NO. 87-465
IN THE SUPREME COURT OF THE STATE OF MONTANA
1389
MESTLAND ENTERPRISES, INC.,
an<. VERNON F. TAYLOR, Trustee,
Plaintiffs and Respondents,
-vs-
BOYNE USA, INC.; RURAL IMPROVEMENT
DISTRICT # 3 0 5 and its Directors,
JACK HARPER, JOHN McCULLEY, and RAYMOND
J. TOUT; GALLATIN COUNTY COMMISSIONERS,
RAY WHITE, JANE JELINSKI and WILBUR VISSER;
and MADISON COUNTY COMMISSIONERS, MARIE McALEAR,
RILL DRINGLE and JOHN ALLHANDS,
Defendants and Appellants.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Peter 1. Rapkoch, Judge presiding.
,
COUNSEL OF RECORD:
For Appellant:
Kirwan & Barrett; Peter M. Kirwan, Bozeman, Montana
A. Michael Salvagni, County Attorney; Duke Wolf, Deputy
County Attorney, Rozeman, Montana
Loren Tucker, County Attorney, Virginia City, Montana
For Respondent:
Morrow, Sedivy & Bennett; Edmund P. Sedivy, Rozeman,
Montana
'2
m 7
>
'
--
J- .<,,
\
Submitted on Briefs: March 9, 1989
De~ided:April 27, 1989
Mr. Zustj.ce R.. C. McDonough deli.vered the Opinion of the
Court
This appeal involves a dispute over contract terms
granting use of a sewer system located at Rig Sky, Montana.
Defendants Royne USA, et al. (Royne) appeal from the judgment
O F the District Court of the Eighteenth Judicial Di.strict,
Gallatin County. The District Court enjoined Royne from
allowing further connections to the system until the sewage
facility had been expanded sufficiently to accommodate sewage
from future real estate development contemplated by
plaintiffs Westland Enterprises, et al. (Westland). The
court also granted declaratory relief by quantifying the
treatment capacity to be provided for Westland under the
terms of the contract. We affirm in part and reverse in
part.
Boyne presents six issues for review:
1. Were the District Court's original Findings of Fact
supported by the record?
2. Did the District Court have jurisdiction to make a de
novo determination of the capacity and adequacy of the RIP
P305 Sewage Treatment Facility?
3. Was the District Court's Order entered after the
second trial supported by any findings of fact or evidence of
record?
4. Did the District Court err in interpreting the con-
tract at issue to require that RID # 3 0 5 provide Plaintiffs
with present unused sewage treatment capacity for their
future development?
5. Does the contract at issue contain a condition prece-
dent and, if so, have Plaintiffs performed the condition?
6. Is an injunction a proper remedy where the contract
at issue could not be specifically enforced?
The record from the District Court in this case is
lengthy. The facts a r e many, and some have been argued
vehemently. T h e r e a r e a l s o a number o f p a r t i e s i n v o l v e d . In
the i n t e r e s t s of keeping the discussion of the issues as
s i m p l e a s p o s s i b l e , t h e f a c t s and t h e r e l a t i o n s h i p s among t h e
p a r t i e s w i l l be summarized.
Royne i s t h e s u c c e s s o r c o r p o r a t i o n t o Rig Sky o f Mon-
t a n a , I n c . , t h e e n t i t y which began devel-opment o f t h e B i g Sky
ski r e s o r t , g o l f c a u r s e and r e s i d e n t i a l r e a l e s t a t e n e a r t h e
s k i area. F o r p u r p o s e s o f t h i s a p p e a l . , a l l a c t i v i t i e s o f Rig
Sky o f Montana, I n c . , p r i o r t o t h e t a k e o v e r o f t h e p r o j e c t by
Boyne w i l l b e r e g a r d e d a s h a v i n g b e e n u n d e r t a k e n by Boyne.
Westland i s t h e c r e a t i o n o f i n d i v i d u a l owners o f l a n d a d i a -
c e n t t o t h e Rig Sky r e s o r t '?or t h e p u r p o s e s o f d e v e l o p i n ?
that property. The contract at i s s u e was signed by the
indjvj_c?ual landowners, h u t was f o r thle b e n e f i t o f W e s t l a n d ,
a n d w i l l t h e r e f o r e b e t r e a t e d a s a c o n t r a c t between Royne and
Westland.
R i g Sky i s l o c a t e d . j.n t h e m 0 u n t a i . n ~a l o n g t h e W e s t Fork
of the West Gallatin River. Due to the resort's rural
l o c a t i o n , p l a n s c a l l e d f o r t h e b u i l d i n g o f a sewage t r e a t m e n t
plant to serve the ski area, condominiums and other
residential. units associated with the resort. The best
location for this plant was a s i t e on Westland property.
Royne a n d W e s t l a n d e n t e r e d i n t o a c o n t r a c t i n 1 9 7 1 whereby
W e s t l a n d conveyed a p p r o x i m a t e l y 2 1 a c r e s o f land. t o Foyne i n
exchange for the rj.ght to use the sewage faci1i.t.y. The
c o n t r a c t reads i n r e l e v a n t p a r t a s follows:
3. I n consideration f o r the granting of t h i s t r a c t
o f l a n d by t h e G r a n t o r s t o R i g Sky, R i g Sky i n t u r n
agrees t o allow t h e Grantors t o connect with i t s
sewer p l a n t f o r t h e s u b s e q u e n t development o f t h e
a d j a c e n t l a n d s o f t h e G r a n t o r [ s i c ] w i t h no c h a r g e
t c t h e G r a n t o r s by R i g Sky f o r s u c h c o n n e c t i o n and
to further provide free sewage service as more
particularly set forth below.
4. Accordingly, simultaneously upon the execution
of this agreement by all parties and as reciprocal
consideration, the Grantors agree to convey by
Warranty Deed, accompanied by evidence of unencum-
bered merchantable title through a memorandum OF
title, the legal title to the property described in
Exhibit "A". Big Sky in turn conveys to the Gran-
tors upon the execution of this Agreement the right
to connect to the sewer lines of Big Sky in order
that the Grantors can utilize the said central
tertiary sewer plant to be constructed by Big Sky
and Big Sky further agrees to provide to the Gran--
tors sewage treatment at no charge for up to one
million gallons per year for twenty (20) years from
and after the date use of Big Sky's sewer system is
commenced by the Grantors or by July 1, 1981,
whichever is the sooner. Any useage [sic] by the
Grantors over the said figure of one million gal-
lons of sewage per year would be assessed against
the Grantors at the same rate charged to other
users of the plant. Big Sky reserves the right to
refuse service to any user who is a successor of
the Grantors who refuses to join any rural improve-
ment district which may hereafter he created to
own, operate and maintain the said sewer plant.
After twenty (20) years from the date use commences
by the Grantors under this agreement or July 1,
1981, whichever is the sooner, subsequent use by
the Grantors of the sewer plant shall be subject to
charge at the same rate charged for all other
users.
After this contract was signed, the plant was built and
development of Big Sky proceeded. Several proiects were
connected to the treatment facility. Westland did not begin
plans for development of its property until approximately
1982. An initial- study drawn up by a consulting firm hired
hy Westland called for a hotel, golf course, condominiums and
other recreational facilities. The calculated "population
equivalency" of the devel-opment was 3,700, which would re-
quire t-reatment of 4 3 milljon gallons of sewage annually.
Westland's study indicated that Boyne's treatment facility
did not have sufficient capacity remaining to accommodate
this much sewage.
The study results were submitted to defendant Rural
Improvement. District # 3 0 5 (a quasi-public entity created at
Royne 's request to operate the treatment plant) , along with
the suggestion that steps be taken to expand the plant's
capacity. The District consented to accept the amount of
sewage forecast by the plan, subject to certain conditions:
"peak flow" from Westland ' s devel-opment would be limited,
eight more acres of Westland property would be conveyed to
the District for expansion of the plant, and Westland would
allow disposal of treated waste water on its property (by
irrigating the proposed golf course).
Westland disagreed with Boyne as to its rights under the
contract, which eventually resulted in Westland filing suit.
Westland's complaint contained three alternative prayers for
relief. The first sought an injunction against Royne and the
District prohibiting further connections to the treatment
plant until Boyne could show that it had the capacity to
satisfy the needs of Westland's planned development, and a
declaration of the parties' rights under the contract. The
second alternative prayer sought rescission of the contract.
and return of the land to Westland. The third alternative
prayer sought money damages for breach of contract.
After trial by the District Court sitting without a
iury, the court issued its judgment on August 19, 1985. The
court ruled: (1) the contract between Bovne and Westland was
a valid and enforceable agreement; (2) Westl-and was entitled
to use the facility for treatment of 43 million gallons of
sewage per year as proiected by its plan; 13) neither
Westland nor its land could be assessed for the costs of
improvements to or enlargement of the t-reatment facility
necessary to accommodate Westland's use; (4) Westland was
entitled to treatment of its first one million gallons of
sewage per year without charge for the remainder of the
20-year period from July 1, 1981, to June 30, 200L; (5) Royne
and the District were en-joined from allowing any further
connections to the treatment facility until projects were
completed to expand the capacity of the facility to accommo-
date Westlandls projected sewage; ( 6 ) if Royne determined
that it would be impossible to complete any necessary expan-
sion, Westland would be entitled to full rescission of the
contract and return of the land in question; and (7) Westland
was entitled to costs and djshursements.
Royne moved for a stay of execution of the judgment
pending an appeal to this Court, and the parties filed a
Stipulation for Stay of Fxecution on September 30, 1985. The
Stipulation stated terms for the stay agreed to by hoth
sides. Most importantly, hoth parties agreed that paragraph
two of the court's judgment was valid and not subject to
appeal. That paragraph reads:
2. That by virtue of said agreement, Plaintiffs are
entitled to the use of the storage capacity of the
existing sewage facility and the next addition to
the facility in an amount of 43 million gallons of
sewage per year which, usinq a 60-gallon per person
per day figure, would allocate a population equiva-
lency of 3,700 for the development of the Plain-
tiffs ' lands.
The court then entered an order conforming to the terms of
the Stipulation.
Boyne brought its appeal. to this Court, in the course of
which a factual dispute arose between the parties as to what
acti.on was required of Royne under the Dist-rict Court's
judgment. We refused to hear the appeal due to the existence
of the factual dispute, and remanded the case to the District
Court. After a second trial, the District Court entered its
order finding that Boyne had not "completed any projects
which have expanded the capacity of the sewer treatment
facilities" and therefore had not satisfied the court's
August, 1985, judgment. This appeal followed.
While Boyne raises six issues on appeal, its arguments
to this Court center on two portions of the District Court's
judgment: the quantification of rights in paragraph 2 of the
judgment and the injunction requiring Boyne to expand the
capacity of the treatment plant to accommodate Westland's
entitled use. There have been no serious arguments advanced
concerning the court's other holdings, which basically are
corollary to these two main components.
As to the quantification of Westland's right of use, the
Stipulation for Stay of Execution controls. It is improper
to raise an issue on appeal as to a question of law or fact
after the parties have stipulated to that law or fact. In re
Marriage of Prevost (Mont. 1987), 731 P.2d 344, 44 St.Rep.
84. The langua-ge of the Stipulation states that paragraph 2
of the court's judgment is not subject to appeal. The
arguments put forth by both parties alleging withdrawal from
the stipulation by their opponent are unconvincing. We
therefore decline to address Boyne's issues as they relate to
the quantification of rights found in that paragraph.
Westland has the judicia1l.y determined right to utilize the
treatment facility to the extent of 43 million gallons of
sewage per year. That right will be res judicata in any
future dispute between these parties.
Boyne's second challenge raises a novel issue. Injunc-
tions are rarely used to enforce contract rights or prevent
breaches, and applicable court decisions concerning the
propriety of this tactic are scarce. However, the
legislature has set forth st-atutoryguidelines for the use of
injunctions. An applicable guideline is found at 5
27-19-103!5), MCA. Under this sect.ion, an injunction cannot
be obtained "to prevent the breach of a contract the
performance of which woul.cl not be specifically enforced." A.
list of "obligations which cannot be specifical1.y enforced"
is found at S 2 7 - 1 - 4 1 ? , MCA. At subsection ( S ) , that list.
includes "an agreement- the terms of which are nvt
sufficiently certain to make the precise act whj-ch is to he
done clearly ascertainable."
In this case, Westland has alleged that its rights under
the contract are not clear. Westland sought and obtained a
quantification of its entitlement to use the treatment plant
from the District Court. However, if Westland's rights under
the contract are unclear, then Royne ' s corresponding duties
are equally unclear. Those duties have not been clarified in
this action. Both parties admit. that bargaining terms such
as the amount of land required for the treatment plant an6
the scope of future developments were necessarily based on
estimates and assumptions used by the engineers involved in
desi9n.i-ngthe pl.ant. During this action, both parties have
hired engineering firms to produce reports concerning
questions such as the capacity of the facility as it
currently stands; how much of that capacity is in actual use;
how much will be used by developments currently being built;
and how much capacity, if any, must be added to the plant in
order to accommodate Westland's future needs. This evidence
conflicts. Engineers for each party disagree on the answers
to these questions and cast doubt upon the methods used to
arrive at the answers given in the other party's report.
The second trial in this case dealt with these ques-
tions, but failed to produce any real clarification. The
arguments using the engineering evidence were directed toward
Royne's allegation that it had satjsfied the court's prior
judgment by taking more accurate measurements of the plant's
capacity and making certain repairs. The court held that
Boyne had failed to satisfy the judgment because it had not.
"completed any projects which have expanded the capacity"
(emphasis ours) of the facility. The precise acts to be
carried out by Boyne cannot be ascertained from the contract.
itself or the record of this case. Nor have the parties
argued on appeal that Boyne's obligation has been or should
be quantified. Section 27-1-412(5), MCA, thus forbids
specific enforcement of that obligation. The court's injunc-
tion requiring expansion of the plant to prevent a possible
breach of contract by Royne was improper.
By requiring that Boyne somehow build current capacity
into the system for use that will not occur until some indef-
inite point in the future, the District Court appears to have
sanctioned waste. There is evidence in the record to show
that enlargements to the system constructed now could he
useless (due to weed qrowth, rust, etc.) by the time Westland
is read-y to utilize it. Considering the embryonic status of
F7estlandfs development plans, it is also possible that the
chemistry and the mechanics used to treat sewage at Rig Sky
will have changed when the time to connect to the sewer
system arrives.
'The right granted to Westland on the face of the con-
tract is that of connecting to Foyne's sewer system. At
Westland's request, the District Court looked to extrinsic
evidence to quantify the amount of sewage Westland could
place in the system. When Westland wishes to exercise its
right to connect, Boyne and the District must comply or be in
breach of the contract. Unt.il that time, no breach of this
contract will have occurred, and adjudi-cation of this
quest'on will be premature. 4 Corbin on Contracts 9.?3
(1951-1 ; s $ ?7-?-1r)3, MCA. HOW F T ~ s t J a n d ' s s~tnrage will he
accommodated is a concern for Royne and the District tc
address. It was not a proper subject for an Fniunction.
We have held that the District Court's quantification of
rights was stipulated to by the part.i.es, and is therefore
binding. We have also held that the injunction was improper-
ly granted. Given these holdings, v e affirm those portions
7
of the court's judgment upholding the validity of the con-
tract, quantifying Westland's right to utilize the facility,
forbidding assessment of Westland or its property for anv
costs of enlargement of the facility, affirming Westland'c
right to free treatment of sewage in the amount of 1 million
gallons per year for a 20-year period prescribed in the
contract, and granting Westland costs and disbursements of
$519.25. We reverse that portion of the court's judgme~t
enjoining Boyne from making further connections to the treat-
ment facility until current capacity is built into the system
for Westland's future use, and remand the case for the Dis-
trict Court tc strike paragraphs 5 and 6 from its judgment.