Reaves v. Reinbold

No. 80-139

IN THE SUPREME COURT OF THE STATE OF MONTANA
1980

ROBERT REAVES ,
Plaintiff and Appellant,
-vs-

JOSEPH REINBOLD,

Defendant and Respondent.

Appeal from: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone, The Honorable
Willian J. Speare, Judge presiding.

Counsel of Record:
For Appellant:

Jerrold L. Nye; Stacey and Nye, Billings, Montana

For Respondent :
H. Elwood English, Billings, Montana

Submitted on Briefs: July 10, 1980

Decided : 2 5 1980

Filed: -&u&2 5

I
Clerk
Mr. J u s t i c e Gene B. Daly d e l i v e r e d t h e Opinion of t h e C o u r t .
P l a i n t i f f a p p e a l s from a n o r d e r o f t h e D i s t r i c t C o u r t ,

Yellowstone County, t h e Honorable William J . S p e a r e p r e -

s i d i n g , whereby p l a i n t i f f ' s motion f o r summary judgment was

d e n i e d and d e f e n d a n t ' s motion f o r summary judgment was
granted.

I n November 1975 d e f e n d a n t J o s e p h Reinbold w a s h i r e d by
L i n c o l n B e n e f i t L i f e Company t o s e l l l i f e i n s u r a n c e as a

d i s t r i c t representative. Reinbold was t o work under t h e

s u p e r v i s i o n of p l a i n t i f f R o b e r t Reaves, a g e n e r a l a g e n t f o r

Lincoln Benefit Life.

Under a "Submitted Annualized Commission Agreement,"

d a t e d November 21, 1975, R e i n b o l d ' s income w a s t o be based

on commissions from s a l e s o f i n s u r a n c e p o l i c i e s . I n addi-

t i o n , t h e agreement p r o v i d e d t h a t L i n c o l n B e n e f i t L i f e would

advance $1,250 p e r month a g a i n s t f u t u r e e a r n e d f i r s t y e a r

commissions. R e i n b o l d , a s d i s t r i c t r e p r e s e n t a t i v e , Reaves,

as g e n e r a l a g e n t , and D. L. S a y l e r , a s v i c e p r e s i d e n t of
L i n c o l n B e n e f i t L i f e Company, were s i g n a t o r i e s t o t h i s

agreement.

On November 20, 1975, p r i o r t o s i g n i n g t h e commission

agreement, Reinbold r e c e i v e d a l e t t e r from Reaves s t a t i n g i n

pertinent part:

" J o e , you have your $900 g u r a n t e e [ s i c ] b u t
I t h i n k you w i l l f a r exceed t h a t i n e a r n i n g s .
J u s t as a l i t t l e h e l p I ' l l throw i n $100.00
e a c h month expense money."
Reinbold c l a i m s t h i s l e t t e r e v i d e n c e s a n o r a l agreement

between p l a i n t i f f and h i m s e l f whereby p l a i n t i f f gave h i s
p e r s o n a l g u a r a n t e e t h a t Reinbold would r e c e i v e $900 a month
w i t h o u t r e g a r d t o t h e advance payments from L i n c o l n B e n e f i t

Life. Reaves h a s d e n i e d any such o r a l agreement w i t h d e f e n -

dant.
 ~ e i n b o l d u i t h i s employment w i t h L i n c o l n B e n e f i t L i f e
q
i n March 1976. A t t h a t t i m e i t w a s determined t h a t Lincoln

B e n e f i t L i f e had p a i d Reinbold $2,341.65 more i n advance

payments t h a n h e had e a r n e d i n commissions. The money owed

by Reinbold was c o l l e c t e d by L i n c o l n B e n e f i t L i f e from

Reaves under a company agreement t h e y had w i t h him a s a

general agent. Reaves, i n t u r n , s u e d Reinbold t o r e c o v e r

t h e money Reaves had p a i d t o t h e company.

Upon t h e s u i t b e i n g f i l e d , Reinbold moved f o r d i s m i s s a l

on t h e b a s i s of l a c k of j u r i s d i c t i o n . T h i s motion w a s h e a r d

and d e n i e d . A p r e l i m i n a r y p r e t r i a l c o n f e r e n c e was t h e n h e l d

on December 11, 1979, d u r i n g which t h e c o u r t o r d e r e d a l l

d i s c o v e r y be completed by F e b r u a r y 6, 1980.

On J a n u a r y 2 4 , 1980, Reaves f i l e d a motion f o r summary

judgment a l l e g i n g t h e r e w a s no q u e s t i o n of e i t h e r law o r

fact. Reinbold responded w i t h h i s own motion f o r summary

judgment on F e b r u a r y 7, 1980. Argument on t h e motions w a s

h e l d i n chambers a t t h e t i m e s e t f o r f i n a l p r e t r i a l con-

f e r e n c e on F e b r u a r y 1 4 , 1980.

On F e b r u a r y 2 6 , 1980, Loren " P i " Page, r e g i o n a l v i c e
p r e s i d e n t f o r Lincoln B e n e f i t L i f e , w a s unexpectedly i n

B i l l i n g s , Montana, from h i s o f f i c e i n Denver, Colorado.
R e a v e s ' s a t t o r n e y used t h a t o p p o r t u n i t y t o t a k e h i s d e p o s i -

t i o n t o preserve h i s testimony f o r use a t t r i a l . In the

d e p o s i t i o n , Page e x p l a i n e d t h e r e l a t i o n s h i p t h a t g e n e r a l

a g e n t s , d i s t r i c t r e p r e s e n t a t i v e s and r e g i o n a l v i c e p r e s i -

d e n t s have w i t h L i n c o l n B e n e f i t L i f e Co. and e a c h o t h e r .
On March 11, 1980, t h e c o u r t e n t e r e d summary judgment

f o r defendant. The D i s t r i c t C o u r t , i n g r a n t i n g d e f e n d a n t ' s
motion, found t h a t t h e r e w a s an o r a l agreement between
Reaves and Reinbold w h e r e i n Reaves p e r s o n a l l y g u a r a n t e e d
~ e i n b o l d$900 a month and t h a t t h e l e t t e r of November 20,

1975, w a s a w r i t t e n memorandum o f t h a t o r a l agreement.

P l a i n t i f f ' s a t t o r n e y f i l e d a motion t o a l t e r and amend

t h e judgment on March 1 4 , 1980. The D i s t r i c t C o u r t d e n i e d

t h i s motion and p l a i n t i f f a p p e a l s .

On a p p e a l p l a i n t i f f raises t h r e e i s s u e s :

1. Whether i t w a s e r r o r and a n a b u s e of d i s c r e t i o n f o r

t h e D i s t r i c t C o u r t t o g r a n t summary judgment f o r d e f e n d a n t .

2. Whether i t w a s e r r o r f o r t h e D i s t r i c t C o u r t n o t t o

e n t e r summary judgment f o r p l a i n t i f f as a matter o f l a w .

3. Whether i t was e r r o r and a n a b u s e of d i s c r e t i o n f o r

t h e D i s t r i c t C o u r t n o t t o c o n s i d e r t h e t e s t i m o n y of Loren

" P i " Page p r i o r t o any d e c i s i o n i n t h i s case.

Summary judgment under Rule 5 6 ( c ) , M.R.Civ.P., is
p r o p e r o n l y i f t h e r e c o r d d i s c l o s e s no g e n u i n e i s s u e o f

m a t e r i a l f a c t and t h e moving p a r t y i s e n t i t l e d t o a judgment

a s a m a t t e r of l a w . Johnson v. Johnson ( 1 9 7 7 ) , 172 Mont.

1 5 0 , 561 P.2d 917; Anderson v . Applebury ( 1 9 7 7 ) , 173 Mont.

411, 567 P.2d 951.

T h i s C o u r t h a s c o n s i s t e n t l y h e l d t h a t t h e p a r t y moving

f o r swnmary judgment h a s t h e burden o f showing t h e complete

a b s e n c e of any g e n u i n e i s s u e a s t o a l l t h e f a c t s which a r e

deemed material i n l i g h t o f t h o s e s u b s t a n t i v e p r i n c i p l e s

which e n t i t l e d him t o a judgment a s a matter of law. Bahn

v. Dormanen ( 1 9 7 5 ) , 168 Mont. 408, 543 P.2d 379; Harland v .
Anderson ( 1 9 7 6 ) , 169 Mont. 447, 548 P.2d 613; Bonawitz v.

Bourke ( 1 9 7 7 ) , 1 7 3 Mont. 179, 567 P.2d 32. To s a t i s f y t h i s

burden t h e movant must make a c l e a r showing a s t o what t h e

t r u t h i s s o as t o e x c l u d e any r e a l d o u b t a s t o t h e e x i s t e n c e
o f any g e n u i n e i s s u e of m a t e r i a l f a c t . Kober v. S t e w a r t

( 1 9 6 6 ) , 148 Mont. 117, 417 P.2d 476; 6 Moore's F e d e r a l

P r a c t i c e 1156.15[3].
 I t i s c l e a r t h a t t h e p a r t y opposing a motion f o r sum-

mary judgment w i l l b e a f f o r d e d t h e b e n e f i t o f a l l r e a s o n a b l e

i n f e r e n c e s which may be drawn from t h e o f f e r e d p r o o f . Mally
v . Asanovich (19671, 149 Mont. 99, 423 P.2d 294; Harland v .
Anderson, s u p r a .

The D i s t r i c t C o u r t c o u l d p r o p e r l y g r a n t summary judg-
ment t o d e f e n d a n t h e r e o n l y by f i n d i n g t h a t , on t h e sub-

m i t t e d r e c o r d , a v a l i d o r a l c o n t r a c t e x i s t e d between t h e

p a r t i e s which p r o v i d e d t h a t p l a i n t i f f would pay d e f e n d a n t ,

a t a minimum, $900 p e r month.
I n s u p p o r t o f a f i n d i n g t h a t s u c h a n o r a l agreement

e x i s t e d , defendant submitted t o t h e court: (1) a n a f f i d a v i t

a l l e g i n g t h a t p l a i n t i f f i n a telephone conversation o f f e r e d
t o pay d e f e n d a n t $900 p e r month; ( 2 ) a l e t t e r from p l a i n t i f f

t o d e f e n d a n t s t a t i n g t h a t d e f e n d a n t would have h i s $900

g u a r a n t e e ; and ( 3 ) a n a d m i s s i o n by p l a i n t i f f t h a t " d e f e n d a n t

w a s p a i d $900 p e r month i n a c c o r d w i t h t h e s u b m i t t e d an-
n u a l i z e d commission agreement," when i n f a c t t h e f i g u r e f o r

advances under t h e agreement w a s $1,250 p e r month.

I n response t o defendant's a l l e g a t i o n s , p l a i n t i f f has

d e n i e d any e x i s t e n c e of a n o r a l c o n t r a c t between t h e p a r t i e s .

H e c o n t e n d s t h a t any c o n v e r s a t i o n o r l e t t e r t h a t d e a l t w i t h

money t o b e p a i d d e f e n d a n t r e l a t e d t o t h e amount t o be

advanced a g a i n s t f u t u r e commissions by L i n c o l n B e n e f i t L i f e

and n o t t o any g u a r a n t e e d s a l a r y t o be p a i d by p l a i n t i f f .
A s t h e r e c o r d i n d i c a t e s , whether t h e p a r t i e s i n t e n d a n

o r a l c o n t r a c t whereby p l a i n t i f f g u a r a n t e e d a $900 p e r month
s a l a r y t o d e f e n d a n t i s a n i m p o r t a n t f a c t o r i n need o f con-
s i d e r a t i o n i n t h i s case. When a n i s s u e of f a c t a r i s e s a s t o
t h e e x i s t e n c e o f a c o n t r a c t and t h e i n t e n t i o n s of t h e p a r -
t i e s p l a y a n i m p o r t a n t p a r t i n t h e r e s o l v e m e n t of t h a t
q u e s t i o n , t h i s C o u r t h a s h e l d t h a t summary judgment i s
usually inappropriate. Kober v. S t e w a r t ( 1 9 6 6 ) , 148 Mont.

1 1 7 , 417 P.2d 476; F u l t o n v . C l a r k ( 1 9 7 5 ) , 167 Mont. 399,

538 P.2d 1371.

~ e f e n d a n t r g u e s t h a t summary judgment i s a p p r o p r i a t e
a

i n t h i s i n s t a n c e because t h e D i s t r i c t Court, p r i o r t o i t s

d e c i s i o n on d e f e n d a n t ' s motion, w a s p r e s e n t e d w i t h a l l t h e

e v i d e n c e needed t o d e c i d e t h e i s s u e of whether a n o r a l

contract existed a s alleged. W e disagree with defendant's

contention.

I t i s t r u e t h a t t h e purpose of t h e summary judgment

p r o c e d u r e i s t o encourage j u d i c i a l economy t h r o u g h t h e

e l i m i n a t i o n of a n u n n e c e s s a r y t r i a l . However, i t i s a l s o

t r u e t h a t t h e procedure i s never t o be a s u b s t i t u t e f o r

t r i a l i f a f a c t u a l controversy e x i s t s . E n g e b r e t s o n v.

Putnam ( 1 9 7 7 ) , 174 Mont. 409, 571 P.2d 368; Duncan v. Rock-

w e l l Mfg. Co. ( 1 9 7 7 ) , 173 Mont. 382, 567 P.2d 936; Bonawitz

v. Bourke ( 1 9 7 7 ) , 173 Mont. 179, 567 P.2d 32.

W e f i n d t h a t d e f e n d a n t , as t h e moving p a r t y , h a s n o t

m e t h i s burden of e s t a b l i s h i n g t h e a b s e n c e of a n i s s u e of
f a c t a s t o t h e e x i s t e n c e o f t h e o r a l c o n t r a c t as a l l e g e d .
I n viewing t h e r e c o r d i n a l i g h t most f a v o r a b l e t o p l a i n -

t i f f , w e c o n c l u d e t h a t a m a t e r i a l f a c t u a l i s s u e e x i s t s and

i s i n need of p r o p e r r e s o l v e m e n t a t t h e t r i a l l e v e l .
W e have n o t a t t e m p t e d t o d e c i d e t h e merits of t h i s c a s e

n o r which p a r t y s h o u l d u l t i m a t e l y p r e v a i l . W e merely h o l d

f o r t h e foregoing reasons t h a t t h e D i s t r i c t Court e r r e d i n
g r a n t i n g d e f e n d a n t ' s motion f o r summary judgment.

I n r e v i e w i n g p l a i n t i f f ' s motion f o r summary judgment,

t h e g e n e r a l r u l e s and p r i n c i p l e s s t a t e d above w i l l c o n t r o l ,
w i t h t h e e v i d e n c e now b e i n g viewed i n a l i g h t most f a v o r a b l e

t o defendant.
 I n s u p p o r t of h i s motion p l a i n t i f f p o i n t s o u t t h a t

defendant's s o l e defense t o the present a c t i o n is t h e a l -

l e g e d o r a l agreement i n which p l a i n t i f f g u a r a n t e e d a $900

p e r month s a l a r y f o r d e f e n d a n t . P l a i n t i f f a r g u e s t h a t even

s h o u l d i t b e found t h a t s u c h a n agreement w a s e n t e r e d i n t o ,

i t c a n n o t be g i v e n e f f e c t i n t h i s i n s t a n c e .
P l a i n t i f f ' s argument i s based on t h e a l l e g a t i o n t h a t

t h e w r i t t e n agreements e n t e r e d i n t o on November 2 1 , 1975,

which i n c l u d e d t h e "Submitted Annualized Commission Agree-

ment," s u p e r s e d e d any p r i o r o r a l n e g o t i a t i o n s o r agreement

between t h e p a r t i e s . I n s u p p o r t of t h i s argument, p l a i n t i f f

c i t e s s e c t i o n s 28-2-904 and 28-3-203, MCA.

A s s t a t e d i n p l a i n t i f f ' s b r i e f , t h e r e i s abundant c a s e

l a w i n Montana which h o l d s t h a t p r i o r o r a l agreements o r
c o n d i t i o n s are n o t a d m i s s i b l e t o a l t e r o r v a r y t h e terms of

a l a t e r written contract. Davidson v. C a s e b o l t ( 1 9 6 9 ) , 154

Mont. 125, 461 P.2d 2; Heckman and S h e l l v. Wilson ( 1 9 7 1 ) ,

158 Mont. 47, 487 P.2d 1 1 4 1 ; K i n g e r s k i v. Lamey ( 1 9 7 9 ) , -

Mont. - 604
, P.2d 782, 36 St.Rep. 2316. I t s h o u l d be
n o t e d , however, t h a t s u c h c a s e l a w h a s o n l y d e a l t w i t h a n

a p p l i c a t i o n of t h e r u l e a s t o p r i o r o r a l a g r e e m e n t s and

s u b s e q u e n t c o n t r a c t s between t h e same p a r t i e s i n r e g a r d t o

t h e same matter. It should a l s o be noted t h a t d i s t i n c t

c o l l a t e r a l a g r e e m e n t s , even a s between t h e same p a r t i e s ,
w i l l n o t merge s o a s t o p r e c l u d e a p r i o r o r a l agreement.
- l&
;.
-
See L d v . Montforton (19411, 112 Mont. 24, 113 P.2d 507;
1 7 C.J.S. C o n t r a c t s 8381 a t 451.
Upon examining t h e a l l e g e d o r a l agreement and subse-
q u e n t w r i t t e n commission agreement, w e n o t e t h a t t h e w r i t t e n

agreement s p e c i f i c a l l y d e a l s w i t h t h e r i g h t s and d u t i e s of
d e f e n d a n t and L i n c o l n B e n e f i t L i f e Company. The agreement
provides that defendant will be advanced up to $1,250 per
month against future earned commissions and that all ad-
vances made are considered a debt to the insurance company.
The alleged oral agreement, on the other hand, deals with a
personal guarantee by plaintiff that defendant would re-
ceive, at a minimum, $900 per month with no obligation of
repayment.
In reviewing the relationship of the two agreements in
a light most favorable to defendant, we note that the al-
leged oral agreement is collateral as opposed to ancillary.
Both agreements were entered into at approximately the same
time and deal with an arrangement whereby defendant is to
receive monies for selling insurance. One agreement, however,
is with Lincoln Benefit Life Company and provides for a
repayment of advances made. The other separate agreement is
with plaintiff and allegedly provides that he personally
will guarantee a set salary no matter how much defendant is
required to repay the insurance company. Each agreement is
distinct, separate, involves a different party and is able
to stand independent of the other. With this being the
case, we cannot find as a matter of law that the written
agreement would supersede the alleged oral agreement.
Plaintiff points out that he also has signed the writ-
ten commission agreement and thus argues he was a party to
both the oral and written agreement. We agree that plain-
tiff was a signatory on the written agreement but only in
his capacity as general agent for Lincoln Benefit Life
Company. As alleged, the separate oral agreement with
defendant was entered into by plaintiff in a personal capa-
city; thus, the fact he may have signed the written agree-
ment will not affect a finding that the agreements are
d i s t i n c t and c o l l a t e r a l o r t h a t t h e y w e r e e n t e r e d i n t o by

different parties,

A s s t a t e d e a r l i e r w e do n o t a t t e m p t t o d e c i d e t h e

merits o f t h i s c a s e o r t o r e s o l v e t h e i s s u e of f a c t a s t o
whether t h e r e was a n o r a l agreement a s a l l e g e d . W e merely

f i n d f o r t h e foregoing reasons t h a t t h e D i s t r i c t Court d i d

n o t e r r i n r e f u s i n g t o g r a n t p l a i n t i f f ' s motion.

A s t o t h e d e p o s i t i o n o f Loren " P i " Page, w e n o t e t h a t

t h e D i s t r i c t C o u r t e s t a b l i s h e d F e b r u a r y 6 , 1980, a s t h e c u t -

o f f d a t e f o r discovery. Loren P a g e ' s d e p o s i t i o n w a s t a k e n

on F e b r u a r y 26, 1980, and f i l e d on March 20, 1980. The

f i n d i n g s of f a c t , c o n c l u s i o n s of law and o r d e r denying

p l a i n t i f f ' s motion f o r summary judgment and g r a n t i n g d e f e n -

d a n t ' s motion f o r summary judgment w a s e n t e r e d on March 11,

1980. The d e p o s i t i o n o f Page w a s n o t t a k e n p r i o r t o t h e

c u t - o f f d a t e f o r p r e t r i a l d i s c o v e r y , n o r was i t b e f o r e t h e

D i s t r i c t C o u r t a t t h e t i m e i t r u l e d on summary judgment.

The D i s t r i c t C o u r t c a n n o t be h e l d i n e r r o r on t h e b a s i s of

documents n o t p r o p e r l y b e f o r e it a t t h e t i m e i t made i t s

ruling. See B a y l o r v. Jacobson ( 1 9 7 6 ) , 170 Mont. 234, 552

P.2d 55.

The o r d e r denying p l a i n t i f f ' s motion f o r summary judg-

ment i s a f f i r m e d . Summary judgment f o r d e f e n d a n t i s v a c a t e d .

The c a u s e i s remanded t o t h e D i s t r i c t C o u r t f o r t r i a l .

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W e concur:

Chief J u s t i c e
4