Scott v. Kyhl

• Decision Date: 18 March 1963
• Docket Number: No. 10487,10487
• Citation: 141 Mont. 523,379 P.2d 803
• Parties: S. W. SCOTT and Elizabeth Scott, Husband and Wife, Plaintiffs and Respondents, v. H. J. KYHL and Dorothy A. Kyhl, Husband and Wife, Defendants and Appellants.
• Court: Montana Supreme Court

Page 803

379 P.2d 803

141 Mont. 523

S. W. SCOTT and Elizabeth Scott, Husband and Wife Plaintiffs and Respondents, v. H. J. KYHL and Dorothy A. Kyhl, Husband and Wife, Defendants and Appellants.

No. 10487.

Supreme Court of Montana.

Submitted Jan. 10, 1963.

Decided March 18, 1963.

Wiggenhorn, Hutton, Schiltz & Sheehy, Billings, John C. Sheehy, Billings, (argued orally) for appellants.

Sandall, Moses, Cavan & Battin, Billings, John Cavan, Jr., Billings, (argued orally), for respondent.

DOYLE, Justice.

This is an appeal from a judgment quieting title to certain property and denying an alleged lien of a mortgage against that property.

The pertinent facts are these. This cause was tried in the Thirteenth Judicial District, County of Yellowstone, by the Honorable E. E. Fenton as District Judge. It was heard under the rules which existed prior to January 1, 1962. The trial was had on February 20, 1962, and resulted in a judgment for the plaintiffs and respondents, S. W. Scott and his wife Elizabeth Scott. The appeal followed.

Prior to the month of September of 1950 appellants were the owners of real property located in Rosebud County on which there was a tavern known as the Colstrip Tavern. The liquor licenses for the Tavern were held in the name of the appellant Dorothy Kyhl only.

Respondent Elizabeth Scott, by a former marriage, had a son and daughter-in-law, Leonard E. and Eva Rothwell. On September 2, 1950, the appellants Kyhl and the Rothwells entered into a written memorandum for the sale of the Colstrip Tavern for the sum of $16,500 with monthly payments of $250 beginning April 1, 1951. Thereafter, on October 18, 1950, a formal contract for deed consisting of eight pages was signed by the appellants and by Leonard E. and Eva Rothwell, which changed the date of the payment of $250 to September 1, 1951, or eleven months after the execution of the agreement, with interest of five percent on the unpaid balance. On page 3, of this contract for deed, there appears the following language:

'Contemporaneously with the execution of this contract a mortgage on the following described property, to-wit:

'Lot six (6) Block Ten (10) Grand View Sub-division of the City of Billings, Yellowstone County, Montana, according to the official plat thereof now on file and of record in the office of the County Clerk and Recorder of Yellowstone County, Montana, is to be executed by S. W. Scott and Elizabeth Scott, Husband and wife, of Moccasin, Montana, in the sum of Seven Thousand Dollars ($7,000); said mortgage is given as security for the purchase price, and for the use and benefit of Vendees, and for the carrying out of the covenants and conditions of this contract, and is subject to record encumbrances.' Emphasis supplied.

On the eighth and final page of this contract for deed is the signature of the respondents and the language used is as follows:

'In consideration of the sale by the Vendors to the Vendees, upon the terms and conditions set forth in the above contract, and for a valuable consideration, the receipt whereof is hereby acknowledged, the undersigned agrees to guarantee the payment of Seven Thousand Dollars ($7,000), on the purchase price of the property described in said contract, and to secure the payment of said Seven Thousand Dollars ($7,000), to execute a mortgage in the sum of Seven Thousand Dollars ($7,000), ON THE PROPERTY DESCRIBED IN SAID CONTRACT, provided that if the payments due under said contract by the Vendees be made as herein, then and in that event said mortgage to be fully cancelled and determined and otherwise to be in full force and effect.'

On June 15, 1951, the respondents S. W. and Elizabeth Scott, executed a mortgage with the appellants H. J. and Dorothy A. Kyhl as the mortgagees, on the property hereinbefore described in the sum of $7,000, which instrument further discloses that there was a first mortgage dated May 24, 1951, for $9,500 in favor of the Western Life Insurance Company of Helena, Montana.

The mortgage, dated June 15, 1951, was made in conformity with the Contract for Deed above referred to, which was made on October 18, 1950.

The Rothwells took possession of the Colstrip Tavern in September 1950 and operated the same until September, 1952. During this nearly two years of occupancy, the Rothwells paid nothing to the appellants. Rothwells then informed appellants that they were abandoning the premises and handed the appellants the keys. It further appears that Mr. Kyhl in company with a Mr. Morton came to the apartment of Mr. Rothwell early in 1953 for the purpose of allowing Mr. Morton to operate the Colstrip Tavern, and who went into possession and operated the Tavern for a period of six weeks.

In the month of May 1953, Mr. Kyhl came to Mr. Rothwell and suggested that they make a trip to Forsyth to purchase the liquor licenses so they would not expire.

On August 19, 1953, there was served on Leonard E. and Eva Rothwell, a notice of cancellation of the contract for deed dated October 18, 1950, and a demand was made for the sum of $16,500 as principal, with interest at five percent from September 13, 1950, and $168.98 due for state, county and school district taxes paid by the Kyhls, making a total of $16,668.98. This notice further provided that a demand for payment of the full amount due under the terms of the contract, together with the delinquent interest thereon, and upon failure to make such payment immediately an action would be instituted to enforce the rights of the undersigned, Dorothy Kyhl.

On October 26, 1960, the respondents filed an action to quiet title to the Billings property naming the appellants as parties. The defendants denied generally the allegations of the complaint and cross-complaint. In the cross-complaint it was asserted that the Billings property was subject to the lien of the second mortgage given by the respondents.

In the reply to the cross-complaint, respondents set up several affirmative defenses.

On April 12, 1962, the trial court made four conclusions of law, which are as follows:

'I. That by said notice, Exhibit D, said contract for deed was cancelled and rescinded, and thereby the original obligation of the vendees, Leonard E. Rothwell and Eva Rothwell, was altered, and the remedies and rights of the defendants against said vendees was impaired, and that the plaintiffs herein were thereby exonerated from payment upon the written contract of guaranty hereinbefore mentioned.

'II. That the contract of guaranty and the mortgage securing the same were collateral to the above-mentioned contract for deed, and did not constitute a separate and independent promise of payment by the plaintiffs.

'III. That the mortgage and contract of guaranty hereinbefore mentioned are not barred by the provisions of Section 93-2603, Revised Codes of Montana of 1947.

'IV. That the lien of said mortgage is now without any right or validity whatsoever, and that the...