No. 14510 INTHE SUPFBlkECOW OFTHE STATE OFMXfTANA 1979

WILLIAMB. JAPPE andMAWARET L. JAPPE, Plaintiffs and Respondents,

-vsmP SUPPLY, IW.,a Corporation, Defendant andAppellant.

Appeal frm: DistrictCourt of theFifthJudicialDistrict, HonorableFrankE. Blair, Judgepresiding. Counsel of Record: ForAppellant: Corette, SmithandDean, Butte, mntana R. D. Coretteargued, Butte, Montana Schulz, Davis and Warren, Dillon, Mntana CarlDavis argued, Dillon, Montana For Respondents: Poore, McKenzie, Roth, Robischon & Robinson, Butte,

Montana Robert Poore argued DavidWing argued, Butte, I%xkma

SuhLtted: May 1, 1979 Decided:

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. -Mr. Justice Daniel J. Shea delivered the Opinion of the Court. PlaintiffsWilliam 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 forby 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 forpayment 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'swife,Marge,was hired as Co-op Supply's bookkeeper. The employment of the Jappeswas 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 fouryears, 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 expansionwas 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 -3-agreementswith 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'smain 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 directorshe 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 iswhether 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 -4-positions with Co-op Supply. The evidence shows that the Jappeswished to continue working at Mini I1 and William Jappe did resume suchwork 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 contractwas 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 Jappeswas 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 contractwhich 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 itwas 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 "theircontribution to CO-OP SUPPLY, INC. in the matter of acquiring,promoting, developing, and establishing said Mini Co-op.. 

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# ." 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 contractwas not dependent on the Jappes employment at Supply's main store and did not cease to be effectlvewhen Co-op Supply terminated the Jappes employment.The next issue iswhether the trial courtwas 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 -5-ever "sellor 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 asmanagers of Mini 11, and that this wrongful oustwas a "disposal"of the premises which triggered the operation of the Jappes' option rights. The court concluded that the contractualwording "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 languagewas 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 I1manager. On the other hand, construction offered by Co-op Supply towards the language "sell or otherwise dispose" is not clear. Although the 1976 contractwas 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 -6-Supply has failed topay the Jappes any commissions since August 26, 1977. The trial court ordered Co-op Supply topay commissions forthe period between August 26, 1977 and the datewhen theJappes obtained possession of Mini I1 from Co-op Supply. The contract provides that the Jappes shall "during the termof the agreement" be compensated by receiving gasoline commissions. The contract does not set out definite dates forthe term of the agreement but it provides that the "agreement shall remain infull force and effect until terminated by written agreement of the parties. 

# . ." It isundisputed that the contract has not been terminated by written agreement. As already discussed, there is ample evidence to support the trialcourt's finding that the contractwas not terminated by Co-op Supply's firingof the Jappes orby any action on the part of theJappes. Therefore, the trial court was correct in finding that the contract is infullforce and effect and that the Jappes are entitled tocommissions. 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 factand conclusions of law and opinion reached by the trial court both difficult tounderstand and contrary to the evidence as I view it. The evidence, as I see it, clearly showed that the Jappes quittheir positions due totheir disagreements with theBoard. Mr. Jappe quiton a disagreement over policy of pay tocertain employees. Such policymaking decisions are a major function of the Board, and it isevident thatMr. Jappe was attempting togo beyond hispower asa paid employee of Co-op Supply. Hisdutieswere torecommend certain operations of Co-op, but not to set policy. TOO, the fact thathe was drinking and was abusive tohis employers was

reason enough to firehim. The Jappes, both by their oral statements, acts and conduct, clearly abandoned any good faithperformance of their agreements with Co-op Supply. They did notperform theirmanagerial dutieswith the loyalty and faithfulness expected. See Garden City Floral v. Hunt (1953), 126Mont. 537, 255 P.2d 352; 53 Am.Jur.2d Master and Servant SS101-103. As I view the evidence, Mr. Jappe's employment was thatof general manager of allof the Co-op facilities, which included the service station, theMini facility, the bulk and oilbusiness, the proposed business and Key-Trol Station, and allbranch facilitiesof Co-op Supply inillo on. The DistrictCourt noted initsmemorandum that "[wlhenwe sayplaintiffswere firedon August 9, [19771, we refer to their employment atthe Service Stationacross the street from theCounty Courthouse atwhich they were employed under

an oral, month tomonth, contract."Thereafter, the DistrictCourt attempted to treat the resignation and subsequent discharge asbeing solely related tothe positions of manager and bookkeeper of Co-op Supply and having nothing todo with the present suiton theMini contract. The DistrictCourt then treats the resignation and discharge as "partof the series of events which became the triggering mechanisms for the wrongful actions of Co-op Supply inendeavoring toforce and pressure the Jappes into relinquishing allproperty rights" under the Mini contract. I do not understand how the court arrived atthisdecision which allows Jappe, after resignation and discharge from managing Co-op Supply's other business, toremain asmanager of theMini facility. I can find no reason toallow the Jappes tocontinue under theMini contract when they had violated their fiduciary duties and obligations toCo-op Supply I would reverse and dismiss the cause. i