NO. 79-66
I N T E SUPREME COURT O THE STATE OF M N A A
H F OTN
1980
E N G I N E REBUILDERS , I N C .,
Counter-Defendant and R e s p o n d e n t ,
SEVEN SEAS IMPORT-EXPORT & MERC. ,
I N C . , and RAYMOND BRAULT, e t ux, e t a l . ,
Counter-Claimants and A p p e l l a n t s .
Appeal from: D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t ,
I n and f o r t h e County o f M i s s o u l a .
Honorable Arnold Olsen, Judge p r e s i d i n g .
C o u n s e l o f Record:
For Appellants:
Raymond W. B r a u l t , H e l e n a , Montana
F o r Respondent :
H i r s t , D o s t a l & Withrow, M i s s o u l a , Montana
Worden, Thane & H a i n e s , M i s s o u l a , Montana
D a t s o p o u l o s , MacDonald & L i n d , M i s s o u l a , Montana
James S a d l e r , M i s s o u l a , Montana
S u b m i t t e d on b r i e f s : May 2 9 , 1980
W G i3 IS64 Decided: !@G 1 3 1980
Filed:
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 .
T h i r d p a r t y p l a i n t i f f s , Seven S e a s Import-Export &
Mercantile, Inc., and Raymond W. B r a u l t , a p p e a l from a n
o r d e r and judgment of d i s m i s s a l by t h e D i s t r i c t C o u r t of t h e
F o u r t h J u d i c i a l D i s t r i c t , Missoula County, d i s m i s s i n g t h e i r
c o u n t e r c l a i m and t h i r d p a r t y c o m p l a i n t i n f a v o r of t h e
c o u n t e r d e f e n d a n t , Engine R e b u i l d e r s , I n c . , and t h i r d p a r t y
d e f e n d a n t s , R i c h a r d Dale Smith, A l i c e Smith, William D .
H i r s t , James H. S a d l e r and Missoula Bank of Montana.
I n J u n e 1973 Seven S e a s c o n t r a c t e d w i t h Engine R e -
b u i l d e r s t o c o n s t r u c t a l a r g e commercial g a r a g e f o r t h e
p r i c e of $46,229.50. To f a c i l i t a t e payment by Seven S e a s
f o r work done on t h e b u i l d i n g , a $48,000 t r u s t fund was
e s t a b l i s h e d a t M i s s o u l a Bank of Montana.
Seven S e a s Import-Export & Mercantile, Inc., a t the
t i m e of c o n t r a c t i n g , c o n s i s t e d p r i m a r i l y of Raymond B r a u l t
and h i s f a m i l y a s o f f i c e r s and s h a r e h o l d e r s . Engine R e -
b u i l d e r s , I n c . , c o n s i s t e d p r i m a r i l y of A l i c e and Dick Smith
and t h e i r f a m i l y a s o f f i c e r s and s h a r e h o l d e r s .
By A p r i l 5, 1974, t h e b u i l d i n g s t i l l had n o t been
completed. I n a d d i t i o n , o n l y $1,200 remained i n t h e t r u s t
account. S e v e r a l of t h e s u b c o n t r a c t o r s remained u n p a i d ,
having t o f i l e m e c h a n i c ' s l i e n s a g a i n s t t h e b u i l d i n g t o t a l -
i n g $10,543.75. To r e l e a s e t h e s e l i e n s , Engine R e b u i l d e r s
p a i d t h e $10,543.75 and i n v e s t e d a n a d d i t i o n a l $5,000 t o
complete t h e u n f i n i s h e d b u i l d i n g . Engine R e b u i l d e r s t h e n
f i l e d s u i t on A p r i l 5, 1974, c l a i m i n g a p p e l l a n t s had w i t h -
drawn t h e t r u s t money and m i s a p p r o p r i a t e d i t f o r t h e i r own
personal use. The a t t o r n e y of r e c o r d f o r Engine R e b u i l d e r s
a l s o p e t i t i o n e d t h e c o u r t f o r a h e a r i n g whereby a p p e l l a n t s
were t o a p p e a r and s t a t e why t h e c o u r t s h o u l d n o t a t t a c h
t h e i r p e r s o n a l and c o r p o r a t e p r o p e r t y . The c o u r t a f t e r a
h e a r i n g i s s u e d a w r i t o f a t t a c h m e n t a g a i n s t t h e p r o p e r t y of
B r a u l t and Seven S e a s .
On May 28, 1975, Raymond B r a u l t , f o r m e r l y d o i n g b u s i -
n e s s a s Seven S e a s Import-Export & p I e r c a n t i l e , I n c . , filed a
p e t i t i o n f o r bankruptcy i n t h e United S t a t e s D i s t r i c t Court
f o r C e n t r a l D i s t r i c t of C a l i f o r n i a i n Cause No. BK-75-
09955(RW). A p p e l l a n t s were a d j u d i c a t e d as b a n k r u p t on March
11, 1977.
On J a n u a r y 1 8 , 1978, a p p e l l a n t s f i l e d a n amended answer,
c o u n t e r c l a i m and t h i r d p a r t y c o m p l a i n t and a s e p a r a t e motion
t o s t r i k e , amended answer, c o u n t e r c l a i m , and t h i r d p a r t y
c o m p l a i n t on b e h a l f of Raymond W. Brault. The c l a i m s b r o u g h t
by a p p e l l a n t s a l l e g e d damages r e s u l t i n g from a c t i o n s by
respondents i n t h e nature of l i b e l , s l a n d e r , c o n t r a c t u a l
i n t e r f e r e n c e , c o n s p i r a c y , n e g l i g e n c e and c o n v e r s i o n of
personal property.
Respondents moved t h e D i s t r i c t C o u r t t o d i s m i s s a p p e l -
l a n t s ' c o u n t e r c l a i m and t h i r d p a r t y c o m p l a i n t . On September
1 4 , 1979, t h e c o u r t g r a n t e d t h e d i s m i s s a l , f i n d i n g a p p e l -
l a n t s ' c l a i m s b a r r e d by t h e s t a t u t e of l i m i t a t i o n s a s s e t
f o r t h i n s e c t i o n 93-2606, R.C.M. 1947, which h a s s i n c e been
c o d i f i e d a s s e c t i o n 27-2-204(3), MCA. This s e c t i o n pro-
vides: "The p e r i o d p r e s c r i b e d f o r commencement of a n a c t i o n
f o r l i b e l , s l a n d e r , a s s a u l t , b a t t e r y , f a l s e imprisonment, o r
seduction i s within 2 years."
Appellants i n appealing t h e d i s m i s s a l contend t h a t t h e
judgment w a s c l e a r l y e r r o n e o u s . I n s o c o n t e n d i n g , numerous
i s s u e s have been r a i s e d by a p p e l l a n t s , b u t t h i s C o u r t need
o n l y d e a l w i t h t h e i s s u e of whether t h e c o u n t e r c l a i m and
t h i r d p a r t y c o m p l a i n t was b a r r e d by any a p p l i c a b l e s t a t u t e
of l i m i t a t i o n s .
I n d e t e r m i n i n g whether t h e p e r i o d of l i m i t a t i o n h a s
e x p i r e d i n a g i v e n c a s e , i t i s n e c e s s a r y t o examine two
p o i n t s i n time. F i r s t , when d i d t h e c a u s e of a c t i o n which
gave rise t o t h e s u i t accrue? Second, when was t h e a c t i o n
commenced?
A s t o when t h e a c t i o n commenced, Rule 3, M. R. Civ. P. ,
states: "A c i v i l a c t i o n i s commenced by f i l i n g a c o m p l a i n t
with the court." I n t h i s instance a p p e l l a n t s ' counterclaim
and t h i r d p a r t y c o m p l a i n t w a s f i l e d on J a n u a r y 1 8 , 1978.
A p p e l l a n t s a r g u e t h a t i n d e t e r m i n i n g when t h e i r a c t i o n
commenced, t h e c o u r t s h o u l d l o o k s o l e l y t o when t h e i r motion
f o r l e a v e t o f i l e a motion t o s t r i k e , amended answer, c o u n t e r -
c l a i m and t h i r d p a r t y c o m p l a i n t was f i l e d w i t h t h e c l e r k of
t h e D i s t r i c t C o u r t , t h a t d a t e b e i n g May 7, 1976. This
argument must f a i l , however, b e c a u s e Rule 3, M.R.Civ.P.,
s p e c i f i c a l l y s t a t e s , "A c i v i l a c t i o n i s commenced by f i l i n g
a complaint with t h e court." A complaint cannot be equated
w i t h a motion f o r l e a v e t o f i l e a c o m p l a i n t ; t h u s , w e con-
c l u d e t h e D i s t r i c t C o u r t was p r o p e r i n f i n d i n g t h a t a p p e l -
l a n t s ' a c t i o n commenced on J a n u a r y 1 8 , 1978.
A s t o when t h e l i m i t a t i o n p e r i o d b e g i n s t o r u n , it i s
n e c e s s a r y t o d e t e r m i n e when a p p e l l a n t s ' a l l e g e d c a u s e of
a c t i o n accrued. G a t e s v . Powell ( 1 9 2 6 ) , 77 Mont. 554, 252
diinJQ&
P. 377; C a s s i d y v . E%&& ( 1 9 7 7 ) , 173 Mont. 475, 568 P.2d
1 4 2 ; 51 Am.Jur.2d -
L i m i t a t i o n s of A c t i o n s S107 a t 679.
The a l l e g e d improper a c t i v i t y g i v i n g r i s e t o a p p e l -
l a n t s ' a l l e g a t i o n s o f l i b e l i n t h e c o u n t e r c l a i m and t h i r d
p a r t y c o m p l a i n t i s t h a t r e s p o n d e n t s William D . H i r s t and
James H . S a d l e r , a s a t t o r n e y s f o r Engine R e b u i l d e r s , made
improper use of District Court process by filing on April 5,
1974, the original complaint in this action. Appellants
contend respondents filed this complaint knowing it con-
tained unfounded and untruthful assertions and knowing that
in so filing the allegations would be made public, thereby
destroying appellants' business reputation.
The alleged improper conduct forming the basis of
appellants' allegation of slander in the counterclaim and
third party complaint is that respondents, in discussions
among themselves beginning on December 1, 1973, falsely
accused appellants of fraudulent misrepresentation, of
illegally misappropriating monies from a trust fund, and of
illegally misapplying the funds to their own personal use
and then allowed these accusations to form the basis of the
complaint filed by Engine Rebuilders and to be disseminated
to various business concerns in the community.
Allegations of contractual interference, negligence,
conspiracy and conversion of property made by appellants, if
they are in fact proper in this action as to all respondents,
are based upon the alleged slanderous actions of respondents
and by the alleged improper filing of the original complaint
on April 5, 1974, and the subsequent issuance of a writ of
attachment as to appellants' property, thereby causing
appellants to lose various contracts with other business
concerns.
The District Court concluded that the alleged actions
giving rise to appellants' claims accrued prior to or on
April 5, 1974, the date Engine Rebuilders filed the original
complaint. Appellants contend, however, that the improper
conduct is ongoing, calculated to produce ongoing emotional
and economic pressures. Appellants further contend that as
l o n g a s t h e c o m p l a i n t f i l e d by Engine R e b u i l d e r s s t a n d s , t h e
improper c o n d u c t c o n t i n u e s t o e x e r t a p r e s e n t day o p p r e s s i o n
with coercion extending i n t o the future. Appellants then
c o n c l u d e , i n t h a t t h e e f f e c t of t h e o r i g i n a l c o m p l a i n t i s
ongoing, t h e s t a t u t e of l i m i t a t i o n s d o e s n o t commence t o r u n
u n t i l t h i s complaint i s dismissed.
I n e f f e c t , a p p e l l a n t s a r e a r g u i n g t h a t t h e damaging
r e s u l t s of r e s p o n d e n t s ' a l l e g e d improper a c t i v i t y i s con-
t i n u i n g , and t h e r e f o r e , i n d e t e r m i n i n g when t h e s t a t u t e o f
l i m i t a t i o n s s t a r t s t o r u n , t h e c o u r t s h o u l d l o o k t o when t h e
a l l e g e d damage c e a s e s , n o t when t h e a l l e g e d improper c o n d u c t
occurred. I n s u p p o r t of t h i s p r o p o s i t i o n a p p e l l a n t s r e l y on
two Montana n u i s a n c e c a s e s . Heckaman v. N o r t h e r n Pac. Ry.
Co. ( 1 9 3 3 ) , 93 Mont. 363, 20 P.2d 258; Walton v. C i t y of
Bozeman ( 1 9 7 8 ) , - Mont. , 588 P.2d 518, 35 St.Rep.
1977.
R e l y i n g on Heckaman a p p e l l a n t s would have u s b e l i e v e
t h a t t h e c o n s e q u e n t i a l i n j u r i e s r e s u l t i n g from t h e a l l e g e d
improper a c t i o n s o f r e s p o n d e n t s i s renewed e a c h p a s s i n g day
and t h u s , t h e s t a t u t e o f l i m i t a t i o n s d o e s n o t b e g i n t o r u n
u n t i l t h e o r i g i n a l c o m p l a i n t f i l e d by Engine R e b u i l d e r s i s
dismissed. However, such a h o l d i n g i n t h i s i n s t a n c e would
b e c o n t r a t o t h e g e n e r a l r u l e s t a t e d i n Heckaman, " t h a t ,
when t h e a c t o r o m i s s i o n c o n s t i t u t i n g n e g l i g e n c e c a u s e s
d i r e c t o r immediate i n j u r y , t h e a c t i o n a c c r u e s from t h e
d o i n g of t h e a c t .. .'I 2 0 P.2d a t 261. (Emphasis a d d e d . )
A p p e l l a n t s have a l l e g e d t h a t r e s p o n d e n t s ' a c t i o n s
between December 1, 1973, and A p r i l 5, 1974, and t h e f i l i n g
of t h e c o m p l a i n t by Engine R e b u i l d e r s on ~ p r i l , 1974,
5
r e s u l t e d i n immediate and d i r e c t i n j u r y , t h a t b e i n g a l o s s
of b u s i n e s s r e p u t a t i o n and s t a n d i n g i n t h e b u s i n e s s com-
munity. Consequently, under Heckaman, a p p e l l a n t s ' a c t i o n s
a c c r u e d , i n r e g a r d t o t h o s e i n j u r i e s , on A p r i l 5, 1974.
Walton l i k e w i s e d o e s n o t s u p p o r t a p p e l l a n t s ' argument
t h a t t h e i r c a u s e of a c t i o n i s c o n t i n u i n g i n n a t u r e . In
Walton t h e C i t y of Bozeman r e c o n s t r u c t e d a n i r r i g a t i o n d i t c h
and t h e p l a i n t i f f i n c u r r e d c o s t s and damages c a u s e d by t h e
f l o o d i n g of h i s l a n d on a y e a r l y b a s i s . This Court held
t h a t t h e p l a i n t i f f was n o t b a r r e d by a two-year s t a t u t e of
l i m i t a t i o n because t h e reoccurring i n j u r i e s w e r e t h e r e s u l t
of a r e o c c u r r i n g n u i s a n c e . Here, t h e a l l e g e d a c t s which
c a u s e d a p p e l l a n t s d i r e c t damages o c c u r r e d a t a c e r t a i n p o i n t
i n t i m e with consequential e f f e c t s . They are n o t based on
r e o c c u r r i n g e v e n t s such a s a n a n n u a l snow m e l t o r s p r i n g
flooding.
I t b e i n g d e t e r m i n e d t h a t a p p e l l a n t s ' a l l e g e d c a u s e of
a c t i o n i s n o t r e o c c u r r i n g i n n a t u r e , a p p e l l a n t s make a
f u r t h e r argument i n s u p p o r t of t h e i r p o s i t i o n t h a t t h e
s t a t u t e of l i m i t a t i o n s h a s n o t e x p i r e d . A p p e l l a n t s contend
t h a t t h e f i l i n g of a p e t i t i o n f o r b a n k r u p t c y s t a y e d t h e
t o l l i n g of t h e s t a t u t e of l i m i t a t i o n s from May 1975 u n t i l
March 1977.
1 U.S.C.
1 3 6 2 of t h e Bankruptcy Act s t a t e s t h a t a s u i t
which i s pending a g a i n s t a p e r s o n a t t h e t i m e of f i l i n g a
p e t i t i o n of b a n k r u p t c y s h a l l be s t a y e d u n t i l a d j u d i c a t i o n o r
d i s m i s s a l of t h e p e t i t i o n . Thus, l a w s u i t s which a r e f i l e d
a g a i n s t - b a n k r u p t a r e s t a y e d d u r i n g t h e b a n k r u p t proceed-
a
ing. i n th -
However, nothinq - -e Bankrupt Act stays prevents
-
t h e p e t i t i o n e r b e f o r e t h e Bankruptcy C o u r t from f i l i n g
claims a g a i n s t o t h e r p a r t i e s .
1 U.S.C.
1 108 of t h e Bankruptcy A c t p r o v i d e s f o r a
t o l l i n g of t h e s t a t u t e of l i m i t a t i o n s i n r e g a r d t o t h e
t r u s t e e i n bankruptcy; b u t again, t h e Act s t a t e s nothing
a b o u t a s u s p e n s i o n of t h e s t a t u t e of l i m i t a t i o n s on a c t i o n s
t h a t t h e bankrupt could f i l e a g a i n s t o t h e r p a r t i e s .
I n M a t t e r of Dickson ( D . N.C. 1 9 7 7 ) , 432 F.Supp. 752,
t h e c o u r t a d d r e s s e d t h e i s s u e of whether a b a n k r u p t c o u p l e
c o u l d i n v o k e t h e t o l l i n g p r o v i s i o n of 1 U.S.C.
1 2 9 ( e ) of t h e
Bankruptcy A c t ( t h i s s e c t i o n h a s been c o d i f i e d under t h e new
Bankruptcy A c t a t 1 U.S.C.
1 108). I n ~ i c k s o nb o t h t h e
b a n k r u p t and t h e t r u s t e e i n b a n k r u p t c y b r o u g h t a n a c t i o n
a g a i n s t a d e f e n d a n t a l l e g i n g v i o l a t i o n s of t h e T r u t h i n
Lending Act. I n d e a l i n g w i t h t h e i s s u e of whether a one-
y e a r s t a t u t e of l i m i t a t i o n s had t o l l e d , t h e c o u r t s t a t e d :
". . . T h i s a c t i o n was commenced a f t e r t h e
s t a t u t e had r u n . T i t l e 1 U.S.C.
1 S29 ( e ) ,
however, g i v e s a t r u s t e e two y e a r s a f t e r
a d j u d i c a t i o n of b a n k r u p t c y t o b r i n g any a c -
t i o n n o t barred a t t h e time t h e bankruptcy
petition was filed ...
"The a c t i o n was n o t b a r r e d when t h e Dicksons
f i l e d t h e i r p e t i t i o n , and s o t h e t r u s t e e ' s
a c t i o n i s n o t barred.
"There - - t o l l i n g p r o v i s i o n - -
i s no for the
d e b t o r s , however, - - t h e i r a c t i o n i s
and s o
and w i l l
b a r r e d bv t h e s t a t u t e , - - - be d i s m i s s e d . "
--C-
432 F.Supp. a t 756. (Emphasis a d d e d . )
S i n c e t h e r e i s no t o l l i n g of a s t a t u t e of l i m i t a t i o n s
f o r anyone b u t a t r u s t e e i n b a n k r u p t c y , a p p e l l a n t s by f i l i n g
a p e t i t i o n f o r b a n k r u p t c y d i d n o t suspend t h e r u n n i n g of t h e
s t a t u t e a s t o t h e i r claims.
A p p e l l a n t s ' a l l e g e d c l a i m s as s t a t e d i n t h e c o u n t e r -
c l a i m and t h i r d p a r t y c o m p l a i n t were d e r i v e d from a c t i v i t y
o c c u r r i n g p r i o r t o and on A p r i l 5, 1974, t h e d a t e on which
t h e o r i g i n a l c o m p l a i n t was f i l e d by Engine R e b u i l d e r s , I n c .
The s t a t u t e of l i m i t a t i o n s was n o t t o l l e d a s t o t h o s e c l a i m s .
T h e r e f o r e , t h e D i s t r i c t C o u r t was n o t e r r o n e o u s i n l o o k i n g
a t t h i s d a t e and J a n u a r y 1 8 , 1978, t h e d a t e a p p e l l a n t s '
a c t i o n w a s f i l e d , i n d e t e r m i n i n g i f t h e s t a t u t e of l i m i t a -
t i o n s had e x p i r e d . The p e r i o d between t h e s e two d a t e s b e i n g
o v e r t h r e e y e a r s , t h e D i s t r i c t C o u r t was p r o p e r i n f i n d i n g
appellants' claims barred.
The D i s t r i c t C o u r t ' s f i n d i n g t h a t a l l of a p p e l l a n t s '
c l a i m s , i n c l u d i n g t h o s e f o r c o n t r a c t u a l i n t e r f e r e n c e , con-
s p i r a c y , n e g l i g e n c e and c o n v e r s i o n of p r o p e r t y , a r e b a r r e d
under s e c t i o n 27-2-204(3), MCA, which o n l y a p p l i e s i n t h i s
i n s t a n c e t o c l a i m s of l i b e l and s l a n d e r was n o t c h a l l e n g e d
by a p p e l l a n t s i n t h e i r b r i e f . However, even i f such a
c h a l l e n g e had been made, t h e c o u r t c o u l d have d i s m i s s e d i t
by l o o k i n g t o t h e a p p l i c a b l e two-year and t h r e e - y e a r statutes
of l i m i t a t i o n s f o r e a c h c l a i m , a l l of which have e x p i r e d .
Appellants a l s o challenge t h e D i s t r i c t Court's finding
t h a t a l l words r e s u l t i n g from a c o u r t a c t i o n a r e p r i v i l e g e d
and t h u s c a n n o t s u p p o r t a c l a i m f o r l i b e l o r s l a n d e r .
However, i n t h a t a l l o f a p p e l l a n t s ' c l a i m s , whether o r n o t
based on p r i v i l e g e d a c t i v i t y , a r e b a r r e d by t h e s t a t u t e of
l i m i t a t i o n s , t h i s i s s u e need n o t be d i s c u s s e d .
The d i s m i s s a l o f a p p e l l a n t s ' c o u n t e r c l a i m and t h i r d
p a r t y complaint i s affirmed.
W e concur: