NO. 81-405
IN THE SUPREME COURT OF THE STATE OF MONTANA
1982
GARY COMO,
Plaintiff and Respondent,
VS.
JIM RHINES and SOUND WEST, INC.,
Defendants and Appellants.
Appeal from: District Court of the Fourth Judicial District,
In and for the County of Missoula
Honorable Jack L. Green, Judge presiding.
Counsel of Record:
For Appellants:
Datsopoulos, MacDonald & Lind, Missoula, Montana
For Respondent:
Hirst, Dostal & Withrow, Missoula, Montana
Submitted on briefs: February 11, 1982
Decided: MAY 2 7 ma
Filed:
&@ $ 4 y v
Clerk
Mr. J u s t l c e Gene B. D a l y delivered t h e O p l n i o n o f t h e C o u r t .
This is an appeal from a judgment issued by the
Dlstrlct Court of the Fourth Jud~cial District, Missoula
County, i n which the District Court found that appellants
breached an employment contract with respondent. The
Dlstrict C o u r t awarded damages to respondent against both
a p p e l l a n t s i n t h e amount o f $ 3 , 7 5 4 , including $ 1 , 0 0 0 f o r o n e
m o n t h ' s s a l a r y , $ 1 , 7 5 4 f o r t r a v e l and moving e x p e n s e s , and a
penalty of $1,000 as provided by sectlon 39-3-206, MCA.
Respondent was also awarded reasonable attorney fees and
c o s t s u n d e r s e c t i o n 39-3-214, MCA.
A p p e l l a n t , J i m R h i n e s , is p r e s i d e n t and a s t o c k h o l d e r
of: Sound West, Inc. (Sound West). Sound West owns a c h a i n
o f s t o r e s , o n e i n M i s s o u l a , Montana.
Respondent, G a r y Como, h a s a background in business
and accounting. I n 1964, he r e c e i v e d a c o l l e g e d e g r e e i n
b u s i n e s s a d m i n i s t r a t i o n with a minor i n accounting. He has
had about ten years of experience as an accountant and
worked w l t h a c o m p u t e r f o r two y e a r s o f that time. From
J a n u a r y 1 9 7 7 t o March 1 9 7 8 , respondent worked a s a m a n a g e r
of a family r e s t a u r a n t i n S t . Paul, Minnesota.
D e s i r i n g t o f i n d work i n w e s t e r n Montana, respondent
c o n t a c t e d s e v e r a l employment a g e n c i e s i n M i s s o u l a , Montana.
On A p r i l 1 8 , 1 9 7 8 , a n employment a g e n c y n o t i f i e d r e s p o n d e n t
t h a t J i m R h i n e s a t Sound N e s t w a s l o o k i n g f o r someone w i t h
e x p e r i e n c e i n a c c o u n t i n g and c o m p u t e r programming.
Respondent called Rhines. They briefly discussed
respondent's q u a l i f i c a t i o n s and s e t a d a t e f o r a n i n t e r v i e w
I n Missoula.
R e s p o n d e n t t r a v e l e d t o M i s s o u l a b y t r a i n and m e t w i t h
Rhines on A p r i l 26, 1978. 'The D i s t r i c t C o u r t f o u n d t h a t a t
t h e f i r s t i n t e r v i e w Rhines t o l d r e s p o n d e n t t h a t he wanted a n
a c c o u n t a n t who c o u l d use a n IBM c o m p u t e r to handle inven-
tory, a c c o u n t s p a y a b l e and bank a c c o u n t s .
Rhines claims that, in fact, he wished to hire a
computer programmer, not an accountant. Rhines admits,
however, t h a t he n e v e r t o l d r e s p o n d e n t t h i s .
At the first interview, respondent's qualifications
were d i s c u s s e d . He met with Sound West's accountant, A1
Hawley, discussed the accounting s y s t e m and was shown t h e
c o m p u t e r p r i n t o u t s o f t h e a c c o u n t i n g p r o g r a m s u s e d by Sound
West. H e w a s t o l d by R h i n e s t o r e t u r n t h e n e x t d a y .
At t h e second interview, respondent claims, and the
District Court found, that Rhines t o l d respondent t h a t he
would like to take him on. Compensation, benefits, and
d u t i e s of t h e job were t h e n d i s c u s s e d and, a c c o r d i n g to t h e
t l n d l n g s o f t h e D i s t r i c t C o u r t , a g r e e d upon.
R e s p o n d e n t made n o t e s o f t h e t e r m s o f h i s employment:
he would be paid $1,000 per month for two months; then
$ 1 , 2 0 0 p e r month, a n d $ 1 , 5 0 0 p e r month s o m e t i m e i n t h e f a l l .
Respondent would work five days a week unless more were
necessary. He would h a v e s i x d a y s o f p a i d v a c a t i o n .
The D i s t r i c t C o u r t concluded that, as part of this
agreement, respondent's moving e x p e n s e s a s w e l l a s e x p e n s e s
f o r h i s i n t e r v i e w t r l p would b e r e i m b u r s e d by J i m R h i n e s and
Sound West. The District Court also found that Rhines
d g r e e d r e s p o n d e n t would n o t h a v e t o move f r o m S t . P a u l u n t i l
June 5, so his c h i l d r e n could finish scl?ool. Respondent
would t h e n s t a r t work a s s o o n as h e w a s s e t t l e d .
On A p r i l 28, 1978, respondent went to t h e Missoula
J o b S e r v i c e and c o m p l e t e d a n i n t e r s t a t e wage c l a i m . On t h e
form, respondent s t a t e d t h a t on A p r i l 26 h e had b e e n h i r e d
by Sound West as an accountant with a starting date of
a p p r o x i m a t e l y June 19, 1978. H e a l s o n o t e d t h a t Sound West
was p a y i n g f o r t h e move.
I n e a r l y J u n e r e s p o n d e n t r e n t e d a t r u c k a n d moved h i s
f a m l l y and t h e i r b e l o n g i n g s to M i s s o u l a . On J u n e 9 , 1978,
r e s p o n d e n t w e n t t o t h e Sound West s t o r e and t o l d R h i n e s t h a t
h l s h o u s i n g a r r a n g e m e n t s had n o t worked o u t and he would n o t
b e a b l e t o b e g i n work f o r two w e e k s . Respondent t e s t i f i e d ,
and t h e D i s t r i c t C o u r t f o u n d , t h a t R h i n e s a d v i s e d r e s p o n d e n t
t o d o w h a t h e had t o d o t o s e t t l e i n and t h e n r e p o r t f o r
work l a t e r i n t h e month.
On o r a b o u t J u n e 21, 1 9 7 8 , r e s p o n d e n t r e t u r n e d t o t h e
Sound West s t o r e and r e q u e s t e d a d a t e t o s t a r t work. Rhines
s e n t r e s p o n d e n t t o Sound West ' s a c c o u n t a n t . The a c c o u n t a n t
dld not give a specific date f o r r e s p o n d e n t t o s t a r t work
dnd s a i d h e would c o n t a c t r e s p o n d e n t t h e f o l l o w i n g week.
R e s p o n d e n t c o n t i n u e d t o c a l l and p e r s o n a l l y g o t o t h e
Sound West s t o r e t o s e t a s t a r t i n g d a t e . R h i n e s was non-
committal. Respondent gave Rhines a list of his moving
expenses, but Rhines refused t o p a y them. Finally, on o r
about June 30, 1978, Rhines t o l d r e s p o n d e n t he d i d n o t have
a l o b a t Sound West.
Respondent then began looking for other work in
Mlssoula. He received t e m p o r a r y work i n J a n u a r y 1 9 7 9 . In
March 1 9 7 9 h e r e c e i v e d p e r m a n e n t employment a s a n a c c o u n t a n t
w i t h t h e U n i v e r s i t y o f Montana, w h e r e h e r e m a i n s e m p l o y e d .
The District Court concluded that under the above
facts Jim Rhines, as the president and manager of Sound
West, offered employment to respondent with express terms
and r e s p o n d e n t accepted the o f f e r . The D i s t r i c t C o u r t t h e n
concluded t h a t Rhines and Sound West, Inc., breached this
c o n t r a c t by f a i l i n g t o p a y s a l a r y and b e n e f i t s , and f a i l i n g
t o a l l o w r e s p o n d e n t t o p e r f o r m h i s employment.
The D i s t r i c t C o u r t c o n c l u d e d t h a t r e s p o n d e n t had b e e n
hired on a month-to-month basis and awarded respondent
$ 1 , 0 0 0 i n o n e m o n t h ' s s a l a r y ; $ 1 , 7 5 4 i n moving e x p e n s e s w e r e
a l s o a w a r d e d a s p a r t o f t h e employment c o n t r a c t .
Under s e c t i o n 39-3-206, MCA, t h e D i s t r i c t Court found
that K h l n e s and Sound West a l s o owed $ 1 , 0 0 0 a s a penalty.
Flnally, under section 39-3-214, MCA, the District Court
dwarded respondent a reasonable attorney fee and costs.
Both Rhines and Sound West were held liable for the
1udgment .
A p p e l l a n t s raise t h r e e i s s u e s :
1. Is there substantial evidence to support the
Dlstrlct Court's f i n d i n g t h a t r e s p o n d e n t had a c o n t r a c t o f
employment w i t h Sound W e s t , I n c . ?
2. Did t h e D i s t r i c t C o u r t e r r by a p p l y i n g sectlons
39-3-206, MCA, and 39-3-214, MCA, t o respondent's breach of
contract action?
3. Did t h e D l s t r i c t C o u r t e r r by h o l d i n g a p p e l l a n t
J i m Rhines l i a b l e f o r r e s p o n d e n t ' s damages?
The District Court's judgment is affirmed to the
e x t e n t t h a t a c o n t r a c t w a s a g r e e d upon and b r e a c h e d and t h a t
K h l n e s 1s p e r s o n a l l y l i a b l e f o r d a m a g e s r e s u l t i n g from t h e
breach. The case is r e m a n d e d , h o w e v e r , for a redetermination
o f damages.
Appellants contend under the first issue that the
s t a t e m e n t "we would l i k e t o t a k e you o n " is n o t d e f l n i t e o r
c e r t a i n and d o e s n o t c o n s t i t u t e a n o f f e r . They claim t h a t
Sound West had a n o p e n l n g f o r a c o m p u t e r programmer o n l y .
~ a s t l y , R h i n e s c l a i m s h e t o l d t h e r e s p o n d e n t t h a t h e would
b e h i r e d i n J u n e 1 9 7 b o n l y i f h e were n e e d e d .
Where t h e e x i s t e n c e o f a n o r a l c o n t r a c t i s c o n t e s t e d
and the evidence is conflicting, the existence of the
contract is a question for the trier of fact. Keil v.
Glacler Park, Inc. (1980), Mont. , 614 P.2d 502,
505, 37 St.Kep. 1151, 1154. The c r e d i b i l i t y o f witnesses
and t h e w e i g h t g i v e n t h e i r t e s t i m o n y a r e matters e x c l u s i v e l y
w i t h i n t h e province of t h e D i s t r i c t Court i n a nonjury c a s e .
h a r r i s v . Harrls ( 1 9 8 0 ) , - Mont. ,
- 616 P.2d 1099, 1102,
37 S t . R e p . 1696, 1699. T h i s Court w i l l not d i s t u r b a judg-
ment on a p p e a l where substantial evidence to support the
j u d g m e n t a p p e a r s on t h e r e c o r d . See, K e i l , 614 P.2d a t 505,
and c a s e s c i t e d t h e r e i n .
Here, t h e e v i d e n c e s u p p o r t s t h e D i s t r i c t C o u r t ' s con-
c l u s i o n t h a t an a g r e e m e n t w a s r e a c h e d b e t w e e n r e s p o n d e n t a n d
R h i n e s . The D i s t r i c t C o u r t was i n t h e b e s t p o s l t i o n t o w e i g h
the credibility of the testimony and it chose to believe
respondent. Respondent's a c t i o n s were totally consistent
w i t h t h o s e o f a p e r s o n who, i n good f a i t h , t h o u g h t h e had a
job. He took notes of the terms o f h i s employment. He
f i l l e d o u t a J o b S e r v i c e form s t a t i n g t h a t h e had a j o b a s
an accountant at Sound West. He moved himself and his
family t o Missoula a t a g r e a t expense.
Most importantly, however, are the admitted a c t i o n s
of Khines and Sound West's accountant, A1 Hawley. When
respondent went to the Sound West store in early June,
R h i n e s was t o t a l l y n o n c o m m i t t a l . He d i d not t e l l respondent
a t t h a t t i m e he d i d n o t h a v e a j o b . I n s t e a d , Rhines r e f e r r e d
r e s p o n d e n t t o Bawley, who t e s t i f i e d t h a t h e remembered t h a t
t h e c o n v e r s a t i o n t o o k p l a c e b u t c o u l d n o t remember what w a s
said. Respondent's uncontradicted testimony is t-hat he
a s k e d Hawley a b o u t a s t - a r t i n g d a t e and Hawley a s k e d him t o
return later.
The above f a c t s amply s u p p o r t the District Court's
c o n c l u s i o n t h a t a c o n t r a c t was e n t e r e d i n t o b e t w e e n r e s p o n -
d e n t and m i n e s .
Appellants cont-end in their second issue that the
District Court e r r e d by applying the statutory provisions
found i n T i t l e 39, Chapter 3, P a r t 2, of t h e Mont-ana Code
Annotated. Appellants' c o n t e n t i o n is w e l l - taken.
In sect.ion 39-3-201, MCA, "employ," "employee,"
" e m p l o y e r " and " w a g e s " a r e d e f i n e d f o r t h i s p a r t . :
" ( 2 ) 'Employ' means p e r m i t o r s u f f e r t o work.
" ( 3 ) ' E m p l o y e e ' i n c l u d e s a n y p e r s o n who w o r k s
f o r another f o r hire.
" ( 4 ) 'Employer' includes any i n d i v i d u a l ,
partnership, association, corporation,
b u s i n e s s t r u s t , l e g a l r e s p r e s e n t a t i v e , o r any
o r g a n i z e d g r o u p of p e r s o n s a c t i n g d i r e c t l y or
i n d i r e c t l y i n t-he i n t e r e s t o f a n e m p l o y e r i n
r e l a t i o n to an employee b u t s h a l l n o t i n c l u d e
t h e United S t a t e s .
"(5) ' W a g e s ' i n c l u d e s a n y money d u e a n
employee from t h e employer o r employers,
w h e t h e r t o b e p a i d by t h e h o u r , d a y , week,
s e m i m o n t h l y , m o n t h l y , o r y e a r l y and s h a l l
include bonus, piecework, t-ips, and
y r a t u i t - i e s of any k i n d . " (Emphasis added. )
Respondent w a s n o t a n employee w i t h i n t h e meaning o f
the statutes. He n e v e r a c t u a l l y p e r f o r m e d work f o r Sound
West.
Further, t.he g e n e r a l provision of sect i o n 39-3-
,
204 (1) MCA, p r o v i d e s :
"Every employer o f l a b o r i n t h e s t a t e of
Montana s h a l l p a y t o e a c h e m p l o y e e t h e wages
e a r n e d by s u c h e m p l o y e e .. . and no p e r s o n
..
f o r whom l a b o r h a s b e e n p e r f o r m e d may wit-h-
L
h o l d f r o m a n y e m-p l o- e e a n y wages e a r n e d o r
y
u n p a i d f o r a - l o n g e r p e r i o d t.han 1 0 b u s i n e s s
d a y s a f t e r t h e same a r e d u e . . ."
Here, respondent. n e i t h e r earned, nor performed, any
w o r k f o r Sound West. Respondent, by d e f i n i t i o n , does not
come under t-he p r o t e c t i o n s of these sections, including
section 39-3-206, MCA, which permits the imposition of a
p e n a l t y and s e c t i o n 39-3-214, MCA, w h i c h a l l o w s t.he award o f
a r e a s o n a b l e a t t o r n e y f e e and c o s t s .
Further, respondent's position i s not. s u p p o r t - e d by
t h e p o l i c y u n d e r l y i n g t h e wage claim s t a t - u t e s . The O r e g o n
Supreme C o u r t h a s s t a t e d :
"The p o l i c y o f t - h e [wage c l a i m ] s t a t u t e i s t o
a i d an employe i n t h e prompt c o l l e c t i o n o f
c o m p e n s a t i o n d u e him and t o d i s c o u r a g e a n
employer from u s i n g a p o s i t i o n o f economic
s u p e r i o r i t y as a l e v e r t o d i s s u a d e a n e m p l o y e
from p r o m p t l y c o l l e c t i n g h i s a g r e e d upon
compensation. .. " S t a t e ex rel. Nilsen v.
Oregon S t a t e Motor Assoc. ( 1 9 6 7 ) , 248 O r .
1 3 3 , 432 P.2d 5 1 2 , 515.
The District Court erred, therefore, by imposing a
$1,000 penalty under section 39-3-206, MCA, and awarding
a t t o r n e y f e e s a n d c o s t s u n d e r s e c t i o n 39-3-214, MCA.
A redetermination of damages must be made by the
District Court. In redetermining damages, the District
Court should be guided by the general rule for damages
r e s u l t i n g from a b r e a c h o f c o n t r a c t . T h i s g e n e r a l r u l e is
found i n s e c t i o n 27-1-311, MCA, which p r o v i d e s :
"For t h e b r e a c h o f a n o b l i g a t i o n a r i s i n g from
c o n t r a c t , t.he m e a s u r e o f d a m a g e s , e x c e p t when
o t h e r w i s e e x p r e s s l y provided by t h i s code, i s
t h e amount w h i c h w i l l c o m p e n s a t e t h e p a r t y
a g g r i e v e d f o r a l l t h e d e t - r i m e n t w h i c h was
p r o x i m a t e i y c a u s e d t h e r e b y or i n t.he o r d i n a r y
c o u r s e o f t h i n g s would b e l i k e l y t o r e s u l t
therefrom. Damages w h i c h a r e n o t c l e a r l y
a s c e r t a i n a b l e i n b o t h t h e i r n a t u r e and o r i g i n
cannot be recovered for a breach of
contract ."
In construing the above section, this Court has
emphasized that its purpose is to compensate an a g g r i e v e d
party for the loss he has sustained, and that the
n o n b r e a c h i n g p a r t y s h o u l d r e c e i v e a sum w h i c h w i l l g i v e him
a n economic status identical t.o t - h a t w h i c h he would have
enjoyed had t h e c o n t r a c t been performed. Wyatt v. School
District No. 104, F e r g u s County (1966), 1 4 8 Mont. 83, 89,
417 P.2d 221, 224; and see also, Laas v. Montana St-ate
Highway Commission ( 1 9 7 1 ) , 1 5 7 Mont.. 1 2 1 , 483 P.2d 699; and
W h i t n e y v. B a i l s ( 1 9 7 7 ) , 1 7 2 Mont. 121, 560 P.2d 1344. We
a c k n o w l e d g e d i n Wyatt. t h a t t h e m e a s u r e o f d a m a g e s f o r b r e a c h
of a n employment c o n t r a c t b y a n e m p l o y e r i s p r i m a f a c i e t-he
sum stipulated t.o b e paid for the services. More impor-
tantly, however, we also noted t h a t ot-her expenses, such a s
those incurred while seeking alt.ernative employment., may
a l s o be a l l o w a b l e i f s u c h a c t i v i t y i s c o n s i d e r e d t.he n a t u r a l
c o n s e q u e n c e o f t.he b r e a c h . Wyat-t, 417 P. 2d a t 224-225.
Appellants' last cont.ention is that the District
C o u r t e r r e d by h o l d i n g R h i n e s p e r s o n a l l y l i a b l e f o r r e s p o n -
d e n t ' s damages. The D i s t . r i c t C o u r t c o n c l u d e d a s a m a t t e r o f
l a w t h a t " J i m R h i n e s as t h e p r e s i d e n t a n d m a n a g e r o f Sound
West, Inc., did offer employment t o Gary Como f o r an ac-
c o u n t i n g p o s i t i o n w i t h e x p r e s s t.erms." (Conclusion of Law
No. 2.) The D i s t r i c t C o u r t t.hen w e n t o n t o c o n c l u d e t h a t
Jim Rhines - Sound
and West, Inc., breached the employment
c o n t r a c t and t h a t b o t h R h i n e s and Sound West w e r e l i a b l e f o r
t h e damages a r i s i n g o u t o f t h i s b r e a c h .
This Court has recognized the general rule that an
a g e n t is n o t p e r s o n a l l y l i a b l e on a c o n t r a c t e n t e r e d i n t o by
him on b e h a l f o f h i s p r i n c i p a l i f it a p p e a r s , in fact, that.
he disclosed the identity of his principal and made the
e n g a g e m e n t f o r him. F a r r v . S t e i n ( 1 9 1 8 ) , 54 Mont.. 529, 1 7 2
P. 135; Budget I n s . & Finance v. Leight.y ( 1 9 8 0 ) , Mont.
, 607 P.2d 1125, 37 S t . R e p . 411. In Farr, t - h i s Court.
also recognized that the existence of the agency must be
disclosed i n a p p r o p r i a t e terms, including the name o f the
principal f o r whom the a g e n t is a c t i n g . Farr, 1 7 2 P. at
136. Moreover, merely because the agent, in making the
contract for his principal, u s e s t h e t r a d e name u n d e r w h i c h
his principal transacts business is not of itself a
sufficient i d e n t i f i c a t i o n of the principal t o protect the
agent from liability. Myers-Leiber Sign Co. v. Weirich
This general rule of agency also applies to the
corporate setting:
"'The r u l e t h a t where an a g e n t e n t e r s i n t o a
c o n t r a c t i n h i s own name f o r a n u n d i s c l o s e d
principal, the other party to the contract
may h o l d t h e a g e n t p e r s o n a l l y l i a b l e , a p p l i e s
equally w e l l t o corporate o f f i c e r s o r agents.
It h a s been h e l d t h a t t h e managing o f f i c e r o f
a c o r p o r a t i o n , even though a c t i n g f o r t h e
company, becomes l i a b l e a s a p r i n c i p a l w h e r e
he d e a l s w i t h one i g n o r a n t o f t h e company's
e x i s t e n c e and o f h i s r e l a t i o n t o i t , and
f a i l s t o inform t h e l a t t e r of t h e f a c t s . ' 3
F l e t c h e r ' s C y c l o p e d i a on C o r p o r a t i o n s , S1120,
p. 762 ( 1 9 6 5 ) ." McCluskey Commissary, I n c .
v. S u l l i v a n ( 1 9 7 4 ) , 96 I d a h o 9 1 , 524 P.2d
1063, 1065.
Here, t h e record does n o t i n d i c a t e that. Rhines t o l d
respondent h e would be working for Sound West, Inc. In
f a c t , t h i s l a w s u i t . was i n i t i a t e d b y r e s p o n d e n t a g a i n s t " J i m
Rhines, d/b/a ( d o i n g b u s i n e s s a s ) Sound West." While the
a g e n c y was d i s c l o s e d d u r i n g t h e c o u r s e o f this litigation,
the disclosure of the principal after the contract is
e x e c u t e d w i l l n o t r e l i e v e t h e agent. from l i a b i l i t y . Myers-
L e i b e r S i g n Co., s u p r a , 410 P.2d a t 493.
In the absence of a showing by appellant-s that
respondent u n d e r s t o o d R h i n e s was a c t i n g a s a n a g e n t f o r t h e
corporation, Sound West, Inc., and not as an individual
d o i n g b u s i n e s s as Sound West, i t c a n n o t be s a i d t-he D i s t r i c t
Court. erred by holding Rhines personally liable on the
contract.
W therefore affirm the
e Dist.rict Court's conclusion
that. appellants breached an employment contract with
respondent. We remand, however, for a redetermination of
damages i n a c c o r d a n c e w i t h t h i s o p i n i o n .
W e concur :
Chief J u s t i c e
I would a f f i r m t h e D i s t r i c t