No. 13667 IN THE SUPREI'TECOURT 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: 

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## q-- Filed: - v- 2Honorab1e.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 (plaintiffsand respondents) and against Schreiners (defendantsand appellants)by the eighth judicial district court,Cascade County. The lawsuitbetween 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 ofWhittakers. On September 28, 1964, Schreiners mortgaged two separate tracts of real property located in Cascade County with the Small Business AdministrationF~f 2,00 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 Schreinersagreed to convey the Vaughn property to Whittakers by warranty deed upon payment of the purchase price of $3,300by way of monthly installment payments of $50 each with interestat 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, Schreinershad 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 BusinessAdministration in the United States District Court. In said action,both whittakers and Schreiners were named parties defendant. At this time Whittakers discontinued their monthly installmentpurchase payments, which up to this date had totaled $2,500. On May 5, 1971, the Federal District Court entered judgment of foreclosureand 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 substantialand costly improvements to theVaughn property. In order to prevent execution sale of said Vaughn property, Whittakerspurchased 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 ~dministrationfiled satisfaction of judgment in the Federal ~istrict Court action, thus discharging Schreiners in full so far as the Small Business Administration obligationwas concerned. For the sake of argument itmay be conceded that under F.R.Civ.P. 13(g),Whittakers could have filed a cross-claim against Schreiners in the federal forclosureaction,but for some reason not disclosed, this was not done. Instead ~hittakerssubsequently 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 Schreinerswere 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 iswhether the rights of the WHITTAKERS to performance of the contract should have been litigated in the Federal foreclosureaction, 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 againstwhom it is asserted is ormay be liable to the crossclaimant for all or part of a claim asserted in the action against the cross-claimant." (Emphasis added.) The Schreinerswould have us change the word "may"appearing in 13(g) to "must". In their brief they state: "Whilethe applicableMontana 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 'mighthave been litigated', it now appears that we must add the phrase 'Shouldhave been litigated'." This Court cannot adopt the argument of appellants. Insofar as Rule 13(g) is concernedwe agreewith the statement of 6Wright & Miller, Federal Practice and Procedure: Cross-claims,pp. 164, 165,where it is stated: "Several important distinctionsbetween cross-claims and counterclaims should be kept inmind 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 resjudicata, waiver, orestoppel from asserting it ina later action, ashe would if the claimwere a compulsory counterclaim under Rule 13(a).

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## * *" 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 asserthisclaim asa crossclaim ortoreserve it for laterindependent litigation. In accord isTemperance Insurance Exchange v. Carver, 365 P.2d 824, 83 Idaho 487 (1961). The judgment of the district court is affirmed. I--"

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

### Mr. JusticePaul G. Hatfield.