NO. 94-524

IN THE SUPREME COURT OF THE STATE OF MONTANA

1995

MARTA CORPORATION, a Montana

corporation, PAUL R. SMITH and

DONNA C. SMITH, husband and wife;

WALTER J, VERMEDAHL and PATRICIA

L. VERMEDAHL, husband and wife;

and ARLEN WISSEMAN,

Plaintiffs, Counterclaim Defendants

and Appellants,

ROBERT A. THOFT and SUSIE M. THOFT,

husband and wife,

Defendants, Counterclaimants

and Respondents.

APPEAL FROM: District Court of the Twentieth Judicial District,

1n and for the County of Lake,

The Honorable Michael H. Keedy, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Douglas J. Wold; wold Law Firm, Polson, Montana

For Respondent:

Sam E. Haddon; Boone, Karlberg & Haddon, Missoula

Montana

Filed:

Submitted on Briefs: February 23, 1995

Decided: May 4, 1995
Justice W. William Leaphart delivered the Opinion of the Court

Marta Corporation, Paul and Donna Smith, Walter and Patricia

Vermedahl, and Arlen Wisseman (Appellants) appeal from the

September 23, 1994 order of the Twentieth Judicial District, Lake

County, denying their motion requesting reconsideration of court

orders enforcing a stipulation and relief from an order granting a

show cause hearing to find Appellants in contempt. We affirm.

This case started with a water rights dispute involving

conflicting claims to waters of White Earth Creek and to the Irvine

Flats aquifer in Lake County. Appellants and Robert and Susie

Thoft (Respondents) claim water rights in White Earth Creek, which

flows through the parties' properties. Respondents hold irrigation

water claims from a well which draws its water from the Irvine

Flats aquifer. Additionally, one Appellant party, the Smiths, have

a developed spring which draws its waters from the Irvine Flats

aquifer. Appellants, all neighboring ranchers, sued Respondents

for injunctive relief arising from Respondents' use of surface and

ground water.

This case was originally filed on September 30, 1992. On May

5 , 1993, the District Court entered an order appointing a Special

Master to effect an agreement for interim management of the water

rights at issue. The Special Master completed a report and

recommendation on June 30, 1993, but it was set aside by the court

on August 11, 1993 because of "substantial error in the

proceedings."

On May 12, 1994, the morning of the scheduled trial, the court

2
initiated settlement discussions, during which the parties agreed

to general settlement terms. The court directed the parties'

attorneys to meet and prepare a stipulation for entry of an order.

The court scheduled a meeting for 6:00 p.m. on May 19, 1994 for

entry of the order. On May 16, 1994, Respondents' counsel sent a

draft stipulation to Appellants' counsel. On May 19, 1994,

Respondents' counsel sent Appellants' counsel the final form of the

stipulation: Appellants' counsel signed and mailed the stipulation

to the court and the parties that same day. He did not have client

approval but anticipated their approval for three reasons: First,

they had an urgent need for water, second, the terms of the

stipulation provided for modification if it became unworkable, and

third, the court imposed the May 19 deadline. The next day, in

accordance with the stipulation, counsel filed a motion to replace

the Special Master.

Appellants received the stipulation on May 23, 1994 and they

concluded that the written stipulation was unacceptable. They were

not able to talk with their counsel until May 24, 1994. Appellants

allege that after they explained to him that it was unacceptable,

he called the court and spoke with the judge's assistant. At that

time the stipulation had not been signed by the judge. Appellants

allege that their counsel told the judge's assistant he wanted to

withdraw the stipulation and she agreed to withdraw it and notify

the judge that further documents would be filed. Appellants allege

that, relying on the judge's assistant's assurances, they believed

that the stipulation had been withdrawn. On May 26, 1994,

3
Appellants' counsel signed and mailed a motion to reschedule the

trial date.

On May 29, 1994, the court signed the stipulation and order

that both parties' counsel had signed on May 19, 1994. on May 31,

1994, Respondents filed their motion to enforce the stipulation and

order. On June 6, 1994, the stipulation was filed with the clerk

of court. On June 14, 1994, Respondents wrote to Appellants Smiths

that they (Respondents) intended to enforce the signed stipulation

and that unless the Smiths wrote a letter indicating a willingness

to "honor and carry out" the terms of the stipulation, they would

commence contempt proceedings. on July 7, 1994, Respondents moved

for an order to show cause why the Smiths should not be held in

contempt for their failure to carry out the terms and conditions of

the stipulation. On July 15, 1994, the court granted Respondents'

motion to enforce the stipulation and order (and for attorney's

fees and costs) and denied Appellants' motion to reschedule the

trial date. On September 23, 1994, the District Court denied

Appellants' motion for relief from, and reconsideration of, its

June 6 and July 15 orders, and granted Respondents' request to

prepare and submit an order to show cause regarding Appellants'

contempt. This appeal followed.

Two issues are presented on appeal:

1 . Did the District Court err in denying Appellants relief

from the court's orders of June 6 and July 15, 1994?

2 . Did the District Court err in granting Respondents'

motion for a show cause hearing to find Appellants in contempt for

4
not complying with the June 6, 1994 order?

I

Did the District Court err in denying Appellants relief from

the court's orders of June 6 and July 15, 1994?

In Hetherington v. Ford Motor Company (19931, 257 Mont. 395,

849 P.Zd 1039, after settlement negotiations, it appeared as if the

parties had reached a settlement agreement. The Hetheringtons

agreed to Ford's settlement offer and gave their counsel authority

to accept the offer. Their counsel sent a letter stating that his

clients had decided to accept Ford's offer of settlement. The

letter specified the amount of the settlement offer, the parties'

contributions, and stated that each party would forward certain

paperwork. Hetherington, 849 P.Zd at 1041.

Four days after this letter was sent, the Hetheringtons wrote

a letter to their counsel indicating that they were discharging him

and his firm, that they were not interested in the settlement which

had been offered, and that they did not wish him to negotiate

further on their behalf. The Hetheringtons contended that it was

their understanding that their right to bring their claim would be

preserved until the "written settlement agreement was formally

approved and executed." Hetherington, 849 P.2d at 1041. We held

that "[aIn agreement is binding if made by an unconditional offer,

and accepted unconditionally." Hetherington, 849 P.2d at 1042. In

that case, we held that the attorney's letter, and conference

between the Hetheringtons and their attorney, "disclosed no

conditions or manifestations of conditional intent." Hetherington,

5
849 P.2d at 1042.

In the instant case, during the May 12 settlement discussion,

the parties agreed to general terms, and the parties' counsel were

instructed to meet and prepare a stipulation for entry of an order.

Appellants' attorney executed a signed stipulation and submitted it

to the judge for his signature. As in Hetherington, there were no

conditions placed on Appellants' acceptance of the settlement

agreement. Appellants and Respondents were present and represented

at the settlement discussion and therefore were party to the

agreement on general terms. Although Appellants argue strenuously,

after the fact, that the written stipulation did not meet their

wishes and was unacceptable to them, they do not point to any

specific instances wherein the written stipulation is contrary to

what they agreed to at the May 12 settlement conference.

Appellants argue that their attorney was unauthorized to

execute the stipulation and that the court mistakenly entered the

stipulation after it had been withdrawn. Appellants, however, were

participants in the May 12, 1994 settlement discussion, at which

time the terms of the stipulation were formulated. Applying the

rationale of Hetherington to these facts, we hold that Appellants

are bound by the terms of the written stipulation signed by their

counsel pursuant to the Appellants' participation in a settlement

conference. "The intentions of the parties are those disclosed and

agreed to in the course of negotiations. A party's latent

intention not to be bound does not prevent the formation of a

binding contract." Hetherington, 849 P.2d at 1042. The instant

6
case is more compelling than Hetherington which involved oral

settlement negotiations followed by a letter of acceptance. Here

we have a signed stipulation filed with the court. That Appellants

no longer wish to be bound by the settlement agreement, as set

forth in the written stipulation, does not excuse them from

complying with the terms of that stipulation.

II

Did the District Court err in granting Respondents' motion for

a show cause hearing to find Appellants in contempt for not

complying with the June 6, 1994 order?

In its September 23, 1994 order and memorandum, the District

Court granted Respondents' request to prepare and submit an order

to show cause regarding Appellants' alleged contempt for not

complying with the signed stipulation. No hearing has been held on

this issue. The Smiths argue that the facts do not support their

contempt and no hearing should be held. We do not rule on the

former contention and we disagree with the latter contention.

Rule 1 of the Rules of Appellate Procedure states in part:

(b) In civil cases a party aggrieved may appeal

from a judgment or order, except when expressly made

final by law, in the following cases:

(1) From a final judgment entered in an action or

special proceeding commenced in a district court, or

brought into a district court from another court or

administrative body.

No contempt hearing was held and no final judgment regarding the

Smiths' contempt was issued. It is premature for us to rule on

this issue.

Affirmed

Justi&&
We concur:
May 4‘, 1995

CERTIFICATE! OF SERVICE

I hereby certify that the following certified orde:

following named:

r was sent by United States mail, prepaid, to the

Douglas J. Wold, Esq.

Wold Law Firm

P.O. Box 1212

Polson, MT 59860-1212

Sam E. Haddon, Esq.

Boone, Karlberg & Haddon

P.O. Box 9199

Missoula, MT 59807-9199

‘HE SUPREME COURT

ED SMITH

CLERK OF T

STATE OF MONTANA

,BY:

Deputy

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