No. 89-629 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

CITIZENS STATE BANK, a Montana 

banking corporation, 

Plaintiff and Respondent, 

JOHN R. RYAN and ROBERTA 

C. RYAN, husband and wife, 

Defendants and Appellants, 

and 

BUTLER R. EITEL, AMERICAN LAND 

AND TITLE COMPANY, MONTANA BOARD 

OF HOUSING, DONALD F. TUNNELL and 

EVELYN I. TUNNELL, FARMERS STATE 

BANK and LARRY PERRSON, Trustee, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Fourth Judicial District, 

In and for the County of Ravalli, 

The Honorable John S. Henson, Judge presiding. 

COUNSEL OF RECORD: 

b-- .. For Appellant: 

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csl , .) Terry A. Wallace, Attorney at Law, Missoula, Montana 

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, -I For Respondent Farmers State Bank: 

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Filed: 

George H. Corn, Bell, Corn & Bell, Hamilton, Montana 

Submitted on Briefs: April 19, 1990 

Decided: June 7, 1990 

f Clerk 
Justice Diane G. Barz delivered the Opinion of the Court. 

Defendants John R. and Roberta C. Ryan appeal from the 

decision of the District Court of the Fourth Judicial District, 

Ravalli County, granting Farmers State Bank's motion for possession 

of the real property in question pursuant to 5 27-1-431, MCA. We 

affirm. 

In March, 1981, Farmers State Bank loaned John R. and Roberta 

C. Ryan fifty-three thousand dollars ($53,000) for the real 

property located on the West 210 feet of Lot four, Black Lane 

Estates, Ravalli County, Montana, also known as 167 Black Lane, 

Corvallis, Montana. This loan was secured by a trust indenture 

dated March 26, 1981 and was duly recorded in Book 113, page 210 

at the Clerk and Recorder Office in Ravalli County. This trust 

indenture and the underlying promissory note was then purchased by 

and assigned to the Montana Board of Housing. On September 28, 

1988, the successor trustee, John H. Grant, was appointed. 

In December, 1982, Citizens State Bank loaned the Ryans twenty 

thousand dollars ($20,000). The promissory note was secured by a 

trust indenture executed on December 1, 1982 between the Ryans and 

Citizens State Bank for the real property described as Lot four, 

Black Lane Estates, Ravalli County, Montana. This trust indenture 

was also duly recorded at the Clerk and Recorder Office in Ravalli 

County in Book 115, page 612. 

The Ryans subsequently defaulted on both of the trust 

indentures held by the Montana Board of Housing and by the Citizens 
State Bank. On August 27, 1987, Citizens State Bank filed a 

complaint in the District Court of the Fourth Judicial District, 

Ravalli County, seeking to recover on the promissory notes and to 

foreclose the trust indenture and mortgage on Lot four, Black Lane 

Estates, Ravalli County. citizens State Bank also sought to assert 

the superiority of its claim as to the other defendants, including 

Farmers State Bank. 

On September 23, 1987, Citizens State Bank stipulated that the 

interests of the successor of Farmers State Bank as beneficiary and 

the American Land Title Company (a/k/a First American Title Company 

of Montana) as trustee was prior in interest to the interest of 

Citizens State Bank as it applied to the West 210 feet of Lot four, 

Black Lane Estates, Ravalli County. Citizens State Bank therefore 

stipulated that any foreclosure decree entered in regards to the 

real property in question should reflect that the sale is subject 

to the interest of the American Land Title Company as trustee and 

the successor of Farmers State Bank as beneficiary. In light of 

the Farmers State Bank assigning its interest in the trust 

indenture to the Montana 'Board of Housing, Citizens State Bank 

further stipulated on March 8, 1988 that any foreclosure decree in 

the real property in question should reflect that the sale is 

subject to the successor of the Montana Board of Housing as 

beneficiary. 

The Ryans filed an answer on April 8, 1988, claiming that 

Roberta Ryan had no interest in the property involved in the suit. 
On September 29, 1988, the Montana Board of Housing executed a 

notice of trustee sale of the Ryan's real property located on the 

West 210 feet of Lot four, Black Lane Estates, Ravalli County, 

Montana. The notice stated that the default for which the 

foreclosure was made was for the nonpayment of the amounts due 

pursuant to the trust indenture dated March 26, 1981. John H. 

Grant, the successor trustee, filed affidavits of mailing, posting, 

and publication as required by 71-1-315, MCA. The real property 

was offered for sale on February 21, 1989 at 10:OO a.m. inside the 

front door of the Ravalli County Courthouse, Hamilton, Montana. 

The Montana Board of Housing was the highest and best bidder and 

became the purchaser of the said property at the sale. A trustee's 

deed conveying the real property to the Montana Board of Housing 

was executed on March 3, 1989 and filed with the Clerk and Recorder 

Office, Ravalli County on March 8, 1989. On May 12, 1989, the 

Montana Board of Housing conveyed to Farmers State Bank the real 

property located at the West 210 feet of Lot four, Black Lane 

Estates, Ravalli County. 

In the spring of 1989, the District Court set a pretrial 

conference for the case. On June 6, 1989, Farmers State Bank filed 

a notice and motion for judgment for possession for the real 

property located at the West 210 feet of Lot four, Black Lane 

Estates, Ravalli County. Farmers State Bank also filed a 

supporting brief. The matter was set for hearing on June 14, 1989. 

The Ryans were personally served the notice, motion and brief on 
June 8, 1989. On June 9, 1989, the Ryans personally filed a motion 

to dismiss the complaint and an answer to Farmers State Bank's 

motion for judgment for possession of real property. The Ryans 

also argued that Farmers State Bank failed to give them proper 

notice of their motion for judgment for possession of real 

property. At the close of the June 14, 1989 hearing, the court set 

a briefing schedule and both the Ryans and Farmers State Bank filed 

briefs and responses. 

On August 16, 1989, the court issued its Opinion, Order and 

Judgment stating that pursuant to 5 27-1-431, MCA, and the statutes 

regarding Small Tract Financing, 55 71-1-301 through -321, MCA, 

that the Ryans were in wrongful possession of the West 210 feet of 

Lot four, Black Lane Estates, Ravalli County and therefore granted 

Farmers State Bank's motion for judgment for possession of real 

property. 

The sole issue raised on appeal is whether the District Court 

erred in granting Farmers State Bank's motion for possession of 

real property pursuant to 5 27-1-431, MCA. 

In 1963, the Montana legislature enacted the Small Tract 

Financing Act of Montana. The law in effect at the time the Ryans 

and Farmers State Bank executed the March 26, 1981 trust indenture 

stated that f'[t]ransfers in trust of any interest in real property 

of an area not exceeding 15 acres may be made to secure the 

performance of an obligation of a grantor . . . to a beneficiary 

. . . I' Section 71-1-304 (1) , MCA (1979) . The Act also provided 
that after a grantor breaches his obligation that a power of sale 

is then conferred upon the trustee. Section 71-1-304(2), MCA 

(1979). 

As the District Court duly noted, John R. Ryan and Roberta C. 

Ryan granted a trust indenture to Farmers State Bank as beneficiary 

and American Land Title Company as trustee. This trust indenture 

was then properly recorded in the Clerk and Recorder Office, 

Ravalli County, on March 27, 1981. Farmers State Bank then 

transferred its interest to the Montana Board of Housing as 

successor beneficiary and John H. Grant became successor trustee. 

After the Ryans breached their obligation to pay monies due as 

evidenced by the underlying promissory note, John H. Grant sold the 

real property as allowed under 55 71-1-304 (3) and 71-1-313, MCA. 

Grant properly followed the procedures as set out in 5 71-1-315, 

MCA, regarding notice, posting and publication. 

The Ryans had a right to pay the successor beneficiary the 

sums then due under the trust indenture, together with other 

statutorily required payments in order to cure the existing 

default. Section 71-1-312, MCA. The Ryans, however, did not make 

the required payments and were therefore required to surrender 

possession to the purchaser on the tenth day following the sale, 

and without right of redemption after the sale. Section 71-1-319, 

MCA; First State Bank of Forsyth v. Chunkapura (1987), 226 Mont. 

54, 734 P.2d 1203. 

The District Court granted Farmers State Bank's motion for 
possession of real property pursuant to 5 27-1-431, MCA. Section 

27-1-431, MCA, states that 

A person entitled to specific real property, 

by reason either of a perfected title or of a 

claim to title which ought to be perfected, 

may recover the same in the manner prescribed 

by this code, either by a judgment for its 

possession to be executed by the sheriff or by 

a judgment requiring the other party to perfect the title and to deliver possession of 

the property. 

In light of the above, the District Court properly granted Farmers 

State Bank's motion. 

The Ryans' arguments on appeal are without merit. The Ryans 

first argue that Farmers State Bank did not have a claim against 

them and therefore that there was no judgment for either the 

plaintiff or the defendant in this case. Quite contrary to what 

the Ryans argue, the District Court's August 16, 1989 iudclment 

clearly stated that Farmers State Bank was entitled to possession 

of the West 210 feet of Lot four, Black Lane Estates, Ravalli 

County and that the Ryans were in wrongful possession of that 

property. Also, contrary to what the Ryans argue, Farmers State 

Bank was not required to make a claim against the Ryans via a 

complaint, counterclaim, third-party complaint or cross-claim. 

Under the present set of facts, Farmers State Bank's motion for 

judgment for possession of the real property in question was 

properly presented and the District Court properly issued its 

judgment. 

The Ryans also argue that they did not have proper notice of 
the June 14, 1989 hearing. The record demonstrates that the Ryans 

were served with notice of hearing on June 8, 1989, and filed 

documents with the court demonstrating the same on June 9, 1989. 

The court then allowed briefing of the matter before it issued its 

August 16, 1989 judgment. The Ryans' argument that they did not 

have proper notice of the June 14, 1989 hearing is without merit. 

Affirmed. 

We concur: ,+' 

Justice