No. 14486
IN THE SUPREME COURT OF THE STATE OF MONTANA
1979
THE KOOTENAI CORPORATION,
a Montana Corporation,
Plaintiff and Respondent,
WAYNE L. DAYTON and
JEROME F. BORKOSKI,
Defendants and Appellants.
Appeal from: District Court of the Fourth Judicial District,
Honorable Edward Dussault, Judge presiding.
Counsel of Record:
For Appellants:
Milodragovich, Dale and Dye, Missoula, Montana
Harold Dye argued, Missoula, Montana
For Respondent:
Robert B. Brown argued, Stevensville, Montana
Submitted: September 18, 1979
Decided : OcT r I979
;
Filed: ~ J C T r P
Mr. Chief Justice Frank I. Haswell delivered the Opinion of the
Court.
Defendant, Jerome F. Borkoski, appeals from a denial of
a motion to set aside a default judgment.
On March 27, 1974, Wayne Dayton agreed to buy from the
Kootenai Corporation (Corporation) a certain parcel of real es-
tate in Ravalli County, Montana. The contract provided that pay-
ment for the land would be made over several years and when the
full purchase price was paid title would pass to the buyer. The
transfer of this property also included the transfer of an on-
premise beer license to the buyer. The agreement provided that
in the event of a default by the buyer that all of Buyer's interest
in the property would terminate and that the Buyer "shall reassign
the beer license."
On December 30, 1974, this contract was assigned by Wayne
Dayton to Jerome F. Borkoski. At the bottom of the last page of
the assignment of contract is an acceptance of the assignment
signed by the President of the Corporation.
On October 13, 1977, the defendant Borkoski was served
with a notice of default and cancellation of contract. The reason
given for the notice was that Borkoski had allowed the on-premises
beer license to be revoked.
On June 24, 1978, Borkoski was served with a summons and
a complaint. The complaint alleged that the corporation "is the
owner and is entitled to the immediate possession of certain de-
scribed real property . . ." It then continued:
"That the Defendant Wayne L. Dayton surrendered
deed to the above-described premises to the
plaintiff, which deed, conveying his interest
in the premises, was recorded on the 26th day
of May, 1978, in Book 147 of Deeds at Page 514,
Records of Ravalli County, Montana. That the
Defendant, Jerome F. Borkoski, prior to the 26th
day of May, 1978, entered and took possession of
the said premises peacefully, without right to
do so, and from and after the 26th day of May,
1978, holds and keeps possession of the same
unlawfully and by force, contrary to the form of
the statute in such case made and provided."
The complaint further alleged that the plaintiff was "deprived
of the rents, issues and profits of said land and premises
ever since the 26th day of May, 1978, to its damage in the sum
of $20.00 per day . . ." and prayed for restitution and treble
damages.
The summons required that the defendants appear in the
District Court on June 30, 1978. The summons also stated that
the action was one for forcible detainer of the premises. Bor-
koski did not appear in court on that date and judgment was
entered against him on the same day.
On July 14, 1978, Borkoski, through his attorney, filed
a motion to set aside judgment by default. The motion alleged
that the failure of Borkoski to appear in court on June 30 was
due to excusable mistake, and that the action had not been prop-
erly brought under the unlawful detainer statute, because the
parties were not landlord and tenant. An affidavit attached to
this motion stated Borkoski had failed to appear in court on
June 30 for the following reasons:
"[The defendant] was under the impression that it
was not necessary for him to go to Court unless
the Defendant Wayne L. Dayton was also served with
a Summons ordering him to go to Court at the same
time. Your Affiant was told by Mr. Dayton that he
had not been served with process ordering him to
appear on June 30, 1978, and assumed that it was
not necessary for your Affiant to do so. Your
Affiant further telephoned the Clerk of Court's
office and was informed that the above mentioned
matter was not on the calendar for June 30, 1978,
and therefore assumed that it was not necessary
for him to appear in Court on that date."
The affidavit further stated that Borkoski was "informed
and believes that the Plaintiff contends that [Borkoski] has
forfeited his rights under the Contract . . . because [Borkoski]
has allowed a certain . .. liquor license to lapse."
On July 28, there was a hearing on the motion. The only
person questioned during testimony was Mr. Brown, the attorney
for the corporation. During this testimony the original contract
for deed, the assignment of this contract to Borkoski, and the
notice of default were all introduced into evidence.
At the end of the hearing the district judge denied
Borkoski's motion. It is from this denial that defendant appeals.
The issues on appeal are as follows:
I. Whether the summary proceeding of forceful detainer
may be used to recover property sold under contract for deed?
11. Whether the District Court judge abused his discretion
in not setting aside the judgment by default?
ISSUE 1.
~efendant'scentral contention is that the District Court
erred in allowing the plaintiff to bring an action for forcible
detainer rather than requiring that the action be one for eject-
ment. Defendant contends that an action for ejectment would have
allowed him twenty days to answer under Rule 12(a), M.R.Civ.P.
AS it occurred, the default was entered only six days after the
summons was served in accordance with the forcible detainer statute.
Cited in support of the propo~~tion
that the plaintiff is barred
from bringing this action under the forcible detainer statute is
Kransky v. Hensleigh (1965), 146 Mont. 486, 409 P.2d 537. In
Kransky this Court said "Whenever the unlawful detainer statutes,
S93-9701, R.C.M. 1947, et seq. [now section 70-27-101, MCA, et seq.],
are brought into operation it is the rule that such action may
only prevail where the relation of landlord-tenant exists." 146
Mont. at 490, 409 P.2d at 539.
In the present case it is clear that a landlord-tenant
relationship did not exist. The legal relationship was contractual.
It must be noted, however, that Kransky is limited to the unlawful
detainer statute, section 70-27-108, MCA, which by its language
specifically provides that the action may only be brought against
a tenant. The present case was brought as a forcible detainer
action under section 70-27-103, MCA. A reading of this statute
will reveal that a landlord-tenant relationship is not required
in order to bring this action. This section states in part:
"Every person is guilty of a forcible detainer
who either:
"(1) by force or by menaces and threats of violence
unlawfully holds and keeps the possession of any
real property or mining claim, whether the same
was acquired peaceably or otherwise . . ."
The Corporation alleged these elements in their complaint.
The cases in Montana which construe this statute and its
predecessors have not limited its application to landlord-tenant
circumstances. In Kennedy v. Dickie (1902), 27 Mont. 70, 69 P.
672, the plaintiff was allowed to bring a forcible detainer action
against a defendant who had simply ousted the plaintiff from his
farm. 27 Mont. at 73, 69 P. at 673. For other cases where a
forcible detainer action was brought where there was not a land-
lord-tenant relationship see, Park Saddle Horse Co. v. Cook (1931),
89 Mont. 414, 300 P. 242; Spellman v. Rhode (1905), 33 Mont. 21,
81 P. 395, and McCleary v. Crowley (1899), 22 Mont. 245, 56 P. 227.
While these cases do not involve a contractual relation-
ship they certainly indicate that a landlord-tenant relationship
is not necessary to bring a forcible detainer action. For this
reason Kransky does not apply.
This is not to say that the plaintiff in the present action
would have prevailed at trial under a forcible detainer action,
but there is no indication under Montana law that an ejectment
action must be brought when the parties have a contractual relation
ship. Likewise, there is no indication that where a contractual
relationship does exist between the parties that the plaintiff
may not bring a forcible detainer action. The District Court did
not commit error by allowing the forcible detainer action in this
case.
At this point we feel that it is necessary to make some
observations concerning the differences between ejectment and
forcible detainer actions. The Corporation alleges that the
procedures for ejectment are found at sections 70-27-101, MCA,
et seq. These sections include the forcible detainer statutes,
among other provisions.
Case law in Montana indicates that ejectment and forcible
detainer are not the same cause of action. In Miner v. Cook
(1930), 87 Mont. 500, 288 P. 1016, this Court said:
"The vital allegations of this complaint [eject-
ment] are (a) plaintiff 's ownership and right to
possession of the tract of land described in the
complaint and from which it is alleged he was
ejected by defendants, and (b) wrongful and un-
lawful ouster and ejectment by the defendants.
Proof of both of these vital allegations is neces-
sary in order to make out a case." 87 Mont. at
502-503, 288 P. at 1017.
In Kennedy v. ~ickie,supra, this Court said:
"If the purpose of the action is to obtain relief
from a forcible detainer, proof must be made under
section 2092 [section 70-27-203, MCA] (1) of the
forcible detainer as described in section 2081
[section 70-27-103, MCA]; and (2) of the plaintiff's
right to the possession at the time of the forcible
detainer." 27 Mont. at 75, 69 P. at 674.
As can be easily seen the two causes of action are differ-
ent. In ejectment the question of title is necessary to a resolu-
tion of the dispute. In forcible detainer title is not an issue.
Therefore, the summary procedures provided for in sections 70-27-
101, MCA et seq., do not apply to ejectment actions.
The contract which is at the heart of this action provides
that upon default of the agreement by the buyer the seller (Cor-
poration) had the option of terminating the agreement. In other
words, the seller is given an election of whether to terminate
the agreement or not upon the buyer's default. Obviously, ter-
mination of the agreement is not the Corporation's sole remedy in
the event of a default. As was said by this Court in White v.
Jewett (1938), 106 Mont. 416, 78 P.2d 85:
"A p a r t y may p u r s u e any remedy which t h e law
a f f o r d s i n a d d i t i o n t o t h e remedy p r o v i d e d by
t h e c o n t r a c t , u n l e s s it d e c l a r e s t h e remedy
t o be e x c l u s i v e . " 106 Mont. a t 420, 78 P.2d
a t 87.
In the present case t h e contract did not specifically
name a remedy which was t o be e x c l u s i v e i n t h e e v e n t of a d e f a u l t ,
and t h e law a f f o r d s t o t h e C o r p o r a t i o n a f o r c i b l e d e t a i n e r a c t i o n .
F i n a l l y , t h e d e f e n d a n t c o n t e n d s t h a t s e c t i o n 70-27-203,
MCA, i s a s t a t u t e of l i m i t a t i o n s which b a r s p l a i n t i f f ' s a c t i o n .
Defendant d i d n o t p r e s e n t t h i s d e f e n s e i n D i s t r i c t C o u r t , t h e r e -
f o r e we w i l l n o t c o n s i d e r t h i s c o n t e n t i o n .
ISSUE 11.
S e c t i o n 70-27-117, MCA, states:
" I f a t t h e t i m e a p p o i n t e d t h e d e f e n d a n t does n o t
a p p e a r and d e f e n d , t h e c o u r t must e n t e r h i s d e f a u l t
and e n t e r judgment i n f a v o r of t h e p l a i n t i f f a s
prayed f o r i n t h e c o m p l a i n t . "
I n t h i s c a s e t h e d e f e n d a n t d i d n o t a p p e a r on J u n e 30, 1978,
and t h e judge had no d i s c r e t i o n a t t h i s p o i n t . A d e f a u l t judgment
had t o be e n t e r e d .
Montana's Rules o f C i v i l P r o c e d u r e p e r m i t a d e f a u l t judg-
ment t o be s e t a s i d e f o r t h e same r e a s o n s a t r i a l c o u r t may s e t
a s i d e a judgment f o l l o w i n g a t r i a l on t h e m e r i t s . Rule 5 5 ( c ) ,
M.R.Civ.P., says i n p a r t :
"For good c a u s e shown t h e c o u r t may set a s i d e a n
e n t r y of d e f a u l t and, i f a judgment by d e f a u l t h a s
been e n t e r e d , may l i k e w i s e s e t it a s i d e i n a c c o r d -
ance w i t h Rule 6 0 ( b ) . . ."
Rule 60 ( b ) , M.R.Civ.P. says:
"On motion and upon s u c h t e r m s a s are j u s t , t h e
c o u r t may r e l i e v e a p a r t y o r h i s l e g a l r e p r e s e n t a -
t i v e from a f i n a l judgment, o r d e r o r p r o c e e d i n g
f o r t h e following reasons:
" (1) M i s t a k e , i n a d v e r t e n c e , s u r p r i s e , o r excus-
able neglect . . ."
The s t a n d a r d of r e v i e w f o r d e f a u l t judgments i s s t a t e d i n
Eder v. B e r e o l o s ( 1 9 2 2 ) , 63 Mont. 363, 368, 207 P. 471, 472, where
t h i s Court s a i d :
"In order to justify the district court in grant-
ing the motion, the defendant was required to show:
(a) That he proceeded with diligence; (b) his
excusable neglect; (c) that the judgment, if per-
mitted to stand, will affect him injuriously, and
that he has a defense to plaintiff's cause of action
upon the merits."
This standard of review must be applied with the under-
standing that "No great abuse of discretion by the trial court in
refusing to set aside a default need be shown to warrant a reversal,
for the courts universally favor a trial on the merits." Brothers
v. Brothers (1924), 71 Mont. 378, 383-84, 230 P. 60, 61. In
Reynolds v. Gladys Belle Oil Co. (1926), 75 Mont. 332, 341, 243 P.
576, 579, this Court said " ... since 'it is the policy of the
law to have every litigated case tried on its merits,' judgments
by default are not favored."
This policy is best stated in Holen v. Phelps (1957),
131 Mont. 146, 150, 308 P.2d 624, 627:
"In furtherance of justice, trial courts should,
in applying the above statute [sec. 9187, Rev.
Codes, 1921, a predecessor of Rule 60(b), M.R.
C v P 1 to a given case, maintain and exercise that
i..
liberal spirit which prompted the Legislature to
grant them this discretionary power, and, while
this court will disturb the action of a trial
court in opening default only in exceptional
cases, 'no great abuse of discretion by the
trial court in refusing to set aside a default
need be shown to warrant a reversal.'"
From a reading of the above cited cases it is clear that
the issue of abuse of discretion must be made on a case-by-case
basis. With this in mind it is helpful to look at the defendant's
actions in this case, and apply to them the standard from Eder v.
Bereolos, supra, which is set out above.
There is no doubt that Borkoski proceeded with diligence.
His motion to set aside the default judgment was entered only 14
days after the default judgment had been entered.
There is also no doubt that the defendant will be injuriously
affected by the loss of this property.
Defendant has a defense to plaintiff's cause of action
upon the merits. Plaintiff alleged in the complaint that the
defendant " . . . entered and took possession of the said
premises peacefully, without right to do so . . . and keeps
possession of the same unlawfully . . ." Defendant has alleged
that he had the right to enter and take possession of the premises,
and he has alleged that his possession continued to be lawful
under the terms of the contract which was assigned to him. While
we do not hold that the defendant would win upon the merits, we
find that he has presented a defense of sufficient merit to meet
the criteria of Eder v. Bereolos, supra.
The issue comes down to the question of excusable neglect.
The following Montana cases provide us with some guidance on this
matter.
In Brothers v. Brothers, supra, the only question presented
was the defendant's excusable neglect. This Court held that the
defendant's erroneous belief that her appearance before a notary
public was the only appearance required of her would not warrant
setting aside the default. 71 Mont. at 382. his Court went on
to hold, however, that these facts coupled with the fact that the
defendant had recently spent some time in a state hospital because
of her insanity warranted excusable neglect. 71 Mont. at 384-85.
In Schalk v. Bresnahan (1960), 138 Mont. 129, 354 P.2d
735, this Court held that it was not excusable neglect where de-
fendant failed to appear because of forgetfulness. 138 Mont. at
132, 354 P.2d at 736.
In Worstell v. DeVine (1959), 135 Mont. 1, 335 P.2d 305,
this Court had occasion to review the Montana case law on excusable
neglect. This Court said:
"We observe that since 1922, the cases we have
studied indicate that the decisions turn
on promptness and diligence in moving to set
aside the default and on whether or not a show-
ing of a meritorious defense is made." 135 Mont.
at 6, 335 P.2d at 307.
In the present case, the defendant's strongest point is his
promptness i n moving t o s e t a s i d e h i s d e f a u l t , and w e have h e l d
t h a t a showing of a m e r i t o r i o u s d e f e n s e h a s been made. I n an
a f f i d a v i t t o t h e D i s t r i c t C o u r t t h e d e f e n d a n t s t a t e d t h a t he d i d
n o t a p p e a r on t h e r e t u r n d a t e b e c a u s e he b e l i e v e d t h a t he d i d n o t
have t o a p p e a r u n t i l Wayne Dayton w a s s e r v e d . He a l s o s t a t e d i n
t h e a f f i d a v i t t h a t t h e C l e r k o f C o u r t had s a i d t h a t no h e a r i n g
d a t e had been s e t . The d e f e n d a n t o n l y had s i x d a y s from t h e t i m e
o f s e r v i c e u n t i l t h e d e f a u l t judgment was e n t e r e d . With t h i s i n
mind t h e e x c u s e which t h e d e f e n d a n t o f f e r e d t o t h e D i s t r i c t C o u r t
c o n s t i t u t e s excusable neglect. The D i s t r i c t Court abused i t s
d i s c r e t i o n i n n o t s e t t i n g a s i d e t h e d e f a u l t judgment.
The d e f a u l t i s v a c a t e d and t h e c a s e remanded t o t h e
D i s t r i c t Court f o r f u r t h e r proceedings.
Chief J u s t i c e