No. 88-551 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1989 

AETNA FINANCE COMPANY, 

a corporation, 

Plaintiff and Appell-ant, 

-VSCOURT E. BALL and TOWE, BALL, 

EMRIGHT & MACKEY, a partnership, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable Diane G. Barz, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Robert J. Phillips; Snavely & Phillips, Missoula, 

Montana 

For Respondent: 

Richard E. Gillespie; Keller, Reynolds, Drake, Sternhagen & Johnson, Helena, Montana 

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Submitted on Briefs: April 27, 1989 

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L:I L-" Decided: June 15, 1989 

li 
Mr. Justice L. C. Gulbrandson delivered the Opinion of the 

Court. 

Aetna Finance Company (Aetna) appeals the final 

judgment entered September 9, 1988, by the Thirteenth 

Judicial District Court in favor of the defendants. The 

court held that Aetna's attorney, defendant Court Ball, 

fulfilled his duty to advise Aetna as to whether a proposed 

borrower had a mortgageable interest in certain real 

property, such that Aetna could obtain a secured interest in 

the property, and whether the mortgagee title insurance would 

appropriately insure this secured interest. Therefore, 

defendants were held not liable for any legal malpractice. 

We affirm. 

The issues presented for our review are as follows: 

1. Did attorney Ball have a duty to assure that client 

Aetna had a valid secured interest and that it received 

mortgagee title insurance covering that secured interest? 

2. Did the attorney breach this duty to his client? 

The ownership history of that real property central to 

the issues raised in this appeal is quite lengthy and 

involved. We will detail only those stipulated facts 

regarding this property which are directly relevant to the 

legal malpractice issues raised by Aetna. 

On September 9, 1980, Anne Zemple executed a trust 

agreement conveying in trust a certain parcel of real 

property in Gallatin County to Henry Richner. Richner, as 

trustee, assumed the responsibility of making improvements to 

the property. To this end, Richner secured a loan for 

$25,000 from Aetna on August 7, 1981. This loan was secured 

by a trust indenture prepared by attorney Ball and signed by 

Richner. Ball prepared this trust indenture per instructions 

from Aetna after having advised Aetna to ensure that Richner 
had authority to grant a security interest in the property. 

In response, Aetna obtained from Zemple a Consent to Mortgage 

which gave her agreement to a mortgage of the property as 

security for this loan. 

On March 2, 1983, Richner executed, without designation 

of capacity, a Quit Claim Deed conveying his interest in the 

property back to Zemple. Thereafter, Richner began making 

arrangements with Aetna to obtain another loan totaling 

$38,829.66. 

On November 4, 1983, the USLIFE Title Insurance Company 

(Company) issued a commitment for title insurance which 

stated it would generally insure title to the property from 

all claims except those affecting title and arising out of 

the trust agreement dated September 9, 1980 and/or the Quit 

Claim Deed executed on March 2, 1983. The Company later 

issued a mortgagee title policy containing these exceptions. 

During a meeting in Ball's office on November 11, 1983, 

Aetna informed him of Richner's request for an additional 

loan against the property. Ball testified that after 

examining the Quit Claim Deed and title commitment, he 

advised Aetna to determine if the trust was still effective, 

and if so, to obtain another Consent to Mortgage from Zemple. 

Ball then prepared a consent form, and Aetna subsequently 

obtained the necessary signature. Ball also advised Aetna to 

get the two above-mentioned exceptions on the title insurance 

commitment removed. During a telephone conversation on 

November 18, 1983, Aetna told Ball that the Company would 

delete the Quit Claim Deed Exception. Consequently, Ball 

advised Aetna it could proceed with the closing of the loan, 

and he subsequently prepared a trust indenture which Richner 

then signed. Ball was present at the closing of this loan 

that same day. 
Ball prepared a post-closing written opinion on 

November 21, 1983, upon request of Aetna, stating that the 

trust indenture signed by Richner had created a valid 

security interest in the property sufficient to enable Aetna 

to obtain mortgagee title insurance. Ball testified that 

this opinion was based upon review of the Consent to 

Mortgage, the title commitment naming Richner as the vested 

trustee owner, and Aetna's verbal assurance that the Company 

would delete the Quit Claim Deed exception. Ball did not see 

the mortgagee title insurance policy, which was issued 

November 21, 1983 and which in fact retained the two 

exceptions, prior to issuance of this written opinion. 

Richner defaulted on his loan obligation on January 3, 

1984. Ball, acting on behalf of Aetna, commenced foreclosure 

proceedings. Zemple filed suit against Aetna and Ball to 

obtain damages and a permanent injunction against foreclosure 

of the trust indenture. Aetna filed a counterclaim against 

Zemple and a third party complaint against Ball. The lawsuit 

against Aetna was subsequently settled by Zemple's payment of 

$23,998.26 to Aetna in exchange for Aetna's reconveyance of 

the trust indentures, cancellation of the promissory notes, 

and dismissal of the counterclaim against Zemple. 

Thereafter, the court ordered a realignment of the remaining 

parties with Aetna as the plaintiff and Ball and his law firm 

as defendants. 

Following a non-jury trial on July 5 and 6, 1988, the 

District Court issued its findings and rendered judgment in 

favor of defendants in this realigned lawsuit. The court 

held that Ball had not assumed the duty of guaranteeing that 

the title company would issue appropriate coverage insuring 

Aetna's interest in the property. Rather, Ball was employed 

as an attorney with limited duties and he fulfilled these by 

advising Aetna how to proceed to insure its interest in the 
property. Defendants thus were held not liable for any loss 

Aetna incurred by virtue of its loss of a security interest 

in the property, an interest which had guaranteed repayment 

of monies loaned to Richner. 

Aetna alleges that Ball had a duty to ensure that it 

received a security interest and appropriate title insurance 

for that security interest. Aetna contends Ball's failure to 

fulfill these duties constituted a breach of contract as well 

as negligence. 

This whole case turns on a determination of what duties 

Aetna retained Ball to fulfill. The parties dispute the 

specific duties for which the attorney-client relationship 

was created, and not the general duties owed clients in 

general. See generally, Huszagh and Molloy, Legal 

Malpractice: A Calculus For Reform, 37 Mont.L.Rev. 279, 335 

(1976) (recognizing the two subparts to the duty element). 

This dispute is one of material fact. The broad standard of 

review urged by Aetna, which would allow this Court to make a 

determination of this case based upon our own findings, 

therefore is not applicable to this case. Such a broad 

standard of review would be applicable only if the facts were 

relatively uncontested. See, e.g., Johnson v. Division of 

Motor Vehicles (1985), 219 Mont. 310, 312, 711 P.2d 815, 816. 

Because a factual dispute exists as to the specific duties 

Ball was obligated to perform, we will rely on the District 

Court's findings and presume that they are correct unless 

unsupported by substantial, credible evidence and thus 

clearly erroneous. As stated in Rule 52 (a) , M.R.C~V.P. : 

Findings of fact shall not be set aside 

unless clearly erroneous, and due regard 

shall be given to the opportunity of the 

trial court to judge the credibility of 

the witnesses. 
The District Court examined the nature of past legal 

dealings between Aetna and Ball to determine the terms of 

their attorney-client contractual relationship. The court 

did not abuse its discretion in ascertaining the exact duties 

Aetna intended Ball to perform from an examination of the 

parties' conduct. We have previously held that when contract 

terms are ambiguous, the conduct of the parties is the best 

indication of the true intent of the parties at the time of 

contracting. E.g., Souders v. Montana Power Co. (1983), 203 

Mont. 483, 486, 662 P.2d 289, 291; Rumph v. Dale Edwards, 

Inc. (1979), 183 Mont. 359, 368, 600 P.2d 163, 168. A court 

then must interpret the terms of a contract so as to give 

effect to this initial intent. See § 28-3-301, MCA. 

From an examination of the parties' conduct, the 

District Court determined that the parties intended Ball to 

determine if the proposed borrower had a mortgageable 

interest which could act as security for the proposed loan. 

Moreover, Ball was to review the title commitment to 

determine if this secured interest would be covered under an 

appropriate mortgagee title insurance policy. If Aetna did 

not have a valid interest, Ball was to advise Aetna what 

actions to take to obtain such a valid security interest 

and/or appropriate title insurance coverage. Aetna, not 

Ball, had the responsibility for acting upon this advice. 

The court concluded that Ball fulfilled these advisory duties 

and thus he was not liable for any negligence or breach of 

contract. 

Substantial credible evidence exists in support of the 

court's findings as to the nature of the duties Ball was 

retained to perform. Ball testified that Aetna hired him to 

advise it as to the validity of the security interest and 

title insurance coverage, to issue a written opinion as to 

the validity of each, to prepare the trust indenture 
document, and to attend the closing. He testified that he 

was not expected to ensure the validity of the security 

interest or appropriateness of the title insurance coverage. 

In Ball's opinion, Aetna routinely handled all these other 

details and problems, arising in regards to loan 

transactions, to save the cost of attorney's fees and thereby 

to remain competitive in the lending market. 

Memos from a telephone conversation and meeting prior 

to the 1981 loan by Aetna reveal that Ball assumed the 

responsibility only for advising Aetna of the steps necessary 

to ensure appropriate mortgagee title insurance coverage. 

Memos from a November 11, 1983 meeting with Aetna again 

reveal that Ball only advised Aetna of steps it should take 

to ensure a valid security interest and appropriate title 

insurance in regards to the proposed 1983 loan. Moreover, 

Ball testified he advised Aetna to obtain a consent to 

mortgage from Zemple, which Aetna subsequently obtained. 

Ball also testified he advised Aetna to ensure appropriate 

mortgagee title insurance coverage by having the title 

company remove from the policy those two exceptions 

detrimental to insurance coverage. A telephone call from an 

Aetna representative on November 18, 1983, as documented on a 

message pad, indicated that Aetna had assumed the duty of 

resolving those problems brought to its attention by Ball and 

had induced the title company to delete the quit claim deed 

exception. Ball testified that his subsequent written 

opinion was based upon this telephone assurance that Aetna, 

in fact, had acted upon his legal advice. Given all the 

foregoing evidence indicating Ball routinely assumed only an 

advisory responsibility regarding Aetna's security interest 

and mortgagee title insurance, we hold that the District 

Court's findings, that Ball did not have a duty to ensure the 

validity of the security interest and the appropriateness of 
mortgagee title insurance coverage, were not clearly 

erroneous. 

The evidence indicated that Ball did not "delegate" to 

Aetna a duty to ensure the accuracy of the security interest 

and appropriateness of mortgagee title insurance. Rather, 

Aetna only contracted with Ball to obtain his advisory 

opinion about whether or not a valid security interest and 

appropriate mortgagee title insurance existed, and if not, 

what steps to take to achieve appropriate coverage. The 

District Court thus did not abuse its discretion in finding 

that Ball had fulfilled all those duties undertaken and, 

consequently, in holding Ball not liable for breach of 

contract. The judgment of the District Court -5S affirmed. 

' / 

Justice. 

We concur: //