113. S:-622 

I?i THE SUPREXE COCRT OF THE STATE OF MCSTAKA 

1994 

FOX GFSIX AND CATTLE CO., 

Plaintiff and Respondent, 

-vsFRAKK F. MAXYELL, 

Derendant and Appellant. 

APPEAL FROM: District Court of the Tenth Judicial District, 

In and for the County of Fergus, 

The Honorable Peter L. Rapkoch, Judge presiding 

COCYSEL OF RECORD: 

For Appellant: 

Donald A. Ranstrom; Sias & Ranstrom, Chinook, 

Montana 

For Respondent: 

Jaaes A. Wubble, John R. Christensen; Christensen 

& Hubble, Stanford, Montana 
,--5:- ' LILA> LS an appeal and cross-acpezl fron a jury verdict in the 

Tenth Judicial Gistrict Ccurt invclvirLg the tsr~ination of a f.ar3 

lease. By special verdict the jury found that Frank F. Maxwell 

(aell did not naterially breach the farm ].ease which he 

enkerec? with Fox Grair. E; Cattle Co. (Fox a) The jury, 

hwdever, found that Maxwell owed Fox Grain $38,779.60 for farming 

expenses; it then awarded P!axr~:ell $23,013.42, plus 75 percent of 

the net Federal Crop Insurance Payaent, for Fox Grain's failure to 

mitigate its daxages, and found in favor of Ifaxgel1 on his 

counterclaims: 1) $16,721.15 for his share of the Conservation 

Reserve Program (CRP) proceeds; and 2) $16,500 for hi.s loss of 

nachinery claim. The jury also asrarded Maxwell $95,000 for Fox 

Grain's breach of the inplied covenant of gocd faith ar.d fair 

dealing. 

The District Court granted judgment riatwitfistanding the 

verdict eliminating the jury's award of $95,000 to Maxwell. 

Nax~cell appeals the District Court's decision to grant judgment 

notwithstanding the verdict. Fox Grain cross-appeals: 1) the 

jur.13s findings on the breach issue; 2) the coiurt's failure to 

grant it a judgnent notxithstanZing the verdict on the iss~e of 

?%ax:gell's other danages; and 3 j the court's grant of surznary 

judgment to Maxwell on the issue of t?ie volunteer crop owiership. 

We affirn in part and remand. 

The issaes on appeal are: 
i. DL-: ~istrict CO:;-+ ,_, err by granting Fcx Grain's notici? 

far judgment notvithstanding the verdict on the jury's award of 

--- +?=,000 for ?ox Grain's violation of the covenant of good faith and 

-. "0-7 --L-I..g '"'- .' 

2. Di5 the 3istrict Ccu,rt err by denying Fcx Grain's action 

- for ;uc!grnent not;;ithstanding tee verdict on the issue of Ma:vdell's 

other damages? 

3. Was there sufficient evidence in the record to support 

the jury's findings that Maxwell did not breach the lease? 

4. Did the District Court err by granting Haxwell summary 

judgnect on Fox Grain's ownership claim of the volunteer winter 

wheat crop? 

:.:axwell entered a three-year farm lease with Fox Grain on 

February 17, 1989. 

The lease agreexent entered into bet:.;een the parties gave 

?aIaxwell the right to farm Fox Grain's land during the crop seasons 

of 1989, 1490, and 1991. As part of that agreement, Maxwell agreed 

that he 'would occupy and cultivate the land in a "farxer-like 

manner" and would not permit damage to the land. In return, he was 

entitled t o a l l of the 1989 crop and 75 percent of the 1990 and 

1991 crops. Maxxell also agreed that all acres would be cultivated 

either by planting crop, or by s,;-- c~.t.t~er fa1 iow . 

Fox Grain terainated the lease based on its claim that Maxwell 

breached the lease agreement: by not mltivating t h e e n t i r e property 

and by failing to care for the property in a "farmer-like manner." 

E:'r:*;e;-er, afrer listening t-. thrse and ciie-half :leeks of testimony, 
incluriinq several e:.:perts i?ho testified on behalf cf Fox Grain, the 

jury concluded that :.laxveil's failure to culti-late 100 acres of the 

property ;\ms not a aaterial breach and apparently also found that 

he had performed in a "farmer-like 3.annern a~d ha3 not allcxed the 

property to be dap.age3. 

T ,n 22 ef fcrrt tr, prcve the vzlue cf its da~.ages from Maxwell's 

alleged failure to properly care for the farm land, Fox Grain 

offered testimony froe several neighboring landowners to establish 

what the land would have been capable of producing had it been 

properly cultivated and cared for. 

For exa~ple, Larry Kalina testified that he farmed 1300 acres 

of land about four miles north of the Fox Grain property; that he 

xas familiar with the Fox Grain property; and that his property and 

the Fox Grain property were quite similar. In the fall of 1990 

(after Maxwell had been evicted from the Fox Grain property), 

Kalina planted a winter wheat crop on his land which produced a 

199i harvest of 30 to 35 bushels per acre. 

Jess Knerr faras 2800 acres of land adjoining the Fox Grain 

property. He testified that his property is likewise similar to 

Fox Grain's land. In 1991, he produced 37 bushels of winter wheat 

per acre and 20 bushels of spring wheat per acre. Ee testified 

thzt L99i xas a better-than-average year &&e to increased noisture. 

Kyle Grimsrud farms 1400 acres of property ten miles from the 

Fox Grain Land. He testified that he was faniliar with the Fox 

Grain property and considered it similar to the property that he 

tarrs. In 1391, he raised 43 bushels of xinter wheat per acre and 
2s buskels of spring yJ;:?-at per acre. Iiis production in 1091 

exceeded that for either of the two previous years. It was his 

cpicizn that the Fox Grain prcperty, if properly cared for, was 

capable of producing siailar yields. 

Alex Smith, who farxs land scuth of Le>~istoxn, was called as 

an expert witness to testify on behalf cf Fox Grain. Ee testified 

that in 1991 it cost $12 an acre to harvest wheat. He estiaated 

the price of wheat during 1991 was $2.80 a bushel. 

Fex Grain served notice on Maxwell that the lease was being 

termi-nated on July 23, 1990. i"ixwel1 actually left the property on 

August 23--one lonth later. Yecause he was wrongfully evicted from 

the property and %as unable to plant a winter or spring crop for 

1991, Mawel? was denied the opportunity to realize a profit from 

whatever crep he could have produced. The testimony was that had 

he renained on the property he could have seeded 1503.9 acres. 

Did the District Cou.rt err by granting Fox Grain's notion 

for judyment notwithstanding the verdict on the jury's 

award of $95,000 for Fox Grain's violation of the 

covenant of good faith and fair dealing? 

It is %ell settled that this Court will review a district 

court's grant of a J?WV with the identical standard used to reviev 

a rotion for directed verdict. S'- i.,,chuk v. Angel Island Community 

Ass'n (1992), 253 Xont. 221, 225, 833 P.2d 153, 160 

[A] directed -~erdict may be granted only -,<here it appears 

as a nntter if Law that :the non-loving party; 

could not recover upon any view of the evidence, 

including the legitimate inferences to be drawn from it. 

Si?chnk, 633 P.2d at 160. Further, a 
district COGT~ must ~ie% the evidence in a light most 

faxjorable to tire ~cr.-rs*~ing party tihen c-.r:si6erir!y a 

motio? fcr [JKOV]; the ccurt must deny the motion if the 

non-zcving party built a prima facie case or if a 

s&stzmtiia conflict in the evidence exists. Orly if the 

s;-idence pzesents no rcox f3r an hc~est difference of 

opinion shoul3 a ZX07 be granted. 

the evidence. 

The jury found that Fox Grain breached the implied covenant of 

good faith and fair dealing. It was established by Maxwell and his 

witnesses that Fox Grain only complained once about Maxwell's 

farming practices before Fox Grain evicted Maxwell frox the land. 

PIax~;ell argues that if Fox Grain had left hi- alone, he would have 

planted and harvested wheat and nade a profit just like the 

neighbors in the area. 

Had Maxwell produced 35 bushels of winter wheat per acre 

(which was well within the range of his neighbors' production) ; and 

had he provided 25 percent of that crop to Fox Grain pursuant to 

the parties' lease agreement; and after deducting $12 per acre as 

the reasonable cost of harvesting the crop, he blould still have 

reallzed a prof~t of $95,618.04. 

FOX Grain argues that while it offered proof of what its 

praprty kas capable of prod~cing had it beer! cared for in a 

farrer-like manner, zke prcperty wzs not capable of producing that 

n?lci- .wheat ;.b.en Fcx Grair tcok it b.ck fro-, Marvell due to tne 

terrible condition in which Maxwell left it. However, according to 

our conclcsien under Issue IV, FOX Grain's evidence to that effect 
appa"r=_tly raised, at mast, riestioi? of facc which the jury 

- res-lved in fax;cr of Xaxweii. Ead the jury found that ?he property 

was as unprod~ctive as Fcx Grain and its witnesses alleged, the 

3ury xould nezessarily ha7ve ha3 t3 find that KaxweZl ha3 per~~itted 

waste or daaage to the property and, thereby, breached the lease 

Fox Grain argues that the crop it prod,~ced in 1991 was 

~nprcductive, dze to the condition of its land. However, Maxwell's 

evidence was to the effect that he would have employed different 

farming techniques, which he felt vould have been more productive 

thdn those employed by Fox Grain. The jury had a right to, and 

apparently did, believe Maxwell. 

The jury's verdict :]as further supported by the fact thzt in 

1939, on the sane piece of land, i.iax:~ell realized income of 

$79,885.84 fron a winter wheat crop which he had not even planted, 

but h-hich grew fron seeds knocked from their stalks in 1988 as a 

resuit of hail damage. The jury had a right to find that if 

Yaxwell could realize net income of over $70,C00 from a volunteer 

winter wheat crop in 1989, he could earn subscantially more than 

that on the same land by e~ploying good farminy techniques in the 

fall cf 1990 and the growing season of 1991. 

tihile there was substactial evidence produced by Fox Grain 

frcx hi the jury could have found that Maxwell's farming 

techniques wccld not have beec profitable during the rexainder of 

his lease term with Fox Grain, it was not the responsibility of the 

Cistrizt Ccurt, a=_d is certainly not the appropriate faction of 
eT~lcience, cr rcferences frcm the eyJ-rdence, siaply because the 

pcinted out in Shchuk: 

A directed verdict xiy be granted only where it appears 

as a nstter af law that . . . [the nonmoving partyj could 

not reco"zer upon any view of the evidence, including the 

Legiti~ate infererces to be drawn fron it, 

Si~chuk, 833 P.2d at 160 (quoting Wilkerson v. School Dist. Xo. 15 

In this case, the jury found that Fox Grain breached the 

covenant of good faith and fair dealing which was implied from its 

contract with Earnell. When a breach of that covenant occurs, 

contract dar?ages are appropriate. Story v. City of Bozeman (1990), 

242 Kont. 435, 450, 791 P.2d 767, 775. The purpose of contract 

dazages is to make the nonbreaching party whole, or put the 

nonbreaching party in a posirion as if the contract had been 

performed. Stensvad v. Miners and Merchants Bank (1982), 196 Mont. 

193, 206, 640 P.2d 1303, 1310. 

Maxwell's contract dana~es for breach of the covenapt of good 

faith and fair dealing were based on the profits he lost from being 

unable to farn Fox Grain's land pursuant to his lease agreement. 

Xhile damages for lost profits may not be speculative, it is orly 

required that they be proven with "the best evidence under the 

circunstances [which] will support a reasonably close estimate of 

the loss." Stensvad, 640 P.2d at 1310. 

The best evi6er.ce of the profits which Phx-dell could have 

prcdzced, had he been allowed to continue farxing Fox Grain's land 
-. bULadant , - .- , . to their lease aqreexent, !,:as evi3snce cf what farxers on 

=i-: ~-iar - land in the area were able to produce. 

- in this case, Fox Grain introduced evidence of --" i,r:at 

neighboring farcers were able to pr.zdace in oreer to establish its 

cun daxages based on its allegation that Waxwell had danaged its 

land. The jury, however, fourd that Max-:lei1 hac! not daaage~3 Fox 

Gram's land xben it found that Max-xell had not breach4 the lease 

agreement. It is, therefore, only logical to conclude that had 

FTaxwelL been able to perfor~. under the lease agreement he would 

have been able to produce crops similar to those produced on 

adjoining and neighboring lands. We conclude that the jury's 

verdict on this issue was supported by substantial credible 

evidence, that the District Caurt erred in granting a JNOV on this 

iss~e, and reinstate the jury verdict awarding Frank F. Max-uell 

Did the District Court err by denying Fox Grain's ~~otion 

for judginent notwithstanding the verdict on the issue of 

Maxwell's other damages? 

The jury awarded Max'well: 1) $23,013.42, plus 75 percent of 

the net federal crop insurance payment, for Fox Grain's failure to 

mitigate its damages; and 2) $16,500 on his loss of machinery 

claia. According to Fox Grair,, there was absolutely no evidence in 

tke reccrd to scpport these two iuw . -1 awards. Fox Grain contends 

that the District Court improperly refused to grant a JNoV as to 

thess awards 

First, Fox Grain challenges the axard of 75 percent of the 
federal crcp ins-rance payaent. Fox Srain zrgues that the award 

was unnecessary. Since the j-ry ccncluAed that the lezse was iz 

effect during 1991, pursl.ia3t tg t5e lease terxs Ma:ciell was 

entitled to 75 percent of all government paynents, includixg crop 

insarance. 

Xe conclude that Maxwell &-as entitled tc 75 percent of 211 

govercaent payments, including crop insurance. We remand this 

issue to the District Court to determine the types of government 

payments received by Fox Grain during 1991 and the aaounts due to 

?faxwell under each program. 

Fox Grain further argxes that the award of $23,013.42, was not 

supported by acy evidence and thus, was speculative. Accordingly, 

the District Court should have granted a S?iOV as to that award. 

A review of the record, however, negates Fox Grain's argurr.ent. 

Technically the award of $23,013.42 was not an award but, rather, 

that miount represented an axount which Maxwell was not liable 

since Fox Grain failed to aitigate its damages. The jury 

determined that the lease was in effect and, pursuant to the lease, 

Naxwell was liable for 75 percent of the farming expenses, or 

$38,779.60. The jury then determined that Fox Grain failed to 

~.iti;.ate those farming expenses and conc?,uded that if Fox Grain 

properly mitigated its damages, it would have saved Xaxvell 

$23,013.42. 

The record reveals that evidence was elicited to prove that 

Fox Grain refused t,o sell stored grain, which resulted in $1,000 of 

extra storaqe costs. Fi;-rther, Fox Grain refused to enter an 
agreenent with Xaxdell so that the Agriculture Stzbilizatior ac3 

Conservation Service would release advance deficiency payments of 

$i3,C13.42, Cn that basis, ;we ccncl~de chat the District Court 

properly denied Fox Grain's nction for a JNOV as to the $23,013.42. 

Additixall;;, Fox Grain contends that the special verdict for3 

xas pisleading. According to Fox Grain, the ~wording of 

question 2)b), is nonsensical, confusing, and the jury did not know 

what the question was asking. The special verdict provided, in 

pertinent part: 

2) Do you find against [Fox Grain] and in favor of 

[E4axxell], that no naterial breach of the lease 

occurred? 

Answer: YesL NoIf your answer is yes, resulting in reccgnition of the 

contlcu~ng validlty of the lease, then: 

a) Khat anount of farming expenses incurred since July 

23, 1990, do you find [Max~ell] responsible for the 

payment of? 

b) Taking into consicleration mitigation of damages, 

what anount of damages, if any, do you award to 

[Hax-#ell jand against [Fox Grain]? 

$ 2?,C13.42 + 75% of nec Fed Crqo ins pnt 

While questicn 2)b) is not a nodel question on the mitigation 

issue, :;e cczclude that the special verdict form coxporrs with the 

standards of Rule 45(a), M.R.Civ.P. In Story v. City of Bozeman 

(1993)' 239 Mont. ZOil 229, 856 P.2d 202, 215-16, we exaained the 

three-part stan3ard to asternine the adeqaacy of a special verdict 
1) w3ether, when read as a whole and in conj*~nction with 

the general charge, the i?terrogatcries arieqcately 

presented tke contested issues ta the jury; 

2) rwhetber the s,kmission of the issues to the jury vas 

fair; ax6 

3) whether the ultimate questions of fact were clearly 

suhitted to the jury. 

In the present case, when question 2)b) is read in context 

with the remaining portions of the special verdict form, the issue 

of nitigation was properly presented to the jury. The special 

verdict fairly and accurately subnitted the issues, and 

specifically the nitigation issue, to the jury. F~rther, the 

ultimate question of fact of whether Fox Grain mitigated its 

damages was logically and clearly presented to the jcry. We hold 

that the special verdict form complied with Rule 49(a), l4.R.Civ.P. 

Finally, Fox Grain maintains that the District Court should 

have overturned the jury award of $16,500 for loss of machinery. 

Fox Grain contends that ?lam-ell's father, TOP., purchased the 

tractor in his om name. Since Tom was not a party to the lease, 

the loss of the tractor was Ton's, and not Xaxwell's. Fox Grain 

argues that the District Court improperly allowed Maxwell to 

recover t>e loss of that tractor. The record, however, dilutes Fox 

Grain's argunant. 

Even though Tom purchased the tractor in his name, Xaxwell's 

property--worth $14,300--was used as a down payment, and Masvell 

was responsible fcr the paperits. Tom only assisted Haxwell in 

obtzining financing for the tractor, Fcrther, two other itens of 
~achirs-~ '1 were lcst, a pcsthole digger and rotary cuzter valaed 

between $2,500 and $2,750. After an extensive review of the 

record, Tt:e ccnclude that the District Court properly denied Fox 

Grain's nc:icn f=r a J!:gC as to the ---s: ,.,czb:.,nery damrjes. We hold 

that ths recorc: contains sufficient pr3of to justify the jury's 

conclusion that Fox Grain failed to rnitiqate its daz.ages-- 

$2?,C13.42--and owed Maxwell $16,500 for Maxiellis loss of 

nackinery. The District Court is affimed on Issue 11. 

Was there sufficient evidence in the record to scpport 

the jury's findings that Maxweii dld not breach the 

lease? 

The jury concluded that P1axwel.l had not breached the lease and 

the Lease was in effect for 1991. Fox Grain contends that the 

jury,- conclusion on the breach issue is unsupported by the 

evidence. Moreover, Fox Grain argues that the District Court erred 

by granting Maxwell's motion in limine relating to negotiations or 

discussions which predated the execntion of the lease agreement. 

We will not disturb a district court's evidentiary rulings 

absent an abuse of discretion. Haines Pipeline Construction, Inc. 

v. Kontana Power Co. (1991)' 251 Mont. 422, 427, 830 P.2d 1230, 

1234. In this case, the District Court's order in limine excluded 

parcl evidence of the lezse agreement. Tox Grain contends that 

parol evidence should have been adaitted to exglain aabigcities in 

the lease. See Eliingson Agency, Inc. v. Baltrusch (1937), 228 

Mont. 360, 366, 742 P.2d 1009, 1013. Fox Grain contends that the 

foLloaing previsions are ambignous: 
I) Maxwell agreed to "occupy-, till axi in all res-;?ects 

cultivate the premises 3bove nentioced during the tsrzt 

aforesaici, in a farmer-like manner, and according to the 

usnal course of farning practiced in the neighborhood;" 

and 

2) MaxweLl and Fox Grain "agreed that nc? less than all 

acres skall bs c~~itivatei. each year of this Lease, ef"' -n-- n-r 

by being in crop or suamerfallow, except that Xzxwell is 

allmied tc stubble in approxiaately- 1,000 acres of 

sunr.erfallov and will leave 1,OCO acres of sunnerfallow 

at the end of the Lease." 

Fox Grain arques that the terzs "farmer-like manner," "usual course 

of farming practiced in the neighborhood," acd "not less than all 

acres snail be cultivated each year of this lease" were ambiguous 

and required parol evidence to explain their xeaning. Further, the 

tern "Eaxb:ell is alloxed to stubble in approximately 1,000 acres of 

summerfallow" is ambiguous, since any farmer knows that a person 

cannct "stubble in" summerfallow. 

When ambiguous terms exist in a contract, parol evidence is 

admissible to explain the ambiguous terms. Ellinason Aqency, 742 

P.2d at 1013. In Ellinqscn Aoencv, ire examined ~shether the tern 

3, c3nveyance" under a real estate broker's exclusive listing 

2greemer.t inclucied a transfer of title in lieu cf foreclosure. We 

concluded that summary judgment was improper because genuine issues 

of fact existed since the term "conveyance" did not have a fixed 

meaning. Ellinqson Aqency, 542 I?.;:! at 1013. Cie helci that parcl 

evidence was necessary to interpret the parties' intention of 

inclcding that tern in the agreenent. unascn Aqencv, 742 P.2d 

at 1013. 

Fox traifi contends that. the District Court should have allowed 

it t:, testify as to the meaning of the term of the lease. 

14 
According ts Fox Grain, it was unable to explain to the jury that 

the Lease reqoired "axwell to spray for weeds and snmnerfaiiow the 

pro~erty. 3." , :else, however, did not pra-iide that Haxweli was 

zeqak-ed to spray cr su-m?rfallox the prcperty. Tkn lease di2 

pr""irJe ";t]hat Fox [Grain: is to be consult& by Yamell as to the 

farcing decisions, however, the final. decisicn of Maxlcell shall be 

binding upcn Pcx [Grain] ." Even though the court refused to allow 

Fox Grain to testify about the xeaning of the terns, the court did 

allow neighboring farmers' testimony on the issue of farming 

practices. We conclude that the court did not abuse its discretion 

when it limited Fox Grain's testimony as to what it felt the lease 

required of Maxwell. 

Fox Grain also argues that the jury's findkg that i"ixwell did 

rtot breach the lease was not supported by substantial evidence. 

Fox Grain extensively argues the facts of this case and concludes 

that Maxwell breached the lease. When conflicting evidence exists, 

the jury must judge the credibility and ~geight of the evidence and 

we will not retry the case nor will Fie reweigh the evidence on 

appeal. Whisher v. Higgs (1993), 257 Mont. 132, 146, 849 P.2d 152, 

160. After an extensive review of the record, we conclude that the 

jury's finding that Maxwell did not breach the lease was supported 

by substantial ex:idence. We affirm the jury verdict on Issue 111. 

Did the District Court err by granting Maxwell summary 

judgnent on Fox Grain's ownership claim of the volunteer 

winter wheat crop? 

Ol~r standard of review on a grant of surzaar'j judgaent is 
identical t? that cf the trial court. Mimic v. City of Rcundup 

(199- J,, ' 255 ~oct. 423, 431, 849 P.Z~ 212, 214. First, we exaaine 

the record to determine whether genuine issues of fact exist. 

., aln~ie, 1 249 P.Z? at 214, If no genuine issues of fact exist, then 

<ve rust deter~ine xhether the noving party is entitled to judgcent 

as 2 natter of ia~x, -t Minnte 249 P.22 ac 214. 

The lease provisions stated that Maxijell would lease the 

prenises during the 1989, 1990, and 1991 crop seasons. Maxwell was 

to deliver to Fox Grain one-fourth of all crops produced on the 

land, except that Maxwell was to receive the entire 1939 crop ard 

Fox Grain was not to share in that crcp. 

Fox Grain concedes that the volunteer crop was harvested in 

1929, but contends that an issue of fact exists as to which year 

the crop began growing. Fox Grab contends that the crop was 

actually planted in 1987 for harvest in 1988. However, due to the 

hail storm in 1988, the volunteer crop sprouted in 1939. 

We conclude that no genuine issue of fact exists and tke 

agreexent is clear on its face that since the volunteer crcp was 

harvested in 1989, Maxwell had a right to receive the entire crop. 

At the beginning of the lease, the parties were a-dare of the 

existence of the volurteer crop, but chose not to address the 

ownership of that crcp in their agree~~ent. Moreover, ."$hen Maxwell 

harvested the volunteer crop in 1989, Fox Grain did nct claio that 

it owned the crop. Ratker, Fox Grain wait& until 1996-->;hen it 

sent Naxxell the Lease cancelletion notice--to clain an ownership 

interest ic that cr3p. We hale that the District Court properly 
We concur: A i \