NO. 84-143 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1984 

GARY A. GRAY and DIANA M. GRAY, 

husband and wife, 

Plaintiffs and Appellants, 

v. 

CITY OF BILLINGS, et al., 

Defendants and Respondents. 

Appeal from: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone 

Honorable Robert Wilson, Judge presiding. 

Counsel of Record: 

For Appellants : 

Jones, Jones & Work, Billings, Montana 

For Respondents : 

Peterson, Schofield & Leckie, Billings, Montana 

Submitted on briefs: July 10, 1984 

Decided: October 15, 1984 
Mr. Chief Justice Frank I. Haswell delivered the Opinion of 

the Court. 

This is an appeal from a jud-gment entered by the District Court. of the Thirteenth Judicial District, 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 improvement district formed under 

the provisions of the agreement and accompanying waiver. 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-ct claim. 

In 1977, the Grays purchased approximately seven acres 

of surplus state lands located in the City of Billings, 

paying a purchase price of $47,000 plus $15,000 in delinquent 

property assessments. When purchased, the acreage was 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.fter public hearing 

and a series of negotiations and reviews, the Grays signed a 

subdivision improvement agreement and waiver. Five months 

later, the City accepted the agreement and a-pproved the 

preliminary plat. 

The City's approval included eight conditions, six to 

be met by the Grays, one--the vacation of a previously platted street--to be 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. The 
Grays complied with five of the enumerated conditions. The 

sixth is at issue in the present case. 

The agreement entered into by the parties provides that 

a "crossing" be installed over the city-county drain. The 

subdivision improvement agreement provided that all required 

improvements be constructed within eighteen months after 

filing of the final plat. 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 Grays waived 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 District No. 1155 (SID 1155) for the purpose of 

constructing the crossing. The project costs were 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 agreement and waiver, could be resolved. 

The Grays raise the following issues on appeal: 

1. Whether it was error for the District Court to deny 

them a trial by jury where 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 economic duress. 

3. Whether the agreement and waiver 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 impossibility of performance. 

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 issues until jury determination of the 

existence of a contract between the parties. 

I 

Breach of contract is traditionally a legal claim. The 

Grays made timely demand for trial by jury. The Grays allege 

that the parties either failed to attach like meanings 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 intent depends upon construction of 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 of meaning, 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), 169 Mont. 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.ly ambiguous 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. "However broad may be the terms of: a contract, i.t extends only to those things concerning which it appears that 

the parties intended to contract". Section 28-3-305, MCA; 

Custer v. Missoula Public Service Co. (1931), 91 Mont. 136, 

143, 6 P.2d 131, 134. 

The Grays, by seekinq subdivision approval, did not 

bind themselves to perform every act required 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 lot plat. 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 their promise. 

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-ifferent thing. 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 

as meaning, of the present contract at issue. 

The cause is remanded for jury determination 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.etermination of the particular crossing 

intended by 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 rules of ratification, performance as 

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 far as the facts are known or 

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 to provide for the crossing envisioned by 

the City, the City may not proceed to enforce the contract 

through formation of 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 factual determination of the 

meaning or meanings intended in the word "crossing." The 

Grays are entitled to have the issue tried by 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 rely on an overly broad statement in Butler 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 (trying purely equitable actions without jury) ; Little v. Mackel (1968) , 151 Ilont. 

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, 396 U.S. at 538, n. 10. 
Recent decisions of 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 existence of the oral contract before the alleged 

contract could be construed in a declaratory judgment action. 

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, 3 L.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 claims and counterclaims tried by jury. The rule 

is consistent with our prior holdings if not entirely consistent with our chosen manner of expression. We foresee no 

hardship for the courts below. The same rules that permit us 

liberal joinder also permit a severance of claims and issues. 

We vacate the judgment and remand for a new trial in 

accordance with the views set forth in this opinion. 

~&PP,%Lc*J,-~-P Chief Justice 
We concur: