NO. 94-396

IN THE SUPREME COURT OF THE STATE OF MONTANA

1995

EDWARD J. WRIGHT,

Plaintiff and Respondent,

v.

RALPH MERSDORF and DENNIS MERSDORF,

Defendants and Appellants.

APPEAL FROM: District Court of the Fifth Judicial District,

In and for the County of Madison,

The Honorable Frank M. Davis, Judge presiding.

COUNSEL OF RECORD:

For Appellants:

Michael J. Lilly, Berg, Lilly, Andriolo

& Tollefsen, Bozeman, Montana

For Respondent:

James D. McKenna, Lineberger, Walsh & McKenna,

Bozeman, Montana
Justice William E. Hunt, Sr., delivered the opinion of the Court.

Appellants Ralph Mersdorf and Dennis Mersdorf appeal from a

judgment of the Fifth Judicial District Court, Madison County, in

favor of respondent Edward J. Wright entitling him to recover the

amount of the unpaid balance of a sales agreement, interest, and

costs, and against appellants' claim for reformation of the sales

agreement.

Affirmed.

Appellants raise the following issues:

1 . Did the District Court err in concluding, as a matter of

law, that respondent was entitled to the amount of the suspended

installment payments?

2 . Did the District Court err in concluding, as a matter of

law, that appellants were not entitled to a reformation of the

parties' sales agreement?

Respondent and appellants are both licensed in Montana as

professional guides and outfitters. In 1987, respondent purchased

the assets of Hidden Lake Outfitters from Robert Bovee, a licensed

Montana outfitter. The total purchase price was $135,000.

Respondent made a down payment of $65,000, with the balance to be

paid semi-annually. The balance was secured by a filed security

agreement which created a lien on outfitting equipment and

livestock in favor of Bovee.

In the fall of 1990, respondent decided to sell most of the

assets he was purchasing from Bovee. Respondent and appellants met

at respondent's ranch and executed a written contract whereby
respondent agreed to sell his "right, title and interest" in a

Forest Service lease, a Burlington Northern lease, livestock, and

outfitter equipment. The Burlington Northern lease remained in

Bovee's name and was not assignable. Bovee retained his secured

interest in some of the outfitter equipment and livestock. Neither

party was advised or represented by counsel. The contract was

typed by respondent's wife and witnessed by an employee of

respondent. The parties agreed on a purchase price of $150,000.

Appellants made an $80,000 down payment with the balance to be paid

in equal monthly installments. Appellants performed until

October 1, 1991. Thereafter, they made no further payments.

Respondent filed a complaint on December 18, 1991, alleging

breach of contract and seeking judgment in the amount of the unpaid

purchase price and interest. Appellants answered by generally

denying the allegations set forth in respondent's complaint.

Appellants counterclaimed for the right to reformation of the

contract, alleging fraud and mutual mistake.

On May 10, 1994, the District Court entered its findings of

fact and conclusions of law. The District Court concluded that

appellants breached the contract by failing to make the installment

payment due on October 1, 1991, and all subsequent payments

thereafter. The District Court concluded that respondent was

entitled to the amount of the suspended installment payments with

interest. The District Court dismissed appellants' counterclaim.

It is from the District Court's findings, conclusions, and judgment

that appellants appeal.

3
ISSUE 1

Did the District Court err in concluding, as a matter of law,

that respondent was entitled to the amount of the suspended

installment payments?

We review a district court's conclusions of law to determine

whether the district court's interpretation of the law was correct.

In re Marriage of Schara (Mont. 1994), 878 P.2d 908, 910, 51 St.

Rep. 676, 677; In re Marriage of Barnard (Mont. 1994) 870 P.2d 91,

93, 51 St. Rep. 173, 174.

Appellants argue that respondent was not entitled to the

amount of the suspended installment payments because respondent was

the first to materially breach the contract. Specifically,

appellants assert that respondent did not fulfill his promise to

secure a conveyance of the Burlington Northern permit. In

addition, appellants contend that respondent did not convey clear

title to the equipment and livestock, and that he did not convey

title to sufficient and adequate equipment and livestock to operate

the Forest Service permit.

The testimony of the parties concerning the transferability of

the Burlington Northern permit and Bovee's lien on the equipment

and livestock was diametrically opposed. The parties agreed that

respondent notified appellants that Bovee retained title to the

Burlington Northern permit. However, respondent testified that he

informed appellants that the permit was not transferable.

Appellants, on the other hand, testified that respondent claimed

that he would be able to effect a transfer of title from Bovee to

4
appellants. As to Bovee's lien on the equipment and livestock,

respondent testified that appellants were informed of Bovee's lien

during a four-way telephone conversation with Bovee during

negotiations between the parties. Appellants deny taking part in

this conversation. Given the conflicting testimony of the parties,

the District Court was forced to determine which party presented

the more credible testimony. The District Court determined that

respondent's testimony was more credible than that of appellants.

When reviewing the findings of fact of a district court in a

civil action sitting without a jury, this Court will not substitute

its judgment for the district court's, but rather we are confined

to determining whether the findings of fact are clearly erroneous.

Rule 52(a), M.R.Civ.P. When conflicting evidence is presented at

trial, it is the function of the district court to resolve such

conflicts. The district court's findings will not be disturbed on

appeal when supported by substantial, though conflicting, evidence.

Pare v. Morrison (1991), 241 Mont. 218, 221, 786 P.2d 655, 657;

Meridian Minerals Company v. Nycore Minerals, Inc. (1987), 228

Mont. 274, 203, 742 P.2d 456, 461.

There is nothing in the record to demonstrate that the

District Court's factual determinations as to the Burlington

Northern permit and the Bovee lien on the equipment and livestock

are clearly erroneous.

Appellants argue that respondent did not convey title to

sufficient equipment and livestock to operate the Forest Service

permit. As a result, appellants were required to purchase

5
additional equipment and livestock in order to meet Forest Service

requirements. Appellants contend that respondent's failure to

transfer adequate equipment and livestock constitutes a material

breach of contract.

The record reveals that in response to a question about what

steps appellants took to assure the validity of the Forest Service

permit, appellant Dennis Mersdorf testified that prior to signing

the contract they "went down to the Forest Service and talked to

them." He also testified that prior to signing the contract they

inspected the outfitting equipment and livestock they were about to

purchase from respondent. Appellants both testified that upon

inspection they discovered that the equipment was used and of

little value. It is not clear from the record whether the quantity

or quality of the equipment and livestock was inadequate for

purposes of operating the Forest Service permit. However,

appellants inspected the equipment and livestock prior to purchase,

and they were well aware of its quality. The sales agreement was

specific as to the quantity of the equipment and livestock for

sale. Appellants discussed the validity of the permit with the

Forest Service prior to signing the contract. During that

discussion, appellants had the opportunity to find out what

equipment and livestock was needed to operate a Forest Service

permit. Appellants exercised their right to inspect the equipment

and livestock under 5 30-z-513, MCA. Appellants cannot now

complain that defects in either the quantity or the quality of the

equipment for purposes of operating under the Forest Service permit

6
constitute material breach by respondent. See § 30-2-316(3) (b),

MCA.

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

a matter of law, that respondent was entitled to the amount of the

suspended installment payments.

ISSUE 2

Did the District Court err in concluding, as a matter of law,

that appellants were not entitled to a reformation of the parties'

sales agreement?

We apply the same standard of review to Issue 2 that we

applied to Issue 1.

Appellants argue that they are entitled to a reformation of

the contract due to mutual mistake of fact. Appellants contend

that both parties shared a mistaken assumption that the Burlington

Northern lease was transferable from Bovee to appellants. In

Issue 1 we affirmed the District Court's finding that there was no

credible evidence to show that respondent represented to appellants

that the Burlington Northern lease was transferable from Bovee to

appellants. If there was a mistake as to the Burlington Northern

lease it was unilateral on the part of appellants. As opposed to

mutual mistake, unilateral mistake is not normally grounds for

relief for the mistaken party. Carney v. Wallner (1986), 223 Mont.

260, 266, 725 P.2d 557, 560.

We hold that the District Court did not err, as a matter of

law, in concluding that appellants were not entitled to reformation

of the parties' sales agreement.

7
Affirmed.

Pursuant to Section I, Paragraph 3(c), Montana Supreme Court

1988 Internal Operating Rules, this decision shall not be cited as

precedent and shall be published by its filing as a public document

with the Clerk of the Supreme Court and by a report of its result

to Montana Law Week, State Reporter and West Publishing Company.

We concur:
March 16, 1995

CERTIFICATE OF SERVICE

I hereby certify that the following certified order was sent by United States mail, prepaid, to the

following named:

Michael J. Lilly

Berg, Lilly, Andriolo & Tollefsen

910 Technology Blvd., Suite A

Bozeman, MT 59715

James D. McKenna

Lineberger, Walsh, McKenna

P.O. Box 6400

Bozeman, MT 59771/6400

ED SMITH

CLERK OF THE SUPREME

,STATE OF MONTANA

COURT