No. 81-245
IN THE SUPREME COURT OF THE STATE OF MONTANA
1982
SAWYER-ADECOR INTERNATIONAL, INC.,
Plaintiff and Appellant,
-vs-
B. C. ANGLIN, et al.,
Defendants and Respondents.
Appeal from: District Court of the Fifth Judicial District,
In and for the County of Beaverhead, The Honor-
able Frank Blair, Judge presiding.
Counsel of Record:
For Appellant:
Burns, Dwyer & Chaffin, Dillon, Montana
For Respondents:
Frank M. Davis, Dillon, 14ontana
W. G. Gilbert, 111, Dillon, Montana
Cleland, Hurtt, Witt & Weil, Fittsburg, PA
Submitted on Briefs; April 1, 1982
Decided: June 24, 1982
.JUN
Filed, 2 4 1982
Mr. Justice John C. Sheehy delivered the Opinion of the Court.
Appeal by Sawyer-Adecor International, Inc. (Sawyer)
from a judgment dated March 31, 1981, rendered against
Sawyer in the District Court, Fifth Judicial District,
Beaverhead County. The District Court quieted title to
three unpatented mining claims (the Grouse claims), and further
granted defendant James V. Joyce specific performance of a
contract between him and Sawyer, or in the alternative, gave
Joyce a judgment against Sawyer for $144,000, with interest
from March 20, 1976.
On consideration of the whole record, we affirm the
District Court.
Specific Performance
In and prior to May 1975, Sawyer was the record owner
of 64 unpatented lode mining claims in the Lemhi Pass area
in Beaverhead County. In that month, negotiations commenced
between Arthur E. Granger, representing Joyce, and Fred
Maxey, the president of Sawyer, culminating in a "Memorandum
of Intent," dated July 24, 1975.
The first paragraph of the memorandum provided:
"1. In consideration of JOYCE undertaking
mining, geologic and geophysical work of
the SAWYER properties in Lemhi Pass, Montana,
to the extent of a minimum of $6,400.00 worth,
which will be recorded as assessment work
for the year ending August 30, 1975 by
JOYCE at the Beaverhead County Courthouse in
Montana. SAWYER grants an option period to JOYCE
for six months --- August 1, 1975 to February 1,
1976. Further, if an additional $6,400.00
worth of work is performed by JOYCE, the option
may be extended to August 1, 1976. JOYCE may
recommend, but only SAWYER may decide if this
additional work may be undertaken. At the end
of either option period, JOYCE may exercise this
option to pick up a mining lease agreement based
on that agreement enclosed in a letter dated
June 4, 1975 addressed by Fred Maxey to Arthur
E. Granger. "
Joyce performed the assessment work for the year ending
August 30, 1975, through Arthur E. Granger, who conducted,
supervised and paid for the work. Joyce paid Arthur E.
Granger $6,500 for doing that work. Assessment affidavits
for the period involved, to August 1, 1975, were filed, on a
group basis, with the county clerk and recorder, by Granger.
In other words, the assessment work as required by the
memorandum of intent was performed by Joyce through Granger.
If one reads again the first paragraph of the memorandum
of intent, as set forth above, one will find an internal
conflict in the paragraph respecting the time in which Joyce
could exercise the option. The first sentence gives Joyce
an option from August 1, 1975 to February 1, 1976. However,
the last sentence of the paragraph provides that "[alt the
end of either option period JOYCE may exercise this option. . ."
The last sentence does not require Joyce to exercise the
option within the period specified in the first sentence.
At any rate, the mining lease (its terms are unimportant
here) was never executed between Joyce and Sawyer.
On February 4, 1976, Sawyer, through its president,
wrote to Granger that the company was considering the sale
of its mining claims in Beaverhead County and asked Granger
to "start contacting possible interested parties, with a
view to initiating negotiations with them." Sawyer offered
Granger a compensation of 10 percent of the sale price over
the first $25,000 if the sale was consummated. Sawyer addressed
the same letter to Dudley Davis and ~ i c k
Barron on the same
basis for the solicitation of negotiations.
Upon receipt of the February 4 letter from Sawyer,
Granger found that Joyce was interested in purchasing the
mining claims of Sawyer, and thereupon negotiated with
its president. On March 8, 1976, Sawyer and Joyce executed
a "letter of intent" respecting a purchase. It provided for
a purchase price of $100,000 with $25,000 downpayment upon
the signing of the contract of purchase and sale, including
$1,500 to be paid at the time of the signing of the letter
of intent. The balance was to be payable over a period of 5
years. Particularly, the March 8, 1976 letter of intent
contained the following paragraphs:
"5. The conditions and terms of the proposed
contract of Purchase and Sale mentioned here-
inabove are subject to the final approval of
the Board of Directors of SAWYER.
"6. Sixty (60) days after notice is given
to JOYCE of Board approval of these conditions
and terms, JOYCE shall consummate the contract
of Purchase and Sale, and shall pay SAFJYER the
cash down payment mentioned [the $25,000 mentioned
above]. If after sixty (60) days have elapsed
after such notice JOYCE has not consummated the
contract of Purchase and Sale, then JOYCE shall
forfeit unconditionally to SAFJYER the sum of
$1,500 referred to in section 3 above."
On March 20, 1976, Granger, on behalf of Joyce, gave
Sawyer a check for $1,500 as required in the-letter o.f intent.
The agreement for Purchase and Sale is dated April 9,
1976 and is executed by James B. Joyce. Sawyer never executed
the purchase and sale agreement mentioned and provided for
in the letter of intent dated March 8, 1976.
The president of Sawyer testified that Sawyer's board
of directors considered Joyce's proposed contract at a
meeting on March 31, 1976, and rejected the proposal because
a higher offer had been received from another party. The
president further testified that this information was
communicated by him to Granger by telephone soon after the
board meeting, at which time Granger requested that the
earnest money check for $1,500, which Granger had delivered
at the time of the execution of the memorandum of intent, be
returned to him and that his signature be cut from the check.
Sawyer, through Maxey, did not immediately return the
$1,500 check, but simply left it in a file uncashed. However,
on July 26, 1975, some 15 months later, Sawyer, through
its president, returned the check to Granger. In the meantime,
Sawyer had made a deal to sell the 64 claims to Tenneco for
a total consideration of $244,000.
Sawyer, as plaintiff, brought an action in the Beaverhead
County District Court on October 2, 1978, seeking to quiet
title to the 64 unpatented lode mining claims. On February
14, 1980, Joyce filed an amended answer, crosscomplaint and
counterclaim seeking quiet title in himself to the Grouse claims
(more hereafter) claiming (1) that he is entitled to a
mining lease under the option agreement dated July 24, 1975; (2)
to a deed for all 64 of the claims upon performance by him
of the terms of the contract under the letter of intent
dated March 8, 1976; and (3) that he was owed $6,600 [sic] for
the assessment work he had done for Sawyer.
The District Court made findings of fact and conclusions
of law and entered judgment as we have indicated in favor of
Joyce. Sawyer contends, and it appears correct, that the
District Court adopted verbatim the findings of fact and
conclusions of law presented by Sawyer. The appeal by Sawyer
followed from the judgment in the normal course.
The issues raised by Sawyer that relate to the specific
performance judgment are these:
1. Whether the District Court committed reversible
error in adopting verbatim the findings of fact and con-
clusions of law requested by Joyce and in adopting verbatim
the post-trial brief of Joyce as the opinion of the court?
2. Whether the evidence supports the findings of fact
and conclusions of law adopted by the court and whether the
District Court erred in finding that the expired "option" to
lease could be unilaterally revived and converted into a
contract for purchase of 64 unpatented lode mining claims?
3. Whether the District Court could rely on estoppel
to determine that a contract existed between Sawyer and
Joyce?
4. Whether the District Court erred in awarding
damages to Joyce for breach of contract in the absence of
pleadings or proof?
Verbatim Adoption - Proposed Findings
of
The continuing practice of verbatim adoption of proposed
findings by district courts in judge-trials remains a sore
point in this state, especially to losing counsel who see
therein a lack of due consideration by the district courts of
their parties' contentions of fact and law. We expressed
our disapproval of adopting verbatim the prevailing parties'
proposed findings and conclusions in Tomaskie v. Tomaskie
(19811, - Mont. -, 625 P.2d 536, 38 St.Rep. 416, a d in
that case referred to Canon 19, Canons of Judicial Ethics,
144 Mont. at xxvi-xxvii. In In Re Marriage of Jensen (1981),
- Mont. ,
- 631 P.2d 700, 703-711, 38 St.Rep. 1109, where
the District Court had adopted verbatim findings and conclusions,
it was suggested by appellant that a lower standard should
exist for the review by us of findings and conclusions
drafted by counsel for the prevailing party than exists
under the "clearly erroneous" standard of Rule 52(a), 3I.R.Civ.P.
We declined to adopt that suggestion in Jensen. Again, in
City of Billings v. Public Service Com'n. (1981), - Pl nt
lo .
, 631 P.2d 1295, 38 St.Rep. 1162, we met the same problem,
repeated that we disapproved of the practice of adopting
verbatim findings and conclusions submitted by the prevailing
party, but restated that the standard for review of the
findings and conclusions remains the same, citing United
States v. El Paso Gas Co. (1964), 376 U.S. 651, at 656, 84
S.Ct. 1044, at 1047, 12 L.Ed.2d 12, at 17.
We continue to disapprove, heartily and stoutly, the
verbatim adoption of proposed findings and conclusions.
We have expressed the reasons on several occasions. We are
not compelled, however, when in appellate review we are
confronted with a verbatim adoption, to find such an inherent
fault therein that the prevailing party must be reversed.
Although the "clearly erroneous" standard of Rule 52(a),
still applies to verbatim findings, it is equally incumbent
upon us to apply, in appellate review of equity cases and
proceedings of an equitable nature, the rule that we review
all questions of fact arising upon the evidence presented in
the record, whether the evidence is alleged to be insufficient
or not, and to determine the same, as well as questions of
law. Section 3-2-204 (5), MCA. There is in that statutory
requirement for our appellate review a measure of protection
for the losing party coming to us on appeal, at least in equity
cases such as this.
Whether the Record Supports the Findings and Conclusions
of - ~istrict
- the Court
The critical facts found by the District Court in
connection with the contract for purchase of the mining
claims were: During the period from August 30, 1975 to
March 8, 1976, Joyce was at all times ready and able to
enter into the lease agreement in accordance with the memorandum
of intent dated July 29, 1975; during that period, the
defendant Joyce performed the $6,500 annual representation
(assessment) work; Sawyer started negotations with Joyce and
others for a sale of all the mining claims which changed the
lease into a contract for purchase by Joyce for the sum of
$100,000; pursuant to the contract Joyce offered and Sawyer
accepted a check for $1,500 in accordance with the proposed agree-
ment of sale; the letter of intent of March 8, 1976 was
executed with the authority of Sawyer's board of directors;
Sawyer unreasonably withheld its formal consent to the
agreement of sale accepted by Joyce and led Joyce to believe
that a formal contract had been entered into by keeping the
tendered downpayment of $1,500 while at the same time Sawyer
was conducting secret negotiations for the sale of the
property to others; on July 26, 1977, Sawyer returned to
Joyce the $1,500 downpayment on which date Joyce discovered
the purported sale to Tenneco.
Sawyer contends that the District Court erred in
characterizing the memorandum of intent of July 24, 1975 as
a lease when in fact it was an option to lease; that the
assessment work was consideration for the option; that the
lease never became effective; that no completed purchase and
sale contract was entered into; that no evidence exists in the
record to support the finding that the "lease and option"
merged in a contract.
We can disregard the purported mining lease between the
parties, and whether it matured into a contract for purchase,
because in reality no mining lease ever existed between the
parties. Sawyer never executed a mining lease. It is true,
however, that because of the ambiguous language of paragraph
one of the memorandum of intent of July 24, 1975, Joyce,
having performed the assessment work required, either had an
option for a mining lease that expired on February 1, 1976,
or he may have such an option even now to procure a mining
lease upon the unpatented lode mining claims. The real
question confronting us in this case is whether the execution
by Sawyer and Joyce of the memorandum of intent on March 8, 1976,
the execution of the agreement to purchase by Joyce on April
9, 1976, and the delivery of the $1,500 check to Sawyer
constituted a mutually binding contract between Sawyer and
Joyce for the sale of the mining claims to Joyce.
When we review a cause on appeal under section 3-2-
204(5), MCA, our review and determination follow the appellate
rules set forth in Lurnby v. Doetch (1979), Mont . I
"In resolving this issue, we are guided by
a number of principles established by this
Court. The credibility of witnesses and the
weight to be given their testimony are matters
for the District Court's determination in a
,
nonjury case. Corscadden v. Kenney (1977) - Mont.
, 572 P.2d 1234, 1237, 34 St.Rep. 1533, 1537.
Thus, in examining the sufficiency of the evidence,
we must view the same in a light most favorable
to the prevailing party, and we will presume the
findings and judgment by the District Court are
correct. Hellickson v. Barrett Mobile Home
Transport, Inc. (1973), 161 Mont. 455, 459, 507
P.2d 523, 525. We will not overturn the findings
and conclusions of the District Court unless
there is a decided preponderance of the evidence
against them, and when the evidence furnishes
reasonable grounds for different conclusions,
the findings of the District Court will not
be disturbed. Morgen and Oswood Const. Co. v. Rig
Sky of Mont. (1976), 171 Mont. 268, 275, 557
P.2d 1017, 1021. The burden of proof is on the
appellant. Schuman v. Study Com'n. of Yellowstone
. ,
Cty. (19781, - Mont - 578 P.2d 291, 292, 35
St-Rep. 386, 388."
To determine that a contract existed in this case, for
the sale by Sawyer to Joyce of unpatented lode mining
claims, we must find that the parties consented to the same
thing in the same sense from the record in the case. Section
28-2-303, MCA. The essential elements of consent of the
parties to the contract are that the consent must be free,
mutual, and communicated by each to the other. Section 28-
2-301, MCA.
Indubitably, the parties exhibited some degree of
mutual consent when they executed (Sawyer with the approval
of its board of directos) the March 8, 1976 letter of intent.
Without setting it forth - -
in haec verba, the March 8, 1976
letter of intent provided that Sawyer would warrant title to
the mining claims and would sell them to Joyce for $100,000;
that upon signing a contract for the purchase and sale approved
by Sawyer's board, Joyce would pay $25,000; that upon signing
the March 8, 1976 letter of intent, Joyce would pay, and did
tender $1,500 as earnest money to be held by Sawyer and to
be part of the cash downpayment of $25,000; that the balance
of $75,000 was to be paid over 5 years under a promissory
note signed by Joyce, bearing interest at 10 percent per
annum. Then followed the provisions which we have above set
forth providing that the conditions of the proposed contract
for purchase and sale were subject to the final approval of
Sawyer's board of directors and that the balance of the first
cash downpayment would be due from Joyce 60 days after the
board of directors had approved.
On April 9, 1976, Joyce executed an agreement to purchase
the unpatented lode mining claims. That agreement meets
exactly each and all of the conditions contained in the
letter of intent of March 8, 1976. However, the agreement
executed by Joyce added a provision that, in the event title
to the mining claims be deemed defective, Joyce was given
the option to acquire only such mining claims as bore good
title with a pro rata reduction of the purchase price. To
that extent, therefore, the acceptance by Sawyer through the
written agreement of April 9, 1976 of the conditions in the
memorandum of intent of March 8, 1976, was in variance.
To constitute a contract, a proposal must be accepted
in the very terms in which it was made. Schwartz v. Inspiration
Gold Mining Co. (Mont. 1936), 15 F.Supp. 1030, 1037; J.
Neils Lumber Co. v. Farmers' Lumber Co. (1930), 88 Mont.
392, 397, 293 P. 288, 290; Glenn v. S. Birch & Sons Const.
Co. (19161, 52 Mont. 414, 420, 158 P. 834, 836. The question
of the existence of a contract does not end at this point,
however.
Section 28-2-504, MCA, provides that " [a]n acceptance
must be absolute and unqualified or must include in itself
an acceptance of that character which the proposer can
separate from the rest and which will bind the person accepting."
The only provision in the April 9, 1976 agreement of purchase
that is different from the March 8, 1976 letter of intent is
the pro rata reduction of the purchase price for any mining
claims to which Sawyer had a defective title. In the March
8, 1976 letter of intent, Sawyer warranted "that it owns
certain mining claims in Beaverhead County, Montana." Joyce's
proposal to reduce the purchase price in case Sawyer's title
failed seems to take into account Sawyer's warrant of title.
It could be argued therefore, that Joyce's ~ p r i l9, 1976
agreement was an absolute acceptance, and not qualified as a
new proposal. If Sawyer's warrant of title was good as to
all the mining claims, there would be no pro rata reduction of
the purchase price.
We find that Joyce's written acceptance, by the executed
written agreement of April 9, 1976, was an acceptance which
includ~d"in itself an acceptance of that character which the
proposer [Sawyer] can separate from the rest and which will
bind the person accepting." Section 28-2-504, MCA.
Sawyer did not turn down Joyce's written agreement to
purchase because of the added provision relating to failed
title. Rather on March 31, 1976, while its March 8, 1976
letter of intent was still in effect, Sawyer determined
unilaterally that it would reject - offer from Joyce under
any
the March 8, 1976 letter because it had now obtained a
better offer in price. Whatever other provision Sawyer might
have required in connection with its contractual power to
have its board of directors approve any future written contract,
under the letter of intent of March 8, 1976, Sawyer absolutely
bound itself to contract with Joyce to sell the mining
properties to him for $100,000.
The March 8, 1976 letter of intent constituted at
least a continuing offer (if not a contract) from Sawyer to
Joyce to sell him the unpatented lode mining claims for
$100,000. Sawyer reneged on the purchase price by determining
unilaterally on March 31, 1976 that it would not sell the
property to Joyce for $100,000. Sawyer's board of directors
never got around to considering Joyce's proposal, in his
written agreement, for a prorata reduction of the purchase
price for failed title.
If the March 8, 1976 letter of intent is to be construed
as a continuing offer rather than a binding contract, it
could be revoked by Sawyer at any time before its acceptance
by Joyce, but not afterwards. Section 28-2-511, MCA. In
order to revoke the offer of March 8, 1976, Sawyer must have
communicated that revocation to Joyce before he accepted the
continuing offer. Section 28-2-512, MCA. That revocation
should have been communicated by some act on the part of
Sawyer informing Joyce of the revocation of the offer.
Section 28-2-501, MCA. Here Sawyer's president testified that
at some unspecified time he telephoned to Granger that
Joyce's deal was off because Sawyer had gotten a better
offer. No direct communication was had with Joyce on this
subject by Sawyer. The evidence shows that Joyce never knew
of the telephone conversation or of the revocation until
after Sawyer returned the $1,500 check, some 15 months
later, on July 26, 1977. Of course if Granger was Joyce's
agent in the transaction, with the actual or ostensible
authority in Granger to receive such a communication of
revocation, then the telephone call to Granger would be
sufficient. There is, however, nothing in the record to
indicate that the telephone call to Granger occurred before
the April 9, 1976 written agreement submitted by Joyce.
Joyce's acceptance, by the executed agreement of April 9,
1976 therefore, preceded the communication to him of Sawyer's
revocation of the offer, again assuming arguendo that the
March 8, 1976 letter of intent was an offer.
This brings us to the third issue raised by Sawyer,
whether the District Court properly considered estoppel in
determining that a contract existed between Sawyer and Joyce
for the sale and purchase of the mining claims.
The District Court stated in its opinion (a brief also
submitted by Joyce, and adopted verbatim by the court) that
"elementary principles of estoppel" bound Sawyer to its
contract with Joyce.
The acts relied upon by the District Court to constitute
estoppel against Sawyer were that Joyce had performed $6,500
of annual representation work at the behest of Sawyer; that
while the option to enter into a mining lease was still open
Sawyer started negotiations with Joyce and with others for
the purpose of making a sale of the mining claims; that
Sawyer agreed to sell Joyce the mining claims for $100,000;
that Joyce tendered Sawyer $1,500 as a downpayment, in the
form of a check which was accepted by Sawyer; that the March
8, 1976 letter of intent was executed by Sawyer's corporate
offices and duly authorized by its board of directors; that
Sawyer unreasonably withheld its formal consent to the
agreement of sale accepted by Joyce, while at the same time
conducting negotiations for the sale of said property to
others at a higher price; that Sawyer wrongfully sold the 61
claims to Tenneco for a sum of $244,000 when by its conduct
it had already effected a sale to Joyce for $100,000; that
Joyce did not discover the purported sale to Tenneco until
the check was returned to him after July 26, 1977.
Sawyer contends that the District Court should not have
considered estoppel against it (1) because Joyce did not
affirmatively plead estoppel and (2) the evidence for estcppel
against Sawyer is insufficient.
Estoppel is an affirmative defense which must be specially
alleged in the pleadings. Rule 8(c), I4.R.Civ.P. This Court
has always held, however, that where there has been no
opportunity to allege estoppel, it may be put in evidence
with the same effect as if alleged. Scott v. Prescott
(1924), 69 Mont. 540, 556, 223 P. 490, 495; Colwell v. Grandin
Inv. Co. (1922), 64 Mont. 518, 527, 210 P. 765, 767. If
the evidence of estoppel is admitted without objection,
pleading is not necessary. Middle States Oil Corporation v.
Tanner-Jones Drill. Co. (1925), 73 Mont. 180, 183, 235 P .
770, 771. Because of the nature of the pleadings in this
case, Joyce was not given an opportunity to allege estoppel
as an affirmative defense. Sawyer filed an ordinary quiet
title complaint, which required all defendants to appear and
set forth their claims as to the property involved. Joyce
appeared by way of general denial to Sawyer's complaint and
set forth four counts in crossclaim including a claim that
Joyce had exercised the right to purchase the property from
Sawyer but Sawyer refused to honor his right. Sawyer filed
a reply to the crossclaim by way of general denial. Under
Rule 7, M.R.Civ.P., Joyce was permitted no other pleading.
In the pleadings of the cause, Joyce's stance was much like
that of a plaintiff, asserting his claims to the property as
against Sawyer, but without a right of reply. He therefore
had no opportunity to plead estoppel as an affirmative
defense. Under our case law Joyce is entitled to give
evidence in support of estoppel.
Do the facts relied upon in the District Court con-
stitute estoppel? In State ex rel. Howeth v. D. A. Davidson
& Co. (1973), 163 Mont. 355, 367, 517 P.2d 722, 728-29, we set
forth elements to be considered in determining estoppel. We
find in this case, Sawyer repudiating its March 8, 1976
letter of intent, executed by it with the authority of its
board of directors without notifying Joyce directly or
immediately; Joyce relying on the letter of intent of March
8, 1976; and Granger tendering a check to Sawyer for $1,500
in payment on Joyce's part for that letter of intent.
Joyce, after the secret repudiation by Sawyer's board of
directors, executed an agreement in accordance with the
letter of intent which was apparently refused by Sawyer
because it had a better offer. Because of these acts of
Sawyer, Joyce stood to lose the benefit of his bargain.
We do not rely on estoppel in deciding this case. We
find a situation where Sawyer had left open a continuing
offer to sell the mining claims to Joyce under the March 8,
1976 letter of intent which Joyce accepted before Sawyer
revoked it properly. Joyce is entitled to the bargain
struck between him and Sawyer and to any increased benefit
thereof that thereafter developed.
The final issue raised by Sawyer with respect to the
judgment entered by the District Court is that it erred in
awarding damages for breach of contract in the absence of
pleadings or proof.
The District Court, as we have said, ordered specific
performance by Sawyer of the contract with Joyce for the
sale of the unpatented lode mining claims, or in the alternative,
gave Joyce a judgment against Sawyer for $144,000, with
interest from March 20, 1976.
In his amended answer and crossclaim to Sawyer's action
for quiet title, Joyce prayed that the court order Sawyer to
execute and deliver to him a deed for the mining properties
upon the payment by Joyce of any sums found due and owing to
Sawyer.
In finding and concluding that Joyce was entitled to
specific performance, the court entered a judgment accordingly.
However, the court further decreed if Sawyer did not or
could not perform, then it should pay Joyce $144,000, with
interest from March 20, 1976.
The sum of $144,000 is obviously the difference between
what Joyce agreed to pay Sawyer for the property, $100,000,
and the price Tenneco is apparently willing to pay or has
paid Sawyer for the property, $244,000. The March 20, 1976
date comes from the date of the $1,500 check that was delivered
to Sawyer on behalf of Joyce as partial payment under the
letter of intent of March 8, 1976.
The court's award of $144,000 to Joyce is not damages
in the true sense, because Sawyer can avoid that damage
figure by conveying to Joyce the mining claims, subject to
the payments required by Joyce under the contract between
them. In so providing in its order, the District Court,
sitting as a court of equity, has merely fashioned a way to
make effective its decree of specific performance. The
District Court has acted in the interests of judicial economy
in case of nonperformance by Sawyer under the d~cree.
When a District Court sits as a court of equity, it is
empowered to determine the questions involved in the case
and to do complete justice. Hames v. City of Polson (1949),
123 Mont. 469, 477, 215 P.2d 949, 955; Link v. State by &
through Dept. of Fish & Game (1979), 180 Mont. 469, 482, 591
P.2d 214, 222. Sawyer's fourth contention against the
specific performance decree therefore is without merit.
The Grouse Claims
The problem with the Grouse claims is another phase of
the case before the District Court on which the ruling was
in favor of Joyce, and from which Sawyer appeals.
A part of the 64 contiguous unpatented mining claims to
which Sawyer sought quiet title were those four claims
described as Ragand 8, 9, 10 and 11.
In July 1965, Bill Anglin, the owner of a group of
mining claims adjoining the Sawyer claims group, but across
the Idaho border, checked at the office of the clerk and
recorder in the Beaverhead County courthouse and discovered
that no affidavit of performance of annual assessment work
had been filed for the Sawyer claims group for the assessment
year ending September 1, 1974. Anglin entered the land
covered by the Ragand 8-11 claims and on July 16, 1975,
"overstaked" much of the ground covered by the Ragand claims
with the Grouse I, I1 and I11 claims (hereafter Grouse
claims). Anglin filed certificates of location for the Grouse
claims in the office of the county clerk and recorder and each
year thereafter filed affidavits of annual representation in
that office to show that his assessment work for the Grouse
claims was being performed.
Sawyer was apparently unaware of the staking, location,
and filings relating to the Grouse claims, and its president
testified that the assessment work was done on all of the 64
Sawyer group claims each year, but that it had omitted to
file annual affidavits of representation in the office of
the county clerk and recorder.
In August 1978, Joyce purchased the Grouse claims from
Anglin. In his amended answer and crossclaim to Sawyer's
quiet title complaint, Joyce claimed title to the Grouse
claims by virtue of the transfer from Anglin, and his assess-
ment work and filing of the necessary affidavits of representation
thereafter.
Sawyer's evidence at trial was that although the annual
affidavits of representation had not been filed by Sawyer,
it nevertheless had done the assessment work on the claims
by expending the required amounts of assessment work on a
group basis. Joyce produced two witnesses who stated they
had viewed the properties in question in several of the
years involved, and saw no evidence of assessment work
having been done on the mining claims. It is not clear from
the record that the two witnesses visited all of the 64
claims in question.
The District Court determined and found that Sawyer had
failed to do its annual assessment work on the claims for
1963 and 1964 and had not filed the required annual affidavits
of representation. During trial, Sawyer took the position
that under the law, even if it had failed to file the annual
affidavits of representation, it could nevertheless maintain
its title to the mining claims if in fact the annual assessment
work was done by him. The District Court found as a fact
that the annual assessment work had not been done on any of
the claims and that the Ragand claims were open for location
and filing as Grouse claims by Anglin.
Sawyer's issues with respect to the Grouse claims are:
1. The finding that the annual assessment work was not
performed for the work year ending September 1, 1964 is
clearly erroneous;
2. The District Court erred in determining the legal
effect of Sawyer's failure to file an affidavit of annual
representation;
3. Work resumed on the Sawyer claims group in 1965,
prior to the time that Anglin located the conflicting Grouse
claims;
4. The District Court erred in concluding that the
Ragand claims had been abandoned by Sawyer;
5. Any doubt as to the validity of the overlapping
Grouse claims should be resolved in favor of Sawyer because
of the "bad faith" of Anglin.
Almost the whole of the District Court's determination
that Joyce was the valid owner of the Grouse claims rests
on the District Court's finding that Sawyer had failed to do
its annual assessment work for the years involved. On the
one hand the District Court had the testimony of the officials
of Sawyer that the assessment work had in fact been done,
that it had arranged with a contractor or workman to do
trenching in 1964 and 1965, and had otherwise done or caused
to be done the assessment work in each annual segment required.
On the other hand, the District Court had the testimony of
Anglin that no work had been done in the year 1964, or in
1965; the testimony of two witnesses who saw no work being
done on the mining claims by Sawyer; no substantiating
testimony of workmen or contractors was produced by Sawyer
to uphold the testimony of Sawyer's officers; and the inescapable
fact that Sawyer had not filed any annual affidavits of
representation. The great weight of the testimony favors
the District Court's determination. There is no need to
cite a long string of cases, all available in our annals,
that on appellate review, the finding of a District Court
will be sustained where it is not clearly erroneous, and
where substantial credible evidence supports the findings of
the District Court.
That finding alone, that Sawyer had failed to do any
assessment work on the claims for the period here involved,
without more, is sufficient to overcome all of Sawyer's fact
issues. The court's finding precludes any argument that
Sawyer had resumed its assessment v~ork in 1975 before Anglin
made his Grouse locations, sustains the District Court's
determination that the Ragand claims had been abandoned by
Sawyer and makes irrelevant Sawyer's claim that the failure
to file affidavits of annual representation has no legal
adverse effect on Sawyer, if it actually did the assessment
work.
However, the basis of Sawyer's claim,that failure to file
the annual representation affidavits did not adversely
affect Sawyer's title, should be explained.
Former section 50-704, R.C.M. 1947, provided that the
owner of a lode or placer mining claim who performed the
annual assessment work could file in the office of the
county clerk and recorder where the claim was situated an
affidavit showing the nature and character of the work that
had been done on the mining claim. Section 50-704 further
provided that "such affidavits ... are prima-facie evidence
of the facts therein stated."
Thus, under former section 50-704, R.C.M. 1947, this
Court had decided that an affidavit of annual representation
is prima facie evidence that assessment work has been done,
but that oral evidence could be given to prove that the work
had been done without regard to the affidavit. Davidson v.
Bordeaux (1895), 15 Mont 245, 250, 38 P. 1075, 1076. We held
that the statute was merely a means of preserving prima
facie evidence that the assessment work requirement had
been fulfilled. Coleman v. Curtis (1892), 12 Mont. 301,
305, 30 P. 266, 267.
Section 50-704, R.C.M. 1947, was amended by the legislature
in 1971, and is now carried forward as section 82-2-103,
MCA. The effect of the 1971 amendment is that whereas
under section 50-704, the filing of an annual affidavit was
permissive ("may") it is now under section 82-2-103, MCA,
mandatory ("must"). In addition, the clause we have cited
above has been changed to recite that "[Tlhe failure to file
such affidavits within the period allowed therefor shall be
prima facie evidence that such labor has not been performed
and that the owner of the claim or claims has abandoned and
surrendered same."
Sawyer claims that the District Court applied the
mandatory provision of section 82-2-103, MCA, to this claim
when in fact the assessment work involved was performed at a
time when the statute was permissive, in 1964 and 1965.
Sawyer therefore claims that the court applied the wrong
legal test with respect to the effect of failure to file
annual affidavits of representation.
As we have indicated, the issue is one that we need not
reach. The District Court determined that no assessment
work had been done by Sawyer. Under that finding, it makes
no difference whether we apply the provisions of the statute
on recording of annual affidavits before or after its amend-
ment in 1971. Since no annual assessment work was done by
Sawyer, the statute does not come into play and is irrelevant.
Sawyer's final contention is that Anglin, in making the
Grouse location, was guilty of bad faith and for that reason
the prior rights of Sawyer should be recognized.
The gist of Sawyer's claim on this contention is that
work had taken place on the Sawyer claims prior to July
15, 1965 and each year thereafter. One of Joyce's witnesses,
Granger, admitted seeing machines including a bulldozer on
the properties during either 1965 or 1966, and acknowledged
that work had been done on the "shear zone", a part of the
claims. Sawyer's contention is that under mining law, even
though claims may be subject to forfeiture by failure to
perform assessment work, the original locator can subsequently
re-enter the claims, and as long as he is actively performing
work he will defeat the rights of any subsequent junior
locator. Sawyer further contends that Anglin observed the
activities of Sawyer for a period of three years until he
discovered that an affidavit and assessment work had not
been filed, and then he quickly moved in and "jumped" the
Ragand claims.
It is true that in Columbia Standard Corp. v. Ranchers
Explor. & Dev., Inc. (10th Cir. 1972), 468 F.2d 547, it was
held that a junior locator who had entered and overstaked
prior claims without making inquiry of knowledgeable persons
or examining the senior locator's claims individually to see
if location requirements had been satisfied could not maintain
the junior mining claims because of his bad faith. We do
not have such a case here. Again the determination of the
District Court that the assessment work had not been done is
conclusive against this contention.
Other Issues
With respect to the whole case, Sawyer also raises
additional issues contending that the court should have
applied the doctrines of estoppel and laches against Joyce,
particularly relating to his claim of contract for the
purchase of the 64 unpatented mining lode claims. Those
issues, however, do not reach the principle issues in this
case and are inconsequential. The court's decision in
favor of Joyce appears to us to be soundly based. We see
no basis for estoppel against Joyce, nor any ground to deter-
mine he was guilty of laches.
Accordingly, the judgment of the District Court is
affirmed.
- ~ . % _
Justice
We Concur: