Court Opinion

ID: 878802
Source: CourtListenerOpinion
Date Created: 2013-06-04 22:56:45.36683+00
Date Added: 2024-06-11T12:30:14.418587
License: Public Domain

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
Mr. J u s t i c e L.C.           Gulbrandson            delivered        the      Opinion of        the
Court.

        William        Harlow           Hass      appeals        from      an      order     of     the

District         Court           of      the       Thirteenth           Judicial           District,

Yellowstone            County,             Montana,            granting           the        specific

performance          of     a    s e t t l e m e n t a g r e e m e n t between       the parties.

W e affirm.

        This     appeal           involves         a     long-standing            family     dispute

between       William            Harlow      Hass        and    his     two       sisters,        Paula

A l t h o f f and L a u r a J e a n K n o t t , o v e r t h e c o n t r o l and o p e r a t i o n

o f two f a m i l y f a r m c o r p o r a t i o n s i n S h e r i d a n County, Montana.

        Hass Land Company owns a p p r o x i m a t e l y 6,130 a c r e s o f farm

l a n d which was t h e f a m i l y farm b e q u e a t h e d by M a r g a r e t Hass i n

the     approximate             shares       of     50    percent        to      Tdil.liam    and    25

p e r c e n t e a c h t o P a u l a and L a u r a .            Hass Farms,           Inc.,    is the

operating        arm        of     the      Hass        Land     Company,          and    owns      the

m a c h i n e r y and equipment.               I t was a l s o b e q u e a t h e d by M a r g a r e t

Hass t o h e r c h i l d r e n i n a p p r o x i m a t e l y 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,       alleging           stockholder

o p p r e s s i o n and r e q u e s t i n g t h e a p p o i n t m e n t o f a r e c e i v e r f o r

t h e corporation.                The s i s t e r s c r o s s - c l a i m e d    a g a i n s t William

and Hass Farms,                 Inc.,    f o r an accounting.                   On 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,

resulting        in       the      filing         of     separate        complaints          against

William        and        Hass        Farms,       Inc.          These          complaints        were

consolidated          f o r t r i a l w i t h t h e Hass Land and W i l l i a m Hass

suit.

        O July
         n            23,        1982,     a l l of      the parties,             a c t i n g i n both

their     persona1          and       corporate          capacities,            entered      into    an

"Agreement o f S e t t l e m e n t . "            Among o t h e r a r r a n g e m e n t s 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 " d e t e r m i n e t h e e n t i r e v a l u e o f

the     assets          of        each      corporation.         I'     Further,        the        agreement

provided               that         " [ t ]h e       value            determined       ...         [by     the

a p p r a i s e r s ] s h a l l b e r e d u c e d by c o r p o r a t e d e b t s owed t o t h i r d

parties           such        as         banks        or     the        CCC,"      subject          to     the

qualification that                    I'   [ o ] n l y $100,000 o f t h i r d - p a r t y          debts is

to    be      used           to     reduce          the     market        value        of     Hass       Farms

corporat i o n .        "

        After           executing            this      agreement,          the     sisters          promptly

appointed           their          appraiser.              William d i d n o t ,            and,    in    fact

d e l a y e d u n t i l May 11, 1 9 8 3 , t h r o u g h an e n t i r e p l a n t i n g s e a s o n

d u r i n g which h e was i n f u l l c o n t r o l o f                         t h e farm.         O that
                                                                                                     n

date,      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

the     settlement                 contract.                William         then       appointed           his

appraiser           and       both         appraisers          were      able     to    agree        on    the

requested valuations.                        The p e t i t i o n d i d n o t r e a c h t r i a l u n t i l

April        2,    1984;          through          yet     another       planting           season.        The

D i s t r i c t Court entered                    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              20,    1984;         well      into the          third     season       after       the

parties           had       settled         their        disputes.          W i l l i a m was       in    full

control           of        the     farm         during        the      whole       time,          planting,

harvesting,             and       s e l l i n g t h e crops each year.                      William t h e n

appealed t h e District Court's o r d e r t o t h i s Court.                                        W e note

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

dispute.

        A p p e l l a n t r a i s e s t h e f o l l o w i n g i s s u e s on a p p e a l :

        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 m a r k e t

v a l u e 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       the

D i s t r i c t C o u r t t o d e t e r m i n e t h e p r i c e t o b e p a i d by W i l l i a m
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 the parties'           i n t e n t , and t h e law.

        3.      That      t h e District Court e r r e d                 in    levying 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 Court e r r e d i n adding t o t h e appraised value o f

Hass      Farms,          Inc.       the        amount      of     the        Commodity      Credit

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 , a n d t h e " 1 1 5

a c c o u n t " ; t h e r e b y i n c r e a s i n g t h e amount h e w a s r e q u i r e d u n d e r

the    settlement          agreement            t o t e n d e r h i s sisters t o purchase

their interests.                 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

valuation         of   the assets of              Hass Farms,            Inc.,    a n d H a s s Land

Company.           William         argues       t h a t when       the    appraisers        reached

these     figures,         they         had     already incorporated                those debts.

        Two      separate         clauses        of   the        settlement       agreement      are

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 d e t e r m i n e t h e v a l u e
             - - a s s e t s o f each corporation."
             of  the
             (Emphasis added.)

And t h e s e c o n d :

             "The v a l u e a s d e t e r m i n e d a b o v e s h a l l b e
             r e d u c e d b y 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 s b c h a s b a n k s o r t h e CCC.               ...
             "Only $100,000 o f t h i r d p a r t y d e b t s is
             t o b e used t o reduce t h e market val-ue o f
             H a s s 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 C o u r t f o u n d :

             "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 contained 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
             u n a m b i g u o u s a n d a l l g r a i n owned b y H a s s
             Farm a s o f J u l y 2 3 , 1 9 8 2 , i s t o b e
             included             in      the        valuation      of     the
             corporate             assets           and      further,      the
             deduction             for       debts         owed  to      third
             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      . . ."
        In     Ryan v .      Board o f County Commissioners,                         etc.     (Mont.

1 9 8 0 ) , 620 P.2d 1203,         37    St.Rep.     1965,       we r e f e r r e d t o t h e
following           statutes        in      interpreting              a     disputed          contract

provision:

             " S e c t i o n 28-3-301,      MCA, p r o v i d e s :

             "A c o n t r a c t must b e s o i n t e r p r e t e d a s           to
             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              of
             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          of
             contracting,              so f a r a s the        same              is
             a s c e r t a i n a b l e and l a w f u l .

             " S e c t i o n 28-3-303,      MCA, p r o v i d e s :

             "When a c o n t r a c t i s r e d u c e d 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
             provisions of t h i s chapter."

        F u r t h e r , i n Wortman v . G r i f f          (Mont. 1 9 8 2 ) , 651 P.2d 998,

39 St.Rep.           1916, w e h e l d t h a t where t h e " l a n g u a g e i s c l e a r

and unambiguous a n 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

enforce        it a s t h e p a r t i e s made             i t . " ( C i t i n g Ryan,         supra.)

        The D i s t r i c t C o u r t h e l d 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 a g r e e .                 It s p e c i f i c a l l y provides t h a t t h e

assets       of    each corporation              includes            " a l l personal         property

owned and u s e d i n t h e o p e r a t i o n o f Hass Land f o r Hass Farms,

all     of     its       grain,      [and]       personal            equipment         . . ."            The

appraisers           were,     by     the       terms       of       the     contract,             simply

d i r e c t e d t o determine t h e value of those a s s e t s .                          They w e r e

not    directed          to   engage      in     any      adjustments            for    debt.            The

simple         language        in     the       contract,             that       "the     value           -
                                                                                                          as

determined           above"         necessarily            suggests             that     the        value

r e f e r r e d t o i s antecedent t o t h e adustment f o r d e b t .                             In the

c l a u s e where t h e d e b t a d j u s t m e n t 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 s i m p l y p r o v i d e d           first

that    the       appraisers were              to    reach       a    value      of     the    assets.

Then,        secondly         and    independently,                  that       value     would           be

increased          by    corporate       debts        in    excess         of    $100,000.               The

court,        in        enforcing        the        specific          performance             of        this

agreement          did    no more        than       the    parties         had    agreed           to   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    - - types as
                                                         of all
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
is     controlling,             appellants           argument         mentioned          above       is

irrelevant.

        As        to      William's           argument          that         the       appraiser's

c a l c u l a t i o n s a r e binding, we recognize t h e general 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 i s
             s u p p o r t e d by e v e r y r e a s o n a b l e i n t e n d m e n t
             and p r e s u m p t i o n , and it s h o u l d n o t be
             vacated           unless     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 f r a u d o r
             mistake,             or      the        misfeasance               or
             malfeasance of t h e appraisers.''                         Lee v .
             Providence             Washington          Insurance            Co.
             ( 1 9 2 8 ) , 82 Mont. 264, 274, 266 P. 640,
             643.

I n a c c o r d , 5 W i l l i s t o n - C o n t r a c t s , 5802, p.
                                      on                                        825.

        H e r e i t was c l e a r t h a t t h e a p p r a i s e r s m i s t a k e n l y f o r g o t

t o include i n t h e a s s e t valuation of each corporation those

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 W i l l i a m ' s d e b t s t o Hass Farms,            Inc.,

the    a p p r a i s e r s overlooked           those      owed     by      Paula. A l t h o f f    and

Laura Knott.              This type of mistake, a f f e c t i n g both p a r t i e s ,

n e g a t e s 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 is t h i s type

o f m i s t a k e , 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 C o u r t may c o r r e c t when e x a m i n i n g a n a p p r a i s e r ' s

report.         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 u n d e r t h e c o n t r a c t t o make d e d u c t i o n s from t h e

appraisal         value       that     it e r r e d     i n d e t e r m i n i n g t h a t t h e CCC

loans w e r e corporate debt.

        The       District          Court      found       that      the      CCC      loans       were

corporate debt.               At    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            l o a n program a d m i n i s t e r e d        by     the     CCC.     Under

this     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 u p 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 h i g h e r t h a n t h e l o a n r a t e , t h e Farmer c a n s e l l t h e

crop,      satisfy the             loan,     and k e e p      the     difference.            If     the
m a r k e t p r i c e d o e s n o t go above t h e l o a n r a t e , t h e f a r m e r c a n

activate a           "non-recourse            clause"     in the      l o a n a g r e e m e n t and

turn over t h e crop t o s a t i s f y h i s obligation.

        At      trial       William           presented      testimony            through       his

a c c o u n t a n t t h a t Hass Farms,          Inc.,     was a c a s h b a s i s e n t i t y ,

and    treated        the     loans      as    sales.       Paula      Althoff          and   Laura

K n o t t p r ~ s e n t e de v i d e n c e t o t h e e f f e c t t h a t t h e CCC payments

were a c t u a l - l y a     l o a n and n o t a s a l e .         Further,        t h e y argued

the    contract         specifically           provides      that     CCC      payments       were

corporate          debt.         The    District        Court     concluded         that      these

payments were a              loan,      thus debt,        and d e d u c t e d t h e i r amount

from      the       corporate          assets       pursuant        to     the          settlement

agreement.

        I n Lauterjung v.              J o h n s o n ( 1 9 7 7 ) , 175 Mont. 74, 572 P.2d
511, w e s t a t e d :

             "'When r e v i e w i n g f i n d i n g s o f f a c t and
             c o n c l u s i o n s 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
             repeatedly             held      such        findings         and
             conclusions w i l l n o t be d i s t u r b e d i f
             s u p p o r t e d by s u b s t a n t i a l e v i d e n c e and by
             t h e law      ....         When r e v i e w i n g e v i d e n c e
             it w i l l b e viewed i n t h e l i g h t most
             favorable t o t h e prevailing party 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 o f
             w i t n e s s e s and t h e w e i g h t a s s i g n e d t o
             t h e i r testimony i s f o r t h e determination
             of       t h e ~ i s t r i c t Court i n a                nonjury
             trial.           (Citations omitted.)'"                    Citing
             Luppold v . Lewis ( 1 9 7 7 ) , 172 Mont. 280,
             2 8 4 , 5 6 3 P.2d 538, 540

        Given o u r d e f e r e n c e 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           we    do   not      find    error.         There       is    substantial

credible         evidence        on     the     record     to    support          the    District

Court's         conclusion            that      Hass     Farms,       Inc.        treated       the

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 l o a n s 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 o f t i t l e .      Under t h e l o a n program t h e f a r m e r h a s

t h e c o n t i n u i n g power t o d i s p o s e o f t h e g r a i n s h o u l d t h e p r i c e

go h i g h e r o r o t h e r w i s e d e s i r e s t o d o s o .          Actual t i t l e o r
ownership          (possession         with      the    intent       to    exclude)        of    the

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

activates         the    non-recourse           clause       or    pays     his     loan.        The

government p a y s t h e f a r m e r 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 l o a n , 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    the     same.        The      fact,     f r e q u e n t l y mentioned       by W i l l i a m ,

t h a t t i t l e t o t h e g r a i n h a s gone t o t h e government t h r o u g h

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

is irrelevant.             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       s u p p o r t i n g t h e D i s t r i c t C o u r t ' s d e t e r m i n a t i o n 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        interest        to    t h e respondents.              On t h i s    point,       the

court held:

           "That         f o r many y e a r s W i l l i a m Harlow
           Hass     ...          h a s c o n t i n u e d t o farm a l l o f
           t h e Hass Land Company's l a n d 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 a n y r e n t a l p a i d by Hass
           Farms,             Inc.         since         the      appraisal
           date,      ...         was n o t t a k e n i n t o a c c o u n t i n
           the              determination                   of       market
           value      ...          [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 e n f o r c e d and t h e c o u r t
           d o e s h e r e b y c o n c l u d e t h a t i t s h o u l d be
           s p e c i f i c a l l y e n f o r c e d , Hass Farms, I n c .
           and W i l l i a m Harlow Hass w i l l h a v e g a i n e d
           u n f a i r a d v a n t a g e by t h e d e l a y i n t h e
           closing of t h i s transaction i n t h a t they
           have had t h e u s e o f t h e l a n d and n o t had
           t o pay any r e n t t h e r e u p o n ; t h e c o u r t
           t h e r e f o r e c o n c l u d e s t h a t it would b e 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 b e p a i d by
           W i l l i a m Harlow Hass and Hass Land upon
           t h e amount s t a t e d from September 5 , 1982,
           t h e date of t h e anticipated closing."

        The g e n e r a l     rule     s t a t e d i n 81A Corpus J u r i s Secundum,

S p e c i f i c P e r f o r m a n c e , S198, p.    164 is:

           "Where t h e r e i s d e l a y i n t h e c o m p l e t i o n
           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 b e made by p r o v i d i n g
           f o r a n a c c o u n t i n q 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.
T h i s C o u r t , i n S c h u l t z and Wood v. Campbell ( 1 9 6 6 ) , 147 Mont.
439,      413 P.2d 879,       "for       future        specific          performance

cases,     . . . reserve[d]            the     right      to     allow       interest      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 specifically enforcing

this     contract,        the     court      acted      under      the       general       equity

u m b r e l l a 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 b e e n p e r f o r m e d when r e q u i r e d and a s r e q u i r e d .             In this

case     William's         delay      of     now     up     to    four        years      of    his

performance under t h e s e t t l e m e n t agreement c l e a r l y deprived

P a u l a A l t h o f f and Laura K n o t t o f 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 b e p a i d by W i l l i a m .          F u r t h e r , h e had

t h e use of a s u b s t a n t i a l piece of property f o r t h a t period.

The D i s t r i c t C o u r t a c t e d f u l l y w i t h i n i t s powers i n a w a r d i n g

interest.

         The o r d e r o f D i s t r i c t C o u r t i s a f f i r m e d .

             4 ,/
       ief Justice