Ponderosa Pines Ranch, Inc. v. McBride ( 1982 )

No. 81-297
I N THE SUPREME COURT O THE STATE O MONTANA
F F
1981
PONDEROSA PINES RANCH, INC.,
a Mont. c o r p . ,
P l a i n t i f f and A p p e l l a n t ,
STANLEY W. McBRIDE,
Defendant and Respondent.
Appeal from: D i s t r i c t Court o f t h e E i g h t e e n t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e County o f G a l l a t i n , The Honorable
W. W. L e s s l e y , Judge p r e s i d i n g .
Counsel o f Record:
For A p p e l l a n t :
Landoe, Brown, P l a n a l p , Kommers & L i n e b e r g e r ,
Bozeman, Montana
For Respondent:
B e n n e t t & B e n n e t t , Bozeman, Montana
S u b m i t t e d on B r i e f s : December 3, 1 9 8 1
Decided: March 25, 1982
MAR 2 5 1982
Filed:
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
Ponderosa Pines Ranch, Inc. appeals from a judgment
in the Eighteenth Judicial District, Gallatin County, dis-
missing its complaint seeking cancellation of a land sale
contract with Stanley ~cBride.
On July 24, 1978, the parties entered into a sales
contract under which McBri.de was to purchase a tract of land
from Ponderosa. The contract provided:
"Time is of the essence of this contract. In the
event the buyer shall fail to pay any installment
as and when due, the Seller shall, 45 days or
more thereafter, have the right to cancel this
contract by notice thereof mailed by registered
or certified mail to the Buyer . .
."
On February 6, 1981, Ponderosa filed its complaint
alleging that McBride was a year behind in his monthly
payments and that he had been sent notice of the default.
Ponderosa demanded that the District Court order the cancellation
of the contract, remove the contract as a cloud on Ponderosa's
title, require McBride to vacate the premises, and decree
that Ponderosa had title to the property.
On February 24, 1981, McBride filed a motion to dismiss
on the ground that. the complaint failed to state a claim
upon which relief could be granted. The motion was not
accompanied by a brief and was not ruled on by the District
Court.
On March 4, 1981, McBride filed a notice of tender with
the District Court, accompanied by a certified check for
$5,308.48, representing the full sum due and owing plus
interest. That same day McBride filed a motion to dismiss
on the ground that all sums due and owing Ponderosa had
been tendered by deposit with the Clerk of the District
Court. The motion to dismiss included notice to Ponderosa
that McBride would present the motion to the District Court
on March 16, 1981, at 10:OO a.m. No brief was filed by
McBride in support of this motion to dismiss.
The hearing was held as scheduled on March 16, 1981.
McBride's counsel was present, but neither Ponderosa nor its
counsel attended. The District Court granted McBride's
motion to dismiss on March 18, 1981, and ordered: (1) that
Ponderosa's action be dismissed with prejudice; (2) that the
amount tendered by McBride be delivered to Ponderosa in
satisfaction of all amounts due and owing Ponderosa in the
transaction; and, (3) that Ponderosa deliver to McBride a
warranty deed to the property. Ponderosa moved to amend its
complaint on April 2, 1981, and a hearing on the motion was
held on April 13, 1981. The District Court did not specifically
rule on this motion, but the amended complaint was never
filed. At the hearing, Ponderosa indicated that it had not
been served with a copy of the District Court's order of
March 18, 1981. Ponderosa subsequently submitted an affidavit
to that effect, and on April 16, 1981, filed a motion to set
aside the order of the court and allow plaintiff to file an
amended complaint. The motion was argued on May 11, 1981.
In an order filed May 12, 1981, the District Court denied
Ponderosa's motion. The order contains the following statement:
"The Court does not file a Memorandum here. The
Defendant's brief in opposition sets out in
chronological order the events concerning the
matter before the court. It also cites the law,
and I think properly the conclusion, therefore, I
do not file my own Memorandum in this instance."
Ponderosa appeals from the dismissal order of March 18,
and from that portion of the May 12 order refusing to set
aside the dismissal.
The i s s u e on a p p e a l i s whether t h e D i s t r i c t C o u r t e r r e d
i n dismissing Ponderosa's complaint o r i n subsequently
r e f u s i n g t o s e t a s i d e i t s judgment o f d i s m i s s a l . W find
e
t h e r e a r e i n s u f f i c i e n t f a c t s i n t h e record t o determine
whether o r n o t McBride i s e n t i t l e d t o r e l i e f from f o r f e i t u r e
under s e c t i o n 28-1-104, MCA. W e t h e r e f o r e remand t h e c a s e
f o r a h e a r i n g on t h e q u e s t i o n of whether McBride's a c t i o n s
constituted a "grossly negligent, willful, o r fraudulent
breach of duty. "
S e c t i o n 28-1-104, MCA, c i t e d by b o t h p a r t i e s , i s
d i s p o s i t i v e of t h i s appeal. The s t a t u t e states:
-
" R e l i e f from f o r f e i t u r e . Whenever by t h e t e r m s
of an o b l i g a t i o n a p a r t y t h e r e t o i n c u r s a f o r -
f e i t u r e o r a l o s s i n t h e n a t u r e of a f o r f e i t u r e
by r e a s o n o f h i s f a i l u r e t o comply w i t h i t s
p r o v i s i o n s , h e may b e r e l i e v e d t h e r e f r o m upon
making f u l l compensation t o t h e o t h e r p a r t y ,
e x c e p t i n c a s e of a g r o s s l y n e g l i g e n t , w i l l f u l ,
o r fraudulent breach of duty."
T h i s s t a t u t e h a s proved a p o p u l a r s o u r c e of l i t i g a t i o n
i n Montana. ,
F r a s e r v . Edmisten ( 1 9 8 0 ) , - Mont. - 616
P.2d 360, 37 S t - R e p . 1607, s t a t e s : " [ w l e have c o n s t r u e d t h i s
s t a t u t e t o mean ' t h a t a p e r s o n may o b t a i n r e l i e f under i t i n
any c a s e where h e sets f o r t h f a c t s which a p p e a l t o t h e
conscience of a c o u r t of e q u i t y ' [ c i t a t i o n omitted]." 616
P.2d a t 362, 37 St.Rep. a t 1608. See a l s o P a r r o t v. Heller
( 1 9 7 6 ) , 1 7 1 Mont. 212, 214, 557 P.2d 819, 820. Fraser also
states t h a t s e c t i o n 28-1-104 " g r a n t s r e l i e f from f o r f e i t u r e s
i n most i n s t a n c e s , b u t upholds f o r f e i t u r e i n t h e c a s e of a
' g r o s s l y n e g l i g e n t , w i l l f u l , o r f r a u d u l e n t b r e a c h of d u t y
[by t h e p e r s o n s e e k i n g r e l i e f from f o r f e i t u r e l . ' " 616 P.2d
a t 362, 37 S t - R e p . a t 1608. I t i s t h e duty of t h e d e f a u l t i n g
p u r c h a s e r t o show t h a t h e i s e q u i t a b l y e n t i t l e d t o r e l i e f
from f o r f e i t u r e and t h a t h i s b r e a c h of d u t y was n o t g r o s s l y
negligent, w i l l f u l , o r fraudulent. S t a t e e x r e l . Howeth v.
D. A. Davidson & Co. ( 1 9 7 3 ) , 163 Mont. 355, 369, 517 P.2d
722, 730; E l l i n g h o u s e v. Hansen Packing Co. ( 1 9 2 3 ) , 66
Mont. 4 4 4 , 449, 213 P . 1087, 1089; 19 Mont. L. Rev. 50(1957).
The r e c o r d i s d e v o i d of any p l e a d i n g o r e v i d e n c e t h a t
would e n t i t l e McBride t o r e l i e f from f o r f e i t u r e under t h e
statute. H e p r e v a i l e d below on t h e b a s i s o f an u n c o n t e s t e d
motion t o d i s m i s s . I t i s when t h e d e f a u l t i n g p u r c h a s e r c a n
make a showing t h a t he i s e q u i t a b l y e n t i t l e d t o s u c h r e l i e f
and t h a t h i s b r e a c h of d u t y was n o t g r o s s l y n e g l i g e n t , w i l l f u l ,
o r fraudulent t h a t t h e c o u r t s w i l l i n proper cases, r e l i e v e
t h e d e f a u l t i n g p u r c h a s e r from t h e f o r f e i t u r e . Howeth, s u p r a ,
163 Mont. a t 369, 517 P.2d a t 730.
When c o n f r o n t e d w i t h t h e c o m p l a i n t demanding f o r f e i t u r e ,
McBride s h o u l d have f i l e d an a f f i r m a t i v e d e f e n s e i n h i s
answer a l l e g i n g t h e r e a s o n s h e was e n t i t l e d t o r e l i e f from
f o r f e i t u r e under s e c t i o n 28-1-104. I n t h i s c a s e , hoisever,
McBride f i l e d a motion t o d i s m i s s r a t h e r t h a n an answer.
McBride's f i r s t motion was n o t r u l e d on by t h e D i s t r i c t
Court. H i s second motion t o d i s m i s s , however, which was
f i l e d s h o r t l y a f t e r t h e f i r s t , w a s set f o r h e a r i n g on March
1 6 , 1981. The motion w a s p r e s e n t e d a s s c h e d u l e d , b u t Ponderosa
d i d not attend t h e hearing. The motion was g r a n t e d . Only
two o t h e r h e a r i n g s w e r e h e l d i n t h e case. The f i r s t , h e l d
on A p r i l 1 3 , 1981, concerned P o n d e r o s a ' s motion f o r l e a v e t o
amend c o m p l a i n t . N f o r m a l r u l i n g w a s made on t h i s motion.
o
On A p r i l 1 5 , 1981, Ponderosa f i l e d a memorandum i n which i t
x a r g u e d t h a t t h e o r d e r s h o u l d be s e t a s i d e on p r o c e d u r a l
m
grounds and t h a t Ponderosa s h o u l d be a l l o w e d t o f i l e an
amended c o m p l a i n t . On A p r i l 1 6 , 1981, a second motion w a s
f i l e d by Ponderosa. T h i s one was t i t l e d "Motion t o S e t
Aside Order of the Court and Allow the Plaintiff to File an
Amended Complaint." Ponderosa did not file an additional
memorandum. On April 21, 1981, McBride filed a brief in
opposition to Ponderosa's latest motion. The brief argues:
(1) that the District Court acted properly in treating
McBride's motion to dismiss as a motion for summary judgment;
(2) that Ponderosa failed to appear and resist the motion;
and, (3) that Ponderosa waived any right to object to the
tender by failing to affirmatively state the objection. The
third and final hearing was held on May 11, 1981. It con-
cerned Ponderosa's second motion. The motion was denied.
None of the hearings were recorded and the only evidence
we have of what transpired at them are the minutes of the
hearings, the briefs filed in support of the motions, and
the orders of the District Court based on the hearings.
Nowhere is there any evidence that McBride has satisfied the
requirements for relief from forfeiture called for by section
28-1-104, MCA, and Montana case law. That is, he has neither
alleged nor proved that his action did not constitute a
"grossly negligent, willful, or fraudulent breach of duty,"
and he has not presented any facts which would "appeal to
the conscience of a court of equity." Absent such a
showing, McBride is not entitled to relief from the forfeiture
clause of the contract. The case is reversed and remanded
for further proceedings in accordance with this opinion.
We Concur:
1
C h i s Justice
I
Justices