Title: HASS v HASS LAND CO
Citation: N/A
Docket Number: 84-470
State: Montana
Issuer: Montana Supreme Court
Date: August 5, 1985

No. 84-470 IN THE SUPREME COURT OF THE STATE OF MONTANA 1985 WILLIAM HARLOW HASS, individually and on behalf of HASS LAND COMPANY, Plaintiff and Appellant, HASS LAND COMPANY, a Mont. corp., and PAULA ALTHOFF and LAURA JEAN KNOTT, individually and as direc- tors of said corporation, Defendants and Respondents. ******************* HASS LAND COMPANY and PAULA ALTHOFF and LAURA JEAN KNOTT, individually and in the right of HASS FARMS, INC., a Montana corp., Cross-Plaintiffs and Respondents, -vs- HASS FARi?4S, INC., and WILLIAM HARLOW HASS, individually and as President and Director of Bass Farms, Inc., Cross-Defendants and Appellants. APPEAL FROM: District Court of the Thirteenth Judicial District, In and for the County of Yellowstone, The Honorable Robert W . Holmstrom, Judge presiding. COUNSEL OF RECORD: For Appellants: Tipp, Hoven, Skjelset & Frizzell; Thomas Frizzell, Missoula, Montana For Respondents: Moulton, Bellingham, Longo & Mather; B.E. Lcngo, Billinqs, Montana - Submitted on Briefs: April 25, 1985 Filed: ii,c~I; 2 1985 Clerk M r . J u s t i c e L.C. Gulbrandson d e l i v e r e d t h e Opinion of t h e Court. William Harlow Hass appeals from an o r d e r of t h e D i s t r i c t Court o f t h e T h i r t e e n t h J u d i c i a l D i s t r i c t , Yellowstone County, Montana, g r a n t i n g t h e s p e c i f i c performance o f a s e t t l e m e n t agreement between t h e p a r t i e s . W e a f f i r m . This appeal i n v o l v e s a long-standing family d i s p u t e between William Harlow Hass and h i s two sisters, Paula Althoff and Laura Jean Knott, over t h e c o n t r o l and o p e r a t i o n of two family farm c o r p o r a t i o n s i n Sheridan County, Montana. Hass Land Company owns approximately 6,130 a c r e s o f farm land which was t h e family farm bequeathed by Margaret Hass i n t h e approximate s h a r e s o f 50 p e r c e n t t o Tdil.liam and 25 p e r c e n t each t o Paula and Laura. Hass Farms, I n c . , i s t h e o p e r a t i n g arm o f t h e Hass Land Company, and owns t h e machinery and equipment. It was a l s o bequeathed by Margaret Hass t o h e r c h i l d r e n i n approximately t h e same p r o p o r t i o n s a s t h e Land Company. I n 1976, William f i l e d s u i t a g a i n s t h i s sisters, Paula and Laura, and Hass Land Company, a l l e g i n g s t o c k h o l d e r oppression and r e q u e s t i n g t h e appointment o f a r e c e i v e r f o r t h e corporation. The sisters cross-claimed a g a i n s t William and Hass Farms, I n c . , f o r an accounting. O n t h e motion of William t h e D i s t r i c t Court severed t h e sisters1 cross-claim, r e s u l t i n g i n t h e f i l i n g of s e p a r a t e complaints a g a i n s t William and Hass Farms, Inc. These complaints w e r e consolidated f o r t r i a l w i t h t h e Hass Land and William Hass s u i t . O n J u l y 23, 1982, a l l o f t h e p a r t i e s , a c t i n g i n both t h e i r persona1 and c o r p o r a t e c a p a c i t i e s , e n t e r e d i n t o an "Agreement o f Settlement." Among o t h e r arrangements s e t t l i n g t h e v a r i o u s l a w s u i t s , t h e Agreement c a l l e d f o r t h e p a r t i e s t o a p p o i n t a p p r a i s e r s who w e r e t o "determine t h e e n t i r e v a l u e o f t h e a s s e t s o f each c o r p o r a t i o n . I' F u r t h e r , t h e agreement provided t h a t " [ t ] he v a l u e determined . . . [by t h e a p p r a i s e r s ] s h a l l be reduced by c o r p o r a t e d e b t s owed t o t h i r d p a r t i e s such a s banks o r t h e CCC," s u b j e c t t o t h e q u a l i f i c a t i o n t h a t I' [o] n l y $100,000 o f t h i r d - p a r t y d e b t s i s t o be used t o reduce t h e market v a l u e o f Hass Farms corpora t i o n . " A f t e r executing t h i s agreement, t h e sisters promptly appointed t h e i r a p p r a i s e r . William d i d n o t , and, i n f a c t delayed u n t i l May 11, 1983, through an e n t i r e p l a n t i n g season during which he was i n f u l l c o n t r o l o f t h e farm. O n t h a t d a t e , t h e sisters f i l e d a p e t i t i o n w i t h t h e D i s t r i c t Court r e q u e s t i n g t h a t t h e c o u r t enforce t h e s p e c i f i c performance o f t h e s e t t l e m e n t c o n t r a c t . William then appointed h i s a p p r a i s e r and both a p p r a i s e r s w e r e a b l e t o a g r e e on t h e requested v a l u a t i o n s . The p e t i t i o n d i d n o t reach t r i a l u n t i l A p r i l 2 , 1984; through y e t a n o t h e r p l a n t i n g season. The D i s t r i c t Court e n t e r e d i t s f i n d i n g s , c o n c l u s i o n s , and o r d e r on August 2 0 , 1984; well i n t o t h e t h i r d season a f t e r t h e p a r t i e s had s e t t l e d t h e i r d i s p u t e s . William was i n f u l l c o n t r o l o f t h e farm during t h e whole t i m e , p l a n t i n g , h a r v e s t i n g , and s e l l i n g t h e c r o p s each year. William t h e n appealed t h e District C o u r t ' s o r d e r t o t h i s Court. W e n o t e t h a t it i s now f o u r y e a r s s i n c e t h e p a r t i e s " s e t t l e d " t h e i r d i s p u t e . Appellant r a i s e s t h e following i s s u e s on appeal: 1. That t h e D i s t r i c t Court erroneously s u b s t i t u t e d i t s judgment f o r t h e a p p r a i s e r s i n making a d d i t i o n s t o t h e market value o f Hass Land Company and Hass Farms. 2 . That even i f t h e s e t t l e m e n t agreement allowed t h e District Court t o determine t h e p r i c e t o be p a i d by William t o h i s sisters, t h e c o u r t i n t e r p r e t e d t h e agreement c o n t r a r y t o t h e p a r t i e s ' i n t e n t , and t h e law. 3. That t h e D i s t r i c t Court e r r e d i n l e v y i n g i n t e r e s t a g a i n s t William. I n h i s f i r s t a l l e g a t i o n o f e r r o r , William contends t h a t t h e D i s t r i c t C o u r t e r r e d i n adding t o t h e a p p r a i s e d v a l u e o f Hass Farms, I n c . t h e amount o f t h e Commodity C r e d i t C o r p o r a t i o n (CCC) g r a i n h e l d a s l o a n c o l l a t e r a l , and t h e "115 account"; t h e r e b y i n c r e a s i n g t h e amount he was r e q u i r e d under t h e s e t t l e m e n t agreement t o t e n d e r h i s sisters t o purchase t h e i r i n t e r e s t s . The a p p r a i s e r s had p r e v i o u s l y a g r e e d t o t h e v a l u a t i o n o f t h e a s s e t s o f Hass Farms, I n c . , and Hass Land Company. William a r g u e s t h a t when t h e a p p r a i s e r s reached t h e s e f i g u r e s , t h e y had a l r e a d y i n c o r p o r a t e d t h o s e d e b t s . Two s e p a r a t e c l a u s e s o f t h e s e t t l e m e n t agreement a r e r e l e v a n t t o t h e CCC g r a i n i s s u e . The f i r s t s t a t e s : "The a p p r a i s e r s w i l l determine t h e v a l u e o f t h e a s s e t s o f each c o r p o r a t i o n . " - - (Emphasis added.) And t h e second: "The v a l u e a s determined above s h a l l be reduced by c o r p o r a t e d e b t s owed t o t h i r d p a r t i e s sbch a s banks or t h e CCC. . . . "Only $100,000 o f t h i r d p a r t y d e b t s i s t o b e used t o reduce t h e market val-ue o f Hass Farms c o r p o r a t i o n . " On t h i s p o i n t , t h e D i s t r i c t Court found: "The c o u r t f i n d s t h a t t h e p r o v i s i o n t o f i n d i n g market v a l u e c o n t a i n e d i n t h e agreement o f s e t t l e m e n t i s p l a i n and unambiguous and a l l g r a i n owned by Hass Farm a s o f J u l y 23, 1982, i s t o b e included i n t h e v a l u a t i o n o f t h e c o r p o r a t e a s s e t s and f u r t h e r , t h e d e d u c t i o n f o r d e b t s owed t o t h i r d p a r t i e s , i n c l u d i n g t h e CCC i s l i m i t e d t o $100,000 . . ." I n Ryan v. Board o f County Commissioners, etc. (Mont. 1 9 8 0 ) , 620 P.2d 1203, 37 St.Rep. 1965, w e r e f e r r e d t o t h e following s t a t u t e s i n i n t e r p r e t i n g a d i s p u t e d c o n t r a c t provision: "Section 28-3-301, MCA, provides: "A c o n t r a c t must be s o i n t e r p r e t e d a s t o g i v e e f f e c t t o t h e mutual i n t e n t i o n o f t h e p a r t i e s a s it e x i s t e d a t t h e t i m e o f c o n t r a c t i n g , s o f a r a s t h e same is a s c e r t a i n a b l e and lawful. "Section 28-3-303, MCA, provides: "When a c o n t r a c t i s reduced t o w r i t i n g , t h e i n t e n t i o n o f t h e p a r t i e s i s t o be a s c e r t a i n e d from t h e w r i t i n g a l o n e i f p o s s i b l e , s u b j e c t , however, t o t h e o t h e r p r o v i s i o n s o f t h i s chapter." F u r t h e r , i n Wortman v. G r i f f (Mont. 1982), 651 P.2d 998, 39 St.Rep. 1916, we held t h a t where t h e "language i s c l e a r and unambiguous an i t s f a c e , it i s t h e d u t y o f t h e c o u r t t o e n f o r c e it a s t h e p a r t i e s made it." ( C i t i n g Ryan, s u p r a . ) The D i s t r i c t Court held t h a t t h e c o n t r a c t was c l e a r and unambiguous and w e agree. It s p e c i f i c a l l y provides t h a t t h e a s s e t s o f each c o r p o r a t i o n i n c l u d e s " a l l personal p r o p e r t y owned and used i n t h e o p e r a t i o n o f Hass Land f o r Hass Farms, a l l o f its g r a i n , [and] personal equipment . . ." The a p p r a i s e r s w e r e , by t h e terms o f t h e c o n t r a c t , simply d i r e c t e d t o determine t h e v a l u e o f t h o s e a s s e t s . They w e r e n o t d i r e c t e d t o engage i n any adjustments f o r d e b t . The simple language i n t h e c o n t r a c t , t h a t " t h e v a l u e - a s determined above" n e c e s s a r i l y s u g g e s t s t h a t t h e v a l u e r e f e r r e d t o is antecedent t o t h e adustment f o r d e b t . I n t h e c l a u s e where t h e d e b t adjustment i s d i r e c t e d no r e f e r e n c e t o t h e a p p r a i s a l i s made. The c o n t r a c t simply provided f i r s t t h a t t h e a p p r a i s e r s w e r e t o reach a v a l u e o f t h e a s s e t s . Then, secondly and independently, t h a t v a l u e would be increased by c o r p o r a t e d e b t s i n excess o f $100,000. The c o u r t , i n e n f o r c i n g t h e s p e c i f i c performance of t h i s agreement did no more than t h e p a r t i e s had agreed t o do. William made a practice over the years of drawing on the bank account of Hass Farms, Inc. as though it was his own personal bank account. By deposition, Cordell Almond, a CPA and accountant for Hass Farms, testified that this account, called the "115 account," was a personal checking account of William, though drawn on the corporation. William argues that his liabilities under this account were released when all of the claims were released by the settlement agreement. Alternatively, he contends the account, being an asset of the corporation, was specifically includ-ed within the appraisers calculations and the parties are bound thereby. The District Court held: "The said account is an asset of the corporation and should be included in determining the value of the assets of said corporation and that in addition thereto, accounts owed by Paula Althoff and Laura Jean Knott to Hass Land Company should be included as an asset of said corporation for the purpose of determining the value of its assets." We affirm the District Court for two reasons. First is that the court's order effectuated the parties' contractual expectations. William argues that his personal liability under the "115 account" was released in the settlement agreement. To determine the validity of his contention, we must turn to the agreement itself. It directed the appraisers, when valuing Hass Farms, Inc. to consider: "all of its grain, personalty, equipment and machinery . . . and other equipment and personal property - of - all types as shown on the books of the corporation. " (Emphasis added. ) The District Court deemed this clause "clear and unambiguous." Based on evidence on the record that William, Paula, and Laura owed money to Hass Farms, Inc., and that these debts were "on the books" the court determined that they were corporate assets and added them to the amount reached by the appraisers. Since the Agreement of Settlement i s c o n t r o l l i n g , a p p e l l a n t s argument mentioned above i s i r r e l e v a n t . A s t o William's argument t h a t t h e a p p r a i s e r ' s c a l c u l a t i o n s a r e binding, w e recognize t h e g e n e r a l r u l e t h a t : " [A]n award made by t h e a p p r a i s e r s is supported by every reasonable intendment and presumption, and it should n o t be vacated u n l e s s it was made without a u t h o r i t y , o r was t h e r e s u l t o f fraud o r mistake, o r t h e misfeasance o r malfeasance o f t h e appraisers.'' Lee v. Providence Washington Insurance Co. (1928), 82 Mont. 264, 274, 266 P. 640, 643. I n accord, 5 W i l l i s t o n - on C o n t r a c t s , 5802, p. 825. H e r e it was c l e a r t h a t t h e a p p r a i s e r s mistakenly f o r g o t t o i n c l u d e i n t h e a s s e t v a l u a t i o n of each c o r p o r a t i o n t h o s e d e b t s t h a t t h e i n d i v i d u a l p a r t i e s owed t h e r e t o . Along w i t h n e g l e c t i n g t o c o n s i d e r William's d e b t s t o Hass Farms, I n c . , t h e a p p r a i s e r s overlooked t h o s e owed by Paula. Althoff and Laura Knott. This type o f mistake, a f f e c t i n g b o t h p a r t i e s , negates any i n f e r e n c e o f p a r t i a l i t y o r b i a s . I t i s t h i s t y p e of mistake, where t h e i n d i c a o f i m p a r t i a l i t y i s s t r o n g , t h a t t h e D i s t r i c t Court may c o r r e c t when examining an a p p r a i s e r ' s r e p o r t . W e a f f i r m on t h i s p o i n t . William n e x t contends t h a t even i f t h e D i s t r i c t Court was empowered under t h e c o n t r a c t t o make deductions from t h e a p p r a i s a l v a l u e t h a t it e r r e d i n determining t h a t t h e CCC loans w e r e c o r p o r a t e d e b t . The D i s t r i c t Court found t h a t t h e CCC loans w e r e c o r p o r a t e debt. A t i s s u e i s g r a i n used a s c o l l a t e r a l f o r a non-recourse loan program administered by t h e CCC. Under t h i s program, a farmer borrows from t h e government a sum c a l c u l a t e d t o r e f l e c t t h e v a l u e o f t h e c r o p and p u t s up t h e crop i t s e l f a s c o l l a t e r a l . I f t h e market p r i c e o f t h e g r a i n t u r n s o u t higher t h a n t h e loan r a t e , t h e Farmer can sell t h e crop, s a t i s f y t h e l o a n , and keep t h e d i f f e r e n c e . I f t h e market p r i c e does n o t go above t h e loan r a t e , t h e farmer can a c t i v a t e a "non-recourse c l a u s e " i n t h e loan agreement and t u r n over t h e c r o p t o s a t i s f y h i s o b l i g a t i o n . A t t r i a l William presented testimony through h i s accountant t h a t Hass Farms, I n c . , was a cash b a s i s e n t i t y , and t r e a t e d t h e loans a s s a l e s . Paula Althoff and Laura Knott p r ~ s e n t e d evidence t o t h e e f f e c t t h a t t h e CCC payments were actual-ly a loan and n o t a s a l e . F u r t h e r , t h e y argued t h e c o n t r a c t s p e c i f i c a l l y provides t h a t CCC payments w e r e c o r p o r a t e debt. The D i s t r i c t Court concluded t h a t t h e s e payments were a loan, t h u s d e b t , and deducted t h e i r amount from t h e c o r p o r a t e a s s e t s pursuant t o t h e s e t t l e m e n t agreement. I n Lauterjung v. Johnson (1977), 175 Mont. 74, 572 P.2d 511, w e s t a t e d : "'When reviewing f i n d i n g s of f a c t and conclusions o f law o f a d i s t r i c t c o u r t , s i t t i n g without a jury, t h i s Court has r e p e a t e d l y held such f i n d i n g s and conclusions w i l l n o t be d i s t u r b e d i f supported by s u b s t a n t i a l evidence and by t h e law . . . . When reviewing evidence it w i l l be viewed i n t h e l i g h t most favorable t o t h e p r e v a i l i n g p a r t y i n t h e d i s t r i c t c o u r t , and t h e c r e d i b i l i t y of w i t n e s s e s and t h e weight assigned t o t h e i r testimony i s f o r t h e determination o f t h e ~ i s t r i c t Court i n a nonjury t r i a l . ( C i t a t i o n s o m i t t e d . ) ' " C i t i n g Luppold v. Lewis (1977), 172 Mont. 280, 2 8 4 , 563 P.2d 538, 540 Given our deference t o t h e D i s t r i c t C o u r t ' s f i n d i n g s and conclusions w e do n o t f i n d e r r o r . There i s s u b s t a n t i a l c r e d i b l e evidence on t h e record t o support t h e D i s t r i c t C o u r t ' s conclusion t h a t Hass Farms, Inc. t r e a t e d t h e Commodity C r e d i t C o r p o r a t i o n ' s l o a n s a s c o r p o r a t e d e b t . The CCC loans have few o f t h e a s p e c t s o f a t r u e s a l e . There i s no t r a n s f e r of t i t l e . Under t h e loan program t h e farmer has t h e continuing power t o dispose o f t h e g r a i n should t h e p r i c e go h i g h e r o r otherwise d e s i r e s t o do so. Actual t i t l e o r ownership (possession w i t h t h e i n t e n t t o exclude) o f t h e g r a i n i s n o t s p e c i f i c a l l y t r a n s f e r r e d u n t i l t h e farmer e i t h e r a c t i v a t e s t h e non-recourse c l a u s e o r pays h i s loan. The government pays t h e farmer f o r s t o r i n g t h e g r a i n d u r i n g t h e t e r m o f t h e loan, b u t a s i d e from t h a t h a s no o t h e r power t o use t h e same. The f a c t , f r e q u e n t l y mentioned by William, t h a t t i t l e t o t h e g r a i n has gone t o t h e government through a c t i v a t i o n of t h e non-recourse c l a u s e f o r t h e p a s t few y e a r s i s i r r e l e v a n t . There i s s u b s t a n t i a l c r e d i b l e evidence i n t h e record supporting t h e D i s t r i c t C o u r t ' s determination and w e a f f i r m t h e same. F i n a l l y , William argues t h a t t h e D i s t r i c t Court e r r e d i n awarding i n t e r e s t t o t h e respondents. O n t h i s p o i n t , t h e c o u r t held: "That f o r many y e a r s William Harlow Hass . . . has continued t o farm a l l o f t h e Hass Land Company's land s i n c e t h e d a t e of t h e execution o f t h e agreement of s e t t l e m e n t ; t h a t any r e n t a l paid by Hass Farms, Inc. s i n c e t h e a p p r a i s a l d a t e , . . . was n o t taken i n t o account i n t h e determination o f market v a l u e . . . [and] t h a t i f s a i d agreement i s s p e c i f i c a l l y enforced and t h e c o u r t does hereby conclude t h a t it should be s p e c i f i c a l l y enforced, Hass Farms, Inc. and William Harlow Hass w i l l have gained u n f a i r advantage by t h e d e l a y i n t h e c l o s i n g o f t h i s t r a n s a c t i o n i n t h a t they have had t h e use o f t h e land and n o t had t o pay any r e n t thereupon; t h e c o u r t t h e r e f o r e concludes t h a t it would be f a i r and e q u i t a b l e f o r i n t e r e s t t o be paid by William Harlow Hass and Hass Land upon t h e amount s t a t e d from September 5, 1982, t h e d a t e o f t h e a n t i c i p a t e d c l o s i n g . " The general r u l e s t a t e d i n 81A Corpus J u r i s Secundum, S p e c i f i c Performance, S198, p. 1 6 4 is: "Where t h e r e i s d e l a y i n t h e completion o f a c o n t r a c t f o r t h e s a l e o r conveyance of p r o p e r t y , an adjustment o f t h e r i g h t s o f t h e p a r t i e s may be made by providing f o r an accountinq a s t o t h e r e n t s and p r o f i t s , o r f o r t h e payment o f i n t e r e s t on t h e purchase p r i c e . " Accord, 71 Am.Jur.2d, S p e c i f i c Performance, $219, pp. 282-283. This Court, i n Schultz and Wood v. Campbell (1966), 147 Mont. 439, 413 P.2d 879, "for f u t u r e s p e c i f i c performance c a s e s , . . . r e s e r v e [ d ] t h e r i g h t t o a l l o w i n t e r e s t a s an o f f s e t a g a i n s t p r o f i t s o r crops." I n s p e c i f i c a l l y e n f o r c i n g t h i s c o n t r a c t , t h e c o u r t a c t e d under t h e g e n e r a l e q u i t y umbrella and had t h e power t o a d j u s t t h e p a r t i e s o b l i g a t i o n s t o p u t them i n n e a r l y a s good a p o s i t i o n a s i f t h e c o n t r a c t had been performed when r e q u i r e d and a s r e q u i r e d . I n t h i s c a s e William's d e l a y o f now up t o f o u r y e a r s o f h i s performance under t h e s e t t l e m e n t agreement c l e a r l y deprived Paula A l t h o f f and Laura Knott of t h e b e n e f i t o f t h o s e y e a r s i n t e r e s t on t h e r e n t t o be p a i d by William. F u r t h e r , he had t h e use o f a s u b s t a n t i a l p i e c e of p r o p e r t y f o r t h a t period. The D i s t r i c t Court a c t e d f u l l y w i t h i n its powers i n awarding i n t e r e s t . The o r d e r o f D i s t r i c t Court is affirmed. 4 , / i e f J u s t i c e