Opinion ID: 877394
Heading Depth: 1
Heading Rank: 5

Heading: Issue on cross-appeal: Did the District Court err in its accounting decree?

Text: This is a suit for an accounting. It must be decided upon its own peculiar facts and circumstances which clearly distinguish it from all other authorities cited and relied upon by either party. Reickoff v. Consolidated Gas Co. (1950), 123 Mont. 555, 217 P.2d 1076. The District Court ruled that appellants were entitled to $819,321.08 for the crop share and interest. The corporation argues that this is improper because the court is rewarding the appellants for their illegal action. In an accounting action, the court is sitting in equity and can determine from the facts presented, the testimony and the circumstances which awards are the most equitable. The appellants did not act in good faith in their effort to acquire the land in question. There is little doubt that appellants knew the contract they entered into was suspect. However, they did give up something to acquire the farm. They gambled that the contract would never be questioned and proceeded to treat the land as their own since 1968. To deprive persons of their efforts and to say that they did not actually keep the farm operating efficiently and profitably during that period would also be unfair. A dilemma occurs as to whether appellants should be awarded for their efforts or deprived of any reimbursement for the caretaking of the farm. The District Court was proper in ruling that the appellants should receive two-thirds of the crop share, $819,321.08, if for no other reason than it was fair and equitable. To deprive appellants the fruits of their labor for thirteen years would not be in the best interests of justice, fair play and public policy. Rieckhoff, supra, does not apply as that case deals with a willful trespasser. This Court will not treat appellants as such, but will follow the rule of equity that each case stands on its own facts in an equity action. Hamilton v. Rock (1948), 121 Mont. 245, 191 P.2d 663. However, the District Court did err in its accounting decree in allowing appellants the excess amounts by which the value of improvements made upon the farm exceeded the cost of such improvements. The corporation argues that the reimbursement for the improvements should be limited to the cost of those improvements and cites the Restatement of the Law, Restitution, § 42 at 42, as authority, along with various case citations in support of the Restatement. Also, the corporation contends that the rule in this state is that a willful trespasser shall receive no compensation for the improvements made and any improvements appellants made after the instigation of this action should not be compensated for. However, the corporation asked in its pleadings that appellants receive no more than the cost of the improvements. 42 C.J.S. Improvements, § 7 at 436-437, states: As a general rule an occupant is regarded as an occupant in bad faith and not entitled to compensation for his improvements, where, and only where, he either has actual notice of adverse title, or what is equivalent thereto, such as where there is brought home to him notice of some fact or circumstance that would put a man of ordinary prudence to such an inquiry as would, if honestly followed, lead to a knowledge of the adverse title. It has also been held that an occupant cannot recover if he had full means of discovering the existence of such adverse title, because in order to be in the position of a holder in good faith he must have used proper care and diligence in ascertaining the condition of the title on which he bases his claim .. . See also Fouser v. Paige (1980), 101 Idaho 294, 612 P.2d 137. The discussion continues in 42 C.J.S. Improvements § 7 at 438, by stating, ... it is generally held that an occupant is not entitled to compensation for improvements made on the land after the commencement of an action in which title is disputed. From the foregoing and from the facts on hand in this matter, it would appear that appellants are not entitled to the cost of their improvements, much less the enhanced value. Appellants were aware of the questionable nature of their title, contained in the void contract, and there is no question that the majority of the improvements took place after this suit had commenced. However, the corporation is asking that the credit allowed appellants be reduced by $82,148  that is, it does not want the entire credit removed but only the enhanced value. Since this is the amount plead, and this Court is sitting in equity on the accounting decree, the award to appellants should be reduced from $192,500 (enhanced value of improvements) to $110,352, the cost of the improvements. The District Court further erred in the accounting decree by allowing appellants to retain the oil and gas income derived from the corporation farmland during the accounting period. Boumas received title to the oil and gas rights through the void contract. The corporation, represented by Krull and Treadaway, did not have the authority to make the original contract and, therefore, did not have the authority to contract away the corporation's mineral (oil and gas) rights. This allowance must be vacated. As so modified, the judgment of the District Court is affirmed. HASWELL, C.J., HARRISON, WEBER and MORRISON, JJ., and JACK L. GREEN, [] District Judge, concur.