No. 81-295 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

PARKER BROTHERS FARMS, INC., 

a Montana Corporation, 

Plaintiff and Respondent, 

vs . 

ED BURGESS, 

Defendant and Appellant. 

Appeal from: District Court of the Eleventh Judicial District, 

In and for the County of Flathead 

Honorable Robert Sykes, Judge presiding. 

Counsel of Record: 

For Appellant: 

Murphy, Robinson, Heckathorn and Phillips, Kalispell, 

Montana 

For Respondent: 

Murray, Kaufman, Vidal & Gordon, Kalispell, Montana 

Submitted on briefs: December 17, 1981 

Decided: March 25, 1982 

~iled: MAR 2 5 1982 
Mr. Justice John C. Sheehy delivered the Opinion of the 

Court. 

Plaintiff brought this action in Flathead County 

District Court to recover the price of potatoes sold and 

delivered to defendant, alleging that the defendant had 

breached a contract for the sale of approximately 811,500 

pourlds of potatoes grown by the plaintiff on its Flathead 

Valley farm. Personal service was made upon the defendant 

in Jerome County, Idaho, where he resides. Pursuant to Rule 

4B(1), M.R.Civ.P., the defendant moved for dismissal on the 

ground that the court lacked jurisdiction over him, but the 

motion was denied. Defendant then answered, alleging that 

the parties had contracted only for the sale of approximately 

50,000 pounds (one truckload) of potatoes, and that this 

contract had been fully performed. The defendant further 

alleged that after this contract had been performed, the 

plaintiff requested that the defendant purchase the remainder 

of its 1977 potato crop. The defendant alleged that he 

declined this offer, but agreed to help "move" some of the 

plaintiff's potatoes into the market, thereby creating the 

customary merchant and grower commission relationship. The 

defendant also counterclaimed for his costs and expenses. 

Trial without jury was held on January 15, 1981, and 

thereafter the court entered judgment for the plaintiff, 

finding that the parties had entered into a verbal agreement 

on May 8 and 10, 1978, for the sale of 550,000 pounds of 

potatoes, and then, on May 17, 1978, entered into a new 

agreement whereby 250,000 pounds of potatoes were shipped to 

the defendant on a consignment basis. The court subsequently 

amended its findings and conclusions to correct two mathematical 

errors, and entered judgment in favor of the plaintiff in 
the amount of $12,864.28, plus interest and costs. The 

defendant appeals, raising two issues: 

1. Whether the District Court's exercise of personal 

jurisdiction over the defendant violated Rule 4B(1), M.R.Civ.P. 

and the due process requirements of the federal constitution? 

2. Whether the evidence supports the District Court's 

findings and judgment? 

The plaintiff began independently marketing its potatoes 

in 1978 when the potato market was depressed and its broker, 

Small Farms, Inc., was having difficulty finding buyers for 

the plaintiff's potatoes. The plaintiff, through Hugh 

Parker, contacted a friend in Idaho to spread word of the 

availability of the plaintiff's potatoes. On May 8, 1978, 

the defendant, a potato grower and packer in Idaho, telephoned 

the plaintiff in Montana to negotiate for the purchase of 

plaintiff's potatoes. On May 9, 1978, the plaintiff shipped 

to the defendant one truckload (approx. 53,810 pounds) of 

potatoes. On May 10, 1978, the parties discussed this 

shipment by telephone, with the defendant seemingly pleased 

with the quality of the potatoes. That load of potatoes is 

not in dispute. 

The plaintiff contends that during the May 10, 1978 

telephone conversation, the defendant purchased approximately 

757,690 more pounds (about 6,000 sacks) of the plaintiff's 

potatoes. The plaintiff then shipped 11 more truckloads to 

the defendant. The defendant contends that he did not contract 

with the plaintiff to purchase these potatoes, but rather, 

that he only agreed to help market the potatoes for the 

plaintiff. 

On May 17, defendant telephoned the plaintiff, thinking 

that he had already received as many potatoes as he had 
expected. Plaintiff informed him that he still had a "couple 

thousand" sacks to go. Defendant said to hold off after 

that in order to see how marketable the potatoes would be. 

He had just begun receiving rejections of plaintiff's potatoes 

from his customers. As to these potatoes, yet to be sent, 

defendant said "send them down we will see what we can do 

with them. " (Tr. at 118. ) 

The defendant then apparently sold and shipped some of 

the plaintiff's potatoes to wholesale and retail buyers 

throughout Idaho, Utah, and Pennsylvania. The defendant, 

however, began receiving more complaints from buyers that 

the potatoes were not acceptable. The defendant then retrieved 

the plaintiff's defective potatoes and replaced them with 

his own nondefective potatoes. During this time, the plaintiff 

had sent the defendant invoices for the potatoes, but did 

not receive payment. 

On June 5, 1978, the defendant telephoned the plaintiff 

and informed it that its potatoes were not merchantable in 

the "fresh-pack" (potatoes which are graded, washed, packed, 

and ready for consumption) market. The plaintiff informed 

the defendant that the defendant owned the potatoes and had 

to pay for them. The defendant then sold some of the plaintiff's 

potatoes to a potato processor and received $16,041.70 for 

them. The defendant received no other money from any sources 

for the plaintiff's potatoes. 

The defendant has never paid the plaintiff for these 

potatoes and contends that these potatoes were to be sold 

byconsignment, and that he incurred expenses of $20,934.48 

in handling the potatoes, and therefore suffered a net loss 

of $4,893-41. The plaintiff then filed this suit. 
On appeal, the defendant claims that the District 

Court's exercise of personal jurisdiction over him violated 

Rule 4B(l)(a), 3l.R.Civ.P. and the due process requirements of the 

Fourteenth Amendment to the United States constitution. 

Rule 4B (1) (a) reads: 

"(1) Subject to jurisdiction. All persons found 

within the state of Montana are subject to the 

jurisdiction of the courts of this state. In 

addition, any person is subject to the jurisdiction 

of the courts of this state as to any claim for 

relief arising from the doing personally, through 

an employee, or through an agent, of any of the 

following acts: 

(a) the transaction of any business within this 

state;" 

This Court uses a two-step approach in its interpretation 

of this statute. First, it must be determined whether the 

statute provides for the exercise of jurisdiction under the 

particular facts of the case, and second, whether the assertion 

of jurisdiction would offend due process requirements. 

State of N.D. v. Newberger (1980), - Mont. - , 613 P. 2d 

1002, 1004, 37 St-Rep. 1119, 1121; May v. Figgins (1980), 

- Mont. - , 607 P.2d 1132, 1134, 37 St.Rep. 493, 495. 

It is not contended very seriously that the "long arm 

statute" does not confer jurisdiction under the facts of 

this case. In fact, it requires no discussion to conclude 

that the defendant transacted business within this state. 

However, the defendant does argue strenuously that, 

under the second step of our test, the assertion of jurisdiction would offend due process and fundamental fairness. 

He grounds his argument on factors set out in three prominent 

cases and their progeny. Hanson v. Denkla (1958), 357 U.S. 

235, 78 S.Ct. 1228, 2 L.Ed.2d 1283; McGee v. International 

Life Ins. Co. (1957), 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 

223; Internat. Shoe Co. v. Washington (1945), 326 U.S. 310, 
Generally, these cases require only that certain 

"minimum contacts" be established so as not to make the 

assertion of jurisdiction offensive to "traditional notions 

of fair play and substantial justice." Of more particular 

significance to the case at bar is the following discussion 

of the "minimum contacts" rule from Hanson v. Denkla, supra, 

357 U.S. at 253: 

". . , The application of that rule will vary with 

the quality and nature of the defendant's activity, 

but it is essential in each case that there be some 

act by which the defendant purposefully avails itself 

of the privilege of conducting activities within the 

forum State, thus invoking the benefits and protections 

of its laws . . ." (Emphasis added.) 

In support of this rule, defendant relies on Friberg v. 

Schlenske (D. Mont. 1975), 396 F.Supp. 124. There, a Utah 

artist delivered four of his paintings to a Montana art 

dealer on consignment. Without authority, this art dealer 

pledged them to secure personal loans from Montana banks, 

which eventually foreclosed on the pledges and took possession 

of the paintings. The Montana art dealer then contacted a 

Texas art dealer, and offered to sell him these four paintings. 

After several Montana-Texas telephone calls, the Montana 

banks shipped the paintings to a Texas bank, and the sale 

was consummated. The Texas art dealer secured the paintings, 

which were ultimately delivered to another Texan. These two 

were the Texas defendants in a subsequent action brought by 

the Utah artist. 

In that case, Senior United States District Judge 

Russell E. Smith stated: 

"The Texas defendants had no general relationship 

with Montana. In this one instance they did not 

seek to do business in Montana. They were sought 

out. They had no dealings of any kind with the 

plaintiff. The Texas defendants did nothing which 
resulted in the accrual of a tort action in Montana. 

Having paid the purchase price for the paintings, 

the Texas defendants did nothing which would lead 

them as reasonably prudent persons to foresee a 

lawsuit against them in Montana. Unless it can be 

said that the Texas defendants did something which 

would lead them as reasonable persons to foresee that 

they might be defendants in a lawsuit in Montana, it 

is simply unfair to bring them to this distant forum." 

396 F.Supp. at 125. 

This case is clearly distinguishable. The defendant 

here did seek to do business in Montana. He accepted several 

shipments from the plaintiff, establishing a course of 

dealing. Also, he has yet to pay for a good number of potatoes 

and didn't pay for the first undisputed load until 6 months 

later. That, regardless of the merits of his position 

otherwise, is a critical factor in favor of exercising 

jurisdiction over him. Friberg, supra, 396 F.Supp. at 125, 

in a footnote, states: 

"Had they failed to make the payments required, 

then they might very well have contemplated that 

they would be sued in Montana, and perhaps the 

telephone conversations would be sufficient to 

bring the transaction within M0nt.R.Civ.P. 4 

subd. B. See State ----- ex rel. Goff v. District 

Court, 157 Mont. 495, 487 P.2d 292 (1971); renti ice Lumber -- Co. G. Spahn, 156 ~dnt. 68, 474 

P.2d 141 (1970). In such a case it would not be 

unfair to 'require them to defend here. " 

This is such a case. The District Court did not err in 

exercising jurisdiction. 

Defendant also appeals from finding of fact no. 17 and 

conclusion of law no. 4, claiming that they are unsupported 

by the evidence. Reduced to their essentials, those findings 

state that, on May 17, defendant and plaintiff agreed that 

all potatoes from any further deliveries would be handled by 

defendant on a consignment basis. In short, the first 

550,000 pounds were delivered pursuant to an oral contract 

for sale, and the remaining 250,000 pounds were delivered 

pursuant to a commission merchant and grower agreement. 
There is a vast difference of opinion on this point. 

The plaintiff contends that all 811,500 pounds were "sold." 

The defendant claims that, except for the first 50,000 pound 

shipment, the entire transaction was a commission agreement. 

The record reflects that an oral agreement was reached 

which was misunderstood because of the unspoken assumptions 

of both parties. Plaintiff, with summer on the way, needed to 

unload his produce, and assumed he had found a buyer. 

Defendant agreed to accept plaintiff's potatoes, partly out 

of gratitude for the first load, but assumed that he was 

just helping to "move" them on a commission basis. 

The controversy arose because of the difficulty in 

marketing the potatoes. That controversy became manifest 

about May 17, the day the defendant called the plaintiff and 

told him to postpone further deliveries. 

There is substantial credible evidence to uphold a 

finding that there was a sale of the first 550,000 pounds. 

The record also supports a finding that a consignment 

agreement developed on May 17. 

When the record furnishes reasonable grounds for 

different conclusions, we will not disturb the findings of 

the District Court. Bostwick v. Butte Motor Company (1965), 

145 Mont. 570, 589, 403 P.2d 614, 624. They are not clearly 

erroneous. Rule 52(a), M.R.Civ.P. 

Af f irmed. 
We Concur: 

Chief Justice 

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