United Campgrounds, U. S. A. v. Stevenson

No. 13666

IN THE SUPREME COURT OF THE STATE OF MONTANA
1977

UNITED CAMPGROUIJDS, U.S.A.,
a corporation,
Plaintiff and Appellant,

LESLIE B. STEVENSON,
Defendant and Respondent.

Appeal from: District Court of the Eighteenth Judicial
District,
Honorable W. W. Lessley, Judge presiding.
Counsel of Record:
For Appellant:
J. David Penwell, Bozeman, Montana
For Respondent :
Joseph W. Sabol, Bozeman, Montana
Submitted on briefs.

Submitted: September 26, 1977

Decided :
NOv 2 9 1577
Filed: & , 7 ., ';;I
G
Mr. Justice Gene B. Daly delivered the Opinion of the Court.
This action by United Campgrounds, U.S.A., a Nevada
corporation, against Leslie B. Stevenson, a resident of
Bozeman, Montana, was brought in the District Court, Gallatin
County, for damages for breach of contract and termination of
a franchise agreement. It was tried to the District Court
sitting without a jury. The court found in favor of Stevenson,
awarded attorney fees, terminated the contract, and dismissed
the claim. United appeals.
On July 17, 1971, a franchise agreement was executed
between United and Stevenson for the operation by Stevenson
of a United Campground franchise at Bozeman, Montana. There-
after, on December 1, 1971, the parties entered into a sign
lease agreement for the lease of a sign owned and furnished by
United for use by Stevenson at the campground. In December
1971, Stevenson purchased land near bozeman and started a
campground in early 1972.
The franchise agreement provided that 3% of the annual
registration fees at the campground was to be paid to United
for educational and supervisory services. An additional sum of
4 of the annual registration fees was to be paid for the use
%
of the trade name and trademark "UNITED CAMPGROUNDS". Stevenson
was also to pay United the sum of $500 per year as an advertising
payment for promoting and advertising the "UNITED CAMPGROUNDS"
trade name.
Specifically, the franchise agreement required the payment
by Stevenson to United of the sum of $7,500. This sum consti-
tuted compensation to United for work performed and services
rendered in connection with setting up the campground. This
sum of money was paid to United. In addition to the franchise
agreement United and Stevenson entered into a lease agreement for
the lease of an advertising sign. Steventon was to pay the sum
of $350 per year as rental for the use of the sign. This sign
lease was a separate agreement. However, the sign rental was
required by the franchise agreement which in Article V, Paragraph
1, Section S, states:
"1. DUTIES OF FRANCHISEE: Franchisee agrees :
"***
'1
s. To lease or purchase a standard lighted
sign from Franchisor * * *."
All payments were duly made by Stevenson to United until
the beginning of 1974, at which time all payments ceased with no
payments made since then. The franchise agreement is explicit
as to the duties of United as the franchisor, and likewise, insofar
as the duties of Stevenson as the franchisee. The District Court,
after hearing testimony and examining the evidence and proof,
found that United as franchisor had not met its duty to Stevenson
as franchisee in that:
1. United did not send a competent, qualified and experienced
location advisor to Stevenson's territory to advise Stevenson.
2. United did not furnish paper goods, sales aids,
advertising materials or other items printed with United's trade-
mark or trade name to Stevenson.
3. . United did not provide Stevenson with one week of basic
operational training in an actual operating campground.

4 United did not instruct or advise Stevenson with regard
.
to the leasing of equipment and rental of facilities or equipment
for the operation of his campground.
 5. United did not assist Stevenson in developing sources
of income from new and different types of facilities related
to overnight campting.
6. United failed, neglected and refused during the years
1974 and 1975, to maintain the trade name and business of
"United Campgrounds, U.S.A." in such a manner as to signify a
high standard of excellence in management and operation. United
did not publish, advertise, promote and develop I IUnited Camp-
grounds, U S A "
... trade name and public image. United did not
make available to Stevenson paper goods, sales aids, advertising
materials; did not publish during the years 1974 and 1975, a
directory in content, scope or accuracy to facilitate and pro-
mote Stevenson's business.
The court further found United's- failures to perform
materially impaired and jeopardized Stevenson's business and
were material breaches of the covenants, and were conditions
precedent of the franchise agreement.
United's first issue for review is whether the District
Court erred in failing to rule on the evidence that a separate
sign lease had been entered into between the parties and no
payment had been made by the franchisee after December 1973, nor
had the sign been returned to the franchisor?
As heretofore noted, Article V of the franchise agreement
imposes the obligation upon Stevenson to lease or purchase a sign
from United. The sign agreement is of a lesser consequence in
relation to the entire agreement than the segment relating to
advertising and use of United's name. The obligation here is no
different than the other payments relating to trade name and other
advertising material. It has its own method of execution based
on the purchase or lease option, but like all other obligations
has its genesis in the franchise agreement and is a part thereof.
Therefore, lack of specific reference beyond the franchise
agreement is not reversible error.
United's final issue is whether the District Court was
correct in construing the obligations of the franchisor as

conditions precedent. Section 58-206, R.C.M. 1947, states:
"A condition precedent is one which is to be performed
before some right dependent thereon accrues, or some
act dependent thereon is performed."

This Court in Atlantic-Pacific Oil Co. v. Gas Development Co.,

105 Mont. 1, 15, 69 P.2d 750 (1937), dealt at length with a

"condition precedent" and held that a condition precedent is not

a question of phrase or form, but one of the intent of the

parties. Here, Stevenson contends the franchise agreement
demonstrates it was the intent of the parties to create all
obligations on the part of Stevenson, dependent upon performance
of obligations by United. His contention is evidenced by the

franchise agreement itself, reciting at length the rights of

United for any breach of an obligation by Stevenson. Yet, no-
where within the agreement is there any provision concerning the

rights of Stevenson for a failure by United to perform the

obligations imposed upon United. The termination clause contained

in the franchise agreement is very specific -- the agreement
may be terminated when either a ten year period has expired
or the franchisee is in breach of the agreement. However, no

provision is made in the franchise agreement which allows for

the termination of the agreement for breach thereof by the

franchisor, United.

United on the other hand maintains that each party's per-

formance was equally dependent and ran concurrently, contending
that conditions precedent are not favored and the courts

will not construe stipulations to be such, unless required to

do so by plain, unambiguous language or by necessary implica-

tion. 17 Am Jur 2d, Contracts, 5321, p. 752.

The District Court decided these duties of the franchisor
by necessary implication were conditions precedent. The
District Court held Stevenson failed to establish damages,
yet the court did feel that United had substantially failed
in many of its obligations as a franchisor. Therefore, if this

franchise agreement was to be construed as imposing upon United
covenants or concurrent duties, this would leave Stevenson

without an adequate remedy for a breach of these obligations

by United.

The judgment of the District Court is affirmed.

i
Chief Sustice