D A 0 8

- 0 3 5 2

I N T H E S U P R E M E C O U

R T O F T H E S T

A T E O F M O N T

A N A

2 0 0 9 M T 4 4 8

E S T A T E O F E A R L M

. P R U YN

, a c t i n g t h r o u g h

t h e P e r s o n a l R e p r e s e n t a t i v e J A C K M E Y E R

,

P l a i n t i f f a n d A p p e l l a n t

,

v

.

A X M E N P R O P A

N E

, I N C

. , a M o n t a n a c o r

p o r a t i o n

,

a n d E D W A R D K I M B R E L L

, i n d i v i d u a l l y

,

D e f e n d a n t s a n d A p p e l l e e s

.

APPEAL FROM: District Court of the Fourth Judicial District,

I n a n d F o r t h e C o u

n t y o f M i s s o u l a

, C a

u s e N o

. D V 2 0 0 4

- 5 8 9

H o n o r a b l e R o b e r t L

. D e s c h a m p s

, I I I

, P r e s i d i n g J u d g e

C O U N S E L O F R E C O R D :

F o r A p p e l l a n t :

R a n d y J

. C o x

, S c o t t M

. S t e a r

n s

, T h o m a s J

. L e o n a r d

, B o o n e K a r l b e r g P

. C

. M i s s o u l a

, M o n t a n a

F o r A p p e l l e e A x m e n P r o p a n e

, I n c

. :

D a v i d B

. C o t n e r

, T r e n t N

. B a k e r

, E r i k a P e t e r m a n

, D a t s o p o u l o s

, M a c D o n a l d & L i

n d

, P

. C

. , M i s s o u l a

, M o n t a n a

F o r A p p e l l e e E d w a r d K i

m b r e l l :

E d w a r d K i

m b r e l l

, ( S e l f

- R e p r e s e n t e d )

, S a n A n t o n i o

, T e x a s

S u b m i t t e d o n B r i e f

s : A u g u s t 5

, 2 0 0 9

D e c i d e d : D e c e m b e r 2 9

, 2 0 0 9

F i l e d :

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ C l e r k December 29 20092

Justice J ames C. Nelson delivered the Opinion of the Court.

¶ 1 E a r l P r

u y n f i l e d s u i t a g

a i n s t E d w a r d K i m

b r e l l a n d A x m e n P r o p a n e

, I n c

. ( A x m e n )

claiming they had defaulted under the terms of a promissory note. A f t e r P r u y n ’ s d e a t h i n

J u n e 2 0 0 8

, h i s e s t a t e w a s s u b s t i t u t e d a s p l a i n t i f

f i n t h i s c a s e

. E v e n t u a l l y

, t h e D i s t r i c t

C o u r t f o r t h e F o u r t h J u d i c i a l D i strict, Missoula County, denied Pruyn’s motion s f or

summary judgment and granted Axmen ’ s cross

- motion s for summary judgment and

a w a r d e d A x m e n i t s a t t o r n e y ’ s f e e s

. W e a f

f i r m i n p a r t

, r e v

e r s e i n p a r t

, a n d r e m a n d f o r

f u r t h e r p r o c e e d i n g s c o n s i s t e n t w i t h t h i s O p i n i o n

.

¶ 2 Pruyn raises the following issues on appeal:

¶ 3 1. D i d the District Court err in overturning a prior order granting summary

judgment to Pruyn?

¶ 4 2. Did the District Court err in granting summary judgment to Axmen on Pruyn’s

contract claim?

¶ 5 3. Did the District Court err in granting summary judgment to Axmen on Pruyn’s

unjust enrichment claim?

¶ 6 4. Did the District Court abuse its discretion in awarding Axmen its attor ney ’ s

f e e s ?

¶ 7 5. Were Pruyn’s due process right s v i o l a t e d a s a r e s u l t o f A x m e n ’ s e x p a r t e

c o m m u n i c a t i o n s w i t h t h e D i s t r i c t C o u r t ?

Factual and Procedural Background

¶ 8 E d w a r d K i m

b r e l l

, G u y H a n s o n a n d G r a n t H a n s o n c o

- o w n e d A x m e n

, a f

u l l

- s e r v i c e

p r o p a n e r e t a i l e r i n M i s s o u l a

, M o n t a n a

. B e c a

u s e K i m b r e l l h a d e x

p e r t i s e i n t

h e p r o p a n e3

business, he became managing partner when the partnership was formed in 1999, and

then President when Axmen was incorporated in 2000. Kimbrell and the Hansons were

Axmen’s only sharehold ers, its only officers, and its only directors. The three provided

the company’s initial capitalization from their own pockets and they held equal shares in

the company.

¶ 9 K i m

b r e l l r a n t h e d a y

- t o

- d a y o p e r a t i o n s a t A x m e n w

h i l e t h e H a n s o n s w o r k e d a t

a n o t h e r location running their other business ventures. A l a r g e p a r t o f K i m

b r e l l ’ s d u t i e s

i n v o l v e d p u r c h a s i n g p r o p a n e

. H e o f t e n b o u g h t t h o u s a n d s o f g

a l l o n s o f p r o p a n e b y

s i m p l y p i c k i n g u p t h e p h o n e a n d c a l l i n g a s u p p l i e r

. B e s i d e s p u r c h a s i n g p r o p a n e t o

maintain Axmen’s normal stock levels, Kimbrell also purchased large quantities of

p r o p a n e t o “ h e d g

e ” a g a i n s t p r i c e f

l u c t u a t i o n s

. I

n t h e s e t r a n s a c t i o n s

, K i m b r e l l w o u l d

p u r c h a s e l a r g

e a m o u n t s o f p r o p a n e f

o r d e l i v e r y o v

e r s e v e r a l m o n t h s r a t h e r t h a n a f e w

days to “loc k in” a fixed price for Axmen and its customers

.

¶ 1 0 Powderhorn Petroleum (Powderhorn) was one of A xm e n ’ s m a i n p r o p a n e

s u p p l i e r s

, a n d K i m

b r e l l e n t e r e d i n t o n u m e r o u s p r o p a n e p r o c u r e m e n t a n d f

u t u r e s

t r a n s a c t i o n s w i t h P o w d e r h o r n

. I n M a r c h 2 0 0 3

, K i m

b r e l l a n d t w o o t h e r s

, J o h n G i u l i a n i

a n d S h a w n D i e h l

, e n t e r e d i n t o a p r o p a

n e t r a n s a c t i o n w i t h P o w d e r h o r n f o r t h e p u r c h a s e o f

1

. 7 m i l l i o n g a l l o n s o f p r o p a n e

, a l m o s t 2 0 t i m e s t h e v o l u m e o f a n y p r e v i o u s o r d e r b y

A x m e n

. S h o r t l y a f

t e r e n t e r i n g i n t o t

h i s t r a n s a c t i o n w i t h P o w d e r h o r n

, p r o p a n e p r i c e s

d r o p p e d a n d K i m

b r e l l i n c u r r e d a s u

b s t a n t i a l l o s s

. T o f

i n a n c e t h i s l o s s

, K i m

b r e l l

a p p r o a c h e d P r

u y n f o r a l o a n

. P r

u y n w a s a l o c a l b u s i n e s s m a n w h o o f t e n l e n t m o n e y o n4

b u s i n e s s v

e n t u r e s

. P r

u y n l a t e r t e s t i f

i e d t h a t h e u n d e r s t o o d f r o m K i m b r e l l t h a t A x m e n

n e e d e d t o b o r r o w m o n e y t o acquire property in the Bitterroot for a larger supply of tanks.

¶ 1 1 Kimbrell had several meetings with Pruyn wherein he gave Pruy n information

relating to Axmen’s assets, cash flow and accounts receivable. Pruyn testified that b ased

u p o n t h e d o c u m e n t a t i o n f

r o m A x m e n a s w e l l a s h i s o w n i n v e s t i g a t i o n i n t o t

h e c o m p a n y ’ s

r e p u t a t i o n a n d o v e r a l l b u s i n e s s p r o s p e c t s

, h e d e c i d e d t o l e n d A x m e n $ 5 4 4

, 5 0 0

. Pruyn

also testified that although he told his attorney to draft the promissory note “to Axmen

Propane guaranteed by Guy and Grant Hansen [sic], p e r s o n a l l y

, ” A x m e n w a s n o t

s p e c i f i c a l l y m e n t i o n e d i n t h e n o t e

. T h e p r o m i s s o r y n o t e i n c l u d e d s i g

n a t u r e b l o c k s f

o r

K i m b r e l l a n d b o t h o f t h e H a n s o n s

, b u t i t d i d n o t i n d i c a t e t h a t t h e y would be signing in

any representative capacity.

¶ 1 2 On April 4, 2003, Kimbrell executed the note forging the Hansons ’ signatures.

After Kim

brell returned the signed note to Pruyn , the money was w i r e d t o P o w d e r h o r n ’ s

b a n k t o p a y o f

f t h e d e b t t o P o w d e r

h o r n

. A l t h o u g

h t h e p r o m

i s s o r y n o t e w a s n o t p a i d a s

agree d, Pruyn did receive two c a s h i e r ’ s c h e c k s f r o m K i m b r e l l

, o n e d a

t e d A u g u s t 1 1

,

2 0 0 3

, f o r $ 2 0

, 0 0 0

, a

n d o n e d a t e d O c t o b e r 1

, 2 0 0 3

, for $40,000.

¶ 1 3 O n C h r i s t m a s E v

e 2 0 0 3

, P r

u y n d i s c u s s e d t h e p r

o m i s s o r y n o t e w i t h G

u y H a n s o n

.

P r u y n l e a r n e d a t t h a t t i m e t h a t n e i t h e r o f t h e H a n s o n s k n e w a n y t h i n g a b o u t t

h e l o a n

, t h e5

promissory note

, or the Powderhorn debt . Kimbrell subsequently admitte d that he had

f o r g e d t h e H a n s o n s ’ s i g

n a t u r e s o n t h e n o t e

. 1

¶ 1 4 P r u y n f i l e d t h i s a c t i o n a g

a i n s t A x m e n a n d K i m

b r e l l o n J u l y 8

, 2 0 0 4

, s e e k i n g t h e

u n p a i d p r i n c i p a l b a

l a n c e o n t h e p r o m

i s s o r y n o t e

, a c c r

u e d i n t e r e s t

, a l l c o s t s a n d e x p e n s e s

o f s u i t

, a n d a t t o r n e y ’ s f

e e s

. A x m e n f

i l e d i t s A n s w e r

, C r o s s C l a i m a n d D e m a n d f o r J u r y

T r i a l o n S e p t e m

b e r 2

, 2 0 0 4

, w

h e r e i n A x m e n c o n t e n d e d t h a t t h e n o t e w a s b a r r e d b y t h e

s t a t u e o f f

r a u d s b e c a u s e A x m e n i s n o t m e n t i o n e d i n t h e n o t e

. A x m e n a l s o f

i l e d a c r o s s

c l a i m a g a i n s t K i m

b r e l l f o r

, a m o n g o t h e r t h i n g s

, f r a u d

, c o n s t r

u c t i v e f r a u d

, b r e a c h o f

fiduciary duty, and unj ust enrichment.

¶ 1 5 O n J

u l y 2 5

, 2 0 0 5

, P r

u y n m o v e d f o r s u m m a r y j u d g m e n t a s s e r t i n g t h a t t h e

u n d i s p u t e d m a t e r i a l f

a c t s s h o w e d t h a t b e c a u s e K i m b r e l l h a d a u t h o r i t y t o s p e a k o n b e h a

l f

o f A x m e n a n d t o e n t e r i n t o t h e s u b j e c t l o a n t r a n s action, Axmen was liable on the

p romissory note. After r e v i e w i n g t h e p a r t i e s ’ b r i e f

i n g a n d h e a r i n g o r a l a r g

u m e n t

, t h e

n

District Court Judge He nson 2 g r a n t e d s u m m a r y j u d g m e n t i n f a v o r o f P r u y n

. I n h i s

M a r c h 2 0

, 2 0 0 6 O p i n i o n a n d O r d e r

, J u d g e H e n s o n d e t e r m

i n e d t h a t K i m b r e l l h a d

o s t e n s i b l e a u t

h o r i t y t o b i n d A x m e n i n t h e l o a n t r a n s a c t i o n

, a n d t h a

t A x m e n h a d r e t a i n e d

t h e b e n e f i t o f t h e l o a n b y a p p l y i n g i t t o w a r d i t s d e b t w i t h P o w d e r h o r

n

. J u d g e H e n s o n

1 C r i m i n a l c h a r g

e s w e r e b r o u g

h t a g a i n s t K i m b r e l l a n d h e w a s e v

e n t u a l l y f o u n d g u i l t y o f

f o r g e r y i n v i o l a t ion of § 45

- 6

- 325, MCA, and sentenced to twenty years at Montana State

P r i s o n w i t h a l l t w e n t y y e a r s s u s p e n d e d

.

2 J u d g e H e n s o n r e s i g

n e d o n M a r c h 3 1

, 2 0 0 6 ; h o w e v e r

, h i s s u c c e s s o r

, J

u d g e D e s c h a m

p s

,

w a s n o t a p p o i n t e d a

n d s w o r n i n u n

t i l J u l y 1 0

, 2 0 0 6

.6

a l s o d e t e r m

i n e d t h a t P r u y n s h o u l d n o t b e m a d e t o s u f f e r f o r K i m b r e l l ’ s a c t i o n s e v

e n i f t h e

l o a n t r a n s a c t i o n w a s a c c o m p l i s h e d f r a u d u l e n t l y a n d w i t h o u t a c t

u a l a u t h o r i t y

.

¶ 1 6 O n A

p r i l 2 8

, 2 0 0 6

, A x m e n f

i l e d a M o t i o n f

o r R e l i e f f

r o m O p i n i o n a n d O r d e r

.

W h e n t h e D i s t r i c t C o u r t f

a i l e d t o m a k e a d e c i s i o n o n t h e m o t i o n w i t h i n 6 0 d a y s o f i t s

filing, Pruyn filed a “Notice of 60 Day Pendency of Axmen Propane’s Motion for Relief

f r o m O p i n i o n a n d O r d e r ” o n J u n e 2 8

, 2 0 0 6

, a r g

u i n g t h a t t h e m o t i o n h a d b e e n d e e m e d

d e n i e d

. T h e f

o l l o w i n g d a y

, A x m e n f

i l e d i t s R e n e w e d M o t i o n f o r R e l i e f f

r o m O p i n i o n

a n d O r d e r

. S i n c e J

u d g e H e n s o n h a d r e t i r e d a n d h i s s u c c e s s o r h a d n o t y e t b e e n a p p o i n t e d

o r s w o r n i n

, t h e m a t t e r w a s c a l l e d t o t h e a t t e n t i o n o f J

u d g e M c L ean, who, on July 6,

2006, granted Axmen’s request and vacated Judge Henson’s order. Pruyn moved to set

as ide Judge McLean’s or der claiming the 60

- day time period for considering Axmen’s

m o t i o n h a d e x

p i r e d p r i o r t o J

u d g e M c L e a n ’ s r

u l i n g

. T h e r e a f

t e r

, t h e c a s e w a s a s s i g

n e d t o

n e w l y

- a p p o i n

t e d J u d g e D e s c h a m

p s f o r f u r t h e r p r o c e e d i n g s

.

¶ 1 7 On January 24, 2007, Judge Deschamps, confronted w ith what he considered to be

mistakes by both of his predecessors, decline d to set aside Judge McLean’s order. In his

Opinion and Order, Judge Deschamps stated that the “simple solution” would be to set

aside Judge McLean’s order as untimely thereby reins tating Judge Henson’s original

order

, an d allow Axmen to appeal. However, Judge Deschamps, “convinced that Axmen

would prevail on appeal,” decided to forego the appeal process altogether and opted for

“the more just, albeit risky, approach of upholding Ju dge McLean’s order.” In doing so,

Judge Deschamps stated that “for reasons of equity and avoiding enforcing an order that

w a s i s s u e d i n e r r o r

, J

u d g e M c L e a n ’ s o r d e r m

u s t s t a n d a n d t h e p a r t i e s m u s t h a v e t h e i r d a y7

in court.” Judge Deschamps further stated t hat “Judge McLean’s weeklong delay in

ruling on Axmen’s motion due to administrative upheaval in the District Court is

unfortunate, but excusable.”

¶ 1 8 B o t h A x m e n a n d P r u y n a g a i n m o v e d f o r s u m m a r y j u d g m e n t

. O n J u l y 2 3

, 2 0 0 7

,

J u d g e D e s c h a m

p s g r a n t e d p a r t i a l s u m m a r y j u d g m e n t t o A x m e n f i n d i n g t h a t t

h e

p r o m i s s o r y n o t e was not a corporate obligation of Axmen

. I n d i s m i s s i n g P r

u y n ’ s

c o n t r a c t c l a i m

, J

u d g e D e s c h a m

p s d e t e r m

i n e d t h a t P r

u y n m i g h t s t i l l b e e n

t i t l e d t o

r e s t i t u t i o n f

r o m A x m e n u n d e r o n e o f t h e u n j u s t e n r i c h m e n t c l a i m s p l e d i n t h i s m a t t e r

.

¶ 1 9 Axmen urged a stay of the civil proceedings while the criminal matter against

Kimbrell was pending. Pruyn, who was 83 years old at the time, objected to further

d e l a y i n g t h e l a w s u i t

, b u t J u d g e D e s c h a m

p s r u l e d i n A x m e n ’ s f

a v o r a n d s t a y e d t h e

p r o c e e d i n g s

. K i m

b r e l l w a s f

o u n d g u i l t y o f f o r g e r y o n J a n u a r y 3

, 2 0 0 8

. A f t e r K i m b r e l l

w a s s e n t e n c e d

, t h e c o u r t l i f t e d t h e s t a y i n t

h e i n s t a n t c a s e , and the parties briefed the

unj ust enrichment issue

.

¶ 2 0 P r u y n p a s s e d a w a y o n J

u n e 1 1

, 2 0 0 8

, a

n d h i s e s t a t e w a s s u b s t i t u t e d a s p l a i n t i f f i n

this case. 3 I

n a n O p i n i o n a

n d O r d e r d a

t e d J u n e 2 7

, 2 0 0 8

, J

u d g e D e s c h a m

p s d e t e r m

i n e d

t h a t A x m e n w a s n o t u n

j u s t l y e n r i c h e d a t t h e e x

p e n s e o f P r

u y n

, t h u s A x m e n w a s e n t i t l e d

t o j u d g m e n t a s a m a t t e r o f l a w o n Pruyn’s unjust enrichment claim.

¶ 2 1 Pruyn filed a Notice of Appea l on July 25, 2008. On August 7 , 2008, Axmen

m o v e d t h e D i s t r i c t C o u r t f

o r a n a w a r d o f a t t o r n e y ’ s f e e s

, a n d a l s o m o v

e d t h i s C o u r t t o

3 E v e n t h o u g h P r u y n ’ s e s t a t e w a s s u b s t i t u t e d a s p l a i n t i f f i n t h i s m a t t e r

, f

o r p u r p o s e s o f

c l a r i t y

, w e w i l l c o n t i n

u e t o r e f e r t o t h e p l a i n

t i ff and appellant simply a s “ P r u y n

. ”8

dismiss Pruyn’s appeal as premature. We denied Axmen’s motio n to dismiss Pruyn ’s

appeal, but remanded the case to the District Court for a ruling on Axmen’s motion for

a t t o r n e y ’ s f e e s

. Est. of Pruyn ex rel. Meyer v. Axmen Prop

. , 2008 MT 329, ¶¶ 15

- 16, 346

Mont. 162, 194 P.3d 650.

¶ 2 2 On remand, the District Court aw arded Axmen its attorney ’s fees stating that

“Pruyn’s actions in this matter were in the very least frivolous and perhaps even

malicious.” Pruyn now appeals the various orders of the District Court on summary

judgment as well as the court’s award of attor n e y ’ s f e e s t o A x m e n

.

Standard of Review

¶ 2 3 S u m m a r y j u d g m e n t i s p r o p e r o n l y w h e n n o g e n u i n e i s s u e s o f m a t e r i a l f a c t e x i s t

a n d t h e m o v i n g p a r t y i s e n t i t l e d t o j u d g m e n t a s a m a t t e r o f l a w

. E a s t g a t e V i l l a g e W a t e r

and Sewer v. Davis

, 2 0 0 8 M T 1 4 1

, ¶ 1 8

, 3 4 3 M o n t

. 1 0 8

, 1 8 3 P

. 3 d 8 7 3 ( c i t i n g W a t k i n s

Trust v. Lacosta

, 2 0 0 4 M T 1 4 4

, ¶ 1 6

, 3 2 1 M o n t

. 4 3 2

, 9 2 P

. 3 d 6 2 0 )

. O u r s t a n d a r d i n

r e v i e w i n g a d i s t r i c t c o u r t ' s s u m m a r y j u d g m e n t r u l i n g i s d e n o v

o ; w e u s e t h e s a m e

M

. R

. C i v

. P

. 5 6 c r i t e r i a a p p l i e d b y t h e d i s t r i c t c o u r t

. Eastgate

, ¶ 1 8

. M o r e o v e r

, a l l

r e a s o n a b l e i n f

e r e n c e s w h i c h m a y b e d r a w

n f r o m t h e o f

f e r e d p r o o f m

u s t b e d r a w

n i n f a v o r

o f t h e p a r t y o p p o s i n g s u m m a r y j u d g m e n t

. Eastgate

, ¶ 1 8

. I f t h e r e i s a n y d o u b t r e g a r d i n g

t h e p r o p r i e t y o f t h e s u m

m a r y j u d g m e n t m o t i o n

, i t s h o u l d b e d e n i e d

. Eastgate

, ¶ 1 8

( c i t i n g 3 6 0 R a n c h C

o r p

. v

. R & D H

o l d i n g

, 2 7 8 M o n t

. 4 8 7

, 4 9 1

, 9 2 6 P

. 2 d 2 6 0

, 2 6 2

( 1 9 9 6 ) ; W

h i t e h a w k v

. C l a r k

, 2 3 8 M o n t

. 1 4

, 1 8

, 7 7 6 P

. 2 d 4 8 4

, 4 8 6

- 8 7 ( 1 9 8 9 ) )

.

¶ 2 4 I n a d d i t i o n

, w e r e v i e w a d i s t r i c t c o u r t ' s c o n c l u s i o n s o f l a w t o d e t e r m i n e w h e t h e r

t h e y a r e c o r r e c t

. M

o n t a n a P e t

. T

a n k C o m p

. B d

. v

. C

r u m l e y s , 2008 M T 2

, ¶ 3 2

, 3 4 19

M o n t

. 3 3

, 1 7 4 P

. 3 d 9 4 8 ( c i t i n g S t a t e F a r m M u t

. A u t o

. I n s

. C o

. v

. G i b s o n

, 2 0 0 7 M T 1 5 3

,

¶ 9

, 3 3 7 M o n

t

. 5 0 9

, 1 6 3 P

. 3 d 3 8 7 )

.

¶ 2 5 We review a district court’s order a w a r d i n g a t t o r n e y ’ s f e e s f o r a n a b u s e o f

d i s c r e t i o n

. Harding v. Savoy

, 2 0 0 4 M T 2 8 0

, ¶ 6 8

, 3 2 3 M o n t

. 2 6 1

, 1 0 0 P

. 3 d 9 7 6 ( c i t i n g

Trustees of Indiana University v. Buxbaum, 2 0 0 3 M T 9 7

, ¶ 1 5

, 3 1 5 M o n t

. 2 1 0

, 6 9 P

. 3 d

6 6 3 )

. A d i s t r i c t c o u r t a b u s e s i t s d i s c r e t i o n i f i t a c t s a r b i t r a r i l y w i t h o u t e m

p l o y m e n t o f

c o n s c i e n t i o u s j u d g m e n t o r e x c e e d s t h e b o u n d s o f r e a s o n r e s u l t i n g i n s u b s t a n t i a l i n j u s t i c e

.

Essex Ins. Co. v. Moose’s Saloon, Inc.

, 2 0 0 7 M T 2 0 2

, ¶ 1 9

, 3 3 8 M o n t

. 4 2 3

, 1 6 6 P

. 3 d 4 5 1

( c i t i n g Jarvenpaa v. Glacier Ele c. Co

- op., Inc., 1 9 9 8 M T 3 0 6

, ¶ 1 3

, 2 9 2 M o n t

. 1 1 8

, 9 7 0

P

. 2 d 8 4 ; C

. H a y d o n L t d

. v

. M

T M i n

. P r o p e r t i e s

, I n c

. , 2 8 6 M o n

t

. 1 3 8

, 1 4 6

, 9 5 1 P

. 2 d 4 6

,

5 1 ( 1 9 9 7 ) )

.

Issue 1.

¶ 2 6 Did the District Court err in overturning a prior order granting summary

judgment to Pruyn?

¶ 2 7 Pruyn contend s that A x m e n ’ s M o t i o n f o r R e l i e f f

r o m O p i n i o n a n d O r d e r w a s a

p o o r l y d i s g u i s e d m o t i o n f

o r r e c o n s i d e r a t i o n t h a t i s n o t a u t h o r i z e d b y t h e M o n t a n a Rules

of Civil Procedure . Pruyn also contends t h a t e v e n i f A x m e n ’ s m o t i o n w e r e c o n s i d e r e d a

m o t i o n t o a l t e r o r a m e n d j u d g m e n t u n d e r M

. R

. C i v

. P

. 5 9 ( g )

, i t w a s e r r o r f

o r J u d g e

M c L e a n t o r

u l e o n t h a

t m o t i o n a f

t e r t h e e x p i r a t i o n o f t h e 6 0

- d a y t i m e p e r i o d s e t f o r t h i n

M

. R

. C i v

. P

. 59(g), and error for Judge Deschamps to affirm Judge McLean’s mistake.

Pr uyn further contends that J u d g e H e n s o n ’ s O p i n i o n a n d O r d e r w a s t h e l a w o f t h e c a s e

a n d t h a t i t c o u l d o n l y b e a l t e r e d u n d e r c e r t a i n l i m i t e d c i r c u m s t a n c e s

, o r a f t e r a p p e a l t o10

this Court. To that end, Pruyn argue s that in vacating Judge Henson’s order, Judge

McLean improperly exercised appellate jurisdiction.

¶ 2 8 A x m e n a r g

u e s o n t h e o t

h e r h a n d t

h a t b e c a u s e n o n o t i c e o f e n t r y o f j u d g m e n t o r

o r d e r p u r s u a

n t t o M

. R

. C i v

. P

. 7 7 ( d ) w a s e v e r f i l e d o r s e r v e d i n t h i s c a s e

, J u d g e

H e n s o n ’ s s u m m a r y j u d g m e n t o r d e r d i d n o t c o n s t i t u t e a f i n a l j u d g m e n t

, t h u s i t c o u l d b e

c h a n g e d a t a n y t i m e b y J

u d g e H e n s o n o r a s u c c e s s o r j u d g e i n t h a t c o u r t

. A x m e n f u r t h e r

argues that contrary to Pruyn’s contentions, Judge McLean’s decision to vacate Judge

Henson’s order was not untimely. Axme n also argues that Pruyn’s “law of the case”

doctrine is misplaced.

¶ 2 9 F i r s t

, c o n c e r n i n g t h e p r o c e d u r a l p r o b l e m s s u r r o u n d i n g A x m e n ’ s m o t i o n a n d t h e

v a r i o u s r u l i n g s o f t h e s u c c e s s o r d i s t r i c t c o u r t j u d g e s

, w e n o t e t h a

t “ [ a ] j u d g

m e n t i s t h e

f i n a l determination o f t h e r i g h t s o f t h e p a r

t i e s i n a n a c t i o n o r p r

o c e e d i n g

. . . . ”

M

. R

. C i v

. P

. 5 4 ( a ) ( e m p h a s i s a d d e d )

. W

h e n t h e r e a r e m

u l t i p l e c l a i m s f

o r r e l i e f o r

m u l t i p l e p a r t i e s

, a j u d g m e n t i s n o t f i n a l u n l e s s i t i s c e r t i f

i e d a s s u c h b y t h e c o u r t

, a n d i f i t

is not s o c e r t i f

i e d

, i t “ i s s u b

j e c t t o r e v i s i o n at any time before the entry of judgment

adjudicating all the claims and the rights and liabi lities of all the parties.” M. R. Civ. P.

54(b) (emphasis added)

.

¶ 3 0 A l t h o u g

h A x m e n c l a i m e d i n i t s M o t i o n f o r R e l i e f f

r o m O p i n i o n a n d O r d e r t h a t i t

w a s f i l i n g t h e m o t i o n p u r s u a

n t t o M

. R

. C i v

. P

. 6 0

, t h a t r u l e a p p l i e s t o f

i n a l judgments,

ord ers, or proceedings. M. R. Civ. P. 60(b). As Judge Deschamps pointed out in his

January 25, 2007 Opinion and Order, Judge Henson’s order w a s “ i n t e r l o c u t o r y i n n a t u r e11

and is subject to a motion under Rule 54(b) where the only time limit is that it be ruled

upon prior to final judgment being entered.”

¶ 3 1 I n S m i t h v

. F o s s

, 1 7 7 M o n

t

. 4 4 3

, 4 4 7

, 5 8 2 P

. 2 d 3 2 9

, 3 3 2 ( 1 9 7 8 )

, t h i s C o u r t h e l d

t h a t

[ s ] o l o n g a s a c o u r t h a s j u r i s d i c t i o n o v e r a n a c t i o n

, i t s h o u l d h a v e p l e n a r y

p o w e r o v e r i t s i n t e r l o c u

t o r y o r d e r s a n d s h o u l d b e a

b l e t o r e v i s e t h e m w

h e n

i t i s c o n s o n a n

t w i t h j u s t i c e s o t o d o

. C o u r t c o n t r o l o v

e r a n i n t e r l o c u

t o r y

o r d e r s h o u l d n o t b e s u

b j e c t t o t h e r e s t r i c t i o n s o f R

u l e 6 0 ( b )

.

¶ 3 2 W e m a d e a s i m

i l a r r u l i n g i n T

e a m s t e r s U n i o n v

. C

. N

. H

. A c q u i s i t i o n s

, 2 0 0 9 M T

9 2

, 3 5 0 M o n t

. 1 8

, 2 0 4 P

. 3 d 7 3 3

, r e g a r d i n g M

. R

. C i v

. P

. 5 9 m o t i o n s t o a l t e r o r a m e n d

. I

n

T e a m s t e r s

, t h e d e f e n d a n t a r g

u e d t h a t a r e n e w e d m o t i o n f

o r s u m m a r y j u d g m e n t w a s

i m p r o p e r l y g

r a n t e d b e c a

u s e i t c o n s t i t

u t e d a n M

. R

. C i v

. P

. 5 9 m o t i o n t o a l t e r o r a m e n d a

j u d g m e n t

. W e h e l d i n t

h a t c a s e t h a

t M

. R

. C i v

. P

. 5 9 w a s n o t a p p l i c a b l e b e c a u s e t h a t r u l e

c o n c e r n s j u d g

m e n t s a n d w

h e n t h e p l a i n t i f

f s f i l e d t h e i r r e n e w e d m o t i o n

, t h e r e w a s n o

j u d g m e n t

. Teamsters , ¶ 18.

¶ 3 3 Here, final judgment as applied to all parties was never entered following Judg e

Henson’s Opinion and Order

— n o m o n e t a r y j u d g m e n t a n d n o n o t i c e o f e n t r y o f j u d g m e n t

a g a i n s t A x m e n o r K i m

b r e l l w a s e v e r f

i l e d

. I n a d d i t i o n

, K i m

b r e l l d i d n o t a

p p e a r i n t h i s

c a s e u n t i l l o n g a f

t e r J u d g e H e n s o n h a d i s s u e d h i s d e c i s i o n a n d

, a l t h o u g h t h e r e w e r e

m u l t i p l e d e f

e n d a n t s

, J u d g e H e n s o n d i r e c t e d e

n t r y o f j u d g m e n t o n l y a g

a i n s t A x m e n

.

¶ 3 4 B e c a u s e J

u d g e H e n s o n ’ s O p i n i o n a n d O r d e r d i d n o t a d j u d i c a t e a l l o f t h e c l a i m s

,

r i g h t s a n d l i a b i l i t i e s o f a l l o f t h e p a r t i e s

, t h e r e w a s n o f i n a l d i s p o s i t i o n o f t h e c a s e p r i o r t o

Judge McLean’s and Judge Deschamps’ rulings. C o n s e q u e n t l y

, J u d g e H e n s o n ’ s O p i n i o n12

a n d O r d e r w a s “ s u b

j e c t t o r e v

i s i o n a t a n y t i m e b e f

o r e t h e e n

t r y o f j u d g m e n t a d

j u d i c a t i n g

a l l t h e c l a i m s a n d t h e r i g

h t s a n d l i a b i l i t i e s o f a l l t h e p a r t i e s

. ” M

. R

. C i v

. P

. 5 4 ( b )

. H e n c e

,

t h e 6 0

- d a y t i m e r e s t r i c t i o n s f o r r u l i n g o n m o t i o n s f

i l e d u n d e r R

u l e s 5 9 ( g ) a n d 6 0 ( b ) d i d

not apply. Th us, we hold that Judge McLean’s ruling vacating Judge Henson’s Opinion

a n d O r d e r w a s t i m e l y

. U n d e r t h a t s a m e r a t i o n a l e

, w e h o l d t h a t P r u y n ’ s l a w

- o f

- t h e

- c a s e

a r g u m e n t i s m i s p l a c e d

.

¶ 3 5 As to the merits of A x m e n ’ s c l a i m i n i t s M o t i o n f o r R e l i e f f

r o m O p i n i o n a n d

O r d e r

, w e h o l d t h a t J

u d g e M c L e a n a n d J

u d g e D e s c h a m

p s w e r e c o r r e c t i n v

a c a t i n g J u d g e

Henson ’s o rder. Axmen presented newly discovered or previous ly unavailable evidence

regarding a statement to police made by Pruyn’s attorney, Dennis Starkel, in connect ion

with Kimbrell’s criminal trial. Even tho ugh this statement was taken more than a year

prior

, the statement w a s n o t a v a i l a b l e t o t h e p a r

t i e s a t t h e t i m e o f J

u d g e H e n s o n ’ s

d e c i s i o n b e c a u s e i t w a s p a r t o f t h e c o n f i d e n t i a l c r i m

i n a l j u s t i c e i n f

o r m a t i o n i n t h e

c r i m i n a l p r o c e e d i n g s a g

a i n s t K i m

b r e l l

. T h e C o u

n t y A t t o r n e y h a

d n o t d i s c l o s e d t

h i s

i n f o r m a t i o n a s o f t h e d a t e o f t h e i n i t i a l s u m m a r y j u d g m e n t p r o c e e d i n g s i n t h i s c a s e

. I n

a d d i t i o n

, A x m e n w a s u n a b l e t o o b t a i n t h i s i n f o r m a t i o n t h r o u g

h d i s c o v e r y i n t h e c ivil

matter because Pruyn asserted attorney

- client privilege.

¶ 3 6 This previously unavailable statement o f S t a r k e l ’ s c o n c e r n i n g t h e f a c t s

s u r r o u n d i n g t h e c r e a t i o n o f t h e p r o m i s s o r y n o t e c r e a t e d a n i s s u e o f m a t e r i a l f a c t

rega rding whether the note obligated A xmen precluding summary judgment. Given this,

we conclude that Judge McLean’s decision to vacate Judge H e n s o n ’ s o r d e r w a s

a p p r o p r i a t e a n d

, i n d e e d

, m a n d a t e d

.13

¶ 3 7 “ [ T ] h e p u r

p o s e o f s u m m a r y j u d g m e n t i s t o e l i m i n a t e u n n e c e s s a r y t r i a l s

, b u t

. . .

s u m m a r y a d

j u d i c a tion ‘ should never be substituted for a trial if a material factual

controversy exists. ’ ” Bradley v. Crow Tribe of Indians

, 2 0 0 5 M T 3 0 9

, ¶ 1 5

, 3 2 9 M o n t

.

4 4 8

, 1 2 4 P

. 3 d 1 1 4 3 ( q

u o t i n g Boyes v. Eddie , 1998 MT 311, ¶ 16, 292 Mont. 152, 970

P.2d 91)

.

¶ 3 8 According

ly, we hold that the District Court did not err in overturning Judge

H e n s o n ’ s p r i o r o r d e r g

r a n t i n g s u m m a r y j u d g m e n t t o P r u y n

.

Issue 2.

¶ 3 9 D i d t

h e D i s t r i c t C o u r t e r r i n g r

a n t i n g s u m m a r

y j u d g m e n t t o A x m e n o n P

r u y n ’ s

c o n t r a c t c l a i m ?

¶ 4 0 C o n c l u d i n g t h a t t h e p r o m i s s o r y n o t e w a s n o t a c o r p o r a t e o b l i g

a t i o n f o r A x m e n

,

t h e D i s t r i c t C o u r t g

r a n t e d s u m m a r y j u d g m e n t t o A x m e n o n t h i s c l a i m

. P r u y n n o w a r g

u e s

o n a p p e a l t h a t i n m a k i n g t h i s d e t e r m i n a t i o n

, t h e D i s t r i c t C o u r t disregarded undisputed

f a c t s d e m o n s t r a t i n g K i m

b r e l l ’ s o s t e n s i b l e a u t h o r i t y t o b i n d A x m e n t o t h e a g r e e m e n t

.

P r u y n a l s o a r g

u e s t h a t t h e D i s t r i c t C o u r t m i s a p p l i e d the parole evidence rule as well as

provisions of the Uniform Commercial Code (U CC)

.

¶ 4 1 I n M o n t a n a

, o n e e n t r u s t e d w i t h t h e m a n a g

e m e n t o f a b u s i n e s s c a n h a v e e i t h e r

a c t u a l

, i m p l i e d o r o s t e n s i b l e a u t

h o r i t y t o m a k e c o n t r a c t s o n b e h a l f o f a b u s i n e s s

. A u d

i t

S e r v

. , I n c

. v

. E l m o R o a d C

o r p

. , 175 Mont. 533, 536

- 3 7, 575 P.2d 77, 79 (1978).

“ Ostens ib le authority is such as a principal, intentionally or by want of ordinary care,

causes or allows a third person to believe the agent to possess.” Section 28

- 10

- 403,

MCA. O s t e n s i b l e a u t h o r i t y m a y b e e s t a b l i s h e d “ b y o m i s s i o n s a s w e l l a s b y14

c o m m i s s i o n s

. ” N

o r t h w e s t P o l y m e r i c v

. F

a r m e r s S t a t e B k

. , 2 3 6 M o n

t

. 1 7 5

, 1 7 8

, 7 6 8 P

. 2 d

8 7 3

, 8 7 5 ( 1 9 8 9 )

. B u

t

, o s t e n s i b l e a u

t h o r i t y c a n n o t b e p r o v

e n b y t h e d e c l a r a

t i o n s o f a n

a g e n t w h o s e s t a t e m e n t s a r e s o u g h t t o b e c h a r g

e d t o t h e p r i n c i p a l

. S e e N o r t h w e s t

P o l y m e r i c

, 2 3 6 M o n t

. a t 1 7 7

- 7 8

, 7 6 8 P

. 2 d a t 8 7 5 ; P h e l p s v

. U n i o n C e n t r a l L i f e I n s

. C o

. ,

1 0 5 M o n t

. 1 9 5

, 1 9 9

, 7 1 P

. 2 d 8 8 7

, 8 8 9 ( 1 9 3 7 )

.

[ I ] t i s e l e m e n t a r y t h a t t h e a c t s

, d e c l a r a t i o n s

, a d m i s s i o n s

, s t a t e m e n t s

, o r

r e p r e s e n t a t i o n s o f a n a g

e n t a r e n o t a d m

i s s i b l e a g a i n s t t h e p r i n c i p a l t o p r o v e

t h e p o w e r o r a u t h o r i t y o f t h e a g e n t o r t h e s c o p e o r e x t e n t t h e r e o f

, u n l e s s

s u c h a c t s o r d e c l a r a

t i o n s w e r e d o n e o r m a d e i n t h e p r e s e n c e o f t h e

p r i n c i p a l

, o r w e r e w i t h i n h i s k n o w l e d g e

, o r w e r e a u t h o r i z e d o r r a t i f i e d b y

h i m

, o r t h e r e i s o t h e r e v i d e n c e o f a u t h o r i t y

. T h e r u l e r e f e r s t o d e c l a r a t i o n s

m a d e b y t h e a g

e n t o u t o f c o u r t

, o f

f t h e w i t n e s s s t a n d

, o r o t h e r w i s e t h a n i n

h i s s w o r n t e s t i m o n y

, a n d i t m e a n s t h a t s u c h d e c l a r a t i o n s c a

n n o t b e t e s t i f

i e d

t o b y a t h i r d p e r s o n f

o r t h e p u r p o s e o f p r o v

i n g t h e s c o p e o r e x t e n

t o f t h e

a u t h o r i t y o f t h e a g

e n t

.

P h e l p s

, 1 0 5 M o n t

. a

t 1 9 9

, 7 1 P

. 2 d a

t 8 8 9 ; s e e a l

s o E x c h a n g e S t a t e B a n k v

. O c c i d e n t

E l e v a t o r C

o

. , 9 5 M o n t

. 7 8

, 8 9

, 2 4 P

. 2 d 1 2 6

, 1 3 0 ( 1 9 3 3 )

.

¶ 4 2 “ P a r t o f t h e t e s t t o d e t e r m i n e w h e t h e r a n o s t e n s i b l e a u t

h o r i t y e x i s t s i s t o d e t e r m

i n e

w h a t a p r u d e n t p e r s o n

, a c t i n g i n g

o o d f a i t h

, u n d e r t

h e c i r c u m s t a n c e s

, w o u l d r e a s o n a b l y

b e l i e v e t h e a u t h o r i t y t o b e

. ” Y o u d e r i a n C

o n s t

. , I n c

. v

. H a l l

, 2 8 5 M o n

t

. 1

, 1 0

, 9 4 5 P

. 2 d

9 0 9

, 9 1 4 ( 1 9 9 7 )

. F u r

t h e r m o r e

,

[ a ] p e r s o n d e a l i n g w i t h a k n o w n a g e n t i s n o t a

u t h o r i z e d u n d e r a n y circumstances blindly to t r u s t t h e a g e n t ’ s s t a t e m e n t s a s t o t

h e e x t e n t o f h i s

p o w e r s ; s u c h p e r s o n m

u s t n o t a c t n e g

l i g e n t l y

, b u t m u s t u s e r e a s o n a b l e

d i l i g e n c e a n d p r

u d e n c e t o a s c e r t a i n w

h e t h e r t h e a g

e n t a c t s w i t h i n t h e s c o p e of his powers. In other words, a person dealing with an a gent assumes the

risk of lack of authority in the agent. He cannot charge the principal by

r e l y i n g u p o n t h e a g

e n t ’ s a s s u m

p t i o n o f a u t h o r i t y w

h i c h p r o v

e s t o b e

u n f o u n d e d

. T h e p r i n c i p a l

, o n t h e o t h e r h a n d

, m a y a c t o n t h e p r e s u m p t i o n

t h a t t h i r d p e r s o n s d e a l i n g w i t h h i s a g e n t w i l l n o t b e n e g

l i g e n t i n f a i l i n g t o

a s c e r t a i n t h e e x t e n

t o f h i s a u t h o r i t y a s w e l l a s t h e e x i s t e n c e o f h i s a g

e n c y

.15

P h e l p s , 105 Mont. at 200, 71 P.2d at 8 89.

¶ 4 3 In this case, Kimbrell had never entered into any transactions similar to the

p romissory note with any party on Axmen’s behalf, and neither the promissory note itself

nor any other evidence supports Pruyn’s assertions that Kimbrell was authorized to bind

A x m e n t o t h e p r o m

i s s o r y n o t e o r t o e n t e r t h e t r a n s a c t i o n w i t h P r

u y n a s A x m e n ’ s

r e p r e s e n t a t i v

e

. T h e p r o m

i s s o r y n o t e c l e a r l y c o n t e m p l a t e s o n l y i n d i v

i d u a l l i a b i l i t y w i t h

n o r e f e r e n c e t o A x m e n o r a n y i n d i c a t i o n t h a t t h e i n d i v i d u a l s w e r e s i g n i n g i n a

r e p r e s e n t a t i v

e c a p a c i t y

. T h e p r o m

i s s o r y n o t e s p e c i f

i c a l l y p r o v i d e s t h a t K i m

b r e l l a n d t

h e

Hansons are the “Makers.” The note also provides that “each Maker is jointly and

severally bound hereon as a principal and not as a surety.”

¶ 4 4 W e a g r e e w i t h t h e D i s t r i c t C o u r t ’ s c o n c l u s i o n t h a t a r e a s o n a b l e l e

n d e r i n P r

u y n ’ s

s h o e s

, h a d h e i n t e

n d e d t o b i n d A x m e n t o t h e N o t e

, w o u l d h a v

e m a d e s u r e K i m

b r e l l h a d

the authority to do so.

¶ 4 5 In addition, Pruyn’s attorney, Dennis Starkel, testified in his deposition that he

d r a f t e d t h e p r o m

i s s o r y n o t e a t P r

u y n ’ s r e q u e s t w i t h K i m

b r e l l a n d t

h e H a n s o n s a s

o b l i g o r s

. S t a r k e l f

u r t h e r t e s t i f

i e d t h a t

, i n p r e

p a r i n g t h e n o t e

, i t w a s n o t h i s i n t e n t i o n t h a t

t h e s p e c i f i c e n t i t y

, A x m e n

, b e a n o b l i g o r o n t h e n o t e

. I

n s t e a d

, S t a r k e l t e s t i f

i e d t h a t i t w a s

h i s g o a l i n d r a f

t i n g t h e n o t e t o c r e a

t e i n d i v i d u a l l i a b i l i t y t o t

h e t h r e e i n d i v

i d u a l s w h o w e r e

t o s i g n t h e n o t e

, K i m

b r e l l

, G u y a n d G r a n t H a n s o n

, a n d n o t t o c r e a t e l i a b i l i t y o n b e h a l f o f

A x m e n o r a n y o t h e r e n t i t y

. B e c a u s e o f a t t o r n e y

- c l i e n t p r i v i l e g e

, S t a r k e l d i d n o t t e s t i f

y16

w h e t h e r h e f

o l l o w e d P r

u y n ’ s i n s t r u c t i o n s i n d r a f

t i n g t h e n o t e

, b u

t h e d i d t e s t i f

y t h a t i n

p r e p a r i n g t h e n o t e h e d i d n o t b r e a c h a n y p r o f e s s i o n a l d u t y o w e d t o P r

u y n

.

¶ 4 6 P r u y n t e s t i f i e d t h a t h e i n s t r

u c t e d S t a r k e l t o p u

t t h e n a m e s o f K i m

b r e l l

, G u y a n d

G r a n t H a n s o n o n t

h e p r o m i s s o r y n o t e a n d t

h a t S t a r k e l d r a f

t e d t h e n o t e a s h e

, P r

u y n

, h a d

instructed. Pruyn also testified as follows:

A. [Pruyn] . . . I wasn’t loaning to the propane company only.

Q. [ Pruyn’s Counsel] Y o u w e r e n ’ t

. A

. N o

. Q

. W h o w e r e y o u l o a n i n g t o ?

A

. T o t h o s e t w o g

e n t l e m e n t h a t w e r e o n t h e n o t e

. M y r e q u i r e m e n t w a s that they had to sign the note.

Q. And you’re speaking of Grant Hanson and Guy Hanson.

A. Correct.

¶ 4 7 This Court has previously stated that “[e]xtrinsic evidence of contemporaneous or

prior oral agreements which contradicts the express terms of a written agreement is

a d m i s s i b l e w h e r e t h e w r i t t e n a g r e e m e n t i s a m

b i g u o u s

. ” C a r e l l i v

. H

a l l

, 2 7 9 M o n t

. 2 0 2

,

2 0 9

, 9 2 6 P

. 2 d 7 5 6

, 7 6 1 ( 1 9 9 6 ) ( c i t i n g H a g g e r t y v

. G a l l a t i n C

o u n t y , 221 Mont. 109,

117

- 18

, 7 1 7 P

. 2 d 5 5 0

, 5 5 5 ( 1 9 8 6 ) )

. “ W h e r e t h e l a n g

u a g e o f a n a g

r e e m e n t i s c l e a r a n d

u n a m b i g u o u s a n d

, a s a r e s u l t

, s u s c e p t i b l e t o o n l y o n e i n t e r p r e t a t i o n

, t h e d u

t y o f t h e c o u r

t

i s t o a p p l y t h e l a n g

u a g e a s w r i t t e n

. ” C

a r e l l i

, 2 7 9 M o n

t

. a t 2 0 9

, 9 2 6 P

. 2 d a

t 7 6 1 ( c i t i n g

A u d i t S e r v i c e s

, I

n c

. v

. S y s t a d , 252 Mont. 62, 65, 826 P.2d 549, 551 (1992)). An

ambiguity exists when a contract is subject to two different interpretations, and under

s u c h c i r c u m s t a n c e s

, p a r o l e v i d e n c e c a n b e u s e d t o d e t e r m i n e t h e p a r t i e s ’ i n t e n t

. C a r e l l i

,

279 Mont. at 209, 926 P.2d at 761.

¶ 4 8 Section 28

- 2

- 9 0 5

, M C A

, M o n t a n a ’ s p a r o l e e v

i d e n c e r u l e

, p r o v i d e s :17 W h e n e x t r i n s i c e v i d e n c e c o n c e r n i n g a w r i t t e n a g r e e m e n t m a y b e

c o n s i d e r e d

. ( 1 ) W

h e n e v e r t h e t e r m s o f a n a g

r e e m e n t h a v

e b e e n r e d u c e d

t o w r i t i n g b y t h e p a r t i e s

, i t i s t o b e c o n s i d e r e d a s c o n t a i n i n g a l l t h o s e t e r m s

. T h e r e f o r e

, t h e r e c a

n b e b e t w e e n t h e p a r

t i e s a n d t h e i r r e

p r e s e n t a t i v

e s o r

s u c c e s s o r s i n i n t e r e s t n o e v i d e n c e o f t h e t e r m s o f t h e a g r e e m e n t o t h e r t h a

n

t h e c o n t e n t s o f t h e w

r i t i n g e x c e p t i n t h e f

o l l o w i n g c a s e s : ( a ) w h e n a m i s t a k e o r i m

p e r f e c t i o n o f t h e w

r i t i n g i s p u t i n i s s u e b y

t h e p l e a d i n g s ; ( b ) w h e n t h e v a l i d i t y o f t h e a g

r e e m e n t i s t h e f

a c t i n d i s p u t e

. ( 2 ) T h i s s e c t i o n d o e s n o t e x c l u d e o t h e r e v i d e n c e o f t h e

c i r c u m s t a n c e s u n d e r w

h i c h t h e a g r e e m e n t w a s m a d e o r t o w h i c h i t r e l a t e s

,

a s d e s c r i b e d i n 1

- 4

- 102, or other evidence to explain an extrinsic ambiguity

or to establish illegality or fraud.

¶ 4 9 W e f

i n d n o a m

b i g u i t y i n t h e p r o m

i s s o r y n o t e a t i s s u e h e r e

. I t i s c l e a r o n t h e f

a c e

o f t h e n o t e t h a

t K i m b r e l l a n d t h e H a n s o n s w e r e t o s i g n a s i n d i v i d u a l s a n d n o t i n a n y

representative capacity

. Thus, w e a g r e e w i t h t h e D i s t r i c t C o u r t ’ s c o n c l u s i o n t h a t P r u y n

i n t e n d e d t h a

t t h e N o t e w a s t o b e a p e r s o n a l r e s p o n s i b i l i t y o f K i m b r e l l a n d t h e H a n s o n s

a n d s p e c i f

i c a l l y n o t a

n o b l i g a t i o n o f A x m e n

.

¶ 5 0 A m o n g h i s o t h e r a r g u m e n t s

, P r

u y n c o n t e n d e d o n a

p p e a l t h a t t h e D i s t r i c t C o u r t

m i s a p p l i e d v

a r i o u s p r o v

i s i o n s o f t h e U C C t o t h e f a c t s o f t h i s c a s e

. A s t h e p a r t i e s s u g g e s t

,

t h e p r o m i s s o r y n o t e i n t h i s c a s e i s a n “ i n s t r u m e n t ” a s d e f

i n e d b y t h e U C C

, T i t l e 3 0

,

c h a p t e r 3

, M C A

, r e f

e r r i n g t o n e g

o t i a b l e i n s t r

u m e n t s

. Section 30

- 3

- 104, MCA. U nder the

UCC, a person or entity “ i s n o t l i a b l e o n a n i n s t r u m e n t u n l e s s : ( a ) t h e p e r s o n s i g

n e d t h e

i n s t r u m e n t ; o r ( b ) t h e p e r s o n i s r e p r e s e n t e d b y a n a g e n t o r r e p r e s e n t a

t i v e w h o s i g n e d t h e

instrument and the signature is binding on t he represented person under 30

- 3

- 4 0 3

. ”

S e c t i o n 3 0

- 3

- 4 0 1

, M C A

. T h e U C C f u r t h e r p r o v

i d e s :

( 2 ) I f a r e p r e s e n t a t i v

e s i g n s t h e n a m e o f t h e r e p r e s e n t a t i v e t o a n

i n s t r u m e n t a n d t h a

t s i g n a t u r e i s a n a u t h o r i z e d s i g n a t u r e o f t h e r e p r e s e n t e d

p e r s o n

, t h e f

o l l o w i n g r

u l e s a p p l y :18 ( a ) I f t h e f

o r m o f t h e s i g

n a t u r e s h o w s u n a m

b i g u o u s l y t h a t t h e

s i g n a t u r e i s m a d e o n b e h a l f o f t h e r e p r e s e n t e d p e r s o n w h o i s i d e n t i f

i e d i n

t h e i n s t r u m e n t

, t h e r e p r e s e n

t a t i v e i s n o t l i a b l e o n t h e i n s t r u m e n t

. ( b )

. . . i f t h e f o r m o f t h e s i g n a t u r e d o e s n o t s h o w u n a m b i g

u o u s l y

t h a t t h e s i g n a t u r e i s m a d e i n a r e

p r e s e n t a t i v e c a

p a c i t y

, o r t h e r e p r e s e n t e d

p e r s o n i s n o t i d e

n t i f i e d i n t h e i n s t r

u m e n t

, t h e r e p r e s e n t a t i v

e i s l i a b l e o n t

h e

i n s t r u m e n t t o a h o l d e r i n d u e c o u r s e t h a t t o o k t h e i n s t r u m e n t w i t h o u t n o t i c e

t h a t t h e r e p r e s e n t a

t i v e w a s n o t i n t e n d e d t o b e l i a b l e o n t h e i n s t r u m e n t

. W

i t h

r e s p e c t t o a n

y o t h e r p e r s o n

, t h e r e

p r e s e n t a t i v e i s l i a b l e o n t h e i n s t r u m e n t

u n l e s s t h e r e p r e s e n t a t i v e p r o v e s t h a t t h e o r i

g i n a l p a r t i e

s t o t h e i n s t r u m e n t

d i d n o t i n t e n d t

h e r e p r e s e n t a t i v e t o b e l i a b l e o n t h e i n s t r u m e n t

.

Section 30

- 3

- 403 , MCA (emphasis added)

. 4

¶ 5 1 In the instant case, Kimbrell’s signature of his own name and his forgery of the

H a n s o n s ’ s i g

n a t u r e s o n l y b i n d s K i m

b r e l l i n d i v

i d u a l l y

. T h e p r o m i s s o r y n o t e d o e s n o t

s h o w u n a m

b i g u o u s l y t h a t K i m

b r e l l w a s s i g

n i n g a s a r e p r e s e n t a t i v

e o f A x m e n

. I

n

addition, Axmen, as the represented person, is not identified in the promissory note.

While Pruyn was the holder of the note a nd not a “holder in due course,” the last sentence

of § 30

- 3

- 403(2)(b), refers to “any other person.” Thus, “[w]ith respect to any other

p e r s o n

, ” s u c h a s P r

u y n

, K i m b r e l l a l o n e i s l i a b l e o n t h e p r o m i s s o r y n o t e u n l e s s h e c a n

p r o v e t h a t P r u y n d i d n o t i n t e n d K i m

b r e l l t o b e l i a b l e o n t h e n o t e

. S e c t i o n 3 0

- 3

- 403(2)(b),

MCA. No such showing has been made here. On the contrary, as indicated in ¶¶ 45 and

46 of this Opinion, the evidence shows that Pruyn wanted the individuals

— Kimbrell,

Guy Hanson and Grant Hanson

— l i a b l e o n t h e n o t e

, n o t A x m e n

. T h e e v i d e n c e f u r t h e r

4 The Dissent maintains in ¶ 100 t h a t o n l y s u b s e c t i o n ( 1 ) o f § 3 0

- 3

- 4 0 3

, M C A

, a p p l i e s t o

t h e f a c t s o f t h i s c a s e

. O n t h e c o n t r a r y

, s u b s e c t i o n ( 2 ) q u a l i f i e s s u b s e c t i o n ( 1 )

, t

h u s

subsection (2) p r o p e r l y a p p l i e s t o t h e f a c t s i n t h i s c a s e

. I f t h e D i s s e n t ’ s r e a s o n i n g w e r e

c o r r e c t

, t h e n a n y t i m e K i m

b r e l l s i g n e d a c o n t r a c t

, e v

e n f o r h i s p e r s o n a l h o m e m o r t g a g e

, A x m e n w o u l d b e b o u n d s i m p l y b e c a u s e K i m

b r e l l s i g n e d t h e c o n t r a c t

.19

shows that Kimbrell made two payments to Pruyn on the note from Kimbrell’s personal

accounts and not from any account of Axmen’s.

¶ 5 2 T he evidence indicates that although Kimbrell was given authority by Axm en to

p u r c h a s e p r o p a n e f

o r A x m e n ’ s c u s t o m e r s

, K i m b r e l l w a s n o t g i v e n a u t h o r i t y t o s p e c u l a t e

i n s u c h l a r g

e a m o u n t s

. T h e 1

. 7 m

i l l i o n g a l l o n s o f p r o p a n e p u r c h a s e d f r o m P o w d e r h o r n

i n t h i s s p e c u l a t i v

e t r a n s a c t i o n w a s a q u a n t i t y t h a t A x m e n c o u l d n o t t a k e p o s s e s s i o n o f n o r

s e l l i n i t s b u s i n e s s o p e r a t i o n s

. S u c h a l a r g e

, s h o r t t e r m

, s p e c u l a t i v

e t r a n s a c t i o n h a d n e v

e r

b e e n e n t e r e d i n t o b e t w e e n A x m e n a n d a n y s u p p l i e r b e f o r e t h i s

. W

h i l e A x m e n

o c c a s i o n a l l y p u r c h a s e d p r o p a n e f o r f u t u r e u s e t o m

i n i m i z e r i s k d u e t o p r i c e f

l u c t u a t i o n s

,

the amounts purchased were closer to 80,000 gallons based on Axmen’s available storage

capacity. We cannot conclude from these facts that Kimbrell’s signature alone would

bind Axmen to a contract.

¶ 5 3 The Dissent contends that Kimbrell had oste n s i b l e a u t

h o r i t y t o a c t a s A x m e n ’ s

a g e n t

. A s s u m i n g

, f

o r t h e s a k e o f a r g

u m e n t

, t h a t i s t r

u e

, P r u y n n o n e t h e l e s s m a d e a

c o n s c i o u s d e c i s i o n t o m a k e t h e l o a n p e r s o n a l l y t o K i m

b r e l l a n d t h e H a n s o n s ; t o h a v e

K i m b r e l l p e r s o n a

l l y s i g n t h e n o t e ; a

n d t o n o t n a m e A x m e n a s t h e p a y o r

. I f Pruyn

believed that Kimbrell

— exercising his ostensible authority

— w a s a c t i n g o n b e h a l f o f

A x m e n a n d

, a c c o r d i n g

l y m a d e A x m e n t h e p a y o r

, a n d i f K i m b r e l l h a d s i g n e d t h e n o t e o n

b e h a l f o f A x m e n

, t h e n w e w o u l d h a v e a d i f f e r e n t c a s e

. T h o s e a r e n o t t h e f a c t s

, h o w e v e r

.

P r u y n w a s u n i q u e l y i n t h e p o s i t i o n t o d e t e r m i n e i n w h o m h e w a s c r e a t i n g a d e b t

. P r u y n

c h o s e t o c r e a t e a d e b t p e r s o n a l l y i n K i m b r e l l a n d t

h e H a n s o n s

, a n d n o t i n t h e e n t i t y h e

n o w

, b e l a t e d l y

, c o n

t e n d s o w e s h i m r e p a y m e n t o n t h e l o a n

. O n c e K i m b r e l l o b t a i n e d t

h e20

loan funds, they were his to do with as he pleased. The debt on which Pruyn is suing was

n e v e r A x m e n ’ s b e c a u s e P r

u y n n e v e r made it Axmen’s obligation. Pruyn is the author of

his own misfortune.

¶ 5 4 A s p o i n t e d o u t i n ¶ ¶ 8 8 a n d 8 9 o f t h e D i s s e n t

, t h e r e a r e t w o p a r t s t o t h e t e s t f o r

d e t e r m i n i n g o s t e n s i b l e a u t h o r i t y

. H o w e v e r

, b e c a u s e t h e t e s t i s w o r d e d i n t h e c o n j u n c t i v e

r a t h e r t h a n t h e d i s

j u n c t i v e

, b o t h p a r t s o f t h e t e s t m u s t b e m e t f

o r o s t e n s i b l e a u t

h o r i t y t o

e x i s t

. E v e n i f w e w e r e t o a s s u m e t h a t t h e f i r s t p a r t o f t h e t e s t h a d b e e n m e t h e r e , Pruyn

has failed to establish that the facts in this case meet the s econd part of the test, i.e., that

“ a prudent person, acting in good faith, under the circumstances, would reasonably

bel i e v e t h e a u t h o r i t y t o b e

. ” Y o u d e r i a n , 285 Mont. at 10, 945 P.2d at 914. P r u y n ’ s o w n

a c t i o n s d e m o n s t r a t e t

h a t P r u y n h i m s e l f w a s n o t c o n v

i n c e d t h a t K i m b r e l l h a d o s t e n s i b l e

a u t h o r i t y t o b i n d A x m e n t o t h e n o t e

. I f P r

u y n believed so, he would not have instru cted

his attorney to require the Hansons ’ signatures on the note. Under the theory of

ostensible authority suggested by Pruyn, Kimbrell’s signature alone would have been

enough to bind Axmen.

¶ 5 5 B e c a u s e P r

u y n i n s t r u c t e d h i s a t t o r n e y t o d r a f t t h e p r o m i s s o r y n o t e w i t h t

h e

s i g n a t u r e s o f K i m

b r e l l a n d t h e H a n s o n s i n d i v i d u a l l y

, a n y u n c e r t a i n t y i n t h e n o t e m

u s t b e

c o n s t r u e d a g a i n s t P r u y n

. “ I n c a s e s o f u n c e r t a i n t y

. . . t h e l a n g u a g e o f a c o n t r a c t s h o u l d

b e i n t e r p r e t e d m o s t s t r o n g

l y a g a i n s t t h e p a r t y w

h o c a u s e d t h e u n c e r t a i n t y t o e x i s t

. ”

Section 28

- 3

- 206, MCA.

¶ 5 6 T he Dissent s t a t e s i n ¶ 9 8 t h a t i f K i m b r e l l a n d P r

u y n h a d i n t e n d e d t o d r a f

t a l o a n

a g r e e m e n t b a s e d s o l e l y o n i n d i v i d u a l l i a b i l i t y

, K i m b r e l l w o u l d n o t h a v

e p r o v i d e d o r21

needed to provide Pruyn with informatio n a b o u t t h e c o m p a n y ’ s a s s e t s

, c a s h f

l o w a n d

a c c o u n t s r e c e i v a b l e

. K i m

b r e l l w o u l d h a v

e s i m p l y s h o w

n P r u y n h i s o w n p e r s o n a l

f i n a n c i a l d o c u m e n t s

. F i r s t

, the Dissent w r o n g l y f o c u s e s o n K i m

b r e l l ’ s a c t i o n s t o s u p p o r

t

i t s o s t e n s i b l e a u t h o r i t y t h e o r y

. S e c o n d

, a s a l r e a d y i n d i c a t e d

, t h i s r a i s e s t h e f o l l o w i n g

q u e s t i o n s : I f P r

u y n b e l i e v e d t h a t K i m

b r e l l h a d o s t e n s i b l e a u

t h o r i t y t o b i n d A x m e n t o t h e

a g r e e m e n t

, w

h y d i d P r u y n i n s i s t o n h a v i n g t h e H a n s o n s ’ names on the note as well?

And, assuming ostensible authority ex isted here, wouldn’t Kimbrell’s signature have

been sufficient to bind Axmen?

¶ 5 7 The Dissen t claims in ¶ 93 that “[i]t was only when the company suffered a

financial loss that the Hanson brothers suddenly claimed that Kimbrell acted outside the

scope of his a u t h o r i t y

. ” T h a t s u p p o s i t i o n i s n o t s u p p o r t e d i n t h e f a c t s

. P r u y n h i m s e l f

t e s t i f i e d t h a t w h e n h e a p p r o a c h e d G

u y H a n s o n o n C h r i s t m a s E v e 2 0 0 3 c o n

t e n d i n g t h a

t

A x m e n o w e d P r

u y n m o n e y

, G

u y H a n s o n d i s c l a i m e d a n y k n o w l e d g e o f t h e p r o m

i s s o r y

n o t e o r t h a t K i m b r e l l h a d a u t h o r i t y t o e n t e r i n t o t h e n o t e o n b e h a

l f o f A x m e n

. And, i t

was only after this encounter that Axmen learned that the promissory note was used to

cover Kimbrell’s speculative transaction.

¶ 5 8 Moreover, in analyzing the second prong of the o stensible a uthority test, rather

than focusing on “what the principal did” as the Disse nt says we must , the Dis sent claims

in ¶ 9 7 t h a

t A x m e n i s a t f

a u l t b e c a u s e Kimbrell

“met with Pruyn several times to discuss

t h e l o a n ” a n d t h a

t Kimbrell “gave Pruyn information rel ating to Axmen’s assets,

Axmen’s cash flow and Axmen’s accounts receivable.” The Dissent also states i n ¶ 9 722

that “[a] prudent person in Pruyn’s position would believe that Kimbrell had authority to

act on behalf of Axmen.

. . . ”

¶ 5 9 A s already noted in thi s O p i n i o n

, “ i t i s e l e m e n t a r y t h a t t h e a c t s

, d e c l a r a t i o n s

,

a d m i s s i o n s

, s t a t e m e n t s

, o r r e p r e s e n t a t i o n s o f a n a g

e n t a r e n o t a d m

i s s i b l e a g a i n s t t h e

p r i n c i p a l t o p r o v

e t h e p o w e r o r authority of the agent or extent thereof

. . . .” Phelps , 105

Mont. at 199, 71 P.2d at 889. In other words, K i m b r e l l ’ s actions in producing certain

information regarding Axmen are not relevant to a determination of ostensible authority.

¶ 6 0 Accordingly, we hold that the District Court did not err in granting summary

judgment to Axmen o n P r u y n ’ s c o n t r a c t c l a i m

.

Issue 3.

¶ 6 1 D i d t

h e D i s t r i c t C o u r t e r r i n g r

a n t i n g s u m m a r

y j u d g m e n t t o A x m e n o n P

r u y n ’ s

u n j u s t e n r i c h m e

n t c l a i m ?

¶ 6 2 Pruyn argues that regardless of any finding relative to Kimbrell’s authority, the

fact remains that Pruyn’s money was u s e d t o p a y o f f A x m e n ’ s a c c o u n

t a t P o w d e r

h o r n

,

t h u s P r u y n c o n t e n d s h e i s e n t i t l e d t o q u a n t u m m e r u i t as a matter of law. Axmen argues,

o n t h e o t h e r h a n d

, t

h a t P r u y n ’ s u n j u s t e n r i c h m e n t c l a i m f

a i l s b e c a u s e t h e o b l i g

a t i o n i s

g o v e r n e d b y a n e x

p r e s s c o n t r a c t ; P r

u y n w a i v e d a n y u n

j u s t e n r i c h m e n t c l a i m a g a i n s t

A x m e n w h e n h e a c c e p t e d p a y

m e n t s f r o m K i m b r e l l ; P r u y n c a n n o t e s t a b l i s h t h e r e q

u i r e d

e l e m e n t s o f u n

j u s t e n r i c h m e n t ; a

n d s u c h a c l a i m i s i n c o n s i s t e n t w i t h t h e U C C

.

¶ 6 3 U n j u s t e n r i c h m e n t i s a n o b l i g a t i o n c r e a t e d b y l a w i n t h e a b s e n c e o f a n a g r e e m e n t

b e t w e e n t h e p a r t i e s

. M

a x t e d v

. B a r

r e t t

, 1 9 8 M o n t 8 1

, 8 7

, 6 4 3 P

. 2 d 1 1 6 1

, 1 1 6 4 ( 1 9 8 2 )

.

I n o t h e r w o r d s

, c o u r

t s h a v e a p p l i e d t

h e t h e o r y o f u n

j u s t e n r i c h m e n t w

h e n n o c o n t r a c t23

e x i s t s b e t w e e n t h e p a r t i e s

, b u t a c o n t r a c t i n l a w i s i m

p l i e d

. M a x t e d , 198 Mont. at 87, 643

P.2d at 1164.

¶ 6 4 T h e d o c t r i n e o f u n j u s t e n r i c h m e n t i s a n e q u i t a b l e m e a n s o f p r e v e n t i n g o n e p a r t y

f r o m b e n e f

i t i n g f r o m h i s o r h e r w

r o n g f u l a c t s

. Albinger v. Harris

, 2 0 0 2 M T 1 1 8

, ¶ 2 1

,

3 1 0 M o n t

. 2 7

, 4 8 P

. 3 d 7 1 1 ( c i t i n g S e b e n a v

. S t a t e

, 2 6 7 M o n t

. 3 5 9

, 3 6 7

, 8 8 3 P

. 2 d 1 2 6 3

,

1 2 6 8 ( 1 9 9 4 ) ; R a n d o l

p h V

. P e t e r s o n

, I n c

. v

. J

. R

. S i m p l o t C o

. , 2 3 9 M o n

t

. 1

, 8

, 7 7 8 P

. 2 d

8 7 9

, 8 8 3 ( 1 9 8 9 ) )

. A m o n g o t h e r t h i n g s

, a c l a i m o f u n

j u s t e n r i c h m e n t r e q u i r e s a p l a i n t i f f

t o s h o w t h e e l e m e n t o f m i s c o n d u c t o r f a u l t o n t h e p a r t o f t h e d e f e n d a n t o r t

h a t t h e

d e f e n d a n t s o m e h o w t o o k a d v a n t a g e o f t h e p l a i n t i f

f

. R a g l a n d v

. S

h e e h a n , 256 Mont. 322,

327, 846 P.2d 1000, 1004 (1993)

.

¶ 6 5 The undisputed facts show that Pruyn fails to meet this latter requirement to show

miscon d u c t o r f

a u l t o n A x m e n ’ s p a r t

. A x m e n h a d n o k n o w l e d g e o f t h e s p e c u l a t i v

e

t r a n s a c t i o n b e t w e e n K i m b r e l l a n d P o w d e r

h o r n o r t h e t r a n s a c t i o n b e t w e e n K i m b r e l l a n d

P r u y n u n t i l G u y H a n s o n w a s c o n f

r o n t e d b y P r

u y n i n D e c e m

b e r 2 0 0 3

. S i n c e G

u y a n d

G r a n t Hanson were not aware of either transaction until shortly before suit was filed,

Pruyn could not show any misconduct or fault on Axmen’s part.

¶ 6 6 T he Dissent maintains that Axmen was unjustly enriched because Kimbrell

engaged in misconduct by using Pruyn’s lo a n t o p a y o f f A x m e n ’ s d e b t t o P o w d e r h o r n

.

F i r s t

, t h e D i s s e n t f

a i l s t o r e c o g

n i z e t h e s i g

n i f i c a n c e o f t h e f

a c t t h a t i t w a s K i m

b r e l l w h o

e n g a g e d i n m

i s c o n d u c t

, n o t A x m e n

. S e c o n d

, i t h a s n e v e r b e e n e s t a b l i s h e d t

h a t t h i s w a s

A x m e n ’ s d e b t

. W e p o i n t e d o u t i n ¶ ¶ 1 0 a n d 5 2 o f t h i s O p i n i o n t h a t a l t h o u g h K i m b r e l l

w a s g i v e n a u t

h o r i t y b y A x m e n t o p u r c h a s e p r o p a n e f o r A x m e n ’ s c u s t o m e r s

, K i m b r e l l24

w a s n o t g i v e n a u t h o r i t y t o s p e c u l a t e i n t h i s f a s h i o n

. T h e 1

. 7 m

i l l i o n g a l l o n s o f p r o p a

n e

p u r c h a s e d f

r o m P o w d e r h o r n i n t

h i s t r a n s a c t i o n w a s a q u a n t i t y t h a t A x m e n c o u l d n o t t a k e

p o s s e s s i o n o f n o r s e l l i n i t s b u s i n e s s o p e r a t i o n s

. T h i s a m o u n t w a s a l m o s t 2 0 t i m e s t h e

v o l u m e o f a n y p r e v

i o u s o r d e r

. S u c h a l a r g

e

, s h o r t t e r m

, s p e c u l a

t i v e t r a n s a c t i o n h a d n e v

e r

b e e n e n t e r e d i n t o b e t w e e n A x m e n a n d a n y s u p p l i e r b e f o r e t h i s

. W

h i l e A x m e n

o c c a s i o n a l l y p u r c h a s e d p r o p a n e f o r f u t u r e u s e t o m

i n i m i z e r i s k d u e t o p r i c e f

l u c t u a t i o n s

,

the amounts purchased were closer to 80,000 gallons based on Axmen’s available storage

capacity.

¶ 6 7 The Dissent also claims in ¶ 93 t h a t “ [ t ] h e r e i s n o indication that if the prices had

risen instead of dropped, that Axmen would have rejected the propane and large profits

resulting from Kimbrell’s dealings . . . .” However, there is also no indication that if

there had b e e

n p r o f i t s f r o m t h i s s p e c u l a t i v

e d e a l o f K i m

b r e l l ’ s t h a t A x m e n w o u l d h a v e

r e c e i v e d a n y o f s a i d p r o f

i t s o r t h a t A x m e n w o u l d e v e n h a v e known of the transaction to

be able to reject or accept any such profits.

¶ 6 8 And, finally, t

he Dissent claims in ¶ 10 2 that “ [ t ] h e r e c o r d s h o w s t h a t t h e m o n e y

w a s w i r e d t o t

h e A x m e n P r o p a n e a c c o u n t a t P o w d e r H orn.” Th e record shows no such

thing. The “Wire/Funds Transfer Payment Order” shows the originator of the wire

transfer as “Pruyn Ranch” and the beneficiary of the wire transfer as “Powder Horn

Pe troleum” r e f

e r e n c i n g “ E d K i m

b r e l l

, ” n o t A x m e n

. A x m e n i s n o t m e n t i o n e d a n y w h e r e

i n t h e w i r e t r a n s f

e r d o c u m e n t

. W

h i l e t h e d o c

u m e n t t h e D i s s e n t r e f

e r s t o i n ¶ 10 2 was

a t t a c h e d a s a n e x

h i b i t t o P r

u y n ’ s d e p o s i t i o n

, t h a

t d o c u m e n t m a k e s n o s e n s e

. A s t h e25

Dissent points out, that document is signed by Kimbrell, which begs the question: H ow

could Kimbrell authorize a wire transfer from Pruyn’s account?

¶ 6 9 A c c o r d i n g

l y

, w e h o l d t h a

t t h e D i s t r i c t C o u r t d i d n o t e r r i n granting summary

judgmen t to Axmen on P r u y n ’ s u n j u s t e n r i c h m e n t c l a i m

Issue 4.

¶ 7 0 Did the District Court abuse its discretion in awarding Axmen its attorney ’ s f e e s ?

¶ 7 1 I n a w a r d i n g A x m e n i t s a t t o r n e y ’ s f e e s

, t h e D i s t r i c t C o u r

t d e t e r m i n e d t h a t A x m e n

w a s d r a w

n i n t o t h i s l a w s u i t b y P r u y n a n d f o r c e d t o d e f

e n d i t s e l f

, a n d t h a t “Pruyn

doggedly persisted in seeking compensation from Axmen” even though Pruyn knew

“fairly early on” that Kimbrell forged Guy an d Grant Hansons ’ signatures. T h e court

concluded that “Pruyn’s actions in this matter we re in the very least frivo lous and perhaps

even malicious ,” thus the court granted Axmen’s motion for attorney’s fees “[i]n order to

make Axmen whole.”

¶ 7 2 “The longstanding rule in Montana, also known as the American Rule, is that,

absent a contractual or st a tutory provision to the contrary, attorney fees will not be

a w a r d e d t o t h e p r e v

a i l i n g p a r t y i n a l a w s u i t

. ” P a n k r a t z F a r m s

, I n c

. v

. P a n k r a t z , 2004

M T 1 8 0

, ¶ 9 3

, 3 2 2 M o n

t

. 1 3 3

, 9 5 P

. 3 d 6 7 1 ( c i t i n g E r k e r v

. K e s t e r , 1999 MT 231, ¶ 43,

296 Mont. 123, 988 P.2d 1221). In rare instances, a district court may award attorney’s

fees to an injured party under t h a t c o u r t ’ s e q u i t y p o w e r s

. Pankratz

, ¶ 9 3 ( c i t i n g F o y v

.

A n d e r s o n

, 1 7 6 M o n

t

. 5 0 7

, 5 1 1

- 1 2

, 5 8 0 P

. 2 d 1 1 4

, 1 1 6

- 1 7 ( 1 9 7 8 ) )

. H o w e v e r

, s u c h a w a r d s

a r e t o b e d e t e r m

i n e d o n a c a s e

- by

- case basis, and “only when a party has been forced to

d e f e n d a g a i n s t a w h o l l y f r i v o l o u s o r m a l i c i o u s a c t i o n

. ” Pankratz

, ¶ 9 3 ; s e e a l s o E l26

Dorado Heights Home own. Ass’n v. Dewitt , 2008 MT 199, ¶ 27, 344 Mont. 77, 186 P.3d

1249.

¶ 7 3 P r u y n a r g u e s o n a p p e a

l t h a t h i s a c t i o n s t o r e c o v

e r h i s m o n e y w e r e n o t f r i v o l o u s

a n d m a l i c i o u s

, a n d t

h a t t h e e q u i t a b l e e x c e p t i o n t o t h e A m e r i c a n r u l e d o e s n o t a p p l y t o t

h e

f a c t s i n t h i s c a s e

. T h e p r o m i s s o r y n o t e s p e c i f

i c a l l y s t a t e d :

I f l e g a l a c t i o n i s c o m

m e n c e d t o c o l l e c t t h i s N o t e

, e a c h M a k e r a g r e e s

t h a t t h e v e n u e o f s u c h a c t i o n s h a l l b e i n M i s s o u l a C o u n t y

, M o n t a n a

, t h a t

s u c h a c t i o n m a y b e m a i n t a i n e d w i t h o u t r e g a r d t o t h e r e s i d e n c e o f a n y o f t h e

d e f e n d a n t s

, a n d t h a

t i n a n y s u c h a c t i o n

, b o t h a t t r i a l a n d o n a p p e a l

, each

Maker will pay all costs and expenses and such sum as the court may

adjudge reasonable as attorney’s fees.

¶ 7 4 The District Court pointed out that this is an unusual case in that, had Pruyn

prevailed, he would have been entitled to his attorney’s fees u nder Montana contract law,

y e t w h e n A x m e n p r e v

a i l e d

, i t w a s n o t e

n t i t l e d t o a

t t o r n e y ’ s f

e e s b e c a u s e i t w a s n o t a

p a r t y t o t h e p r

o m i s s o r y n o t e

. T h e c o u r t c o n c l u d e d t h a t s u c h a r e s u l t i s i n e q u i t a b l e a n d

that, under its equity powers, the court may award att o r n e y ’ s f e e s t o m a k e a n i n

j u r e d

p a r t y w h o l e

. S e e B r a a c h v

. G r

a y b e a l , 1999 MT 234

, ¶ 9, 296 Mont. 138, 988 P.2d 761.

¶ 7 5 H o w e v

e r

, a s P r u y n n o t e d

, t h e e q u i t a

b l e e x c e p t i o n h a s b e e

n i n v o k e d i n f r e q u e n t l y

,

a n d o n l y i n c a s e s w i t h p a r t i c u l a r l y l i m i t e d f a c t s

. T h e e x c e p t i o n d o e s n o t a p p l y w h e r e t h e

l o s i n g p a r t y h a d a r e a s o n a b l e b a s i s t o b e l i e v

e h i s c a u s e m

i g h t p r e v a i l

. See Goodover v.

L i n d e y ’ s I n c

. , 255 Mont. 430, 446

- 47 , 843 P.2d 765, 775

- 76 (1993).

¶ 7 6 In this case, we conclude that w hether or not Judge Deschamps agre ed with

P r u y n ’ s p o s i t i o n

, t

h e r e i s n o m e r i t t o t h e i d e a t h a t P r u y n l a c k e d a r e a s o n a b l e b a s i s t o27

believe he could recover his money from Axmen. And, we disagree with Judge

Deschamps’ conclusion that Pruyn’s action was “frivolous and perhaps even malicious. ”

¶ 7 7 Accordingly, we hold that the District Court abused its discretion in awarding

Axmen its attorney ’s fee s and we reverse on this issue. We remand this issue to the

D i s t r i c t C o u r t f

o r e n t r y o f a n o r

d e r v a c a t i n g i t s a w a r d o f a t t o r n e y ’ s f e e s t o A x m e n

.

Issue 5.

¶ 7 8 Were Pruyn’s due process right s v i o l a t e d a s a r e s u l t o

f A x m e n ’ s e x p a r t e

c o m m u n i c a t i o n s w i t h t h e D i s t r i c t C o u r t ?

¶ 7 9 Pruyn contends on appeal that when the billing records compiled by Axmen’s

a t t o r n e y s w e r e p r o v

i d e d t o P r

u y n f o r r e v i e w o f t h e a t t o r

n e y ’ s f e e s a w a r d e d

, m a n y o f t h e

e n t r i e s r e d a c t e d o n t

h e b a s i s o f a t t o r n e y

- client privilege d e m o n s t r a t e d t h a t A x m e n ’ s

a t t o r n e y s h a d e n g

a g e d i n m

u l t i p l e e x p a r t e c o m m

u n i c a t i o n s w i t h t h e D i s t r i c t C o u r t

, a t

least one of which involved substantive argument on the mer its of this case. 5 B e c a u s e

P r u y n w a s n o t g i v

e n n o t i c e o r a n o p p o r t

u n i t y t o r e s p o n d

, h e c o n

t e n d s t h a t t h e s e e x p a r t e

contacts violated his rights to due process.

¶ 8 0 The District Court had no time to respond to these allegations, however, because

Pruyn did n o t f

i l e h i s “ N o t i c e o f F i l i n g R e g a r d i n g C o u r t C o m

m u n i c a t i o n s ” d e t a i l i n g h i s

c o m p l a i n t s r e g

a r d i n g t h e a l l e g

e d e x p a r t e c o m

m u n i c a t i o n s u n t i l t h e d a y h e f i l e d h i s

A m e n d e d N o t i c e o f A

p p e a l

. T h i s C o u r t g

e n e r a l l y w i l l n o t a d d r e s s a n i s s u e w h i c h t h e

d i s t r i c t c o u r t h a d n o o p p o r t u n i t y t o d e c i d e

. I

n r e M a r r i a g e o f G e r h a r t

, 2 0 0 3 M T 2 9 2

,

5 A l t h o u g

h a b l a c k m a r k e r w a s u s e d t o c r o s s o u t c e r t a i n e n t r i e s

, t h e r e v i e w e r w a s s t i l l

a b l e t o r e a

d t h e e n t r i e s t h r o u g

h t h e b l a c k i n k

.28

¶ 3 1

, 3 1 8 M o n t

. 9 4

, 7 8 P

. 3 d 1 2 1 9 ( c i t i n g S i e f k e v

. S i e f k e

, 2000 MT 281, ¶ 25, 302 Mont.

167, 13 P.3d 937 )

.

¶ 8 1 I f P r

u y n ’ s c o u n s e l b e l i e v

e d e t h i c a l v

i o l a t i o n s o c c u r r e d h e r e

, t h e p r o p e r a c t i o n f o r

c o u n s e l t o t a k e i s t o r e

p o r t a n y a l l e g e d v i o l a t i o n s b y a j u d g

e o f t h e C a n o n s o f J

u d i c i a l

E t h i c s t o t

h e E x e c u t i v e S e c r e t a r y o f t h e J

u d i c i a l S t a n d a r d s C o m

m i s s i o n o f t h e S t a t e o f

M o n t a n a

, a n d t o r e p o r

t a n y a l l e g

e d v i o l a t i o n s b y a n a t t o r n e y o f t h e M o n t a n a R u l e s o f

P r o f e s s i o n a l C o n d u c t t o t

h e O f f i c e o f D i s c i p l i n a r y C o u n s e l

.

¶ 8 2 A f f i r m e d i n p a r t

, r e v

e r s e d i n p a r t

, a n d r e m a n d e d f o r f u r t h e r p r o c e e d i n g s c o n s i s t e n t

w i t h t h i s O p i n i o n

.

/ S / J A M E S C

. N E L S O N

W e c o n c u r :

/ S / P A T R I C I A O

. C O T T E R

/ S / J O H N W A R N E R

/ S / B R I A N M O R R I S

/S/ JIM RICE

Justice John Warner concurs.

¶ 8 3 I c o n c u r

.

¶ 8 4 A s f

a r a s P r u y n i s c o n c e r n e d

, i t i s i r r e l e v a n t w h e t h e r A x m e n h a d c o n f e r r e d

o s t e n s i b l e a u

t h o r i t y o n K i m

b r e l l

. N o m a t t e r w

h a t K i m b r e l l m a y h a v

e t o l d h i m o r s h o w e d

h i m

, P r u y n c h o s e n o t t o d e a l w i t h A x m e n a n d i n s t e a d d e a l t o n l y w i t h K i m b r e l l a s a n

i n d i v i d u a l

. T h e C o u r t i s e n

t i r e l y c o r r e c t t h a

t § 3 0

- 3

- 4 0 1

, M C A

, d o e s n o t a p p l y

. I t w a s29

s o l e l y P r u y n ’ s m i s t a k e t o t r

u s t K i m b r e l l a n d n o t c h e c k w i t h t h e H a n s o n s t o m a k e s u r e

they signed the note. A x m e n s i m p l y w a s n o t i n v

o l v e d i n K i m b r e l l ’ s d e a l w i t h P r

u y n

.

¶ 8 5 I a m w i l l i n g t o a c c e p t t h a t A x m e n

, I

n c

. , c o u l d h a v

e m a d e a m i s t a k e a n d g

r a n t e d

K i m b r e l l o s t e n s i b l e a u t h o r i t y t o d e a l w i t h P o w d e r h o r n

. T h i s d o e s n o t c h a n g e t h e f a c t

t h a t t h e d e a l b e t w e e n P o w d e r h o r n a n d K i m b r e l l h a d n o t h i n g t o d o w i t h P r u y n

.

¶ 8 6 T h e l o n g a n d t h e s h o r t o f t h i s c a s e i s t h a t P r u y n m a d e a s e r i o u s m

i s t a k e w h e n h e

r e j e c t e d A x m e n a s a d e b t o r a n d l o a n e d m o n e y t o K i m b r e l l w i t h o u

t t a k i n g s e c u r i t y a n d

w i t h o u t c h e c k i n g w i t h t h e H a n s o n s

. I t i s n o t e s t a b l i s h e d i n t

h e r e c o r d

, b u

t m a y b e A x m e n

a l s o m a d e a m i s t a k e a n d g r a n t e d K i m

b r e l l o s t e n s i b l e a u t h o r i t y t o d e a l w i t h P o w d e r h o r n

.

H o w e v e r

, A x m e n ’ s m i s t a k e d o e s n o t t r a n s l a t e i n t o a c o n c l u s i o n t h a t i t h a s b e e n u n j u s t l y

enriched by Pruyn’s carelessness. I n m y o p i n i o n

, P r

u y n ’ s c a r e l e s s n e s s w a s f

a r m o r e

e g r e g i o u s t h a n a n y m

i s t a k e A x m e n m i g

h t h a v e m a d e

. H o w e v

e r

, a t m o s t

, P r

u y n a n d

Axmen are equally at fault

— a n d b e t w e e n t h o s e w h o a r e e q u a l l y i n t

h e w r o n g

, t h e l a w

d o e s n o t i n

t e r p o s e

. S e c t i o n 1

- 3

- 2 1 5

, M C A

.

¶ 8 7 T h e D i s t r i c t C o u r t a n d t h i s C o u r t a r e c o r r e c t i n l e a v

i n g t h e s e p a r t i e s w

h e r e i t

f o u n d t h e m

. I c o n c u r i n t h e C o u r t ’ s o p i n i o n

.

/ S / J O H

N W A R N E R

J u s t i c e W

. W i l l i a m L e a p h a r t

, d i s s e n t i n g

.

¶ 8 8 I d i s s e n t o n i s s u e s t w o a n d t h r e e

. T h e C o u r t h a s f a i l e d t o a p p l y b o t h p a r

t s o f t h e

t e s t f o r d e t e r m i n i n g o s t e n s i b l e a u t h o r i t y

. T h e C o u r t h a s a n a l y z e d o n l y t h e s e c o n d s t e p :30

“ P a r t o f t h e t e s t t o d e t e r m i n e w h e t h e r o s t e n s i b l e a u t h o r i t y e x i s t s i s t o d e t e r m i n e w h a t a

p r u d e n t p e r s o n

, a c t i n g i n g

o o d f a i t h

, u n d e r t

h e c i r c u m s t a n c e s

, w o u l d r e a s o n a b l y b e l i e v

e

the authority to be.” Opinion

, ¶ 4 2

. W h i l e i t i s t r

u e t h a t p a r t o f t h e t e s t i s

, i n d e e d

, a

“prudent person” perspective, the Court fails to analyze t h e f i r s t p a r t o f t h i s C o u r t ’ s l o n g

e s t a b l i s h e d t e s t f

o r d e t e r m i n i n g o s t e n s i b l e a u t

h o r i t y

.

¶ 8 9 A s w e h a v

e h e l d i n B u t l e r

, A u d

i t S e r v i c e s

, a n d Y

a n z i c k : “ T h e t e s t i s f

o u n d i n a

d e t e r m i n a t i o n o f t h e e x a c t e x t e n t t o w h i c h t h e p r i n c i p a

l h e l d t h e a g

e n t o u t o r p e r m i t t e d

h i m t o h o l d h i m s e l f o u t a s a u t h o r i z e d

, a n d w h a t a p r u d e n t p e r s o n

, a c t i n g i n g

o o d f a i t h

,

u n d e r t h e c i r c u m s t a n c e s w o u l d r e a s o n a b l y b e l i e v

e t h e a u t h o r i t y t o b e

. ” B u t l e

r M f g

. C o

.

v

. J & L I

m p

. C o

. , 1 6 7 M o n t

. 5 1 9

, 5 2 7

, 5 4 0 P

. 2 d 9 6 2

, 9 6 9 ( 1 9 7 5 ) ( e m p h a s i s a d d e d ) ;

Y a n z i c k v

. B d

. o

f T r u s t e e s

, 1 7 7 M o n t

. 4 5 9

, 4 6 2

- 6 3

, 5 8 2 P

. 2 d 3 3 8

, 3 4 0 ( 1 9 7 8 ) ; A u d i t

S e r v s

. v

. E l m o R d

. C

o r p

. , 1 7 5 M o n

t

. 5 3 3

, 5 4 0

, 5 7 5 P

. 2 d 7 7

, 8 1 ( 1 9 7 8 )

. O s t e n s i b l e

a u t h o r i t y i s “ s u c h a s a p r i n c i p a l

, i n t e n t i o n a l l y o r b y w a n t o f o r d i n a r y c a r e

, c a u s e s o r

a l l o w s a t h i r d p e r s o n t o b e l i e v e t h e a g e n t t o p o s s e s s

. ” B u t l e r M f g

. C o

. , 1 6 7 M o n

t

. a t 5 2 4

,

5 4 0 P

. 2 d a t 9 6 5

. O s t e n s i b l e a u t h o r i t y “ c a n b e i m p l i e d f r o m t h e w o r d s a n d c o n d u c t o f t h e

p a r t i e s a n d t h e c i r c u m s t a n c e s o f t h e p a r t i c u l a r c a s e n o t w i t h s t a n d i n g a d e n i a l b y t h e

a l l e g e d p r i n c i p a l

. ” Y

o u d e r i a n C o n s t r

. v

. H a l l

, 2 8 5 M o n t

. 1

, 7

, 9 4 5 P

. 2 d 9 0 9

, 9 1 3 ( 1 9 9 7 )

( c i t i n g A u d

i t S e r v

. , I n c

. , 1 7 5 M o n

t

. a t 5 4 1

, 5 7 5 P

. 2 d a t 8 1 )

. F u r t h e r

, t h e a g e n c y

r e l a t i o n s h i p “ m a y b e i m

p l i e d f r o m t h e c o n d

u c t a n d f r o m a l l t h e f a c t s a n d c i r c u m s t a n c e s

i n t h e c a s e a n d i t m a y b e s h o w n b y c i r c u m s t a n t i a l e v

i d e n c e

. ” Y

o u d e r i a n

, 2 8 5 M o n

t

. a t 7

,

9 4 5 P

. 2 d a

t 9 1 2

- 1 3

. A s o u t l i n e d b e l o w

, b o t h r e q u i r e m e n t s f

o r o s t e n s i b l e a u t h o r i t y a r e

m e t i n t h i s c a s e

. A x m e n i s l i a b l e

.31

¶ 9 0 T h e w o r d s

, c o n d u c t

, c i r c u m s t a n c e s a n d f a c t s o f t h i s c a s e a l l i n d i c a t e t h a t K i m b r e l l

w a s a c t i n g w i t h o s t e n s i b l e a u t h o r i t y o n b e h a l f o f A x m e n

. A x m e n ’ s s o l e o f f i c e r s

,

d i r e c t o r s a n d s h a r e h o l d e r s w e r e E d w a r d K i m b r e l l

, G r a n t H a n s o n

, a

n d G u y H a n s o n

.

A x m e n

, b y “ w a n t o f o r d i n a r y c a r e

, ” h a d f a i l e d t o m o n i t o r o r s e t l i m i t s o n K i m

b r e l l ’ s

a u t h o r i t y t o a c t o n b e

h a l f o f t h e c o m

p a n y

. K i m

b r e l l w a s A x m e n ’ s p r e s i d e n t a n d w a s

v e s t e d w i t h a u t h o r i t y f r o m t h e H a n s o n b r

o t h e r s t o c o n d u c t d a y

- t o

- d a y o p e r a t i o n s

.

I n d e e d

, h e w a s t h e o n l

y p e r s o n i n c h a r g

e o f d a i l y o p e r a t i o n s a t A x m e n

. K i m b r e l l w a s

h e l d o u t b y t h e c o m

p a n y t o e n

t e r p r o p a n e p r

o c u r e m e n t c o n t r a c t s

, w

h i c h i n c l u d e d b o t

h

l a r g e a n d s m a l l a m o u n t s

. N o m e e t i n g s

, r e s o l u t i o n s o r a u t h o r i z a t i o n w e r e e v

e r r e q u i r e d

p r e r e q u i s i t e s o f K i m

b r e l l e n t e r i n g c o n t r a c t s o n b e h a l f o f t h e c o m

p a n y

. I t i s d i f f i c u l t t o

u n d e r s t a n d h o w t h e C o u r

t c a n a s s e r t t h a t K i m

b r e l l w a s “ n o t g

i v e n a u t h o r i t y t o s p e c u l a t e

i n t h i s f a s h i o n ” w

h e n t h e r e i s n o i n d i c a t i o n t h a t t h e c o r

p o r a t i o n h a d e v

e r e s t a b l i s h e d t h a

t

t h e r e w e r e l i m

i t s t o t h e s c o p e o f K i m

b r e l l ’ s a u t

h o r i t y i n t h e f

i r s t p l a c e

. O p i n i o n

, ¶ 6 6

.

¶ 9 1 T h e C o u r t m a k e s a s t r a i n e d d i s t i n c t i o n b e t w e e n w h a t i t d e s c r i b e s a s t h i s

“ s p e c u l a t i v

e ” t r a n s a c t i o n a n d t h e o t h e r t r a n s a c t i o n s P r

u y n h a s e n g a g

e d i n o n b e h a l f o f

A x m e n

. O p i n i o n

, ¶ 6 6

. T h e r e c o r d s h o w s t h a t A x m e n a l l o w e d K i m b r e l l t o e n g a g e i n

b o t h

, a n d h e d i d s o w i t h o u

t l i m i t a t i o n o r q

u e s t i o n f r o m t h e c o r

p o r a t i o n

. I

n t h e c o u r s e o f

h i s e m p l o y m e n t a t A x m e n

, K i m

b r e l l e n g a g e d i n “ h e d g i n g t r a n s a c t i o n s

, ” i n w h i c h h e

w o u l d p u r c h a s e l a r g

e a m o u n t s o f p r o p a

n e a t a f i x e d p r i c e

, t h e n s e l l i t t o c u s t o m e r s a t a

f u t u r e d a t e

. T h e c o m

p a n y n e v e r o b j e c t e d

. I n f a c t

, G u y H a n s o n ’ s t e s t i m o n y i n d i c a t e s t h a t

A x m e n h a d n o w

r i t t e n p o l i c y

, o v

e r s i g h t

, o r i n t e r n a l c o n

t r o l s e s t a b l i s h i n g t h e s c o p e o f

K i m b r e l l ’ s p u r c h a s i n g a n d / o r h e d g i n g a u t h o r i t y

. A

n d i t i s n o t t h i s C o u r

t ’ s p r e r o g a t i v e t o32

d e c i d e h o w m

u c h a u t h o r i t y i s t o o m

u c h a u t h o r i t y

. T h a t i s a d e c i s i o n A x m e n s h o u l d h a v e

m a d e a n d e

n f o r c e d p r i o r t o w

h a t a m o u n

t e d t o a f i n a n c i a l l y d e l e t e r i o u s o u t c o m e f o r t h e

c o m p a n y

.

¶ 9 2 F u r t h e r

, t

h e m a j o r i t y o f K i m

b r e l l ’ s a c t i o n s a s d a y

- t o

- d a y b u s i n e s s m a n a g e r a t

A x m e n w e r e d o n e o n c r e d i t

. A x m e n a d m i t t e d t h a t K i m

b r e l l w a s a u t h o r i z e d t o i n c u r d e b t

o n b e h a l f o f A x m e n

. T h e c o r p o r a t i o n h a d n o w

r i t t e n p o l i c y a r t i c u l a t i n g t h e s c o p e o f

K i m b r e l l ’ s b o r r o w i n g a u t h o r i t y

. T h e r e f o r e

, t h e e x p o s t f

a c t o c l a i m t h a t K i m

b r e l l a c t e d

o u t s i d e o f h i s a u t h o r i t y i s u n t e n a b l e g i v e n t h a t t h e c o m

p a n y n e v e r a r t i c u l a t e d t

h e s c o p e o f

t h e a u t h o r i t y i t n o w c l a i m s h a s b e e n o v e r s t e p p e d

.

¶ 9 3 T h e r e i s n o i n d i c a t i o n t h a t i f t h e p r i c e s h a d r i s e n i n s t e a d o f d r o p p e d

, t h a t A x m e n

w o u l d h a v

e r e j e c t e d t h e p r o p a n e a n d l a r g e p r o f i t s r e s u l t i n g f

r o m K i m b r e l l ’ s d e a l i n g s o n

b e h a l f o f A x m e n

. I

t w a s o n l y w

h e n t h e c o m p a n y s u f f e r e d a f i n a n c i a l l o s s t h a t t

h e

H a n s o n b r o t h e r s s u d d e n l y c l a i m e d t h a t K i m b r e l l a c t e d o u

t s i d e t h e s c o p e o f h i s a u t h o r i t y

.

T h i s i s t h e e x a c t t y

p e o f “ w a n t o f o r d i n a r y c a r e ” o n t h e p a r t o f A x m e n t h a t s a t i s f i e s t h e

f i r s t p r o n g o f t h e o s t e n s i b l e a u t h o r i t y t e s t

. T h e e x i s t e n c e o f o s t e n s i b l e a u t h o r i t y i s s i m p l y

n o t d e p e n d e n t o n t h e s u c c e s s o r f

a i l u r e o f t h e a g

e n t ’ s d e a l i n g s o n b e

h a l f o f t h e c o m

p a n y

.

¶ 9 4 I n d e t e r m i n i n g w h e t h e r K i m

b r e l l w a s a u t h o r i z e d t o e n t e r t h e t r a n s a c t i o n w i t h

P r u y n a s a r e p r e s e n

t a t i v e o f A x m e n

, t h e C o u r

t f o c u s e s s o l e l y o n t h e p r o m i s s o r y n o t e a n d

t h e a l l e g e d i n d i v i d u a l l i a b i l i t y i t c r e a t e d

. W e h a v e

, h o w e v e r

, m a d e c l e a r t

h a t t h e

o s t e n s i b l e a u t

h o r i t y a n a l y s i s i s n o t a “ f o u r c o r n e r s ” i n q u i r y

. I t i s m e a s u r e d b y t h e

c o n d u c t

, a l l t h e f a c t s a n d c i r c u m s t a n c e s i n t h e c a s e

, a n d m a y b e s h o w

n b y c i r c u m s t a n t i a l

e v i d e n c e

. Y

o u d e r i a n

, 2 8 5 M o n t

. a

t 7

, 9 4 5 P

. 2 d a t 9 1 2

- 1 3

. L i k e w i s e

, t h e C o u r t33

i m p r o p e r l y f

o c u s e s o n t h e i n a b i l i t y o f A x m e n t o s t o r e t h e p r o p a n e r e s u l t i n g f r o m t h e

transaction. O p i n i o n

, ¶ 5 2

. K i m b r e l l h a d d o n e t h i s t y p e o f t r a n s a c t i o n i n t h e p a s t w i t h o u t

objection from the corporation. R e g a r d l e s s

, A x m e n ’ s a b i l i t y t o s t o r e t h e p r o p a n e p l a y s n o

p a r t i n t h e l e g a l d e t e r m i n a t i o n r e q

u i r e d u n d e r t h e t w o

- p a r

t o s t e n s i b l e a g

e n c y a n a l y s i s

.

T h e g e r m a n e f a c t h e r e i s t h a t A x m e n h a s a l o n g t r a c k r e c o r d o f a l l o w i n g K i m b r e l l t o b u y

p r o p a n e w i t h n o l i m

i t s o n h i s s c o p e o f a u

t h o r i t y

.

¶ 9 5 T h e w e i g

h t o f r e s p o n s i b i l i t y u n d e r t h e f i r s t p r o n g o f t h e o s t e n s i b l e a u t h o r i t y t e s t

l i e s n o t o n K i m

b r e l l ’ s o r P r

u y n ’ s s h o u l d e r s

, b u

t o n t h e s h o u l d e r s o f t h e c o r p o r a t i o n t o

e x e r c i s e “ o r d i n a r y c a r e ” i n e s t a b l i s h i n g t h e b o u n d a r i e s o f i t s p r e s i d e n t ’ s a u t h o r i t y

. U n d e r

t h e l e g a l s t a n d a r

d f o r o s t e n s i b l e a u

t h o r i t y

, t h e c o r

p o r a t i o n

— n o t P r u y n

— a u t h o r e d t h i s

m i s f o r t u n e b y f

a i l i n g t o e s t a b l i s h t h e s c o p e o f t h e i r p r e s i d e n t ’ s a u t h o r i t y

.

¶ 9 6 T h e C o u r

t n e x t c o n c l u d e s t

h a t t h e s e c o n d p r

o n g o f t h e o s t e n s i b l e a

u t h o r i t y t e s t i s

n o t s a t i s f i e d

. O p i n i o n

, ¶ 5 4

. T h e a s s e r t i o n i s n o t s u p p o r t e d b y a n y a

n a l y s i s u n d e r t

h e

“ p r u d e n t p e r s o n ” s t a n d a r

d

. I n s t e a d

, t h e C o u r t s t a t e s : “ P r

u y n h i m s e l f w a s n o t c o n v

i n c e d

t h a t K i m b r e l l h a d o s t e n s i b l e a u

t h o r i t y t o b i n d A x m e n t o t h e n o t e

. ” O p i n i o n

, ¶ 5 4

. T h i s

s p e c u l a t i o n a b o u

t a p a r t y ’ s t h o u g h t p r o c e s s p l a y s n o r

o l e i n t h e t w o

- s t e p a

n a l y s i s r e q u i r e d

b y t h i s C o u r

t ’ s p r e c e d e

n t o n o s t e

n s i b l e a u t h o r i t y

. T h e o s t e n s i b l e a u t h o r i t y t e s t d o e s n o t

a s k t h e C o u r t t o d i v

i n e w h e t h e r P r u y n w a s c o n v i n c e d

. I

t r e q u i r e s t h i s C o u r

t t o e m b a r k o n

a c a r e f u l i n q u i r y r e g

a r d i n g “ w

h a t a p r u d e n t p e r s o n

, a c t i n g i n g

o o d f a i t h

, u n d e r t

h e

c i r c u m s t a n c e s w o u l d r e a s o n a b l y b e l i e v e t h e a u t h o r i t y t o b e

. ” B u t l e r M f g

. C o

. v

. J & L

I m p

. C o

. , 1 6 7 M o n t

. a t 5 2 7

, 5 4 0 P

. 2 d a t 9 6 9 ; Y a n z i c k v

. B d

. o

f T r u s t e e s

, 1 7 7 M o n

t

. a t

4 6 2

- 6 3

, 5 8 2 P

. 2 d a t 3 4 0

.34

¶ 9 7 T h i s s e c o n d p r o n g o f t h e o s t e n s i b l e a u t h o r i t y t e s t i s s a t i s f

i e d

. K i m b r e l l m e t w i t h

P r u y n s e v e r a l t i m e s t o d i s c u s s t h e l o a n a n d d e t a i l s a b o u t t

h e c o m p a n y

. D u r i n g t h e

m e e t i n g s

, K i m

b r e l l g a v e P r u y n i n f o r m a t i o n r e l a t i n g t o A x m e n ’ s a s s e t s

, A x m e n ’

s c a s h

f l o w a n d A x m e n ’

s a c c o u n t s r e c e i v a b l e

. P r

u y n h i m s e l f t e s t i f

i e d t h a t b a s e d o n t

h e

d o c u m e n t a

t i o n f r o m A x m e n a n d h i s o w

n i n v e s t i g a t i o n i n t o t h e c o m

p a n y ’ s r e p u t a t i o n a n d

o v e r a l l b u s i n e s s p r o s p e c t s

, h e d e c i d e d t o l e n d A x m e n $ 5 4 4

, 5 0 0

. A p r u d e n t p e r s o n i n

P r u y n ’ s p o s i t i o n w o u l d b e l i e v e t h a t K i m

b r e l l h a d a u t

h o r i t y t o a c t o n b e h a

l f o f A x m e n :

h e w a s t h e c o m

p a n y ’ s p r e s i d e n t

, r a n d a y

- t o

- d a y b u s i n e s s o p e r a t i o n s

, a n d a p p e a r e d t o

h a v e t h e a u t h o r i t y t o p o s s e s s a n d s h a r e t h e c o m p a n y ’ s p r i v

a t e f i n a n c i a l d o c u m e n t s

.

¶ 9 8 I f t h e t w o m e n i n t e n d e d t o d r a f t a l o a n a g

r e e m e n t b a s e d s o l e l y o n i n d i v i d u a l

l i a b i l i t y

, a s t h e C o u r t c o n c l u d e s

, K i m b r e l l w o u l d n o t h a v

e p r o v i d e d o r n e e d e d t o p r o v i d e

P r u y n w i t h i n f

o r m a t i o n a b o u t t

h e c o m p a n y ’ s a s s e t s

, c a s h f

l o w a n d a c c o u n

t s r e c e i v a b l e

.

H e w o u l d h a v

e s i m p l y s h o w n P r u y n h i s o w n p e r s o n a l f

i n a n c i a l d o c

u m e n t s

. T h e s a m e

a p p l i e s t o t

h e H a n s o n b r o t h e r s

. O n l y t h e i r p e r s o n a l d o c u m e n t s w o u l d h a v e b e e n

n e c e s s a r y

, n o t t

h e c o r p o r a t i o n ’ s f

i n a n c i a l d o c u m e n t s

. I

t w a s P r u y n ’ s u n d e r s t a n d i n g t h a t

t h e m o n e y w a s t o b e u s e d b y A x m e n t o b u y a t r a c t o f l a n d o n w h i c h a l a r g

e n u m b e r o f

p r o p a n e t a n k s w e r e t o b e s t o r e d

. T h e f i n a n c i a l d i s c l o s u r e s a n d s t a t e d p u r p o s e d o n o t

s u g g e s t a p e r s o n a l

, i n d i v

i d u a l p r o p a n e s t o r a g

e p r o j e c t

.

¶ 9 9 A p r

u d e n t p e r s o n u n d e r t

h e s e c i r c u m s t a n c e s w o u l d r e a s o n a b l y b e l i e v e t h a t

K i m b r e l l

, a f t e r p r o v i d i n g a n d d i s c u s s i n g t h e c o m p a n y ’ s p r i v

a t e f i n a n c i a l d o c

u m e n t s

, w a s

a c t i n g o n b e h a

l f o f t h e c o m

p a n y

, n o t h i m s e l f

. K i m b r e l l h a d e n g a g e d i n b u s i n e s s

t r a n s a c t i o n s

—

w h e t h e r t h e y b e h e d g

i n g t r a n s a c t i o n s o r o t h e r w i s e

— f o r y e a r s o n b e h a l f o f35

t h e c o m p a n y w i t h o u

t a w o r d f

r o m t h e H a n s o n b r o t h e r s

. T h e f a c t s

, c o n d u c t

, a n d

c i r c u m s t a n c e s c l e a r l y i n d i c a t e t h a t A x m e n ’ s “ w a n t o f o r d i n a r y c a r e ” a l l o w e d K i m b r e l l t o

a c t

, u n b r i d l e d

, o n b e

h a l f o f t h e c o r

p o r a t i o n

, a n d t

h a t a p r u d e n t p e r s o n w o u l d h a v

e

b e l i e v e d t h a t K i m

b r e l l w a s a u t h o r i z e d t o a c t o n t h e c o m p a n y ’ s b e h a l f

. T h e r e f o r e

, b o t h o f

t h e r e q u i r e d e l e m e n t s o f t h e o s t e n s i b l e a u t h o r i t y t e s t a r e s a t i s f

i e d

.

¶ 1 0 0 T h e C o u r t a n a

l y z e s t h i s c a s e u n d e r § 3 0

- 3

- 4 0 3 ( 2 )

, M C A

. O p i n i o n

, ¶ 5 0

.

H o w e v e r

, i t i s s u b s e c t i o n o n e t h a t d i r e c t l y a p p l i e s

. T h e s t a t u t e r e a d s a s f

o l l o w s :

I f a p e r s o n a c t i n g

, o r p u r p o r t i n g t o a c t

, a s a r e p r e s e n t a t i v e s i g n s a n

i n s t r u m e n t b y s i g

n i n g e i t h e r t h e n a m e o f t h e r e p r e s e n t e d p e r s o n o r t h e n a m e

o f t h e s i g n e r

, t h e r e p r e s e n

t e d p e r s o n i s b o u n d b y t h e s i g n a t u r e t o t h e s a m e

e x t e n t t h e r e p r e s e n t e d p e r s o n w o u l d b e i f t h e s i g n a t u r e w e r e o n a s i m

p l e

c o n t r a c t

. I f t h e r e p r e s e n t e d p e r s o n i s b o u n d

, t h e s i g n a t u r e o f t h e representative is the “authorized signatur e o f t h e r e p r e s e n t e d p e r s o n ” a n d

t h e r e p r e s e n t e d p e r s o n i s l i a b l e o n t h e i n s t r u m e n t

, w h e t h e r o r n o t i d e n t i

f i e d

i n t h e i n s t r u m e n t

.

S e c t i o n 3 0

- 3

- 4 0 3 ( 1 )

, M C A ( e m p h a s i s a d d e d )

. T h e p r e s e n c e o f t h e A x m e n n a m e o n t h e

c o n t r a c t i s s i m

p l y n o t n e c e s s a r y f

o r t h e c o m

p a n y t o b e h e l d l i a b l e

. K i m b r e l l

, a c t i n g a s a

r e p r e s e n t a t i v

e o f A x m e n

, s i g

n e d h i s n a m e ( “ t h e s i g

n e r ” )

. U n d e r t h e s t a t u

t e

, A x m e n ( t h e

“ r e p r e s e n t e d ” ) i s b o u n d b y t h e s i g n a t u r e

, r e g

a r d l e s s o f w

h e t h e r A x m e n w a s i d e n t i f i e d i n

t h e i n s t r u m e n t

. S e c t i o n 3 0

- 3

- 4 0 3 ( 1 )

, M C A

. K i m b r e l l

, v i a o s t e n s i b l e a u t h o r i t y

, s i g n e d a s

a n a u t h o r i z e d r e p r e s e n t a

t i v e o f t h e c o r

p o r a t i o n

, t h

u s m a k i n g A x m e n l i a b l e

.

¶ 1 0 1 I s s u e t h r e e a d d r e s s e s t h e u n j u s t e n r i c h m e n t c l a i m

. T h e d o c t r i n e o f u n j u s t

e n r i c h m e n t i s a n e q u i t a b l e m e a n s o f p r e v e n t i n g o n e p a r t y f

r o m b e n e f

i t t i n g f r o m h i s o r h e r

w r o n g f u l a c t s a n d r e q

u i r e s a s h o w i n g o f m

i s c o n d u c t

, f

a u l t o r t h a t o n e p a r t y t o o k

a d v a n t a g e o f t h e o t h e r

. L e

F e b e r v

. J o h n s o n

, 2 0 0 9 M T 1 8 8

, ¶ 2 6

, 3 5 1 M o n t

. 7 5

, 8 1

, 2 0 936

P

. 3 d 2 5 4

, 2 6 0 ; A l b i n g e

r v

. H a r r i s , 2002 MT 1 18

, ¶ 2 1

, 3 1 0 M o n t

. 2 7

, 3 3

, 4 8 P

. 3 d 7 1 1

,

7 1 6 ; R a n d

o l f v

. P e t e r

s o n

, I n c

. v

. J

. R

. S i m p l o t C o

. , 2 3 9 M o n

t

. 1

, 8

, 7 7 8 P

. 2 d 8 7 9

, 8 8 3

( 1 9 8 9 )

.

¶ 1 0 2 K i m

b r e l l

, w i t h o s t e n s i b l e a u t h o r i t y f r o m t h e c o r

p o r a t i o n

, b o r r o w e d m o n e y f

r o m

P r u y n

. T h e r e c o r d s h o w s t h a t t h e m o n e y w a s w i r e d t o t h e A x m e n P r o p a n e a c c o u

n t a t

Powder Horn. Kimbrell is the only person who signed the wire transfer form

. 1 T h e

“ O r i g i n a t o r ’ s N a m e ” s p a c e r e a d s : “ A x m e n P r o p a n e

, I n c

. — R e f e r e n c e

. ” T h e

“ O r i g i n a t o r ’ s A d d r e s s ” i s f i l l e d i n w i t h t h e b u s i n e s s a d d r e s s o f A x m e n P r o p a n e

. W h i l e

“ P r u y n R a n c h ” i s w

r i t t e n i n a b l a n k s p a c e a t t h e t o p o f t

h e p a g e

, t h e w i r e i s s i g

n e d b y

E d w a r d K i m

b r e l l

, A x m e n ’ s p r e s i d e n t

. T h e c r i t i c a l f a c t h e r e

, h o w e v

e r

, i s t h a t t h e m o n e y

w a s r e c e i v

e d b y P o w d e r H o r n

, c r e d i t e d t o A x m e n P r o p a n e ’ s a c c o u n t

, a n d p a i d o f f t h e

p r o p a n e f u t u r e s l o s s f

o r A x m e n P r o p a n e

. T h e c o m p a n y u n j u s t l y b e n e f

i t e d f r o m t h e a c t s

o f i t s p r e s i d e n t

. T h i s s c e n a r i o g o e s t o t h e h e a r

t o f u n j u s t e n r i c h m e n t

, i n w

h i c h t h e g o a l i s

t o i d e n t i f y a n d a m e l i o r a t e a b r e e d o f m i s c o n d u c t i n w

h i c h o n e p a r t y u

n j u s t l y b e n e f

i t s

f r o m i t s o w

n a c t i o n s

.

¶ 1 0 3 T h e C o u r t b a s e s i t s c o n c l u s i o n o n t h e o b s e r v a t i o n t h a t t

h e H a n s o n b r o t h e r s w e r e

u n a w a r e o f K i m

b r e l l ’ s p u r c h a s e a n d t

h e l o a n

. H o w e v

e r

, u n d e r t h i s C o u r

t ’ s t e s t f o r

o s t e n s i b l e a u t

h o r i t y

, i t i s c l e a r t h a t t

h e b r o t h e r s g

r a n t e d K i m

b r e l l t h e a u

t h o r i t y t o e n g

a g e

i n b u s i n e s s o n t h e c o r

p o r a t i o n ’ s b e h a

l f

. T h e r e f o r e

, t h e f o c u s o f t h e a n a

l y s i s s h o u l d n o t b e

1 T h e C o u r t r e f e r s t o a n o t

h e r d o c u m e n t

, t i t l e d “ W i r e / F u n d T r a n s f e r P a y m e n t O r d e r

. ” T

h e f o r m

w e r e f e r e n c e a n d t h e p a y m e n t o r d e r r e f l e c t t h e s a m e t r a n s a c t i o n

. T h e r e i s n o i

n d i c a t i o n i

n t h e

r e c o r d r e g a r d i

n g t h e p r e c i s e i

n t e r a c t i o n o r r e l a t i v e w e i g h t t h e t w o f o r m s s h o u l d b e g r a n t e d

. R e g a r d l e s s

, b o t h d o c u

m e n t s r e f l e c t t h e r e a l i

t y t h a t t h e m o n e

y w a s u s e d t

o p a y o f f t h e P o w e r

H o r n P e t r o l e u m d e b t

.37

o n t h e b r o t h e r s ’ a l l e g

e d i g n o r a n c e

, b u

t r a t h e r o n t h e m i s c o n d u c t o f t h e c o m

p a n y t h r o u g

h

K i m b r e l l ’ s o s t e n s i b l e a u t h o r i t y

. A x m e n d i r e c t l y b e n e f i t e d f r o m t h e m

i s c o n d u c t o f t h e

c o r p o r a t i o n t h r o u g h i t s p r e s i d e n t

, w

h o i l l e g i t i m a t e l y b o r r o w e d f r o m P r u y n a n d a p p l i e d

t h e p r o c e e d s o f t

h e l o a n t o p a y o f

f A x m e n ’ s d e b t t o P o w d e r h o r n

. U n j u s t e n r i c h m e n t

t h e r e f o r e a p p l i e s

.

¶ 1 0 4 F o r t h e a b o v

e r e a s o n s

, I w o u l d r e v

e r s e t h e D i s t r i c t C o u r t ’ s s u m m a r y j u d g m e n t

r u l i n g o n P r

u y n ’ s c o n t r a c t a n d u

n j u s t e n r i c h m e n t c l a i m s

.

/ S / W

. W I L L I

A M L E A P H A R T

C h i e f J u s t i c e M i k e M c G r a t h j o i n s i n t h e d i s s e n t i n g O p i n i o n o f J u s t i c e W

. W i l l i a m

L e a p h a r t

.

/ S / M I K E M c G R A T H