No. 88-548 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1989 

DANIEL J. FELSKA and ADOLPH L. 

SOLVIE, Plaintiffs, 

WORLD REALTY LTD., KADON MANAGEMENT 

CO., LTD, YORK VENTURES, LTD., HELUND 

FOREST CONSULTANTS, RONALD EDWARD LITTLE, 

DONALD JOHN HENRY WILLIAMSON, et al., 

Plaintiffs/Intervenors and Appellants, 

-vsBRIAN GEORGE GOULDING, and all other 

persons, unknown, claiming or who might 

claim any right, title, estate or interest 

in or lein or encumbrance upon the real 

property described in the complaint, 

adverse to the plaintiffs title thereto, 

whether such claim or possible claim be 

present or contingent, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Joseph Gary, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Ben Berg, Jr. argued; Berg, Stokes, Tollefsen & Hayes, 

Bozeman, Montana 

For Respondent : 

J. Robert Planalp argued; Landoe, Brown, Planalp & 

Kornmers, Bozeman, Montana 

Rodney Schwasinger argued, Bozeman, Montana 

Filed: 

Submitted: May 9, 1989 

Decided: July 19, 1989 
Mr. Justice John Conway Harrison delivered the Opinion of the 

Court. 

This case comes on appeal from the Eighteenth Judicial 

District, Gallatin County, the Honorable Joseph B. Gary 

presiding. The District Court quieted title in the 

plaintiffs, purchasers of certain real property in Bozeman, 

Montana. Previously, the property had been held by a group 

of investors (hereinafter referred to as the co-owners) from 

British Columbia, Canada, each of whom held their respective 

interests as tenants in common. In addition to the quiet 

title determination, the District Court awarded defendant 

Goulding a portion of the sale proceeds in proportion to his 

initial capital investment. We affirm in part, reverse in 

part and remand for further proceedings. 

In December, 1977, Brian George Goulding and other 

co-owners acquired the real property, personal property, 

fixtures, furniture, liquor license and other business assets 

of the Inn of Bozeman (Inn). The parties entered into an 

agreement for the purpose of setting forth the rights and 

obligations with respect to their interest in the Inn. 

Specific provisions of the agreement will be discussed later 

in this opinion. 

In December, 1983, citing financial difficulties, the 

co-owners decided to list the property for sale. Throughout 

the following year, meetings were held during which the 

co-owners discussed prospective sales and financial problems 

of the Inn. Goulding or his attorney, Michael Karton, 

attended most of these meetings. 

Between December, 1984, and March 9, 1985, Goulding 

lived in the Philippines with his family. Goulding did not 

leave a forwarding address with the other co-owners, nor 
his instructions with his attorney regarding a potential sale 

the Inn. 

On January 3, 1985, fourteen of the sixteen co-owners 

entered into an agreement with plaintiffs for the sale of the 

Inn. The co-owners attempted to contact Goulding through his 

attorney and sent by registered mail letters informing him of 

the majority decision to sell the property. In accordance 

with the terms of the co-owners' 1977 agreement, Goulding was 

informed that his consent would be "deemed" given if written 

objection to the sale was not received within ten days. 

(Thereafter, the co-owners petitioned the Supreme Court of 

British Columbia for an order authorizing appellant 

Williamson to sign on Goulding's behalf. However, all 

parties agree the order is void for lack of jurisdiction.) 

On March 20, 1985, after returning from the 

Philippines, Goulding visited his attorney and was given a 

copy of the sale agreement and the registered letter. 

Goulding did not respond to the letter. However, on April 3, 

1985, Goulding attended a meeting of the co-owners. At that 

meeting the sale documents were signed by all co-owners 

except Goulding, who abstained. Two days later, Goulding 

sent a letter to the co-owners setting forth his objections 

to the sale. 

Plaintiffs initiated a quiet title action against 

Goulding, alleging Goulding's claimed ownership interest in 

the Inn created a cloud on their title. Goulding 

counterclaimed, stating the co-owners had no authority to 

transfer his ownership interest in the Inn. Goulding 

additionally claimed plaintiffs had recorded the deed 

intentionally and with knowledge of his interest in the 

property, and thereby depreciated his interest. Later, the 

other co-owners of the Inn filed a complaint in intervention. 
On December 3, 1987, the Honorable Joseph B. Gary 

entered judgment in favor of the plaintiffs. The District 

Court found the agreement between the co-owners required 

majority vote for the complete sale of the property. 

Alternatively, the court ruled Goulding impliedly consented 

to the sale because he failed to give written objection. 

Finally, in original Conclusion of Law No. 8, the court 

ordered that upon delivery of the deed to plaintiffs, all 

monies in deposit due and owing to Goulding shall be 

delivered by the escrow agent to Goulding. 

By order of March 8, 1988, the District Court amended 

its Findings to include the following: 

Finding No. 13. During the 

negotiations for the sale of the 

principle assets it was necessary that 

additional capital be infused in the 

corporation for operating expenses. A 

Motion was passed at the meeting of 

December 8, 1983, at which the Defendant 

Goulding was not present, that any 

advance of capital would be considered as 

a loan at the interest rate of 

twenty-five percent (25%) or at U.S. 

prime rate plus six/nine percent (6/9%) 

and that a legal opinion was to be 

obtained as to whether this was 

enforceable. No legal opinion was ever 

obtained and the net effect of this 

Motion as shown by the evidence would be 

to completely wipe out the equity of all 

of the original investors in the business 

and all monies remaining on hand would be 

paid to those persons advancing funds. 

That the effect of wiping out all 

original investors was done without 

notice to the members of the partnership 

that this would be the result taken at 

the meeting and would amount to an 

inequitable result and contrary to due 

process of law. 
14. That any investments made 

after the December 14, [sic] 1983 meeting 

by the members of the partnership should 

be treated as capital investments and 

added to each partner's original capital 

account so that the monies remaining in 

escrow at this time be paid out pro rated 

share on all capital accounts. 

Conclusion of Law No. 8 was amended to conform to the new 

findings and reads as follows: 

That upon the delivery of the Deed to 

Felska and Solvie by either Goulding or a 

referee appointed by the Court to execute 

a deed, that all monies in deposit at 

Security Title Insurance Company shall be 

distributed to the members of the 

partnership in proportion of their 

original investments plus any infusion of 

capital following the December 14, [sic] 

1983 meeting. Said payments following 

that meeting constitute a capital 

investment and not a loan. 

On April 13, 1988, co-owners moved for relief under 

Rule 60(b) (2), M.R.Civ.P., from the March 8, 1988 order, 

seeking to admit a legal opinion written December 9, 1983, 

which discussed the legality of the 25% interest on loans. 

On April 18, 1988, the District Court denied the motion 

without opinion. 

On June 28, 1988, the District Court entered judgment 

and decreed the plaintiffs fee owners of the real property. 

Further, the court ordered that all monies held in escrow be 

distributed to the partners in proportion to their original 

investments plus any infusion of capital. 

Upon Goulding's motion to amend for a definite amount 

due him, the District Court, on August 8, 1988, ordered that 

he should receive 10.26% of all net proceeds of disposition 

or $25,163.70, together with interest from the date of sale, 
plus 10.26% of all other assets which arose out of the 

operation and sale of the Inn. 

The following issues are raised on appeal: 

1. Did the District Court err when it quieted title in 

the plaintiffs? 

2. Did the plaintiffs and co-owners slander Goulding's 

title? 

3. Did the District Court err when it adopted Findings 

Nos. 13 and 14 and Conclusion of Law No. 8, in which it 

determined the advances made after December, 1983 were 

capital investments rather than loans and wherein it awarded 

a money judgment? 

4. Did the District Court err when it denied the 

co-owners' Rule 60(b)(2), M.R.Civ.P., motion? 

Our scope of review is such that we may consider the 

contract language independently. SAS Partnership v. Schafer 

(1982), 200 Mont. 478, 653 P.2d 834. Generally, contract 

ambiguities are questions of fact. S-W Co. v. Schwenk (1977), 

176 Mont. 546, 568 P.2d 145. However, the determination of 

whether or not an ambiguity exists is one of law, freely 

reviewable by this Court. - SAS Partnership; Martin v. United 

States (9th Cir. 1981), 649 F.2d 701; United States Fidelity 

and Guaranty Co. v. Newman (9th Cir. 1981), 656 F.2d 457. 

The entire case focuses upon the 1977 agreement entered 

into between the 16 co-owners. Therefore, a review of the 

significant contract provisions is in order: 

15. . . . Voting shall be by hand, with 

each Co-owner having one vote, unless 

otherwise demanded by any Co-owner, in 

which case voting shall be according to 

the equities of the Co-Owners in the Inn. 

All decisions shall be bv maioritv vote 

RESTRICTIONS OF TRANSFER: 
16. No Co-owner shall assign, or 

otherwise dispose of, all or any part of 

his interest in the Inn unless such 

Co-owner : 

A. has obtained the prior written 

consent of the other Co-Owners; or 

B. has first offered his interest 

in the Inn to the other Co-Owners 

17. No Co-owner shall mortgage, pledge, 

charge or otherwise encumber all or any 

part of his interest or restrict the 

transferability of his co-ownership 

interest unless: 

A. such Co-owner has obtained the 

prior written consent of the other 

Co-Owners; and 

B. the holder of such mortgage, 

pledge, charge encumbrance or other 

restriction agrees to be bound to 

and with the other Co-Owners and to 

grant to the other Co-Owners the 

rights of first refusal and options 

to purchase hereby granted amongst 

and between the Co-Owners, pursuant 

to the terms of this Agreement. 

BORROWING PROVISIONS: 

21. The Co-Owners shall borrow from time 

to time all the sums of money required in 

connection with the carrying on of the 

Inn, upon the security of the assets of 

the Inn to the extent possible. The 

approval of all Co-Owners shall be 

acquired when establishing lines of 

credit or financing with any banks or 

other financial institutions or private 

lenders. 

LOANS BY CO-OWNERS: 
22. If at any time a Co-owner shall 

properly determine that, in order to 

protect or preserve any of the properties 

or other assets of the Inn, additional 

funds are required to meet the current 

cash requirements of the Inn and the same 

are not available from sources already 

available to the Co-Owners, then any such 

Co-owner may, but shall not be obligated 

to, advance such funds to the Inn or pay 

such funds to third parties for the 

benefit of the Inn. . . Any such advances 

or payments shall during their existence 

bear interest at a rate determined by the 

Manager. 

DISTRIBUTION OF DISTRIBUTABLE FUNDS: 

28. . . . Distributable funds shall be 

distributed as follows: 

A. Firstly, in repayment of the 

principal and accrued interest 

under each temporary loan, if any, 

to the Inn pursuant to Paragraph 22 

hereof which remains unpaid, with 

all amounts being applied firstly 

to accrued interest and the balance 

to principal, and, if more than one 

such loan remains unpaid, then on a 

pro rata basis; 

B. Secondly, the balance if any 

shall be distributed to the 

Co-Owners in accordance with their 

respective interests. 

29. In the event that the Co-Owners 

agree to --- sell all or any portion -- of the 

interest or properties --- of the Inn, then 

in such event, the net proceeds of such 

sale (except for the amounts thereof 

required to be paid to any liabilities) 

shall be deemed to be distributable funds 

and shall be distributed in accordance 

with the provisions of the aforesaid. 

(Emphasis added.) 
. . . 

IMPLIED CONSENT: 

37. In any instance under this Agreement 

in which the consent or approval of a 

CoOwner [sic] to any proposed action 

already approved by a majority of the 

Co-Owners is required, such consent or 

approval shall be deemed to have been 

given unless written objection to such 

proposed action, setting out the grounds 

for such objection, is sent by such 

objecting Co-owner to the General Manager 

within ten (10) days after receipt of a 

written request for such consent or 

approval. 

An ambiguity exists when a contract is subject to two 

interpretations. In such an instance, par01 testimony may be 

used to ascertain the parties' intent. S-W Co., 568 P. 2d at 

147. 

However, intent of the parties is only 

looked to when the agreement in issue is 

not clear on its face . . . Where the 

contractual language is clear and 

unambiguous on its face, it is this 

Court's duty to enforce the contract as 

drafted and executed by the parties. 

(Citations Omitted. ) 

Monte Vista Co. v. Anaconda Co. (Mont. 1988), 755 P.2d 1358, 

1362, 45 St.Rep. 809, 814; citing Glacier Campground v. Wild 

Rivers, Inc. (1978), 182 Mont. 389, 597 P.2d 689. It is 

fundamental when reviewing contractual disputes that we are 

required to read the entire contract together and give 

effect to every part, if reasonably practicable. Section 

28-3-202, MCA. 

The 1977 agreement is silent concerning the specific 

vote required for the full sale of the property. However, 

the agreement mandates unanimous co-owner consent for one 

owner's sale or encumbrance of his individual interest and, 
in connection with the regular business activities, the 

establishment of lines of credit and financing with banks or 

financial institutions. Goulding argues that because 

unanimous consent is required of these activities, unanimous 

consent must also be required for the sale of the business. 

In support of his position, Goulding points to comments made 

during meetings that "the sale agreement requires the 

signatures of Messrs. Otto and Goulding, both of whom are 

unwilling to sign" and statements regarding the co-owners' 

need for "powers of attorney executed by all partners to sell 

the motel." Further, Goulding contends the void British 

Columbia court order indicates that the co-owners believed 

unanimous consent was necessary to effect a full sale of the 

business. 

The District Court found the contract language clear 

and unambiguous and therefore rejected Goulding's attempt to 

introduce extrinsic evidence. We agree. 

While the contract does not specifically address the 

vote required to effect a full sale, the absence of that 

specific language does not render the contract ambiguous. 

First, the provisions requiring unanimous consent address 

specific circumstances, unrelated to the sale in issue. 

Because the unanimous consent provisions are definite, we 

refuse to stretch their applicability. Additionally, the 

parties contemplated the full sale of the business, as 

evidenced by Paragraph 29, which discusses the distribution 

of proceeds in the event of a sale. More importantly, 

however, the agreement states that all decisions are to be 

determined by majority vote, unless otherwise specified. We 

interpret this provision to limit the instances which require 

unanimous consent, because it indicates the co-owners' intent 

to maintain majority vote for all other decisions. 
When a contract is clear and unambiguous, this Court 

must enforce the agreement as written by the parties. We 

conclude that Paragraph 15, which allows for majority vote, 

governs the sale of the property. 

The District Court concluded that Goulding's letter of 

April 5, 1985, did not specifically object to the sale, as 

required under Paragraph 38 of the agreement. Rather, 

Goulding expressed concern over management problems, the 

repayment of loans to various co-owners, amounts held in 

escrow, and legal questions of warranties. Because we uphold 

the sale on other grounds, we need not address the matter. 

However, we state simply that it is clear to this Court that 

Goulding did not act promptly to protect his interest in the 

Inn. 

Next, Goulding contends that because the co-owners 

maintained their interests as tenants-in-common, a majority 

vote of the co-owners is ineffective to divest him of his 

property. However, Paragraph 38 of the agreement provides: 

The Co-Owners shall and will sign such 

further and other papers and documents, 

shall cause such meetings to be held and 

do and cause to be done and perform such 

further and other acts or things that may 

be necessary or desirable from time to 

time in order to give full effect to this 

Agreement and each and every part hereof. 

Further, Paragraph 42 states: 

Any decision of the Co-Owners made in the 

manner herein before described shall be 

fully and faithfully carried out by all 

Co-Owners - as - if - all Co-Owners - had 

unanimously consented to such decision, 

and all Co-Owners shall execute such 

documents and things as may be necessary 

or advisable for the full carrying out of 

the true intent of such decision. 

(Emphasis added.) 
The agreement is sufficient to control the rights of 

the various co-owners. Hence, by signing the agreement, 

Goulding expressly agreed to abide by all decisions rendered 

by the majority. We conclude Goulding is required to comply 

with the will of the majority. 

In light of the above, Goulding's slander of title 

counterclaim against the plaintiffs must necessarily fail. 

In First Security Bank v. Tholkes (1976), 169 Mont. 422, 427, 

547 P.2d 1328, 1331, we defined slander of title as "[olne 

who maliciously publishes false matter which brings in 

question or disparages the title to property, thereby causing 

special damage to the owner . . . " See, 50 Am.Jur.2dI Libel 

and Slander, S 541. Since we upheld the sale and rejected 

Goulding's claimed interest in the property, plaintiffs' 

actions were not slanderous. 

Next, we consider the apportionment of funds addressed 

in the District Court's amended order of March 8, 1988. 

Based on plaintiffs' Exhibit 2, a summary of investments and 

advanced funds at 10% and 12% interest rates, the District 

Court found that "[tlhe net effect of allowing interest on 

the advancements after the December 8, 1983 payments, . . . is to completely wipe out all the original investors and 

giving all of the remaining assets to those persons that 

advanced monies." The court concluded the equitable manner 

of disbursing the funds would be to add the contributions to 

the original capital investment of the respective co-owners 

and distribute the funds on a pro rata basis. 

The standard of review for a case in equity is that the 

judgment of the trial court is presumed correct, and all 

legitimate inferences will be drawn to support this 

presumption. This Court's inquiry into the evidence is 

limited to whether the findings of the trial court are 

clearly erroneous. Rule 52, M.R.Civ.P.; and Citizens State 
Bank v. Bossard (Mont. 1987), 733 P.2d 1296, 44 St.Rep. 468. 

With this standard in mind, we review the evidence, dividing 

our discussion into post- and pre- December, 1983 

advancements. 

The co-owners contend the evidence indicates an intent 

to treat the advancements as loans with an accrued interest, 

not as capital investments. We agree in part. The evidence 

supports a loan designation for the post-December, 1983, 

advancements. First, in his letter of April 5, 1985, 

Goulding acknowledged the monies advanced were loans. The 

record indicates Goulding objected to an interest rate of 

59%, but stated that a "usual bank rate is reasonable." 

Second, Paragraph 22 of the agreement provides for 

loans, at a rate of interest determined by the manager, by 

the various co-owners of the Inn, if necessary to protect or 

preserve the assets. Paragraphs 28 and 29 provide for 

distribution of sale proceeds first to the repayment of 

principal and accrued interest, and thereafter the balance to 

the co-owners according to respective shares. 

Third, minutes of the co-owners ' meetings indicate 

complete discussions took place regarding the poor financial 

condition of the Inn. During these meetings, management 

requested additional funds for the Inn which included an 

interest rate commensurate with the risk and a repayment 

preference upon distribution of the sale proceeds. However, 

it is not clear what rate of interest the parties 

contemplated: (25%; 6%/9% over U.S. prime; or the "highest 

legal rate") . Nor is it clear what reasonable rate could be 

applied. We leave these specific questions to the District 

Court upon remand. 

The District Court's findings related solely to 

advancements made after December, 1983. However, plaintiff's 

Exhibit 2 indicates that the co-owners contributed funds in 
January 1982 and 1983. In addition, the co-owners expressed 

a desire to retroactively designate these monies as loans, as 

evidenced by the minutes of their December 8, 1983, meeting: 

MOTION: All funds contributed after the 

initial investment accrue interest 

at U.S. Prime rate plus 6%/9% and 

that this interest should be paid 

out monthly. 

All monies advanced since that 

time should be secured, if 

possible, and be treated as loans 

from partners. 

Interest accrued on funds 

contributed before December 31, 

1983, be treated as a portion of 

the partners [ ' ] loans. (Emphasis 

added. 

Neither party presented argument regarding these funds. 

The District Court must make specific findings regarding the 

pre-December, 1983, advancements by determining the legality 

of the retroactive designation of these funds as loans. 

We conclude the co-owners' final issue regarding the 

District Court's denial of the Rule 60(b)(2) motion, is moot. 

Upon remand, the District Court may give the evidence 

whatever weight it deems appropriate. 

Affirmed in part, reversed in part and remanded for 

proceedings consistent with this opinion. 

Ch-ef Justice 7 n 
Justices 
Mr. Justice John C. Sheehy, dissenting: 

I dissent and would affirm the District Court in total. 

This case is an example of the minor investors ganging 

up on one of the two largest investors by passing resolutions 

in his absence which in effect take away his investment and 

leave nothing of the net proceeds in which the larger 

investor will participate. Judge Gary saw through this 

obvious raid or, the net proceeds and refused to agree. I 

would affirm judge Gary. 

Justice 

Mr. ~ustice William E. Hunt, Sr., dissenting: 

I concur ir, the foregoing dissent of Justice Sheehy. 

/' 

Justice