No. 8 6 - 2 4 6
IN THE SUPREME COURT OF THE STATE OF MONTANA
1986
WESTMONT TRACTOR COMPANY,
Plaintiff and Appellant,
CONTINENTAL I, INC., an Idaho
Corp., and CHARLES A. WHITE,
an individual,
Defendants and Respondents.
APPEAL FF.OM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable Jack L . Green, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Datsopoulos, MacDonald & Lind; Fichard A. Reep,
Missoula, Montana
For Respondent:
Boone, Karlberg & Haddon; Wil1ia.m L. Crowley,
Missoula, Montana
Submitted on Briefs: Oct. 23, 1 9 8 6
Decided: December 31, 1986
Filed: DEC 3 1986
-. ~
Clerk
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
Plaintiff Westrnont Tractor Company appeals from a
summary judgment granted to defendant Charles White in the
District Court, Fourth Judicial District, Missoula County.
We affirm the District Court" judgment.
The dispute in this case arises over a series of unpaid
debts between the plaintiff Westmont Tractor Company and the
defendants Continental I, Inc. and Charles White, former
president of Continental. In its complaint, Westmont alleged
five counts of unpaid indebtedness, plus one count for
attorney fees incurred in its collection efforts. A default
judgment was entered against Continental I on February 5,
1985. A hearing was held April 25, 1985 on defendant White's
alternative motion for sumary judgment, and proceedings
continued until November 27, 1985 when the District Court
entered its findings of fact and conclusions of law, ordering
summary judgment in favor of defendant White on all counts.
The court also set a hearinq for award of attorney fees.
Judgment was entered January 28, 1q86 awarding White
$9,207.00 in attorney fees.
The issues presented for our review are:
1. Whether the District Court erred in sranting summary
judgment?
2. Whether the District Court erred in awardjng
attorney fees to the defendant?
In order to determine whether summary judgment was
proper, we review the pleadings, affidavits, answers to
interrogatories and admissions on file to establish whether
any genuine issues of materjal fact are presented. Tf there
is no genuine issue as to any material fact, then the moving
party is entitled to summary judgment as a matter of lar.
Reagan v. Union Oil of California (Mont. 1984), 675 P.2d 953,
956, 41 St.Rep. 131, 134.
Westmont first argues it was error for the District
Court to make findings of fact, rather than to conclude
factual issues remained to be determined. Under Rule 52 ( a ) ,
M.R.Civ.P., findings of fact are unnecessary on summary
judgment motions. Lewis v. State, Dept. of Revenue (Mont.
1984), 675 P.2d 107, 114, 41 St.Rep. 9, 17. However, an
analysis of the findings is useful in determining the
correctness of the summary judgment involved. Upper Missouri
G & T Electric Co-op., Inc. v. McCone Electric Co-op., Xnc.
(1971), 157 Mont. 239, 244, 484 P.2d 741, 744. Thus, we will
examine the District Court's fin?.ings for evidence of the
existence or non-existence of genuine and material factual
issues.
F e first note the specific claims made in Westmont's
7
complaint. Count I was a request for a deficiency judgment
on an instal-lment sales contract for heavy equipment. A
security interest in the contract was perfected. April 22,
1974. Collateral for the security interest consisted of the
heavy eauipment purchased by Continental. Charles Whit-e
signed the security agreement as an individual guarantor for
Continental. When Continental defaulted on its payments
under the contract, F7estmont repossessed the heavy equipment
pursuant to a voluntary repossession agreement executed
between itself and Continental. This agreement was signed
February 2 7 , 1376 by Robert Street, who had replaced Charles
White as president of Continental.
Count I1 of Westmont's complaint alleged defendants were
in default on payments for the lease of a Euclid TS-14
scraper. Westmont and Continental entered into a lease
agreement March 24, 1972. Charles White signed this
agreement as an individual guarantor. A U.C.C. financing
statement was also filed on this lease March 27, 1972. The
lease agreement provided for rental payments of $2,500.00 the
first month, $2,000.00 for the next twelve months, and
$1,650.00 for each month thereafter. Paragraph 12 of the
stipulations and conditions of the lease stated that title to
the leased equipment remained vested in the owner, and the
lessee had no option to purchase the equipment. However,
when Continental defaulted on its lease payments, Westmont
"purchased" the scraper and credited $13,000.00 to
Continental's delinquent account.
Count's 111 and V of Westmont's complaint are requests
for paynents on delinquent open accounts. Continental kept
open accounts for parts and services (Count 111) and for
rentals (Count V) . Continental owed $39,887.85 on its parts
and services open account for the period from April, 1974, to
January, 1978. It owed $4,052.39 on its rental account for
the period from August, 1974, to February, 1976. In response
to defendant White's request for admissions, Westmont
admitted that the debts incurred on these open accounts were
corporate l iabilities, rather than liabilities personal ly
incurred by Charles White.
Count IV alleges breach of payment on a promissory note
signed by Continental and co-signed by White "as an
individual." This note appare~tlywas the security for the
refinancing of charges made on the above open accounts prior
to February 3 8 , 1974. Westmont filed a security agreement on
this note April 10, 1.974, listing as collateral the Euclid
TS-14 scraper (the same scraper listed as collateral in the
lease agreement) and a Euclid waterwagon. A payment of
$30,486.39 plus interest at 10% was due on the note on
December 10, 1974, and was never paid.
Count VI is a request for attorney fees incurred in the
attempted collection of the debts.
After reviewing the parties' pl.eadings, interrogatories,
request for admissions, requests for production, and
affidavits, the District Court made findings of fact and
conclusions of law as follows:
FINDINGS OF FACT
There is no' genuine issue as to any material fact.
Plaintiff and Defendant Corporation entered into a
security agreement by t~hich Defendant Corporation
granted Plaintiff a security interest in certain
corporate property. Defendant White signed the
security agreement as individual guarantor.
Plaintiff was granted the security agreement to
secure corporate obligations set forth in Counts I,
I1 and V [sic] of the Compl-aint.
Plaintiff repossessed and disposed of the secured
property.
Plaintiff did not give Defendant White reasonable
notice of the time and place of any public sale or
reasonable notice of the time after which any
private sale or other intended disposition [of]
collateral was to be made as required by
S30-9-504 (3), MCA.
Defendant White did not, after default, sign a
written statement renouncing or modifying his right
to notification.
Defendant Corporation maintained an open account
with Plaintiff as alleged in Count 111.
VIIL
Defendant White was not a party to the agreement
alleged in Count I11 either indivi.dually or as
guarantor.
Defendant Corporation and Plaintiff entered into an
agreement whereby Plaintiff extended Defendant
Corporation a line of credit on a rental account as
alleged in Count V.
Defendant White was not a party to the agreement
alleged in Count V either individual-ly or as a
guarantor.
From the foregoing Findings of Fact, the Court
now makes the following:
CONCLUSIONS OF LAW
Defendant White is not legally obligated for the
obligations alleged in Counts T I 1 and V.
Since Plaintiff failed to comply with 530-9-504(3),
MCA with respect to Defendant White, Plaintiff is
barred from recovering any deficiency judgment from
Defendant White.
The court then directed a summary judgment in defendant
White ' s favor .
The purpose of summary judgment is to encourage judicial
economy through the prompt elimination of questions not
deserving of resolution by trial. Harland v. Anderson
(1976), 169 Mont. 447, 450, 548 P. 2d 613, 615. While the
initial burden is on the moving party to establish there are
no genuine issues of material fact, the burden shifts to the
opposing party once the showing has been made that no issues
of material fact exists. Id.
- at 451, 548 P . 2 d at 615. The
party opposing the motion must present material facts in
dispute, not ones which are fa.ncifu1, frivolous, gauzy or
merely suspicions. Silloway v. Jorgenson (1965), 146 Mont.
307, 310, 406 P.2d 167, 169.
Findings of Fact VII through X are essentially
uncontroverted. In Counts 111 and V of the complaint,
Westmont seeks to recover the unpaid sums on two open
accounts. However, Westmont has admitted in its answers to
White's request for admissions and set of interrogatories
that the debts incurred on the accounts were expenses
incurred by Continental as a corporation, rather than by
White as an individual. Westmont claims it will demonstrate
at trial that it relied on oral assurances of payment
guaranteed by White personally. However, the court was not
required to anticipate further proof at trial. Dooling v.
Perry (1979), 183 Mont. 451, 457, 600 P.2d 799, 802. We
therefore find summary judgment proper as to Counts 111 and V
of plaintiff's complaint.
We now examine the facts underlying Findings of Fact 11
through VI. Westmont and Continental entered into three
secured transactions. The first was on an installment sales
contract for heavy equipment. Continental agreed to purchase
a number of pieces of logging equipment, and White signed the
agreement as an individual guarantor. Westmont filed a
financing statement perfecting its interest in April, 1974,
and listed the heavy equipment as collateral.
The second secured transaction was a lease agreement
entered into for the "lease" of a scraper. White also signed
this agreement as an individual guarantor. Westmont filed a
financing statement on the lease agreement, listing the
scraper as collateral. Westmont arques the Pistrict Court
erred in concluding the lease agreement was a lease purchase
agreement, rather than leave for trial the issue of whether
the lease was or was not a "true lease." We find ample
evidence to support the District Court's finding that the
lease was in fact a sale. First, Westmont itself refers to
the agreement as a "lease purchase agreement" in its answers
to F7hite ' s interrogatories. Second, Mestmont's
vice-president of finance, Walter Kero, in a statement
attached to White's attorney's affidavit refers to the
agreement as a "lease purchase contract." Finally,
F7estmont1s own treatment of the collateral strongly implies
the transaction was actually a sale. Upon default, Westmont
"purchased" the scraper, credited Continental's account for
the "purchase price" of $13,000.00 and then resold the
scraper to a third partv. In light of these facts, we find
no genuine issue of fact existed as to the status of the
lease purchase agreement.
The third secured transaction was the execution of a
promissory note signed by Continental and Charles White "as
an individual." The note stated, "Each and every party
signing or endorsing this note hereby waives presentment,
demand, protest and notice of nonpayment thereof, and
declares himself bound thereon - - principal - - - - as a
as a and not
surety." (Emphasis added.) From the face of the note, it
appears White signed expressly as a co-maker rather than as a
guarantor. The note was secured by the same TS-14 scraper
which secured the lease purchase agreement, and also by a
Euclid waterwagon. The note apparently was used to refinance
earlier debts on the open accounts noted above.
In February, 1976, Westmont and Continental entered into
a voluntary repossession agreement. The agreement stated
that whereas Continental was i n d.efault on its i.nstallment
.
sales contract, lease agreement, promissory note and open
accounts, and whereas Continental had already voluntarily
returned all the equipment listed as collateral for the
various debts, Continental and Westmont agreed to have
Westmont sell the equipment and apply the proceeds to t-he
debts. Continental waived the requirement that the equipment
be sold at public auction and authorized Westmont to dispose
of the equipment through private sales. Continental. also
agreed to pay any deficiency arising from the sales.
The agreement was signed by Robert Street, then
president of Continental. A copy of the agreement was never
sent to White, and in fact he never saw the agreement until
the period of discovery in this action. Westmont does not
dispute the fact notice of this agreement was never sent to
White. It argues rather a theory of constructive notice,
that White should have heen aware of this agreement since the
final, mutual release between White and Continental was not
signed until October, 1975. White has sworn in his affidavit
that he took no part in Continental's business after
December, 1974. Westmont has not produced evidence
sufficient to rebut this statement. We therefore conclude no
material issue of fact exists to dispute the contention that
White never received notice of the repossession and sale of
the collateral which secured the installment sales contract,
the lease purchase agreement or the promissory note.
In Montana, failure of a secured party to provide notice
of sale of collateral. as required under S 30-9-504(3), MCA,
bars the secured party from obtaining a deficiency judgment
from the debtor. Bank of Sheridan v. Devers (Mont. 1985),
702 P.2d 1388, 1390, 42 St.Rep. 1107, 1110-11; FJippert v.
Blackfeet Tribe (Mont. 1985), 695 P.2d 461, 465, 42 St.Rep.
1
200, 204. White, as an individual guarantor on the
installment sales contract and lease agreement, and as a
co-maker of the promissory note, was entitled to notice prior
to Westmont's repossession and sale of the collateral.
Failure to give notice precludes Westmont from recoverina a
deficiency judgment on the three secured transactions.
Westmont's final assignment of error to the District
Court is i.ts award of attorney fees to White. Under the
provisions of the three contracts, Westmont was entitled to
attorney fees in its prosecution of action against the
debtor. Under S 28-3-704, IICA, the contractual right to
attorney fees is reciprocal. Northwestern National Bank of
Great Falls v. Weaver-Maxwell, Inc. (Mont., No. 85-419,
Decided November 13, 1-9861, 43 St.Rep. 1995, 2003. We find
no abuse of discret.i.on in the District Court's award of
attorney fees to White.
Judgment of the District Court is affirmed.
We Concur:
d
1 We distinguish here First National Park Bank v. Johnson
(9th Cir. 1977), 553 F.2d 599, 602. In that case, the
court found that a guarantor was not a debtor for the
purpose of waiving the notice requirement of §§
30-9-501(3) and -504 ( 3 ) , MCA. A debtor is given the
opportunity to waive notification of sale after default,
but may not waive notice of repossession and sale prior
to default. In this case, White was not at any time
given an opportunity to waive notification.
i I
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