Opinion ID: 882953
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Heading Rank: 2

Heading: Did the District Court err in awarding prejudgment interest?

Text: The Dowers contend that the District Court did not have a legal basis to award prejudgment interest. As this presents a question of law, we determine whether the District Court was correct. See Steer, Inc. v. Dep't of Revenue (1990), 245 Mont. 470, 474, 803 P.2d 601, 603. The court cited § 27-1-212, MCA, as authority for its prejudgment interest award. That statute states in pertinent part: In an action for the breach of an obligation not arising from contract and in every case of oppression, fraud, or malice, interest may be given, in the discretion of the jury. Section 27-1-212, MCA. The Dowers argue that because the trier of fact in this case was a judge, rather than a jury, the court had no authority to award prejudgment interest. We disagree. Montana patterned the statute after the California Civil Code § 3288. When interpreting a statute adopted from a sister state, we generally follow the construction placed on the statute by the highest court of the state from which it was adopted. State v. Murphy (1977), 174 Mont. 307, 311, 570 P.2d 1103, 1105. The pertinent language of § 27-1-212, MCA, is identical to that of the California statute. The California Supreme Court noted that while the statute grants authority to award prejudgment interest only to the `jury,' the trial court, when acting as the trier of fact, may award prejudgment interest under [the statute]. Bullis v. Security Pac. Nat'l Bank (Calif. 1978), 582 P.2d 109, 116 n. 16. Similarly, we hold that § 27-1-212, MCA, gives a District Court judge authority to award prejudgment interest when the judge, rather than a jury, is sitting as the trier of fact. The Dowers further argue that the discretionary interest statute, § 27-1-212, MCA, does not give a court the authority to award prejudgment interest, unless the court can pinpoint a date from which the defendants owed and should have paid a sum certain to the plaintiffs. As authority for their argument, the Dowers cite several cases interpreting a different statute, § 27-1-211, MCA. See Thayer v. Hicks (1990), 243 Mont. 138, 793 P.2d 784; McPherson v. Schlemmer (1988), 230 Mont. 81, 749 P.2d 51; Safeco Ins. Co. v. Lovely Agency (1985), 215 Mont. 420, 697 P.2d 1354. That statute gives a person the right to recover prejudgment interest only from the particular day that the right to a sum certain in damages vests. Section 27-1-211, MCA; Thayer, 793 P.2d at 796. In this case, the District Court awarded interest under the discretionary interest statute, § 27-1-212, MCA, rather than the right to interest statute, § 27-1-211, MCA. The statute on discretionary interest awards does not specify rigid certainty requirements, as does the right to interest statute. See § 27-1-212, MCA; § 27-1-211, MCA. In contested fraud cases, like contested negligence cases, the right to recover a sum certain in damages usually does not vest until the date of the court's judgment. Cf. McPherson, 749 P.2d at 54 (in cases where liability for negligence is contested, the right to recover damages vests only on the date of the jury verdict, not on an earlier date certain). Therefore, to interpret the discretionary interest statute to require absolute certainty, as to the specific time a sum certain in damages vests, before the trier of fact may award prejudgment interest would render the statute inoperative as to fraud cases. An interpretation which gives effect is preferred to one which makes void. Section 1-3-232, MCA. In addition, the Supreme Court of California has held that the statute allows a trier of fact to award prejudgment interest whether or not plaintiff's damages are liquidated before entry of judgment. Redke v. Silvertrust (Calif. 1971), 490 P.2d 805, 812. Likewise, we hold that in cases where it applies, § 27-1-212, MCA, gives the trier of fact the discretion to award prejudgment interest whether or not the plaintiff's right to receive a sum certain in damages has vested before judgment. The District Court was correct in determining that the statute gave it discretionary authority to award prejudgment interest in this case. The Dowers further contend that the District Court erred in awarding plaintiff Dew interest for damages on the last tract he purchased, starting before he purchased the tract. We agree. The judge awarded interest from the day that the Dowers did the road construction. He determined that the damages were fixed on that day in August of 1983. Dew had purchased six tracts before August 1983, but he purchased a seventh tract in February 1984. By awarding interest starting six months before Dew purchased the seventh tract, the District Court over-calculated the prejudgment interest due on Dew's interest in that tract. We hold that interest on the seventh tract should begin on the date Dew purchased the tract. C. May one co-tenant sue for tort damages in a personal action arising from the tenancy and recover the entire amount of damages to both him and the other co-tenant? Initially, the wives of plaintiffs Dew, Dresch and Posey were also plaintiffs in the case because they were co-tenants with their respective husbands. An examination of the contracts for deed shows the vendees were tenants in common. At trial, the claims of the female co-tenants were withdrawn during arguments on the Dowers' motion for a directed verdict. Apparently, the plaintiffs saw no need to keep the female co-tenants as parties to the suit because there was no evidence that the Dowers made any misrepresentations to these women. Although the plaintiffs each owned only a one-half interest in their respective tracts, the District Court awarded each plaintiff damages representing the difference between the amount each pair of co-tenants paid for their property and the fair market value of the property. In Montana, a tenant in common may bring or defend an action in vindication of the tenant's own rights without joining the other co-tenants as necessary parties. Section 70-1-310, MCA. However, absent an authorized agency relationship between co-tenants, we find no authority for one co-tenant to sue for the entire amount of tort damages to both him and the other co-tenant in a personal action arising out of the tenancy. Adopting a general rule that allows one co-tenant to sue for all of the damages could easily infringe on the rights of another co-tenant, thus creating due process problems. See Mayo v. Jones (Wash. App. 1972), 505 P.2d 157, 161. In addition, co-tenants are not generally agents of each other and do not have the privity necessary for application of the doctrine of res judicata. 46 Am.Jur.2d Judgments § 573. Therefore, a rule allowing one co-tenant to sue in a personal action for the entire amount of tort damages for injury arising out of the tenancy could expose defendants to multiple actions. Furthermore, the plaintiffs in this case asked the court to dismiss the female co-tenants from the suit because the Dowers did not make any misrepresentations to them. On dismissal with prejudice, the court lost jurisdiction over the female co-tenant's interests in the property. See Rule 41(a), M.R.Civ.P.; Miller v. Northern Pac. Ry. (1904), 30 Mont. 289, 296, 76 P. 691, 694. A court cannot rule outside of its appointed sphere. A court's actions are void with respect to persons who are not party to its proceedings. Sloan v. Byers (1908), 37 Mont. 503, 510-13, 97 P. 855, 857-58. Without deciding whether a single co-tenant may sue for tort damages for injury to the property itself and recover the entire amount, we hold that the court in this case erred in awarding damages for injury to the personal interests of persons who were not plaintiffs at the time of judgment. We remand to the District Court to determine the damages to the interests of the plaintiffs before the court. D. Does a court have jurisdiction to offset a tort judgment with the amount the plaintiffs owe the defendants on the contracts underlying the tort? The District Court required Alice Dower to file an accounting reflecting the principal balance due her from each of the plaintiffs for property purchased from her under the contracts for deed. The court then offset and credited the amounts due the plaintiffs from the judgment against the balance of the principal owed by the plaintiffs under the contracts for deed. Generally, a judgment must be based on a verdict or findings of the court and must be within the issues presented to the court. Old Fashion Baptist Church v. Mont. Dep't of Revenue (1983), 206 Mont. 451, 457, 671 P.2d 625, 628 (quoting National Surety Corp. v. Kruse (1948), 121 Mont. 202, 205-06, 192 P.2d 317, 319). In this case, the contracts themselves were not at issue before the court. However, the respective obligations of the parties arise because of the same transaction, and the damages relate to the value of the premises and the purchase price, which was the basis of the principal under the contract. The District Court may act as a court of equity and use its authority to allow or compel set-off under special and peculiar circumstances like those presented in this case. The power to allow a set-off of debts by a court of equity exists independent of statute where grounds for equitable interposition are shown, such as fraud or insolvency. Southern Surety Co. of New York v. Maney (Okla. 1941), 121 P.2d 295, 298. The District Court acted within its equitable authority when it offset the principal amounts due under the contracts with the judgment in this case. We affirm in part, reverse in part, and remand to the District Court to recalculate damages consistent with this opinion. TURNAGE, C.J., and HARRISON, GRAY and WEBER, JJ., concur.