No. 13666 IN THE SUPREME COURT OF THE STATE OF MONTANA 1977

UNITED CAMPGROUIJDS, U.S.A., a corporation, Plaintiff and Appellant,

LESLIE B. STEVENSON, Defendant and Respondent.
Appeal from: District Court of the Eighteenth Judicial District, Honorable W. W. Lessley, Judge presiding. Counsel of Record: For Appellant: J. David Penwell, Bozeman, Montana For Respondent: Joseph W. Sabol, Bozeman, Montana Submitted on briefs.

Submitted: September 26, 1977 Decided:

### NOv29 

### 1577

7

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### ';;I Filed:

### &, GMr. Justice Gene B. Daly delivered the Opinion of the Court. This actionby United Campgrounds,U.S.A., a Nevada corporation, against Leslie B. Stevenson,a resident of Bozeman, Montana,was brought in the District Court,Gallatin County, for damages for breach of contract and termination of
a franchise agreement. Itwas tried to the District Court sittingwithout a jury. The court found in favor of Stevenson, awarded attorney fees, terminated the contract,and dismissed the claim. United appeals. On July 17, 1971,a franchise agreementwas executed between United and Stevenson for the operationby Stevenson of a United Campground franchise at Bozeman,Montana. Thereafter, on December 1, 1971, the parties entered into a sign lease agreement for the lease of a sign owned and furnished by United for use by Stevensonat the campground. In December 1971,Stevensonpurchased land near bozeman and started a campground in early 1972. The franchise agreement provided that 3% of the annual registration fees at the campgroundwas to be paid to United for educational and supervisory services. An additional sum of 

### 4% of the annual registration feeswas to be paid for the use of the trade name and trademark 

### "UNITED CAMPGROUNDS". Stevenson
was also to pay United the sum of $500per year as an advertising payment for promoting and advertising the "UNITED CAMPGROUNDS" trade name. Specifically, the franchise agreement required the payment by Stevenson to United of the sum of $7,500. This sum constituted compensation to United forwork performed and servicesrendered in connection with setting up the campground. This
sum of money was paid to United. In addition to the franchise agreement United and Stevenson entered into a lease agreement for the lease of an advertising sign. Steventonwas to pay the sum of $350per year as rental for the use of the sign. This sign leasewas a separate agreement. However, the sign rentalwas required by the franchise agreementwhich inArticle 

### V, Paragraph 1,Section S, states: "1. DUTIES OF FRANCHISEE: Franchisee agrees: 

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'1s. To lease or purchase a standard lighted sign fromFranchisor

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# *." All payments were duly made by Stevenson to United until the beginning of 1974, atwhich time all payments ceased with no payments made since then. 

### The franchise agreement is explicit
as to the duties of United as the franchisor,and likewise, insofar
as the duties of Stevensonas the franchisee. The District Court, after hearing testimony and examining the evidence and proof, found that United as franchisorhad not met its duty to Stevenson
as franchisee in that: 1. United did not send a competent, qualified and experienced location advisor to Stevenson's territory to advise Stevenson. 2. United did not furnishpaper goods, sales aids, advertising materials or other items printed with United's trademark or trade name to Stevenson. 3.


### .United did not provide Stevensonwith one week of basic operational training in an actual operating campground. 

### 4. United did not instruct or advise Stevensonwith regard to the leasing of equipment and rental of facilities or equipment for the operation of his campground.5. United did not assist Stevenson in developing sources of income fromnew and different types of facilities related to overnight campting. 6. United failed,neglected and refused during the years 1974and 1975, to maintain the trade name and business of "United Campgrounds,U.S.A." in such a manner as to signify a high standard of excellence inmanagement and operation. United

II did not publish, advertise,promote and develop United Campgrounds, U.S.A." trade name and public image. United did not make available to Stevensonpaper goods, sales aids,advertising materials; did not publish during the years 1974and 1975, a directory in content, scope or accuracy to facilitate and promote Stevenson's business. The court further found United's-failures to perform materially impaired and jeopardized Stevenson's business and
were material breaches of the covenants, and were conditions precedent of the franchise agreement. United's first issue for review is whether the District Court erred in failing to rule on the evidence that a separate sign lease had been entered intobetween the parties and no payment had been made by the franchisee after December 1973,nor had the signbeen returned to the franchisor? As heretoforenoted,Article 

### V of the franchise agreement imposes the obligation upon Stevenson to lease

## or purchase a sign fromUnited. The sign agreement is of a lesser consequence in relation to the entire agreement than the segment relating to advertising and use of United's name. The obligation here is no different than the other payments relating to trade name and other advertising material. Ithas its ownmethod of executionbasedon the purchase or lease option,but like all other obligations has its genesis in the franchise agreement and is a part thereof. Therefore, lack of specific reference beyond the franchise agreement is not reversible error. United's final issue is whether the District Court was correct in construing the obligations of the franchisor as conditionsprecedent. Section 58-206,R.C.M. 1947, states: "A conditionprecedent is one which is to be performed before some right dependent thereon accrues, or some act dependent thereon is performed." This Court inAtlantic-PacificOil Co. v. Gas Development Co., 105Mont. 1, 15, 69 P.2d 750 (1937), dealt at lengthwith a "conditionprecedent" and held that a condition precedent is not

a question of phrase or form,but one of the intent of the parties. Here, Stevenson contends the franchise agreement demonstrates it was the intent of the parties to create all obligations on the part of Stevenson, dependent upon performance of obligations by United. His contention is evidenced by the franchise agreement itself, reciting at length the rights of United for any breach of an obligationby Stevenson. Yet,nowhere within the agreement is there any provision concerning the rights of Stevenson for a failure by United to perform the obligations imposed upon United. The termination clause contained in the franchise agreement is very specific

# -- the agreement may be terminatedwhen either a ten year period has expired
or the franchisee is inbreach of the agreement. However,no provision is made in the franchise agreementwhich allows for the termination of the agreement for breach thereof by the franchisor,United. United on the other hand maintains that each party's performancewas equally dependent and ran concurrently, contendingthat conditions precedent are not favored and the courts will not construe stipulations to be such,unless required to do so by plain, unambiguous language or by necessary implication. 17Am Jur 2d,Contracts, 5321,p. 752. The District Court decided these duties of the franchisor by necessary implication were conditions precedent. The District Court held Stevenson failed to establish damages, yet the court did feel that United had substantially failed inmany of its obligations as a franchisor. Therefore, if this franchise agreementwas to be construed as imposing upon United covenants or concurrent duties, this would leave Stevenson without an adequate remedy for a breach of these obligations by United. The judgment of the District Court is affirmed.



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