Yellowstone County v. Wight ( 1943 )

I concur in the above dissent of Mr. Justice Erickson. However, I find it necessary to add something further in view of the confusion exhibited by the majority opinion as to the nature of the suit and the issues involved. Under our judicial system appellate courts are supposed to do more than merely settle the rights of the parties to the instant case, and the bar is entitled to know what this court considers the issues and the law relevant thereto.

After correctly stating that this is a quiet title action, the majority opinion goes on to speak of equitable relief from forfeiture under section 8658, Revised Codes. I shall not here comment upon the majority opinion's manifest confusion between (1) the relief provided by section 8658 against the forfeiture of payments resulting from Wight's default under his purchase contract and (2) a relief against the agreed termination or cancellation of the contract on account of those defaults, which is a quite different thing and for which in my opinion other authority than that section must be found. I believe that this court's decision, written by Mr. Chief Justice Brantly, inSuburban Homes Co. v. North, 50 Mont. 108, 145 P. 2, Ann. Cas. 1917C, 81, makes the distinction amply clear.

What I want to clarify here is the apparent confusion between quiet title actions and actions for affirmative relief. The purpose of the latter is obviously to change the rights of the parties by giving one of them affirmative relief against a present legal right of the other. But the purpose of a quiet title action is not to reverse or alter the rights of the parties, or to declare them otherwise than what they are under existing facts and laws; it is for the purposes of examining the actual or possible claims of any adverse claimants, "determining such claim or possible claim, and quieting the title" as against it. (Sec. 9479, Rev. Codes.) It is aimed solely at the pretentions of individuals claiming adversely (Slette v. Review Pub. Co., 71 Mont. 518,230 P. 580) and seeks to adjudicate their validity, not to alter them. The complaint here, being one to quiet title, does not seek to terminate any valid rights of the vendee, but merely to determine whether he has any rights and, if not, to silence his claims. Likewise, the answer does not seek to extend or renew defendants' rights under the contract but merely to determine if they have any and if so to silence plaintiff's claims to the contrary.

It is, of course, possible to change the issues of a suit by evidence admitted without objection. If in this instance they have been changed the bar is entitled to know the basis upon which the case was determined by this court. Certainly the bar has no way of ascertaining that basis from the majority opinion, which holds that the contract has never been terminated but is still in effect, and then speaks of a relief from forfeiture, obviously meaning relief against the termination of the contract. It is obviously contradictory to adjudge in the same decision (1) that a contract has not been terminated, and (2) that there has been a termination against which relief should be granted.

As the majority opinion correctly points out, the pleadings make this purely a quiet title suit. Plaintiff county alleges title in itself and a groundless adverse claim by defendants, and seeks an adjudication quieting its title as against them. Defendants in their answer deny plaintiff's title, assert title in themselves and seek to have the latter quieted against plaintiff. It is true that they plead that their title is "under a contract of sale and purchase * * * made by plaintiff as vendor to defendant, John Wight, as vendee, dated November 3, 1934, and that said contract is now in full force and effect."

For present purposes it is unnecessary to discuss the fact that the entire reference to the contract is purely by way of conclusion of law, since the contract itself is not pleaded either in full or according to its legal effect, (sec. 9172, Rev. Codes), and no facts are pleaded to show what defendant's claimed rights under the contract are or that the contract is still legally effective. The reference to the contract shows that in spite of defendants' denial of plaintiff's title, the defendants mean to assert an equitable title under plaintiff's contract of sale, and that they therefore rely affirmatively upon plaintiff's legal title and ask only that their equitable title be quieted as against it; in other words, that it be determined by the court that the contract, and therefore their equitable interest under it, are in full force and effect. Thus the answer seeks merely an adjudication of the title as defendants contend it actually to be, rather than any affirmative relief against the title as it actually is. The prayer makes this clear in asking that the court adjudicate their rights "to be in full force and effect and through it [the contract?] defendants to have the equitable title to the said land and premises;" and in asking that the court determine the amount, if any, due plaintiff. What is thus sought is not a change in the status of the parties under the contract, but merely an adjudication of that status and of the sum still due, if any, under an allegedly subsisting contract; which is within the proper function of a quiet title suit, since the extent of the asserted equitable interest, if any, and therefore the corresponding limitation of plaintiff's legal interest, must be determined in order to declare the status of the title as it actually exists.

It is true that the prayer goes on to ask that they be "givena reasonable time * * * within which to make payment * * *." That part of the prayer obviously does ask for affirmative relief, namely the extension of the contract granting time in addition to that given by it. In other words, the only affirmative relief sought was not the reinstatement of the terminated contract, but the extension of one allegedly then existing.

It is well settled that the prayer is no part of the statement of facts in the pleading (Donovan v. McDevitt, 36 Mont. 61,

92 P. 49) and that it cannot enlarge the relief warranted by that statement of facts (Murray v. Cresse, 80 Mont. 453,260 P. 1051, and other cases cited in the American Digest System, Pleading, Key 72). The answer itself alleges only title under a contract, and seeks an adjudication that the equitable title be found good as against plaintiff.

In any event, therefore, the answer does not alter the fact that the action is merely a quiet title suit; and even if the issues could have been enlarged by its prayer, the only additional relief thus sought was the extension by the court of an allegedly valid contract, and not the restoration to validity of a contract voided under its own terms by Wight's defaults.

While, as stated above, it is possible to change or enlarge the issues of an action by evidence admitted without objection, we have no way of telling, in the absence of a bill of exceptions, what the evidence was or what it may have accomplished in that respect. It is therefore necessarily the rule under the authorities mentioned in the dissenting opinion of Mr. Justice Erickson that we must presume the findings necessary to sustain the judgment, even though such evidence might have been inadmissible under the pleadings, or even directly contrary to them. However, even to sustain the judgment we may presume only findings which are not inconsistent with the express findings, since we cannot presume the exact opposite of what the court expressly did. Yet that is exactly what the majority opinion does in order to reverse the judgment.

An examination of the findings of fact and conclusions of law, which with the pleadings constitute the entire record, discloses the express findings that on November 5, 1934, plaintiff owned the property and made a contract to sell it to defendant, John Wight, upon a partial payment contract which expressly made time of the essence and provided that the contract should be terminated and defendants' prior payments and improvements forfeited automatically upon default in his payment of the taxes, principal or interest; that Wight defaulted in the contract and in the payment of principal, interest and taxes; that the plaintiff's board of county commissioners by resolution on July 30, 1940, declared the contract in default and expressed an intention to cancel it unless fully complied with by August 31, 1940; that notice thereof was given Wight, but that he failed and neglected to comply; that on September 17, 1940, the board by resolution declared the contract cancelled and that notice thereof was given Wight two days later and acknowledged by him; that at the trial he tendered the full amount of principal, interest and taxes.

The conclusions of law were that Wight breached the contract and thereby terminated it and released plaintiff from all obligation thereunder; that the property and improvements and all payments made by Wight were therefore the property of plaintiff, and that plaintiff was entitled to a decree quieting its title as against the defendant's claims.

Thus the findings and conclusions show affirmatively that the issues were not changed by the evidence, and that the court merely found that the contract had been terminated under its own provisions because of defendant John Wight's defaults and that defendants' claim of right under the contract was not good as against the plaintiff. In other words, the action concluded as it had begun, purely a quiet title suit.

As stated above, the theory of defendants' case, and therefore the basis for the tender at trial, was that the contract was still in full effect. Their theory has never changed. They say in their appeal brief, "We insist and contend that the defendants had a property right in the land in question which they could not be deprived of by notice of cancellation;" that the contract conferred upon them an equitable title which, under section 10611, Revised Codes, could be divested only by a subsequent instrument in writing subscribed by them or by operation of law; that the circumstances could not constitute "operation of law;" that the only way by which a contract can be cancelled, regardless of its terms, is by a court judgment for that purpose; that without such legal adjudication the defendants "did not have a day in court;" that "courts should do more than rubber stamp notices of cancellation of this sort with a judicial O.K. The * * * trial court simply found that defendants' equitable estate in the land was extinguished by the act of plaintiff. Our idea of a day in court is to have the court enter judgment determining the rights of the parties to the contract as in Henderson v. Daniels, supra [62 Mont. 363, 205 P. 964], not to hold a sort of coroner's inquest over the victim after the deed was completed."

I do not propose to discuss this revolutionary contention that regardless of its terms every contract relating to property vests an interest in the vendee which can be divested only by a subsequent writing signed by him or by the judgment of a court of law. It may not be inappropriate to point out that a quiet title suit, though not a coroner's inquest, is nevertheless an inquest into the situation as it exists, rather than a means of obtaining affirmative relief against that situation. But what I want to point out here is that this action was not changed by the evidence into one for relief against the termination of the contract, or even against a forfeiture under the contract; that the defendants have contended throughout and still contend that there has been no termination of the contract and that there can be none until the court has so adjudicated, that the contract is therefore still in effect, and that accordingly they still have the legal right to tender payment and receive a deed; that is clearly the theory on which the tender was made at the trial, and it is likewise clear that the court mentioned the tender in its findings because if the defendants' contentions should be sustained by this court such tender would be necessary to preserve defendants' rights, as held in Suburban Homes Co. v.North, supra.

As noted above, the court made the express findings that the contract provided that time was of the essence and that the vendee's defaults would automatically terminate the contract, that although the vendor repeatedly waived defaults, it finally gave the vendee warning of termination, which he ignored; and the court made the conclusion of law "that the defendant, John Wight, breached said contract and thereby terminated the same." It naturally follows from the court's conclusion that since the contract had been terminated the tender came too late. Yet the majority opinion says "It must be that the trial court took the view the contract had not been cancelled and was still in existence on the day of trial. The court's finding of fact that a tender of payment was made must have followed a finding that there was still a contract. Without a contract a tender of payment would not have been made material to any issue before the court because there would have been no contract to which the tender would apply. That is the case presented to this court on the record before us."

It is submitted that the above is an entirely unique use of the inductive method to prove that the court must have done the exact opposite of what it manifestly did do, and thereby, in order to reverse a decree fully supported by the express findings of fact and conclusions of law, to presume findings and conclusions directly contrary to and inconsistent with those expressly made. I have seen no similar holding and expect never to see another.

The majority opinion's conclusion upon this point, entirely without statement of reason, argument or precedent, is that the tender made at the trial was valid because "there never had been a valid cancellation of the contract at the time the tender was made." In other words, contrary to the terms of the contract, and contrary to the law of contracts, and contrary to the express findings of fact made by the trial court on evidence not before us, and contrary to the conclusions of law which were amply sustained by the express findings of fact, to say nothing of findings which if necessary to sustain the judgment this court must presume; — contrary to all of these things the majority states upon its bare ipse dixit that the contract was still in effect and the tender therefore timely. One wonders why, if the terms of the contract as agreed to between the parties are so utterly immaterial to the determination of their rights, they should go to the trouble of stating the conditions at all. It would seem that they need only name the parties, the subject matter and the price, and leave everything else, including the duration of the contract, to the courts.

But the majority opinion does not even stop there. Although it finds that there has been no termination of the contract (and therefore no forfeiture, which is only a result of the termination, as pointed out by Mr. Chief Justice Brantly in theNorth case, supra), the greater part of the opinion discusses relief against forfeiture under section 8658, which with substantial but obviously mistaken authority in precedent it assumes synonymous with relief from the termination itself. The opinion states that "defendants' prayer in effect asks for relief against forfeiture." I have already pointed out that the facts are entirely otherwise and that in any event it is immaterial what the prayer asks for in the absence of appropriate allegations in the answer itself. After quoting section 8658, which authorizes relief from forfeiture "upon making full compensation to the other party, except in case of a grossly negligent, wilful, or fraudulent breach of duty," the majority opinion quotes this court's statement in Huston v.Vollenweider, 101 Mont. 156, 53 P.2d 112, 115, that a person is entitled to that relief "in any case where he setsforth facts which appeal to the conscience of the court of equity," although such statement of facts is conspicuous by its utter absence in this case.

Thus, in spite of the fact that the majority opinion expressly finds that there has been no termination and therefore no forfeiture, it treats section 8658 as applicable. And in spite of the fact that the evidence is not before us, the opinion states flatly "there are no circumstances which would render it unjust or inequitable to grant the relief" (apparently meaning the unsought relief against the termination which the defendants and the majority opinion pronounce non-existent). The discussion of the supposed facts is contained in the same paragraph and includes the statement that the county, and not an individual, is the vendor, and that "the purchase was made at a time when money for private investment * * * was difficult to obtain." As to the first point, I know of no reason why a county is less entitled to its contractual and statutory rights than an individual. As to the latter point, it may explain why the county, under legislative authorization, gave the defendant a partial payment contract and why he accepted it, presumably with full knowledge of then existing conditions. But the depression existing when thepurchase was made in 1934 does not explain why he committed the defaults in 1935, 1936, 1937, 1938, 1939 and 1940 or why, long after the conditions had changed, the defendant in spite of his continued and repeated defaults and the contract's express terms, should be entitled to complete the purchase as late as the trial of the case in June, 1942, nearly eight years later, or at any time after the termination of the contract in September, 1940.

The majority opinion goes on to say "While the vendee was in default, it occurred under circumstances such as we cannot see that he is negligent to the degree which would bar him from consideration. * * * There are no circumstances which would render it unjust or inequitable to grant the relief." The proper test is not whether we cannot see that he is negligent; it is whether we can see that the trial court erred in not seeing that Wight was not negligent. But we cannot apply either test, for the circumstances of the many defaults are not before this court; and in view of the issues as disclosed by the pleadings, the findings of fact, the conclusions of law, the decree, and the defendants' appeal brief, which issues made those circumstances entirely immaterial, we cannot even conjecture that they were before the trial court or that it can possibly be in error concerning them. The record offers no scintilla of a suggestion how the trial court can be in error in that respect.

The opinion further says "The tender made would constitutefull performance so as to entitle the vendee to deed of conveyance. To the vendor it would give all that the contract called for, with no loss because of delay, and would constitute full compensation. With the county as the vendor, its only interest was to complete the sale and get the land into private ownership and on the tax rolls. The only possible loss to the county by reason of the delay would be the loss of the use of the money. This would be fully compensated for by the payment of interest which was tendered."

Since the statutory requirement is not full performance of the cancelled contract but full compensation for the defaults, the principle thus announced is, that no matter what the terms of the contract may be, or how long it has been void, or what the unknown prior or subsequent circumstances may be, and regardless of the present value of the property, a tender of the balance of the original contract amount with interest will constitute fullcompensation to the vendor.

In the first place, it is not true that the county's only interest is to dispose of the property regardless of its value. The property belongs to the public as represented by the county, a subdivision of the state, and cannot be given away, in whole or in part. "Neither the state, nor any county, * * * shall ever * * * make any donation or grant, by subsidy or otherwise, to any individual, * * *." (Art. XIII, sec. 1, Constitution of Montana.)

Upon the termination of the contract by the board of county commissioners on September 17, 1940, the county's property was entirely freed from the defendants' claim under the contract, whether or not under section 8658 the defendants might by proper allegations be able to make out a case for relief against the forfeiture of their payments. Certainly that section cannot, as against the constitutional inhibition above quoted, authorize either the county board or the courts to donate back to defendant John Wight even the forfeited payments without appropriate pleadings and proof, assuming that it can constitutionally authorize an orderly adjudication therefor under due process of law. Surely it may not constitutionally do so as to the land, the county's ownership of which, free from the terminated contract, cannot seriously be questioned.

What the public owns is not the value placed upon the land at or near the depth of the depression in 1934, of which the majority take judicial notice, but the land itself, whatever its value may be, on and after the termination of the contract in 1940. There can be no authority compelling a private owner to sell his property at the price set in an expired contract, even if it can be proved that the market value has not risen meantime, for that would constitute a taking without due process. Assuming that the Legislature might constitutionally so provide in the case of public property, it has not done so.

It may be that neither general circumstances nor oil or gas discoveries, indications or possibilities have increased the value of the land. But the defendants' changing attitude suggests that there has been some such change. There was never a time after November 5, 1935, that the defendant John Wight was not in default under the contract; he took no action upon the notice of intention to terminate the contract in August, 1940, or upon the notice of termination in September. Even when he filed his answer on January 11, 1941, he made no tender, offer or expression of intention to complete the purchase. Not even in the prayer of the answer did he do so; he merely asked the court to adjudge the contract in effect, to determine the balance due, and to grant him an extension of the time for payment, without even a suggestion of any promise or intention to pay. Certainly the circumstances justify at least the suspicion that after five years of continued default he was merely stalling for still more time. It was not until a year and a half later, at the trial on July 7, 1942, that the tender was first made. Certainly so far as the record indicates, if the equities are not all against him, they are at least not so manifestly in his favor that the trial court can properly be placed in error.

To conclude upon such a record, and in entire ignorance of the facts, that performance of the original contract several years after its termination will constitute full compensation for relief, not only against a forfeiture under the contract, but also against the cancellation of the contract, is utterly impossible. Every contract, regardless of its terms, may under that argument, and regardless of pleadings, evidence and equities, be revived and enforced long after its termination. It is incomprehensible to me how, in such a state of the law, any owner can safely grant a contract or option for purchase. Yet this decision not only determines the rights of the parties here, but lays down a rule for guidance in future cases.

In this state of the record, assuming that section 8658 is applicable and authorizes relief from terminations as well as forfeitures, it is incomprehensible to me how this court can conclude that the trial court erred in not deciding (1) that the defendants have not been guilty of "grossly negligent, wilful or fraudulent breach of duty" under the contract, and (2) that a tender of the principal, interest and taxes under the long expired contract, much of it seven years overdue and all of it nearly four years overdue at the time of trial, constitutes "full compensation to the other party." In this connection it should be noted again that the statutory requirement is not the full, though grossly belated, performance of the original contract; the requirement is "full compensation to the other party," which is entirely different in view of the fact that the value of the latter's property, which is free from the terminated contract, can no longer be measured by the terms of that contract as made by the parties nearly eight years before.

The full facts, if known, might possibly justify defendants' relief from the forfeiture of payments and improvements resulting from the cancellation; but since the defendants have not sought even that remedy, and apparently have not submitted the applicable facts even to the trial court, we have no ground for pronouncing the trial court in error, or for trying the question ourselves.

Many other things are said in the majority opinion which might well be commented upon, but I shall mention only one or two of them. One is the comment toward the end of the opinion relative to this court's decision in Suburban Homes Co. v. North, supra. I am unable to discern any such pregnancy in the language quoted.

Certain casual rulings are thrown in concerning sections 2208.1, 2235 and 4465.9 of the Codes, which may or may not be correct with reference to cases in which they might be material. Since the record does not show that the land in question is tax title property, sections 2208.1 and 2235 are not even remotely in point. I particularly dissent from the cursory statement pronouncing unconstitutional as class legislation, without argument or citation of authority, the requirement of section 2208.1 that contracts for the sale of tax title property shall automatically become cancelled upon vendee's failure to pay taxes when due. Not only do I dissent from the ground stated; but it is not my understanding that we should pass upon a question of constitutionality which is not necessary to the decision of the instant case. All that could properly have been said about the section is that under the record it does not appear pertinent to the issues.

Mr. Justice Erickson has authorized me to state that he concurs in this further dissent.

Rehearing denied February 21, 1944.