No. 86-457
I N THE SUPREME COURT OF THE S T A T E OF MONTANA
1987
CHARLES MONTGOMERY,
P l a i n t i f f and R e s p o n d e n t ,
-vs-
DARREL L . HUNT and ANTHONY E . BROWN,
D e f e n d a n t s and A p p e l l a n t s .
A P P E A L FROM: D i s t r i c t C o u r t of t h e N i n e 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 C o u n t y of L i n c o l n ,
T h e H o n o r a b l e A r n o l d O l s e n , Judge p r e s i d i n g .
COUNSEL O F RECORD:
For A p p e l l a n t :
P a t r i c k F. Flaherty, G r e a t Falls, Montana
For R e s p o n d e n t :
D o n a l d L. Shaffer, L i b b y , M o n t a n a
S u b m i t t e d on B r i e f s : May 7 , 1987
Decided: June 25, 1 9 8 7
Filed:
Mr. Justice R.C. McDonough delivered the Opinion of the
Court.
Darrel L. Hunt and Anthony E. Brown ,
defendants/appellants, appeal the judgment of the Nineteenth
Judicial District Court awarding judgment to the
plaintiff/respondent Charles A. Montgomery in the amount of
$5,000 and denying Hunt and Brown's motion to discharge or in
the alternative quash the writ of attachment and dismissing
the counter claim of Hunt and Brown. The issue presented to
this Court by Hunt and Brown is whether the District Court
erred in issuing the writ of attachment. We affirm.
Hunt and Brown borrowed $5,000 from Montgomery and
executed and delivered a promissory note as evidence of the
debt. The note was due December 27, 1985 and was not paid on
the due date. This action was commenced upon the note on
January 3, 1986 and Montgomery moved the court for a writ of
attachment filing an affidavit of attachment, and an
attachment bond. Hearing was held on the same date by the
court and Montgomery was sworn and testified. The court
thereupon on the same date, made written findings,
conclusions and order for Writ of Attachment to issue to
attach two all-terrain vehicles as requested in the affidavit
of attachment. Hunt and Brown filed a counter claim February
10, 1986, alleging damages in a sum in excess of $5,000
against Montgomery for breach of fiduciary duty, constructive
fraud, creditor overreaching, wrongful attachment, and asked
that their judgment be offset against the balance owed on the
$5,000 note. In addition to the answer and counter claim,
Hunt and Brown filed on the same date a motion to discharge
or in the alternative to quash the writ of attachment.
A bench trial was had in the cause on June 30, 1986, and
on July 22, 1986, the District Court handed down its findings
which granted judgment to the plaintiff plus interest and
costs of action, which judgment has now been paid, finding
that attachment was proper and dismissing the defendants'
counter claim for lack of evidence.
Hunt and Brown in their brief allege the issues are:
1. Did the District Court err in issuing a writ of
attachment when the note was secured by an alleged mortgage
on real property?
2. Did the District Court err in ordering the issuance
of the writ of attachment when the affidavit of attachment
failed to show facts that the contract was not secured by any
mortgage or lien upon real property and failed to state the
actual value of the property to be attached both as required
by § 27-18-202, MCA?
3. Whether attachment statutes are to be strictly
construed?
4. Did the District Court err in failing to return
judgment for Hunt and Brown on their counterclaim for damages
for wrongful attachment?
Hunt and Brown claim the following wording in the note
herein grants to Montgomery a real estate mortgage covering
lots 23, block 2, West Troy:
This note is given in connection with a certain
other note and mortgage executed by the undersigned
to secure a loan of $5,000 on 1. LOT 23 BLOCK 2
WEST TROY.
2. 1985 HONDA ATV 250 SE (Big Red).
3. 1985 HONDA ATV 250 SX
4. 1975 FORD 3/4 TON 4 x 4 ID. # TZGYR X20471 AS
SECURITY ON ABOVE CAPTION LOAN in the County of
LINCOLN in the State of Montana; . ..
Also described as collateral are two all terrain vehicles
which were the subject to the attachment. There was no other
note and mortgage as mentioned in the executed note. There
is grave question as to whether or not this wording
constitutes a hypothecation for real estate mortgage
purposes. However, the parties do not dispute a security
interest in the vehicles. The Uniform Commercial Code
governs insofar as the personal property is concerned which
states in B 30-9-501(4), MCA, as follows:
If the security agreement covers both real and
personal property the secured party may proceed
under this part as to the personal property or he
may proceed as to both the real and the personal
property in accordance with his rights and remedies
in respect of the real property in which case the
provisions of this part do not apply.
It appears that Montgomery did elect to proceed under the UCC
and under the UCC 5 30-9-503, MCA, Montgomery as the secured
party on the default had the right to take possession of the
collateral and the alleged erroneous issuance of the writ of
attachment to take possession of the collateral was harmless
error.
The same reasoning may be applied to the second error
assigned by Hunt and Brown in this appeal.
Hunt and Brown's third issue alleging that the
attachment statutes are to be strictly construed also is not
applicable to the facts here. As to the fourth issue which
is contained in the conclusion of the appellants' brief, did
the court err in failing to return judgment for Hunt and
Brown in their counterclaim for damages for wrongful
attachment?
Even assuming that the writ of attachment was improperly
obtained because the note was secured by a mortgage of real
property and for failure of the affidavit to state facts as
required in said S 27-18-202, MCA, and assuming that the
hearing on the issuance of the writ of attachment and the
sworn testimony of Montgomery did not cure the defects in the
affidavit and no further oral motions were made to amend the
affidavit of attachment as allowed by § 27-18-713, MCA, Hunt
and Brown's counterclaim must fail. This is not a
counterclaim and third party complaint on an attachment bond
as provided by § 27-18-204, MCA. The surety was originally
named as a third party defendant but was not served and later
was dropped as a party. Such action on the attachment bond,
cannot be brought in the attachment action but can only be
brought after "defendant recovers judgment" in the attachment
action or when "the court finally decides that the plaintiff
was not entitled to an attachment." See Yellowstone
Livestock Commission v. Dupuis (1958), 133 Mont. 454, 325
P.2d 691. The counterclaim is then premised upon the common
law notions of malicious prosecution or abuse of process,
which is a suit in tort. To recover on such a suit, two
elements must be present and proved, malice and want of
probable cause.
The record is entirely devoid of any proof in support of
Hart and Brown's counterclaim relative to fiduciary
relationship between the parties or of any constructive fraud
or creditor overreaching on the part of Montgomery, and in
fact the record does show that Montgomery did act in good
faith in bringing the action and attempting the attachment
and had probable cause. The court found the debt was owed to
Montgomery by Hunt and Brown; that Montgomery was told that
he could not have possession of the all-terrain vehicles when
he asked for them after the debt became due and unpaid; and
that plaintiff was informed by Hunt that Hunt and Brown were
going to sell such vehicles. This action on their part would
convert the tangible attachable property to cash which would
then be practically unreachable by Montgomery.
Hunt and Brown failed to prove any malice (actual or
legal) on the part of Montgomery. Proof of malice (actual or
legal) and want of probable cause are two essential elements
of an action for wrongful attachment in tort. Attachment and
Garnishment, § 596, 6 Arn.Jr.2nd. Brown v. Guaranty Estates
Corporation, (N.Car. 1954), 80 S.E.2d 645, Ray v. City Bank
and Trust Co. (DC Ohio 1973), 358 F.Supp 630. The ~istrict
Court is affirmed.
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