Holman v. Hansen

• Decision Date: 18 May 1989
• Docket Number: No. 88-287,88-287
• Citation: Holman v. Hansen, 237 Mont. 198, 773 P.2d 1200, 46 St.Rep. 734 (Mont. 1989)
• Parties: Ralph M. HOLMAN, Plaintiff and Appellant, v. George G. HANSEN, Margaret E. Hansen, Rita M. Turley, Georgia L. Hansen, Chris M. Hansen, Vic G. Hansen and Michael J. Hansen, Defendants, Respondents and Cross-Appellants.
• Court: Montana Supreme Court

Page 1200

773 P.2d 1200

237 Mont. 198

Ralph M. HOLMAN, Plaintiff and Appellant, v.George G. HANSEN, Margaret E. Hansen, Rita M. TurleyGeorgia L. Hansen, Chris M. Hansen, Vic G. Hansen and Michael J. Hansen, DefendantsRespondents and Cross-Appellants.

No. 88-287.

Supreme Court of Montana.

Submitted on Briefs April 6, 1989.

Decided April 27, 1989.

Rehearing Denied May 18, 1989.

Richard F. Cebull, Anderson, Brown, Gerbase, Cebull, Fulton, Harman & Ross, Billings, for plaintiff and appellant.

John T. Jones, Moulton, Bellingham, Longo & Mather, Billings, for defendants, respondents and cross-appellants.

McDONOUGH, Justice.

This appeal involves a contract for deed to ranch property located near Big Timber, Montana.PlaintiffRalph M. Holman(Holman), the buyer under the contract, appeals from the order of the District Court of the Sixth Judicial District, Sweet Grass County, granting summary judgment in favor of the sellers, George G. Hansen, et al. (Hansens).The order held Holman's claims to be barred, and granted one of the two alternative remedies sought by Hansens.The court ordered that Holman would forfeit all payments made under the contract, and Hansens would retake possession of the premises, less a 40-acre tract described below.The court denied Hansens' request for payment in full of the balance of the contract price.We affirm.

Holman presents two issues on appeal:

1.Whether the District Court improperly usurped Holman's right to a jury trial by resolving questions of fact in its grant of summary judgment to Hansens?

2.Did the District Court err in granting Hansens' motion for summary judgment on the grounds that Holman's claim is barred by the applicable statute of limitations, waiver, estoppel and contract terms?

Hansens present one additional issue on cross-appeal:

Whether the trial court erred in ruling that Hansens could not elect the remedy of specific performance and obtain a judgment for the accelerated balance of the contract for deed, and that Hansens' sole remedy was repossession of the ranch property and retention of the payments made by Holman.

The contract for deed at issue is dated January 1, 1982.The subject of the contract is approximately 2,800 acres of deeded land and assignment of a leasehold interest in another 1,120 acres.The purchase price is $950,000.00, paid with a $200,000.00 down payment and 20 annual installments of $88,132.76.The contract also provides that upon payment of $500,000.00 in principal and interest, Holman receives title to a 40-acre parcel within the ranch where a house and other improvements are to be built for Holman.

After execution of the contract, Holman took possession of the property, which he still retains.After the 1986 installment was made, more than $500,000.00 in principal and interest had been paid on the contract, and Holman received the deed to the 40-acre parcel.Holman failed to pay the 1987 installment.Pursuant to contract terms, Hansens sent Holman a Notice of Default, which gave him 40 days to pay the 1987 installment in full.Holman did not make the payment.Hansens then elected under the contract to accelerate the entire balance due, and sent a Notice of Acceleration to Holman.The notice gave Holman 90 days to pay all outstanding principal and interest under the contract.Holman did not do this, and filed suit against Hansens on January 30, 1987.

Holman's complaint alleged fraud, breach of warranty, breach of the implied covenant of good faith and fair dealing, failure of consideration and breach of four separate contracts to make improvements on the property.Holman sought rescission, or in the alternative, reformation of the contract for deed, general and punitive damages for fraud, contract damages, costs and attorney's fees.

Holman's claims of fraud stem from his alleged intention to use the ranch property to pursue an outfitting business.While Holman's primary profession was the operation of an iron and steel business, he had been licensed as an outfitter in Montana since 1957.According to Holman, he was contemplating the sale of his business in order to "retire" to the ranch to work full-time as an outfitter.

George Hansen was Holman's main contact with the sellers.It Was George Hansen who showed the ranch to Holman.According to the Complaint, George Hansen made misrepresentations to Holman by claiming that, among other things, an abundance of game and fish inhabited the property, only one small patch of noxious weeds was to be found on the entire ranch, 250 to 300 cow/calf pairs could be grazed on the land in season, and Hansen himself had paid $600,000.00 for the property approximately ten years earlier.According to Holman, these statements were false, Hansen knew they were false, and Holman relied on them in deciding to purchase the property.

In their answer, Hansens asserted a counter-claim alleging two counts: (1) Holman was in default on the contract for deed, which entitled Hansens to judgment for the entire balance of the purchase price, or in the alternative awarding forfeiture of all payments made and repossession of the property; and (2) the location of Holman's 40-acre parcel rendered much of the ranch unusable by inhibiting access to it, therefore Holman's warranty deed to the 40 acres should be declared void and quiet title granted to Hansens.

Hansens later moved for summary judgment.By its order of February 29, 1988, the District Court granted summary judgment, but permitted Holman to retain the 40-acre parcel together with an easement for access over existing roads.The court requested briefs detailing Hansens' claim to the balance of the purchase price as opposed to forfeiture and repossession as provided for in the contract.By its Order of April 6, 1988, the court denied Hansens' request for the contract balance and instead awarded forfeiture and repossession.This appeal followed.

I. Holman's Appeal

Holman's arguments on appeal center on the District Court's holding that his fraud-based claims are barred by the applicable statute of limitations.The statute of limitations for fraud is found at Sec. 27-2-203, MCA:

The period prescribed for the commencement of an action for relief on the ground of fraud or mistake is within 2 years, the cause of action in such case not to be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud or mistake.

According to Holman, he did not discover the facts constituting George Hansen's fraud until 1985, less than two years before the complaint was filed.

The party asserting fraud is put on inquiry notice of the other party's misdeeds, and must exercise ordinary diligence to discover the facts constituting the fraud.Yellowstone Conference of United Methodist Church v. D.A. Davidson(Mont.1987), 741 P.2d 794, 44 St.Rep. 1528;Gregory v. City of Forsyth(1980), 187 Mont. 132, 609 P.2d 248.Mere ignorance of the facts will not suffice to toll the statute of limitations.

"He must show that the acts of fraud were committed under such circumstances that he would not be presumed to have knowledge of them, it being the rule that if he has 'notice or information of circumstances which would put him on inquiry which if followed would lead to knowledge, or that the facts were presumptively within his knowledge, he will be deemed to have actual knowledge of the facts.' "

Mobley v. Hall(1983), 202 Mont. 227, 232, 657 P.2d 604, 607(quotingKerrigan v. O'Meara(1924), 71 Mont. 1, 8, 227 P. 819, 822).As stated in Holman's brief to this Court, "The gravamen of Mr. Holman's complaint is that Hansen engaged in a continuing fraudulent concealment of facts that disallowed Mr. Holman from truly ascertaining the extent of the fraud."

Holman thus relies on the doctrine of fraudulent concealment to toll the statute until 1985.Holman cites our definition of fraudulent concealment from E.W. v. D.C.H.(Mont.1988), 754 P.2d 817, 821, 45 St.Rep. 778, 783:

"Fraudulent concealment has been described as the employment of artifice, planned to prevent inquiry or escape investigation, and mislead or hinder acquisition of information disclosing a right of action."

(quotingMonroe v. Harper(1974), 164 Mont. 23, 28, 518 P.2d 788, 790).We have previously held that in the context of non-malpractice negligence actions, invoking fraudulent concealment requires a showing of affirmative conduct by the defendant calculated to obscure the existence of the cause of action.Yellowstone, 741 P.2d at 798.Given our previous discussions of fraud, this rule applies with equal force to the case at hand.

Holman first contends that the District Court"usurped" his right to a jury trial by resolving questions of fact in order to grant summary judgment.According to Holman, numerous issues of material fact existed as to when he knew, or should have known, that Hansen defrauded him.He cites Sec. 28-2-404, MCA; and Jenkins v. Hillard(1982), 199 Mont. 1, 647 P.2d 354, for the proposition that actual fraud is always a question of fact.While this is a correct statement of the law which would apply to the merits of this case, it sidesteps the threshold barrier of the statute of limitations.

Under Sec. 27-2-203, MCA, whether there has been a "discovery" of facts sufficient to start the running of the statute of limitations is a question of law.Mobley, 657 P.2d at 607.Holman's fraud claims were held to be barred under the statute of limitations because he discovered, or should have discovered by the use of his senses, the facts constituting the alleged fraud more than two years prior to the filing of this suit.This was a question of law.The court did not "usurp" Holman's right to a jury trial.

Holman's second argument asserts that Hansens are estopped from raising the statute of limitations as a defense because of George Hansen's acts of fraudulent concealment.He relies on Keneco v. Cantrell(1977), 174...