No. 83-48 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1983 

JESSIE T. LEWIS, Estate of 

WADE V. LEWIS, deceased, et al., 

Plaintiffs and Appellants, 

STATE OF MONTANA, DEPARTMENT 

OF REVENUE, et a1 . , 

Defendants and Respondents. 

APPEAL FROM: District Court of the Fifth Judicial District, 

In and for the County of Jefferson, 

The Honorable Frank E. Blair, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

John Leslie Hamner, Butte, Montana 

For Respondents: 

Poore, Roth and Robinson; J. Richard Orizotti, 

Butte, Montana 

R. Bruce McGinnis, Dept. of Revenue, Helena, 

Montana 

Submitted on Briefs: September 15, 1983 

Decided: January 5, 1984 

Filed: ., ;~-i _ !t,j .:, . qj14 

Clerk 
Mr. Justice Fred #J. Weber delivered the Opinion of the Court. 

Plaintiffs appeal from the order of the Fifth Judicial 

District Court, Jefferson County, granting defendants' motion 

for summary judgment. We affirm the order of the District 

Court. 

The issue on appeal is whether the District Court 

properly granted defendants' motion for summary judgment. 

Wade V. Lewis and Jessie T. Lewis granted to Azcon 

Corporation (Azcon), the exclusive rights to conduct mining 

exploration and removal and sale of all minerals from real 

property in the Elkhorn Mountains near Boulder. The agreement of the parties was contained in an "Operational Agreement" dated August 13, 1973. The defendants contend that the 

agreement was drafted by Wade V. Lewis, now deceased. 

Plaintiffs claim that the agreement was drafted by Azcon. 

The parties' interests in the a-qreement were assignable. 

Azcon later assigned its rights and obligations under the 

operational agreement to Galli Exploration Company. All 

rights and obligations under the agreement were later assumed 

by Everett Berg, d/b/a Falcon Explorations. Berg owned the 

mining interest at commencement of this action. 

Wade V. Lewis died in 1974. All property subject to the 

operational agreement is now solely owned by his wife, 

plaintiff Jessie Lewis. John T. Lewis, son of Wade and 

Jessie Lewis, is personal representative of the estate of 

Wade Lewis. The estate is a party to this action, although a 

final decree of distribution of the estate was entered in 

1.975. John Lewis also has power of attorney to conduct the 

affairs of his mother, Jessie Lewis. 

As required by the agreement, an initial payment of $800 

and annual rental payments of $3,500 for the years 1974 

through 1980 were tendered to plaintiffs in the form of 
personal or company checks. Plaintiffs cashed the checks, 

all of which were honored by defendants1 banks. 

In a letter dated October 20, 1980, John Lewis (Lewis) 

made various inquiries concerning the mining operation and 

requested as follows: 

"We will prefer to have the preponderance of our 

royalty, from this and subsequent runs, paid in 

gold bullion, with the remainder of the total 

payment via Certified Check." 

However, the operational agreement did not require this form 

of payment and no agreement was made that payment would be as 

Lewis requested. 

On January 23, 1981, Lewis served notice of default 

under the agreement upon defendants. The notice alleged six 

specific deficiencies: 

"1. Second Party [defendants] has failed to pay to 

First Parties [plaintiffs] the certain $3,500.00 

annual rental due and payable on January 2, 1981; 

according to paragraph 5. of such agreement. 

"2. That Second Party has realized "Net Smelter 

Returns" from the operation of such Claims; and 

Second Party has failed to pay to First Parties the 

certain "Royalty" for such Net Smelter Returns 

called-for in said agreement, during the Royalty 

Periods specified therein. That Second Party has 

further failed to send First Parties the statement 

called-for in paragraph 6 (d) of such agreement. 

"3. That Lessee has failed to account to Lessor 

for all minerals mined, processed and sold from 

such claims as required by such agreement. 

"4. That Lessee has failed to keep open to inspection of Lessor complete records of the entire 

central milling transaction as required by such 

agreement. 

"5. That Lessor is informed and believes that the 

Lessee, Second Party, has allowed a pretended lien 

to attach to said claims in the proceedings of 

cause 79-5193 in the Second Judicial District Court 

of Washoe County, Nevada; contrary to the provisions of Paragraph 9. of said agreement. 

"6. That Lessee has failed to provide Lessor with 

all maps, assay reports, drilling results, records 

and other data at the end of each year as provided 

in Paragraph 11 of such agreement." 
The notice stated that pursuant to the operational 

agreement, defendants had 60 days to remedy the default. 

Defendant Berg's counsel promptly responded to the notice by 

letter on February 4, 1981. The letter responded point by 

point to Lewis' allegations of default. 

A check for the $3,500 annual rental was enclosed with 

the letter. The letter stated that no "Net Smelter Returns" 

had been received and therefore no royalty payment or 

statement was yet due. Further, no accounting was required 

by the agreement because the agreement required only that 

records be open to inspection during business hours. The 

letter stated that the records were in fact open for 

inspection. The "lien" alleged in the notice was explained 

as having no effect on plaintiffs' interest because it was a 

judicially-ordered sale of the interest of one of the 

defendants. That interest was purchased by defendant Berg, 

who then became the owner of the entire interest under the 

operational agreement. 

Finally, the letter requested clarification as to which 

records Lewis demanded. Some documents were sent to Lewis 

and the letter stated that any additional documents would be 

sent as soon as Lewis clarified his request. Lewis never 

responded to the letter nor otherwise requested further 

documents or the opportunity to inspect documents. 

On April 13, 1981, Lewis sent defendants notice of 

termination of the operational agreement. The notice alleged 

that the defendants had failed to comply with the provisions 

of the operational agreement and had failed to cure the 

defaults specified in the default notice. Lewis demanded 

return of possession of the premises. 

Defendant Berg first received net smelter returns from 

the refinery on April 20, 1981, seven days after the 
termination notice. The net smelter returns totaled 

$393,752.19. The earned royalty was then calculated as 

specified in the agreement. Berg notified plaintiffs by 

letter dated June 8, 1981 that an earned royalty was due and 

payable on or before August 1, 1981. By letter dated July 

24, 1981, Berg documented the calculation of the earned 

royalty, pursuant to paragraph 6(d) of the agreement, and 

enclosed a check for the calculated amount of $20,024.87. 

Lewis kept this check but never attempted to cash it. 

Plaintiffs filed suit on April 27, 1981, seeking declarations that defendants had no interest whatsoever in the 

subject property, that plaintiffs were sole owners of the 

property and that the agreement had been void all along or 

had been properly terminated bl7 the plaintiffs. Plaintiffs 

asked for damages for loss of minerals and for exemplary 

damages. 

After extensive discovery, including requests for admissions and production of documents, filing of several sets of 

interrogatories and responses, filing of affidavits, and 

deposition of Lewis, defendants moved for summary judgment. 

The issues were briefed and argument was heard by the District Court on October 26, 1982. 

The District Court found that the operational agreement 

was in full effect, that the terms of the agreement were not 

ambiguous, and that defendants had performed their obligations under the a.greement or had cured any default within 60 

days as required by the agreement. The Court found there 

were no remaining genuine issues of material fact and that 

defendants were entitled to judgment as a matter of law. The 

Court granted defendants' motion and entered judgment for 

defendants. Plaintiffs appeal. 
Plaintiffs argue that the District Court erred in 

granting summary judgment. They contend that numerous 

genuine issues of material fact remain unresolved and that 

the case should be remanded for trial on the merits. We 

disagree. 

Rule 56(c), M.R.Civ.P. provides that summary judgment is 

proper where: 

". . . the pleadings, depositions, answers to 

interrogatories, and admissions on file, together 

with the affidavits, if any, show that there is no 

genuine issue as to any material fact and that the 

moving party is entitled to a judgment as a matter 

of law. l1 

The well-settled rules applicable to summary judgment 

motions are set forth in Krone v. McCann (Mont. 1982), 638 

P.2d 397, 399-400, 39 St.Rep. 10, 13, and we need not repeat 

them here. 

This action revolves around whether defendants Everett 

Berg and Falcon Explorations, a.s Azconls successors to the 

mineral interest, were in default of their obligations under 

the operational agreement. If they were, the question arises 

whether the default was cured or whether plaintiffs properly 

terminated the agreement. We will review each alleged default in light of the parties1 allegations and the record. 

The first default alleged by plaintiffs was defendants1 

failure to remit the required $3,500 rental payment on the 

due date of January 2, 1981. It is undisputed that the 

payment was due on that date but that it was not made when 

due. However, that payment was made on February 4, 1981. The 

payment was therefore made within 60 days of the January 23 

default notice. Under paragraph 14 of the agreement, payment 

within 60 days of the notice cured the default. 

Plaintiffs argue, however, that the February 4 payment 

did not cure the default because the payment did not include 
$17.50 interest as required under section 31-1-106, MCA. 

However, even assuming that payment of interest was due under 

the statute, the agreement did not require payment of 

interest. Failure to remit the interest was not a default 

under the agreement. Moreover, plaintiffs did not specify in 

their default notice that interest was due and unpaid. The 

default clause requires that the notice specify the details 

of default so that the other party is fully informed. 

Plaintiffs failed to notify defendants that interest was due. 

Failure to include a $17.50 interest payment is immaterial. 

Plaintiffs' default notice next alleged that defendants 

had failed to make royalty payments as due and had failed to 

provide the required statement detailing the royalty calculation. Plaintiffs argue that the agreement is ambiguous as to 

when royalty payments were due and that this ambiguity must 

be resolved against defendants because Azcon drafted the 

agreement. At least, they argue, there is a remaining factual issue as to who drafted the agreement. Plaintiffs argue 

the authorship issue is crucial and precludes summary 

judgment. Further, plaintiffs argue that this ambiguity 

gives rise to a question of intent which makes summary 

judgment inappropriate in this case. 

Plaintiffs' contentions depend upon the existence of an 

ambiguity in the contract. The language of the contract 

itself is to govern its interpretation if the language is 

clear and explicit and does not involve an absurdity. Sections 28-3-401 and 28-3-303, MCA. It is necessary to determine who drafted the contract only where the contract 

contains an ambiguity that cannot be resolved by other rules 

of interpretation. Section 28-3-206, MCA. "Ambiguity exists 

when a contract taken as a whole in its wording or phraseology is reasonably subject to two different interpretations." 
S-W Co. v. Schwenk (1977), H+3- Mont. 481, 485, 568 ~.2d 145, 

The operational agreement provides: 

"6. (a) Second Party agrees to pay First Parties 

as earned royalty on all minerals mined, milled and 

shipped (or mined and shipped without milling) from 

the Property a percentage (determined as hereinafter set forth) of the Net Smelter Returns. 

"(b) 'Net Smelter Returns' shall mean the net 

proceeds received by second party for said minerals 

sold by Second Party to a mill, smelter, mint, 

refinery or other bona fide purchaser (hereinafter 

sometimes called 'the purchasing plant') after 

deduction of all of the following expenses: 

"(i) Charges made by the purchasing plant for 

treatment of the minerals, however termed, and all 

other deductions by the purchasing plant including 

penalties for impurities and metal losses. 

"(ii) Costs of transportation of said minerals from 

the mine to the purchasing plant." 

The percentage to be applied to net smelter returns to determine the amount of the earned royalty is based upon the crude 

ore value per ton. A table in the agreement specifically 

shows the percentage for each possible value per ton. The 

crude ore value is determined by dividing net smelter returns 

by the total number of dry tons mined to produce the minerals 

shipped to the refinery. 

The agreement further provides: 

"(d) Each calendar quarter shall constitute a 

Royalty Period commencing with the calendar quarter 

during which production from the Property first 

commences. Payments of royalty shall be made by 

Second Party to First Parties on or before the 

first day of the second month following the close 

of each Royalty Period. Such payments shall be 

accompanied by a statement signed by an authorized 

representative of Second Party showing the Net 

Smelter Returns and the Crude Ore Value Per Ton of 

the minerals mined from the Property settled for by 

the purchaser during the preceding Royalty Period." 

Plaintiffs argue that under these provisions of the 

agreement, a royalty payment was due February 1, 1981, 

because minerals were extracted and shipped to the refinery 

during the last calendar quarter of 1980. Further, they 
argue that even if this interpretation is not clearly correct, there is an ambiguity as to payment date which raises a 

material issue of fact. We disagree. 

Plaintiffs1 argument is based upon defining "production" 

as mere extraction and shipment of minerals. "Production" is 

not so defined in the agreement and that definition is absurd 

when considered in light of all royalty provisions contained 

in the agreement. Under plaintiffs' reading of the contract, 

payments would be due before the amount due could be 

calculated. Moreover, plaintiffs complained of nonpayment on 

January 23, 1981, before the payment would have been due 

according to their interpretation. 

Defendants did not receive the first net smelter returns 

from the refinery until April 20, 1981, seven days after 

plaintiffs1 termination notice. Under the terms of the 

agreement, it is impossible to calculate the earned royalty 

until net smelter returns are received. Upon receipt of the 

net smelter returns, defendants calculated the payment 

amount, began preparation of the statement required by the 

agreement, and notified plaintiffs that a payment was due on 

August 1, 1981. The payment and statement were tendered on 

July 24, 1981. Plaintiffs do not dispute that the amount was 

correctly calculated. 

The due date was calcula-ted by treating the second 

calendar qua.rter of 1981, the period in which the first net 

smelter returns were received, as the royalty period. This 

calculation was entirely consistent with the language of the 

agreement. 

The defendants clearly performed according to the only 

reasonable meaning of the agreement. Reading the agreement 

as a whole, it is clear and unambiguous. There is no factual 

issue as to the intent of the contracting parties or the 
meaning of the agreement. Determining the parties' obligations under the agreement was a legal question which the 

District Court properly determined by looking at the language 

of the agreement itself. See Farmers State Bank of Victor v. 

Johnson (Mont. 1980), 610 P.2d 1172, 1174, 37 St.Rep. 880, 

883. 

Plaintiffs make several other allegations regarding the 

royalty payment. They contend defendants had minerals in 

their possession and intentionally delayed receipt of net 

smelter returns. However, plaintiffs presented absolutely 

nothing to support this allegation. Unsupported conclusory 

or speculative statements do not raise a genuine issue of 

material fact. Gates v. Life of Montana Insurance Co. (Mont. 

1982), 638 P.2d 1063, 1066, 39 St.Rep. 16, 19. 

Plaintiffs also argue that defendant's personal check 

was insufficient to constitute tender because plaintiffs had 

notified defendants that they preferred to receive payment in 

gold bullion or certified check. But the agreement does not 

require payment by gold bullion or certified check. Defendants never agreed to such payment. The evidence is undisputed that all previous payments had been made by personal or 

company check, that all checks had been honored and that 

plaintiffs had no reason to anticipate dishonor of this 

check. Defendants did not default by making payment by 

personal check. 

The third specification of default was that defendants 

had failed to account to plaintiffs for all minerals mined, 

processed and sold. But the agreement requires only that 

defendants maintain accounts and keep them open to inspection 

during business hours. It does not require that defendants 

furnish an accounting to plaintiffs. There is no evidence in 
the record to suggest that defendants failed to keep such 

records or allow inspection. 

The fourth alleged default was failure to keep open for 

inspection complete records of the "central milling transaction. " However, defendants made clear in their response to 

the default notice that all records were open to inspection 

and always had been. Plaintiffs never asked to inspect the 

documents and never requested that records located in 

out-of-state offices be brought to Boulder for inspection. 

Defendants were willing to cooperate in allowing inspection 

and did not default in this respect. 

The fifth specification of default was that defendants 

had allowed a lien to attach to the mining claims. This 

allegation referred to a notice of judicial sale of the 

interest of defendant Martineau. Berg and Martineau had been 

partners in a joint venture which succeeded to Azcon's interest. Berg sued Martineau, resulting in a court-ordered sale 

of Martineau's interest which Berg purchased. The judicial 

sale did not affect plaintiffs' interest, but related only to 

Martineau's interest in the mining rights. The agreement 

requires only that "no liens from any act of Second party" be 

allowed to "remain" on the property. Even if this judicial 

sale constituted a lien within the meaning of the agreement, 

a question we need not decide, it was removed before the 

60-day remedy period had expired. 

Finally, plaintiffs alleged in the default notice that 

defendants had failed to provide "all maps, assay reports, 

drilling results, records and other data at the end of each 

year." Again, the default notice did not give details sufficient to inform defendants how they could correct the deficiency. Defendants informed plaintiffs that they were unsure 

what documents or information was lacking and asked for 
clarification of plaintiffs' demands. Defendants offered to 

send any documents they had. Plaintiffs received, but never 

responded to this request for clarification. Plaintiffs 

cannot claim default where they failed to specify the 

deficiency as required by the agreement. 

Plaintiffs argue that a genuine issue of material fact 

remains as to whether defendant Berg is actually the successor to Azcon's interest in the operational agreement. Berg 

set forth in affidavits the facts relating to his acquisition 

of that interest. His explanation is supported by the 

record. Plaintiffs offered absolutely no facts to refute 

Berg's statements. They offered only denials that Berg's 

statements were true. Plaintiffs' unsupported allegations 

are insufficient to raise a genuine issue of material fact. 

The trial court has no duty to anticipate possible proof. 

Gates, 638 P.2d at 1066, 39 St.Rep. at 19. 

Plaintiffs argue that their mere denial by affidavit of 

the statements in their opponents' affidavits is sufficient 

to raise a factual issue. We disagree. Rule 56(e), 

M.R.Civ.P. provides that affidavits shall be made on personal 

knowledge and shall set forth such facts as would be 

admissible in evidence. The party opposing the motion for 

summary judgment must present facts which are material and 

substantial. Cheyenne Western Bank v. Young (1978) , 179 

Mont. 492, 497, 587 P.2d 401, 404. 

Plaintiffs have offered no facts to support their allegations regarding Berg's interest. There is no genuine issue 

of material fact on this point nor on any among the host of 

other alleged "issues" plaintiffs raise in an attempt to 

preclude summary judgment. These "issues" are either irnrnaterial or mere unsupported allegations, none of which deserves 

discussion. 
Plaintiffs further contend that the operational 

agreement violates the rule against perpetuities, section 

70-1-408, MCA. We reject this argument. 

Section 4 of the agreement provides for an initial 

five-year term. The agreement could then be extended for a 

second five-year term if the second party is actively engaged 

in prospecting, developing or mining the property. After the 

second five-year term, if the second party is engaged in 

commercial production of minerals, the agreement would continue for four additional consecutive five-year terms and 

then for an additional period of time so long as an active 

mining operation is being carried on by the second party. 

In Montana Consolidated Mines Corp. v. O'Connell (1938), 

107 Mont. 273, 85 P.2d 345, mining property was leased: 

". . . for the period of two years from and after 

the execution of this contract with the privilege 

in the party of the second part to extend this 

contract from year to year provided the party of 

the second part works said mine continuously from 

and after the date of this agreement and subject to 

the terms thereof." 107 Mont. at 274, 85 P.2d at 

345. 

The Court quoted from Haeffner v. Green Fire Brick Co. (Mo. 

1934), 76 S.W.2d 122, which stated that a right to renew or 

extend a lease limited by the clause "so long as paying 

minerals are found," although indefinite, was not a 

perpetuity. Further, the Missouri court stated that "[ulnder 

the law of this state, and generally, a lease is not made 

void by reason of a covenant of perpetual renewal." 107 

Mont. at 282, 85 P.2d at 349, quoting Haeffner, 76 S.W.2d at 

126. This Court found that the provision did not violate the 

rule against perpetuities. Here, the extension of the 

agreement is limited first by "commercial production of 

minerals" and then by the continuation of "an active mining 
operation." There is no merit to plaintiffs' claim that the 

operational agreement violates the rule against perpetuities. 

We need not address the parties' lengthy argument 

regarding the applicability of the forfeiture statute because 

the agreement is clearly in effect. 

Finally, plaintiffs complain that the District Court did 

not enter findings of fact and conclusions of law. However, 

there is no requirement that the District Court do so under 

these circumstances. Rule 52 (a) , M.R.Civ.P. provides that 

findings and conclusions are not required on summary judgment 

motions. Downs v. Smyk (1979), 185 Mont. 16, 19, 604 P.2d 

307, 309. 

There being no genuine issues of material fact, and 

defendants being entitled to judgment as a matter of law, the 

District Court's order granting summary 

We concur: 

A