No. 87-116 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

DOUGLAS F. EIGEMAN, 

Plaintiff and Appellant, 

-vsLLOYD J. MILLER and BETTY J. MILLER, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Eighth Judicial District, 

In and for the County of Cascade, 

The Honorable John McCarvel, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Church, Harris, Johnson & Williams; Richard F. 

Gallagher, Great Falls, Montana 

For Respondent: 

Emmons & Coder; H. William Coder, Great Falls, 

Montana 

Cotter & Cotter; Patricia O'Brien Cotter, Great 

Falls, Montana 

Filed: 

Submitted on Briefs: July 14, 1987 

Decided: October 27, 1987 

*,b 0 

Clerk 
Mr. Justice Fred J. Weber delivered the Opinion of the Court. 

Mr. Eigeman brought this action for forfeiture of the 

Millers' contract right to property they purchased from him 

on a contract for deed. The District Court for the Eighth 

Judicial District, Cascade County, dismissed the complaint. 

Mr. Eigeman appeals. We reverse and remand for trial. 

The dispositive issues are: 

1. Did the District Court err in failing to find that 

the Millers must tender the full balance due under the contract in order to be entitled to the benefits of the 

antiforfeiture statute, § 28-1-104, MCA? 

2. Did the court err in finding and concluding that the 

contract's shortening of notice provision is unconscionable 

as applied and that the default notices were inadequate and 

fatally defective? 

In September 1982, Mr. Eigeman agreed to sell the Millers a piece of commercial property in Great Falls, Montana, 

under a contract for deed. The Millers used their equity in 

a home as the downpayment on the contract. Mr. Eigeman's 

interest in the property was based on a lease with an option 

to buy. His lessors gave their written agreement that they 

would pass title to him when the Millers paid off the option 

price under the lease-option. The Eigeman-Miller contract 

requires the Millers to pay $1,480.16 on the 10th of each 

month. 

Paragraph 7 of the Eigeman-Miller contract provides that 

if the Millers default in making any payment, and if the 

default continues for 10 days, then Mr. Eigeman may give 

notice to the Millers of the default claimed. If the first 

default claimed is not cured within 30 days of the notice, 

then the contract is' in default and Mr. Eigeman may elect to 

either sue for the entire balance remaining unpaid, repossess 
the property, or foreclose the contract as a real estate 

mortgage. Paragraph 8 provides: 

8. If, after the first notice of default, the 

Purchasers cure or correct the default or defaults, 

and if there is a subsequent default, the periods 

of time are shortened to FIVE DAYS (5) after the 

existence of the default before the notice can be 

given, and to TWENTY DAYS (20) as the period within 

which the default may be cured. If, after this 

TWENTY DAYS (20) notice the Purchasers cure the 

default or defaults complained of, and a subsequent 

default exists, the periods are further shortened 

to THREE DAYS (3) after the default before the 

notice can be given, and to TEN DAYS (10) within 

which to cure the default. If there is a default 

after THREE (3) notices have been given to the 

Purchasers, then the Sellers need give no further 

notice and may forthwith elect one of the three 

alternatives described above in the paragraph under 

defaults, No. 7. 

The record of payments to the escrow account shows that 

the Millers never once made their payments on time, although 

they were never more than 13 days late. Beginning in August 

1984, Mr. Eigeman gave the Millers notices of default for 

late payments. The notice of default for September read: 

NOTICE OF DEFAULT 

Per the contract for Deed dated the 10th day of 

September, 1982, you are in default of Article 7 of 

that agreement, in that the payment of $1,480.16 

was not paid by September 10, 1984. The property 

affected by the agreement is described as follows: 

Lot 5, Block 3, Charles Russell Addition to 

Great Falls, Cascade County, Montana according 

to the officially recorded plat thereof on 

file and of record in the office of the Clerk 

and Recorder of Cascade County, Montana. 

Demand is hereby made under Article 7 of the 

agreement. 
The other default notices were substantially the same as the 

September notice. The series of payments on which Mr. 

Eigeman sent default notices was as follows: 

Payment Due 

August 10 

September 10 

October 10 

November 10 

Date of Default Notice Date of Payment 

August 22 

September 17 

October 15 

------ 

August 23 

September 18 

October 22 

November 14 

When the Millers failed to make the December payment by 

December 11, Mr. Eigeman sent them a Notice of Election of 

Remedies and Cancellation and Termination of Contract for 

Deed, based on the provisions of paragraph 8. 

Mr. Eigeman then brought this action to terminate the 

contract for deed and to obtain forfeiture of the downpayment 

and monthly payments which had been made by the Millers. 

Both parties filed motions for summary judgment. After the 

first of five hearings in this matter, the court granted 

partial summary judgment to Mr. Eigeman, ruling that the 

Millers were in default of their obligations under the contract. It also granted Mr. Eigeman leave to amend his complaint, to allege defects making the Millers' house less 

valuable than the value assigned to it for downpayment on the 

contract. It ordered the Millers, if they could do so, to 

show that they were entitled to the benefits of Montana's 

antiforfeiture statute, § 28-1-104, MCA. 

At the second hearing, the Lawsons, Mr. Eigeman's lessors, moved to intervene. Their motion was granted, and the 

court ordered an escrow account set up for deposit of payments on the property during this litigation. 

At the third hearing, the court heard brief testimony by 

Mr. Miller and extensive arguments of counsel on applicability of the antiforfeiture statute. The discussion between 
court and counsel then broadened to other aspects of the 

case. In its findings and conclusions, the court altered, 

amended, or withdrew its prior findings and conclusions to 

the extent that they were in conflict with the findings and 

conclusions from this hearing. It found that the default 

notices Mr. Eigeman sent to the Millers referred only to 

paragraph 7 of the contract. Only the final notice of election of remedies referred to paragraph 8. The court stated 

[this] court does not find any substantial, credible evidence . . . that the Millers, in their 

performance of the terms of said contract, were 

grossly negligent; nor . . . that there was any 

willful or fraudulent breach of duty on the part of 

the Millers to prevent the application of the 

equitable benefits of that statute. 

It found that under the circumstances of this case the application of paragraph 8 was unconscionable and that the failure 

of Mr. Eigeman to mention paragraph 8 in the notices to the 

Millers rendered the complaint for forfeiture fatally defective. It dismissed the complaint and awarded the Millers 

their costs and attorney fees. It also ordered that none of 

the payments which the Millers had deposited in the escrow 

- ------- account could be distributed witout court order. 

Two additional hearings were held. At those hearings, 

the disposition of funds in the escrow account was arranged 

and the amount of the Millers' attorney fees was set. 

I 

Did the District Court err in failing to find that the 

Millers must tender the full balance due under the contract 

in order to be entitled to the benefits of the antiforfeiture 

statute, S 28-1-104, MCA? 

Section 28-1-104, MCA, provides: 

Relief from forfeiture. Whenever by the terms of 

an obligation a party thereto incurs a forfeiture 
or a loss in the nature of a forfeiture by reason 

of his failure to comply with its provisions, he 

may be relieved therefrom upon making full compensation to the other party, except in case of a 

grossly negligent, willful, or fraudulent breach of 

duty. 

In its order dated October 1, 1986, the District Court concluded that "the Millers have successfully demonstrated their 

right to the antiforfeiture provisions of Section 28-1-204, 

[sic] M.C.A." 

In order for S 28-1-104, MCA, to apply, the party exposed to the forfeiture must have offered as full compensation the entire outstanding balance on the contract. Sun 

Dial Land Co. v. Gold Creek Ranches (1982), 198 Mont. 247, 

251, 645 P.2d 936, 939. The Millers made no such offer of 

full compensation to Mr. Eigeman. Therefore the District 

Court's conclusion that the Millers proved their right to the 

antiforfeiture provision is reversed. 

I1 

Did the court err in finding and concluding that the 

contract's shortening of notice provision is unconscionable 

as applied and that the default notices were inadequate and 

fatally defective? 

The court's finding on unconscionability after the third 

hearing was "[tlhat, given the factual circumstances out of 

which this case arises, the Court finds that Paragraph 8 of 

said contract for deed is, in its application, unconscionable 

. . . ." The court concluded that "the forfeiture provisions 

under Paragraph 8 of the parties' contract for deed are, 

under the circumstances, unconscionable . . . ." 

At the time of the third hearing, summary judgment had 

been granted to Mr. Eigeman with the exception that the 

Millers would be allowed an opportunity to prove they were 

entitled to the benefit of the antiforfeiture statute. The 
purpose of the hearing was to allow the Millers to prove 

their entitlement to application of that statute. The presentation and cross-examination of witnesses was limited to 

that purpose. Yet the District Court went on to rule on the 

unconscionability of paragraph 8 and the inadequacy of the 

notices. 

The court's holding on the unconscionability of paragraph 8 as applied involves issues of fact. The court found 

that the circumstances constituting unconscionability included oppression (Mr. Eigeman's attorney drafted the contract 

and the Millers were unrepresented) and unfair surprise 

(paragraph 8 was not mentioned in the notices of default). 

Similarly, although no authority was cited which would require the notices of default to refer specifically to paragraph 8, the court found that the notices were inadequate and 

fatally defective. Mr. Eigeman argues in his brief to this 

Court that the notice given was adequate in light of the 

contract provision that "notice shall be sufficient for all 

purposes if it describes the default in general terms." He 

was not allowed to present any evidence on that or any other 

theory in the proceeding before the District Court. 

These are issues on which full opportunity for presenting testimony and cross-examining witnesses should have been 

allowed to all parties. Yet only Mr. Miller testified at the 

hearing, and his testimony was limited to the issue of whether the Millers were entitled to the benefit of the 

antiforfeiture statute. We conclude that this case should be 

remanded for full trial on the merits. 

Mr. Eigeman has also raised the issues of whether he 

should have been allowed to present evidence of latent defects in the house used as a down payment on this contract, 

and whether the Millers were properly awarded their attorney 
fees . These issues need not be addressed at this stage 

because of the remand for trial. 

Reversed and remanded. 

We Concur- 

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