NO. 84-143
I N T E SUPREME C U T O F T E STATE O M N A A
H O R H F OTN
1984
GARY A. GRAY and DIANA M. GRAY,
husband and w i f e ,
P l a i n t i f f s and A p p e l l a n t s ,
v.
CITY O BILLINGS, e t a l . ,
F
Defendants and Respondents.
Appeal from: D i s t r i c t Court o f t h e T h i r t e e n t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e County o f Yellowstone
Honorable Robert Wilson, Judge p r e s i d i n g .
Counsel o f Record:
For A p p e l l a n t s :
J o n e s , J o n e s & Work, B i l l i n g s , Montana
For Respondents :
P e t e r s o n , S c h o f i e l d & L e c k i e , B i l l i n g s , Montana
Submitted on b r i e f s : J u l y 1 0 , 1984
Decided: October 15, 1 9 8 4
Mr. Chief Justice Frank I. Haswell delivered the Opinion of
the Court.
This is an appeal from a jud-gment entered by the Dis-
trict Court. of the Thirteenth Judicial District, Yellowstone
County.
The plaintiffs, Gary and Diana Gray, challenge (1) the
validity of a subdivision improvement agreement entered into
between the Grays and defendant, City of Billings, and (2)
the legality of a special improvement district formed under
the provisions of the agreement and accompanying waiver. The
trial court found for the City, and the Grays appeal. We
vacate the judgment and remand for a jury trial of the plain-
tiffs' breach of contra-ctclaim.
In 1977, the Grays purchased approximately seven acres
of surplus state lands located in the City of Billings,
paying a purchase price of $47,000 plus $15,000 in delinquent
property assessments. When purchased, the acreage was plat-
ted for forty-four mobile home lots. After purchase, the
Grays, with the aid of an engineering firm, planned and
applied for a replatting that would accommodate fifty-four
mobile home lots. On November 4, 1977, a.fter public hearing
and a series of negotiations and reviews, the Grays signed a
subdivision improvement agreement and waiver. Five months
later, the City accepted the agreement and a-pproved the
preliminary plat.
The City's approval included eight conditions, six to
be met by the Grays, one--the vacation of a previously plat-
ted street--to be accomplished by the City and, lastly, the
creation of a special improvement district for the completion
of a sewer system. The sewer district was created. The
City, by resolution, abandoned the street, as agreed. The
Grays complied with five of the enumerated conditions. The
sixth is at issue in the present case.
The agreement entered into by the parties provides that
a "crossing" be installed over the city-county drain. The
subdivision improvement agreement provided that all required
improvements be constructed within eighteen months after
filing of the final plat. The Grays, as developers, had the
choice of personally funding the improvements or of permit-
ting the creation of a special improvement district to fi-
nance construction. The waiver, required by the City as a
condition of approval of the Grays' plat, prclvided, among
other things, that the Grays waived all right to protest the
formation of a special. improvement district to construct the
drain crossing. Upon the Grays' failure to construct the
crossing, the City passed a resolution creating Special
Improvement District No. 1155 (SID 1155) for the purpose of
constructing the crossing. The project costs were estimated
at $114,000. All costs were assessed to the Grays' subdivi-
sion. The Grays then brought suit, seeking to enjoin the
City from proceeding with the crossing project until their
contract claims, arising out of the execution and construc-
tion of the agreement and waiver, could be resolved.
The Grays raise the following issues on appeal:
1. Whether it was error for the District Court to deny
them a trial by jury where questions of fact were raised in
their claim for breach of contract.
2. Whether the agreement and waiver are rendered
voidable by the City's misrepresentations, undue influence
and economic duress.
3. Whether the agreement and waiver are unconscionable
and thus unenforceable.
4. Whether Special Improvement District No. 1155 was
lawfully created.
5. Whether their promise to construct a crossing is
excused by impossibility of performance.
We hold that it was error to deny plaintiffs a jury
trial on their claims for breach of contract. We decline to
rule on the remaining issues until jury determination of the
existence of a contract between the parties.
I
Breach of contract is traditionally a legal claim. The
Grays made timely demand for trial by jury. The Grays allege
that the parties either failed to attach like meanings to the
word "crossing" or, alt-ernatively, that the crossing to be
constructed under SID 1155 is not comparable to the one
contemplated by the parties when the agreement and waiver
were executed.
Section 28-3-301, MCA, provides that "a contract must
be so interpreted as to give effect to the mutual intention
of the parties as it existed at the time of contracting."
Where the question of intent depends upon construction of an
unambiguous contract, the question is one for the court
alone. Greening v. Gazette Printing Co. (1939), 108 Mont.
158, 166, 88 P.2d 862, 864. Where, however, a contract term
is ambiguous or obscure or uncertain of meaning, interpreta-
tion of the language, and thus a determination of the real
intention of the parties, is a matter to be left to the
consideration of the jury. Rankin v. Fidelity Trust Co.
(1903), 189 U.S. 242, 253, 23 S.Ct. 553, 47 L.Ed. 792; -
ac-
cord, Storrusten v. Harrison (1976), 169 Mont. 525, 533, 549
P.2d 464, 468-469; McNussen v. Graybeal (1965), 146 Mont.
173, 186, 405 P.2d 447, 454. The bare term "crossing" is
potential.ly ambiguous and patently uncertain on its face. No
elaboration or specification accompany the agreement or
waiver nor, apparently, was a design adopted or agreed upon
by the parties prior to execution of the agreement and waiv-
er. "However broad may be the terms of: a contract, i t ex-
.
tends only to those things concerning which it appears that
the parties intended to contract". Section 28-3-305, MCA;
Custer v. Missoula Public Service Co. (1931), 91 Mont. 136,
143, 6 P.2d 131, 134.
The Grays, by seekinq subdivision approval, did not
bind themselves to perform every act required for the approv-
al. They were free to abandon the plan to replat for fifty-
four Lots and to divide and sell their land under the
existing forty-four lot plat. Their decision rested on their
understanding of the comparative costs and benefits of each
plan. The appraisal of costs to be attributed to the fifty-
four lot plat rested, in turn, on the terms--and the Gra.ysl
understanding of the terms--of the parties' agreement. In
the agreement entered into by the Grays and the City, the
Grays agreed to provide various improvements, including the
crossing, in exchange for approval of the fifty-four I-ot
plat. The Grays' waiver of right to protest guaranteed
performance of their promise.
The agreement and waiver must be construed in the same
manner as any contract. Section 28-3-101, MCA. The Grays
challenge the City's interpretation of a basic term of that
contract. No contract exists where an essential term is
understood by one party to mean one thing and by the other
party to mean a d-ifferent thing. Raffles v. Wichelhaus (the
two ships "Peerless") (1864), 2 Hurl. & C. 906; Price v.
Stipek (1909), 39 Mont. 426, 104 P. 195. A claim of differ-
ing uses of the word "crossing" puts the existence, as well
as meaning, of the present contract at issue.
The cause is remanded for jury determination of whether
the parties attached like meanings to the term "crossing" so
that a contract for its construction exists and, if a con-
tract exists, for a d.etermination of the particular crossing
intended by the parties when they entered the contract.
The City, relying on section 28-2-503, MCA, argues that
the Grays, by accepting the benefits of the agreement, are
bound by the terms of the agreement. Section 28-2-503, MCA,
codifies the common law rules of ratification, performance as
acceptance of an offer and quasi-contractual obligation:
"Implied acceptance. (1) Performance of
the conditions of a proposal or the
acceptance of the consideration offered
with a proposal is an acceptance of the
proposal.
" (2) A voluntary acceptance of the bene-
fit of a transaction is equivalent to a
consent to all the obligations arising
from it, so far as the facts are known or
ought to be known to the person
accepting."
The section is not applicable where the terms of a
valid contract govern the transaction. Where a contract
exists, the duty of the court is to enforce it. Maxted v.
Barrett (Mont. 1982), 643 P.2d 1161, 1164, 39 St.Rep. 780.
The Gra.ys challenge the existence or, alternatively, the
terms of a contract for the crossing. If the agreement and
waiver fail or fail to provide for the crossing envisioned by
the City, the City may not proceed to enforce the contract
through formation of SID 1155. The City's remedy lies, then,
in the section 28-2-503, MCA , provisions for
quasi-contractual, restitutionary relief. "The theory of
unjust enrichment and restitution is brought into play when
no contract between the parties exists and the court implies
a contract in law." Maxted, supra. See, Palmer, - -
Law of
Restitution (1978).
The cause is remanded for factual determination of the
meaning or meanings intended in the word "crossing." The
Grays are entitled to have the issue tried by jury.
We have, in the past, purported to permit a court of
equity to rule on all questions in a case. Butler Brothers
Dev. Co. v. Butler (1941), 111 Mont. 329, 108 P.2d 1041.
Defendants rely on an overly broad statement in Butler to the
effect that "a court of equity once having jurisdiction of a
suit will retain jurisdiction of it for all purposes and
dispose of all questions in the case even though this in-
volves a determination of legal issues." Butler, 111 Mont.
at 343, 108 P.2d at 1048. We have never held that a court
sitting in equity may try those issues of fact raised by
plaintiff in a legal cause of action. See, Butler, supra
(denying jury trial of the legal issues raised in an answer
and cross-claim); Thisted v. Country Club Tower Corporation
(1965), 146 Mont. 87, 405 P.2d 432; Downs v. Smyk (Mont.
1982), 651 P.2d 1238, 39 St.Rep. 1786 (trying purely equita-
ble actions without jury); Little v. Mackel (1968), 151 Ilont.
421, 443 P.2d. 891 (denying jury trial of a fraud defense to
an action for specific performance); Citizens State Rank v.
Duss (1969), 154 Mont. 18, 459 P.2d 696 (denying jury trial
of a permissive counterclaim to a foreclosure action);
Montana Coalition for Stream Access, Inc. v. Hildreth (Mont.
1984) , - P.2d - 41 St.Rep.
, 1192 (denying defendant a
jury trial in an action for injunction).
To the extent that Butler and its progeny have been
deny plaintiff a right trial his
legal claims, the cases are overruled. This Court, in -
But-
- recognized the distinction between those legal issues
ler,
raised by plaintiff and those raised in defense or by way of
a cross or counterclaim. Butler, 111 Mont. at 343-344, 108
P.2d at 1048-1049. The Grays, by seeking to enjoin formation
of SID 1155, did not abandon their right to have a jury try
their legal claim for breach of contract. Dairy Queen v.
Wood (1962), 369 U.S. 469, 82 S.Ct.. 894, 8 L.Ed.2d 44. The
Grays were free to plead in the alternative--seeking rescis-
sion of an avoidable contract and claiming damages under the
same contract. Rule 8 (e)(2), M.R.Civ.P. The pleading of
equitable issues and issues involving only questions of law
did not destroy the rights granted plaintiffs by our Consti-
tution and Rules of Civil Procedure. Art. 11, Sec. 26, 1972
Mont. Const. ; Rule 38 (a), M.R.Civ.P. " [W]here equitable and
legal claims are joined in the same action, there is a right
to jury trial on the legal claims which must not be infringed
either by trying the legal issues as incidental to equitable
ones or by a court trial of a common issue between the
cl-aims." Ross v. Bernhard (1970), 396 U.S. 531, 537-538, 90
S.Ct. 733, 24 L.Ed.2d 729. "[Tlhe '1ega.l' nature of an issue
is determined by considering, first, the pre-merger custom
with reference to such questions; second, the remedy sought;
and third, the practical abilities and limitations of ju-
ries." ROSS, 396 U.S. at 538, n. 10.
Recent decisions of this Court and of the United States
Supreme Court have moved toward greater protection of the
parties' right to jury trial on any factual issues raised in
either a court of law or court of equit-y. In State ex rel.
Industrial Indem. Co. v. District Court (1975), 169 Mont. 10,
544 P.2d 438, we affirmed relator's right to jury determina-
tion of the existence of the oral contract before the alleged
contract could be construed in a declaratory judgment action.
The United States Supreme Court has held that the Seventh
Amendment protects defendants' right to jury trial of a legal
counterclaim. Beacon Theatres, Inc. v. Westover (1959), 359
U.S. 500, 79 S.Ct. 948, 3 L.Ed.2d 988.
The modern merger of law and equity courts and the
liberal joinder provisions of our Rules of Civil Procedure
force reevaluation of the traditional justification for
permitting an equity court to decide legal issues. We hold
that, upon timely demand, all parties are entitled to have
their legal claims and counterclaims tried by jury. The rule
is consistent with our prior holdings if not entirely consis-
tent with our chosen manner of expression. We foresee no
hardship for the courts below. The same rules that permit us
liberal joinder also permit a severance of claims and issues.
We vacate the judgment and remand for a new trial in
accordance with the views set forth in this opinion.
~&PP,%Lc*J,-~-P
Chief Justice
We c o n c u r :