No. 13807 IN THE SUPREME COURT OF THE STATE OF MONTANA 1978

JACK C. HOLLOWAY, Plaintiff and Appellant,

-vsUNIVERSITY OF MONTANA, Defendant and Respondent.

Appeal from: District Court of the Fourth Judicial District, Honorable Edward Dussault, Judgepresiding. Counsel of Record: For Appellant: Milodragovich, Dale & Dye, Missoula, Montana Harold Dye argued,Missoula, Montana For Respondent: George L. Mitchell argued, Missoula, Montana

Submitted: June 9, 1978Mr. Justice John C. Sheehy delivered the Opinion of the Court

# . Appeal from a judgment against appellant Jack C. Holloway in the Fourth Judicial District Court,Missoula County. Holloway soughta declaratory judgment that he was entitled to a Masters of Business Administration degree from the University of Montana. He alleged his candidacy for the degree and that the University refused it for the sole

reason he had failed to obtain a grade of "C"or better in a

course entitled, "BA650,QuantitativeMethods". A nonjury trialwas held in District Court December 6, 1976. The sole issuewas whether Holloway's graduate student advisor had orally waived the Business School requirement that he obtain

a "C"or better grade in Quantitative Methods described as a "core course." The District Court denied Holloway's request for a declaratory judgment,adopting in full the University's proposed findings of fact and conclusions of law and rejecting Holloway's motion for additional findings. During the academic years 1966-67 and 1967-68, Holloway's graduate student advisorwas Dr. Jack Kempner, a professor in the School of Business. Holloway received a grade of "Dl' in QuantitativeMethods. He thereupon approached Dr. Kempner concerning his situation. The grade adversely affected Holloway's academic record in twoways. Itdropped his grade point average below the required 3.0 (ona 4.0 scale) and the grade did notmeet the requirement that a candidate for a graduate degreemust receive a "C" or better for the course to count toward his master's degree. Holloway testified that Dr. Kempner had told him Kempner

was of the opinion that all thatwas required was a 3.0 average. Appellant subsequently took four other courses at the University and succeeded in raising his average to the required 3.0. He did not repeat the Quantitative Methods course. Uponcompletion of a professional paper appellantmade application for his degree in 1973. He was informed by the Dean of the Business School that his "D"grade in Quantitative Methods could not be counted toward the degree and the coursewould have to be retaken. Further,he could take an equivalent

course in the San Francisco areawhere he was then residing, which course the University would recognize. Dr. Kempner, who testified at the trial, recognized Holloway but had no recollection of ever having told Holloway he would not have to retake the course in Quantitative Methods. However, Kempner further testified he had never waived any "sixhundred core course for any MBA student", and in his recollection no studenthad ever received a waiver of the Quantitative Methods course. Considerable testimonywas heard concerning the University'spolicy on granting a waiver of a required course and the "unwritten" nature of that policy. The issuespresented on appeal are two-fold: 1. Is Holloway's testimony about the waiver granted to him uncontroverted as a matter of law? 2. Was the District Court's finding of fact, simply stating Dr. Kempner had not granted a waiver to Holloway, sufficient

as an ultimate fact? Holloway contends the evidencewas insufficient to support the judgment because he positively and unequivocally testified that an oralwaiver had been granted him by Dr. Kempner and because Dr. Kempner's testimony that he did not recall any conversations failed to directly contradict Holloway's testimony. General rules are given in support of this contention: "Therule that the trial judgemay not disregard uncontroverted credibleevidence is fundamental." In Re Minder's Estate (19541,128Mont. 1, 270 P.2d 404; Higby 

### v. Hooper (1950), 124Mont. 331, 221 P.2d 1043; State ex rel. Nagle v. Naughton(1936), 103Mont. 306, 63 P.2d 123;Haddox v. Northern Pacific R. Co. (1911),43Mont. 8, 113 P. 1119." 'I*

## * 

## * the testimony of a witness that he does not remember whether a certain event or conversation took place does not contradictpositive testimony that such event or conversationdid take place. (citing cases)

### "

# . Bender v. Roundup Mining Co. (1960)

## , 138Mont. 306, 356 P.2d 469. Holloway correctly states the general rule,but falls short of sustaininghis contention for two reasons. First, considerablymore goes into a trial judge's examination of the evidence than Holloway contends. Second, a trial judge is not bound to find in favor of a party simply because one of his witness' testimony isnot directly controverted. The evidence in its entirety forms the basis of the Court's decision. In O'Sullivanv. Simpson,et al. (1949), 123 Mont. 314, 212 P.2d 435, this Court, citing considerable authority, examined the many qua-lificationsand extensions to the general rule that a trial court cannot disregard uncontroverted credible evidence. To summarize: statementsmay be so inherently improbable the Court is induced to disregard them. Testimonymay be contradictedby other facts. There may be somany omissions in the testimony that the witness1 whole story isdiscredited. The witness' manner of testifying, his appearance and demeanormay be considered. Attendant circumstancesmay cast suspicion upon the narration of a particular event. Finally, the interest of any witness in the result of the trial or any bias he might have may properly be considered. We find the record supports the trial court's decision

on thispoint. For example, the University's requirements for a Masters of Business Administration degreewere spelled out in its catalog. Dr. Kempner testified as to the Business School'sstandard procedure for handling requests for waivers, and that he did not forget to use it. Dr. Kempner also testified that "sixhundred level"graduate courses, specifically Quantitative Methods, were never waived, and that he had

never personallywaived a core course. When coupled with the intangible factors a trial judge considers inmaking a decision, the considerable record established in this case would make it unreasonable to conclude the judgmentwas unsupported by the evidence. Holloway specifies error in that the District Court's single finding of fact on the contested issue was insufficient to support the judgment, and additional findings, as requested by appellant, should have been made. The applicable finding of fact states: "Dr. Jack Kempner, Plaintiff's graduate student advisor,did not grant Plaintiff a waiver of the required core course of BusinessAdministration 650,QuantitativeMethods." It is contended that specific findings on appellant's credibility and the nature and extent of the authority possessed by Dr. Kempner should have been made. As to the latter, the University admitted in its answer to appellant's InterrogatoryNo. 10 that Dr. Kempner had at least apparent authority to grant thewaiver. Therefore, this was not a material issue requiring a specific finding. Rule 52(a), M.R.Civ.P., provides that, "inall actions tried upon the facts without a jury or with

an advisory jury, the Court shall find the facts specially and shall state separately its conclusions of law thereon." Since the adoption of Rule 52(a) in Montana, the sufficiency of findingsof fact has been considered only briefly. In Mondakota Gas Co. v. Becker (1968),151Mont. 513, 445 P.2d 745, this Court said:"Wethink it is quite evident that a 'finding of fact' will vary from case to case. As defined in 53 

### Am. Jur. Trials, Section 1131, page 786: 'Findingsof factmay be defined as the written statement of the ultimate facts as found by the court, signed by the court and filed therein, and essential to support the decision and judgment rendered thereon.'" Despite the infrequencywith which this Court has dealt with the sufficiencyof findingsof fact,neighboring jurisdictions (thathave adopted rules identical to Rule 52(a)) have dealt with the issue on numerous occasions.

"The trial court's function in nonjury cases is to find ultimate facts from conflicting evidence; and if these findings are sustained by competent, substantial,although conflicting evidence, suchwill not be disturbed on appeal." Hafer

### v. Horn (1973),95 Idaho 621, 515 P.2d 1013. "With theseprinciples inmind we turn to the finding in question and note, first, the classic rule-~ that findingsmust state ultimate facts; they should not relate evidentiary facts relied upon by the court to reach the ultimate facts." Seeley

### v. Combs (1966),52 Gal-Rptr. 578, 65 C.2d 127, 416 P.2d 810. "In regard to the matter of the sufficiency of findingsof fact,a substantial compliance with Rule 52, Utah Rules of Civ.P., is sufficient and findings of fact and conclusions of lawwill support a judgment though they are very general, where they in most respects follow the allegation of the pleadings. Findings should be limited to the ultimate facts and if they ascertain ultimate facts and sufficiently conform to the pleadings and the evidence to support the judgment, they will be regarded as sufficient, thoughnot as complete as might be desired." Pearsonv. Pearson (Utah1977), 561 P.2d 1080. In thewords of counsel for the appellant, "the case proceeded to trial on the basis of the single ultimate issueof whether a waiver was given by Dr. Kempner in the manner alleged." Holloway's credibility was not a material issue and no finding of fact was required concerning his credibility simpl:ybecause Holloway speculates it was considered in the trial judge's decision. The District Courtmade its finding of fact on thematerial issue alleged in the pleadings. The record supports that "ultimate fact". We have held (MondakotaGas Co. v. Becker, supra) and

now hold, in linewith what we find other courts hold, that Rule 52(a) M.R.Civ.P., which obliges a trial court without a jury to "find the facts specially," requires findings of ultimate facts and not evidentiary facts. Sometimes (and this

case is an example) a situation exists where the ultimate fact stated by the Court can also be read as a conclusion of law. Thus,here it is a statement of ultimate fact that "Dr. Jack Kempner 

## * * * did not grant Plaintiff a waiver of the required core course 

## * * * 

## ",but that same statement could also be read as a conclusion of law. The statement does not thereby lose its character as a finding of ultimate fact, however. Thepurpose of requiring "ultimate facts" in a court's findings is three-fold: (a)to aid the trial court in making correct factualdecisions and reasoned application of law to facts; (b)to define for purposes of res judicata and estoppel by judgment the issues there adjudicated; and (c)to aid the appellate court. Moore's Federal Practice,Vol. 5A, p. 2666, Section 52.03 (3)(Rel. No. 9)

# . An ultimate fact is one deduced by the Court from evidentiary facts,but evidentiary facts should not be part of the Court's findings,because evidentiary facts are incapable of becoming res judicata. Abeles v. Wurdack (Mo. 1955) 285 S.W.2d 544, 548. The function -7-of the trial court in determining the ultimate facts from the evidentiary facts is respected in Rule 52(a), and such ultimate fact findings "shallnot be set aside unless clearly erroneous, and due regard shallbe given to the opportunity of the trial court to judge of the credibility of the witnesses." It isbecause the statementhere involved could be read both as a conclusion of law and as a finding of ultimate fact that this case isdistinguishable from those cases relied on by Holloway as supportinghis contention that this particular finding is insufficient to support the judgment. In this case the material fact issue is determined by the trial court in an expression of ultimate fact. No more is required under Rule 52(a). It is axiomatic that a District Court makes findings only as tomaterial issues of fact related to the cause of action, Thompsonv.Bantz (1959),136Mont. 210, 215, 346 P.2d 982, 985,and that a Courtmay not make findings upon matter outside the material issues. See: O'Brien v. Drinkenberg (1910), 41Mont. 538, 544, 111 P. 137, 139; Dutro v. Kennedy (1889), 9Mont. 101, 107, 22 P. 763, 764. Here the credibility of Hollowaywas not a material issue related to the cause of action; rather, it was only a factor to be considered inweighing the evidence. It is not a necessary or sole implication that because the Court found against the direct testimony of Holloway, that automatically the Court found his testimony to be false. Itmay be as easily assumed that, in the light of the weight of other evidence against the testimony of Holloway, that Holloway could have been mistaken or he may have misunderstood the tenor ormeaning of what Dr. Kempner told him. Whether Holloway wasmistaken, or elsewhether his testimony was false,was not amaterial issue in the case on which the -8-Court had tomake a finding. The record afforded sufficient evidence that nowaiver had been granted without any finding necessary as to the truth of Holloway's testimony. For the reasons expressed, the judgment of the District Court is affirmed.

Justice

We Concur:

Chief Justice