Brunner v. Lacasse , 234 Mont. 368 ( 1988 )

No. 8 8 - 1 8 ?
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988
ELLIS A. RRUNNER and GLORIA A.
BRUNNER, husband and wife,
Plaintiffs and Appellants,
-vs-
LEO R. LaCASSE and FRIEDA LaCASSE,
husband and wife, and ED LaCASSE,
Defendants and Respondents.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable James R . Wheelis, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Richard R. Ruley; Tipp, Frizzell. & Ruley, Missoula,
Montana
For Respondent :
Clinton H. Kammerer, Kammerer Law Offices, Missoula,
Montana
Stewart A. Pearce, 11, Missoula, Montana
C-
m cT
(3 3
c>
Submitted on Briefs: Sept. 29, 1988
Decided: October 25, 1938
-
-3
LL
L
n
c.4
-
c> GJ
1
Filed:, ---
c
.-?
U 700 P.2d 596, 601, 42 St.Rep. 680, 685.
Respondents contend, however, that an exception to the
general rule allowing prejudgment interest exists "where the
party seeking to recover the payments made on the purchase
price ha[ve] enjoyed the possession of the premises .. ."
Silfvast v. Asplund, et a1. (1935), 99 Mont. 152, 160, 42
P.2d 452, 456. The respondents further contend the actions
of appellant Davis in 1983, allowing one Dean Clinkenbeard to
cut hay on the subject parcels on shares, constitutes
exercising possession of the property. In denyinq
prejudgment interest to the appellants, the District Court
found exercise of dominion and control existed sufficient to
deny an award of prejudgment interest. Upon review of the
evidence presented and the authority cited, we find the
Silfvast case has been misinterpreted and the facts do not
support denial of prejudgment interest.
The Silfvast case deals with our present S 28-7-1716,
MCA. The statute authorizes the court to direct the
rescinding party to "make any compensation or restoration to
the other which justice may require." Section 28-2-1716,
MCA. This statute allows the court to balance the equities
of the parties to a rescission action. It is in line with
the objective of rescission that the parties be returned to
their respective positions as if the contract had not been
entered.
Respondents contend that since the District Court found
appellant Davis exercised dominion and control over the
properties in 1983, by allowing the cutting of the hay on the
properties, the Silfvast case requires an automatic finding
that appellants are not entitled to prejudgment interest.
In Silfvast, the Court states:
We do not feel that under [ S 28-2-1716,
MCA], it is incumbent upon the trial
court to allow or disallow interest in
accordance with the strict rules of law
which would apply to ordinary
transactions, but only to award
compensation as justice may require ...
Silfvast, 42 P.2d at 456. This language does not support
respondents1 contention that the Silfvast Court adopted the
exception as law in this state. Further, the portion of
Silfvast respondents cite to is an excerpt of the Court's
examination of other jurisdictions on this issue.
In the more recent case of Forsythe v. Elkins (Mont.
1985), 700 P.2d 596, 601, 42 St.Rep. 680, 685, 686, this
Court was again faced with interpreting 5 28-2-1716, MCA, and
stated:
Although the object of § 28-2-1716, MCA,
requiring one rescinding a contract to
make compensation or restoration, is to
place the other party in status quo,
absolute and literal restoration is not
required, it being sufficient if
restoration is such as is reasonably
possible or as may be demanded by the
equities of the case. OIKeefe v.
Routledge (1940), 110 Mont. 138, 103 P.2d
307.
Looking at the equities in this case we find the
appellants were induced to enter these agreements on the
premise they could be subdivided using a gift theory which
would avoid the costly subdivision process. Some type of
agreement existed in the first few years allowing the sellers
to hay the properties, with the purchasers to get credit for
the hay removed. No credit on the purchase price appears to
have been given. In 1981, after being informed the division
was not possible as planned, three of the appellants
attempted rescission. The fourth party, the Brunners, had
signed a separate agreement to attempt to consummate the
transaction, but joined with the others in sending the 1983
rescission notice. Later in 1383, appellant Davis authorized
Clinkenbeard to cut hay on the properties on shares.
However, the appellants' share was left baled and stacked on
the property, purportedly to the time of trial. From 1984
on, by agreement the parties had cut the hay on the
properties and placed the profits in escrow. Appellants
received no benefit from having cut the hay on the
properties. Rased on the lack of a showing of any benefit to
the appellants by this act, we find the court's holding
denying prejudgment interest is reversible error. The
holding fails to balance the equities of this case wherein
appellants have been deprived of their monies for eight to
nine years to the date of judgment, while respondents
received or are able to receive the profits from the use of
the land for nearly all the years in question. We therefore
reverse the District Court's judgment regarding the award of
prejudgment interest.
Issue No. 2.
In its opinion and order of April 23, 1987, the
District Court declined to award the Brunners the equity in
the property transferred to the respondents as partial
payment. The District Court based its denial on the case of
Carey v. Wallner (Mont. 1986), 725 P.2d 557, 43 St.Rep. 1706,
agreeing with respondents argument that:
[Rlestoration in rescission covers only
those funds actually expended, it does
not cover losses, which occur incidental
to the contract, those which arise out of
accounting procedures or speculative
losses.
The Carey case on which the court and respondents relied
dealt with rescission of a contract for deed involving the
sale of a business. The court allowed rescission based upon
mutual mistake of the parties at the time of entering the
contract, similar to this case. In restoring the parties to
their respective status quo, the court denied the Carey's
recovery of "any loss on the discounted contract for deed
which they sold." Carey, 725 P.2d at 561. The Carey case
and this case are distinguishable. In Carey, the rescinding
party sought recovery for a loss sustained when they sold a
separate contract for deed and used the proceeds to pay off
their loan obtained for converting a carport to a room. The
contract for deed which was sold covered out of state
property in no way related to the sellers. No benefit
resulted to the sellers.
In the case at hand the buyers transferred property to
the sellers as partial consideration paid upon the contract
in issue. The transferred property was subject to various
indebtedness which was assumed by respondents. The Brunners
further agreed to pay $30,000 cash toward the purchase of the
property. The contract for deed, however, does not specify a
total purchase price for the parcel the Brunners purchased;
the record shows only that an exchange of the Brunners'
equity in the transferred parcel to the LaCasses occurred as
a partial down payment. It should be noted that the amount
of equity the Brunners possessed in the property when it was
transferred is estimated at $17,000 according to the
testimony of Ellis Brunner.
Sections 28-2-1713(2) and 28-2-1715, MCA, provide "each
party must restore to the other everything of value received
under the contract.'' Carey, 725 P.2d at 561. As the equity
in the transferred property constituted partial payment on
the contract, they are entitled to its return. For this
reason, we direct the District Court on remand to allow a
hearing at which both parties may present evidence of the
value of the equity at the time of the transfer.
The judgment of the District Court filed May 7, 1987,
is reversed and remanded for further proceedings in
conformity with this opinion. The District Court shall also
award a fair attorney's fee for this appeal to the
appellants.
Reversed and remanded.
1
We concur: