Nyquist v. Nyquist

NO. 91-127

IN THE SUPREME COURT OF THE STATE OF MONTANA
1992

KENNETH NYQUIST and KATHLEEN NYQUIST,
husband and wife,
Plaintiffs and Respondents,
-vs-
THOMAS NYQUIST and VIRGINIA NYQUIST, RONALD '-
PRESTON, EARL BRADFORD and ALICE BRADFORD, CLERK OF SUPREME C o u a
and CRYSTAL SPRINGS TROUT COMPANY, a Montana _- @QN.TW
corporation,
Defendants and Appellants.

APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Thomas A. Olson, Judge presiding.

COUNSEL OF RECORD:
For Appellants:
Lon J. Dale, Milodragovich, Dale & Dye: Missoula,
Montana
For Respondents:
Peter S . Lineberger, Lineberger, Walsh & McKenna
P.C., Bozeman, Montana

Submitted on Briefs: December 4, 1991
Decided: November 1 2 , 1 9 9 2
Filed:

8
Clerk
Justice Karla M. Gray delivered the Opinion of the Court.

This is an appeal from a judgment entered by the Eighteenth
Judicial District Court, Gallatin County, in October of 1990. The
judgment settled obligations between the parties and determined
entitlement to monies from a prior judgment award entered in
Crystal Springs v. First State Bank of Froid (1987), 225 Mont. 122,
732 P.2d 819. We affirm and remand.,
Appellants raise the following issues on appeal:
1. Did the District Court err in concluding that the February
13, 1982, agreement was not a loan agreement?

2. Did the District Court err in determining that Ron Preston
must repay loans made by Ken Nyquist from Preston's individual
share of the judgment award?
3. Did the District Court err in declining to award
attorney's fees to appellants?
4. Did the District Court err in failing to determine that
the repayment of advanced litigation expenses should come first
from the corporation's share of the judgment award?
5. Does 5 28-1-1302, MCA, result in a waiver by Ken and
Kathleen Nyquist of interest accrued since the date of appellants'
post-judgment motion for partial release of trust funds?
6. Did the District Court err : imposing on the Bradfords an
in
obligation to repay advanced litigation expenses pursuant to the
February 13, 1982, agreement?
All parties to this appeal were successful plaintiffs in
previous litigation in Broadwater County. In the original action,
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the Crystal Springs Trout Company and its shareholders brought a
damage action against First State Bank of Froid (First Bank) and
its agent. Judgment for the plaintiffs in that action was entered
in June of 1985. After appeal and remand for further damage
calculations, the court entered an Order Clarifying Amounts on
August 20, 1987. That order directed First Bank to tender to all
plaintiffs one check in the amount of $413,170, reflecting the
total amount due all of the plaintiffs, offset by money Ken and
Kathleen Nyquist owed First Bank. The 1987 order was not appealed.
The judgment award was paid by First Bank to plaintiffs'
attorney, Ron Waterman, who held the money in trust for plaintiffs.
When the shareholders could not agree as to disbursal of the money,
Waterman put the money in an interest-bearing account. Interest
has raised the balance in the account to approximately $425,000 at
the time of trial. Waterman has refused to release any of the
monies without a court order due to dissension among the parties
regarding amounts due each of them from the judgment award.
The dissension arises in large part from differing
interpretations of a February 13, 1982, agreement (1982 agreement)
between Ken and Kathleen Nyquist, the Crystal Springs Trout Company
(CSTC), and CSTC's other shareholders except Earl and Alice
Bradford. Under the 1982 agreement, Ken and Kathleen agreed to
continue to advance litigation expenses for the First Bank lawsuit
because the other parties had no source of funds to pursue the
action. These expenses, plus 20% interest on amounts advanced "per
annum from the date such advance was made to the date of actual

3
recoupment ... I' are to be recovered by Ken and Kathleen from any
judgment award arising from the First Bank litigation. Ken and
Kathleen Nyquist filed the current action to enforce what they view
as unfulfilled obligations under the February 13, 1982, agreement.
They also seek repayment of promissory notes executed by Ron
Preston and Tom and Virginia Nyquist. In response, Tom and
Virginia Nyquist, Ron Preston and CSTC raised Ken and Kathleen's
failure to pay a deficit sum to the judgment fund and usury under
the 1982 agreement and sought, inter alia, a penalty against Ken
and Kathleen for usurious interest and attorney's fees. AS
discussed below, the Bradfords did not join in the response by the
other defendants.
Following trial of this action, the District Court determined
the specific obligations between and among the various parties and
the appropriate sums owed each party from the judgment award in the
original action. In its October, 1990, Findings of Fact,
Conclusions of Law and Judgment, the court determined that,
pursuant to the 1982 agreement, Ken and Kathleen were entitled to
the litigation monies they had advanced plus interest, but were not
entitled to funds they alleged to be due them as a result of tax
consequences in funding the litigation; the court further
determined that nothing in the agreement entitled Ken and Kathleen
to reimbursement for the accounting fees they claimed to have
incurred in such funding. The court found that Ron Preston and Tom
Nyquist defaulted on their promissory notes. Finally, the District
Court determined that the 1982 agreement was not a loan and,

4
therefore, no usury issue existed under that agreement.
Ron Preston, Tom and Virginia Nyquist and CSTC, appellants
herein, moved the court to amend its Findings of Fact, Conclusions
of Law and Judgment. The motion was deemed denied by operation of
law when the District Court did not rule within 45 days.
Appellants also filed a motion for partial release of trust funds.
Before a ruling on the motion or expiration of the 45-day limit,
notice of appeal was filed.
We will not set aside a district court's findings of fact
unless the findings are clearly erroneous. Klose v. Klose (1990),
243 Mont. 211, 793 P.2d 1311. We review a court's conclusions of
law to determine whether they are correct. Steer, Inc. v. Dept. of
Revenue (1990), 245 Mont. 470, 803 P.2d 601.
I.
Did the District Court err in concluding that the
February 13, 1982, agreement was not a loan agreement?
The District Court concluded that the 1982 agreement was not
a loan agreement because it did not contain an unconditional
obligation to repay; on that basis, it determined that no usury
issue existed. Appellants contend that the 1982 agreement was a
loan which they had an absolute duty to repay. As such, according
to appellants, the 20% interest rate contained in the agreement is
usurious pursuant to § 31-1-107(1), MCA, in that the appropriate

ceiling interest rate on the date of the agreement was 16%.
If an obligation is based on Itacertain condition which may or
may not happen or occur, the transaction is not a loan." Rae v.
Cameron (1941), 112 Mont. 159, 167, 114 P.2d 1060, 1064. The
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February 13, 1982, agreement provides:
Kenneth and Kathleen Nyquist shall be entitled to recoup
and recover from anv awards and Droceeds arisina out of
such court action prior to the distribution thereof to
any of the other parties in this Agreement all of such
funds so advanced by them. .. .[Emphasis added.]
The plain wording of the agreement establishes that Ken and
Kathleen Nyquist are entitled to recoupment only from any proceeds
arising out of the First Bank litigation. Thus, a judgment award
of damages in plaintiffs' favor in the First Bank action was a
condition precedent to any obligation of CSTC and the other
shareholders to repay the advanced litigation expenses; in other
words, it was a condition which "may or may not happen." No
certainty ever existed that the plaintiffs in that litigation would
prevail and receive a damage award.
We conclude that the 1982 agreement contains a conditional,
rather than an unconditional, obligation to repay. We hold that
the District Court did not err in concluding that the February 13,
1982, agreement was not a loan agreement.
11.
Did the District Court err in determining that Ron
Preston must repay loans made by Ken Nyquist from
Preston's individual share of the judgment award?
Via Exhibit A to its October, 1990, Findings and Conclusions,
the District Court determined that seven loans made by Ken Nyquist
to Ron Preston were to be paid from Preston's individual share,
rather than from CSTCIs share, of the judgment award. Appellants
argue that the loans were made for expenses incurred by Preston
while he was involved in corporate business pertaining to the First

6
Bank litigation. On this basis, appellants argue that the
corporation, rather than Ron Preston individually, should be
obligated to repay Ken Nyquist. Respondents claim that the loans
to Preston were made for Preston's personal business.
Whatever the reasons for the loans, the record clearly
establishes the source of repayment of Preston's loans. Preston
specifically assigned his share of any proceeds from the First Bank
litigation to Ken Nyquist to the extent of the loan amounts owing:
Assignor hereby transfers, assigns and sets over to
Assignee, to the extent of all amounts owins to Assisnor
under the Promissorv Note described below, all of
Assisnor's riuht, title, and interest, leual and
equitable. in and to all proceeds and other credits in
favor of Assiqnor arisins and of that cause of action
entitled Crystal Springs Trout Company, a Montana
corporation, Thomas Nyquist and Virginia Nyquist, husband
and wife, Kenneth Nyquist and Kathleen Nyquist, husband
and wife, Ronald E. Preston, Robert Moore and Peggy
Moore, husband and wife; and Earl Bradford and Alice
Bradford, husband and wife. vs. First State Bank of
Froid, a banking corporation, and Jerry B. Wallander.
.. [Emphasis added.]
.
A separate assignment relating to each of the seven loans, and
containing the referenced language, was executed by Preston. The
assignments establish that Preston's share of the judgment proceeds
is to be the source of repayment.
The record contains substantial evidence to support the
District Court's determination that Preston's loans were to be
repaid from Preston's individual share of the judgment award. The
District Court did not err.
111.
Did the District Court err in declining to award
attorney's fees to appellants?

7
 The District Court determined that neither party could be
considered the prevailing party and, thus, neither was entitled to
attorney's fees. Appellants contend that they are the prevailing
party because Ken and Kathleen's failure to restore a $50,767.11
deficit sum to the judgment fund is a breach of the 1982 agreement.
Further, appellants argue that they prevailed on the issue of Ken
and Kathleen's request for monies for tax liabilities and
accounting fees. Respondents point out that the District Court
determined that they must restore the deficit sum to the judgment
fund, but did not conclude that the failure to do so constituted a
breach of the agreement. Respondents assert that since the
obligation to restore the deficit amount resulted fromthe District
Court's 1987 Order Clarifying Amounts, it was not a contractual
obligation which could form the basis for a breach and attorney's
fees under the agreement.
Ken and Kathleen's complaint was based primarily on the 1982
agreement. That agreement contains an express provision for
attorney's fees to be awarded against the "defaulting party."
Appellants contend that the reciprocity provisions of 9 28-3-704,
MCA, entitle them to attorney's fees because they are the non-
defaulting, 'prevailing party" in this litigation.
The District Court determined, and the record establishes,
that Ken and Kathleen's obligation to restore approximately $50,000
to the judgment fund resulted from the 1987 Order Clarifying
Amounts Due Under June 18, 1985, Judgment. It did not arise under
the 1982 agreement and, therefore, Ken and Kathleen did not breach

8
the 1982 agreement. Absent such breach or default by Ken and
Kathleen under the agreement, neither the agreement's attorney's
fees provision nor the reciprocity provision of $ 28-3-704, MCA,
3

provides a basis for an award of attorney's fees to appellants.
Further, the District Court determined that neither party was
the prevailing party for purposes of awarding attorney's fees.
Appellants prevailed on Ken and Kathleen's claims of reimbursement
for tax and accounting fees pursuant to the agreement. On the
other hand, they defaulted on their promissory notes and did not
reimburse Ken and Kathleen for advanced litigation expenses. Nor
are Ken and Kathleen the prevailing party, according to the court,
because their failure to restore the deficit sum to the judgment
fund and tax and accounting fee claims contributed to causing the
lawsuit.
There are cases where, at the close of litigation, there is no
actual "prevailing party" entitled to attorney's fees because both
parties gain a victory but also suffer a loss. Lauderdale v.
Grauman (1986), 223 Mont. 357, 359, 725 P.2d 1199, 1201. Here,
even though all parties prevailed in part and are entitled to part
of the judgment award, none prevailed on all issues or recovered
the total of what was individually sought. We hold, therefore,
that the District Court did not err in concluding that appellants
were not entitled to attorney's fees.
IV .
Did the District Court err in failing to determine that
the repayment of advanced litigation expenses should come
first from the corporation's share of the judgment award?

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 The District Court attributed part of the repayment of
advanced litigation expenses to the shareholders' individual shares
of the judgment award and part to the corporate entity's share.
Appellants argue that minutes of a corporate or shareholder
meeting, in which the corporation decided to continue litigation
against First Bank, indicate a clear intent that repayment of
advanced litigation expenses would be made from the corporate
entity's share of the judgment award first. They argue that
individual shareholders should not be compelled to repay the
litigation expenses fromtheir own individual portions ofthe award
unless the corporation's share of the judgment award is
insufficient to cover the repayment.
The minutes are not nearly as clear as appellants suggest. In
addition, to the extent the minutes could be interpreted in
accordance with appellants' assertion, they conflict with the 1982
agreement.
The agreement itself is clear. The individual shareholders
and the corporate entity were parties to the agreement. The
agreement recites that the purpose of the First Bank litigation is
to recover for wrongful actions by First Bank and its agent which
were "causing damage to all the parties to this Agreement." The
parties agreed that "it is essential to their individual and mutual
benefit to pursue such litigation. .. .It Finally, the agreement
provides that Ken and Kathleen Nyquist will have a claim to the
proceeds before any other vvpartiesvv the agreement.
to
This wording is clear and unambiguous. When wording of a

10
contract is clear, the court merely must enforce it. Morning Star
Enterprises, Inc. v R.H. Grover, Inc. (1991), 247 Mont. 105, 805
.
P.2d 553. Meeting minutes could not and did not alter the
agreement: indeed, to the extent the minutes are at all probative,
they reflect ratification of the agreement. The District Court
correctly attributed responsibility for the repayment of the
advanced litigation expenses to all parties to the agreement, both
individual shareholders and the corporate entity. We hold that the
District Court did not err in failing to determine that repayment
of advanced litigation expenses should come first from the
corporation's share of the judgment award.
V.
Does 5 28-1-1302, MCA, result in a waiver of interest
accrued since the date of appellants' post-judgment
motion for partial release of trust funds?
In early December, 1990, while their motion to amend the
judgment was pending before the District Court, appellants
submitted a proposed stipulation to Ken and Kathleen for partial
release of trust funds: their intent was to release funds in
payment of some, but not all, of their obligations to Ken and
Kathleen under the October, 1990, judgment, thereby preventing
accrual of additional interest on those amounts. The stipulation
was not executed.
Appellants subsequently movedthe court for partial release of
the trust funds. The motion was neither ruled upon by the District
Court nor deemed denied by operation of law prior to appellants'
filing of a notice of appeal on January 21, 1991.

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 Appellants argue that, pursuant to 5 28-1-1302, MCA, Ken and
Kathleen have waived their right to continued accrual of interest
by their refusal to accept partial payment of trust funds after
trial. Their post-trial motion for partial release of trust funds
did not cite or rely on 5 28-1-1302, MCA. In any event, the
District Court did not have an opportunity to address appellants'
motion on this issue and we decline to do so.
VI.
Did the District Court err in imposing on the Bradfords
an obligation to repay advanced litigation expenses
pursuant to the February 13, 1982, agreement?
In its 1990 Findings, Conclusions, and Judgment, the court
determined that Earl and Alice Bradford were responsible for
repaying their determined share of the litigation expenses advanced
by Ken and Kathleen Nyquist. Appellants assert that the Bradfords
are not responsible for any part of the litigation expense
repayment to the Nyquists because they did not sign the 1982
agreement. Respondents argue that the Bradfords are not before
this Court on appeal.
On November 27, 1987, Earl and Alice Bradford moved the
District Court to dismiss the action against them on the basis that
the complaint failed to state a claim. The court denied their
motion on December 23, 1987, and gave them 20 days to plead
further. No formal default was entered and the court proceeded to
determine their obligations in its October, 1990, Findings,
Conclusions and Judgment.
Neither of the Bradfords joined in the appeal to this Court.

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Appellants' attorney did not represent the Bradfords in the
District Court and designates himself as counsel on appeal for CSTC
and its shareholders Thomas Nyquist, Virginia Nyquist and Ronald
Preston; no attempt has been made to include the Bradfords as
appellants. Therefore, we will not consider the propriety of the
District Court's determinations regarding the Bradfords.
Finally, we note that the record suggests that the trustee of
the interest-bearing account will not release any monies without a
court order. Therefore, we remand this case to the District Court
with instructions to issue an order for release of trust account
funds in accordance with the court's October, 1990, Findings,
Conclusions and Judgment, and for any further proceedings which may
be appropriate and which are not inconsistent with this opinion.
Affirmed and remanded with instructions.

We concur: 4
1

\
Y .Chief Justice

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 November 12, 1992

CERTIFICATE OF SERVICE

I hereby certify that the following order was m t by United States mail, prepaid, to the
~

following named:

Lon J. Dale
MILODRAGOVICH, DALE & DYE
P.O. Box 4947
Missoula, MT 59806-4947

Peter Lineberger
ATTORNEY AT LAW
P.O. Box 6400
Bozeman, MT 59771-6400

Herb Kirchoff
ATTORNEY AT LAW
P.O. Box 1312
Bozeman, MT 59715

ED SMITH
CLERK OF THE SUPREME COURT