NO. 82-319
I N THE SUPREME COURT OF THE STATE OF MONTANA
1983
JAMES E . PRESTON a n d ELIZABETH PRESTON,
P l a i n t i f f s and Appellants,
VS.
SIDNEY G . McDONNELL,
Defendant and Respondent.
Appeal from: D i s t r i c t Court of t h e T h i r 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 County o f Yellowstone
Honorable W i l l i a m J Speare, Judge p r e s i d i n g .
Counsel of Record:
For Appellants:
Whalen & Whalen, B i l l i n g s , Montana
Hauf a n d F o r s y t h e , B i l l i n g s , Montana
For Respondent:
Moulton, Bellingham, Longo & Mather, Billings,
Montana
S u b m i t t e d on b r i e f s : January 6, 1983
Submitted: February 2 4 , 1983
Filed:
Mr. J u s t i c e L . C. G u l b r a n d s o n d e l i v e r e d t h e O p i n i o n of the Court.
E l i z a b e t h P r e s t o n and James P r e s t o n , m o t h e r and s o n , b r o u g h t
t h i s a c t i o n t o r e s c i n d two c o n t r a c t s t h e y had w i t h t h e d e f e n d a n t ,
S i d n e y McDonnell. Upon a s p e c i a l jury verdict finding neither
fraud nor failure of consideration, the D i s t r i c t Court of the
Thirteenth Judicial District, Yellowstone County, entered
judgment f o r McDonnell . McDonnell was t h e r e a f t e r awarded $ 9 , 5 0 0
i n a t t o r n e y f e e s and $210 i n c o s t s .
I n e a r l y 1 9 7 7 , J a m e s P r e s t o n and h i s m o t h e r E l i z a b e t h P r e s t o n
bought a bakery in Billings, Montana. In 1978 they became
i n t e r e s t e d i n b u y i n g a n o t h e r b a k e r y i n Red Lodge, Montana. James
Preston inspected the Red Lodge bakery, noting that it needed
c l e a n i n g and m i n o r r e p a i r s .
On J a n u a r y 5, 1979, Prestons bought the Red Lodge bakery.
Two c o n t r a c t s were s i g n e d , o n e f o r t h e p u r c h a s e of the business,
the other f o r the r e a l property. I n t h e c o n t r a c t f o r t h e s a l e of
the business, the s e l l e r , McDonnell , expressly represented that
t o h i s knowledge, he had c o m p l i e d w i t h a l l g o v e r n m e n t r u l e s and
regulations.
The c o n t r o v e r s y h e r e c e n t e r s upon t h e d i f f i c u l t y t h e P r e s t o n s
t h e n had in obtaining a license from t h e Montana D e p a r t m e n t of
Health .
On J a n u a r y 3 0 , 1979, two inspectors from t h e D e p a r t m e n t of
H e a l t h a t t e m p t e d t o i n s p e c t t h e b a k e r y , b u t were r e f u s e d e n t r y by
the Prestons. The inspectors returned on February 1 and were
allowed t o complete t h e i r i n s p e c t i o n .
The inspectors noted many v i o l a t i o n s of the s t a t e ' s health
standards. These violations, or deficiencies, resulted mostly
from inadequate cleaning. Other d e f i c i e n c i e s included l a c k of
a d e q u a t e l i g h t i n g , s t o r a g e of food t o o close t o t h e f l o o r , no f a n
in the lavatory, and a two-compartment rather than a three-
compartment s i n k .
The H e a l t h D e p a r t m e n t t h e n r e q u e s t e d t h e P r e s t o n s to make a
" p l a n of correction," o u t l i n i n g when and how t h e y would c o r r e c t
the deficiencies. The D e p a r t m e n t wanted t h i s plan within ten
days. The P r e s t o n s d i d n o t s u b m i t a p l a n , c l a i m i n g t h a t i t would
b e t o o e x p e n s i v e to c o r r e c t a l l of the d e f i c i e n c i e s a t once. A t
t r i a l , James P r e s t o n e s t i m a t e d t h a t it would cost b e t w e e n $ 4 0 , 0 0 0
a n d $ 6 0 , 0 0 0 t o b r i n g t h e b a k e r y up to s t a n d a r d s .
Prestons continued to have problems with the Health
Department throughout t h a t year. A hearing was h e l d b e f o r e a
Department hearing's officer, with no satisfactory results.
While the Prestons were n e v e r g i v e n a l i c e n s e , t h e y were a l s o
never expressly denied one. Meanwhile, t h e b a k e r y w a s o p e n and
operating.
Frustrated by their inability to o b t a i n a health license,
t h e P r e s t o n s s e n t a n o t i c e of r e s c i s s i o n t o McDonnell i n J a n u a r y
1980. T h i s was t h e f i r s t t i m e McDonnell knew t h a t P r e s t o n s were
having d i f f i c u l t y g e t t i n g a l i c e n s e . Prestons closed the bakery
on February 27, 1980, returning their keys to McDonnell.
McDonnell t o o k p o s s e s s i o n of the b a k e r y on March 10, 1980.
After spending approximately $4,200 to c o r r e c t t h e d e f i c i e n c i e s
l i s t e d by t h e H e a l t h D e p a r t m e n t , he o b t a i n e d a h e a l t h l i c e n s e and
reopened t h e bakery.
Prestons brought this action f o r r e s c i s s i o n on t h e grounds
t h a t McDonnell fraudulently represented that the bakery was in
f u l l c o m p l i a n c e w i t h D e p a r t m e n t of H e a l t h s t a n d a r d s .
McDonnell had o p e r a t e d t h e b a k e r y f o r n e a r l y s e v e n t e e n y e a r s .
H e had o b t a i n e d a h e a l t h l i c e n s e f o r t h e y e a r s 1 9 7 3 , 1 9 7 5 , 1 9 7 6 ,
1977, and 1978. The D i s t r i c t C o u r t r e f u s e d to a d m i t i n t o e v i -
d e n c e two c o n d i t i o n a l h e a l t h l i c e n s e s McDonnell r e c e i v e d i n 1968
and 1969.
The P r e s t o n s h a v e r a i s e d two i s s u e s on a p p e a l :
1. Whether the District Court erred by n o t admitting into
e v i d e n c e t h e two c o n d i t i o n a l h e a l t h l i c e n s e s g i v e n t o McDonnell
i n 1 9 6 8 and 1 9 6 9 .
2. Whether the District Court erred by awarding attorney
f e e s and c o s t s to McDonnell.
In the first issue: appellants argue that the conditional
health licenses are relevant because they tend to show that
McDonnell knew the bakery would not meet health standards.
R e s p o n d e n t claims, and t h e D i s t r i c t C o u r t d e c i d e d , t h a t t h e con-
d i t i o n a l l i c e n s e s were so remote i n t i m e t h a t t h e y had l i t t l e , i f
a n y , p r o b a t i v e v a l u e and w e r e t h e r e f o r e n o t r e l e v a n t .
I n d e t e r m i n i n g w h e t h e r e v i d e n c e is t o o r e m o t e to be r e l e v a n t ,
a trial court is n o t guided by a n y fixed rules. Rather, the
n a t u r e of t h e e v i d e n c e and the c i r c u m s t a n c e s of the particular
case must control, 2 Wigmore, Evidence S437 (Chadbourn r e v .
1979). For t h i s r e a s o n , t h e d e t e r m i n a t i o n of r e m o t e n e s s is l e f t
in great part t o the t r i a l court's discretion. Wigmore,
- -
- supra;
Courtney v. Courtney (1975), -- - . Alaska .- , 5 4 2 P.2d 164;
Gilliland v. Rhoads (1975), - Wyo. , 539 P.2d 1221;
Blankenship v. Brookshier (1966), 91 Ida. 317, 420 P.2d 800;
and Morrison v. B r a d l e y ( 1 9 8 0 ) , .- - C o l o .App. - -- , 6 2 2 P.2d 8 1 ,
c e r t . g r a n t e d Dec. 1 5 , 1 9 8 0 . The t r i a l c o u r t ' s d e t e r m i n a t i o n of
relevancy is subject to review only in the case of manifest
abuse. S e e a l s o G u n d e r s o n v. B r e w s t e r ( 1 9 7 0 ) , 1 5 4 Mont. 4 0 5 , 466
P.2d 5 8 9 ; Cech v. S t a t e (1979), - Mont. -- -- , 6 0 4 P.2d 9 7 , 36
St.Rep. 2185.
Here, t h e District Court d i d not abuse its d i s c r e t i o n . The
c o n d i t i o n of t h e b a k e r y t e n y e a r s p r i o r to i t s s a l e c o u l d e a s i l y
be c o n s i d e r e d t o o r e m o t e and irrelevant. Many o l d d e f i c i e n c i e s
may h a v e b e e n c o r r e c t e d , w h i l e new, y e t s i m i l a r , d e f i c i e n c i e s may
have arisen. The District Court did not err by refusing
admission of t h e c o n d i t i o n a l h e a l t h l i c e n s e s .
A p p e l l a n t s a r g u e i n t h e n e x t i s s u e t h a t McDonnell s h o u l d n o t
b e a w a r d e d a t t o r n e y f e e s and c o s t s . They claim t h a t t h e c o n t r a c t
p r o v i s i o n s a l l o w i n g a t t o r n e y f e e s a p p l y o n l y t o en£ o r c e m e n t and
not rescission of the contract. This contention l a c k s merit.
An a r g u m e n t s i m i l a r t o a p p e l l a n t s ' c o n t e n t i o n was r a i s e d in
Winer v. J o n a l C o r p o r a t i o n ( 1 9 7 6 ) , 1 6 9 Mont. 2 4 7 , 5 4 5 P.2d 1094.
I n Winer, t h e a p p e l l a n t s c l a i m e d t h e i r a c t i o n t o r e c o v e r damages
f o r b r e a c h of contract, fraud, and conspiracy, was g r o u n d e d in
tort and not in contract law, and therefore no attorney fees
should be awarded. This Court summarily concluded that this
a r g u m e n t had no m e r i t , e s p e c i a l l y i n v i e w of a p p e l l a n t s ' r e q u e s t s
f o r a t t o r n e y f e e s i n a l l c o u n t s of t h e i r pleadings. Similarly,
here, a p p e l l a n t s amended t h e i r complaint seeking attorney fees,
and o n l y o b j e c t e d t o a n award of a t t o r n e y f e e s a f t e r McDonnell
prevailed in the action.
Moreover, in Compton v. Alcorn ( 1 9 7 6 ) r 1 7 1 Mont. 230, 557
P.2d 292, this Court allowed attorney fees in an action for
rescission. W e reasoned t h a t s e c t i o n 28-3-704, MCA, provides a
r e c i p r o c a l r i g h t t o a t t o r n e y f e e s t o a l l p a r t i e s to t h e c o n t r a c t
in any action on the contract. Using the same r e a s o n i n g , in
Bartmegs v . Bourassa (1982), -- .--. Mont. - ., 639 P.2d 1 1 4 7 , 39
St.Rep. 5 6 , w e a l l o w e d a t t o r n e y f e e s b a s e d on a c o n t r a c t t h a t was
void a b i-n i t i o .
-- - Here, because the contracts provide for the
award of attorney fees and costs to the prevailing party, the
award o f f e e s and c o s t s was p r o p e r .
F i n d i n g no e r r o r , the District
We concur: