No. 86-275
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
STEPHEN J. KENNEY,
Plaintiff and Appellant,
-vs-
RUDY KOCH, SIMON KUNTZ, AND K & K
DEVELOPMENT, INC.,
Defendants and Respondents.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Big Horn,
The Honorable G. Todd Baugh, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Stanton, Hovland & Torske; James E. Torske,
Hardin, Montana
For Respondent:
Wright, Tolliver & Guthals; Joel E. Guthals,
Billings, Montana
Submitted on Briefs: March 5, 1987
Decided: MaY 28, 1987
Filed: MAY 2 s 1987
Mr. Justice William E. Hunt, Sr., delivered the Opinion of
the Court.
Appellant, Stephen J. Kenney appeals from a judgment
from the Thirteenth Judicial District of the State of Montana
awarding him $32,120.00 in damages for wrongful conversion of
his property and also awarding respondents, K & K
Development, Inc., $500.00 in damages for trespass.
We reverse in part and remand for re-evaluation of
damages consistent with this Opinion.
We are asked to decide six issues. Issue number one is
raised by respondents and questions the jurisdiction of this
Court because appellant did not comply with the Montana Rules
of Civil Procedure. The remaining five issues are raised by
the appellant and go to the judgment of the District Court.
The six issues are:
1. Does this Court have jurisdiction to hear this
appeal because of the failure of the appellant to timely file
notice of appeal and failure to file transcript of the
proceedings in accordance with the Montana Rules of Civil
Procedure?
2. Did the District Court abuse its discretion by
awarding damages based on $3.25 per cubic yard of gravel as
the highest market value pursuant to 5 27-1-320, MCA?
3. Was appellant entitled to an award for reasonable
time and money expended in the pursuit of his property
pursuant to S 27-1-320, MCA?
4. Did the District Court err by not including attorney
fees in its award for appellant under § 27-1-320, MCA?
5. Did the District Court err by awarding damages for
trespass to respondents?
6. Did the District Court err by awarding damages based
on equity rather than S 27-1-320, MCA?
The personal property, subject of this dispute, is 7,390
cubic yards of gravel of the specification " 3 / 4 minus"
required by appellant to meet many of his contractual
obligations. In 1971, appellant refused an offer by the
owner, Robert Downs, to sell the gravel for $6.00 per cubic
yard. Later, in February, 1981, Downs offered to sell the
gravel for $3.25 per cubic yard and appellant accepted.
Appellant did not record notice of his interest in the
gravel. The gravel had been stockpiled on Downs' property
located within eyesight of appellant's general contracting
business in Hardin, Montana. After selling the gravel to
appellant, Downs conveyed the real property on which the
gravel was located to Ernie DeVries to satisfy a pre-existing
debt.
In October, 1981, respondents Koch and Kuntz became
interested in purchasing the land where the gravel was still
stockpiled. Koch and Kuntz negotiated with DeVries, his
attorney and Downs' real estate broker for the sale of the
land. It was during these negotiations that the question of
ownership of the stockpiled gravel was raised. Koch and
Kuntz wanted to acquire the gravel to use in the development
of the property. A search through the title records produced
only an expired State of Montana stockpiling agreement.
On October 23, 1981, the respondents purchased the land
on a contract for deed. The contract was silent as to the
ownership of the gravel and Koch and Kuntz received no bill
of sale for it. After the sale, Koch and Kuntz decided to
lock the gate and cut off access to the gravel in an attempt
to determine who, if anyone, owned the gravel and to protect
themselves from any liability from theft. The same day that
Koch and Kuntz chained and locked the gate to the property,
appellant met them on the road immediately adjacent to the
stockpiled gravel and informed them of his ownership of the
gravel. Koch and Kuntz asked for documentation and shortly
thereafter their attorney formally requested verification of
ownership from appellant.
On October 29, 1981, appellant provided the respondents'
attorney with the cancelled check made out to Downs and with
the vendor's invoice for the gravel which he received from
Downs. Because there was no notice of interest on record,
the invoice did not contain an exact legal description of the
location of the stockpiled gravel, and because the State
Highway Department was also making claims on some of the
gravel on their land, Koch and Kuntz refused to honor
appellant's claim. Koch and Kuntz did not contact Downs to
inquire about the validity of appellant's ownership.
In November, 1981, appellant completed a contract with
the City of Hardin for which 1,450 cubic yards of gravel,
comparable to the gravel in question, was purchased for
$16.50 per cubic yard. In April, 1982, appellant sold
another 7,390 cubic yards of comparable gravel to the City of
Hardin as part of another construction contract.
In June, 1982, appellant needed more grade "3/4 minus"
gravel for a contract with Petty Ray GeoSource. To get the
gravel which he purchased from Downs, appellant broke the
padlock on the gate to Koch and Kuntz's property (now K & K
Development, Inc.) and removed 10 semi-truck loads or 90
cubic yards of gravel. Appellant was paid $6.50 per cubic
yard for these 90 cubic yards. Immediately thereafter, Koch
and Kuntz, through their attorney, informed appellant that
they did not consent to the removal of any gravel from their
property and that he was trespassing.
On July 29, 1982, appellant filed a wrongful conversion
claim under 5 27-1-320, MCA. In accordance with the
provisions of that statute, appellant opted to receive the
highest market value of the gravel between the time of
conversion and the date of the verdict, without interest,
instead of the fair market value of the gravel at the time of
conversion with interest. Appellant also requested
reasonable costs of pursuing his property and attorney fees.
On August 19, 1982, due to the dispute over the gravel,
DeVries traded property with Koch and Kuntz to relieve them
of having to prove ownership of the gravel.
The case was heard on June 4, 1985 in a non-jury trial.
The District Court judgment awarded appellant: $23,725.00
for the conversion of 7,300 cubic yards of gravel valued at
$3.25 per cubic yard as the highest market value between the
date of conversion and December 18, 1985, the date of the
verdict; $8,395.00 for incidental and consequential damages;
10% interest from the date of the judgment until paid;
nothing for time and money spent in pursuit of his property;
and nothing for attorney fees. The judgment further ordered
that appellant pay K & K Development, Inc. $500.00 in
"nominal" damages for trespass.
Following this judgment of October 25, 1985, both
parties filed post-trial motions. These motions were all
denied by an order dated January 15, 1986. No notice of
entry of judgment was filed until March 26, 1986, when a
notice of appeal was also filed by appellant.
Before considering the facts and applicable law, we must
first consider the question of whether this Court has
jurisdiction to hear this appeal. To do that, we must begin
with an analysis of Rule 77 (dl , M.R.Civ.P., which states in
part: "Within 10 days after entry of judgment in an action
in which an appearance has been made, notice of such
entry,. .. shall be served by the prevailing party upon all
parties who have made an appearance . . ."
Rule 5, M.R.App.Civ.P. provides that when Rule 77 (d) is
applicable, the 30 day limitation on filing notice of appeals
begins to run upon service of notice of entry of judgment.
The history of Rule 77 (d) tells us that the obligation
of who is to serve notice of entry of judgment has fluctuated
since the rule's inception. Prior to 1975, Rule 77 (d)
required that notice of entry of judgment be served by the
prevailing party on the adverse parties to the case. From
1975 to 1984, such notice was to be served by the clerk of
court on all adverse parties. The reason for this change was
to substitute reliable proof of mailing "for the interminable
wrangling between counsel concerning whether prevailing
counsel had in fact mailed the notice of entry of judgment to
opposing counsel and if so, on what date." Pierce Packing
Co. v. District Court (1978), 177 Mont. 50, 53, 579 P.2d 760,
761.
In 1984, Rule 77 (d) was amended to require that the
"prevailing party serve notice upon all parties who have made
an appearance" as preferable to the old rule requiring the
clerk of court to serve such notice.
This Court has held that it is the filing of the notice
of entry of judgment that begins the running of the time
limitations for filing a notice of appeal. Actual notice is
not sufficient. "This rule has been technically applied to
assure proper notice and an understanding of when the time
for appeal begins to run. " Morrison v. Higbee (Mont. 1983) ,
668 P.2d 1029, 1032, 40 St.Rep. 1031, 1034.
In spite of this statutory language and case law,
respondents argue that this Court lacks jurisdiction to hear
this appeal due to untimely filing of notice of appeal.
Respondents argue that on January 15, 1986, when the District
Court denied all post-trial motions, the ten day period in
which to serve notice of entry of judgment pursuant to Rule
77 (d) began to run.
However, in Haywood v. Sedillo (1975), 167 Mont. 101,
535 P.2d 1014, neither party ever filed a notice of entry of
judgment. Notice of appeal was filed 58 days after the
District Court's judgment was filed. Even though both
parties in Haywood had actual notice of the court's ruling,
this Court held that:
Service of notice of the entry of judgment is not
an idle act. In order to provide certainty in the
law, some arbitrary point must be chosen from which
the time to appeal may run. That point by the
Montana Rules is the date of service of the notice
of entry of judgment.
In the present case, a notice of entry of judgment was
filed 71 days after judgment on the post-trial motions was
filed. The obligation to file the notice was on the
prevailing party. If a prevailing party neglects to file a
notice of entry of judgment, that party cannot then claim
untimely filing of a notice of appeal by a non-prevailing
party who wishes to appeal.
To determine whether Rule 77(d) was violated, we must
resolve the question of who was the "prevailing party" in the
District Court decision.
Appellant Kenney originally brought suit against
respondents Koch and Kuntz for conversion of his property and
resulting damages. The judgment granted to appellant was
$23,725.00 for his conversion claim and $8,395.00 for
consequential damages. There was no award for time and money
expended in pursuit of his property nor for attorney fees.
Respondents were awarded $500.00 for their trespass
counterclaim.
Although the monetary amount of a judgment is not
decisive, the award of money is an important consideration
when deciding who prevailed. E.C.A. Environmental Management
v. Toenyes (Mont. 1984), 679 P.2d 213, 217-218, 41 St.Rep.
388, 392-393.
Both parties received a judgment for money. Appellant
was successful in his claim for conversion. Respondents were
successful in their claim for trespass. Both parties filed
post-trial motions, all of which were denied. In Jorden v.
Elizabethan Manor (1979), 181 Mont. 424, 434, 593 P.2d 1049,
1055, we stated that "[a] prevailing party is the one who has
an affirmative judgment rendered in his favor at the
conclusion of the entire case. 'I In this case, both parties
had an affirmative judgment rendered in their favor, so both
can be considered to have prevailed. Either party could have
made the requisite filing and both were responsible for the
failure to technically comply with Rule 77(d) and file a
notice of entry of judgment by January 27, 1986.
In Pierce Packing, where neither party observed the
requirements of the Rules of Civil Procedure, we stated that
"where counsel for petitioner seeks to enforce the technical
requirements of the Rules against opposing counsel, we will
apply the same standard to petitioner and require the same
technical compliance of him." 579 P.2d at 761.
The notice of entry of judgment was filed on March 26,
1986. Appellant filed his notice of appeal the same day. In
this case, March 26, 1986 began the running of time
limitations for the filing of an appeal. We hold that the
appeal was timely filed.
Respondents argue further that appellant failed to
timely order a transcript of the proceedings. The record
shows that the District Court granted a request for an
extension of time to the court reporter to complete a
transcript of the proceedings. All pertinent transcripts and
records were before this Court at the time of review of
respondents' request for dismissal and we hold that this
appeal is properly before this Court. In view of the
foregoing, we hold that this Court has jurisdiction to hear
this case.
We now consider the second issue as to whether the
District Court abused its discretion by awarding appellant
damages based on an amount of $3.25 per cubic yard of gravel
as the "highest market value" pursuant to § 27-1-320, MCA.
We hold that the court did err.
The value of the gravel at issue is a question of fact.
The standard of review for this Court for findings of fact
are that unless "clearly erroneous," we will not set them
aside. Rule 52 (a), K. R.Civ.P. The same rule gives deference
to the District Court's direct observance of the witnesses
and the weight to be given their testimony.
Section 27-1-320, MCA, states as follows:
The detriment caused by the wrongful conversion of
property is assumed to be: (a) the value of the
property at the time of its conversion with the
interest from that time or, when the action has
been prosecuted with reasonable diligence, the
highest market value of the property at any time
between the conversion and the verdict without
interest, at the option of the injured party; and
(b) a fair compensation for the time and money
properly expended in pursuit of the property ...
The language of § 27-1-320, MCA, has been virtually unchanged
since 1895. The presumption contained in this statute is a
disputable one. It may be overcome by evidence of peculiar
circumstances that result in greater or less injury than the
statute contemplates. " [I]n the absence of proof of such
special circumstances, the statutory rules govern." Graham
v. Clark's Fork National Rank (Mont. 1981), 631 P.2d 718,
720, 38 St.Rep. 1140, 1142-43, citing Ferrat v. Adamson, et
al. (1917), 53 Mont. 172, 163 P. 112.
Appellant opted, under S 27-1-320, MCA, to recover "the
highest market value of the property at any time between the
conversion and the verdict without interest" instead of the
"value of the property at the time of its conversion with the
interest from that time." The District Court found that
appellant 's gravel was wrongfully converted as of early
November, 1981. There is no evidence on record of any
special circumstances which proved greater or lesser injuries
than those for which this statute provides.
Testimony was heard as to the "highest market value" of
the gravel. This Court has held that "market value" means
the price which "a buyer willing but not obligated to buy
would pay a seller willing but not obligated to sell, but
with full knowledge of all pertinent facts affecting value."
In re Estate of Powers (1970), 156 Mont. 100, 103, 476 P.2d
506, 507-08. See also State Dept. of Highways v. Schumaker
(1979), 180 Mont. 329, 590 P.2d 1110.
An expert witness testified that the value of the gravel
was $3.25, which was the original purchase price paid by
appellant. Appellant testified that he sold 90 cubic yards
of the gravel at $6.50 per cubic yard in June, 1982. He also
testified that he sold comparable gravel to the City of
Hardin for $16.50 per cubic yard. This price included the
standard overhead cost of transporting the gravel for 50
cents per cubic yard mile. In appellant's opinion, the
gravel in question had a fair market value at the time of
conversion of $15.15 per cubic yard.
The District Court found that, excluding overhead and
profit, the highest market value of the gravel in question
was $3.25 per cubic yard. This finding is contrary to the
evidence. Testimony showed that appellant sold the gravel he
purchased at $3.25 per cubic yard for various prices greater
than the purchase price, up to a sale price of $16.50 per
cubic yard. Mathematically the market value is obviously
between the upper and lower limits of these two figures. In
opting to forego interest since November, 1981, on the value
of his gravel at the time of conversion, appellant relied on
the statutory provision providing for "highest market value"
without interest. "[A] plaintiff in an action for conversion
may, by waiving interest, elect any date between the date of
the conversion and the date of the trial on which to lay his
damages." Klus v. Lamire (1924), 71 Mont. 445, 446, 230 P.
364, 365. The substantial credible evidence on record
supports appellant's contention that $3.25 per cubic yard is
- the "highest market value" of the gravel at "anytime
not
between the conversion and the verdict." In Broadwater Farms
Co. v. Broadwater Elevator Co. (19211, 61 Mont. 21-51 201 P -
687, this Court held that where a plaintiff in an action for
conversion has brought himself within the rule requiring
diligence in prosecuting the action, the fact that the
measure of damages recoverable under it may be inequitable
and unjust cannot deprive him of his right to recover the
highest market value of the property at any time between the
conversion and the verdict, at plaintiff's option, which he
might have obtained but for the wrongful act of defendant.
Profit is a factor in any property's fair market value. It
follows that even more profit would be included in "highest"
market value. It was an error for the District Court to
estimate profit and subtract it from amounts testified to as
being the highest market value of the gravel.
Respondents, Koch and Kuntz' actions wrongfully kept
appellant's gravel from him for nearly a year. The record
shows varying values for gravel, comparable to the gravel in
question, dependent upon the business acumen of the buyer.
The $3.25 per cubic yard is the lowest value testified to for
comparable gravel. Appellant testified that he sold a lower
grade of gravel for $3.50 per cubic yard. It was clearly
erroneous and an abuse of the District Court's discretion to
find that the "highest market value" for the gravel between
November, 1981, when the gravel was found to have been
wrongfully converted, through October, 1985, when the verdict
was reached, was $3.25 per cubic yard.
We remand for a redetermination of damages in accordance
with this decision.
The next issue raised by appellant is whether appellant
is entitled to reasonable expenses incurred in the pursuit of
recovering possession of his property under § 27-1-320, MCA.
Section 27-1-320 provides that "the detriment caused by
wrongful conversion of personal property is presumed to be:
... (b) a fair compensation for the time and money
properly expended in pursuit of the property."
Appellant testified that he spent considerable time
attempting to regain his property from the defendants. He
further testified that he rounded off the estimated time
spent at 100 hours. Since he has never charged for his labor
at an hourly rate, he picked $lOO.OO/hour as commensurable
with his productivity. At trial an objection was made by
defendant that this statement of his hourly worth was
conclusory. The court overruled the objection. Appellant
now contends that the court is estopped from rejecting the
testimony as "speculative" and refusing to award appellant
anything for the pursuit of his gravel, as was done in the
District Court's decision.
The issue here is not whether the testimony was
speculative or conclusory. The issue is whether appellant is
entitled to reasonable expenses incurred in pursuit of his
property. The District Court held that he was entitled to
fair compensation for the time and money he properly expended
in the pursuit of his property. We agree.
It was an abuse of the court's discretion to find
appellant was entitled to compensation under 5 27-1-320 (b),
MCA, and then award appellant nothing. On remand, fair
compensation must be determined.
Tied to the preceding issue is the question of whether
attorney fees are properly included as "time and money"
properly expended. The District Court denied appellant
attorney fees based on the lack of a contract or statute
providing for them. The general rule is that "in absence of
statute or contract, attorney fees will not be awarded."
Martin v. Randono (Mont. 1981), 623 P.2d 959, 962, 38 St.Rep.
209, 212. It is well established in Montana that the term
"costs" does not include attorney fees, 623 P.2d at 962;
Tomten v. Thomas (1951), 125 Mont. 159, 165, 232 P.2d 723,
727. Section 27-1-320, MCA does not explicitly state that
attorney fees are to be considered in an award of time and
money expended in pursuit of appellant's property. Neither
does the statute contain the term "costs." However, the
statutory terms "expenses" and "money expended" mean
virtually the same thing as cost^.'^ Precedent tells us that
"costs" do not contemplate attorney fees and we hold that
attorney fees were properly denied by the District Court.
The fifth issue raised by appellant is whether the
District Court erred by awarding damages for trespass to
respondent.
Whether trespass occurred and whether there were
consequential damages to respondent's property is a question
of fact to be determined by the trier of fact. The District
Court determined that there was substantial evidence to
sustain a charge of trespass. The court found further that a
"nominal" award of $500.00 for damages was appropriate. The
record does not contradict this finding and we affirm the
award.
The final issue of whether damages should be based on
equity or whether an award must be made in accordance with S
27-1-320, MCA, has been adequately addressed and we need not
discuss it further.
The decision of the District Court is reversed and
remanded for a re-evaluation of damages consistent with this
n
Opinion.
We Concur: /
v Chief Justice
/ Justices \