No. 84-531 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1985 

JOHN W. WEBB, 

Plaintiff and Appellant., 

-VSFIRST NATIONAL RANK OF HINSDALE, 

Defendant and Respondent. 

APPEAL FROM: District Court of the Seventeenth Judicial District, 

In a.nd for the County of Valley, 

The Honorable Leonard Langen, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Morrison, Barron & Young; Robert C. Melcher, Havre, 

Montana 

For Respondent: 

Gallagher, Archambeault & Knierim; Matthew Rnierim, 

Glasgow, Montana 

Submitted on Briefs: June 14, 1385, 

Decided.: December 24, 1985 

Filed: 
Mr. Justice L. C. Gulbrandson delivered the Opinion of the 

Court. 

This is an appeal from the District Court of the 

Seventeenth Judicial District, Valley County. John W. Webb, 

appellant, filed suit against the First National Bank of 

Hinsdale (Bank) alleging tortious interference with a 

contract for the sale of his cattle. He claimed that the 

Bank wrongfully induced the buyer, Glasgow Livestock Sales 

Company, Inc. (Glasgow Livestock) to place the Bank's name on 

a check for the cattle as an additional payee. Appellant 

appeals an order granting the Bank's motion for summary 

judgment. We affirm the District Court's order. 

From 1970 to 1977, appellant was a customer of the Bank 

and a good business relationship existed between them. In 

September 1977 the Bank refused to loan Webb additional money 

because of outstanding loans. 

Appellant then secured financing from another lending 

institution, the First State Bank of Malta, and purchased 100 

cows and 100 calves. He sold some of these cattle to Glasgow 

Livestock, in November 1978. The Bank, through its attorney, 

requested that Glasgow Livestock place the Bank's name on the 

check for the cattle as an additional payee, along with the 

First State Ba.nk of Malta and another bank. The Bank claimed 

a right to have its name placed on the check because j.t 

claimed a security interest in appellant's cattle based on 

past loans made to him. He countered that the money owed was 

secured only by certain trucking equipment and that the Bank 

could not collect this indebtedness out of the proceeds of 

the cattle sale. 

Appellant delivered the check from Glasgow Livestock to 

the First Bank of Malta, where it was retained until 

appellant paid off their loan on January 31, 1979. The check 

was then returned to appellant. Finally, on October 18, 
1979, the Bank brought a collection action against appellant, 

Civil Action No. 15311. 

Appellant responded by hiring an attorney and inquiring 

into the possibility of suing the Bank, claiming that it 

wrongfully induced Glasgow Livestock to place the Bank's name 

on the check as a payee. The attorney reviewed the Bank' s 

records and concluded that such a suit would have no merit. 

He advised appellant to negotiate a settlement with the Bank. 

Subsequently, at appellant's request, the attorney began 

settlement negotiations with the Bank. Appellant was at all 

times kept apprised of the negotiations. On December 18, 

1979, his attorney and the Bank's attorney stipulated that 

the collection action should be dismissed with prejudice. As 

part of this settlement, Webb endorsed the check from Glasgow 

Livestock over to the Bank and pursuant to the stipulation 

the Bank discounted its claim by the sum of $4,273.26. The 

collection action then was dismissed. 

For nearly two years afterward there was no further 

communication between the parties. During that time, 

however, Webb hired a new attorney, and on November 6, 1981, 

filed the present action. He alleges that the Bank 

tortiously interfered with his contractual relations when it 

induced Glasgow Livestock to place the Bank's name on the 

check as a payee. The Bank moved for summary judgment under 

Rule 56, M.R.Civ.P., claiming that the current action was 

fully settled when No. 15311 was dismissed by the 

stipulation. Webb responded that the stipulation for 

dismissal of Civil Action No. 15311 bras intended for the 

settlement of that cause only and was not intended to settle 

all disputes between the parties. The stipulation and order 

to dismiss stated that the "above entitled action [No. 153111 

be dismissed with prejudice as settled in full." The 
District Court granted the Bank's motion for summary judgment 

in the current action. 

Appellant appeals the granting of summary judgment. We 

consder three issues on the appeal: 

(1) Whether the negotiated compromise was a full and 

final settlement which included appellant's claim for 

tortious interference? 

(2) Even if the compromise was a full and final 

settlement, are there genuine issues of material fact as to 

appellant's intent, his counsel's authority to enter the 

agreement and appellant's ratification of the agreement which 

preclude summary judgment? 

(3) Does either estoppel or res judicata bar the 

current litigation? 

. . . Rule 56 (c) , N0nt.R.Civ.P. permits 

summary judgment to issue only when there 

is no genuine issue of material fact, and 

the moving party is entitled to the 

judgment as a matter of law. 

The moving party's initial burden is 

two-fold . First, it must show the 

absence of any genuine issue as to 

material fact. Second, that party must 

also show that this set of facts entitles 

it to the judgment as a matter of 

law . . . 

In addressing the factual test, although 

the court has no duty to anticipate or 

specula-te as to material facts to the 

contrary, it must nonetheless draw every 

inference in favor of the non-moving 

party. 

If the movant has met this burden, it 

then shifts to the non-moving party to 

demonstrate a genuine issue of material 

fact. Mere denial or speculation will 

not suffice, the non-moving party must 

show facts sufficient to raise a genuine 

issue. (Citations omitted.) 

Gamble Robinson Co. v. Carousel Properties (Mont. 1984), 688 
In the first issue, the Bank argues the District Court 

properly granted summary judgment because the compromise and 

settlement in the first action is final and binding on the 

parties and bars the current action as a matter of law. 

Generally, a compromise agreement, when the basis for a final 

judgment operates "as a merger and bar of all preexisting 

claims and causes of action." Rodriguez v. Fireman's Fund 

Ins. Compani-es (Cal. 1983), 142 Cal.App.3d 46, 54, 190 

Cal.Rptr. 705, 709. In Rodriguez, the action concluded when 

the plaintiff accepted defendant's settlement offer and the 

court entered a dismissal with prejudice. The California 

court equated this dismissal to a verdict and judgment on the 

merits barring any new actions. Rodriguez, 190 Cal.Rptr. at 

710. Folsom v. Butte County Ass'n of Governments (Cal. 

1982) , 652 P. 2d 437, characterizes a compromise agreement as 

"[concluding] all matters put in issue by the pleadings--that 

is, questions that otherwise would have been resolved at 

trial. " Folsom, 652 P.2d at 444. In that case, the 

statutory rights to costs and attorney's fees were held not 

to be part of the agreement since they were matters incident 

to the judgment rather than part of the cause of action. The 

court also noted the surrounding facts did not show the 

parties intended costs and fees be included in the agreement. 

These cases accord with the policy that "reciprocal rights 

flowing from a common source [should] be determined in a 

single action, thus avoiding not only unnecessary vexatious 

litigation but also the contingency of conflicting judgments 

... " Kittle Mfg. Co. v. Davis (Cal. 1935), 47 P.2d 1089, 

1094, cited in Datta v. Staab (Cal. 1959), 343 P.2d 977, 981. 

Appellant's argument may be summarized as an assertion 

that the dismissal with prejudice only had the effect of 

withdrawing the Bank's claim. This would have merit if 

appellant had received nothing for the dismissal. However, 
the amount appellant owed was substantially reduced. He 

benefitted from the settlement. The Bank received no benefit 

from agreeing to the discount and dismissal unless it served 

to end the litigation between the parties. The facts on 

which appellant relies for this cause of action all occurred 

prior to the time the Bank brought its collection action. 

The check at issue was signed and delivered to the Bank from 

appellant as part of the first settlement. His attorney 

stated, by affidavit, that "both parties wished to resolve 

the matter and avoid the costs of further litigation over who 

was a proper payee on the proceeds check . . . or the amount 

due the bank." He also stated that he "acted with the full 

knowledge and authority of [his] client, Mr. Webb, in 

negotiating and accepting the settlement." The appellant 

stated by deposition that he discussed the presence of the 

Rank's name on the check with his attorney and that the 

attorney advised him he "didn't have a lawsuit" and should 

settle his differences with the Bank. The affid.avits of 

other persons involved in the negotiations reflect that the 

parties discussed all issues including the question of who 

was the proper payee on the check and that the amount 

appellant paid the Bank in exchange for a discount of the 

amount due concluded all outstanding disputes. Appellant 

does not contradict the evidence showing the parties 

discussed the current claim and included it in their 

negotiations. He accepted the benefit of its inclusion, a 

reduction of the amount due. We hold that the dismissal with 

prejudice in the first action concluded the pre-existing 

claims between the parties. The Bank therefore was entitled 

to a summary judgment in its favor. 

Appellant argues in the second issue that he never 

intended his attorney to have authority to settle his 

tortious interference claim, and that this raises a genuine 
issue of material fact precluding summary judgment. We agree 

with his contention that the compromise agreement may not be 

fully binding unless the attorney has the authority to enter 

the agreement. However, appellant's remedy is to bring an 

action to set aside the agreement. McGinley v. Maryland 

Casualty of Baltimore (1929), 85 Mont. 1, 277 P. 414. The 

client in McGinley knew how the settlement had been 

accomplished and took no action to set it aside for nearly a 

year. 

If defendant has ratified the acts of its 

attorney, it will not be heard to 

complain, and slight evidence of 

acquiescence on the client's part will be 

deemed a ratification of the acts of the 

attorney in making the compromise. 

(Thornton on Attorneys at Law, p. 400, 

sec 222.) These principles find 

recognition in the case of 

Harris v. Root, 28 Mont. 159, 72 Pac. 

429, relied upon by defendant. Here the 

stipulation and dismissal took place in 

,July, 1926. The defendant's answer in 

this case was filed in July, 1927, which 

shows knowledge at that time of the 

settlement, and, though this action was 

not tried until June, 1928, the record 

fails to show any affirma-tive action 

taken by the defendant to repudiate the 

settlement agreement. Such conduct on 

the part of the defendant is tantamount 

to a ratification of the settlement and 

dismissal of the former action. 

85 Mont. at 10. When his attorney wrote him a letter 

advising him of the result of the negotiations, appellant 

accepted the offer and acknowledged the discount of the 

amount he owed the Bank. This shows his knowledge at the 

time of the settlement. Appellant acquiesced for nearly two 

years in the benefits of the bargain and with specific 

knowledge of its terms. His conduct amounts to a 

ratification of the settlement and dismissal under McGinley , 

85 Mont. 1, and Harris, 28 Mont. 159. In addition, his 

attorney stated he had appellant's express authority to 

"negotiate a settlement of the outstanding differences" 

between appellant and the Bank. Appellant's claim that the 
attorney lacked authority, absent any action to set aside the 

agreement, does not raise a factual question material to the 

current action of tortious interference against the Bank. 

The District Court correctly found that his contentions at 

this late date were not material and would not preclude 

summary judgment. 

The Bank argues that estoppel and res iu-dicata also bar 

appellant's current action against it. The District Court 

mentioned both doctrines as possible bases for summary 

judgment. Our holdings on the first two issues dispose of 

this appeal. We therefore do not address this issu.e. 

The order of the District Court is affirmed,,"" 

rri I ,\ @ ~' 1 ' 

'5 i . '<@s;i j. fit' P' gp $P tw 

Justice 

r' 

Justices 
Mr. Justice Frank B. Morrison, Jr. dissents as follows: 

I dissent. 

The appellant, John W. Webb, had, in the past, obtained 

financing from the defendant, First National Bank of 

Hinsdale, for the purpose of buying cattle. Eventually Webb 

changed banks and began financing his cattle buying operation 

through the First State Bank of Malta. At the time he 

changed banks he owed the Hinsdale Bank $29,000 with interest 

from January 25, 1978. This note was secured by four 

semitrailers. On November 7, 1978, Webb sold cattle to the 

Glasgow Livestock Sales Company and received a check for 

those cattle in the amount of $30,389.00. The check was made 

payable to Webb, the First State Bank of Hinsdale and to the 

First State Bank of Malta. The First State Bank of Hinsdale 

had its name put on the check without Webb's consent 

apparently to secure the $29,000 debt owing from Webb to the 

Hinsdale Bank. 

On January 25, 1978, the First National Bank of Hinsdale 

had instituted proceedings to collect on the $29,000 note due 

from Webb to the Hinsdale Bank. In order to free up the 

money received from the cattle sales Webb agreed to pass a 

substantial. portion of the cattle sale proceeds over to the 

Hinsdale Bank in return for a dismissal of that action. In 

order to obtain the cash settlement the Hinsdale Bank 

discounted its claim to the sum of $4,273.26. The action 

instituted by the Hinsdale Bank was dismissed with prejudice. 

That action contained no issues other than the collection 

proceedings instituted by the Bank. Webb did not file an 

answer and did not allege any claims against the Bank by way 

of offset or counterclaim. 

The majority opinion holds that dismissal of the 

collection suit instituted by the Bank settled the tortious 
interference claim that Webb had which was premised upon the 

fact that the Hinsdale Bank improperly asked that its name be 

put on the check he was to receive for the sale of his 

cattle. Webb contended that the cattle did not secure his 

loan with the Hinsdale Bank and that the Bank was not 

entitled to any of those proceeds as a matter of lien. In 

this case Webb contends that the Eank tortiously interfered 

with his contractual relationships with the Glasgow Livestock 

Company by improperly claiming an interest in his cattle 

sales. This claim formed no part of the collection suit 

instituted by the Hinsdale Bank against Webb and therefore 

the dismissal with prejudice of the Bank's claim in that 

case, settled nothing with respect to Webb's tortious 

interference claim. 

The defendant Bank seeks to shore up its argument by 

contending that the affidavit of Webb's attorney shows that 

Webb and the Bank intended to settle a11 claims including the 

tortious interference claim that Webb had against the Bank. 

This argument should fail for the following reasons: 

1. The record in the collection case is clear and needs 

no explanation. The dismissal with prejudice could do no 

more than settle the claims pending in that action. Since a 

counterclaim for tortious interference would not be a 

compulsory counterclaim the issue involved in this case could 

have in no way been a part of that first litigation 

instituted by the Hinsdale Bank. 

2. Any communications between Webb and his attorney 

with respect to what was involved in the dismissal with 

prejudice, are privileged and cannot be used against Webb. I 

am at a loss to understand how Webb's attorney reconciles his 

affidavit with the canons of ethics. 
3. Even if the attorney's affidavit could be 

considered, the facts stated therein are disputed by Webb so 

that a summary judgment would not be proper. 

In summary, dismissal with prejudice of the collection 

suit did not settle Webb's separate claim for tortious 

interference with contract rights. It could not; it did not. 

Summary judgment should be reversed and the matter remanded 

for trial. 

I concur in the foregoing dissent o