No. 81-276 IN THE SUPREME COURT OF THE STATE OF MONTANA 1982
FIRST BANK-SOUTHSIDE MISSOULA, Plaintiff and Respondent,
JAMES H. SADLER, DARLA C. SADLER and BILLIE WILLIAMS, Defendants and Appellants.
Appeal from: District Court of the Fourth Judicial District, In and for the County of Missoula Honorable James B. Wheelis, Judge presiding. Counsel of Record: For Appellants: Milodragovich, Dale & Dye, Missoula, Montana James Sadler, Missoula, Montana For Respondent: Anthony F. Keast, Missoula, Montana Garlington, Lohn & Robinson, Missoula, Montana
Submitted on Briefs: April 29, 1982 Decided: August 11,1982 Filed: AUG 11 1982 Mr. Justice John Conway H a r r i s o n d e l i v e r e d t h e O p i n i o n of the Court. This is an action commenced by the plaintiff bank an i n t e r p l e a d e r , t o compel t h e d e f e n d a n t s to s e t t l e t h e i r r e s p e c t i v e r i g h t t o c e r t a i n real e s t a t e i n which t h e a p p e l l a n t was a s e l l e r
and t h e r e s p o n d e n t was a b u y e r . The c a s e was t r i e d without a j u r y and judgment was e n t e r e d i n f a v o r of t h e r e s p o n d e n t b u y e r . From this j udgmen t the appellant sel l e r appe a 1s . The sole i s s u e p r e s e n t e d is whether the t r i a l judge abused his judicial discretion by denying the appellant, Billie
Williams, a n y remedy i n t h i s c a u s e of a c t i o n . The c o n t r a c t h e r e
o r i g i n a t e d when the appellant, B i l l i e Williams, and h e r f o r m e r husband, Richard Williams, s o l d t h e p r o p e r t y i n v o l v e d s u b j e c t to a c o n t r a c t t o a f i r m known a s N o r t h w e s t L i m i t e d . The p u r c h a s e r ' s
i n t e r e s t i n N o r t h w e s t L i m i t e d was t r a n s f e r r e d to J a m e s and D a r l a Sadler thereafter. The a p p e l l a n t a l l e g e s t h a t a f t e r t h e t r a n s f e r of t h e p r o p e r t y t o t h e S a d l e r s , p a y m e n t s were f r e q u e n t l y l a t e and
at times the Sadlers had more than one payment delinquent. A n o t i c e of d e f a u l t was m a i l e d to t h e S a d l e r s and r e c e i v e d by
them; and t h e y i n t u r n p a i d to t h e escrow a g e n t t h e amount d u e on
a F r i d a y a f t e r n o o n a f t e r t h r e e o ' c l o c k p.m. o n t h e 3 0 t h d a y of the default. T h e r e a f t e r on t h e 3 3 r d d a y of default, a Monday, B i l l i e W i l l i a m s demanded t h a t t h e escrow a g e n t close t h e escrow,
a s payment had b e e n made a f t e r 3:00 p.m. on t h e 3 0 t h day. As a
result, the escrow agent filed this interpleader action. The a p p e l l a n t , B i l l i e W i l l i a m s , is a r e a l e s t a t e loan o f f i c e r with the First Bank-Western, Missoula, Montana, which is a f f i -
liated with the escrow agent, the First Bank-Southside at
M i s s o u l a , Montana. Geraldine C. McLaughlin is the mother-in-law of James H. Sadler, and is the owner/operator of Montana L e a s i n g , a commercial property management firm that manages the real e s t a t e subject t o the Williams/Sadler contract. A l l p a y m e n t s on
t h e c o n t r a c t were made by t h e l e a s i n g company from r e n t s r e c e i v e d from t h e p r o p e r t y . A t the time of t h e d e f a u l t , t h e r e w a s a nega- t i v e c a s h f l o w of $320 a month, p a r t i a l l y c a u s e d by t h e i n c r e a s e
in taxes from $1,200 to $3,200 a year on the property. The Sadler contract includes a mortgage at the Western
F e d e r a l S a v i n g s and Loan and t h e a p p e l l a n t W i l l i a m s r e c e i v e s an i n t e r e s t o v e r r i d e due to t h e f a c t t h a t t h e S a d l e r c o n t r a c t i s a t
a greater interest rate than the Williams' Western Federal S a v i n g s and Loan m o r t g a g e . The payment i n q u e s t i o n a m o u n t s to
$1,046.80 in principal and i n t e r e s t and $355.50 p e r month f o r a tax and insurance budget. After payment to the First
Bank-Southside , the bank distributes the whole payment to
B i l l i e Williams a s per her i n s t r u c t i o n s .
Mrs. W i l l i a m s claims by n o t r e c e i v i n g payment o n t h e first o f e v e r y month, t h e r e is a b u r d e n p l a c e d on h e r a s s h e is c h a r g e d a $15 l a t e p e n a l t y payment on t h e o u t s t a n d i n g m o r t g a g e a t t h e Western Federal Savings and Loan. In reply, the Sadlers
complained t h a t t h e t e n a n t s pay t h e i r r e n t s l a t e ; t h u s causing
them t o make t h e i r p a y m e n t s l a t e o n o c c a s i o n . T h e r e is t e s t i m o n y
t h a t t h e S a d l e r s had r e q u e s t e d t h a t t h e y be a l l o w e d to d i v i d e t h e payment, to allow the Sadlers to pay the payment to Western F e d e r a l S a v i n g s and Loan d i r e c t l y , t h u s s a v i n g any l a t e p e n a l t y payments to the appellant. The a p p e l l a n t r e f u s e d t o go a l o n g
w i t h t h i s p l a n o f making payment. Much i s made i n t h e b r i e f i n g o f t h e c a s e and i n t h e t e s t i m o n y
a t t h e t i m e t h e c a u s e was h e a r d , o f the f a c t t h a t M r . S a d l e r is an attorney. However, t h e r e i s n o t h i n g i n t h e r e c o r d to s u b s t a n - tiate any a l l e g a t i o n s t h a t M r . S a d l e r u s e s h i s p o s i t i o n a s an attorney to his own advantage. T h e r e was no c l i e n t / a t t o r n e y
r e l a t i o n s h i p e x i s t i n g b e t w e e n t h e p a r t i e s and t h e r e c o r d f a i l s to r e v e a l a n y i m p r o p r i e t y on t h e p a r t of M r . Sadler in handling h i s d e b t o b l i g a t i o n s to M r s . Williams. The t e s t i m o n y c l e a r l y shows t h a t t h e economic f a c t o r s o f t h e r e n t a l p r o p e r t y i n t h e b u i l d i n g i n v o l v e d is s u c h t h a t t h e S a d l e r s h a v e to g e t t h e r e n t s to pay
off Mrs. W i l l i a m s a n d , t h e economy b e i n g what i t is, t h e r e a r e
p e r i o d s when i t is n o t p o s s i b l e to pay t h e o b l i g a t i o n s o n t h e schedule t h a t the appellant W i l l i a m s desires.
The t r i a l c o u r t found t h a t s i n c e t h e payment was made o n t h e
30th day, t h e r e was n o d e f a u l t . The p o s i t i o n of the appellant i s ; b e c a u s e S a d l e r knows o f t h e 3 : 0 0 p.m. c u t o f f t i m e a t t h e bank o n F r i d a y a f t e r n o o n and made p a y m e n t s a f t e r t h e 3:00 p.m. cutoff
time; t h a t s h e s h o u l d h a v e some r e l i e f from t h e c o u r t , e i t h e r (1) the court should have declared the contract as clear, unambiguous, and that Sadlers forfeited their rights in the c o n t r a c t by failure t o remedy the contract within t h e 30-days
allowed therein; or ( 2 ) t h a t t h e c o u r t s h o u l d have reformed t h e contract to provide f o r a late-payment penalty to correct the deficiency of the contract and to enforce compliance by the
d e f e n d a n t , S a d l e r ; o r ( 3 ) d e n y a r e c o v e r y u n d e r e i t h e r (1) o r ( 2 ) a b o v e and invoke t h e c o u r t ' s i n h e r e n t e q u i t a b l e power to o r d e r t h e o f f i c e r o f t h e c o u r t to p e r f o r m l e g a l and c o n t r a c t u a l d u t i e s
i n a matter c o n s i s t e n t w i t h t h e c o n t r a c t and t h e e t h i c a l r e q u i r e - ments of t h e p r o f e s s i o n . T h i s C o u r t h a s s t a t e d o n numerous o c c a s i o n s t h a t it w i l l n o t
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No. 81-276 IN THE SUPREME COURT OF THE STATE OF MONTANA 1982
FIRST BANK-SOUTHSIDE MISSOULA, Plaintiff and Respondent,
JAMES H. SADLER, DARLA C. SADLER and BILLIE WILLIAMS, Defendants and Appellants.
Appeal from: District Court of the Fourth Judicial District, In and for the County of Missoula Honorable James B. Wheelis, Judge presiding. Counsel of Record: For Appellants: Milodragovich, Dale & Dye, Missoula, Montana James Sadler, Missoula, Montana For Respondent: Anthony F. Keast, Missoula, Montana Garlington, Lohn & Robinson, Missoula, Montana
Submitted on Briefs: April 29, 1982 Decided: August 11,1982 Filed: AUG 11 1982 Mr. Justice John Conway H a r r i s o n d e l i v e r e d t h e O p i n i o n of the Court. This is an action commenced by the plaintiff bank an i n t e r p l e a d e r , t o compel t h e d e f e n d a n t s to s e t t l e t h e i r r e s p e c t i v e r i g h t t o c e r t a i n real e s t a t e i n which t h e a p p e l l a n t was a s e l l e r
and t h e r e s p o n d e n t was a b u y e r . The c a s e was t r i e d without a j u r y and judgment was e n t e r e d i n f a v o r of t h e r e s p o n d e n t b u y e r . From this j udgmen t the appellant sel l e r appe a 1s . The sole i s s u e p r e s e n t e d is whether the t r i a l judge abused his judicial discretion by denying the appellant, Billie
Williams, a n y remedy i n t h i s c a u s e of a c t i o n . The c o n t r a c t h e r e
o r i g i n a t e d when the appellant, B i l l i e Williams, and h e r f o r m e r husband, Richard Williams, s o l d t h e p r o p e r t y i n v o l v e d s u b j e c t to a c o n t r a c t t o a f i r m known a s N o r t h w e s t L i m i t e d . The p u r c h a s e r ' s
i n t e r e s t i n N o r t h w e s t L i m i t e d was t r a n s f e r r e d to J a m e s and D a r l a Sadler thereafter. The a p p e l l a n t a l l e g e s t h a t a f t e r t h e t r a n s f e r of t h e p r o p e r t y t o t h e S a d l e r s , p a y m e n t s were f r e q u e n t l y l a t e and
at times the Sadlers had more than one payment delinquent. A n o t i c e of d e f a u l t was m a i l e d to t h e S a d l e r s and r e c e i v e d by
them; and t h e y i n t u r n p a i d to t h e escrow a g e n t t h e amount d u e on
a F r i d a y a f t e r n o o n a f t e r t h r e e o ' c l o c k p.m. o n t h e 3 0 t h d a y of the default. T h e r e a f t e r on t h e 3 3 r d d a y of default, a Monday, B i l l i e W i l l i a m s demanded t h a t t h e escrow a g e n t close t h e escrow,
a s payment had b e e n made a f t e r 3:00 p.m. on t h e 3 0 t h day. As a
result, the escrow agent filed this interpleader action. The a p p e l l a n t , B i l l i e W i l l i a m s , is a r e a l e s t a t e loan o f f i c e r with the First Bank-Western, Missoula, Montana, which is a f f i -
liated with the escrow agent, the First Bank-Southside at
M i s s o u l a , Montana. Geraldine C. McLaughlin is the mother-in-law of James H. Sadler, and is the owner/operator of Montana L e a s i n g , a commercial property management firm that manages the real e s t a t e subject t o the Williams/Sadler contract. A l l p a y m e n t s on
t h e c o n t r a c t were made by t h e l e a s i n g company from r e n t s r e c e i v e d from t h e p r o p e r t y . A t the time of t h e d e f a u l t , t h e r e w a s a nega- t i v e c a s h f l o w of $320 a month, p a r t i a l l y c a u s e d by t h e i n c r e a s e
in taxes from $1,200 to $3,200 a year on the property. The Sadler contract includes a mortgage at the Western
F e d e r a l S a v i n g s and Loan and t h e a p p e l l a n t W i l l i a m s r e c e i v e s an i n t e r e s t o v e r r i d e due to t h e f a c t t h a t t h e S a d l e r c o n t r a c t i s a t
a greater interest rate than the Williams' Western Federal S a v i n g s and Loan m o r t g a g e . The payment i n q u e s t i o n a m o u n t s to
$1,046.80 in principal and i n t e r e s t and $355.50 p e r month f o r a tax and insurance budget. After payment to the First
Bank-Southside , the bank distributes the whole payment to
B i l l i e Williams a s per her i n s t r u c t i o n s .
Mrs. W i l l i a m s claims by n o t r e c e i v i n g payment o n t h e first o f e v e r y month, t h e r e is a b u r d e n p l a c e d on h e r a s s h e is c h a r g e d a $15 l a t e p e n a l t y payment on t h e o u t s t a n d i n g m o r t g a g e a t t h e Western Federal Savings and Loan. In reply, the Sadlers
complained t h a t t h e t e n a n t s pay t h e i r r e n t s l a t e ; t h u s causing
them t o make t h e i r p a y m e n t s l a t e o n o c c a s i o n . T h e r e is t e s t i m o n y
t h a t t h e S a d l e r s had r e q u e s t e d t h a t t h e y be a l l o w e d to d i v i d e t h e payment, to allow the Sadlers to pay the payment to Western F e d e r a l S a v i n g s and Loan d i r e c t l y , t h u s s a v i n g any l a t e p e n a l t y payments to the appellant. The a p p e l l a n t r e f u s e d t o go a l o n g
w i t h t h i s p l a n o f making payment. Much i s made i n t h e b r i e f i n g o f t h e c a s e and i n t h e t e s t i m o n y
a t t h e t i m e t h e c a u s e was h e a r d , o f the f a c t t h a t M r . S a d l e r is an attorney. However, t h e r e i s n o t h i n g i n t h e r e c o r d to s u b s t a n - tiate any a l l e g a t i o n s t h a t M r . S a d l e r u s e s h i s p o s i t i o n a s an attorney to his own advantage. T h e r e was no c l i e n t / a t t o r n e y
r e l a t i o n s h i p e x i s t i n g b e t w e e n t h e p a r t i e s and t h e r e c o r d f a i l s to r e v e a l a n y i m p r o p r i e t y on t h e p a r t of M r . Sadler in handling h i s d e b t o b l i g a t i o n s to M r s . Williams. The t e s t i m o n y c l e a r l y shows t h a t t h e economic f a c t o r s o f t h e r e n t a l p r o p e r t y i n t h e b u i l d i n g i n v o l v e d is s u c h t h a t t h e S a d l e r s h a v e to g e t t h e r e n t s to pay
off Mrs. W i l l i a m s a n d , t h e economy b e i n g what i t is, t h e r e a r e
p e r i o d s when i t is n o t p o s s i b l e to pay t h e o b l i g a t i o n s o n t h e schedule t h a t the appellant W i l l i a m s desires.
The t r i a l c o u r t found t h a t s i n c e t h e payment was made o n t h e
30th day, t h e r e was n o d e f a u l t . The p o s i t i o n of the appellant i s ; b e c a u s e S a d l e r knows o f t h e 3 : 0 0 p.m. c u t o f f t i m e a t t h e bank o n F r i d a y a f t e r n o o n and made p a y m e n t s a f t e r t h e 3:00 p.m. cutoff
time; t h a t s h e s h o u l d h a v e some r e l i e f from t h e c o u r t , e i t h e r (1) the court should have declared the contract as clear, unambiguous, and that Sadlers forfeited their rights in the c o n t r a c t by failure t o remedy the contract within t h e 30-days
allowed therein; or ( 2 ) t h a t t h e c o u r t s h o u l d have reformed t h e contract to provide f o r a late-payment penalty to correct the deficiency of the contract and to enforce compliance by the
d e f e n d a n t , S a d l e r ; o r ( 3 ) d e n y a r e c o v e r y u n d e r e i t h e r (1) o r ( 2 ) a b o v e and invoke t h e c o u r t ' s i n h e r e n t e q u i t a b l e power to o r d e r t h e o f f i c e r o f t h e c o u r t to p e r f o r m l e g a l and c o n t r a c t u a l d u t i e s
i n a matter c o n s i s t e n t w i t h t h e c o n t r a c t and t h e e t h i c a l r e q u i r e - ments of t h e p r o f e s s i o n . T h i s C o u r t h a s s t a t e d o n numerous o c c a s i o n s t h a t it w i l l n o t
d i s t u r b t h e judgment o f t h e District Court u n l e s s e v i d e n c e pre- ponderates a g a i n s t it. Our s t a n d a r d o f r e v i e w i n n o n - j u r y cases i s s i m p l y t o d e t e r m i n e w h e t h e r t h e r e was s u b s t a n t i a l e v i d e n c e to
support the findings of the District Court, see Hayden v.
Snowden ( 1 9 7 8 ) , 1 7 6 Mont. 1 6 9 , 1 7 2 , 576 P.2d 1115, 1117. Here t h e e v i d e n c e was c l e a r and u n c o n t r o v e r t e d . The payment r e q u i r e d
by t h e n o t i c e o f d e f a u l t was p a i d o n t h e 3 0 t h d a y o f the default p e r i o d and t h e r e was n o t h i n g i n t h e c o n t r a c t c o n c e r n i n g a payment a f t e r 3:00 p.m. as being l a t e . A t the t i m e o f t h e payment o n t h e 3 0 t h d a y t h e b r e a c h o f c o n t r a c t was c u r e d and u n d e r t h e terms of the c o n t r a c t i n t h e p a r a g r a p h s e t o u t f o r d e f a u l t , it c l e a r l y
states t h a t if t h e d e f a u l t has been cured within t h i r t y days: "No d e f a u l t , termination, cancellation, or a c c e l e r a t i o n s h a l l be worked." The D i s t r i c t C o u r t was c o r r e c t when it found no d e f a u l t and
it was correct in rejecting the appellant's request for late p e n a l t y payments, for if s u c h had b e e n g r a n t e d , t h e c o u r t would be rewriting a contract which it is not permitted to do. Judgment of the District Court is affirmed, and on this
record each party shall pay their own attorney's fees.
We concur: