Schweigert v. Fowler

No. 89-76

I N T H E SUPREME COURT O F THE S T A T E O F MONTANA

1990

LYNN G . S C H W E I G E R T and GLENNA J .
SCHWEIGERT,

P l a i n t i f f s and A p p e l l a n t s ,
-vs-

W I L L I A M V. FOWLER a n d ROSEMARY T . FOWLER,

D e f e n d a n t s and R e s p o n d e n t s .

r i

A P P E A L FROM: ~ i s t r i c t o u r t of t h e ~ i n t h u d i c i a l i s t r i & ,
C ~ ~
I n and f o r t h e C o u n t y of T o o l e
T h e H o n o r a b l e R. D. ~ c ~ h i l l i p Judge p r e s i d i n g .
s,

COUNSEL O F RECORD:

For A p p e l l a n t :

~lizabeth . Rest;
A B e s t Law offices, G r e a t Falls,
Montana

For R e s p o n d e n t :

D a v i d F. S t u f f t ; ~ r i s b e e ,M o o r e , S t u f f t & Olson, Cut
Bank, Montana

S u b m i t t e d on ~ r i e f s : O c t . 20, 1989

Decided: January 2 , 1 9 9 0

~il e d :
Justice Fred J. Weber delivered the Opinion of the Court.

This appeal arises from a judgment following a
bench trial by the District Court, Ninth Judicial District,
Toole County, Montana. Plaintiffs alleged fraud in the sale
of land and so.ught rescission of a contract for deed. Fol-
lowing trial, the court found in favor of defendants. Plain-
tiff appeals. We affirm.

The controlling issues are:
1. Are the District Court's findings of fact supported
by substantial credible evidence?

_.
3 Did the District Court err in failing to order
restitution for plaintiffs?

3. Did the District Court err in failing to require
Defendants to pay Plaintiff's expert witness fees?

Lynn and Glenna Schweigert both grew up working on

ranches. Lynn was raised in South Dakota and worked on

various ranches from grade school through high school.
Glenna was raised on a ranch in Montana. Lynn and Glenna met
in Conrad, Montana while Lynn was working there as an
ironworker. They married, and moved to various states while

Lynn continued to do ironwork, eventually settling near
Seattle, Washington. For approximately a year and a half in

the mid-19601s, the Schweigerts moved back to Montana.
Durinq this time they lived on the ranch owned by Glenna's

father, helping him with ranching. They lived most of their
married life in Washington, but desired to return to Montana
to buy a ranch. Glenna's brother, Jack Hurley, is a rancher
in Montana, and he beaan helping them search for a ranch to
purchase.
In 1 9 8 5 Mr. Hurley heard that a ranch very close to his

ranch, owned by William Fowler, was for sale. On inquiry he

learned that the asking price was $450,000, which he deter-
mined was too high. In 1 9 8 6 Mr. Fowler called Mr. Hurley and

informed him that he had lowered the price to $300,000. Mr.
Hurley learned from a realtor that the ranch had been ap-

praised at $250,000, and that Mr. Fowler might be willing to
take even less. Mr. Hurley then discussed the Fowler ranch
with his father, Gordon Hurley, and they determined that they

should tell the Schweigerts about it. Gordon and Jack Hurley
took a short tour of the ranch in the spring of 1 9 8 6 , driving
through it in Gordon's pick-up. During this tour, Mr. Fowler

showed them a gravel pit and pasture reservoirs.
In April of 1 9 8 6 the Schweigerts decided to travel to
Montana to view the ranch themselves. They arrived in Mon-

tana during a snowstorm. The next day they drove to the
Fowler ranch but were unable to drive over the property

because of the snow on the ground. However, they discussed

the property with the Fowlers over the kitchen table.
 A few days later Mr. Schweigert and Jack Hurley drove
through the ranch, and on another occasion the Schweigerts
were both driven through the property by Mr. Fowler. During
this trip they asked Mr. Fowler about the presence of leafy
spurge and knapweed. Mr. Fowler stopped and showed them a
leafy spurge plant. Shortly after this, Lynn Schweigert and
Jack and Gordon Hurley flew over the ranch to view its
boundaries.
The Schweigerts decided to purchase the ranch, and the
parties agreed to a price of $226,500. A Receipt and Agree-
ment to Sell and Purchase was signed on April 17, 1986. This
agreement did not state a total number of acres; rather the
land was sold as a gross unit for a set price. Further, the
agreement contained a clause which stated:

Purchaser enters into this agreement with full
reliance upon his independent investigation and
judgment. No agreements, verbal or otherwi se,
modify or affect this agreement.

On April 18, 1986, the Schweigerts delivered $2,500 of ear-
nest money to the Fowlers. They then moved from Washington
to Montana. In April and June the Schweigerts seeded all of
the spring crops for the 1986 growing season. After seeding
the property, the Schweigerts executed a Contract for Pur-
chase and Sale on June 16, 1986. In this contract the total

purchase price was stated as $221,500.
The Schweigerts continued to farm this property for the
years 1986 and 1987. On August 7, 1987, they filed suit
against the Fowlers, alleging fraud, and seeking rescission
of the contract. On November 18, 1987, the Schweigerts were
notified that they were in default under the terms of the

contract. On December 22, 1987 they were notified that the

contract for deed had been cancelled for failure to cure the
default. On June 17, 1988, the Schweiqerts executed a
quit-claim deed on the property to the Fowlers.

I

Are the District Court's findings of fact supported by

substantial credible evidence?
In reviewing the trial court's findings of fact and
conclusions of law, this Court's standard of review is to

determine whether the findings of fact are supported by

substantial credible evidence. Lorenz v. Estate of Schillinq
(Mont. 1989), 768 P.2d 869, 870, 46 St.Rep. 198, 200. This
Court will not overturn findinqs of fact by the District
Court unless they are clearly erroneous. Rule 52fa)

M.R.Civ.P.

In the present case, Plaintiffs are contendinq that Mr.
Fowler made several fraudulent misrepresentations. They
contend that he made the followinq misrepresentations in

o r d e r t o i n d u c e them t o buy t h e l a n d :

a. The f a r m c o n t a i n e d 750 a c r e s of cropland.,
w h e r e a s it o n l y c o n t a i n e d 523 a c r e s ;

b. The f a r m c o n t a i n e d 80-100 a c r e s o f i r r i g a t e d
p r o d u c i n g hay l a n d , w h e r e a s it o n l y c o n t a i n e d 35-40
a c r e s o f poorly producing h a y f i e l d s ;

c . A p p r o x i m a t e l y 298 a c r e s o f f a r m ground l e a s e d
from t h e S t a t e o f Montana were b r o k e n and r e a d y f o r
p r o d u c t i o n , w h e r e a s 5 9 . 3 a c r e s o f t h i s l a n d were
unbroken ;

d . A p p r o x i m a t e l y 11 a c r e s o f c r o p l a n d b o r d e r i n g
t h e Fowler p r o p e r t y and a d j a c e n t t o l a n d owned by
n e i g h b o r , M e r r i l l Kovatch, w e r e c o n t a i n e d i n t h e
S t a t e l e a s e which was p a r t o f t h e D e f e n d a n t s '
p r o p e r t y , w h e r e a s t h e s e 11 a c r e s were a c t u a l l y
owned by Kovatch;

e. The p r o p e r t y c o n t a i n e d o n l y a p p r o x i m a t e l y one
a c r e o f l a n d which was i n f e c t e d w i t h t h e n o x i o u s
weeds l e a f y s p u r g e and R u s s i a n knapweed, w h e r e a s
600 a c r e s were h e a v i l y i n f e s t e d w i t h n o x i o u s weeds;

f. A g r a v e l p i t l o c a t e d i n S e c t i o n 19 o f t h e farm
was c o n t a i n e d i n d e e d e d a c r e a g e and was a v a i l a b l e
f o r e x c a v a t i o n a s a s o u r c e o f n e e d e d income f o r a
p o t e n t i a l p u r c h a s e r , w h e r e a s t h i s g r a v e l p i t was
a c t u a l l y owned by t h e Bureau o f Land Management;

g. The b a r n w a t e r w e l l l o c a t e d on t h e p r o p e r t y
would w a t e r 250 head o f c a t t l e and p r o v i d e a d e q u a t e
w a t e r f o r t h e r e s i d e n c e , w h e r e a s t h e b a r n w e l l went
d r y w a t e r i n g o n l y 48 head o f c a t t l e ;

h. The r e s e r v o i r s i n t h e p a s t u r e l a n d would h o l d
w a t e r y e a r round and p r o v i d e a d e q u a t e w a t e r f o r 120
- 150 a n i m a l u n i t s , w h e r e a s two p a s t u r e s w e r e
i n c a p a b l e o f h o l d i n g w a t e r y e a r r o u n d , and went
dry ;

i. T h a t t h e p a s t u r e s had a c a r r y i n g c a p a c i t y o f
120 - 150 a n i m a l u n i t s , whreas t h e y o n l y had h a l f
t h i s capacity;
 j. No more than 50 posts would need replacement in
order to repair fences adequately to hold cattle,
whereas over 400 posts needed repair.
In Poulsen v. Treasure State Industries, Inc. (1981), 626
P.2d 822, 825, 38 St. Rep. 218, 221, we addressed allegations
of fraud, stating:

In Lee v. Stockmen's Nat. Bank (1922), 63
Mont. 262, 284, 207 P. 632, this Court set down the
elements which a plaintiff must prove to make out a
prima facie case of actual fraud: (1) a represen-
tation; (2) its falsity; (3) its materiality; (4)
the speaker's knowledge of its falsity or ignorance
of its truth; (5) his intent that it should be
acted upon by the person and in the manner reason-
ably contemplated; (6) the hearer's ignorance of
its falsity; (7) his reliance upon its truth; (8)
his right to rely thereon; and (9) his consequent
and proximate injury.
Actual fraud is always a question of fact.
Section 28-2-404, MCA. Fraud can never be presumed
but must be proved by a preponderance of the evi-
dence. Good faith will always be presumed and mere
suspicion of fraud is not sufficient. (Citation
omitted. )

Poulsen, 626 P.2d at 825.
Plaintiffs have alleged that Mr. Fowler made fraudulent
misrepresentations about ten different conditions of the
ranch property. They contend that these representations were
material, that Mr. Fowler knew them to he false, yet induced

the Schweigerts to purchase the property in reliance on the
misrepresentations. Plaintiffs contend that they did not
know the statements were false, that they relied upon these
misrepresentations, and that this reliance was justified.
They contend they were damaged by the misrepresentations.
The District Court made lengthy findings of fact on the
issue of fraud, specifically addressing most of the ten
alleged misrepresentations. The court made no specific
findings as to whether each of these representations were
actually made by Mr. Fowler, or as to the falsity of each
separate allegation. Rather, the District Court found that
as to each alleged misrepresentation the Schweigerts learned
the true condition of the property before they signed the
contract to purchase on June 16, 1986. Thus the court con-
cluded that the Schweigerts did not rely on the truth of the

asserted false statements.
Initially, we note that the District Court found it
significant that both Glenna and Lynn Schweigert had worked
on ranches, and were familiar with farmland and farming
methods. The court determined that the Schweigerts inspected
the ranch property five times prior to siqninq any agreement.
The court found it significant that Lynn Schweigert and
Gordon and Jack Hurley flew over the property in an airplane
to inspect the property. The Schweigerts seeded all of the
spring crops for the 1986 qrowing season prior to signing the
contract to purchase. The court noted that the property was
open for inspection, prior to signing the intent to purchase
and prior to signing the contract. Additionally, the court
emphasized that the Schweigerts never complained of any
misrepresentations until filing suit in August of 1987,
although they spoke with various people about the property,
including Mr. Fowler and his son. The court noted that they
seeded, harvested, marketed and appropriated for their own
use two consecutive crops for 1986 and 1987, making no
complaints.
In regard to the allegation that Mr. Fowler said the
property contained 750 acres of cropland, whereas the ranch
only contained 523 acres of cropland, the District Court
found several facts to be relevant. On April 17, 1986, Mr.
Schweigert told the Agricultural Stabilization and Conserva-
tion Service (ASCS) office in Toole County that he would he
seeding a total of 235.3 acres during 1986. The court noted
that the Schweigerts were aware that only one-half of the
farmland would be cropped on any given year. On July 28,
1986 Mr. Schweigert purchased hail insurance, representinq
that his total number of acres for the crop year 1986 was

235.7 acres. On December 9, 1986 Mr. Schweigert contracted
to participate in the 1987 federal government price support
and production price support programs. He acknowledged that
he was to seed 129.4 acres of wheat and 103.8 acres of crop
lands. He did not at that time complain about the number of
farm acres. On November 24, 1986 the ASCS office informed
the Schweiqerts that their cropland acres were 595.9 acres.
The court also noted that ASCS maps are available from which

a producer can determine how many acres he has seeded.

In regard to the alleged misrepresentation by Mr. Fowler
that the ranch contained 80 to 100 acres of irrigated, pro-
ducing hayland, the court found that the Schweigerts were
shown the hay land and knew that the hay land needed to be
reseeded during their own visual inspection of the properties

in April 1986.
The Schweigerts place much emphasis on their allegation
that the property was "infested with noxious weeds." The
court, however, found that Lynn Schweigert knew there was

knapweed infestation during the 1986 spring seeding. Jack

Hurley testified that he discussed the knapweed with Lynn

that spring, and Mr. Schweigert admitted that he sprayed for
knapweed on forty acres of the property prior to siqning the
purchase agreement. Additionally, the Tonle County weed
supervisor testified that knapweed and leafy spurqe are

observable at all times during the year.

In reqard to the leafy spurge, the court found that John
Wanken, a rancher in the area, testified that he saw leafy
spurqe in full bloom on the property in May 1986, on the day
of an auction that was conducted to sell Mr. Fowler's farm
machinery. The court noted that Glenna Schweigert testified

that she conversed with federal aqencies regarding the con-
trol and containment of leafy spurge and knapweed during the

summer of 1986.

The Schweigerts contend that Mr. Fowler represented that
he owned the gravel pit, when in fact it was located on
Bureau of Land Management (BLM) properties. The court,
however, found that Mr. Fowler told the Schweigerts that he
did not know who owned the gravel pit. The court additional-
ly noted that Glenna Schweigert made extensive notes of

meetings with Mr. Fowler in April 1986, yet those notes
contained no mention of the gravel pit. In September 1986,

the Schweigerts received a map showing the location of all
BLM properties on the ranch. Mr. Tom Stokes, an excavator,
testified that in September 1986 Lynn Schweigert showed him

the BLM map and told him he believed the gravel pit was on

BLM land. The Schweigerts, however, made no complaints at

this time about the gravel pit.
As to the Schweigert's complaints about the reservoirs,
the court observed that the reservoirs were open and could be
readily inspected prior to the signing of the contract. It

also noted that some years are "dry", and there will be no
water for the reservoirs. The court found that the water
well did not go dry.
At trial the Schweigerts admitted that the issue of how
many fence posts needed repair was a minor concern. The

court determined that, in any event, the number of fence
posts to be replaced was open, obvious and could he readily
seen by the Schweigerts during their first inspections of the

property.
From our review of the record, we conclude that sub-
stantial credible evidence supports the findings of fact by
the District Court. The Schweigerts had extensive background
in farming and ranching prior to marriage. While married
they spent 13 to 2 years working on a ranch owned by Glenna's

father, which is only a few miles from the ranch they pur-
chased. On their first trip to Montana in April 1986, they

spent ten days to two weeks at the home of Glenna's brother,
Jack Hurley. During this time they inspected the property

numerous times. Glenna's father and brother were experienced
ranchers in that area. They signed an agreement to purchase

which contained a clause stating that they were relying on
their independent inspection of the property. They physical-

ly worked the property for two months prior to signing the
final contract for deed on June 16, 1986. During this time
they had continuous opportunity to discover the true condi-
tions of the ranch property. The Schweigerts inspected,
seeded, and worked the property prior to siqning the contract
to purchase. Even in the absence of their admitting that

they knew the true condition of the property, it is clear
from the court's findings that the Schweigerts did not rely
on the truth of the alleged false statements. Substantial
credible evidence supports this conclusion, and the District
Court's conclusion that the Schweigerts failed to prove the
elements of fraud by a preponderance of the evidence.
The District Court also made extensive findings relating
to the fact that the Schweigerts did not complain of any
fraud or misrepresentation until late in 1987, and in fact
treated and referred to the property as their own, before and
even subsequent to filing suit in August 1987. Section
28-2-1713, MCA, states that to accomplish rescission a party
must "rescind promptly upon discovering the facts which
entitle him to rescind. . . ," and must restore or offer to
restore the property which was received under the contract.
The District Court noted that the Schweigerts admitted that
they were aware of all alleged misrepresentations by spring
of 1987, yet continued to work the property and appropriate
the crop for their own use. The Schweigerts neither informed.
the Fowlers of the alleged fraud, nor offered to tender the
property back. As late as October 1987 the Schweigerts were
treating the property as their own and representing to third
parties that they owned the property. We conclude that these
findings by the District Court are supported by substantial
credible evidence, and were properly considered by the Dis-
trict Court in analyzing the fraud issue. We affirm the
District Court's conclusion that fraud was not proven.
 Plaintiffs allege that the District Court erred in

trying this solely as a case for rescission, which foreclosed
any attempt to prove damages for fraud. We conclude that it
is unnecessary to discus5 this issue since plaintiffs failed
to prove fraud.

Did the District Court err in failing to order restitu-
tion for plaintiffs?
The Schweigerts contend the District Court should have

ordered Fowlers to pay restitution to them of approximately

$110,000. This amount includes Schweigertsl down payment of

$40,000, improvements to the property valued at $8O,OOO, and
payments on certain loans. The Fowlers sold the property
prior to trial for $241,000. The Schweigerts contend it is
"unfair" to allow Fowlers to benefit from selling the land
twice. Plaintiffs urge several theories to support this
contention.

Plaintiffs contend that S 71-3-1302, MCA, allows them a
purchaser's lien against the property. That statute
provides :

Purchaser's lien on real property. One who
pays to the owner any part of the price of real
property, under an agreement for the sale thereof,
has a special lien upon the property, independent
of possession, for such part of the amount paid as
he may be entitled to recover back, in case of a
failure of consideration.
This statute is not helpful to the Schweigerts. It only

applies to a case where there is a failure of consideration
and the purchaser is entitled to recover part of the amount
paid. In the present case, the District Court did not grant
rescission; hence, there was no failure of consideration.
cf. Warner v. Peterson (1988), 762 P.2d 872, 45 St.Rep. 1939
(allowing a purchaser's lien where rescission was granted).
Plaintiffs urge application of Montana'? anti-forfeiture
statute, S 28-1-104, MCA, which states:

Relief from forfeiture. Whenever by the terms
of an obligation a party thereto incurs a forfei-
ture or a loss in the nature of a forfeiture by
reason of his failure to comply with its provi-
sions, he may be relieved therefrom upon making
full compensation to the other party, except in
case of a grossly negligent, willful, or fraudulent
breach of duty.
However, this statute is also not helpful to S~hwe~gerts.
They did not of=er to pay Fowlers full consideration for the
property.
Finally, Schweigerts contend that restitution is appro-

priate because Fowlers have been unjustly enriched, citing
Robertus v. Candee (1983), 205 Mont. 403, 670 P.2d 540. This
allegation ignores the fact that Schweigerts are the default-
ing purchasers, and the contract for deed expressly stated
that in the event of purchaser's default, all payments made
and any improvements to the property would be retained by the
sellers. Restitution is normally denied to a defaulting
purchaser. Burnham, Contract Damages in Montana Part 11:
Reliance and Restitution, 45 Mont.L.Rev. 1, 19 (1984). This
view was implicitly acknowledged in Robertus, where the
non-breaching injured party was allowed restitution from the
party that breached or repudiated an oral contract.
Additionally "[ulnjust enrichment is an equitable doc-
trine wherein the plaintiff must show some element of miscon-

duct or fault on the part of defendant, or that the defendant
somehow took advantage of the plaintiff ." Randolph V. Peter--
son v. J.R. Simplot Co. (Mont. 1989), 778 P . 2 d 879, 883, 46
St. Rep. 1463, 1468; Brown v. Thornton (1967), 150 M 0 n . t . 150,
156, 432 P.2d 386, 390. While this standard may state an
"overly restrictive view of the availability of restitution,"
Burnham, at 12, it is appropriate in the present case. The
Schweigerts failed to establish misconduct on the part of
Fowlers, and the equities of the present case d.0 not support
a theory of unjust enrichment.
We conclude that Schweigerts have failed to present any
basis for restitution.
111

Did the District Court err in failing to require Defen-
dants to pay Plaintiff's expert witness fees?
The Schweigerts contend that the District Court erred in
fail-inq tc require the Fowlers to pay $293.50 in fees in-
curred when Fowlers deposed two of Schweiqerts' expert

witnesses.
In October 1987, counsel for Fowlers requested through
interrogatories the names and addresses of all expert wit-
nesses to be called by the Schweigerts at trial. This re-
quest included summaries of the experts ' testimony. The
Schweigerts, however, did not produce names of any experts
until July 7, 1988, at which time they produced names of
seven expert witnesses, but no addresses or summaries of

testimony. Counsel for Fowlers then moved the court for a
protective order, or in the alternative, a continuance of the
trial, since trial was set for July 26, 1988. However, the

parties agreed that certain expert witnesses would be deposed
prior to trial, and the court did not rule on the motion.

Counsel for Fowlers deposed two expert witnesses in July

of 1988. In a posttrial motion to alter or amend the judu-
ment, the Schweigerts raised the issue of whether Fowlers
should he required to pay fees associated with these deposi-

tions. That motion was denied by the District Court. On

appeal, the Schweigerts contend that the District Court

should have required the Fowlers to pay these fees, citing
Rule 26 (b)(4)(C), M.R.Civ.P. Our analysis of this rule,
however, discloses no error. The rule does not require the
court to order payment of expert witness deposition fees,
unless the court has ordered this discovery, and even in that
instance, the court may not order payment if manifest injus-

tice would result. We conclude that the District Court did

not err in failing to require Fowlers to pay expert witness

fees.

Affirmed.

4-AJ
/ Chief Justice