No. 12709
I N T E SUPREME COURT O THE STATE O M N A A
H F F OTN
1974
GLADYS L. MERRITT,
P l a i n t i f f and Respondent,
-vs -
A T U H. MERRITT,
RH R
Defendant and Appellant.
Appeal from: D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t ,
Honorable Charles Luedke, Judge p r e s i d i n g .
Counsel of Record:
For Appellant:
J o n e s , Olsen and Christensen, B i l l i n g s , Montana
Paul G. Olsen argued, B i l l i n g s , Montana
Reno and Dolve, B i l l i n g s , Montana
For Respondent :
Longan and Holmstrom, B i l l i n g s , Montana
Robert W. Holmstrom argued, B i l l i n g s , Montana
Submitted : September 16, 1974
Filed: ODT
Decided :
mo 19LT
Mr. Justice John Conway Harrison delivered the Opinion of the
Court .
This is a declaratory judgment action to have the Court
declare the rights of the parties in a business known as the
Merritt Distributorship. The cause was initiated by Gladys L.
Merritt against Arthur H. Merritt, who counterclaimed alleging
he was entitled to a one-half interest in the business and to
one-half of the revenue derived therefrom. Judgment was entered
in favor of Gladys L. Merritt, declaring her the sole owner of
the Merritt Distributorship.
The Merritts were formerly husband and wife and for some
years prior to their divorce had been engaged in the business of
selling Shaklee Products as Merritt Distributors. The business
was located in Billings, Montana. Shaklee Products include
organic cleaners, food supplements, cosmetics, a baby line and
mens toiletries that are sold by the direct selling method. Over
a period of approximately nine years their distributorship had been
built up to a gross annual sale of nearly $200,000. One of the
keys to the success of the distributorship were the operations
of 10 supervisors that had been brought into the Shaklee sales by
the Merritts.
On September 9, 1970, the Merritts were divorced after
reaching a property settlement agreement which was incorporated
and adopted as part of the decree. The property settlement
agreement provided for the division of the marital assets, includ-
ing the business known as the Merritt Distributorship. Paragraph
9 ( f ) of the Agreement recognized that the assignment of the super-
visors was subject to the approval of the Shaklee Company. Para-
graph 9 ( £ ) reads :
"That during the course of the partnership,
as set forth above, various co-ordinators,
supervisors, wholesale and retail dealers,
have been developed by the parties hereto;
t h a t each of s a i d co-ordinators, s u p e r v i s o r s ,
w h o l e s a l e and r e t a i l d e a l e r s s h a l l have the
r i g h t , s u b j e c t t o t h e a p p r o v a l of t h e S h a k l e e
Company, t o select whichever of t h e p a r t i e s
h e r e t o he d e s i r e s t o a c t a s o v e r a l l co-ordinator
f o r f u t u r e d i s t r i b u t i o n of S h a k l e e P r o d u c t s ;
t h a t i n t h e e v e n t t h a t t h e S h a k l e e Company
r e f u s e s t o r e c o g n i z e t h e c h o i c e made by s u c h
co-ordinator, supervisor, wholesale o r r e t a i l
d e a l e r f o r f u t u r e sales, t h e p a r t y h e r e t o
deeming h i m s e l f o r h e r s e l f o f f e n d e d t h e r e b y ,
s h a l l have h i s o r h e r r i g h t o f a c t i o n , i f a n y ,
a g a i n s t t h e S h a k l e e Company e x c l u s i v e o f i n t e r -
f e r e n c e from t h e o t h e r p a r t y . "
I t was known e i t h e r a t t h e t i m e o f t h e d i v o r c e o r j u s t
a f t e r t h a t t h e S h a k l e e Company was g o i n g t o g r a n t a l l of t h e
s a l e s f o r c e ( t h e 10 s u p e r v i s o r s ) of t h e M e r r i t t D i s t r i b u t o r s h i p
t o Gladys. An e l e c t i o n w a s h e l d which p o l l e d t h e 1 0 s u p e r v i s o r s
a s t o which of t h e p a r t i e s i n t h e p a r t n e r s h i p t h e y d e s i r e d t o
remain w i t h a f t e r i t s d i s s o l u t i o n . F i v e of them v o t e d t o remain
w i t h Gladys and t h e rest d i d n o t chflo,seeither s o t h e y were a s s i g n - " .
ed t o Gladys by S h a k l e e .
A t t h e t i m e of t h e d i v o r c e James M. Janke, C.P.A., was
h i r e d t o do a l l books of a c c o u n t w i t h t h e r i g h t of i n s p e c t i o n i n
both p a r t i e s . T h i s w a s p r o v i d e d f o r i n p a r a . 1 of t h e Agreement
1
and was s e t up a l o n g w i t h p a r a . 9 ( f ) a n t i c i p a t i n g t h a t some d i s -
a g r e e m e n t s might a r i s e between t h e p a r t i e s r e l a t i v e t o t h e i n v e n -
t o r y and t h e v a l u e s o f which e a c h p a r t y was e n t i t l e d t o . Such a
d i s p u t e d i d a r i s e r e l a t i v e t o t h e amount of money Gladys s h o u l d
pay A r t h u r f o r t h e p r o p e r t y s h e r e t a i n e d . On F e b r u a r y 2 4 , 1971
Gladys p a i d A r t h u r t h e sum of $4,442.17, which s h e t e s t i f i e d i n
her opinion represented a l l t h e a s s e t s . Arthur disagreed a l l e g i n g
t h a t t h e w o r d s " F u l l s a t i s f a c t i o n of S e t t l e m e n t " on t h e check had
been s c r a t c h e d o u t w h i l e t h e y w e r e b e f o r e t h e c o u r t and h e a l l e g e d
t h i s w a s only a p a r t i a l settlement. Between t h e t i m e of t h i s
c h e c k , 2/24/71 and 4/1/71, Gladys became d i s s a t i s f i e d w i t h h e r
a t t o r n e y and t e r m i n a t e d t h e i r r e l a t i o n s h i p . Gladys t e s t i f i e d t h a t
on o r a b o u t t h a t d a t e s h e m e t w i t h A r t h u r , a t h e r r e q u e s t , t o see
i f a s e t t l e m e n t c o u l d be r e a c h e d . Concerning t h i s m e e t i n g s h e
testified as follows:
"A. I had no legal counsel at the time; Mr.
Merritt came to my apartment and I asked him
if he would settle for $10,000 and we'd get
this thing resolved because I was tired of
all the legal aspects and so forth, and he
thought a minute and -- I said you go to your
attorney -- he said he would go to Mr. Willis
Jones and get a paper drawn up to that effect,
and he brought it to my apartment--
"Q. The same day? A. I don't recall if it was
the same or the next day. I believe it was the
next day after the meeting of the evening.
'Cause I don't think Mr. Jones was available that
night, I'm sure.
"Q. And was that signed then in your apartment?
A. Yes, it was.
"Q. Did your husband sign it? A. Yes, he did.
"Q. And did you pay the $10,000.00? A. I did."
The "stipulation" signed on April 2, 1971, contains the
following language:
" * * * that the parties hereby release each other
from any further liability whatsoever under said
Property Settlement Agreement * * *".
Gladys further testified her understanding of the $10,000
payment was:
"Q. --complete settlement of all disputes for
the sum of $10,000.00. A. Correct. To wipe
everything clean.
"Q. What disputes were you having at that point?
"A. Well, we had been in and out of court and
I had no legal counsel at that time and in order
to resolve the whole deal, with Shaklee Corpor-
ation, myself and Mr. Merritt, I offered him, to
wipe the slate clean, for $10,000.00,with two
payments, and he agreed. He went down to your
office and got the papers made up, 'cause I had
no legal counsel at that time. And he did say
that he was going to have plenty from Shaklee,
anyway, from a suit which was $1,900,000.00,
later. But he did mention that this would be
fine because he would have plenty of money,
anyway.
"Q. Well now, you had already paid $4,442.17 to
Mr. Merritt for products and furniture, so what
were you still fighting about? That is-- A.
So there would be no more lawyer problems, no
more court cases, 'cause I have had it. And he
said that he would accept that. And I said, 'Let's
just forget it,' and he said he wanted no part of
Shaklee, the Shaklee business or the Shaklee
distributors or promotion or anything like that,
that he was going to get money. Now, that's
exactly what we discussed and ... Because --
On account of a suit against Shaklee Products for
$1,900,000.00, and this was considered a complete
resolving of our problems with anything to do
with Shaklee between the two of us."
At about the same time as the stipulation Arthur filed
a suit in federal court against the Shaklee Company alleging a
breach of contract with him as to the assignment of the super-
visors to Mrs. Merritt. Mrs. Merritt was not a party in the
federal court case. On November 9, 1972, a consent decree
issued from the federal court awarding Arthur $10,000 against
the Shaklee Company and it ordered the Shaklee Company:
" * * * to make all payments, whether bonuses,
commission, royalties or otherwise, currently
being made to Gladys Merritt alone to Gladys
Merritt and Arthur Merritt doing business as
Merritt Distributors, a partnership, commencing
with the date of entry of this decree, and to
forthwith modify its records and accounts to show
Arthur Merritt thereon with Gladys Merritt in the
same style and in the same force and effect as
though the said records and accounts had not been
changed by defendant corporation in September, 1970
* * *.It
Immediately after the consent decree came down Arthur
Merritt claimed reinstatement as a partner and demanded half the
income from the supervisors. This action was instituted for the
purpose of determining the rights of the parties.
The issue stated by the appellant is: whether or not
there is sufficient evidence for the district court to find that
the stipulation of April 2, 1971, constituted a complete and full
release by Arthur Merritt unto Gladys Merritt of any claim he
might have had to the partnership assets.
While the respondent Gladys alleges that the issue, as
stated, is too narrow and argues that the "conduct of the parties"
must be taken into consideration, We agree and will, for our
purposes, consider the totality of the facts presented to the
trial court for its decision.
In so doing we note two principles concerning the ex-
tent of appellate review many times referred to by this Court in
previous cases. First, as recently set forth in Cope v. Cope,
158 Mont. 388, 392, 493 P.2d 336, the rule was stated:
"We have many times stated that the function
of this Court is to determine whether there
is substantial evidence to support the find-
ings of the trial court, and we will not
reverse such findings of fact unless there is
a clear preponderance of evidence against such
findings. (Citing cases. ) ''
Second, as noted in Eliason v. Eliason, 151 Mont. 409, 416,
443 P.2d 884:
" * * * The credibility of the witnesses and
the weight to be given their testimony is a
matter for the district court's determination
in a non-jury case (Notti v. Clark, 133 Mont.
263, 322 P.2d 112; Ballenger v. Tillman, 133
Mont. 369, 324 P.2d 1045) and the Supreme Court
will sustain such determination by the trial
court based on substantial conflicting evidence.
Hammond v. Knievel, 141 Mont. 433, 378 P.2d 388;
Havre Irrig. Co. v. Majerus, 132 Mont. 410, 318
P.2d 1076. The trial court, having observed and
considered the appearance of the witnesses upon
the witness stand, their manner of testifying,
their apparent candor or want of candor, in
addition to the testimony itself, is in a better
position than this Court to decide questions or
credibility of witnesses and the weight to be
given their testimony. * * * "
Here, the only conflict in the testimony of the parties
was the intention of the parties at the time of the execution of
the stipulation dated April 2, 1971. Mrs. Merritt's testimony
was that she paid $10,000 to resolve all disputes growing out of
the Property Settlement Agreement. Mr. Merritt's testimony was
that when he accepted the $10,000, he did not give up whatever
rights he had to the Shaklee Distributorship or the income from
it. This argument is premised on (1) There was no consideration
for releasing his interest in the partnership; (2) that the
consideration given was inadequate. This argument ignores the
facts and certain settled principles of law.
The facts either overlooked or ignored by appellant that
the assignment of the supervisors was a foregone conclusion prior
to the execution of the Property Settlement Agreement of September
9, 1970, that paragraph 9(f) of that Agreement recognized that
Shaklee Company controlled the assignment of the supervisors, and
that the stipulation expressly released each of the parties from
any further liabilities except for the payment of a promissory
note.
Too, the argument of appellant ignores well settled prin-
ciples of law. The Stipulation as drafted is in plain, simple
and concise language. The appellant is trying to modify both
the Stipulation and Property Settlement Agreement by oral testi-
mony. We have in Montana both statutory and case law holding
that oral agreements are deemed to be superseded by a written
instrument.
Section 13-607, R.C.M. 1947, provides:
"The execution of a contract in writing, whether
the law requires it to be written or not, super-
sedes all the oral negotiations or stipulations
concerning its matter which preceded or accompanied
the execution of the instrument."
Section 13-705, R.C.M. 1947, sets forth the rule of inter-
pretation of contracts:
"When a contract is reduced to writing, the
intention of the parties is to be ascertained
from the writing alone, if possible; subject,
however, to the other provisions of this
chapter.It
Two recent opinions of this Court control the disposition
of this case and the appellant's argument that he did not intend
to release any claim he had on the supervisors. In Heckman and
Shell v. Wilson, 158 Mont. 47, 487 P.2d 1141, we held:
" * * * The rule of statute, followed mandatorily
throughout the body of contract law, is that the
written contract supersedes all prior negotiations
and precludes evidence that alters, contradicts,
or amends its written terms."
Last, the appellant seems to argue that the consent decree
of the federal court adjudicated Mrs. Merritt's rights to the
Merritt Distributorship. Mr. Merritt's cause of action was against
the Shaklee Company and Mrs. Merritt was never a party to the
action. Under our form of jurisprudence, such a decree could ad-
judicate the rights of Mrs. Merritt to the business known as Merritt
Distributorship.
Here the stipulation is written in clear and unambiguous
language, and the trial court after considering all of the evi-
dence along with the exhibits properly rejected Mr. Merritt's
efforts to modify the language of the stipulation by par01 evi-
dence. There was substantial evidence to support its decision
-
Judgment of the trial court finding Mrs. Merritt sole
owner of Merritt Distributorship is affirmed.
We concur: /
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