No. 81-526
IN THE SUPREME COURT O F THE S T A T E O F MONTANA
1982
SUNBIRD AVIATION, INC.,
a M o n t . corp. ,
P l a i n t i f f and T h i r d P a r t y D e f e n d a n t -
Respondent,
-VS-
ROD ANDERSON, a l s o k n o w n a s
RODNEY ANDERSON,
D e f e n d a n t and T h i r d P a r t y P l a i n t i f f -
Appellant.
*%*****
ROD ANDERSON, a/k/a RODNEY ANDERSON,
Plaintiff-Appellant,
SUNBIRD AVIATION, INC. ,
Defendant-Respondent .
Appeal from: D i s t r i c t C o u r t of t h e E i g h t e e n t h 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 C o u n t y of G a l l a t i n , T h e H o n o r a b l e
W. La. L C s s l e y , Judge p r e s i d i n g .
C o u n s e l of R e c o r d :
For A p p e l l a n t :
R a l p h L. Herriott, Billings, Montana
For R e s p o n d e n t :
Morrow, Sedivy, O l s o n & Eck, Bozeman, Montana
S u b m i t t e d on B r i e f s : June 1 0 , 1 9 8 2
Decided: September 28, 1982
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
Appeal by defendant Rod Anderson from a judgment against
him in the District Court, Eighteenth Judicial District,
Gallatin County. He was ordered to pay plaintiff Sunbird
Aviation, Inc. $1,297.89, plus interest, attorney fees, and
$3,892.22 on an accounting arising from the co-ownership of
an airplane. We affirm the District Court.
Sunbird Aviation, Inc. is a Montana corporation which
provides a general aviation service. Rod Anderson is a real
estate agent and an experienced pilot.
On December 7, 1978, the parties and one Stanley Langaker
entered into a written agreement for co-ownership of a 1977
Piper Seneca I1 airplane. The purchase of the plane was
financed at the First Security Bank of Billings by a first
mortgage of $75,000 principal, with monthly payments of
$1,486.43.
Under the co-ownership agreement one-half of the aircraft
was owned by Sunbird and one-half by Rod Anderson and Stanley
Langaker. Insurance premiums, taxes and routine maintenance
were to be paid 70 percent by the corporate owner and 30
percent by the individual owners. The expense of engine
overhauls and major component expenses were to be paid 50
percent by the corporate owner, and 50 percent by the individual
owners. All parties to the agreement had the right to use
the Seneca at a cost for each hour of usage of $45. Sunbird
kept the accounts for the co-ownership, and would collect the I
amounts due from the individual owners as the expenses or
debts were incurred.
On February 4, 1980, Anderson was delinquent in his
payments to the co-ownership in the sum of $1,297.89. He
executed a promissory note to Sunbird for that amount
p r o v i d i n g f o r semi-annual i n t e r e s t a t 16 p e r c e n t and r e a s o n a b l e
attorney fees.
On May 1 6 , 1980, Langaker owed t h e co-ow!~ership a
b a l a n c e o f $17,000 on h i s a c c o u n t i n s e t t l e m e n t o f which h e
t r a n s f e r r e d h i s i n t e r e s t i n t h e plane t o Sunbird. After
t h a t d a t e , S u n b i r d owned 7 5 p e r c e n t and Anderson 2 5 p e r c e n t
of t h e a i r c r a f t .
When i t was d e t e r m i n e d t h a t t h e Seneca would n o t m e e t
FFA s t a n d a r d s u n l e s s e n g i n e r e p a i r was c a r r i e d o u t , on J u l y
29, 1980, S u n b i r d p u r c h a s e d and had i n s t a l l e d two r e b u i l t
e n g i n e s a t a c o s t o f $23,166.41.
I n e a r l y 1980, t h e p a r t i e s d e c i d e d t o s e l l t h e p l a n e a t
a p r i c e s u f f i c i e n t t o s a t i s f y t h e b a l a n c e owing on t h e f i r s t
mortgage. A t a t i m e when t h e p a r t i e s b e l i e v e d t h e p l a n e would
be s o l d t o Dutton A v i a t i o n , Anderson e x e c u t e d a b l a n k b i l l
o f s a l e and d e l i v e r e d i t t o S u n b i r d t o b e u s e d i n t h e s a l e
t o Dutton. However, t h e s a l e t o D u t t o n d i d n o t o c c u r .
A n d e r s o n ' s b l a n k b i l l o f s a l e remained w i t h t h e o f f i c e r s o f
S u n b i r d who u s e d i t i n t h e s a l e o f t h e p l a n e on O c t o b e r 3 0 ,
1980 t o bne Tucker o f Bremerton, Washington. Tucker's
c o n s i d e r a t i o n f o r t h e Seneca c o n s i s t e d o f $65,000 i n c a s h t o
S u n b i r d , and t h e t r a n s f e r o f t i t l e t o a n o t h e r a i r p l a n e ,
which was l a t e r s o l d by S u n b i r d f o r $19,000. These monies
w e r e c r e d i t e d t o t h e Anderson and S u n b i r d a c c o u n t s a f t e r
t h e s e c u r i t y i n t e r e s t a t F i r s t S e c u r i t y Bank o f B i l l i n g s w a s
satisfied.
During t h e e n t i r e p e r i o d of co-ownership, Sunbird
m a i n t a i n e d and p r o v i d e d Anderson a n a c c o u n t i n g of a l l t r a n s -
actions. The r e c o r d shows and t h e D i s t r i c t C o u r t found t h a t
S u n b i r d f l e w t h e Seneca 515 h o u r s , and t h a t Anderson and
Langaker f l e w it 1 5 0 . 1 h o u r s . Maintenance h o u r s t o t a l e d
15.1 hours. During this period, expenses for maintenance,
insurance, mortgage payments and taxes totaled $51,298.65.
The accounts of Anderson and Langaker were debited $15,237.27.
In addition, Anderson's account was debited $5,791.60 for
the rebuilt engines. As of October 30, 1980, Anderson owed
Sunbird $11,336.49. Of the $84,000 realized in the sale of
the Seneca, $59,414.47 was paid to satisfy the first mortgage.
Of the remaining $24,585.53, $18,439.15 was credited to
Sunbird and $6,146.38 to Anderson. This credit left a
balance of $5,190.11 owing by Anderson to Sunbird, less the
unpaid principal balance on the promissory note of $1,297.89.
Therefore Anderson owed a further $3,892.22 under the co-
ownership agreement.
On April 7, 1980, Sunbird instituted an action against
Anderson on the promissory note demanding full payment plus
interest and attorneys fees. Anderson filed an answer
generally denying Sunbird's complaint and included a third-
party complaint against Langaker and Sunbird seeking partition
of the aircraft, or a sale of the aircraft and a division of
the proceeds.
On December 12, 1980, Sunbird filed an answer and
complaint demanding an additional $4,490.11 owing from
Anderson with interest and costs. On February 4, 1981,
Anderson filed a complaint against Sunbird, in a separate
action, for damages alleged to have resulted from the sale
of the plane. On May 4, 1981, the cases were consolidated.
The consolidated cases were tried to the District Court on
July 29, 1981, and thereafter the District Court concluded
that Anderson owed Sunbird $3,892.22 under the co-ownership
agreement, and $1,297.89 plus interest on the promissory
note. After a hearing on the issue of attorneys fees, the
District Court granted Sunbird $2,325 for the nrosecution of
the collection action on the note.
On September 24, 1981, the District Court entered
judgment against Anderson and in favor of Sunbird for $3,892.22
on the account, $1,297.89 on the note, plus 16 percent
interest thereon, attorneys fees of $2,325, and costs of
$45.74, together with interest on the judgment from the date
of the judgment at 10 percent per annum.
Anderson filed his notice of appeal on October 21,
1981.
The issues presented by Anderson are:
1. Whether the District Court erred in finding Anderson
owed Sunbird $1,297.89 on the promissory note, and $3,892.22
on the account.
(a) Did the District Court's consideration of the co-
ownership as a joint venture in any way prejudice appellant
Anderson?
(b) Did Sunbird's written letter to Anderson that he
had no interest in the plane received in trade constitute a
release from further obligation?
(c) Did the release of Longaker release Anderson from
further obligation to Sunbird?
There is little doubt that Anderson owed Sunbird on the
promissory note. He delivered a promissory note to Sunbird
in recognition of his account balance. The note provided for
attorneys fees and interest at 16 percent. This Court
follows the rule that a party primarily liable on a negotiable
promissory instrument is indebted in that amount to the
payee. John K. Etc. Renev. Corp. v. School District No. 17-
H (1935), 99 Mont. 388, 43 P.2d 902. Therefore, Sunbird is
entitled to collection of the debt owed by Anderson on the
promissory note and the incidental benefits provided therein
of interest and attorneys fees.
We look to the other issues raised by Anderson to
determine whether the judgment for the amount of the account,
$3,892.22 is proper.
First Anderson claims that the District Court's con-
sideration of the co-ownership agreement as a joint venture
prejudiced him.
Sunbird answers that there were no specific findings by
the District Court on the issue of joint venture. The court
mentioned joint venture in its memorandum but Sunbird contends
that this does not affect the outcome of the case. Sunbird
notes in its brief that Anderson does not explain the claimed
prejudice from the mention of joint venture by the District
Court.
A joint venture is "[Aln enterprise undertaken by
several persons jointly, and more particularly, as an association
of two or more persons to carry on a single business enterprise
for profit. It has also been defined, somewhat variantly,
as a special combination of persons undertaking jointly some
specific adventure for profit,. . ." Rae v. Cameron (1941),
112 Mont. 159, 167, 114 P.2d 1060, 1064. In the sense of
that definition, the arrangement between the parties here
was not a joint venture. It was simply an agreement for the
co-ownership of an aircraft with provisions in the agreement
for the costs of usage, repair and maintenance to be divided
among the parties. The District Court's reference to a
"joint venture" in the memorandum does not affect its inter-
pretation, which we find to be proper, of the responsibilities
of the parties under the co-ownership agreement.
Anderson further contends as an issue that a letter
from Sunbird to Anderson dated November 3, 1980, constituted
an independent release of Anderson from further obligations
to Sunbird. He contends the District Court made no specific
findings of fact relating to the letter of November 3, 1980,
and that we should review and determine whether in fact the
letter constituted an independent release of Anderson.
The letter of November 3, 1980, states in part: "In
view of these facts Sunbird feels you have absolutely no
claim to ownership of the C-206." Anderson is contending on
appeal that this has the legal effect of terminating the co-
ownership or that the language has the effect of releasing
him from obligations under the co-ownership agreement.
Sunbird answers that the issue of Anderson's release
under the letter of November 3, 1980, concerning the aircraft
was not raised in the lower court.
An issue not raised in the District Court will not be
considered by us on appeal. Chadwick v. Giberson, et al.
(1980) ,
Mont. - 618 P.2d 1213, 37 St.Rep. 1723; Stout
v. Reiter (19791, ,
Mont. - 595 P.2d 1167, 36 St.Rep.
992; Kearns v. 14cIntyre Construction Co. (1977), 173 Mont.
239, 567 P.2d 433, 440; O'Hanlon v. Ruby Gulch ~ i n i n gCo.
(1922), 64 Mont. 318, 326, 209 P. 1062, 1064.
Anderson further contends that the sale of the Seneca
by Sunbird, and the release of Langaker each had the effect
of releasing Anderson from any further obligation to Sunbird.
There is no evidence in the record to support Anderson's
contention that the sale of the Seneca, standing alone,
constituted a release of obligations owing by Anderson to
Sunbird. The parties had agreed to sell the plane and
Anderson had delivered a blank bill of sale to be used in
the sale of the plane. There is nothing in the record to
support Anderson's contention that the sale of the plane was
to terminate all of his obligations to Sunbird arising out
of the co-ownership agreement.
We do not find anything in the release of Langaker by
Sunbird and the transfer of his interest in the plane to
Sunbird sufficient to constitute a release of the obligations
owing by Anderson.
The common law rule is that a release of one joint
obligor on a contract releases all other obligors. See
Colliers v. Field (1872), 1 Mont. 612, 2 Mont. 205, 2 Mont.
320. "The modern view is where two or more obligors are
jointly liable for a breach of a contract, a release to one
does not necessarily release the other, and that the question
whether the other is released depends upon (1) the intention
of the parties to the release instrument, and (2) whether
the injured party has in fact received full compensation
(satisfaction). . ." 66 Am.Jur.2d Release 9 35.
With regard to release of joint tortfeasors, this Court
has stated that:
"Unless the release specifically states
otherwise, a finder of fact may consider
the intent of the parties in making a
release." Kussler v. Burlington Northern,
Inc. (1980), Mont. , 606 P.2d 520,
524, 37 St-Rep. 240,52
.4
Here Anderson contends that the findings of fact by the
District Court do not expressly state whether Langaker was
indeed released, and if he was, whether his release constituted
a release of Anderson.
Nothing in the evidence indicates an intent on the part
of Sunbird to release Anderson when it acquired the interest
of Langaker to the airplane. Prom the record, it appears
that Sunbird simply acquired Langaker's interest in the
aircraft in exchange for assuming Langaker's obligation to
the co-ownership arrangement. We find nothing in the termination
of Langaker's interest in the airplane by his transfer to
Sunbird that would constitute a release, express or implicit,
of Anderson from his obligations for expenses under the
co-ownership agreement.
Since we find no error in the findings of fact and
conclusions of law on which the judgment of the District
Court is founded, we affirm the ~istrictCourt.
We Concur:
Chief Justice
Mr. Chief J u s t i c e Frank I . Haswell, s p e c i a l c o n c u r r i n g :
I concur w i t h t h e m a j o r i t y o p i n i o n i n t h e t r e a t m e n t
of t h e i s s u e s r a i s e d and o u r r u l i n g s t h e r e o n .
However, t h e r e i s a q u e s t i o n i n m mind c o n c e r n i n g t h e
y
amount o f a t t o r n e y f e e s awarded i n t h i s c a s e . I t appears
t h a t t h e D i s t r i c t C o u r t ' s award covered s e r v i c e s performed
by t h e a t t o r n e y i n a d d i t i o n t o c o l l e c t i o n of t h e n o t e .
S i n c e t h i s i s s u e was n o t r a i s e d i n t h e D i s t r i c t C o u r t , I
would n o t c o n s i d e r i t f o r t h e f i r s t t i m e on a p p e a l under
t h e a u t h o r i t i e s c i t e d i n t h e majority opinion.