Boise Cascade v. First SEC. Bank of Anaconda

No. 14204

INTHEsUPHEME~uKrOFTHEsrATEOF~

1979

BOISE CASCADE CORPORATION,
A Delaware Corporation,

P l a i n t i f f and Appellant,

FIRST SECUUTY BANK O JWiENDA, et al.,
F

Defendants and Respondents.

Appeal froan: D i s t r i c t Court of t h e Third J u d i c i a l D i s t r i c t ,
Honorable R o b e r t Boyd, J d g e presiding.

Counsel of Record:

For Appellant :

Scribner, H u s s and Mulroney, Helena, Plbntana
Watkiss and Campbell, S a l t Lake City, Utah
Robert Maach arqued, S a l t Lake City, Utah

For Respondents:

Knight, Dahood, Mackay and m a n , Anaconda, bbntana
David M c L e a n arqued, Anaconda, bbntana

Submitted: - a 3, 1979
My

Decided: AU -9
Filed : AUF - 9 197$
Mr. Justice John C. Sheehy delivered the Opinion of the Court.

Boise Cascade Corporation appeals from a summary judgment
entered against it in the Third Judicial District, Deer Lodge
County.
Boise Cascade was engaged in the design, construction
and fabrication of modular homes. It maintained a system of
independent dealers to market and distribute the prebuilt homes.

Mountain Sales, Inc., of Missoula, Montana, was a duly authorized
dealer for Boise Cascade in Montana. The president and managing
executive of Mountain Sales, Inc. at the time this case arose
was James D. Spring. David M. McLean, one of the defendants,
an Anaconda, Montana lawyer, was a partner in an enterprise
known as Lakeview Associates, then engaged in the subdivision of
real property around the area in Montana known as Georgetown

Lake.
In the spring of 1974, James D. Spring had a conversation
with Robert "Jasty" Johnson, one of McLean1s partners in Lakeview
Associates. Spring mentioned to Johnson that there was a home
already built at Post Falls, Idaho, which was being used as a
modular home and which couTd be purchased, but that the partner-
ship should act immediately because a substantial price increase
was about to go into effect. The partnership agreed and Spring
called the Boise Cascade facility in Post Falls, to make arrange-
ments to purchase the house through Mountain Sales, Inc. Then
he executed on behalf of Mountain Sales, Inc., and forwarded to
Boise Cascade, a dealer purchase order dated March 18, 1974,
for the home at a total selling price of $18,341 plus $7,659
sales commission. The dealership made a downpayment of $100
with the purchase order.
On March 25, 1974, the modular home was shipped from Post
Falls, Idaho to Missoula, Montana and placed on the sales lot
for Mountain Sales, Inc.
-2-
 On March 21, 1974, four days before the house was shipped
to Missoula, Spring brought two separate documents for signatures
to Anaconda. One was a letter of instruction and joint
assignment of funds, and the other was an assignment of funds.
Spring told McLean that McLean's signatures on the documents
were necessary for Mountain Sales' files. One of those signed
by McLean had the following language:

TO_
First S e_u r i g
_ . c _. f21
i1k ___
_ ___-
Anaconda, --f -o n t a n a_
-_-- i --- _& - -
-
A>-
---- -- -- ---- -- ,c*-

I -(We) tiir U I Jersigued
~ ilal~f2?.l.,?setl
a11 o r d e r i or ,I'
8 0 : s ~ Last-.ade ilon~e(s)
-
, .

in t h e amount o f S s A ! ~ - p ~ _(_ ----
, .-,
. -., ....-I (See ; ~ c t , ~ c h ecant r a c t )
d . AS a11 irrducenent

t o X o u n t a f n S a l e s , I n c . . a s Sei.lt:r ;~iid i ; i r s t S e r t l r i t " hihiik i.1 ?liss,:uLn. Ire*-einafter

r e f e r r e d t o a s r\ssi.r:nt\c?s, t1.1 st;it-t. p roriclc t i o n , t.tie uncic rs igncd tl(~?:, hereby n u t h c r i z e

you to allucete, :inti does ilcbrcby ass!):n, trailfe:. ancl s c ! t OVPI- to Asslpl~ces the sum

of $ 'f
,
;
Is,

(
-
'
/
c-I ------ ,'.
c,@ c
, t o be d i s b u r s e d : o A s s i g n e e s a s joint p a y e e s u p o n d e l i v e r y
*

o f s a i d home(s) e v i d e n c e d b y a c o n p l e t i o n cercificats s i g n e d b y t h e u n d z r s i g n e d

Purchasers. .I I

Zt i s s p e c i f i c a l l y untlr?l.stood and a g r e e d t h a t n e i t h e r titc y i v i n ~ o r nccep t < n g
n

of this letter by Assif.:iii:es, w i t h o r w i t l ~ ~ ~ ct, . t r ~ L V ,
s ~ t i si1e1i i r ~; I I I V r ~ c i yn l lec~or

c o n s t i t u t e a waiver of tltc rLp,!,l~t c i t h c r - t'issi~:nee t o f j l c o r cn1i.t-cc a n v mechanic's
of

o r m a t e r i a l m a n ' s lien o r m ; l i n t a i n any action to which i t w o u l d otherwise b e e n t i t l e d .
 As p e r tlie forey,nf.ng i n s t l - t ~t ini~:;. !JC h a v e
c
d~ 2$,&$ fi
U o l l z r s (6----- o o o , 1,
Jb
m d paynenc o f t l l c Iicreinabove d e s c r i b e d .
invoices w i l l b c made b y us to A s s i g n e e s as
joint p a y e e s from the said funds upon presen-
tation by A s s i m e e s of a n y one or nlore such
a executed completion certificates.

S E L L E R ~ i u C 6 t a i nSales, I n c
/
.

Title j. Li. id:;::...: , ,,
1, , & . .'
-

The foregoing assignment was stamped "RECEIVED, MAR 23

1974, BOISE CASCADE" and the following handwritten notation:
IfTom
"Invoice this to Bank when we bill this out

LKA"

"LKA" is Larry K. Anderson, a managing employee in the

home office of Boise Cascade.
As indicated above, J. R. Bennett, president of the
First Security Bank of Anaconda, had executed the instrument

shown on March 21, 1974.
The second document was a letter of instruction and joint
assignment of funds which was not presented to J. R. Bennett
for his signature until July 25, 1974. We will set out below

the full text of the second document in our discussion relating
to letters of credit. It is enough to say at this time that

the two documents concerned the same sale and the same fund,
-4-
but the first instrument assigned the funds to Mountain Sales
and First Security Bank of Missoula as joint payees, whereas
the second instrument assigned the funds to Mountain Sales
and Boise Cascade as joint payees.
Bennett signed the second instrument on behalf of the
First Security Bank of Anaconda at the request of James D.
Spring.
On August 1, 1974, the house was transported from the
sales lot in Missoula to the site in the subdivision on George-
town Lake. McLean paid the balance due for the modular house
by taking three checks to Missoula. The three checks were
payable to Mountain Sales, Inc. and were deposited by James D.

Spring in the dealership account at First Security Bank of
Missoula. The money used by McLean to pay for the house had
been loaned to Lakeview Associates by the First Security Bank
of Anaconda. No invoice or completion certificate was presented
to the bank in Anaconda. The Anaconda bank instructed Lakeview
Associates to be certain the funds were delivered to First
Security Bank of Missoula. The record does not disclose what

Mountain Sales, Inc. did with the funds deposited in its accounts.
The dealership contract between Boise Cascade and Mountain
Sales, Inc. was eventually terminated by Boise Cascade. To
settle its account with Boise Cascade, Mountain Sales, Inc.
executed and delivered to Boise Cascade a promissory note
dated January 31, 1975, personally guaranteed by James D. Spring,
in the amount of $20,397.43. The note provided that the guaranty
by Spring would be extinguished upon his death or incapacity.
On April 4, 1975, Spring fell from a horse and became totally
incapacitated.
On October 10, 1974, Boise Cascade had filed a materialman's
lien on the modular house now situated on Georgetown Lake.
On August 1, 1975, Boise Cascade filed a release of material-
man's lien in the Clerk and Recorder's Office in Granite
County, stating that the debt had been fully paid. However,
an affidavit before the District Court at the time of the
motion for summary judgment from a Boise Cascade representative
stated that the release had been mistakingly filed and that
no consideration had been received for the release of the
materialman's lien and that the debt had not been satisfied.

On June 11, 1976, Boise Cascade filed a complaint in the
District Court for Missoula County against First Security Bank
of Anaconda and McLean. The complaint has four claims. The
first claim is on breach of contract, alleging that as a
condition precedent to approval of the purchase contract and
commencement of construction of the modular home, on July 24,
1974, the defendants had executed the second document, assigning
funds to Boise Cascade as a joint assignee; that the funds had
not been delivered and that the defendants refused to perform

the assignment. The second claim is alleged to be one in
"estoppel in pais or equitable estoppel." The essential
allegations are that the defendants disclaim any contractual
obligations to Boise Cascade; that they gave a written promise
to set aside and pay funds to Boise Cascade as a joint payee
in order to induce Boise to manufacture, sell and deliver the
prefabricated home; that Boise Cascade relied on the assignment
to materially change its position; and that because thereof
the defendants are estopped from denying the obligation to
pay Boise Cascade $18,341. The third claim for relief in the
complaint is alleged to be on the basis of negligence, in which
it is stated that the defendants owed a duty to Boise Cascade
in connection with the disbursement of the proceeds of the
$18,341 construction loan; that the defendants were negligent
-6-
in that they disbursed the proceeds to Mountain Sales, Inc.,
solely; that Mountain Sales is insolvent; and by reason of
such alleged negligence of the defendants, Boise Cascade has
been damaged in the sum of $18,341. The fourth claim is
alleged to be on quasi-contract, quantum meruit and uncon-
scionability in that Boise Cascade has provided materials for
a home with the expectation of being paid; that the defendants
have received a benefit; and that it would be unjust and
unconscionable for the defendants to retain the benefits without
payment to Boise Cascade.
McLean and First Security Bank of Anaconda filed their
amended answer generally denying the allegations in Boise Cascade's
complaint and adding a counterclaim in the nature of malicious
prosecution.
Both sides moved the District Court for summary judgment.
On December 21, 1977, the District Court entered findings of
fact and conclusions of law granting summary judgment to
defendants on the claims of Boise Cascade, and denying the
counterclaims of defendants. Judgment was entered January 16,
1978 in favor of the defendants on Boise Cascade's claim. Boise
Cascade appeals from the summary judgment taken against it;
no cross-appeal is taken by the defendants as to the counterclaims.
The issues stated by Boise Cascade are:
1. The District Court erred in granting summary judgment
to the defendants on both the contractual and negligence causes.
2. The District Court erred in concluding that the second
document (set forth below) dated July 25, 1974 failed for lack
of consideration and lack of mutuality.
3. The District Court erred in concluding that as a
matter of equity defendants have performed the obligation by
paying Mountain Sales, Inc.
-7-
 4. The District Court erred in finding that the
defendants were not guilty of any negligence.
While those are the issues stated by Boise Cascade, it
has developed, in the briefs and upon oral argument, that the
real issue being presented by Boise Cascade to this Court is
that the second document of July 25, 1974 was in legal effect
a letter of credit, and thereof Boise Cascade, and not the
defendants, is entitled to summary judgment.
FINDINGS - - - IN SUMMARY JUDGMETJT CASE
OF FACT
It has been helpful to us in considering this matter
that the District Court set forth in findings, the "uncon-
tradicted, uncontested facts" of the case. As we noted in
Eisemann v. Hagel (1971), 157 Mont. 295, 299, 485 P.2d 703,
705, findings of fact in cases where the court grants summary
judgment are unnecessary and redundant. The reason is that
the facts are not decided when a summary judgment is granted,
since Rule 56, M0nt.R.Civ.P. requires that there be no material
fact issue present in the case. Therefore, the failure of an
appellant to assign error to findings of facts in a summary
judgment case has no effect on his appeal, Eisemann, supra;

Washington Optometric Association v. County of Pierce (1968),
73 Wash. 445, 438 P.2d 861. Accordingly, in this case, while
we have regarded the facts noted by the District Court for
its summary judgment, we have also reviewed the record in this
case to make certain that no fact issue is present which would
make it necessary to alter, vacate, or remand on the basis of
a fact issue.
THE LETTER - CREDIT ISSUE
OF
In this Court, Boise Cascade has contended that the
document of July 25, 1974 was in legal effect a letter of
credit, and as such, requires a summary judgment in favor
of Boise Cascade, at least against First Security Bank of Anaconda.
- 8-
 W e s e t f o r t h now t h e f u l l t e x t o f a document s i g n e d

by F i r s t S e c u r i t y Bank o f Anaconda on J u l y 2 5 , 1974:

LETTES OF INSTRUCTION AND
JOINT ASSIGNMENT OF FUMDS

As an inducement to
S -sJIJA?Ja = U
$
& b d c . ) ~ . d JALSS
O Q ~ ~ -
I (We) the undsrsignea have placed an order for one (I) Boise Cascade Home in the emount o f
- dollars (See Attached Contract).
. , as Seiler
and Boise Cascade Corporation as Manufacturer, hereinafter referred to as Assignees, to begin production
and to further secure Assignees' ability to collect sums owing pursuant to the above-mentioned order, you
are hereby authorized and instructed to allocate and, on or before thirty (30) days following the dale of
d lilrery of said home, to set aside on $ p o s i t and/or allocated by you the sum of
&&FHs~)&~ bdf-+-)a n LGb m * a.
a - a d - L d o i l a r s ($ 1 3+1. ).
I (We) in further consideration of Assignees' beginning production of the above-mentioned house, do hereby
assign, transfer, and set over to Assignees the above-mentionsd set-aside funds and do hereby instruct y o u
to delivsr such set-aside funds to Assignees as joint payees upon presentation to you by Assignees of an
invoice and a Covptetizm Certificate signed by the undersigned purchasers.

i t is specifically understood and agreed that neither the giving nor accepting of this letter by Assign-
ees, with or withcrit security, shall in any way affect or constitute a waiver of the right of either Assignee
t o file or enforce zny mechanic's or materialman's li- maintain zny action to which i t would otherwise
be entitled.
+
&
J
4
+
J' . t
k &-
.
Purchaser Purchaser

APPROVED:

SELLER: vi c-cL-..
f ZL ;,A&,*@, MANUFACTURER: Boise Cascade Corporaticn

BY
/
Title
 ACKNOWLEDGEMENT AND ACCEPTANCE

As per tho foregoing instructions, we have allocated and will set aside o n or before 30 da s after
sum o f b E / s A ~ ? $ O J J ~P J /$,dpx&.
d e b e r y of the above-mentioned house
,ew,?y+ d $ - < ) and paym+nt of the hereinbefore described invoice will
be made by us to Assignees as joint payees from said funds Upon presentation by Assignees of the above-
mentioned invoice accompanied by an appropriate Completion Certificate.

Accepted this 7 J m a y of J J
L L z 1973'
FIRST SECURITY BAElK
'Anaconda, Montana 59711
BY 2&
/-
FA 'is BENNEIT, Pr'ZESiDENT
(Lending Institution) Title

C h a p t e r 5 of t h e Uniform Commercial Code r e l a t e s t o

letters of c r e d i t . S e c t i o n 30-5-102 MCA s t a t e s :

" (1) T h i s c h a p t e r a p p l i e s :
" ( a ) t o a c r e d i t i s s u e d by a bank i f t h e
c r e d i t r e q u i r e s a documentary d r a f t o r a
documentary demand f o r payment; and

"(b) t o a c r e d i t i s s u e d by a p e r s o n o t h e r
t h a n a bank i f t h e c r e d i t r e q u i r e s t h a t t h e
d r a f t o r demand f o r payment be accompanied
by a document o f t i t l e ; and

" ( c ) t o a c r e d i t i s s u e d by a bank o r o t h e r
p e r s o n i f t h e c r e d i t i s n o t w i t h i n sub-
paragraphs ( a ) o r (b) b u t conspicuously
s t a t e s t h a t it i s a l e t t e r of c r e d i t o r i s
conspicuously s o e n t i t l e d .

" ( 2 ) U n l e s s t h e engagement m e e t s t h e r e q u i r e -
ments o f s u b s e c t i o n ( I ) , t h i s c h a p t e r d o e s-t
- no
a p p l y t o engagements - - t o make a d v a n c e s - - or to
honor d r a f t s o r demands f o r payment, - a u t h o r i t i e s
- to
- - - r p u r c h a s e , - g u a r a n t e e s o r to
t o pay o to
g e n e r a l agreements . . ." (Emphasis added. )

F u r t h e r , under t h e UCC, a " l e t t e r of c r e d i t " and a

"documented demand f o r payment" a r e d e f i n e d a s f o l l o w s :

-10-
 "(a) 'Credit' or 'letter of credit' means an
engagement by a bank or other person made at
the request of a customer and of a kind within
the scope of this chapter (30-5-102) that the
issuer will honor drafts or other demands for
payment upon compliance with the conditions
specified in the credit. A credit may be
either revocable or irrevocable. The engage-
ment may be either an agreement to honor or a
statement that the bank or other person is
authorized to honor.
"(b) A 'documentary draft' or a 'documentary
demand for payment' is one honor of which is
conditioned upon the presentation of a document
or documents. 'Document' means any paper in-
cluding document of title, security, invoice,
certificate, notice of default and the like."
Section 30-5-103 (a) (b) MCA.
&

If the instrument of July 25, 1974 is truly a letter of
credit, as contended by Boise Cascade, then that letter of
credit would become a primary obligation between the issuer,
First Security Bank of Anaconda, and Boise Cascade as beneficiary.

Asociacion de az-de Gua v. United States Nat. Bank of Ore.
(9th Cir. 1970), 423 F.2d 638, 641; Fidelity Bank v. Lutheran
Mutual Life Insurance Co. (10th Cir. 1972), 465 F.2d 211. Lack
of consideration is not a defense to a documentary demand on
a letter of credit, section 30-5-105 MCA, and the issuer must
honor a draft for payment which complies with the relevant
terms of the credit regardless of conformance with the underlying
contract between the customer and the beneficiary.
We conclude, upon consideration, that the written acceptance
by the bank in the instrument of July 25, 1974 does not con-
stitute a letter of credit for two reasons: (1) the acceptance

contained in the instrument of July 25, 1974 is not a letter of
credit within the meaning of the Uniform Commercial Code; and,
(2) in any event there has been no compliance with the terms
of the instrument of July 25, 1974 so as to make the issuer
liable.
The contention that the bank's obligation was a letter of
credit was not raised by the pleadings, Milne v. Leiphart (19461,
119 Mont. 263, 174 P.2d 805; Sonnek v. Universal C.I.T.
Credit Corporation (1962), 140 Mont. 503, 374 P.2d 105, nor

raised in briefs or argument before the entry of summary
judgment, State ex rel. Sol. v. Orcutt (1979), Mont . I

588 P.2d 996, 36 St.Rep. 1; State v. Voyich (1963), 142 Mont.
355, 384 P.2d 765. We will not consider such issues for the
first time on appeal.
Without waiving that ground for rejection of Boise Cascade's
contention, we are constrained to note that this instrument
does not constitute a letter of credit. The instrument does
not evince a clear intention on the part of the bank to be
primarily liable to Boise Cascade upon Boise Cascade's compliance
with the terms of the instrument, irrespective of the underlying
agreements between Boise Cascade and PlcLean. Sections 30-5-101
et seq., MCA apply essentially to a letter of credit arrangement,
and not to a contract between the issuer and his customer, nor
to a contract between the customer and the beneficiary. The
instrument here, prepared by Boise Cascade, is no more than its
title indicates: a letter of instruction and joint assignment
of funds. The bank does not agree to be primarily liable. For
that reason the engagement of the bank does not meet the
requirements of section 30-5-102(1) MCA, and accordingly that
portion of the UCC does not apply, under section 30-5-102(2)
to "engagements to make advances or to honor drafts or demands
for payments, to authorities to pay or purchase, to guarantees
or to general agreements."
Finally, whether the instrument is regarded as a letter
of credit, or a simply assignment, Boise Cascade has made no
showing that it has complied or could comply with the terms of
the engagement, that it supply an invoice and a completion
certificate signed by McLean. The purchaser of the mobile home
is Mountain Sales, Inc.; therefore, the dealer was Boise Cascade's
customer and not McLean.
-12-
BREACH - CONTRACT ISSUE
OF
Boise Cascade also maintains that both the bank and
McLean are liable to it upon a breach of contract theory in
that they did not perform the obligations of the instrument of
July 25, 1974.
The District Court decided that no contract was involved

between Boise Cascade on the one hand, and McLean and First
Security Bank of Anaconda on the other, because no contract
existed between them. The courts decision was based on grounds
of lack of consideration and lack of mutuality.
Consideration is defined in section 28-2-801 MCA as
"[alny benefit conferred or agreed to be conferred upon the promisor
by any other person . . ." The consideration recited in the
July 25, 1974 instrument is that as an inducement to Mountain
Sales as seller and Boise Cascade Corporation and Manufacturer,
hereinafter referred to as assignees, to begin production
of the modular home. In this case, at the time of the execution
of the instrument, the modular home had already been constructed
and was sitting on the Missoula lot of Mountain Sales, Inc.
From the viewpoint of David M. McLean, no consideration
whatever transferred from Boise Cascade to him. He had agreed
to purchase a modular home from Mountain Sales, Inc. which was
already constructed. He had agreed to pay $26,000 for his
purchase which amount he fully paid. The instrument he signed
on July 25, 1974 was not addressed to any particular bank, and
the balance he agreed could be allocated was no more than what
he had already agreed to pay as the balance on the purchase from
Mountain Sales, Inc. Boise Cascade cannot point to any benefit
conferred on upon David M. McLean by it through his signature
on July 25, 1974.
In like manner, no benefit moved from Boise Cascade to
First Security Bank of Anaconda. Its lending arrangement was
-13-
made with David M. McLean and his associates, not with Boise
Cascade. It had signed two instruments, one for delivery to
Mountain Sales, Inc. and Boise Cascade, and the other to
Mountain Sales, Inc. and First Security Bank of Missoula. The
monies from First Security Bank of Anaconda were eventually
deposited with the First Security Bank of Missoula. Both instru-
ments had been procured from the bank at the instigation of
Mountain Sales, Inc. No dealings occurred between any repre-
sentative of Boise Cascade and First Security Bank of Anaconda.
There is no consideration from Boise Cascade moving to First
Security Bank of Anaconda which in any way can be considered

an inducement to the bank, or a benefit conferred upon it by
Boise Cascade, or could be construed as a detriment incurred
by Boise Cascade through the signature received from First
Security Bank of Anaconda. In that situation, again, no
consideration existed.
Consideration is an essential element of a contract,

section 28-2-102 MCA, without which a contract does not exist.
What Boise Cascade had from First Security Bank of Anaconda

was simply a gratuitous promise. Such a promise cannot be
enforced at all.
"It is well settled, as a general rule, that
consideration is an essential element of, and
is necessary to the enforceability or
validity of, a contract. It follows from this
rule that a promise not supported by any con-
sideration cannot amount to a contract or be
enforced, and that want or lack of consideration
is an excuse for nonperformance of a
promise. In order for a contract to be valid
and binding, each party must be bound to give
some legal consideration to the other by
conferring a benefit upon him or suffering a
legal detriment at his request. In suits
upon unilateral contracts, it is only where
the defendant has had the benefit of the
consideration for which he bargained that he
can be held bound." 17 Am.Jur.2d 428 Contracts
S86.
The engagement also lacks mutuality as against both McLean
and the bank, but in view of the fact that we find no consideration

here, it is unnecessary to discuss lack of mutuality at length.
THE NEGLIGENCE ISSUE
Boise Cascade contends that because the trial court
made no findings or conclusions respecting Boise's claims of

negligence against the bank and McLean, that the District Court
overlooked Boise's negligence claim entirely. It also contends
that the negligence issue was not squarely before the court
and that the general proposition is that issues of negligence
are ordinarily not susceptible of summary adjudication, citing
Mally v. Asanovich (1967), 149 Mont. 99, 105, 106, 423 P.2d
294, 297. As we have pointed out earlier in this opinion,

there is no duty on the District Court to make findings of
fact and conclusion of law, so this is not a factor so far as

our review of summary judgment is concerned. We wish to
determine whether there was any genuine issue of material fact

involved, and if none exists, it then becomes a question of
law as to whether a summary judgment was properly rendered
in this case on the question of negligence as well as the
other issues.
We have recognized that a breach of contract might also

give rise to an action in tort, State v. District Court of
Eighth Judicial District (1967), 149 Mont. 131, 136, 423 ~ . 2 d
598, 600. We have also discussed what determines when a tort
and a breach of contract arise out of the same set of facts in

First Security Bank of Bozeman v. Bankers Union Life Insurance
Company (1979), Mont . I P.2d , 36 St.Rep.
854, 862. We stated:
"A cause of action may sound in tort although
it arises out of a breach of contract, if a
defaulting party, by breaching the contract,
also breaches a duty which he owes to the
other party independently of the contract.
This distinction was carefully noted in
Battista v. Lebanon Trotting Association
(U.S.C.A. 6th 1976), 538 F.2d 111, where the
Sixth Circuit Court applied Ohio law. There
the court noted that under Ohio law a tort
 a r i s e s o u t of a b r e a c h of c o n t r a c t i f t h e
p a r t y a l s o b r e a c h e s a d u t y which he owes
t o a n o t h e r i n d e p e n d e n t l y of t h e c o n t r a c t ,
and which d u t y would e x i s t even i f no
contract existed. It is t h i s factor
which d e t e r m i n e s whether an a c t i o n o f t h i s
k i n d i s one of c o n t r a c t o r of t o r t . . ."
Boise Cascade's claim h e r e i s t h a t t h e defendants f a i l e d

t o make t h e i r check p a y a b l e t o Boise Cascade and Mountain S a l e s ,

I n c . j o i n t l y , and t h a t t h i s f a i l u r e c o n s t i t u t e d a b r e a c h -
of

c o n t r a c t and n e g l i g e n c e . I n o t h e r words, B o i s e Cascade i s

a t t e m p t i n g t o r e c o v e r under two l e g a l t h e o r i e s f o r one b r e a c h of

duty. A s we s t a t e d i n F i r s t S e c u r i t y - -of Bozeman, s u p r a ,
Bank

t h e r e must e x i s t an i n d e p e n d e n t d u t y , s e p a r a t e and d i s t i n c t

from t h e c o n t r a c t o b l i g a t i o n , b e f o r e a p a r t y can r e c o v e r f o r

a t o r t o r f o r a b r e a c h of c o n t r a c t on t h e same s e t of f a c t s .

What i s m i s s i n g h e r e , and what d e f e a t s Boise C a s c a d e ' s n e g l i g e n c e

c l a i m , i s an i n d e p e n d e n t d u t y , a p a r t from t h e i n s t r u m e n t of

J u l y 25, 1974, owed by e i t h e r d e f e n d a n t t o Boise Cascade. In

t h a t c i r c u m s t a n c e , a s a m a t t e r of law, Boise Cascade h a s no

n e g l i g e n c e a c t i o n on which i t may r e c o v e r a g a i n s t e i t h e r d e f e n d a n t .

THE EQUITY ISSUE

The D i s t r i c t Court found a s " a m a t t e r of e q u i t y " t h a t

t h e d e f e n d a n t s f u l l y performed t h e i r o b l i g a t i o n by p a y i n g t h e

agreed-upon p r i c e t o Mountain S a l e s , I n c .

B o i s e Cascade c o n t e n d s by s o h o l d i n g t h e c o u r t d e n i e d

t h a t p o r t i o n of i t s c o m p l a i n t r e l y i n g upon e q u i t a b l e e s t o p p e l

and t h a t such a d e n i a l i s improper.

E q u i t a b l e e s t o p p e l i s an unfavored d o c t r i n e and w i l l o n l y

be s u s t a i n e d upon c l e a r and c o n v i n c i n g e v i d e n c e , F i e r s v .

Jacobson ( 1 9 4 9 ) , 123 Mont. 2 4 2 , 211 P.2d 9 6 8 . What i s l a c k i n g

a s an e l e m e n t of e s t o p p e l a g a i n s t t h e d e f e n d a n t s i s any r e l i a n c e
on t h e e x e c u t i o n of t h e i n s t r u m e n t of J u l y 25, 1974 by B o i s e

Cascade t o b e g i n p r o d u c t i o n o f o r t o d e l i v e r t h e modular home.

An e s t o p p e l a r i s e s o n l y when a p a r t y by h i s a c t s , c o n d u c t o r
acquiescence has caused another in good faith to change his
position for the worse. Mundt v. Mallon (1938), 106 Mont.

242, 249, 76 P.2d 326; Bagley v. Hotel Florence Company (1974),
165 Mont. 145, 151, 526 P.2d 1372, 1375.
The summary judgment entered by the District Court is
affirmed .

We Concur:

9
---------- -------------------
-

Justice
-

f---