*1 Carolyn Weinberg, THOMAS A. WEINBERG husband wife, Respondents, Plaintiffs v. FARMERS WORDEN, Montana, STATE BANK OF Defendant Appellant. No. 86-463. Submitted Jan. 1988. Decided March 1988.
Rehearing
April
Denied
Moulton Law R. Thomas for First Bank-Livingston, Billings, amicus curiae. Opinion
MR. JUSTICE SHEEHY delivered the of the Court. State appeals judgment Farmers Bank of Worden from a founded District, jury Court, on a in District Thirteenth Judicial County, awarding compensa- Yellowstone favor of tory $104,790.75 damages punitive damages amount cross-appealed have of the court from decision $12,500.00 attorney fees, Weinbergs’ awarding claim which inadequate. Bank, judgment against
We affirm the affirm the also Court, attorney award of fees allowed the District but remand for attorney appeal. award of further fees on BANK’S APPEAL (Restated) Bank’s Issues
I. special The District Court’s verdict form: Adopted plaintiffs’ issues; a. disputed view of factual damages, b. Concentrated on with instruc- contract and conflicted only tions related damages; to tort findings: II. jury The evidence was insufficient to sustain a. agreement; That breached its loan $104,790.00 compensa- b. That were entitled to tory damages; implied
c. faith and good That the Bank breached an contract of dealing; fair any punitive damages underlay
d. That actual the award damages; pas-
e. punitive damages proper, That result of not the sion prejudice.
Facts verdict, determine reviewing jury function is to our supports whether substantial in the record credible evidence favorable light verdict. We must view evidence most
15
conflicting
presents
below,
if the record
prevailing party
pre-
jury,
this Court
has been resolved
evidence which
Company v. Whitta-
Anaconda
disturbing the verdict.
cluded from
in
66,
(1980),
When the evidence
ker
In their farm near about they small herd of feed than could use on the farm with their cows, with They discussions a bull and milk cow or two. had they ought Bank, to counseled them that Bud Lawrence of who expanded expand up feed. The their herd of cattle to use the extra run the cat- operation require place in which to would an additional place arrangements lease a Accordingly, Weinbergs tle. made basis, Bighorn expanded near herd. On that for an cows. expand herd enough advanced additional monies necessary for the money promised Bank had advance expansion. herd place decidedly expensive. expanded operation more operation they grass miles from the Custer rented for was 90 de- seasons as the required trucking of cattle and forth back bills, veterinary taxes,
manded. There were and the ne- additional cessity meantime, part-time help In hire for the cattle. prices dropped drastically. 1974 and In cattle the fall of owing approximately found themselves the fall of the Bank officers notified the longer provide operating the Bank could no monies to the guaranty unless a of their debt from the FmHA could obtained.
Accordingly, application FmHA was made to the for a Contract of Emergency Guarantee under the Livestock Credit Act of 1974 part application, amended. As the Bank certified that was it unwilling guar- to extend a line of credit to without the anty *6 existing and that it would not refinance loan balance with- the guaranty. application, out Weinbergs signed certifying The the signed that the statements of the Bank were true and also and sub- separate application guaranty revealing mitted a for the loan their necessity guaranty. financial condition to show the for the loan On 23, 1975, FmHA December issued its Contract of Guarantee Worden, guaranteed the Farmers State Bank of a line of $137,533.40 up ceiling credit A. to a on loans made to Thomas Weinberg. guaranty percent was for 90 of the difference owed principal any emergency on the total amount of and interest on live- ceiling stock loan advances made within the line of credit any security any value collateral or loan at the time of foreclo- sure, paid. unless sooner part
As guaranty procedure, Weinbergs of the loan had each signed promissory ap- part of the note which was submitted plication. 14, 1975, years The note was dated November due seven 14, $137,533.40, later on with November for a face amount of (There percent. additional annual interest rate of 9.5 were some here.) charges unimportant finance Weinbergs
It was the contention execution of the of the note, applications guaranty, for the loan the November 1975 Weinbergs the Bank had guaranty, the issuance of the loan agreed period years to the that for a of seven the Bank would extend ceiling Weinbergs operation up to a loan advances on their cattle percent. 9.5 limit of the face amount of the at an annual rate of note Any the face amounts advanced the Bank over and above of inter- subject prevailing amount of the note to the rates would be charged by est were made. the Bank at the time the additional loans about The face note included amount of the November 1975 $93,000.00 existing of the refinancing indebtedness for the of the Bank, approximately proposed amount of Weinbergs to the and a $44,000.00 coming year. in In operational monies to be used for loan, savings up an escrow account connection with the the Bank set from the farm- into the monies received as income which all deposited, gain inter- ing operations there to were year, percent per year. At end of the approximately est at applied be taken and monies from the escrow account would indebtedness of note. 1976, Weinbergs further of- the fall of had discussions with They longer FmHA no re-
ficers of the Bank. were told that quired kept it be to the an escrow account to be and that would account, drop advantage the escrow since there- after, operations applied income received from farm would be di- Thus, rectly outstanding. to reduce the face loans amount monies, lying percent, instead an escrow account at would Weinberg used to reduce the and so reduce the indebt- indebtedness percent. edness which accrued interest at 9.5 told, however, result, be neces- order to achieve this it would sary note, sign they sign for them to a new a note did on December $137,533.40, still in the face amount of with interest at the year, rate of payable 9.5 but in one December Thereafter, succeeding year, Weinbergs signed on each succes- ap- sive notes as advances were made the Bank and income was plied However, outstanding interest debt. 1979 and substantially signed rates had increased and the successive notes percent, 9.5 were at rates of interest excess of in- high percent per year. sometimes as as 18 interest rate first *7 April Weinbergs charged crease occurred on when the were percent. FmHA, Guarantee, is no the Contract of issued there specific expiration guaranty. parties, date All and set for the FmHA, expired The agree guaranty that in the fall of 1982. expiration only of No- gathered original date could from the note 14, years. provided vember which a term of seven When for guaranty expired notified the the fall of the Bank provide unwilling that it the debt or to to refinance operational extend further monies. FmHA had indicated it would guaranty years on terms which an additional ten but therefore, Bank, required apparently unacceptable to the Bank. The notes, liquidation resulted eventual collateral under in the herd, sale of the Weinberg crops, entire some and their farm machinery. More of the relating post-liquidation facts to the situa- tion will be recited connection with our discussion hereunder on sufficiency of evidence.
The above facts are viewpoint stated from the Weinbergs, jury since the found in accordance with their view. It should be noted that the Bank contends that it did not counsel the expand herd; their cattle Weinbergs agreed that the to the execu- tion of the December, 1976, second note in which modified their agreement; and the agreed payment to the of interest , rates over percent and above the 9.5 signing subsequent notes. Special The Verdict Form
Two issues are raised relating special the Bank to the verdict form jury. submitted paragraph first is that in A-l of the special form, verdict improperly the District disputed Court decided against issues the Bank.
The record here shows following the settlement of instructions Court, in the special District a form of containing interroga- verdict tories jury for the to answer was examined parties counsel for the agreed upon objection. without Sometime after the cause had (the been jury submitted to the gave court jury case to the at p.m. 2:18 p.m.), reconvened at chambers at 3:10 the court sum- moned counsel and prepared informed them he had a different special verdict form from the one agreed upon. that had earlier been The District Court if any objection asked either counsel had to the special new verdict responded, form. Both objection, counsel “no your honor.”
The court p.m. special recessed at 3:15 and the new verdict form was presumably jury. delivered to jury returned its verdict p.m. at 8:17 day. preserved No record has been in this case of original special verdict form. interrogatory first special to the contained form, jury’s response thereto follows:
“A-l. Was the parties November 1975 contract between the modified on December 1976 so as to relieve the Bank from the obligation loaning Thirty One Hundred Seven Thousand Five Thirty-three ($137,533.40) Hundred Dollars 40/100 (7) years for seven with interest at the rate of nine and (9.5%) per one-half payable semi-annually. annum
19 YES NO _ pretrial it in the or- first issue raised that the
The Bank contends obligation to no furnish Bank had was that the der of the court $137,533.40at interest of an plaintiffs of the amount a line credit years. Bank seven per period for a of percent annum rate of 9.5 special verdict wording A-l of the paragraph of contends that court away from the because form took that issue of fact obligation. in fact an assumed there was such posi against the great appellate of review militate Two rules First, objection no was raised tion on this issue. of secondly, jury, special verdict form before its submission to ap on raised for the first time this Court will not review an issue Regulation, et al. Corp. Dept. Service peal. Rozell v. Public of (Mont. 282, 618; 1987), St.Rep. 44 Bow 437,] P.2d Mont. 735 [225 (Mont. 9, 1984), 459,] St.Rep. 41 692 P.2d man v. Prater Mont. [213 (1982), 205, 2236; VanDeWetering Mont. 642 P.2d Akhtar v. 197 1210, 149; (1981), [_ Mont __,] Peters v. Newkirk 633 P.2d special was St.Rep. propriety Here verdict the issue of counsel, presentation nor by objection not at time its raised trial, subsequently, in had been a motion for new after entered. Bank, however, argues under that we should consider issue Mary- v. plain State Bank Townsend citing error doctrine 295; ann’s, (1983), 21, Inc. 204 Mont. P.2d and Halldorson will review the
Halldorson
The main thrust this issue Bank’s exclusively the Bank and Contract of Guarantee one between was prom- part, FmHA in which the and that had no issory the Contract note of executed before November Guarantee, of credit not in extend a line obligation itself an years. period for a of seven occurred be- oppugnant to what contention the Bank Guar- Weinbergs following the Contract of tween the Bank taken its it is Guarantee antee. While true that the Contract of corners, simply agreement guarantee four Bank; prom- obligation and the imposes line on the of credit no issory completely performed nearly note was the Bank in that 9, between provided November 1975 and it November had refinancing $137,288.00; sum advances it is also true *9 the operational Bank to for continued make advances monies to the (though separate the it was Bank contends under arrangements). other The Bank did look in 1982 the FmHA for guaranty the it line credit had extended to the through ensuing years. the Weinbergs, course, contended the contract between
them and Bank operational money the was for a line of credit advances by year period to be made to them the Bank for the seven 14, and that the Contract of Guarantee and the note of November 1975, simply expressions agreement. written of that
Moreover, position the throughout of the Bank the was trial agreement parties November, that an beginning existed between the 1975, which year by was modified a later note as evidenced 30,1976. December itself offered an instruction was by given jury the District Court to the as follows: only “Farmers State Bank contends that the contract between the Bank and promissory security were the notes and agreements time, 14, executed from time to and while the November 1975, note original agreement embodied the terms between Bank, the Weinbergs and the that contract was later modified on 30, December 1976. Farmers State Bank contends that Thomas and Carolyn Weinberg, signed promissory on new 12-30-76 a note $137,533.40, favor Farmers Bank in with State the face amount of per maturity at interest the rate of annum and a date of one 9.5% year from making. the date of Farmers State Bank contends that governs this new relationship parties, contract and that with the there owing upon obligation remains due and evidenced note, as annually by Carolyn 12-30-76 Wein- renewed Thomas and $25,991.53.” berg, the sum of given jury, another it instruction offered the Bank and
was stated: you
“In this presented following case are with issues: “1. Did the Bank a which the breach contract under were entitled to some benefit?” Bank,
It clear from from the instructions offered opening position of the Bank argument, statement and final that the during this case agreement the trial was that whatever existed procedure parties between the in 1975 to a was modified 1976 signed upon notes to be where would be made successive advances subject originally of Guarantee by Weinbergs, all to the Contract note of 1975. issued the first November special Dis- Paragraph A-l verdict form submitted merely position, jury to deter- trict Court recited this and asked mine whether modification had on December occurred Thus, case, v. in Northwestern National Bank this our decisions (Mont. 1986), Weaver-Maxwell, 33,] Inc. Mont. 729 P.2d [223 (Mont. 1981), [_ Mont. St.Rep. 1995; Kinjerski Lamey _,] distinguished St.Rep. are to be because P.2d designed jury paragraph special here A-l of the verdict was for the judgment in this to determine a factual issue essential cause. Special Between Verdict and the Instructions Conflict form, upon special In a second attack verdict Bank con- inherently contradictory tends the form with instructions allowing jury fix based on breach of contract when damages. the court had instructed the on the measure tort *10 special responses The full text of the form and jury set are forth under It will be seen from the Footnote infra. responses 14,1975 jury con- that the determined that the November 30, 1976; parties tract had by not been modified on December contract, and that the Bank had breached the November 1975 $104,709.75. damages jury which in The found resulted further implied good that the Bank fair breached covenant of faith and dealing. jury damages con- Because the under the breach of awarded claim, special .fix jury tract not to dam- verdict form directed ages implied jury’s for the breach of the covenant and directed the punitive damages attention should be awarded. instead to whether $100,000.00. jury punitive The damages did fix in the amount Montana, damages In contract the measure of for a breach of compensatory proximately is the amount for all the detriment by ordinary likely caused or in the course result therefrom things. Damages clearly both for such breach must be ascertainable 27-1-311, origin. nature The of dam Section MCA. measure ages compensatory for a for all tort is the amount Montana have proximately detriment it could caused tort “whether 27-1-317, anticipated The con been or not.” MCA. Section damages of contract tends here that the a breach measure of for statutory substantially narrower than the tort measure under the definitions Court instruct and that failure of District damages measure of for breach of contract was a serious funda- mental error. anomaly position
The in the it Bank’s is that offered instructions accepted by jury the District in a Court which instructed the clearly damages breach of contract case the amount of must be as- origin, certainable in and in instruction No. embod- nature statutory damages ied the definition of the measure of for breach of However, contract. these instructions were withdrawn the Bank settling the course of the instructions. give jury District Court did its instruction No. damages In embodied the measure of for a tort. its instruction No. 25, however, profits jury damages it warned the for loss of speculative. jury should damages not be It further told the that no clearly were recoverable which were not ascertainable both nature origin only reasonably profits and that which are certain could be awarded. $104,790.75 jury mathematically award of can be deter transcript. payment
mined from the claimed the $33,158.17; years’ excess interest over 9.5 loss of three $42,532.99; $7,349.59; crops barley crop cash loss of and loss of years’ hay production regarded Whether from the contract, viewpoint damages for tort or the amount awarded jury would have been the same based on the claims of the Weinbergs. spe recognized arranged The District Court this and bring cial verdict forms so as not to allow the an award of contract, damages, double one for breach of for breach of and one event, implied any good dealing. covenant of faith and fair damages would have same. been the reasons, therefore, (1) For three the instructions on breach of con- damages during tract the settlement withdrawn the Bank (2) instructions, given by the instructions the court were substan- tially modified so as elements for breach of to include essential (3) damages, damages contract no harm was done because the *11 event, any would be the we merit in this issue raised same find no by the Bank.1
SUFFICIENCY OF EVIDENCE ISSUES Agreement Breach the Loan
Bank contends the evidence is insufficient to sustain agreement with a loan had breached verdict that the Bank Weinbergs. contention, of Guarantee argues that the Contract
Under this Bank FmHA, obliga and created no was the Bank and the one between Weinbergs. The part to loan monies to the tion on the of the Bank mutuality, privity, or points holding is no Bank to cases that there guarantor, and joint liability principal debtor and the between the party subject liability guaranteed is not again holding cases debtor, and the may the creditor to the defenses that exist between liability guar of the guaranty measure the and that the terms of the antor, and the between the debtor but do not constitute a contract (1943), 114 Company Powell General Finance It creditor. cites 473, 255; Machinery Co. v. Carbonate Hill Butte Mont. 138 P.2d 956; (1926), 167, 242 Baroch v. Mining P. Company 75 Mont. P. 800. Company Greater Montana Oil addition, Weinbergs may base their that the not Bank contends upon promissory claim of breach note executed November validly replaced by note and because that note was a renewal year maturity or subsequent carrying dates of one renewal notes less.
Again, argues promissory the Bank note of November part Bank to do obligation does not create an on the rule, 28-2-905, anything. Relying parol Section on the evidence MCA, merely writing the Bank states that the on the note allows plaintiffs pay principal under the note over a back the advances semi-annually. period years percent payable of seven at 9.5 Finally, promissory of November the Bank that the note contends prom- parties replaced by agreement with was stamped issory 30,1976; original was note that the note of December original “paid” although the with the execution of the second note the borrowers. kept note was in the Bank file and not returned to replace- Weinbergs executed the The Bank testified that the officers voluntarily without subsequent freely and *12 chief, for a di- Weinbergs in the Bank moved At the close of case carry to Weinbergs had failed ground rected on the that the denied, proof saying: their burden of which the court sup- point to be sufficient to “The court views the evidence at this verdict, by of the port was a breach the Bank jury here that there agreed wherein the Bank agreement parties which the entered into $137,533.40 sufficient provide years That there is for 7 at 9.5%. that, find, breaching in the Bank upon can evidence malice, . . .” acted with actual or constructive Bank, saying Weinbergs respond contentions of the to these by position they represent change from that taken Court, in Weinbergs state that the District Bank at trial. The Weinbergs obligation to extend a recognized Bank it had an sums subject of Guarantee for the line of credit to the Contract percent. further period years at 9.5 The Bank’s stated for a of seven of credit position obligation to extend such line at trial was that the by the of the new note changed had been the execution accompanying together with an December security position was evi- agreement. The Bank’s of modification denced, pre- say Weinbergs, by set forth its contentions following paragraph: trial order which include the paid by Weinbergs, “That the November 1975 note was same, voluntary the benefit of their renewal of the order to obtain Farmers Home Adminis- a modification of the manner which the one, loans, were ad- Emergency of which this was tration Livestock ministered banks.” application parol evidence
This is not a case for the
promissory
trying
vary the terms of the
rule.
are not
that the
They
contending instead
note of November
are
itself,
terms,
agreement
between
note
all its
is evidence of
extended
line of credit would be
and the
that a
original
percent. The
years
them for seven
at an interest rate of 9.5
parol
evi
promissory
contention.
note is consonant with that
statute,
28-2-905,MCA,
provisions that
in its
dence
Section
includes
agreement
which the
“other evidence of the circumstances under
28-3-402,
is admissible. Section
was made or to which it relates”
MCA,
explained by reference
provides
may
that a contract
which it
matter to
made and the
circumstances under which it was
Here,
promissory note of November
relates.
the execution of the
of Guaran
procurement by
Contract
and the
the Bank
tee,
point
agreement between
all
to and confirm an
by the
the terms contended for
and the Bank for a line of credit on
the exis-
Weinbergs.
parties
demonstrates
When the conduct
them,
that conduct
agreement between
evidence of
tence of an
Veterans Rehabilitation
agreement.
admissible
to establish
Center,
Inc. v.
Birrer
The attack on the award is paid by that the amount for excessive interest the included 2) face, Weinbergs wrong that the amounts awarded for on its crop expenses speculative. loss and other are
Although compensatory by jury the the is in the nature of award general damages and as to the items used the is not broken down award, jury compute the it seems clear from the record that the compensatory upon award the amounts claimed was based plaintiff damage, as items of which the awarded to the Weinbergs in full. $33,158.17 Weinbergs an item as the amount of ex- claimed percent they paid
cess to the Bank interest over and above 9.5 that $137,533.40. up on loans to the credit line amount of testimony of Weinbergs produced part of their case Kelley, CPA, Billings Donovan on the behalf of who liability Weinberg loan and ledger examined the Bank’s loan for the percent during computed 9.5 the amount of interest over and above line of year period relationship credit the seven on a $137,533.40. Kelley produced the total 15 which showed Exhibit $126,249.86, and charged liability ledger interest on the amounted paid the rate of 9.5 the total interest been at that should have $93,091.69. shows figures, Exhibit 15 amounted to On those $33,158.17. liability charged ledger excess of interest on the 27, 1983, May The Bank contends 15 shows that on that Exhibit in favor of Kelley’s computations negative there was a balance under $7,916.67 interest is the amount of and that this entitled, and not overcharged Weinbergs are to which the $33,158.17 approxi- figure includes Bank contends Bank, $25,000.00 which mate owed to the interest paid. They contend the never therefore unpaid figures the amount of the should be reduced at least indebtedness. argument on this
There are several difficulties with the Bank’s $33,158.17 First, testimony, Kelley testified that item. oral paid by Weinbergs. The figure was the amount of excess interest they had Weinbergs themselves testified that their calculations $25,000.00 Secondly, ar- paid in excess interest. the Bank’s at least gument equates negative principal on the of the debt balance on its face that overcharge of interest. Exhibit demonstrates princi- application to the negative is arrived at after the balance liquidation pal indebtedness of the amounts recovered addition, 15, Kelley Weinberg added to the assets. on Exhibit expiration date of the balance due on November principal part guaranty, FmHA the accrued interest as Thirdly, testimony Kelley the amount of excess the loan. $33,158.17 either during controverted the trial interest was was not except testimony a minor reference cross-examination or other negative balance. compensatory dam- prong The second of the Bank’s attack on the *14 general age apparently included within the award relates to amounts barley $42,532.99; years’ crops, loss of 1983 award: loss of three calf $7,349.00; and, crop, years’ hay production, loss of three justify such that the evidence is insufficient Bank contends they speculative. awards and that are at best Weinbergs apparently stems The basis of these awards to the They testify by jury. testimony accepted from their which was agree loan they original that were induced the Bank to enter ment, they would be representations officers that the Bank at an inter up ceiling amount extended a line of credit to the credit agreement. year life of the est rate of 9.5 over seven sign a new year they had to they next were the Bank that told im requirement first year in escrow note each order to remove the time posed. Although testified that at the Bank officers sign the choice, reality either to their choice was had a operation en farming financing on their new notes or to lose the blank, which Thereafter, notes, tirely. they signed sometimes new
27 Bank breached shows that were filled the Bank. Evidence by failing to extend implied duty good faith agreement, its and its Guarantee, charg- Contract of a line of credit in accordance with the eventually upon rate which ing agreed in excess of the interest $33,158.17. They testi- payment excess interest amounted to an indebtedness, requiring conduct inflated their fied that the Bank’s 1983, liquidate, holdings required by the Bank. In them to their through they eligible refinancing were still for an extension of FmHA, they writing by eligi- FmHA their but were informed bility “your guaranteed with Farm- subject for that loan was loan being ers Other lenders also refused State Bank of Worden settled.” Weinbergs financing they with the Bank. Because unless had settled required liquidation, they were forced to sell off their en- herd, they un- machinery equipment, tire cattle were their farm and fertilizer, buy properly crops in those able to take care of the years. Opinion, detailing three Without same in this their evi- crops they jury, dence calculated for the value the calf raised, crops they would otherwise have could have raised crop Although and sold. the Bank contends that the calf amounts amounts, gross these amounts and not net the evidence of appears reasonably computed. losses to be sufficiency regarding
Montana law
the review the
sufficiency
repeated.
examining
evidence has
been oft
When
support
verdict,
light
evidence to
in a
we review
evidence
(Mont.
Kukuchka v. Ziemet
most
prevailing party.
favorable to the
1985),
Anderson v.
1361,
1916;
155,]
St.Rep.
Mont.
710 P.2d
[219
(Mont. 1983),
Jacqueth
493,]
St.Rep.
Mont.
668 P.2d
[205
Hoyt
1451;
(Mont. 1981),
Gunnels v.
[_ Mont. _,]
633 P.2d
Corp.
(1980),
Springs
Rock
v. Pierre
St.Rep. 1492;
Wright
(1979),
206;
Groundwater
Mont.
180 Mont.
615 P.2d
(1979),
1003; In Matter
Holm
Estate
179 Mont.
588 P.2d
Jury
position
weigh the
Corp., supra. evidence, credibility conflicting When there is weight given province not this to the evidence is the *15 Co. v. Mountain Farm Bureau Mutual Insurance West Court. (Mont. 1362, 1985), St.Rep. Girton 408,] 42 Mont. 697 P.2d [215 28 Holm, Estate Hoyt, Gunnels v. In Re Carrols’
500;
supra;
supra;
(1921),
59 Mont.
This stated it will disturb Court has not jury’s grounds provides verdict if for differ the evidence reasonable (1979), Hoyt, Payne Gunnels v. v. Sorenson supra; ent conclusions. Murphy v. (1945), Adami 362; 183 Mont. 599 P.2d 118 Mont. support 164 P.2d If 150. there is substantial credible evidence insuffi ing a it cannot be overturned on the basis of Jacqueth, supra; Brogan ciency. Anderson v. v. Blanchard Hoyt, supra. Gunnels v. 1390; 650 P.2d Co. (Mont. 1985), In Nicholson v. United Ins. Mont. [219 Pacific 32,] 1342, 1348-9, held, St.Rep. P.2d we “substan 42 person evidence could tial is relevant evidence a reasonable accept Further, adequate support a “Evidence conclusion.” substantial, may inherently sub weak be deemed and still v. Anderson may stantial evidence with other evidence.” conflict Jacqueth, Hoyt, supra; In Matter Estate supra, Gunnels citing Holm, 26-1-301, MCA, testimony supra. provides that Section prove any of one credible witness is sufficient fact. Accordingly, compensatory we affirm the award this case. Dealing Implied Good And Covenant Faith Fair Of support contends the evidence is insufficient by implied good dealing of an and fair breach contract of faith jury. Bank as found Nicholson v. United controlling case this issue is that of (Mont. 1985), 32,] P.2d Company Insurance Mont. [219
Pacific Nicholson, engaged in an ex- St.Rep. In Court this implied covenant haustive examination the tort of breach of Nicholson did not good dealing Although faith and fair Montana. in- bank, principles applicable to cases involve a set forth are volving relationships with its customers. bank contracts bank Nicholson, we held: good implied faith
“The nature and extent of an covenant expec- by justifiable dealing particular fair measured contract arbitrarily, capriciously party parties. tations of the one acts Where expectations unreasonably, justifiable or that conduct exceeds compensated party. party then be the second The second should culpable damages resulting conduct.” from other’s fair obligation good faith legal We have also held that Nich- customers. dealing dealing has Bank’s with been extended to *16 (Mont. olson, Great Falls supra; Tribby v. Northwestern Bank of Na- First 1133; 1985), St.Rep. 196,] 42 Mont. 704 P.2d [217 (Mont. 1984), 66,] 689 Libby Twombly tional Bank v. Mont. [213 (Mont. 1984), v. 1948. Deist Wachholz St.Rep. In P.2d [208 207,] St.Rep. recognized Court that Mont. 678 P.2d this fiduciary to its customer where obligation there is a owed a bank into a confidential a customer and officer of the Bank have entered relationship. especially plays the role This is true when the advisor. implied in good dealing
“The covenant of faith and fair has been specific statutory duty, where simi- situations where there is no but Nicholson, supra; present.” inequality lar indicia of adhesion or Weber Blue Cross Montana
P.2d Weinbergs they encouraged The testified that and advised expand Lawrence of the Farmers State Bank of Worden to their cat- operation. partici- tle further testified that the Bank pated in encouraged changes regarding and to be made operation that, coupled farming with the fact finances, fiduciary obligation Bank controls the created a plaintiffs case, part on the of the Bank. the immediate there is inequality bargaining positions sufficient indication of between Weinbergs. the Bank and the The Bank held the means to allow the Weinbergs to continue to farm and if the Bank failed to advance the money, loan farming op- would be forced out of their choice,” testified, erations. As the bank officer “had a financially. but one wipe of the choices would out them implied good court’s instructions on the faith and covenant of dealing fair parties adequately between our law on the sub- covered ject set out Nicholson: principles here, parties, relationships,
“When are involved in contractual contract, arises, im- separate apart there sometimes an from the plied good dealing, that each covenant of faith and fair which is party justifiable expectation has a as a rea- the other will act person. implied sonable covenant nature and extent of good particular faith contract dealing and fair is measured case, you justifiable expectations parties. If in find this defendant, Bank of from the evidence Farmers State Worden, unreasonably, such con- arbitrarily, capriciously acted or plaintiffs, exceeding justifiable expectations duct should plaintiffs culpable and Weinbergs, then such conduct arising therefrom.” compensated damages special contract, showing of some “A without mere breach capricious or un- arbitrary, activity, such as impermissible kind of of Thomas expectations exceeding justifiable reasonable acts duty good implied Carolyn Weinberg, is not a breach dealing. faith and fair disregard own interest to required totally its party
“A is not good show faith. does is asserted liability under a contract party against
“A whom dealing by fair good faith and implied covenant of not breach the *17 disputing liabil- long as liability contract so disputing its under that or arbitrarily, capriciously ity, party disputing does not act so unreasonably. Farmers State defendant you
“If the evidence that the find from and fair deal- implied good faith covenant of Bank has breached an arbi- has acted ing, by finding State Bank of Worden that Farmers justifiable ex- unreasonably, in excess of the trarily, capriciously or must, in to consider parties, you order pectations of the then addition, that, Farmers State punitive damages, find award of malice, or ac- oppression, fraud guilty been of Bank of Worden has faith and good implied covenant presumed. tual or Breach of the not compensatory, and more, party to dealing entitles a fair without punitive damages. Farmers Carolyn Weinberg contend
“. . . further Thomas and and fair good faith implied covenant of State Bank breached rate, in the interest increase in that an dealing raising the interest parties, and was expectation of the justifiable rate exceeded unreasonably. arbitrarily, capriciously done not it has further contends “. . . Farmers State Bank dealing in that and fair implied good faith breached the covenant of ex- justifiable rate were within raising the interest its actions capricious or arbitrary or not pectations parties and were unreasonable.
“Farmers were neither State contends further that its actions they oppressive.” fraudulent nor malicious nor were evidence, Under we determine that the instructions and finding faith fair implied good of a breach of an covenant of case, long- dealing supported. is we such a are controlled held standard of review:
“When, case, appeal judgment challenged as in on the this it, insufficiency support mid- basis the evidence to there is no ground ap- appellate party dle for the court. We must find that pealing judgment entitled as matter of law based on the evi- find, judgment dence and if we not so in favor of the do other party must be affirmed.” Equipment Company v. (Mont.
Gunlock Western 1985), Mont. [219 112,] 1882, 42 St.Rep. P.2d Damages Underlay Damages No Actual The Award Punitive Of case, jury In this punitive damages fixed an award appeal, sum On no the Bank contends that there is showing damages underlying actual such an award. special verdict,
In a had found defendants breached implied good dealing against covenant of and fair faith fraudulent, Weinbergs and that such breach was malicious and oppressive.
This
previously
punitive
Court
damages may
has
held
plaintiffs
granted
awarded
only
damages.
where the
nominal
monetary
The same is true
even
cases where no
value has been
assigned
(Mont.
Lauman v. Lee
damages
actual
suffered.
1981),
499;
Butcher
[_ Mont. _,]
St.Rep.
626 P.2d
Petranek
(1979),
181 Mont.
In Gilmore v. Mulvihill 98 P.2d *18 338, this Court stated: technically construed,
“A given is not to be is to be but such a carry reasonable will obvious inten- construction as out the jury. arriving intention, may tion the had at this reference by by the pleadings, to issues the submitted made instructions court, trial; if and the evidence at the a fair introduced record, it, and readable construction in the view whole manifest, jury intention of the is it to stand.” should be allowed Sufficiency Damages Evidence Punitive for Here, punitive damages was Bank contends that the award of prejudice. passion and improper the result of and must have been Mulvihill, supra, Gilmore What was said this Court punitive damages. As we equally applicable jury award of to above, proper instructions to de- jury given was have indicated instructed jury was likewise termine the breach had occurred. punitive damages. The Bank respect what it must find with as to inadequate in- instructions were does not contend that those properly in- necessary they elements deed seem to contain in- having properly jury been jury struct on this item. appellate rules which structed, familiar again, we are left to the once jury sufficiency respecting the of the evidence. are recited above covenant, the breach implied and it found that a breach of an found arbitrary. having made that de- oppressive, Once was malicious and damages. termination, jury the amount determines APPEAL CROSS Weinbergs, promissory signed *19 promissory nonpayment, The note on which the Bank claimed April following provisions: of the included makers, endorsers, guarantors severally agree pay “The a to attorney placed reasonable if this in fee notice is the hands of attorney demand, maturity, protest, for after waive collection protest, notice of notice of dishonor.” Weinbergs The Bank claimed in the were indebted to it $25,991.53, August plus promissory sum of interest on the note. On 23, 1983, attorney Weinberg demanding its to A. wrote Thomas $25,991.53 plus May sum interest at the of 18 rate from claim, amounted, plus 1983. The interest to ac- March cording plaintiffs’ counsel, $39,036.80. to calculations attorney hearing District Court held a further on fees on June awarding and thereafter entered an order attorney fees to be recovered in from the Bank the amount appeal
On claim that the District Court its abused (1) fixing attorneys discretion in Dis- fees for two reasons: trict Court plaintiffs’ failed to into take account counsel under- unsuccessful; and, (2) took payment the risk of no if he were plaintiff’s District Court disregarded testimony re- from witness specting the attorneys reasonable value of services this case.
Although Weinbergs brought action first instance against case, Bank this the Weinbergs contend that the action was nonetheless at- defensive nature. The letter from the Bank’s torney August 23, pay- 1983 informed the that unless interest, ment days including made within claim Bank’s duly Weinbergs’ a agent authorized of the Bank enter would premises possession and take se- appearing in the collateral curity agreement. against action filed their August 29, 1983, contending necessary the action was to save machinery although farming, they any and to continue obli- denied gation They sought temporary restraining the Bank. a order subsequent injunction prevent taking from their farm the Bank machinery they delivery from them. Later ac- defended claim and Bank, again repel attempt tion commenced the Bank’s possession Weinbergs’ take pending litigation. of the collateral Thus they simply against contend defending were not the counterclaim $25,991.53, plus for the sum against action was interest. Their Bank, they repeated but defending against were also efforts put machinery and them out Weinbergs’ the Bank to take the farm of business. Cavan, testimony attorney John J. hearing at the fees featured hourly charge Billings attorney, who testified that a reasonable hour, per $100
this other than trial time would be case services *20 hour, any in per compensation and for trial time for $150 if reasonably further that event was certain to occur. He testified uncertain, risky hourly charge compensation or reasonable the was for per for and an hour $200 $300 would be hour nontrial services trial services. finding in its of attor-
The court’s memorandum connection with ney suggest compensation fees states: was evidence to the “There no mind, reasonably Having in these in was not certain this case. facts attorney’s $12,500.00 appropriate court is the concluded an fee.”
Complicating contingent in is a fee our consideration this matter attorneys’ agreement Weinbergs and their entered into between the 1983, attorneys August 29, paid firm. On their $4,623.97 partial payment upon as a fees services in connection for fur- representation Weinbergs. with the firm’s pay recov- agreed writing attorneys in their one-third of all ther ery $15,000.00 the com- made on their behalf in excess of after claims, 40 all upon said mencement action based $15,000.00 any recovery in trial excess of after commencement of upon contingent further to be based based claims. fee was upon any respect outstanding claimed balance as success with here setting forth in detail Farmers State Bank. Without our judg- contingent computations, fee based on we note less the deducti- ment recovered and the defeat of the counterclaim $91,531.02. ble would amount cross-appeal, if of their
On claim that the amount them, least be they should at contingent fee is not awarded to $48,600.00 upon the the sum for services rendered based awarded submitted, testimony of counsel and the affidavit hours $12,500.00 by abuse Court an the award the District discretion. case, course, attorney proper Dis fixing in fee in a
Of was estab contingent agreement. trict fee This Court not bound 416, Engelbretson 409, (1977), 571 Putnam in Mont. lished Instead, Engelbretson 368, attorney fees be P.2d directed that & in Forrester in set out fixed accordance with standards first (1904), P. Company v. B & M McGuinniss Georgetown Recreation repeated in Crncevich v. Corporation 541 P.2d 59: Mont. compensa- determining “The in circumstances to be considered tion to be of the services recovered are the amount and character rendered; labor, time, involved, character and and trouble importance rendered, litigation in which the services were affected, money property profes- amount of or the value of to be for, experience standing sional skill called the character and profession attorneys; . . . the result secured the ser- attorneys may important vices of the be considered as an element determining their value.”
It findings is clear from the that each of the memorandum and foregoing factors was case. considered the District Court this addition, contingent the District Court noted that if the fee con- applied controversy tract had been to the amount between the note, promissory upon and the based the fee would not result more than purposes
There statutory provision pro- are two in a or contractual viding attorney party. hoped-for fees to a successful One is the claims; elimination of frivolous claims or defenses to and the other *21 the party having intent of statute or the to contract make the to resort to court action if whole he or she is successful. It is incumbent
upon point why, us parties therefore to out reasons when such as attorney amounting here are faced with fees to $91,531.53, recovery attorney their fees in the amount of $12,500.00 approved. should be principles contract, purposes
The result comes from the and attorney provisions provide statutes or contractual fees. which for This past support court has in the and does now continue to advocacy necessity and retainer contracts based on a reasonable contingent compe- reasonably parties fee where arrived at between needy worthy tent might prevent to contract. To hold otherwise but litigants reaching from the courthouse door. attorney statutory provisions
On the other hand or contractual for party upon contingency fees to the of col- successful are not based lection, in upon expectation losing party but will rather that the pay attorney arrangement, contingent fact In fee fees awarded. a may attorney he there is a factor of risk that undertaken prompts nothing receive his is risk which for labor. It that factor of approve un- contingent might courts to otherwise seem fees which necessarily large. component of no is a or factor The risk return support contemplated tending larger to fee. risk is not Such a attorney statutory provisions or for involving those cases contractual result, at- contemplation regardless fees. The is then distinction, torney paid of that will for his labor. Because Compton Alcorn, correct, supra, contingent holding of v. that a determining proper fee contract does not bind a district court attorney amount of fees to be awarded under a statute or contract provision. statutory provi purposes
Since one for a or contractual of the whole, party attorney for successful it sion fees is make the attorney finally should be clear when fixed the court that the fees agree belongs party subject contingent is not fee (Mont. point Howery Smith v. ment. This was demonstrated 1985), 23,] St.Rep. 701 P.2d 995. There Mont. [217 $243,475.00 Howerys damages, for from the State total recovered $42,958.33 $29,850.70 costs damages, on those for interest case, attorney plaintiffs, working fees. counsel for the contract, percent requested the court contingent a 40 fee $129,866.34 computation attorney of attor and for their fees. attorney ney fees did not for costs and include the amount awarded approved approach in the fees We taken District Court. Howery case, summary upheld judgment in that Smith case computation. on that based kind of Court, approve by the
We the fee here District awarded involved, though experienced counsel we are aware that where are life attorney compensation knowledge of a entitled to for the approval affirmance leading time. One factor our is that with the charged fees them judgment Weinbergs, favor of arrangement with their contingent under the are accordance fee Bank’s portion for that The defeat of the judgment. contract against Weinbergs to a fee of 40 subject claim will them claim, pointed would out of the Bank’s District Court $12,500.00 by Dis $15,500.00.The have amounted award of District appear proportion, since the trict Court does not out of *22 reasonably payment found was certain. Court attor- respect no award We find abuse of discretion with However, entitled ney in this case are fees this case. Court attorney of the District appeal. judgment further fees on The and the appeal appeal, cross is therefore both on the and affirmed proceedings respect to costs and cause is remanded for further with attorney appeal. fees on
MR. CHIEF JUSTICE MR. TURNAGE and JUSTICES McDON- HASWELL, retired, OUGH and HUNT and MR. CHIEF JUSTICE sitting for MR. JUSTICE HARRISON concur. WEBER, dissenting:
MR. JUSTICE majority opinion plaintiffs concludes entitled to were $33,158.17 by charged award of excess interest the Bank. The ma- jority points testimony out the oral to that effect refers to and also majority the exhibits. I conclude that has misconstrued the figures erroneously contained the exhibits as a result has al- $33,158.17. lowed the award of prepared by Kelley,
Exhibit 13 is the written exhibit Mr. account- ant Weinbergs, presented part plaintiffs’ for the as a case. Kelley’s The exhibit figures recomputed demonstrated Mr. in- he principal terest history on the In entire of the loan. that exhibit Kelley computed Mr. plaintiffs interest at 9.5% which the contend rate, is the correct interest varying rather than the interest rates computations the Bank used in the course of its bal- by owing ances Weinbergs. computations clearly are shown by Kelley, demonstrating application Mr. payments to both principal. recomputation interest and principal This of interest and 27, 1983, showing May concludes with a negative that on there was a $7,916.67. words, clearly balance of In other the exhibit demon- 2, 1983, strates that May payments for the first time on made in- owing principal exceeded the balance of both May pay- terest. On Kelley computed Mr. the excess $4,287.29. ments made By May at $7,440.09. Last, amount May had increased to Weinbergs paid resulting overpayment $476.58 a total $7,916.67. computations demonstrate that the only trying prove they overpaid $7,916.67. had the Bank con- overpayment, Kelley nection with that Mr. noted that he had not computed negative Weinbergs. interest on the balance due to the plaintiffs’ pointed
At the bottom of the total Exhibit 13 he out that charged liability ledger interest the Bank on the following The exhibit then sets forth the calculation accountant Kelley: *23 $126,249.86 liability ledger charged the
Total interest 93,091.69 (which pages all is the total of the interest Total interest 9.5%) by Kelley calculated Mr. at 33,158.17 liability ledger charged $ Excess interest on the foregoing analysis plaintiffs’ is with Exhibit 13 consistent charged by again which the interest demonstrated the total of excess damages argued Unfortunately, the to the lender. when the jury, attorney plaintiffs argued excess the for the interest $33,158.17 collected and therefore should be paid the back to was mathematically, upon evi- Weinbergs. That incorrect based the was collected by only plaintiffs. dence submitted excess interest the by proved plaintiffs $7,916.67.1 the Bank as the would there- modify judgment fore as follows: 33,158.17 $ to
Amount of interest awarded Weinbergs 7,916.67 actually payable Weinbergs Less amount of interest to 25,241.50 judgment $ Amount should reduced foregoing joins MR. JUSTICE GULBRANDSON dissent. FOOTNOTES form, special jury responses, follows: full text of the with the was as Defendant, your “It is this State task at time to determine whether the Farmers Worden, Plaintiffs, Carolyn Weinberg
Bank of liable A. Wein- is to the Thomas wife, berg, or liable to the bank. To husband and and whether not the are you verdict, reaching your you following questions. assist must answer the set you instructed, questions you following Unless otherwise answer each of the are must received, your you regardless answer to accordance with instructions have prior questions. “SECTION A. parties De- “A-l. modified on Was the contract between the November 30, 1976, loaning obligation One Hun- cember so as to the bank relieve from Thirty-three Thirty-seven Dollars dred Five Hundred Thousand 40/100ths ($137,533.40) (7) years nine at the rate of for seven with interest (9.5%), payable semi-annually? and one-half “YES_NO x ques- your question remaining ‘yes’, “If not answer to A-l above is do answer ‘no’, A, your proceed to proceed If tions B. answer this Section but Section question. the next “A-2. Did the bank breach the November contract? NO_ “YES x questions your question ‘no’, any in this “If more A-2 is do not answer answer you ‘yes’, your question then A-2 is proceed If B. answer Section but to Section question A-3. must answer damages the bank’s breach as a result of “A-3. Did sustain 14, 1975, November contract? NO_ x “YES ‘no’, any questions in this your question not answer more “If A-3 is do answer to you ‘yes’, your question must proceed If A-3 Section but to Section B. answer damages result then determine the amount of the sustained in the insert amount 1975 contract and bank’s breach of November — $104,790.75. following Damages for contract blank. breach of November B. “SECTION dealing implied good its faith and fair “B-l. Did bank breach the covenant Weinbergs? dealings with NO_ *24 x “YES ‘no’, question questions your in this “If B-l is no more Section answer to answer go your question ‘yes’ you to B-l and if have awarded but to Section C. If answer A-3, you proceed question damages part your question If B-2. have answer to to any A-3, you damages your question must not answer to then determine awarded damages, any, by Weinbergs if as a of the bank’s amount of sustained result implied dealing good fair insert amount breach of the covenant of faith and and following implied good Damages blank. for breach of the covenant of faith — $__ dealing fair good breaching implied “B-2. covenant of faith Was conduct the bank fraudulent, dealing oppressive? and fair malicious or NO_ x “YES your ‘no’, any questions question “If in this answer to B-2 is do not answer more go your question ‘yes’, you C. B-2 is then Section but Section If answer to must amount, any, punitive damages if are determine provided. Pu- entitled to recover from the said amount in the blank bank insert — damages nitive “Section C. Plaintiffs, Carolyn Weinberg, Weinberg A. indebted “C-l. Are Thomas Defendant, Worden, upon promissory note? Bank of Farmers State “YES_NO x questions ‘no’, your question any “If further answer to above do not answer C-l ‘yes’,you your then the amount owed this Section. If answer is must determine provided. Amount of bank insert amount in the blank said — $__ indebtedness to bank jury impaneled in this case. “The answers above stated are March, day “Dated this 13 Valdez Jesse “/s/ “Foreman” ment note and notes coercion. Guarantee therefore, position, It is that the Contract the Bank’s priv- FmHA, no Weinbergs had that the between the original Guarantee, ity that the mutuality in or the Contract consent of year by and with the note was modified a later agreement be- Weinbergs. writings terms determined parol any subject to parties agreement other tween the evidence rule.
Notes
Each of the Bank’s
notes
the Bank
security agreements provided
at least one of the
attorney
if an action
fees and costs
entitled to reasonable
security
of the notes or
brought
court to enforce the collection
agreement.
28-3-704, MCA,
attorney
right to
fees
Under Section
any
based on the
reciprocal
parties
action
to all
to the contract
any
contract,
attorney
provides
fees to
when the
for
contract
Compton v. Alcorn
See,
parties.
example,
successfully
Thus,
having
defended