No. 12650 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1974 

ROTHER-GALLAGHER , a Partnership composed 

of William J. Gallagher and James Rother, Jr., 

Plaintiffs and Appellants, 

MONTANA POWER COMPANY, a Montana Corporation, 

Defendant and Respondent. 

Appeal from: District Court of the Fourth Judicial District, 

Honorable E. Gardner Brownlee, Judge presiding. 

Counsel of Record: 

For Appellants : 

Goldman, McChesney and Datsopoulos, Missoula, Montana 

James Wheelis and Milton Datsopoulos argued, 

Missoula, Montana 

For Respondent : 

Corette, Smith and Dean, Butte, Montana 

Kendrick Smith argued, Butte, Montana 

Submitted: April 24, 1974 

Decided : ~tm 5 194 

Filed: JUN 5 1974 
Mr. Justice John Conway Harrison delivered the Opinion of the 

Court. 

This is an appeal from an order of the district court 

granting summary judgment in a timber sale contract dispute. 

We affirm the judgment of the district court. 

On July 23, 1958, two corporations, Rother's Inc. and 

Rother Lumber Co., Inc., entered into a timber contract with the 

Montana Power Company to log off an area in Missoula County. 

Under the contract the two corporations agreed to construct a 

main-haul timber road, known as the Rattlesnake Road. The road 

was to be paid for through an amortization of the timber removed. 

The Rother companies began immediate operations in 1958 

and by 1964 had logged off some 18 million board feet of timber 

and through the amortization program for paying for the road had 

reduced the amount owing them by the Montana Power Company to an 

alleged amount of $46,000. 

At the end of 1964 the stockholders of the two Rother 

companies decided for tax purposes to dissolve the two corporations. The stockholders at the time being James Rother, Jr., 

William J. Gallagher and a son of Gallagher who had a minority 

interest. Immediately thereafter the two major parties in the 

dissolving corporations alleged that they formed a partnership 

which assumed all the duties and all the obligations of the two 

corporations. Rother-Gallagher now alleges that they attempted 

to operate under the timber sale contract but that respondent 

refused to either designate timber to be cut or to revoke the 

contract which would have required paying off the unamortized 

road. 

Respondent argues that this is not a simple forfeiture 

suit but that appellantsin~complaint sued for a breach of 

contract and for alleged loss in profits of some $200,000; that 

the original agreements between respondent and the Rother companies 

called for specific reliance on the corporations; further that 
Rother, the operations man of the corporations no longer lives 

in Montana; and that in the assertion by appellants that protection of the Montana Power was "enhanced" is untrue, for over 

$108,000 of book value assets of each of the companies referred 

to in the dissolution amounted in actual value to a sum in excess 

of over $300,000 and were distributed to the two principal stockholders of the two dissolved corporations. All of these reasons 

respondent argues puts them in a far less desirable position in 

dealing with the alleged partnership. 

Respondent Power Company replies to the allegations of 

the complaint noting that over 5 years had passed between the time 

of the last work done under the contract in 1964, and the filing 

of this action, and that parties to the original contract, the 

Rother Lumber Company and Rother, Inc. had dissolved and were no 

longer in existence. Further as an absolute defense against this 

action that the contract they made with the Rother companies had 

a provision, Para. 23, which prevented the assignment of any portion of the contract without the consent of the Montana Power 

Company. Paragraph 23 reads: 

"(23) Rothers Ireferring to both of the companies] 

shall not assign this contract, or any portion 

thereof, nor shall the logging operations be 

sub-let without the written consent of the Power 

company. " 

It is admitted by appellants that no attempt was ever made 

to secure a written consent from the Power Company to any assignment nor was there ever any written consent to the alleged assignments ever given. Due to this failure to obtain such a consent 

the Montana Power Company alleges that appellants have no standing whatever to claim any privity or any rights against it. 

Concerning the dissolution there was filed by the two 

Rother companies statements of voluntary dissolution dated January 

21, 1965. These statements stated that each company had ceased 
to transact business, had no assets, had no intention of ever 

again resuming operations and attached a tax clearance certificate as provided by section 15-1115, R.C.M. 1947, repealed effective December 31, 1968. 

From the interrogatories of Rother and Gallagher it would 

appear that they formed a partnership on December 31, 1964, but 

without any written agreement. Gallagher stated "It was the 

understanding that the Rother-Gallagher partnership would assume 

the obligations and debts of the Rothers, Inc., and Rother Lumber 

Company, as well as receiving their assets." Neither Gallagher 

rxr Rother ever advised the Montana Power Company that the Rother 

companies were dissolved at the end of 1964 nor was the Power 

Company ever advised that there was a transfer of assets from 

the Rother companies to the alleged partnership. The book value 

of the assets turned over from the two companies amounted to 

$59,219.37 from Rother Lumber Company and $59,219.37 from Rother, 

Inc. Gallagher, when questioned about whether there was a partnership or not, stated that when the change was made it was a change 

in name to avoid double taxation. He said it was "sort of an 

evolution of a business for thej. continued to use the same books, 

the same ledger, the same everything * * *." In discussing how 

they operated after the dissolution Gallagher said the partnership 

operated as a joint venture. 

In the period between the last cutting on the property, 

which was the last quarter in the year 1964, and the time the legal 

action was filed in February of 1970, Gallagher met with officials 

of the Power Company several times, probably during the year 1967. 

On one occasion he had Rother with him in an effort to either get 

more timber off the property or to get the lease cancelled. These 

efforts were unsuccessful. 

The only issue raised is whether the trial court properly 
granted summary judgment on the ground that appellants had no 

standing to bring suit. 

Appellants argue that the contract language does not 

void assignments breaching the nonassignment clause and that the 

general prohibition against transferring contracts of a personal 

nature is not applicable here. 4 Corbin on Contracts, section 

865; Gresmore on Contracts, Sect. 258 119651. 

Appellantsfurther argue that the transfer of rights in 

the contract between the Rother companies and the partnership is 

not in violation of the nonassignment clause relying on the holdings of the California Supreme Court in the cases of Trubowitch 

v. Riverbank Canning Co., 30 C.2d 335, 344, 182 P.2d 182, 188; 

People v. McNamara Corporation Limited, 28 C.A.3d 641, 104 Cal. 

Rptr. 822. In these cases the California Supreme Court held that 

where there is a transfer of an interest, or an assignment of a 

contract, the court will look to see how it affects the interests 

of the parties by the nonassignability clause of the contract and 

will allow it if it can be made without a change of the beneficial 

interest in and to the contract. See also: Ruberoid Co. v. Glassman Construction Co., 248 Md. 97; 234 A.2d 875. 

However, as argued by the respondent, this is not the law 

of Montana. We do not follow Trubowitch. Rather it has long been 

the law of this state established in 1912 by the case of Winslow 

v. Dundom, 46 Mont. 71, 82, 125 P. 136, that provisions for nonassignment in a contract will be upheld. The key case, Standard 

Sewing-Machine Co. v. Smith, 51 Mont. 245, 248, 152 P. 38, holds 

that nonconsent to assignment (where nonassignability is set forth 

in the contract) destroys or precludes the establishment of privity between an alleged assignee and the other party. 

The Court in Winslow said: 

"While the rule is uniform that a person may 

contract with whom he pleases and may refuse to 
contract with any particular person, still the 

rule is equally well settled, as stated in 

4 Cyc. 20, as follows: 'As to assignability 

of private contracts, it may be stated as a 

general rule that rights arising out of agreements or contracts between private individuals 

may be assigned, in the absence of any provision 

or stipulation in the agreement or contract to 

the contrary.' Certain well-recognized exceptions to that rule arise in case the right is 

coupled with a liability, or the contract involves the relation of personal confidence, or 

the contract is for personal services; and the 

reason for these exceptions is apparent at 

once. I' 

In Standard Sewinq-Machine Co. the Court, in speaking to 

the above exceptions, said: 

"In the last analysis all the exceptions to the 

rule of assignability arise out of the nature 

of the contract, and among them are these: 

Contracts wherein rights are coupled with lia- . 

bilities, contracts for personal services, and 

contracts involving the relation of personal 

confidence (4 Cyc. 22; Winslow v. Dundom, 46 

Mont. 71, 125 P. 136.) A glance at the contract 

in question, or the slightest consideration of 

the stipulations above recited, will, we think, 

disclose that it is within all these exceptions * * *.'I 

We find no reason to change the long established law in Montana 

that controls this case. See also 6 C.J.S. Assignments 524; 

Restatement of Law of Contracts 151; 3 Williston on Contracts, 

Third Edition, 8411. 

The judgment of the district court is affirmed. 

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Justice 

concur : 

Justices