No. 91-288 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

TRACY KROON, RHODA KROON, and 

FIRE INSURANCE EXCHANGE, 

Plaintiffs and Appellants, 

-vsJAMES L. COVER, d/b/a CVR OAK DESIGNS, 

Defendant and Respondent. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Larry W. Moran, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Paul L. Frantz; Morrow, Sedivy & Bennett, P.C., 

Bozeman. Montana 

For Respondent: 

Gig A. Tollefsen; Berg, Lilly, Stokes, Andriolo E, 

Tollefsen, Bozeman, Montana 

Submitted on Briefs: August 15, 1991 

y:: <' .,I Decided: September 10, 1991 

Filed: i' ,. ... 
Justice John Conway 'Harrison delivered the Opinion of the Court. 

Plaintiffs appeal from a judgment of the District Court for 

the Eighteenth Judicial District, Gallatin County, dismissing their 

complaint. we affirm. 

The issue for review is whether the District Court erred in 

finding that the risk of loss in a sales transaction passed to the 

buyer instead of remaining with the seller. 

In the fall of 1989, Cover contracted to build furniture for 

Kroons. The furniture was complete and ready for delivery on 

December 14, 1989. Kroons inspected the furniture at Cover's shop 

and accepted the quality of the furniture. Cover gave Kroons a 

receipt indicating that their account was paid in full. Although 

Cover wanted to deliver the furniture, Kroons asked if Cover could 

hold the furniture until after Christmas. Cover agreed to hold the 

furniture at no extra charge. Kroons agreed to take actual 

physical possession of the furniture on or about December 27, 1989. 

The parties' contract did not specify who would be responsible for 

delivering the furniture to Kroons' home. Further, the parties 

did not discuss who would bear the risk of loss. 

On December 20, 1989 a fire of unknown origin destroyed the 

furniture. Subsequently, Kroons filed a claim under their 

homeowners' policy which covered the furniture. After investigation, Fire Insurance Exchange paid Kroons for their loss. 

Fire Insurance Exchange initiated this subrogation claim to 

Kroons seek recoverey of their 

The District Court entered judgment in favor of Cover. 

On appeal, appellants maintain that the District Court erred 

recover the amount paid to Kroons. 

deductible. 
in dismissing their complaint. Appellants contend that risk of 

loss remained with the seller under 5 30-2-509(3), MCA, entitling 

appellants to prevail. We disagree and therefore affirm the 

District Court's jud.pent in favor of Cover. 

The well established rule regarding risk of loss in the 

absence of breach in sales transactions is contained in 5 30-2- 

509, MCA. Section 30-2-509(3), MCA, places risk of loss as 

follows : 

(3) In any case not within subsection (1) or (2), the 

risk of loss passes to the buyer on his receipt of the 

goods if the seller is a merchant; otherwise the risk 

passes to the buyer on tender of delivery. 

The District Court found 5 30-2-509(3), MCA, placed the risk 

of loss on the buyers on December 14, 1989 because they were in 

constructive receipt of the furniture on that day. Further, the 

court found that a gratuitous bailment resulted because Cover 

desired to actually 'deliver the property to Kroons, but agreed at 

Kroons' request to postpone delivery until December 27, 1989. As 

a gratuitous bailee, Cover's only obligation was to exercise 

ordinary care. Appellants failed to show a lack of ordinary care. 

Risk of loss is no longer governed by the "arbitrary shifting 

of the risk with the 'property' in the goods." Note 1 of the 

Official Comment, 5 30-2-509, MCA. By adopting Montana's version 

of the Uniform Commercial Code, the legislature adopted the 

contractual approach to risk of loss cases. Note 1 of the Official 

Comment, 5 30-2-509, MCA. 

Applying the contractual approach, risk of loss passed to 

Kroons when the contract was completely performed and they 

constructively received the furniture. Cover's performance of the 

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contract was complete when he finished the furniture and made it 

available for immediate possession by Kroons. The contract was 

complete, Kroons were the actual owners of the property, and they 

obtained an insurable interest in the furniture on December 14, 

1989. Consistent with ownership rights, Kroons filed a claim with 

their insurance company and received compensation for their loss. 

We conclude that the District Court did not err in dismissing 

plaintiffs' complaint. Kroons' acceptance and request for later 

delivery qualified as constructive receipt of the furniture. 

Pursuant to 5 30-2-509, MCA, the risk of loss transferred to KroonS 

when they constructively received the furniture since Cover is a 

merchant. Accordingly, we affirm the District Court. 

Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 

1988 Internal Operating Rules, this decision shall not be cited as 

precedent and shall be published by its filing as a public document 

with the Clerk of this Court and by a report of its result to the 

West Publishing Company. 

Let remittitur issue forthwith. 

We concur: 

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September 10, 1991 

CERTIFICATE OF SERVICE 

I hereby certify that the following order was sent by United States mail, prepaid, to the 

following named: 

Paul L. Frantz 

MORROW, SEDIW & BENNETT, P.C. 

P.O. Box 1168 

Bozeman, MT 59711-1168 

Gig Tollefsen 

BERG, LILLY, STOKES, ANDRIOLO, TOLLEFSEN & SCHRAUDNER 

910 Technology Boulevard, Suite A 

Bozeman, MT 59715 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF MONTANA