No. 86-170 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

LARRY LEE DILLREE and BARBARA 

ANN DILLREE, 

Plaintiffs and Appellants, 

CLAYTON E. DEVOE, 

Defendant and Respondent. 

APPEAL FROM: District Court of the Fourth Judicial District, 

In and for the County of Missoula, 

The Honorable Douglas Harkin, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Byron W. Boggs, Missoula, Montana 

For Respondent : 

David Rodli, Missoula, Montana 

Submitted on Briefs: May 30, 1986 

Decided: August 21, 1986 

Filed : 
Mr. Justice Fred J. Weber delivered the Opinion of the Court. 

The Dillrees appeal the decision of the District Court 

for Missoula County declaring certain transactions between 

the parties to be sales rather than loans and awarding Mr. 

Devoe property and attorney fees. We affirm. 

The issues are: 

1. Did the trial court err in concluding that the 

transactions were sales rather than secured loans, and in 

doing so did it fail to apply the principles of Murray v. 

Butte-Monitor Tunnel Mining Co. (1910), 41 Mont. 449, 110 P. 

497? 

2. Did the trial court err in holding that the transactions at issue were not usurious secured loans of money? 

3. Did the trial court err in holding that the Montana 

Consumer Loan Act does not apply to the transactions? 

4. Did the trial court err in awarding attorney fees to 

Mr. Devoe? 

In this case, the parties presented directly contradictory evidence in a trial to the District Court, sitting 

without a jury. The court entered extensive findings and 

conclusions. It found that the Dillrees had been self-employed in the logging business since 1969. They had owned a 

number of skidders, tractors, trucks, loaders and vehicles 

and had obtained financing from six banks and three credit 

and acceptance corporations. In many of these, equipment or 

vehicles had served as collateral. As a businessman for 16 

years Larry Dillree knew that titled property is not held in 

the name of a lender during the repayment period, that bills 

of sale on untitled equipment are not provided to a lender, 

and that a borrower need not obtain reconveyance. He was 
aware that the function of a bill of sale is to convey ownership and that one executes a Montana certificate of title 

only when selling or transferring ownership of motor vehicles. Barbara Dillree demonstrated knowledge of the same 

facts. 

In the fall of 1984 the Dillrees were in financial 

distress and attempted to secure loans from several banks, 

but were turned down. Larry Dillree approached Mr. Devoe, to 

whom the Dillrees had several years before sold a contract 

for deed on some real estate. Mr. Devoe purchases contracts 

in seven western states, but was not in the business of 

loaning money. 

The court found that Larry Dillree initially requested a 

loan. Mr. Devoe refused the loan, stating he was not in the 

business of loaning money. After being told that Mr. Devoe 

was in the business of buying property, Mr. Dillree suggested 

he would sell certain property if he could be assured of the 

opportunity of buying it back. It was agreed that two items 

of property, a 1979 double-wide mobile home and a 30-foot 

boat, would be purchased for $5,000. It was also agreed that 

the Dillrees would retain possession of the property. 

After Larry Dillree had taken the titles and a written 

"Lease-Rental Agreement" home overnight, he and Barbara 

Dillree executed the lease-rental agreement. Prior to 

receiving the $5,000, Mr. Dillree provided Mr. Devoe the 

necessary lien releases and accompanied Mr. Devoe to the 

county courthouse to transfer the titles to the mobile home 

and boat. The parties intended that in six months the 

Dillrees could pay Mr. Devoe $6,000 and receive back title to 

the mobile home and the boat. 
In December 1984 Larry Dillree requested another $2,000 

from Mr. Devoe. A second agreement was reached in which Mr. 

Devoe took title to a 1968 White truck tractor with log 

loader and a 1978 Trapper travel trailer. The agreement 

called for a payment of $2,200 in one month's time. It was 

also memorialized in a written "Lease-Rental Agreement." 

Neither of the obligations were paid in a timely fashion. The Dillrees were unable to make any payments except 

for $1,500. In May 1985, Mr. Devoe demanded they surrender 

all four pieces of property. None of the property, with the 

exception of the mobile home, had been kept in Ovando as 

required in the written agreements. At the time of trial, 

Mr. Devoe did not know the whereabouts of the travel trailer 

or the truck tractor. The Dillrees filed a complaint and 

petition for temporary restraining order alleging fraud, 

usury, breach of good faith and fair dealing, and outrageous 

conduct. A hearing was held, and the District Court concluded that the parties entered into valid contracts by which 

property was sold to Clayton DeVoe subject to an intended 

repurchase provision not actually reduced to writing. The 

court concluded that the subject transactions were not fraudulently arranged, were not loans of money by Clayton Devoe, 

and were not usurious transactions. 

The District Court entered judgment in favor of Mr. 

Devoe and awarded him the immediate right to possession of 

the mobile home, the boat, the travel trailer and the White 

truck tractor. 

I 

Did the trial court err in concluding that the transactions were sales rather than secured loans, and in doing so 

did it fail to properly apply the principles of Murray v. 
Butte-Monitor Tunnel Mining Co. (1910), 41 Mont. 449, 110 P. 

497? 

The Dillrees argue that these transactions were not 

sales. They point out that this Court has listed four factors which, if present, tend to confirm the view that a 

transaction is a security arrangement or a mortgage and not a 

sale. The four factors are: 1) the transaction in its 

inception had for its purpose a loan, not a sale; 2) the 

grantor was in financial distress at the time of the transaction; 3) the price appears to have been grossly inadequate; 

and 4) according to the grantee's own theory, the transaction 

did not amount to an absolute sale, but to a conditional 

sale, that is, a sale with an option to repurchase. Bermes 

v. Sylling (1978) , 179 Mont. 448, 458, 587 P. 2d 377, 383, 

citing Murray v. Butte-Monitor Tunnel Mining Co. (1910), 41 

Mont. 449, 110 P. 497. The Dillrees' position is that these 

four factors are present in this case, and that the District 

Court's judgment should be reversed. 

We initially point out that in both the Murray and the 

Bermes cases, this Court upheld the trial court's findings of 

fact that the questioned transactions were loans and that the 

four factors were present. Here, the fact-finder did not 

conclude that the transactions were loans. The parties agree 

that factors (2) and (4) were present. It is undisputed that 

the Dillrees were in financial distress, and Mr. Devoe characterized the transactions as sales with options to repurchase. However, it is not agreed that factors (1) and (3) 

were present, and the District Court did not find that all 

four factors were present. Our standard of review of findings of fact is whether the District Court's findings are 
clearly erroneous. Lacey v. Herndon (Mont. 1983), 668 P.2d 

The District Court's finding which goes to factor (1) , 

the purpose of the transaction, was: 

Just prior to October 15, 1984, Larry Dillree 

contacted Clayton Devoels business, initially 

speaking on the telephone to Mr. Devoe's son, 

Charles, to request a loan for the purpose of 

preparing his business equipment for sale in the 

Spring. Mr. Devoe refused to loan Mr. Dillree the 

money, stating that Mr. Devoe was not in the business of loaning money. The refusal was in keeping 

with Mr Devoe's normal business practice, though he 

regularly is asked for loans of money. After being 

told by Mr. Devoe that he was in the business of 

buying property, Mr. Dillree suggested that he 

would sell certain property to Mr. Devoe if he 

could be assured of the opportunity of buying it 

back at the expiration of six months. Mr. Devoe 

agreed . . . 

Mr. Devoels testimony supported the above finding of fact. 

He testified that he conveyed to Mr. Dillree that he "did not 

loan money ever," and that it was Mr. Dillree who brought up 

the idea of a sale of some of the Dillrees' property with a 

right of repurchase. We conclude there is substantial evidence that the transactions did not in their inception have 

for their purposes loans. 

The values of the mobile home, boat, truck tractor, and 

travel trailer were disputed, and the Dillrees claim factor 

(3) was present because their values far exceeded the amount 

of money received from Mr. Devoe. The adequacy of consideration is tested by the conditions existing at the time of the 

transaction. Boysun v. Boysun (1962), 140 Mont. 85, 89, 368 

P.2d 439, 441. A Missoula mobile home dealer testified that 

the value of the mobile home, which would have to be moved 

from Ovando on a repossessed, cash basis sale, would not 

significantly exceed $5,000. The boat had its flooring out 

and, according to Mr. Devoe, had little if any value. We 
conclude that there was substantial evidence to support the 

District Court's finding that $5,000 would not significantly 

exceed the actual value of the mobile home and that "the boat 

in its present condition would be difficult to sell at any 

price. " 

Mr. Devoe testified at the time of trial that he had not 

located either the truck tractor or the travel trailer. He 

testified that based on his knowledge of automobiles in 

general, he was suspicious of placing any value on the unseen 

truck tractor. He estimated the value of the travel trailer 

at $2,000. It is true that the Dillrees presented testimony 

of higher values for both the truck tractor and the travel 

trailer. However, we conclude that there was substantial 

evidence to support the finding that Clayton Devoe reasonably 

assumed "that any sale price that might be had if he took 

possession of [the truck tractor and travel trailer] would 

not significantly exceed $2,200." 

We conclude that the District Court did not err in 

failing to find that the four factors listed in Murray were 

present. 

I1 

Did the trial court err in holding that the transactions 

at issue were not usurious secured loans of money? 

The trial court concluded that " [tlhe subject transactions were not loans of money by Clayton Devoe and were not 

usurious transactions." The Dillrees cite the principle from 

Bermes, 587 P.2d at 383, that a transaction which resolves 

itself into a secured transaction will be treated as a mortgage, whatever name is given it by the parties. The instant 

case differs from Bermes in that it involves personal, not 

real, property. In Bermes, the Court went on to discuss 
tests which indicate whether a deed should be treated as a 

secured transaction. The first test cited in Bermes is the 

four-factor test discussed under issue one. We have held 

that the District Court properly concluded that test was not 

met. We conclude that the District Court did not clearly 

err, because under the four-factor test, these transactions 

do not resolve themselves into secured transactions. 

The Dillrees next argue that these transactions meet the 

definition of loans under § 31-1-101, MCA: 

Loan of money--what constitutes. A loan of money 

is a contract by which one delivers a sum of money 

to another and the latter agrees to return at a 

future time a sum equivalent to that which he 

borrowed. A loan for mere use is governed by the 

law on loan for use. 

The contracts as described in Mr. Devoe's testimony, which 

was relied upon by the District Court, were sales of property 

with the opportunity for the Dillrees to repurchase it. They 

do not fit the above definition. 

The Dillrees also contend that these transactions 

amounted to secured transactions under 5 30-1-201(37), MCA: 

" [aln agreement that upon compliance with the terms of the 

lease the lessee shall become or has the option to become the 

owner of the property for no additional consideration or for 

a nominal consideration does make the lease one intended for 

security." That statement describes the title of the written 

agreement combined with the oral understanding that the 

Dillrees would regain title to the property upon payment of 

the "lease" amounts. But the parties agree that the written 

agreement does not accurately reflect their contract. The 

identification of the agreement as a "lease agreement" is 

clearly inaccurate. It is more accurately described as a 

sale with right of repurchase. 
Since we have concluded the District Court properly 

found that the transactions were not loans, we need not 

consider the contention that the transactions were usurious 

loans. 

I11 

Did the trial court err in holding that the Montana 

Consumer Loan Act does not apply to the transactions? 

We have upheld the trial court's conclusion that no 

loans were made. The Montana Consumer Loan Act, Title 32, 

Chapter 5, MCA, applies to persons engaged in the business of 

making loans of money. We need not address this issue further. We affirm the trial court. 

IV 

Did the trial court err in awarding attorney fees to Mr. 

Devoe? 

The Dillrees' complaint alleged violations of the Montana Unfair Trade Practices and Consumer Protection Act, 

S 30-14-101, et seq., MCA. Section 30-14-133(3), MCA states 

that, "In any action brought under this section, the court 

may award the prevailing party reasonable attorney fees 

incurred in prosecuting or defending the action." The District Court concluded that I' [tlhe provisions of the Montana 

Unfair Trade Practices and Consumer Protection Act do not 

apply to the subject matter of this action" and that 

"[plursuant to the provisions of the Montana Unfair Trade 

Practices and Consumer Protection Act, Defendant is entitled 

to his reasonable attorney's fees for defending the 

action . . ." The Dillrees argue that attorney fees should 

not be awarded to Mr. Devoe because he did not prevail on the 

main issue in controversy and because the court concluded the 

Act did not apply. Mr. Devoe prevailed on the counts of 
fraud, usury, breach of good faith and fair dealing, and 

outrageous conduct. His title in the property was affirmed. 

We conclude that Mr. Devoe is the prevailing party in this 

action which was brought under the Unfair Trade Practices and 

Consumer Protection Act, and that the District Court properly 

awarded him reasonable attorney fees. 

A£ f irmed . 

We Concur: