No. 14425 

IN THE SUPREME CT)UHT OF THE STATE OF MXJTANA 

1979 

AUDIT SEE7VICFS, INC., a 

Mntana Corporation, 

Plaintiff and Appellant, 

FRANCIS TllmALL rnSTHUCrION, 

a Corporation, 

Defendant and Respondent. 

Appeal from: District Court of the Tenth Judicial District, 

Honorable Charles B. Sande, Judge presiding. 

Counsel of Record: 

For Appellant: 

Cure and Borer, Great Falls, Montana 

For Respondent: 

Bradley B. Parrish, Iewistuwn, IJbntana 

Filed : 

Subknitted on hriefs: May 15, 1979 - 

Decided: SEF 26 1979 
Mr. Justice John C.. Sheehy delivered the Opinion of the Court. 

Audit Services appeals from a statement of the Fergus 

County District Court, entered on behalf of the respondent 

denying recovery of alleged delinquent contributions, liquidated 

damages, interest, audit fees and attorney fees assessed as 

owing to appellant's assignors, the Montana Laborers, 

Operating Engineers and Teamsters Trust Funds for the period 

of January 1, 1971 through March 31, 1974. 

Francis Tindall is the owner of Francis Tindall 

Construction, an unincorporated sole proprietorship located 

in Lewistown, Montana. Tindall Construction is primarily 

a road and highway construction firm but also does other 

construction work. 

Tindall executed a "compliance agreement" with the 

Montana Laborers Union and the Montana Teamsters Union 

in June 1966 and with the Montana Operating Engineers Union 

in September 1967, binding the construction company to the 

terms of the collective bargaining agreements between the 

three unions and the Montana Contractors Association. Audit 

Services, a nonprofit corporation, is the assignee of the 

trustees of eight Montana employee benefit trust funds 

belonging to the three unions. 

The trusts are jointly managed funds established 

pursuant to the National Labor Management Relations Act, 

29 U.S.C., §186(c) (5) and the 1974 Pension Reform Act, 29 

U.S.C., 81001, et seq., and are funded by employer contributions based on hours worked by employees within a 

particular craft. These funds provide health and welfare, 
pension, apprenticeship and vacation benefits to 

Montana laborers, operating engineers and teamsters, 

both union and nonunion. Contribution rates for each 

of the trust funds are set forth in the collective bargaining 

agreements negotiated between the unions and employers. 

In order to contribute to these trust funds on behalf 

of his employees, an employer completes remittance report 

forms each month which are sent to the administrative office 

of the trusts. The employer lists on the forms each of 

his employees who has worked within the particular craft 

classification in the preceding month, lists the number of 

hours worked by each employee and then multiplies the total 

number of hours so listed against the contribution rates set 

forth, in the applicable collective bargaining agreement. 

The employer then sends his check for the full amount 

computed as owing along with the remittance report. 

A representative of the trust funds contacted Tindall 

and requested an audit of his payroll records pursuant to 

the provisions of the individual trust agreements. No 

objection was voiced and an audit was conducted in May 1974, 

by Howard G. Sand, an accountant retained by Audit Services. 

The audit revealed that during the period from January 1, 

1971 through March 31, 1974, Tindall's contributions to 

the trust funds covered only 84.8% of his total payroll (i.e. 

11,151 1/2 or 15.2% of the hours were not reported). 

Using the collective bargaining agreements in effect 

during the period of time covered by his audit, Sand 

computed that an amount of $8,479.68 was owing to the 

respective trust funds for delinquent contributions. An 

additional amount consisting of $415.08 in liquidated 

damages, $60.79 in interest and $327.04 for auditor fees 

was assessed as owing, also based on the trust agreement 

provisions. 

-3- 
After receiving no response to several requests 

for payment, claims for the liability were assigned to 

Audit Services and suit commenced on November 26, 1974. 

During the pendency of the litigation and up until the 

trial, Tindall continued to file regular monthly remittance 

reports and to make contributions to the trust funds at the 

rates specified by the union contracts in effect at the 

time. 

As of the date of trial, Tindall's audited liability 

totaled $11,028.12. Additionally, Audit Services requested 

$3,000 as attorney fees under the terms of the trust 

agreements. A nonjury trial was held on February 16, 1978. 

On May 17, 1978, the decision of the court was rendered 

with findings of fact and conclusions of law dismissing the 

complaint. 

The sole issue presented on this appeal is whether 

the District Court erred in deciding that as a matter of 

law, Francis Tindall has no obligation to make fringe benefit 

contributions to the Montana Laborers, Operating Engineers 

and Teamsters Trust Funds between January 1, 1971 and March 

31, 1974. 

A careful review of all the circumstances of the 

case and the matters on record requires as a matter of 

law, a holding that the respondent ratified the collective 

bargaining agreements that were in force during this period 

and the respondent is thereby estopped from denying the 

effect of this ratification. 

Section 28-2-304, MCA, states: 

"Ratification of contract void for want of 

consent. A contract which is voidable solely 

for want of consent may be ratified by a 

subsequent consent." 

Ratification may occur in either an express oral manner 

or solely by means of personal conduct. 

-4- 
Ratification is a form of equitable estoppel and 

ordinarily is applied strictly in an agency context, 

whereby a principal approves the unauthorized act of an 

agent. See Larson v. Marcy (19211, 61 Mont. 1, 201 P. 

685. However, it is also applied in varying classes of 

cases including contracts. Generally, contract ratification 

is the adoption of a previously formed contract, notwithstanding a quality that rendered it relatively void and 

by the very act of ratification the party affirming becomes 

bound by it and entitled to all the proper benefits from 

it. Shagun v. Scott Mfg. Co. (8th Cir. 1908), 162 F. 209, 

219. The contract is obligatory from its inception and 

may be signified from the commission or omission of acts. 

East Cent. Okl. Elec. Coop., Inc. v. Oklahoma G. & E. Co. 

(Okl. 1977), 505 P.2d 1324, 1329. 

Montana case law also has held that the subsequent 

recognition of a contract is the equivalent of ratification. 

This Court has stated: 

"'Ratification' is defined to be the confirmation of a previous act done either 

by the party himself or by another. (Citing 

authority.) And a confirmation necessarily 

supposes knowledge of the thing ratified. 

(Citing authority.) It follows that to 

constitute a ratification there must be 

an acceptance of the results of the act 

with an intent to ratify and with full 

knowledge of all the material circumstances." 

Koerner v. Northern Pac. Ry. Co. (1919) , 56 Mont. 511, 520, ,'$$q. 337, 340. 

It is the manifestation of the ratifying party which 

controls. The respondent's outward expressions and actions 

judge of his intentdon and his intent in the case sub 

judice is clear. No doubt exists that the respondent had 

full knowledge of the existence and content of the collective 

bargaining agreements. Respondent's conduct in making 

contributions to the trust funds for the admitted purpose 
of obtaining benefits thereunder for his employees, 

results in the ratification of the collective bargaining 

agreements providing for those contributions. At no 

time during the eight years since the original inception 

of the payment of contributions to the trust funds, including 

the three years involved in this action, did the respondent 

by an affirmative act attempt to rescind the contracts. 

His actions manifest the opposite conclusion. 

Respondent vigorously asserts that these collective 

bargaining agreements were not ratified but this Court 

believes there is sufficient evidence of ratification and 

acquiescence and that in the absence of any reasonable 

explanation, such factors constitute indisputable evidence 

of ratification. 

It must be held therefore, that the respondent having 

ratified the collective bargaining agreements by his actions 

and inactions, is now estopped from denying the validity 

of the contracts. For the reasons indicated, the judgment 

of the District Court is reversed and the matter shall be 

remanded for further proceedings in accordance with this 

Opinion. 

Justice 

We Concur: