No. 81-526 IN THE SUPREME COURT OF THE STATE OF MONTANA 1982

SUNBIRD AVIATION, INC., a Mont. corp.

### , Plaintiff and ThirdPartyDefendantRespondent,-VSROD ANDERSON, also known as RODNEY ANDERSON, Defendant and ThirdP a r t y P l a i n t i f f - Appellant. 

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ROD ANDERSON, a/k/a RODNEY ANDERSON, Plaintiff-Appellant,

SUNBIRD AVIATION, INC.

### , Defendant-Respondent

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Appeal from: DistrictCourtof the EighteenthJudicial District, In and for the Countyof Gallatin, The Honorable W. La. LCssley, Judge presiding. Counsel of Record: For Appellant: Ralph L. Herriott, Billings, Montana For Respondent: Morrow, Sedivy, Olson & Eck, Bozeman, Montana

Submittedon Briefs: June 10, 1982 Decided: September 28, 1982Mr. Justice John C. Sheehy delivered the Opinion 

### of the Court. Appeal by defendantRod Anderson from a judgment against him in the District Court, Eighteenth Judicial District, Gallatin County. He was ordered to pay plaintiff Sunbird Aviation, Inc. $1,297.89, plus interest, attorney fees, and $3,892.22 on an accounting arising from the co-ownership of

an airplane. We affirm the DistrictCourt. SunbirdAviation, Inc. is a Montana corporationwhich provides a general aviation service. Rod Anderson is a real estate agent and an experiencedpilot. On December 7, 1978, the parties and one Stanley Langaker entered into a written agreement for co-ownership of a 1977 Piper Seneca I1 airplane. The purchase of the plane was financed at the First Security Bank of Billings by a first mortgage of $75,000 principal,with monthly payments of $1,486.43. Under the co-ownership agreement one-half of the aircraft

was owned by Sunbird and one-half by Rod Anderson and Stanley Langaker. Insurance premiums, taxes and routine maintenance

were to be paid 70 percent by the corporate owner and 30 percent by the individual owners. The expense of engine overhauls and major component expenseswere to be paid 50 percent by the corporate owner, and 50 percent by the individual

owners. All parties to the agreement had the right to use the Seneca at a cost for each hour of usage of $45. Sunbird kept the accounts for the co-ownership, and would collect the I amounts due from the individual owners as the expenses or debts were incurred. On February 4, 1980,Anderson was delinquent in his payments to the co-ownership in the sum of $1,297.89. He executed a promissory note to Sunbird for that amountproviding for semi-annual interest at16 percent and reasonable attorney fees. On May 16, 1980, Langaker owed the co-ow!~ership a balance of $17,000 on his account in settlement of which he transferred his interestintheplane toSunbird. After thatdate, Sunbird owned 75percent and Anderson 25 percent of the aircraft. When itwas determined thatthe Seneca would notmeet FFA standards unless engine repairwas carried out, on July 29, 1980, Sunbirdpurchased and had installed two rebuilt engines ata cost of $23,166.41. In early 1980, theparties decided tosell the plane at

a price sufficienttosatisfy thebalance owing on the first mortgage. Ata timewhen the partiesbelieved theplanewould be sold toDutton Aviation, Anderson executed a blank bill of saleand delivered it toSunbird tobe used inthe sale toDutton. However, the sale toDutton did not occur. Anderson's blank billof saleremained with the officers of Sunbirdwho used it inthe saleof theplane on October 30, 1980 tobne Tucker of Bremerton, Washington. Tucker's consideration for the Seneca consisted of $65,000 incash to Sunbird, and the transfer of titletoanother airplane, which was later soldby Sunbird for $19,000. These monies

werecredited totheAnderson and Sunbird accounts after the security interest atFirstSecurity Bank of Billingswas satisfied. During the entireperiod of co-ownership, Sunbird maintained and provided Anderson an accounting of alltransactions. The record shows and the DistrictCourt found that Sunbird flew the Seneca 515 hours, and thatAnderson and Langaker flew it 150.1 hours. Maintenance hours totaled15.1 hours. During this period, expenses for maintenance, insurance,mortgage payments and taxes totaled $51,298.65. The accounts of Anderson and Langakerwere debited $15,237.27. In addition, Anderson's accountwas debited $5,791.60 for the rebuilt engines. As of October 30, 1980,Anderson owed Sunbird $11,336.49. Of the $84,000 realized in the sale of the Seneca, $59,414.47 was paid to satisfy the firstmortgage. Of the remaining $24,585.53, $18,439.15was credited to Sunbird and $6,146.38 to Anderson. This credit left a balance of $5,190.11 owing by Anderson to Sunbird, less the unpaid principal balance on the promissory note of $1,297.89. Therefore Anderson owed a further $3,892.22 under the coownership agreement. On April 

### 7, 1980, Sunbird instituted an action against Anderson on the promissory note demanding full payment plus interest and attorneys fees. Anderson filed an answer generally denying Sunbird's complaint and included a thirdparty complaint against Langaker and Sunbird seeking partition of the aircraft, or a sale of the aircraft and a division of the proceeds. On December 12, 1980, Sunbird filed an answer and complaint demanding an additional $4,490.11 owing from Anderson with interestand costs. On February 4, 1981, Anderson filed a complaint against Sunbird, in a separate action, for damages alleged to have resulted from the sale of the plane. On May 4, 1981, the cases were consolidated. The consolidated caseswere tried to the DistrictCourt on July 29, 1981,and thereafter the District Court concluded that Anderson owed Sunbird $3,892.22 under the co-ownership agreement, and $1,297.89 plus interest on the promissory note. After a hearing on the issue of attorneys fees, theDistrict Court granted Sunbird $2,325 for the nrosecution of the collection action on the note. On September 24, 1981, the DistrictCourt entered judgment against Anderson and in favor of Sunbird for $3,892.22

on the account, $1,297.89 on the note,plus 16 percent interest thereon, attorneys fees of $2,325, and costs of $45.74, togetherwith intereston the judgment from the date of the judgment at 10percent per annum. Anderson filed his notice of appeal on October 21, 1981. The issues presented by Anderson are: 

### 1. Whether the District Court erred in findingAnderson owed Sunbird $1,297.89 on the promissory note, and $3,892.22

on the account. (a) Did the DistrictCourt's consideration of the coownership as a joint venture in any way prejudice appellant Anderson? (b) Did Sunbird's written letter to Anderson that he had no interest in the plane received in trade constitute a release from further obligation? (c) Did the release of Longaker release Anderson from further obligation to Sunbird? There is little doubt that Anderson owed Sunbird on the promissory note. He delivered a promissory note to Sunbird in recognition of his accountbalance. The note provided for attorneys fees and interest at 16 percent. This Court follows the rule that a party primarily liable on a negotiable promissory instrument is indebted in that amount to the payee. John K. Etc. Renev. Corp. v. School DistrictNo. 17- H (1935), 99Mont. 388, 43 P.2d 902. Therefore, Sunbird is entitled to collection of the debt owed by Anderson on thepromissory note and the incidental benefits provided therein of interest and attorneys fees. We look to the other issues raised by Anderson to determinewhether the judgment for the amount of the account, $3,892.22 is proper. FirstAnderson claims that the District Court's consideration of the co-ownership agreement as a joint venture prejudiced him. Sunbird answers that therewere no specific findings by the District Court on the issue of joint venture. The court mentioned joint venture in its memorandum but Sunbird contends that this does not affect the outcome of the case. Sunbird notes in its brief thatAnderson does not explain the claimed prejudice from themention of joint venture by the District Court. A joint venture is "[Aln enterprise undertaken by several persons jointly, and more particularly, as an association of two or more persons to carry on a singlebusiness enterprise for profit. It has also been defined, somewhat variantly,

as a special combination of persons undertaking jointly some specific adventure for profit,. 

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# ." Rae v. Cameron (1941), 112Mont. 159, 167, 114 P.2d 1060, 1064. In the sense of that definition, the arrangement between the parties here was not a joint venture. Itwas simply an agreement for the co-ownership of an aircraft with provisions in the agreement for the costs of usage, repair and maintenance to be divided among the parties. The District Court's reference to a "jointventure" in the memorandum does not affect its interpretation, which we find to be proper, of the responsibilities of the parties under the co-ownership agreement. Anderson further contends as an issue that a letter from Sunbird to Anderson dated November 3, 1980, constitutedan independent release of Anderson from further obligations to Sunbird. He contends the District Courtmade no specific findings of fact relating to the letter of November 3, 1980, and thatwe should review and determinewhether in fact the letter constituted an independent release of Anderson. The letter of November 3, 1980, states in part: "In view of these facts Sunbird feelsyou have absolutely no claim to ownership of the C-206." Anderson is contending on appeal that this has the legal effect of terminating the coownership or that the language has the effect of releasing him from obligations under the co-ownership agreement. Sunbird answers that the issue of Anderson's release under the letter of November 3, 1980, concerning the aircraft

was not raised in the lower court. An issue not raised in the DistrictCourtwill not be considered by us on appeal. Chadwick v. Giberson, et al.

(1980) Mont. 

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## , 618 P.2d 1213, 37 St.Rep. 1723; Stout

v. Reiter (19791, Mont. 

### , 595 P.2d 1167, 36 St.Rep. - 992; Kearns v. 14cIntyre Construction Co. (1977), 173 Mont. 239, 567 P.2d 433, 440; O'Hanlon v. Ruby Gulch ~ining Co. (1922),64Mont. 318, 326, 209 P. 1062, 1064. Anderson further contends that the sale of the Seneca by Sunbird, and the release of Langaker each had the effect of releasing Anderson from any further obligation to Sunbird. There is no evidence in the record to supportAnderson's contention that the sale of the Seneca, standing alone, constituted a release of obligations owing by Anderson to Sunbird. Theparties had agreed to sell the plane and Anderson had delivered a blank bill of sale to be used in the sale of the plane. There is nothing in the record to supportAnderson's contention that the sale of the plane was to terminate all of his obligations to Sunbird arising outof the co-ownership agreement. We do not find anything in the release of Langaker by Sunbird and the transfer of his interest in the plane to Sunbird sufficient to constitute a release of the obligations owing by Anderson. The common law rule is that a release of one joint obligor on a contract releases all other obligors. See Colliersv. Field (1872), 1 Mont. 612, 2Mont. 205, 2 Mont. 320. "Themodern view iswhere two or more obligors are jointly liable for a breach of a contract,a release to one does not necessarily release the other, and that the question whether the other is released depends upon (1)the intention of the parties to the release instrument, and (2)whether the injuredparty has in fact received full compensation

(satisfaction).

# . ." 66Am.Jur.2d Release 9 35. With regard to release of joint tortfeasors, this Court has stated that: "Unlessthe release specifically states otherwise, a finder of factmay consider the intent of the parties in making a release." Kussler v. BurlingtonNorthern, Inc. (1980), Mont. 

## , 606 P.2d 520, 524, 37 St-Rep.240, 245. HereAnderson contends that the findings of factby the District Court do not expressly statewhether Langaker was indeed released, and if he was, whether his release constituted a release of Anderson. Nothing in the evidence indicates an intent on the part of Sunbird to releaseAnderson when it acquired the interest of Langaker to the airplane. Prom the record, it appears that Sunbird simply acquired Langaker's interest in the aircraft in exchange for assuming Langaker's obligation to the co-ownership arrangement. We find nothing in the termination

### of Langaker's interest in the airplane by 

### his transfer to Sunbird thatwould constitute a release, express or implicit, of Anderson fromhis obligations for expenses under the co-ownership agreement. Sincewe find no error in the findings of fact and conclusions of law on which the judgment of the District Court is founded,we affirm the ~istrict Court.

We Concur:

Chief JusticeMr. Chief Justice Frank I. Haswell, special concurring:

I concur with themajority opinion inthe treatment of the issues raised and our rulings thereon. However, there isa question inmy mind concerning the amount of attorney fees awarded inthis case. It appears that the District Court's award covered services performed by the attorney inaddition tocollection of the note. Since this issuewas not raised inthe DistrictCourt, I would not consider it for the firsttimeon appeal under the authorities cited inthemajority opinion.