Title: MITCHELL v MITCHELL
Citation: N/A
Docket Number: 12974
State: Montana
Issuer: Montana Supreme Court
Date: January 16, 1976

No. 12974 I N T H E S U P R E M E C O U R T O F THE STATE O F MONTANA 1975 WILLIAM G. MITCHELL, P l a i n t i f f and Appellant, -vs - H A R O L D F. MITCHELL, Defendant and Respondent. Appeal from: D i s t r i c t Court of t h e Third J u d i c i a l D i s t r i c t , Honorable John B e McClernan, Judge presiding. Counsel of Record: For Appellant: William R. Taylor argued, Deer Lodge, Montana Radonich and Reardon, Anaconda, Montana John N. Radonich appeared, Anaconda, Montana For Respondent: Knight, Dahood and Mackay, Anaconda, Montana C. F, Mackay argued, Anaconda, Montana Submitted: November 6, 1975 Decided : J&& 1.6 q f t Y R ,3!h M r . Justice Gene B. Daly delivered the Opinion of the Court. This i s an appeal from a judgment i n an accounting action from the d i s t r i c t c c u r t , Deer Lodge County, s i t t i n g without a jury. P l a i n t i f f William G. Mitchell i s t h e son of defendant Harold F. Mitchell. In August 1970, the son f i l e d a complaint alleging t h e existence of an o r a l partnership between himself and h i s f a t h e r , and seeking t o obtain a f u l l accounting of partnership funds and assets. The complaint stated: (1) t h a t the purpose of t h e partnership was t o acquire c e r t a i n described r e a l property, commonly known a s Yanlcee F l a t s , west of Anaconda, Montana, and t h a t both the son and the father had advanced monies t o apply on the contract f o r purchase; (2) t h a t t h e f a t h e r now claims an exclusive r i g h t i n and t o the r e a l property and denies t h e son has any r i g h t t o the use, o r ownership i n t h e properties; and (3) t h a t a demand f o r an accounting of t h e monies advanced by the son f o r the purchase of the r e a l property has been denied by the father. Answer and demand f o r a jury t r i a l was f i l e d by t h e father i n September 1971, more than a year a f t e r t h e f i l i n g of the complaint. I n t h a t answer t h e father denied the existence of an o r a l partnership agreement; denied t h e son had advanced money on a contract f o r deed t o purchase the r e a l property; and denied the son had any r i g h t t o t h e use, o r ownership i n the r e a l property. The answer s t a t e d t h a t the reason no accounting was ever given was I I t h a t there has never been a partnership and therefore t h i s answering defendant was not under any obligation t o the p l a i n t i f f . " In April 1973, Judge Robert J. Boyd of the t h i r d j u d i c i a l d i s t r i c t was disqualified and Judge John B. McClernan, of t h e second j u d i c i a l d i s t r i c t , assumed jurisdiction. O n July 23, 1973, a t r i a l without jury was held i n Deer Lodge County. Immediately before t r i a l and a period of one year and ten months a f t e r t h e o r i g i n a l answer, the defense counsel handed counsel f o r the p l a i n t i f f an amended answer and demand f o r a jury t r i a l . P l a i n t i f f ' s counsel objected t o the o f f e r of the amended answer on the grounds t h a t it was untimely, prejudicial and would cause a delay i n the t r i a l . The delay i n t h e t r i a l was objected t o because t h i s was t h e second t r i p p l a i n t i f f had made from St. Louis, Missouri, a t considerable ex- pense. The court overruled the objection and granted leave t o f i l e the amended answer. The demand f o r a jury t r i a l was denied. This exchange then took place between counsel f o r p l a i n t i f f and t h e court: "14JX. TAYLOR: Your Honor, i n view of the Court ' s r u l i n g , may we recess t o read the answer? " T H E C O U R T : You may s i t down and read t h e answer M r . Taylor, 11 M r . Taylor then renewed h i s objection and added: 1 1 ~ ; J; * t h e Defendant i n t h i s amended answer has completely changed h i s defense i n t h e action. "THE C O U R T : The Court w i l l take t h a t i n t o considera- t i o n , M r . Taylor. I I Later, during t h e course of t r i a l , M r , Taylor requested a recess t o analize and t o adjust t o the amended answer, and t h e following allowance was made: "THE C O U R T : Very well, we w i l l recess f o r ten minutes. "THE C O U R T : Court i s i n session. You may proceed. "MR. TAYLOR: You may return t o the stand, M r . Mitchell. I I The t r i a l then proceeded u n t i l finished, a period of two days. The amended answer, f i l e d the day of t r i a l , admits the existence of the partnership and t h a t t h e son had made advances of money towards the purchase of Yankee F l a t s . The answer then con- tinues with these defenses: ( I ) P l a i n t i f f "failed t o keep h i s end of the agreement which was t o return t o Montana and help with t h e ownership use and labors on s a i d r e a l properties and f a i l e d t o continue t o make t h e payments agreed upon and t o put i n an equal amount of c a p i t a l . " (2) That "the defendant denies t h a t he has f a i l e d t o o f f e r an accounting 9 : f:." (3) The ?defendant admits t h a t he has possession of the premises and records 9 : * * and defendant stands ready t o account t o p l a i n t i f f f o r h i s contributions * 9 : +:.'I O n June 24, 1974, almost a year a f t e r t r i a l , an i n t e r - locutory order s e t t l i n g partnership accounts and dissolving t h e partnership was signed and f i l e d by the d i s t r i c t court. In September 1974, a judgment was entered which made f i n a l the terms of the interlocutory order. I n the interlocutory order, t h e d i s t r i c t court made these findings of f a c t : I Jc 2 k the partnership remains i n f u l l force and e f f e c t , and a l l property i n the 'Yankee F l a t s 1 t r a c t is, i n f a c t , partnership property. hat the agreement between the partners required each t o share equally i n the amount of c a p i t a l in- vested, and equally i n the labors of the project. The p l a i n t i f f ' s (son's) share of c a p i t a l investment i s not f u l l y paid, and he owes t h e Defendant (father) t h e sum of $2,949.29 i n money. That from t h e date of the partnership agreement (May, 1964) u n t i l the date of t h e i n s t i t u t i o n of t h i s s u i t (August 4, 1970), the Defendant ( f a t h e r ) , on weekends and holidays, con- tributed approximately 302 days of labor (clearing brush, rocks, building roads, mending fences, e t c . ) , and t h e P l a i n t i f f (son), during said period, contributed approximately two days of labor; t h a t the P l a i n t i f f (son) owes the Defendant (father) 300 days of labor on the partnership property, payable e i t h e r i n kind o r i n cash a t the prevailing r a t e f o r common labor. "That the relationship between the P l a i n t i f f (son) and t h e Defendant (father) is so strained, unfriendly and irreconciable t h a t the further continuance of t h e partnership i s impractical. 11 The court then dissolved the partnership and offered: It* * * upon application of e i t h e r party, t h e Court w i l l proceed t o determine the respective i n t e r e s t s of the p a r t i e s i n the partnership property, and p a r t i t i o n t h e same i n accordance therewith. 11 From t h a t judgment p l a i n t i f f appeals. Several issues a r e presented on appeal but the decisive issue is whether the amended answer was properly allowed t o be f i l e d under Rule 15(a), M.R.Civ.P. The applicable portion of Rule 15 ( a ) , M.R. Civ. P. , provides : "* * * Otherwise a party may amend h i s pleading only by leave of court o r by written consent of the adverse party; and leave s h a l l be f r e e l y given when j u s t i c e so requires. * *I1 For the purpose of placing the issue i n the proper frame work, we examine t h e reasons f o r and t h e background of Rule 15(a). That r u l e contains language i d e n t i c a l t o Rule 15(a) of the federal rules. In 6 Wright & Miller, Federal Practice and Procedure: C i v i l $ 5 1487, 1488, there a r e comments and reasons f o r Rule 15 (a). $1487 The l i b e r a l amendment policy prescribed by Rule 15(a) does not mean t h a t leave w i l l be granted i n a l l cases. Indeed, t h e t e x t of the r u l e makes it c l e a r t h a t permission t o amend i s not t o be given automatically but i s allowed only I1 when j u s t i c e so requires". Perhaps the most frequent reason given f o r denying leave t o amend i s t h a t the opposing party w i l l be prejudiced i f the movant i s permitted t o a l t e r h i s pleading. Thus, t h e f a c t s of each case must be examined t o determine i f the t h r e a t of prejudice i s s u f f i c i e n t t o j u s t i f y denying leave t o amend. This e n t a i l s an inquiry i n t o the hardship t o the moving party i f leave t o amend i s denied, the reasons f o r the moving party f a i l i n g t o include the material t o be added i n the o r i g i n a l pleading, and the i n j u s t i c e resulting t o the party opposing t h e motion should i t be granted. The court a l s o may consider the good f a i t h of the party seeking t h e amendment and the reasons f o r the movant's delay. $1488 Rule 15(a) does not prescribe any time l i m i t within which a party may apply t o the court f o r leave t o amend. The policy of allowing amendments t o be made a t any time during the l i t i g a t i o n is sound. It would be unreasonable t o r e s t r i c t a party's a b i l i t y t o amend t o a p a r t i c u l a r stage of t h e action inasmuch a s the need t o amend may not appear u n t i l a f t e r d i s - covery has been completed or testimony has been taken a t t r i a l . Nonetheless, i n keeping with the purpose of Rule 15(a), which i s t o f a c i l i t a t e a determination of t h e action on i t s merits, a motion t o amend should be a s soon a s the necessity f o r a l t e r i n g t h e pleading becomes apparent. In addition t o considering the possible prejudice r e s u l t i n g from the moving ~ a r t y ' s delay i n making h i s amendment, some courts a l s o have decided a motion f o r leave t o amend on the b a s i s of the reason given f o r the inaction. I f the party can demonstrate t o the court t h a t t h e delay was not excessive and was excusable o r t h a t h i s f a i l u r e t o include the amendment i n t h e o r i g i n a l pleading was due t o an oversight, the amendment may be allowed. However, i n the absence of oversight o r excusable neglect, courts have denied leave t o amend when the moving party knew about the f a c t s on which the proposed amendment was based but omitted the necessary allegations from t h e o r i g i n a l pleading. Some courts a l s o have held t h a t a long delay by the movant constitutes laches so t h a t a r e f u s a l t o permit an amendment i s warranted. In t h e i n s t a n t case, the o r i g i n a l answer denied the existence of a partnership; denied a contribution of c a p i t a l by the p l a i n t i f f son and refused t o give an accounting of partnership funds and assets. The amended answer turned t h e s i t u a t i o n around by admitting both the partnership and a contribution of c a p i t a l by p l a i n t i f f son and s t a t e d t h e defendant f a t h e r now was ready t o give a f u l l accounting. The amendment then placed i n issue how much labor had been contributed by each partner. When the amended answer was offered, the d i s t r i c t court made no inquiry a s t o the reasons why these new f a c t s were not pleaded i n t h e o r i g i n a l answer or why there was a delay of nearly two years i n offering the amendment, o r whether the amendment would impose a prejudicial burden on p l a i n t i f f . The d i s t r i c t court i n f a c t refused t o grant even a continuance f o r p l a i n t i f f ' s counsel t o study the amendment and prepare h i s case accordingly. Thus, following a l i b e r a l policy of amendment of pleadings a s previously discussed, opportunity must be afforded the opposing party t o adjust accordingly. Failure t o permit t h i s i s e r r o r and demands a new t r i a l . The judgment of the d i s t r i c t court i s vacated and t h e cause i s remanded t o the d i s t r i c t court f o r a new t r i a l . , W e - Concur: < . B R t --"" * ( L - 3 a * % . - 5 Chief J u s t i k e " - q a 8 s e