No. 84-531
IN THE SUPREME COURT OF THE STATE OF MONTANA
1985
JOHN W. WEBB,
Plaintiff and Appellant.,
-VS-
FIRST NATIONAL RANK OF HINSDALE,
Defendant and Respondent.
APPEAL FROM: District Court of the Seventeenth Judicial District,
In a.nd for the County of Valley,
The Honorable Leonard Langen, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Morrison, Barron & Young; Robert C. Melcher, Havre,
Montana
For Respondent:
Gallagher, Archambeault & Knierim; Matthew Rnierim,
Glasgow, Montana
Submitted on Briefs: June 14, 1385,
Decided.: December 24, 1985
Filed:
Mr. Justice L . C. Gulbrandson delivered the Opinion of the
Court.
This is an appeal from the District Court of the
Seventeenth Judicial District, Valley County. John W. Webb,
appellant, filed suit against the First National Bank of
Hinsdale (Bank) alleging tortious interference with a
contract for the sale of his cattle. He claimed that the
Bank wrongfully induced the buyer, Glasgow Livestock Sales
Company, Inc. (Glasgow Livestock) to place the Bank's name on
a check for the cattle as an additional payee. Appellant
appeals an order granting the Bank's motion for summary
judgment. We affirm the District Court's order.
From 1970 to 1977, appellant was a customer of the Bank
and a good business relationship existed between them. In
September 1977 the Bank refused to loan Webb additional money
because of outstanding loans.
Appellant then secured financing from another lending
institution, the First State Bank of Malta, and purchased 100
cows and 100 calves. He sold some of these cattle to Glasgow
Livestock, in November 1978. The Bank, through its attorney,
requested that Glasgow Livestock place the Bank's name on the
check for the cattle as an additional payee, along with the
First State Ba.nk of Malta and another bank. The Bank claimed
a right to have its name placed on the check because jt
.
claimed a security interest in appellant's cattle based on
past loans made to him. He countered that the money owed was
secured only by certain trucking equipment and that the Bank
could not collect this indebtedness out of the proceeds of
the cattle sale.
Appellant delivered the check from Glasgow Livestock to
the First Bank of Malta, where it was retained until
appellant paid off their loan on January 31, 1979. The check
was then returned to appellant. Finally, on October 18,
1979, the Bank brought a collection action against appellant,
Civil Action No. 15311.
Appellant responded by hiring an attorney and inquiring
into the possibility of suing the Bank, claiming that it
wrongfully induced Glasgow Livestock to place the Bank's name
on the check as a payee. The attorney reviewed the Bank's
records and concluded that such a suit would have no merit.
He advised appellant to negotiate a settlement with the Bank.
Subsequently, at appellant's request, the attorney began
settlement negotiations with the Bank. Appellant was at all
times kept apprised of the negotiations. On December 18,
1979, his attorney and the Bank's attorney stipulated that
the collection action should be dismissed with prejudice. As
part of this settlement, Webb endorsed the check from Glasgow
Livestock over to the Bank and pursuant to the stipulation
the Bank discounted its claim by the sum of $4,273.26. The
collection action then was dismissed.
For nearly two years afterward there was no further
communication between the parties. During that time,
however, Webb hired a new attorney, and on November 6, 1981,
filed the present action. He alleges that the Bank
tortiously interfered with his contractual relations when it
induced Glasgow Livestock to place the Bank's name on the
check as a payee. The Bank moved for summary judgment under
Rule 56, M.R.Civ.P., claiming that the current action was
fully settled when No. 15311 was dismissed by the
stipulation. Webb responded that the stipulation for
dismissal of Civil Action No. 15311 bras intended for the
settlement of that cause only and was not intended to settle
all disputes between the parties. The stipulation and order
to dismiss stated that the "above entitled action [No. 153111
be dismissed with prejudice as settled in full." The
District Court granted the Bank's motion for summary judgment
in the current action.
Appellant appeals the granting of summary judgment. We
consder three issues on the appeal:
(1) Whether the negotiated compromise was a full and
final settlement which included appellant's claim for
tortious interference?
(2) Even if the compromise was a full and final
settlement, are there genuine issues of material fact as to
appellant's intent, his counsel's authority to enter the
agreement and appellant's ratification of the agreement which
preclude summary judgment?
(3) Does either estoppel or res judicata bar the
current litigation?
. . . Rule (c), N0nt.R.Civ.P. permits
56
summary judgment to issue only when there
is no genuine issue of material fact, and
the moving party is entitled to the
judgment as a matter of law.
The moving party's initial burden is
two-fold. First, it must show the
absence of any genuine issue as to
material fact. Second, that party must
also show that this set of facts entitles
it to the judgment as a matter of
law ...
In addressing the factual test, although
the court has no duty to anticipate or
specula-te as to material facts to the
contrary, it must nonetheless draw every
inference in favor of the non-moving
party.
If the movant has met this burden, it
then shifts to the non-moving party to
demonstrate a genuine issue of material
fact. Mere denial or speculation will
not suffice, the non-moving party must
show facts sufficient to raise a genuine
issue. (Citations omitted.)
Gamble Robinson Co. v. Carousel Properties (Mont. 1984), 6 8 8
In the first issue, the Bank argues the District Court
properly granted summary judgment because the compromise and
settlement in the first action is final and binding on the
parties and bars the current action as a matter of law.
Generally, a compromise agreement, when the basis for a final
judgment operates "as a merger and bar of all preexisting
claims and causes of action." Rodriguez v. Fireman's Fund
Ins. Compani-es (Cal. 1983), 142 Cal.App.3d 46, 54, 190
Cal.Rptr. 705, 709. In Rodriguez, the action concluded when
the plaintiff accepted defendant's settlement offer and the
court entered a dismissal with prejudice. The California
court equated this dismissal to a verdict and judgment on the
merits barring any new actions. Rodriguez, 190 Cal.Rptr. at
710. Folsom v. Butte County Ass'n of Governments (Cal.
1982) , 652 P. 2d 437, characterizes a compromise agreement as
"[concluding] all matters put in issue by the pleadings--that
is, questions that otherwise would have been resolved at
trial. " Folsom, 652 P.2d at 444. In that case, the
statutory rights to costs and attorney's fees were held not
to be part of the agreement since they were matters incident
to the judgment rather than part of the cause of action. The
court also noted the surrounding facts did not show the
parties intended costs and fees be included in the agreement.
These cases accord with the policy that "reciprocal rights
flowing from a common source [should] be determined in a
single action, thus avoiding not only unnecessary vexatious
litigation but also the contingency of conflicting judgments
... " Kittle Mfg. Co. v. Davis (Cal. 1935), 47 P.2d 1089,
1094, cited in Datta v. Staab (Cal. 1959), 343 P.2d 977, 981.
Appellant's argument may be summarized as an assertion
that the dismissal with prejudice only had the effect of
withdrawing the Bank's claim. This would have merit if
appellant had received nothing for the dismissal. However,
the amount appellant owed was substantially reduced. He
benefitted from the settlement. The Bank received no benefit
from agreeing to the discount and dismissal unless it served
to end the litigation between the parties. The facts on
which appellant relies for this cause of action all occurred
prior to the time the Bank brought its collection action.
The check at issue was signed and delivered to the Bank from
appellant as part of the first settlement. His attorney
stated, by affidavit, that "both parties wished to resolve
the matter and avoid the costs of further litigation over who
was a proper payee on the proceeds check . . . or the amount
due the bank." He also stated that he "acted with the full
knowledge and authority of [his] client, Mr. Webb, in
negotiating and accepting the settlement." The appellant
stated by deposition that he discussed the presence of the
Rank's name on the check with his attorney and that the
attorney advised him he "didn't have a lawsuit" and should
settle his differences with the Bank. The affid.avits of
other persons involved in the negotiations reflect that the
parties discussed all issues including the question of who
was the proper payee on the check and that the amount
appellant paid the Bank in exchange for a discount of the
amount due concluded all outstanding disputes. Appellant
does not contradict the evidence showing the parties
discussed the current claim and included it in their
negotiations. He accepted the benefit of its inclusion, a
reduction of the amount due. We hold that the dismissal with
prejudice in the first action concluded the pre-existing
claims between the parties. The Bank therefore was entitled
to a summary judgment in its favor.
Appellant argues in the second issue that he never
intended his attorney to have authority to settle his
tortious interference claim, and that this raises a genuine
issue of material fact precluding summary judgment. We agree
with his contention that the compromise agreement may not be
fully binding unless the attorney has the authority to enter
the agreement. However, appellant's remedy is to bring an
action to set aside the agreement. McGinley v. Maryland
Casualty of Baltimore (1929), 85 Mont. 1, 277 P. 414. The
client in McGinley knew how the settlement had been
accomplished and took no action to set it aside for nearly a
year.
If defendant has ratified the acts of its
attorney, it will not be heard to
complain, and slight evidence of
acquiescence on the client's part will be
deemed a ratification of the acts of the
attorney in making the compromise.
(Thornton on Attorneys at Law, p. 400,
sec 222.) These principles find
recognition in the case of
Harris v. Root, 28 Mont. 159, 72 Pac.
429, relied upon by defendant. Here the
stipulation and dismissal took place in
,July, 1926. The defendant's answer in
this case was filed in July, 1927, which
shows knowledge at that time of the
settlement, and, though this action was
not tried until June, 1928, the record
fails to show any affirma-tive action
taken by the defendant to repudiate the
settlement agreement. Such conduct on
the part of the defendant is tantamount
to a ratification of the settlement and
dismissal of the former action.
85 Mont. at 10. When his attorney wrote him a letter
advising him of the result of the negotiations, appellant
accepted the offer and acknowledged the discount of the
amount he owed the Bank. This shows his knowledge at the
time of the settlement. Appellant acquiesced for nearly two
years in the benefits of the bargain and with specific
knowledge of its terms. His conduct amounts to a
ratification of the settlement and dismissal under McGinley ,
85 Mont. 1, and Harris, 28 Mont. 159. In addition, his
attorney stated he had appellant's express authority to
"negotiate a settlement of the outstanding differences"
between appellant and the Bank. Appellant's claim that the
attorney lacked authority, absent any action to set aside the
agreement, does not raise a factual question material to the
current action of tortious interference against the Bank.
The District Court correctly found that his contentions at
this late date were not material and would not preclude
summary judgment.
The Bank argues that estoppel and res iu-dicataalso bar
appellant's current action against it. The District Court
mentioned both doctrines as possible bases for summary
judgment. Our holdings on the first two issues dispose of
this appeal. We therefore do not address this issu.e.
The order of the District Court is affirmed,,""
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Justices
Mr. Justice Frank B. Morrison, Jr. dissents as follows:
I dissent.
The appellant, John W. Webb, had, in the past, obtained
financing from the defendant, First National Bank of
Hinsdale, for the purpose of buying cattle. Eventually Webb
changed banks and began financing his cattle buying operation
through the First State Bank of Malta. At the time he
changed banks he owed the Hinsdale Bank $29,000 with interest
from January 25, 1978. This note was secured by four
semitrailers. On November 7, 1978, Webb sold cattle to the
Glasgow Livestock Sales Company and received a check for
those cattle in the amount of $30,389.00. The check was made
payable to Webb, the First State Bank of Hinsdale and to the
First State Bank of Malta. The First State Bank of Hinsdale
had its name put on the check without Webb's consent
apparently to secure the $29,000 debt owing from Webb to the
Hinsdale Bank.
On January 25, 1978, the First National Bank of Hinsdale
had instituted proceedings to collect on the $29,000 note due
from Webb to the Hinsdale Bank. In order to free up the
money received from the cattle sales Webb agreed to pass a
substantial. portion of the cattle sale proceeds over to the
Hinsdale Bank in return for a dismissal of that action. In
order to obtain the cash settlement the Hinsdale Bank
discounted its claim to the sum of $4,273.26. The action
instituted by the Hinsdale Bank was dismissed with prejudice.
That action contained no issues other than the collection
proceedings instituted by the Bank. Webb did not file an
answer and did not allege any claims against the Bank by way
of offset or counterclaim.
The majority opinion holds that dismissal of the
collection suit instituted by the Bank settled the tortious
interference claim that Webb had which was premised upon the
fact that the Hinsdale Bank improperly asked that its name be
put on the check he was to receive for the sale of his
cattle. Webb contended that the cattle did not secure his
loan with the Hinsdale Bank and that the Bank was not
entitled to any of those proceeds as a matter of lien. In
this case Webb contends that the Eank tortiously interfered
with his contractual relationships with the Glasgow Livestock
Company by improperly claiming an interest in his cattle
sales. This claim formed no part of the collection suit
instituted by the Hinsdale Bank against Webb and therefore
the dismissal with prejudice of the Bank's claim in that
case, settled nothing with respect to Webb's tortious
interference claim.
The defendant Bank seeks to shore up its argument by
contending that the affidavit of Webb's attorney shows that
Webb and the Bank intended to settle a11 claims including the
tortious interference claim that Webb had against the Bank.
This argument should fail for the following reasons:
1. The record in the collection case is clear and needs
no explanation. The dismissal with prejudice could do no
more than settle the claims pending in that action. Since a
counterclaim for tortious interference would not be a
compulsory counterclaim the issue involved in this case could
have in no way been a part of that first litigation
instituted by the Hinsdale Bank.
2. Any communications between Webb and his attorney
with respect to what was involved in the dismissal with
prejudice, are privileged and cannot be used against Webb. I
am at a loss to understand how Webb's attorney reconciles his
affidavit with the canons of ethics.
3. Even if the attorney's affidavit could be
considered, the facts stated therein are disputed by Webb so
that a summary judgment would not be proper.
In summary, dismissal with prejudice of the collection
suit did not settle Webb's separate claim for tortious
interference with contract rights. It could not; it did not.
Summary judgment should be reversed and the matter remanded
for trial.
I concur in the foregoing dissent o