No. 89-451 

IN THE SIJPREME COURT OF THE STATE OF MONTANA 

CLARENCE A. WIRERG, 

Plaintiff and Ap-pellant, 

-vs17 BAR, INC., H & H ENTERPRISES, INC., 

aka M & M ENTERPRISES, INC., THOMAS J. 

MORROW and VIOLET L. MORROW, husband & wife, 

the sole stockholders of said corporations, 

Defends-nts and Respondents. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable William ,T. Speare, LTudqe presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Robert E. LaFountain, Billings, Montana 

For Respondent: 

Fred E. Work, Jr., Billings, Montana 

Submitted on Briefs: Jan. 4, 1990 

Decided: February 23, 1990 
Justice Diane G. Barz delivered the Opinion of the Court. 

This appeal arises from an order of the District Court for the 

Thirteenth Judicial District, Yellowstone County, granting 

respondentsv motion for a directed verdict following presentation 

of appellant's case in chief. We affirm. 

Appellant Clarence Wiberg filed suit on April 24, 1986, 

seeking rescission of contract, damages for breach of the implied 

covenant of good faith and fair dealing, punitive damages and 

specific performance of an alleged oral partnership agreement. 

Prior to trial, the District Court granted respondents' motion in 

limine excluding evidence of respondent Violet Morrow's forged 

endorsement of a check made payable to appellant. Following 

presentation of appellant's case in chief, the District Court 

granted respondents' motion for directed verdict. 

Appellant's first contention on appeal is that the District 

Court erroneously granted respondents' motion for directed verdict 

in light of the existence of factual disputes. District courts 

properly direct verdicts when the non-moving party fails to 

establish a prima facie case. Rookhuizen v. Blain's Mobile Home 

Court, Inc. (Mont. 1989), 767 P.2d 1331, 1334, 46 St.Rep. 139, 143. 

Nonetheless, in so doing, trial courts must review the evidence in 

the light most favorable to the non-moving party. Phillip R. 

Morrow, Inc. v. FBS Insurance Montana-Hoiness LaBar, Inc. (Mont. 

Appellant Clarence Wiberg read an advertisement in the 
Billings Gazette seeking a purchaser for the 17 Bar in Billings. 

The sellers were represented by a realtor. Appellant had 

previously owned and operated a restaurant in Billings. After 

operating other businesses and working in other fields, appellant 

wanted to return to the restaurant business. Respondents Violet 

and Tom Morrow owned 100% of the stock in the 17 Bar, Inc. 

Corporate assets included real and personal property and a liquor 

license. Both the property and the liquor license were encumbered 

by an underlying contract between Morrows and Kenneth Hannen from 

whom Morrows had purchased the 17 Bar stock. The terms of this 

agreement required that Morrows obtain Hannenfs permission prior 

to assignment either of the contract or the corporate assets, 

including the liquor license. 

In an agreement executed June 3, 1985, appellant and 

respondents agreed upon a $1,000,000 selling price for the 17 Bar 

and its assets allocated as follows: 

Land $ 100,000 

Building and Leasehold Improvements 475,000 

Liquor License 165,000 

Covenant not to compete 15,000 

Goodwill 45,000 

Furniture, fixtures and equipment 200,000 

~1,000,000 

Appellant agreed to the following terms regarding payment of 

the purchase price: 

1. $100,000 to be paid by closing, including $25,000 earnest 

money, $25,000 cash on closing date and a $50,000 promissory note 

secured by a trust indenture on appellant's home; 

2. Appellant to assume respondentsf $195,582.98 obligation 
to Hannen at 7% interest, subject to possible increase in interest 

to at least 9%; 

3. The remaining balance of $704,417.02 represented by a 

promissory note secured by a trust indenture on appellant's home, 

$10,500 of which was payable within 60 days of closing with the 

balance payable in graduated monthly installments over a 20-year 

period. 

The agreement further allowed for an increase in the interest 

rate on the Hannen contract from 7% to 9% or more to facilitate 

Hannen's consent to the sale. The agreement contained a provision 

requiring that respondents obtain Hannen's written consent to 

appellant's assumption of the obligation owed to Hannen. Although 

the clause operated as a condition precedent to appellant's 

performance of his duties under the agreement, the parties deleted 

this provision by crossing it out and initialling the deletion. 

The closing took place on June 3, 1985. 

Appellant began operating the 17 Bar on June 4, 1985. On June 

10, 1985, the parties executed an addendum to their previous 

agreement providing that both would share equally the cost of 

increased interest on the Hannen contract in excess of 9% and that, 

through no fault of the respondents, Hannen's consent to the 

transfer had not yet been obtained. Appellant apparently paid only 

$52,000 of the one million dollars required by the parties' 

contract. Appellant paid $25,000 earnest money, $25,000 at closing 

and $2,000 of the first $10,500 payment due pursuant to the 

promissory note appellant executed in favor of respondents to 
Violet Morrow. Although appellant gave respondents a $50,000 trust 

indenture on his home, the realtors handling the sale had 

previously attempted to foreclose on a $50,000 trust indenture 

given them by appellant. However, appellant testified the equity 

in his home was worth only $50,000 and there were two prior 

encumbrances as well. 

Appellant filed his completed liquor license application along 

with respondents' assignment of the 17 Bar license with the 

Department of Revenue in June of 1985. Appellant testified that 

the DOR denied his application based upon Hannents continuing 

security interest in the license. At trial, appellant offered no 

documentation of DORts refusal to transfer the license. 

Appellant and respondents executed a release of escrow 

documents on August 16, 1985. The escrow documents released 

included a quitclaim deed and a check. Appellant executed the deed 

at the June 3, 1985, closing and, by authorizing its transfer to 

respondents transferred all his right, title and interest in the 

17 Bar back to respondents. Respondents recorded the quitclaim 

deed shortly thereafter. A check in the amount of $527.21 was 

payable to Clarence Wiberg. 

The parties gave divergent reasons for, in effect, cancelling 

their purchase agreement. Appellant alternatively contends the 

absence of an escrow account prevented him from making payments 

required by the contract and that respondents1 non-performance made 

him hesitant to fulfill his own obligations. Respondents testified 

that appellant requested the cancellation because he felt incapable 
of operating the business successfully. 

Respondents permitted appellant to operate the 17 Bar through 

September 1, 1985, so that he could benefit from the additional 

income generated at fair time. Appellant's records show the 17 

Bar's gross income for June, July and August of 1985 was 

$89,590.08. Nonetheless, during the period of appellant's 

management, the 17 Bar suffered a net loss. After September 1, 

appellant discontinued his operation of the 17 Bar. 

Appellant contends he and respondents entered into an oral 

partnership agreement to operate the 17 Bar until they found a 

buyer for the business at which time the parties agreed they would 

split any sale proceeds. Respondents claim that whatever oral 

agreement the parties may have made, such was barred by the Statute 

of Frauds because it involved the sale of real property. Appellant 

testified he advertised the 17 Bar for sale in USA Today and 

received several responses. These inquiries, introduced into 

evidence by appellant, were mailed to him in late September. 

Appellant claims he continued to work at the 17 Bar until ejected 

from the premises by Violet Morrow in December. Both Morrows 

testified appellant quit coming into the business in approximately 

October. 

From the vast and murky swamp of pleadings and testimony in 

this case, we dredge the following contentions. We cast the facts 

related to appellant's claims in the light most favorable to him. 

Appellant makes two allegations that permeate the remaining issues. 

For purposes of brevity, we address these assertions first. 
Appellant first contends respondents committed fraud and cites 

numerous instances of allegedly fraudulent conduct. Respondents 

misrepresented the availability of Hannenls consent to the transfer 

of the liquor license and assignment of the obligation owing to 

him. Respondents led appellant to believe that Hannenls consent 

was forthcoming. Counsel for respondents advised appellant to use 

a letter from Hannenls attorney as evidence of Hannenls consent to 

transfer of the liquor license in appellant's application for the 

liquor license. Respondents failed to show a copy of their Stock 

Purchase Agreement with Hannen to appellant. Respondents led 

appellant to believe the parties had entered into an oral 

partnership. Although provided for in the contract, no escrow 

account was ever established at First Interstate Bank. 

Notwithstanding a contract provision requiring that respondents 

obtain title insurance in the amount of one million dollars, the 

actual policy provided coverage only up to $575,000.00. 

Actual fraud, within the meaning of this part, 

consists in any of the following acts 

committed by a party to the contract or with 

his connivance with intent to deceive another 

party thereto or to induce him to enter into 

the contract: 

(1) the suggestion as a fact of that 

which is not true by one who does not believe 

it to be true; 

(2) the positive assertion, in a manner 

not warranted by the information of the person 

making it, of that which is not true, though 

he believes it to be true; 

(3) the suppression of that which is 

true by one having knowledge or belief of the 

fact ; 
(4) a promise made without any intention 

of performing it; or 

(5) any other act fitted to deceive. 

Section 28-2-405, MCA. 

Constructive fraud consists in: 

(1) any breach of duty which, without an 

actually fraudulent intent, gains an advantage 

to the person in fault or anyone claiming 

under him by misleading another to his 

prejudice or to the prejudice of anyone 

claiming under him; or 

(2) any such act or omission as the law 

especially declares to be fraudulent, without 

respect to actual fraud. 

Section 28-2-406, MCA. 

Furthermore, to recover damages for fraud, plaintiffs must 

plead and prove the existence of: 

1. A representation; 

2. Falsity of the representation; 

3. Materiality of the representation; 

4. Speaker's knowledge of the falsity of the 

representation or ignorance of its truth; 

5. Speaker's intent that it be relied upon; 

6. The hearer's ignorance of the falsity of 

the representation; 

7. The hearer s reliance on the 

representation; 

8. The hearer's right to rely on the 

representation; and 

9. Consequent and proximate injury caused by 

the reliance on the representation. 

McGregor v. Mommer (1986), 220 Mont. 98, 105, 714 P.2d 536, 540. 
Appellant failed to allege or prove the existence of any duty 

on the part of respondents or any act or omission considered 

fraudulent by law. Therefore, appellant failed to establish a 

prima facie case of constructive fraud. 

Although we must view the evidence in the light most favorable 

to appellant, we are not requiredto ignore uncontradicted evidence 

damaging to his case. Appellant first testified that he read none 

of the documents executed in connection with his purchase of the 

17 Bar, then later conceded he had read each document but 

understood none of them. Appellant does not allege respondents 

made any assertions which they knew or should have known were 

untrue. The agreement quite clearly demonstrates the existence of 

respondentst Stock Purchase Agreement with Hannen. It stated in 

unequivocal terms that Hannents consent was necessary prior to 

assignment of the obligation owed him and transfer of the liquor 

license. Appellant agreed to the deletion of a provision requiring 

respondents to obtain Hannents consent as a condition precedent to 

any requirement that appellant perform. The addendum executed by 

all parties on June 10, 1985, clearly set forth the absence of 

Hannents consent. Appellant does not allege either a denial of his 

request to review the Stock Purchase Agreement or that he was 

misled as to its existence or material terms contained therein. 

Appellant alleges no facts showing misconduct by respondents 

in relation to creation of the escrow account. Appellant offers 

only the release language in support of his contention that the 

escrow account was not created thus leading us to conclude his only 
knowledge of any defect came upon cancellation of the entire 

transaction. Appellant has further failed to show his right to 

rely on the representations of respondents. Appellant is a 

businessman. He owned and operated several businesses prior to the 

transaction with respondents and has been in the work force for a 

number of years. The alleged misstatements made to appellant were 

easily verified and rectified by him. Appellant testified that 

respondents had not misled him in regard to his purchase of the 17 

Bar. Appellant failed to establish a prima facie case of fraud. 

The second pervasive issue concerns the failure of 

respondents1 consideration. Appellant appears to contend 

respondentsf consideration failed because the liquor license was 

never transferred to appellant. However, appellant does not claim 

the liquor license would never have been his. There is ample 

evidence that negotiations between the parties pertinent to 

obtaining Hannenfs consent continued even after closing. Appellant 

had every reason to believe acquiring Hannenfs authorization would 

be a somewhat lengthy process. Consideration does not fail merely 

because of delay. Appellantls contention in this regard lacks 

merit. 

At trial, appellant contended that no contract existed between 

the parties due to the existence of numerous contingencies. The 

only contingency we ascertain is Hannents consent to transfer of 

the liquor license and assignment of the obligation due him, and 

the related transfer of the liquor license from respondents to 

appellant. Both parties agree the liquor license transfer did not 
take place and that Hannen's authorization was not immediately 

forthcoming. Section 28-2-102, MCA, sets forth the essential 

elements of a contract: 

(1) identifiable parties capable of contracting; 

(2) their consent; 

(3) a lawful object; and 

(4) a sufficient cause or consideration. 

The contract between appellant and respondents contains these 

crucial features. Appellant disputes the existence of consent 

freely given and sufficient cause or consideration, however, as set 

forth above, we found these contentions lacked merit. Appellant 

failed to adequately attack the validity of the contract. 

Appellant next maintains respondents breached the contract by 

their failure to facilitate transfer of the liquor license to him. 

We disagree. Testimony of both parties shows respondents were 

negotiating said transfer up until cancellation of the transaction. 

Respondents at no time indicated the transfer would not take place. 

The ~istrict Court correctly determined that appellants did not set 

forth facts proving respondents' breach. 

Appellant asserts the District Court erroneously refused to 

rescind the agreement. Pursuant to 5 28-2-1711, MCA: 

A party to a contract may rescind the same in 

the following cases only: 

(1) if the consent of the party rescinding or of any party j ointly contracting 

with him was given by mistake or obtained 

through duress, menace, fraud, or undue 

influence exercised by or with the connivance 

of the party as to whom he rescinds or of any 

other party to the contract jointly interested 
with such party; 

(2) if, through the fault of the party 

as to whom he rescinds, the consideration for 

his obligation fails in whole or in part; 

(3) if such consideration becomes 

entirely void from any cause; 

(4) if such consideration, before it is 

rendered to him, fails in a material respect 

from any cause; or 

(5) if all the other parties consent. 

The only allegations made by appellant that would entitle him 

to rescission are those of fraud and failure of consideration. As 

elucidated above, these claims are simply not supported by the 

facts of this case. The District Court did not err in concluding 

appellant was not entitled to rescission. 

Appellant's next specification of error centers around the 

District Court's failure to find the parties entered into an oral 

partnership agreement. "A partnership is an association of two or 

more persons to carry on as co-owners a business for profit." 

Section 35-10-201, MCA. Appellant asserts the parties agreed to 

jointly operate the 17 Bar until they located a buyer for the 

business. Upon sale of the bar, appellant would recover funds he 

expended while attempting to purchase the business himself. 

We previously held that where purported partners did not hold 

property jointly, had unequal control over assets, held no joint 

bank accounts and did not file partnership tax returns, no 

partnership existed. Matter of Estate of Smith (Mont. 1988), 749 

P.2d 512, 516-17, 45 St.Rep. 93, 100. Appellant relinquished his 

interest in the real and personal property by quitclaim deed, he 
discontinued use of a checking account opened for 17 Bar purposes 

and testified that his status at the 17 Bar was more akin to that 

of an employee than a partner. Appellant had the burden of proving 

the existence of a partnership between himself and Morrows. Smith, 

749 P.2d at 515. We hold the evidence of a partnership is 

insufficient and that the District Court did not err in ruling that 

no partnership existed. 

Appellant next contends the District Court failed to address 

the issue of respondents1 bad faith. Although respondents may well 

have owed appellant a duty to deal with him fairly and in good 

faith, in light of our discussion above regarding appellant's 

allegations of fraud, we find the District Court did not err in 

directing a verdict denying appellant recovery for respondents' bad 

faith based on the absence of any breach of duty. 

Appellantls final specification of error concerns the 

exclusion of certain evidence. Respondent Violet Morrow forged 

appellant's endorsement on a check made payable to him. 

Respondents contend the proceeds of this check were used to pay 17 

Bar bills remaining from appellant's tenure as owner/manager. 

Violet Morrow received a deferred imposition of sentence contingent 

upon reimbursement of appellant for the amount of the check. We 

surmise from the record that reimbursement did in fact take place. 

Appellant sought to introduce the forged check as evidence of 

respondents1 scheme to defraud him. The District Court granted 

respondents1 motion in limine excluding testimony regarding the 

forgery as prejudicial. We agree. 
We will not reverse the District Court's grant of a motion in 

limine absent an abuse of discretion. Wacker v. Park Rural 

Electric Co-Operative, Inc. (Mont. 1989), 783 P.2d 360, 361, 46 

St.Rep. 1864, 1865. Appellant claims respondents schemed to 

defraud him by misrepresenting the transferability of certain 

assets of the 17 Bar. The probative value of evidence regarding 

Violet Morrow's forgery of appellant's endorsement is outweighed 

by its prejudicial nature. Introduction of such evidence would not 

tend to prove or disprove that respondents knowingly misrepresented 

the truth regarding the transferability of the 17 Bar liquor 

license. The District Court properly excluded such evidence. 

The District Court captured the flavor and essence of this 

case in dismissing the jury: 

I believe the jury is entitled to some explanation. The 

Court has taken this case away from you, and I have 

directed a verdict in favor of the [respondents], and I 

am going to now excuse you. 

And someday, if you ever have any questions, I will be 

glad to answer them, but at this time I think it best 

that the jury is now excused, with our thanks. 

I don't know. I do know the weather and I do know the 

type of case and I do know that you must have had a hard 

time following some of it and, in any event, I certainly 

do appreciate the fact that you are all here and all 

timely and all attentive. It is unusual and, in any 

event, you are free to go. 

Affirmed. 

We concur: 

Justice