Veterans Rehabilitation Center, Inc. v. Birrer

No. 13183

I N THE SUPREME COURT O THE S W E OF MONTANA
F

1976

VETERANS REHABILITATION
CENTER, I N C . ,

P l a i n t i f f and A p p e l l a n t ,

EMMETT F. BIRRER,

Defendant and Respondent.

Appeal from; D i s t r i c t Court o f t h e E i g h t e e n t h J u d i c i a l D i s t r i c t ,
Hon. W. W. L e s s l e y , Judge p r e s i d i n g .

Counsel of Record:

For Appellant:

B e n n e t t and B e n n e t t , Bozeman, Montana
Lyman B e n n e t t I11 a r g u e d , Bozeman, Montana

F o r Respondent:

Berg, Angel, A n d r i o l o and Morgan, Bozeman, Montana
Gregory 0. Morgan a r g u e d , Bozeman, Montana

Submitted: J u n e 4, 1976
""k - 7 l2T&
9ec i d e d :'"
M r . J u s t i c e John C . Harrison d e l i v e r e d t h e Opinion o f . t h e
Court.

P l a i n t i f f a p p e a l s from t h e judgment of t h e d i s t r i c t

c o u r t , G a l l a t i n County, d i s m i s s i n g i t s complaint and a l l o w i n g

defendant t o r e c o v e r c o s t s i n c u r r e d i n d e f e n s e of t h e s u i t .

P l a i n t i f f , a n o n p r o f i t Oregon c o r p o r a t i o n , and defendant

Emmett B i r r e r , e n t e r e d i n t o a c o n t r a c t under which defendant

was t o o p e r a t e a r e t a i l b u s i n e s s f o r p l a i n t i f f c o r p o r a t i o n i n

Bozeman, Montana. Under t h e e x p r e s s terms of t h e c o n t r a c t (1)

p l a i n t i f f was t o r e c e i v e 6% of t h e g r o s s income r e c e i v e d i n

connection w i t h t h e o p e r a t i o n of t h e e n t e r p r i s e , ( 2 ) defendant

was t o r e c e i v e 15% of t h e g r o s s income, ( 3 ) t h e b a l a n c e was t o be

a p p l i e d t o t h e o p e r a t i o n of t h e b u s i n e s s .

B i r r e r c o n t r i b u t e d approximately $19,500 t o b e g i n t h e

b u s i n e s s o p e r a t i o n and he r e c e i v e d a "manager's s a l a r y f 1 of

$200 per week d u r i n g t h e p e r i o d he o p e r a t e d t h e b u s i n e s s . His

t o t a l s a l a r y amounted t o "about e l e v e n thousand d o l l a r s " .

B i r r e r ' s w i f e a l s o r e c e i v e d "close" t o $300 i n s a l a r y d u r i n g t h e

same p e r i o d . P l a i n t i f f a l l e g e s t h e r e was an agreement between

t h e p a r t i e s i n v o l v i n g t h e l e a s e of a 1968 Chevrolet t r u c k on a

monthly b a s i s f o r a f e e of $50 per month. N payments were r e -
o

c e i v e d pursuant t o t h e a l l e g e d l e a s e , and p l a i n t i f f c l a i m s t h a t one

f u l l y e a r ' s r e n t a l i s due and has never been p a i d .

The t o t a l g r o s s proceeds of t h e b u s i n e s s o p e r a t e d by

B i r r e r d u r i n g t h e e x i s t e n c e of t h e c o n t r a c t were $65,815.70.

The i n v e n t o r y and b u s i n e s s were l a t e r s o l d by B i r r e r t o one

Stocker. P l a i n t i f f d i d n o t r e c e i v e any percentage of t h e g r o s s

s a l e s d u r i n g t h e p e r i o d of d e f e n d a n t ' s o p e r a t i o n of t h e b u s i n e s s

and r e c e i v e d no payments on t h e a l l e g e d l e a s e of t h e t r u c k .
 P l a i n t i f f contends, under t h e e x p r e s s terms of che

c o n t r a c t , it i s e n t i t l e d t o r e c e i v e 6% of t h e g r o s s r e c e i p t s ,

p l u s t h e same percentage of t h e $10,000 r e c e i v e d by B i r r e r upon

s a l e of t h e b u s i n e s s t o S t o c k e r , which amounts t o $4,584.94, p l u s

6 X a n n u a l i n t e r e s t upon t h a t amount from August 27, 1972, t h e

dace of t h e c a n c e l l a t i o n of t h e c o n t r a c t between t h e p a r t i e s .

P l a i n t i f f a l s o argues i t i s e n t i t l e d t o receive reasonable attorney

f e e s and c o s t s p u r s u a n t t o t h e terms of t h e c o n t r a c t and t h a t

i t should r e c e i v e r e n t a l f e e s of $600 f o r t h e p e r i o d of one y e a r ,

d u r i n g which B i r r e r was i n p o s s e s s i o n of t h e t r u c k , p u r s u a n t t o

t h e a l l e g e d l e a s e agreement.

Defendant B i r r e r c o u n t e r s t h a t performance of t h e c o n t r a c t

was impossible due t o t h e l a c k of funds a v a i l a b l e a f t e r payment of

b u s i n e s s d e b t s and expenses. He u r g e s t h e o n l y r e a s o n a b l e

i n t e r p r e t a t i o n of t h e c o n t r a c t a s a whole was t h a t t h e i n t e n t

of t h e p a r t i e s was t o pay p l a i n t i f f and defendant p u r s u a n t t o

t h e c o n t r a c t only i n t h e e v e n t of t h e e x i s t e n c e of p r o f i t s above

o p e r a t i n g expenses. B i r r e r contends, and t h e d i s t r i c t c o u r t

a g r e e d , t h a t h i s s a l a r y was a r e a s o n a b l e and j u s t i f i a b l e expense

of o p e r a t i o n of t h e b u s i n e s s and was r i g h t f u l l y p a i d . B i r r e r

a l s o contends t h e d i s t r i c t c o u r t ' s f i n d i n g t h a t no o r a l l e a s e

e x i s t e d between t h e p a r t i e s i s c l e a r l y supported by t h e t e s t i -

mony and evidence p r e s e n t e d a t t r i a l and should b e allowed t o

stand.

G e n e r a l l y t h e term "gross revenue" means g r o s s r e c e i p t s

o f a b u s i n e s s b e f o r e d e d u c t i o n h r any purpose except t h o s e items

s p e c i f i c a l l y exempted. P u b l i c S e r v i c e Co. v. C i t y and County of

Denver, 153 Colo. 396, 387 P.2d 33, 36. A t 38 C.J.S. Gross

1082, i t i s s a i d :
 "The phrase [ g r o s s p r o f i t s ] r e f e r s g e n e r a l l y t o t h e
excess of s e l l i n g p r i c e over c o s t p r i c e without
deducting t h e expenses of r e s a l e and o t h e r c o s t s of
doing b u s i n e s s ; t h e g r o s s amount of s a l e s made, a f t e r
deducting o n l y t h e c o s t , import d u t i e s , and c a r r i a g e
* * *."
Here, t h e c o n t r a c t e x p r e s s l y provides t h a t p l a i n t i f f

s h a l l "without r e g a r d t o o p e r a t i n g g a i n o r d e f i c i t , r e c e i v e

from t h e f i r s t moneys s i x p e r c e n t of t h e g r o s s income i n

connection w i t h t h e o p e r a t i o n of t h e e n t e r p r i s e ** *.I1

S e c t i o n 13-704, R.C.M. 1947, provides:

"The language of a c o n t r a c t i s t o govern i t s
i n t e r p r e t a t i o n , i f t h e language i s c l e a r and
explicit * * *."
The i n t e n t of t h e c o n t r a c t i n g p a r t i e s i s t o be a s c e r t a i n e d

from t h e c o n t r a c t i t s e l f , i f p o s s i b l e . U n i v e r s a l Under. I n s . Co.

v. S t a t e Farm Mut. A . I n s . Co., 166 Mont. 128, 531 P.2d 668, 32

S t . Rep. 102. I n Fulton v. C l a r k , Mont . , 538 P.2d

1371, 32 St.Rep. 808, 811, t h e Court s t a t e d :

"The i n t e n t of t h e p a r t i e s *** must b e d e t e r -
mined from t h e w r i t t e n agreement a l o n e , i f p o s s i b l e .
S e c t i o n 13-705, R.C.M. 1947. I f t h e language of
t h e agreement i s c l e a r and e x p l i c i t t h e language must
govern i t s i n t e r p r e t a t i o n . S e c t i o n 13-704, R.C.M.
1947."

Here, t h e i n t e n t of t h e contra.cting p a r t i e s was c l e a r

t h a t p l a i n t i f f was t o r e c e i v e 6% of t h e g r o s s income of t h e

business. Thus p l a i n t i f f i s e n t i t l e d t o t h a t percentage of

$65,815.70, o r t h e amount of $3,948.94.

This Court i n Hein v. Fox, 126 Mont. 514, 520, 521, 254 P.

2d 1076, h e l d :
11
Courts can g i v e no s o l a c e where p a r t i e s t o a c o n t r a c t
f i n d themselves minus expected p r o f i t through f a i l u r e
t o e x e r c i s e c a r e i n drawing up such c o n t r a c t . What
t h i s c o u r t s a i d i n Hinerman v. Baldwin, 67 Mont. 417,
 433, 215 Pac. 1103, 1108, w e l l a p p l i e s h e r e , v j z :
'There i s no l e g a l impediment shown which would
prevent t h e p a r t i e s from e n t e r i n g i n t o any con-
t r a c t which they saw f i t nor from expressing i t i n
language of t h e i r own, and under such circumstances
i t i s t h e duty of t h e c o u r t t o g i v e e f f e c t t o t h e
meaning and i n t e n t i o n of t h e p a r t i e s a s expressed
i n t h e language employed. +c **

"'Whether t h e p l a i n t i f f made a good o r a bad b a r g a i n
i s of no concern t o t h e c o u r t . H e was of l e g a l a g e ,
and had a11 of t h e f a c t s s q u a r e l y and c l e a r l y b e f o r e
him long p r i o r t o t h e execution of t h e l e a s e . Merely
because t h e terms of t h e c o n t r a c t now appear unreasonable
o r burdensome a f f o r d s no reason t o permit him t o avoid
h i s c o n t r a c t . ; 9c
k *"'
I n U n i v e r s a l Under. I n s . Co. v . S t a t e Farm Mut. A . I n s .

Co., 166 Mont. 128, 531 P.2d 668, 32 St.Rep. 102, 107, t h i s Court

approved t h e language of t h e f e d e r a l d i s t r i c t c o u r t i n t h a t c o u r t ' s

d e c i s i o n i n Kansas C i t y F i r e and Marine Insurance Company v . C l a r k ,

217 F.Supp. 231, 235, wherein Judge Jameson, i n i n t e r p r e t i n g t h e

a p p l i c a b l e Montana law s a i d :

"'* 9~ * i f t h e i n t e n t i o n of t h e p a r t i e s i s c l e a r ,
t h e c o u r t s have no a u t h o r i t y t o change t h e c o n t r a c t
i n any p a r t i c u l a r , o r t o d i s r e g a r d t h e e x p r e s s
language t h e p a r t i e s have used."'

Here, t h e r e i s no q u e s t i o n b u t t h a t t h e c o n t r a c t d r a f t e d

and agreed upon by t h e p a r t i e s e n t i t l e d p l a i n t i f f c o r p o r a t i o n t o

a 6% s h a r e of t h e g r o s s income of t h e b u s i n e s s operated by defendant

Birrer .
P l a i n t i f f a l s o contends i t i s e n t i t l e d t o a 6% s h a r e of t h e

proceeds of t h e s a l e o f t h e b u s i n e s s and i t s i n v e n t o r y t o S t o c k e r ,

upon r e c i s s i o n of t h e c o n t r a c t . However, t h e c o n t r a c t i s very c l e a r

i n g i v i n g defendant t h e r i g h t t o a l l t h e proceeds of such s a l e . The

c o n t r a c t provides:

"10. Upon t e r m i n a t i o n o r c a n c e l l a t i o n of t h i s
c o n t r a c t , n e x t a f t e r payment of a l l moneys due
 Center ( p l a i n t i f f ) , B i r r e r (defendant) s h a l l be
e n t i t l e d t o a l l t h e s t o c k , goods, wares, merchandise,
equipment, s u p p l i e s and o t h e r p r o p e r t y used i n t h e
o p e r a t i o n of s a i d b u s i n e s s . "

C l e a r l y , B i r r e r had f u l l r i g h t t o t h e i n v e n t o r y , e t c . and would

be e n t i t l e d t o r e t a i n t h e proceeds of t h e s a l e of such i t e m s , a f t e r

payment of t h e amounts due.

The d i s t r i c t c o u r t found no e n f o r c e a b l e l e a s e agreement

e x i s t e d between t h e p a r t i e s i n r e g a r d t o a c e r t a i n C h e v r o l e t

t r u c k , b u t r a t h e r t h a t t h e r e was a t r a n s f e r t o defendant of t h e

v e h i c l e , and t h u s no r e n t a l monies were due from defendant t o

plaintiff. However, testimony g i v e n a t t r i a l by B i r r e r and by

a M r . Booth, on b e h a l f of p l a i n t i f f c o r p o r a t i o n , i n d i c a t e s t h e

p a r t i e s had a r r i v e d a t an agreement r e g a r d i n g t h e u s e of t h i s

t r u c k by B i r r e r which i n s u b s t a n c e , i f n o t i n form, amounted t o a

l e a s e arrangement. T h i s testimony i n d i c a t e s t h e e x i s t e n c e of a

agreement whereby defendant B i r r e r was t o r e c e i v e t h e p o s s e s s i o n

of t h e v e h i c l e and l e g a l t i t l e t o i t f o r a c o n s i d e r a t i o n of $1.00,

t o p r o t e c t p l a i n t i f f from any l i a b i l i t y i n connection w i t h

B i r r e r ' s o p e r a t i o n of t h e t r u c k . B i r r e r was t o pay p l a i n t i f f a

monthly r e n t a l f e e of $50 and r e t u r n t i t l e t o p l a i n t i f f a t termina-

t i o n of t h e l e a s e agreement.

The conduct of t h e p a r t i e s demonstrates t h e e x i s t e n c e

of an agreement t o l e a s e t h e v e h i c l e . B i r r e r took p o s s e s s i o n o f

t h e v e h i c l e and used i t i n t h e o p e r a t i o n of h i s b u s i n e s s and

r e t u r n e d i t t o p l a i n t i f f upon demand. S e c t i o n 13-603, R.C.M.

"An implied c o n t r a c t i s one t h e e x i s t e n c e and
terms of which a r e manifested by conduct."
S e c t i o n 13-713, K.C.M. 1947:

"A c o n t r a c t may be explained b y r e f e r e n c e t o
t h e circumstances under which i t was made and
t h e m a t t e r t o which i t r e l a t e s . "

I n Rentfro v. D e t t w i l e r , 95 Mont. 391, 398, 26 P.2d 992, t h e

Court s t a t e d :

"The conduct of t h e p a r t i e s m a n i f e s t s t h e e x i s t e n c e
and terms of an implied c o n t r a c t , having a l l t h e
e s s e n t i a l elements t o r e n d e r i t v a l i d and binding."

I n t h e i n s t a n t c a s e , t h e evidence of t h e conduct of t h e

p a r r i e s s u p p o r t s t h e conclusion t h a t a l e a s e of t h e v e h i c l e was

intended by t h e p a r t i e s and t h a t r e n t a l f e e s i n t h e amount of

$600 a r e due from B i r r e r t o p l a i n t i f f c o r p o r a t i o n .

Under t h e express terms of t h e c o n t r a c t :

"20. I n c a s e s u i t o r a c t i o n i s i n s t i t u t e d by
e i t h e r party hereto, the prevailing party s h a l l
be e n t i t l e d t o reasonable a t t o r n e y s f e e s and
costs ' k * *."
I n Roseneau Foods, I n c . v. Coleman, 140 Mont. 572, 579, 374 P.

2d 87, i t i s s t a t e d :

"* +C * the general r u l e is that attorney's fees are
n o t r e c o v e r a b l e by a s u c c e s s f u l l i t i g a n t e i t h e r i n
law o r e q u i t y except when they a r e e x p r e s s l y provided
f o r by c o n t r a c t o r s t a t u t e . I I

See: S t a t e Highway Comm'n v . Heltborg, 140 Mont. 196, 369 P.2d

521; Nikles v. Barnes, 153 Mont. 113, 454 P.2d 608.

I n view of t h e express terms of t h e agreement between

t h e p a r t i e s h e r e t o , t h e m a t t e r i s remanded t o t h e d i s t r i c t c o u r t

t o determine reasonable a t t o r n e y f e e s and c o s t s .

The judgment of t h e t r i a l c o u r t i s r e v e r s e d . The cause

i s remanded t o t h a t c o u r t t o e n t e r judgment f o r p l a i n t i f f i n

compliance w i t h t h i s o p i n i
We Concur:

/ r,

/ Justices. /#