### No. 84-470 INTHE SUPREME COURTOF THE STATEOF MONTANA 1985

WILLIAM HARLOW HASS, individually and on behalf of HASS LAND COMPANY, Plaintiff and Appellant,

HASS LAND COMPANY, a Mont. corp., and PAULAALTHOFF and LAURA JEAN KNOTT, individuallyand asdirectors of said corporation, Defendants and Respondents. 

## ******************* HASS LAND COMPANY and PAULAALTHOFF and LAURA JEAN KNOTT, individually and 

### in the right of HASS FARMS, INC., a

### Montana corp., Cross-Plaintiffs and Respondents,-vsHASS FARi?4S,INC., and WILLIAM HARLOW HASS, individuallyand as Presidentand Director of Bass Farms, Inc., Cross-Defendants and Appellants.

APPEAL FROM: District Court of the Thirteenth JudicialDistrict, In and for the County of Yellowstone, The Honorable Robert

### W. Holmstrom,Judgepresiding. COUNSELOF RECORD: ForAppellants: Tipp,Hoven, Skjelset & 

### Frizzell; Thomas Frizzell, Missoula,Montana For Respondents: Moulton,Bellingham,Longo & 

### Mather; B.E. Lcngo, Billinqs,Montana

- 

### Submitted on Briefs: April 25, 1985

Filed: 

### ii,c~I; 2 

# 1985

ClerkMr. Justice L.C. Gulbrandson delivered the Opinion of the Court.

William Harlow Hass appeals from an order of the District Court of the Thirteenth Judicial District, Yellowstone County, Montana, granting the specific performance of a 

### settlement agreement between the parties. Weaffirm. This appeal involves a long-standing family dispute between William Harlow Hass and his two 

### sisters, Paula Althoff and Laura Jean Knott, over the control and operation of two family farm corporations in Sheridan County, Montana. Hass Land Company owns approximately 6,130 acresof farm land which was the family farm bequeathed by Margaret Hass in the approximate shares of 50 percent to Tdil.liam and 25 percent each to Paula and Laura. Hass Farms, Inc., 

### is the operating arm of the Hass Land Company, and owns the machinery and equipment. Itwas alsobequeathed by Margaret Hass toher children inapproximately the same proportions as theLand Company. In 1976, William filed suit against his 

### sisters, Paula and Laura, and Hass Land Company, alleging stockholder oppression and requesting the appointment of a receiver for the corporation. The 

### sisters cross-claimed against William and Hass Farms, Inc., for an accounting. On the motion of William the District Court severed the 

### sisters1cross-claim, resulting in the filing of separate complaints against William and Hass Farms, Inc. These complaints 

### were consolidated for trial with the Hass Land and William Hass suit.On July 23, 1982, all of the parties, acting in both their persona1 and corporate capacities, entered into an "Agreement of Settlement." Among other arrangements settling thevarious lawsuits, theAgreement called for the partiestoappoint appraiserswho 

### wereto "determinetheentirevalue of the assets of each corporation.I' Further, the agreement provided that 

### "[t] he value determined

# . . . [by the appraisers] shallbe reduced by corporate debtsowed tothird parties such as banks or the CCC," subject to the qualification that I' [o] nly $100,000 of third-party debts 

### is to be used to reduce the market value of Hass Farms corporation. " After executing this agreement, the 

### sisters promptly appointed their appraiser. William did not, and, in fact delayed until May 11, 1983, through an entireplanting season during which he was in full control of the farm. On that date, the 

### sisters filed a petition with the District Court requesting thatthecourt enforce the specificperformance of the settlement contract. William then appointed his appraiser and both appraisers 

### were able to agree on the requested valuations. The petition did not reach trialuntil April 2, 1984; through yet another planting season. The District Court entered 

### its findings, conclusions, and order

on August 20, 1984; well into the third season after the parties had settled their disputes. William was in full control of the farm during the whole 

### time, planting, harvesting, and selling the crops each year. William then appealed the 

### District Court's order tothis Court. We note that 

### it is now four years since the parties "settled" their dispute. Appellant raises the following issues on appeal: 1. That the District Court erroneously substituted 

### its judgment fortheappraisers inmaking additionstothemarket value of Hass Land Company and Hass Farms. 2. That even if the settlement agreement allowed the District Court to determine the price tobe paid by Williamtohis 

### sisters, the court interpreted the agreement contrary tothe parties' intent, and the law. 3. That the 

### District Court erred in levying interest againstWilliam. In his firstallegation of error, William contends that the DistrictCourt erred in adding tothe appraised value of Hass Farms, Inc. the amount of the Commodity Credit Corporation (CCC) grainheld asloancollateral, and the "115 account"; thereby increasingthe amount he was required under the settlement agreement to tender his 

### sisters 

### to purchase theirinterests. The appraisers had previously agreed tothe valuation of the assets of Hass Farms, Inc., and Hass Land Company. William argues that when the appraisers reached these figures, they had already incorporated those debts. Two separate clauses of the settlement agreement are relevant

### totheCCC grain issue. The firststates: "The appraisers will determine the value of the assets of each corporation." 

## - - (Emphasis added.) And the second: "The value as determined above shall be reduced by corporate debts owed tothird parties sbch as banks or the CCC. 

# . . . "Only $100,000 of third party debts 

### is tobe used toreduce themarket val-ueof Hass Farms corporation." On thispoint, theDistrictCourt found: "The court finds that the provision to finding market value contained in the agreement of settlement 

### is plain and unambiguous and all grain owned by Hass Farm as of July 23, 1982, is to be included in the valuation of the corporate assets and further, the deduction for debts owed to third parties, including the CCC 

### is limited to $100,000 

# ..."

In Ryan v. Board of County Commissioners, 

### etc. (Mont. 1980), 620 P.2d 1203, 37 St.Rep. 

### 1965, 

### we referred 

### to thefollowing statutes in interpreting a disputed contract provision: "Section 28-3-301, MCA, provides: "A contract must be so interpreted asto give effect to the mutual intention of the parties as 

### it existed atthe 

### timeof contracting, so far as the same 

### is ascertainableand lawful. "Section 28-3-303, MCA, provides: "When a contract 

### is reduced to writing, the intention of the parties 

### is to be ascertained from the writing alone if possible, subject, however, tothe other provisions of thischapter." Further, inWortman v. Griff (Mont. 1982), 651 P.2d 998, 39 St.Rep. 1916, 

### we held that where the "language 

### is clear and unambiguous an 

### its face, 

### it 

### is the duty of the court to enforce 

### it as the parties made 

### it." (Citing Ryan, supra.) The DistrictCourt held that the contract was clear and unambiguous and 

### we agree. It specificallyprovides that the assets of each corporation includes "all personal property owned and used in the operation of Hass Land for Hass Farms, all of 

### its grain, [and] personal equipment

# ..." The appraisers 

### were, by the terms of the contract, simply directed to determine the value of those assets. They 

### were not directed to engage in any adjustments for debt. The simple language in the contract, that "the value 

### - as determined above" necessarily suggests that the value referred to

### is antecedent tothe adustment fordebt. Inthe clause where the debt adjustment 

### isdirected no reference to the appraisal 

### is made. The contract simply provided first that the appraisers 

### were to reach a value of the assets. Then, secondly and independently, that value would be increased by corporate debts in excess of $100,000. The court, in enforcing the specific performance of this agreement did no more than the parties had agreed to do.

### Williammade apractice over theyears of drawing on the bank account of Hass Farms, Inc. as though it was his own personal bank account. By deposition,CordellAlmond, a CPA and accountant for Hass Farms, testified that this account, called the "115 

### account,"was a personal checking account of William, though drawn on the corporation. William argues that his liabilities under this account were released when all of the claims were released by the settlement agreement. Alternatively,he contends the account,being an asset of the corporation,was specifically includ-edwithin the appraisers calculations and the parties arebound thereby. The DistrictCourtheld: "The said account is an asset of the corporation and should be included in determining the value of the assets of said corporation and that in addition thereto, accounts owed by Paula Althoff and Laura JeanKnott to Hass Land Company should be included as an asset of said corporation for the purpose of determining the value of its assets." We affirm the DistrictCourt for two reasons. First is that the court's order effectuated the parties' contractual expectations. William argues that his personal liability under the "115 

### account" was released in the settlement agreement. To determine the validity of his contention,we must turn to the agreement itself. It directed the appraisers, when valuing Hass Farms, Inc. to consider: "all of its grain, personalty, equipment and machinery

# . . . and other equipment and personal property 

## - of 

## - all types as shownon 

## the books of the corporation.

### " (Emphasisadded.) 

### The District Court deemed this clause "clear and unambiguous." Based on evidence on the record that William, Paula, and Laura owed money to Hass Farms, Inc., and that these debts were "on the books" the court determined that they were corporate assets and added them to the amount reached by the appraisers. Since theAgreement of Settlement

### is controlling, appellants argument mentioned above 

### is irrelevant. As to William's argument that the appraiser's calculations arebinding, 

### we recognize thegeneral rulethat: 

## "[A]n award made by the appraisers 

### is supported by every reasonable intendment and presumption, and 

### it should not be vacated unless 

### it was made without authority, orwas the result of fraud or mistake, or the misfeasance or malfeasance of the appraisers.'' Lee v. Providence Washington Insurance Co. (1928), 82 Mont. 264, 274, 266 P. 640, 643. In accord, 5 Williston 

## - on Contracts, 5802, p. 825. Here 

### it was clear that the appraisersmistakenly forgot to include in the asset valuation of each corporation those debts that the individual parties owed thereto. Along with neglecting to consider William's debts to Hass Farms, Inc., the appraisers overlooked those owed by Paula. Althoff and Laura Knott. This type of mistake, affectingboth parties, negates any inference of partiality orbias. It

### isthistype of mistake, where the indica of impartiality 

### is strong, that the District Court may correctwhen examining an appraiser's report. Weaffirm on thispoint. William next contends that even if the District Court

was empowered under the contract tomake deductions from the appraisal value that 

### it erred in determining that the CCC loans

### were corporate debt. The District Court found that the CCC loans 

### were corporate debt. At issue 

### is grain used as collateral for a

non-recourse loan program administered by the CCC. Under this program, a farmer borrows from the government a sum calculated to reflect the value of the crop and puts up the crop itself ascollateral. If themarket price of the grain turns outhigher 

### than the loan rate, the Farmer can 

### sell the crop, satisfy the loan, and keep the difference. If themarket price does not go above the loan rate, the farmer can activate a "non-recourse clause" in the loan agreement and turnover the croptosatisfyhisobligation. At trial William presented testimony through his accountant that Hass Farms, Inc., was a cash basis entity, and treated the loans as sales. Paula Althoff and Laura Knott pr~sented evidence tothe effect that the CCC payments

were actual-ly 

### a loan and not a sale. Further, they argued the contract specifically provides that CCC payments 

### were corporate debt. The District Court concluded that these payments were 

### a loan, thus debt, and deducted their amount from the corporate assets pursuant to the 

### settlement agreement. In Lauterjung v. Johnson (1977), 175Mont. 74, 572 P.2d 511, 

### we stated: "'When reviewing findings of fact and conclusions of law of a district court, sitting without a jury, this Court has repeatedly held such findings and conclusions 

### will not be disturbed if supported by substantial evidence and by the law

# .. ..When reviewing evidence 

### it 

### will be viewed in the light most favorable tothe prevailing party inthe district court, and the credibility of witnesses and the weight assigned to their testimony 

### is for the determination of the 

### ~istrictCourt in a nonjury trial. (Citations omitted.)'" Citing Luppold 

### v. Lewis (1977), 172 Mont. 280, 284, 563 P.2d 538, 540 Given our deference totheDistrictCourt's findings and conclusions 

### we do not find error. There 

### is substantial credible evidence on the record to support the District Court's conclusion that Hass Farms, Inc. treated the Commodity Credit Corporation's loans ascorporate debt. The CCC loans have few of the aspects of a true sale. There 

### is

no transfer of title. Under the loan program the farmer has the continuing power todispose of thegrain should theprice go higher or otherwise desires to do so. Actual 

### title orownership (possession with the intent to exclude) of the grain

### isnot specificallytransferred untilthe farmer either activates the non-recourse clause or pays his loan. The government pays the farmer for storing the grain during the 

### termof the loan, but aside from that has no other power to

use the same. The fact, frequently mentioned by William, that title to the grain has gone tothe government through activation of the non-recourse clause forthepast few years 

### is irrelevant. There 

### is substantial credible evidence inthe record supporting the District Court's determination and 

### we affirmthe same. Finally, William argues thattheDistrictCourt erred in awarding interest to the respondents. On this point, the courtheld: "That for many years William Harlow Hass

# . . .has continued to farm all of the Hass Land Company's land since the dateof theexecution of theagreement of settlement; that any rental paid by Hass Farms, Inc. since the appraisal date,

# .. .was not taken intoaccount in the determination of market value

# . .. [and] that if said agreement 

### is specifically enforced and the court does hereby conclude that 

### it should be specifically enforced, Hass Farms, Inc. and William Harlow Hass 

### will have gained unfair advantage by the delay in the closing of this transaction in that they have had the use of the land and not had to pay any rent thereupon; the court therefore concludes that

### itwould be fair and equitable for interest tobe paid by William Harlow Hass and Hass Land upon theamount stated from September 

### 5, 1982, the date of the anticipated closing." The general rule stated in 81A Corpus Juris Secundum, SpecificPerformance, S198, p. 164

### is: "Where there 

### is delay in the completion of a contract for the saleorconveyance of property, an adjustment of the rights of the parties may be made by providing for an accountinq as to the rents and profits, or for the payment of interest 

### on the purchase price." Accord, 71 Am.Jur.2d, Specific Performance, $219, pp. 282-283.This Court, inSchultz and Wood 

### v. Campbell (1966), 147Mont. 439, 413 P.2d 879, 

### "for future specific performance cases,

# ...reserve[d] the right to allow interest as an offset against profits or crops." In specifically enforcing this contract, the court acted under the general equity umbrella and had thepower toadjust thepartiesobligations toput them innearly as good a position as if the contract had been performed when required and as required. In this

case William's delay of now up to four years of his performance under the settlement agreement clearly deprived Paula Althoff and Laura Knott of the benefit of those years interest on the rent tobe paid by William. Further, he had the use of a substantial piece of property for that period. The DistrictCourt acted fullywithin 

### itspowers 

### inawarding interest. The orderof 

### DistrictCourt 

### isaffirmed.



# 4, / ief Justice