No. 14770 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1979 

DONALD J. HOFFMAN and DONNA M. HOFFMAN, 

Plaintiffs and Appellants, 

VS . 

PATRICK A. BYRNE and ROBERTA R. BYRNE, 

Defendants and Respondents. 

ORIGINAL PROCEEDING : 

Counsel of Record: 

For Appellants: 

Keller, Reynolds, Drake, Sternhagen & Johnson, Helena, 

Montana 

Hood and Sherwood, Missoula, Montana 

Mike Sherwood argued, Missoula, Montana 

Morales, Volinkaty and Harr, Missoula, Montana 

1. - /* , [/-a ..-- .. / 

For Respondents: 

Milodragovich, Dale & Dye, Missoula, Montana 

Harold Dye argued, Missoula, Montana 

Submitted: November 6, 1979 

~ecided: DEG31 1979 

Cje;[l Q 7 *A- Filed: , /~'7$j 
Mr. Justice John C. Sheehy delivered the Opinion of the Court. 

Appeal is by plaintiffs Donald J. Hoffman and Donna 

Hoffman from a grant of summary judgment against them by the 

District Court, Fourth Judicial District, Missoula County. 

They had brought action in that court against defendants 

Patrick A. Byrne and RobertaR. Byrne for a declaratory judgment that plaintiffs were not in default with respect to a 

contract to purchase real estate from the defendants. The 

District Court decided against the Hoffmans as purchasers, 

granted summary judgment to the Byrnes, and later ordered by 

writ of restitution that the Hoffmans surrender the real 

property to the Byrnes. The appeal followed. 

In separating the facts of the case, it is easier to 

separate the incidents by dates as follows: 

October -- 23, 1974: Patrick A. Byrne and RobertaR. 

Byrne, as sellers entered into a contract for deed with Donald 

J. Hoffman and Donna M. Hoffman, as buyers, for certain real 

property located in Missoula County. The contract provided 

for an escrow to which payments were to be made this being the 

Southside National Bank of Missoula at the time that is pertinent 

here. The contract also provided that the escrow holder was 

to deduct from each monthly payment made by the Hoffmans a sum 

sufficient to pay a mortgage remaining due on the property on 

the interest of the sellers, Byrnes. 

December -- 6, 1977: On this date the Byrnes sent a letter by 

certified mail to the Hoffman~ alleging a default in that 

judgment had been taken against them by Budget Finance in 

Flathead County for $4,223.81 and the Sheriff of Missoula 

County had filed and served a notice of levy of execution on 

the interest of the Hoffmans in the real property being 

purchased. This contract for deed required a 30-day written 

notice, the time apparently to run from the receipt of the 

written notice by the buyers. The provision of the contract 

on which the sellers relied as a default provides: 

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"The buyer agrees to keep all of the property 

covered hereby free from any lien, mortgage 

or encumbrance which may be or become superior 

to the lien of the Sellers' title, without the 

prior written permission of the sellers.. . ." 

December - 21, -- 1977: Donald Hoffman signed the certified 

mail receipt, acknowledging receipt of the letter of December 

January - 11, -- 1978: The sellers Byrnes closed the escrow 

account of the Southside National Bank, and obtained the escrow 

papers which have been deposited therein. One of these was a 

quitclaim deed to the subject property from the buyers to 

the sellers which the'sellers filed and recorded on that date. 

January -- 12, 1978: Donald Hoffman filed a petition for 

bankruptcy. 

January -- 20, 1978: The buyers filed a petition for 

declaratory judgment against the sellers. In general, the 

allegations are that Donna Hoffman never received a notice of 

default in respect to the property; that in any event no default 

existed. The prayer was that the court declare that the 

defendants were not entitled to default by reason of the 

notice dated December 6, 1977 and to restrain the sellers 

from otherwise selling or transferring or encumbering the 

subject property. 

January - 24, -- 1978: Hugh Kidder, on behalf of Donna 

Hoffman, tendered to Southside National Bank, and then to 

Gary Chumrau, counsel for the bank, such sums as might then 

be due upon the contract. 

March -- 24, 1978: Judgment in the declaratory judgment 

action by the buyers was entered against the sellers on 

sellers' default. 

--- June 26, 1978: The default judgment against the sellers 

was set aside by stipulation. The sellers filed their 

answer to the petition for declaratory judgment on that 

date. The answer alleged essentially: 
The sellers admit they sent the notice of default 

on December 6, 1977, but deny any knowledge of 

whether or not it was received by Donald Hoffman. 

The sellers admit that they have demanded and 

received the escrow papers from Southside National 

Bank of Missoula. 

2-- Jul 31, 1978: The bankruptcy petition by Donald J. 

Hoffman was dismissed. 

August 16, -- 1978: On this date a second letter addressed 

to the Hoffman~ was sent by the attorneys for the Byrnes setting 

out several alleged defaults and demanding cure of the same 

within 30 days. 

September -- 27, 1978: The sellers, through their attorneys, 

sent out a request for admissions to each of the buyers, asking 

in essence that they admit that they had received a second 

notice of default, that they had not made payments in connection 

with the same, except for a letter dated September 19, 1978 from 

Richard Volinkaty, one of the attorneys for the husband, in 

which letter Volinkaty agreed on behalf of Hoffman to pay the 

amounts now due on the contract, provided that the sellers also 

pay the sum of $10,000 for damages. 

December -- 13, 1978: Sellers moved for summary judgment 

against buyers. 

December -- 13, 1978: Affidavit of John Peterson, Vice 

President of Southside National Bank of Missoula was filed in 

which he indicated that "since January 13, 1978" no offer 

of payments have been made to him in connection with the escrow. 

Also filed on this date was the affidavit of one of the 

sellers, Patrick Byrne, stating that since January 13, 1978, 

no tender of payment has been made. 

December -- 21, 1978: The deposition of Patrick Byrne was 

taken. He testified that he still had the escrow papers, that 

he has never authorized Southside National Bank, since January 

11, 1978 to accept payments, and that he has continued to make 
the mortgage payments and tax reserve payments in connection 

with the property concerned. During that period of time the 

property has continued to be occupied by the buyers. 

January -- 3, 1979: Donna Hoffman filed her responses to 

the request for admissions, admitting receiving the second 

notice of August 16, 1978. 

February -- 22, 1979: The Court granted sellers' motion 

for summary judgment against the defendants. 

February -- 26, 1979: The sellers made a motion for writ 

of restitution. 

March -- 1, 1979: The court denied the motion for a stay 

order. 

April -- 12, 1979: The court granted a writ of restitution 

but stayed the effect of the order pending appeal. 

Subsequently this Court stayed any further action of the 

court below until this appeal has been decided. 

The issues as framed by the parties are these: 

1. Whether the District Court erred in granting summary 

judgment because material questions of fact exist. 

2. Whether the District Court erred in granting summary 

judgment by construing the declaratory judgment as a request 

for relief from forfeiture. 

3. Whether the District Court erred in granting a writ 

of restitution. 

The first notice of default was defective. The clause 

in the contract of purchase relied upon by the sellers makes 

the filing of a lien a cause for default only if it affects 

the sellers' title. The lien of a judgment creditor against 

the buyer in this case would affect only the interest of the 

buyer in the property, and not the sellers' title. Therefore 

the original default notice was without basis. 

However, based on the notice of default of December 6, 

1977, and within 30 days of the receipt of that written notice 

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by Donald Hoffman (Donna, the wife, did not receive the notice), 

the sellers on January 11, 1979, closed out the escrow, and 

recorded the quitclaim deed against the buyers which had 

been filed as a part of the escrow papers. 

The pleadings in the declaratory judgment action relate 

only to the situation as it existed on January 20, 1978, the 

date of the filing of the petition for declaratory judgment. 

The court without any further pleadings, but based only upon 

requests for admissions on matters that occurred after the 

case was at issue, granted summary judgment in favor of the 

sellers. Thus the court went outside the pleadings, because 

as far as the pleadings are concerned, the court should have 

declared and determined that the original notice of default 

was defective, that the defendants were not in default and 

perhaps have given such additional relief as might be necessary 

to restore the parties to their status quo. At the time of 

the hearing on the writ of restitution, on April 12, 1979, 

the buyers did in fact through their attorneys tender a 

cashier's check,the sum of $7,408, which they had calculated 

to be the amount that would make the sellers whole on that 

date. Nevertheless, the court refused to accept this tender 

and went ahead and issued the writ of restitution. The 

proper result in this case is to set aside the findings and 

conclusions and summary judgment and we return the matter to 

the District Court for further proceedings ordering: 

(1) that the court require the parties to determine 

the amounts necessary to bring the contract current; 

(2) that the buyers and sellers restore escrow 

arrangements and documents; 

(3) that the buyers be given a reasonable time to cure 

any defaults properly a ground for forfeiture of the contract; 

and, 

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(4) thereupon if the defaults are cured, restore the 

contract for deed as in full force and effect; otherwise 

declare a forfeiture. 

(5) As we see no present merit in buyers' claim for 

tort damages, we reserve our opinion on that point, and leave 

it to the District Court for any further decision. 

We realize we have not pointed to a single authority in 

this Opinion. It is enough to say the situation is novel. 

This cause is remanded for further proceedings in 

accordance with this Opinion. 

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' -- -- +b b' i- -aLL ----- 6 ----- 

Justice '7 

We Concur: 

Chief Justice 

Justices