No. 13667 

IN THE SUPREI'TE COURT OF THE STATE OF MONTANA 

1977 

WILLIAM HENRY WHITTAKER and 

LaVERNA WHITTAKER, husband and wife, 

Plaintiffs and Respondents, 

ALEXANDER SCHREINER and DAMNIE 

SUE SCHREINER, husband and wife, 

Defendants and Appellants. 

Appeal from: District Court of the Eighth Judicial District, 

Honorable Paul G. Hatfield, Judge presiding. 

Counsel of Record: 

For Appellants: 

A. Evon Anderson argued, Fort Benton, Montana 

For Respondents: 

Cameron Ferguson argued, Great Falls, Montana 

-- 

Submitted: September 13, 1977 

Decided: 

3Ci 5 q-- Filed: - v- 2 
Honorab1e.Leonard.H. Lan en, ~istrict Jud e, sitting in-place of Mr. Chlef Justlce ~au? G. Hatfleld, deqlvered the oplnlon of 

the Court. 

This is an appeal from a judgment entered in favor of 

Whittakers (plaintiffs and respondents) and against 

Schreiners (defendants and appellants) by the eighth judicial 

district court, Cascade County. The lawsuit between the parties 

arose out of a contract for sale of land, Whittakers claiming 

damages for breach of contract and for unjust enrichment of 

Schreiners at the expense of Whittakers. 

On September 28, 1964, Schreiners mortgaged two separate 

tracts of real property located in Cascade County with the Small 

Business AdministrationF~f 2,0 0 0, one tract known as the Big Sky 

Vista property and the other property located near Vaughn and 

hereinafter referred to as the Vaughn property. 

On September 30, 1965, Schreiners and Whittakers entered 

into a contract for deed whereby Schreiners agreed to convey the 

Vaughn property to Whittakers by warranty deed upon payment of 

the purchase price of $3,300 by way of monthly installment payments of $50 each with interest at 3% per annurn. 

The case was tried to the court without a jury. In its 

findings of fact the trial court found: that under the contract 

for sale Schreiners were required to apply Whittakers' monthly 

installment payments on the monthly mortgage payments which 

Schreiners were required to make to the Small Business Administration; that upon paying up the contract in full, Schreiners were 

required to convey title to the Vaughn property free and clear 

of the Small Business Administration mortgage. 

However, by September, 1969, Schreiners had become delinquent in their mortgage payments and in December, 1969, the 

Whittakers learned the United States of America had filed a 

mortgage foreclosure action on behalf of the Small Business Administration in the United States District Court. In said action, 
both whittakers and Schreiners were named parties defendant. 

At this time Whittakers discontinued their monthly installment purchase payments, which up to this date had totaled 

$2,500. 

On May 5, 1971, the Federal District Court entered judgment of foreclosure and decreed deficiency judgment against 

Schreiners for any deficiency following execution sale of the 

mortgaged properties which included the Big Sky Vista property 

plus the Vaughn property which had been sold to Whittakers. 

Pursuant to the federal forclosure decree the Big Sky 

Vista property was sold at execution sale for $6,000, leaving a 

deficiency judgment against Schreiners in the amount of $5,811.14. 

Between September 30, 1965, which was the date of the 

sale of the Vaughn property to Whittakers, and December 1969, 

when the Small Business Administration mortgage foreclosure action 

was instituted, Whittakers had made substantial and costly improvements to the Vaughn property. In order to prevent execution sale 

of said Vaughn property, Whittakers purchased it from the Small 

Business Administration for $5,465.71 and executed a mortgage to 

the Small ~usiness Administration in this amount at 8% interest. 

On October 6, 1971, the Small Business ~dministration filed 

satisfaction of judgment in the Federal ~istrict Court action, 

thus discharging Schreiners in full so far as the Small Business 

Administration obligation was concerned. 

For the sake of argument it may be conceded that under 

F.R.Civ.P. 13(g), Whittakers could have filed a cross-claim against 

Schreiners in the federal forclosure action, but for some reason 

not disclosed, this was not done. Instead ~hittakers subsequently 

filed this action in the eighth judicial district court for Cascade 

County and after trial the district court entered judgment in favor 

of Whittakers and against Schreiners in the sum of $6,197.16, 
and Schreiners were ordered to convey the Vaughn property to 

Whittakers by quitclaim deed. 

It is from this judgment that Schreiners appeal. In 

their brief they state: 

"The issue is whether the rights of the WHITTAKERS 

to performance of the contract should have been 

litigated in the Federal foreclosure action, thus 

making this action res judicata." 

Rule 13 (g), F.R.Civ.P. is identical to Rule 13 (g) , 

M.R.Civ.P. and reads: 

"Cross-Claim Against Co-Party. A pleading may - 

state as a cross-claim any claim by one party 

against a co-party arising out of the transaction 

or occurrence that is the subject matter either 

of the original action or of a counterclaim therein 

or relating to any property that is the subject 

matter of the original action. Such cross-claim 

may include a claim that the party against whom 

it is asserted is or may be liable to the crossclaimant for all or part of a claim asserted in 

the action against the cross-claimant." (Emphasis 

added. ) 

The Schreiners would have us change the word "may" appearing in 13(g) to "must". In their brief they state: 

"While the applicable Montana Rule, MRCP, Rule 

13g, regarding 'cross-claim against co-party' is 

couched in the 'may' term, it is apparent that the 

framers of that rule did not contemplate the situation presented by the instant case. * * *" 

Later in their brief appellants argue: 

"To the well established rule that the doctrine 

of res judicata applies not only to those matters 

that were previously litigated but to those that 

'could have been litigated' or 'might have been 

litigated', it now appears that we must add the 

phrase 'Should have been litigated'." 

This Court cannot adopt the argument of appellants. 

Insofar as Rule 13(g) is concerned we agree with the 

statement of 6 Wright & Miller, Federal Practice and Procedure: 

Cross-claims, pp. 164, 165, where it is stated: 

"Several important distinctions between cross-claims 

and counterclaims should be kept in mind other 

than the obvious difference in the alignment of the 

parties. Rule 13 (g) , unlike Rule 13 (a) , always is 

permissive. A party who decides not to bring his 

claim under Rule 13(g) will not be barred by res 
judicata, waiver, or estoppel from asserting it 

in a later action, as he would if the claim were 

a compulsory counterclaim under Rule 13(a). * * *" 

See St. Paul Fire Ins. Co. v. Thompson, 152 Mont. 396, 

451 P.2d 98 (1969), where we held that cross-claims were not 

compulsory and that under Rule 13(g), M.R.Civ.P. it is discretionary with the party whether to assert his claim as a crossclaim or to reserve it for later independent litigation. 

In accord is Temperance Insurance Exchange v. Carver, 

365 P.2d 824, 83 Idaho 487 (1961). 

The judgment of the district I--" court is affirmed. 

HO~. Leonard Langen, District ~ud~e, 

sitting in place of Mr. Justice Paul 

G. Hatfield.