No. 81-205 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

R & W LEASING, a Montana Corporation, 

Plaintiff and Respondent, 

JACK MOSHER, d/b/a BIG SKY CAMPER 

VILLAGE, 

Defendant and Appellant. 

Appeal from: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, The Honorable 

W. W. Lessley, Judge presiding. 

Counsel of Record: 

For Appellant: 

J. David Penwell, Bozeman, Montana 

For Respondent : 

Lyman H. Bennett, 111, Bozeman, Montana 

Submitted on Briefs: September 17, 1981 

Decided : NO\/ I 2 1981 
Mr. Justice John Conway Harrison delivered the Opinion of 

the Court. 

This is an appeal from a judgment in the amount of 

$207.34 plus attorney fees of $650 arising out of a leasing 

agreement. 

Appellant Mosher, manager of the Big Sky Camper 

Village, came to town from his pristine mountain camping 

area on February 10, 1978, looking for a truck that would 

not only assist him in his work as camp manager but would 

also be able to push a plow attached to its front end. He 

did not go to all the leasing places in town but went 

directly to respondent R & W Leasing, Inc. There appellant 

leased a 1978 Dodge 3/4 ton, four-wheel drive pickup truck. 

The total lease agreement obligation owing from 

appellant to respondent was $11,334.07, with monthly 

payments of $277, except for the first payment which was 

$178.07. Twelve payments were made, ending with the January 

1979 payment, which totaled $3,225.07. In February 1978, at 

the time of the lease, a deposit of $277 was made by 

appellant to immediately obtain the truck. 

At the time of the lease, appellant had a snow plow 

attached to the front end of the truck. Whether the plow 

belonged to appellant or to the Chrysler Corporation, for 

whom he worked, is not established in the record. However, 

there is no question that respondent sold the plow for $650, 

without appellant's permission, upon repossession of the 

vehicle by respondent. 

Appellant had the truck for approximately one year. 

During that period he had problems with the truck and had it 

into ,respondent's shop a number of times. In October 1978 

appellant's wife, while driving the truck down the Gallatin 
Canyon, had an accident, causing damages to the truck in the 

amount of $1,935.49. The truck was towed into respondent's 

shop for repairs, and appellant never again had possession 

of it, although he testified he tried to get it several 

times. Respondent testified parts were not available, and 

since appellant's payments were late, it was decided that 

respondent would terminate the lease and sell the truck. 

Between the time of the accident and the termination of the 

lease, appellant rented a substitute vehicle. He later 

purchased a secondhand Ford truck for $800 and kept it on 

the job until he left his position as camp manager sometime 

in 1979. 

Following termination of the lease, the respondent 

obtained two cash bids for the truck, each in the amount of 

$5,000. Respondent incurred costs of $514.42 for sales and 

reconditioning costs prior to selling the truck for $7,987. 

The purchaser of the truck was allowed $2,100 as a 

trade-in for another vehicle. However, only $700 was set 

forth as the value to be allowed on the sale as respondent 

testified that $1,400 was what it termed an "over 

allowance." Respondent testified that the over allowance 

figure of $1,400 was "more than you should have unless you 

wanted to make the deal." 

Respondent received from its insurance company the 

sum of $1,885 for damages to the truck caused by the October 

accident. The court found that appellant owed respondent 

$98.34 for total costs of repairs after allowing credit for 

the insurance payment. The court's finding follows: 
Cash Wholesale Price 

Depreciated Value $4,375.00 

Premature Termination 

Factor ($20 x 9 months) 180.00 

Unpaid Rent (Feb-Apr 1979) 831.00 

Deposit previously paid by 

lessee 277.00 

($ 109.00) 

Rentals and Repairs ($ 98.34) 

TOTAL ($ 207.34) 

Three issues are presented: 

1. Whether the trial court erred in disregarding the 

actual purchase price of the leased vehicle while giving 

credence to respondent's "appraisals" secured without any 

notice to the appellant. 

2. Whether the trial court erred in ruling against 

appellant's counterclaim for the value of the snow plow 

admittedly sold by respondent. 

3. Whether the trial court erred in rendering 

judgment for the respondent. 

Appellant first alleges that respondent, according to 

the paragraph nine in the lease agreement, should have 

consulted him on appraisals. Appellant's argument, as best 

we can understand it from his brief, really resolves itself 

to determining whether the trial court had sufficient facts 

to make the determination it did. We find there was 

sufficient testimony introduced on the value of the vehicle 

and the District Court's use of a "wholesale value" and 

"retail value" in arriving at the $5,000 figure was within 

the meaning of paragraph nine of the leasing agreement. 
That paragraph read: "Upon such premature termination, 

Lessor shall promptly obtain the highest available cash 

offer at wholesale . . ." 

This Court, in setting the standard of review in 

nonjury cases, has held numerous times that, "[w] ith regard 

to the standard of review, this Court has repeatedly stated 

it will not overturn the findings of fact and conclusions of 

law if supported by substantial evidence and by the law. 

Evidence will be viewed in the light most favorable to the 

prevailing party. [Citations omitted.]" Toeckes v. Baker 

(1980) I Mont . , 611 P.2d 609, 611, 37 St.Rep. 948, 

The subissue of whether the court erred in ruling 

against appellant's counterclaim will be discussed under 

this issue. 

As previously noted, the record did not reveal 

whether appellant originally owned the plow. Respondent 

does not deny keeping and selling the plow and justifies its 

actions with a lame excuse that it sold the plow to get 

collateral to cover money that might be due and owing. 

However, we cannot find from the facts testified to at trial 

that the trial judge erred in not allowing appellant's 

counterclaim. 

The third issue concerns granting attorney fees. 

Appellant alleges that fees of $650 on a $350 claim tried in 

two hours is excessive. Paragraphs eight and ten of the 

lease agreement provided for attorney fees in the event of a 

breach. 

Under Rule 15(b), M.R.Civ.P., the court can award 

damages over and above the amount asked for in the complaint 
and greater attorney fees than originally requested. That 

rule provides: 

"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 the issues may 

be made upon motion of any party at any time, 

even after judgment; but failure to so amend 

does not effect the result of the trial of 

these issues. If evidence is objected to at 

the trial on the grounds that it was not 

within the issues made by the pleadings, the 

Court may allow the pleadings to be amended 

and shall do so freely when the presentation 

of the merits of the action will be subserved 

thereby and the objecting party fails to 

satisfy the court that the admission of such 

evidence would prejudice him in maintaining 

his action or defense upon the merits. The 

Court may grant a continuance to enable the 

objecting party to meet such evidence." 

See also Kizziar v. Dollar (10th Cir. 1959), 268 F.2d 914, 

Here, respondent filed a notion for attorney fees 

together with a supporting affidavit showing: 

Correspondence Total $ 90.00 

Office time (8-1/2 hr. at $60/hr) 425.00 

Court time (4-1/2 hr. at $100/hr) 450.00 

TOTAL DUE $965.00 

In conformity with the motion, a hearing was held 

before the court, and the court awarded $650. We find no 

error . 

The final issue concerns whether the court erred in 

failing to award appellant damages for the alleged breach of 

implied warranty of merchantability. 

Appellant relies on Henningsen v. Bloomfield Motors, 

Inc. (1960), 32 N.J. 418, 161 A.2d 69, and Whitaker v. 

Farmhand, Inc. (1977), 173 Mont. 345, 567 P.2d 916, as 

controlling here on implied warranties. 
Under the facts of this case the theory of implied 

warranty of merchantability and/or the implied warranty of 

fitness for a particular purpose do not apply. These 

warranties are only applicable in the event of a "sale" as 

defined by the Uniform Commercial Code. Section 30-2-106, 

MCA, defines sale as follows: 

"A 'sale' consists in the passing of title 

from the seller to the buyer for a price 

(30-2-401) . . ." 

Anderson Uniform Commercial Code (2nd ed.), section 

2-106:5 states: 

"Although the Code determines most legal 

problems without reference to title, a sale 

is defined as the passing of title from the 

seller to the buyer for a price. The 

transfer of title is the essential element or 

the distinguishing characteristic of a sale 

of goods. " 

The lease agreement as entered into by and between 

appellant and respondent provides in pertinent part: 

"This agreement is one of leasing only, and 

the lessee shall not have or acquire any 

right, title, or interest in the vehicle 

except the right to use or operate it as 

provided herein. Lessee has no option to 

purchase the leased vehicle." 

On the basis of the above language contained in the 

lease agreement, as well as on the definition of a "sale" as 

found in the UCC, no implied warranty of either 

merchantability or fitness for a particular purpose is 

applicable to a lease arrangement. 

The judgment of the District Court is affirmed. 
We concur: 
Mr. Justice Frank B. Morrison, Jr., dissenting: 

I respectfully dissent from the majority opinion. 

A review of the District Court file, and particularly 

the findings of fact entered by the District Court, fail to 

disclose that the counterclaim was treated. The District 

Court did, in a conclusion of law, deny defendant's counterclaim. 

However, this is insufficient. 

In defendant's counterclaim, defendant alleges that the 

vehicle was defective and that defendant incurred damages as 

the result of being without the service of the vehicle for 

prolonged periods of time. Defendant alleges that the 

defects resulted in continuous repair attempts with resulting 

cost for replacement vehicles. 

In reviewing this record I am unable to determine the 

basis for the District Court's resolution of this issue. 

The District Court failed to make any findings of fact with 

respect to defendant's allegation of defects. 

I would remand to the District Court with direction to 

make specific findings of fact on defendant's counterclaim 

so that this Court would have an adequate opportunity to 

review those issues.