No. 14752 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1979 

JOHN KINJERSRI , 

Plaintiff and Appellant, 

VS. 

FRITZ LAMEY, individually and as 

President of K & L LIVESTOCK,INC., 

a corporation, and PHILLIPS CREEK RANCH, 

a corporation, 

Defendants and Respondents, 

ANNA KINJERSKI I 

Third Party Defendant and Appellant. 

Appeal from: District Court of the Nineteenth Judicial District, 

Honorable Robert M. Holter, Judge presiding. 

Counsel of Record: 

For Appellants: 

Morrison Law Offices, Missoula, Montana 

Frank Morrison, Sr., argued and Douglas Bauxbaum argued, 

Missoula, Montana 

For Respondents: 

Fennessy, Crocker, Harman & Bostock, Libby, Montana 

Thomas Bostock argued, Libby, Montana 

Submitted: November 1, 1979 

Decided: DEC 2 7 jm 

Filed: ECz7 
Mr. Chief Justice Frank I. Haswell delivered the Opinion of the 

Court. 

Plaintiff John Kinjerski brought this action to recover 

49 head of cows, $22,000 earnest money, and seeking an accounting of assets held by K & L Livestock, Inc. Defendants, Fritz 

Lamey and Phillips Creek Ranch, Inc. answered denying Kinjerski 

was entitled to relief and alleging several affirmative defenses. 

Defendants also counterclaimed, naming plaintiff's wife Anna as 

a third-party defendant and alleging that plaintiff and his wife 

were attempting to defraud defendants of the 49 head of cows. The 

jury returned a verdict in favor of the defendants on the issue 

of ownership of the 49 cows and the accounting, and in favor of 

plaintiff on the issue of the $22,000 earnest money. Plaintiff's 

motion for a new trial was denied and from that denial they appeal 

on the issue of the ownership of the 49 cows. Defendants' crossappeal on the issue of the $22,000 earnest money, Neither party 

appeals from denial of the accounting. 

In 1976 defendants Lamey and Phillips Creek Ranch were 

urged by the Bank of Columbia Falls to take remedial steps to reduce outstanding indebtedness to the Bank. Consequently, in order 

to raise money, Lamey decided to form a joint venture with Kinjerski. The joint venture was to be known as K & L Livestock, Inc. 

The principal assets of K & L were to be a certain number of registered purebred Hereford cattle and a parcel of land, both to be 

purchased from the Ranch. 

The agreement contemplated that Kinjerski and Lamey would 

purchase a parcel of land from the Phillips Creek ranch by putting 

up $120,000 and assuming the outstanding mortgage on the land. 

Each party was to pay $60,000 of the $120,000 down payment. Kinjerski contributed an initial $22,000 as earnest money while Lamey 

made no cash contribution to this end. Later when the contemplated 

purchase of the land did not transpire, Lamey drew an instrument 
acknowledging a debt of $22,000 to Kinjerski to be paid when 

the property was sold. 

Concerning the cattle that were to be purchased by K 

& L, Kinjerski was to purchase some cattle from Lamey and the 

Phillips Creek Ranch. Lamey drew a bill of sale stating that 

Lamey and the Phillips Creek Ranch sold to Kinjerski 131 head 

of cattle (80 cows, 31 bulls and 20 calves) for a total price 

of $59,000 of which $24,000 was paid leaving a balance of $35,000. 

Kinjerski claimed that he never received 49 of the 80 

cows provided in the bill of sale. In April 1978, Kinjerski demanded these 49 cows from Lamey. Upon Lamey's refusal, Kinjerski 

filed the present action. 

Prior to trial, Kinjerski's attorneys made a motion in 

limine to disallow any parol evidence to impeach, vary or contradict the terms of the bill of sale. This motion was denied without prejudice to later objections during the trial. Despite an 

objection during trial Lamey was allowed to testify that he had 

not received the $24,000. He was also allowed to testify that 

the parties intended that only 31 cows be transferred, that the 

other 49 cows were dead at the time that the bill of sale was 

written, and that the purpose of the arrangement was to boost 

Kinjerski's borrowing power. Kinjerski, in turn, testified that 

he paid the $24,000 and that the bill of sale constituted the 

entire transaction between the parties. 

The jury found that Lamey did not owe Kinjerski the 49 

cows. They also found that Lamey owed Kinjerski $22,000 arising 

out of the purported agreement on the sale of the land. 

We will summarize the controlling issues on appeal in this 

manner : 

(1) The admissibility of evidence under the parol evidence rule. 

(2) Sufficiency of the evidence to support the judgment 
of $22,000 in favor of Kinjerski's. 

(3) Sufficiency of the evidence to support judgment in 

favor of Phillips Creek Ranch on ownership of the cattle. 

The parol evidence rule in Montana has been stated as 

follows : 

"'"The principle is well-established and of general application, subject to certain exceptions, 

that when a contract has been reduced to writing 

the contents of such writing cannot be added to, 

contradicted, altered, or varied by parol or 

extrinsic evidence, and that such writing supersedes all oral negotiations concerning its matter 

which preceded, accompanied or led up to its execution. This was the rule at common law, and has 

been embodied in the statute law of this state 11 I 11 ... W. River Equip. v. Holzworth (1959), 134 

Mont. 582, 588, 335 P.2d 298. 

Different aspects of this rule have been codified in Montana at 

sections 28-2-904, 28-2-905 and 28-2-1602, MCA. 

The parties in this case do not dispute the fact that the 

rule applies to the bill of sale. Respondents do contend, however, 

that the testimony which varied the terms of the bill of sale, was 

admissible under one or more of three exceptions to the parol 

evidence rule. Those exceptions are ambiguity, fraud, and failure 

of consideration. 

Under section 28-2-905(2) evidence may be introduced to 

explain an extrinsic ambiguity in a written agreement. In the 

instant case we find no ambiguity which would call for the application of this exception. 

Section 28-2-905(2) also allows the introduction of parol 

evidence to establish fraud. The case law in Montana is to the 

same effect. GoggaIi v. Winkley (1970), 154 Mont. 451, 459, 465 

P.2d 326. Lamey was allowed to testify that the purpose of putting the figure of 80 cows instead of 31 cows on the bill of sale, 

was to boost Kinjerski's borrowing power. Lamey contends that 

this purpose constitutes fraud and that he was correctly permitted 

to give testimony that 49 of the cows were dead. 
The case of Higby v. Hooper (1950), 124 Mont. 331, 221 

P.2d 1043 is closely analogous to the instant case and is 

controlling here. In the Higby case there was a written contract 

to the effect that the defendant would build a house for the 

plaintiffs for a certain sum. The defendant was allowed to testify at trial that the contract price was merely an estimate 

to aid the plaintiffs in securing a loan and that there was an 

oral argreement that he was to receive costs plus 10%. The judgment was for defendant at trial court. This Court reversed, 

saying : 

"Under certain circumstances, none of which is here 

present, a person may show that the document in 

question was intended to serve the purpose of a 

mere jest, joke or sham. 'But a just policy would 

seem to concede this only when the pretense is a 

morally justifiable one (as, to calm a lunatic or 

to console a dying person). When it is morally 

beyond sanction, or aims at an evasion of the law 

or a deception of other persons, by intention of 

the parties, that intention will not be given effect.' 

9 Wigmore on Evidence, 3d Ed., sec. 2406, subd. (I), 

pp. 16, 17. 

"The law does not allow parties to a contract to 

show that it was got up as a sham to deceive and defraud. Graham v. Savage, 110 Minn. 510, 126 N.W. 

394, 396, 136 Am.St.Rep. 527, 19 Ann.Cas. 1022. So 

here the defendant will not be permitted to defeat 

his own solemn written contract by saying that it 

was given solely for a fraudulent and deceitful use." 

124 Mont. at 350. 

Lamey was allowed to testify as follows: 

"Q. Your testimony is that you were both aware of 

those 49 cows not alive? A. Yes. 

"Q. What was the reason for that? 

"A. Well, it was just mainly to boost John's borrowing power. 

"Q. Was that specifically discussed at that time? 

A. Well, that is the only reason he could have 

wanted them for." 

In other words, Lamey was allowed to testify that his 

own bill of sale was a sham. Under Higby this testimony is not 
admissible under the fraud exception. It was error for this 

testimony to be admitted. 

There is another reason why the defendant may not rely 

upon the fraud exception to the parol evidence rule. Under 

Rule 9(b), M.R.Civ.P. the circumstances constituting fraud must 

be stated with particularity. The elements of fraud under Montana law are: 

" . . . (1) a representation; (2) its falsity; 

(3) its materiality; (4) the speaker's knowledge 

of its falsity or ignorance of its truth; (5) the 

intent that it should be acted upon in the manner 

contemplated; (6) the hearer's ignorance of its 

falsity; (7) the hearer's reliance upon its truth; 

(8) the right of the hearer to rely thereon; and 

(9) the hearer's consequent and proximate injury 

or damage." Hutton v. Ming (1970), 155 Mont. 149, 

153, 469 P.2d 688. 

In the present case, the defendant's answer in one instance 

makes a bald assertion of fraud. In another instance it merely 

states the fact that the recitation of the 49 additional cattle 

on the bill of sale was at Kinjerski's request and that the institution of this action constitutes fraud. Nowhere in the answer 

or counterclaim does it appear that Lamey was ignorant of the fact 

that 49 of the cows were dead or that he relied upon the truth 

of any of Kinjerski's representations. 

The defense of fraud was not properly pleaded and it may 

not be used as a defense or an exception to the parol evidence 

rule under the facts of this case. 

Respondents next allege that Lamey's testimony that he 

did not receive the $24,000 was admissible under the failure of 

consideration exception to the parol evidence rule. 

"It is frequently held that a want or failure of 

consideration, either whole or in part, may be 

shown by parol, and that this is true at least 

as between the original parties to the instrument 

in question." 32A C.J.S. Evidence S948. 

This exception, however, must be limited in its application. The rule in Montana was stated in Warner v. Johns (1949), 
122 Mont. 283, 201 P.2d 986: 

"The rule with a long line of supporting authorities is stated in 32 C.J.S., Evidence, sec. 958, 

page 889, as follows: 'Where the statement in a 

written instrument as to the consideration is more 

than a mere statement of fact or acknowledgement 

of payment of a money consideration, and is of a 

contractual nature, as where the consideration consists of a specific and direct promise by one of 

the parties to do certain things, this part of the 

contract can no more be changed or modified by 

parol or extrinsic evidence than any other part, 

for a party has the right to make the consideration 

of his agreement of the essence of the contract, and 

when this is done the provision as to the consideration for the contract must stand on the same plane 

as the other provisions of the contract with reference to conclusiveness and immunity from attack by 

par01 or extrinsic evidence . . . 1 11 122 Mont. at 

288-289. 

The recitation as to the $24,000 in the bill of sale in 

the instant case is more than the acknowledgement of payment of 

money consideration. It constitutes the central element of the 

contract. That is, 131 cattle for $59,000; $24,000 having been 

paid. Lamey's testimony that he did not receive the $24,000 

varied the written terms of the contract. Lamey is not attempting to compel payment of the $24,000. He is seeking to escape the 

legal effect of the bill of sale. The testimony is inadmissible 

for this purpose. 32A C.J.S. Evidence, S956. 

Defendants contend that the verdict as to the issue of 

cattle ownership is sustained by substantial credible evidence 

even if the parol evidence is disregarded. They contend that 

even if it were error to admit such evidence, that it was harmless 

error. 

Lamey testified that 49 dead cows were added to the bill 

of sale in order to induce the bank to loan more money to Kinjerski. Lamey also testified that he did not receive the $24,000. 

Both of these items of testimony were inadmissible under the parol 

evidence rule. The jury found that Kinjerski was not entitled 

to 49 of the 80 cows listed on the bill of sale. From our review 

of the record we find that the jury could not have reached this 
conclusion without relying on the wrongfully admitted evidence. 

Because this evidence was admitted, the plaintiff's rights were 

substantially affected. When such is the case, it cannot be 

said that this is harmless error. Ehni v. N.P. and White Pine 

Co. (1969), 152 Mont. 373, 381, 450 P.2d 882. 

Finally, respondents contend that the verdict against 

them for $22,000 based on Lamey's guarantee to Kinjerski was not 

supported by substantial credible evidence. This written guarantee stipulated that Lamey did not owe the $22,000 to Kinjerski 

until the property was sold. There is no evidence that the property was sold. 

The general rule is that a bill payable on condition does 

not mature until the performance of the condition. Where the 

time fixed, however, is for the convenience of the parties and 

the future event does not happen as contemplated the law implies 

a promise to pay in a reasonable time. 10 C.J.S. Bilk and Notes, 

S245(d). In the instant case the $22,000 was to be repaid from 

the proceeds of the sale of the property. It is apparent that 

this provision was for the convenience of the parties. That is, 

the $22,000 would not be available until that time. Consequently, 

the reasonable time standard would apply. Obviously the jury must 

have found that a reasonable time had elapsed. They found for 

plaintiffs on this issue. The instrument itself provided substantial credible evidenee that the money was owed to plaintiff. 

This supports the jury's verdict. 

The verdict as to the $22,000 owed by Lamey to Kinjerski 

is affirmed. As to the issue of the ownership of the 49 cows, 

cause reversed and appellants awarded a new trial. 

Chief Justice