No. 14510 

IN THE SUPFBlkE COW OF THE STATE OF MXfTANA 

1979 

WILLIAM B. JAPPE and MAWARET L. JAPPE, 

Plaintiffs and Respondents, 

-vsmP SUPPLY, IW., a Corporation, 

Defendant and Appellant. 

Appeal frm: District Court of the Fifth Judicial District, 

Honorable Frank E. Blair, Judge presiding. 

Counsel of Record: 

For Appellant: 

Corette, Smith and Dean, Butte, mntana 

R. D. Corette argued, Butte, Montana 

Schulz, Davis and Warren, Dillon, Mntana 

Carl Davis argued, Dillon, Montana 

For Respondents: 

Poore, McKenzie, Roth, Robischon & Robinson, Butte, 

Montana 

Robert Poore argued David Wing argued, Butte, I%xkma 

SuhLtted: May 1, 1979 

Decided: - - -1 M9 

Filed: -- -

';F' , 

5.'. 6 

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Mr. Justice Daniel J. Shea delivered the Opinion of the Court. 

Plaintiffs William and Margaret Jappe sought specific 

performance of a 1976 contract providing for payment of 

commissions and an option to purchase a self-service, gasconvenience store. Co-op Supply, the defendant, has appealed 

a judgment for the plaintiffs entered by the Beaverhead 

County District Court. 

This appeal raises the following issues: (1) whether 

the plaintiffs refused to perform their management duties 

called for by the 1976 contract, and if so, whether their 

refusal excused defendant's nonperformance of the contract; 

(2) whether the defendant terminated the 1976 contract by 

discharging the plaintiffs from their employment positions; 

and, (3) whether there was sufficient evidence to support 

the District Court order for specific enforcement of the 

1976 contract provisions for payment of commissions and 

option to purchase. 

The defendant, Co-op Supply, Inc. is the owner of 

petroleum plants, gas stations and convenience stores in 

Dillon, Montana. In 1966, William Jappe was employed as 

general manager of defendant's main store in Dillon, Montana. 

Two years later, Jappe's wife, Marge, was hired as Co-op 

Supply's bookkeeper. The employment of the Jappes was by 

oral agreement. 

In 1972, the plaintiffs became interested in developing 

their own service station-convenience store. William Jappe 

developed plans for the store and negotiated a "hold" on property 

located in northern Dillon. He presented these plans to 

Co-op Supply, and Co-op Supply became interested in the 

project. Thereafter the "hold" on the Dillon property became 

a lease to Co-op Supply and William Jappe as joint lessees. 
During the next four years, the parties operated under 

the written agreement providing that William Jappe provide the 

management and Co-op Supply provide the capital for the business, 

which was called Mini Co-op (Mini I). The agreement also 

stated that the Jappes should be compensated by receiving 

monthly gasoline commissions and an option to purchase the 

property should it be sold or otherwise disposed. The 

business was so successful that expansion was planned. 

Jappes and Co-op Supply decided to build a larger store 

on company-owned ground. To facilitate the development of 

the project, the Jappes purchased land and innovated special 

features for the new store. The contract which governed the 

rights and duties of the parties towards Mini I was rewritten 

to pertain to the new site and to reimburse the Jappes for 

their cost in purchasing the site. This contract was executed 

on August 10, 1976. The new site is referred to as Mini 11. 

Mini I1 began operating in the fall of 1976 and the 

parties operated without problems under the 1976 contract 

until the following summer. In June 1977, a dispute arose 

between the Board of Directors and the Jappes concerning 

the size of bonuses to be paid to employees. 

The dispute came to a head at a Board meeting on July 

5, 1977, when the Jappes, disgusted with the Board's rejection 

of their recommendations concerning employee bonuses, made 

statements to the effect that they felt like quitting. The 

Board interpreted these comments as resignations. Whatever 

the case, in the next few days the Jappes decided to seek reinstatement of their employment positions. 

At subsequent meetings unattended by the Jappes, the Board 

decided that reinstatement would be permitted only if the 

Jappes signed an agreement cancelling their prior written 

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agreements with Co-op Supply. On August 9, 1977, the Jappes 

refused to sign the cancellation agreement and the Board 

agreed their "resignation" was thereafter effective. Jappes 

left their keys at the office and departed. The following day, 

Marge Jappe resumed her usual bookkeeping duties at Co-op 

Supply's main store. She continued working until she received 

a letter signed by Supply's president telling her that she 

had been terminated. Approximately one week later, William 

Jappe returned to Mini I1 to perform his management duties but 

at the request of the directors he left the premises. 

The Jappes were not paid any commissions on gasoline 

sales after August 26, 1977 and by writing on September 26, 

1977, advised Co-op Supply that they elected to exercise 

their option. Thereafter, the Jappes instituted this suit 

to enforce the commission and option provisions of the 1976 

contract. 

The first issue raised by Co-op Supply is whether the 

trial court erred in concluding that the 1976 contract is 

valid and enforceable, and governs the rights of the parties 

concerning Mini 11. The 1976 contract stated that it "embraced 

the operation and management" of Mini I1 and that the facility 

"is . . . managed by Jappe." Co-op Supply argues that the 

contract is not in effect because the Jappes abandoned any 

good faith performance of their management duties. 

There is substantial evidence to support the trial court's 

conclusion that at all times the Jappes stood ready and willing 

to perform their management duties. Co-op Supply would have 

this Court find that the Jappes' expressions of disappointment 

at the July 5, 1977 meeting was a refusal to perform their 

duties under the 1976 contract. The trial court found that 

the Jappes' "resignation" related only to their employment 

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positions with Co-op Supply. The evidence shows that the 

Jappes wished to continue working at Mini I1 and William Jappe 

did resume such work until he was requested to leave. Thus, 

the evidence supports rather than preponderates against the 

trial court's finding that the Jappes were willing to continue 

managing Mini 11. 

Co-op Supply also argues that the 1976 contract was only 

in effect as long as the Jappes remained as employees and 

therefore that the contract ceased to be effective on August 

9, 1977 when the Board accepted the Jappes' resignations. 

But, the trial court found that Co-op Supply's 1976 contract 

with the Jappes was not contingent upon their continued 

employment at the main store. The Jappes were employed by oral 

agreement to work at the main store while their duties at 

Mini I1 were governed by the 1976 contract which stated that 

Jappes' management of Mini I1 shall be "in addition to their 

other and normal duties as employees of Co-op Supply, Inc." 

Additional language in the 1976 contract suggests that 

it was a property agreement, not an employment contract. 

Paragraph two of the contract provides that the Jappes shall 

be compensated not for their duties but for "their contribution 

to CO-OP SUPPLY, INC. in the matter of acquiring, promoting, 

developing, and establishing said Mini Co-op.. . ." This 

language along with the testimony of William Jappe that he 

understood the contract to be a form of partnership agreement 

is ample evidence that the contract was not dependent on the 

Jappes employment at Supply's main store and did not cease 

to be effectlve when Co-op Supply terminated the Jappes employment. 

The next issue is whether the trial court was correct 

in granting the Jappes specific performance of the option 

to purchase Mini 11. The 1976 contract stated in paragraph 

six that Co-op Supply agreed that if for any reason it should 

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ever "sell or otherwise dispose" of Mini 11, that Jappes 

would have the exclusive option to purchase the facility. 

Co-op Supply contends that since it never sold the facility, 

and has continued to operate Mini 11, that the option cannot 

be exercised. 

The District Court held that Co-op Supply had wrongfully 

ousted the Jappes from their position as managers of Mini 

11, and that this wrongful oust was a "disposal" of the 

premises which triggered the operation of the Jappes' option 

rights. The court concluded that the contractual wording 

"sell or otherwise dispose" is ambiguous and therefore 

looked to the surrounding circumstances as permitted by 

section 28-3-402, MCA. We cannot hold as a matter of law 

that the language was clear by its very tenor; therefore, it 

was proper for the trial court to consider the surrounding 

circumstances. 

The circumstances surrounding the execution of the 

contract support the trial court's conclusion that the 

Jappes intended Mini I1 to be a joint venture with Co-op 

Supply. The "sell or otherwise dispose" clause was inserted 

at William Jappe's insistence to protect his property interest 

in Mini 11, in the event that Co-op Supply should release 

him from his position as Mini I1 manager. On the other 

hand, construction offered by Co-op Supply towards the 

language "sell or otherwise dispose" is not clear. Although 

the 1976 contract was signed by Co-op Supply's president, 

Peter Rebish, it was not read or discussed by the Board 

members prior to July 5, 1977. Based on this evidence, we 

cannot say that the evidence clearly preponderates against 

the construction of the language reached by the District 

Court. 

The final issue is whether the Jappes are entitled to 

any unpaid gasoline commissions under the 1976 contract. Co-op 

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Supply has failed to pay the Jappes any commissions since 

August 26, 1977. The trial court ordered Co-op Supply 

to pay commissions for the period between August 26, 1977 

and the date when the Jappes obtained possession of Mini 

I1 from Co-op Supply. 

The contract provides that the Jappes shall "during 

the term of the agreement" be compensated by receiving 

gasoline commissions. The contract does not set out definite 

dates for the term of the agreement but it provides that 

the "agreement shall remain in full force and effect until 

terminated by written agreement of the parties. . . " It 

is undisputed that the contract has not been terminated by 

written agreement. As already discussed, there is ample 

evidence to support the trial court's finding that the 

contract was not terminated by Co-op Supply's firing of 

the Jappes or by any action on the part of the Jappes. 

Therefore, the trial court was correct in finding that the 

contract is in full force and effect and that the Jappes 

are entitled to commissions. 

The judgment of the District Cour affirmed. 

We Concur: 

Chief Justice 

," 
Mr. Justice John Conway Harrison dissenting: 

I dissent. First, I find the findings of fact and 

conclusions of law and opinion reached by the trial court 

both difficult to understand and contrary to the evidence as 

I view it. 

The evidence, as I see it, clearly showed that the 

Jappes quit their positions due to their disagreements with 

the Board. Mr. Jappe quit on a disagreement over policy of 

pay to certain employees. Such policymaking decisions are a 

major function of the Board, and it is evident that Mr. 

Jappe was attempting to go beyond his power as a paid employee 

of Co-op Supply. His duties were to recommend certain 

operations of Co-op, but not to set policy. TOO, the fact 

that he was drinking and was abusive to his employers was 

reason enough to fire him. The Jappes, both by their oral 

statements, acts and conduct, clearly abandoned any good 

faith performance of their agreements with Co-op Supply. They 

did not perform their managerial duties with the loyalty and 

faithfulness expected. See Garden City Floral v. Hunt (1953), 

126 Mont. 537, 255 P.2d 352; 53 Am.Jur.2d Master and Servant 

SS101-103. 

As I view the evidence, Mr. Jappe's employment was 

that of general manager of all of the Co-op facilities, 

which included the service station, the Mini facility, the 

bulk and oil business, the proposed business and Key-Trol 

Station, and all branch facilities of Co-op Supply in illo on. 

The District Court noted in its memorandum that "[wlhen we 

say plaintiffs were fired on August 9, [19771, we refer to 

their employment at the Service Station across the street 

from the County Courthouse at which they were employed under 

an oral, month to month, contract." 
Thereafter, the District Court attempted to treat the 

resignation and subsequent discharge as being solely related 

to the positions of manager and bookkeeper of Co-op Supply 

and having nothing to do with the present suit on the Mini 

contract. The District Court then treats the resignation 

and discharge as "part of the series of events which became 

the triggering mechanisms for the wrongful actions of Co-op 

Supply in endeavoring to force and pressure the Jappes into 

relinquishing all property rights" under the Mini contract. 

I do not understand how the court arrived at this decision 

which allows Jappe, after resignation and discharge from 

managing Co-op Supply's other business, to remain as manager 

of the Mini facility. I can find no reason to allow the 

Jappes to continue under the Mini contract when they had 

violated their fiduciary duties and obligations to Co-op 

Supply 

I would reverse and dismiss the cause. 

i