Court Opinion

ID: 877530
Source: CourtListenerOpinion
Date Created: 2013-06-04 21:30:41.933146+00
Date Added: 2024-06-11T15:26:50.666744
License: Public Domain

No. 80-462
               IN THE SUPREME COURT OF THE STATE OF MONTANA

CONSOLIDATED DAIRIES OF LAKE COUNTY, INC.,
                       Petitioner and Respondent,

AMERICAN ABSTRACT AND TITLE CO., FIRST
CITIZENS BANK OF POLSON, DOUGLAS K. STAM,
et al.,
                       Respondents and Appellants.

Appeal from:   District Court of the Fourth Judicial District,
               In and for the County of Lake.
               Honorable Jack L. Green, Judge presiding.
Counsel of Record:
     For Appellants:
         Hash, Jellison, O'Brien and Bartlett, Kalispell,
          Montana
         James C. Bartlett argued, Kalispell, Montana
        Mike Greely, Attorney General, Helena, Montana
     For Respondent:
        John R. Frederick argued, Polson, Montana
        Williams Law Firm, Missoula, Montana
        Richard Ranney argued, Missoula, Montana

                             Submitted:    ~ p r i l22, 1981
                                 Decided :JUN   10 1981

                         Clerk
Mr. J u s t i c e J o h n Conway H a r r i s o n d e l i v e r e d                  t h e Opinion of
the Court.
           This        is an a p p e a l            from a judgment             setting aside a
t r u s t e e ' s s a l e and d i r e c t i n g t h a t t h e s a l e be r e c o n d u c t e d .
           Once        in     a great             while     the      wrath     of     mother      nature
t e m p e r s e v e n t h e power and a u t h o r i t y o f l a w .                      On t h e q u i e t
Sunday e v e n i n g o f May 1 8 , 1 9 8 0 , i n t h e n o r t h w e s t c o r n e r o f

t h e United          States,         an explosion occurred with a magnitude
and e n e r g y o f 500 H i r o s h i m a a t o m i c bombs.                     A dust        cloud of
unknown         toxicity         spread            over    the      e n t i r e Northwest.            News

r e p o r t s i n d i c a t e d t h a t t h e e x a c t n a t u r e and p o s s i b l e e f f e c t s

of t h e d u s t were undetermined.                         P e o p l e were s t r o n g l y a d v i s e d

to    remain         at     home,         but      if     they     had    to   go     out,      t o wear
p r o t e c t i v e masks.            A       psychological           s h o c k wave o f       unbelief
q u i c k l y r o l l e d a c r o s s t h e P a c i f i c Northwest.

           When t h e d u s t had s e t t l e d and t h e p a n i c s u b s i d e d , it
was    discovered             that        a       relatively        dormant         volcano      in    the

State      of        Washington,              Mount       St.      Helens,      had      erupted       and
continued eruptive a c t i v i t y .                       During a p e r i o d of f o u r d a y s

t h i s p a r t of t h e l i v i n g world stood s t i l l .                    Towns and c i t i e s
seemed      deserted            and       abandoned.              The o n c e g r e e n       landscape
b u d d i n g w i t h s p r i n g c o l o r s a g a i n s t a b l u e s k y was g r a y and

bleak.
           Prior          t o t h i s marvel of                 n a t u r e ' s power,     a group of
people          in     the      Polson,             Montana,          area     were        conducting

b u s i n e s s , u n s u s p e c t i n g t h a t i n a few d a y s t h e y would h a v e a
rendevous w i t h n a t u r e . .             .
           That group c o n s i s t e d of p e t i t i o n e r - r e s p o n d e n t            herein,
Consolidated                D a i r i e s o f Lake C o u n t y , I n c . ,           and a p p e l l a n t s
h e r e i n , t h e t i t l e company ( A m e r i c a n A b s t r a c t and T i t l e C o . ) ,

t h e bank ( F i r s t C i t i z e n s Bank o f P o l s o n ) , t h e S t a m s ( D o u g l a s
K.    and L e n o r e Kay S t a m ) and t h e B l a n k e n h o r n s ( C h a r l e s E .                and

Karen K . B l a n k e n h o r n )     .
            The     Blankenhorns               own    a     house      and       lot        in    Polson,

Montana.            This       real       property        is    subject          to        (1) a       trust

indenture          in   favor       of     the       bank      securing          a    $46,000          note,

f i l e d of     r e c o r d September 1 5 , 1977,                   and    ( 2 ) a mortgage i n

favor      of     Consolidated,                securing          a   promissory                 note     for

$55,000         f i l e d of    record         August       17,      1979.           At     t h e end of

1979, Blankenhorns d e f a u l t e d                  i n p a y m e n t s on t h e bank n o t e .

Consequently,           t h e bank         i n s t r u c t e d t h e t r u s t e e of          the t r u s t

i n d e n t u r e , which was t h e t i t l e company, t o h o l d a t r u s t e e ' s

s a l e o f t h e p r o p e r t y p u r s u a n t t o t h e t r u s t i n d e n t u r e and t h e

Small T r a c t Financing A c t .                 ( S e c t i o n 71-1-301           e t s e q . , MCA).

            The     title       company,             acting       through            its       president,

R u s s e l l Harshberger, proceeded t o n o t i c e such a s a l e .                               After

s u b s t i t u t i n g a t t o r n e y J a m e s B a r t l e t t a s t r u s t e e , a n amended

n o t i c e of t r u s t e e ' s s a l e was f i l e d o f r e c o r d on J a n u a r y 1 6 ,

1980.       T h i s amended n o t i c e r e c i t e d t h a t t h e p r o p e r t y would

be s o l d " a t p u b l i c a u c t i o n t o t h e h i g h e s t b i d d e r i n c a s h " on

May     21,       1980,        at     ll:00       a.m.      at       the     entrance             to     the

c o u r t h o u s e o f Lake C o u n t y i n P o l s o n .           C o p i e s o f t h i s amended

n o t i c e w e r e m a i l e d t o t h e B l a n k e n h o r n s and t o C o n s o l i d a t e d .

           As     it t u r n e d o u t ,       May 2 1 ,       1 9 8 0 , was a n u n f o r t u n a t e

choice.           On    May     18,       1980,       the      Mount       St.       Helens       volcano

erupted.          On May 1 9 , 1980 ( M o n d a y ) , Lake C o u n t y and m o s t o f

w e s t e r n Montana was c o v e r e d w i t h a l a y e r o f                       f i n e volcanic
ash.

           On t h a t same d a y ,             i n response t o t h i s ash f a l l o u t ,

t h e Montana D e p a r t m e n t o f H e a l t h and E n v i r o n m e n t a l S c i e n c e s

issued      a     "Declaration            of     Emergency,          Findings             of     Fact    and
Emergency Order to All Persons in the State of Montana."
This order, among other           things, ordered closure of "all
off ices of local, county and state government, including
authorities, joint meetings, and other public bodies                   . . .
all   retail    trade    establishments with         certain    exceptions
. . .   banks, credit agencies other than banks                . . .      real
estate off ices       . . .   all schools and universities, and in
general all business establishments with certain necessary
exceptions."      In addition, "all unnecessary use of motor
vehicles [was] prohibited."
        The District Court took             judicial notice of the
conditions prevailing during this period of ash fallout and
the   reactions and       attitudes of      the     general    population.
People were essentially confined to their homes both by fear
for their health if they ventured outdoors and by the widely
publicized order described above.
        On May 21, 1980, the day for which the trustee's sale
was noticed, Lake County and most of western Montana were
still subject to the above order and to the ash fallout.
The title company was not open for business.                        The Lake
County Courthouse was closed.          Lake County was released to
an "alert" level on May 22, 1980, and all restrictions were
lifted on May 23, 1980.
        On May 21, 1980, at 11:OO a.m. Russell Harshberger
proceeded to the courthouse steps.             He "proclaimed to the
public" that the sale noticed for that time and place was
postponed to May 27, 1980, at the same place at 11:OO a.m.
No one was there to listen to the proclamation.
        Later    that    day, Doug    Stam    came     to   Harshberger's
office and      was    informed of    the    time    and    place    of   the
postponed         sale.         The    n e x t working            day        after     restrictions

were     lifted,        the     bank        inquired         of        Harshberger          what      had

happened.          The bank was i n f o r m e d o f                t h e t i m e and p l a c e o f

the     postponed          sale.        No      other       persons           or     organizations

( o t h e r t h a n a t t o r n e y B a r t l e t t ) w e r e n o t i f i e d by H a r s h b e r g e r

or    t h e t i t l e company o f            t h e d a y and t i m e o f             t h e postponed

sale      or     that      it    had     been       postponed.                  In     particular,

C o n s o l i d a t e d was n o t n o t i f i e d .      No n o t i c e s were p o s t e d n o r

advertising          conducted          concerning           the        postponement            of    the

sale.

           On May 2 7 , 1 9 8 0 , a t a r o u n d 10:OO a . m . ,                    a f f i d a v i t s of

p u b l i c a t i o n and p o s t i n g w e r e f i r s t r e c o r d e d .          A t 11:OO       a.m.

Harshberger proceeded t o t h e courthouse s t e p s .                                     Present a t

t h i s t i m e were a d i r e c t o r o f t h e bank, C h a r l e s Blankenhorn,

an    employee        of     the      title     company,           and        the    Stams.           The

b i d d i n g was s t a r t e d a t $ 5 1 , 3 5 6 . 6 6 .     The s o l e b i d was t h a t o f

t h e Stams f o r $51,357.66.

           The     Stams'       bid     of     $51,357.66              was    accepted,         and     in

f i v e minutes         they      presented           Harshberger             with     a    cashier's

c h e c k i n t h a t amount.          F o l l o w i n g t h e s a l e , t h e t i t l e company

d i d n o t i n f o r m o r n o t i f y C o n s o l i d a t e d t h a t t h e s a l e had b e e n

accomplished.               There       is     evidence           that        the     property          in

q u e s t i o n was w o r t h b e t w e e n $ 7 5 , 0 0 0 and $ 8 5 , 0 0 0 .

           Consolidated f i l e d a p e t i t i o n i n t h e D i s t r i c t Court

of    t h e Fourth J u d i c a l D i s t r i c t of           t h e S t a t e o f Montana t o

set aside the t r u s t e e ' s s a l e .              A l l p a r t i e s f i l e d answers            to

the     petition.           The     parties         filed         an    agreed        statement         of

facts      and     stipulated          to    have      the    cause           submitted         to    the

D i s t r i c t C o u r t b a s e d on t h a t s t a t e m e n t .

            The     District           Court          entered           findings           of     fact,
conclusions          of    law,      and     order          setting      the    trustee's         sale

aside.         American A b s t r a c t ,          the trustee,             and t h e b a n k ,     as

b e n e f i c i a r y , have a p p e a l e d .
           The D i s t r i c t C o u r t f o u n d , i n t h e u n i q u e c i r c u m s t a n c e s
p r e s e n t e d by t h e f a c t s o f          t h i s case,       two s e p a r a t e r e a s o n s

for     setting           aside       the        trustee's            sale.             First,     the
p o s t p o n e m e n t o f t h e s a l e m e r e l y by o r a l p r o c l a m a t i o n a t t h e

time and p l a c e f i x e d i n t h e n o t i c e o f s a l e was n o t l e g a l l y
sufficient          notice        under          the    Small        Tract      Financing         Act,

section        71-1-301         et    seq.,         MCA,      as      applied t o t h e unique
circumstances of t h i s c a s e .                     Second,         if    the        Small    Tract
F i n a n c i n g A c t were i n t e r p r e t e d t o p e r m i t t h e t y p e o f n o t i c e

o f p o s t p o n e d s a l e employed by t h e t r u s t e e i n t h i s c a s e , t h e n

the A c t ,      a s applied t o Consolidated i n t h i s case,                            would    be
u n c o n s t i t u t i o n a l a s v i o l a t i n g t h e due process c l a u s e of t h e
U n i t e d S t a t e s and Montana C o n s t i t u t i o n s .
           The      relevant         statute           is    section        71-1-315(3),          MCA,

which p r o v i d e s :

            ". . .      The p e r s o n making t h e s a l e may, f o r
           any c a u s e h e deems e x p e d i e n t , p o s t p o n e t h e
           s a l e f o r a p e r i o d n o t e x c e e d i n g 1 5 d a y s by
           p u b l i c p r o c l a m a t i o n a t t h e t i m e and p l a c e
           f i x e d i n t h e n o t i c e o f s a l e . No o t h e r n o t i c e
           o f t h e p o s t p o n e d s a l e need be g i v e n . "
           The      relevant         contractual provision                         of    the     trust
i n d e n t u r e is:

           "14.         . . .      The p e r s o n c o n d u c t i n g t h e s a l e
           may, f o r a n y c a u s e h e d e e m s e x p e d i e n t ,
           postpone t h e s a l e f o r a period n o t exceeding
           f i f t e e n ( 1 5 ) d a y s by p u b l i c p r o c l a m a t i o n by
           s u c h p e r s o n a t t h e t i m e and p l a c e f i x e d i n
           t h e N o t i c e o f S a l e , and no o t h e r n o t i c e o f
           t h e p o s t p o n e d s a l e need be g i v e n            ..
                                                                        ."
           Appellants          contend           that       the    title     company c o m p l i e d
with t h e c o n t r a c t u a l p r o v i s i o n s of           t h e t r u s t i n d e n t u r e and

f u l l y complied w i t h t h e Small T r a c t Financing A c t .                               Thus,
appellants argue, the District Court was without authority
to set aside the trustee sale.              We disagree.
         While the notice by public proclamation at the time
and place fixed in the notice of sale was sufficient to meet
the technical requirements of both the law and the trust
indenture instrument, it was not sufficient in the present
case.      As    a practical        matter,   because    of    the    volcanic
eruption and the declared emergency, potential purchasers,
subsequent lienholders and the public in general were not
able to attend at the time and place fixed in the notice of
sale.
         Where potential purchasers, subsequent lienholders,
and     the public       in general are E ---- t i c a x- legally
                                          rac             -
                                                        and
prevented from traveling to and attending at the time and
place    noticed       for   the   sale, the giving        of notice of a
postponed sale only by "public proclamation at the time and
place fixed in the notice of sale" is a futile act, of no
practical or legal significance.              The provisions of section
71-1-315(3), MCA, apply to normal situations where there is
no    state     of     general      emergency     preventing         potential
purchasers, subsequent lienholders and the public in general
from attending at the time and place fixed in the notice of
sale.
         Under the circumstances of this case, notice of a
postponed       sale only by        "public proclamation at the time
fixed in the notice of sale" is not reasonably calculated to
apprise all          interested parties of          the details of the
postponed sale, and so is in violation of the due process
clause    of     the    United     States   and   Montana     Constitutions.
Great Falls National Bank v. McCormick                  (1968), 152 Mont.
3 1 9 , 4 4 8 P.2d 9 9 1 .

           It       was    practically          and     legally          difficult         for       the

general         public,          potential      purchasers              and     lienholders           to

attend       the      time       and    place      of    the       notice           of   the     sale.

Because        of    these       facts,     the       "public proclamation"                    of    the

postponed           sale a t      the    time     and p l a c e     of        the    trustee        sale

would n o t h a v e t h e e f f e c t o f n o t i f y i n g a l l t h o s e i n t e r e s t e d

p e r s o n s o f t h e t i m e and p l a c e o f t h e p o s t p o n e d s a l e and a l l

i n t e r e s t e d p a r t i e s were n o t a p p r i s e d o f t h e n o t i f i c a t i o n .

           The D i s t r i c t C o u r t d i d n o t l o o k a t t h e l i t e r a l w o r d s

of    t h e s t a t u t e , b u t i n s t e a d l o o k e d t o a l l o f t h e f a c t s and

the    i n t e n t of      the legislation.               Postponing            a noticed s a l e
o n l y b y way o f a p u b l i c p r o c l a m a t i o n a t t h e time and p l a c e

where     no     one       was    present       and     no   interested              person      could

l e g a l l y o r p r a c t i c a l l y be p r e s e n t a t and g i v i n g no f u r t h e r

n o t i c e of t h e postponed s a l e is n o t c a l c u l a t e d t o o b t a i n a

fair      price           for    the     property,           nor    was         it       reasonably

c a l c u l a t e d t o a p p r i s e a l l i n t e r e s t e d p a r t i e s of t h e pendency

of the action.

           We       affirm       the    District        Court      in    setting          aside      the

trustee        sale       and    find proper          the    remedy           t o reconduct          the

t r u s t e e s a l e a s p r o v i d e d i n t h e judgment.
W e concur :

  PA&
    ,,
    -
               g.$Git?
         Chief J u s t i c e