Court Opinion

ID: 882032
Source: CourtListenerOpinion
Date Created: 2013-06-05 00:57:03.142415+00
Date Added: 2024-06-11T15:35:21.305695
License: Public Domain

No.    91-288

                IN THE SUPREME COURT OF THE STATE OF MONTANA
                                             1991

TRACY KROON, RHODA KROON, and
FIRE INSURANCE EXCHANGE,
                      Plaintiffs and Appellants,
     -vs-
JAMES L. COVER, d/b/a CVR OAK DESIGNS,
                      Defendant and Respondent.

APPEAL FROM:          District Court of the Eighteenth Judicial District,
                      In and for the County of Gallatin,
                      The Honorable Larry W. Moran, Judge presiding.

COUNSEL OF RECORD:
            For Appellant:
                      Paul L. Frantz; Morrow, Sedivy              &   Bennett, P.C.,
                      Bozeman. Montana

            For Respondent:
                      Gig A. Tollefsen; Berg, Lilly, Stokes, Andriolo E,
                      Tollefsen, Bozeman, Montana

                                        Submitted on Briefs:          August 15, 1991

                y:: < '        . , I
                                                       Decided:       September 10, 1991
Filed:      '
            i             ,.     ...
Justice John Conway 'Harrison delivered the Opinion of the Court.

     Plaintiffs appeal from a judgment of the District Court for
the Eighteenth Judicial District, Gallatin County, dismissing their
complaint.   we affirm.
     The issue for review is whether the District Court erred in
finding that the risk of loss in a sales transaction passed to the
buyer instead of remaining with the seller.
     In the fall of 1989, Cover contracted to build furniture for
Kroons.   The furniture was complete and ready for delivery on
December 14, 1989.   Kroons inspected the furniture at Cover's shop
and accepted the quality of the furniture.      Cover gave Kroons a
receipt indicating that their account was paid in full.     Although
Cover wanted to deliver the furniture, Kroons asked if Cover could
hold the furniture until after Christmas. Cover agreed to hold the
furniture at no extra charge.        Kroons agreed to take actual
physical possession of the furniture on or about December 27, 1989.
The parties' contract did not specify who would be responsible for
delivering the furniture to Kroons' home.       Further, the parties
did not discuss who would bear the risk of loss.
     On December 20, 1989 a fire of unknown origin destroyed the
furniture.    Subsequently, Kroons    filed a    claim   under   their
homeowners' policy which covered the furniture.     After investiga-
tion, Fire Insurance Exchange paid Kroons for their loss.
     Fire Insurance Exchange initiated this subrogation claim to
recover the amount paid to Kroons.   Kroons seek recoverey of their
deductible. The District Court entered judgment in favor of Cover.
     On appeal, appellants maintain that the District Court erred
in dismissing their complaint.              Appellants contend that risk of
loss remained with the seller under 5               30-2-509(3),   MCA, entitling
appellants to prevail.              We disagree and therefore affirm the
District Court's jud.pent in favor of Cover.
       The well established rule regarding risk of loss in the
absence of breach in sales transactions is contained in 5                       30-2-

509,   MCA.    Section       30-2-509(3),        MCA, places risk of loss as
follows:
       (3)  In any case not within subsection (1) or ( 2 ) , the
       risk of loss passes to the buyer on his receipt of the
       goods if the seller is a merchant; otherwise the risk
       passes to the buyer on tender of delivery.
       The District Court found 5           30-2-509(3),    MCA, placed the risk
of loss on the buyers on December 14,                1989   because they were in
constructive receipt of the furniture on that day.                   Further, the
court found that a gratuitous bailment resulted because Cover
desired to actually 'deliver the property to Kroons, but agreed at
Kroons' request to postpone delivery until December                 27,   1989.    As
a gratuitous bailee, Cover's only obligation was to exercise
ordinary care.     Appellants failed to show a lack of ordinary care.
       Risk of loss is no longer governed by the "arbitrary shifting
of the risk with the 'property' in the goods."                     Note 1 of the
Official Comment, 5         30- 2- 509,   MCA.    By adopting Montana's version
of the Uniform Commercial Code, the legislature adopted the
contractual approach to risk of loss cases. Note 1 of the Official
Comment, 5    30- 2- 509,    MCA.
       Applying the contractual approach, risk of loss passed to
Kroons when      the contract was               completely performed      and     they
constructively received the furniture. Cover's performance of the

                                            3
contract was complete when he finished the furniture and made it
available for immediate possession by Kroons.      The contract was
complete, Kroons were the actual owners of the property, and they
obtained an insurable interest in the furniture on December 14,
1989.    Consistent with ownership rights, Kroons filed a claim with
their insurance company and received compensation for their loss.
    We conclude that the District Court did not err in dismissing
plaintiffs' complaint.     Kroons' acceptance and request for later
delivery qualified as constructive receipt of the furniture.
Pursuant to 5 30-2-509, MCA, the risk of loss transferred to KroonS
when they constructively received the furniture since Cover is a
merchant.    Accordingly, we affirm the District Court.
     Pursuant to Section I, Paragraph 3(c), Montana Supreme Court
1988 Internal Operating Rules, this decision shall not be cited as

precedent and shall be published by its filing as a public document
with the Clerk of this Court and by a report of its result to the
West Publishing Company.
        Let remittitur issue forthwith.

We concur:

                                   4
                                            September 10, 1991

                            CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:

Paul L. Frantz
MORROW, S E D I W & BENNETT, P.C.
P.O. Box 1168
Bozeman, MT 59711-1168

Gig Tollefsen
BERG, LILLY, STOKES, ANDRIOLO, TOLLEFSEN & SCHRAUDNER
910 Technology Boulevard, Suite A
Bozeman, MT 59715

                                               ED SMITH
                                               CLERK O F THE SUPREME COURT
                                               STATE OF MONTANA