Hull v. D. Irvin Transport Ltd.

No. 83-316
IN THE SUPREME COURT OF THE STATE OF MONTANA

1984

ARDELL HULL, individually and
d/b/a A & H TRUCKING and as
P & H TRUCKING; and DEL McALPINE,

Plaintiffs and Respondents,

D. IRVIN TRANSPORT LTD., a body
corporate; and SPENCER GROUP, an
unincorporated association consisting
of SPENCER CONTRACT HAULING LTD., a
body corporate, TROCHU TRUCKING
SERVICES LTD., a body corporate,
and D. IRVIN TRANSPORT LTD., a body
corporate,
Defendants,
and
THE CLARKSON COMPANY LIMITED, and
FRUEHAUF TRAILER COMPANY OF CANADA LTD.,

Intervenors and Appellants.

APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Joel Roth, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Crowley Law Firm; Sherry J. Matteucci argued,
Billings, Montana (Clarkson Co. Ltd.)
Church, Harrison, Johnson & Williams; Michael B.
Anderson argued, Great Falls, Montana (Fruehauf)
For Respondent :
Jardine, Stephenson, Blewett & Weaver; Jack Lewis
argued, Great Falls, Montana (Hull)

Submitted: June 191 1984
Decided: October 23, 1984

Clerk
Mr. . J u s t i c e ,John Conway H a r r i s o n d e l i v e r e d the Opinion of
t h e Court.

This case is a priority dispute between Hull 3nd

McAlpine, Montana r e s i d e n t s who o b t a i n e d j u d g m e n t s and t h e n
attached certain semi truck trailers and tractors of

d e f e n d a n t s , and C l a r k s o n and F r u e h a u f , C a n a d i a n c o r p o r a t i o n s
which claimed prior security interests in the vehicles.
C l a r k s o n and F r u e h a u f a p p e a l from t h e o r d e r of t h e Eighth
Judicial District Court, Cascade County, g r a n t i n g summary

judgment i n favor of H u l l and McAlpine. The p r o p e r t y i n
q u e s t i o n c o n s i s t s of n i n e t r a i l e r s and/or semi t r u c k s . For

t h e s a k e of s i m p l i c i t y t h e y w i l l b e r e f e r r e d t o a s u n i t s 1
through 9 throughout t h i s opinion.

D u r i n g 1980 and 1 9 8 1 , H u l l and McAlpine e n t e r e d i n t o
w r i t t e n a g r e e m e n t s w i t h d e f e n d a n t s D. I r v i n Transport, Ltd.,
( h e r e i n a f t e r I r v i n ) and S p e n c e r Group ( h e r e i n a f t e r Spencer
Group). Spencer Group is a Canadian unincorporated

a s s o c i a t i o n c o n s i s t i n g of Spencer C o n t r a c t H a u l i n g , L t d . , a
Canadian corporation, Trochu Trucking Services, Ltd.,

( T r o c h u ) , a C a n a d i a n c o r p o r a t i o n , D. I r v i n Transport, Ltd.,

a Canadian c o r p o r a t i o n , and o t h e r c o r p o r a t i o n s n o t i n v o l v e d
here. H u l l and McAlpine a r e b o t h Montana r e s i d e n t s and U.S.

citizens. A s provided i n t h e a g r e e m e n t s , H u l l and McAlpine
l e a s e d t r u c k s owned by them t o I r v i n and S p e n c e r Group f o r
t h e purpose of h a u l i n g c a r g o i n and t h r o u g h o u t Canada and

the listed states. The t r a n s p o r t a t i o n o f c a r g o was d o n e i n
t h e names o f e i t h e r I r v i n o r T r o c h u .

Fruehauf i s a c o r p o r a t i o n which m a n u f a c t u r e s t r a i l e r s
f o r s e m i trucks. It sold two t r a i l e r s , u n i t s 1 and 2 , to
Spencer C o n t r a c t H a u l i n g i n August o f 1 9 8 1 , by means o f a
"conditional sales contract," which retained title to the

trailers in Fruehauf until the total purchase price was
paid. The contract was signed and registered with the
Alberta Vehicle Registry.

On F e b r u a r y 3 , 1 9 7 7 , S p e n c e r Group e x e c u t e d a demand
debenture to evidence a loan of certain sums from the
C a n a d i a n I m p e r i a l Bank o f Commerce ( h e r e i n a f t e r t h e Bank).
Under t h e tems o f the debenture, Spencer C o n t r a c t Hauling
granted the Bank a security interest in all of Spencer

C o n t r a c t H a u l i n g ' s p e r s o n a l p r o p e r t y whenever a c q u i r e d a n d
wherever l o c a t e d . One o f t h e remedies i n case of d e f a u l t
p r o v i d e d by t h e d e b e n t u r e i s t h e a p p o i n t m e n t o f a r e c e i v e r ,

who i s a u t h o r i z e d t o t a k e p o s s e s s i o n o f a n d l i q u i d a t e a l l o f
Spencer Contract Hauling's personal property among other
powers. S p e n c e r C o n t r a c t H a u l i n g d e f a u l t e d and on December
2 9 , 1 9 8 1 , t h e Bank a p p o i n t e d C l a r k s o n a s r e c e i v e r o f S p e n c e r
C o n t r a c t H a u l i n g i n a c c o r d a n c e w i t h t h e t e r m s o f t h e demand

debenture. Stan Spencer, a p p a r e n t l y t h e p r e s i d e n t o r head
of S p e n c e r Group a c c e p t e d the a p p o i n t m e n t of Clarkson as

receiver.
On December 2 1 , 1 9 8 1 , S p e n c e r Group s e n t a f o r m l e t t e r

to a11 leased operators, including Hull and McAlpine,
n o t i f y i n g them t h a t t h e y would n o t b e p a i d t h e a m o u n t s owed
t h e m u n d e r t h e h a u l i n g c o n t r a c t s d u e t o a l a c k of available
funds. They w e r e also notified that the Bank would be

a p p o i n t i n g a r e c e i v e r o f t h e a s s e t s and a f f a i r s o f S p e n c e r

C o n t r a c t Hauling. Nevertheless, f e r t i l i z e r was l o a d e d by
S p e n c e r Group o n t o u n i t s 1 a n d 2 , t h e P r u e h a u f t r a i l e r s , a n d
Hull transported the fertilizer from Calgary to Butte.
After doing so, Hull pulled the trailers t o h i s home in
'Teton County and p a r k e d them. McAlpine was in California

p u l l i n g u n i t s 3 and 4 when h e r e c e i v e d h i s n o t i c e . When h e

r e t u r n e d t o Montana, h e p a r k e d t h e u n i t s a t h i s r e s i d e n c e i n

T e t o n County also. They p r o m p t l y contacted S p e n c e r Group

about being paid, and when told they would not be paid

brought the underlying a c t i o n .

The c o m p l a i n t was f i l e d on J a n u a r y 7 , 1 9 8 2 . H u l l and

McAlpine contacted Fruehauf to ascertain t h e v a l u e of the

units, and F r u e h a u f p e r s o n n e l mentioned t h a t S p e n c e r Group

owed them money. However, t h e y d i d n o t mention any claimed

mortgages o r security interests i n the property. Units 1

t h r o u g h 4 w e r e a t t a c h e d by t h e s h e r i f f of T e t o n C o u n t y on

J a n u a r y 7. On J a n u a r y 8 , u n i t 5 was a t t a c h e d by t h e s h e r i f f

of S i l v e r Bow County. Units 6, 7 and 8 w e r e a t t a c h e d o n

J a n u a r y 20 by the sheriff of Cascade County, and on that

same d a y , unit 9 was attached by the sheriff of Missoula

County. A 1 1 n i n e u n i t s were a t t a c h e d p u r s u a n t t o w r i t s of

attachment i s s u e d o u t of t h e D i s t r i c t C o u r t of t h e Eighth

Judicial District for C a s c a d e County. All are registered

in Alberta, Canada, and h a v e e i t h e r a r a t e d c a p a c i t y o r a

l o a d c a r r y i n g a x l e of a t l e a s t 10,000 pounds. The A l b e r t a

r e g i s t r a t i o n s name I r v i n a s t h e owner of a l l units except

u n i t 5 , which i s r e g i s t e r e d t o T r o c h u .

After filing the complaint, a copy of it and the

summons w e r e served on Charles Irvin in Toole County as

" D i r e c t o r of D. I r v i n T r a n s p o r t , Ltd." and a s " A s s o c i a t e o f

Spencer Group." On January 27, 1982, Clarkson filed a

motion to intervene as defendant or to substitute it in

p l a c e of S p e n c e r C o n t r a c t H a u l i n g . On t h e same d a y i t a l s o

filed a motion to quash the writs of attachment. The
motions were denied for failure of Clarkson to plead a claim
or defense as required by rule 24(c), nl.R.Civ.P. Having
failed to appear and plead, defaults were entered against
the defendants on January 29, 1982. Hull recovered a
judgment in the amount of $74,811.51 and McAlpine recovered
a judgment in the amount of $101,176.13.
On February 23, 1982, Clarkson again moved to
intervene and quash the attachment. Fruehauf moved to
intervene on March 4, 1982. The basis of Clarkson's motion
was that Spencer Contract Hauling had no equity in the
attached vehicles, that the vehicles were in the control of
Spencer Contract Hauling, not Irvin or Trochu, and as such
its appointment as receiver gave it a claim to the vehicles
prior in time to Hull's and McAlpinels. Clarkson also
contends that five of the vehicles are encumbered by a prior
security interest held by Commerce Leasing and Bow-llac
Leasing, by virture of their having leased the vehicles to
Spencer Contract Hauling. Both leasing companies have
appointed Clarkson as their agent for purposes of this case.
The basis of Fruehauf's motion was that it had title to the
two trailers, units 1 and 2, pursuant to the conditional
sales contract. Both Clarkson and Fruehauf were allowed to
intervene.
Neither Fruehauf, Clarkson or the Bank has caused any
lien or encumbrance on the vehicles to be filed in Montana.
The Fruehauf conditional sales contract covering units 1 and
2 was registered with the Alberta Office of Vehicle Registry
on September 8, 1981. Under Alberta law, certificates of
title are not given, provided or required on motor vehicles.
The Motor Vehicles Division registers the owners of vehicles
operating out of Alberta and issues vehicle registrations.
A different office, the Office of Vehicle Registry, Personal
Property Registration Branch, maintains the records of liens

and encumbrances on motor vehicles operating out of Alberta.
Liens and encumbrances are to be filed in that office to be
perfected.
Hull, McAlpine, Clarkson an3 Fruehauf all moved for
summary judgment, claiming that their respective
encumbrances or attachments, had priority over the other
parties'. After the issues were briefed and argued the
District Court ruled in favor of Hull and McAlpine. An
extensive memorandum was filed in support of this ruling,
where the District Court advanced several grounds which it
felt either individually or alternatively were sufficient to
require such a result. These alternative grounds include
the court's reading of Montana public policy, and several
Montana and federal statutory provisions. The conclusion
reached was that Clarkson and Fruehauf had no right, title
or interest in the subject vehicles superior to the
dttachment of Hull and McAlpine. Clarkson and Fruehauf
appeal this ruling.
Of the numerous issues raised by Clarkson and
Fruehauf, only the following need by addressed in this
opinion:
(1) Did the District Court acquire jurisdiction over
jefendants D. Irvin Transport, Ltd., the "Spencer Group,"

Spencer Contract Hauling, Ltd., or any other named defendant
by service upon Charles Irvin as "Director of D. Irvin
Transport, Ltd." and "associate of Spencer Group?"
(2) Were the writs of attachment valid and properly
issued and enforced by the District Court?
(3) If jurisdiction was properly invoked, did the
District Court arr in concluding that no genuine issues of
material fact existed which would preclude an order granting
Yull and McAlpinels motion for summary judgment?
Appellants first attack the underlying judgment
against Irvin, Trochu, Spencer Contract Hauling and Spencer
Group. They contend that Hull and PlcAlpine have not proven
the legal status of the above entities, and absent such
proof, service on Charles Irvin as "Director of D. Irvin
Transport, Ltd." and "associate of Spencer Group" is
insufficient to give the District Court jurisdiction.

However, Hull and McAlpine correctly argue that questions of
defective service of process may be raised only by the one
01-1 whom attempted service was made. In Re Roberts' Estate
(1936), 102 blont. 240, 58 P.2d 495. This rule is equally
applicable to parties and intervenors in a lawsuit. See 72
C.J.S. Process, section 106. Therefore appellants may not
attack the service on Charles Irvin and the issue is not
properly before the Court.
The same rule applies to appellants' objections to the

issuance of the writs of attachment. Defects in the
issuance of the writs may only be raised and objected to by
the defendants in an attachment proceeding. Section
27-18-711, MCA and Patch v. Stewart (1927), 78 Mont. 192,
253 P. 254. A third party is entitled to assert its
interest in the attached property as appellants were allowed
to do in this case. However, not every party may attack
defects in the issuance of the writs, only the defendant in
the action. Again this issue is not properly before the
Court.
Appellants next contend there were several questions
of material fact which were either not addressed by the
trial court or were improperly decided on respondents'
motions for summary judgment. We agree. Summary judgment,
"[Wlas not intended nor can it be used as a substitute for
existing methods in the trial of issues of fact. . . I
'
Kober and Kyris v. Billings Deaconess Hospital (1966), 148
Mont. 117 at 122, 417 P.2d 476 at 479. The purpose of a
motion for summary judgment is to determine whether any
issues of material fact exist, and whether the moving party
is entitled to judgment as a matter of law. Rule 56(c)
M.R.Civ.P., and Cereck v. Albertson's, Inc. (1981), 195
Mont. 409, 637 P.2d 509.
There are several important unanswered questions which
remain in this case, especially concerning the validity of
the security interests held by the Canadian creditors.
Though Hull and McAlpine did not rest their case on any
supposed failure of the security interests to attach, the
trial court's memorandum implied such a possibility and it
obviously weighed on the decision below. The trial court
also decided several issues of fact, which is improper on a
motion for summary judgment. The trial court found that the
"Presumption that Irvin and Trochu were [the] owners of
units 3 through 9 [is] not overcome by the evidence." This
is obviously an issue which is properly left to the trier of
fact. The court also did not ever address Fruehauf's claim
of ownership concerning units 1 and 2.
In short, numerous issues of fact remain which must be
resolved and applied to the appropriate law. The above is
by no means a complete l i s t of t h e o u t s t a n d i n g q u e s t i o n s of
fact. Counsel f o r both p a r t i e s and t h e D i s t r i c t Court Judge
are properly l e f t the task of framing the issues, as the

important f a c t s a r e not completely b e f o r e t h i s Court, but
remain t o be uncovered. Without s u f f i c i e n t f a c t s b e f o r e u s ,
i t would be unwise t o r i s k misguiding t h e lower c o u r t and
counsel by a t t e m p t i n g t o l i s t a l l remaining m a t e r i a l i s s u e s
of f a c t .
Lastly, we note that the parties requested

clarification of Montana law applied here by the trial
court. I t would be premature for u s to advise the p a r t i e s
and t h e lower c o u r t on p o s s i b l e a p p l i c a t i o n of t h e law when
the case is not completely before us. When all the

p e r t i n e n t f a c t s a r e known, t h e D i s t r i c t Court i s t h e forum
where i n i t i a l a p p l i c a t i o n of t h e law should be made.

Reversed and remanded for further proceedings as

outlined i n t h i s opinion.

W concur:
e V
? 4 4 4
Chief J u s t i c e -
.aQ&Do

Justices
 I dissent from the remand. In my opinion the majority
has strained to find factual issues. This case appears ripe
for ruling upon the legal questions.
The majority states:
"The trial court found that the 'presumption that
Irvin and Trochu were [the] owners of units 3
through 9 [is] not overcome by the evidence.' This
is obviously an issue which is properly left to the
trier of fact."
The trial court's memorandum in support of its summary
judgment specifically states that any factual issue existing
between the presumption and other evidence was not necessary
to the summary judgment and was not a. question of fact
resolved by the court.
In my opinion we should decide the legal questions in
this case. Since the case is being remanded for
determination of factual issues I hesitate to make a
determination on the legal questions. The more propitious
course is reserve ruling until the case returns and is
reargued.