No. 95-193
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
Plaintiff and Respondent,
v.
LEE McDONALD,
Defendant and Respondent, ..A ! .,;;
2,,,-:,e ,.
and
B. DALE FAYRAM,
Defendant and Appellant.
APPEAL FROM: District Court of the Third Judicial District,
In and for the County of Granite,
The Honorable Ted. L. Mizner, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
James A. Rice, Jr.; Jackson & Rice, Helena,
Montana
For Respondent:
Nancy K. Moe, Attorney at Law, Missoula, Montana
Byron W. Boggs, Attorney at Law, Missoula, Montana
Submitted on Briefs: March 14, 1996
Decided: April 16, 1996
Filed:
Justice Karla M. Gray delivered the Opinion of the Court.
B. Dale Fayram (Fayram) appeals from the judgment entered by
the Third Judicial District Court, Granite County, on its order
granting Lee McDonald's (McDonald) motion for summary judgment and
denying Fayram's motion to amend his answer to add a cross-claim
against McDonald. We affirm.
Fayram raises the following issues on appeal:
1. Did the District Court err in granting McDonald's motion
for summary judgment on the basis that Fayram had no right to
redeem the mining properties?
2. Did the District Court abuse its discretion in denying
Fayram's motion to amend his pleadings?
This case involves two parcels of land, known as the Iron Clad
Lode # 1982 and the Non Pariel Lode # 2763, located in Granite
County, Montana (mining properties) . In 1982, Ripple Resources,
I . , a Colorado corpuration, becariie the record owrier of the minirig
properties when it acquired them by quitclaim deed from Boulder
Creek, Inc. Ripple Resources, Inc. was a subsidiary of Ripple
Resources, Ltd., a Canadian corporation.
The taxes on the mining properties were not paid for the years
1986 and 1987. In December of 1989, McDonald paid the delinquent
taxes, penalties, costs and interest and Granite County assigned
its tax sale certificate for the mining properties to him.
In May of 1991, McDonald published notice of the pending
issuance of a tax deed to the mining properties in the local
newspaper; the notice listed Ripple Resources, Inc. as the sole
2
interested party. Approximately two months later, Fayram submitted
a sworn affidavit to Janice Bowen (Bowen), the Granite County
Treasurer, stating that he was a director of Ripple Resources,
Inc., and was authorized to redeem the mining properties on behalf
of the company. Based on the information in the affidavit, Bowen
issued Fayram a certificate of redemption. In August of 1991,
McDonald provided documents to Bowen indicating that Ripple
Resources, Inc. had been dissolved prior to Fayram's redemption of
the mining properties.
Bowen filed a complaint for declaratory relief in October of
1991, requesting the District Court to resolve the controversy
between Fayram and McDonald and to direct her regarding the proper
disposition of the mining properties. McDonald answered and
requested the court to order issuance of the tax deed on the mining
properties to him. In January of 1992, Fayram answered and
counterclaimed against Bowen, realleging his authority to redeem on
behalf of Ripple Resources, Inc. McDonald deposed Fayram in April
of 1992; no further discovery took place.
In March of 1994, McDonald moved for summary judgment against
Fayram on the basis that Fayram had no right to redeem the mining
properties; Bowen joined in his motion. Fayram's brief and
affidavit in opposition to McDonald's motion advanced an entirely
different basis for redemption from that asserted in his 1991 sworn
affidavit for redemption. In addition, Fayram moved to amend his
answer to allege a cross-claim against McDonald for failing to
comply with statutory requirements for obtaining a tax deed. His
proposed amended pleading continued to affirmatively allege that he
"was authorized" to redeem the mining properties on behalf of
Ripple Resources, Inc.; Fayram proposed to add, as part of his
prayer for relief, a request that the court determine that he had
made a proper redemption.
The District Court granted McDonald's motion for summary
judgment and denied Fayram's motion to amend his pleadings. The
court subsequently entered judgment declaring Fayram's certificate
of redemption void and vesting title to the mining properties in
McDonald. Fayram appeals.
1. Did the District Court err in granting McDonald's
motion for summary judgment on the basis that Fayram had
no right to redeem the mining properties?
Summary judgment is proper when no genuine issues of material
fact exist and the moving party is entitled to judgment as a matter
,
of law. Rule 56 (c) M.R.Civ.P. We review a district court's grant
of summary judgment de novo, applying the same criteria used by
that court initially under Rule 56 (c), M.R.Civ.P. Brinkman & Lenon
v. P & D Land Enterprises (1994), 263 Mont. 238, 241, 867 P.2d
1112, 1114 (citing Minnie v. City of Roundup (1993), 257 Mont. 429,
431, 849 P.2d 212, 214) .
The moving party has the initial burden of establishing both
the absence of genuine issues of material fact and entitlement to
judgment as a matter of law. Brinkman & Lenon, 867 P.2d at 1115.
Only where the moving party satisfies its initial burden does the
burden shift to the party opposing summary judgment to present
evidence raising a genuine issue of material fact. Matter of
Estate of Lien (1995), 270 Mont. 295, 298, 892 P.2d 530, 532
(citing Owen v. Ostrum (19931, 259 Mont. 249, 255-56, 855 P.2d
1015, 1019).
The law governing tax liens on real property and tax sales,
and redemption of, real property subject to a tax lien is codified
in Title 15 of the Montana Code Annotated. In the instant case, no
person paid the delinquent taxes on the mining properties when they
were offered at a tax sale pursuant to § 15-17-211, MCA, and
Granite County acquired a tax sale certificate for the properties
under 5 15-17-214,MCA. McDonald subsequently paid the delinquent
taxes, penalties, interest and costs and Bowen assigned the tax
sale certificate to him pursuant to § 15-17-323, MCA. McDonald
published a notice of the pending issuance of a tax deed under §
15-18-212, MCA, and Fayram timely asserted an alleged right to
redeem the mining properties pursuant to § 15-18-111, MCA.
McDonald contended in his motion for summary judgment that no
genuine issue of material fact existed regarding whether Fayram had
a right to redeem the mining properties under § 15-18-111, MCA,
and, as a result, that he was entitled to judgment as a matter of
law. Under § 15-18-11111),MCA, redemption of a property tax lien
acquired at a tax sale may only be made by "the owner, the holder
of an unrecorded or improperly recorded interest, the occupant of
the property, or any interested party . . . . "
The right of redemption is wholly statutory and redemption
statutes are construed liberally in favor of the redemptioner.
Lowery v. Garfield County et al. (19491, 122 Mont. 571, 581, 208
P.2d 478, 484. Notwithstanding the principle of liberal
construction, however, Montana law has long required that "the
person seeking to redeem must bring himself within [the statutory]
provisions." See State ex rel. Federal Land Bank of Spokane v.
Hays (1929), 86 Mont. 58, 63, 282 P. 32, 34; State ex rel. Bell v.
McCollough (1929), 85 Mont. 435, 438, 279 P. 246, 247.
In support of his motion for summary judgment, McDonald
provided documentation from the State of Colorado indicating that
Ripple Resources, Inc. had been involuntarily dissolved in 1989.
McDonald also relied on Fayram's deposition testimony conceding
that he only served as a director of Ripple Resources, Inc. from
1982 until 1984 and that Ripple Resources, Inc. had never issued
stock. We conclude that McDonald established the absence of any
genuine issue of material fact regarding Fayram's right to redeem
the mining properties on the Ripple Resources, 1nc.-related basis
upon which Fayram originally asserted that right and received the
certificate of redemption from Bowen.
McDonald also addressed a different basis for Fayram's alleged
right to redeem which Fayram first referenced during his
deposition: that he redeemed the mining properties on behalf of
Ripple Resources, Ltd. Both during his deposition and in his
response to McDonald's motion for summary judgment, Fayram
contended that Ripple Resources, Ltd. was the true owner of the
mining properties and that the references to Ripple Resources, Inc.
in the quitclaim deed from Boulder Creek, Inc. and in his sworn
affidavit to Bowen were errors. He argued that, as a shareholder
of Ripple Resources, Ltd., he was entitled to redeem the mining
properties on behalf of that company.
McDonald provided the District Court with a copy of the
quitclaim deed in which Boulder Creek, Inc. granted its interest in
the mining properties to "Ripple Resources, Inc." McDonald also
submitted a timber purchase agreement under which Fayram, as
"Director Ripple Resources, Inc.," granted Eagle Stud Mill, Inc.
the right to conduct logging operations on the mining properties
approximately one month after submitting his affidavit to Bowen.
We conclude that McDonald established that no genuine issue of
material fact existed regarding ownership of the mining properties
by Ripple Resources, Inc. and, therefore, that Fayram could not
redeem on behalf of Ripple Resources, Ltd. The burden then shifted
to Fayram to present affirmative evidence of a material and
substantial nature to raise a genuine issue of material fact; he
could not rest on the allegations or denials in his pleadings or on
conclusory or speculative statements. See Estate of Lien, 892 P.2d
at 532.
Fayram failed to come forward with any evidence whatsoever
raising a genuine issue of material fact regarding his originally
asserted right to redeem the mining properties on behalf of Ripple
Resources, Inc., effectively conceding the issue. He then advanced
the unpleaded theory that his right to redeem was premised on his
shareholder status in Ripple Resources, Ltd., which he asserted was
the true owner of the mining properties. As noted, the
underpinnings of this new theory first arose during Fayram's
deposition and, in opposing McDonald's motion, Fayram submitted his
own aff idavit stating that he owned stock in Ripple Resources, Ltd.
until it was dissolved in approximately 1986. He also submitted an
affidavit from Robert Dixon, the former president of both Ripple
Resources entities, to the same effect. Fayram argued that, as a
shareholder in Ripple Resources, Ltd. when it was dissolved, he is
the successor to the true owner of the mining properties and is
entitled to redeem them under § 15-18-111(1),MCA, as the holder of
an unrecorded or improperly recorded interest
Fayram's affidavits and other materials regarding ownership of
the mining properties by Ripple Resources, Ltd. and his shareholder
status in that company attempt to raise a genuine issue of material
fact about his right to redeem by contradicting the sworn affidavit
for redemption he submitted to Bowen, his answer and counterclaim,
and his proposed amended answer. We view evidence in a summary
judgment context in the light most favorable to the party opposing
the motion. Kaseta v. Northwestern Agency of Great Falls (1992),
252 Mont. 135, 138, 827 P.2d 804, 806 (citing Lorash v. Epstein
(19891, 236 Mont. 21, 24, 767 P.2d 1335, 1337). However, we do not
permit parties opposing summary judgment to create genuine issues
of material fact by means of sworn statements or testimony totally
contradicting their earlier sworn statements:
"While the district courts must exercise extreme care not
to take genuine issues of fact away from juries, ' (a)
party should not be allowed to create issues of
credibility by contradicting his own earlier testimony'
. . . Ambiguities and even conflicts in a deponent's
testimony are generally matters for the jury to sort out,
but a district court may grant summary [judgment] where
a party's sudden and unexplained revision of testimony
creates an issue of fact where none existed before.
Otherwise, any party could head off a summary judgment
motion by supplementing previous depositions ad hoc with
a new affidavit, and no case would ever be appropriate
for summary judgment."
Stott v. Fox (199O), 246 Mont. 301, 309, 805 P.2d 1305, 1309-10
(quoting Wilson v. Westinghouse (8th Cir. 1988), 838 F.2d 286,
289).
In m,we refused to allow the plaintiff to create ''a
material issue of fact . . . through the use of his own
contradictory testimony." a, at
805 P.2d 1310. We followed
Stott in Kaseta, where we again determined that summary judgment
was proper because the nonmoving parties attempted "to make a
material issue of fact through the use of their own contradictory
testimony." Kaseta, 827 P.2d at 806.
Here, Fayram swore in the affidavit which formed the basis for
Bowen's certificate of redemption that he was a director of Ripple
Resources, 1nc.--the record owner of the mining properties--and
authorized by its directors and shareholders to redeem on its
behalf. His original pleading and his proposed amended pleading
both affirmatively alleged that same basis for his right to redeem.
On the same day he filed his motion to amend and proposed amended
pleading, however, Fayram filed his brief and materials in
opposition to McDonald's motion for summary judgment, wherein he
asserted that he actually redeemed as a shareholder of Ripple
Resources, Ltd., which he asserted was the true owner of the mining
properties. By this means, Fayram tried to create a genuine issue
of fact by contradicting his earlier sworn statements. Under m
and Kaseta, he is not permitted to do so.
McDonald highlighted the contradictions and inconsistencies in
Fayram's various statements in the District Court and the court
noted that Fayram was merely trying "to advance a theory that might
allow him to recover." While the District Court did not base its
determination that Fayram had failed to raise a genuine issue of
material fact regarding his right to redeem on the Stott/Kaseta
principle, we conclude that it properly could have done so on this
record. We will affirm a district court's decision which reaches
the correct result regardless of the court's reasoning. See
Farmers Union Cent. Exch., Inc. v. Department of Revenue (1995),
272 Mont. 471, 475, 901 P.2d 561, 563; Bohmer v. Uninsured
Employer's Fund (19941, 266 Mont. 289, 291, 880 P.2d 816, 817.
We conclude that Fayram failed to raise a genuine issue of
material fact regarding his right to redeem. Accordingly, we hold
that the District Court did not err in granting McDonald's motion
for summary judgment on the basis that Fayram does not have a right
to redeem the mining properties pursuant to § 15-18-111, MCA.
2. Did the District Court abuse its discretion in
denying Fayram's motion to amend his pleadings?
As set forth above, Fayram's motion to amend his pleadings to
state a cross-claim against McDonald was filed contemporaneously
with his response to McDonald's motion for summary judgment. The
proposed cross-claim, specifically premised on Fayram's asserted
rlghc to redeem on behalf of Ripple Resources, Inc., alleged that
the tax deed process McDonald initiated did not comply with
statutory requirements. As discussed in issue one, the District
10
court granted McDonald's motion for summary judgment, concluding
that Fayram had no right to redeem. The court then denied Fayram's
motion to amend on the basis that, lacking a right to redeem,
Fayram did not have standing to challenge the procedures used.
Rule 15 (a), M.R.Civ.P. , provides, insofar as is relevant here,
that "a party may amend the party's pleading only by leave of court
. . . and leave shall be freely given when justice so requires."
However, while leave should be freely given, a motion for leave to
amend pleadings is properly denied if amendment would be futile.
- Mogan
See v. City of Harlem (19891, 238 Mont. 1, 8, 775 P.2d 686,
690. We review a district court's denial of a motion to amend
pleadings to determine if the court abused its discretion. See
Richland Nat'l Bank & Trust v. Swenson (1991), 249 Mont. 410, 421,
816 P.2d 1045, 1052; Prentice Lumber Co., Inc. v. Hukill et al.
(1972), 161 Mont. 8, 17, 504 P.2d 277, 282.
Legal principles relating to standing are well-established.
That we are seldom called upon to apply those principles is more a
function of the ordinarily direct and personal nature of the
disputes which become legal actions than of significant
disagreement about the content of the principles themselves. "At
the threshold of every case, especially those where a statutory or
constitutional violation is claimed to have occurred, is the
requirement that the plaintiff allege ' . . . a personal stake in
the outcome of the controversy . . . . I I, Olson v. Department of
Revenue (1986), 223 Mont. 464, 469, 726 P.2d 1162, 1166 (quoting
Baker v. Carr (1962), 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7
L.Ed.2d 663, 678). This principle is referred to as standing to
sue and it rests on both a constitutional basis and a judicial
self-restraint basis. Olson, 726 P.2d at 1166. Standing relates
not to the merits of the underlying claim, but to whether the
plaintiff has "alleged a personal injury that is a prerequisite to
an adjudication on the merits." -
,
Olson 726 P.2d at 1166.
In Won,
we addressed the standing prerequisite in the
context of the appellants' challenge to the constitutionality of
statutes requiring county residency to run for county office or
obtain a hunting or fishing license. Olson, 726 P.2d at 1166. The
record reflected that the appellants had alleged neither an attempt
to run for office or obtain hunting or fishing licenses nor a
denial of entitlement to do so via operation of the statutes. We
stated that "Lilt is not enough that appellants allege an injury
which others may have suffered . . .I [tlhey must allege an
injury personal to themselves . . . . " -
,
Olson 726 P.2d at 1166.
We held that the appellants had not alleged a personal injury that
is a prerequisite to an adjudication on the merits and, in the
absence of standing, declined to address their constitutional
argument. Olson, 726 P.2d at 1166-67.
Stewart v. Board of County Comm'rs of Big Horn County (1977),
175 Mont. 197, 573 P.2d 184, involved facts similar to those in the
present case in the context of a standing issue. There, the
plaintiffs sued to have tax deed sales declared null and void and
to exercise their alleged statutory preferential right of
repurchase. Stewart, 573 P.2d at 185. We set forth the minimum
criteria to establish standing: 1) an allegation of past, present
or threatened injury to a property or civil right; and 2) that the
alleged injury be distinguishable from that to the general public,
although not necessarily exclusive to the plaintiff. Stewart, 573
P.2d at 186. We determined that the statutory preferential rights
on which the plaintiffs based their action did not exist--that is,
the plaintiffs were not entitled to exercise those rights; as a
result, the plaintiffs had alleged no injury to a property or civil
right. We held, on that basis, that the plaintiffs lacked standing
to sue for alleged improper procedure in the tax deed sales.
Stewart, 573 P.2d at 187.
Here, Fayram's effort to assert a cross-claim against McDonald
was premised on his alleged statutory right to redeem on behalf of
Ripple Resources, Inc. The effect of the District Court's proper
grant of summary judgment to McDonald on that issue is that Fayram
is not entitled to exercise the statutory right to redeem; in other
words, as to Fayram, the statutory right to redeem does not exist.
Fayram did not allege any other injury. Therefore, like the
plaintiffs in Stewart, he does not meet even the first Stewart
criterion. See Stewart, 573 P.2d at 186.
Fayram relies on Hudson v. McDonald (1987) 229 Mont . 426,
,
430, 747 P.2d 221, 223, for the proposition that "the time for
redemption continues indefinitely" if the published notice of a
pending tax deed issuance is defective. Fayram's reliance on
Hudson is misplaced.
Hudson was a quiet title action brought by the owner/seasonal
occupant of the property at issue against the tax sale purchaser.
The plaintiff was clearly entitled to redeem and did so after the
tax deed had been issued to the defendant purchaser; the District
Court ratified the redemption. See Hudson, 747 P.2d at 222. The
applicable notice statute required service on both the owner and
the occupant of the property. The purchaser notified the owner of
his intent to apply for a tax deed via certified mail which the
owner never received; notwithstanding the purchaser's admission
that he knew that the property was occupied, no notice was given to
the occupant. Hudson, 747 P.2d at 222.
We noted that the statutory requirement that both the owner
and the occupant be served "maximizes the probability that the
delinquent taxpayer will receive notice." Hudson, 747 P.2d at 223.
On that basis, we held that if the required notice was not given to
the persons statutorily entitled to it, "then the time for
redemption continues indefinitely." Hudson, 747 P.2d at 223
(emphasis added) .
No standing issue was addressed in Hudson, perhaps because the
plaintiff's right to redeem and his right to notice were both
undisputed. Thus, Hudson was decided against the backdrop of a
clear right to redeem not timely asserted due to a clear failure to
comply with statutorily-required notice provisions. It cannot be
read to disregard the requirements for standing which are at issue
in the present case. Here, unlike the complaining party in Hudson,
no right to redeem exists in Fayram.
Fayram also relies on Kahle v. Smithers (1987), 225 Mont. 452,
733 P.2d 844, which, like Hudson, involved a challenge to the
procedures used in obtaining a tax deed after the redemption period
had expired and the tax deed had been obtained; in w,however,
the tax deed had been procured through a default judgment against
the owner in a court action under then-existing (and subsequently
repealed) statutes. The District Court granted the tax deed
holder's motion for summary judgment against the owner on the basis
of res judicata. w,733 P.2d at 845. On appeal, we concluded
that the tax deed purchaser's affidavit for publication of summons
was deficient and, therefore, the service of process upon the owner
of the property at issue was insufficient for the court to obtain
jurisdiction over her. a, at
733 P.2d 846. On that basis, we
held that the owner could collaterally attack the earlier judgment
issuing the tax deed. u,P.2d at
733 846.
Neither the factual nor the procedural context in which we
decided Kahle bears any similarity to the present case. Kahle
involved the record owner of the property; Fayram is not only not
the record owner of the property, it has been determined that he
had no right to redeem. Procedurally, this is not a collateral
attack on an earlier judgment in which a question of proper service
in the earlier proceeding is raised; conversely, w did not
involve a standing issue. As a result of these and other
significant differences between and the present case, our
conclusions in Kahle are both irrelevant and inapplicable to the
present case.
As discussed above, Fayram does not meet the first Stewart
criterion for standing. We conclude, therefore, that Fayram does
not have standing to assert a cross-claim against McDonald for
alleged failures to comply with statutory requirements regarding
the procedures used in this case. Absent standing, Fayram is not
entitled to an adjudication of his underlying claim on the merits.
See Olson
- I 726 P.2d at 1166. We further conclude, therefore, that
amendment of Fayram's pleadings to include the proposed cross-claim
against McDonald alleging failure to comply with statutory
requirements would be futile. On that basis, we hold that the
District Court did not abuse its discretion in denying Fayram's
motion for leave to amend his pleadings.
Affirmed.
April 16, 1996
CERTIFICATE OF SERVICE
I hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:
Gregory A. Jackson
JACKSON & RICE
833 North Last Chance Gulch
Helena, MT 59601
Ms. Nancy K. Moe
Attorney at Law
P.O. Box 9198
Missoula, MT 59807
Mr. Byron W. Boggs
Atiorney at Law
336 Ryman
Missoula, MT 59802
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA
Deputy