No. 81-297 INTHE SUPREME COURT OF THE STATE OF MONTANA 1981

PONDEROSA PINES RANCH, INC., a Mont. corp.,Plaintiff and Appellant,

STANLEY W. McBRIDE, Defendant and Respondent.

Appeal from: District Court of the Eighteenth Judicial District, In and for the County of Gallatin, The Honorable W. W. Lessley, Judge presiding.
Counsel of Record: For Appellant: Landoe, Brown, Planalp, Kommers & Lineberger, Bozeman, Montana For Respondent: Bennett & Bennett, Bozeman, Montana

Submitted on Briefs: December 3, 1981 Decided: March 25, 1982

Filed: 

## MAR

## 2

## 5

# 1982

### Mr. Justice John C. 

### Sheehy delivered the Opinion of the Court.
Ponderosa Pines Ranch, Inc. appeals from a judgment in the Eighteenth Judicial District, Gallatin County, dismissing its complaint seeking cancellation of a land sale contract with Stanley ~cBride. On July 24, 1978, the parties entered into a sales contractunder which McBri.dewas to purchase a tract of land from Ponderosa. The contract provided: "Time is of the essence of this contract. In the event the buyer shall fail to pay any installment as and when due, the Seller shall, 45 

### days or more thereafter, have the right to cancel this contractby notice thereof mailed by registered or certified mail to the Buyer 

# .

# . ." On February 6, 

### 1981,Ponderosa filed its complaint alleging thatMcBride was a year behind in his monthly payments and that he had been sent notice of the default. Ponderosa demanded that the District Court order the cancellation of the contract, remove the contract as a cloud on Ponderosa's title, requireMcBride to vacate the premises, and decree that Ponderosa had title to the property. On February 24, 1981,McBride filed a motion to dismiss
on the ground that. 

### the complaint failed to state a claim upon which relief could be granted. Themotion was not accompaniedby 

### a brief and was not ruled on by the District Court. On March 4, 1981,McBride filed a 

### notice of tender with the District Court, accompanied by a 

### certified check for $5,308.48, representing the full sum due and owing plus interest. That same day McBride filed a motion to dismiss
on the ground that all sumsdue and owing Ponderosa had been tendered by deposit with the Clerk of the District

### Court. Themotion to dismiss included notice to Ponderosa thatMcBride would present the motion to the District Court
on March 16, 1981,at 10:OO a.m. No brief was filed by McBride in support of this motion to dismiss. The hearing was held as scheduled on March 16, 1981. McBride's counselwas present, but neither Ponderosanor its counsel attended. The District Court granted McBride's motion to dismiss on March 18, 1981,and ordered: (1)

### that Ponderosa's action be dismissed with prejudice; (2) that the amount tendered by McBride be delivered to Ponderosa in satisfaction of all amounts due and owing Ponderosa in the transaction; and, (3) 

### that Ponderosa deliver to McBride a warranty deed to the property. Ponderosamoved to amend its complaint onApril 2, 1981, and a hearing on the motion was held onApril 13, 1981. The DistrictCourt did not specifically rule on this motion, but the amended complaintwas never filed. At the hearing, Ponderosa indicated that it had not been served with a copy of the District Court's order of March 18, 1981. Ponderosa subsequently submitted an affidavit to that effect, and onApril 16, 1981, filed a motion to set aside the order of the court and allow plaintiff to file an amended complaint. The motion was argued on May 11, 1981. In an order filed May 12, 1981, the District Court denied Ponderosa'smotion. The order contains the following statement: "TheCourt does not file a Memorandum here. The Defendant's brief in opposition sets out in chronological order the events concerning the matter before the court. It also cites the law, and I think properly the conclusion, therefore, I 

### do not filemy own Memorandum in this instance." Ponderosa appeals from the dismissal order of March 18, and from thatportion of the May 12 

### order refusing to set aside the dismissal.The issueon appeal iswhether the District Court erred indismissingPonderosa's complaint or in subsequently refusing toset aside itsjudgment of dismissal. We find there are insufficient facts inthe record todetermine whether ornot McBride isentitled torelief from forfeiture under section 28-1-104, MCA. Wetherefore remand the case for a hearing on the question of whether McBride's actions constituted a "grossly negligent, willful, or fraudulent breach of duty.

### " Section 28-1-104, MCA, citedby both parties, is dispositiveof this appeal. The statute 

### states: "Relief 

# - from forfeiture. Whenever by the terms of an obligation a party thereto incurs a forfeiture

### or a loss inthe nature of a forfeiture by reason of his failureto comply with its provisions, he may be relieved therefrom upon making fullcompensation tothe other party, except incase of a grossly negligent, willful, or fraudulent breach of duty." This statutehas proved a popular source of litigation inMontana. Fraser v. Edmisten (1980), -Mont. - 

## , 616 P.2d 360, 37 St-Rep. 1607, states: "[wlehave construed this statute tomean 'that a person may obtain relief under it in any casewhere he sets forth factswhich appeal tothe conscience of a court of equity' [citationomitted]." 616 P.2d at362, 37 St.Rep. at 1608. See also Parrot v. Heller (1976), 171Mont. 212, 214, 557 P.2d 819, 820. Fraser also states that section 28-1-104 "grants relief from forfeitures inmost instances, but upholds forfeiture inthe case of a 'grossly negligent, willful, or fraudulent breach of duty [by theperson seeking relief from forfeiturel.'" 616 P.2d at362, 37 St-Rep. at1608. It is the duty of the defaulting purchaser to show thathe is equitably entitled torelief from forfeiture and that hisbreach of duty was not grossly negligent, willful, or fraudulent. State ex rel. Howeth v.D. A. Davidson & Co. (1973), 163Mont. 355, 369, 517 P.2d 722, 730; Ellinghouse v. Hansen Packing Co. (1923), 66 Mont. 444, 449, 213 P. 1087, 1089; 19 Mont. L. Rev. 50 (1957). The record isdevoid of any pleading or evidence that would entitleMcBride torelief from forfeitureunder the statute. Heprevailed below on the basis of an uncontested motion todismiss. It is when the defaultingpurchaser can make a showing that he isequitably entitled to such relief and that his breach of duty was not grossly negligent, willful,
or fraudulent that the courtswillinproper cases, relieve the defaulting purchaser from the forfeiture. Howeth, supra, 163Mont. at 369, 517 P.2d at730. When confronted with the complaint demanding forfeiture, McBride should have filedan affirmative defense inhis
answer alleging the reasons he was entitled torelief from forfeitureunder section 28-1-104. In this case, hoisever, McBride fileda motion todismiss rather than an answer. McBride's firstmotion was not ruled on by the District Court. Hissecond motion todismiss, however, which was filed shortlyafterthe first, was set forhearing on March 16, 1981. The motion was presented as scheduled, but Ponderosa did not attend thehearing. The motion was granted. Only two other hearings 

### were held inthe case. The first, held
on April 13, 1981, concerned Ponderosa's motion for leave to amend complaint. No formal rulingwas made on this motion. On April 15, 1981, Ponderosa filed a memorandum inwhich it
xm argued that the order should be set aside on procedural grounds and that Ponderosa should be allowed to filean amended complaint. On April 16, 1981, a second motion was filedby Ponderosa. This one was titled "Motion to Set

### Aside Order of the Court and Allow the Plaintiff to File an Amended Complaint." Ponderosa did not file an additional memorandum. On April 21, 1981,McBride filed a brief in opposition to Ponderosa's latestmotion. The brief argues:

(1)that the District Court acted properly in treating McBride's motion to dismiss as a motion for summary judgment;

(2) 

### that Ponderosa failed to appear and resist the motion; and, (3)

### that Ponderosa waived any right to object to the tender by failing to affirmatively state the objection. The third and final hearing was held on May 11, 1981. It concerned Ponderosa's second motion. The motion was denied. None of the hearingswere recorded and the only evidence
we have of what transpired at them are the minutes of the hearings, the briefs filed in support of the motions, and the orders of the District Court based on the hearings. Nowhere is there any evidence that McBride has satisfied the requirements for relief from forfeiture called for by section 28-1-104, MCA, and Montana case law. That is, he has neither alleged nor proved that his action did not constitute a "grossly negligent,willful, or fraudulent breach of duty," and he has notpresented any factswhich would "appealto the conscience of a court of equity." Absent such a showing, McBride is not entitled to relief from the forfeiture clause of the contract. The case is reversed and remanded for further proceedings in accordancewith this opinion.We Concur:

1 ChisJustice

I
Justices