Montana Bank of Roundup, N.A. v. Benson

• Decision Date: 06 May 1986
• Docket Number: No. 85-261,85-261
• Citation: 717 P.2d 6,220 Mont. 410
• Court: Montana Supreme Court
• Parties: MONTANA BANK OF ROUNDUP, N.A., Plaintiff and Respondent, v. John A. BENSON & Pam Benson, husband and wife, William L. Benson and Karen O. Benson, n/k/a Karen Hough, Defendants and Appellants.

Page 6

717 P.2d 6

220 Mont. 410

MONTANA BANK OF ROUNDUP, N.A., Plaintiff and Respondent, v. John A. BENSON & Pam Benson, husband and wife, William L Benson and Karen O. Benson, n/k/a Karen Hough Defendants and Appellants.

No. 85-261.

Supreme Court of Montana.

Submitted on Briefs Dec. 18, 1985.

Decided March 20, 1986.

Rehearing Denied May 6, 1986.

Harris Law Firm, Linda L. Harris, Billings, for defendants and appellants.

K. Robert Foster, Bozeman, for plaintiff and respondent.

HARRISON, Justice.

This is an appeal from an order issued in the Tenth Judicial District, the Honorable Peter L. Rapkoch presiding, in and for Petroleum County, Montana, denying defendants' motion to set aside the default and judgment of default entered in favor of the plaintiffs. We reverse and remand.

The single issue presented by appellants is whether the court erred in denying the Bensons' motion to set aside default and judgment by default.

The defendants/appellants, John and Pam Benson, own and operate a ranch near Melstone, Montana. Their principal source of revenue is sale of sheep and horses. They had been substantial customers of the Montana Bank of Roundup (Bank) for several years. We will spare the reader a lengthy discourse on the recent and less than harmonious relationship between the Bensons and the Bank. It is sufficient to set forth the following: Bensons and the Bank had negotiated a loan through the Farmers Home Administration (FHA), whereby FHA guaranteed 90% of the loan after liquidation of all collateral. In addition, the Bank approved a $64,000 credit line for the Bensons' operating expenses. Collateral included real estate equity, equipment, sheep and horses, and any increase in any sheep and horses. Serious losses of livestock in the fall of 1984 rendered the Bensons insolvent and the Bank deemed itself insecure. A complaint filed by the Bank alleged default in the security agreements and that it had deemed itself insecure. Contemporaneously, a motion for a temporary restraining order and preliminary injunction were presented. A temporary restraining order was issued, and after a hearing on the motion for preliminary injunction, an injunction incorporating the temporary restraining order was issued. The Bank's efforts to gather its collateral were met with extraordinary resistance by the Bensons. Bank officials eventually believed they had reasonable grounds to fear for their safety and then attempted to enforce the Bank's rights in court.

A notice of intention to take default was personally served on Bensons' counsel who responded by way of a motion to withdraw and a motion for continuance. Bensons were served a notice of hearing on the combined motion, but did not appear. Consent to withdraw was granted, and the withdrawing attorney was ordered to notify Bensons. The motion for continuance was not ruled on. Bensons claim they did not receive notice of their attorney's withdrawal, and there is no evidence in the record of any notice to Bensons. This Court can review only what is in the record.

... [I]n the absence of the evidence from the record we are precluded from inquiring whether it is sufficient to sustain the findings, since error or prejudice cannot be presumed.

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