Mary J. Baker Revocable Trust v. Cenex Harvest States, Cooperatives, Inc.

No. 04-333

IN THE SUPREME COURT OF THE STATE OF MONTANA

2007 MT 159

THE MARY J. BAKER REVOCABLE
TRUST and LINDA J. ECKLUND, on
behalf of themselves and all similarly
situated persons and entities,

Plaintiffs and Appellants,

v.

CENEX HARVEST STATES, COOPERATIVES,
INC., and FRONT RANGE PIPELINE, L.L.C.,

Defendants and Respondents.

APPEAL FROM: The District Court of the Fourteenth Judicial District,
In and For the County of Wheatland, Cause No. DV 2003-006,
Honorable Randall I. Spaulding, Presiding Judge

COUNSEL OF RECORD:

For Appellant:

Thomas E. Towe, Towe, Ball, Enright, Mackey & Sommerfield, PLLP,
Billings, Montana

For Respondent:

John G. Crist, Crist Law Firm, Billings, Montana

David A. Veeder, Attorney at Law, Billings, Montana

Submitted on Briefs: January 5, 2005

Decided: June 27, 2007

Filed:

__________________________________________
Clerk
Justice James C. Nelson delivered the Opinion of the Court.

¶1 The Mary J. Baker Revocable Trust and Linda J. Eklund (individually referred to

as “Baker Trust” and “Eklund,” respectively, and collectively referred to as “the

Landowners”) appeal the judgment of the District Court for the Fourteenth Judicial

District, Wheatland County, denying the Landowners’ motion for partial summary

judgment and motion for class certification and granting the motion for summary

judgment filed by Cenex Harvest States Cooperatives, Inc., and Front Range Pipeline,

L.L.C. (collectively referred to as “Cenex”).1 We affirm.

ISSUES

¶2 The Landowners provide the following “STATEMENT OF ISSUES

PRESENTED FOR REVIEW” at the outset of their opening brief:

1. Whether the district court erred in granting Appellee-Defendants’
Motion for Summary Judgment?

2. Whether the district court erred in denying Appellants-Plaintiffs’
Motion for Summary Judgment?

3. Whether the district court erred in ignoring and refusing to apply
§ 1-4-102, MCA, in interpreting the granting language in the
easements at issue?

4. Whether the district court erred in ignoring the principle that an
instrument should be construed against the drafter and refusing to
apply precedent established in a strikingly similar case in
Mississippi?

The argument section of the Landowners’ brief, however, does not conform to this

statement of the issues. Rather, the Landowners’ two issue headings are as follows:
1
Front Range Pipeline, L.L.C., is a wholly-owned subsidiary of Cenex Harvest
States Cooperatives, Inc.

2
 A. The District Court Failed to Consider the Circumstances
Surrounding the Procurement of the Easements in Violation of
§ 1-4-102, MCA. The District Court Also Failed to Interpret the
Easement Granting Language in the Light Most Favorable to the
Landowners.

B. In the Alternative, the Easement Granting Language is
Ambiguous, Thereby Requiring Consideration of the Surrounding
Circumstances. The Landowners’ Unrefuted Summary Judgment
Evidence Supports the Entry of Summary Judgment in Their
Favor or, in the Further Alternative, Consideration by a Jury.

The Landowners’ “alternative” arguments under Issue “B” do not appear in their opening

statement of the issues presented for review. Furthermore, within the discussion under

Issue “A” the Landowners present an argument that does not match any of their issue

statements—namely, that the District Court erred in construing a term in the easement

granting language contrary to the dictionary definition of that term.

¶3 Given this disconnect between the issues as articulated at the outset of the

Landowners’ opening brief and the issues as articulated and argued in the argument

section of the brief, this Court is in the position of having to divine precisely what issues

the Landowners are presenting to this Court. The Rules of Appellate Procedure,

however, place the responsibility of matching arguments with issue statements on the

Landowners, not this Court. See M. R. App. P. 23(a)(2) (requiring an appellant’s brief to

contain “[a] statement of the issues presented for review”); M. R. App. P. 23(a)(4)

(requiring the argument section of the brief to contain the contentions of the appellant

“with respect to the issues presented”). Accordingly, we will address the merits of the

Landowners’ actual arguments without regard to their uncoordinated issue statements.

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¶4 In their first argument, the Landowners agree with the District Court that the

language of the right-of-way agreements by which the Landowners granted easements

across their properties to Cenex is unambiguous, but they disagree with the court’s

conclusion that Cenex has not exceeded the scope of those easements as defined in the

right-of-way agreements. The Landowners contend (1) that the District Court

erroneously construed the term “together with” as that term is used in the granting

language; (2) that the District Court erred by failing to interpret the granting language in

the light most favorable to the Landowners; and (3) that the District Court erred by

refusing to consider the circumstances under which the easements were granted. As an

alternative argument, the Landowners contend that the granting language is ambiguous,

thus (1) requiring consideration of the circumstances under which the easements were

granted or (2) creating a genuine issue of material fact and thereby precluding summary

judgment for either party.

¶5 Accordingly, having studied the Landowners’ arguments, we perceive the

following five issues on this appeal:

1. Did the District Court erroneously construe the term “together with” as that

term is used in the unambiguous granting language?

2. Did the District Court err by failing to interpret the unambiguous granting

language in the light most favorable to the Landowners?

3. Did the District Court err by refusing to consider the circumstances under

which the easements were granted?

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 4. Did the District Court err in determining that the granting language is

unambiguous?

5. Did the District Court err in determining that there is no genuine issue as to any

material fact?

FACTUAL AND PROCEDURAL BACKGROUND

¶6 The Front Range Pipeline is a system of crude oil pipelines that extends

approximately 320 miles from the United States/Canadian border to Laurel, Montana, by

way of Santa Rita, Montana. The stretch from Santa Rita to Laurel consists of one 16-

inch pipeline and a 36-strand fiber optic cable. For most of this distance, the fiber optic

cable is buried in the same trench as the pipeline. The dispute in this case concerns

Cenex’s use of the fiber optic cable.

¶7 Cenex began acquiring easements for the pipeline and cable in 1994. This process

continued into 1996 and involved approximately 450 parcels of land on the route between

Santa Rita and Laurel. Cenex entered into a right-of-way agreement with Eklund on

November 12, 1994, and with Baker Trust on February 13, 1995. Both agreements,

which had been prepared by Cenex, contained the following granting language:

[Grantors] do hereby grant, sell and convey unto [Cenex] . . . its successors
and assigns, hereinafter referred to as Grantee, the right to construct,
maintain, inspect, operate, protect, repair, replace, change the size of or
remove a pipeline or pipelines or other appurtenances, for the transportation
of oil, liquids and/or gases and the products thereof, together with a buried
fiber optic communications cable, in, on, under or upon and along a strip of
land Fifty Feet (50 ft.) in width to be selected by Grantee on, in, over and
through the following described lands . . . .

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The agreements further provided that “[t]he rights herein granted may be assigned in

whole or in part” and that “[t]he terms, conditions and provisions of this agreement shall

extend to and be binding upon the heirs, executors, administrators, personal

representatives, successors and assigns of the parties hereto.”

¶8 During this same period, Cenex and TRI Touch America, Inc. (“TRI”) negotiated

a Fiber Optic Agreement. Pursuant to this agreement (dated June 26, 1995), TRI agreed

to install the fiber optic cable in the trench opened by Cenex for the pipeline and to

maintain the cable, but the agreement specified that Cenex would own the cable. For its

part, Cenex granted TRI an exclusive, indefeasible right to use 32 strands of the cable for

an initial term of 25 years. The four remaining strands were specifically dedicated to the

exclusive use of Cenex for the transmission of data, voice, and video communication

along the pipeline.

¶9 Ultimately, the pipeline project was completed in late 1995, and the fiber optic

cable became operational in mid 1996. Cenex assigned its rights, title, and interest in the

pipeline and fiber optic cable to Front Range Pipeline, L.L.C., in September 1999.

¶10 The Landowners initiated the instant action on March 21, 2003. In essence, they

alleged as follows: that the right-of-way agreements permitted Cenex to use the fiber

optic cable only for purposes of operating and monitoring the pipeline; that Cenex had

exceeded the scope of the easements by using and allowing a third party to use the cable

for purposes other than operating and monitoring the pipeline; that Cenex had done so

without the Landowners’ authorization and without compensating the Landowners; that

Cenex, thus, had surreptitiously created a valuable revenue-producing corporate asset;

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that Cenex had retained the revenues and profits generated by this asset; and that these

wrongful acts and omissions amounted to an unlawful scheme to convert money derived

from the trespass upon the Landowners’ properties. The Landowners claimed breach of

contract, trespass, conversion, breach of the implied covenant of good faith and fair

dealing, civil conspiracy, and unjust enrichment, and they requested certification under

M. R. Civ. P. 23 as a class consisting of “[a]ll persons and entities who own land over

which fiber optic cable has been strung or laid in the Cenex Front Range Pipeline right-

of-way.”

¶11 Cenex filed an answer denying the allegations concerning the scope of the

easements and the allegations of wrongdoing. Thereafter, the parties filed cross-motions

for summary judgment.

¶12 The Landowners, in their summary judgment motion, asserted that the granting

language in the right-of-way agreements “is crystal clear in its scope.” Focusing on the

words “together with,” they argued that this term means “in union with” and that

“[a]uthority to bury a fiber optic cable ‘in union with’ the pipeline clearly suggests its use

is limited to operating and monitoring the Pipeline.” They also set forth a number of

“circumstances under which the Easements were obtained” as support for their

interpretation of “together with,” citing § 1-4-102, MCA, as authority for the District

Court to consider these circumstances. One such “circumstance” was that Cenex

allegedly had obtained the easements by threatening to condemn the Landowners’

properties pursuant to § 69-13-103(1), MCA. Finally, the Landowners argued that use of

the fiber optic cable by parties other than Cenex “clearly creates added physical and legal

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burdens” on the Landowners’ properties. They provided a number of examples of such

burdens—e.g., “[i]f there is a break in the line . . . multiple companies’ repair crews must

physically enter the land to replace and/or repair the cable,” and “by going beyond the

scope and intent of the Easement granting language, Cenex has saddled the land with a

significant, additional legal burden - a potential cloud on their titles.”

¶13 In its summary judgment motion, Cenex agreed that the granting language is

“clear and unambiguous”; however, contrary to the Landowners’ interpretation, Cenex

argued that the language “place[s] no limits on how the fiber optic cable may be used”

and “expressly give[s] Cenex the right to assign any of its rights, in whole or in part, to

any third party.” According to Cenex, therefore, it did not breach the right-of-way

agreements by using or allowing the use of the cable for purposes other than operating or

monitoring the pipeline, and all of the Landowners’ claims, which were predicated on the

same alleged violation of the terms of the right-of-way agreements, should be dismissed

accordingly.

¶14 The District Court agreed with Cenex. First, the court noted that the Landowners

were not challenging the validity of the right-of-way agreements. Second, the court

determined that the granting language in the agreements is unambiguous. Third, the

court read the granting language as placing no limitations upon the use of the fiber optic

cable. In so doing, the court rejected the Landowners’ “grammatical gymnastics,”

concluding that that the term “together with” means “and” in the context of the granting

language.

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¶15 With respect to the Landowners’ reliance on § 1-4-102, MCA, the court stated that

since the granting language was not ambiguous, the court could not consider the

circumstances under which the right-of-way agreements had been made. The court also

refused to construe the right-of-way agreements by reference to § 69-13-103(1), MCA,

reasoning that this statute had no application here because the easements had been

obtained by voluntary agreements, not condemnation. Lastly, the court concluded that

the language of the right-of-way agreements gave Cenex authority to assign its rights

thereunder.

¶16 Based on this analysis, the District Court dismissed all of the Landowners’ claims,

noting that each claim was predicated on Cenex’s using the fiber optic cable for purposes

other than operating and monitoring the pipeline and Cenex’s assigning a portion of the

easements to TRI, both of which the court had determined were not wrongful acts. The

court also denied the Landowners’ motion for class certification as moot. This appeal

followed.

STANDARD OF REVIEW

¶17 We review a district court’s ruling on a motion for summary judgment de novo,

applying the same criteria of M. R. Civ. P. 56 as did the district court. Redies v.

Attorneys Liability Protection Soc., 2007 MT 9, ¶ 26, 335 Mont. 233, ¶ 26, 150 P.3d 930,

¶ 26; Montana-Dakota Utilities Co. v. City of Billings, 2003 MT 332, ¶ 6, 318 Mont. 407,

¶ 6, 80 P.3d 1247, ¶ 6. Rule 56(c) provides that a motion for summary judgment “shall

be rendered forthwith if the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show that there is no genuine issue

9
as to any material fact and that the moving party is entitled to a judgment as a matter of

law.” In evaluating a motion for summary judgment, the evidence must be viewed in the

light most favorable to the non-moving party, and all reasonable inferences that might be

drawn from the offered evidence should be drawn in favor of the party opposing

summary judgment. Redies, ¶ 26; Porter v. Galarneau, 275 Mont. 174, 179, 911 P.2d

1143, 1146 (1996). Summary judgment is an extreme remedy that should never be a

substitute for a trial on the merits if a controversy exists over a material fact. In re

Dorothy W. Stevens Revocable Trust, 2005 MT 106, ¶ 13, 327 Mont. 39, ¶ 13, 112 P.3d

972, ¶ 13; Montana Metal Buildings, Inc. v. Shapiro, 283 Mont. 471, 474, 942 P.2d 694,

696 (1997).

DISCUSSION

¶18 The breadth and scope of an easement are determined by the actual terms of the

grant. Mularoni v. Bing, 2001 MT 215, ¶ 32, 306 Mont. 405, ¶ 32, 34 P.3d 497, ¶ 32

(citing § 70-17-106, MCA, and Van Hook v. Jennings, 1999 MT 198, ¶ 12, 295 Mont.

409, ¶ 12, 983 P.2d 995, ¶ 12). The construction of a writing granting an interest in real

property, in turn, is governed by the rules of contract interpretation. See § 70-1-513,

MCA (“Grants are to be interpreted in like manner with contracts in general, except so far

as is otherwise provided in this part.”); Mularoni, ¶ 32 (“In interpreting the meaning of an

easement grant, contract principles apply.”). Thus, we begin by setting forth a number of

the rules of contract interpretation that are pertinent to the issues discussed below.

¶19 The construction and interpretation of a contract is a question of law. Ophus v.

Fritz, 2000 MT 251, ¶ 19, 301 Mont. 447, ¶ 19, 11 P.3d 1192, ¶ 19; Van Hook, ¶ 10.

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Likewise, whether an ambiguity exists in a contract is a question of law. Mularoni, ¶ 32;

SVKV, L.L.C. v. Harding, 2006 MT 297, ¶ 43, 334 Mont. 395, ¶ 43, 148 P.3d 584, ¶ 43.

If the language of a contract is unambiguous—i.e., reasonably susceptible to only one

construction—the duty of the court is to apply the language as written. Ophus, ¶ 23;

Carelli v. Hall, 279 Mont. 202, 209, 926 P.2d 756, 761 (1996). However, if the language

of a contract is ambiguous, a factual determination must be made as to the parties’ intent

in entering into the contract. In re Marriage of Mease, 2004 MT 59, ¶ 30, 320 Mont.

229, ¶ 30, 92 P.3d 1148, ¶ 30; Klawitter v. Dettmann, 268 Mont. 275, 281, 886 P.2d 416,

420 (1994).

¶20 The determination of whether an ambiguity exists in a contract is to be made on an

objective basis. See Richard A. Lord, Williston on Contracts vol. 11 § 30:4, at 51 (4th

ed., West 1999). Thus, “a conclusion of ambiguity is not compelled by the fact that the

parties to a document, or their attorneys, have or suggest opposing interpretations of a

contract, or even disagree as to whether the contract is reasonably open to just one

interpretation.” Williston on Contracts § 30:4, at 51-54 (footnotes omitted); accord E.

Allan Farnsworth, Farnsworth on Contracts vol. II, § 7.12a, at 305-06 (2d ed., Aspen

1998); Holmstrom v. Mutual Benefit Health & Accident Ass’n, 139 Mont. 426, 428, 364

P.2d 1065, 1066 (1961) (“Ambiguity does not exist just because a claimant says so.”);

Heggem v. Capitol Indem. Corp., 2007 MT 74, ¶ 30, 336 Mont. 429, ¶ 30, 154 P.3d 1189,

¶ 30 (“[A] mere disagreement over the meaning of an insurance provision does not render

the provision ambiguous.”). Rather, an ambiguity exists only if the language is

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susceptible to at least two reasonable but conflicting meanings. Ophus, ¶ 23; Van Hook,

¶ 13.

¶21 “A contract must be so interpreted as to give effect to the mutual intention of the

parties as it existed at the time of contracting, so far as the same is ascertainable and

lawful.” Section 28-3-301, MCA; accord § 1-4-103, MCA (“In the construction of an

instrument, the intention of the parties is to be pursued if possible.”). The mutual

intention of the parties, in turn, is to be ascertained from the writing if possible. Section

28-3-303, MCA (“When a contract is reduced to writing, the intention of the parties is to

be ascertained from the writing alone if possible, subject, however, to the other

provisions of this chapter.”). In addition, evidence of the circumstances under which the

contract was made and the matter to which it relates may be considered. Section 28-3-

402, MCA (“A contract may be explained by reference to the circumstances under which

it was made and the matter to which it relates.”); § 28-2-905(2), MCA (“[The parol

evidence rule] does not exclude other evidence of the circumstances under which the

agreement was made or to which it relates.”). However, such evidence of circumstances

and subject matter is not admissible to add to, vary, or contradict the terms of the

contract. See § 28-2-904, MCA (“The execution of a contract in writing, whether the law

requires it to be written or not, supersedes all the oral negotiations or stipulations

concerning its matter which preceded or accompanied the execution of the instrument.”);

§ 28-2-905(1), MCA (“Whenever the terms of an agreement have been reduced to writing

by the parties, it is to be considered as containing all those terms. Therefore, there can be

between the parties and their representatives or successors in interest no evidence of the

12
terms of the agreement other than the contents of the writing except . . . (a) when a

mistake or imperfection of the writing is put in issue by the pleadings[, or] (b) when the

validity of the agreement is the fact in dispute.” (paragraph breaks omitted)). 2

¶22 With these principles in mind, we now turn to the Landowners’ contentions.

¶23 Issue 1. Did the District Court erroneously construe the term “together with” as
that term is used in the unambiguous granting language?

¶24 The Landowners do not contest Cenex’s authority under the right-of-way

agreements to construct and operate the fiber optic cable. But they claim that the “plain

and unambiguous” granting language “confirms that the fiber optic cable is incidental or

subservient to the clearly dominant grant of a petroleum pipeline easement” and “limits

its use to operating and monitoring the Pipeline.”

¶25 As support for this position, the Landowners renew their contention that the term

“together with” in the granting language unambiguously limits Cenex’s use of the fiber

optic cable to operating and monitoring the pipeline. Again, the granting language

provides as follows:

[Grantors] do hereby grant, sell and convey unto [Cenex] . . . the right to
construct, maintain, inspect, operate, protect, repair, replace, change the
size of or remove a pipeline or pipelines or other appurtenances, for the
2
Sections 28-2-904 and -905(1), MCA, are Montana’s articulation of the parol
evidence rule. See Savik v. Entech, Inc., 278 Mont. 152, 156, 923 P.2d 1091, 1094
(1996). As a general proposition, the parol evidence rule “prohibits the admission of
extrinsic evidence of prior or contemporaneous oral agreements, or prior written
agreements, to explain the meaning of a contract when the parties have reduced their
agreement to an unambiguous integrated writing.” Williston on Contracts § 33:1, at 541;
see also Black’s Law Dictionary 1139 (Bryan A. Garner ed., 7th ed., West 1999)
(defining the parol evidence rule as “[t]he principle that a writing intended by the parties
to be a final embodiment of their agreement cannot be modified by evidence that adds to,
varies, or contradicts the writing”).

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 transportation of oil, liquids and/or gases and the products thereof, together
with a buried fiber optic communications cable, in, on, under or upon and
along a strip of land Fifty Feet (50 ft.) in width to be selected by Grantee
on, in, over and through the following described lands . . . . [Emphasis
added.]

The Landowners argue that because the language pertaining to the fiber optic cable is

prefaced with the words “together with,” and because this term is defined as “in union

with” or “along with” (citing Black’s Law Dictionary 1487 (6th ed. 1990), and Gilmore v.

Mulvihill, 109 Mont. 601, 613, 98 P.2d 335, 341 (1940)), the granting language “clearly

limits” the use of the fiber optic cable to operating and monitoring the pipeline. In the

Landowners’ view, the import of the term “together with” is “in connection with”; in

other words, the fiber optic cable is to be used “in connection with” the pipeline.

¶26 The District Court however, reasoned that “[the words ‘together with’] mean

nothing more than ‘and’ in the context of the granting language.” The court stated that

Black’s Law Dictionary 79 (5th ed. 1979) defines “and” as meaning “together with” and

“along with,” and that Webster’s Third New International Dictionary 2404 (1971) defines

the term “together with” as “along with,” “in addition to,” and “as well.” (The court

consulted Webster’s Third New International Dictionary because this Court had relied on

Webster’s New International Dictionary in Gilmore when defining the word “together.”)

Thus, under the District Court’s interpretation of “together with,” the Landowners

granted Cenex the right to bury a pipeline and a fiber optic cable, not a pipeline and a

fiber optic cable “to be used in connection therewith.”

¶27 We agree with the District Court and reject the Landowners’ strained

interpretation of “together with.” Whether “together with” is defined as “in union with,”

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“along with,” “in addition to,” “as well,” or “and,” the term—on its face—simply does

not carry the meaning the Landowners ascribe to it. As support for their “in connection

therewith” interpretation, the Landowners rely on the Mississippi Supreme Court’s

decision in McDonald v. Mississippi Power Co., 732 So.2d 893 (Miss. 1999).

McDonald, however, does not support the Landowners’ position.

¶28 The Mississippi Power Company (“MPC”) obtained easements through a number

of properties by way of condemnation, eminent domain proceedings, and voluntary

easements. The easements gave MPC the right to

“construct, operate and maintain electric lines and all telegraph and
telephone lines, towers, poles, wires, and appliances and equipment
necessary or convenient in connection therewith from time to time and
counterpoise wire and other counterpoise conductors, upon, over, under,
and across a strip of land . . .”

McDonald, ¶ 2 (ellipsis in original, emphasis added).

¶29 In McDonald, MPC sought a declaratory judgment that it had the right under the

easements to install, utilize, and sublet space on fiber optic cables. The chancery court

determined that laying fiber optic cables was “well within the express or implied

language of the easements” and that MPC had the right to “leas[e] or sell[] excess

capacity on said lines, without further compensation to the landowners.” McDonald, ¶ 4

(internal quotation marks omitted). The Mississippi Supreme Court agreed with the first

conclusion but disagreed with the latter. The court observed that the clear intent of the

easements was “to grant MPC the right to install and maintain telephone lines” and a

fiber optic cable “is nothing more than a technologically advanced or new type of

telephone line.” McDonald, ¶ 9. However, with respect to MPC’s desire to sublet space

15
on the fiber optic cables to third parties for uses other than providing electricity, the court

observed:

MPC’s current easements contain limiting language which precludes them
from utilizing the fiber optics cable for anything but services provided in
connection with supplying electricity. According to the phrase in question,
MPC’s use of “telegraph and telephone lines, towers, poles, wires, and
appliances and equipment” is limited to “in connection therewith” MPC’s
service of providing electricity to its customers. Although it would not
constitute an additional servitude on the property, MPC without more
definite easements simply does not have the authority. Since MPC drafted
a number of the easements in question, they are interpreted most favorably
to the landowner. We find that the chancellor erred in holding that the
language of the above easements permitted MPC to sublease space on its
fiber optics cables for purposes other than those which are in connection
with providing electricity.

McDonald, ¶ 10 (citation omitted). The court reached the same conclusion with respect

to the easements that had been obtained through condemnation or eminent domain

proceedings. See McDonald, ¶ 11.

¶30 In the case at hand, by contrast, there is no such limiting language. The

Landowners insist that “there is little difference between the words ‘together with’ in the

instant case and ‘in connection therewith’ in McDonald” and that use of the word

“together” in the instant case and “connection” in McDonald “is a distinction without a

difference.” We disagree. It seems that the Landowners would have us rewrite the

granting language to say:

[Grantors] do hereby grant, sell and convey unto [Cenex] . . . the right to
construct, maintain, inspect, operate, protect, repair, replace, change the
size of or remove a pipeline or pipelines or other appurtenances, for the
transportation of oil, liquids and/or gases and the products thereof, together
with and a buried fiber optic communications cable to be used in
connection therewith . . . . [Strikethrough for old language; underscore for
new language.]

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This we may not do. See § 1-4-101, MCA (“In the construction of an instrument, the

office of the judge is simply to ascertain and declare what is in terms or in substance

contained therein, not to insert what has been omitted or to omit what has been

inserted.”); cf. City of Missoula v. Mix, 123 Mont. 365, 372, 214 P.2d 212, 216 (1950)

(“Where the language of a reservation in a grant is clear, certain and unambiguous, it

must be given effect as written.”). Accordingly, we hold that the term “together with,” as

used in the granting language, does not unambiguously limit Cenex’s use of the fiber

optic cable to operating and monitoring the pipeline.

¶31 Issue 2. Did the District Court err by failing to interpret the unambiguous
granting language in the light most favorable to the Landowners?

¶32 The Landowners argue that the District Court erred by failing to interpret the

granting language in the light most favorable to the Landowners. They contend that

“with a very few minor exceptions, Cenex drafted all of the [right-of-way agreements]”;

thus, “[i]f Cenex truly intended the Easement granting language to be unlimited in its use,

Cenex should have said so.” As support for this argument, the Landowners rely on

McDonald, in which the Mississippi Supreme Court stated: “Since MPC drafted a

number of the easements in question, they are interpreted most favorably to the

landowner.” McDonald, ¶ 10. The Landowners also cite United States v. Seckinger, 397

U.S. 203, 210, 90 S. Ct. 880, 884 (1970) (reciting “the general maxim” that “a contract

should be construed most strongly against the drafter”), and Anderson v. Baker, 196

Mont. 494, 501, 641 P.2d 1035, 1039 (1982) (noting that in “ ‘take-it-or-leave-it’

situations, where adhesion contracts are involved, . . . the terms are to be construed

17
against the drafter and any ambiguities are to be resolved in favor of the party having no

voice in arriving at the document’s terms”).

¶33 Cenex contends that “[i]t is only when the terms of an agreement or contract are

uncertain or ambiguous that they are construed against the party causing the uncertainty”;

thus, “[s]ince the district court found the [granting language] unambiguous, there is no

reason to construe [it] against Cenex.” As support for this argument, Cenex cites C & L

Enterprises, Inc. v. Citizen Band Potawatomi Tribe of Oklahoma, 532 U.S. 411, 423, 121

S. Ct. 1589, 1596-97 (2001) (stating that “the common-law rule of contract interpretation

that a court should construe ambiguous language against the interest of the party that

drafted it” was inapposite because the contract in question was not ambiguous (internal

quotation marks omitted)), and Matter of Estate of Thies, 273 Mont. 272, 276, 903 P.2d

186, 188 (1995) (stating that our decision in Matter of Estate of Flasted, 228 Mont. 85,

741 P.2d 750 (1987), in which we construed a contractual ambiguity against the drafter,

did not apply in Thies because the agreement in question was “ ‘straightforward and

simple’ ”).

¶34 We agree with Cenex. The Restatement (Second) of Contracts explains the

rationale for the construction-against-drafter principle as follows:

Where one party chooses the terms of a contract, he is likely to provide
more carefully for the protection of his own interests than for those of the
other party. He is also more likely than the other party to have reason to
know of uncertainties of meaning. Indeed, he may leave meaning
deliberately obscure, intending to decide at a later date what meaning to
assert.

18
Restatement (Second) of Contracts § 206 cmt. a (1981). Thus, the Restatement provides

that “[i]n choosing among the reasonable meanings of a promise or agreement or a term

thereof, that meaning is generally preferred which operates against the party who supplies

the words or from whom a writing otherwise proceeds.” Restatement (Second) of

Contracts § 206.

¶35 Yet, it is not necessary to “choos[e] among . . . reasonable meanings” when the

promise, agreement, or term thereof is reasonably susceptible to only one meaning. In

other words, the general maxim that a court should construe contract language against the

party that drafted it presupposes that the language is reasonably susceptible to more than

one construction. See C & L Enterprises, 532 U.S. at 423, 121 S. Ct. at 1596-97; Thies,

273 Mont. at 276, 903 P.2d at 188.

¶36 Here, the Landowners contend that the granting language is unambiguous. Thus,

the construction-against-drafter principle does not apply. Rather, the duty of the District

Court was to apply the language as written. Ophus, ¶ 23; Carelli, 279 Mont. at 209, 926

P.2d at 761. Accordingly, we hold that the District Court did not err by not interpreting

the granting language in the light most favorable to the Landowners.

¶37 Issue 3. Did the District Court err by refusing to consider the circumstances
under which the easements were granted?

¶38 The Landowners contend that the granting language of the right-of-way

agreements must be considered in light of the circumstances under which the agreements

were made and that the District Court erred when it refused to do so. The Landowners

rely on § 1-4-102, MCA, which provides:

19
 For the proper construction of an instrument, the circumstances
under which it was made, including the situation of the subject of the
instrument and of the parties to it, may also be shown so that the judge be
placed in the position of those whose language he is to interpret.[ 3 ]

The District Court reasoned that § 1-4-102 did not apply in this case “[b]ecause the

Easements are unambiguous.” The Landowners point out, however, that § 1-4-102 does

not say “except when the language of the instrument itself is unambiguous.” The

Landowners also point out that in Tester v. Tester, 2000 MT 130, 300 Mont. 5, 3 P.3d

109, this Court applied § 1-4-102 to a deed that we determined was unambiguous:

The plain language of the Funk deed is unambiguous. An
unambiguous deed must be interpreted according to its language as written,
without resort to extrinsic evidence of the grantor’s intent. For proper
construction of an instrument § 1-4-102, MCA, allows us to examine the
“circumstances under which it was made, including the situation of the
subject of the instrument and of the parties to it.”

Tester, ¶ 25 (citation omitted). We then proceeded to discuss the circumstances under

which the Funk deed had been made. See Tester, ¶¶ 25, 27-28. Therefore, the

Landowners contend, “[u]nder § 1-4-102, MCA, a court may look to the surrounding

circumstances in order to construe an instrument even when that instrument is

unambiguous on its face.”

¶39 Cenex counters that § 1-4-102 applies only where an ambiguity exists in the

language of the instrument. As support for this position, they cite Payne v. Buechler, 192

Mont. 311, 628 P.2d 646 (1981), Spraggins v. Elvidge, 192 Mont. 8, 625 P.2d 1151
3
Similarly, § 28-3-402, MCA, provides that “[a] contract may be explained by
reference to the circumstances under which it was made and the matter to which it
relates,” and § 28-2-905(2), MCA, provides that the parol evidence rule, as articulated in
§ 28-2-905(1), MCA, “does not exclude other evidence of the circumstances under which
the agreement was made or to which it relates, as described in 1-4-102.”

20
(1981), and Yellowstone II Dev. Group v. First American Title Ins., 2001 MT 41, 304

Mont. 223, 20 P.3d 755. In Payne, this Court stated:

[Section 1-4-102] relates to construction and interpretation of written
instruments but is irrelevant here. The language of the contract is plain and
unambiguous. Under such circumstances, the language alone controls and
there is nothing for the Court to interpret or construe. Section 28-3-401,
MCA and section 28-3-303, MCA. [Section 1-4-102] only applies where
an ambiguity exists in the language of the contract.

Payne, 192 Mont. at 317, 628 P.2d at 650. Similarly, we stated in Spraggins: “When the

contract is clear and unequivocal on its face, section 1-4-102, MCA, does not apply.”

Spraggins, 192 Mont. at 12, 625 P.2d at 1153 (citing Ryan v. Ald, Inc., 146 Mont. 299,

406 P.2d 373 (1965)). Finally, in Yellowstone II, we stated:

Determining whether a term in a contract is ambiguous—i.e., subject to
more than one reasonable meaning in view of the contract as a whole—is
not a question involving parol evidence, but merely one of law concerning
interpretation and potential use of extrinsic evidence.

Yellowstone II, ¶ 35.

¶40 Given the apparently inconsistent statements in Tester, Payne, Spraggins, and

Yellowstone II concerning the applicability of § 1-4-102, it is necessary to clarify whether

ambiguity is a prerequisite to the statute’s application in a given case.

A. Clarification of the Applicability of § 1-4-102, MCA

¶41 Section 1-4-102 derives from, and is identical to, § 1860 of the Code of Civil

Procedure of California (1871), which in turn is credited to § 1693 of the New York Code

of Civil Procedure. 4 The language of § 1-4-102, which has remained unchanged since its

4
See Revised Laws of the State of California, Code of Civil Procedure, Reported
by Commissioners, at 464 (1871). Our research discloses that “N. Y. C. C. P. § 1693,” to

21
enactment in 1877 (see Laws of Montana Territory, 1877, § 614, at 198), is a codification

of the decisions of the courts on this subject. See Shreve v. Copper Bell Min. Co., 11

Mont. 309, 323, 28 P. 315, 315-16 (1891) (noting the same about § 1-4-107, MCA, which

was enacted as § 615 of the Laws of Montana Territory, 1877, at 198-99). Thus, an

appropriate starting point for this discussion is to consider how the principles now

codified in § 1-4-102 were understood and applied during that period.

¶42 In Donnell v. Humphreys, 1 Mont. 518 (Mont. Terr. 1872), the parties disputed the

language of a deed, dated June 23, 1870, by which Humphreys conveyed to Donnell the

following property:

“The ditches known as the Silver Bow Ditch Company’s ditches; said
ditches carrying water from Silver Bow creek to Butte City and the placer
mines in that vicinity, and more particularly known as the Humphreys and
Allison ditches.”

Donnell, 1 Mont. at 522-23. At trial, Donnell sought to prove that the “Park ditch” was

included in this conveyance. To that end, Donnell offered the following testimony: that

the Silver Bow Ditch Company’s ditches were made up of and included what was then

known as the “upper ditch,” the “lower ditch,” and the “Park ditch”; that the upper and

lower ditches carried water from Silver Bow creek and its tributaries to the placer mines,

in the vicinity of Butte City; that the Park ditch was built to supply water from a branch

of Bolder creek to Silver Bow creek and, in turn, to the upper and lower ditches; that the

Park ditch, thus, was a feeder of the upper and lower ditches; that at the time of the

which § 1860 of the Code of Civil Procedure of California is credited, is most likely a
reference to the proposed New York Code of Civil Procedure. See John T. Fitzpatrick,
Procedural Codes of the State of New York, 17 Law Lib. J. 12, 16 (1924) (noting that the
Code of Civil Procedure submitted December 31, 1849, never became law in New York).

22
conveyance, the waters from the Park ditch had always flowed through the upper and

lower ditches; and that the three ditches were known and reputed as the Silver Bow Ditch

Company’s ditches and, more particularly, as the Humphreys and Allison ditches.

Donnell, 1 Mont. at 523. The trial court sustained an objection to this testimony.

¶43 On appeal, the Supreme Court of the Montana Territory considered whether the

trial court had erred in rejecting the proffered testimony. In so doing, the Court first

observed that “parol contemporaneous evidence is inadmissible to contradict or vary the

terms of a valid written instrument” because “when parties have deliberately put their

contracts in writing in such terms as import a legal obligation, without uncertainty or

ambiguity as to the object, nature and extent of their agreements, it is conclusively

presumed that the whole of the contract was reduced to writing.” Donnell, 1 Mont. at

525-26. The Court explained, however, that parol evidence is always admissible to give

effect to the contract:

And so the intent of the parties must be gathered from what is
written rather than from parol evidence, but the language of the instrument
may be construed by the light of surrounding circumstances, and, so far as
possible, the court may put itself in the place of the parties, and may
interpret the language from this standpoint, but nothing can be added to or
taken from the written words.
So extrinsic parol evidence is always admissible to give effect to a
written instrument, by applying it to its proper subject-matter, by proving
the circumstances under which it was made, thereby enabling the court to
put themselves in the place of the parties with all the information possessed
by them, the better to understand the terms employed in the contract, and to
arrive at the intention of the parties.
Instruments are to be interpreted according to their subject-matter,
and parol evidence may be resorted to in order to ascertain the nature and
qualities of the subject to which the instrument refers. Whatever indicates
the nature of the subject, is a just medium of interpretation of the language
of the parties, and is also a just foundation for giving the instrument an

23
 interpretation when considered relatively, different from that which it
would receive if considered in the abstract.
It is necessary to the validity of a grant that the thing granted should
be capable of being distinguished from all other things of the kind, but it is
not necessary that the description should be such as to identify the object
without the aid of extraneous testimony. And when the description alludes
to facts beyond the deed, parol evidence may be offered, not to contradict
the description, but to locate the deed upon the land.

Donnell, 1 Mont. at 526 (citations and emphases omitted).

¶44 The Court reasoned that it was not possible for the trial court, looking at the

language of the deed alone, to say how many ditches were known as “the Humphreys and

Allison ditches” and whether the Park ditch was an essential component of a system of

ditches by which water was carried from Silver Bow creek to the mines of Butte City.

Donnell, 1 Mont. at 527. In this regard, the Court noted:

If the upper and lower ditches were valueless without the Park ditch, and all
three were known as the Humphreys and Allison ditches, then we must
suppose that the party paying more than $6,000 for the Humphreys and
Allison ditches, and the party receiving that sum in consideration of the
conveyance, intended to convey the three ditches in question, for the value
of each would so depend upon the other as to make the three one property,
one subject-matter.

Donnell, 1 Mont. at 528. Accordingly, the Court held that parol evidence was admissible

to apply the deed to its proper subject matter and that Donnell’s proffered testimony

should not have been rejected by the trial court.

¶45 The Court provided an insightful clarification of the foregoing principles in Taylor

v. Holter, 1 Mont. 688 (Mont. Terr. 1872). At issue in that case was a deed by which

Hoyt and Holter granted Taylor, Smith, and Cleveland “[a]ll the water of the right-hand

fork of Oro Fino gulch.” Taylor, 1 Mont. at 691 (internal quotation marks omitted). At

24
trial, testimony was offered to prove that the grantors had intended to convey, and that

the grantees had intended to receive by virtue of this deed, the waters of the left-hand fork

of Oro Fino gulch. The trial court sustained an objection to this testimony.

¶46 On appeal, the Supreme Court restated the principles set forth in Donnell (quoted

above in ¶ 43) and then clarified the applicability of these principles:

The true rule is, to give effect to the intention of the parties if the words
they employ will admit of it. But if the words used, by their clearness and
certainty, absolutely forbid the aid of extrinsic evidence in their
interpretation, it would be changing the certain written contract of the
parties to let in outside parol proof.
Parties must contract for themselves, courts cannot make contracts
for them, and the rules of interpretation are utterly unavailing to aid a
contract or agreement that is specific and certain in its terms, and clearly
speaks what the parties intended it should. If parties convey the right-hand
fork of Oro Fino gulch, courts nor witnesses cannot say they thereby
intended the left-hand fork. As well might they say they intended the left
fork of the Missouri river, or the north fork of the Yellowstone, and all the
circumstances and surroundings of the parties, however plausible they may
appear, cannot blot out the language of the deed and supply other language
in its place. Such circumstances and surroundings may aid the language
but cannot destroy it. They can apply the deed to its proper subject, and
when thus applied, the language must describe such subject, and be entirely
consistent with it. The language must control and not the circumstances.
The written words must stand and no parol proof can destroy them.

Taylor, 1 Mont. at 698-99 (emphases omitted). The Court held, therefore, that the

proffered parol evidence had been properly rejected by the trial court.

¶47 Thus, as a general rule, evidence of the circumstances under which an instrument

was made may not be considered where the language of the instrument is clear and

certain in its terms. Taylor, 1 Mont. at 698-99; see also Ming v. Pratt, 22 Mont. 262,

265, 56 P. 279, 280 (1899) (stating that resort to evidence of the surroundings of the

parties, the subject matter, and prior and contemporaneous oral negotiations and promises

25
illumining the design and intent of the parties is not permissible where the intention and

understanding are explicitly declared upon the face of the writing itself); Kimball v.

Semple, 25 Cal. 440, 449 (1864); Richardson v. Scott River W. and M. Co., 22 Cal. 150,

155-56 (1863). However, as recognized in the authorities discussed below, this rule does

not preclude consideration of surrounding circumstances for the purpose of determining,

as a preliminary matter, whether the instrument contains an ambiguity. 5 For instance,

borrowing the illustration set forth in Taylor, 1 Mont. at 694, if a grantor conveys “my

house and lot in Helena,” it would be proper for the court to consider the circumstance

that the grantor owned two houses and lots in Helena, thus rendering “my house and lot

in Helena” susceptible to at least two reasonable but conflicting meanings; and extrinsic

evidence would also be admissible in this situation to show which of the two houses the

grantor intended to convey. By contrast, if the grantor conveyed “my brick house on

Main Street,” the fact that the grantor also owned a wooden house on Rodney Street

would not render “my brick house on Main Street” ambiguous; and extrinsic evidence

would not be admissible to show that the grantor intended to convey the wooden house.

5
We note that there may be other purposes for which evidence of surrounding
circumstances is admissible. See, e.g., Weinberg v. Farmers State Bank of Worden, 231
Mont. 10, 24-25, 752 P.2d 719, 728-29 (1988) (consideration of surrounding
circumstances proper to establish the existence of an agreement between the parties);
Anderson v. Baker, 196 Mont. 494, 500-03, 641 P.2d 1035, 1038-40 (1982)
(consideration of surrounding circumstances proper to ascertain the intent of depositor
when she added her son’s name to signature cards drafted by the depository institution).
However, we need not articulate here a comprehensive list of the situations in which
§ 1-4-102, MCA, might apply. Rather, we will confine our discussion to the applications
of § 1-4-102 raised by the parties in the case at hand.

26
¶48 It is thus stated in the Restatement (Second) of Contracts § 212 cmt. b (1981): “It

is sometimes said that extrinsic evidence cannot change the plain meaning of a writing,

but meaning can almost never be plain except in a context.” Accordingly, the

Restatement takes the position that

[a]ny determination of meaning or ambiguity should only be made in the
light of the relevant evidence of the situation and relations of the parties,
the subject matter of the transaction, preliminary negotiations and
statements made therein, usages of trade, and the course of dealing between
the parties. But after the transaction has been shown in all its length and
breadth, the words of an integrated agreement remain the most important
evidence of intention.

Restatement (Second) of Contracts § 212 cmt. b (cross-references omitted).

¶49 The Ohio Supreme Court long ago articulated one rationale for this approach:

These parties [to the written contract in question] may be fairly presumed to
have understood the matter about which they were contracting. But the
same thing cannot be said of every court and jury that may be called on to
interpret their contract. To enable the court and jury to be as wise as the
parties, and so to arrive at and give application to the words they have used,
and thus carry out their intentions, the law permits them to hear a full
description, from evidence, of the subject matter of the contract, and of all
the circumstances that surrounded the parties at the time it was made; and
to learn what were the motives and inducements that led to the contract, and
the object to be attained by it; . . . . The object or tendency of this evidence
is not to contradict or vary the terms of the instrument, but to enable the
court to come to the language employed, with an enlightened understanding
of the subject matter in reference to which it has been used.

Hildebrand v. Fogle, 20 Ohio 147, 157 (1851); see also Jenny Lind Co. v. Bower & Co.,

11 Cal. 194, 198 (1858); Kimball, 25 Cal. at 449.

¶50 A more recent articulation of these principles appears in Corn Exchange Nat. Bank

& Trust Co. v. Taubel, 175 A. 55 (N.J. 1934), where the Court of Errors and Appeals of

New Jersey explained as follows:

27
 The standard of interpretation of an integrated agreement, supported
by the weight of modern authority, is the meaning that would be attached to
the integration by a reasonably intelligent person acquainted with all
operative usages and knowing all the circumstances prior to and
contemporaneous with the making of the writing, other than oral statements
by the parties of what they intended it to mean, except where it produces an
ambiguous result, or is excluded by rule of law establishing a definite
meaning. This has been termed a primary rule of interpretation which is
always applicable, whether the writing seems clear or ambiguous. The
underlying theory is that as all language will bear some different meanings,
evidence of surroundings is always admissible in the interpretation of
integrated agreements, but not for the purpose of giving effect to an intent
at variance with any meaning that can be attached to the words. . . . So far
as the evidence tends to show, not the meaning of the writing, but an
intention wholly unexpressed in the writing, it is irrelevant.

Corn Exchange, 175 A. at 58 (citations and internal quotation marks omitted).

¶51 Likewise, in S.W. Bridges & Co. v. Bank of Fergus County, 77 Mont. 524, 538,

251 P. 1057, 1060-61 (1926), this Court stated:

The face of an instrument is not always conclusive of its purpose.
The rule regards the circumstances of the parties, and executes their real
intention, and prevents either of the parties to the instrument from
committing a fraud on the other by claiming it to be what it in fact is not.
In other words, the real transaction may be proved.

And as long ago as Newell v. Nicholson, 17 Mont. 389, 43 P. 180 (1896), we recognized

that words, while they may be perfectly clear to the contracting parties, may not be

correctly understood by the court tasked with the construction of the contract. The

dispute in Newell was over the meaning of the words “Don’t sell we to exchange any

goods that don’t sell; credit for same,” and “Sales guarantied.” Citing §§ 632 and 633 of

the Code of Civil Procedure (Comp. St. 1887) (now §§ 1-4-102 and -107, MCA,

respectively), we held that the trial court had not erred in considering the testimony of a

number of merchants, salesmen, and businessmen showing that the words had a technical

28
or peculiar signification and were so used and understood in the particular instance.

Newell, 17 Mont. at 392-93, 43 P. at 181.

¶52 This same point was made in AM Intern. v. Graphic Management Inc., 44 F.3d

572, 575 (7th Cir. 1995), where the Seventh Circuit observed:

The famous contract in Raffles v. Wichelhaus, 2 H. & C. 906, 159 Eng.Rep.
375 (Ex. 1864), . . . was clear on its face. It called for the shipment of a
specified amount of cotton from one port to another on the ship Peerless.
Clear as a bell. Only there were two (if not more) ships Peerless, and it
was impossible to tell which one the contract referred to. The contract was
unclear because clarity in a contract is a property of the correspondence
between the contract and the things or activities that it regulates, and not
just of the semantic surface.
Take another example. Suppose the parties to the contract in Raffles
had been members of a trade in which the term “cotton” was used to refer
to guncotton rather than to the cotton used in textiles. The ordinary reader
of English would not know about this special trade usage, and so would
suppose the contract unambiguous. Again, the ambiguity is in the reference,
that is, the connection between the word and the object that it denotes.

See also Margaret N. Kniffin, Corbin on Contracts vol. 5, § 24.7, at 30-39 (Joseph M.

Perillo ed., rev. ed., Lexis 1998).

¶53 In light of the foregoing authorities, we hold that “the circumstances under which

[an instrument] was made, including the situation of the subject of the instrument and of

the parties to it,” § 1-4-102, MCA, may be shown and considered to aid the court in

determining, as a preliminary matter, whether the instrument contains an ambiguity. We

emphasize, however, that not all “circumstances” are admissible for this purpose. As

stated earlier, an instrument does not contain an ambiguity simply because the parties

have or suggest opposing interpretations thereof or disagree as to whether the language is

reasonably open to just one interpretation. Rather, the determination of whether an

29
ambiguity exists in a contract is made on an objective basis. See ¶ 20, supra. Addressing

this subject in some detail, the Seventh Circuit (interpreting Illinois law) explained:

[A contract] may be extrinsically ambiguous, being clear on its face but
someone who knows the context of the contract would know that the
contract means something other than what it seems to mean. In that
situation, we distinguish between “subjective” and “objective” evidence of
ambiguity. “Subjective” evidence of ambiguity is the testimony of the
parties themselves as to what they believe the contract means, which is
invariably self-serving, inherently difficult to verify and thus, inadmissible.
. . . “Objective” evidence, on the other hand, is evidence of ambiguity that
can be supplied by disinterested third parties, such as custom or usage of
the trade. This kind of evidence is admissible because the ability of one of
the contracting parties to fabricate such evidence is limited.

Home Ins. Co. v. Chicago and Northwestern Transp. Co., 56 F.3d 763, 768 (7th Cir.

1995) (citations and some internal quotation marks omitted).

¶54 Another reason objective evidence is admissible, while subjective evidence is not,

is “because there is a further screen to protect the parties: the objective evidence of

ambiguity must be presented first to the judge, and only if the judge concludes that it

establishes a genuine ambiguity is the evidence given to the jury.” Home Ins. Co., 56

F.3d at 768-69 (citing AM Intern., 44 F.3d at 575, and Sunstream Jet Exp. v. International

Air Service Co., 734 F.2d 1258, 1267-68 (7th Cir. 1984)). This procedural mechanism is

characterized in Williston on Contracts as “correctly allocat[ing]” to the judge and the

jury their respective responsibilities:

First, the evidence is considered by the court to enable it to determine
whether the contract or clause is ambiguous; if it is not, the inquiry ends
and parol evidence is kept from the jury. If, however, the judge is
convinced by the extrinsic evidence that an ambiguity exists, the evidence
is presented to the jury so that it may determine, on the basis of the written
contract, as explained or supplemented by the extrinsic evidence, which of
two or more meanings the parties intended.

30
Richard A. Lord, Williston on Contracts vol. 11, § 33:39, at 815-16 (4th ed., West 1999);

see also Margaret N. Kniffin, Corbin on Contracts vol. 5, § 24.7, at 39-54 (Joseph M.

Perillo ed., rev. ed., Lexis 1998); E. Allan Farnsworth, Farnsworth on Contracts vol. II,

§ 7.12, at 295-97 (2d ed., Aspen 1998).

¶55 We are persuaded that this procedural mechanism is the correct approach and

therefore adopt it. Thus, for the purpose of aiding the court in determining, as a

preliminary matter, whether the instrument contains an ambiguity, objective evidence of

“the circumstances under which [the instrument] was made, including the situation of the

subject of the instrument and of the parties to it,” may be shown and considered. Section

1-4-102, MCA. If the court determines that the instrument contains no ambiguity, then

the extrinsic evidence may not be considered further. See Doble v. Bernhard, 1998 MT

124, ¶ 19, 289 Mont. 80, ¶ 19, 959 P.2d 488, ¶ 19 (“If the terms of the contract are clear

. . . there is nothing for the courts to interpret or construe and the court must determine

the intent of the parties from the wording of the contract alone.” (internal quotation marks

omitted)). But if the court determines that an ambiguity is present in the instrument, then

the extrinsic evidence may be introduced at trial to allow the trier of fact to determine the

intent of the parties in entering into the contract. See Olson v. Jude, 2003 MT 186, ¶ 47,

316 Mont. 438, ¶ 47, 73 P.3d 809, ¶ 47 (“Where a written instrument is ambiguous,

extrinsic evidence may be utilized to discover the parties’ intent.”); Martin v. Laurel

Cable TV, Inc., 215 Mont. 229, 233, 234, 696 P.2d 454, 457 (1985) (“The [trial] court

properly accepted parol testimony to explain circumstances surrounding the lease

31
agreement, thus resolving the ambiguity existing in the instrument.” (citing §§ 1-4-102

and 28-2-905(2), MCA)).

¶56 With these clarifications concerning the applicability of § 1-4-102, MCA, in mind,

we now consider the cases cited by the Landowners (Tester) and Cenex (Spraggins,

Payne, and Yellowstone II) for their respective arguments concerning the statute’s

applicability in this case.

B. Spraggins, Payne, Yellowstone II, and Tester

¶57 In Spraggins, the written contract in question was “clear on its face.” Spraggins,

192 Mont. at 12, 625 P.2d at 1153. It spoke exclusively of the parties’ agreement

concerning the Mint Bar and made no mention of the Diablo Mobile Repair business.

Nevertheless, the district court allowed parol evidence of an earlier agreement between

the parties concerning the Diablo Mobile Repair business to alter and vary the terms of

the written contract concerning the Mint Bar. We held this was error, noting that none of

the exceptions to the parol evidence rule applied. With respect to § 1-4-102, we stated

that “[w]hen the contract is clear and unequivocal on its face, section 1-4-102, MCA,

does not apply.” Spraggins, 192 Mont. at 12, 625 P.2d at 1153 (citing Ryan v. Ald, Inc.,

146 Mont. 299, 406 P.2d 373 (1965)). This statement is consistent with the principle that

surrounding circumstances may not be considered once the court has determined that the

instrument is unambiguous. Thus, Spraggins comports with our clarifications of

§ 1-4-102 above.

¶58 The written contract at issue in Payne gave Payne the exclusive right to sell

property owned by Buechler. It also provided that Buechler would pay Payne the 10%

32
commission if Buechler sold the property herself or withdrew Payne’s authority under the

contract prior to the stated expiration date. Payne, 192 Mont. at 312-13, 628 P.2d at 647.

Following a bench trial, the district court found that Buechler had not intended to grant

Payne the exclusive right to sell the property. This finding was based on testimony by

Buechler that she did not intend to give Payne an exclusive listing and that she had

previously given listings to other agencies which were still in effect at the time she

entered into the contract with Payne. On appeal, Buechler argued that the district court

had properly admitted this testimony pursuant to § 1-4-102. We disagreed, observing

that the language of the parties’ contract was “plain and unambiguous” and that, under

such circumstances, “the language alone controls and there is nothing for the Court to

interpret or construe.” Payne, 192 Mont. at 317, 628 P.2d at 650.

¶59 As in Spraggins, this statement is consistent with the principle that surrounding

circumstances may not be considered once the court has determined that the instrument is

unambiguous. However, our subsequent statement that § 1-4-102 “only applies where an

ambiguity exists in the language of the contract,” Payne, 192 Mont. at 317, 628 P.2d at

650, was overbroad. As explained above, § 1-4-102 also applies to aid the court in

determining whether an ambiguity exists in the first place, and our statement in Payne

that the statute “only applies where an ambiguity exists in the language of the contract,”

which was correct on the facts of that case, should not be read as precluding this

additional purpose of § 1-4-102. 6

6
The same is true of the similar statements in Ryan, 146 Mont. at 303, 406 P.2d at
375 (stating that R.C.M. 1947, § 93-401-17 (now § 1-4-102, MCA) “is applicable only

33
¶60 Next, parol evidence abounded in the briefs and in the record before this Court in

Yellowstone II due to the inherent complications of the case. See Yellowstone II, ¶ 36.

Yet, the documents at issue in the case were not ambiguous. Yellowstone II, ¶ 35. Thus,

we clarified that we would disregard the parol evidence in the briefs and the record:

While we may properly consider evidence of the circumstances under
which the agreement was made, see, e.g., Weinberg v. Farmers State Bank
of Worden (1988), 231 Mont. 10, 24, 752 P.2d 719, 728; § 28-2-905, MCA,
we will not consider evidence presented for the singular purpose of
establishing that a contract includes supplemental promises or mutual
understandings or conditions of performance that were never incorporated
into a written agreement that by its own terms purports to represent the
entire agreement between the parties. [Citations to §§ 28-2-904 and
70-20-202, MCA.]
Suffice to say, this Court must therefore disregard all attempts by
Yellowstone II to establish that, in addition to the express, unambiguous
terms of the written agreement, the “contract” should include additional
parol promises or representations or mutual understandings allegedly made
by the parties prior to and at the time of formation . . . .

Yellowstone II, ¶¶ 36-37 (emphasis added). These statements are merely applications of

the parol evidence rule, §§ 28-2-904 and -905(1), MCA.

¶61 Cenex points out that we also stated: “Determining whether a term in a contract is

ambiguous . . . is not a question involving parol evidence, but merely one of law

concerning interpretation and potential use of extrinsic evidence.” Yellowstone II, ¶ 35

(citing In re Marriage of Holloway, 2000 MT 104, ¶ 5, 299 Mont. 291, ¶ 5, 999 P.2d 980,

¶ 5, and § 1-4-102, MCA). Our use of the term “parol evidence” in this sentence,

however, must be understood in the context of the discussion in ¶¶ 35-37 of Yellowstone

when the instrument requires construction”), and First Nat. Bank of Plains v. Green
Mountain Soil Con. Dist., 130 Mont. 1, 5, 293 P.2d 289, 291 (1956) (stating that R.C.M.
1947, § 93-401-17 “allows the circumstances under which a contract was made to be
shown only for the proper construction of the instrument”).

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II. The documents at issue were unambiguous; and the point of the discussion in

¶¶ 35-37, therefore, was to clarify that we would not consider evidence presented by

Yellowstone II of additional parol promises or representations or mutual understandings

allegedly made by the parties prior to and at the time the documents were executed.

Thus, our statement that “[d]etermining whether a term in a contract is ambiguous . . . is

not a question involving parol evidence,” Yellowstone II, ¶ 35, stands for the

unremarkable proposition that subjective evidence of prior or contemporaneous oral

promises may not be considered for the purpose of determining whether the contract

contains an ambiguity. Nevertheless, to the extent that this statement might be

understood to conflict with our clarifications above concerning the applicability of

§ 1-4-102, MCA, it is overruled.

¶62 Lastly, Tester concerned a boundary dispute in Bridger Canyon, just north of

Bozeman, Montana (hereinafter, “Section 17”). Two roads of public record ran through

Section 17 in a north-south direction: the 1891 County Road and the 1948 State

Highway. Tester, ¶ 3. Throughout the plaintiffs’ chain of title, there were many

inconsistencies, including the unclear use of the terms “public road” and “country road”

in reference to the boundary between plaintiffs’ and defendants’ respective properties in

Section 17. Tester, ¶ 16. The key point of confusion, however, regarded language in a

1951 deed by which James Funk conveyed all that part of Section 17 “ ‘lying East of the

old County Road as existing over and across said Section prior to the year 1950.’ ”

Tester, ¶¶ 16, 17. The plaintiffs claimed that the terms “public road” and “country road”

in the deeds in their chain of title were references to the “traveled way,” which became

35
the State Highway, and that Funk, therefore, had intended the State Highway, and not the

Country Road, to be the boundary. The defendants, however, contended that if Funk had

intended to transfer all land east of the State Highway, he would have used the words

“ ‘all land lying East of the State Highway.’ ” Tester, ¶¶ 13, 22.

¶63 Applying § 1-4-102, we concluded that the defendants were correct:

The plain language of the Funk deed is unambiguous. An
unambiguous deed must be interpreted according to its language as written,
without resort to extrinsic evidence of the grantor’s intent. For proper
construction of an instrument § 1-4-102, MCA, allows us to examine the
“circumstances under which it was made, including the situation of the
subject of the instrument and of the parties to it.” The record indicates that
the County Road was the only official road in the Section from 1891 to
1948 and was recorded as being in its original location until the State
Highway was constructed in 1948.
....
If Funk intended to convey east of the State Highway which was
constructed only three years earlier, he certainly could have done so.
Instead, he explicitly conveyed east of the old County Road. To conclude
that Funk’s language is ambiguous and that he really meant to convey east
of the State Highway would be to read an intent into his language which is
simply not justified.
We conclude that based on the unambiguous language of the deed,
and the circumstances under which it was made, including the plats of
Section 17, and the State Highway records, the District Court’s conclusion
that the State Highway is the legal boundary between the properties was
incorrect.

Tester, ¶¶ 25-28 (citation omitted).

¶64 This application of § 1-4-102 illustrates the use of extrinsic evidence for the

purpose of determining, as a preliminary matter, whether the language in question is

ambiguous. The crucial question was whether “the old County Road as existing over and

across said Section prior to the year 1950” was susceptible to at least two reasonable but

conflicting meanings. We considered the objective surrounding circumstances—namely,

36
the plats of Section 17, the State Highway records, and the fact that at the time Funk

executed the deed (in 1951), the County Road had existed since 1891 and the State

Highway had existed since 1948—and we decided that the language was unambiguous. 7

¶65 Our analysis in Tester also illustrates the important distinction between Donnell

and Taylor, supra. “Instruments are to be interpreted according to their subject-matter,

and parol evidence may be resorted to in order to ascertain the nature and qualities of the

subject to which the instrument refers.” Donnell, 1 Mont. at 526. Thus, it was

appropriate in Tester to consider parol evidence in order to ascertain the subject to which

“the old County Road as existing over and across said Section prior to the year 1950”

referred. But while circumstances and surroundings may aid the language, they may not

destroy it. “They can apply the deed to its proper subject, and when thus applied, the

language must describe such subject, and be entirely consistent with it.” Taylor, 1 Mont.

at 699. The plaintiffs’ evidence of Funk’s intent to convey “the State Highway” was

entirely inconsistent with the language “old County Road” in the deed. Thus, such

evidence should not have been considered by the district court.

¶66 We conclude, therefore, that Tester also comports with our clarifications of § 1-4-

102 herein.
7
In this regard, Cenex cites Olson v. Jude, 2003 MT 186, ¶ 47, 316 Mont. 438,
¶ 47, 73 P.3d 809, ¶ 47, DeNiro v. Gasvoda, 1999 MT 129, ¶ 29, 294 Mont. 478, ¶ 29,
982 P.2d 1002, ¶ 29, In re Estate of Kuralt, 1999 MT 111, ¶ 30, 294 Mont. 354, ¶ 30, 981
P.2d 771, ¶ 30, and Downs v. Smyk, 200 Mont. 334, 346, 651 P.2d 1238, 1244 (1982), for
the proposition that “[t]his Court has consistently applied § 1-4-102, MCA, only where
there has been ambiguity or uncertainty with respect to an instrument” (emphasis added).
Given our analysis in Tester, however, Cenex’s assertion is incorrect. Nevertheless, we
note that Olson, DeNiro, Kuralt, and Downs are consistent with the foregoing
clarifications of the applicability of § 1-4-102, MCA.

37
 C. Application of § 1-4-102, MCA, to the Right-of-Way Agreements

¶67 Turning now to the right-of-way agreements, the District Court reasoned that

§ 1-4-102 did not apply in this case “[b]ecause the Easements are unambiguous.” To the

extent the District Court understood § 1-4-102, MCA, as precluding it from considering

objective evidence of the circumstances under which the right-of-way agreements were

made for the purpose of determining, as a preliminary matter, whether the agreements

contained an ambiguity, the court erred for the reasons set forth above.

¶68 Nevertheless, the Landowners’ leading argument (in both the District Court and

this Court) is that the granting language is unambiguous, and Cenex agrees with the

Landowners on this point. Accordingly, in this situation, where the parties concede that

the language in question is unambiguous, § 1-4-102 does not apply. See ¶ 47, supra. On

this basis, therefore, we hold that the District Court did not err in refusing to consider the

circumstances under which the right-of-way agreements were made.

¶69 Issue 4. Did the District Court err in determining that the granting language is
unambiguous?

¶70 As a backup position, the Landowners argue (as they did in the District Court) that

the granting language is ambiguous. The Landowners first point out that they and Cenex

have offered “two distinct readings of the Easement granting language,” which in their

view “establishes the ambiguity of the granting language.” We reject this argument

outright. As stated above, “a conclusion of ambiguity is not compelled by the fact that

the parties to a document, or their attorneys, have or suggest opposing interpretations of a

contract, or even disagree as to whether the contract is reasonably open to just one

38
interpretation.” Richard A. Lord, Williston on Contracts vol. 11, § 30:4, at 51-54 (4th

ed., West 1999) (footnotes omitted); accord Holmstrom v. Mutual Benefit Health &

Accident Ass’n, 139 Mont. 426, 428, 364 P.2d 1065, 1066 (1961) (“Ambiguity does not

exist just because a claimant says so.”); Heggem v. Capitol Indem. Corp., 2007 MT 74,

¶ 30, 336 Mont. 429, ¶ 30, 154 P.3d 1189, ¶ 30 (“[A] mere disagreement over the

meaning of an insurance provision does not render the provision ambiguous.”).

¶71 The Landowners next argue that “ ‘[t]ogether with’ and ‘in connection with’ easily

can be considered synonymous by reasonable people. Thus, reasonable people could

interpret the Easement granting language differently.” We have already rejected this

argument. The term “together with,” as used in the granting language, is not reasonably

susceptible to the meaning “in connection with.” See ¶ 27, supra.

¶72 The Landowners also present three “circumstances” under which the easements

were granted. We will examine these circumstances to determine, as a preliminary

matter, whether they demonstrate the existence of an ambiguity in the granting language.

¶73 First, the Landowners contend that they were told by Cenex’s agents that the fiber

optic cable would be used only to operate and monitor the pipeline. Second, and in a

similar vein (but framed as a separate “circumstance”), the Landowners state:

The Landowners never contemplated that a transcontinental
communications network would be running across their land. They
certainly had no idea that tens, if not hundreds, of third-party companies
would use the Easements to transmit General Telecommunications. The
Landowners also had no idea that repair trucks from tens, if not hundreds,
of different companies could come onto their land to regenerate the light
and maintain, repair, and splice the [Indefeasible Rights of Use].

39
These two circumstances, however, do not demonstrate the existence of an ambiguity in

the granting language. As explained above, testimony of the parties as to what they

believe the language in question means—i.e., subjective evidence of ambiguity—“is

invariably self-serving, inherently difficult to verify and thus, inadmissible.” Home Ins.

Co., 56 F.3d at 768. Thus, these two circumstances may not be considered here. But

even if this subjective evidence could be considered, the granting language is not

susceptible to the meaning the Landowners advocate here based on what Cenex’s agents

allegedly told them and how the Landowners “contemplated” the fiber optic cable would

be used. To conclude that the granting language provides that “the fiber optic cable may

be used only to operate and monitor the pipeline” would be to insert language into the

right-of-way agreements—something we may not do. See § 1-4-101, MCA; see also

Corn Exchange, 175 A. at 58 (“So far as the [proffered] evidence tends to show, not the

meaning of the writing, but an intention wholly unexpressed in the writing, it is

irrelevant.”). These two circumstances, therefore, do not establish that the granting

language is ambiguous. 8

8
It is important to clarify here that our reasoning is specific to the question of
whether the Landowners’ proffered “circumstances” establish an ambiguity in the
granting language, not the question of whether the right-of-way agreements are valid in
the first place. The Landowners’ briefs are peppered with assertions that the agreements
were procured by Cenex using “deceit” and “threat” and that the Landowners were
“duped.” Yet, their Complaint did not set forth a claim challenging the validity or
accuracy of the agreements. See, e.g., § 28-2-1711(1), MCA (providing that a party to a
contract may rescind the same if the party’s consent was given by mistake or obtained
through duress, menace, fraud, or undue influence). Rather, the Landowners sought only
to enforce their interpretations of the agreements. To do so, however, they may not use
extrinsic evidence of prior oral agreements to explain the meaning of, or to add words to,
otherwise unambiguous granting language. See §§ 28-2-904 and -905(1), MCA.

40
¶74 Third, the Landowners assert that Cenex “threatened” condemnation in order to

secure the right-of-way agreements. The Landowners maintain that the granting

language, therefore, “was intended to convey only that which would be authorized by

statute if Cenex exercised its power of eminent domain. The language Cenex chose [in

drafting the right-of-way agreements] only can be interpreted to conform to, and be in

compliance with, § 69-13-103(1), MCA.” Section 69-13-103(1), MCA, provides:

The right to lay, maintain, and operate pipelines, together with
telegraph and telephone lines incidental to and designed for use only in
connection with the operation of such lines, or along, across, or under any
public stream or highway in this state is hereby conferred upon all persons,
firms, limited partnerships, joint-stock associations, or corporations coming
within any of the definitions of common carrier pipelines as hereinbefore
made. [Emphasis added.]

However, even assuming, arguendo, that Cenex used “the threat of condemnation” to

secure the easements, this circumstance does not render the granting language susceptible

to at least two reasonable but conflicting meanings. Rather, it seems that the Landowners

would have us simply insert the words “incidental to and designed for use only in

connection with the operation of such lines” into the granting language immediately

following “a buried fiber optic communications cable.” Again, this we may not do. See

§ 1-4-101, MCA.

¶75 In sum, the Landowners have not shown that an ambiguity exists in the right-of-

way agreements. The three circumstances proffered by the Landowners, even when they

are considered collectively, do not demonstrate that the granting language is susceptible

to at least two reasonable but conflicting meanings. Accordingly, we hold that the

District Court did not err in concluding that the granting language is unambiguous.

41
¶76 Issue 5. Did the District Court err in determining that there is no genuine issue
as to any material fact?

¶77 The Landowners’ final “alternative” argument is that there are genuine issues of

material fact precluding summary judgment for either side. The Landowners cite Proctor

v. Werk, 220 Mont. 246, 250, 714 P.2d 171, 173 (1986), in which this Court stated that

“[s]ummary judgment is usually inappropriate where the intent of the contracting parties

is an important consideration” (internal quotation marks omitted). Cenex agrees that if

we determine that extrinsic evidence is necessary to determine the parties’ intent in

entering into the right-of-way agreements, then summary judgment is not appropriate.

However, they maintain that the disputed language of the right-of-way agreements is

unambiguous and, thus, that there are no genuine issues of material fact. We agree with

Cenex.

¶78 The Landowners’ argument that there are genuine issues of material fact

precluding summary judgment is premised on the theory that the language of the right-of-

way agreements is ambiguous; however, we concluded under Issue 4 that the disputed

language is not ambiguous, and we perceive no other genuine issues of material fact.

“When a contract is reduced to writing, the intention of the parties is to be ascertained

from the writing alone if possible.” Section 28-3-303, MCA. “The language of a

contract is to govern its interpretation if the language is clear and explicit and does not

involve an absurdity.” Section 28-3-401, MCA. Here, the disputed language of the right-

of-way agreements is clear and explicit and is not alleged to involve an absurdity.

Furthermore, it is possible to ascertain the intention of the parties from that language

42
alone. The language provides that the Landowners grant Cenex “the right to construct,

maintain, inspect, operate, protect, repair, replace, change the size of or remove a pipeline

or pipelines or other appurtenances, for the transportation of oil, liquids and/or gases and

the products thereof, together with a buried fiber optic communications cable.” Cenex’s

use of the fiber optic cable is not restricted by these words to operating and monitoring

the pipeline. To the extent that the Landowners intended such a meaning or understood

the language as providing for such a meaning, that intent simply is not expressed in the

right-of-way agreements, the validity of which the Landowners have not challenged (see

¶ 73 n.8, supra).

¶79 Given that the granting language is unambiguous, the District Court’s duty was to

apply that language as written. Ophus, ¶ 23; Carelli, 279 Mont. at 209, 926 P.2d at 761.

The court did so and determined that the right-of-way agreements (1) grant Cenex an

easement to bury a fiber optic cable on the Landowners’ properties, (2) does not limit the

use of the fiber optic cable to operating and monitoring the pipeline, and (3) gives Cenex

the right to assign any of its rights, in whole or in part, to any third party. Accordingly,

the court concluded that Cenex was not in breach of the right-of-way agreements and that

Cenex was entitled to judgment as a matter of law. We agree with this conclusion and,

thus, affirm the District Court’s judgment granting Cenex’s motion for summary

judgment and denying the Landowners’ motion for partial summary judgment. Further,

given this conclusion, we agree with the District Court’s decision to deny as moot the

Landowners’ motion for class certification.

CONCLUSION

43
¶80 Pursuant to § 1-4-102, MCA, objective evidence of “the circumstances under

which [an instrument] was made, including the situation of the subject of the instrument

and of the parties to it,” may be shown and considered for the purpose of aiding the court

in determining, as a preliminary matter, whether the instrument contains an ambiguity.

The District Court erred to the extent it understood § 1-4-102 as precluding consideration

of such evidence. However, the surrounding circumstances proffered by the Landowners

in this case do not demonstrate that the granting language is ambiguous. Thus, the

District Court ultimately reached the correct conclusion that the granting language of the

right-of-way agreements is unambiguous. “We affirm district court decisions which are

correct regardless of the court’s reasoning in reaching the decision.” Clark v. Eagle

Systems, Inc., 279 Mont. 279, 286, 927 P.2d 995, 999 (1996); accord In re Marriage of

Rolf, 2003 MT 194, ¶ 41, 316 Mont. 517, ¶ 41, 75 P.3d 770, ¶ 41 (“[W]e will affirm a

district court’s decision when it reaches the correct result for the wrong reasons.”

(internal quotation marks omitted)).

¶81 Because the granting language is unambiguous, the District Court was not required

to interpret that language in the light most favorable to the Landowners. Likewise, the

court properly refused at this point to consider surrounding circumstances for the purpose

of applying the granting language. Lastly, the court correctly determined that the term

“together with,” as used in the granting language, does not unambiguously limit Cenex’s

use of the fiber optic cable to operating and monitoring the pipeline. In light of this

determination, the District Court did not err in granting Cenex’s motion for summary

44
judgment and denying the Landowners’ motion for partial summary judgment and

motion for class certification.

¶82 Affirmed.

/S/ JAMES C. NELSON

We Concur:

/S/ PATRICIA COTTER
/S/ JOHN WARNER
/S/ JIM RICE
/S/ BRIAN MORRIS

45