NO. 84-143
INTHE SUPREME COURT OF THE STATE OF MONTANA 1984

GARY A. GRAY andDIANA M. GRAY, husband and wife, Plaintiffs and Appellants, v. CITY OF BILLINGS, etal., Defendants and Respondents.

Appeal from: DistrictCourt of theThirteenthJudicial District, Inand fortheCounty of Yellowstone Honorable RobertWilson, Judgepresiding. Counsel of Record: For Appellants: Jones, Jones & Work, Billings, Montana For Respondents: Peterson, Schofield & Leckie, Billings, Montana

Submittedon briefs: July 10, 1984 Decided: October 15, 1984Mr. Chief Justice Frank I. Haswell delivered the Opinion of theCourt. This is an appeal from a jud-gmententered by the District Court.of the Thirteenth JudicialDistrict,Yellowstone County. The plaintiffs, Gary and Diana Gray, challenge (1)the validity of a subdivision improvement agreement entered into between the Grays and defendant, City of Billings, and (2) the legality of a special improvementdistrict formed under the provisions of the agreementand accompanyingwaiver. The trial court found for the City, and the Grays appeal. We vacate the judgment and remand for a jury trial of the plaintiffs'breach of contra-ctclaim. In 1977, the Grays purchased approximately seven acres of surplus state lands located in the City of Billings, paying apurchase price of $47,000 plus $15,000 indelinquent property assessments. When purchased, the acreagewas platted for forty-four mobile home lots. After purchase, the Grays, with the aid of an engineering firm, planned and applied for a replatting that would accommodate fifty-four mobile home lots. On November 4, 1977,a.fterpublic hearing and a series of negotiationsand reviews, the Grays signed a subdivision improvement agreement and waiver. Five months later, the City accepted the agreement and a-pproved the preliminaryplat. The City's approval included eight conditions, six to be met by the Grays,one--the vacation of a previously platted street--tobe accomplished by the City and, lastly, the creation of a special improvement district for the completion of a sewer system. The sewer district was created. The City, by resolution, abandoned the street, as agreed. TheGrays complied with five of the enumerated conditions. The sixth is at issue in thepresent case. Theagreemententered intoby thepartiesprovides that

a "crossing" be installed over the city-county drain. The subdivision improvement agreementprovided that all required improvements be constructed within eighteen months after filing of the finalplat. The Grays,as developers,had the choice of personally funding the improvements or of permitting the creation of a special improvement district to finance construction. The waiver, required by the City as a condition of approval of the Grays' plat, prclvided, among other things, that the Grayswaived all right to protest the formation of a special. improvement district to construct the drain crossing. Upon the Grays' failure to construct the crossing, the City passed a resolution creating Special Improvement DistrictNo. 1155 (SID 1155) for the purpose of constructing the crossing. Theproject costswere estimated at $114,000. All costs were assessed to the Grays' subdivision. The Grays then brought suit, seeking to enjoin the City from proceeding with the crossing project until their contract claims, arising out of the execution and construction of the agreementandwaiver, could be resolved. The Grays raisethe following issues on appeal: 1. Whether it was error for theDistrict Court to deny them a trial by jurywhere questions of fact were raised in their claim for breach of contract. 2. Whether the agreement and waiver are rendered voidable by the City's misrepresentations, undue influence and economicduress. 3. Whether the agreementandwaiver are unconscionable and thus unenforceable.4. Whether Special Improvement District No. 1155 was lawfully created. 5. Whether their promise to construct a crossing is excused by impossibilityofperformance. We hold that it was error to deny plaintiffs a jury trial on their claims for breach of contract. We decline to rule on the remaining issuesuntil jury determination of the existence of a contract between theparties.

I Breach of contract is traditionally a legal claim. The Grays made timely demand for trialby jury. The Grays allege that theparties either failed to attach likemeanings to the word "crossing" or, alt-ernatively,that the crossing to be constructed under SID 1155 is not comparable to the one contemplated by the parties when the agreement and waiver

were executed. Section 28-3-301, MCA, provides that "a contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting." Where the question of intentdepends upon constructionof an unambiguous contract, the question is one for the court alone. Greening v. Gazette Printing Co. (1939), 108 Mont. 158, 166, 88 P.2d 862, 864. Where, however, a contract term is ambiguous or obscure or uncertain ofmeaning, interpretation of the language, and thus a determination of the real intention of the parties, is a matter to be left to the consideration of the jury. Rankin v. Fidelity Trust Co.

(1903), 189 U.S. 242, 253, 23 S.Ct. 553, 47 L.Ed. 792; 

### -accord, Storrusten

### v. Harrison (1976),169Mont. 525, 533, 549 P.2d 464, 468-469; McNussen v. Graybeal (1965), 146 Mont.173, 186, 405 P.2d 447, 454. The bare term "crossing" is potential.lyambiguous and patently uncertain on its face. No elaboration or specification accompany the agreement or waiver nor, apparently,was a design adopted or agreed upon by the parties prior to execution of the agreement and waiver. "Howeverbroad may be the terms of:a contract, i.t extends only to those things concerningwhich it appears that the parties intended to contract". Section 28-3-305, MCA; Custer 

### v. Missoula Public Service Co. (1931), 91Mont. 136, 143, 6P.2d 131,134. The Grays, by seekinq subdivision approval, did not bind themselvesto perform every actrequired for the approval. They were free to abandon the plan to replat for fiftyfour Lots and to divide and sell their land under the existing forty-four lotplat. Their decision rested on their understanding of the comparative costs and benefits of each plan. The appraisal of costs to be attributed to the fiftyfour lot plat rested, in turn, on the terms--and the Gra.ysl understanding of the terms--of the parties' agreement. In the agreement entered into by the Grays and the City, the Grays agreed to provide various improvements, including the crossing, in exchange for approval of the fifty-four I-ot plat. The Grays' waiver of right to protest guaranteed performance of theirpromise. The agreement and waiver must be construed in the same
manner as any contract. Section 28-3-101, MCA. The Grays challenge the City's interpretation of a basic term of that contract. No contract exists where an essential term is understood by one party to mean one thing and by the other party to mean a d-ifferentthing. Raffles

### v. Wichelhaus (the two ships "Peerless") (1864), 2 Hurl. & C. 906; Price v.Stipek (1909),39 Mont. 426, 104 P. 195. A claim of differing uses of the word "crossing" puts the existence, as well

asmeaning, of the present contract at issue. The cause is remanded for jurydetermination of whether the parties attached like meanings to the term "crossing"so that a contract for its construction exists and, if a contract exists, for a d.eterminationof the particular crossing intendedby the parties when they entered the contract.

The City,relying on section 28-2-503,MCA, argues that the Grays, by accepting the benefits of the agreement, are bound by the terms of the agreement. Section 28-2-503,MCA, codifies the common law rulesof ratification, performanceas acceptance of an offer and quasi-contractual obligation: "Implied acceptance. (1)Performance of the conditions of a proposal or the acceptance of the consideration offered with a proposal is an acceptance of the proposal. 

### "(2)A voluntary acceptance of the benefit of a transaction is equivalent to a consent to all the obligations arising from it, so faras the facts are knownor ought to be known to the person accepting." The section is not applicable where the terms of a valid contract govern the transaction. Where a contract exists, the duty of the court is to enforce it. Maxted v. Barrett (Mont. 1982), 643 P.2d 1161, 1164, 39 St.Rep. 780. The Gra.ys challenge the existence or, alternatively, the terms of a contract for the crossing. If the agreement and waiver fail or fail toprovide for the crossingenvisioned by the City, the City may not proceed to enforce the contract through formationof SID 1155. The City's remedy lies, then,in the section 28-2-503, MCA

## , provisions for quasi-contractual, restitutionary relief. "The theory of unjust enrichment and restitution is brought into play when

no contract between the parties exists and the court implies a contract in law." Maxted, supra. See, Palmer, Law of -- Restitution (1978).

The cause is remanded for factualdetermination of the meaning or meanings intended in the word "crossing." The Grays are entitled to have the issue triedby jury. We have, in the past, purported to permit a court of equity to rule on all questions in a case. Butler Brothers Dev. Co. v. Butler (1941), 111 Mont. 329, 108 P.2d 1041. Defendants relyon an overlybroad statement inButler to the effect that "a court of equity once having jurisdiction of a suit will retain jurisdiction of it for all purposes and dispose of all questions in the case even though this involves a determination of legal issues." Butler, 111 Mont. at 343, 108 P.2d at 1048. We have never held that a court sitting in equity may try those issues of fact raised by plaintiff in a legal cause of action. See, Butler, supra

(denying jury trial of the legal issues raised in an answer and cross-claim); Thisted v. Country Club Tower Corporation

(1965), 146 Mont. 87, 405 P.2d 432; Downs v. Smyk (Mont. 1982), 651 P.2d 1238, 39 St.Rep. 1786 (tryingpurely equitable actionswithout jury);Littlev. Mackel (1968)

### , 151Ilont. 421, 443 P.2d. 891 (denying jury trial of a fraud defense to an action for specific performance); Citizens State Rank 

### v. Duss (1969), 154 Mont. 18, 459 P.2d 696 (denying jury trial of a permissive counterclaim to a foreclosure action);Montana Coalition for Stream Access, Inc. v. Hildreth (Mont. 1984)

## , - P.2d 

### - 

## , 41 St.Rep. 1192 (denying defendant a jury trial in an action for injunction). To the extent that Butler and its progeny have been deny plaintiff a right trial his legal claims, the cases are overruled. This Court, in 

### - But- ler, recognized the distinction between those legal issues 

### - raised by plaintiff and those raised in defense or by way of

a cross or counterclaim. Butler, 111 Mont. at 343-344, 108 P.2d at 1048-1049. The Grays,by seeking to enjoin formation of SID 1155,did not abandon their right to have a jury try their legal claim for breach of contract. Dairy Queen v. Wood (1962),369 U.S. 469, 82 S.Ct.. 894, 8 L.Ed.2d 44. The Grays were free to plead in the alternative--seeking rescission of an avoidable contract and claiming damages under the

same contract. Rule 8 (e)(2)

## , M.R.Civ.P. The pleading of equitable issues and issues involving only questions of law did not destroy the rights granted plaintiffs by our Constitution and Rules of Civil Procedure. Art. 11, Sec. 26, 1972 Mont. Const.;Rule 38(a)

## ,M.R.Civ.P. 

### "[W] here equitable and legal claims are joined in the same action, there is a right to jury trial on the legal claims which must not be infringed either by trying the legal issues as incidental to equitable

ones or by a court trial of a common issue between the cl-aims." Ross v. Bernhard (1970), 396 U.S. 531, 537-538, 90 S.Ct. 733, 24 L.Ed.2d 729. "[Tlhe '1ega.l'nature of an issue is determined by considering, first, the pre-merger custom with reference to such questions; second,the remedy sought; and third, the practical abilities and limitations of juries." ROSS, 396U.S. at 538,n. 10.Recent decisionsof this Court and of the United States Supreme Court have moved toward greater protection of the parties' right to jury trial on any factual issues raised in either a court of law or court of equit-y. In State ex rel. Industrial Indem. Co. v. District Court (1975),169 Mont. 10, 544 P.2d 438, we affirmed relator's right to jury determination of the existenceof the oral contract before the alleged contractcouldbe construed in adeclaratory judgmentaction. The United States Supreme Court has held that the Seventh Amendment protects defendants' right to jury trial of a legal counterclaim. Beacon Theatres, Inc. v. Westover (1959)

## , 359 U.S. 500, 79 S.Ct. 948,3L.Ed.2d 988. The modern merger of law and equity courts and the liberal joinder provisions of our Rules of Civil Procedure force reevaluation of the traditional justification for permitting an equity court to decide legal issues. We hold that, upon timely demand, all parties are entitled to have their legal claimsand counterclaimstriedby jury. The rule is consistent with ourprior holdings if notentirely consistent with our chosen manner of expression. We foresee no hardship for the courtsbelow. The same rules that permitus liberal joinder also permit a severanceof claimsand issues. We vacate the judgment and remand for a new trial in accordancewith the views set forth in thisopinion. 

# ~&PP,%Lc*J,-~-P ChiefJusticeWe concur: