NO. 12689
I N T E SUPREME C U T O T E STATE O M N A A
H OR F H F OTN
1974
EDWIN BEIERLE AND AGNES BEIERLE,
P l a i n t i f f s and A p p e l l a n t s ,
ROBERT A. TAYLOR and WANDA K. TAYLOR,
UNITED AGENCIES AND FIRST NATIONAL BANK,
Defendants and Respondents.
Appeal from: D i s t r i c t Court of 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 ,
Honorable W. W. Less l e y , Judge p r e s i d i n g .
Counsel of Record:
For A p p e l l a n t s :
A l l e n L. McAlear argued, Bozeman, Montana
For Respondents :
Berg, Angel, Andriolo & Morgan, Bozernan, Montana
Gregory 0. Morgan argued, Bozeman, Montana
Submitted: May 20, 1974
Decided
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Filed: ixfr - 7/94
'
Mr. Justice Frank I, Haswell delivered the Opinion of the Court.
This is an action by the buyers for rescission of a purchase
contract on a motel. The district court of Gallatin County granted
summary judgment against the buyers, dismissing their complaint.
Buyers appeal.
Plaintiffs are Edwin and Agnes Beierle, husband and wife,
who bought the Trail-In Motel in West Yellowstone, Montana. De-
fendants are the sellers, Robert A. Taylor and Wanda K Taylor,
.
his wife; the real estate agent, United Agencies; and the financing
institution, the First National Bank of Bozeman,
Early in 1973 plaintiff Edwin Beierle was contemplating
retirement. He was looking for a business he could acquire and
make a living. He contacted United who showed him several business
properties,
The Beierles indicated an interest in the Trail-In Motel.
United compiled and made available to them a brochure containing
a description of the motel; a cost appraisal of the property; an
unaudited gross income and expense statement for the years 1969,
1970 and 1971; and, an analysis of projected income and expense.
The gross income and expense statements showed net operating
losses of approximately $5,000 in 1969; $6,800 in 1970; and $4,600
in 1971.
The analysis of projected income and expense was based on a
substantial increase in motel rates, a year-round motel operation
by the owners, and an estimated future occupancy rate. The
previous motel operation had been essentially a three month summer
operation by an absentee owner.
Several conversations were held between Jack Rosenthal of
United and the Beierles. The failure of the motel to make money
and the reasons for this were discussed. Rosenthal told Edwin
Beierle that he would not be able to make it without outside work
for a couple of years until the motel business was built up. The
net operating loss statements were not discussed but were available
at the discussion. Copies were not furnished the Beierles.
The Beierles personally inspected the motel property. The
asking price was $125,000.
Eventually Beierles purchased the motel property at this
price, transferring their equity in their home in Three Forks and
$4,000 cash to the sellers and signing an installment promissory
note for the balance, secured by a trust indenture. Beierles took
possession of the motel on May 1, 1973 and have continued to operate
it since that time. They have made no monthly installment payments
on the note.
After the ~eierles'default, the entire balance of the note
was declared payable. A notice of sale of the motel property was
served on the Beierles. Thereafter, Beierles served notice of
rescission of the purchase contract followed by a complaint seeking
rescission.
The complaint states two grounds for rescission (1) fraudulent
misrepresentation of the income-producing capability of the motel
and ( ) partial failure of consideration arising from nondelivery
2
to Beierles of a bill of sale on the motel furnishings.
Issue was joined by denial of misrepresentation and a cross-
claim for possession and sale of the motel property. Plaintiffs
moved for jury trial. Discovery depositions were taken of Edwin
Beierle and Jack Rosenthal. Defendants moved for summary judgment.
The district court granted summary judgment to defendants on
two grounds: (1) the alleged representations were opinion, not
fact, and ( ) no damage resulted from sellers' failure to deliver
2
a bill of sale on the motel furnishings. The district court denied
as moot plaintiffs ' request for jury trial.
Two issues are presented for review: ( ) Was summary judgment
1
proper? ()
2 If not, are plaintiffs entitled to a jury trial?
Rule 5 ( )
6c, M.R.Civ.P., provides that summary judgment is
proper if:
"* * * the pleadings, depositions, answers to interroga-
tories, and admissions on file show that there is no
genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law."
The burden of establishing the absence of any issue of
material fact is on the moving party. Home Insurance Company v.
Pinski Brothers, Inc., Mont . , 500 P . d 945, 29 St.Rep.
.2
705; Gilleard v. Draine, 159 Mont. 167, 171, 496 P.2d 83. But
where the record discloses no genuine issue of material fact,
the party opposing the motion must present substantial evidence
raising such issue. Roope v The Anaconda Co., 159 Mont. 28, 32,
.
494 P.2d 922; Flansberg v. Mont. Power Co., 154 Mont. 53, 58,
460 P.2d 263.
The buyers' principal claim of misrepresentation is founded
on the projected income figures contained in the brochure. The
complaint states:
" * * * Defendants falsely and fraudulently represented
to Plaintiffs that said property so exchanged was capable
of producing an income of Twenty Seven Thousand Six
Hundred Forty-eight Dollars * * I
'
.
* (Emphasis added.)
"Capable" suggests an expression of opinion rather than a
statement of fact. Only under unusual circumstances, not present
here, can projected future income be considered a fact. Ordinarily
future income is but an estimate, subject to the vagaries of the
marketplace. It is an opinion, not a guarantee.
A mere expression of opinion, however erroneous, will not
warrant rescission of a contract. Buhler v Loftus, 53 Mont. 546,
.
555, 165 P 601; F.B. Connelly Co., v Schlueter Bros., 69 Mont.
. .
65, 220 P 103; Ray v Divers, 72 Mont. 513, 517, 234 P 246.
. . .
Although exceptions to this rule exist, none is germane here.
Buyers were presented gross income figures for three years which
indicated the projected future income was not based on past per-
formance. Buyers were furnished the details of the computation.
Lincoln v Keene, 51 Wash.2d 171, 316 P.2d 899, 901, states
.
the controlling law here:
"* * * any statement * * * as to what appellant's
future income from the motel would be * * * was a
matter of opinion and cannot be the basis of an
action for fraud."
For a case substantially similar on its facts to the instant
case where rescission was denied under claims of fraudulent mis-
representations of future motel income, see Miller v Protrka,
.
193 Ore. 585, 238 P.2d 753.
The Beierles seek rescission on the additional ground that
sellers' failure t supply a bill of sale for the motel furnishings
o
constituted a partial failure of consideration. Sellers admit
the furnishings were a part of the transaction and that a bill of
sale was promised. Beierles have had exclusive possession of the
furnishings since they took possession of the motel on May 1, 1973.
The failure of sellers to supply a bill of sale here has resulted
in no damage.
Section 13-903, R.C.M. 1947, permits rescission:
"If, through the fault of the party as to whom he
rescinds. the consideration for his obligation fails,
-
in whole-or in part".
Under this statute, this Court has denied rescission to a buyer
who purchased goods from one who did not have title, until the
buyer was disturbed in his possession. Courtney v Gordon, 74
.
Mont. 408, 417, 241 P. 233. "'courts of equity, like courts of
law, however, do not concern themselves withwongs which do not
produce injury. I I t Mason v Madson, 90 Mont. 489, 500, 4 P.2d 475;
.
Stillwell v, Rankin, 55 Mont, 130, 134, 174 P 186.
. Damage is
necessary to support a claim for rescission.
Sonnek v Universal C,I.T. Credit Corp., 140 Mont. 503,
.
374 P.2d 105 is distinguishable. Failure to transfer title an
automobile automatically damages the buyer because without the title
the vehicle cannot be registered and licensed for its intended use
on public highways.
Absent damage, as here, rescission will not lie for partial
failure of consideration.
Our decision on the first issue precludes consideration of
the second.
Judgment # affirmed.
Justice.
, We concur:
Chief ~ u s t i c e
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Justices.