No. 8 6 - 5 7 8
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
HUGH W. FRAME and AMERICAN ASPHALT,
INC., a Montana corporation,
Plaintiffs and Respondent,
-VS-
DAVID E. FRAME and MULLAN PROPERTIES,
a Montana general partnership,
Defendants and Appellants.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable James B. Wheelis, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Garlington, Lohn & Robinson; 'Gary Chumrau & Clay D.
Creps, Missoula, Montana
For Respondents:
Snavely & Phillips; Robert J. Phillips, Missoula,
Montana
Submitted on Briefs: April 23, 1 9 8 7
Decided: July 21, 1 9 8 7
;HIL 2 1j-$37
Filed:
Clerk
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
Appellants David Frame and Mullan properties appeal an
order of the Fourth Judicial District Court, Missoula County,
granting an injunction to respondents Hugh Frame and American
Asphalt, Inc. pending suit on their action for partition of
real property owned by Mullan Properties.
The single issue raised on appeal is whether the
District Court erred in granting an injunction prohibiting
termination of respondent's lease pending partition of Mullan
Properties' real property.
Plaintiffs/respondents Hugh W. Frame (Hugh) and American
Asphalt, Inc. are involved in a sand and gravel and asphalt
paving business in western Montana. Defendant/appellant
David Frame (David) is a resident of Washington state.
Defendant/appellant Mullan Properties is a Montana general
partnership between Hugh and David. David has a two-thirds
controlling interest in the partnership.
A brief history of this partnership is necessary. In
September, 1981, there were three equal partners in Mullan
Properties: David, Hugh and Arnold Mohl. These three men
were also the principal shareholders of American Companies,
Inc., the parent corporation of American Asphalt, Inc.,
American Line Builders and American Excavating. When
American Asphalt needed a new gravel source in the Missoula
area, the three men were advised to form a partnership which
could purchase the real estate and lease it to American
Asphalt. The resulting partnership was Mullan Properties
which had, as its purpose, the acquisition of real estate
that would constitute a long term gravel source for American
Asphalt. As was intended, the partnership acquired, by
contract for deed, approximately 100 acres west of Missoula
for a source of gravel. The property was purchased September
18, 1981. On September 30, 1981, the property was leased to
American Asphalt.
The written lease agreement provided for a term of one
year from the date of execution and granted American Asphalt
the option to extend the term of the lease for four periods
of one year each. American Asphalt exercised its option in
each of the four succeeding years. The lease, by its terms,
was to terminate on September 30, 1986.
In January, 1986, the three principals of American
Companies decided to split up their operations. As a result
of this split, David took as his own business American Line
Builders, Inc., Arnold Mohl took American Excavating and Hugh
took American Asphalt. There was no action to dissolve the
Mullan Properties partnership. However, at that time and
unbeknownst to Hugh, Arnold Mohl agreed to convey Mohl's
partnership interest to David, giving David a two-thirds
interest in Mullan Properties. Hugh received no notice of
this transaction, though it involved amendment of the
original partnership agreement. Hugh learned of the
transaction in June 1986 when David's attorney wrote Hugh's
attorney that there had been a transfer of interest from
Arnold to David and that David, as owner of a two-thirds
interest in Mullan Properties, did not intend to renew
American Asphalt's gravel lease.
Because American Asphalt depended on the Mullan
Properties gravel pit, had no other source for gravel and had
entered roadwork contracts assuming the source would
continue, American Asphalt and Hugh Frame sued for partition
of the gravel property and for an injunction preventing
termination of the lease until partition could be had. The
District Court issued a preliminary injunction, with
subsequent modifications, restraining David and Mullan
Properties from removing Hugh and his business from the
portion of the gravel property used by Hugh under the terms
of the lease. The District Court explained that the
partition action would be ineffective if an injunction was
not imposed to protect the property for an equitable
division. It also ruled that Hugh had no adequate remedy at
law, explaining that the potential for damage to his company
was incalculable and arguably compensable while David would
suffer little harm since a condition of the injunction was
continuation of the lease payments.
One of the more significant conclusions drawn by the
District Court was that it need not make a determination of
ownership of title, as there was no dispute regarding
ownership. The court explained that the parties conceded
Hugh owned a one-third interest while David owned a
two-thirds interest in Mullan Properties. This concession is
central to the conclusion we draw in this case.
David argues that an injunction is not available as a
remedy when litigation involves title to, or possession or
use of real property. Davis v. Burton (1952), 126 Mont. 137,
246 P.2d 236. David asserts that the original action brought
by Hugh was for an injunction and that the District Court.
tacitly and wrongfully litigated the right to possession of
the real property under the guise of granting an injunction.
David argues the law stated in Jeppeson v. State Department
of State Lands (1983), 667 P.2d 428, 431, 40 St.Rep. 1 2 7 2 ,
1275 applies here:
Even though an injunction in this case would not
automatically vest title to the leasehold interest
in the appellant, it would have the practical
effect of doing so. And, where the practical
effect of an injunction is to oust one party from
possession of a real property interest and vest it
in another, the remedy is still not available.
(Citations omitted.)
David explains that, but for the injunction, the lease term
would have expired and Hugh would be off the property.
Therefore, the injunction effectively litigated the right of
possession of the partnership's property, in violation of "an
old rule in Montana that title to, or possession of, a real
estate interest may not be litigated in a suit for
injunction." - at 430, citing Davis v. Burton, 126 Mont.
Id.
at 139, 246 P.2d at 237.
We accept David's argument insofar as it applies to
title for real property. However, title to the real property
owned by the partnership is not at issue here. As the
District Court explained, there is no dispute between the
parties as to ownership. The parties agree that Hugh
maintains a one-third ownership in the real property and that
David maintains a two-thirds interest. This concession
renders inapplicable the rule established in Jeppeson and
Davis, supra, because those cases involve ousting
leaseholders from possessory interests where they have no
right or title. The leaseholder in our case is a partner
with right to title in the property.
David's argument focuses all attention on the language
in the complaint requesting an injunction, though he tacitly
concedes that the complaint also requested partition. The
complaint read:
This is a complaint for partition of real property
under Chapter 29 of Title 70 of the Montana Codes
Annotated as well as an action for an injunction,
both permanent and pending litigation.
Partition is an equitable action in which the court has
great flexibility in fashioning appropriate relief for the
parties. Cumrnings v. Anderson (Wash. App. 1 9 7 9 ) , 590 P.2d
1297; Chesmore v. Chesmore (Okla. 1971), 484 ~ . 2 d516; ~ e ~ i k
v. Cargill (Okla. 1971), 485 P.2d 229; 68 C.J.S. S 62(b)
(1950). The fundamental objective in a partition action is
to divide the property so as to be fair and equitable and
confer no unfair advantage on any of the cotenants.
Blonquist v. Frandsen (Utah 19841, 694 P.2d 595.
An injunction is an equitable remedy. Section
27-19-101, MCA. Preliminary injunctive relief is proper when
it appears that "the commission or continuance of some act
during litigation" will produce irreparable injury to the
applicant. Section 27-19-201(2), MCA. A court of equity
may, in a partition proceeding, grant an injunction to
preserve the property pending the proceeding. Rainey v. H.
C. Frick Coke Co. (W.D. Penn. 1896), 73 F. 389.
... if mining were allowed the court would be
confronted by a shifting state of facts and values,
which, in its confused and confusing nature, could
afford no stable ground on which to base an
intelligent, equitable and just decree.
The prompt use of its plenary powers to prevent
these mischiefs at the outset of the case, rather
than to cure them at the close, is a course which
better commends itself to the sound discretion of a
court of chancery. By preserving the status in
quo--one of the most beneficial branches of equity
jurisdiction--we avoid confusion and all danger of
injustice, and insure a speedy, plain, and
practical method of arriving at a proper decree.
- at 392.
Id.
In addition to the reasons given by the District Court
to sustain the injunction, it is plain that Hugh as a partner
has an equal right with David to possess the partnership
property for partnership purposes. Section 35-10-502, MCA.
One of the partnership purposes in executing the lease to
American Asphalt, Inc., was to provide monies sufficient to
enable the partnership to make payments to the seller of the
gravel property under the contract for deed. By the
injunction, the District Court preserved the real property
for the partnership by ensuring that the underlying contract
for deed should not be terminated for default in payments.
The District Court found that Hugh and American Asphalt
had no adequate remedies at law pending outcome of the action
for partition. In the court's opinion, an injunction was
necessary to preserve and protect the status quo. It found
that money damages would not be sufficient to replenish what
could be lost if injunctive relief were not granted. The
District Court also found no evidence of harm to David or
Mullan Properties in allowing Hugh and American Asphalt to
maintain continued possession under the terms of the
then-expiring lease.
The granting of a preliminary injunction is in the
discretion of the trial court, and we will not interfere with
the exercise of this discretion unless manifest abuse is
shown. Smith v. Ravalli County Board of Health (Mont. 1984),
679 P.2d 1249, 41 St-Rep. 716. We find no manifest abuse of
discretion in the District Court's ruling.
Affirmed.
We Concur:
A
/
Justices