No. 91-021
IN THE SUPREME COURT OF THE STATE OF MONTANA
1991
JOHN H. MARTIN AND PEGGY MARTIN,
Plaintiffs and Appellants,
-vs-
DORN EQUIPMENT COMPANY, INC., and
SPERRY-NEW HOLLAND,
Defendants and Respondents.
APPEAL FROM: District Court of the Sixth Judicial District,
In and for the County of Park,
The Honorable Byron L. Robb, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
J. David Penwell, Bozeman, Montana
For Respondent:
Michael W. Tolstedt; Anderson, Brown, Gerbase,
Cebull, Fulton, Harman & Ross, Billings, Montana
W. Lee Stokes, Bozeman, Montana
NOV 14 199% Submitted on Briefs: May 31, 1991
Cd Smitll
File%~~~~ OF SUPREME COURI
Decided: November 14, 1991
STATE OF MONTANA
Justice Karla M. Gray delivered the Opinion of the Court.
John and Peggy Martin appeal from the October 24, 1990, order
of the Sixth Judicial District Court, Park County, granting the
motion of Dorn Equipment Company, Inc. and Sperry-New Holland
(collectively, the respondents) for summary judgment. We affirm in
part, and reverse and remand in part.
The issues raised on appeal are whether the District Court
erred in granting summary judgment by:
1. failing to consider the deposition of Richard Jeppson;
2. concluding as a matter of law that no breach of the peace
occurred during a repossession; and
3. finding that no material facts exist to support the
Martins' claim that the respondents acted fraudulently regarding an
oral agreement to extend or delay payments.
John and Peggy Martin (the Martins) owned a 40-acre ranch
north of Livingston, Montana. They operated a custom haying
business and raised registered Simmental cattle.
Dorn Equipment Company, Inc. (Dorn), a Montana corporation,
sells and repairs new and used agricultural equipment in Bozeman.
Sperry-New Holland (Sperry) manufactures agricultural equipment and
is a financier for purchasers of Sperry-New Holland equipment from
dealers such as Dorn.
The Martins' business relationship with Dorn spanned from 1975
until December of 1986. During this period, the Martins purchased
various items of farm equipment and parts for the equipment from
Dorn. Dorn also repaired the equipment for the Martins. The
Martins financed the equipment through Sperry and its affiliated
credit corporations, First Security Bank of Bozeman, and other
entities.
Going into the haying season of 1986, the total amount of
Martins' debt to the respondents was as follows:
Creditor Collateral Amount Due Date Due
Dorn on account $5,009.47 6-6-86
Sperry swather $5,894.96 8-15-86
Sperry baler $3,846.53 9-1-86
Sperry grinder $2,336.66 9-15-86
Sperry bale wagon $4,500.04 10-15-86
The Martins failed to make the required payments as they came due
John Martin met with representatives of Dorn and Sperry on
October 28, 1986 at Dorn's place of business in Bozeman. The
parties discussed the overdue payments and attempted to make
arrangements to resolve the situation. The respondents claim that
Martin orally agreed to make an immediate $8,000 payment to Sperry
and to allow Sperry to inspect and inventory the equipment and
that, in return, Dorn and Sperry would combine all of the Martins'
contracts and extend them for two more years. The respondents
maintain that November 3, 1986, was the agreed date for meeting to
inspect the equipment. However, Peggy Martin stated in her
deposition that the respondents agreed at the October 28 meeting to
give the Martins time to put their equipment to work and obtain
refinancing elsewhere.
On November 1, 1986, the Martins left Montana for Idaho in
order to resume work on custom farming operations there. The
Martins had expanded their custom farming business into Idaho the
previous year and most of their equipment was located in Idaho at
that time. On or about November 4, 1986, the respondents
repossessed the equipment located in Idaho on the basis of the
Martinsf failure to make the $8,000 payment or the November 3
meeting. A Notice of Repossession and a Notice of Private Sale
were sent to the Martins by certified mail on November 10, 1986,
indicating that the Idaho equipment would be sold at private sale
on or after fifteen days from November 10.
On November 11, 1986, J i m Drummond (Drummond) of First
Security Bank of Bozeman contacted John Dorn of Dorn and informed
him that he was going to the Martinsf ranch to repossess equipment
that the Martins pledged as collateral on debts owing to the bank.
John Dorn sent a driver and pickup truck to accompany Drummond and
repossess a Sperry-New Holland Grinder/Mixer.
The gate to the ranch was secured by a chain and padlock.
Drummond cut the chain with bolt cutters and the parties proceeded
onto the premises. Richard Jeppson, the Martinsf hired hand,
confronted Drummond and inquired into the purpose of the partiesf
presence on the Martin ranch. Drummond informed him that they were
there to repossess certain equipment.
On November 24, 1986, the day before the fifteen days referred
to in the Notice of Sale expired, the Martins filed an Application
for Preliminary Injunction and Temporary Restraining Order in the
Eighteenth Judicial District, Gallatin County. A Temporary
Restraining Order was issued prohibiting the respondents from
selling any of the repossessed equipment; a show cause hearing was
held on December 17, 1986.
During the show cause hearing, the District Court discovered
that the Martins had filed for bankruptcy in the United States
Bankruptcy Court for the District of Montana on December 11, 1986.
The District Court immediately suspended the proceedings until such
time as the Bankruptcy Court determined whether it would assume
jurisdiction of the case,
On February 8, 1988, the Bankruptcy Court issued an Order of
Abstention from Jurisdiction allowing the Martins to proceed in the
civil action pending in Gallatin County. The Martins, however,
dismissed the Gallatin County action and filed this action in the
Sixth Judicial District Court, Park County. That District Court
granted the respondents1 motion for summary judgment and the
Martins appealed.
The Martins contend, for three different reasons, that the
District Court erred in granting summary judgment. The first issue
is whether the District Court erred in not considering the
deposition of Richard Jeppson.
The District Court concluded that because the deposition of
Richard Jeppson, the Martinst hired hand, was taken in the course
of the earlier action filed in Gallatin County, the deposition
should not be considered as establishing any facts in the case at
bar. Based on the record before us, the Jeppson deposition may
have been properly before the District Court by virtue of either
Rule 32, M.R.civ.P., or a stipulation of the parties. In any
event, it is clear that the court did consider it in part and still
concluded that the respondents' actions did not constitute a breach
of the peace. Given our holding below on breach of the peace, no
further discussion of this issue is necessary.
The second issue is whether the District Court erred in
concluding as a matter of law that no breach of the peace occurred
when the respondents repossessed the Martins' equipment. The
parties agree that the Martins were past due on their various
accounts. Further, all relevant security agreements gave the
respondents the right to forego judicial proceedings and retake
possession of the collateral.
The Sperry default provisions gave Sperry the right to
lawfully enter the premises to take possession:
If the Buyer should fail to make a payment by the
date herein specified for the payment, TIME BEING OF THE
ESSENCE OF T H I S AGREEMENT, or otherwise breach this
agreement ... , the Seller or the Seller's assigns may
either or both obtain a judgement [sic] for the same or
lawfully enter any premises where the goods may be and
take possession thereof, ....
Section 30-9-503, MCA, supplements these contractual default
provisions with the following Language:
Unless otherwise agreed a secured party has on default
the right to take possession of the collateral. In
takinq ~ossession a secured party may proceed without
i u d i c i a l process if this can be done without breach of
the peace or may proceed by action. ...
(Emphasis added). Therefore, the respondents could only repossess
the Martins' equipment without resorting to judicial process if
they could do so lawfully, without breaching the peace.
Although the District Court did not explicitly state that no
genuine issues of material fact existed regarding the repossession,
it held as a matter of law that the respondents' actions were not
unlawful and did not constitute a breach of the peace. The
District Court noted that the respondents made no threats, used no
force or violence, and repossessed the equipment in broad daylight.
These facts, however, do not support a legal conclusion that a
breach of the peace did not occur.
The question of what constitutes a breach of the peace under
the Uniform Commercial Code is a case of first impression in
Montana. Section 30-9-503, MCA, does not define breach of the
peace. However, to avoid breaching the peace, "[tlhe general rule
is that the creditor cannot utilize force or threats, cannot enter
the debtor's residence without consent, and cannot seize any
property over the debtor's objections." J. Sheldon & R. Sable,
Repossessions, 5 6.3 (1988).
We find Laurel Coal Co. v . Walter E. Heller & Co., Inc. (W.D.
Penn. 1982), 539 F.Supp. 1006, persuasive. In Laurel Coal Co.,
defendant repossessed a bulldozer from plaintiff's property.
Defendant entered onto plaintiff's property after cutting a chain
used to lock a fence which enclosed the property. The court stated
that any form of forcible entry constitutes a breach of the peace
and, as a result, held that the breaking of a lock securing
property constitutes a breach of the peace. Laurel Coal Co., 539
F.Supp. at 1007-1008.
The facts of the instant case clearly indicate that the
respondents forcibly entered the Martins' property. Drummond and
the respondentsf representative entered the property without the
Martins1 consent after cutting the locked chain on the gate with
bolt cutters. This action in itself constitutes a breach of the
peace. Self-help repossessions must be conducted in such a manner
as to avoid forcible breakings and entries,
The respondents argue that Drummond, a representative of the
bank and not a party to this action, cut the chain and that their
representative merely drove onto the property through the open
gate. We find this argument unpersuasive. Drummond contacted Dorn
before travelling to the ranch to repossess the equipment. Dorn,
on behalf of itself and Sperry, sent a driver with the bank
representatives to repossess certain additional equipment. The
members of the group were acting in concert and the respondents
cannot now contend that the bank is solely responsible for the
unlawful entry onto the Martins1 ranch.
"This Court has the power to reverse the district court's
grant of summary judgment and order it to enter summary judgment in
favor of the other party as a matter of law only when it is clear
that all the facts bearing on the issues are before this C~urt.'~
Canal Ins, Co. v. Bunday (Mont. 1991), 813 P.2d 974, 979, 48
St.Rep. 597, 600; citing Hereford v. Hereford (1979), 183 Mont.
104, 110, 598 P . Z ~
600, 603. NO genuine issues of material fact
exist on the issue of breach of the peace in the instant case.
Having concluded that the forcible entry onto the Martins' ranch to
repossess equipment was a breach of the peace, we hold that the
District Court erred in concludingthat the repossession was lawful
and did not constitute a breach of the peace. We reverse the grant
of summary judgment in the respondents' favor and direct the
District Court to enter partial summary judgment for the Martins on
this issue.
The final issue is whether the District Court erred in finding
that no material facts exist to support the Martins1 claim that the
respondents acted fraudulently regarding an oral agreement to
extend or delay payments. Representatives from Dorn and Sperry met
with John Martin on October 28, 1986 regarding the Martins' past
due account. Martin claims that the respondents agreed to extend
his time in which to pay before they would repossess his equipment;
the respondents contend that Martin had to meet certain conditions
prior to an extension, which he failed to meet.
The Martins1 complaint asserts that the respondents acted
fraudulently by inducing them to believe that they had reached an
agreement extending the time in which the Martins could make their
payments. The Martins failed to meet the requirements of Rule
9(b), M.R.Civ.P.: I1In all averments of fraud or mistake, the
circumstances constituting fraud or mistake shall be stated with
particularity. . , . 11
The purpose of summary judgment underlying Rule 56,
M. R.Civ. P. , is to encourage j udfcia1 economy through the prompt
elimination of questions not deserving of resolution by trial.
Westmont Tractor Co. v. Continental I, Inc. (1986), 224 Mont. 516,
521, 731 P.2d 327, 330. Summary judgment is proper if no genuine
issues of material fact exist and the moving party is entitled to
judgment as a matter of law. Rule 5 6 (c), M.R.Civ.P. The party
moving for summary judgment has the initial burden of proving no
genuine issues of material fact exist. Westmont Tractor Co., 224
Mont. at 521, 731 P.2d at 330. Once the moving party meets this
burden, t h e burden shifts to the non-moving party to prove that
material issues of fact are in dispute. Westmont Tractor Co., 224
Mont. at 521, 731 P.2d at 330.
The Martins contend they have made out a prima facie case of
fraud in their complaint and through deposition testimony of Peggy
Martin. The respondents contend that such has not been
established. We agree with the respondents. The Martins made
reference to fraud in their complaint and in their response to the
respondents' summary judgment motion, but they failed to allege the
facts and circumstances constituting the fraud with particularity.
Furthermore, Peggy Martin's deposition was before the court which
also made reference to a misrepresentation but failed to state
facts in support of all nine fraud elements which the Martins were
required to aver and satisfy.
The Martins failed to a l l e g e and s a t i s f ] the
f revuired elements
of f r a u d . Additionally, t h e Martins failed to raise genuine i s s u e s
of material fact regarding the elements. Therefore, the District
Court did not err in granting summary judgment on t h i s issue.
Affirmed in p a r t , and reversed and remanded in part for
further proceedings consistent w i t h this o p i n i o n .
3
W e concur:
November 14, 1991
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:
J. David Penwell
Attorney at Law
P.O. Box 1677
Bozeman, MT 59715
Michael W. Tolstedt
Anderson, Brown, Gerbase, Cebull, Fulton, Harman & Ross
P.O. Drawer 849
Billings, MT 59103
W. Lee Stokes
Berg, Lilly, Stokes, Andriolo, Toilefsen & Schraudner
910 Technology Blvd., Ste. A
Bozeman. MT 59715
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA