WESTMONT TRACTOR CO v CONTINENTA
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No. 8 6 - 2 4 6 IN THE SUPREME COURT OF THE STATE OF MONTANA 1986 WESTMONT TRACTOR COMPANY, Plaintiff and Appellant, CONTINENTAL I, INC., an Idaho Corp., and CHARLES A. WHITE, an individual, Defendants and Respondents. APPEAL FF.OM: District Court of the Fourth Judicial District, In and for the County of Missoula, The Honorable Jack L . Green, Judge presiding. COUNSEL OF RECORD: For Appellant: Datsopoulos, MacDonald Missoula, Montana & Lind; Fichard A. Reep, For Respondent: Boone, Karlberg & Haddon; Wil1ia.m L. Crowley, Missoula, Montana Submitted on Briefs: Oct. 23, 1 9 8 6 Decided: Filed: December 31, 1986 DEC 3 1986 -. Clerk ~ Mr. Justice John C. Sheehy delivered the Opinion of the Court. Plaintiff Westrnont Tractor Company appeals from a summary judgment granted to defendant Charles White in the District Court, Fourth Judicial District, Missoula County. We affirm the District Court" judgment. The dispute in this case arises over a series of unpaid debts between the plaintiff Westmont Tractor Company and the defendants Continental I, Inc. president of Continental. five counts of unpaid and Charles White, former In its complaint, Westmont alleged indebtedness, plus one count for A default attorney fees incurred in its collection efforts. judgment was entered against Continental I on February 5, A hearing was held April 25, 1985 on defendant White's 1985. alternative motion for sumary judgment, and proceedings continued until November 27, 1985 when the District Court entered its findings of fact and conclusions of law, ordering summary judgment in favor of defendant White on all counts. The court also set a hearinq for award of attorney fees. was Judgment entered January 28, 1q86 awarding White $9,207.00 in attorney fees. The issues presented for our review are: 1. Whether the District Court erred in sranting summary judgment? 2. Whether the District Court erred in awardjng attorney fees to the defendant? In order proper, we to determine whether review the pleadings, summary judgment was affidavits, answers to interrogatories and admissions on file to establish whether any genuine issues of materjal fact are presented. Tf there is no genuine issue as to any material fact, then the moving party is entitled to summary judgment as a matter of lar. Reagan v. Union Oil of California (Mont. 1984), 675 P.2d 953, 956, 41 St.Rep. 131, 134. Westmont first argues it was error for the District Court to make findings of fact, rather than to conclude Under Rule 52 ( a ) , factual issues remained to be determined. M.R.Civ.P., findings judgment motions. 1984), 675 P.2d analysis of of fact are unnecessary findings is useful in & However, an determining correctness of the summary judgment involved. G summary Lewis v. State, Dept. of Revenue (Mont. 107, 114, 41 St.Rep. 9, 17. the on the Upper Missouri T Electric Co-op., Inc. v. McCone Electric Co-op., Xnc. (1971), 157 Mont. 239, 244, 484 P.2d 741, 744. Thus, we will examine the District Court's fin?.ings for evidence of the existence or non-existence of genuine and material factual issues. F e first note the specific claims made in Westmont's 7 complaint. Count I was a request for a deficiency judgment on an instal-lment sales contract for heavy equipment. A security interest in the contract was perfected. April 22, 1974. heavy Collateral for the security interest consisted of the eauipment purchased by Continental. Charles Whit-e signed the security agreement as an individual guarantor for Continental. When Continental defaulted on its payments under the contract, F7estmont repossessed the heavy equipment pursuant to a voluntary repossession between itself and Continental. agreement executed This agreement was signed February 2 7 , 1376 by Robert Street, who had replaced Charles White as president of Continental. Count I1 of Westmont's complaint alleged defendants were in default on payments for the lease of a Euclid TS-14 scraper. Westmont Continental entered into a lease agreement March and 24, 1972. Charles White signed A U.C.C. agreement as an individual guarantor. this financing statement was also filed on this lease March 27, 1972. The lease agreement provided for rental payments of $2,500.00 the first month, $2,000.00 for the next twelve months, $1,650.00 for each month thereafter. and Paragraph 12 of the stipulations and conditions of the lease stated that title to the leased equipment remained vested in the owner, and the lessee had no option to purchase the equipment. However, when Continental defaulted on its lease payments, Westmont "purchased" the scraper and credited $13,000.00 to Continental's delinquent account. Count's 111 and V of Westmont's complaint are requests for paynents on delinquent open accounts. (Count 111) and for open accounts for parts and services rentals (Count V) . Continental kept Continental owed $39,887.85 on its parts and services open account for the period from April, 1974, to January, 1978. It owed $4,052.39 on its rental account for the period from August, 1974, to February, 1976. to defendant White's request for In response admissions, Westmont admitted that the debts incurred on these open accounts were corporate l iabilities, rather than liabilities personal ly incurred by Charles White. Count IV alleges breach of payment on a promissory note signed by individual." Continental and co-signed by White "as an This note appare~tlywas the security for the refinancing of charges made on the above open accounts prior to February 3 8 , 1974. Westmont filed a security agreement on this note April 10, 1.974, listing as collateral the Euclid TS-14 scraper (the same scraper listed as collateral in the lease agreement) and a Euclid waterwagon. $30,486.39 plus A payment of interest at 10% was due on the note on December 10, 1974, and was never paid. Count VI is a request for attorney fees incurred in the attempted collection of the debts. After reviewing the parties' pl.eadings, interrogatories, request for admissions, requests for production, and affidavits, the District Court made findings of fact and conclusions of law as follows: FINDINGS OF FACT There is no' genuine issue as to any material fact. Plaintiff and Defendant Corporation entered into a security agreement by t~hich Defendant Corporation granted Plaintiff a security interest in certain corporate property. Defendant White signed the security agreement as individual guarantor. Plaintiff was granted the security agreement to secure corporate obligations set forth in Counts I, I1 and V [sic] of the Compl-aint. Plaintiff repossessed and disposed of the secured property. Plaintiff did not give Defendant White reasonable notice of the time and place of any public sale or reasonable notice of the time after which any private sale or other intended disposition [of] collateral was to be made as required by S30-9-504 (3), MCA. Defendant White did not, after default, sign a written statement renouncing or modifying his right to notification. Defendant Corporation maintained an open account with Plaintiff as alleged in Count 111. VIIL Defendant White was not a party to the agreement alleged in Count I11 either indivi.dually or as guarantor. Defendant Corporation and Plaintiff entered into an agreement whereby Plaintiff extended Defendant Corporation a line of credit on a rental account as alleged in Count V. Defendant White was not a party to the agreement alleged in Count V either individual-ly or as a guarantor. From the foregoing Findings of Fact, the Court now makes the following: CONCLUSIONS OF LAW Defendant White is not legally obligated for the obligations alleged in Counts T I 1 and V. Since Plaintiff failed to comply with 530-9-504(3), MCA with respect to Defendant White, Plaintiff is barred from recovering any deficiency judgment from Defendant White. The court then directed White ' s favor a summary judgment in defendant . The purpose of summary judgment is to encourage judicial economy through deserving of the prompt resolution by elimination of questions trial. Harland v. (1976), 169 Mont. 447, 450, 548 P. 2d 613, 615. not Anderson While the initial burden is on the moving party to establish there are no genuine issues of material fact, the burden shifts to the opposing party once the showing has been made that no issues of material fact exists. Id. - at 451, 548 P . 2 d at 615. The party opposing the motion must present material facts in dispute, not ones which are fa.ncifu1, frivolous, gauzy or Silloway v. Jorgenson (1965), 146 Mont. merely suspicions. 307, 310, 406 P.2d 167, 169. Findings uncontroverted. Westmont accounts. Fact of through VII In Counts 111 seeks to recover the are X essentially and V of the complaint, unpaid sums on two open However, Westmont has admitted in its answers to White's request for admissions and set of interrogatories that the debts incurred on the accounts were expenses incurred by Continental as a corporation, rather than by White as an individual. at trial that it Westmont claims it will demonstrate relied on oral assurances of payment guaranteed by White personally. However, the court was not required to anticipate further proof at trial. Perry Dooling v. (1979), 183 Mont. 451, 457, 600 P.2d 799, 802. We therefore find summary judgment proper as to Counts 111 and V of plaintiff's complaint. We now examine the facts underlying Findings of Fact 11 through VI. Westmont and Continental entered into three secured transactions. The first was on an installment sales contract for heavy equipment. Continental agreed to purchase a number of pieces of logging equipment, and White signed the agreement as an individual guarantor. Westmont filed a financing statement perfecting its interest in April, 1974, and listed the heavy equipment as collateral. The second secured transaction was a lease agreement entered into for the "lease" of a scraper. White also signed this agreement as an individual guarantor. Westmont filed a financing statement on the lease agreement, listing the scraper as collateral. Westmont arques the Pistrict Court erred in concluding the lease agreement was a lease purchase agreement, rather than leave for trial the issue of whether the lease was or was not a "true lease." We find ample evidence to support the District Court's finding that the lease was in fact a sale. First, Westmont itself refers to the agreement as a "lease purchase agreement" in its answers to F7hite ' s interrogatories. vice-president attached of finance, Walter White's to agreement Second, attorney's as a "lease Kero, in affidavit purchase Mestmont's a statement refers contract." to the Finally, F7estmont1s own treatment of the collateral strongly implies the transaction was actually a sale. Upon default, Westmont "purchased" the scraper, credited Continental's account for the "purchase price" of scraper to a third partv. $13,000.00 and then resold the In light of these facts, we find no genuine issue of fact existed as to the status of the lease purchase agreement. The third secured transaction was the execution of a promissory note signed by Continental and Charles White "as an individual." The note stated, "Each and every party signing or endorsing this note hereby waives presentment, demand, protest and notice of nonpayment thereof, and as a and not declares himself bound thereon - - principal - - - - as a surety." (Emphasis added.) From the face of the note, it appears White signed expressly as a co-maker rather than as a guarantor. The note was secured by the same TS-14 scraper which secured the lease purchase agreement, and also by a Euclid waterwagon. The note apparently was used to refinance earlier debts on the open accounts noted above. In February, 1976, Westmont and Continental entered into a voluntary repossession agreement. The agreement stated that whereas Continental was i n d.efault on its i.nstallment . sales contract, lease agreement, promissory note and open accounts, and whereas Continental had already voluntarily returned all the equipment listed as collateral for the various debts, Continental and Westmont agreed to have Westmont sell the equipment and apply the proceeds to t-he debts. Continental waived the requirement that the equipment be sold at public auction and authorized Westmont to dispose of the equipment through private sales. Continental. also agreed to pay any deficiency arising from the sales. The agreement was signed president of Continental. by Robert Street, then A copy of the agreement was never sent to White, and in fact he never saw the agreement until the period of discovery in this action. Westmont does not dispute the fact notice of this agreement was never sent to White. It argues rather a theory of constructive notice, that White should have heen aware of this agreement since the final, mutual release between White and Continental was not signed until October, 1975. that he December, took no 1974. part White has sworn in his affidavit in Westmont Continental's has sufficient to rebut this statement. not business produced after evidence We therefore conclude no material issue of fact exists to dispute the contention that White never received notice of the repossession and sale of the collateral which secured the installment sales contract, the lease purchase agreement or the promissory note. In Montana, failure of a secured party to provide notice of sale of collateral. as required under S 30-9-504(3), MCA, bars the secured party from obtaining a deficiency judgment from the debtor. 702 P.2d Bank of Sheridan v. Devers (Mont. 1985), 1388, 1390, 42 St.Rep. 1107, 1110-11; FJippert v. Blackfeet Tribe (Mont. 1985), 695 P.2d 461, 465, 42 St.Rep. 1 200, 204. White, as an individual guarantor on the installment sales contract and lease agreement, and as a co-maker of the promissory note, was entitled to notice prior to Westmont's repossession and sale of the collateral. Failure to give notice precludes Westmont from recoverina a deficiency judgment on the three secured transactions. Westmont's final assignment of error to the District Court is i.ts award of attorney fees to White. Under the provisions of the three contracts, Westmont was entitled to attorney fees in debtor. Under S its prosecution of Falls v. the 28-3-704, IICA, the contractual right to attorney fees is reciprocal. Great action against Northwestern National Bank of Weaver-Maxwell, Inc. (Mont., No. Decided November 13, 1-9861, 43 St.Rep. 1995, 2003. 85-419, We find no abuse of discret.i.on in the District Court's award of attorney fees to White. Judgment of the District Court is affirmed. We Concur: d 1 We distinguish here First National Park Bank v. Johnson (9th Cir. 1977), 553 F.2d 599, 602. In that case, the court found that a guarantor was not a debtor for the purpose of waiving the notice requirement of ยงยง 30-9-501(3) and -504 ( 3 ) , MCA. A debtor is given the opportunity to waive notification of sale after default, but may not waive notice of repossession and sale prior to default. In this case, White was not at any time given an opportunity to waive notification. i I , '
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