Hansen v. Transamerica Ins. Co., 13614

• Citation: 35 St.Rep. 55,573 P.2d 663,175 Mont. 273
• Decision Date: 16 January 1978
• Docket Number: No. 13614,13614
• Parties: Gerald HANSEN and Consolidated Commerce Corporation, Plaintiffs and Appellants, v. TRANSAMERICA INSURANCE COMPANY, a corporation, and County of Silver Bow, et al., Defendants and Respondents, v. COUNTY OF SILVER BOW et al., Cross-Claimant and Respondent.
• Court: Montana Supreme Court

Page 663

573 P.2d 663

175 Mont. 273

Gerald HANSEN and Consolidated Commerce Corporation, Plaintiffs and Appellants, v. TRANSAMERICA INSURANCE COMPANY, a corporation, and County of

Silver Bow, et al., Defendants and Respondents, v. COUNTY OF SILVER BOW et al., Cross-Claimant and Respondent.

No. 13614.

Supreme Court of Montana.

Submitted Sept. 27, 1977.

Decided Jan. 16, 1978.

Michael J. McKeon argued, Anaconda, M. F. Hennessey, Butte, for plaintiffs and appellants.

John G. Winston, County Atty., Butte, Corette, Smith & Dean, R. D. Corette, Jr. and John W. Larson, argued, John T. Mullany, argued, Butte, for defendants and respondents.

SHEA, Justice.

Plaintiffs Gerald Hansen and Consolidated Commerce Corporation appeal from an order of the Silver Bow County District Court granting summary judgment in favor of defendants Transamerica Insurance Company and Silver Bow County in an action on an insurance policy.

Plaintiffs brought this action seeking the full amount of an insurance policy following the destruction by fire of a building known as the Woodrow Hotel, located in Butte, Montana, and a declaration of the county's interest in the building at the time of its destruction. The county was the seller and plaintiff Hansen the buyer of this building under a contract of sale entered into by these parties. The county cross-claimed against Transamerica seeking the full amount of the insurance policy, alleging its interest in the building was superior to that of plaintiffs. On March 13, 1974, Transamerica deposited $2,862.35, a sum less than the full amount of the insurance policy, with the District Court.

On May 29, 1974, the District Court ordered the remains of the destroyed building demolished, reserving for a later hearing determination of the rights of the parties in the building and the building's value at the time of its destruction. Following a hearing, the District Court granted motions of the county and Transamerica for summary judgment on the issue of the building's ownership, ruling that plaintiffs had forfeited all rights to the building as of June 19, 1970, nearly five months before the building's loss, because of their failure to pay the first of four yearly installments on the contract which was due on that date.

Undisputed facts upon which summary judgment was granted are as follows:

On June 19, 1969, plaintiff Gerald Hansen entered into a contract with Silver Bow County to purchase property which had reverted to the county for back taxes. By the terms of the contract Hansen was to pay $8,500 for this property, which consisted of the Woodrow Hotel building. The contract called for a payment of $1,700 down and $1,700 in each of the next four years, with the payments due on the 19th of June of each year.

Important here is the third clause of this contract, which provides "3. That time is of the essence of this contract, and in the event that the purchaser or his assigns shall fail to pay any installment, when due, or any annual interest on deferred payment when due, or any tax or assessment, when due, or shall fail to comply with any other terms or covenants in this contract, then and thenceforth the vendor shall be released from all obligation in law or equity to convey such property, and the purchaser, or his assigns, shall forfeit all right thereto. * * *"

Hansen made the down payment and assigned the contract to the Consolidated Commerce Corporation, which was owned by Hansen. The installment due on June 19, 1970, was not paid. The county sent no notice of default with respect to this missed installment and took no action to repossess the property. The building was destroyed as the result of two fires, on the 3rd and 9th of November, 1970. Four days after the building's destruction, nearly five months after plaintiffs' failure to pay the 1970 installment, the county repossessed the building.

Transamerica, which had transferred an existing insurance policy covering the building to Hansen on August 11, 1969, received proofs of loss from plaintiffs and the county following the building's destruction. Transamerica paid neither claim.

The underlying issue on appeal is whether Hansen still had an interest in the property at the time of the fire.

Summary judgment is proper if the record shows there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. The burden initially is on the movant to show the absence of any genuine issue of material fact; if the record discloses no such issue, the burden shifts to the party opposing the motion, who must then establish a genuine factual issue. Rule 56(c), M.R.Civ.P.; Harland v. Anderson (1976), 169 Mont. 447, 548 P.2d 613, 33 St.Rep. 363.

In this case determination of the interest of the parties in the building at the time of its destruction did not raise an issue of material fact. The propriety of summary judgment, therefore, turns on whether the county is, as a matter of law, entitled to sole ownership of the building as of June 19, 1970, the date on which the unpaid installment became due.

The county contends the third clause of the contract, the "time is of the essence" provision, controls, and that since no notice of forfeiture was required by that provision, plaintiffs' failure to pay the installment due on June 19, 1970 automatically terminated their interest in the building as of that date.

Plaintiffs contend they had an insurable interest in the building at the time of the fire because the county had not yet acted to repossess the property. They argue that by failing to assert its ownership interest by repossession until five months after plaintiffs' default the county waived the "time is of the essence" provision and therefore, as a matter of law, was not entitled to invoke strict forfeiture under this provision.

All parties rely on Fratt v. Daniels-Jones Co. (1913), 47 Mont. 487, 133 P. 700, in support of...