Wright v. Mersdorf ( 1995 )

NO. 94-396
IN THE SUPREME COURT OF THE STATE OF MONTANA
1995
EDWARD J. WRIGHT,
Plaintiff and Respondent,
v.
RALPH MERSDORF and DENNIS MERSDORF,
Defendants and Appellants.
APPEAL FROM: District Court of the Fifth Judicial District,
In and for the County of Madison,
The Honorable Frank M. Davis, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Michael J. Lilly, Berg, Lilly, Andriolo
& Tollefsen, Bozeman, Montana
For Respondent:
James D. McKenna, Lineberger, Walsh & McKenna,
Bozeman, Montana
Justice William E. Hunt, Sr., delivered the opinion of the Court.
Appellants Ralph Mersdorf and Dennis Mersdorf appeal from a
judgment of the Fifth Judicial District Court, Madison County, in
favor of respondent Edward J. Wright entitling him to recover the
amount of the unpaid balance of a sales agreement, interest, and
costs, and against appellants' claim for reformation of the sales
agreement.
Affirmed.
Appellants raise the following issues:
1. Did the District Court err in concluding, as a matter of
law, that respondent was entitled to the amount of the suspended
installment payments?
2. Did the District Court err in concluding, as a matter of
law, that appellants were not entitled to a reformation of the
parties' sales agreement?
Respondent and appellants are both licensed in Montana as
professional guides and outfitters. In 1987, respondent purchased
the assets of Hidden Lake Outfitters from Robert Bovee, a licensed
Montana outfitter. The total purchase price was $135,000.
Respondent made a down payment of $65,000, with the balance to be
paid semi-annually. The balance was secured by a filed security
agreement which created a lien on outfitting equipment and
livestock in favor of Bovee.
In the fall of 1990, respondent decided to sell most of the
assets he was purchasing from Bovee. Respondent and appellants met
at respondent's ranch and executed a written contract whereby
respondent agreed to sell his "right, title and interest" in a
Forest Service lease, a Burlington Northern lease, livestock, and
outfitter equipment. The Burlington Northern lease remained in
Bovee's name and was not assignable. Bovee retained his secured
interest in some of the outfitter equipment and livestock. Neither
party was advised or represented by counsel. The contract was
typed by respondent's wife and witnessed by an employee of
respondent. The parties agreed on a purchase price of $150,000.
Appellants made an $80,000 down payment with the balance to be paid
in equal monthly installments. Appellants performed until
October 1, 1991. Thereafter, they made no further payments.
Respondent filed a complaint on December 18, 1991, alleging
breach of contract and seeking judgment in the amount of the unpaid
purchase price and interest. Appellants answered by generally
denying the allegations set forth in respondent's complaint.
Appellants counterclaimed for the right to reformation of the
contract, alleging fraud and mutual mistake.
On May 10, 1994, the District Court entered its findings of
fact and conclusions of law. The District Court concluded that
appellants breached the contract by failing to make the installment
payment due on October 1, 1991, and all subsequent payments
thereafter. The District Court concluded that respondent was
entitled to the amount of the suspended installment payments with
interest. The District Court dismissed appellants' counterclaim.
It is from the District Court's findings, conclusions, and judgment
that appellants appeal.
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ISSUE 1
Did the District Court err in concluding, as a matter of law,
that respondent was entitled to the amount of the suspended
installment payments?
We review a district court's conclusions of law to determine
whether the district court's interpretation of the law was correct.
In re Marriage of Schara (Mont. 1994), 878 P.2d 908, 910, 51 St.
Rep. 676, 677; In re Marriage of Barnard (Mont. 1994) 870 P.2d 91,
93, 51 St. Rep. 173, 174.
Appellants argue that respondent was not entitled to the
amount of the suspended installment payments because respondent was
the first to materially breach the contract. Specifically,
appellants assert that respondent did not fulfill his promise to
secure a conveyance of the Burlington Northern permit. In
addition, appellants contend that respondent did not convey clear
title to the equipment and livestock, and that he did not convey
title to sufficient and adequate equipment and livestock to operate
the Forest Service permit.
The testimony of the parties concerning the transferability of
the Burlington Northern permit and Bovee's lien on the equipment
and livestock was diametrically opposed. The parties agreed that
respondent notified appellants that Bovee retained title to the
Burlington Northern permit. However, respondent testified that he
informed appellants that the permit was not transferable.
Appellants, on the other hand, testified that respondent claimed
that he would be able to effect a transfer of title from Bovee to
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appellants. As to Bovee's lien on the equipment and livestock,
respondent testified that appellants were informed of Bovee's lien
during a four-way telephone conversation with Bovee during
negotiations between the parties. Appellants deny taking part in
this conversation. Given the conflicting testimony of the parties,
the District Court was forced to determine which party presented
the more credible testimony. The District Court determined that
respondent's testimony was more credible than that of appellants.
When reviewing the findings of fact of a district court in a
civil action sitting without a jury, this Court will not substitute
its judgment for the district court's, but rather we are confined
to determining whether the findings of fact are clearly erroneous.
Rule 52(a), M.R.Civ.P. When conflicting evidence is presented at
trial, it is the function of the district court to resolve such
conflicts. The district court's findings will not be disturbed on
appeal when supported by substantial, though conflicting, evidence.
Pare v. Morrison (1991), 241 Mont. 218, 221, 786 P.2d 655, 657;
Meridian Minerals Company v. Nycore Minerals, Inc. (1987), 228
Mont. 274, 203, 742 P.2d 456, 461.
There is nothing in the record to demonstrate that the
District Court's factual determinations as to the Burlington
Northern permit and the Bovee lien on the equipment and livestock
are clearly erroneous.
Appellants argue that respondent did not convey title to
sufficient equipment and livestock to operate the Forest Service
permit. As a result, appellants were required to purchase
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additional equipment and livestock in order to meet Forest Service
requirements. Appellants contend that respondent's failure to
transfer adequate equipment and livestock constitutes a material
breach of contract.
The record reveals that in response to a question about what
steps appellants took to assure the validity of the Forest Service
permit, appellant Dennis Mersdorf testified that prior to signing
the contract they "went down to the Forest Service and talked to
them." He also testified that prior to signing the contract they
inspected the outfitting equipment and livestock they were about to
purchase from respondent. Appellants both testified that upon
inspection they discovered that the equipment was used and of
little value. It is not clear from the record whether the quantity
or quality of the equipment and livestock was inadequate for
purposes of operating the Forest Service permit. However,
appellants inspected the equipment and livestock prior to purchase,
and they were well aware of its quality. The sales agreement was
specific as to the quantity of the equipment and livestock for
sale. Appellants discussed the validity of the permit with the
Forest Service prior to signing the contract. During that
discussion, appellants had the opportunity to find out what
equipment and livestock was needed to operate a Forest Service
permit. Appellants exercised their right to inspect the equipment
and livestock under 5 30-z-513, MCA. Appellants cannot now
complain that defects in either the quantity or the quality of the
equipment for purposes of operating under the Forest Service permit
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constitute material breach by respondent. See § 30-2-316(3) (b),
MCA.
We hold that the District Court did not err in concluding, as
a matter of law, that respondent was entitled to the amount of the
suspended installment payments.
ISSUE 2
Did the District Court err in concluding, as a matter of law,
that appellants were not entitled to a reformation of the parties'
sales agreement?
We apply the same standard of review to Issue 2 that we
applied to Issue 1.
Appellants argue that they are entitled to a reformation of
the contract due to mutual mistake of fact. Appellants contend
that both parties shared a mistaken assumption that the Burlington
Northern lease was transferable from Bovee to appellants. In
Issue 1 we affirmed the District Court's finding that there was no
credible evidence to show that respondent represented to appellants
that the Burlington Northern lease was transferable from Bovee to
appellants. If there was a mistake as to the Burlington Northern
lease it was unilateral on the part of appellants. As opposed to
mutual mistake, unilateral mistake is not normally grounds for
relief for the mistaken party. Carney v. Wallner (1986), 223 Mont.
260, 266, 725 P.2d 557, 560.
We hold that the District Court did not err, as a matter of
law, in concluding that appellants were not entitled to reformation
of the parties' sales agreement.
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Affirmed.
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 the Supreme Court and by a report of its result
to Montana Law Week, State Reporter and West Publishing Company.
We concur:
March 16, 1995
CERTIFICATE OF SERVICE
I hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:
Michael J. Lilly
Berg, Lilly, Andriolo & Tollefsen
910 Technology Blvd., Suite A
Bozeman, MT 59715
James D. McKenna
Lineberger, Walsh, McKenna
P.O. Box 6400
Bozeman, MT 59771/6400
ED SMITH
CLERK OF THE SUPREME COURT
,STATE OF MONTANA