NO. 96-157 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1996 

WESTERN INDUSTRIES, INC., 

CHICAGO MINING CORP., a corporation, and l'dl!!~ l~L/ 11 / , l$c3 a, c~ T 

BYRON H. WEIS, ROBERT L. GREINER, and 

ROBERT THOMLINSON, individually, jointly 

and severally, 

Defendants and Appellants 

APPEAL FROM: District Court of the Fifth Judicial District, 

In and for the County of Madison, 

The Honorable Frank M. Davis, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

Edmund F. Sheehy, Jr., Cannon & Sheehy, 

Helena, Montana 

For Respondent: 

Patrick D. Vellone and Curtis L. Clay, 

Vinton Nissler Allen & Vellone, P.C., 

Denver, Colorado 

George W. Huss, Brown & Huss, P.C., 

Miles City, Montana 

Filed: 

Submitted on Briefs: August 22, 1996 

Decided: November 7, 1996 
Justice Terry N. Trieweiler delivered the opinion of the Court. 

The respondent, Western Industries, Inc. ("Western"), filed an 

action against the appellants, Byron H. Weis, Robert L. Greiner, 

and Robert Thomlinson (collectively, "Guarantors"), in the District 

Court for the Fifth Judicial District in Madison County. The 

District Court: (1) granted summary judgment in favor of Western; 

(2) entered a judgment for Western in the principal amount of 

$232,730.04; and (3) awarded Western pre- and post- judgment 

interest from February 1, 1991. The Guarantors appeal the order of 

the District Court. We affirm and modify the judgment of the 

District Court, and remand the case for entry of judgment in the 

principal amount of $196,849.72, plus pre- and post-judgment 

interest from February 1, 1991. 

The issues on appeal are: 

1. Did the District Court err when it granted summary 

judgment in favor of Western? 

2. Did the District Court err when it entered judgment for 

Western in the principal amount of $232,730.04? 

3. Did the District Court err when it awarded Western 

pre-judgment interest from February 1, 1991? 

FACTUAL BACKGROUND 

Based on a contract executed in 1990, Western supplied 

materials and labor for Chicago Mining Corporation's ("CMC") 

tailings pond in Pony, Montana. CMC, however, failed to make 

payments when due, and in November 1990, Western filed a 
construction lien against CMC's property in Madison County to 

enforce collection of the amount of $232,730.04. 

Subsequently, in January 1991, the Guarantors individually 

executed personal guaranties, which included the following 

language : 

[Western] is hereby authorized to collect [$232,730.041 

individually from me, jointly, with any other guarantor 

of such debt, with the necessity of first proceeding 

against [CMC] . 

In return, Western promised that it would not institute foreclosure 

proceedings to enforce its construction lien until February 1, 

1991. 

In October 1991, Western filed an action in the District Court 

against CMC and the Guarantors.' Specifically, Western sought the 

following: (1) the foreclosure of its construction lien; 

(2) recovery of damages for breach of contract by CMC; 

(3) recovery of damages for unjust enrichment by CMC; and 

(4) recovery from the Guarantors based on their personal 

guaranties. 

In August 1994, Western and CMC stipulated to an entry of 

judgment against CMC. Pursuant to that stipulation, the District 

Court entered a final judgment against CMC in the principal amount 

of $196,849.72. Western arranged for a sheriff's sale in aid of 

lpursuant to the parties' original contract, CMC owed Western 

$232,730.04. Western's complaint against CMC and the Guarantors, 

however, sought only $203,999.50. The reduced amount reflects the 

fact that Western had been paid some of the money owed to it prior 

to the time it filed its complaint in the District Court. 
execution to enforce its judgment. However, in April 1995, CMC 

filed a petition for relief, pursuant to Chapter 11 of the 

Bankruptcy Code, in the U.S. Bankruptcy Court for the Northern 

District of Illinois. 

In June 1995, Western filed a motion for summary judgment 

against the Guarantors. The District Court denied Western's motion 

and scheduled its claims for trial during March 1996. Prior to 

trial, however, the U.S. Bankruptcy Court rejected CMC's Chapter 11 

plan, and converted its petition to a Chapter 7 proceeding. On 

that basis, Western filed a renewed motion for summary judgment, 

which the District Court granted in February 1996. The District 

Court entered judgment for Western in the principal amount of 

$232,730.04, plus pre-judgment interest from February 1, 1991, to 

February 22, 1996. 

ISSUE 1 

Did the District Court err when it granted summary judgment in 

favor of Western? 

Summary judgment is governed by Rule 56 (c) , M.R. Civ. P., which 

provides, in relevant part: 

The judgment sought shall be rendered forthwith if the 

pleadings, depositions, answers to interrogatories, and 

admissions on file, together with the affidavits, if any, 

show that there is no genuine issue as to any material 

fact and that the moving party is entitled to a judgment 

as a matter of law . . . . 

The purpose of summary judgment is to encourage judicial 

economy through the elimination of any unnecessary trial. However, 

summary judgment is not a substitute for trial if a genuine factual 
controversy exists. Reavesv.Reinbold (l98O), 189 Mont. 284, 288, 615 

It is well established that the moving party must prove that 

it is entitled to judgment as a matter of law. To do this, it is 

required to show a complete absence of any genuine factual issues. 

D.4guslinuv.Swunson (1990), 240 Mont. 435, 442, 784 P.2d 919, 924. To 

defeat the motion, the nonmoving party must set forth facts which 

demonstrate that a genuine factual issue exists. O'Bagl~ v. First Interstate 

Bank of' Missoula (1990), 241 Mont. 44, 46, 785 P.2d 190, 191. 

Additionally, if there is any doubt with regard to the propriety of 

summary judgment, it should be denied. Whitehawk v. Clark (1989) , 238 

Mont. 14, 18, 776 P.2d 484, 486-87. 

In their brief, the Guarantors concede that there are no 

genuine issues of material fact; however, they claim that, based on 

the law of guaranties in Montana, Western is not entitled to 

judgment as a matter of law. Specifically, they assert the 

following argument: 

[Als provided by the express terms of the guarantee 

[sicl, which says that the guarantee [sic] is governed by 

Montana law, Western must first proceed against CMC and, 

only upon the default of CMC, can it collect on the 

guarantees [sic]. The bankruptcy proceeding . . . does 

not constitute a "default" of CMC . . . . A default . . . 

only occurs if the collateral upon which the debt is 

secured, the land upon which [the construction] lien is 

sought to be foreclosed, fails to satisfy the amount of 

the debt. 

In Sherwood & Roberts, Inc. v. First Security Bank of Missozda ( 19 84 ) , 2 0 9 Mont . 

402, 408, 682 P.2d 149, 152, we recognized that whether a guaranty 
is absolute or conditional depends upon the terms of the guaranty, 

and that those terms also determine the specific condition 

precedent to the liability of the guarantor. In this case, the 

guaranties contained the following provision: 

[Western] is hereby authorized to collect [$232,730.041 

individually from me, jointly, with any other guarantor 

of such debt, with the necessitv of first proceedinq 

aqainst [CMC]. 

(Emphasis added. l 

The express terms of the guaranties require Western to first 

proceed aqainst CMC, and it is undisputed that this language 

establishes a condition precedent to the Guarantors' liability. 

Although the guaranties do not specify what steps Western must take 

to satisfy the condition precedent, we conclude that, contrary to 

the Guarantors' assertions, they do not require Western to proceed 

against CMC1s collateral, nor do they require a "default" by CMC. 

Rather, we conclude that the guaranties require Western to first 

diligently pursue a recovery against CMC. We base our conclusion 

on the following well-established principles of guaranty law: 

The extent to which the creditor must pursue the debtor 

depends primarily upon the terms of the contract of 

guaranty. If the contract specifically details the 

action which the creditor may or must take, then the 

contract is controlling. When a conditional contract is 

not specific in its details, the liability of the 

guarantor [is] conditioned upon the exercise of diligence 

by the creditor to promote payment by the debtor. 

38 Am. Jur. 2d 1114 Guaranty, 5 108 (1968) 

Western claims that it has diligently pursued a recovery from 

CMC, and that, therefore, it is entitled to judgment as a matter of 
law. In support of its claim, it asserts the following facts: 

(1) it filed a complaint in the District Court against CMC in 1991; 

(2) it obtained a stipulated judgment against CMC, which was 

entered by the District Court in 1995; (3) it attempted to enforce 

its judgment through a sheriff's sale of CMC1s property; (4) in 

response to CMC1s petition for Chapter 11 relief, it filed a proof 

of claim in bankruptcy, actively participated in the demand for 

disclosures, and contacted the U.S. Trustee's office with regard to 

its interest in the bankruptcy proceedings; (5) it appeared, in 

Chicago, at CMC's bankruptcy hearing; (6) it filed a brief in 

support of the U.S. Trustee's motion for conversion of CMC's case 

from a Chapter 11 to a Chapter 7 proceeding; (7) it appeared in 

Chicago at the hearing to consider the motion for conversion, which 

was eventually granted; (8) it took depositions of two of CMC's 

principals and two of the Guarantors; and (9) it has been in 

contact with the U.S. Bankruptcy Trustee in Chicago. 

The Guarantors, on the other hand, have not offered evidence 

or even attempted to establish that Western has failed to 

diligently pursue a recovery from CMC. 

Based on the uncontroverted evidence, we conclude that Western 

has sufficiently satisfied the condition precedent of "first 

proceeding against [CMC] . " 

We conclude that there are no genuine issues of material fact, 

and that Western is entitled to judgment as a matter of law. 
Accordingly, we hold that the District Court did not err when it 

granted summary judgment in favor of Western. 

ISSUE 2 and ISSUE 3 

Did the District Court err when it entered judgment for 

Western in the principal amount of $232,730.04? 

Did the District Court err when it awarded Western 

pre-judgment interest from February 1, 1991? 

When we review a district court's conclusions of law, the 

standard of review is whether those conclusions are correct. Carbon 

Cozmtyv. UnionReserveCoalCo. (1995), 271 Mont. 459, 469, 898 P.2d 680, 

686. 

When the District Court granted Western's renewed motion for 

summary judgment, it entered a final judgment "in the principal sum 

of $232,730.04 plus pre- and post-judgment interest . . . as of 

February 1, 1991 to February 22, 1996 . . . . " The Guarantors 

contend that the District Court erred when it entered this 

judgment, and that, therefore, it must be vacated. Specifically, 

they assert that the judgment should be reduced to the principal 

amount of $196,849.72, and that pre-judgment interest should be 

calculated only from August 31, 1994. The Guarantors guaranteed 

payment as of February 1, 1991. However, the stipulated judgment 

was not entered until August 31, 1994. 

THE PRINCIPAL AMOUNT OF $232,730.04 

Section 28-11-201, MCA, states: 

Obligation of guarantor not to exceed that of principal. 

The obligation of a guarantor must be neither larger in 
amount nor in other respects more burdensome than that of 

the principal, and if in its terms it exceeds it, it is 

reducible in proportion to the principal obligation. 

CMC (the principal debtor) and Western entered into a 

stipulated judgment in the amount of $196,849.72. This stipulated 

judgment conclusively established CMC's obligation. Therefore, 

pursuant to § 28-11-201, MCA, the Guarantors' obligation cannot 

exceed the amount to which CMC and Western stipulated. 

Accordingly, we hold that the District Court erred when it 

entered judgment for Western in the principal amount of 

$232,730.04. 

PRE-JUDGMENT INTEREST FROM FEBRUARY 1, 1991 

Section 27-1-211, MCA, states, in relevant part: 

Right to Interest. Every person who is entitled to 

recover damages certain or capable of being made certain 

by calculation and the right to recover which is vested 

in him upon a particular day is entitled also to recover 

interest thereon from that day . . . . 

Pursuant to the express terms of the guaranties, Western's 

right to recover from the Guarantors vested on February 1, 1991, 

the date on which CMC failed to make the payment that was then due, 

and the date by which the Guarantors guaranteed payment. The 

amount was also capable of being made certain by calculation on 

that date. It was simply the difference between the amount set 

forth in the written guaranties, and any amount paid. 

Accordingly, we hold that the District Court did not err when 

it awarded Western pre-judgment interest from February 1, 1991. 
We affirm and modify the judgment of the District Court, and 

remand the case for entry of judgment in the principal amount of 

$196,849.72, plus pre-judgment interest from February 1, 1991, and 

post-judgment interest to the date on which the judgment is 

satisfied. 

We concur: 

4-frric~ Justice