PARROTT v HELLER

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No. 13373 I N THE SUPREME COURT O T E STATE OF MONTANA F H 1976 DEWEY I. PARROTT, H R L M. PARROTT, AOD MANILA B. McGUIRE, a / k / a MANILA B . PARROTT, and D L SCHNEIDT, Executor of t h e E s t a t e AE of Zula M. S c h n e i d t , P l a i n t i f f s and A p p e l l a n t s , VERN HELLER and GRACE HELLER, husband and wife, Defendants and Respondents. Appeal from: D i s t r i c t Court of t h e F o u r t e e n t h J u d i c i a l D i s t r i c t , Honorable Nat A l l e n , Judge p r e s i d i n g . Counsel of Record: For A p p e l l a n t s : P e t e r s o n and Hunt, B i l l i n g s , Montana Richard J. Hunt argued, B i l l i n g s , Montana For Respondents: Johnson and F o s t e r , Lewistown, Montana Robert L. Johnson argued, Lewistown, Montana Submitted : Decided : October 12, 1976 DEC 13 Im s Mr. Justice Gene B. Daly delivered the Opinion of the Court, This is an appeal by plaintiffs from a judgment of the district court, Wheatland County, dismissing their complaint for forfeiture under a contract for deed. These facts are not in dispute: On December 12, 1966, defendants Vern and Grace Heller purchased the property involved on a contract for deed from one Irven L. Parrott. The contract called for a total consideration of $56,766.51. A $7,000 down payment was made, defendants assumed an existing mortgage in the amount of $3,533.03 and agreed to pay the sum of $3,000 annually plus 6% interest per annum on the unpaid principal. The installment payments were to be made on December 15, beginning with the year 1967 and continue until the entire contract was paid. Defendants made payments approximately on schedule for the years 1967, 1968, 1969 and 1970. However, they failed to make the payments due December 15, 1971 and December 15, 1972. As a result on January 17, 1973, plaintiffs, successors to Irven Parrott's interest in the contract, agreed with defendants to amend the contract in an effort to clarify the default provision. At the time the amendment was executed, defendants paid the sum of $10,045.55, making the contract payments current to December 15, 1972. When the payment scheduled for December 15, 1974, was again not made on schedule, defendants on December 21, 1974, were served with a notice of default. Defendants then issued a check for the installment payment but that check was not honored by the payee bank. The check was never paid. P l a i n t i f f s f i l e d a complaint f o r f o r f e i t u r e of t h e c o n t r a c t on March 26, 1975. P r i o r t o t r i a l , on September 4 , 1975 defendants tendered a c e r t i f i e d check t o t h e escrow agent bank i n f u l l payment of t h e unpaid c o n t r a c t p r i n c i p a l and i n t e r e s t . fendants Counsel f o r de- was advised p r i o r t o tender t h a t t h e escrow agent bank would r e c e i v e t h e funds b u t they would n o t be applied t o t h e c o n t r a c t pending mutual agreement of t h e p a r t i e s o r o r d e r of t h e c o u r t . Following t r i a l of t h e a c t i o n , t h e d i s t r i c t c o u r t j udgmen t r e l i e v e d defendants of d e f a u l t and allowed them t o redeem t h e property. A s a b a s i s f o r i t s judgment, t h e d i s t r i c t c o u r t found f a i l u r e t o pay was n o t due t o gross negligence o r any w i l l f u l o r f r a u d u l e n t breach of duty and payment of t h e e n t i r e c o n t r a c t balance was made w i t h i n a reasonable time a f t e r s e r v i c e of n o t i c e of d e f a u l t . P l a i n t i f f s appeal. The s o l e i s s u e presented on appeal i s whether t h e d i s t r i c t c o u r t e r r e d i n f i n d i n g defendants' d e f a u l t was not due t o any g r o s s l y n e g l i g e n t , w i l l f u l o r fraudulent breach of duty. Section 17-102, R.C.M. 1947, provides: "Whenever, by t h e terms of an o b l i g a t i o n , a p a r t y thereto incurs a f o r f e i t u r e , o r a loss i n the nature of a f o r f e i t u r e , by reason of h i s f a i l u r e t o comply with i t s p r o v i s i o n s , he may be r e l i e v e d therefrom, upon making f u l l compensation t o t h e o t h e r p a r t y , except i n case of a g r o s s l y n e g l i g e n t , w i l l f u l , o r fraudulent breach of duty." P l a i n t i f f s contend t h e record does n o t support t h e r e l i e f from f o r f e i t u r e granted by t h e d i s t r i c t c o u r t under s e c t i o n 17-102. W b e l i e v e i t does. e This p a r t i c u l a r s t a t u t o r y s e c t i o n has been t h e source. of much l i t i g a t i o n i n Montana. See: 19 Montana Law Review 50 (1957). I n numerous cases t h e s t a t u t e has been construed t o provide a person w i t h r e l i e f from f o r f e i t u r e , " i n any c a s e where he s e t s f o r t h f a c t s which appeal t o t h e conscience of a c o u r t of equity." Greenup v. United S t a t e s , 239 F.Supp. 330,332, Kovacich v. Metals Bank & T r u s t Co., 139 Mont. 449, 451, 365 P.2d 639; Blackfeet Tribe v. K l i e s Livestock Company, . 160 F.Supp. 131. This Court i n Yellowstone County v. Wight, 115 Mont. 411, 417, 145 P.2d 516, s a i d : : "Section 8658, Revised Codes [now s e c t i o n 17-102,R.C.M. 19471 was enacted f o r t h e b e n e f i t of o b l i g o r s whose f a i l u r e t o punctually perform would r e s u l t i n l o s s t o them i n t h e m a t t e r s i n r e s p e c t t o which they have cont r a c t e d . The i n t e n t i o n of t h e l e g i s l a t u r e i n enacting t h e s t a t u t e was t h a t i t should be o p e r a t i v e and t h a t i t should be given f u l l f o r c e and e f f e c t when t h e circumstances i n any c a s e gave i t a p p l i c a t i o n . The i n t e n t i o n of t h e law under t h i s s t a t u t e i s t h a t a f o r f e i t u r e should n o t be n e e d l e s s l y enforced. The c o u r t s have e s t a b l i s h e d t h a t a s t h e p o l i c y of t h e law i n t h e absence of s t a t u t e . The r u l e a s i t has found expression i n c o u r t d e c i s i o n s genera l l y i s t h a t both i n law and i n e q u i t y f o r f e i t u r e s a r e abhorred. *I' ** See: L e s t e r v. J & S:.Investment Company, , 133 Mont . P.2d 9 - S t . Rep. 1104, decided November 23, 1976. Here, t h e dishonored check was f o r approximately $4,600 b u t a t t h e t i m e i t was presented f o r payment defendants only had s l i g h t l y more than $3,000 i n t h e i r checking account. Defendants c i t e d crop f a i l u r e s and i n a b i l i t y t o c o l l e c t from t h e i r d e b t o r s a s reasons f o r t h e shortage. The record a l s o d i s c l o s e s v a r i o u s attempts by defendants t o secure t h e necessary funds from o t h e r sources. ~efendant Vern H e l l e r t r i e d t o secure a loan from a Harlowton bank and from t h e Federal Land Bank Association, His e f f o r t s were n o t s u c c e s s f u l because of a judgment a g a i n s t defendants' property. P r i o r t o i s s u i n g a check f o r t h e annual payment both defendants secured employment o f f t h e i r ranch t o h e l p meet t h e o b l i g a t i o n , Vern H e l l e r worked long hours on c o n s t r u c t i o n and Grace H e l l e r worked a s a housekeeper i n t h e l o c a l h o s p i t a l . , Defendants were f i n a l l y a b l e t o make t h e a c c e l e r a t e d payment on t h e c o n t r a c t only when Vern H e l l e r ' s b r o t h e r reached a f i n a n c i a l p o s i t i o n where he could advance them s u f f i c i e n t money on an open note. \ I n summary, t h e record d i s c l o s e s t h a t defendants made good f a i t h e f f o r t s t o r a i s e t h e necessary money i n time f o r t h e i n s t a l l m e n t payment b u t because of temporary circumstances o u t s i d e t h e i r c o n t r o l were unsuccessful u n t i l Vem H e l l e r ' s b r o t h e r was a b l e t o a s s i s t . Once defendants d i d secure t h e necessary funds, t h e e n t i r e c o n t r a c t balance plus i n t e r e s t , was promptly tendered t o p l a i n t i f f ' s escrow agent. The f a c t s of t h i s a c t i o n present a c l e a r case f o r a p p l i c a t i o n of s e c t i o n 17-102, R.C.M. 1947. The judgment of t h e d i s t r i c t c o u r t i s afiirmed. Justice /.-' Judge, s i & i n g f o r J u s t i c e Wesley Castles.

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