No. 13614 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1977 

GERALD HANSEN and CONSOLIDATED 

CO14NERCE CORPORATION, 

Plaintiffs and Appellants, 

TRANSAMERICA INSURANCE COMPANY, 

A corporation, and COUNTY OF SILVER 

BOW, et al., 

Defendants and Respondents, 

COUNTY OF SILVER BOW, et al., 

Cross-Claimant and Respondent. 

Appeal from: District Court of the Second Judicial District, 

Honorable Arnold Olsen, Judge presiding. 

Counsel of Record: 

For Appellants: 

Michael J. McKeon argued, Anaconda, Montana 

N. F. Hennessey, Butte, Montana 

For Respondents: 

John G. Winston, County Attorney, Butte, Montana 

Corette, Smith & Dean, Butte, Montana 

R. D. Corette Jr. argued and John Larson argued, 

Submitted: September 27, 1977 

~ecided: JAN IS 1978 
Mr. Justice Daniel J. Shea delivered the Opinion of the Court. 

Plaintiffs Gerald Hansen and Consolidated Commerce Corporation appeal from an order of the Silver Bow County District Court 

granting summary judgment in favor of defendants Transamerica Insurance Company and Silver Bow County in an action on an insurance 

policy. 

Plaintiffs brought this action seeking the full amount of 

an insurance policy following the destruction by fire of a building 

known as the Woodrow Hotel, located in Butte, Montana, and a 

declaration of the county's interest in the building at the time 

of its destruction. The county was the seller and plaintiff Hansen 

the buyer of this building under a contract of sale entered into by 

these parties. The county cross-claimed against Transamerica seeking the full amount of the insurance policy, alleging its interest 

in the building was superior to that of plaintiffs. On March 13, 

1974, Transamerica deposited $2,862.35, a sum less than the full 

amount of the insurance policy, with the District Court. 

On May 29, 1974, the District Court ordered the remains of 

the destroyed building demolished, reserving for a later hearing 

determination of the rights of the parties in the building and 

the building's value at the time of its destruction. Following 

a hearing, the District Court granted motions of the county and 

Transamerica for summary judgment on the issue of the building's 

ownership, ruling that plaintiffs had forfeited all rights to the 

building as of June 19, 1970, nearly five months before the building's 

loss, because of their failure to pay the first of four yearly installments on the contract which was due on that date. 

Undisputed facts upon which summary judgment was granted 

are as follows: 
On June 19, 1969, plaintiff Gerald Hansen entered into a 

contract with Silver Bow County to purchase property which had 

reverted to the county for back taxes. By the terms of the contract 

Hansen was to pay $8,500 for this property, which consisted of the 

Woodrow Hotel building. The contract called for a payment of $1,700 

down and $1,700 in each of the next four years, with the payments 

due on the 19th of June of each year. 

Important here is the third clause of this contract, which 

provides : 

"3. That time is of the essence of this contract, 

and in the event that the purchaser or his assigns 

shall fail to pay any installment, when due, or any 

annual interest on deferred payment when due, or 

any tax or assessment, when due, or shall fail to 

comply with any other terms or covenants in this 

contract, then and thenceforth the vendor shall be 

released from all obligation in law or equity to 

convey such property, and the purchaser, or his 

assigns, shall forfeit all right thereto. * * *" 

Hansen made the down payment and assigned the contract to 

the Consolidated Commerce Corporation, which was owned by Hansen. 

The installment due on June 19, 1970, was not paid. The county 

sent no notice of default with respect to this missed installment 

and took no action to repossess the property. The building was 

destroyed as the result of two fires, on the 3rd and 9th of November, 

1970. Four days after the building's destruction, nearly five 

months after plaintiffs' failure to pay the 1970 installment, the 

county repossessed the building. 

Transamerica, which had transferred an existing insurance 

policy covering the building to Hansen on August 11, 1969, received 

proofs of loss from plaintiffs and the county following the building's 

destruction. Transamerica paid neither claim. 

The underlying issue on appeal is whether Hansen still had 

an interest in the property at the time of the fire. 

Summary judgment is proper if the record shows there is no 

genuine issue of material fact and the movant is entitled to judgment 
as a matter of law. The burden initially is on the movant to show 

the absence of any genuine issue of material fact; if the record 

discloses no such issue, the burden shifts to the party opposing 

the motion, who must then establish a genuine factual issue. 

Rule 56(c), M.R.Civ.P.; Harland v. Anderson (1976), 169 Mont. 447, 

548 P.2d 613, 33 St.Rep. 363. 

In this case determination of the interest of the parties 

in the building at the time of its destruction did not raise an 

issue of material fact. The propriety of summary judgment, therefore, turns on whether the county is, as a matter of law, entitled 

to sole ownership of the building as of June 19, 1970, the date on 

which the unpaid installment became due. 

The county contends the third clause of the contract, the 

"time is of the essence" provision, controls, and that since no 

notice of forfeiture was required by that provision, plaintiffs' 

failure to pay the installment due on June 19, 1970 automatically 

terminated their interest in the building as of that date. 

Plaintiffs contend they had an insurable interest in the 

building at the time of the fire because the county had not yet 

acted to repossess the property. They argue that by failing to 

assert its ownership interest by repossession until five months 

after plaintiffs' default the county waived the "time is of the 

essence" provision and therefore, as a matter of law, was not entitled 

to invoke strict forfeiture under this provision. 

All parties rely on Fratt v. Daniels-Jones Co. (1913), 47 

Mont. 457, 133 P. 700, in support of their respective positions. 

In Fratt, the sellers of real property sought to enforce a contract 

clause which provided that failure of the buyer to make a payment 

when due "shall work an immediate forfeiture of this contract, 

without any notice whatever * * *." Four months after the due date 

of a missed installment the sellers sent the buyer notice of for- 
feiture. The buyers then tendered the amount owed, which was refused. 

The sellers received a judgment on the pleadings in their subsequent 

quiet title action and upon appeal the buyers contended that the 

delay between default and taking action thereon constituted a waiver 

of the default. This Court did not agree. Distinguishing between 

two "classes" ofcontractswhich include "time is of the essence" 

provisions, this Court stated: 

" * * * counsel failed to discriminate between a 

contract like the one now under consideration, by the 

very terms of which the failure to pay an installment 

when due ipso facto ends the contract, and one which 

provides that upon the failure of the vendee to make 

payment on time, the vendor shall have the right to 

declare the agreement at an end * * * Under an agreement of the first class the breach by the vendee terminates the contract unless the vendor elects to 

waive the time provision and continue the agreement 

in force. * * * Under a contract of the second class 

the breach by the vendee does not ipso facto terminate 

the agreement. It merely creates the condition under 

which the vendor may terminate it if he elects to 

avail himself of the power conferred * * *." 47 Mont. 499. 

The "time is of the essence" provision at issue here is 

not qualified by a notice requirement of any kind, and the contract 

therefore can be described as being of the first "class" as set 

forth in Fratt. Absent a waiver of the operation of this provision, 

plaintiffs' default would have the effect of working a forfeiture 

of their interests in the building as of the date of the default. 

We hold in this case there was such a waiver by the county. 

A period of nearly five months elapsed between the date on which 

the 1970 installment became due and the county's action in repossessing the building as a result of plaintiffs' nonpayment of that 

installment. During that period the county did nothing. It was 

not until four days after the building's destruction that the county 

commissioners notified the county treasurer of the repossession. 

As this Court stated in Suburban Homes Co. v. North (1914), 50 Mont. 
" * * * If payment is to be made in installments, 

default in the payment of any installment is a distinct breach and gives the vendor the right to 

declare a forfeiture. The right must be promptly 

exercised, however; otherwise, the right being 

exclusively that of the [vendor], he will be 

presumed to regard the contract as still valid 

and existent. * * * " 

The county could have repossessed the building immediately 

upon plaintiffs' failure to pay the 1970 installment when it was 

due. However, the county was not required to repossess the building, 

and could have either expressly waived the time provision or accepted 

latepayment if such payment had been tendered. In either event, 

the contract would have remained in effect notwithstanding plaintiffs1 

default. Although not express, the county's waiver in the present 

case by its nonaction achieved the same result. 

Plaintiffs concede that the county has an interest in the 

building and a corresponding right to the insurance proceeds to the 

extent of the unpaid balance of the purchase price. Although not 

named a loss payee in the insurance policy as required by the contract, the county still has an equitable lien on the insurance proceeds regardless of the positions of the parties at the time of the 

loss. American Equitable Assurance Co. v. Newman (1957), 132 Mont. 

The summary judgment of the District Court is vacated and 

the cause remanded for further proceedings consistent with this 

opinion. 

We Concur: 

f 

Justices 

-6- 
Mr. Justice Frank I. Haswell, dissenting: 

I would affirm the judgment of the Uistrict Court. 

In my view all right, title or interest of plaintiffs 

in the property was terminated automatically on their failure 

to pay the first installment of the purchase price on June 19, 

1970. The contract between plaintiffs and Silver Bow County 

expressly so provides in pertinent part: 

"That time is of the essence of this contract, 

and in the event that the purchaser or his assiqns 

shall fail to pay any installment, when due * * * 

then and thenceforth the vendor shall be released - 

Erom all obligation in law or equity - to convey - 

such property, and they, o; his assisnq, 

1 fnrfu all risht ther-. * * *" (Emphasis 

supplied.) 

The majority find an implied waiver of this contract 

provision in the failure of the county to repossess the property 

for a period of five months. Fratt, cited and quoted in the 

majority opinion, holds that a breach terminates a contract of 

the type involved in this case " * * * unless the vendor elects 

to waive the time provision and continue the agreement in force." 

It is axiomatic that a waiver is the voluntary relinquishment of a known right. I would not imply such voluntary 

relinquishment by the county of its contract right simply from 

its nonaction for a period of five months to formally repossess 

the property and cut off any rights of the plaintiffs under the 

contract, an action it was not required to take under the automatic termination provision of the contract. Hence no waiver, 

and the judgment of the District Court should be affirmed. 

Justice 

Mr. Justice John Conway Harrison dissenting: 

I concur in the dissent of Justice Haswell. 

L Justice