Westland Enterprises, Inc. v. Boyne, USA, Inc., 87-465

• Decision Date: 27 April 1989
• Docket Number: No. 87-465,87-465
• Citation: 772 P.2d 309,237 Mont. 186
• Parties: WESTLAND ENTERPRISES, INC., and Vernon F. Taylor, Trustee, Plaintiffs and Respondents, v. BOYNE USA, INC.; Rural Improvement District # 305 and its Directors, Jack Harper, John McCulley, and Raymond J. Tout; Gallatin County Commissioners, Ray White, Jane Jelinski and Wilbur Visser; and Madison County Commissioners, Marie McAlear, Bill Dringle and John Allhands, Defendants and Appellants.
• Court: Montana Supreme Court

Page 309

772 P.2d 309

237 Mont. 186

WESTLAND ENTERPRISES, INC., and Vernon F. Taylor, Trustee, Plaintiffs and Respondents, v. BOYNE USA, INC.; Rural Improvement District # 305 and its

Directors, Jack Harper, John McCulley, and Raymond J. Tout;

Gallatin County Commissioners, Ray White, Jane Jelinski and

Wilbur Visser; and Madison County Commissioners, Marie

McAlear, Bill Dringle and John Allhands, Defendants and

Appellants.

No. 87-465.

Supreme Court of Montana.

Submitted on Briefs March 9, 1989.

Decided April 27, 1989.

Kirwan & Barrett, Peter M. Kirwan, A. Michael Salvagni, County Atty., Duke Wolf, Deputy County Atty., Bozeman, Loren Tucker, County Atty., Virginia City, for defendants and appellants.

Morrow, Sedivy & Bennett, Edmund P. Sedivy, Bozeman, for plaintiffs and respondents.

McDONOUGH, Justice.

This appeal involves a dispute over contract terms granting use of a sewer system located at Big Sky, Montana. Defendants Boyne USA, et al. (Boyne) appeal from the judgment of the District Court of the Eighteenth Judicial District, Gallatin County. The District Court enjoined Boyne from allowing further connections to the system until the sewage facility had been expanded sufficiently to accommodate sewage from future real estate development contemplated by plaintiffs Westland Enterprises, et al. (Westland). The court also granted declaratory relief by quantifying the treatment capacity to be provided for Westland under the terms of the contract. We affirm in part and reverse in part.

Boyne presents six issues for review:

1. Were the District Court's original Findings of Fact supported by the record?

2. Did the District Court have jurisdiction to make a de novo determination of the capacity and adequacy of the RID # 305 Sewage Treatment Facility?

3. Was the District Court's Order entered after the second trial supported by any findings of fact or evidence of record?

4. Did the District Court err in interpreting the contract at issue to require that RID # 305 provide Plaintiffs with present unused sewage treatment capacity for their future development?

5. Does the contract at issue contain a condition precedent and, if so, have Plaintiffs performed the condition?

6. Is an injunction a proper remedy where the contract at issue could not be specifically enforced?

The record from the District Court in this case is lengthy. The facts are many, and some have been argued vehemently. There are also a number of parties involved. In the interests of keeping the discussion of the issues as simple as possible, the facts and the relationships among the parties will be summarized.

Boyne is the successor corporation to Big Sky of Montana, Inc., the entity which began development of the Big Sky ski resort, golf course and residential real estate near the ski area. For purposes of this appeal, all activities of Big Sky of Montana, Inc., prior to the takeover of the project by Boyne will be regarded as having been undertaken by Boyne. Westland is the creation of individual owners of land adjacent to the Big Sky resort for the purposes of developing that property. The contract at issue was signed by the individual landowners, but was for the benefit of Westland, and will therefore be treated as a contract between Boyne and Westland.

Big Sky is located in the mountains along the West Fork of the West Gallatin River. Due to the resort's rural location, plans called for the building of a sewage treatment plant to serve the ski area, condominiums and other residential units associated with the resort. The best location for this plant was a site on Westland property. Boyne and Westland entered into a contract in 1971 whereby Westland conveyed approximately 21 acres of land to Boyne in exchange for the right to use the sewage facility. The contract reads in relevant part as follows:

3. In consideration for the granting of this tract of land by the Grantors to Big Sky, Big Sky in turn agrees to allow the Grantors to connect with its sewer plant for the subsequent development of the adjacent lands of the Grantor [sic] with no charge to the Grantors by Big Sky for such connection and to further provide free sewage service as more particularly set forth below.

4. Accordingly, simultaneously upon the execution of this agreement by all parties and as reciprocal consideration, the Grantors agree to convey by Warranty Deed, accompanied by evidence of unencumbered merchantable title through a memorandum of title, the legal title to the property described in Exhibit "A". Big Sky in turn conveys to the Grantors upon the execution of this Agreement the right to connect to the sewer lines of Big Sky in order that the Grantors can utilize the said central tertiary sewer plant to be constructed by Big Sky and Big Sky further agrees to provide to the Grantors sewage treatment at no charge for up to one million gallons per year for twenty (20) years from and after the date use of Big Sky's sewer system is commenced by the Grantors or by July 1, 1981, whichever is the sooner. Any useage [sic] by the Grantors over the said figure of one million gallons of sewage per year would be assessed against the Grantors at the same rate charged to other users of the plant. Big Sky reserves the right to refuse service to any user who is a successor of the Grantors who refuses to join any rural improvement district which may hereafter be created to own, operate and maintain the said sewer plant. After twenty (20) years from the date use commences by the Grantors under this agreement or July 1, 1981, whichever is the sooner, subsequent use by the Grantors of the sewer plant shall be subject to charge at the same rate charged for all other users.

After this contract was signed, the plant was built and development of Big Sky proceeded. Several projects were connected to the treatment facility. Westland did not begin plans for development of its property until approximately 1982. An initial study drawn up by a consulting firm hired by Westland called for a hotel, golf course, condominiums and other recreational facilities. The calculated "population equivalency" of the development was 3,700, which would require treatment of 43 million gallons of sewage annually. Westland's study indicated that Boyne's treatment facility did not have sufficient capacity remaining to accommodate this much sewage.

The study results were submitted to defendant Rural Improvement District # 305 (a quasi-public entity created at Boyne's request to operate the treatment plant), along with the suggestion that steps be taken to expand the plant's capacity. The District consented to accept the amount of sewage forecast by the plan, subject to certain conditions: "peak flow" from Westland's development would be limited, eight more acres of Westland property would be conveyed to the District for expansion of the plant, and Westland would allow disposal of treated waste water on its property (by irrigating the proposed golf course).

Westland disagreed with Boyne as to its rights under the contract, which eventually resulted in Westland filing suit. Westland's complaint contained three alternative prayers for relief. The first sought an injunction against Boyne and the District prohibiting further connections to the treatment plant until Boyne could show that it had the capacity to satisfy the needs of Westland's planned development, and a declaration of the parties' rights under the contract. The second alternative prayer sought rescission of the contract and return of the land to Westland. The third alternative prayer sought money damages for breach of contract.

After trial by the District Court sitting without a jury, the court issued its judgment on August 19, 1985. The court ruled: (1) the contract...