NO. l4354
IN THE SUPREME COURT OF THE STATE OF MONTANA
1978
DONALD MCNULTY and DIANA
McNULTY, husband and wife,
Plaintiffs and Respondents,
THE BEWLEY CORPORATION,
a M0ntana Corp0rati0n,
Defendant and Appellant.
Appea1 fr0m: District Court of the Nineteenth Judicial
District,
H0norable R0bert M. H0lter, Judge presiding.
C0unSel of Rec0rd:
F0r Appellant:
WilliamS & Sverdrup, Libby, M0ntana
F0r Resp0ndents:
Fennessey, Cr0cker & Harman, Libby, M0ntana
Submitted on briefs: December l3, 1978
_ Decided: 18
Filed: 1979
7 .
Mr. Justice Daniel J. Shea delivered the Opinion of the Court.
Defendant appeals from a judgment of the Lincoln County
District Court awarding the plaintiffs $40O per month as
reasonable compensation for 20 months work as managers
of the Silver Spur Bar and Lounge.
The basic facts are not in dispute. Defendant, The Bewley
Corporation, is a Montana corporation whose principle asset
is the Silver Spur Bar and Lounge of Troy, Montana. During
the period involved in this appeal (l97l-l972), the Bewley
Corporation was wholly owned by Tex and Bernice Bewley,
husband and wife. Bernice Bewley served as president of the
corporation and Tex Bewley was listed as its vice president.
The plaintiffs in this action are Donald McNulty and
Diana (Bewley) McNulty, husband and wife. Diana McNulty is
the daughter of Tex and Bernice Bewley.
The Bewley Corporation entered into a contract to
purchase the Silver Spur Bar and Lounge in l967. Thereafter,
the corporation did not take an active part in operating the
Silver Spur; instead, its officers, Tex and Bernice Bewley,
hired a number of individuals to manage the bar and keep the
liquor license active. The various managers were allowed to
keep all revenues from the bar over and above certain fixed
costs.
In April l97l, Tex and Bernice Bewley discharged the
married couple who had been managing the Silver Spur. They
then approached their daughter, Diana McNulty, and her
husband, Donald McNulty, and asked them to take over the
Silver Spur's management. When the Bewleys first approached
the McNultys, Diana McNulty was employed by St. Regis Paper
Co., earning a salary of $334 per month; Donald McNulty was
employed with a plumbing contractor, earning approximately
$7,000 to $8,000 per year.
After some initial reluctance, the McNultys agreed to
manage the Silver Spur. Diana McNulty quit her job with St.
Regis Paper so she could devote her full time to the operation
of the bar. It was agreed that the McNultys would be compensated
for their services by retaining all bar revenue in excess of
operating and fixed costs. It was also agreed that the
McNultys would manage the bar until the Bewleys obtained new
managers, or until the place could be sold.
After managing the bar for approximately six months,
the McNultys became totally dissatisfied with their duties
and compensation; they informed the Bewleys that they wanted
to be replaced immediately. The Bewleys, however, were
unable to find any replacements, so they offered to give the
McNultys 49% ownership in the business if the McNultys would
agree to manage the Silver Spur for an additional two years.
The McNultys rejected this offer, but nonetheless, they
remained as managers until the end of November l972, an
additional fourteen months. The McNultys testified that
they stayed because the Bewleys indicated that things would
be made "right" with the McNultys if they remained until
replacements could be found.
In November l972, the Bewleys hired a man named Neil
Lamorie as replacement manager. The Bewleys never offered
to make things "right" with the McNultys, which prompted the
present action.
On January 22, l976, Donald and Diana McNulty filed a
complaint in the District Court, Lincoln County seeking to
recover $8,000 for wages due plaintiffs for work and services
Bar and
performed as managers of the Silver Spur/Lounge. On April
l, l977, defendant filed its answer denying any liability to
Diana or Donald McNulty. The matter was tried before the District
Court, sitting without a jury, on November 2, l977,
On December l4, l977, the District Court entered findings
of fact, conclusions of law and judgment in favor of the
_3_
to
McNultys, The judgment ordered the corporation/pay $7,052.50
to the McNultys as back wages, attorney fees and costs of
suit. The corporation's motion for a new trial was thereafter
denied and this appeal followed.
The parties stipulated to submit the case to this Court
without oral argument.
The defendant's contentions are: (l) that the court
erred when it admitted testimony relating to certain representa-
tions made by Tex Bewley; (2) that the court erred when it
awarded the plaintiffs "reasonable compensation" for the
services they performed at the Silver Spur; and (3) that the
court erred when it awarded attorney fees pursuant to section
39-3-214 MCA (formerly section 41-l306, R.C.M. l947).
Defendant, first contends that the court violated the
dead man's statute (formerly section 93-701-3(4), R.C.M. l947)
by allowing Diana and Donald McNulty to testify to a conversation
they had with Tex Bewley before his death. Defendant also
contends the evidence was hearsay.
We note that Montana has abolished its archaic dead
man's statute by adopting the new Montana Rules of Evidence.
Rule 60l, Mont.R.Evid. provides: "(a) General rule competency.
Every person is competent to be a witness except as otherwise
provided in these rules."
The new Montana Rules of Evidence remove the limitations
which formerly attached to testimony about transactions or
oral communications with persons who die before trial.
Under the new Rules, such testimony is admissible, subject,
of course, to cross-examination to establish the weight to
be afforded to the testimony. Accordingly, under Rule 60l,
Mont.R.Evid., the McNultys were competent to testify about
the representations made by Tex Bewley.
_4_
The testimony concerning Tex Bewley's representations
is not barred as hearsay. Rule 80l, Mont.R.Evid. provides:
". . . A statement is not hearsay if: . . . The
statement is offered_against a party and is . . .
a statement by his agent or servant concerning a
matter within the scope of his agency or employ-
ment, made during the existence of that relationship.
. . ." (Emphasis added.)
Here, Tex Bewley, as the vice-president of Bewley Corporation,
was an agent of that corporation. There is no question that
he made the statements while he was acting within the scope
of his agency relationship. Therefore, the testimony cannot
be classified as hearsay.
Defendant next asserts insufficiency of the evidence to
support the court's conclusion that a contract for reasonable
wages was implied by law because of plaintiffs' performance
of such services. Here we must agree in part. The District
Court's conclusion is not fully supported by the record and
accordingly, the judgment as to the amount of wages must be
modified.
In Keith v. Kottas (l946), ll9 Mont. 98, l0l, l72 P.2d
306, this Court stated:
"There cannot be an express and implied contract
for the same thing existing at the same time.
It is only when parties do not expressly agree
that the law imposes and raises a promise. §§
agreement can be implied where there is an express
one existing." (Emphasis added.)
Under Keith, if an express contract has been entered into
by the parties, the District Court cannot alter the terms of
that express agreement. In the present case, the uncontroverted
testimony shows that there was an express agreement in existence
between the Bewleys and McNultys during the first six months
of the management relationship. Diana McNulty, Donald McNulty
and Bernice Bewley all testified that the parties understood
that the McNultys would retain whatever money remained from
the bar revenues after operating and fixed costs had been paid.
_5_
This understanding was tantamount to an express agreement
fixing the compensation to be paid the McNultys during the
first six months of the arrangement. Therefore, the District
Court could not impose an implied contract for the first six
months of the arrangement. The judgment in favor of the
plaintiffs must therefore be reduced by $2,400 (6 x $400 per
month).
There is sufficient evidence, however, supporting the
McNultys' right to compensation for their final fourteen
months as managers of the Silver Spur.
A change in the parties relationship took place on or
about October l, 1971 (6 months into the arrangement). At
that time the McNultys became dissatisfied with the arrangement
and asked the Bewleys to find immediate replacements. The
Bewleys, unable to find a replacement, enticed the plaintiffs
to remain as managers for an additional fourteen months.
The McNultys stayed because the Bewleys made representations
that things would be made "right". Here the contract was
implied as evidenced by the conduct of the parties, Cartwright
v. Joyce (l970), l55 Mont. 478, 473 P.2d 5l5.
The representations made by the Bewleys were sufficient
to revoke the original express contract and give rise to an
implied contract for reasonable compensation. This implied
contract was in existence for the final fourteen months of
the McNultys' term as managers. Accordingly, that portion
of the judgment awarding the McNultys $5,600 (l4 x $400 per
month) must be affirmed.
Defendant's final claim of error is that the court
erred in awarding $700 in attorney fees to the McNultys
because they cannot be classified as "employees" as defined
by section 39-3-20l(3) MCA (formerly section 4l-l30l(3)(c),
R.C.M. l947). We find the attorney fees were properly
awarded.
Section 39-3-214 MCA (formerly section 4l-l306, R.C.M
l947), provides:
"Whenever it shall become necessary for the
emplo ee to enter or maintain a suit at law for
the recovery or collection of wages due as
provided for by this part, then such judgment
shall include a reasonable attorney's fee in
favor of the successful party, . . . (Emphasis
added.)
It is clear that the plaintiffs initial status as
managers of the Silver Spur was changed to that of employees
in early October l972. From that point on, the McNultys
were employees of defendant corporation, i.e., they were
persons who worked for another for hire. Clearly, therefore,
they were entitled to reasonable attorney fees after they
successfully prosecuted their wage claim against defendant.
For the foregoing reasons, the judgment of the District
Court is reduced by $2,400. Otherwise, the judgment is
affirmed.
Costs on appeal are awarded to plaintiffs.
We Concur:
Justices