No. 13756 

IN THE SUPREME COUFU' OF THE STATE OF MONTANA 

1978 

AKlXUR G. NYGARD and ARIENE NYGARD, 

Plaintiffs and Respondents, 

WAYNE A. HILLSTEAD, BE!r!IY L. HILLSTEAD 

and JEFXE H. COYLE, 

Defendants and Appellants. 

Appeal frm: District Court of the Fourth Judicial District, 

Honorable Edward Dussault, Judge presiding. 

Counsel of Record: 

For Appellants: 

Murray and Holt, Nissoula, Montana 

Harold Holt argued, Missoula, Mntana 

Goldman & WChesney, Missoula, Montana 

For Respondents: 

Mulroney, Delaney, Dalby and Jbdd, Missoula, P.lontana 

Dexter Delaney argued, Missoula, Montana 

Suhnitted: September 14, 1978 

Decided: 7 - ,979 
Mr. Justice Daniel J. Shea delivered the Opinion of the 

Court. 

Wayne A. and Betty L. Hillstead, defendants, appeal 

from a District Court judgment which directed the parties to 

the action to sell certain Seeley Lake real property and 

divide the proceeds equally between them. 

Several issues are raised in this appeal, but the 

dispositive issue is our conclusion that the defendants were 

denied due process of law because the trial court prematurely 

terminated the trial without giving the defendants an opportunity to present further testimony and documentary evidence. 

A summary of the facts leading to this litigation, as 

well as a surrimary of the proceedings in the trial court follows. 

The events which led to this appeal began in December 

1972, when Wayne A. Hillstead, Betty L. Hillstead, Arthur G. 

Nygard and Arlene J. Nygard formed a verbal partnership for 

the express purpose of purchasing and operating the Seeley 

Lake Inn. When the Hillstead-Nygard partnership was formed, 

the Seeley Lake Inn was being operated by Stewart and Marilyn 

Rose. The Roses' claimed title to the Inn under a contract 

for deed entered into with Jerrie Coyle, the record owner of 

the Inn. 

On December 19, 1972, the Roses' assigned all their 

rights under the Coyle-Rose contract for deed to the NygardHillstead partnership. Thereafter, on or about December 22, 

1972, the partnership took physical possession of the Seeley 

Lake Inn. 

The partnership operated the Inn from December 22, 1972 

until April 15, 1973. On the latter date, "unhappy differences" 

caused the Nygards' to leave Seeley Lake on an extended trip 

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to North Dakota. The Hillsteads remained in Seeley Lake 

and continued to operate the Inn. 

On July 10, 1973, the Nygards instituted an action 

in the District Court, Missoula County, seeking a dissolution 

of the partnership and a public sale of the partnership's 

assets. Nygards' complaint alleged that they had been forced 

to leave Seeley Lake because of "unhappy differences" between 

the partners, particularly, Wayne L. Hillstead. 

The Hillsteads filed various responsive pleadings, 

including an amended answer and counterclaim. The amended 

answer claimed the Nygards had not been ousted from the Inn, 

but had abandoned the premises of their own volition. The 

counterclaim sought reimbursement for the Hillsteads for 

one-half of all the Inn expenses paid after April 15, 1973. 

The case was set for trial on June 28, 1976, before the 

Hon. Edward T. Dussault, sitting without a jury. The trial 

lasted one day, with the following judgment being entered 

against the Hillsteads on December 30, 1976: 

"1. That the partnership relationship between 

the Nygards and the Hillsteads be adjudged 

as being terminated as of April 15, 1973. 

"2. That the Hillsteads provide the Nygards 

with an accounting of the sale of personal 

property, equipment and fixtures which the 

parties purchased jointly from the Roses. 

"3. That the Plaintiffs Nygards be entitled 

to a Judgment against the Defendants Hillsteads 

partitioning said property, requiring the same 

to be sold at Sheriff's Sale to the highest 

bidder, and, after the parties have been 

reimbursed for those sums of money expended 

by them in connection with the payment of 

partnership obligations between December 19, 

1972, and April 15, 1973, and the Plaintiffs 

credited to the extent of their interest in 

the personal property sold by the Defendants, 

the proceeds thereof be equally divided between 

the Nygards and the Hillsteads. 

"4. That the Hillsteads be entitled to take 

nothing by virtue of their affirmative defenses 

or cross-complaint against the Nygards." 
After the adverse judgment in the District Court, 

defendants substituted their counsel and prosecuted this 

appeal. The thrust of defendants' argument on appeal is 

that the District Court prematurely terminated the June 28th 

trial and thereby deprived them of the opportunity to present 

their case to the finder of fact. The transcript reveals the 

following occurrences. 

Betty L. Hillstead was the only witness allowed to 

testify on behalf of the defendants. During her testimony, 

her attorney was laying a foundation for the introduction 

of a number of defense exhibits; 5ut, her testimony was 

interrupted when plaintiffs' c~unsel objected to all of the 

defense exhibits. The trial judge decided to take plaintiffs' 

objection under advisement. He stated he would review the 

proposed exhibits during the noon hour and render a decision 

on their admissibility immediately after lunch. The court 

then recessed for a ninety-minute lunch break. 

When the court reconvened at 1:30 p.m., the trial judge 

held a short meeting in his chambers with both opposing 

counsel. Thereafter, the judge returned to open court and 

made the following statement: 

"THE COURT: For the record, and so the clients 

will know, we retired to the office of the 

Court Reporter to at least try to iron out what 

law governs the situation in this case, and I 

told the parties what I felt that the Uniform 

Joint Partnership Act controlled in this 

case, and as a result, I'm not so sure just 

what counsel for the Defendants Hillstead 

feels, but the Court feels that, and has 

ruled as a matter of record, that the 

partnership actually was dissolved as of 

April fifteenth, 1973, and from that date 

on the remaining partner who stayed in the 

business didso at his peril. In other 

words, if he expended any money in the 

hopes of making money or borrowed money in 

the hopes of making the business flourish, 

which it did -- I know of my own knowledge 

at one time under the original owner that 
he didso, and they did so at their own 

peril. The Court will admit the notes 

which were offered in.evidence with the 

exception of L which was not offered - 

Defendants' Exhibit L." 

After this statement was made, an extended discussion 

took place between the court and opposing counsel. The 

bulk of this discussion seems to be an attempt to clarify 

exactly what the trial judge had decided. At one point, 

the following exchange took place: 

"THE COURT: I think both counsel know exactly 

what we're talking about. 

"[PLAINTIFFS' CCUNSEL] . . . Shall we - prepare 

proposed findings? 

"THE COURT: - Yes, --- if you will. I would 

appreciate your preparing findings, and I am 

just saying this -- I was trying to shorten the 

record for you in case you didn't like the way 

I interpret the law, so if you want to take 

an appeal it would cost you less, and I know 

nobody can say 'anybody,' but I think I can 

read the law and we've had two or three cases 

exactly in point regarding this type of 

partition or dissolution. If it cannot be 

partitioned, then it would have to be sold." 

(Emphasis added.) 

Betty Hillstead never returned to the witness stand. 

Wayne Hillstead, who was scheduled to testify in his own 

behalf, was never given the opportunity to take the stand. 

The District Court simply ruled the trial was complete and 

findings and conclusions should be submitted. 

After the court announced its ruling, defendants' 

counsel made the following objection to the termination of 

the proceedings: 

"[DEFENDANTS' COUNSEL] . . . Would you hold 

the floor a minute, Judge? May we have a 

few minutes to think about this, Judge? 

"THE COURT: Sure. 

"[DEFENDANTS' COUNSEL] . . . Your Honor, at 

this time I would like to lay a foundation 

for appeal, if it's all right with the Court. 

"THE COURT: Sure. 
"[DEFENDANTS' COUNSEL] . . . That the 

Defendant, or Defendants, rather, have been 

barred from introducing any evidence of the 

conduct of the Plaintiffs and their abandonment of the premises. That further we were 

barred from introducing the income tax returns 

for the years '74 and '75, made by the 

accountant for the partnership. This is only 

part of the basis of our appeal. This is no 

reflection upon the Court, Your Honor; merely 

was to make this of the record. I also want 

to make, for the record, or state for the 

record, that the parties without a statement 

of an indemnification, refuse to sign the 

liquor and beer licenses. Is that correct, 

Mr. Delaney?" 

It is fundamental that "[nlo person shall be deprived 

of life, liberty, or property without due process of law." 

1972 Mont. Const. Art. 11, S17. "It is well settled that 

notice and opportunity --- to be heard are essential elements 

of Due Process". Halldorson v. Halldorson (19771, Mont . 

also stated in Halldorson: 

". . . [Wle believe that appellate courts 

---- have a duty to determine whether the 

parties before them have been denied 

substantial justice the trial - court, 

and when that has occurred we can. within 

our sound discretion, consider whether 

the trial court has deprived a litigant 

of a fair and impartial trial, even though 

no objection was made to the conduct during 

the trial." (Emphasis added.) 573 P.2d at 172. 

Our review of the District Court record convinces us 

that the defendants were not given an adequate opportunity 

to present their side of the case. They were denied substantial 

justice. Accordingly, they are entitled to a new trial. 

Since the case must be retried, we feel it is incumbent 

on this Court to offer some suggestions to avoid further 

confusion and delays. First, we note that this action was 

tried without the benefit of discovery or pretrial conference. 

We strongly recommend holding a formal pretrial conference 

to simplify the issues and formulate the contentions of the 

parties. Such a procedure expedites the trial and is valuable 

for this Court if a subsequent review becomes necessary. 

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We also note that there was some dispute over the 

applicability of Montana's Uniform Partnership Act. The 

parties now concede that the act applies, but disagree as 

to the applicable sections. The pretrial conference will 

afford the litigants an opportunity to present their arguments 

to the court prior to the trial date. This procedure will 

allow the court to make an informed decision as to which 

section of the act should be applied. 

For the foregoing reasons, the case is remanded to the 

District Court for a new trial. 

We Concur: 

Chief Justice