No. 81-205
IN THE SUPREME COURT OF THE STATE OF MONTANA
1981
R & W LEASING, a Montana Corporation,
Plaintiff and Respondent,
JACK MOSHER, d/b/a BIG SKY CAMPER
VILLAGE,
Defendant and Appellant.
Appeal from: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin, The Honorable
W. W. Lessley, Judge presiding.
Counsel of Record:
For Appellant:
J. David Penwell, Bozeman, Montana
For Respondent :
Lyman H. Bennett, 111, Bozeman, Montana
Submitted on Briefs: September 17, 1981
Decided : NO\/I 2 1981
Mr. Justice John Conway Harrison delivered the Opinion of
the Court.
This is an appeal from a judgment in the amount of
$207.34 plus attorney fees of $650 arising out of a leasing
agreement.
Appellant Mosher, manager of the Big Sky Camper
Village, came to town from his pristine mountain camping
area on February 10, 1978, looking for a truck that would
not only assist him in his work as camp manager but would
also be able to push a plow attached to its front end. He
did not go to all the leasing places in town but went
directly to respondent R & W Leasing, Inc. There appellant
leased a 1978 Dodge 3/4 ton, four-wheel drive pickup truck.
The total lease agreement obligation owing from
appellant to respondent was $11,334.07, with monthly
payments of $277, except for the first payment which was
$178.07. Twelve payments were made, ending with the January
1979 payment, which totaled $3,225.07. In February 1978, at
the time of the lease, a deposit of $277 was made by
appellant to immediately obtain the truck.
At the time of the lease, appellant had a snow plow
attached to the front end of the truck. Whether the plow
belonged to appellant or to the Chrysler Corporation, for
whom he worked, is not established in the record. However,
there is no question that respondent sold the plow for $650,
without appellant's permission, upon repossession of the
vehicle by respondent.
Appellant had the truck for approximately one year.
During that period he had problems with the truck and had it
into ,respondent's shop a number of times. In October 1978
appellant's wife, while driving the truck down the Gallatin
Canyon, had a n a c c i d e n t , c a u s i n g damages t o t h e t r u c k i n t h e
amount o f $ 1 , 9 3 5 . 4 9 . The t r u c k was towed i n t o r e s p o n d e n t ' s
shop f o r repairs, and a p p e l l a n t n e v e r a g a i n had p o s s e s s i o n
of it, although he testified he tried to get it several
times. Respondent t e s t i f i e d p a r t s were n o t a v a i l a b l e , and
since appellant's payments were late, i t was d e c i d e d t h a t
respondent would terminate the lease and sell the truck.
Between t h e t i m e o f t h e a c c i d e n t and t h e t e r m i n a t i o n o f t h e
lease, appellant rented a substitute vehicle. He later
purchased a secondhand Ford truck for $800 and k e p t i t on
t h e j o b u n t i l he l e f t h i s p o s i t i o n a s camp manager s o m e t i m e
i n 1979.
Following termination of the lease, the respondent
o b t a i n e d two c a s h b i d s f o r t h e t r u c k , e a c h i n t h e amount o f
$5,000. R e s p o n d e n t i n c u r r e d c o s t s o f $ 5 1 4 . 4 2 f o r s a l e s and
r e c o n d i t i o n i n g c o s t s p r i o r t o s e l l i n g t h e t r u c k f o r $7,987.
The p u r c h a s e r of the t r u c k was a l l o w e d $ 2 , 1 0 0 as a
trade-in for another vehicle. However, o n l y $700 was s e t
f o r t h a s t h e v a l u e t o be a l l o w e d on t h e s a l e a s r e s p o n d e n t
testified that $1,400 was what it termed an "over
allowance." Respondent testified that the over allowance
f i g u r e of $ 1 , 4 0 0 was "more t h a n you s h o u l d have u n l e s s you
w a n t e d t o make t h e d e a l . "
Respondent received from its insurance company the
sum o f $ 1 , 8 8 5 f o r damages t o t h e t r u c k c a u s e d by t h e O c t o b e r
accident. The c o u r t found that a p p e l l a n t owed respondent
$98.34 f o r t o t a l c o s t s of r e p a i r s a f t e r a l l o w i n g c r e d i t f o r
t h e i n s u r a n c e payment. The c o u r t ' s f i n d i n g f o l l o w s :
Cash Wholesale Price
Depreciated Value $4,375.00
Premature Termination
Factor ($20 x 9 months) 180.00
Unpaid Rent (Feb-Apr 1979) 831.00
Deposit previously paid by
lessee 277.00
($ 109.00)
Rentals and Repairs ($ 98.34)
TOTAL ($ 207.34)
Three issues are presented:
1. Whether the trial court erred in disregarding the
actual purchase price of the leased vehicle while giving
credence to respondent's "appraisals" secured without any
notice to the appellant.
2. Whether the trial court erred in ruling against
appellant's counterclaim for the value of the snow plow
admittedly sold by respondent.
3. Whether the trial court erred in rendering
judgment for the respondent.
Appellant first alleges that respondent, according to
the paragraph nine in the lease agreement, should have
consulted him on appraisals. Appellant's argument, as best
we can understand it from his brief, really resolves itself
to determining whether the trial court had sufficient facts
to make the determination it did. We find there was
sufficient testimony introduced on the value of the vehicle
and the District Court's use of a "wholesale value" and
"retail value" in arriving at the $5,000 figure was within
the meaning of paragraph nine of the leasing agreement.
That paragraph read: "Upon such premature termination,
Lessor shall promptly obtain the highest available cash
o f f e r a t wholesale . . ."
This Court, in setting the standard of review in
n o n j u r y c a s e s , h a s h e l d numerous t i m e s t h a t , " [ w ] i t h r e g a r d
t o t h e s t a n d a r d of review, t h i s Court h a s r e p e a t e d l y s t a t e d
i t w i l l n o t o v e r t u r n t h e f i n d i n g s o f f a c t and c o n c l u s i o n s o f
law i f s u p p o r t e d by s u b s t a n t i a l e v i d e n c e and by the law.
E v i d e n c e w i l l be viewed i n t h e l i g h t m o s t f a v o r a b l e t o t h e
prevailing party. [Citations omitted.]" Toeckes v. Baker
(1980) I Mont . , 6 1 1 P.2d 6 0 9 , 6 1 1 , 37 S t . R e p . 948,
The subissue of whether the court erred in ruling
against appellant's counterclaim will be discussed under
t h i s issue.
As previously noted, the record did not reveal
whether appellant originally owned the plow. Respondent
d o e s n o t d e n y k e e p i n g and s e l l i n g t h e p l o w and j u s t i f i e s i t s
actions with a lame excuse that it s o l d t h e plow t o g e t
collateral to cover money that might be due and owing.
However, we c a n n o t f i n d f r o m t h e f a c t s t e s t i f i e d t o a t t r i a l
that the trial judge erred in not allowing appellant's
counterclaim.
The third issue concerns granting attorney fees.
A p p e l l a n t a l l e g e s t h a t f e e s o f $650 on a $350 c l a i m t r i e d i n
two h o u r s i s e x c e s s i v e . P a r a g r a p h s e i g h t and t e n o f the
l e a s e a g r e e m e n t p r o v i d e d f o r a t t o r n e y f e e s i n t h e e v e n t of a
breach.
Under Rule 1 5 ( b ) , M.R.Civ.P., the court can award
damages o v e r and a b o v e t h e amount a s k e d f o r i n t h e c o m p l a i n t
and g r e a t e r a t t o r n e y f e e s t h a n o r i g i n a l l y r e q u e s t e d . That
r u l e provides:
"When i s s u e s n o t r a i s e d by t h e p l e a d i n g s a r e
t r i e d by e x p r e s s o r i m p l i e d c o n s e n t o f t h e
parties, t h e y s h a l l be t r e a t e d i n a l l
r e s p e c t s a s i f t h e y had b e e n r a i s e d i n t h e
pleadings. Such amendment o f t h e p l e a d i n g s
a s may be n e c e s s a r y t o c a u s e them t o c o n f o r m
t o t h e e v i d e n c e and t o r a i s e t h e i s s u e s may
be made upon m o t i o n o f any p a r t y a t any t i m e ,
e v e n a f t e r j u d g m e n t ; b u t f a i l u r e t o s o amend
d o e s n o t e f f e c t t h e r e s u l t of t h e t r i a l of
these issues. I f evidence is o b j e c t e d t o a t
t h e t r i a l on t h e g r o u n d s t h a t it was n o t
w i t h i n t h e i s s u e s made by t h e p l e a d i n g s , t h e
C o u r t may a l l o w t h e p l e a d i n g s t o be amended
a n d s h a l l do s o f r e e l y when t h e p r e s e n t a t i o n
o f t h e m e r i t s o f t h e a c t i o n w i l l be s u b s e r v e d
t h e r e b y and t h e o b j e c t i n g p a r t y f a i l s t o
s a t i s f y t h e c o u r t t h a t t h e admission of such
e v i d e n c e would p r e j u d i c e him i n m a i n t a i n i n g
h i s a c t i o n o r d e f e n s e upon t h e m e r i t s . The
C o u r t may g r a n t a c o n t i n u a n c e t o e n a b l e t h e
o b j e c t i n g p a r t y t o meet such e v i d e n c e . "
S e e a l s o K i z z i a r v. D o l l a r (10th Cir. 1959), 268 F . 2 d 9 1 4 ,
Here, respondent filed a notion for attorney fees
t o g e t h e r w i t h a s u p p o r t i n g a f f i d a v i t showing:
Correspondence T o t a l $ 90.00
O f f i c e t i m e (8-1/2 h r . a t $ 6 0 / h r ) 425.00
C o u r t t i m e (4-1/2 h r . a t $ 1 0 0 / h r ) 450.00
TOTAL DUE $965.00
In conformity with the motion, a hearing was held
before the court, and t h e c o u r t awarded $650. W f i n d no
e
error .
The f i n a l i s s u e concerns whether the court erred in
f a i l i n g t o award a p p e l l a n t damages f o r t h e a l l e g e d b r e a c h o f
implied warranty of merchantability.
A p p e l l a n t r e l i e s on H e n n i n g s e n v . Bloomfield Motors,
Inc. (1960), 32 N.J. 418, 1 6 1 A.2d 69, and Whitaker v.
Farmhand, Inc. (1977), 1 7 3 Mont. 345, 567 P.2d 916, as
c o n t r o l l i n g h e r e on i m p l i e d w a r r a n t i e s .
Under the facts of this case the theory of implied
warranty of merchantability and/or the implied warranty of
fitness for a particular purpose do not apply. These
warranties are only applicable in the event of a "sale" as
defined by the Uniform Commercial Code. Section 30-2-106,
MCA, defines sale as follows:
"A 'sale' consists in the passing of title
from the seller to the buyer for a price
(30-2-401) . . ."
Anderson Uniform Commercial Code (2nd ed.), section
2-106:5 states:
"Although the Code determines most legal
problems without reference to title, a sale
is defined as the passing of title from the
seller to the buyer for a price. The
transfer of title is the essential element or
the distinguishing characteristic of a sale
of goods. "
The lease agreement as entered into by and between
appellant and respondent provides in pertinent part:
"This agreement is one of leasing only, and
the lessee shall not have or acquire any
right, title, or interest in the vehicle
except the right to use or operate it as
provided herein. Lessee has no option to
purchase the leased vehicle."
On the basis of the above language contained in the
lease agreement, as well as on the definition of a "sale" as
found in the UCC, no implied warranty of either
merchantability or fitness for a particular purpose is
applicable to a lease arrangement.
The judgment of the District Court is affirmed.
W concur:
e
Mr. J u s t i c e Frank B. M o r r i s o n , J r . , d i s s e n t i n g :
I r e s p e c t f u l l y d i s s e n t from t h e m a j o r i t y o p i n i o n .
A r e v i e w o f t h e D i s t r i c t C o u r t f i l e , and p a r t i c u l a r l y
t h e f i n d i n g s o f f a c t e n t e r e d by t h e D i s t r i c t C o u r t , f a i l t o
d i s c l o s e t h a t t h e c o u n t e r c l a i m was t r e a t e d . The D i s t r i c t
C o u r t d i d , i n a c o n c l u s i o n o f law, deny d e f e n d a n t ' s c o u n t e r c l a i m .
However, t h i s i s i n s u f f i c i e n t .
I n defendant's counterclaim, defendant a l l e g e s t h a t t h e
v e h i c l e was d e f e c t i v e and t h a t d e f e n d a n t i n c u r r e d damages a s
t h e r e s u l t of being w i t h o u t t h e s e r v i c e of t h e v e h i c l e f o r
prolonged p e r i o d s of t i m e . Defendant a l l e g e s t h a t t h e
d e f e c t s r e s u l t e d i n continuous r e p a i r attempts with r e s u l t i n g
c o s t f o r replacement vehicles.
I n r e v i e w i n g t h i s r e c o r d I am u n a b l e t o d e t e r m i n e t h e
b a s i s f o r t h e D i s t r i c t C o u r t ' s r e s o l u t i o n of t h i s i s s u e .
The D i s t r i c t C o u r t f a i l e d t o make a n y f i n d i n g s o f f a c t w i t h
r e s p e c t t o d e f e n d a n t ' s a l l e g a t i o n of d e f e c t s .
I would remand t o t h e D i s t r i c t C o u r t w i t h d i r e c t i o n t o
make s p e c i f i c f i n d i n g s o f f a c t on d e f e n d a n t ' s c o u n t e r c l a i m
s o t h a t t h i s C o u r t would have a n a d e q u a t e o p p o r t u n i t y t o
review those i s s u e s .