FULTON v CLARK

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No. 12989 I N T E SUPREME C U T O T E STATE O MONTANA H OR F H F JOHN E. FULTON, H R L C , AOD S H A T and DELOIT R. WOLFE, C W RZ P l a i n t i f f s and Respondents, SPENCE C A K and JAMES A , COLLIER, LR Defendants and A p p e l l a n t s . Appeal from: D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , Honorable E. Gardner Brownlee, Judge p r e s i d i n g . Counsel of Record: For Appellants : Tipp and Hoven, Missoula, Montana Vernon Hoven appeared, Missoula , Montana F r e d e r i c k S , P r i n c e , Jr. argued, S a l t Lake C i t y , Utah For Respondents: G a r l i n g t o n , Lohn & Robinson, Missoula, Montana Lawrence F. Daly argued, and Sherman V. Lohn, appeared, Missoula, Montana - - - -- - -- - Submitted: F i l e d :6i,,! G 6 June 23, 1975 M r . J u s t i c e Frank I. Haswell d e l i v e r e d t h e Opinion of t h e Court. Defendant General P a r t n e r s a p p e a l from a summary judgment g r a n t e d p l a i n t i f f Limited P a r t n e r s i n an a c t i o n f o r d e c l a r a t o r y judgment. The d i s t r i c t c o u r t of Missoula County h e l d t h a t t h e General P a r t n e r s a r e n o t e n t i t l e d a s a m a t t e r of law t o a $60,000 f e e f o r s e r v i c e s rendered i n r e n o v a t i n g and improving t h e Holiday V i l l a g e Shopping Center. The d i s t r i c t c o u r t g r a n t e d a p e r s o n a l judgment i n f a v o r of t h e Limited P a r t n e r s a g a i n s t one of t h e General P a r t n e r s , Spence Clark. P l a i n t i f f s John F. F u l t o n , Harold C. Schwartz and D e l o i t R. Wolfe e n t e r e d i n t o a l i m i t e d p a r t n e r s h i p agreement on A p r i l 1, 1968, w i t h General P a r t n e r s Spence C l a r k and James A . C o l l i e r , doing b u s i n e s s a s F i n a n c i a l Management S e r v i c e , c o v e r i n g operat i o n of t h e Holiday V i l l a g e Shopping Center i n Missoula, Montana. The b r i e f s i n d i c a t e t h a t Spence C l a r k h a s s i n c e succeeded t o t h e i n t e r e s t of James A . C o l l i e r . Under t h e terms of t h e l i m i t e d p a r t n e r s h i p agreement, t h e General P a r t n e r s were r e s p o n s i b l e f o r t h e management of t h e shopping c e n t e r ; t h e Limited P a r t n e r s had no r i g h t t o p a r t i c i p a t e i n t h e management of t h e b u s i n e s s . The General P a r t n e r s r e c e i v e d a 5% c a p i t a l i n t e r e s t a s c o n s i d e r a t i o n f o r t h e assumption of t h e r e s p o n s i b i l i t i e s of managing and o p e r a t i n g t h e p a r t n e r s h i p p r o p e r t i e s and t h e l i a b i l i t y assumed. A l l l o s s e s i n e x c e s s of t h e c a p i t a l a c c o u n t s of t h e l i m i t e d p a r t n e r s h i p were t h e s o l e l i a b i l i t y of t h e General Partners. I n a d d i t i o n , Paragraph l l ( a ) of t h e l i m i t e d p a r t n e r s h i p agreement p r o v i d e s : "* * * The General P a r t n e r s s h a l l r e c e i v e a r e a s o n a b l e management f e e f o r s e r v i c e s a c t u a l l y rendered by them * * *." During t h e l i f e of t h e p a r t n e r s h i p C l a r k p a i d himself an a n n u a l management f e e e q u a l i n g 5% of t h e g r o s s proceeds of t h e partnership properties. These payments a r e n o t i n d i s p u t e . I n 1971, Clark determined t h e g r o s s and n e t r e n t a l s of t h e b u s i n e s s could be s u b s t a n t i a l l y i n c r e a s e d by b u i l d i n g a new s t o r e i n t h e shopping c e n t e r f o r A l b e r t s o n ' s grocery and l e a s i n g t h e o l d A l b e r t s o n ' s space t o Skagg's Drug Center. From 1971 through 1973, Clark worked a t p u t t i n g t h i s plan i n t o e f f e c t . He n e g o t i a t e d new l e a s e s w i t h A l b e r t s o n ' s and Skagg's; superv i s e d and coordinated t h e design and c o n s t r u c t i o n of t h e new f a c i l i t i e s ; r e f i n a n c e d t h e e x i s t i n g f i r s t mortgage; and, obt a i n e d f i n a n c i n g f o r t h e new c o n s t r u c t i o n p r o j e c t . lark' s e f f o r t s r e s u l t e d i n i n c r e a s i n g t h e g r o s s r e n t a l s from $1,685,000 t o $2,700,000. As compensation f o r t h e s e s e r v i c e s performed from 1971 through 1973, Clark p a i d himself a management f e e of $60,000. T h i s f e e was i n a d d i t i o n t o t h e f e e of 5% of t h e p a r t n e r s h i p ' s g r o s s proceeds which he charged a n n u a l l y f o r normal management duties. P l a i n t i f f s o b j e c t e d t o t h e $60,000 f e e and f i l e d a complaint f o r d e c l a r a t o r y judgment a s k i n g t h e d i s t r i c t c o u r t t o c o n s t r u e t h e terms of t h e l i m i t e d p a r t n e r s h i p agreement and t o o r d e r Clark t o r e t u r n t h e $60,000. P l a i n t i f f s claimed t h e d e f e n d a n t ' s c o u r s e of conduct s i n c e 1968 of charging o n l y a 5% management f e e l i m i t e d t h e f e e t h a t could be charged t o 5% of t h e g r o s s r e n t a l s . Defendant answered by claiming t h a t a l l f e e s r e c e i v e d were reasonable f o r s e r v i c e s a c t u a l l y rendered and t h a t t h e r e was no agreement o r a l o r w r i t t e n , e x p r e s s o r implied, l i m i t i n g t h e management f e e s t o 5% of t h e g r o s s r e n t a l s . O December 3 0 , 1974, t h e d i s t r i c t c o u r t g r a n t e d p l a i n t i f f s n summary judgment, f i n d i n g t h a t Clark was n o t e n t i t l e d t o a f e e f o r s e r v i c e s rendered r e l a t i n g t o long t e r m renovation and i m provement of t h e Holiday V i l l a g e Shopping Center. The judgment i s a p e r s o n a l judgment i n favor of p l a i n t i f f s a g a i n s t Clark. The c o n t r o l l i n g i s s u e on a p p e a l i s whether o r n o t summary judgment f o r p l a i n t i f f s was e r r o r . W hold i t was, v a c a t e t h e e judgment, and remand t o t h e d i s t r i c t c o u r t f o r t r i a l . Rule 5 6 ( c ) , M.R.Civ.P., s t a t e s t h a t summary judgment s h a l l b e rendered only i f : "* * * t h e p l e a d i n g s , d e p o s i t i o n s , answers t o interrogatorie~~and admissions on f i l e show t h a t t h e r e i s no genuine i s s u e a s t o any m a t e r i a l f a c t and t h a t t h e moving p a r t y i s e n t i t l e d t o a judgment a s a m a t t e r of law. 11 The q u e s t i o n t o be decided on a motion f o r summary judgment i s whether t h e r e i s a genuine i s s u e of m a t e r i a l f a c t and n o t how t h a t i s s u e should be determined; t h e h e a r i n g on t h e motion i s not a t r i a l . ~ a t t e u c c i ' sSuper Save v. Hustad Corp., 158 Mont. The p a r t y moving f o r summary judgment has t h e burden of e s t a b l i s h i n g t h e absence of any i s s u e of m a t e r i a l f a c t . Beierle v. Taylor, 164 Mont. 436, 524 P.2d 783, 31 S t . Rep. 554. I n Kober & Kyriss v. Stewart, 148 Mont. 1 1 7 , 121, 417 P.2d 476, t h i s Court c i t e d 6 ~ o o r e ' sF e d e r a l P r a c t i c e , Para. he c o u r t s hold t h e movant t o a s t r i c t s t a n d a r d . To s a t i s f y h i s burden t h e movant must make a showing t h a t i s q u i t e c l e a r what t h e t r u t h i s , and t h a t exc l u d e s any r e a l doubt a s t o t h e e x i s t e n c e of any genuine i s s u e of m a t e r i a l f a c t . "'Since i t i s n o t t h e f u n c t i o n of t h e t r i a l c o u r t t o a d j u d i c a t e genuine f a c t u a l i s s u e s a t t h e h e a r i n g on t h e motion f o r summary judgment, i n r u l i n g on t h e motion a l l i n f e r e n c e s of f a c t from t h e p r o o f s p r o f f e r e d a t t h e h e a r i n g must be drawn a g a i n s t t h e movant and i n f a v o r of t h e p a r t y opposing t h e motion. And t h e papers s u p p o r t i n g movantfs p o s i t i o n a r e c l o s e l y s c r u t i n i z e d , w h i l e t h e opposing papers a r e i n d u l g e n t l y t r e a t e d , i n determining whether t h e movant has s a t i s f i e d h i s burden. I I 1 I f t h e r e i s any doubt a s t o t h e p r o p r i e t y o f a motion f o r summary judgment, i t should be denied. Kober & Kyriss v. Stewart, supra. The only way t h e d i s t r i c t c o u r t could p r o p e r l y g r a n t summary judgment t o t h e p l a i n t i f f s h e r e i s by determining t h a t t h e agreement on i t s f a c e p r o h i b i t s t h e $60,000 f e e a s a m a t t e r of law. Any o t h e r b a s i s o u t s i d e t h e f o u r c o r n e r s of t h e agree- ment document, i n v o l v e s d i s p u t e d q u e s t i o n s of f a c t p r e c l u d i n g summary judgment. The i n t e n t of t h e p a r t i e s t o p r o h i b i t such payment must be determined from t h e w r i t t e n agreement a l o n e , i f p o s s i b l e . S e c t i o n 13-705, R.C.M. 1947. I f t h e language of t h e agreement i s c l e a r and e x p l i c i t t h e language must govern i t s i n t e r p r e t a t i o n . S e c t i o n 13-704, R.C.M. 1947. A p l a i n r e a d i n g r e v e a l s t h e agree- ment g i v e s t h e General P a r t n e r s a 5% c a p i t a l i n t e r e s t a s cons i d e r a t i o n f o r assuming t h e r e s p o n s i b i l i t i e s of managing and o p e r a t i n g t h e b u s i n e s s and assuming l i a b i l i t y beyond t h a t of t h e Limited P a r t n e r s . I n a d d i t i o n t o t h i s 5% c a p i t a l i n t e r e s t Paragraph l l ( a ) of t h e agreement provides: I1 The General P a r t n e r s s h a l l r e c e i v e a r e a s o n a b l e management f e e f o r s e r v i d e s a c t u a l l y rendered by them JC 9: ik." I n d i s t r i c t c o u r t p l a i n t i f f s claimed (1) an executed o r a l agreement and (2) t h e d e f e n d a n t ' s c o u r s e of conduct s i n c e 1968 of charging only a 5% management f e e modified t h e agreement and p r o h i b i t e d t h e $60,000 f e e . O appeal p l a i n t i f f k argue n t h a t t h e r e a s o n a b l e management f e e s e t f o r t h i n Paragraph l l ( a ) of t h e l i m i t e d p a r t n e r s h i p agreement i s l i m i t e d t o r o u t i n e management s e r v i c e s and does n o t a p p l y t o long term developmental s e r v i c e s . There i s no d i s t i n c t i o n i n t h e terms of t h e agreement between s e r v i c e s f o r long range r e n o v a t i o n and improvement and day t o day r o u t i n e management s e r v i c e s . To determine i f t h e agreement precludes management f e e s f o r long range s e r v i c e s , t h e d i s t r i c t c o u r t must i n q u i r e a s t o t h e conduct of t h e p a r t i e s and a s t o t h e e x i s t e n c e and substance of t h e a l l e g e d o r a l agreement. Whether t h e r e was an executed o r a l agreement, a s w e l l a s whether t h e conduct o f t h e p a r t i e s modified t h e w r i t t e n agreement, a r e m a t e r i a l q u e s t i o n s of f a c t b e a r i n g on t h e i n t e n t of t h e parties. The c o u r t w h i l e c o n s i d e r i n g t h e motion f o r summary judgment cannot go o u t s i d e t h e agreement t o determine t h e i n t e n t of t h e c o n t r a c t i n g p a r t i e s a s t h i s i n v o l v e s d i s p u t e d q u e s t i o n s of material fact. Summary judgment is usually inappropriate where the intent of the contracting parties is an important consideration. Kober h Kyriss v. Stewart, supra; 6 ~oore'sFederal Practice, Para. 56.17[41.-11. Plaintiffs have not met their burden of establishing the absence of any issue of material fact. Their arguments clearly show that genuine factual issues do exist. We do not here decide where the merits of this controversy lie, nor which parties should ultimately prevail. We simply hold that a trial is necessary to resolve disputed issues of fact. The summary judgment is vacated and set aside. is remanded to the district court for trial. Justice Ye Concur: . ., Chief Justice The cause

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