No. 80-411 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1982 

DALE A. BOLZ and JUDY A. BOLZ, 

Plaintiffs and Respondents, 

VS . 

MASON MYERS, 

Defendant and Appeliant. 

Appeal from: District Court of the Eleventh Judicial District, 

In and for the County of Flathead 

Honorable James M. Salansky, Judge presiding. 

Counsel of Record: 

For Appellant: 

Hash, Jellison, O'Brien and Bartlett, Kalispeli, Montana 

Kenneth E. O'Brien argued, Kalispell, Montana 

For Respondents: 

James Cumming argued, Coiumbia Falls, Montana 

Filed: SEP 14 1882 

Submitted: June 21, 1982 

Decided: September 14, 1982 
Mr. Justice John C. Sheehy delivered the Opinion of the 

Court. 

Defendant Mason Myers appeals from an order and judgment 

of the District Court of the Eleventh Judicial District, 

Flathead County, the order finding him in contempt of court, 

and the judgment awarding plaintiffs $25,802.50 in actual 

damages plus $5,000 in exemplary danages. We affirm in part 

and reverse in part. 

This dispute began in mid-August of 1978, when Dale 

Bolz went to the home of Plason Myers to discuss the purchase 

by Bolz of the Kalispell Hearing Aid Center (KHAC). Also at 

the meeting were Merle Myers and Michael Myers, wife and son 

respectively of the defendant. At that meeting, agreement 

was reached on a purchase price--$10,000 for KHAC and $20,000 

for the building. There was no discussion at that time of 

any covenant by Mason not to compete. 

Bolz returned to the Myers household on August 31 with 

two buy-sell agreements. Dale and Judy Bolz are shown as 

purchasers, and Merle and Michael Myers as sellers in the 

agreement of the sale of the building. 

The document for the sale of the business was signed 

only by Merle Myers as seller. That agreement apportions 

$2,000 of the purchase price "toward the agreement not to 

compete in the hearing industry within a 20 mile radius of 

Kalispell, Montana." 

Neither instrument was signed by Mason Myers. He told 

Bolz at that time that he was not the owner of either entity, 

and therefore could not sign. Bolz expressed a concern as 

to what would keep Myers from going into competition with 

him, and Myers gave him an oral assurance that he had no 

intent to do so. 

Thereafter, the parties agreed that the sale would not 
become final until January 1, 1979, because of Xason Myers' 

income tax considerations, In the meantime, arrangements 

were made in accordance with the buy-sell agreement for Bolz 

to work out of the XHAC office and to be trained by Mason 

Myers to opera.te the business and to service clients. Bolz 

paid rent of $100 per month. 

After the signing, attempts were made by Solz to have a 

comprehensive sale document prepared to complete the terms 

of those instruments signed on August 31. Counsel was 

obtained by both parties and a series of proposed contracts 

was exchanged, none of which was found satisfactory between 

the parties. It is clear from several of the contracts 

proposed by Myers' attorney that Mason was considered the 

owner of KHAC. 

In December of 1978, Merle and Michael refused to close 

the sale without some sort of approval from laason. At about 

the same time, Mason informed Bolz that he intended to continue in business in competition with Bolz. Arrangements 

were made by Mason to open a hearing aid business near KHAC, 

to be run by James and Karen Myers, son and daughter-in-law 

of Mason. These plans were kept secret from Bolz until he 

had paid the full purchase price to Merle and Michael. That 

occurred on March 9, 1979. James and Karen opened their 

business on April 15. 

Meanwhile, on February 13, 1979, Bolz br~ught this 

action. Following a show-cause hearing on Bolz's request 

for injunctive relief, the District Court issued a temporary 

injunction, dated March 23, enjoining Myers from committing 

the following acts: 

"1, Informing Plaintiff's suppliers that Plaintiff's 

credit is poor. 
"2. Indicating to potential customers of Plaintiff's 

that Plaintiffs are incompetent or untrustworthy. 

"3. Indicating to potential customers of Plaintiff's 

that Defendant had never heard of Plaintiffs. 

"4. Directing customers to Plaintiff's competitors. 

"5, Not informing Plaintiffs of those potential 

customers responding to Plaintiffs advertising and 

promotions. 

"6. Threatening Plaintiffs with driving Plaintiffs 

out of business. 

"7. Refusing to hold Plaintiff's mail for the 

Plaintiffs. 

"8. Falsely reporting to business associates of 

Plaintiffs that Plaintiffs had refused to accept 

Defendant's offer to sell for cash. 

"9, Use of the name 'Kalispell Hearing Aid Center.' 

"10. Carrying on a business in competition with 

the Plaintiffs within a twenty (28) mile radius of 

Kalispell, Montana." 

On May 7, Bolz filed a petition seeking to hold Myers 

in contempt of the court's order. Earlier, at the time 

the purchase was conscmsted, Bolz had offered to drop his 

damage action against Myers if Myers would agree not to 

compete, but Myers refused. The trial ensued on all issues, 

resulting in a permanent injunction against Mason Myers, a 

finding of contempt and the award of damages. 

The issues on appeal, listed in the order we will deal 

with them, raise questions as to whether the District Court 

erred: 

1. By finding that Myers breached the August 30 contract 

and interfered with contract rights held by Bolz? 

2. By granting either a temporary or permanent 

injunction against Mason Myers' competing in the hearing 

aid business against Bolz? 

3. By finding Myers in contempt of its March 23 order? 
4. In any aspect of its award of damages? 

Initially, it is inportant to consider the District 

Court's finding that Myers "was a true owner of said business 

[KHAC] from their first negotiations in mid-August of 1978." 

That is the linchpin finding in this case and there is 

substantial evidence in the record to support it. Myers 

held himself out as the true owner at the mid-August meeting, 

and he conducted all negotiations for the sale. 2411 later 

negotiations in regard to preparation of a comprehensive 

sale document were likewise conducted by Myers. As noted, 

several of the contracts prepared by Myers' attorney and 

exchanged as part of this process denominate Mason Myers as 

the seller of KHAC. These factors, along with flyers' 

efforts to acquaint Bolz with routes, customers, and contacts, are adequate to substantiate the court's finding. It 

will not be set aside unless clearly erroneous. Rule 52(a), 

Having made that determination, one which clearly 

comports with the reality, we move on to the legal issues. 

BREACH OF CONTRACT AND INTENTIONAL INTERFERENCE 

The general rule is that the tort of intentional interference with contractual or business relationships may be 

committed only by strangers to the relationships. Restatement 

(Second) of Torts § 76624 (1977) provides: 

"One who intentionally and improperly interferes 

with the performance of a contract (except a 

contract to marry) between another and a third 

person, by preventing the other from performing 

the contract or causing his performance to be 

more expensive and burdensome is subject to 

liability to the other for the pecuniary loss 

resulting to him." 

In Phillips v. Montana Education Association (1980), 

-- Mont. , 610 P.2d 154, 37 St.Rep. 821, we recognized 
the rule that imposes upon strangers to a contract a 

duty not to interfere with its performance. 

In this case the District Court determined, in its 

conclusion of law no. 13, that Mason Nyers breached the 

August 31, 1978 contract with Bolz, and "[interfered] with 

Bolz' contract rights against Michael and Merle Myers" to 

cause loss to Bolz. These two bases of liability are incompatible. On the one hand the District Court concluded 

that Mason committed a breach of contract, which could only 

mean that Mason was a party to the contract, and bound to 

perform it. On the other hand, the District Court found 

"interference" by Mason with Bolz' contract with others. 

Interference can give rise to tort liability only if one 

intentionally intermeddles with another's contractual or 

business relations to which the one is a stranger. Restatement (Second) of Torts § 766A, supra; Phillips v. Montana 

Education Association, supra; Pelton v. Markegard (1978), 

179 Mont. 102, 586 P.2d 306; Taylor v. Anaconda Federal 

Credit Union (1976), 170 Mont. 51, 550 P.2d 151; Quinlivan 

v. Brown Oil Co. (1934), 96 Mont. 147, 29 P.2d 374; Burden 

v. Elling State Bank (1926), 76 Mont. 24, 245 P. 958. Myers 

cannot be at one time on the same facts liable for breach of 

contract to which he is a party, and also liable for the 

tort of intentional interference in not performing that 

contract. 

Under the court's findings, Michael and Merle Myers 

were merely contractual figureheads in the place of Mason 

Myers. Therefore Mason could not be liable for intentional 

interference with Bolz's contractual rights with blerle 

and 14ichael Myers. Mason was not a stranger to that contract 

If Mason's actions constituted only a breach of contract 

with Bolz, then Bolz's remedy is for breach of the contract 

and not for the tort of intentional interference. 
The distinction to be made here on the facts as found 

by the court is that Mason breached his contract with Bolz; 

but he also went further and intentionally interfered with 

Bolz's business relationships with third parties, who were 

Bolz's customers or potential customers. 

We have here nearly the same situation that faced the 

Washington Supreme Qourt in Cherberg v. Peoples National 

Bank of Washington (1977), 88 Wash.2d 595, 564 P.2d 1137. 

There a landlord with a duty to repair premises under lease 

to the plaintiff willfully failed to make repairs. The 

landlord was sued by the tenant for the tort of intentional 

interference. The Washington court referred to other cases 

which had held the injured party to be limited to an action 

for breach of contract, even though the breach of duty under 

a lease or contract necessarily interfered with the injured 

party's business relations with third parties. The Washington 

court nonetheless in Cherberg held in effect that the 

landlord's actions were not "privileged" and were therefore 

a basis for liability in tort. 

In a later case, the Washington Supreme Court explained 

further its holding in Cherberg , saying: 

"Although the parties to that lawsuit were also 

parties to a contract, it was not that contract 

upon which the claim of interference was based. 

We held in that case that the defendant's intentional 

and outrageous action in breaching that contract 

interfered with the business relationship that 

the plaintiffs had with their customers. The 

defendant was a third party as to that relationship, 

and thus not subject to contractual actions based 

upon it." Houser v. City of Redmond (1978), 91 

Wash.2d 36, 586 P.2d 482, 485. 

The Restatement (Second) of Torts 5 767 (1977) sets 

out factors to be considered in determining whether intentional 

interference with contractual rights is "improper." (The 

Restatement talks of "improper" actions in these cases 
because its rule for liability requires interference by 

the actor both "intentionally and improperly." Section 

766A, supra.) Those factors are: (a) the nature of the 

actor's conduct; (b) the actor's motive; (c) the interests 

of the other with which the actor's conduct interferes; (d) 

the interests sought to be advanced by the actor; (e) the 

social interests in protecting the freedom of action of the 

actor and the contractual interests of the other; (f) the 

proximity or remoteness of the actor's conduct to the interference; and, (g) the relations between the parties. 

The outrageous acts of Mason Myers are improper, considering 

all such factors. In addition to breaching his ccntract to 

sell the business of KHAC, he went far out of his way during 

and after the transfer of the business to destroy Bolz's 

business relationships with customers: interference with 

Bolz's mail, denying to others that Bolz had an interest in 

KHAC, false advertising, misrepresenting Bolz's credit 

record, declaring Bolz to be an imposter to others, denying 

Bolz's competency, using his position on the State Board of 

Hearing Aid Dispensors to harrass Bolz and much else. 

In order to establish a prima facie case of interference 

with contractual or business relations, it must be shown 

that the acts (1) were intentional and willful, (2) were 

calculated to cause damage to the plaintiff in his or her 

business, (3) were done with the unlawful purpose of causing 

damage or loss, without right or justifiable cause on 

the part of the actor, and (4) that actual damages and loss 

resulted. Bermil Corp. v. Sawyer (Fla. App. 3rd Cir. 1977), 

353 So.2d 579. 

Thus on the facts in this case, it is established that 

Mason Myers not only breached his contract with Bolz, but 
Mason went further and intentionally interfered with Bolz's 

contractual or business relationships with third parties. 

It is of no consequence that the District Court had concluded 

that the intentional interference had been "with Michael 

and Merle Mason." The conclusion of the District Court that 

intentional interference had occurred was correct, and it is 

inmaterial what reasons the District Court gave for the 

conclusi~n. Fergus County v. Osweiler (1938), 107 Mont. 

466, 86 P.2d 410, 120 A.L.R. 1457; Johnstone v. Sanborn 

(1960), 138 Mont. 467, 358 P.2d 399. We therefore uphold 

the view of the District Court that Mason Myers had committed 

a tort of intentional interference with Bolz's contractual 

relationships. 

INJUNCTION 

Mason Myers also appeals from the issuance by the 

District Court of an injunction against him on March 23, 

1979, enjoining him from committing the acts which we have 

heretofore enumerated. 

Mason's c~ntentions that the injunction was improper is 

directed mainly to the anti-competitive provision of the 

purchase contract. 3e contends that section 28-2-703, MCA, 

forbids any restraint of business; that the exception found 

in section 28-2-704, MCA, does not apply to him because he 

was not a seller under the contract; and that Merle Myers, 

his wife, who did sign the contract, could not bind Mason 

not to compete in business against Bolz. 

As we indicated, the District Court found that llason 

Myers was a true owner of KHAC, and that the goodwill of 

KHAC was included in the assets sold, and that Mason is 

bound by all theterms of the contract signed by Bolz and 

Merle on August 31, 1978. 
It is true that section 28-2-703, MCA, makes void 

contracts which restrain anyone from exercising a lawful 

profession, trade, or business. It is also true that where 

the goodwill of a business is sold, section 28-2-704, MCA, 

allows a contract to contain a provision that the seller 

will not carry on a similar business within a specified 

county, city or part thereof so long as the buyer carries on 

a like business therein. This Court requires strict compliance 

with these statutes. J. T. Miller Co. v. Madel (1978), 176 

Mont. 49, 52, 575 P.2d 1321, 1323. 

The contract required Mason Myers, as seller, not to 

carry on a business in competition with Bolz within a 20 

mile radius of Kalispell, Montana. This provision is within 

the statutory exception provided in section 28-2-704, MCA, 

unless the 20 mile radius from Kalispell would encompass a 

portion of a county other than Flathead, the county in which 

Kalispell is located. No attempt was made by Mason to 

demonstrate that the 20 mile radius exceeded the county 

boundaries. 

Mason's contentions that he was not the seller and 

therefore not bo~nd by the agreement not to compete are of 

course overridden by the findings of the District Court 

which found him to be the true owner and seller of KHAC. It 

was proper, therefore, for the District Court to enjoin 

Mason from violating his contractual obligations in attempting 

to carry on a business in competition with Bolz within the 

area specified. 

Even so, Mason contends that if he were the true owner 

of KHAC, then his wife Merle had no power to bind him to a 

provision not to compete and that the statutes of frauds 

(sections 28-2-903 (1) (d) , 30-2-201, and 30-11-210, MCA) 
operate to bar his liability on the contract. The District 

Court met this objection by concluding that Mason Myers had 

ratified the contract by his ccnduct in this case. 

We have held that a principal who accepts the benefits 

of an agency transaction cannot later deny the agency, that 

the principal ratifies the transaction by receiving the 

benefits, and he is estopped to deny the agency. First 

National Bank of Miles City v. Nunn (1981), - Mont . I 

628 P.2d 1110, 1116, 38 St.Rep. 869. Under the statute 

of frauds, it is true that ratification itself may be required 

to be in writing. 72 Arn.Jur.2d p. 913-914, Statute - of 

Frauds, § 389. It is clear that when the District Court 

here spoke of "ratification" it had in mind the equitable 

principle that the statute of frauds may not itself be an 

instrument of fraud or used to cloak fraud. 73 Am.Jur.2d p. 

198, 199, Statute of - Frauds, 5 562. The statute is intended 

to prevent fraud, not aid it. Equity may restrain interference 

with rights acquired under a contract sufficiently or 

wholly performed. 73 Arn.Jur.2d p. 200, Statute - of Frauds, 5 

563. The fraud against which the courts will grant relief, 

notwithstanding the statute of frauds, includes situations 

such as this, where the buyer has made an irretrievable 

change in position, or the defendant has secured an unconscionable advantage or inflicted an unjust and unconscionable 

loss upon the plaintiff. This is more than the mere moral 

wrong involved in the refusal to perform a contract which by 

reason of the statute of frauds cannot be enforced. 73 

Am.Jur.2d p. 202, Statute - of Frauds, S 564. The rule is based 

upon principles of estoppel. 

For the same reasons, Mason Myers'reliance upon section 

28-10-203, MCA, which requires that 'I. . . authority to 
enter into a contract required by law to be in writing can 

only be given by an instrument in writing" is misplaced. 

We find that the District Court properly issued the 

injunction against Mason Myers. 

CONTEMPT 

Under section 3-1-523, MCA, the District Court's contempt 

judgment is final and conclusive. It can be reviewed on a 

writ of certiorari, but there is no appeal. State v. State 

Judicial Dist. (1950), 123 Mont. 447, 453, 215 P.2d 279, 283. 

DAMAGES 

The District Court awarded the following items of 

general and special damages to the plaintiffs: 

(1) Increase in interest costs because of an interest 

rate increase from 10 percent to 12 1/2 percent for a total 

of $6,212.50 during the time Mason failed to perform. 

(2) Lost profits from employee sales, $4,000.00. 

(3) Lost battery sales and repairs, $375.00. 

(4) Lost apartment rent, $215.00. 

(5) Loss of profits from December 1978 promotion, 

$9,000.00. 

(6) Loss of walk-in sales, $3,C00.00. 

(7) Lost sales from delay depriving Bolz of his 

bargain, $3,000.00. 

The total general and special damages awarded was 

$25,802.50. The District Court also awarded punitive damages 

of $5,000.00. 

Mason's argument against punitive damages is that the 

allegations of contractual interference are not supported, 

and that there is no showing of willful, wanton and malicious 

acts on the part of Mason. 

We have already explained that under the facts found by 

the court here, Mason was guilty of the tort of intentional 
interference with the business relationships of Bolz. 

Since tort is involved, exemplary damages where the defendant 

has been guilty of oppression, fraud or malice, actual or 

presumed, may be given in addition to actual damages. 

Section 27-1-221, MCA. 

In addition to the many acts found by the court that 

could be construed to be oppressive or malicious, the court 

further found that Mason had committed fraud on Bolz by 

falsely representing that he, Mason, did not intend to 

compete with Bolz and by secretly intending to establish his 

son and daughter-in-law in business in competition to the 

KHAC business which Mason had sold to Bolz. We will not 

disturb the court's award of punitive damages. 

The other elements of damages, however, need some 

attention from us. 

Mason Myers claims error in the award of $6,212.50 

resulting from an increase in interest rates Bolz had to 

assume in obtaining a loan for the purchase. Myers contends 

(1) Bolz could have obtained the loan in September 1978, 

instead of the following March, and (2) Bolz had agreed to a 

closing date of January 1, 1979 in the contract. He also 

contends the award should have been discounted to present 

value. The District Court allowed the testimony of interest 

rate increased cost because of misrepresentations claimed 

against Myers that moved the closing date from September to 

January. Mason Myers' argument that Bolz could have obtained 

the loan in September regardless of Mason Myers' actions is 

specious, since the loan was sought by Bolz to finance the 

purchase of Myers' business. No objection was made in the 

District Court to the undisccunted figure of increased 

interest cost. The award on this item we therefore affirm. 
We likewise affirm as substantiated in the record and 

as proper items of recovery, the award of $375.00 for the 

battery sale and repairs business lost by Bolz through the 

delay, and the lost apartment rentals of $215.00. 

Myers attacks the award of $4,000.00 for lost profits 

from employee sales. Bolz had intended to employ a salesman 

who would have made, Bolz testified, 35 sales of hearing 

aids from which Bolz would have derived $158 per sale, for a 

total of $5,530.00. The District Court reduced this item to 

$4,000.00. Myers claims again that nothing prevented Bolz 

from hiring the employee, and that Bolz' overhead expenses 

were not submitted. At trial the objections raised to this 

evidence were lack of foundation and no foreseeability. 3olz 

substantiated his claim on this item through the testimony 

of the proposed employee. The evidence sustains the finding 

of the District Court. 

More substantial problems arise out of the awards for 

lost profits from a promotional campaign advertisement and 

from claimed loss of walk-in sales. In the case of Stensvad 

v. Miners and Merchants Bank of Roundup (1982), - Mont. 

, 640 P.2d 1303, 39 St-Rep. 27, we said: 

". . . Damages for loss of profits may be awarded 

if not speculative. Silfvast v. Asplund (1935), 

99 Mont. 152, 161, 42 P.2d 452, 456. The rule 

that prohibits speculative profits does not 

apply to uncertainty as to the amount of such 

profits but to uncertainty or speculation as 

tc whether the loss of profits is the result 

of the wrong and whether such profit would have 

been derived at all. Tri-tron International 

v. Velto (9th Cir. 1975), 525 F.2d 432, 437. 

Once liability is shcwn, that is the certainty 

that the damages are caused by the breach, then 

loss of profits on a reasonable basis for 

computation and the best evidence available under 

the circumstances will support a reasonably 

\close estimate of the loss by a District 

Court. Smith v. Zepp (1977), 173 Mont. 358, 

370, 567 P.2d 923, 930. But no damages are 

recoverable which are not clearly ascertainable 

both in nature and origin, and only profits 
which are reasonably certain may be awarded. 

Smith v. FergusCounty (1934), 98 Iqont. 377, 

386, 39 P.2d 193, 195." 

The District Court awarded Bolz $9,000.00 for loss 

of December 1978 promotional campaign business. The foundation 

for this item was the testimony of Bolz. The promotional 

campaign was conducted at a local shopping mall. Advertising 

brochures were obtained by BolZ, and gift certificates to be 

applied to hearing aid purchases were distributed to "leads." 

Because he had no office to work from, Bolz contended that 

he lost the benefit of these leads. There were 150 leads, 

and based upon national averages, he "figured" 50 sales at 

$489.00 per sale for a total of $24,450.00. He deducted 

$9,000,00 for cost of goods and promotion, leaving a lost 

net profit figure of $15,450.00. The District Court reduced 

this item to $9,000.00. 

We conclude from the record that the estimate of sales 

lost by Bolz from the promotional effort is entirely 

speculative. Neither his business nor that conducted by 

Myers before him justified sales in that number for that 

period of time. There is no deduction for overhead, if he 

had an office to work from. We vacate the award of $9,000.00 

as speculative, and place in lieu thereof the lost cost of 

advertising for the promotion of $500.GO as the record 

shows. In other words, we award Bolz what the record shows 

he lost in expenses for the promotion as a natural and 

direct item of damage flowing out of Myers1 actions, and 

reject the contended loss of profits on that item as speculative. 

The District Court further awarded Bolz $3,000.00 for 

loss of walk-in sales. Appellant does not directly attack 

this item in his briefs. It finds support in the evidence 

based on the experience of Bolz in the business, and is not 

otherwise exorbitant for the period of time involved. 

We sustain this item of award. 
The final item of damages awarded, $3,000.00 for lost 

sales from delay and depriving Bolz of his bargain as of 

September 1, 1978, has no foundation in the record to 

support it. It appears to be duplicative of other awards 

made by the District Court. We therefore vacate that award. 

Accordingly, we modify the judgment of the District 

Court and as modified. we affirm. The District Court, on 

remittitur, shall enter judgment in favor of Bolz in the 

following sums: $6,212.50 for increased interest cost; 

$375.00 for lost battery sales and repairs business; $215.00 

for lost rentals; $4,000.00 for lost employee sales; $500.00 

for loss of promotion expenses; and $3,000.00 for loss of 

walk-in sales, for a total of $14,302.50 general and special 

damages. We also affirm the award of punitive damages. 

Since appeal does not lie from a contempt conviction, 

we take no action on that phase of this case. 

Each party shall bear his or her own costs on this 

appeal. 

We Concur: 

-- -- Chief ~ustrce