No. 87-530
I N THE SUPREME COURT OF THE STATE O F MONTANA
1988
POULSEN'S, INC., a M o n t a n a corp.,
P l a i n t i f f and R e s p o n d e n t ,
-vs-
WILLIAM J. WOOD,
D e f e n d a n t and A p p e l l a n t .
APPEAL FROM: D i s t r i c t C o u r t of t h e E i g h 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 C a s c a d e ,
T h e H o n o r a b l e J o e l R o t h , Judge p r e s i d i n g .
COUNSEL O F RECORD:
For Appellant:
LaRue S m i t h , G r e a t F a l l s , Montana
For R e s p o n d e n t :
Cure, Borer & Davis; D e n n i s T i g h e , G r e a t Falls,
Montana
S u b m i t t e d on B r i e f s : May 1 2 , 1 9 8 8
Decided: June 2 1 , 1 9 8 8
Filed: !JUN 2 1 1988'
Mr. Justice L. C. Gulbrandson delivered the Opinion of the
Court.
This is an appeal from a judgment of the Eighth
Judicial District Court, Cascade County, granting plaintiff/
respondent Poulsen's, Inc. (Poulsen's) summary judgment
motion against defendant/appellant, William J. Wood (Wood)
for recovery of principal and interest due on a delinquent
promissory note and attorney's fees pursuant to the terms of
the note. The judgment is appealed from by Wood who filed a
motion for summary judgment on a counterclaim at the trial
court level alleging the note involved was usurious. We
affirm and remand for determination of reasonable attorney's
fees and costs on appeal.
Wood presented no issue for appeal on this case in his
brief required by Rule 23 (a)(2), M.R.App.P. Therefore, the
issue as presented by Poulsen's will be addressed by the
Court. This issue is as follows:
Whether the District Court erred in granting summary
judgment in favor of Poulsen's?
Poulsen's is engaged in the building supply business.
Prior to April 29, 1981, Wood purchased from Poulsen's
$6,085.48 worth of building materials. On April 3 0 , 1981,
Wood executed a promissory note, the first five paragraphs of
which are important in this case, stating the following:
For Value Received, the undersigned
promises to pay to the order of Poulson's
[sic] Inc., a corporation of Great Falls,
Montana, at its office in Great Falls,
Montana, in lawful money of the United
States, the principal sum of SIX THOUSAND
EIGHTY FIVE and 48/100 ($6,085.48) at the
times and in the manner as follows:
On or before the first day of
November 1, 1981, together with
interest thereon at the rate of
eighteen percent (18%) per annum
from the date hereof until paid,
which interest shall be due and
owing at the same time as the
principal hereof.
Any payments made hereunder shall
be credited first to interest at
the aforesaid rate with the
remaining balance to principal
reduction.
In case suit shall be brought for the
collection of any sum payable hereunder,
or if this note or any part thereof shall
be collected upon demand of an attorney,
the undersigned hereby agrees to pay all
costs of collection, including attorney
fees.
Anything herein contained to the contrary
notwithstanding, the undersigned does not
agree and shall not be obligated to pay
any amount which would render this
obligation usurious.
On March 30, 1987, Poulsen's filed a complaint against
Wood for recovery of the principal and interest due on the
note plus the costs of suit and attorney's fees. In response
to the complaint, Wood filed an answer and counterclaim for
usury. Wood admitted executing the note, that it was signed
on April 30, 1981, and that he was in default under the terms
of the note because he had failed to pay any of the principal
and interest due on the note by November 1, 1981.
However, Wood denied the amount due on the note in his
counterclaim because, he alleged, " [tlhe note ... is
usurious on its face in violation of Sections 31-1-106 and
31-1-107 MCA and the defendant is entitled to recover from
the plaintiff the penalty for usury provided by S 31-1-108,
.
MCA "
On May 7, 1987, pursuant to Rule 56, M.R.Civ.P., Wood
filed a motion for summary judgment on his counterclaim. In
his brief, Wood stated that the maximum allowed interest
provided by S 31-1-107(1), MCA, was 17% and therefore the
note was usurious. Attached to this memorandum was an
"affidavit on cross-claim [sic]" signed by LaRue Smith,
(Smith) counsel for Wood, stating:
Contract interest rates in Montana are
legally limited by the provisions of
Section 31-1-107 XCA to no more than 10%
or "4 percentage points in excess of the
discount rate on 90 day commercial paper
in effect at the federal reserve bank in
the ninth federal reserve district" on
the date of the contract. In this date
[sic] the controlling contract date is 29
April 1981. The Montana federal reserve
bank in Helena has advised the
undersigned that on this date the
publicly ublishedand established
discount rt
a: on 90 day commercial paper
was -
- 13%. ( ~ m p h a s iadded. )
s
Under this statute, therefore, Poulsen's could have
charged 17% on the note -- 13% plus the additional 4% in
excess of the discount rate on 90 day commercial paper. On
May 19, 1987, Poulsen's filed its motion for summary judgment
supported by an affidavit of Harold Poulsen, Vice-President
of Poulsen's. Harold Poulsen's affidavit stated that the
promissory note was not prepared by Poulsen's Inc. and that
it was Harold Poulsen's belief that the note was prepared by
Wood's attorney. Poulsen's pointed to a demand letter sent
by its attorney that calculated the maximum allowable
interest rate to be 17% and argued that this figure was based
on paragraph five of the promissory note that Wood was not
required "[tlo pay any amount which would render this
obligation usurious."
A hearing on the motions was held July 13, 1987 and the
court issued an order and memorandum decision on July 14,
1987. Prior to the hearing, Wood filed a motion to strike
the affidavit of Harold Poulsen on grounds it stated
irrelevant and immaterial issues involved in the case and
that the complaint and attached note were all the District
Court should consider. This motion was denied.
The District Court concluded that the note was not for
a loan of money but was evidence of the amount owed by Wood
for purchased materials. Therefore, the court found the
usury statutes did not apply. The court ordered that
Poulsen's was entitled to summary judgment for the principal
of $6,085.48 plus 17% interest, attorney's fees and costs.
Because entry of judgment setting the specific amount
due was not issued, premature notice of appeal was filed by
Wood on July 16, 1987. This Court issued an order on August
19, 1987, pursuant to Rule 22, M.R.App.P., dismissing the
appeal because a final judgment had not been entered. A
subsequent hearing was held and the District Court issued a
judgment, on September 28, 1987, granting Poulsen's
$14,547.86. This total amount reflected the principal amount
due on the note, $6,085.48, interest calculated at 17%,
$1,784.00 for attorney's fees, and $46.70 for costs.
Post-trial motions for a new hearing or in the
alternative to amend the judgment, pursuant to Rules 59 and
60, M.R.Civ.P., were filed by Wood on October 8, 1987. Wood
also attempted to file a Rule 12(b) ( 6 ) , M.R.Civ.P. motion to
dismiss on grounds that an "open account" or "retail
installment sale" was not pleaded by Poulsen's and if so, was
barred by the statute of limitations. On October 16, 1987,
the District Court denied Wood's post-trial motions as being
a "reargument of [Wood's] position at the earlier
hearing. . ." on summary judgment.
Wood's second notice of appeal was filed October 29,
1987. This document stated: "Notice is given that the
defendant appeals the judgments in the above entitled case
... " The only judgment filed in this case was the
September 28, 1987 judgment and it is assumed by this Court
that it is from this judgment that Wood appeals.
The standard of review on summary judgment has been
made clear by this Court.
On review, we will uphold the summary
judgment if there is no genuine issue of
material fact and the evidence shows the
moving party is entitled to judgment as a
matter of law. Sevalstad v. Glaus (Mont.
1987), 737 P.2d 1147, 1148, 44 St.Rep.
930, 932. ..
When the movant has met this initial
burden, the party opposing the motion
must supply evidence supporting the
existence of a genuine issue of fact.
[Citation omitted. 1 Rule 56(c),
M.R.Civ.P.
Vogele v. Estate of Schock (Mont. 1987), 745 P.2d 1138, 1141,
44 St.Rep. 1950, 1953.
We note that summary judgment motions were filed by
both parties based on their statement of the facts and
accompanying affidavits. Wood's initial argument is that
both parties were bound by the admissions in the pleadings
and, since the note was attached to the complaint and only
the amount due for principal and interest was denied, the
lower court erred in its findings that went beyond the issue
of the amounts due under the note. Rule 56 (c), M.R.Civ.P.
allows the court to render judgment "if the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law."
(Emphasis added.)
Poulsen's affidavit explains facts surrounding the
execution of the promissory note and is relevant to the issue
before the court. The affidavit aids the court in
determination of the intent involved in the signing of the
note. Intent is a necessary part of a usurious transaction.
There must be an intent that the lender is to take more than
the legal rate of interest for the sum loaned. Hanson v.
Bonner (1983), 202 Mont. 505, 512, 661 P.2d 421, 424; 45
Am.Jur.2d 129, Interest and Usury S 160.
Wood claims the District Court erred in determining an
"open account" existed. We hold this argument is
unmeritorious. The court merely stated Wood purchased
materials "on open account prior to April 29, 1981" from
Poulsen's. Evidence that supports this statement is present
in Poulsen's affidavit. No material issue of fact was
created because Wood never came forth with any contrary
evidence.
Wood also finds fault with statements by the District
Court that Wood "tendered" the note to Poulsen's and the note
"memorialized" the amount Wood owed. Again, these statements
are supported by Poulsen's affidavit and the pleadings and
Wood did not create a material issue of fact by the affidavit
of his attorney, or in his pl-eadings that merely deal-t with
the usurious interest claim.
Wood claims the District Court erred in finding: "on
February 20, 1987, Plaintiff's counsel mailed a demand letter
to Defendant referring to the note and making demand for the
principal and interest (calculated at 17%)." This finding
was based on a letter sent by counsel for Poulsen's and did
indeed calculate interest at 17%. The letter was attached to
Wood's motion for summary judgment and presented to the
District Court. Wood now claims on this appeal that the
appropriate interest rate should have been 94% because on
February 20, 1987, that was the maximum legal rate.
We disagree with Wood's contentions for two reasons.
First, we note that 5 31-1-107(2), MCA states: "a loan that
is not usurious when made is lawful for the duration of the
loan ... " Here, as is evident from Smith's affidavit, the
legal rate of interest would be 17% when the note was signed.
As this was not a usurious loan in 1981, it cannot now be
claimed that it became usurious when demand was made.
Secondly, paragraph five of the note clearly states
that "the undersigned does not agree and shall not be
obligated to pay any amount which would render this
obligation usurious." In any interpretation of a written
contract, the contract must be interpreted as a whole.
Section 28-3-202, MCA; Julian v. Montana State University
(Mont. 1987), 747 P.2d 196, 199, 44 St.Rep. 2046; Bender v.
Rookhuizen (Mont. 1984), 685 P.2d 343, 346-347, 41 St.Rep.
674. An ambiguity exists due to the two conflicting
statements as to which percentage of interest controls in
this case, and the District Court was proper in interpreting
the contract as it did.
Wood contends the District Court ignored a material
issue of fact in that the note is a novation "given on an
account stated" under § 28-1-1501, MCA. To some extent, Wood
is accurate as the definition of novation "is the
substitution of a new obligation for an existing one."
Poulsen's disputes this claim by arguing that the note was
for merchandise already purchased and therefore was not for
money loaned, as the court found, taking the claim out of the
usury definition of 5 31-1-101, MCA. We will not dismiss
this action as simplistically as Poulsen's suggests.
We hold, nonetheless, that neither of these arguments
creates a question of material fact that would allow us to
reverse the District Court. Even as a novation, a usurious
amount was not found by the District Court. The judgment
allows recovery of the balance due plus interest. in the legal
amount of 17%.
Finally, Wood claims that attorney's fees were
improperly awarded by the District Court. The note
specifically provides that "the undersigned hereby agrees to
pay all costs of collection, including attorney fees" in case
suit is required to collect on the amount due. Attorney's
fees are allowed when they are provided for by statute or
contractual provision. Hoven v. Armine (Mont. 1986), 727
P.2d 533, 534, 43 St.Rep. 1977, 1978. See also, S 5 25-10-301
and 28-3-704, MCA. The District Court did not err in
granting attorney's fees.
Further, Poulsen's has requested its attorney's fees in
responding to this appeal. An award of attorney's fees is
proper on appeal where the fees are based on a contract.
Lauberdale v. Grauman (Mont. 1986), 725 P.2d 1199, 1200, 43
St.Rep. 1785; Diehl and Associates v. Houtchens (1979), 180
Mont. 48, 53, 588 P.2d 1014, 1017; Burnham, Contract Damages,
44 Mont.I,.Rev. 2, 47 (1983). On the facts of this case and
appeal, we hold Poulsen's should receive reasonable
attorney's fees and costs incurred.
No material issue of fact has been raised by Wood in
this case. Poulsen's appropriately cites to Drug Fair
Northwest v. Hooper Enterprises, Inc. (Mont. 1987), 733 P.2d
1285, 1287, 44 St.Rep. 435, for the proposition that a party
opposing summary judgment has an affirmative duty to respond
by affidavit or sworn statement with specific facts which
raise a disputed issue. This burden has not been met by Wood
in this case.
We affirm and remand for determination of reasonable
attorney's fees and costs on appeal.
We concur: