Lythgoe v. First Security Bank of H

No. 85-602

I N T H E SUPREME COURT O F T H E S T A T E O F MONTANA

THOMAS LYTHGOE, CHUCK NOTBOHM, GARY LYTHGOE and J E A N N I E LYTHGOE,

P l a i n t i f f s and A p p e l l a n t s ,

-vs- F I R S T S E C U R I T Y BANK O F HELENA,

D e f e n d a n t and R e s p o n d e n t .

A P P E A L FROM: D i s t r i c t C o u r t of t h e F i r s t J u d i c i a l D i s t r i c t , I n and f o r t h e C o u n t y of L e w i s & C l a r k , T h e H o n o r a b l e T h o m a s H o n z e l , Judge p r e s i d i n g .

COUNSEL O F RECORD:

For A p p e l l a n t :

Peterson, Schofield & L e c k i e ; V. Joe L e c k i e , B i l l i n g s , Montana

For R e s p o n d e n t :

D o n a l d A. Garrity, Helena, Montana

S u b m i t t e d on B r i e f s : A p r i l 24, 1986

Decided: June 1 9 , 1 9 8 6

Clerk

M r . J u s t i c e Frank B. Morrison, Jr. d e l i v e r e d t h e Opinion o f t h e Court.

Plaintiffs appeal t h e October 30, 1985, order of the First Judicial District Court dismissing their complaint b e c a u s e it was n o t p r o s e c u t e d by t h e r e a l p a r t y i n i n t e r e s t a s r e q u i r e d by Rule 1 7 ( a ) , M.R.Civ.P. W e affirm.

I n December o f 1982, d e f e n d a n t bank l o a n e d $47,000 to Patrick and Joan F l a h e r t y f o r t h e purpose of purchasing a restaurant in Helena, Montana, from plaintiffs Chuck and B e t t y Notbohm. F l a h e r t y s a g r e e d t o pay Notbohms $28,000 and assume a Small Business Administration loan of $62,000. S h o r t l y t h e r e a f t e r , Tomas Lythgoe borrowed $15,000 from Gary and Jeannie Lythgoe, and invested those funds in the Flaherty's restaurant. Each o f t h e Lythgoes a r e named p l a i n -t i f f s i n t h i s action.

I n August o f 1983, d e f e n d a n t a c c e l e r a t e d t h e n o t e due from F l a h e r t y s . The r e s t a u r a n t c l o s e d i n October 1983, and pursuant to terms of the note and t h e s e c u r i t y agreement between d e f e n d a n t and F l a h e r t y s , d e f e n d a n t s o l d t h e a s s e t s o f the restaurant. Following closure of the restaurant, F l a h e r t y s were w i t h o u t means t o pay d e b t s owed t o Notbohms and Tomas Lythgoe.

Lythgoes and Notbohms filed suit against defendant a l l e g i n g i n t e r f e r e n c e w i t h t h e c o n t r a c t s between Flahertys and p l a i n t i f f s , breach of implied c o n t r a c t with p l a i n t i f f s , and breach of the duty of good faith and fair dealing. F l a h e r t y s were n o t named a s p l a i n t i f f s i n t h e a c t i o n .

Defendant responded t o t h e c o m p l a i n t w i t h a motion t o d i s m i s s p u r s u a n t t o Rule 1 7 ( a ) , M.R.Civ.P., which r e q u i r e s t h a t e v e r y a c t i o n s h a l l be p r o s e c u t e d i n t h e name o f t h e r e a l party i n interest. Defendants contended F l a h e r t y s were t h e only party to the contract with defendant, and without F l a h e r t y s named a s p l a i n t i f f s no a c t i o n c o u l d be commenced. The D i s t r i c t Court a g r e e d Lythgoes and Notbohms were n o t t h e r e a l p a r t i e s i n i n t e r e s t and by o r d e r d a t e d October 30, 1985, g r a n t e d d e f e n d a n t ' s motion t o d i s m i s s . P l a i n t i f f s a p p e a l and r a i s e t h e following issue:

Does p l a i n t i f f s ' complaint s e t f o r t h a cause o f a c t i o n upon which r e l i e f may be g r a n t e d ?

First, w e must d e t e r m i n e whether Lythgoes and Notbohms c a n r e l y on t h e contractual r e l a t i o n s h i p between Bank and Flahertys. To s t a t e a c a u s e o f a c t i o n , p l a i n t i f f s must show they are the real party in interest. Lefebure e t . a l . v.

Baker e t . a l (1923) 69 Mont. 193, 220 P 1111. . Rule 1 7 ( a ) ,

M.R.Civ.P. r e q u i r e s t h a t "Every a c t i o n s h a l l b e p r o s e c u t e d i n t h e name o f t h e r e a l p a r t y i n i n t e r e s t . " W e agree with t h e District Court t h a t plaintiffs i n t h i s action are not the r e a l party i n i n t e r e s t i n so f a r a s the Flaherty contract is concerned.

Plaintiffs' complaint alleges defendant breached an i m p l i e d c o n t r a c t between d e f e n d a n t and p l a i n t i f f s . Plaint i f f s c i t e a l e t t e r from a v i c e p r e s i d e n t o f t h e d e f e n d a n t bank a d d r e s s e d t o Tomas Lythgoe a s e v i d e n c e o f an implied contract. The l e t t e r r e a d s i n p a r t : "The c o l l a t e r a l s e c u r -i n g your l o a n h a s been sold leaving an unpaid balance of $24,399.38 plus interest. A definite arrangement must be made f o r t h e o r d e r l y s e t t l e m e n t o f t h i s d e b t . "

An i m p l i e d c o n t r a c t i s d e f i n e d i n S 28-2-103, MCA, as "one the existence and terms of which are manifested by conduct. I' The above l e t t e r r e f l e c t s an a t t e m p t by d e f e n d a n t t o c o l l e c t a l o a n from Tomas Lythgoe; it d o e s n o t e s t a b l i s h t h e t e r m s n o r t h e e x i s t e n c e o f a n i m p l i e d c o n t r a c t between d e f e n d a n t and Lythgoe. P l a i n t i f f s o f f e r no o t h e r e v i d e n c e . W e a g r e e w i t h t h e D i s t r i c t Court t h a t t h e r e i s i n s u f f i c i e n t evidence t o r a i s e t h e i s s u e of breach of implied c o n t r a c t .

The next issue is whether defendant interfered with plaintiffs' contract rights. Defendant a c c e l e r a t e d t h e n o t e due from F l a h e r t y s . F l a h e r t y s d e f a u l t e d on t h e n o t e , and defendant sold t h e a s s e t s of t h e r e s t a u r a n t . Subsequently, F l a h e r t y s were u n a b l e t o pay t h e d e b t s owed t o p l a i n t i f f s . P l a i n t i f f s a l l e g e defendant wrongfully a c c e l e r a t e d t h e note due from F l a h e r t y s .

A e s s e n t i a l e l e m e n t o f an a c t i o n f o r i n t e r f e r e n c e w i t h n

c o n t r a c t r i g h t s i s t h e i n t e n t i o n a l doing of a wrongful a c t without j u s t i f i c a t i o n o r excuse. T a y l o r v . Anaconda F e d e r a l C r e d i t Union ( 1 9 7 6 ) , 1 7 0 Mont. 51, 550 P.2d 151. Plaintiffs have n o t a l l e g e d any f a c t s s u p p o r t i n g t h e i r a l l e g a t i o n t h a t defendant wrongfully accelerated Flahertys' note. A s t a t e m e n t o f l e g a l c o n c l u s i o n w i t h o u t any s u p p o r t i n g f a c t s i s i n s u f f i c i e n t a s a claim f o r r e l i e f . Meinecke v . McFarland

(1949) 1 2 2 Mont. 515, 206 P.2d 1012. W find plaintiffs' e

claim of interference with contract rights to be a mere c o n c l u s i o n o f law and shows no e n t i t l e m e n t t o r e l i e f .

F i n a l l y , we f i n d p l a i n t i f f s ' c l a i m o f d e f e n d a n t ' s b r e a c h of t h e duty of good f a i t h and f a i r d e a l i n g t o be e n t i r e l y without merit. The c o m p l a i n t c o n t a i n s no f a c t s e s t a b l i s h i n g d e f e n d a n t owed such a d u t y t o p l a i n t i f f s .

The D i s t r i c t Court was c o r r e c t i n d i s m i s s i n g t h e c a s e . Affirmed.

We Concur: /-