No. 12974 INTHE SUPREME COURT OF THE STATE OF MONTANA 1975

WILLIAM G. MITCHELL,Plaintiff and Appellant,

-vs

# - HAROLD F. MITCHELL, Defendant and Respondent.

Appeal from: District Court of theThird Judicial District, Honorable John 

### BeMcClernan, Judge presiding. Counsel of Record: For Appellant: William R. Taylor argued, Deer Lodge, Montana Radonich and Reardon, Anaconda, Montana John N. Radonich appeared, Anaconda, Montana For Respondent: Knight, Dahood and Mackay, Anaconda, Montana C. F, Mackay argued, Anaconda, Montana

Submitted: November 

### 6, 1975 Decided:

### J&& 

### 1.6 qftYR ,3!hMr. Justice Gene B. Daly delivered the Opinion of the Court.

This is an appeal from a judgment in an accounting action from the district ccurt, Deer Lodge County, sittingwithout

a jury. Plaintiff William G. Mitchell isthe son of defendant Harold F. Mitchell. In August 1970, the son filed a complaint alleging the existence of an oral partnership between himself and his father, and seeking toobtain a fullaccounting of partnership funds and assets. The complaint stated: (1) that the purpose of the partnership was toacquire certain described real property, commonly known asYanlcee Flats, west of Anaconda, Montana, and thatboth the son and the father had advanced monies toapply on the contract forpurchase; 

### (2) that the fathernow claims an exclusive right in and to the realproperty and denies the son has any right to the use, or ownership in the properties; and (3) that a demand for an accounting of the monies advanced by the son for the purchase of the realproperty has been denied by the father. Answer and demand for a jury trialwas filedby the father in September 1971, more than a year after the filingof the complaint. In that answer the father denied the existence of an oralpartnership agreement; denied the son had advanced money on

a contract for deed topurchase the real property; and denied the

son had any right totheuse, or ownership in thereal property. The answer stated that the reason no accountingwas ever given was

I Ithat there has never been a partnership and therefore this answering defendant was not under any obligation to the plaintiff." In April 1973, Judge Robert J. Boyd of the thirdjudicial districtwas disqualified and Judge John B. McClernan, of the second judicial district, assumed jurisdiction.On July 23, 1973, a trialwithout jury was held inDeer Lodge County. Immediately before trialand a period of one year and ten months after the original answer, the defense counsel handed counsel for the plaintiff an amended answer and demand for a jury trial. Plaintiff's counsel objected tothe offer of the amended answer on the grounds that itwas untimely, prejudicial and would cause a delay in the trial. The delay in the trialwas objected tobecause thiswas the second trip plaintiff had made from St. Louis, Missouri, atconsiderable expense. The court overruled the objection and granted leave to filethe amended answer. The demand fora jury trialwas denied. This exchange then took placebetween counsel for plaintiff and the court: "14JX. TAYLOR: Your Honor, inview of the Court

## 's ruling, may we recess toread the answer?

"THE COURT: You may sit down and read the answer Mr. Taylor, 11 Mr. Taylor then renewed his objection and added:
11~; J;

# * the Defendant inthis amended answer has

completely changed his defense in the action. "THE COURT: The Court 

### willtake that into consideration, Mr. Taylor. II

Later, during the course of trial, Mr, Taylor requested

a recess toanalize and toadjust tothe amended answer, and the following allowancewas made: "THE COURT: Very well, we 

### willrecess for ten minutes. "THE COURT: Court is in session. You may proceed. "MR. TAYLOR: You may return to the stand, Mr. Mitchell.II The trialthen proceeded until finished, a period of two days. The amended answer, filed the day of trial, admits the existence of the partnership and that the son had made advances of money towards the purchase of Yankee Flats. The answer then continueswith these defenses: (I) Plaintiff "failed tokeep hisend of the agreement which was to return toMontana and help with the ownership use and labors on saidreal properties and failed to continue tomake the payments agreed upon and toput in an equal amount of capital." 

### (2) That "the defendant denies that he has failed to offer an accounting 9: f:." (3) The ?defendant admits that he has possession of the premises and records 9: 

# ** and defendant stands ready toaccount toplaintiff for his contributions

# * 9: +:.'I On June 24, 1974, almost a year after trial, an interlocutory order settling partnership accounts and dissolving the partnership was signed and filedby the districtcourt. In September 1974, a judgment was entered which made final the terms of the interlocutory order. In the interlocutory order, the district court made these findings of fact:

I Jc 2k the partnership remains in full force and

effect, and allproperty in the 'Yankee Flats1 tract 

### is, in fact, partnership property. 

### hat the agreement between the partners required each toshare equally in the amount of capital invested, and equally in the labors of the project. The plaintiff's (son's) share of capital investment 

### isnot fullypaid, and he owes the Defendant (father) the sum of $2,949.29 inmoney. That from the date of the partnership agreement (May, 1964) until the date of the institution of this suit (August 4, 1970), the Defendant (father), on weekends and holidays, contributed approximately 302 days of labor (clearing brush, rocks, building roads, mending fences, etc.)

## , and the Plaintiff (son), during said period, contributed approximately two days of labor; that the Plaintiff (son) owes the Defendant (father) 300 days of labor on the partnership property, payable either inkind or in cash atthe prevailing rate for common labor. "That the relationship between the Plaintiff (son) and theDefendant (father) 

### is so strained, unfriendly and irreconciable that the further continuance of the partnership isimpractical. 11 The court then dissolved the partnership and offered:

It* 

# ** upon application of either party, the Court will proceed todetermine the respective interests of the parties in the partnership property, and partition the same inaccordance therewith. 11 From thatjudgment plaintiff appeals.Several issues arepresented on appeal but the decisive issue 

### iswhether the amended answer was properly allowed tobe filedunder Rule 15(a), M.R.Civ.P. The applicable portion of Rule 15(a), M.R. Civ.P.

## , provides:

### "*

# ** Otherwise a party may amend his pleading only by leave of court orby written consent of the adverse party; and leave shallbe freely given when justice so requires. 

# * *I1 For the purpose of placing the issue in the proper frame work, we examine thereasons for and thebackground of Rule 15(a). That rule contains language identical toRule 15(a) of the federal rules. In 

### 6 Wright & Miller, Federal Practice and Procedure: Civil 

### $5 1487, 1488, there are comments and reasons forRule 15(a). $1487 The liberal amendment policy prescribed by Rule 15(a) does not mean that leave

### willbe granted inallcases. Indeed, the text of therulemakes it clear that permission to amend isnot tobe given automatically but isallowed only

I1

when justice so requires". Perhaps the most frequent reason given for denying leave toamend is that the opposing party

### will be prejudiced if the movant 

### is permitted toalterhis pleading. Thus, the facts of each case must be examined to determine if the threat of prejudice issufficient tojustify denying leave to amend. This entails an inquiry into the hardship to the moving party if leave to amend isdenied, the reasons for the moving party failingto include the material tobe added in the original pleading, and the injustice resulting to the party opposing the motion should itbe granted. The court alsomay consider the good faith of the party seeking the amendment and the reasons for the movant's delay.$1488 Rule 15(a) does not prescribe any time limit within which a party may apply to the court for leave to amend. The policy of allowing amendments tobe made atany time during the litigation

### is sound. It would be unreasonable torestrict

a party's ability to amend to

### a particular stage of the action inasmuch as the need to amend may not appear until after discovery has been completed or testimony has been taken attrial. Nonetheless, inkeeping with the purpose of Rule 15(a),which is to facilitate

### a determination of the action on itsmerits, a motion to amend should be as soon as the necessity for alteringthe pleading becomes apparent. In addition to considering the possible prejudice resulting from the moving ~arty's delay in making his amendment, some courts alsohave decided a motion for leave to amend on thebasis of the reason given for the inaction. If the party can demonstrate to the court that the delay was not excessive and was excusable

or that his failure to include the amendment inthe original pleading was due toan oversight, the amendment may be allowed. However, in the absence of oversight or excusableneglect, courts have denied leave toamend when the moving party knew about the facts on which the proposed amendment was based but omitted the necessary allegations from the original pleading. Some courts also have held that a long delay by the movant constitutes laches so that a refusal topermit an amendment iswarranted. In the instant case, the original answer denied the existence of a partnership; denied a contribution of capitalby the plaintiff son and refused togive an accounting of partnership funds and assets. The amended answer turned the situation around by admittingboth the partnership and a contribution of capital by plaintiff son and stated the defendant fathernow was ready to give 

### a fullaccounting. The amendment then placed in issue how much labor had been contributed by each partner.When the amended answer was offered, the district court made no inquiry as to the reasons why these new factswere not pleaded in the original answer or why therewas a delay of nearly two years in offering the amendment, orwhether the amendment would impose a prejudicial burden on plaintiff. The district court in fact refused togrant even a continuance forplaintiff's counsel to study the amendment and prepare his case accordingly. Thus, following a liberal policy of amendment of pleadings as previously discussed, opportunity must be afforded the opposing party to adjust accordingly. Failure topermit this iserror and demands a new trial. The judgment of the district court isvacated and the

cause 

### isremanded to the district court for a new trial.

, We-Concur: <. B R

t 

# --"" *( L-3 a *%.- 5 Chief Justike 

### "-q a 8

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