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No. 14770
IN THE SUPREME COURT OF THE STATE OF MONTANA
1979

DONALD J. HOFFMAN and DONNA M. HOFFMAN, Plaintiffs and Appellants, VS. PATRICK A. BYRNE and ROBERTA R. BYRNE, Defendants and Respondents.
ORIGINAL PROCEEDING :
Counsel of Record:

For Appellants:

Keller, Reynolds, Drake, Sternhagen & Johnson, Helena,
Montana
Hood and Sherwood, Missoula, Montana
Mike Sherwood argued, Missoula, Montana
Morales, Volinkaty and Harr, Missoula, Montana

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For Respondents:

Milodragovich, Dale & Dye, Missoula, Montana
Harold Dye argued, Missoula, Montana

Submitted:  November 6, 1979  
~ecided: DEG31 1979  
Filed:  Cje;[l  Q 7 ,  *A-/~'7$j  

Mr. Justice John C. Sheehy delivered the Opinion of the Court.

Appeal is by plaintiffs Donald J. Hoffman and Donna
Hoffman from a grant of summary judgment against them by the
District Court, Fourth Judicial District, Missoula County.
They had brought action in that court against defendants
Patrick A. Byrne and RobertaR. Byrne for a declaratory judg-
ment that plaintiffs were not in default with respect to a
contract to purchase real estate from the defendants. The
District Court decided against the Hoffmans as purchasers,
granted summary judgment to the Byrnes, and later ordered by
writ of restitution that the Hoffmans surrender the real
property to the Byrnes. The appeal followed.

In separating the facts of the case, it is easier to separate the incidents by dates as follows: October --Patrick A. Byrne and RobertaR.
23, 1974:
Byrne, as sellers entered into a contract for deed with Donald

J. Hoffman and Donna M. Hoffman, as buyers, for certain real
property located in Missoula County. The contract provided
for an escrow to which payments were to be made this being the
Southside National Bank of Missoula at the time that is pertinent
here. The contract also provided that the escrow holder was
to deduct from each monthly payment made by the Hoffmans a sum
sufficient to pay a mortgage remaining due on the property on
the interest of the sellers, Byrnes.

December --On this date the Byrnes sent a letter by
6, 1977:
certified mail to the Hoffman~ alleging a default in that
judgment had been taken against them by Budget Finance in
Flathead County for $4,223.81 and the Sheriff of Missoula
County had filed and served a notice of levy of execution on
the interest of the Hoffmans in the real property being
purchased. This contract for deed required a 30-day written
notice, the time apparently to run from the receipt of the
written notice by the buyers. The provision of the contract
on which the sellers relied as a default provides:

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"The buyer agrees to keep all of the property
covered hereby free from any lien, mortgage
or encumbrance which may be or become superior
to the lien of the Sellers' title, without the
prior written permission of the sellers.. . ."

December -21, --1977: Donald Hoffman signed the certified
mail receipt, acknowledging receipt of the letter of December

January -11, --1978: The sellers Byrnes closed the escrow account of the Southside National Bank, and obtained the escrow papers which have been deposited therein. One of these was a quitclaim deed to the subject property from the buyers to the sellers which the'sellers filed and recorded on that date.
January --Donald Hoffman filed a petition for
12, 1978: bankruptcy. January --The buyers filed a petition for
20, 1978:
declaratory judgment against the sellers. In general, the
allegations are that Donna Hoffman never received a notice of
default in respect to the property; that in any event no default
existed. The prayer was that the court declare that the
defendants were not entitled to default by reason of the
notice dated December 6, 1977 and to restrain the sellers
from otherwise selling or transferring or encumbering the
subject property.

January -24, --1978: Hugh Kidder, on behalf of Donna Hoffman, tendered to Southside National Bank, and then to Gary Chumrau, counsel for the bank, such sums as might then be due upon the contract.
March --Judgment in the declaratory judgment
24, 1978:
action by the buyers was entered against the sellers on
sellers' default.

June 26, 1978: The default judgment against the sellers
was set aside by stipulation. The sellers filed their
answer to the petition for declaratory judgment on that
date. The answer alleged essentially:

The sellers admit they sent the notice of default
on December 6, 1977, but deny any knowledge of
whether or not it was received by Donald Hoffman.

The sellers admit that they have demanded and
received the escrow papers from Southside National
Bank of Missoula.

Jul 31, 1978: The bankruptcy petition by Donald J.

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Hoffman was dismissed.
August 16, 1978:

--On this date a second letter addressed to the Hoffman~ was sent by the attorneys for the Byrnes setting out several alleged defaults and demanding cure of the same within 30 days.
September --The sellers, through their attorneys,
27, 1978:
sent out a request for admissions to each of the buyers, asking
in essence that they admit that they had received a second
notice of default, that they had not made payments in connection
with the same, except for a letter dated September 19, 1978 from
Richard Volinkaty, one of the attorneys for the husband, in
which letter Volinkaty agreed on behalf of Hoffman to pay the
amounts now due on the contract, provided that the sellers also
pay the sum of $10,000 for damages.

December --Sellers moved for summary judgment
13, 1978: against buyers. December --Affidavit of John Peterson, Vice
13, 1978:
President of Southside National Bank of Missoula was filed in
which he indicated that "since January 13, 1978" no offer
of payments have been made to him in connection with the escrow.

Also filed on this date was the affidavit of one of the
sellers, Patrick Byrne, stating that since January 13, 1978,
no tender of payment has been made.

December --The deposition of Patrick Byrne was
21, 1978:
taken. He testified that he still had the escrow papers, that
he has never authorized Southside National Bank, since January
11, 1978 to accept payments, and that he has continued to make

the mortgage payments and tax reserve payments in connection
with the property concerned. During that period of time the
property has continued to be occupied by the buyers.

January --Donna Hoffman filed her responses to
3, 1979:
the request for admissions, admitting receiving the second
notice of August 16, 1978.

February --The Court granted sellers' motion
22, 1979: for summary judgment against the defendants. February --The sellers made a motion for writ
26, 1979: of restitution. March --The court denied the motion for a stay
1, 1979: order. April --The court granted a writ of restitution
12, 1979:
but stayed the effect of the order pending appeal.
Subsequently this Court stayed any further action of the
court below until this appeal has been decided.
The issues as framed by the parties are these:

1.
Whether the District Court erred in granting summary
judgment because material questions of fact exist.


2.
Whether the District Court erred in granting summary
judgment by construing the declaratory judgment as a request
for relief from forfeiture.


3.
Whether the District Court erred in granting a writ
of restitution.
The first notice of default was defective. The clause
in the contract of purchase relied upon by the sellers makes



the filing of a lien a cause for default only if it affects
the sellers' title. The lien of a judgment creditor against
the buyer in this case would affect only the interest of the
buyer in the property, and not the sellers' title. Therefore
the original default notice was without basis.

However, based on the notice of default of December 6,
1977, and within 30 days of the receipt of that written notice

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by Donald Hoffman (Donna, the wife, did not receive the notice),
the sellers on January 11, 1979, closed out the escrow, and
recorded the quitclaim deed against the buyers which had
been filed as a part of the escrow papers.

The pleadings in the declaratory judgment action relate
only to the situation as it existed on January 20, 1978, the
date of the filing of the petition for declaratory judgment.
The court without any further pleadings, but based only upon
requests for admissions on matters that occurred after the
case was at issue, granted summary judgment in favor of the
sellers. Thus the court went outside the pleadings, because
as far as the pleadings are concerned, the court should have
declared and determined that the original notice of default
was defective, that the defendants were not in default and
perhaps have given such additional relief as might be necessary
to restore the parties to their status quo. At the time of
the hearing on the writ of restitution, on April 12, 1979,
the buyers did in fact through their attorneys tender a
cashier's check,the sum of $7,408, which they had calculated
to be the amount that would make the sellers whole on that
date. Nevertheless, the court refused to accept this tender
and went ahead and issued the writ of restitution. The
proper result in this case is to set aside the findings and
conclusions and summary judgment and we return the matter to
the District Court for further proceedings ordering:

(1)
that the court require the parties to determine
the amounts necessary to bring the contract current;


(2)
that the buyers and sellers restore escrow
arrangements and documents;



(3) that the buyers be given a reasonable time to cure
any defaults properly a ground for forfeiture of the contract;
and,

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(4)
thereupon if the defaults are cured, restore the contract for deed as in full force and effect; otherwise declare a forfeiture.

(5)
As we see no present merit in buyers' claim for tort damages, we reserve our opinion on that point, and leave it to the District Court for any further decision.


We realize we have not pointed to a single authority in
this Opinion. It is enough to say the situation is novel.
This cause is remanded for further proceedings in
accordance with this Opinion.

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Justice

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We Concur:

Chief Justice

Justices

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