### No. 81-205 IN THE SUPREME COURT OF 

### THE STATE OF MONTANA 1981

R & 

### W LEASING,a Montana Corporation, Plaintiffand Respondent,

JACK MOSHER, d/b/a BIG SKY CAMPER VILLAGE, Defendantand Appellant.

Appeal from: DistrictCourt of the Eighteenth Judicial District, In and for the County of Gallatin,The Honorable 

### W. W. Lessley, Judgepresiding.

Counsel of Record: ForAppellant: J. David Penwell,Bozeman,Montana For Respondent: 

### Lyman 

### H. Bennett, 111,Bozeman,Montana

Submitted on Briefs: September 

### 17, 1981 Decided:

## NO\/

# I2 

## 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 1979payment,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 thatperiod he had problems with the truck and had it into ,respondent'sshop a number of times. In October 1978 appellant's wife, while driving the truck down the GallatinCanyon, had an accident, causing damages tothe truck inthe 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 timeof 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 thejob until he lefthisposition 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 costsprior to sellingthe 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 tomake thedeal." Respondent received from its insurance company the

sum of $1,885 for damages tothe truck caused by theOctober 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 9months) 180.00 Unpaid Rent (Feb-Apr 1979) 831.00 Deposit previouslypaid 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 atwholesale

# ..." 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 willnot overturn the findings of factand conclusions of law if supported by substantial evidence and by the law. Evidence willbe viewed in the lightmost 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 doesnot deny keeping and sellingtheplow 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 toattrial that the trial judge erred in not allowing appellant's counterclaim. The third issue concerns granting attorney fees. Appellant allegesthatfeesof $650 on a $350 claimtried in two hours is excessive. Paragraphs eight and ten of the lease agreement provided for attorney feesin theevent of a breach.Under Rule 15(b), M.R.Civ.P., the court can award damages over and above the amount asked for inthe complaintand 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 asmay be necessary to cause them to conform to the evidence and to raise the issues may be made upon motion of any party atany 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 shalldo so freely when the presentation of themerits of the actionwillbe 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 tomeet such evidence." See also Kizziar v. Dollar (10thCir. 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 toaward appellantdamages 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 controllinghere 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. JusticeFrank B. Morrison, Jr., dissenting: I respectfully dissentfrom themajority opinion. A review of theDistrictCourt file, and particularly the findingsof factenteredby theDistrictCourt, failto disclosethatthecounterclaimwas treated. The District Courtdid, ina conclusionof law, deny defendant's counterclaim. However, thisisinsufficient. Indefendant's counterclaim, defendantalleges thatthe vehiclewas defective and thatdefendant incurred damages as theresultof beingwithout the serviceof thevehicle for prolonged periods of time. Defendant alleges thatthe defects resulted incontinuous repair attempts withresulting costforreplacement vehicles. Inreviewing thisrecord I am unable todetermine the basis for theDistrictCourt's resolution of thisissue. The DistrictCourt failed tomake any findingsof factwith respect todefendant's allegationof defects. I would remand totheDistrictCourtwith direction to make specificfindingsof facton defendant's counterclaim

so thatthisCourtwould have an adequateopportunityto review those issues.