Title: SANT v BARIL
Citation: N/A
Docket Number: 13180
State: Montana
Issuer: Montana Supreme Court
Date: June 9, 1977

No. 13180 I N THE S U S R E M E COUKT O F THE STATE OF MONTANA 1977 ARTHUR H. S A N T and EDNA SANT, P l a i n t i f f s and Appellants, v. LAURA THELMA BARIL, A s Administratrix of t h e Estate of A.R. SMITH, Deceased, Defendant and Respondent. And LAURA THELMA BARIL, A s Administratrix of the Estate of A.R. Smith, Deceased, P l a i n t i f f and Respondent, ROBERT SANT, Defendant and Appellant. Appeal from: D i s t r i c t Court of the F i f t h J u d i c i a l D i s t r i c t , Honorable Peter Meloy, Judge presiding. Counsel of Record: For Appellants : Landoe, Gary and Planalp, Bozeman,Montana Robert Planalp argued, Bozeman, Montana For Respondent : Chester Lloyd Jones argued, Virginia City, Montana Douglas Smith argued, Sheridan, Montana. F i l e d : . I@ i g f i aamw 2 t " i G a " . , L < -7" - Clerk. Submitted: March 9, 1977 Decided : J - 9 I977 M r . Justice Gene B. Daly delivered the Opinion of the Court. This appeal arises out of two causes of action which were consolidated for t r i a l by jury in the d i s t r i c t court, Madison County. The f i r s t cause i s a s u i t for damages under a land lease executed between lessors, A. R. Smith and Laura Smith, and lessee Arthur H. ' Sant. This s u i t was brought by Arthur H. Sant and Edna Sant (Sants), against the Administratrix of the Estate of A. R. Smith (Administratrix). Plaintiffs appeal from the d i s t r i c t court granting defendant's motion t o dismiss, a f t e r p l a i n t i f f s presented t h e i r case and rested. The second cause is a s u i t t o recover on a promissory note held by the F i r s t National Bank of Twin Bridges, Twin Bridges, Montana, and executed by the Sants and t h e i r son, Robert Sant. The promissory note was assigned t o the Administratrix and s u i t was brought by the Administratrix against Robert Sant. The dis- t r i c t court treated t h i s action as a counterclaim. Robert Sant appeals from the d i s t r i c t court's order directing the jury t o return a verdict for the Administratrix. In F i r s t National Bank v. Sant, 161 Mont. 376, 506 P.2d 835, t h i s Court discussed some of the legal problems existing i n the present action. A s a means of introduction and clarification, we review our holding i n that case. I n F i r s t National Bank v. Sant, supra, the Sants appealed from a d i s t r i c t court judgment granting foreclosure on t h e i r r e a l and personal property. This judgment of foreclosure was rendered i n favor of the F i r s t National Bank of Twin Bridges which sought t o foreclose on a mortgage executed by Arthur H. Sant on July 9, 1970, and held by the F i r s t National Bank of Twin Bridges. The mortgage instrument was entitled "(Plan of Paris Robert)". Paris Robert was the president of the First National Bank of Twin Bridges. The plan purported to relieve the Sants of ldAbility for certain creditor debts and balances due the bank on existing notes. This release was to be accomplished through the b a n k ! s disbursement of funds made available to the Sants by virtue of their executing three promissory notes. The notes were in the amounts of $17,690.62; $2,788.05; and $12,968.74, and each bearing interest at the rate of ten percent per annum. Certain real and personal property of the Sants was listed as collateral for the mortgage and $50 was charged by the bank as an expense for organizing the credit plan and overseeing the payments. The plan was divisible into three parts with the promissory notes for $17,690.62 and $2,788.05 to mature February 5, 1971; while the note for $12,968.74 matured on April 1, 1971. At the time First National Bank v. Sant was heard none of the promissory had been paid by the obligors. The notes for $2,788.05 and $12,968.74 were held by the bank and no actual disbursements were made to Continental Oil Co. via Russell Lepp, or to A. R . Smith, both listed as corresponding creditors to these notes. It is the $12,968.74 debt which confronts us in the instant case in the form of the July 9, 1970 promissory note and the assignment of that note. The plan indicates the $12,968.74 debt was a consolidation of debts owed by the Sants to A. R. Smith. Specifically, these debts are listed as an old promissory note of $8,240; $728.74 in interest on this old note; and $4,000 consideration for a 1970 lease. These items are of importance later in this opinion. W e held i n F i r s t National Bank v. Sant that the bank was barred from foreclosing on the promissory notes i n the amount of $2,788.05 and $12,968.74 and the Sants were entitled t o a credit i n the amount of $1,214.32 on the promissory note for $17,690.62. The basis for the $1,214.32 credit was the finding that while the bank had charged $50 as expense for setting up the plan and had charged ten percent interest on the promissory notes, Paris Robert, as agent for the bank, had secretly negotiated with the Sants' creditors for discounts o r rebates as a collection fee. W e found the bank's failure t o disclose such negotiations a breach of a duty owed the principal by h i s agent and held the Sants entitled to the amount of the rebates, $1,214.32. The basis for denying the bank foreclosure on the $2,788.05 and $12,968.74 promissory notes was the finding that the notes were not supported by legal consideration. For example, the $12,968.74 promissory note was purportedly executed t o evidence debts owed by the Sants to A. R. Smith. However, the promissory note was drafted and held by the F i r s t National Bank of Twin Bridges and executed by the Sants and Robert Sant. Since there has never been a showing of any o r a l or express t r u s t , partnership, agency, joint venture o r other such relationship between A. R. Smith and the bank, the promissory note is void for the purpose of establishing the $12,968.74 debt between A. R. Smith and the Sants. The only evidence of any agency relationship is the penciled words "A.R.Smith Trust" which emboss the promissory note and were allegedly written by Paris Robert. In F i r s t National Bank v. Sant w e s e t forth those policy reasons which directed why such evidence should not be equated with an express o r o r a l agreement creating a partner- ship, agency, or t r u s t relationship and, though w e refrain from repeating those policy reasons here, we affirm thebask for that holding . - 3 - W e note that F i r s t National Bank v. Sant never discussed the legal sufficiency of the debts embodied i n the $12,968.74 promissory note: "This holding does not affect any preexisting or present debt between Sant and Smith * * *." 161 Mont. 387. That case held only that the $12,968.74 promissory note could not be sued upon because it was not supported by legal considera- tion. Such a holding i s f a t a l to any attempt by the Administratrix here t o collect on the same promissory note assigned by the bank, apparently without consideration. Any attempt by the Administra- t r i x t o recover a debt of $12,968.74 must be by an action indepen- dent of the promissory note and must be proven by evidence estab- lishing anobligee/obligor relationship. A s u i t t o recover on .the promissory note held by the bank and executed by the Sants and Robert Sant f a i l s to establish such a debt. Therefore, w e hold the d i s t r i c t court erred when it directed the jury t o return a verdict for the Administratrix on the counterlclaim t o recover on the promissory note and that action is dismissed. The remaining issue i s whether the d i s t r i c t court erred when it granted the Administratrix' motion t o dismiss a f t e r the Sants had presented t h e i r case and rested i n the action for damages under the land lease. W e i n i t i a l l y recognize that counsel for the Administratrix incorrectly moved for dismissal i n t h i s jury t r i a l and the d i s t r i c t court inadvertently granted the motion. Rule 41(b), M.R.Civ.P., i s controlling: "(b) INVOLUNTARY DISMISSAL--EFFECT THEREOF. For failure of the p l a i n t i f f t o prosecute o r t o comply with these rules or, any order of court, a defendant may move for dismissal of an action or of any claim against him. After the p l a i n t i f f , i n an action t r i e d by the court without a jury, has completed the presenta- tion of h i s evidence, the defendant, without waiving h i s right t o offer evidence i n the event the motion is not granted, may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right t o r e l i e f . The court a s t r i e r of the facts may then determine them and render judgment against the plaintiff o r may decline t o render any judgment u n t i l the close of a l l the evidence, I f the court renders judgment on the merits against the p l a i n t i f f , the court shall make findings as provided i n Rule 52(a). Unless the court i n i t s order for dismissal otherwise specifies, a dismissal under t h i s subdivision and any dismissal not provided for in t h i s rule, other than a dismissal for lack of jurisdiction or failure t o join a party under Rule 19, operates as an adjudication upon the merits." ' The Advisory Committee's note t o the September 29, 1967 Amendment t o Rule 41(b), states: I I Source: F ~ ~ . R , , C ~ V . P . 41(b), as amended 1963 and 1966. "Explanation of change: Under the prior text of the second sentence of t h i s subdivision [Rule 41(b) 1, the motion for dismissal a t the close of the p l a i n t i f f ' s evidence may be made i n a case t r i e d t o a jury as well a s i n a case t r i e d without a jury. But when made i n a jury-tried case, t h i s motion overlaps the motion for a directed verdict under Rule 50(a), which i s also available i n the same situation, This overlap has caused confusion. Accordingly it is amended t o provide that the motion for dismissal a t the close of the p l a i n t i f f ' s evi- dence shall apply only t o nonjury cases (including cases t r i e d with an advisory jury). Hereafter the correct motion i n jury-tried cases would be a motion for a directed verdict. This amendment .involves no change of substance. "The f i r s t sentence of Rule 41(b), providing for dismissal for failure t o prosecute or t o comply with the Rules o r any order of court, and the general provisions of the l a s t sentence remain applicable i n jury as well as nonjury cases. "This amendment also changes the l a s t sentence of t h i s subdivision t o accord with the amendment t o Rule; 19,': . (Emphasis added.) A motion for directed verdict was not offered i n the instant case. However, both parties recognize the error and counsel t r e a t the motion for dismissal as a motion for directed verdict i n t h e i r briefs. Thus, for purposes of t h i s review w e w i l l likewise t r e a t the motion for dismissal as a motion for directed verdict under Rule 50(a), M,R.Civ.P.; 9 Wright & Miller, Federal Practice and Procedure: C i v i l 5 2371; Warren v. Hudson Pulp & Paper Corp., 477 F.2d 229,232; Haugen v. Minnesota Mining and Manufacturing Co., 15 Wash.App. 379, 550 P.2d 71. The basic r u l e governing our analysis of t h e granting of a motion f o r directed verdict is s e t out i n section 93-5205, R.C.M. 1947: "Where, upon the t r i a l of an issue by a jury, the case presents only questions of law, the judge may d i r e c t the jury t o render a verdict i n favor of the party en- t i t l e d thereto ." Case authority i n Montana has established three basic r u l e s which apply i n interpreting section 93-5205. 1. Upon a motion f o r directed verdict i n favor of defendant, the evidence introduced by p l a i n t i f f w i l l be considered i n the l i g h t most favorable t o p l a i n t i f f and a s proving whatever it tends t o prove. 2. A cause should never be withdrawn from the jury unless the conclusion sought t o be drawn from t h e f a c t s must follow a s a matter of law and recovery cannot be had upon any view which could be reasonably drawn from the f a c t s which the evidence tends t o prove, 3, I n reviewing an order directing a verdict f o r defendant, the reviewing court w i l l only consider the evidence introduced by the p l a i n t i f f and i f t h a t evidence, viewed i n the l i g h t most favorable t o the p l a i n t i f f , tends t o e s t a b l i s h the case made by the p l a i n t i f f ' s pleadings the order w i l l be reversed. See: Hannifin v. R e t a i l Clerks, 162 Mont. 170, 511 P.2d 982; M d l e r v.,Svejkovsky, 153 Mont. 416, 458 P.2d 265; Pickett v. Kyger, 151 Mont. 87, 439 P.2d 57; McIntosh v. Linder-Kind Lumber Co., 144 Mont, 1, 393 P,2d 782, The t e s t commonly employed t o determine i f the evidence i s legally s u f f i c i e n t t o withdraw cases and issues from the jury is whether reasonable men could draw d i f f e r e n t conclusions from the evidence. Collins v. Itoh, 160 Mont. 461, 503 P.2d 36; Hoffman v. Herzog, 158 Mont. 296, 491 P.2d 713; Shields v. Murray, 156 Mont. 493, 481 P.2d 680; Bridges v. Moritz, 149 Mont. 273, 425 P.2d 721. I f only one conclusion i s reasonably proper, then the directed verdict i s proper. I n the instant case the Sants presented evidence i n the d i s t r i c t court which tended t o prove: (1) That a written lease for the years 1966 through 1968 was executed between the lessors, A . R. Smith and Laura Smith, and the lessee, Arthur H. Sant; (2) t h a t the written lease was o r a l l y extended f o r a period of two years, through April 1971; (3) t h a t the terms of the lease provided the lessee was e n t i t l e d t o the exclusive possession and control of the leased premises, including a house on the leased property; (4) t h a t the Britton family was a tenant of the Sants, residing i n the house on the leased property, and the Sants were legally within t h e i r r i g h t s i n attempting t o e v i c t the Brittons; (5) t h a t A . R. Smith and members of h i s family restrained the Sants from evicting the Brittons, and thus interfered with the ants' exclusive possession of the premises; (6) t h a t i n t e r f e r - ence with the ants' exclusive possession of the premises was a violation of the lease provisions; (7) t h a t a s a r e s u l t of the ants' i n a b i l i t y t o e v i c t the Brittons the Sants were unable t o house employees who could work i n the Sants' potato f i e l d s ; (8) t h a t a s a r e s u l t of the Sants' i n a b i l i t y t o house employees t h e i r unattended potato crop f o r the 1970 crop season was damaged by disease, substantially affecting the s a l e p r i c e of the crop; (9) t h a t the Sants' incurred monetary damages resulting from the diseased c ~ ~ n ~ d i t i o n 3-f: Eheir potaco crop, the spread of the disease being proximately caused by A. R. Smith and members of h i s family by preventing the Sants from providing housing f o r 2mployees. I n establishing t h e i r case the Sants presented evidence in i h s 2orm of : (1) The written lease and option executed by che lessors and lessee; (2) t h e testimony of workers who t e s t i - f i e d they and t h e i r families were prepared t o work f o r the Sants and aid i n saving the Sants' diseased potato crop, but were com- pelled t o find other employment when the Sants were unable t o supply housing; (3) the testimony of h o r t i c u l t u r e experts who t e s t i f i e d regarding the blackleg disease which infected t h e Sants' 1970 potato crop and the potential f o r recovering c e r t i f i - cation of the potato crop by manual roguing of the potato plants. The evidence, when viewed i n the l i g h t most favorable t o the Sants, could persuade reasonable men t o conclude the damages incurred by the Sants was a t t r i b u t a b l e t o A. R. smith's alleged interference with the Sants' exclusive possession of the leased premises. The evidence c l e a r l y presents questions of f a c t a s to the proximate cause of the damages incurred by the Sants i n the 1970 crop season. I n any event, the Administratrix was not e n t i t l e d t o judgment a s a matter of law. Therefore, the d i s t r i c t court ' s order and judgment granting the Administratrix' motion t o dismiss i s reversed and the cause is remanded f o r t r i a l on the issues. W e note t h e record f a i l s t o disclose any payment by the Sants on the purported o r a l lease f o r the 1970 crop season. Absent proof of payment, any p o t e n t i a l recovery by the Sants for damages would b e setoff agair~sc the lease consideration. The judgment of the d i s t r i c t court i s reversed and t h e cause is remanded, consistent with t h i s opinion. 4 4 ' J u s t i c e . W e Concur: -1 /.