DOLSEN COMPANY v IMPERIAL CATTLE C
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NO. 79-92 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981 THE DOLSEN COMPANY, Plaintiff and Appellant, VS. THE IMPERIAL CATTLE CO., A Montana Corporation, JAMES EDMISTON and PHILLIS EDMISTON, et al., Defendants and Respondents. Appeal from: District Court of the Eleventh Judicial District, In and for the County of Flathead. Honorable James Salansky, Judge presiding. Counsel of Record: For Appellant: Moare and Doran, Kalispell, Montana For Respondents: Christopher B.Swartley, Missoula, Montana George Harris, Missoula, Montana - - - - Submitted on briefs: December 17, 1980 Decided :MAR Filed: MflP 4 -- Clerk 4 - 1981 Mr. J u s t i c e J o h n Conway H a r r i s o n d e l i v e r e d the Court. This is an appeal by Dolson, t h e Opinion of plaintiff, after an a d v e r s e judgment o f t h e F l a t h e a d County D i s t r i c t C o u r t . In 1973 the Imperial Cattle Company (Imperial) e n t e r e d i n t o s e v e n l e a s e a g r e e m e n t s w i t h t h e D o l s o n Company ( D o l s o n ) , a Washington c o r p o r a t i o n , cattle. Approximately f o r t h e l e a s e of d a i r y to Two o f t h e s e v e n l e a s e s w e r e c o n c l u d e d p r i o r Imperial. 520 d a i r y cows w e r e t r a n s f e r r e d to t h e s e t t l e m e n t n e g o t i a t i o n s which u n d e r l i e t h i s a c t i o n . but one of the remaining five leases were All personally g u a r a n t e e d by d e f e n d a n t s L i l l i t h u n and E d m i s t o n , p r i n c i p a l s i n t h e I m p e r i a l C a t t l e Company. During 1974 Imperial suffered major financial r e v e r s e s and n o t i f i e d D o l s o n i n O c t o b e r o f t h a t y e a r t h a t i t would be u n a b l e t o f u r t h e r p e r f o r m on a n y o f t h e r e m a i n i n g five leases. The parties proceeded a g r e e i n g t o a " P o s s e s s i o n Agreement." agreement cattle Dolson and then would sell reassume them. It to negotiations, By t h e t e r m s o f possession of was that agreed the that dairy Imperial would be l i a b l e f o r any d e f i c i e n c y owing a f t e r i t s a c c o u n t was c r e d i t e d w i t h t h e p r o c e e d s o f t h e s a l e . The a g r e e m e n t was s i g n e d by t h e p a r t i e s a t a m e e t i n g i n M i s s o u l a , Montana, on October 18, 1974. All parties were represented by counsel. P u r s u a n t t o t h e a g r e e m e n t , D o l s o n s o l d t h e d a i r y cows t o t h e h i g h e s t f i n a n c i a l a d v a n t a g e of I m p e r i a l . Dolson t h e n t e n d e r e d a n a c c o u n t i n g and r e q u e s t e d from I m p e r i a l payment of the deficiency. A l l parties cooperated in the l i q u i d a t i o n of t h e d a i r y h e r d . In March 1975 Dolson's general manager met with defendant Lillithun in Ronan, Lillithun did not dispute but did take issue Montana. t h e e x i s t e n c e of with the that A t amount meeting the deficiency owing. Lillithun f u r t h e r i n d i c a t e d t h a t d e f e n d a n t E d m i s t o n was s o l e l y l i a b l e for the deficiency. A f t e r t h e Ronan m e e t i n g D o l s o n p r e p a r e d and f o r w a r d e d t h e n o t i c e of d e f i c i e n c y . A n o t h e r m e e t i n g was a r r a n g e d i n which a l l p a r t i e s would be p r e s e n t . defendant L i l l i t h u n , With t h e e x c e p t i o n o f a l l p a r t i e s were p r e s e n t w i t h c o u n s e l a t a May 2 3 , 1 9 7 5 , m e e t i n g i n S p o k a n e , W a s h i n g t o n . this At m e e t i n g D o l s o n was a d v i s e d t h a t I m p e r i a l , and a l l p r i n c i p a l s of Imperial , were insolvent. Dolson was informed that d e f e n d a n t L i l l i t h u n was n e a r b a n k r u p t c y and t h a t d e f e n d a n t E d m i s t o n was d e f e n d i n g an a c t i o n on c e r t a i n l o a n s from t h e Production Credit Association t h o u s a n d s of d o l l a r s . meeting began at $142,000 deficiency involving hundreds of S e t t l e m e n t d i s c u s s i o n s a t t h e Spokane $100,000, substantially computed by Dolson. less than the Defendants were c l e a r l y i n no p o s i t i o n t o n e g o t i a t e a t t h e $ 1 0 0 , 0 0 0 f i g u r e , and t h e number was r e d u c e d t o $ 6 5 , 0 0 0 and t h e n t o $ 5 5 , 0 0 0 . A t the mentioned that Spokane meeting he owned a defendant parcel of Edmiston real first property in K a l i s p e l l , Montana, which m i g h t be u s e d t o p a r t i a l l y s a t i s f y the deficiency. property was Dolson's referred attorneys to by defendant of property." "commercial, downtown piece represented t o Dolson that and t h a t testified t h e p r o p e r t y had that Edmiston Edmiston the as a also t h e p r o p e r t y was w o r t h $ 4 5 , 0 0 0 r e c e n t l y been a p p r a i s e d a t t h a t f i g u r e by James C h r i s t i a n , f a t h e r o f a t t o r n e y C a l C h r i s t i a n , who r e p r e s e n t e d d e f e n d a n t L i l l i t h u n . Counsel f o r Edmiston informed Dolson Christian, knew that he was acquainted with the elder knew o f h i s e x p e r i e n c e i n t h e r e a l e s t a t e f i e l d , that he was a competent appraiser and that, if a n y t h i n g , t h e a p p r a i s a l would be c o n s e r v a t i v e . the At conclusion advised defendants t h a t of the i t would Spokane meeting, Dolson agree t o a s e t t l e m e n t of $ 5 5 , 0 0 0 c a s h and a d v i s e d d e f e n d a n t E d m i s t o n t h a t h e s h o u l d use the Kalispell property necessary financing as collateral in securing the . On J u l y 2 3 , 1 9 7 5 , a m e e t i n g t o o k p l a c e i n K a l i s p e l l , Montana. P r e s e n t a t t h i s m e e t i n g were R o b e r t D o l s o n and h i s attorney, attorney, James defendant Milton Datsopoulos; representing Lillithun, property Imperial and Cattle was discussed $45,000, as Edmiston a t t o r n e y Cal Company who was a g a i n a b s e n t . deficiency debt. of Gillespie; and his Christian, and defendant Once more t h e K a l i s p e l l possible satisfaction of the I t was a g a i n r e p r e s e n t e d a s h a v i n g a v a l u e a s c o n f i r m e d by t h e r e c e n t a p p r a i s a l . Robert D o l s o n e x p r e s s e d h i s d e s i r e t h a t any s e t t l e m e n t c o n s i s t o f cash. The p a r t i e s d i s c u s s e d a t o t a l m o n e t a r y s e t t l e m e n t o f $55,000, a f i g u r e which was r e d u c e d t o $ 5 2 , 5 0 0 w i t h $ 7 , 5 0 0 i n i t i a l l y w i t h q u a r t e r l y p a y m e n t s t o be made t h e r e a f t e r $2,500 until balance was Finally, the to debt be Dolson was was secured to extinguished. with receive the a The o u t s t a n d i n g Kalispell copy of of the property. property d e s c r i p t i o n , t i t l e insurance ( o r o t h e r proof of c l e a r t i t l e ) and a copy o f the C h r i s t i a n appraisal confirming t h a t t r a c t was w o r t h $ 4 5 , 0 0 0 . Kalispell until the the T h i s was D o l s o n ' s o n l y p r e s e n c e i n settlement was signed. He and his attorney flew into Kalispell on the morning of July 23 and left that afternoon. The Kalispell property was not identified to them, nor did Dolson request to see it. After the Kalispell meeting, negotiations were continued by telephone and correspondence. On October 13, 1975, Dolson agreed to accept the Kalispell property. From defendants Lillithun and Imperial, Dolson was to receive $7,500 in cash. On October 31 Robert Dolson went Missoula and to Kalispell to execute the settlement. to He accepted from Imperial a $7,500 promissory note, payable at 8 percent per annum, and guaranteed by defendant Lillithun. Defendant Edmiston tendered a warranty deed for the to Kalispell and Kalispell property. Dolson traveled from Missoula obtained the signature of defendant Edmiston. While in Kalispell, Dolson contacted a local realtor, John Ming, for the purpose of listing his newly acquired property. Ming at the property site. He met Dolson's brief describes the Edmiston property, which was represented as being conservatively valued at $45,000, as follows: ". . . consist[ing] of slightly over one acre of undeveloped ground situated directly between a Pacific Power & Light substation and the railroad tracks in Kalispell, Montana. While there was a narrow corridor leading from Center Street along and behind the substation to the property, the property itself had no frontage upon any Kalispell street. At its closest point to 'downtown Kalispell', the property was five blocks distant. " Ming informed Dolson that he had no interest in accepting a listing on the property and that he could not imagine who would be interested in the property with the possible exception of Pacific Power & Light, the adjacent landowner. property Ming testified that when he examined the i n O c t o b e r 1 9 7 5 , t h e v a l u e o f t h e t r a c t was a b o u t $7,500. Upon r e t u r n i n g t o Yakima, W a s h i n g t o n , MIA appraiser, Wayne N e i l . between $1,250 uncertainties t o $8,900, regarding Neil Dolson engaged appraised the parcel at d e p e n d e n t upon t h e r e s o l u t i o n o f access. agreed w i t h r e a l t o r Neil J o h n Ming t h a t a c c e s s was s o l i m i t e d , a p p r o x i m a t e l y s i x t e e n f e e t of was land passageway, virtually would t h a t a commerical precluded. have a Neil's use That untenable unmarketable the property conclusion classification industrial." and use of is classification was of one classifications that the "low-level of the most existing with r e s p e c t t o commercial p r o p e r t y . A t trial i t was r e v e a l e d t h a t R o b e r t D o l s o n had n o t seen t h e property p r i o r agreement. t o the execution of the settlement I t was a l s o e s t a b l i s h e d t h a t a l t h o u g h D o l s o n had an e x t e n s i v e b u s i n e s s b a c k g r o u n d , real estate. Revenue a p p r a i s a l which purposes, less Defendants than Lillithun h e was n o t e x p e r i e n c e d i n introduced established a S t a t e Department that t h e t r a c t was w o r t h $ 3 3 , 4 5 0 , Edmiston's nor i t s v a l u e beyond or property only about representations. attorneys Christian seen the property, for Neither t h e r e p r e s e n t a t i o n s of tax $11,500 defendant D a t s o p o u l o s had and a l l d e n i e d h a v i n g of ever any knowledge o f d e f e n d a n t Edmiston and t h e C h r i s t i a n a p p r a i s a l . The f o l l o w i n g i s s u e s a r e r a i s e d on a p p e a l : 1. Whether D o l s o n i s e n t i t l e d t o r e s c i s s i o n b e c a u s e o f d e f e n d a n t s ' m i s r e p r e s e n t a t i o n s a s t o t h e n a t u r e and v a l u e of t h e property? Whether there was substantial credible evidence 2. to support the District Court judgment; whether the District Court properly disposed of the issues; and whether the District Court's conclusions of law were supported by its findings of fact? Appellant maintains that the settlement agreement should be rescinded because of respondents' misrepresentations as to the value and nature of the Kalispell property. We do not agree. This Court has long adhered to the rule that statements of opinion are preeminently subject to the common-law doctrine of caveat emptor. (1925), 72 Pllont. 513, 234 P. 246. See Ray v. Divers Statements as to the value of property are generally considered declarations of opinion and rescission. will not 37 Am.Jur.2d constitute a proper basis for Fraud and Deceit, S 119 at 164. Courts are continually confronted with the dilemma of determining to what lengths a vendor of property may go in "talking up" and his merchandise--where does "traders talk" end actionable fraud begin? Clearly, the line between opinion and fact is an especially fine line for the District Courts to draw when representations are made regarding the value of property. The common law provides reasonable purchasers against fraud and deceit. protection to However, it does not go to the romantic length of offering indemnity against the adverse consequences of folly and indolence or a careless indifference to information which would purchaser as to the assertions as to value. truth or falsity of enlighten the the seller's In such an instance, every person r e p o s e s a t h i s own p e r i l in the f a c e of another's opinion when he h a s ample o p p o r t u n i t y t o e x e r c i s e i n f o r m e d j u d g m e n t . " S i m p l e x commendatio non o b l i q a t . " W emphasize, e the province of t h a t i t is s i n g u l a r l y w i t h i n however, the District f r a u d h a s been p e r p e t r a t e d 2 K e n t s Comm. 485. Court on a n to determine whether innocent purchaser. The D i s t r i c t C o u r t i s i n t h e b e s t p o s i t i o n t o weigh t h e f a c t o r s involved, whether assess the c r e d i b i l i t y of witnesses, the statements regarding value and c o n c l u d e constitute fact or opinion. I n r u l i n g t h a t t h e D i s t r i c t C o u r t ' s d e c i s i o n must be g i v e n g r e a t c r e d e n c e i n t h i s c a s e , we r e a f f i r m o u r d e c i s i o n i n Lumby v . 36 S t . R e p . the Doetch ( 1 9 7 9 ) , in a and presume judgment. clearly 600 P.2d 200, 1 6 8 4 , w h e r e i n we f o u n d t h a t t h i s C o u r t m u s t v i e w evidence party , Mont. l i g h t most the Findings of erroneous. c o n f l i c t s may e x i s t , favorable c o r r e c t n e s s of to the prevailing the District Court's f a c t s h a l l n o t be s e t a s i d e u n l e s s Rule 52(a), M.R.Civ.P. such t h a t t h e evidence Although t e n d s t o show t h a t r e p r e s e n t a t i o n s a s t o v a l u e c o n s t i t u t e b o t h o p i n i o n and f a c t , i t is t h e d u t y and f u n c t i o n o f t h e t r i a l c o u r t t o make a r e s o l u t i o n of t h e c a s e one way o r t h e o t h e r . reasoned and thoughtful determination that That c o u r t ' s the vendor's s t a t e m e n t s a s t o t h e v a l u e of t h e p r o p e r t y were o p i n i o n , n o t declarations of fact, will not be disturbed d e c i s i o n was b a s e d on s u b s t a n t i a l e v i d e n c e . Buckingham St.Rep. 129. (1979), It Mont. is n o t a p r o p e r , where its See Kostbade v. 595 P.2d f u n c t i o n of 1149, 36 t h i s Court t o e x c h a n g e o u r o p i n i o n f o r t h a t of t h e D i s t r i c t C o u r t , e v e n i f we m i g h t h a v e r e a c h e d a d i f f e r e n t conclusion. I n accord, P o r t e r v. P o r t e r ( 1 9 7 0 ) , 1 5 5 Mont. 4 5 1 , 473 P.2d 538. Our r e v i e w m u s t now examine t h e e v i d e n c e t o d e t e r m i n e whether t h e D i s t r i c t Court r e s o l u t i o n of t h i s case. its discretion exceeded is court's substantial judgment, w e conclude t h a t issues, and credible that evidence the court that the Reviewing t h e e v i d e n c e i n a l i g h t most f a v o r a b l e t o t h e p r e v a i l i n g p a r t i e s , there in properly disposed the court's supporting conclusions of the of law the were s u p p o r t e d by i t s f i n d i n g s o f f a c t . Robert contrary, he not financially i s an a b l e and s u c c e s s f u l relationship adversarial is Dolson to to defendants the extent can business acumen and his To the businessman. only their r e p r e s e n t competing i n t e r e s t s . naive. be His considered respective positions T h e s e two f a c t o r s , D o l s o n ' s relationship t o defendants, weigh h e a v i l y a g a i n s t t h e p r o p o s i t i o n t h a t d e f e n d a n t s ' took u n f a i r advantage of Dolson property. If i n d e e d D o l s o n r e l i e d upon t h e r e p r e s e n t a t i o n s of defendants reason why condone as the such agreement. to when the declaring value of the D i s t r i c t C o u r t would imprudence Helena by the have Co. v. been the see no obliged to rescission Claffin of we parcel, allowing Adjustment value of the (1926), 75 Mont. 317, 243 P. 1 0 6 3 ; s e e a l s o , W i l l i a m s v . J o s l i n ( 1 9 6 5 ) , 65 Wash.2d purchaser 696, 399 P.2d 308 ( r e l i a n c e m u s t be r e a s o n a b l e ; may n o t r e l y on r e p r e s e n t a t i o n s when t h e i r truth c a n be r e a d i l y d e t e r m i n e d ) . Even a t t h i s p o i n t i n t h e c a s e , t h e r e c a n be no r e a d y and a c c u r a t e d e t e r m i n a t i o n o f t h e v a l u e o f t h e p r o p e r t y amid t h e c o n f l i c t i n g o p i n i o n s found i n t h e r e c o r d . alleges the property is worth $7,500. R e a l t o r Ming Appraiser Neil b e l i e v e s t h e p a r c e l i s w o r t h a.s much a s $ 8 , 9 0 0 . The S t a t e o f Montana D e p a r t m e n t o f Revenue d e t e r m i n e d t h e v a l u e o f t h e property to be $33,450 Finally, we have a with taxable t h e opinion of value of James C h r i s t i a n $22,000. that the p r o p e r t y is worth $45,000. S u r e l y t h e f a c t s of t h i s c a s e exemplify t h e reasoning behind t h e r u l e t h a t s t a t e m e n t s a s t o t h e v a l u e of p r o p e r t y I t is reasonable t o expect a r e n o t grounds f o r r e s c i s s i o n . that in a s i t u a t i o n s u c h a s t h i s v e n d o r s would a t t a c h t h e highest possible value t o the property. I n d e e d , i t would b e u n r e a s o n a b l e t o assume o t h e r w i s e , and p u r c h a s e r s who r e l y on s u c h r e p r e s e n t a t i o n s p r o c e e d a t t h e i r own r i s k . On O c t o b e r 3 1 , 1 9 7 5 , R o b e r t D o l s o n was i n K a l i s p e l l t o o b t a i n t h e s i g n a t u r e s of t h e E d m i s t o n s and c o n c l u d e t h e p r o v i s i o n s of t h e s e t t l e m e n t agreement. execution of accepted. Only a f t e r c o m p l e t e t h e a g r e e m e n t d i d D o l s o n e x a m i n e what h e had The r e c o r d d i s c l o s e s no r e a s o n why D o l s o n d i d n o t view t h e p r o p e r t y b e f o r e he f o r m a l i z e d t h e agreement. he chos e t o a c c e p t t h e p r o p e r t y ample opportunity to examine the s i g h t unseen, s u b j e c t of Since when h e had his bargain, D o l s o n c a n n o t now be h e a r d t o c o m p l a i n t h a t h e was u n f a i r l y misled. We Dolson's concur with the District f o l l y was h i s own. Court finding The D i s t r i c t C o u r t ' s that finding t h a t r e s c i s s i o n would be i m p r o p e r i n t h i s c a s e i s s u p p o r t e d by substantial evidence, and the court's f i n d i n g s of a r e amply s u p p o r t i v e o f i t s l e g a l c o n c l u s i o n s . A c c o r d i n g l y , we a f f i r m . n fact We c o n c u r ; Justices
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