No. 90-351 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

THE FEDERAL LAND BANK OF SPOKANE, 

a corporation, 

Plaintiff and Respondent, 

ROGER SNIDER and PENNY SNIDER, 

husband and wife; ELMER SNIDER 

and FLORENCE SNIDER, husband 

and wife; UNITED STATES OF 

AMERICA, acting through the 

Farmers Home Administration; 

WESTERN BANK OF CHINOOK, N.A.; 

and INTERSTATE FEDERAL LAND 

BANK ASSOCIATION, a corporation, 

Defendants and Appellants, 

and 

FEDERAL INTERMEDIATE CREDIT 

BANK OF SPOKANE, a Federal 

corporation and FARM CREDIT SYSTEM MAR 2 1 11991 

CAPITAL CORPORATION, a Federal 

corporation, 

CLERK OF SUPREME COURar 

Additional Parties Defendant STATE OF MONTANA 

on counterclaim. 

APPEAL FROM: District Court ofthe Seventeenth Judicial District, 

In and For the County of Blaine 

The Honorable John Warner, presiding. 

COUNSEL OF RECORD: 

For Appellants: 

Leo Graybill, Jr., Graybill, Ostrem, Warner & 

Crotty, Great Falls, Montana 

For Respondents: 

Kevin C. Meek, Alexander, Baucus & Linnell, 

Great Falls, Montana 
~ustice Terry N. ~rieweiler delivered the opinion of the Court. 

plaintiff, the Federal Land Bank of Spokane, ("the Bank") 

commenced this suit in ~istrict Court to foreclose a mortgage on 

property owned by the defendants Roger and Penny snider (~niders). 

The Bank also sought a deficiency judgment for the difference 

between the amount due under a note executed by the ~niders and 

that amount recovered by the Bank at the foreclosure sale. 

Following trial before the Blaine County District Court in the 

Seventeenth ~udicial District of Montana, without a jury, judgment 

was entered for the plaintiff awarding it the sum of $856,560.71, 

plus interest, attorney fees and costs. In addition, the judgment 

foreclosed defendants1 mortgage and ordered that defendants' 

property, described in that mortgage be sold at foreclosure sale. 

Sniders were awarded possession of the mortgaged lands during the 

one-year statutory redemption period. However, they were ordered 

to pay rents or profits received or earned during the period of 

redemption to the person who purchased the property at the 

foreclosure sale. From that judgment, defendants appeal. We 

affirm in part and reverse in part. 

Sniders raise the following issues on appeal: 
1. Did the District Court err in refusing the defendants a 

trial by jury on their legal defenses? 

2. Did the District Court err in concluding the plaintiff had 

no duty to reamortize defendants' loan under the facts proven at 

trial? 

3. Did the District Court err in finding that defendants are 

I1tenantsl1 during the redemption period, and, therefore, liable for 

rents and profits to the purchaser at foreclosure? 

FACTUAL BACKGROUND 

In 1974, Sniders purchased a 1,500-acre ranch north of Harlem 

from Mr. Snider's parents. They entered into a contract for deed 

pursuant to which annual payments were made to his parents. 

Periodically, Sniders picked up additional pieces of agricultural land to combine with their original ranching operation. 

In 1980, defendants learned that the Wilson Ranch, which 

consisted of 4,000 acres, was available for purchase. They decided 

that because of its proximity to their land it would fit in well 

with their existing operation and increase their income disproportionately to the increase in their expenses. 

Defendants intended to purchase the Wilson property on 

contract but needed financing for the down payment. They sought 

that financing from the plaintiff through Federal Land Bank in 

Havre. They offered to secure the loan from the Bank by providing 

a mortgage on their home and original 1,500-acre ranch. In order 
to give the Bank's mortgage priority, Mr. Snider's parents agreed 

to subordinate their interest as sellers on the contract for deed 

and the loan was increased sufficiently to pay off a previous loan 

to the Farm Home Administration which was secured by the same 

property. 

On December 22, 1980, Sniders borrowed $487,000 from the Bank 

and signed a promissory note agreeing to repay the loan by making 

thirty-five annual payments in the amount of $52,736.14. An 

interest payment was due on January 1, 1981; however, the first 

full annual payment was not due until January 1, 1982. As security 

for repayment of the loan, Sniders mortgaged their original ranch 

to the Bank. 

Defendants made the payments which were due in 1981, 1982, and 

1983. 

In 1984, the defendants' farm income was adversely affected 

by drought, grasshoppers and poor prices for their cattle. They 

were unable to make their 1984 loan payment when due. However, 

they qualified for a disaster loan from the Farm Home Administration in the amount of $85,200. From that amount, they used 

$63,306.76 to make their 1984 payment to the Bank on July 2, 1985. 

Conditions did not improve in 1985. In addition, defendants' 

wheat crop was poor, and the income that was realized from the 

wheat crop had to be paid to the Western Bank in Chinook to repay 

a portion of the operating loan that that bank had extended. 
Defendants were unable to make their 1985 payment. They requested 

that the Bank reamortize the payments due pursuant to their loan 

agreement. However, after analyzing the defendantsv ability to 

repay a reamortized loan, the Bank declined to do so and notified 

Sniders that they would begin foreclosure proceedings on May 1, 

1986, if the 1985 payment was not forthcoming prior to that date. 

Defendants did not make the 1985 payment. Neither have they made 

payments for 1986, 1987, 1988, 1989, or 1990. As a result, this 

action was commenced on November 22, 1986, and judgment was entered 

for the plaintiff as set forth above on June 6, 1990. 

In their contentions as set forth in the final pretrial order, 

Sniders denied that they were in default and raised the affirmative 

defense that their loan agreement with the Bank included unwritten 

terms which had been breached by the Bank. 

At trial, Sniders testified that prior to entering into the 

loan agreement with the Bank, they became concerned about their 

ability to make payments during a "disaster year." They communicated that concern to Jerome Daly, the manager of the Bank in 

Havre, and testified that he reassured them that in the event of 

a "disaster yearv1 they could reamortize their payments. Their 

understanding of reamortization was that they could either pay the 

delinquent payment at the end of the pay-back period or blend it 

into their other payments. Defendants testified that when they 

were unable to make payments in 1985 and 1986, they requested an 
opportunity to reamortize their loan but, contrary to the Bank's 

earlier verbal assurances, they were denied the opportunity to do 

so. They testified that because of the Bank's refusal to do so, 

they were unable to use the amount borrowed from the Farm Home 

Administration in 1985 to expand their cattle herd and for that 

reason have been unable to make further payments on their loan 

since that date. 

Jerome Daly acknowledged that reamortization was discussed 

prior to finalization of the Sniders' loan, but stated that he did 

not commit the Bank to reamortization at that time because he did 

not have the authority to do so. He furthermore testified that 

before reamortization could be agreed to, the Bank would have to 

re-evaluate a customer's financial situation to determine whether 

there was any reasonable prospect for making payments under a 

reamortized schedule. He stated that reamortization would have a 

net effect of increasing the annual payment due from the borrower. 

Prior to trial the defendants took the position that their 

affirmative defense constituted a breach of contract claim and that 

they were entitled to a jury trial. The District Court concluded 

that this was an action to foreclose a mortgage which was equitable 

in nature, and that based on the defendants' contentions in the 

pretrial order there were no counterclaims. Defendants' jury 

demand was denied. 
I 

In asserting their right to have had their case tried before 

a jury, Sniders rely on this Court's decision in Gray v. City of 

Billings (1984), 213 Mont. 6, 689 P.2d 268. In Gray, we held that 

when a plaintiff combines a legal claim for breach of contract with 

an equitable action he is entitled to a jury trial of his legal 

claims. We also referred to authority from the United States 

Supreme Court which has held that the Seventh Amendment protects 

a defendant's right to jury trial on a legal counterclaim. Beacon 

Theatres, Inc. v. Westover (1959), 359 U.S. 500, 79 S.Ct. 948, 3 

L.Ed.2d 988. 

Plaintiff argues that this case does not involve a legal claim 

nor a legal counterclaim and that Gray does not apply to an 

affirmative defense. 

We need not decide whether the Gray rationale applies in this 

case. 

Before Sniders were entitled to a jury trial, there had to be 

issues of fact for a jury to decide. Under Montana law, juries 

decide only issues of fact. Section 25-7-103, MCA. The court 

decides issues of law. Section 25-7-102, MCA. 

Whether or not there is sufficient evidence to raise an issue 

of fact is a question of law for the court and is not an issue of 

fact. Mang v. ~liasson (1969), 153 Mont. 431, 458 P.2d 777, and 

Flansberg v. Montana Power Co. (1969), 154 Mont. 53, 460 P.2d 263. 
That standard is the same for an appellate court as it is for the 

trial court. Rhoades v. DeRosier (Wash. App. 1976), 546 P.2d 930, 

. . . The right of jury trial on any issue of 

fact presented by the pleadings is provisional, and if the evidence fails to form such 

issue of fact, the right of jury trial disappears. 

Loucks v. Albuquerque National Bank (N.M. 1966) , 418 P. 2d 191, 194. 

As we stated in Smith v. Polish (1967), 150 Mont. 340, 349, 

. . . Whether there is any substantial evidence in the case made by party upon whom the 

burden rests is always a question of law. 

While the fact situation differs here from the 

case of West v. Wilson, 90 Mont. 522, 4 P.2d 

469, the principle here controlling is set 

down in citing Chief Justice Brantlyts opinion 

in Escallier v. Great Northern Ry. Co., 46 

Mont. 238, 127 P. 458. The principle is the 

same: l1The old rule that a case must go to 

the jury if there is a scintilla of evidence 

has been almost everywhere exploded. There is 

no object in permitting a jury to find a 

verdict which a court would set aside as often 

as found. The better and improved rule is, 

not to see whether there is any evidence, a 

scintilla, a crumb, dust on the scales, but 

whether there is any upon which a jury can, in 

any justifiable view, find for the party 

producing it, upon whom the burden of proof is 

imposed.tt [Connor v. Giles, 76 Me. 132.1 

In this case we hold as a matter of law that Sniders presented 

insufficient evidence to have submitted the issue raised by their 

affirmative defense to a jury and that they were, therefore, not 
prejudiced by the District Court's refusal to grant their request 

for a jury trial. 

In order to prevail in their claim that the Bank breached its 

verbal agreement to reamortize, it was necessary that Sniders prove 

that they would have been in a position to perform their part of 

such an agreement and that they were damaged by the Bank's refusal 

to do so. Brown v. First Federal Savings & Loan Association of 

Great Falls (1969), 154 Mont. 79, 84-89, 460 P.2d 97, 100-102. In 

this case, Sniders offered no substantial evidence that they would 

have been capable of making further loan payments if allowed to 

reamortize. All of the evidence was to the contrary. Therefore, 

defendants sustained no damage by the Bank's refusal to do so. 

Sniders' ability to repay the loan according to its original 

terms was questionable at best. The projection for being able to 

do so was based upon 1977 and 1979 calf and grain prices which had 

declined since those years. Even at those higher prices, the loan 

appraisal only provided Sniders with $729 of discretionary money 

at the end of each year. 

Subsequent to the time that loan was entered into, Sniders' 

income from the ranching operation declined and they incurred 

substantial additional debt which had to be serviced from less 

income. 

Thomas Wolfe testified that he became manager of the Federal 

Land Bank Association in Havre in 1985 and met with Sniders in 1986 
to discuss their delinquent loan payment. In an effort to try to 

resolve their default, he did an analysis of their ability to 

restructure their debt and reamortize their loan at the Bank. That 

analysis was offered as an exhibit at the time of trial and was 

uncontradicted. It established that subsequent to December of 1980 

Sniders incurred several hundred thousand dollars of additional 

debt and that the payments necessary to service that debt on an 

annual basis resulted in a $101,000 operating deficit for the 

Sniders in 1986. Based upon the need to carry over debt from 1986 

to future years because of the Sniders' inability to pay those 

debts in a timely manner, the operating deficit was projected to 

substantially increase on an annual basis. Both plaintiff and 

defendants agreed that reamortization would result in higher, not 

lower, annual payments. The uncontroverted evidence was that in 

1985 and 1986 Sniders had no ability to make their original 

payments. There was no prospect for improvement in their financial 

situation, and they had even less ability to make larger payments 

in the future. They were not in a position to take advantage of 

reamortization had it been offered. Therefore, they sustained no 

damage by the Bank's refusal to reamortize their loan. Their 

affirmative defense fails as a matter of law and they were not 

entitled to a jury trial on that issue. 
For the reasons set forth in the preceding paragraphs, we also 

conclude that the District Court did not err in finding that the 

Bank had no duty to reamortize defendantsu loan under the facts 

proved at trial. 

This case was tried before the ~istrict Court on February 12, 

1990. The court's original Findings of Fact and Conclusions of Law 

were entered on April 16, 1990. On May 10, 1990, the court entered 

additional Findings and Conclusions, including Conclusion of Law 

No. 6 which was as follows: 

The purchaser at the foreclosure sale ordered 

herein is entitled to receive from the 

mortgagors, the Sniders, the rents and profits 

from the mortgaged land during the period of 

redemption. Any amount received by plaintiff 

shall be a credit upon the amount required to 

redeem the property. Section 25-13-822 (1) , MCA; Citizens1 National Bank v. Western L. & 

B. Co., 64 Mont. 40, 47 (1922). Such purchaser may demand an accounting of said rents 

and profits as provided by § 25-13-822(2), 

MCA . 

On appeal, Sniders argue that as the judgment debtor they are 

entitled to possession of the property on which they reside 

pursuant to 5 71-1-229, MCA, and that the issue of "rents and 

profits" only arises when some third person or a true tenant is in 

possession of the property which has been foreclosed upon. We 

agree. 
Title 71, Chapter 1, of the Montana Code Annotated sets forth 

the rights and obligations of debtors and creditors involved in the 

mortgaging of real estate in Montana. Section 71-1-229, MCA, 

provides in relevant part as follows: 

The purchaser of lands at mortgage foreclosure 

is not entitled to the possession thereof as 

against the execution debtor during the period 

of redemption allowed by law while the execution debtor personally occupies the land as a 

home for himself and his family. . . . The 

intention hereof is to insure to such owner 

the possession of his land prior to foreclosure and during the year of redemption. 

Chapter 13 of Title 25 of the Montana Code Annotated provides 

for the execution of judgments. Section 25-13-821, MCA, provides 

a debtor who personally occupies the land as a home with rights of 

possession identical to those provided for in 5 71-1-229, MCA. 

Section 25-13-822, MCA, then provides that: 

(1) The purchaser, from the time of the sale 

until a redemption, and a redemptioner, from 

the time of his redemption until another 

redemption, are entitled to receive from the 

tenant in possession the rents of the property 

sold or the value of the use and occupation 

thereof. . . . 

In arriving at its conclusion that a judgment debtor who 

occupies the premises as a home for himself and his family is a 

"tenant in possessionm pursuant to 5 25-13-822 (1) , MCA, the 

District Court relied on this Courtls decision in Citizensv 

National Bank v. Western L. & B. Co. (1922), 64 Mont. 40, 208 P. 

893. In Citizens1 National Bank, the defendant Western Loan 
foreclosed on certain property located in Hardin. The sheriff's 

sale occurred on June 4, 1917. After receiving its certificate of 

sale from the sheriff, the loan company agreed to sell the property 

to Mrs. A. Becker on a contract. She took possession of the 

property on July 23, 1917, and thereafter received rents and 

profits from the property. 

Pursuant to foreclosure of a second mortgage, the plaintiff 

Citizens' National Bank subsequently received a sheriff's certificate pursuant to which it redeemed the property from the first 

sale. It then demanded from the defendant all rents and profits 

received subsequent to the original foreclosure. 

Under those circumstances, this Court found that Mrs. Becker 

was a "tenant in possession.'' However, that case is distinguished 

from this case for two reasons: First, Mrs. Becker was not the 

execution debtor and did not personally occupy the premises as a 

home for herself; and, second, the case was decided on the basis 

of the law as it existed prior to 1921. Sections 25-13-821, MCA, 

and 71-1-229, MCA, which guarantee the judgment debtor the right 

to possess land he and his family personally occupy as a home were 

not enacted until 1921 and were not applicable to the facts in 

Citizens' National Bank. 

In this case the evidence showed that Sniders did occupy the 

land which was foreclosed on as their home. To require that they 

pay rent or profits from the land detracts from their unqualified 
statutory right to possession in a way that was not provided for 

by the legislature. The sections quoted above provide for an 

unqualified right to possession. To charge rent for that possession diminishes that right without any statutory basis for doing 

SO. 

The plaintiff suggests that if this Court should find that 

Sniders are entitled to possession of the property foreclosed upon 

without the payment of rent then this Court should construe 5 71- 

1-229, MCA, to pertain only to that portion of the property on 

which the defendants reside. In other words, that portion that 

defendants specifically occupy as a home should be separated from 

the rest of the 1,500-acre ranch for purposes of possession. 

Plaintiff's position for purposes of collecting rent is 

different from the position it took when it filed its complaint. 

Paragraph 11 of the complaint states that the premises foreclosed 

upon have at all times been used as one lot or parcel; every part 

of it is necessary for the best use of the property, and, it cannot 

be sold in separate parcels without material injury. 

Section 71-1-229, MCA, makes no provision for subdividing 

lands that the execution debtor occupies and we decline to add such 

a provision by judicial decision. 

Based on the foregoing discussion, we affirm that portion of 

the District Court's judgment foreclosing the Sniders' mortgage in 

favor of the plaintiff and reverse that portion which required that 
defendants pay rent or income to the plaintiff during the one-year 

period of redemption. 

This case is remanded to the District Court for entry of 

judgment consistent with this Opinion. FdT& 

I- Idst ice 

We Concur: / 

" Chief Justice /