WORTMAN v GRIFF
Annotate this Case
Download PDF
No. 82-56 IN THE SUPREME COURT OF THE STATE OF MONTANA 1982 RICHARD A. WORTMAN and ANN F. WORTMAN, Plaintiffs and Appellants, GARY J. GRIFF, GERALD J. CAPLAN, CONSERVATIVE INVESTORS GROUP, and FIRST SECURITY BANK OF LIVINGSTON, Defendants and Respondents. Appeal from: District Court of the Eighteenth Judicial District, In and for the County of Gallatin Honorable W. W. Lessley, Judge presiding. Counsel of Record: For Plaintiffs: Nash & Nash, Bozeman, Montana Cordell Johnson, Helena, Montana For Defendants: Gene I. Brown, Bozeman, Montana IIuppert & Swindlehurst, ~ivingston,Montana Submitted on briefs: Decided: Filed: Clerk July 15, 1982 October 4, 1982 J u s t i c e Gene B. Daly d e l i v e r e d t h e O p i n i o n of t h e C o u r t . Mr. This with action Gary a r o s e o u t of Griff and two a g r e e m e n t s by t h e p l a i n t i f f s Gerald Caplan, C o n s e r v a t i v e I n v e s t o r s Group, p a r c e l s of land. Eighteenth Court found that shareholders and separate had d e f r a u d e d District distinct t h e d e f e n d a n t cor- and C a p l a n , who are o f f i c e r s and Griff of the the defendant the corporation, contacted They became t h e p r o p e r t y t h r o u g h a n ad i n t h e W a l l S t r e e t J o u r n a l . A f t e r r e c e i p t of a b r o c h u r e on t h e l a n d and some i n i t i a l phone contact with the p l a i n t i f f , t o Montana 1977. f o r two the p l a i n t i f f about purchasing the property i n question. aware of with From t h i s j u d g m e n t , p l a i n t i f f a p p e a l s . The d e f e n d a n t s , sole its d e c i s i o n , were contracts a g r e e m e n t s , and t h a t p l a i n t i f f poration. and i n t h e D i s t r i c t C o u r t of t h e In District. the individuals, a California corporation, A t r i a l was h e l d Judicial as from C a l i f o r n i a t o l o o k a t t h e land After subdivided tiations, R i c h a r d Wortman, t h e d e f e n d a n t , f l e w t a k i n g a walking into ten-acre t o u r of tracts, i n mid-November the property, and then which was conducting nego- it was a g r e e d t h a t d e f e n d a n t s , G r i f f and C a p l a n , would p u r c h a s e l o t s one t h r o u g h s i x and t h e h o u s e l o c a t e d on l o t o n e as i n d i v i d u a l s and t h e c o r p o r a t i o n would p u r c h a s e l o t s s e v e n t h r o u g h thirteen. This agreement defendants' knowledge floodplain, because building sites that it was some of was outside entered the alleged the into despite the l o t s were l o c a t e d in a plaintiff floodplain said on were there every lot. A l t h o u g h t h e r e is e v i d e n c e t h a t t h e l o t s i n b o t h p a r c e l s were not of total equal value, price contracts to each it was a g r e e d contract. to a l l o c a t e one-half It was also agreed of in the both t h a t t h e p u r c h a s e r was to pay t h e t a x e s on t h e l a n d . T h i s was n o t done and p l a i n t i f f had t o p a y t h e t a x e s to p r e v e n t a t a x l i e n f r o m b e i n g imposed upon t h e l a n d . However, a n a t t e m p t was made t o r e i m b u r s e t h e p l a i n t i f f f o r s a i d t a x e s b u t he r e f u s e d the check. It should also be noted that t i a t i o n s , n e i t h e r c o n t r a c t r e f e r s to t h e o t h e r . despite the nego- The its semi-annual p a y m e n t s , as r e q u i r e d b y t h e c o n t r a c t i n March 1 9 8 1 . The i n d i v i - dual corporate defendants defendant attempted stopped to make making their payment t h r o u g h s i x , which was r e f u s e d by t h e p l a i n t i f f . lots on one The p l a i n t i f f ' s t h a t t h e c o n t r a c t s are not s e p a r a t e b u t c o n s t i t u t e one contend agreement, and therefore the d e f e n d a n t s are i n d e f a u l t on t h e w h o l e and t h e i r r i g h t s i n a l l t h e p r o p e r t y s h o u l d be t e r m i n a t e d . D e f e n d a n t s on t h e o t h e r hand a n s w e r e d b y c o n t e n d i n g t h a t t h e t w o c o n t r a c t s a r e s e p a r a t e and d i s t i n c t . The c o r p o r a t e d e f e n d a n t also counterclaimed asking f o r r e s c i s s i o n because p l a i n t i f f misrepresented seven sites on lots them, floodplain when and no in through fact thirteen such sites such lots existed as having were building located some on had in of a them. T h e r e are f o u r i s s u e s r a i s e d on a p p e a l : Whether 1. resident the corporate Whether 2. the Court District defendant's erred counterclaim Court's District i n granting finding for of the non- rescission? fraud is sup- p o r t e d by s u b s t a n t i a l e v i d e n c e ? 3. Whether t h e c o u r t e r r e d in failing to c o n s t r u e t h e two c o n t r a c t s as o n e ? 4. Whether a t t o r n e y fees should have been awarded to the prevailing party? The i s s u e o f w h e t h e r t h e D i s t r i c t C o u r t s h o u l d h a v e g r a n t e d the nonresident rescission the corporate defendant I is t h e m o s t e a s i l y r e s o l v e d . corporation a g a i n s t them. cannot assert its counterclaim s for A p p e l l a n t s claim t h a t counterclaim They c i t e s e c t i o n 3 5 - 1 - 1 0 0 4 ( 1 ) , for MCA, rescission which p r o h i - b i t s a c o r p o r a t i o n n o t a u t h o r i z e d to do b u s i n e s s i n Montana from s u i n g i n t h e c o u r t s of t h i s s t a t e , i n s u p p o r t of t h i s c o n t e n t i o n . However, suit. by t h e c o r p o r a t i o n i n t h i s s i t u a t i o n was n o t i n s t i t u t i n g a They were m e r e l y d e f e n d i n g t h e a c t i o n b r o u g h t a g a i n s t them plaintiffs, 35-1-1004(2), d e f e n s e which which MCA. they have a right to do under section The c o u n t e r c l a i m is j u s t o n e a s p e c t o f t h e y are e n t i t l e d t o r a i s e and the c a n t h e r e f o r e be brought. The n e x t i s s u e t o be a d d r e s s e d is w h e t h e r t h e r e is s u b s t a n t i a l c r e d i b l e e v i d e n c e to s u p p o r t t h e nine are elements which must be f i n d i n g of established fraud. prove to There fraud. These are: "1. A representation; "2. F a l s i t y of t h e r e p r e s e n t a t i o n ; "3. M a t e r i a l i t y of t h e r e p r e s e n t a t i o n ; " 4 . S p e a k e r ' s k n o w l e d g e of t h e f a l s i t y of t h e r e p r e s e n t a t i o n o r i g n o r a n c e of i t s t r u t h ; Speaker's "5. intent it should relied be upon ; " 6 . The h e a r e r ' s i g n o r a n c e of the representation; " 7 . The h e a r e r ' s tion ; t h e f a l s i t y of r e l i a n c e on t h e r e p r e s e n t a - " 8 . The hearer's r e p r e s e n t a t i o n ; and right to rely on the " 9 . C o n s e q u e n t and p r o x i m a t e i n j u r y c a u s e d b y t h e r e l i a n c e on t h e r e p r e s e n t a t i o n . " Van E t t i n g e r v. P a p p i n ( 1 9 7 6 ) , 1 8 0 Mont 1, 1 0 , 5 8 8 P.2d 9 8 8 . The D i s t r i c t C o u r t i n t h i s case e l e m e n t s were p r e s e n t as believed is e v i d e n c e d by t h a t a l l of its finding of said fact number e i g h t s t a t i n g t h a t t h e p l a i n t i f f f r a u d u l e n t l y r e p r e s e n t e d l o t s s e v e n t h r o u g h t h i r t e e n and i t s c o n c l u s i o n of l a w number o n e stating that Appellants Firstly, was rescission raise two major proper due to fraud. contentions in this regard. t h e y c o n t e n d t h a t b e c a u s e t h e d e f e n d a n t s had t h e o p p o r - t u n i t y t o i n v e s t i g a t e t o see w h e t h e r t h e r e were a c t u a l l y b u i l d i n g sites on the complain. (1982), lots, But, 647 P.2d and this that is n o t 354, 39 since the they case. St.Rep. did not they I n J e n k i n s v. 1156, this Court Lowe d o n o t s t a n d f o r t h e "Van - g e r and n - E t t i. p r o p o s i t i o n t h a t a b u y e r m u s t assume a s e l l e r o r h i s a g e n t is l y i n g when t h e b u y e r is t o l d a p l a u s i b l e e x p l a n a t i o n f o r a d e f e c t and w h a t is r e q u i r e d to c u r e t h e d e f e c t . The K a n s a s Supreme C o u r t h a s e x p r e s s e d t h e l i m i t a t i o n s t h a t need t o be p l a c e d on t h e Van E t t i n g e r and Lowe cases: " ' T h e t r e n d o f t h e d e c i s i o n s of t h e c o u r t s of t h i s and o t h e r s t a t e s i s t o w a r d s t h e j u s t cannot Hillard stated: d o c t r i n e t h a t w h e r e a c o n t r a c t is i n d u c e d by f a l s e r e p r e s e n t a t i o n s as t o m a t e r i a l e x i s t e n t f a c t s , w h i c h are made w i t h t h e i n t e n t t o d e c e i v e , and upon which t h e p l a i n t i f f r e l i e d , i t is no d e f e n s e , t o t h e a c t i o n f o r r e s c i s s i o n o r f o r damages a r i s i n g o u t of t h e d e c e i t , t h a t t h e p a r t y t o whom t h e r e p r e s e n t a t i o n s were made m i g h t , w i t h d u e d i l i g e n c e , h a v e d i s c o v e r e d t h e i r f a l s i t y , and t h a t h e made n o I 11 searching inquiry into facts N o r d s t r o m v . Miller ( 1 9 8 0 ) , 227 Kan. 591 6 0 5 P.2d 5 4 5 , 5 5 3 , q u o t i n g Speed v . H o l l i n g s w o r t h ( 1 8 9 4 ) , 54 Kan. 4 3 6 , 4 4 0 , 38 P. 4 9 6 , 497. . "Opportunity to i n s p e c t i n i t s e l f is n o d e f e n s e to p o s s i b l e w i l l f u l m i s r e p r e s e n t a t i o n s t h a t , b e c a u s e of t h e i r p l a u s i b i l i t y , p r e c l u d e f u r t h e r i n v e s t i g a t i o n . S e e a l s o , S c h e c h t e r v. B r e w e r (Mo. 1 9 6 1 ) , 3 4 4 S.W.2d 7 8 4 , and Lumby v . Doetch ( 1 9 7 9 ) f Mont , 6 0 0 P.2d 2 0 0 , 36 S t . R e p . 1683:"- 3 9 ~ t . ~ g p ; - . a1160. t . Secondly, floodplain if they contend that because or are m e t regulations you that can the build lots on could a be r e a r r a n g e d so a b u i l d i n g s i t e e x i s t s on e a c h t h a t t h e y a r e n o t liable. However, this is not the case s i t u a t i o n s h a s a n y t h i n g to do w i t h t h e t h e r e were building representation of these t h a t the t h e p l a i n t i f f to h a v e made, D i s t r i c t Court must have determined that neither as sites o u t s i d e the f l o o d p l a i n on e a c h lot. A s t h i s C o u r t h a s s t a t e d on p r e v i o u s i n n u m e r a b l e o c c a s i o n s a d e c i s i o n o f t h e D i s t r i c t C o u r t w i l l n o t be o v e r t u r n e d w h e r e t h e r e i s s u b s t a n t i a l c r e d i b l e e v i d e n c e to s u p p o r t i t . (1979), 600 P.2d 2001 36 St.Rep. mination on the issue of substantial g u i d e d b y a number o f p r i n c i p l e s . 1684. Lumby v . I n making evidence this deter- Court is T h e s e a r e most c o n c i s e l y set o u t i n Lumby w h e r e t h i s C o u r t s t a t e d : " I n r e s o l v i n g t h i s i s s u e , w e are guided by a number o f p r i n c i p l e s established by t h i s Court. The c r e d i b i l i t y o f w i t n e s s e s and t h e w e i g h t t o be g i v e n t h e i r t e s t i m o n y a r e matters f o r the District Court's determination i n a n o n j u r y case. C o r s c a d d e n v . Kenney ( 1 9 7 7 ) , Mont 572 P.2d 1 2 3 4 , 1 2 3 7 , 34 S t .Rep. 1533;-1-577. Thus, i n examining t h e s u f f i c i e n c y o f t h e e v i d e n c e , w e m u s t view t h e same 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 y , and w e w i l l p r e s u m e t h e f i n d i n g s and j u d g m e n t b y t h e D i s t r i c t C o u r t are correct. H e l l i c k s o n v. B a r r e t t M o b i l e Home T r a n s p o r t , I n c . ( 1 9 7 3 ) , 1 6 1 Mont. 4 5 5 , 4 5 9 , 507 P.2d 5 2 3 , 5 2 5 . W w i l l not overturn the e findings and c o n c l u s i o n s o f t h e D i s t r i c t . a Doetch C o u r t u n l e s s t h e r e is a d e c i d e d p r e p o n d e r a n c e o f t h e e v i d e n c e a g a i n s t them, and when t h e evidence f u r n i s h e s reasonable grounds f o r d i f ferent conclusions, the f i n d i n g s of the D i s t r i c t C o u r t w i l l n o t be d i s t u r b e d . Morgen a n d Oswood C o n s t . C o . v . B i g Sky o f Mont. ( 1 9 7 6 ) , 1 7 1 Mont. 2 6 8 , 2 7 5 , 557 P.2d 1 0 1 7 , 1021. The b u r d e n o f proof is on t h e appellant. Schuman v . S t u d y Com'n of Mont - .- , 5 7 8 Yellowstone Cty. (1978 ) , P.2d 2 9 1 , 2 9 2 , 3 5 S t . R e p . 3 8 6 , 3 8 8 . " 600 P.2d a t 202. . I n examining this record i n l i g h t of these principles and d e s p i t e t h e many c o n f l i c t s i n t h e e v i d e n c e r e l a t i n g t o t h e a b o v e enumerated nine elements District Court s decision, dence i n the record The third issue of fraud, we cannot overturn the as t h e r e is s u b s t a n t i a l c r e d i b l e e v i - to s u p p o r t its f i n d i n g t h a t f r a u d e x i s t e d . raised on a p p e a l concerns whether the two c o n t r a c t s be t w e e n t h e p l a i n t i f f and t h e i n d i v i d u a l d e f e n d a n t s and the plaintiff one. As and t h e c o r p o r a t e d e f e n d a n t s h o u l d be c o n s t r u e d as noted above, the District Court found them to be separate. A corporation stockholders. h a s a s e p a r a t e and d i s t i n c t i d e n t i t y from i t s Monarch F i r e I n s u r a n c e C o . I l o n t . 3 0 3 , 3 0 8 , 1 2 4 P.2d 9 9 4 . v. Holmes ( 1 9 4 2 ) , 1 1 3 Appellants urge t h a t t h i s s e p a r a t e i d e n t i t y be d i s r e g a r d e d , as G r i f f and C a p l a n and t h e c o r p o r a t i o n a r e o n e and t h e same, and t h e c o n t r a c t s be c o n s t r u e d as o n e u n d e r s e c t i o n s 28-3-301 and 28-3-203, MCA. However, t h e g e n e r a l r u l e s e t down by t h i s C o u r t i n Monarch F i r e I n s u r a n c e Co. v . s u p r a , as t o d i s r e g a r d i n g a c o r p o r a t e i d e n t i t y is: .. " I . a c o r p o r a t i o n r e t a i n s i t s s e p a r a t e and d i s t i n c t i d e n t i t y w h e r e i t s s t o c k is owned p a r t l y or e n t i r e l y by a n o t h e r c o r p o r a t i o n a s w e l l as w h e r e it is owned by n a t u r a l p e r s o n s . ' ( 1 8 C . J . S . , C o r p o r a t i o n s , sec. 5 , p. 3 7 5 . ) B e f o r e t h e c o r p o r a t e c l o a k w i l l be d i s r e g a r d e d it must a p p e a r n o t o n l y t h a t t h e c o r p o r a t i o n i s c o n t r o l l e d and i n f l u e n c e d b y o n e or a f e w p e r s o n s , b u t , i n a d d i t i o n , it is n e c e s s a r y to demonstrate t h a t t h e c o r p o r a t e cloak is u t i l i z e d a s a s u b t e r f u g e t o d e f e a t p u b l i c conv e n i e n c e , t o j u s t i f y wrong, or to p e r p e t r a t e fraud. ( 1 8 C. J. S . , C o r p o r a t i o n s , s e c . 6 , p. 378.) Under t h e i d e n t i t y t h e o r y it m u s t a p p e a r f r o m t h e e v i d e n c e and m u s t be s u f f i c i e n t l y a l l e g e d t h a t t h e s u b s i d i a r y corp o r a t i o n is a mere c r e a t u r e o f t h e p a r e n t , h a v i n g n o s e p a r a t e b u s i n e s s e x i s t e n c e and s e r v i n g a s a mere b u s i n e s s c o n d u i t of t h e Holmes, p a r e n t s ( I n re Muncie P u l p C o . , 2 C r , 139 Fed. 5 4 6 ) o r a mere d e p a r t m e n t o f t h e p a r e n t ( I n t e r s t a t e T e l . Co. v . B a l t i m o r e & 0 . T e l . C o . , C. C . , 5 1 Fed. 4 9 ) . " I n People ex rel. Studebaker Corp. v. G i l c h r i s t , 244 N.Y. 1 1 4 , 1 5 5 N.E. 6 8 , 7 1 , it is s a i d : ' Bef ore " t h e c o r p o r a t i o n p e r s o n a " may be i g n o r e d , t h e e v i d e n c e m u s t show t h a t " t h e s u b s i d a i r y is n o t l e f t w i t h a n y autonomy" P r o c t o r & Gamble C o . v . Newton, s u p r a [D.C. 289 F e d . 1 0 1 3 1 ) and t h a t t h e p a r e n t , t h o u g h i n f o r m s p e a k i n g and a c t i n g t h r o u g h a n o t h e r , is o p e r a t i n g t h e b u s i n e s s d i r e c t l y f o r i t s e l f .' ( S e e , also, Erickson v. Revere E l e v a t o r C o . , 1 1 0 Minn. 4 4 3 , 1 2 6 N.W. 1 3 0 . ) " 1 1 3 Mont. a t 308. . .. I n the present case t h e r e is a c o n f l i c t as t o how and a t whose u r g i n g versions c o n t r a c t s came i n t o b e i n g . the The Wortmans separate c o n t r a c t s were made at the terms of two s i d e s ' these two claim t h a t t h e y s o l d t h e l a n d t o G r i f f and C a p l a n as i n d i v i d u a l s . the in the They m a i n t a i n t h a t request of C a p l a n , t o them i n d i v i d u a l l y and to t h e c o r p o r a t i o n . Griff and Thus, they claim t h a t it is o n e c o n t r a c t e v i d e n c e d b y t w o i n s t r u m e n t s and a default on either half constitutes a default on the whole. On t h e o t h e r h a n d , t h e r e s p o n d e n t s c o n t e n d t h a t t h e c o n t r a c t s They claim t h e c o n t r a c t s were drawn a r e s e p a r a t e and d i s t i n c t . by the plaintiffs1 attorney at the plaintiffs1 direction, and t h a t n e i t h e r c o n t r a c t r e f e r s to t h e o t h e r . F i n a l l y and u n e q u i v o - cally are c l e a r and they point out that both contracts unam- b i g u o u s on t h e i r f a c e . Where s u c h a c o n f l i c t e x i s t s , a s p r e v i o u s l y p o i n t e d o u t , t h i s Court can o n l y look to see i f the lower c o u r t ' s c o n c l u s i o n s are s u p p o r t e d b y t h e r e c o r d . bility of testimony are left for the f i n d i n g s and Matters o f District the credi- Court's deter- m i n a t i o n , Lumby v . D o e t c h , s u p r a . I n t h i s case, t h e c o n t r a c t s s p e a k f o r t h e m s e l v e s . clear and unambiguous s l i g h t e s t reference where t h e on their to t h e o t h e r . faces. Neither The l a w o f They a r e makes the Montana is t h a t l a n g u a g e is c l e a r and u n a m b i g u o u s o n i t s f a c e , i t is t h e d u t y o f t h e c o u r t t o e n f o r c e it a s t h e p a r t i e s made i t , Ryan v. Board of County C o m m i s s i o n e r s ( 1 9 8 0 ) , 6 2 0 P.2d 1 2 0 3 , 1 2 0 7 , 37 St.Rep. 1 9 6 5 , Madison F o r k Ranch v . L & Lodge P o l e T i m b e r B P r o d u c t s ( 1 9 8 0 ) , 615 P.2d 9 0 0 , 37 S t . R e p . 1468. a r e n o t t h e same a s a p p e l l a n t s c o n t e n d , because although t h e r e may be some e v i d e n c e i n t h e r e c o r d The p a r t i e s h e r e t o support disregarding the c o r p o r a t i o n ' s s e p a r a t e i d e n t i t y , based on t h e r u l e enumerated s u p r a , t h e r e is a l s o e v i d e n c e i n t h e Monarch F i r e I n s u r a n c e C o . , r e c o r d m i t i g a t i n g a g a i n s t t h e a p p l i c a t i o n of t h a t r u l e . t h i s mitigating in e v i d e n c e s u b s t a n t i a l and t h u s cannot W e find interfere w i t h t h e d e c i s i o n of t h e D i s t r i c t C o u r t . The final issue raised on appeal, by the respondents is w h e t h e r t h e y s h o u l d h a v e b e e n awarded a t t o r n e y ' s f e e s as t h e p r e vailing party. The c o n t r a c t s b o t h p r o v i d e t h a t : " I n t h e e v e n t of l e g a l a c t i o n to r e g a i n p o s s e s s i o n or t o e n f o r c e t h e r i g h t s of a n y p a r t y t o t h i s a g r e e m e n t , i t is u n d e r s t o o d t h a t t h e p r e v a i l i n g p a r t y s h a l l be e n t i t l e d t o a r e a s o n a b l e a t t o r n e y ' s f e e to be f i x e d by t h e C o u r t i n s u c h act i o n ; " i s c l e a r and u n a m b i g u o u s , T h i s language i n i t s e l f and t h e c o u r t s h o u l d h a v e e n f o r c e d i t as made by t h e p a r t i e s , Ryan v. Board of County Commissioners, 620 P.2d a t 1207. v i o u s l y u p h e l d s u c h a n award o f a t t o r n e y ' s C o u r t where the contract N e l s o n ( 1 9 8 1 ) , 637 P.2d f a i r l y provided 1 9 , 38 S t . R e p . This Court has pre- f e e s by t h e D i s t r i c t for them. Hares v. 2036. The j u d g m e n t o f t h e D i s t r i c t C o u r t i s a f f i r m e d and t h i s case is remanded W e concur: for further proceeding
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
