NO. 95-114 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1995 

MOLERWAY FREIGHT LINES, 

Plaintiff and 

v. 

INC., 

Appellant, 

RITE-LINE TRANSPORTATION 

SERVICES, INC., 

Defendant and Respondent. 

APPEAL FROM: District Court of the Fourth Judicial District, 

In and for the County of Missoula, 

The Honorable Douglas G. Harkin, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

W. Anderson Forsythe, Moulton, Bellingham, Longo 

and Mather, P.C., Billings, Montana 

For Respondent: 

James C. Bartlett, Hash, O'Brien and Bartlett, 

Kalispell, Montana 

Filed: 

Submitted on Briefs: July 6, 1995 

Decided: August 24, 1 

STATE OF MONTANA 

,995 
Chief Justice J. A. Turnage delivered the Opinion of the court. 

Molerway Freight Lines, Inc. (Molerway), appeals the decision 

of the Fourth Judicial District Court, Missoula County, enforcing 

a contract in favor of Rite-Line Transportation Services, Inc. 

(Rite-Line). We affirm. 

We find the following issues, as rephrased by this Court, 

dispositive on appeal: 

1. Did the District Court err in admitting parol evidence to 

determine the intent of the parties to the Buy-Sell Agreement? 

2. Did the District Court err in determining that the 

Montana Public Service Commission (PSC) "approved" the transfer of 

Montana Intrastate Certificate of Public Convenience and Necessity 

No. 1136 (Certificate No. 1136) pursuant to the terms of the BuySell Agreement? 

3. Did the District Court err in determining that Molerway 

had waived the condition of PSC approval of Certificate No. 1136? 

Molerway and Rite-Line are motor carriers operating intrastate 

trucking businesses in Montana. Intrastate trucking is regulated 

by the PSC. The PSC issues Montana Intrastate Certificates of 

Public Convenience and Necessity by which motor carriers are 

allowed to establish routes within Montana. Certificates can only 

be sold or transferred with PSC approval. 

Rite-Line owned Certificate No. 1136 which authorized it to 

operate certain routes within the State of Montana. Molerway, a 

direct competitor of Rite-Line, sought to obtain Certificate No. 

1136. Following negotiations, Molerway and Rite-Line agreed upon 

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a purchase price of $150,000. Molerway's attorney drafted a BuySell Agreement. On February 13, 1991, Molerway and Rite-Line 

officials signed the Buy-Sell Agreement setting forth the terms of 

the transaction. Under the agreement, Molerway was required to pay 

$30,000 down and monthly payments of $5,427.27 until the $150,00o 

was paid off. The parties also executed a lease of Certificate No. 

1136, allowing Molerway to take immediate possession of the 

certificate and ensuring that there was no interruption in carrier 

service. 

The Buy-Sell Agreement was expressly conditioned on the PSC's 

approval of the transfer. The Buy-Sell Agreement provided, in 

part: 

In the event the transfer is not approved and approval 

cannot be obtained within a reasonable length of time 

after hearing on the application, then this Agreement 

shall be considered null and void, and any funds received 

by Seller for payment of the purchase price shall be 

refunded to the Buyer. 

Following execution of the Buy-Sell Agreement, the parties applied 

to the PSC for approval of the transfer of the certificate. 

On March 15, 1991, the PSC approved the lease of the certificate. At that time, representatives of the PSC indicated that 

portions of Certificate No. 1136 which were duplicative of other 

routes already covered in Molerway's other certificates would be 

cancelled. 

Both parties feared that the PSC's cancellation of duplicate 

authorities would jeopardize the Buy-Sell Agreement. Rite-Line had 

a security interest in Certificate No. 1136. Rite-Line feared that 

if the duplicate authorities were cancelled upon approval by the 

3 
PSC, it would lose its security for the remaining payments due on 

the Buy-Sell Agreement. 

On June 4, 1991, Molerway's attorney wrote the PSC concerning 

the cancellation of duplicate authorities. The letter stated, in 

part: 

The payoff on this Agreement is only two years from the 

date the Commission approves of the transfer. Perhaps 

the Commission would postpone the deletion of the 

duplicate authorities until the outstanding balance has 

been paid off. That way, Rite-Line is protected and the 

Commission would be relieved of interfering with a 

contract. 

Molerway does not want to delay the transfer of this 

authority, nor does it expect to default on the Agreement. Perhaps we could have a meeting with Rite-Line, 

Molerway and the Commission to weigh the alternatives. 

Rite-Line made a similar request that the cancellation of duplicate 

authorities be delayed until the Buy-Sell Agreement was fulfilled. 

On July 22, 1991, the PSC issued Order No. 6051 in which it 

approved the transfer of Certificate No. 1136. Pursuant to the 

requests of Molerway and Rite-Line, the PSC delayed any action on 

cancelling duplicate authorities until Certificate No. 1136 was 

paid off. As of the time of trial, the PSC had not ruled on what 

it considered to be a "duplicate authority." Neither Molerway nor 

Rite-Line presented evidence at trial to establish precisely what 

the PSC would consider to be a "duplicate authority." Therefore it 

is unclear what routes, if any, would be cancelled pursuant to PSC 

Order No. 6051. PSC Order No. 6051 states: 

It is the Commission's policy to cancel duplicating motor 

carrier authority upon a sale or transfer. . . . 

However, the Commission has determined that the unique 

circumstances of this case justify the recognition of an 

exception. Specifically, the "Buy-Sell Agreement" 

4 
between Rite-Line and Molerway establishes a security 

interest in PSC Certificate No. 1136 and its subparts 

during the payment period of two (2) years. If Certificate No. 1136 were to be cancelled, the collateral 

identified in the Agreement would cease to exist. 

Therefore, the Commission will defer cancelling the 

duplicating authority for two (2) years solely for these 

reasons, approve the transfer with the conditions 

described below. 

Although the PSC had done what Molerway had specifically requested 

in its June 4, 1991 letter, Molerway objected to Order No. 6051. 

Molerway stopped payment on its August installment on the Buy-Sell 

Agreement, and on September 4, 1991, sent Rite-Line a notice of 

rescission of contract. Molerway requested the return of the 

$30,000 down payment and first two installments in exchange for 

returning Certificate No. 1136 to Rite-Line. Rite-Line refused to 

rescind the contract. 

On January 29, 1992, Molerway filed a complaint in the Fourth 

Judicial District Court, Missoula County, seeking to rescind the 

Buy-Sell Agreement and to have returned to it money paid pursuant 

to that agreement. Rite-Line answered and counter-claimed, seeking 

specific performance of the Buy-Sell Agreement. 

Following the June 7-8, 1994 trial, the District Court held in 

favor of Rite-Line. The court determined that the PSC's order 

constituted an "approval" of the Certificate transfer and that by 

Molerway's course of conduct, it waived its right to rescind the 

contract due to the cancellation of duplicate authorities. 

Molerway appeals from the decision of the District Court. 

5 
Issue 1 

Did the District Court err in admitting parol evidence to 

determine the intent of the parties to the Buy-Sell Agreement? 

Molerway argues that the District Court erred by allowing the 

introduction of parol evidence during trial in order to determine 

the intent of the parties. Molerway insists that the Buy-Sell 

Agreement was clear and unambiguous on its face. Therefore, the 

contract should have been construed strictly by its terms and no 

parol evidence concerning the parties' intent should have been 

allowed. 

We review district court evidentiary rulings to determine if 

the court abused its discretion. State v. Passama (1993), 261 

Mont. 338, 863 P.2d 378. The language contained in a contract 

controls its interpretation if the contract is clear and unambiguous . Hennen v. Omega Enterprises, Inc. (1994), 264 Mont. 505, 508- 

09, 872 P.2d 797, 799; §§ 28-3-401 and 28-Z-905, MCA. In Montana 

Bank of Circle v. Meyers and Son (1989), 236 Mont. 236, 769 P.2d 

1208, we stated: 

The rule has long been that where no ambiguity exists in 

the written documents, no parol evidence may be taken, 

(citation omitted) and the duty of the court is simply to 

apply the language as written. 

Montana Bank, 769 P.2d at 1212. 

However, when ambiguities exist in a contract, the court may 

look to parol evidence to ascertain the intent of the parties. In 

Monte Vista Co. v Anaconda Co. (19881, 231 Mont. 522, 755 P.2d 

1358, we stated: 
An ambiguity exists when a contract is subject to two 

interpretations and parol testimony can be used to 

determine what the parties intended. (Citations omitted.) However, intent of the parties is only looked to 

when the agreement in issue is not clear on its face. 

(Citation omitted). 

Monte Vista, 755 P.2d at 1362. 

A review of the record reveals that the Buy-Sell Agreement was 

not clear and unambiguous on its face. While the agreement 

specifically conditioned validity of the contract on the PSC's 

"approval" of the transfer, the agreement does not define what will 

constitutes an "approval." Specifically, it is unclear whether 

"approval" as limited by Order No. 6051would constitute "approval" 

under the contract. 

Also, the agreement contains contradictory language concerning 

the purpose of the transfer. The agreement reads, in the recital, 

"[iIn buying this permit, it is the Buyer's intention to serve the 

area and customers previously served by the Seller." This is the 

only clear expression of Molerway's intent. This purpose is not 

inconsistent with and would not be affected by the PSC's cancellation of duplicate authorities. However, elsewhere in the agreement, the contract appears to contemplate the transfer of Certificate No. 1136 as an asset rather than merely as a means by which to 

service Rite-Line's customers. 

We conclude that these contradictory provisions render the 

Buy-Sell Agreement ambiguous. As such, parol evidence was properly 

admissible in order to determine the intent of the parties. We 

hold that the District Court did not abuse its discretion in 

7 
admitting par01 evidence in order to determine the intent of the 

parties. 

Issue 2 

Did the District Court err in concluding that the PSC 

"approved" the transfer of Certificate No. 1136 pursuant to the 

terms of the Buy-Sell Agreement? 

Molerway argues that approval by the PSC was a condition 

precedent expressly stated in the Buy-Sell Agreement. Molerway 

claims that by issuing Order No. 6051 which stated duplicate 

authorities would be cancelled in two years, the PSC did not 

11 approve" Certificate No. 1136 and all its subparts as was a 

condition precedent to the contract. Because the condition 

precedent did not occur, Molerway insists it is not bound by the 

Buy-Sell Agreement. 

Rite-Line argues that PSC Order No. 6051 was an "approval" of 

the certificate transfer. Rite-Line contends that the PSC's 

asserted right to cancel duplicate authorities following completion 

of the contract does not render the PSC's decision a denial. The 

District Court agreed, concluding that Molerway's failure to object 

and acquiescence to the PSC's cancellation of duplicate authorities 

following fulfillment of the contract illustrated Molerway's intent 

that cancellation of duplicate authorities would not result in a 

"denial" of the transfer application. 

Rite-Line also insists that Molerway received what it 

bargained for: authority to use the routes designated in Certificate No. 1136, elimination of Rite-Line as a competitor along those 

8 
routes, and the assurance that Certificate No. 1136 would not be 

sold to another motor carrier. 

We will not overturn a district court's findings of fact 

unless they are clearly erroneous. Interstate Production Credit 

Assoc. v. DeSaye (1991), 250 Mont. 320, 820 P.2d 1285. We review 

district court conclusions of law to determine if the court's 

interpretation of the law was correct. Steer, Inc. v Dep't of 

Revenue (1990), 245 Mont. 470, 474, 803 P.2d 601, 603. 

As discussed above, when a contract is not clear and unambiguous on its face, the court must look elsewhere to discern the 

intent of the parties. Monte Vista, 755 P.2d at 1362. In this 

case, the evidence establishes that Molerway did not consider the 

cancellation of duplicate authorities to be a "denial" of the 

transfer application. During the March 1991 meeting to discuss the 

lease of Certificate No. 1136, Molerway did not object to the PSC's 

suggestion that it would cancel duplicate authorities. Molerway 

made two installment payments on the contract after it had actual 

knowledge of the PSC's intention to cancel duplicate authorities. 

Molerway also encouraged, or at the very least acquiesced to, the 

PST's decision to cancel duplicate authorities in its June 4, 1991 

letter. By its actions and failure to act, Molerway has manifested 

its intent that the PSC's cancellation of duplicate authorities 

would not render the decision a denial of the transfer application. 

We conclude that the District Court's finding that the PSC's 

cancellation of the duplicate authorities did not amount to a 

denial of the transfer application was not clearly erroneous. 

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Issue 3 

Did the District Court err in determining that Molerway waived 

the condition of PSC approval of the certificate transfer? 

As an alternative reason for enforcing the contract, Rite-Line 

argued, and the District Court concluded, that even if the PSC's 

cancellation of duplicate authorities constituted a denial of the 

transfer, Molerway waived its right to rely on the condition 

precedent of PSC approval. The District Court concluded that 

Molerway's course of conduct from the March 1991 meeting of the 

parties with the PSC until issuance of the PSC's Order No. 6051 

manifested Molerway's intent not to require PSC approval of 

Certificate No. 1136 in its entirety. 

Waiver is a voluntary and intentional relinquishment of a 

right. McGregor v. Cushman/Mommer (19861, 220 Mont. 98, 714 P.2d 

536. In McGreqor, this Court stated: 

Waiver is the voluntary, intentional relinquishment of a 

right. (Citation omitted.) A waiver of a right of 

action will be declared only when the party clearly 

manifests such an intention. (Citations omitted.) 

McGresor, 714 P.2d at 543. 

The record reveals that Molerwayvoluntarily and intentionally 

relinquished its right to rely on the PSC's approval of the 

certificate transfer in its entirety. Molerway made no objections 

when it first learned that the PSC was considering cancelling 

duplicate authorities. Molerway made two installment payments on 

the contract while it knew or should have known that the PSC was 

considering cancelling the duplicate authorities. 

10 
Most persuasive was the tune 4, 1991 letter from Molerway to 

the PSC. In this letter, Molerway not only acquiesced to the PSc's 

cancellation of duplicate authorities, but encouraged such a 

cancellation. In the letter, Molerway's attorney stated: 

Perhaps the Commission would postpone the deletion of the 

duplicate authorities until the outstanding balance has 

been paid off. That way, Rite-Line is protected and the 

Commission would be relieved of interfering with a 

contract. 

Molerwav does not want to delay the transfer of this 

authoritv, nor does it expect to default on the Aqreee. [Emphasis added.] 

Despite Molerway's claim that it merely intended to "buy some time" 

by sending this letter, we conclude that the letter is susceptible 

to only one interpretation. Molerway stated it wanted to postpone 

the PSC's cancellation of the duplicate authorities until after 

expiration of the Buy-Sell Agreement. Molerway further stated that 

it did not intend to default on the Buy-Sell Agreement despite the 

cancellation of the duplicate authorities. 

We conclude that Molerway's course of conduct, particularly 

its letter of June 4, 1991, manifested a voluntary and intentional 

relinquishment of its right to rely on the condition precedent of 

the PSC's approval of Certificate No. 1136 in its entirety in order 

to void the contract. We hold the District Court's conclusion of 

law was correct. Affirmed. 

Chief Justice 
we concur: