First National Bank in Havre v. Nel , 228 Mont. 146 ( 1987 )

No. 8 6 - 4 6 0
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
THE FIRST NATIONAL BANK IN HAVRE,
Plaintiff, Cross-Appellant
and Respondent,
-vs-
ARNOLD E. NELSON,
Defendant, Cross-Respondent
and Appellant.
APPEAL FROM: District Court of the Twelfth Judicial District,
In and for the County of Hill,
The Honorable Chan Ettien, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Morrison, Hauge, Ober, Young & Melcher; Stephen R.
Brown, Jr., Havre, Montana
For Respondent:
Thompson & Swenson; Bruce E. Swenson, Havre, Montana
Submitted on Briefs: Feb. 26, 1 9 8 7
Decided: August 18, 1987
Filed:
*,uClerk
4
Mr. Justice William E. Hunt, Sr., delivered the Opinion of
the Court.
This is an appeal and cross-appeal from an action on a
promissory note brought before the Twelfth Judicial District
Court in Hill County.
We remand for rehearing of the summary judgment
proceeding.
The definitive issue on appeal is whether the District
Court erred in granting partial summary judgment on the issue
of liability.
The parties also raised the following issues not reached
by this decision:
1. Did the District Court err in finding there was
adequate consideration for this contract?
2. Did the District Court err in upholding the forced
sale of certain interests in real property resulting from a
mortgage foreclosure on a note signed by appellant and
recorded before a declaration of homestead was filed by
appellant's wife as joint tenant and did it err in denying
appellant's motion for application of foreclosure proceeds?
3. Did the District Court err in granting certain
pre-appeal attorney fees, paralegal fees and costs to the
respondent?
First National Bank in Havre (hereinafter the Bank)
brought this action to collect the amount due on a promissory
note signed by defendant Nelson and to foreclose a mortgage
securing repayment of the promissory note. The Bank had
initially been a lender to Nelson's adult daughter, Kay
Pierson, owner of Pierson's Parkway Grocery.
In May, 1984, Nelson signed the promissory note in favor
of the Bank for the sum of $30,000. The Bank then
distributed over $25,000 of the loan monies.
Pierson made payments on this distribution of $400 per
month.
On February 6, 1985, Nelson signed an updated promissory
note evidencing his indebtedness to the Bank in the amount of
$25,326.59 and a mortgage securing repayment of the
promissory note. The mortgage involved Nelson's interest in
his home in Lot 2, Block 1, Second Sunrise Addition, Havre,
Hill County, Montana. This is the note at issue in this
case.
Appellant Nelson contends that partial summary judgment
was erroneously granted to the Bank on the issue of liability
since he raised genuine issues of material fact which
precluded summary judgment.
Unfortunately we do not have the transcript of the trial
court's proceedings on this issue for our reference as the
tape was not retained by the Clerk of Court. Appellant
claims his answer to the complaint, along with two
affidavits, supports the conclusion that genuine issues of
material fact exist. He raises the issues of fraud and lack
of consideration as affirmative defenses and argues that any
allegations of violation of the parol evidence rule are
inaccurate since fraud is an exception to the parol evidence
rule.
In opposition, the Bank argues that fraud was improperly
pleaded by appellant who therefore should not be allowed to
use fraud as an affirmative defense nor parol evidence in the
form of the two affidavits which bolstered the fraud claim.
The Bank argues the District Court correctly excluded
consideration of the defense and the affidavits.
For an allegation of fraud, the law requires a party to
plead and prove nine elements. Krone v. McCann (1982), 197
Mont. 380, 642 P.2d 584. Those requisite elements are that
there be : (1) a representation; (2) falsity of
representation; (3) materiality of that representation;
(4) speaker's knowledge of falsity of representation or
ignorance of its truth; (5) the speaker's intent that it
should be relied on; (6) the hearer is ignorant of the
falsity of the representation; (7) the hearer relies on the
representation; (8) the hearer has a right to rely on the
representation; and, (9) consequent and proximate injury was
caused by reliance on the representation.
The defendant's answer attempts to plead fraud as an
affirmative defense but fails to allege all of the
above-mentioned nine required elements of fraud. The answer
makes certain representations regarding the terms and nature
of the promissory note. The trial court, however, found that
fraud was not properly plead and proceeded to grant the
plaintiff Bank's motion for partial summary judgment. No
transcript or record of the partial summary judgment
proceedings is available for this Court upon appeal. A
review of the remaining record on appeal indicates no
amendment to defendant's affirmative defense pleading of
fraud was made at any later point.
Because of the missing record, we are unable to
determine whether the defendant requested leave to amend his
complaint and whether the court refused such a request. It
appears an amendment would have been a simple,
non-prejudicial way to eliminate the next question which was
whether certain affidavits by defendant would cure his
defective fraud pleading. This issue would not have arisen
had the defendant been allowed to amend the complaint.
Rule 15 (a), M.R.Civ.P. liberally permits a party to
amend pleadings. A trial court may not unreasonably refuse
to grant an application to amend a pleading. S 3101
Am. Jur.2d Pleadings at 297. A pleading may be amended
provided that the original cause of action or ground of
defense remains the same. 5 322, Arn.Jur.2d Pleadings at 315.
The purpose of this liberal amendment rule is to insure trial
of all the issues on the facts of the case.
As a court of appeal, we cannot thus proceed beyond a
determination of the summary judgment issue of law without a
proper record. It is unfortunate that we must therefore
remand this case to the District Court for rehearing on the
issue of partial summary judgment with instructions to give
full consideration of law to any motion to amend the fraud
pleadings.
Because of our decision to remand this case on the issue
of liability, we do not find it necessary to address the
other issues raised by the parties at this time.
This case is remanded for reheying in accordance with
this Opinion.
Justice
We Concur: