No. 87-220
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988
LEE SIMMONS, KEN SIMMONS, and
COLLEEN SIMMONS,
Plaintiffs and Appellants,
-vs-
L. V. JENKINS, JR., et al.,
Defendants and Respondents.
APPEAL FROM: District Court of the Sixteenth Judicial District,
In and for the County of Rosebud,
The Honorable R. C. McDonough, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Stephens Law Firm; Robert L. Stephens, Jr., Billings,
Montana
For Respondent:
Moulton, Bellingham, Longo & Mather; W.S. Mather,
Billings, Montana
Lucas & Monaghan; Thomas M. Monaghan, Miles City,
Montana
Submitted on Briefs: Jan. 14, 1988
Decided : February 29, 1988
Filed: FEB 2 g
Clerk
The Hon. William E. Hunt, Sr. delivered the Opinion of the
Court.
This is an appeal from the granting of two summary
judgments by the District Court, Sixteenth Judicial District,
County of Rosebud. We affirm.
Appellants raise three issues on appeal:
1. Did the District Court err in granting judgment in
favor of the First State Bank of Forsyth even though there
existed material issues of fact which could have allowed the
jury to find in favor of Simmons?
2. Did the District Court err in granting summary
judgment in favor of Connecticut Mutual Life Insurance
Company even though there were material issues of fact that
could have allowed the jury to find in favor of Simmons?
3. Should both summary judgments be reversed based upon
the failure of the District Court to set forth any reasons or
rationale for granting the summary judgments?
Following is a general overview of the relevant facts.
More facts will be supplied as necessary throughout the
opinion.
On October 29, 1982, the appellants, the Simmons,
executed a contract for deed with defendant Dunning Ranch
Company (owned by James and Elsie Dunning) for the portion of
the Dunning ranch in Rosebud and Custer Counties known as the
home place or headquarters unit. The negotiations took place
between the Dunnings and the Simmons directly and through a
realtor, Ward Fenton. In 1979, the Dunning Ranch Company had
mortgaged its entire land holdings to defendant Connecticut
Mutual Life Ins. Co. (CML). Before the loan was made a local
mortgage banking company, Hall & Hall, made an appraisal of
two of the three units making up the Dunning properties. The
home place was one of the units appraised. The appraisal
showed that the two parcels examined would support a total of
331 cow and calf pairs (animal units). Hall & Hall is a
correspondent mortgage banker for CML and originates its
loans in the Rosebud area. In addition to the mortgage, the
Dunning Ranch Co. had loans from the First State Bank of
Forsyth (First Bank). On October 29, 1982, through a
memorandum of agreement, First Bank agreed to lend the
appellants money should the Dunning Ranch Co. default on the
mortgage payments for the land being acquired by appellants.
Appellants have sued for fraud alleging that the
Dunnings represented that the home place alone would carry
250 head of cattle when they knew in fact that it would not.
They have named First Rank and CML as liable under the theory
of constructive fraud. Both First Bank and CML made motions
for summary judgment which the District Court granted. The
Simmons appeal.
Issue I
As their first issue, appellants contend that the
District Court committed error when it granted respondent
First Bank's motion for summary judgment because there
existed disputed issues of material fact.
On motions for summary judgment, pursuant to Rule 56,
M.R.Civ.P., the party making the motion has the burden of
showing lack of any genuine issue of material fact. The
movant's burden is quite strict, requiring him to make a
showing that
" ' [it] is quite clear what the truth is, and that
excludes any real doubt as to the existence of any
genuine issue of material fact. * * * ' ' I Kober &
Kyriss v. Stewart & Billings Deaconess ~ospital,
148 ~t1
o.7
n1, 122,717 P.2d 476, 478.
Harland v. Anderson (19761, 169 Mont. 447, 450, 548 P.2d 613,
615.
The party opposing the motion then has a similar burden
to show that an issue of material fact does exist. This
party must set forth specific facts and cannot rely on
speculative, fanciful, or conclusory statements. Kronen v.
Richter (Mont. 1984), 683 P.2d 1315, 1318, 41 St.Rep. 1312,
1315; National Gypsum Co. v. Johnson (1979), 182 Mont. 209,
212 & 213, 595 P.2d 1188, 1189 & 1190; Cheyenne Western Bank
v. Young (1978), 179 Mont. 492, 497, 587 P.2d 401, 404;
Barich v. Ottenstror (1976), 170 Mont. 38, 42, 550 P. 2d 395,
397. However, the opposing party will be indulged to the
extent of all inferences which may be reasonably drawn from
the record. Jenkins v. Hillard (19821, 199 Mont. 1, 5, 647
P. 2d 354, 356; Equity Cooperative Ass'n. v. Bechtold (1977),
173 Mont. 103, 105, 566 P.2d 793, 794.
Appellant argues that there was a breach of the
fiduciary duty or at least the duty of good faith and fair
dealing between the Simmons and First Bank and that said
breach constitutes constructive fraud pursuant to S 28-2-406,
MCA. The statute reads as follows:
Constructive fraud consists in:
(1) any breach of duty which, without an actually
fraudulent intent, gains an advantage to the person
in fault or anyone claiming under him by misleading
another to his prejudice or to the prejudice of
anyone claiming under him; or
(2) any such act or omission as the law especially
declares to be fraudulent, without respect to
actual fraud.
The appellant bases his argument on several allegations:
that First Bank was aware of the sale and had advised the
Dunnings to sell; that First Bank knew liquidation of the
farm corporation was near and even suggested the terms of
sale; that the Bank had a loan commitment to the appellants
which was an inducement to buy the farm; and that the Bank
would benefit from the sale by a reduction in the Dunning's
loan.
The relationship between a bank and its customer usually
does not give rise to a fiduciary duty. Deist v. Wachholz
(Mont. 1984), 678 P.2d 188, 193, 41 St.Rep. 286, 290. There
is an exception, however, when the Bank is thrust beyond the
simple role of creditor and into the role of an advisor. In
Deist, we held that a bank officer is vested with a fiduciary
duty were there is a long history of dealing with the bank
and evidence of the bank acting as financial advisor in some
past capacity. This duty extended to all bank officers but
was limited to the scope of the bank's and individual
officer's association with any particular transaction.
More recently, however, we encountered a situation where
a bank had no fiduciary duty. In Pulse v. North American
Land Title Co. (Mont. 1985), 707 P.2d 1105, 42 St.Rep. 1578,
the appellants, the Pulses, were involved in a land purchase
which their bank financed through a mortgage. When problems
arose, the Pulses sued for breach of fiduciary duty. We held
that because the special circumstances that existed in Deist
were not present, the bank had no fidicuary duty to the
Pulses. Unlike Deist, the bank had not located buyers for
the Pulses; the bank was not a party to the transaction
beyond its role as the buyer's lender; the sale was not a
product of the bank's advice; and the Pulses had not dealt
with the bank extensively or exclusively.
Pulse controls in this case. The facts here show that
the connection between First Bank and the Simmons is even
more tenuous than that between the Pulses and their bank.
There is no evidence that the First Bank ever advised the
Simmons. There is no evidence that the Simmons ever asked
for advice from anyone at the Bank. There is no evidence of
a long history of dealings with or reliance upon the Rank by
the Simmons. There is evidence from bank manager Robert
Thiesen's deposition that he did suggest terms of sale to
real estate agent Fenton but that is relevant more to the
bank's relationship to the sellers, the Dunnings, than to its
relationship to the Simmons. In cases where the bank has
been held to a fiduciary duty because of its advisory role
the duty benefited the party being advised and not some third
party. See Deist, 678 P.2d 188. The facts, as presented by
appellants, do not support the existence of a fiduciary duty.
Appellants also contend that the breach of the separate
duty of good faith and fair dealing constitutes constructive
fraud. Specifically, they argue that the question of whether
this duty exists is one of fact and not susceptible to
summary judgment determination.
We have recognized that the duty required by subsection
(1) need not rise to that of a fiduciary to satisfy the
requirements of S 28-2-406, MCA. McJunkin v. Kaufman (Mont.
l987), - P.2d -I ,
- 44 St.Rep. 2111, 2116. This Court
discussed a bank's duty of good faith and fair dealing in
Noonan v. First Bank Butte (Mont. 198?), 740 P.2d 631, 44
St.Rep. 1124. Where we stated:
In the past, the Court has extended the implied
duty of good faith and fair dealing to cases
involvinq banks dealinq with their customers.
- In
Tribby v. Northwestern - -of Great ~ a l l s (Mont.
Bank
1985), 7 0 4 T 2 d 409, 419, 42 St.Rep. 1133, 1142, we
extended the implied covenant of good faith and
fair dealing to the commercial area of
bank-customer relations. In Nicholson v. United
- -
Pacific -- (Mont. 1985), 710 P.2d 1342, 1347,
Ins. Co.
42 St.Rep. 1822, 1828, we noted the extension of
the tort -theory to banks dealina with customers and
cited Tribby and First ~ationgl - -of Libby v.
Bank
Twombly (Mont. 1984), 689 P.2d 1226, 41 ~ t . ~ e p .
1948. In Northwestern - -Bank v. Weaver-Maxwell
Nat. -
(Mont. 1986), 729 P.2d 1258, 43 St.Rep. 1995, we
allowed a case of a bank-customer dispute to be
remanded for retrial on a bad faith theory.
Noonan, 7 4 0 P.2d at 6 3 4 . The duty of good faith and fair
dealing between a bank and its customer is alive and well in
Montana law but as we indicated in Tribby not every contract
or statutorily imposed obligation carries such a duty. 704
P.2d at 419. The appellants cannot refer to a contract
between the Simmons and First Bank existing at the time of
the misrepresentations. Nor do they cite any statutory duty.
The record shows no customer-bank relationship between the
Simmons and First Bank at the time of the alleged
misrepresentations by the Dunnings. In fact the record shows
no relationship at all. Neither are there facts that could
establish an agency relationship between the Bank and the
Dunnings or Ward Fenton. The duty of good faith and fair
dealing presupposes the existence of a relationship of some
type. 3 7 Am.Jur. 2d Fraud and Deceit S 15, at 3 9 . The fact
that the bank knew of the Dunnings' negotiations with the
Simmons and held loans secured. by the ranch property does not
establish a relationship with the Simmons.
As appellant notes First Bank and the Simmons did have a
memorandum of agreement dated the same day as the contract
for deed. Appellant argues that this memorandum is
sufficient to establish a duty of good faith. We do not
agree. The purpose of the memorandum for agreement was to
protect the Simmons in case the Dunnings failed to make the
mortgage payment to Connecticut Mutual Life Ins. In the
event of default, First Bank agreed to loan Simmons the
amount of the difference between their annual payment to the
Dunnings and the mortgage payment due.
Appellants have forcefully argued that this memorandum
is evidence that First Bank was an active procurer of the
sale and in fact attempted to engineer it to its benefit by
taking advantage of the Dunnings' misrepresentation. These
inferences, however, are too tenuous to connect the Bank as a
party to the fraud allegedly perpetrated by the Dunnings.
The appellant cannot rely on suspicions. Cheyenne Western
Bank, 587 P. 22 at 404. There was no duty of good faith and
fair dealing between the Simmons and First Bank with regard
to the contract for deed.
Appellants argue that this question is one for the jury.
We stated in Morse v. Espeland (Mont. 1985), 696 P.2d 428, 42
St.Rep. 251, that the breach of a duty of good faith is a
question of fact not susceptible to summary judgment. The
existence of such a duty, however, is a question of law
properly determined during summary judgment proceedings.
Summary judgment in favor of the bank is affirmed.
Issue I1
Appellants' next issue challenges the correctness of the
District Court's summary judgment in favor of respondent,
Connecticut Mutual Life Insurance Company (CML). In essence,
the Simmons argue that Douglas Hall d/b/a Hall & Hall, was
CML's agent and that therefore the question of the existence
of an agency relationship is a material issue of fact j.n
connection with the extent and nature of CML's prior
knowledge regarding the Simmons/Dunning transaction. In
addition, appellants complain that CML did not adequately
reply to plaintiffs' request for production of documents.
The respondent replies that the existence of an agency
relationship between itself and Hall is irrelevant to any of
the appellants' theories of recovery because no duties were
owed to appellants by CML. Additionally, any objections
regarding CML's responses to plaintiffs' requests for
production of documents have been waived. We agree with the
respondent.
The appellants have alleged that CML had, first, a duty
to use reasonable and ordinary care in approving the mortgage
release; second, a duty t.o investigate the carrying capacity
and economic viability of the land unit purchased by the
Simmons; and third, a duty to exercise good faith and deal
fairly with the appellants that, because of its superior
knowledge, required CML to disclose any information that
would indicate the nonviability of the land in question. The
law regarding these duties has been thoroughly set out in
Issue I and need not be repeated here.
Assuming that Hall was acting as agent for CML, there is
no evidence that would establish a fiduciary or other
relationship between the Simmons and respondent CML to
support appellantst claims. Since 1979, CML has held a
mortgage on the Dunnings' three units of farm property. At
that time, Hall & Hall made an appraisal of two of the units
including an estimation of carrying capacity of 331 animal
units. There is some evidence that Hall spoke on and off
with Bob Thiesen, then the manager of the First Bank, and
Simmons' attorney after the contract for deed had been
signed. There is no evidence that Hall E( Hall or CML had
contact with the Simmons before or during their negotiations
with the Dunnings. There is no contract between the Simmons
and Hall & Hall or CML. CML was asked to approve the sale
only after the contract for deed had been signed. This
approval was required by CML's contract with the Dunnings and
was not requested by the Simmons. There is nothing that
would connect Hall & Hall or CML with the Dunningst
misrepresentations.
Appellant also finds fault with the fact that summary
judgment was entered before CML had provided suitable
responses to Simmonst request for production of documents.
The request was for CMLts "home office file" which would
ostensibly have shown the extent of CML's knowledge of the
economic feasibility of the Dunning ranch. The failure of
CML to adequately respond was brought before the District
Court in plaintiffs' response to motion for summary judgment
and was also addressed by defendant's reply to plaintiffs'
response. CML argues that any objection is waived because
plaintiffs never raised this issue since it failed to file a
response to the motion for summary judgment and failed to
appear at the hearing on the motion.
Apparently appellants' response was misfiled because it
had an incorrect caption and docket number. The District
Court had ordered a response to be filed by October 24, 1986.
Plaintiff did not attempt to file the response until October
28, 1986, several days after the date ordered by the District
Court. In addition, a hearing had been set and was held
October 27, 1986, with the plaintiffs not appearing. The
matter was deemed submitted before the court without the
presence of the plaintiffs and without the court having
possession of the misfiled brief. CML received a copy of the
misfiled brief on October 29, 1986. The District Court
apparently never received the misfiled brief. Summary
judgment for CML was granted by order dated November 21,
1986.
Since we hold that CML was in no relationship to the
Simmons that created a duty to disclose information the
question of what CML knew or did not know about the economic
viability of the Dunnings' parcel is irrelevant. CML ' s
production of its office file would not raise an issue of
material fact. Therefore, the summary judgment for CML is
affirmed.
Issue I11
Finally, appellant argues that it was error for the
District Court to grant summary judgment without entering
findings of fact and conclusions of law. Such findings are
necessary for the reviewing court to determine the basis for
the District Court's decision. The District Court's action,
appellant contends, is contrary to the court's admonishment
in Big Man v. State (Mont. 1981), 626 P.2d 235, 38 St.Rep.
362, and is therefore in error. We disagree.
Under Rule 52 (a), M.R.Civ.P., findings of fact and
conclusions of law are not required to be entered upon
motions for summary judgment pursuant to Rule 56, M. R. Civ. P.
The rule states in pertinent part that "[flindings of fact
and conclusions of law are unnecessary on decisions of
motions under Rules 12 or 56 or any other motion except as
.
provided in Rule 41 (b) " This Court has followed this rule
on several occasions. See Lewis v. State, Dept. of Revenue
(Mont. 19841, 675 P.2d 107, 114, 41 St.Rep. 9, 17; Downs v.
Smyk (1979), 185 Mont. 16, 19, 604 P.2d 307, 309; Boise
Cascade v. First Sec. Bank of Anaconda (1979), 183 Mont. 378,
385, 600 P.2d 173, 178.
Appellant refers us to both the majority and special
concurring opinions of Big - as controlling in this case.
Man
Specifically, appellant refers to the special concurring
opinion by Justice Shea and joined by Justice Sheehy.
Although a concurrence is often insightful and scholarly it
is not the holding of the Court and is not accorded the same
precedential value. It does not control. Neither the
majority nor special concurring opinion in Big Man has
relevance to this issue. The District Court did not err in
its summary judgment. /
Affirmed.
We Concur: ,