No. 90-234 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1990 

KARYN ANN BAIN, 

Plaintiff and Appellant, 

-vs- -- 

LARRY WILLIAMS, BRIAN CLOUTIER, and STATE MEDICAL SERVZC'&, '&c?, 

a Montana corporation, - -, ~rl 

Defendants and Respondents. 1. m0 " , - > :-3 

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APPEAL FROM: District Court of the Eleventh Judicial @$strict, 

In and for the County of Flathead, 

The Honorable Michael Keedy, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

E. Eugene Atherton, Kalispell, Montana 

For Respondent: 

Randy K. Schwickert, Whitefish, Montana 

Filed: 

submitted: August 9, 1990 

Decided: October 30, 1990 
Justice John C. Sheehy delivered the Opinion of the Court. 

The plaintiff, Karyn Ann Bain brought this action in the 

Eleventh Judicial District Court, Flathead County, to recover the 

unpaid balance due under the terms of a written promissory note. 

Although a jury trial had been initially requested by Bain, she 

later agreed to bifurcate the contract (promissory note) issues 

from the tort issues raised in her complaint and to try the 

contract issues in front of the court sitting without a jury. The 

defendants filed an action for declaratory judgment concerning the 

same contract and sought recovery of monies advanced to Bain. The 

District Court consolidated Bain's collection actions with the 

declaratory judgment action. The District Court determined that 

the purpose for execution of the promissory note had been totally 

frustrated and, as a result, the remaining obligation of the 

defendants should be excused and the promissory note rescinded. 

The District Court then entered judgment in favor of the defendants 

and against Bain. Thereafter, Bain filed a Rule 59(g), M.R.Civ.P. 

motion to alter or amend the judgment, which motion was deemed 

denied by the expiration of the 45 day time limit. (Rule 59(d), 

M.R.Civ.P.) Bain now appeals the District Court judgment and the 

denial of the Rule 59 motion. We reverse and remand. 

Bain raises the following issues on appeal: 

1. Whether the trial court's findings are supported by 

substantial evidence? 
2. Whether the trial court erred by allowing the defendants 

to amend their answer on the day of trial? 

Prior to January 28, 1983, Bain was married to Steven Boyd. 

During their marriage, Boyd started an in-home oxygen care business 

known as Montana Medical Oxygen and Supply, Inc. (hereafter f4M) . 

At the time of her divorce from Boyd in 1983, Bain acquired from 

him, as part of the divorce agreement, his promissory note for 

$900,000 and held 50% of the stock of MM as security for Boyd's 

payment under the terms of the note. Late in 1983, Bain learned 

that Boyd was attempting to sell MM to the defendants. At the 

time, Bob Allison, an attorney in Kalispell, represented Bain, and 

he began negotiating with Williams on behalf of Bain in the effort 

by the defendants to purchase her interest in MM. During the 

negotiations with Williams, Bain and Allison demanded to know how 

much Williams was paying Boyd for MM, but were told by Williams 

that was none of their business and the negotiations with Bain was 

a Itseparate deal. 

The negotiations proved to be fruitful, and Bain agreed to 

accept $370,000 from the defendants for the marital obligation Boyd 

owed her, which included her security interest in the MM stock. 

As a result, on November 7, 1983, the defendants executed an 

agreement and promissory note to Bain for $370,000. Allison 

prepared this promissory note for the parties. After the execution 

of the promissory note, Bain conveyed her stock in MM to Williams. 

Sometime in January of 1984, the parties began to suspect that 

the MM purchase was in trouble, and in fact the purchase did not 
close as planned or expected on February 29, 1984. The cause of 

the failure rested on Steven Boyd. Thereafter, Boyd told the 

defendants he intended to look for a new buyer for MM. 

The defendants stopped making payments on the promissory note 

in March of 1984, and Bain filed this suit to enforce payment under 

the note. In their answer, the defendants contended that the 

execution of the promissory note has been conditioned on the 

purchase of Boyd's half of MM, that they had failed to purchase 

Boyd's MM stock, and therefore the defendants' purpose in executing 

the promissory note had been totally frustrated. 

On April 25, 1984, in a letter from defendants' attorney to 

Bain, the defendants discussed filing the declaratory judgment 

action to determine their duty under the agreement with Bain. They 

also advised Bain that they would continue to make payments under 

the note, but that they would seek reimbursement for any money 

advanced. The defendants made payments through January, 1985. 

After a bench trial, the District Court found that the 

execution of the promissory note was contingent upon the 

defendants' successful purchase of Boyd's half of MM. The court 

found that the failure to complete the purchase of Boyd's half of 

MM constituted a frustration of purpose of their promissory note 

with Bain. The trial court determined that the promissory note 

should be rescinded, and the remaining payment obligation under the 

note excused. The court also ordered Bain to repay the money that 

the defendant had already paid her. From this judgment, Bain 

appeals. 
The first issue is whether the District Court's findings are 

supported by substantial evidence. The appellate standard for 

review is clear. This Court may not set aside findings of fact 

unless they are clearly erroneous. Rule 52 (a), M.R.Civ.P. 

Expanding on this standard, we have stated: 

When reviewing findings of fact and conclusions of law 

of a district court, sitting without a jury, this Court 

has repeatedly held such findings and conclusions will 

not be disturbed if supported by substantial evidence and 

by the law. 

. . . 

Central Bank of Montana v. Eystad (1985), 219 Mont. 69, 73, 

710 P.2d 710, 713, and cases cited therein. 

The District Court made findings that (1) the defendants' 

execution of the promissory note was contingent upon their 

successful purchase of Boyd's half of MM; (2) the defendants did 

not complete their purchase of Boyd's half of MM; (3) the failure 

to purchase Boyd's share of the business constituted frustration 

of the principal purpose of the promissory note; and (4) the 

contract is rescinded due to this frustration of the principal 

purpose of the note. 

The District Court's findings and conclusions are not 

supported by substantial evidence and the law. We disagree with 

the court Is findings, and find the parties' promissory note was not 

contingent on the defendants' purchase of Boyd's half of MM. 

The District Court's first obligation was to peruse the four 

corners of the promissory note to determine whether the claimed 

contingency existed. ''Where the language of a written contract is 
clear and unambiguous there is nothing for the court to construe; 

the duty of the court is simply to apply the language as written 

to the facts of the case, and decide the case accordingly.I1 

Danielson v. Danielson (1977) , 172 Mont. 55, 58, 560 P. 2d 893, 894 ; 

Nordlund v. School District No. 14 (1987), 227 Mont. 402, 404, 738 

P.2d 1299, 1301. Courts have no power to change the contract or 

the express language used. Williams v. Insurance Company of North 

America (1967), 150 Mont. 292, 295, 434 P.2d 395, 397. 

Here, the promissory note is unambiguous, and clearly does not 

include a contingency. Despite the obvious lack of contingency in 

the note, the defendants argue that paragraph 5 of the note reveals 

the note was conditioned upon the defendants operating MM 

Paragraph 5 of the note states: 

That should Second Parties (defendants) decide in anyway 

sell or dispose of their majority interest or stock in 

and to the business entities known as State Medical 

Services, Inc. and Montana Medical Oxygen & Supply, Inc. , at any time prior to having paid the obligations to First 

Party (Bain) as set out above in full, the entire balance 

remaining unpaid shall become immediately due and payable 

upon such a sale or transfer of their interest. In other 

words, this Agreement is not assignable and is 

conditioned upon the continuing operation of said 

business by Larry Williams, Brian Cloutier and Mark 

Hungerford. 

This paragraph does not state that the successful acquisition 

of Boyd's business was contingent for the execution of the 

promissory note. Instead, it simply states that if the defendants 

were to sell or otherwise dispose of Boyd's business before 

completing payment to Bain, then the entire remaining balance due 

to Bain would accelerate. The last sentence of the paragraph 

simply reasserts that the obligation to pay under the promissory 
note is not transferrable or assignable to someone else and would 

accelerate unless the defendants continued to run Boyd's business. 

The defendants also argue that the promissory note is 

contingent on their purchase of Boyd's half of MM, because the 

promissory note is peppered throughout with references of the 

defendants assuming the right to manage the assets of MM, and 

references to Bain's and Boyd's earlier property settle agreement. 

We disagree with the defendants, and will not read a contingency 

into the contract when one clearly does not exist on the face of 

the contract. 

The District Court erred when it went beyond the four corners 

of the contract, and looked to the intent of the parties to 

determine if the contingency existed in the promissory note. 

Again, the intent of the parties is only looked at when the 

agreement is not clear on its face. Glacier Campground v. Wild 

Rivers, Inc. (1979), 184 Mont. 543, 547, 597 P.2d 689, 692. Here, 

the promissory note does not contain a contingency, and the court 

mistakenly looked at the intent of the parties. Courts may not 

disregard the express language of a contract. Williams, 434 P.2d 

at 397; Lemley v. Bozeman Community Hotel Co. (1982), 200 Mont. 

470, 475, 651 P.2d 979, 981; New Hampshire Insurance Group v. 

Strecker (Mont. 1990), - P.2d , 47 %.Rep. 1736, 1738; See 

also 5 28-3-401, MCA. 

The District Court improperly granted the defendants the right 

of rescission. In its order, the court stated: 

Defendants' right of rescission, based upon failure of 

consideration, excuses their continued performance under 

7 
this contract, and they may rescind. Despite Plaintiff's 

assertions to the contrary, Defendants failed to acquire 

the business of Montana Medical, and that acquisition was 

fundamental to the promissory note and agreement between 

the parties. 

The consideration in this case was not the acquisition of MM 

but ~ain's agreement to turn over her security interest in 50% of 

the MM stock to the defendants in exchange for the $370,000 under 

the promissory note. Accordingly, we find an exchange of 

consideration among the parties, and reverse the court's rescission 

of the contract. 

We need not address the second issue concerning amending the 

answer the day of trial, since we have found for Bain under the 

terms of the contract. 

Conclusion 

Since the contract was not contingent on the defendants 

purchasing Boyd's half of MM, the defendants did not have a right 

to rescind the contract. Thus, when the defendants stopped their 

payments under the terms of the promissory note, ~ain properly sent 

to the defendants a notice of default and accelerated the balance 

due under the promissory note. We reverse the District Court's 

order and remand the case to the District Court to determine the 

amount of damages the defendants owe Bain under the promissory 

note. Under the terms of the promissory note, Bain, as the 

prevailing party is entitled to recover attorney's fees. Reversed 

and remanded for further proceedings in accordance with this 

Opinion. 
We Concur: