Schilke v. Bean , 232 Mont. 125 ( 1988 )

No. 87-433
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988
KELLY W. SCHILKE ,
Plaintiff and Respondent,
-vs-
RAYMOND P. BEAN,
Defendant and Appellant,
and
JOHN McRAE,
Third-Party Defendant/Respondent.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Ravalli,
The Honorable Douglas Harkin, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Christopher Daly, Missoula, Montana
For Respondent:
Jeffrey H. Langton, Hamilton, Montana
William R. Baldassin, Missoula, Montana
Submitted on Briefs: April 14, 1988
Decided: May 2 4 , 1988
~iled:'
'MAY 2 4 19881
L
Clerk
Mr. Justice Fred J. Weber delivered the Opinion of the Court.
This is an action for rescission of a contract for deed
of real property. The District Court for the Fourth Judicial
District, Ravalli County, allowed Mr. Schilke to rescind the
contract. It awarded him damages for sums paid under the
contract, for expenses of improving the property, and for
attorney fees and costs. Mr. Bean appeals. We affirm.
The issues are:
1. Did the District Court err in failing to grant the
seller a directed verdict?
2. Did the court err in refusing to amend its findings
and conclusions?
3. Did the court err in failing to grant a new trial
because of newly discovered evidence?
4. Did the court err in absolving attorney Mr. McRae
from liability?
In 1979, defendant Mr. Bean (seller) acquired an inter-
est in undeveloped property through an unrecorded contract of
sale. His intent was to subdivide the property through the
use of occasional sales under 5 76-3-207, MCA. Toward that
end, he had attorney Mr. McRae prepare fill-in-the-blank
contract forms.
In January 1980, the seller and Mr. Schilke (buyer)
entered into a written agreement on one of the prepared
contract forms whereby the buyer would purchase a 2-acre
tract of the property. They paced out the tract selected,
but no survey was done. Buyer paid $1,000 down, with monthly
payments for 5 years on the balance of the $8,000 purchase
price. Payments were made directly to the seller. The
contract provided that title would remain in the seller until
the full purchase price was paid and that the seller would
have 16 months to provide title to the tract through warranty
deed. The contract further provided that if the 16-month
deadline were not met, the buyer would receive an undivided
interest in the whole property upon payment of the contract
price. Also, the contract provided that if seller breached
the agreement or refused to complete the sale, the agreement
would be rescinded.
In January 1985, the buyer made the final payment due
under the contract. For a variety of reasons, both personal
and relating to the county's approval process for occasional
sales, seller did not convey the property to the buyer by a
warranty deed before or at that time. In fact, the only deed
to buyer ever filed by the seller was a quitclaim deed. filed
in September 1985.
In February 1985, Ravalli County adopted subdivision
evasion criteria which prohibited use of occasional sale
exemptions for divisions of land adjacent to prior occasional
sales. This affected the 2-acre tract desired by the buyer.
The seller then began the proceedings for approval of his
property as a minor subdivision, but that process had not.
been completed at the time of trial. In January 1986, the
buyer filed this suit. The seller filed a third-party com-
plaint against Mr. McRae, who had drafted the form contracts
for him. After a three-day trial, the District Court entered
extensive findings and conclusions. The court entered judg-
ment that the buyer was entitled to rescind his contract with
the seller. It ordered seller to pay buyer all sums paid for
the property, with interest, plus expenses paid for improve-
ments to the property and costs and attorney fees. The
seller appeals.
I
Did the District Court err in failing to grant the
seller a directed verdict?
The buyer's complaint contained seven counts against the
seller. They were violation of the Montana Subdivision and
Platting Act, fraud, breach of fiduciary duty, breach of duty
as trustee of buyer's land payments, constructive fraud,
breach of the duty to act in good faith, and a claim for
attorney fees. At the close of the buyer's case-in-chief,
the seller moved for directed verdicts on all seven counts of
the complaint. The court denied each of the motions. The
seller contends that the buyer failed to prove that he was
entitled to any of the relief sought.
Since this case was tried to the court, the motions for
directed verdict were not appropriate. A motion for directed
verdict is only proper in a jury trial. We will treat this
issue as if the motions had been for involuntary dismissal
under Rule 41(b), M.R.Civ.P. That rule provides, in relevant
part :
After the plaintiff, in an action tried by the
court without a jury, has completed the presenta-
tion of his evidence, the defendant, without waiv-
ing his right to offer evidence in the event the
motion is not granted, may move for a dismissal on
the ground that upon the facts and the law the
plaintiff has shown no right to relief.
In his case-in-chief, the buyer presented evidence that
the seller failed to reveal at the time the contract was
signed that he did not have clear title to the property. He
also presented evidence that the seller accepted and used all
of buyer's payments for the 2-acre tract without providing
the buyer with a warranty deed to the tract. Many of the
elements of the counts against the seller could arise as a
matter of law, e.g., existence of fiduciary or trustee sta-
tus, duty as a fiduciary or trustee, or could be implied by
the testimony, e.g., fraudulent intent. We conclude that the
buyer presented sufficient evidence to support his claims.
The District Court properly refused to grant an involuntary
dismissal of the complaint.
I1
Did the court err in refusing to amend its findings and
conclusions?
The seller objects to 3 5 specific findings of the trial
judge. Rule 5 2 (a), M.R.Civ.P., provides that I [£Iindings of
'
fact shall not be set aside unless clearly erroneous."
Without listing all of the specifics cited by the seller, we
have reviewed them and in only two instances have found clear
error on the part of the District Court.
Finding no. 52 states that the seller took no action to
collect default fees owing when the buyer was late on con-
tract payments. The seller introduced into evidence copies
of two letters he wrote to buyer demanding late fees. De-
spite seller's statement at trial that buyer had paid all
sums due under the contract, those letters disprove finding
no. 5 2 . For that reason, we hold that finding no. 52 must be
deleted. Such deletion does not require any change in the
judgment.
Finding No. 6 9 describes the buyer's expenses in improv-
ing the 2-acre tract. The finding states that buyer did 2 4
to 3 0 hours of backhoe work on the property, at a rate of $ 1 0
per hour. The actual testimony in the transcript was that
the rate was $ 4 0 per hour. The finding also states that
buyer put in 5 0 hours of additional labor at $ 8 per hour.
The transcript of that testimony shows that the rate was
$ 8 . 5 0 per hour. The buyer also estimated the total value of
his backhoe work at $ 9 6 0 and the total value of his labor at
$450. We order that finding no. 6 9 be amended to show that
the rate for backhoe work was $ 4 0 per hour and the rate for
labor was $ 8 . 5 0 per hour.
As to the other findings, the changes suggested by the
seller are in some cases clarifications, and in other cases
additions to the findings of the court. The testimony and
other evidence at trial supports each of the challenged
findings. We conclude that the court did not err in refusing
to amend its findings and conclusions, other than in the two
instances noted above.
Did the court err in failing to grant a new trial be-
cause of newly discovered evidence?
The newly discovered evidence is a letter dated January
3, 1980, from third-party defendant Mr. McRae to the seller.
The seller apparently had this letter in his files but did
not discover it until after trial.
A new trial will be granted because of newly discovered
evidence only when 1) the evidence has come to the petition-
er's knowledge since the trial; 2) it was not through want of
diligence that the evidence was not discovered earlier; 3)
the evidence would probably produce a different result upon
retrial-; 4) the new evidence is not merely cumulative; 5) the
evidence is supported by affidavit; and 6) the purpose of the
new evidence is not merely to impeach the character or credit
of a witness. Kerrigan v. Kerrigan (19431, 1 1 5 Monte 1-36,
139 P.2d 533.
In the letter, Mr. McRae thanks the seller "for entrust-
ing your legal matters to me." We fail to see how this would
change the result on retrial, because it had already been
shown that Mr. McRae was the attorney who drafted the form
contract for the seller. Further, since the letter was in
the seller's possession since it was received, element (2)
has not been met. We hold that the District Court did not
err in denying the motion for new trial.
IV
Did the court err in absolving attorney Mr. McRae from
liability?
The District Court found that
64. Bean seeks indemnification for his damag-
es, if any, from his former attorney, McRae, on a
theory of negligence. Bean had the burden to prove
(1) the existence of the relationship of attorney
and client with McRae with regard to the contract;
( 2 ) acts constituting the alleged negligence; ( 3 )
that the negligence was the proximate cause of his
injury; and ( 4 ) the fact and extent of the injury
alleged. Bean has completely failed to meet his
burden of proof as to elements 2 and 3. Bean
alleges that but for the negligence of his former
attorney he would not be in breach of contract. In
fact, Bean's own failure to do what he undertook to
do and had the ability to do is the proximate cause
of his present injury.
65. Bean did not present any evidence that
would establish that McRae breached any standard of
care expected of attorneys, either in the area of
McRae's practice or in a similar locality and under
similar circumstances.
66. The Agreement prepared by McRae was
prepared with a reasonable degree of care and skill
for the purposes requested and based upon the
information provided by Bean. McRae was acting
solely as attorney for Bean and said contract has a
legal purpose. Bean does not allege that the
contract does not conform to the specifications he
required of it.
67. McRae acted in good faith and in the
honest belief that his acts were well founded and
in the best interest of his client and furthermore
that his client would in fact perform the agreement
so as not to harm others. There is no evidence
that McRae guaranteed by express agreement, the
validity of the instrument he was engaged to draft
and in such absence an attorney is not held to be
an insurer or guarantor of such validity.
The seller (Mr. Bean) argues that he presented evidence of
negligent conduct on the part of Mr. McRae and that t-his
conduct was the cause of the seller's damages.
If we followed the seller's logic, we would be holding
Mr. McRae liable for the damages resulting from the seller's
delay in filing the deed to buyer. As indicated in the
District Court's findings, the evidence was that Mr. McRae
was asked to prepare fill-in-the-blank contracts, with no
knowledge of the specifics of each deal for which the con-
tracts would be used. There is nothing in the record to
indicate that the occasional sale to the buyer would have
been disallowed had the deed been filed prior to the February
1985 adoption of new subdivision evasion criteria by Ravalli
County. Rather, the problems arose from the delay in filing
a deed to this tract. We conclude that the District Court
correctly absolved Mr. McRae from liability.
The buyer points out that under section 22 of the par-
ties' contract, he is entitled to his attorney fees on ap-
peal. We agree. We remand to the District Court for
determination of reasonable attorney fees on appeal. In all
other respects, with the exception of the two modifications
to findings under Issue 11, we affirm the judgment of the
District Court.
We Concur:
) / Chie'f Justice
4 ustices