Title: R W LEASING v MOSHER
Citation: N/A
Docket Number: 81-205
State: Montana
Issuer: Montana Supreme Court
Date: November 12, 1981

No. 81-205 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981 R & W LEASING, a Montana Corporation, Plaintiff and Respondent, JACK MOSHER, d/b/a BIG SKY CAMPER VILLAGE, Defendant and Appellant. Appeal from: District Court of the Eighteenth Judicial District, In and for the County of Gallatin, The Honorable W. W. Lessley, Judge presiding. Counsel of Record: For Appellant: J. David Penwell, Bozeman, Montana For Respondent : Lyman H. Bennett, 111, Bozeman, Montana Submitted on Briefs: September 17, 1981 Decided : NO\/ I 2 1981 Mr. Justice John Conway Harrison delivered the Opinion of the Court. This is an appeal from a judgment in the amount of $207.34 plus attorney fees of $650 arising out of a leasing agreement. Appellant Mosher, manager of the Big Sky Camper Village, came to town from his pristine mountain camping area on February 10, 1978, looking for a truck that would not only assist him in his work as camp manager but would also be able to push a plow attached to its front end. He did not go to all the leasing places in town but went directly to respondent R & W Leasing, Inc. There appellant leased a 1978 Dodge 3/4 ton, four-wheel drive pickup truck. The total lease agreement obligation owing from appellant to respondent was $11,334.07, with monthly payments of $277, except for the first payment which was $178.07. Twelve payments were made, ending with the January 1979 payment, which totaled $3,225.07. In February 1978, at the time of the lease, a deposit of $277 was made by appellant to immediately obtain the truck. At the time of the lease, appellant had a snow plow attached to the front end of the truck. Whether the plow belonged to appellant or to the Chrysler Corporation, for whom he worked, is not established in the record. However, there is no question that respondent sold the plow for $650, without appellant's permission, upon repossession of the vehicle by respondent. Appellant had the truck for approximately one year. During that period he had problems with the truck and had it into ,respondent's shop a number of times. In October 1978 appellant's wife, while driving the truck down the Gallatin Canyon, had an a c c i d e n t , causing damages t o t h e t r u c k i n t h e amount of $1,935.49. The t r u c k was towed i n t o r e s p o n d e n t ' s shop f o r r e p a i r s , and a p p e l l a n t never a g a i n had p o s s e s s i o n of it, although he t e s t i f i e d he t r i e d t o g e t it s e v e r a l times. Respondent t e s t i f i e d p a r t s were n o t a v a i l a b l e , and s i n c e a p p e l l a n t ' s payments were l a t e , it was decided t h a t respondent would t e r m i n a t e t h e l e a s e and s e l l t h e t r u c k . Between t h e t i m e of t h e a c c i d e n t and t h e t e r m i n a t i o n of t h e l e a s e , a p p e l l a n t r e n t e d a s u b s t i t u t e v e h i c l e . H e l a t e r purchased a secondhand Ford t r u c k f o r $800 and kept it on t h e j o b u n t i l he l e f t h i s p o s i t i o n a s camp manager sometime i n 1979. Following t e r m i n a t i o n of t h e l e a s e , t h e respondent o b t a i n e d two cash b i d s f o r t h e t r u c k , each i n t h e amount of $5,000. Respondent i n c u r r e d c o s t s of $514.42 f o r s a l e s and r e c o n d i t i o n i n g c o s t s p r i o r t o s e l l i n g t h e t r u c k f o r $7,987. The purchaser of t h e t r u c k was allowed $2,100 a s a t r a d e - i n f o r another v e h i c l e . However, o n l y $700 was set f o r t h a s t h e v a l u e t o be allowed on t h e s a l e a s respondent t e s t i f i e d t h a t $ 1 , 4 0 0 was what it t e r m e d a n " o v e r allowance." Respondent t e s t i f i e d t h a t t h e over allowance f i g u r e of $1,400 was "more t h a n you should have u n l e s s you wanted t o make t h e d e a l . " Respondent r e c e i v e d from its i n s u r a n c e company t h e sum of $1,885 f o r damages t o t h e t r u c k caused by t h e October a c c i d e n t . The c o u r t found t h a t a p p e l l a n t owed respondent $98.34 f o r t o t a l c o s t s of r e p a i r s a f t e r allowing c r e d i t f o r t h e i n s u r a n c e payment. The c o u r t ' s f i n d i n g f o l l o w s : Cash Wholesale Price Depreciated Value $4,375.00 Premature Termination Factor ($20 x 9 months) 180.00 Unpaid Rent (Feb-Apr 1979) 831.00 Deposit previously paid by lessee 277.00 ( $ 109.00) Rentals and Repairs ( $ 98.34) TOTAL ( $ 207.34) Three issues are presented: 1. Whether the trial court erred in disregarding the actual purchase price of the leased vehicle while giving credence to respondent's "appraisals" secured without any notice to the appellant. 2. Whether the trial court erred in ruling against appellant's counterclaim for the value of the snow plow admittedly sold by respondent. 3. Whether the trial court erred in rendering judgment for the respondent. Appellant first alleges that respondent, according to the paragraph nine in the lease agreement, should have consulted him on appraisals. Appellant's argument, as best we can understand it from his brief, really resolves itself to determining whether the trial court had sufficient facts to make the determination it did. We find there was sufficient testimony introduced on the value of the vehicle and the District Court's use of a "wholesale value" and "retail value" in arriving at the $5,000 figure was within the meaning of paragraph nine of the leasing agreement. T h a t paragraph read: "Upon such premature t e r m i n a t i o n , Lessor s h a l l promptly o b t a i n t h e h i g h e s t a v a i l a b l e c a s h o f f e r a t wholesale . . ." T h i s Court, i n s e t t i n g t h e s t a n d a r d of review i n nonjury c a s e s , h a s held numerous t i m e s t h a t , " [ w ] i t h r e g a r d t o t h e s t a n d a r d of review, t h i s Court h a s r e p e a t e d l y s t a t e d it w i l l n o t o v e r t u r n t h e f i n d i n g s of f a c t and c o n c l u s i o n s of law i f supported by s u b s t a n t i a l evidence and by t h e law. Evidence w i l l be viewed i n t h e l i g h t most f a v o r a b l e t o t h e p r e v a i l i n g p a r t y . [ C i t a t i o n s o m i t t e d . ] " Toeckes v. Baker (1980) I Mont . , 611 P.2d 609, 611, 37 St.Rep. 948, The s u b i s s u e o f whether t h e c o u r t e r r e d i n r u l i n g a g a i n s t a p p e l l a n t ' s c o u n t e r c l a i m w i l l be d i s c u s s e d under t h i s i s s u e . A s p r e v i o u s l y n o t e d , t h e r e c o r d d i d n o t r e v e a l whether a p p e l l a n t o r i g i n a l l y owned t h e plow. Respondent d o e s n o t deny keeping and s e l l i n g t h e plow and j u s t i f i e s its a c t i o n s w i t h a lame excuse t h a t it s o l d t h e plow t o g e t c o l l a t e r a l t o cover money t h a t might be due and owing. However, we cannot f i n d from t h e f a c t s t e s t i f i e d t o a t t r i a l t h a t t h e t r i a l judge e r r e d i n n o t a l l o w i n g a p p e l l a n t ' s c o u n t e r c l a i m . The t h i r d i s s u e concerns g r a n t i n g a t t o r n e y f e e s . A p p e l l a n t a l l e g e s t h a t f e e s of $650 on a $350 c l a i m t r i e d i n two hours is e x c e s s i v e . Paragraphs e i g h t and t e n of t h e l e a s e agreement provided f o r a t t o r n e y f e e s i n t h e e v e n t of a breach. Under Rule 1 5 ( b ) , M.R.Civ.P., t h e c o u r t can award damages over and above t h e amount asked f o r i n t h e complaint and g r e a t e r a t t o r n e y f e e s t h a n o r i g i n a l l y r e q u e s t e d . T h a t r u l e provides: "When i s s u e s n o t r a i s e d by t h e p l e a d i n g s a r e t r i e d by e x p r e s s o r implied c o n s e n t of t h e p a r t i e s , t h e y s h a l l be t r e a t e d i n a l l r e s p e c t s a s i f t h e y had been r a i s e d i n t h e p l e a d i n g s . Such amendment of t h e p l e a d i n g s a s may be n e c e s s a r y t o cause them t o conform t o t h e evidence and t o r a i s e t h e i s s u e s may be made upon motion of any p a r t y a t any time, even a f t e r judgment; b u t f a i l u r e t o s o amend d o e s n o t e f f e c t t h e r e s u l t of t h e t r i a l of t h e s e i s s u e s . I f evidence is o b j e c t e d t o a t t h e t r i a l on t h e grounds t h a t it was n o t w i t h i n t h e i s s u e s made by t h e p l e a d i n g s , t h e Court may a l l o w t h e p l e a d i n g s t o be amended and s h a l l do s o f r e e l y when t h e p r e s e n t a t i o n of t h e m e r i t s of t h e a c t i o n w i l l be subserved t h e r e b y and t h e o b j e c t i n g p a r t y f a i l s t o s a t i s f y t h e c o u r t t h a t t h e admission of such evidence would p r e j u d i c e him i n m a i n t a i n i n g h i s a c t i o n o r d e f e n s e upon t h e m e r i t s . The Court may g r a n t a continuance t o e n a b l e t h e o b j e c t i n g p a r t y t o meet such evidence." See a l s o K i z z i a r v. D o l l a r ( 1 0 t h C i r . 1 9 5 9 ) , 268 F.2d 914, Here, respondent f i l e d a n o t i o n f o r a t t o r n e y f e e s t o g e t h e r w i t h a s u p p o r t i n g a f f i d a v i t showing: Correspondence T o t a l $ 90.00 O f f i c e time (8-1/2 h r . a t $60/hr) 425.00 Court t i m e (4-1/2 h r . a t $100/hr) 450.00 TOTAL DUE $965.00 I n conformity w i t h t h e motion, a h e a r i n g was h e l d b e f o r e t h e c o u r t , and t h e c o u r t awarded $650. W e f i n d no e r r o r . The f i n a l i s s u e concerns whether t h e c o u r t e r r e d i n f a i l i n g t o award a p p e l l a n t damages f o r t h e a l l e g e d breach of implied warranty of m e r c h a n t a b i l i t y . Appellant r e l i e s on Henningsen v. Bloomfield Motors, I n c . ( 1 9 6 0 ) , 32 N . J . 418, 161 A.2d 69, and Whitaker v. Farmhand, I n c . ( 1 9 7 7 ) , 173 Mont. 345, 567 P.2d 916, a s c o n t r o l l i n g h e r e on implied w a r r a n t i e s . Under the facts of this case the theory of implied warranty of merchantability and/or the implied warranty of fitness for a particular purpose do not apply. These warranties are only applicable in the event of a "sale" as defined by the Uniform Commercial Code. Section 30-2-106, MCA, defines sale as follows: "A 'sale' consists in the passing of title from the seller to the buyer for a price (30-2-401) . . ." Anderson Uniform Commercial Code (2nd ed.), section 2-106:5 states: "Although the Code determines most legal problems without reference to title, a sale is defined as the passing of title from the seller to the buyer for a price. The transfer of title is the essential element or the distinguishing characteristic of a sale of goods. " The lease agreement as entered into by and between appellant and respondent provides in pertinent part: "This agreement is one of leasing only, and the lessee shall not have or acquire any right, title, or interest in the vehicle except the right to use or operate it as provided herein. Lessee has no option to purchase the leased vehicle." On the basis of the above language contained in the lease agreement, as well as on the definition of a "sale" as found in the UCC, no implied warranty of either merchantability or fitness for a particular purpose is applicable to a lease arrangement. The judgment of the District Court is affirmed. W e concur: M r . J u s t i c e Frank B. Morrison, Jr., d i s s e n t i n g : I r e s p e c t f u l l y d i s s e n t from t h e m a j o r i t y opinion. A review of t h e D i s t r i c t Court f i l e , and p a r t i c u l a r l y t h e f i n d i n g s of f a c t e n t e r e d by t h e D i s t r i c t Court, f a i l t o d i s c l o s e t h a t t h e counterclaim was t r e a t e d . The D i s t r i c t Court d i d , i n a conclusion of law, deny d e f e n d a n t ' s counterclaim. However, t h i s i s i n s u f f i c i e n t . I n d e f e n d a n t ' s counterclaim, defendant a l l e g e s t h a t t h e v e h i c l e was d e f e c t i v e and t h a t defendant i n c u r r e d damages a s t h e r e s u l t of being without t h e s e r v i c e of t h e v e h i c l e f o r prolonged p e r i o d s of t i m e . Defendant a l l e g e s t h a t t h e d e f e c t s r e s u l t e d i n continuous r e p a i r a t t e m p t s w i t h r e s u l t i n g c o s t f o r replacement v e h i c l e s . I n reviewing t h i s record I am unable t o determine t h e b a s i s f o r t h e D i s t r i c t C o u r t ' s r e s o l u t i o n of t h i s i s s u e . The D i s t r i c t Court f a i l e d t o make any f i n d i n g s of f a c t with r e s p e c t t o d e f e n d a n t ' s a l l e g a t i o n of d e f e c t s . I would remand t o t h e District Court w i t h d i r e c t i o n t o make s p e c i f i c f i n d i n g s of f a c t on d e f e n d a n t ' s counterclaim s o t h a t t h i s Court would have an adequate o p p o r t u n i t y t o review those i s s u e s .