No. 95-152 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1996 

TRAVELERS INSURANCE COMPANY, 

A Connecticut Corporation, 

Plaintiff and Respondent, 

HOLIDAY VILLAGE SHOPPING CENTER LIMITED ,;, "~ ,, :~ '~ " ' -,.-!'~ 

PARTNERSHIP, a Montana limited partnership; 

SIX SIXTY SEVEN, INC. ; HILL COUNTY, MONTANA; ii/ 1 ’ !~i “i’:‘-~i 

ROBERT L. BROWN; ROBERT W. RECTOR; RICHARD 

F. BOHN; JACK OLIVER; CLARKE STREEPER; and ,;: :j '<, ,_;, 

O.B.S. PARTNERSHIP, ,, ,,,, .~,: ;;;:i ;~,; ,;,, .~~: ,:,‘; it* 

Defendants and Appellants. 

APPEAL FROM: District Court of the Twelfth Judicial District, 

In and for the County of Hill, 

The Honorable Ted 0. Lympus, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

James H. Goetz (argued), Robert K. Baldwin (argued); 

Goetz, Madden & Dunn, Bozeman, Montana 

Frank Altman, Daniel A. Boucher; Altman & Boucher, 

Havre, Montana 

David G. Rice, Hill County Attorney, Havre, Montana 

For Respondent: 

William A. Squires (argued), Randall C. Lester; 

Matteucci, Falcon, Squires & Lester, Great Falls, 

Montana 

Filed: 

Argued: April 2, 1996 

Submitted: June 27, 1996 

Decided: December 16, 1996 

I 

Clerk 
Justice W. William Leaphart delivered the Opinion of the Court. 

Appellants (collectively HVSC), appeal from the Amended 

Findings of Fact, Conclusions of Law, Judgment, and Decree of 

Foreclosure entered by the Twelfth Judicial District Court, Hill 

County, foreclosing their interest in the subject property and 

ordering a sheriff's sale. We reverse and remand. 

We restate the issues raised by HVSC as follows: 

1. Did the District Court err in determining that HVSC's 

interest in the subject property was subject to Travelers' liens? 

2. Did the District Court err in determining that the 

subordination agreements executed by HVSC granted Travelers a 

security interest in the fee to the subject property? 

3. Did the District Court err in determining that the leases 

were terminated and that Travelers would be entitled to relief 

from forfeiture? 

4. Did the District Court err in not requiring the 

delinquent real property taxes to be paid out of the foreclosure 

sale proceeds and in ordering that the costs and attorneys' fees 

would be assessed at a later date? 

Factual Summary 

This case arises out of a complicated dispute relating to the 

financing of the Holiday Village Shopping Center located in Havre, 

Montana. The following facts are taken from the parties' statement 

of stipulated facts. Beginning in 1975, Hill County, Montana, and 

several adjoining landowners, Brown, Rector, Bohn, Oliver, and 

Streeper, entered into lease agreements with M & M Enterprises (M 

& M) covering the land upon which Holiday Village was constructed. 

The lease agreements had been modified several times since they 

were executed. 

In the spring of 1978, Hill County and the adjoining 

2 
landowners executed and delivered subordination agreements to 

Travelers. These agreements were executed on M & M's behalf so 

that Travelers would advance the funds necessary to construct the 

shopping mall. In May of 1978, M & M executed and delivered a 

promissory note to Travelers. To secure payment of the promissory 

note, M & M executed and delivered a mortgage to Travelers. In 

October of 1980, M & M executed an assignment of lease in favor of 

Northwestern Union Trust Company (NWU); the same day, NWU assigned 

the lease to LIC, Inc. (LIC). At the same time, M & M executed a 

special warranty deed to NWU conveying its interest in the subject 

property and NWU subsequently conveyed its interest to LIC. M & M 

also executed an assignment of ground lease giving NWU all of its 

interest in the leasehold estates. Again, the ground leases were 

subsequently assigned to LIC. In 1986, LIC assigned its interest 

in the leasehold agreements to LAACO, Ltd. On May 30 and June 1, 

1990, LAX0 and Holiday Village entered into an assignment 

agreement and conveyance and Travelers and Holiday Village entered 

into an assumption agreement and consent. 

HVSC failed to make the required payments due under the lease 

agreement to Hill County and to the adjoining landowners; 

therefore, HVSC was in default. In the spring of 1993, Hill County 

and the adjoining landowners issued notices of default for failure 

to make the required payments due under the terms of the leases. 

A receiver was appointed to manage HVSC in March of 1993 and has 

made monthly reports to the District Court regarding the financial 

condition of HVSC since his appointment. 

3 
In 1992, Travelers filed its complaint seeking a judgment on 

the monetary obligation and foreclosure of its security interest in 

both the real and personal property. In April of 1993, HVSC and 

its general partner, Six Sixty Seven, Inc., consented to the entry 

of judgment in favor of Travelers and foreclosure of its interest. 

Thus, HVSC is no longer litigating the instant appeal. In 1994, 

all of the remaining parties, Travelers, Hill County, and the 

adjoining landowners moved for summary judgment. The District 

Court ordered that Travelers recover a judgment against HVSC and 

Six Sixty Seven, Inc. pursuant to the stipulation that Hill County 

and Brown did not act as sureties and did not properly terminate 

the ground leases, and that Hill County and the adjoining 

landowners recover the monthly rent payments due under the terms of 

their leases to the date of the judgment. Finally, the District 

Court ordered that the subject property be sold at a sheriff's 

sale. Subsequently, Hill County and the adjoining landowners filed 

the instant appeal. 

Standard of review 

In reviewing a district court's grant of summary judgment we 

use the same criteria as that used by the district court; we are 

guided by Rule 56, M.R.Civ.P. Chilberg v. Rose (1995), 273 Mont. 

414, 416, 903 P.2d 1377, 1378-79 (citing Minnie v. City of Roundup 

(1993), 257 Mont. 429, 431, 849 P.2d 212, 214). Thus, we determine 

whether a genuine issue of material fact exists and whether the 

moving party is entitled to judgment as a matter of law. Chilberq, 

903 P.2d at 1379. Here, the parties submitted a statement of 

4 
stipulated facts and the court entered its findings of fact, 

conclusions of law, and decree based on the stipulated facts and 

oral argument. No genuine issue of material fact exists. 

In the instant case, the District Court determined that "[t]o 

the extent resolution of this matter turns on the construction and 

interpretation of written instruments, such a determination is a 

matter of law." In reviewing a district court's conclusions of 

law, we determine whether the court's interpretation of the law is 

correct. Stratemeyer v. Lincoln County (Mont. 1996), 915 P.2d 175, 

177, 53 St.Rep. 245, 246 (citing Carbon County v. Union Reserve 

Coal Co., Inc. (1995), 271 Mont. 453, 469, 898 P.2d 680, 686); 

Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474-75, 

803 P.2d 601, 603-04. 

Discussion 

Resolution of the appeal hinges upon an interpretation of the 

subordination agreements executed in 1978 by Hill County and the 

adjoining landowners in favor of Travelers. The subordination 

agreement with Hill County1 provides in relevant part that: 

SUBORDINATION AGREEMENT 

. . . 

WHEREAS, the undersigned, Hill County, Montana, a 

political subdivision of the State of Montana, having an 

address of Havre, Montana, is the owner in fee simple 

absolute of the real property situated in Hill County, 

Montana, more particularly described on Exhibit A 

attached hereto and by this reference made a part hereof, 

and 

WHEREAS, the undersigned by a lease dated August 29, 

' The subordination agreement with the adjoining landowners is 

substantially identical to the agreement with Hill County. 

5 
1975, as supplemented by Supplemental Agreement dated 

November 1, 1976, and executed by the parties August 29, 

1975 has leased the hereinbefore described real property 

to M & M Enterprises, a Montana Partnership; and 

WHEREAS, M & M Enterprises has applied to the 

Travelers Insurance Company, a Connecticut corporation, 

hereinafter referred to as Travelers for a loan in the 

amount of FIVE MILLION EIGHT HUNDRED FIFTY THOUSAND and 

No/100 DOLLARS ($5,850,000.00) with interest, evidenced 

by a note dated Februarv 8. 1978 and secured by a 

mortgage on the Lessee's interest in the hereinbefore 

described real property of even date with said note and 

recorded on the 14th dav of June, 1978, in Book 140 of 

Mortqaqes on Paae 348, Document Records of the Clerk 

and Recorder of Hill County, Montana, and 

WHEREAS, Travelers is unwilling to make said loan or 

advance funds thereon unless it is assured that the above 

described mortgage shall be a lien upon the undersigned's 

fee simple title in the hereinbefore described real 

property and unless the undersigned gives Travelers the 

assurances hereinafter set forth, and 

WHEREAS, the undersigned is willing to subordinate 

its fee simple title to said real property to said 

mortgage and is willing to give such assurance, 

NOW, THEREFORE, in consideration of the making of 

said loan to M & M ENTERPRISES, and to induce Travelers 

to advance funds thereon, the undersigned hereby 

subordinates all of its right, title and interest in and 

to said real property to the lien of said mortgage and 

agrees that said mortgage shall continue to be a first 

lien upon said property prior and superior in right to 

any right, title and interest of the undersigned in and 

to said real property. The undersigned, however, shall 

not be liable for the payment of any indebtedness secured 

by said mortgage or the performance of any of the 

covenants or obligations of the mortgagor thereunder. 

The undersigned further assures Travelers that the 

undersigned will not terminate the above described lease 

without the prior written consent of Travelers except in 

the case of a default thereunder by M & M ENTERPRISES in 

which case the undersigned agrees to give Travelers 

written notice thereof, specifying the default and 

Travelers shall have ninety (90) days after receipt of 

said notice within which to cure said default, and if the 

default is cured within said period, or if the default is 

one which cannot be cured within said period, but steps 

are taken in good faith during said period and diligently 

6 
pursued, the lease shall not be terminated[.l [Emphasis 

added. 1 

Hill County and the adjoining landowners assert that they are 

sureties for M & M and that the subordination agreements which they 

executed are not mortgages. Further, Hill County and the adjoining 

landowners assert that they were exonerated when Travelers released 

M & M from all liability without consent of Hill County and the 

adjoining landowners. Travelers argues that the subordination 

agreements subjected Hill County's and the adjoining landowners' 

fee interests to Travelers' lien and that the subordination 

agreements are, in fact, mortgages. Further, Travelers contends 

that the subordination agreements waive any statutory right of 

exoneration. 

In resolving the parties' contentions, the District Court 

concluded that the above-quoted subordination agreement creates a 

contractual right of foreclosure as well as a statutory mortgage 

and an equitable mortgage under Montana law because it was 

"executed with all the formalities required for a grant of real 

property and the execution of a mortgage." However, the 

subordination agreements contain no words purporting to mortgage an 

interest in property. Section 71-l-204, MCA. 

This Court has stated that "[aIs a general rule, construction 

and interpretation of written agreements, including contracts, is 

a question of law for the court to decide." Klawitter v. Dettmann 

(1994), 268 Mont. 275, 281, 886 P.2d 416, 420 (citing First Sec. 

Bank of Anaconda v. Vander Pas (1991), 250 Mont. 148, 152-53, 818 

P.2d 384, 387). Similarly, it is a question of law whether 

7 
ambiguity exists in a written instrument. Klawitter, 886 P.2d at 

420 (citing Audit Sews. Inc. v. Systad (1992), 252 Mont. 62, 65, 

826 P.2d 549, 551); Johnson v. Nyhart (1995), 269 Mont. 379, 387, 

889 P.2d 1170, 1174. 

Hill County and the adjoining landowners argue that l'[t]he 

subordination agreements do not, on their face, purport to be 

mortgages [and that1 Lilt was error for the district court to 

conclude that they are mortgages without resort to extrinsic 

evidence." We agree. The District Court concluded that the 

"Subordination Agreements are unambiguous, and therefore the Court 

need not look to extrinsic evidence for interpretation of the 

same." We hold that the District Court erred in concluding that 

the subordination agreements were not ambiguous. The documents are 

titled "Subordination Agreement" rather than mortgages. Section 

71-l-204, MCA, sets forth the form of a mortgage. The operative 

verb in the §204 mortgage form is to "mortgage." Although the text 

of the documents states that the fee interest is "subordinated," it 

does not contain language purporting to "mortgage" property to a 

mortgagee as security. 

A subordination agreement only dictates the priorities between 

existing interests, for example lien holders--it does not mortgage 

an interest in the property. A mortgage "is a contract by which 

specific property is hypothecated for the performance of an act, 

without the necessity of a change of possession." Section 71-l101, MCA. The agreement at issue here has characteristics of both 

a subordination agreement and a mortgage. The confusion lies in 

8 
the fact that the agreement mixes the concepts of "subordinate" and 

"mortgage" by providing that Hill County and the adjoining 

landowners subordinate their fee simple interests to Travelers' 

mortgage. Subordinate means "Ipllaced in a lower order, class, or 

rank and having a lower position in a recognized scale; 

secondary, minor." BLACK's LAW DICTIONARY 1426 (6th ed. 1990). Since, 

by definition, a fee simple interest is absolute and without 

condition or limitation, an agreement purporting to "subordinate" 

a fee simple interest presents a paradox; can a fee simple 

interest, which is absolute and without limitation, be placed in a 

lower or secondary position by a "subordination agreement?" Thus, 

the language of the agreements is inherently and internally 

inconsistent. 

The District Court was incorrect in holding that the 

agreements are unambiguous and that resort to extrinsic evidence 

was unnecessary. The language of the agreements is ambiguous. 

Further, Hill County and the adjoining landowners assert that had 

the extrinsic evidence been considered it would show that Travelers 

itself did not consider the subordination agreements to be 

mortgages. To resolve this ambiguity, the court must consider the 

intent of the parties at the time of the execution of the 

instrument. As this Court has recognized, "to establish this 

intention [to create a mortgage] the courts will examine the 

surrounding circumstances." Boysun v. Boysun (1962), 140 Mont. 85, 

538, 368 P.2d 439, 440. 

The dissenters correctly point out that § 28-3-206, MCA, 

9 
provides that in cases of uncertainty, the language of the contract 

should be interpreted most strongly against the party who caused 

the uncertainty to exist. It should be noted, however, that this 

is not a peremptory rule. It does not require that the nondrafting party prevail in all cases. Rather, it is a rule of 

interpretation that requires that the court interpret the contract 

"most strongly" against the drafting party. For example, in Landon 

v. Labor Standards Division (1982), 200 Mont. 153, 158, 649 P.2d 

1341, 1343-44, even after the court applied § 28-3-206, MCA, and 

interpreted the contract most strongly against the employer as the 

party who caused the uncertainty to exist, it still reached the 

conclusion that the employer was correct. In the present case, 

although § 28-3-206, MCA, mandates that the District Court 

interpret the agreement most strongly against Travelers in deciding 

whether the agreement constitutes a subordination agreement or a 

mortgage, that statute does not necessarily dictate the outcome of 

the court's deliberation after consideration of the extrinsic 

evidence. 

Were the ground leases properly terminated? 

Travelers filed its complaint in this matter on November 13, 

1992, months before Hill County and Brown, et al. issued their 

February and March, 1993 notices of default on the ground leases. 

On June 18, 1993, Travelers sought the District Court's permission 

to deposit the lease payments into court pending resolution of the 

effect of the subordination agreements. The court denied the 

request. 

10 
The subordination agreements provide: 

If the default is one which cannot be cured within said 

period, but steps are taken in good faith during said 

period and diligently pursued, the lease shall not be 

terminatedL.1 

The District Court concluded that, in light of Travelers' 

timely pursuit of the litigation and request to deposit funds with 

the District Court: 

Travelers so acted in good faith, and was not grossly 

negligent or willful in its refusal to cure the defaults 

alleged by the Lessors. Therefore, the leases were not 

properly terminatedL.1 . . 

The District Court's conclusion that the ground leases were 

not properly terminated is correct and it is therefore affirmed. 

Accordingly, we also affirm the holding that Hill County and Brown, 

et al. are entitled to receive the monthly lease payments as 

specified in the judgment. 

Summary 

We affirm the judgment against Holiday Village Shopping Center 

Limited Partnership and Six Sixty Seven, Inc. in the amounts 

specified in paragraph l(a) through l(h) of the Judgment and Decree 

of Foreclosure with interest at the rate of 12% per annum as 

provided in the Promissory Note. 

In its Conclusion of Law #16, the District Court stated: 

16. Hill County and Brown, et al. did not act as 

sureties as definedby Section 28-11-401, Mont. Code Ann. 

(1993). The subject Subordination Agreements were 

executed for the benefit of Hill County and Brown, et al. 

as part of their contractual obligations under the 

subject ground leases to induce the execution of the same 

by the Mitchells [co-partners of M & Ml, thus securing a 

benefit unto Hill County and Brown, et al. Accordingly, 

the subject Subordination Agreements were not 

extinguished or exonerated by the release from liability 

11 
of M & M Enterprises and the Mitchells from the 

Promissory Note and Mortgage. 

The District Court's conclusion that Hill County and Brown, et 

al. were not, under the specific terms of the ground leases and the 

subordination agreements, acting as sureties is correct and is 

therefore affirmed. Accordingly, Hill County and Brown, et al. 

were not exonerated by the release of M & M Enterprises and the 

Mitchells from the Promissory Note and Mortgage. 

We reverse the judgment of the District Court insofar as it 

holds that the subordination agreements create a contractual right 

of foreclosure, a statutory mortgage or an equitable mortgage with 

regard to appellants' fee interest in the real property. In that 

the court's award of costs and attorneys' fees is dependent upon 

its holding that the agreements constitute mortgages, that award is 

also reversed. 

Accordingly, we reverse and remand to the District Court for 

consideration of the extrinsic evidence which, although presented, 

was not considered in determining whether Hill County and the 

adjoining landowners' fee interests are subject to foreclosure. 

Reversed and remanded. 

12 
we concur: 

Chief Justice 

Judge of the Dlstrlct Court, sitting 

for Justice William E. Hunt, Sr. 

13 
Chief Justice J. A. Turnage specially concurring: 

I concur with the result reached by the majority, remanding 

this case to allow the District Court to consider extrinsic 

evidence concerning the parties' intent in entering the 

"Subordination Agreement." I am confident, from the evidence in 

the record thus far concerning the circumstances surrounding 

execution of the "Subordination Agreement," that the parties 

intended to create a lien under the terms of the mortgage on the 

fee title to the property on which the shopping center is located. 

Chief Justice 

14 
Justice Terry N. Trieweiler dissenting. 

I dissent from the majority's conclusion that the 

subordination agreement is ambiguous and that its interpretation 

requires extrinsic evidence. I conclude that the plain terms of 

the agreement did nothing more than subordinate Hill County's fee 

interest to Travelers' right to foreclose on the lessee's leasehold 

interest. 

Furthermore, in the event of an ambiguity in the subordination 

agreement, Montana's statutory and case law require that 

uncertainties be resolved against the drafter of the document, 

which in this case was Travelers Insurance Company. For these 

reasons, I would reverse the judgment of the District Court and 

enter summary judgment for Hill County. 

The subordination agreement which was executed by Hill County 

in favor of Travelers Insurance Company acknowledged that Hill 

County owned the subject property in fee simple absolute, but had 

leased it on August 29, 1975, to M & M Enterprises, a Montana 

partnership. The agreement then acknowledged that M & M had 

mortgaged its lessee's interest in that property as security for a 

loan given by Travelers. Therefore, in the event that M & M 

defaulted from its obligation to repay that loan, Travelers had a 

right to foreclose on M & M's leasehold interest. 

M & M's leasehold interest gave it the right to occupy land 

owned by Hill County in fee simple for a period of fifty years from 

October 1, 1975, and build a shopping center on that land. It also 

obligated M & M to pay rent to Hill County in the amount of $20,360 
annually after completion of the shopping center. There were 

various other terms and conditions set forth in the written lease 

agreement. However, the leasehold interest was limited to the 

rights provided for in that agreement and did not include a fee 

simple interest in the property owned by Hill County. 

As the lessor and owner of the real estate on which the 

shopping center was to be built, Hill County also had rights 

pursuant to the lease agreement. It had the right to receive rent, 

and it had the right to retake possession of the property in the 

event that the rent was not paid. 

By the written subordination agreement, Hill County agreed, in 

consideration of Travelers' loan to M & M, tc 

[subordinate] all of its right, title and interest in and 

to said real property to the lien of said mortgage and 

agrees that said mortgage shall continue to be a first 

lien upon said property prior and superior in right to 

any right, title and interest of the undersigned in and 

to said real property. 

In other words, Hill County simply agreed to defer the 

enforcement of its rights in the property to Travelers' enforcement 

of its right to foreclose on the leasehold interest. A 

subordination agreement is 

"an agreement by which a party having a superior right of 

some sort agrees with someone having an inferior right 

that, as between the two of them, the inferior right 

shall be treated as if it were superior." 

. . 

. By executing a lien subordination agreement, 

the subordinating party agrees to demote the priority of 

its lien to that of another secured creditor, thereby 

delaying its recourse to the identified collateral until 

the other party's secured claim has been satisfied. 

16 
In re LantanaMotel (Bankr. S.D. Ohio 1990), 124 B.R. 252, 255, 256 

(citation omitted). 

However, while the subordination agreement required that Hill 

County defer its interest in the property during the term of the 

leasehold, it could not have, by its plain terms, given Travelers 

any greater interest in the property than it had pursuant to its 

mortgage agreement with M & M. That conclusion is compelled by the 

fact that Travelers only had an interest in the leasehold and Hill 

County only agreed to defer to Travelers' leasehold interest. 

Travelers had no interest in the fee simple estate, and none was 

created by the subordination agreement. 

A similar issue was presented to the United States District 

Court for the District of Idaho in Old Stone Capital Corp. v. John Home 

ImplementCorp. (D. Idaho 1986), 647 F. Supp. 916. 

In that case, John Hoene Implement Corporation (JHI) leased 

property from Davis. JHI then gave a lending institution a deed of 

trust on its leasehold interest to secure an operating loan. 

Davis, as an inducement for the loan, agreed to subordinate her 

interest in the property to the lending institution's security 

interest in the leasehold. JHI defaulted and the lending 

institution sought to foreclose on Davis's fee simple interest in 

the property. The Federal District Court for the District of Idaho 

first concluded that the subordination agreement could not create 

a mortgage interest in Davis's fee simple estate. Old Stone, 6 4 7 

F. Supp. at 919. However, in language relevant to the issue in 

17 
this case, it also concluded that since the lender never had an 

interest in the fee title to Davis's property, it could not acquire 

that kind of interest simply by virtue of the fact that Davis 

subordinated her fee interest, and whatever rights were attendant 

to it, to the lender's mortgage interest in the leasehold. The 

court held as follows: 

In summary, the nature of a subordination is such 

that the beneficiary of the subordination must have a 

competing interest which, after the subordination, 

becomes senior to that which, before the subordination, 

was the senior interest. In this case, Old Stone [the 

lending institution] never had an interest in the fee of 

Davis's property, but only pursuant to the leasehold 

mortgage a junior interest in the leasehold. After the 

subordination, Old Stone's interest in the leasehold 

became superior to Davis's interest in the leasehold. By 

its very nature, the vehicle of subordination could not 

be used to grant Old Stone an interest in the fee. In 

order to have an interest in Davis's fee estate, a 

mortgage or deed of trust must have been executed. No 

such instrument was executed. Further, the subordination 

agreement cannot be elevated to the position of a 

mortgage or deed of trust since it lacks the formalities 

of such required under Idaho law. The subordination 

agreement could not, as a matter of law, grant any 

interest in the fee, upon which foreclosure could be had, 

to Old Stone. Foreclosure is only possible on the deed 

of trust affecting the leasehold. 

Old smne , 647 F. Supp. at 919. 

Likewise in this case, Travelers had no interest in Hill 

County's fee title based on its mortgage agreement with Hill 

County's lessee. Therefore, when Hill County agreed to defer to 

Travelers' mortgage interest, it agreed to do nothing more than 

waive its rights as lessor during the period of the lease agreement 

so that Travelers could freely enforce its security interest in the 

leasehold without competition from Hill County based on its 

18 
superior interest. These facts are clear from the plain terms of 

the subordination agreement and require reversal of the District 

Court and entry of summary judgment for Hill County. 

However, even if, as the majority concludes, "[tlhe language 

of the agreements is ambiguous," the result must be the same. 

Travelers prepared the documents, and if it intended to create a 

mortgage interest in Hill County's property, it was capable of 

doing so by clear language. The fact that it was aware of how to 

create a mortgage interest is evident from the mortgage document 

that it drafted and had executed by M & M to create a mortgage 

interest in M & M's leasehold estate. 

Section 28-3-206, MCA, provides: 

In cases of uncertainty not removed by parts 1 through 5 

of this chapter, the language of a contract should be 

interpreted most strongly against the party who caused 

the uncertainty to exist. The promiser is presumed to be 

such party, except that in the case of a contract between 

a public officer or body, as such, and a private party, 

it is presumed that all uncertainty was caused by the 

private party. 

We have also repeatedly held that ambiguous contracts should 

be resolved against that party that drafted the contract. See, e.g., 

Topco,Inc. v. State (1996), 275 Mont. 352, 360, 912 P.2d 805, 810; Mueske 

v. Piper, JasJiayBr Hopwood, Inc. (1993), 260 Mont. 207, 216, 859 P.2d 444, 

449-50; St. PaulFire&MarineIns. Co. v. Cumiskey (1983), 204 Mont. 350, 363, 

665 P.2d 223, 229. 

The majority opinion does not address the standard rule 

regarding ambiguous contracts. However, when that rule is applied, 

it clearly requires construing the subordination agreement in favor 

19 
of Hill County and against Travelers' implausible suggestion that 

the subordination agreement was not merely a subordination 

agreement, but was in fact a mortgage agreement, even though it 

makes no mention of a mortgage nor includes any language of 

conveyance. 

For these reasons, I dissent from the majority opinion. I 

would reverse the judgment of the District Court and enter summary 

judgment in favor of Hill County on the issue of whether Travelers 

has a mortgage interest in Hill County's property. 

/ Jus ide 

Justice James C. Nelson joi ing opinion. 

20 
IN THE SUPREME COURT OF THE STATE OF MONTANA 

No. 95-152 

TRAVELERS INSURANCE COMPANY, a 

Connecticut corporation, 

Plaintiff and Respondent, ; 

v. ) ORDER 

HOLIDAY VILLAGE SHOPPING CENTER i 

LIMITED PARTNERSHIP, a Montana ) 

limited partnership; SIX SIXTY 

SEVEN, ZINC.; HILL COUNTY, MONTANA; ; 

ROBERT L. BROWN; ROBERT W. RECTOR; 1 JAWS 0 1997 

RICHARD F. BOHN; JACK OLIVER; CLARKE 

STREEPER and OBS PARTNERSHIP, ; tc! ZLzifL 

) CLERKO~--‘SWREMECOWK 

STATE OF MONTANA 

Defendants and Appellants. 

On January 3, 1997, appellants Hill County, Brown, Rector, 

Oliver, Bohn, Streeper and OBS filed with this Court a petition for 

rehearing in the above-entitled matter; respondent, Travelers 

Insurance Company filed its objections on January 13, 1997. 

Having considered the petition and objections, 

IT IS ORDERED: 

1. The following stricken language is hereby deleted from 

this Court's December 16, 1996, Opinion (slip op. at page 3, second 

line from the top): 

Travelers. These agreements were executed e 

b&&f so that Travelers would advance the funds . . . 

In all other respects, the Opinion shall remain the same 

2. The petition for rehearing is DENIED. 

3. The Clerk is directed to mail a true copy hereof to 

1 
counsel of record for the respective parties, to State Reporter 

Publishing Publishing Company. 

DATED this b ‘&ay of January, 1997. 

Justices 

The Honorable Douglas G. Harkin, District Court Judge, sitting for 

Justice William E. Hunt, Sr:, would also deny the Petition for 

Rehearing. 

2