NO. 90-029 IN THE SUPREME COURT OF THE STATE OF MONTANA 1990

A. DEAN BOHNSACK and DEBRA STETLER BOHNSACK, husband and wife, Plaintiffs, Appellants and Respondents, -- - '*- .7 - (-, ---vsHI-NOON PETROLEUM, INC., a Montana corporation, and MARJEAN CHARLES, Defendants,Appellants, and Respondents. f.-, .-- 

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APPEAL FROM: District Court of the Fourth Judicial District, In and for the County of Missoula, The Honorable Ed McLean, Judge presiding.

COUNSEL OF RECORD: For Appellant: William L. Crowley, Boone, Karlberg & Haddon, Missoula, Montana For Respondent: BrianJ.Smith,Milodragovich, Dale & Dye,Missoula, Montana Milton Datsopoulos, Datsopoulos,MacDonald & Lind, Missoula, Montana

Filed: Submitted on Briefs: April 12, 1990 Decided: May 30, 1990

0Justice Diane G. Barz delivered the Opinion of the Court. Hi-Noon Petroleum, Inc. (Hi-Noon) appeals froman orderof the District Court of the Fourth Judicial District, Missoula County. The District Court granted Hi-Noon'smotion for summary judgment, although it declined to award Hi-Noon its attorney's fees and costs. Plaintiffsbelow,Deanand Debra Bohnsack (Bohnsacks)filed a notice of appeal based on the District Court's denial of their motion for summary judgment. At the outset,we note counsel for the Bohnsacks improperly filed a notice of appeal rather than a cross-appeal. We will, however, treat Bohnsacks' appeal as a cross-appeal. We affirm in part and reverse and remand in part. Bohnsacks entered into a sub-lease and gasoline purchase agreement with Hi-Noon on October 1, 1986. Bohnsacks sub-leased a gasoline station located on Brooks Avenue in Missoula and agreed to purchase gasoline, diesel fuel and oil from Hi-Noon. The contract provided that ''payment for gasoline and diesel shall be net 7 days fromdate of delivery." Theparties furtheragreed that Bohnsacks wouldnot sell,assign or otherwise conveytheir interest absent Hi-Noon's consent. In an assignment executed in April, 1987, Bohnsacks transferred their interest to Marjean Charles (Charles). Hi-Noon consented to the assignment,but, specifically did not release Bohnsacks from their obligation under the sublease and gasoline agreement. Hi-Noon made deliveries of gasoline and diesel to Charles for which she failed to pay within the seven day period provided by contract. Bohnsacksallege,and Hi-Noon appears to agree,that Hi2Noon continued to deliver gasoline and diesel to Charles after she failed topay for delivered loads within the required timeperiod. Charles ceased operations in March of 1988,and at that time owed Hi-Noon approximately $23,729 for gasoline, diesel and oil delivered tothe station. Hi-Noon demandedpayment on thisaccount from Bohnsacks and refused to consent to their second assignment of the sub-lease and gasoline agreement to Ronald Malensek (Malensek)until Bohnsacks made payment arrangements. Malensek gave Bohnsacksa $20,000promissorynotebearing 11% interest and payable in installments of $485.26 per month as partial consideration for the assignment. Bohnsacks assigned both the note and thepayments toHi-Noon. The assignment, release and indemnity agreement executed by ~i-~oon, Bohnsacks and Malensek on March 31, 1988,provided as follows: In consideration of the foregoing assignment, Hi-Noon releases Bohnsack from any liability owing to Hi-Noon from Robert or Margean (sic) Charles and any other contractural (sic) liability to be performed by Bohnsack under theAsset Purchase Agreement between Bohnsack and Malensek. Bohnsacks filed suitagainst Hi-Noonand CharlesonAugust 16, 1988. Bohnsacks asserted in their complaint that Hi-Noon waived its recourse against them forpayment of Charles' debt by failing to notify Bohnsacks of Charles' delinquency and by continuing to make deliveries after Charlesdid not pay promptly. Hi-Noonmoved forsummary judgment claiming the assignment,releaseand indemnity evidenced an accord and satisfaction between it and Bohnsacks. Bohnsacks also moved for summary judgment. After hearing on theparties

## ' respectivemotions for summary judgmentonMarch 24, 1989, the District Court entered its opinion and order on May 15, 1989, holding there was an accord and satisfaction between Hi-Noon and Bohnsacks. Hi-Noon moved to amend the court's order to permit it to collect attorney's fees and for certification pursuant to Rule 54 (b)

### , M.R.Civ.P. In an order dated July 17, 1989, the District Court denied both motions. Bohnsacks then moved for summary judgment against Charles. The District Court on October 31, 1989, ordered that those proceedings be stayed pending the outcome of Charles' bankruptcy case. Hi-Noon renewed its motion for certification and the District Court subsequently ordered certification and entered its final judgment. This appeal followed. The facts of this case are not in dispute, therefore the District Courtproperly granted summary judgment. Benson v. Pyfer

(Mont. 1989), 783 P.2d 923, 924, 46 St.Rep 2033, 2035. Prior to Bohnsacks' assignment of their sub-lease to Malensek, they entered into an assignment, release and indemnity agreement whereby Bohnsacks assigned to Hi-Noon payments due them on a $20,000 promissory note in satisfaction of the $23,729 debt owed by Charles toHi-Noon forwhich Bohnsacksacted asguarantor. Bohnsacks argue they did not release their claims against Hi-Noon for wrongfully delivering gasoline to Charles despite Charles' failure to pay for loads previously delivered. Bohnsacks' argument is circular: Bohnsacks agreed to assignthe $20,000promissory note to Hi-~oon aspayment for amounts owed Hi-Noon for gasoline delivered to Charles. Now Bohnsacks contend theymay proceed against Hi-Noon for increasingBohnsacks'exposure to liability under their assignment to Charles by delivering gasolineand not demandingpayment. Hi-Noon's failuretoterminate delivery or notify Bohnsackswould be a defense to Hi-Noon's claim against Bohnsacks. Section 28-1-1401, MCA, defines an accord as: [A]n agreement to accept in extinction of an obligation something different from or less than that to which the person agreeing to accept is entitled. Furthermore, ll[a]cceptance by the creditor of the consideration of an accord extinguishes the obligation and is called satisfaction." section 28-1-1402, MCA. Hi-Noon accepted $20,000 in settlement of a $23,729 debt. Clearly, Hi-Noon agreed to accept less than that to which it was entitled in extinction of Bohnsacks' debt. Once Hi-Noon accepted payment, the debt was extinguished by accord and satisfaction. The District Court properly foundBohnsacks'claimsbarred by accord and satisfaction. Section 28-3-704,MCA, provides as follows: Whenever, by virtue of the provisions of any contract or obligation in the nature of a contract 

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# . one party to such contract or obligation has an express right to recover attorney fees from any other party to the contract or obligation in the event the party having that right shall bring an action upon the contractor obligation, then in any action on such contract or obligation all parties to the contract or obligation shall be deemed to have the same right to recover attorney fees and the prevailing party in any such action, whether by virtue of the express contractualright or by virtue of this section, shall be entitled to recover his reasonable attorney fees from the losing party or parties. The Assignment, Release and ~ndemnityAgreement executed by the Bohnsacks and Hi-Noon contains the substance of the parties' accord and satisfaction and specifically provides for an award of attorney's feesto theprevailingparty in theevent of litigation. In light of that contractual agreement, the District Court erred indenyingHi-Noon recovery of its attorney's fees. We reverseand remand for an award of reasonable attorney's fees to Hi-Noon. Affirmed in part, reversed in part.

We concur: 

# &~.fl~~ Chief Justi 

# rAk. J* Justice