NO. 82-521 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1983 

NORTHWESTERN UNION TRUST CO., Personal 

Representative of the Estate of CBRIST 

WORM, SR., Deceased, 

Plaintiff and Appellant, 

BEN WORM AND DORIT WORhI, 

Defendants and Respondents. 

Appeal from: District Court of the Thirteenth Judicial District, 

In and for the County of Treasure, 

The Honorable William J. Speare, Judge presiding. 

Counsel of Record: 

For Appellant: 

Keefer, Roybal, Hanson, Stacey & Jarussi; Gene R. 

Jarussi, Billings, Montana 

Bruce E. Lee, co-counsel, Billings, Montana 

For Respondents: 

William F. Fteisburqer, Forsyth, Montana 

I-I. D. Euelow, Miles City, Pilontana 

Submitted on Briefs: March 25, 1983 

Decided: May 19, 1983 

Filed: MAY 1 9 1983 

Clerk 
Mr. Justice John Conway Harrison delivered the Opinion of the 

Court . 

Northwestern Union Trust Company brought this action to set 

aside a recorded deed which placed title to real property located 

in Treasure County into defendants' names. Judgment was entered 

upon a jury verdict in favor of defendants and the Trust Company 

appeal s . 

In the late 19401s, Christ Worm purchased two pieces of property in Treasure County known as the "Home Place" and the "South 

Place." On December 28, 1960, Christ and Helen Worm, and their 

son and daughter-in-law, Ben and Dorit Worm, executed a $12,000 

note payable to the Federal Land Bank of Spokane, after receiving 

a $12,000 loan. In addition, the Worms executed a Federal Farm 

Loan Amortization Mortgage on the Home Place and the South Place. 

The note was to be paid in twenty annual installments of 

$1,046.22. 

On March 31, 1961, Ben and Dorit entered into a contract for 

deed with Christ and Helen, to purchase the Home Place and the 

South Place. The purchase price on the contract was $24,000. 

Ben and Dorit agreed to pay the $12,000 note to the Federal Land 

Bank and another $12,000 to Christ and Helen directly with 1 percent annual interest. Simultaneously with the execution of the 

contract, Christ and Helen executed a warranty deed for the Home 

Place and the South Place to Ben and Dorit. Christ kept 

possession of the warranty deed to be delivered to Ben and Dorit 

upon completion of the contract. 

Ben testified beginning in 1961 and every year thereafter 

until 1973 he paid Christ enough money to cover the Federal Land 

Bank mortgage and paid Christ at least $1,000 annually due on the 

contract. Ben also paid Christ $5,000 in 1974 and $7,000 in 

1975. Ben testified he had therefore paid off the entire 

contract with the final payment in 1975. 

In 1965, Ben and Dorit filed a petition for bankruptcy. The 

petition did not list Ben's equity in the farm as an asset, nor 
did the petition list the note payable to the Federal Land Bank 

as a claim against the bankruptcy estate. After the bankruptcy, 

Ben, Dorit, and their children continued to live and work on the 

farm. From 1967 through 1973 Ben and/or Christ obtained annual 

financing from the Midland Production Credit Association (PCA). 

To obtain financing, the debtor must complete and sign a financial statement, loan applications, and security agreements. In 

those years Ben obtained the financing, he stated on the security 

agreements that he was operating the farm as a lessee. In those 

years Christ obtained the financing, he stated on the security 

agreements that he was operating the farm as the owner. 

Northwestern Union introduced into evidence checks showing 

payments to the Federal Land Bank for the years 1966, 1968, 1969, 

1970, 1975, 1976, and 1977. Each check is drawn upon Christ's 

account and signed by Christ. Ben testified he paid cash to 

Christ who would then make the necessary payments to the Land 

Bank. 

In April 1975, Ben testified Christ gave him the warranty 

deed stating Ben had fulfilled his obligation on the contract. 

Dorit Worm testified she was present when the deed was exchanged. 

Two persons, Shirly Cunningham and Charles Blythe, testified Ben 

had possession of the deed in 1975 and showed the deed to 

them. In February 1977, Dorit Worm filed a petition for dissolution of her marriage to Ben Worm. Paragraph VIII states the parties, "have accumulated no personal or real property." 

In 1978, Christ leased the Home Place and the South Place to 

Harold Zent Farms, Inc. In March 1980, Christ leased the Home 

Place and the South Place to Robert DeCock and James DeCock. Ben 

Worm was not a party to the leases. 

Dawn Worm, Ben's daughter, testified Ben gave her the deed 

for safekeeping and that she returned the deed to Ben near the 

end of 1980 or the beginning of 1981. Helen Worm testified Ben 

found what she thought was the deed in 1981 while he was helping 

her move a mattress in Christ's home. Ben recorded the deed at 
the Treasure County Clerk and Recorder's Office in November 1981. 

Christ died on November 14, 1981. In a Will he executed June 

3, 1975, Christ devised one-third of all his real property to 

Helen Worm; two-thirds of the Home Place to James Jacob Worm; and 

two-thirds of the South Place to Ben's children, Ben Christ Worm 

and Christian Willie Worm. The Will states, "I am leaving the 

'South Place' to my son BENJAMIN'S CHILDREN at his request so 

that he may not sell or encumber the same by reason of his 

admitted weaknesses." Northwestern Union Trust Company was 

appointed personal representative of Christ's estate. 

Northwestern Union brought this action to set aside the deed 

that Ben recorded placing title to the Home Place and the South 

Place in his and Dorit's name. After a jury trial in the 

District Court of the Thirteenth Judicial District , Treasure 

County, the jury returned a verdict in favor of Ben and Dorit 

Worm. Northwestern Union moved for a new trial which the 

District Court denied and this appeal followed. 

The issues raised on appeal are as follows: 

1. Whether the jury verdict was supported by substantial 

credible evidence; 

2. Whether it was error to exclude the video testimony of 

attorney, Richard W. Anderson, who prepared the bankruptcy petition for Ben and Dorit in 1965; 

3. Whether it was error to instruct the jury that they could 

find that Christ and Helen Worm made a gift of the real property 

to Ben and Dorit Worm; 

4. Whether it was error to refuse the plaintiff's offered 

instruction on mutual cancellation of a contract. 

We will first deal with issue number four. Plaintiff's 

offered the following instruction on mutual cancellation of a 

contract: 

"You are instructed that the parties to a 

contract may terminate it at any time by 

mutual consent. The effect is to relieve the 

parties from going forward under the contract. 

This termination may be orally done, and the 

fact of its having been done may be 
established by evidence of the acts and 

declaration of the parties ." 

Plaintiff's contend the District Court erred in refusing to 

give this instruction to the jury. We agree. The rule of law 

stated in the above instruction comes from Eggers v. General 

Refrigeration Co. (1949), 123 Mont. 205, 219, 210 P.2d 636: 

"The parties to the executory written 

agreement were privileged to terminate it at 

any time by mutual consent independently of 

any express agreement so providing and it is 

immaterial whether such termination be characterized an abandonment, cancellation, mutual 

rescission or waiver. The effect is the same 

-- to relieve the parties from going forward 

under the written instrument, and this may be 

accomplished by parol, and the facts of its 

having been done established by evidence of 

the acts and declarations of the parties." 

This rule originates from Kester v. Nelson (1932), 92 Mont. 

69, 10 P.2d 379, and has since been specifically cited in Small 

v. Coca-Cola Bottling Co. (1958), 134 Mont. 168, 328 P.2d 124, 

and West River Equipment Co. v. Holzworth Construction Co. 

(1959), 134 Mont. 582, 335 P.2d 298. In Standard Insurance Co. 

v. Sturdevant (1977), 173 Mont. 23, 27, 566 P.2d 52, this Court 

stated: "Termination of a contract by mutual consent is a 

question of fact for the district court." And in Murphy v. 

Redland, Berthelson & Sidney Livestock (1978), 178 Mont. 296, 

306, 583 P.2d 1049, this Court stated: "A contract may be terminated by the parties, but only by the mutual consent of all the 

parties." 

Plaintiffs pled in their complaint, that the contract had 

been terminated and in their trial memorandum stated the contract 

was cancelled by mutual consent of the parties. Helen Worm 

testified the contract was terminated by the mutual consent of 

the parties when Ben filed a petition for bankruptcy in 1965. 

Plaintiffs introduced evidence which showed Ben did not claim 

ownership of the farm on the bankruptcy petition, loan applications, lease agreements and Dorit's petition for dissolution of 

marriage. There is no question plaintiff's case rested upon the 

issue of mutual cancellation of the contract. A party has a 
right to have instructions given which are adaptable to his 

theory of the case. Williams v. Montana National Bank of Bozeman 

(1975), 167 Mont. 24, 534 P.2d 1247, 1250. Here, refusal to 

instruct on mutual cancellation of the contract constitutes 

reversible error. 

Defendant's argue since mutual cancel lation of the contract 

was not listed as an issue in the pretrial order, plaintiffs cannot raise this issue on appeal. Defendants rely on Rule 16, 

M.R.Civ.P., claiming the pretrial order, "when entered controls 

the subsequent course of the action, unless modified at the trial 

to prevent manifest injustice ." However, Rule 15 (b) , M.R.Civ. P., 

states: 

"When issues not raised by the pleadings are 

tried by express or implied consent of the 

parties, they shall be treated in all respects 

as if they had been raised in the pleadings. 

Such amendment of the pleadings as may be 

necessary to cause them to conform to the evidence and to raise these issues may be made 

upon motion of any party at any time, even 

after judgment; but failure to so amend does 

not affect the result of the trial of these 

issues." 

We find here, the issue of mutual consent was raised at the 

trial and thus was an issue for consideration by the jury. We do 

not agree with defendant's position that this issue was waived at 

the trial and not reviewable by this Court. 

In summation, we will briefly comment on issues number two 

and three. We do not find it necessary to determine whether it 

was error to exclude the video testimony of Richard Anderson as 

he was intended as a rebuttal witness, not listed on the pretrial order. On retrial, plaintiffs can take the necessary 

action to present their evidence concerning the bankruptcy petition and call the proper witness or witnesses. Plaintiffs contend it was error for the District Court to instruct the jury 

that they could find Christ had gifted the property to Ben and 

Dorit. Whether there was a gift was listed as an issue in the 

pretrial order. As stated above, a party has the right to have 

instructions given which are adaptable to his theory of the case. 
We find no error in the instruction. 

Judgment is reversed and the case is remanded for retrial. 

I 

Justice 

We concur: 

3d~A&hQq Chief Justice