No. 92-208 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1993 

D. BARRY SCHRAMMECK 

Plaintiff, Counter-Defendant 

and Appellant, 

-vFEDERAL SAVINGS & LOAN INSURANCE CORP. 

et. al. 

Defendants, Counter-Claimants 

and Respondents. 

APPEAL FROM: District Court of the Twentieth Judicial District, 

In and for the County of Lake, 

The Honorable C. B. ~cNeil, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Alan J. Lerner (argued) , Law off ices of Alan J. 

Lerner, Kalispell, Montana 

For Respondent: 

Mark L. Stermitz (argued for ~idelity Natrl Title 

Ins. Co), Warden, Christiansen, Johnson & Berg, 

Kalispell, Montana; Colleen E. Ambrose (argued for 

FSLIC), Sullivan & Tabaracci, Missoula, Montana 

Filed: 

submitted: January 12, 1993 

Decided: May 19, 1993 
Justice R. C. McDonough Delivered the Opinion of the Court. 

Schrammeck appeals two summary judgment orders of the 

Twentieth Judicial District Court, Lake County, certified as final 

pursuant to Rule 54(b), M.R.Civ.P. Reversed and remanded. 

This case originated with a partnership dispute concerning the 

ownership of Woods Bay Marina on Flathead Lake and loans made using 

the property as collateral. Alton and Lee Ann Bowers (the Bowers) 

and Clark and Roxann Post (the Posts) were the record title owners 

of property consisting of Woods Bay Marina. In the original cause, 

filed in June of 1982, Schrammeck contended that he was a partner 

with Alton W. Bowers (Bowers) and Clark G. Post: (Post), that the 

Marina was partnership property, and that his former partners 

excluded him from the partnership. A prior judgment by Judge 

Henson in the Fourth Judicial District Court, described below, 

settled this controversy among the partners. The dispute now 

centers on a loan transaction that the Bowers and the Posts made 

using Woods Bay Marina as collateral. 

The pertinent issues on appeal are: 

1. Whether the District Court erred by concluding that the Woods 

Bay Marina property did not belong to a partnership consisting 

of Schrammeck, Bowers and Post. 

2. Whether the District Court erred by concluding that the Bowers 

and the Posts could encumber any portion of Woods Bay Marina 

without Schrammeck's consent. 

3. Whether the District Court abused its discretion by denying 

Schrammeck leave to file a second amended complaint and 

supplemental pleading. 
4. Whether the District Court erred by declining to award 

attorney fees to Schrammeck for successfully defending against 

the foreclosure of the trust indenture. 

In Schrammeckls June 1982 complaint, he alleged that he 

entered an oral agreement with Bowers and Post in July 1980 to 

purchase, restore, and operate Woods Bay Marina as a partnership. 

Schrammeck further alleged that he worked at and managed the Marina 

from July 1980 until he was excluded from the partnership in late 

October 1980. Schrammeck filed and recorded a lis pendens in 

connection with that suit on June 17, 1982. 

About a year after Schrammeck recorded the lis ~endens, Bowers 

approached the Montana Savings & Loan Association of Kalispell (the 

S & L) for a loan, using the Woods Bay Marina as collateral. 

Representatives of the S & L knew about the lis ~endens, and loan 

officer John Prather recommended disapproval of the loan because 

ownership of the property was in dispute. 

Prather informed Bowers that the loan request had not been 

approved because of the lis end ens. Bowers then told Prather that 

Schrammeck was not a partner or owner of Woods Bay Marina. Bowers 

insisted that Schrammeck's suit was a nuisance suit, and that 

Bowers and his wife owned the property along with the Posts. 

Prather replied that the S & L still would not make the loan 

because of the lis pendens. 

Bowers then went to Fidelity National Title Insurance Company 

(Fidelity) and convinced it to insure the loan on the condition 

that the Bowers and the Posts hold Fidelity harmless and indemnify 
it for any losses it might incur due to Schrammeck's claim 

underlying the lis vendens. 

Based on Fidelity's insurance policy, the S & L agreed to loan 

the Bowers and the Posts $295,000 with the Marina as collateral. 

On June 15, 1983, the Bowers and the Posts executed a financing 

statement, evidencing S & L's security interest in the personal 

property of Woods Bay Marina. They signed a promissory note for 

$295,000 at the same time. They also executed and recorded a "deed 

of trust" purporting to assign the Woods Bay Marina real property 

to the S & L as security for the loan. 

We have examined this "deed of trust" and determined that it 

is a trust indenture as defined in § 71-1-303(4), MCA: therefore, 

this opinion will refer to it as a trust indenture. This opinion 

will refer to the financing statement, the note, and the trust 

indenture collectively as the loan documents. 

On November 21, 1983, Judge Henson, in the Fourth Judicial 

District, entered an order and judgment (hereafter Judge Henson's 

order) on the merits of Schrammeck's cause against Bowers and Post. 

Judge Hensonrs order declared Schrammeck the owner of an undivided 

one-third interest in the business, personal property and real 

property known as Woods Bay Marina. 

Judge Henson1s order also gave Bowers and Post the right to 

discharge and void Schrammeck's interest by making payments before 

specified dates. If the payments were not made, the order 

judicially recognized Schrammeck's one-th 

4 

ird partnership interest 
in the property and business. Schrammeck did not receive any 

payments and Judge Henson's order is not on appeal. 

On June 14, 1984, Schrammeck filed suit against Bowers, Post, 

and the S & L. Among other things, Schrammeck alleged several 

torts and sought to dissolve and wind-up the partnership. 

The Bowers and the Posts quitclaimed their interests in the 

Woods Bay Marina real property to Schrammeck on July 25, 1984, and 

also signed all of the Marina's personal property over to 

Schrammeck. Two days later, pursuant to a motion by Schrammeck, 

the court dismissed Bowers and Post from the suit. 

In October 1984, Schrammeck filed an amended complaint against 

Fidelity and the S & L, seeking a court order declaring the trust 

indenture and the S & L's security interest in the personal 

property invalid. The complaint also alleged that the S & L and 

Fidelity committed several torts against him. 

In August of 1985, the Federal Home Loan Bank Board declared 

the S & L insolvent and appointed Federal Savings & Loan Insurance 

Corporation (FSLIC) as receiver. The defendants in this case are, 

therefore, FSLIC and Fidelity. 

FSLIC and Fidelity filed third-party complaints and counterclaimed against Schrammeck, the Woods Bay Marina Partnership, and 

its individual partners, Schrammeck, Bowers and Post to foreclose 

on the trust indenture. 

The parties filed several motions for summary judgment and the 

District Court entered two separate orders on the motions. The 
court certified these orders as final and they are before this 

Court on appeal. 

In the summary judgment order dated August 30, 1991, the 

District Court acknowledged that Bowers, Post, and Schrammeck were 

partners in Woods Bay Marina. The court determined that each of 

the partners had the authority to bind the Woods Bay Marina 

Partnership in the usual course of business. The court ruled that 

the Bowers and the Posts did not exercise their authority as 

partners, and thus did not bind the partnership to the promissory 

note. The court also ruled that neither Schrammeck nor the 

partnership were debtors under the security agreement or grantors 

under the trust indenture. 

In the summary judgment order dated January 7, 1992, the 

District Court ruled that Woods Bay Marina was not partnership 

property, but rather, Bowers, Post, and Schrammeck had individual 

interests in the property. The court also acknowledged its 

previous determination that the Bowers and the Posts had authority 

to bind the Woods Bay Marina Partnership, but determined they had 

not exercised their authority. 

This opinion will refer to more detailed facts as they are 

pertinent to the discussion. 

Our review of the District Court's conclusions of law is 

plenary: we determine whether the court's conclusions are correct. 

Steer Inc. v. Dept. of Revenue (1990), 245 Mont. 470, 474-75, 803 

P.2d 601, 603. 
Did the District Court err by concluding that the Woods Bay 

Marina property did not belong to a partnership consisting of 

Schrammeck, Bowers and Post? 

Judge Henson's order disposes of this issue. In November of 

1983, Judge Henson ruled that: 

2. The Plaintiff [Schrammeck] is the owner of an undivided 

one-third interest in the business and property known as Woods 

Bay Marina, Woods Bay, Lake County, Montana. 

3. Defendants [Bowers and Post] may discharge and void 

Plaintiff's ownership interest and claims . . . by paying to 

the Plaintiff [certain sums by certain dates]. 

In the event the Defendants fail to perform in the abovedescribed fashion in a timely manner . . . paragraph 4 of this 

Order and Judgment shall become effective and controlling. 

4. In the event the Defendants fail to make vavment as 

stated in warasrawh 3 in a timely fashion, in addition to his 

one-third ownership interest as stated in paragraph 2 of this 

Order and Judgment, the Plaintiff shall be deemed a one-third 

partner in the wrowertv and business described in varasravh 2. 

The partnership shall be deemed dissolved as of November 21, 

1983: the Plaintiff shall be deemed to have been excluded from 

the partnership and enjoyment of the partnership property . . . and, the Defendants and warties actina in vrivitv with them 

shall be deemed to have had exclusive control. enioyment and 

possession of the entire vartnershiw vrowertv and have 

continued the business without windins the same up or 

liauidatins the same, to the exclusion of the Plaintiff since 

October 16, 1980. In the event this paragraph becomes 

effective, the Plaintiff shall have all rights, causes of 

action and remedies regarding dissolution, accounting, 

liquidation and duties owed him as a partner pursuant to the 

laws of the State of Montana. In the event this varasravh 

comes into effect. the Plaintiff's one-third partnership 

interest in the vrowertv and business identified herein is 

herebv iudiciallv declared. (emphasis added). 

Bowers and Post did not make the required payments to 

Schrammeck, therefore paragraph 4 of Judge Henson's order and 
judgment became effective. The effect of the order was to 

judicially declare Schrammeckts partnership interest in the Woods 

Bay Marina, including both the realty and personalty. The order 

also declared that he had been excluded from the partnership since 

October 16, 1980 and alluded to his right to wind up the 

partnership after the dissolution. See 5 35-10-601, MCA, et seq. 

(explaining the rights and duties associated with dissolution and 

winding up of a partnership). Thus, according to Judge Henson1s 

order, the Woods Bay Marina real and personal property belonged to 

a partnership consisting of Bowers, Post, and Schrammeck. Judge 

Hensonls order was not appealed; therefore, we conclude that the 

District Court erred by determining that the Woods Bay Marina was 

not partnership property. 

11. 

Did the District Court err by concluding that the Bowers and 

the Posts could encumber any portion of the Woods Bay Marina 

property without Schrammeckls consent? 

As stated above, the Bowers and the Posts were the record 

owners of the Woods Bay Marina which was partnership property. 

They executed a trust indenture purporting to assign the property 

to the S & L as security for a loan. The District Court ruled that 

the Bowers and the Posts had authority to bind the partnership, but 

they did not exercise it when encumbering the Woods Bay Marina 

property. The court determined that the Bowers and the Posts, 

respectively, encumbered their individual one-third interests in 

the property. 
Because the Woods Bay Marina was partnership property, 

however, the Bowers and the Posts could not assign any individual 

interests in the property. "A partner is co-owner with the other 

partners of specific partnership property holding as a tenant in 

partnership." Section 35-10-502 (1) , MCA. "The incidents of 

tenancy in partnership are such that a partner's right in specific 

partnership property is not assignable except in connection with 

the assignment of rights of all the partners in the same property." 

Section 35-10-502(2)(b), MCA. This rule applies regardless of the 

formal legal manner in which the property is held. See Matter of 

Estate of Palmer (1985), 218 Mont. 285, 290-93, 708 P.2d 242, 245- 

47. 

Woods Bay Marina, including both the realty and the 

personalty, was partnership property. Therefore, even though the 

Bowers and the Posts were the record title holders, they could not 

assign their individual interests in it, except in connection with 

the assignment of all of the partners1 rights in the property. 

Thus, the District Court erred in determining that the Bowers and 

the Posts had authority to bind the partnership but encumbered only 

their individual one-third interests. 

FSLIC and Fidelity argue that even if the Bowers and the Posts 

did not encumber their individual interests, they encumbered the 

partnership's interest in the property. Schrammeck argues that the 

Bowers and the Posts did not have authority to encumber the 

partnership's property without consent of all the partners, and 

therefore, the purported encumbrances had no effect. The District 
Court ruled in its August 1991 summary judgment order that the loan 

documents did not bind either Schrammeck or the Woods Bay Marina 

Partnership consisting of Bowers, Post, and Schrammeck. 

The first step in analyzing whether the loan documents bound 

the partnership is to determine whether on their face they purport 

to bind the partnership. FSLIC argues that the language of the 

loan documents is ambiguous and gives rise to a reasonable 

inference that the obligation was a partnership debt. FSLIC 

contends that the ambiguities should have been clarified by parol 

evidence. We conclude that parol evidence was unnecessary for that 

purpose, however, because the loan documents are not ambiguous and 

on their face purport to finance the Woods Bay Marina project and 

bind the Woods Bay Marina Partnership. 

The trust indenture incorporates by reference the note and the 

financing statement. The note names the debtors as follows: 

81Alton W. Bowers, Lee Ann Bowers, husband and wife (50%) ; and Clark 

G. Post, Roxann Post, husband and wife (50%); Partners hereinafter 

referred to as obligors.~~ The financing statement identifies the 

debtors as "Alton W. Bowers and Lee Ann Bowers, his wife and Clark 

G. Post and Roxann Post, his wife, dba: Woods Bay Marina." 

The trust indenture identifies the grantors as follows: 

"Alton W. Bowers & Lee Ann Bowers, husband and wife, and Clark G. 

Post & Roxann Post, husband and wife, jointly and individually, of 

Woods Bay Marina, Bigfork, Montana. The trust indenture also 

states: "The indebtedness evidenced by the Note is intended to 

finance the project known as Woods Bay Marina." Thus the loan 
documents, read as a whole, purport to bind the Woods Bay Marina 

Partnership, which Bowers represented to the Bank as consisting of 

only the Bowers and the Posts. 

We note that the Bowers executed the promissory note, the 

financing statement, and the trust indenture granting the Woods Bay 

Marina real property to the S & L. Alton Bowers signed these loan 

documents as attorney in fact for Clark and Roxann Post. 

The next step in analyzing whether the loan documents bound 

the partnership is to determine whether Bowers had authority under 

9 35-10-301(1), MCA, to enter the loan transactions. 

Although the Bowers and the Posts were the record title 

holders of the Woods Bay Marina, it was partnership property of the 

Woods Bay Marina Partnership, which consisted of the three 

partners--Bowers, Post, and Schrammeck. 

Where title to real property is in the name of one or more or 

all the partners . . . a conveyance executed by a partner in 

the partnership name or in his own name passes the equitable 

interest of the partnership, provided the act is one within 

the authoritv of the ~artner under the wrovisions of 35-10- 

301(1). 

Section 35-10-302(4), MCA. Therefore, the trust indenture is a 

valid assignment of the partnership's interest in the property only 

if it was executed within Bowers1 authority under the provisions of 

5 35-10-301(1), MCA. That statute states: 

Every partner is an agent of the partnership for the purposes 

of its business, and the act of every partner, including the 

execution in the partnership name of any instrument, for 

apparently carrying on in the usual way the business of the 

partnership of which he is a member binds the partnership 

unless the partner so actins has in fact no authoritv to act 

for the DartnershiD in the particular matter and the werson 

with whom he is dealins has knowledse of the fact that he has 

no such authoritv. 
Section 35-10-301(1), MCA (emphasis added). 

The first step in analyzing whether Bowers acted within the 

authority of that statute is to determine whether he was apparently 

carrying on partnership business in the usual way when he executed 

the loan documents to obtain a loan to pay partnership debts. We 

need not determine whether using partnership property as collateral 

without the permission of all of the alleged owners of the property 

is appropriate when the ownership of the property is in dispute and 

a notice of lis vendens has been recorded. Because, as discussed 

below, Bowers had no authority to enter the loan transactions on 

the partnership's behalf and the S & L knew it. 

The second step is to determine whether Bowers in fact had no 

authority to execute the loan documents on behalf of the 

partnership. Bowers signed as attorney in fact for the Posts. 

However, he did not have Schrammeckls permission to execute the 

loan documents. 

Indeed, Bowers represented to the S & L that Schrammeck was 

not a partner and Schrammeck therefore, was not included as a party 

to the loan transaction documents. Schrammeck by then had filed 

suit alleging that Bowers and Post had excluded him from the 

partnership and disputing the ownership of Woods Bay Marina. 

Schrammeck had also recorded a lis vendens providing notice of the 

pending suit. Under these circumstances, Bowers had no 

authority to execute documents to obtain a loan, for a partnership 

including Schrammeck, using the disputed property as collateral. 

Thus, the execution of the loan documents was unauthorized. 
A partner can still bind the partnership to an unauthorized 

transaction if all of the other partners ratified the loan either 

explicitly or by knowingly receiving or retaining the benefits of 

the unauthorized loan transaction. See Restatement of Agency 

(Second) §§ 98-99. However, the respondents did not argue that 

Schrammeck ratified the loan transaction. Furthermore, although 

the record shows the purposes for which the S & L disbursed the 

loan, it does not indicate what actually became of the money, and 

there is insufficient evidence in the record to determine whether 

Schrammeck knowingly retained the benefits of the loan. 

The third step is to determine whether the S & L knew that 

Bowers did not have authority to enter the loan transactions when 

it issued the loan. See § 35-10-3Ol(l), MCA. As the following 

discussion reveals, the S & L did know that Bowers acted without 

authority when it executed the loan documents and issued the loan. 

Schrammeck's lis end ens gave notice that he had filed an 

action against Bowers and Post to dissolve and wind up a 

partnership dealing with the Woods Bay Marina real property, to 

enforce certain contract rights, and to secure a judgment on the 

dissolution and contract. Schrammeck prevailed in the suit 

underlying the lis vendens; therefore, the parties are bound by 

Judge Henson's order declaring Schrammeck's partnership rights. 

See Fox v. Clarys (1987), 227 Mont. 194, 196, 738 P.2d 104, 105. 

In Fox we stated: "The doctrine of lis end ens was created to 

hold the subject matter of litigation within the jurisdiction and 

control of the court during the pendency of an action so that any 
final relief granted by the court would be at once binding and 

effective. [citation omitted] This doctrine generally renders 

third persons who subsequently purchase or encumber an interest in 

the subject property bound by the final disposition of the action." 

Fox, 738 P.2d at 105. Thus FSLIC, as the S & Lfs successor in 

interest, is bound by Judge Henson's declaration that Woods Bay 

Marina was partnership property and that Schrammeck was a partner 

who was excluded from the partnership in October of 1980. 

In addition, the S & L's loan officer who handled the loan in 

question, John Prather, acknowledged that the S & L actually knew 

Bowers did not have authority to execute the loan documents. 

Prather stated that "[i]f D. Barry Schrammeck was a partner, his 

express consent to this particular transaction would have been 

required and his signature would have been required on the loan 

papers, trust deed and, note." After Prather denied Bower's loan 

request, Bowers represented that Schrammeck had filed a nuisance 

suit. Prather responded that the S & L "still would not make the 

loan because of the lis uendens." Thus, the S & L knew that Bowers 

did not have authority to execute the loan documents on behalf of 

the partnership. 

Because the S & L knew that Bowers did not have authority to 

execute the loan documents, the trust indenture did not pass any 

interest in the Woods Bay Marina realty to the S & L. See 5 35-10- 

302(4), MCA. In addition, neither the financing statement nor the 

note bound the partnership, because Bowers did not have authority 

to act for the partnership in executing them and the S & L knew 
that he lacked such authority. See 5 35-10-301(1), MCA. The trust 

indenture, financing statement, and note were invalid as to the 

Woods Bay Marina Partnership and the ~istrict Court erred in 

concluding that these loan documents had any effect. 

Schrammeck alleged that Fidelity and FSLIC committed several 

tortious acts against him. He alleged slander of title, 

negligence, conspiracy, and constructive fraud. The District Court 

dismissed these counts on summary judgment partly based on its 

erroneous conclusion that the loan documents bound the Bowersf and 

the Postsf individual interests. We conclude that the court should 

reconsider these issues if Schrammeck presents them on remand. 

Did the District Court abuse its discretion by denying 

Schrammeck leave to file a second amended complaint and 

supplemental pleading? 

The District Court certified two specific partial summary 

judgment orders for appeal as allowed by Rule 54(b), M.R.Civ.P. 

Neitherthese orders nor Schrammeckfs notice of appeal mentions the 

District Court's order denying Schrammeckls motion for leave to 

file supplemental pleadings or a second amended complaint. 

Therefore, the issue is not properly before this Court and we 

decline to rule on it. 

IV. 

Did the District Court err by declining to award attorney fees 

to Schrammeck for successfully defending against the foreclosure on 

the trust indenture? 

The District Court denied Schrammeck's motion for summary 

judgment on the issue of attorney fees, reasoning that Shrammeck 
was "not a party to any of the written instruments which contain 

provisions for the payment of attorney fees, and there exists no 

statutory authority for the payment of attorney fees to either 

party." We note that in the answer to Schrammeckrs October 1984 

amended complaint, the S & L and Fidelity counterclaimed against 

the Bowers, the Posts, and Schrammeck as a partnership to 

judicially foreclose on the trust indenture. We direct the court 

on remand to follow § 71-1-233, MCA, which requires the court to 

allow attorney fees in an action to foreclose a mortgage of real 

property, and to the case law interpreting that statute as 

reciprocal. See Bermes v. Sylling (1978), 179 Mont. 448, 464, 587 

P.2d 377, 387. 

In summary, the loan transaction documents were invalid. We 

reverse and remand for further proceedings. 

We Concur: k 

Y 

Chief Justice 

Justices \ 

16 
Justice Fred J. Weber concurs and dissents as follows: 

I agree with the analysis of the majority up to the point of 

its application of 5 35-10-301(1), MCA, which provides in pertinent 

part: 

Every partner is an agent of the partnership for the 

purpose of its business, and the act of every partner, 

including the execution in the partnership name of any 

instrument . . . binds the partnership unless the partner 

so acting has in fact no authority to act . . . and the 

person with whom he is dealins has knowledse of the fact 

that he has no such authority. (Emphasis supplied.) 

While I agree with the District Court determination that Bowers in 

fact had no authority to enter the loan transaction on the 

partnership's behalf, I do not find a factual basis to conclude 

that the S & L knew of that lack of authority. Even though Bowers 

did not have authority to execute the documents, his action could 

bind the partnership if the S & L did not know of his lack of 

authority. As stated in the majority opinion: 

A partner can still bind the partnership to an 

unauthorized transaction if all of the other partners 

ratified the loan either explicitly or by knowingly 

receiving or retaining benefits of the unauthorized loan 

transaction. . . . 

There are no facts in the summary judgment record before us to 

demonstrate whether or not Schrammeck knowingly received and 

retained the benefits of this unauthorized loan transaction. 

The majority points out that the record does not indicate what 

became of the money and concludes there is not sufficient evidence 

to determine whether Schrammeck did knowingly retain the benefits 

of the loan. This appeal is from a summary judgment determination 

by the District Court. I conclude there is an issue of material 
fact on whether or not Schrammeck knowingly received or retained 

the benefits of the unauthorized loan transaction. I therefore 

conclude that summary judgment is inappropriate and that this 

matter should be remanded for determination of that issue of 

material fact. 

The majority points out that Schrammeck became the successor 

in interest of both the other partners by reason of their 

conveyance to him of all of their interest. As a result, 

Schrammeck became the record owner of the property subject to the 

loan transaction. It then becomes essential to determine if 

Schsammeck knowingly retained the benefits of the loan transaction. 

The next issue of fact is whether or not the S & L actually 

knew that Bowers did not have authority to enter into the loan 

transaction. This issue is raised by the last sentence of 5 35-10- 

301(1), MCA, as above quoted. The majority points out that 

Schrammeckls j& pendens gave notice that he had filed an action to 

dissolve and wind up the partnership, and points out that he 

subsequently prevailed in that action. While all parties are bound 

by the ultimate determination in the action in which the & 

pendens was given, that determination does not establish that the 

S & L had knowledge of any lack of authority at the time the 

instruments were executed. 

The majority concludes that the S & L actually "knew Bowers 

did not have authority to execute the loan document^,^^ This 

conclusion is based upon Pratherls statements that if Schrammeck 

was a partner, his express consent would have been required and his 
signature on the various loan documents would have been required, 

as well as the further statement by Prather that the S & L would 

not make the loan because of the lis pendens. However, those 

statements by Prather are not an adequate basis for the following 

conclusion of the majority : 

Thus, the S & L knew that Bowers did not have authority 

to execute the loan documents on behalf of the 

partnership. 

The statements by loan officer Prather only demonstrate that as a 

matter of loan policy, Schrammeck would have been required to 

execute the documents if, in fact, he were a partner. 

The majority next concludes the S & L knew that Bowers did not 

have authority to execute the loan documents, and as a result, the 

trust indenture failed to pass any interest in the described 

property. There is no evidence in the summary judgment record 

which demonstrates the S & L actually knew Bowers did not have 

authority at the time of the execution of the loan documents. As 

a result, there is no factual basis from which a court may conclude 

whether or not Bowers could bind the partnership to the 

unauthorized transaction because other partners ratified by 

knowingly receiving or retaining benefits of the loan transaction. 

For the foregoing reasons, I conclude it was improper to 

affirm the summary judgment decision. Justice requires a remand 

for determination of the material facts. Upon remand, after a 

factual determination as to whether Schrammeck knowingly received 

and retained the benefits of the entire loan transaction, the 
District Court could properly decide if Schrammeck is bound by the 

provisions of 5 35-10-301(1), MCA. 

I would remand for determination by the District Court of the 

issues of material fact. 

vust!ice