten percent (10%) interest per annum upon 

the total amount of this Judgment, such 

interest to commence with the date of 

filing this Judgment, and good cause 

appearing. 

"NOW, THEREFORE, IT IS HEREBY ORDERED, 

ADJUDGED AND DECREED that Judgment be 

entered for the defendants and against 

the plaintiff for the sum of One Hundred 

Twenty-eight Thousand Six Hundred Twentyseven and 14/100 Dollars ($128,627.14), 

as set forth above, less $1500.00 that 

Defendants owe Plaintiff, making the 

total judgment One Hundred Twenty-seven 

'rhousand, One Hundred Twenty-seven and 

14/100 Dollars ($127,127.14)." 

Section 27-1-303, MCA, provides: "NO person can 

recover a greater amount for the breach of an obligation 

than he could have gained by full performance thereof on 

both sides . . . " Fifteen colts were born as a result of 

the 1975 breeding as evidenced by the Breeder's Certificates 

for that particular year introduced into evidence. Finding 

of Fact No. 22 provided: 
"That there was no documentary evidence 

introduced into evidence by either side 

as to the exact number of the colts born 

as a result of the 1976 or the 1977 

breeding. It was evidenced that a 

ninety-two percent (92%) colt crop would 

be expected, however, in light of poor 

range conditions at the Miller ranch, 

together with improper care of the 

animals, an eighty percent (80%) colt 

crop should be the minimum expected. 

That utilizing the eighty percent (80%) 

figure, there should have been a total of 

eleven (11) colts for the 1976 breeding 

and a total of twenty-four (24) colts for 

the 1977 breeding. Thus, the sum total 

of colts for the three-year breeding 

would be in the number of fifty (50), of 

which each side would be entitled to a 

total of twenty-five (25) colts each." 

The District Court also found that Watkins had received two 

of the colts and that the fair market value of a colt 

registered with the AQHA during the time of the contract was 

Slp00. We find the award for actual damages on the contract 

to be proper. 

Watkins was awarded $627.14 as necessary costs in 

prosecution of this lawsuit. Watkins was not specifically 

awarded attorney fees in either his defense in the civil or 

criminal actions. Watkins submitted a memorandum of his 

costs which provided: 

l. Clerk of Court, filing of Motion 

to Dismiss 

2. Judgment 

3. Deposition 

4. Stenographer's Fee 

5. Witness fees: 

A. Brad Hamlet 88.00 

Two days--$20.00 

Mileage from Sun River, Montana--$68.00 

B. Marge Taylor 61.14 

Two days--$20.00 

Mileage from Jordan, Montana--$41.14 
TOTAL COSTS AND DISBURSEMENTS $627.14 

Section 25-10-201, MCA, provides that a party to whom costs 

are allowed are entitled to include as costs: 

"(1) the legal fees of witnesses, including mileage, or referees and other 

officers; 

"(2) the expenses of taking depositions; 

" (4) the legal fees paid for filing and 

recording papers and certified copies 

thereof necessarily used in the action or 

on the trial;" 

The costs awarded are allowed under section 25-10-201, MCA, 

and are proper. 

Watkins was awarded $30,000 on his counterclaim for 

malicious prosecution and $25,000 as a result of libelous 

and defamatory statements. Conclusion of Law 17 awards 

$55,000 general damages to Watkins for loss of business and 

damage to reputation. Watkins testified that his business 

was damaged, that he incurred considerable attorney fees as 

a result of the criminal proceedings, and that he suffered 

humiliation and embarrassment as a result of the unfounded 

criminal prosecutions. Watkins was arrested and required to 

spend a night in jail. Watkins' son testified as to his 

father's reputation and questions asked of him by others 

involved in the horse breeding and trading business after 

the criminal charges were filed. 

In Keller v. Safeway Stores, Inc. (1940), 111 Mont. 

28, 41, 108 P.2d 605, 612-613, this Court stated that it 

would rarely revise damage awards for defamation. "Unless 

the damages are so unconscionable as to impress the court 

with its injustice and thereby induce the court to believe 

that the jury was actuated by passion, prejudice or 
partiality, it rarely interferes with the verdict. The 

question of excessiveness of the verdict is primarily 

addressed to the discretion of the trial court." While this 

is not a jury case, the question of the damage award for 

defamation is a matter of the discretion of the trial court. 

We do find substantial evidence to sustain the conclusion of 

the trial court and will therefore not interfere with the 

decision of the lower court. 

Watkins was awarded $50,000 punitive damages for 

intentional utterances. Punitive or exemplary damages are 

allowed where the defendant has been guilty of oppression, 

fraud, or malice, actual or presumed, for the sake of 

example and by way of punishing the defendant. Section 

27-1-221, MCA. Exemplary damages shall be used when the 

defendant clearly shows that he is deserving of such special 

treatment and punishment. In Smith v. Krutar (1969), 153 

Mont. 325, 457 P.2d 459, this Court indicates that wnere 

acts are done willfully and the result amounts to fraud or 

oppression, punitive damages may be awarded under the 

statute. 

Bill and LaVonne Watkins have been victims of false 

accusations. The maker of these accusations, Miller, knew 

each and every one of the accusations to be false at the 

time he made them. Each and every one of the allegations 

was made maliciously and viciously. Watkins has been 

accused of criminal conduct. The allegations made are 

serious and directly affect his business reputation. These 

allegations were repeated over a period of three years and 

continued at the time of trial. The award of punitive 

damages is meant to make an example and punish a person so 
that he will cease this type of conduct in the future. 

We find that the facts of this case allow for the 

awarding of punitive damages. 

We affirm. 

\ Jus ic 

We concur: 

4&4 

Chief Justice