No. 12641

I N T E SUPREME C U T OF THE STATE O M N A A H OR F OTN

1974

ROBERT G. SIMKINS and T O A G. H G E T , HMS A GRY

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

-vs - MORRIS JAFFE, WILLIAM H. SIPPEL e t a l . ,

Defendants and Respondents.

Appeal from: D i s t r i c t Court of t h e E i g h t e e n t h J u d i c i a l D i s t r i c t , Honorable Frank E. B l a i r , Judge p r e s i d i n g .

Counsel of Record:

For A p p e l l a n t s :

Berg, ~ ' C o n n e l l ,Angel and Andriolo, Bozeman, Montana Ben E. Berg argued, Bozeman, Montana

For Respondents:

Brown and G i l b e r t , Bozeman, Montana Gene I. Brown argued, Bozeman, Montana C o r e t t e , Smith-and Dean, B u t t e , Montana Kendrick Smith argued, B u t t e , Montana

Submitted: September 9 , 1974

Decided: 1 3 3974 R ~ V 7974 Filed : M r . Chief J u s t i c e James T. H a r r i s o n d e l i v e r e d t h e Opinion of t h e Court.

T h i s i s a n a p p e a l by p l a i n t i f f s from a summary judgment

entered i n favor of defendants i n a slander of t i t l e a c t i o n

e n t e r e d by t h e d i s t r i c t c o u r t of G a l l a t i n County.

The c o n t r o v e r s y g i v i n g r i s e t o t h i s l a w s u i t s t a r t e d i n

J a n u a r y o f 1971. A t t h a t t i m e p l a i n t i f f s Simkins and Haggerty

were d i r e c t o r s o f B r i d g e r Bowl, a n o n - p r o f i t c o r o o r a t i o n c r e a t e d

f o r t h e purpose o f o p e r a t i n g s k i i n g f a c i l i t i e s i n B r i d g e r Canyon

n e a r Bozeman, Montana. The d e f e n d a n t s - - s t o c k h o l d e r s of the cor-

poration--learned t h a t P l a i n t i f f s were n e g o t i a t i n g t o s e l l 170

a c r e s o f l a n d a t t h e b a s e o f t h e ski h i l l . T h i s l a n d had been

a c q u i r e d by p l a i n t i f f s i n 1966 f o r $34,000 w h i l e b o t h were d i r e c -

t o r s o f t h e c o r p o r a t i o n and was now b e i n g o f f e r e d f o r s a l e t o

l a n d d e v e l o p e r s f o r $450,000. T h i s i s how m a t t e r s s t o o d on J a n u -

a r y 1 4 , 1971, when t h e f o l l o w i n g l e t t e r was s e n t t o p l a i n t i f f s by

d e f e n d a n t s ' a t t o r n e y , Gene I. Brown:

J a n u a r y 1 4 , 1971

" M r . Thomas Haggerty 1209 South 5 t h Bozeman, Montana

and "Mr. Robert Simkins 1419 South 3 r d Bozeman, Montana 59715

"Gentlemen :

his f i r m h a s been r e t a i n e d by a number o f s h a r e - h o l d e r s o f t h e Bozeman S t a t e P a r k R e c r e a t i o n a l Asso- c i a t i o n , I n c . , o f Bozeman, Montana. I t h a s been w i d e l y rumored t h a t you i n t e n d t o s e l l o r d i s p o s e o f a l l o r a l a r g e p o r t i o n of t h e land a t t h e base of t h e Bridger Bowl S k i H i l l a c q u i r e d from J o h n F . N e u f f e r . I t was t h e u n d e r s t a n d i n g of t h e s e s t o c k h o l d e r s t h a t t h e Neuf f e r l a n d was a c q u i r e d by t h e c o r p o r a t i o n o r t h a t i t was a c q u i r e d by you i n d i v i d u a l l y on b e h a l f o f t h e c o r p o r a - t i o n . (Emphasis added) ItThe f a c t t h a t t h i s l a n d was a c q u i r e d by you a t a t i m e when you were b o t h d i r e c t o r s o f t h e c o r p o r a t i o n and h a n d l i n g n e g o t i a t i o n s f o r t h e c o r p o r a t i o n t o p u r - chase t h e land, lends s t r o n g support t o t h e conclu- s i o n s of t h e s e s t o c k h o l d e r s . (Emphasis added)

"As you know, a d i r e c t o r o f a c o r p o r a t i o n h a s c e r - t a i n w e l l d e f i n e d d u t i e s and o b l i g a t i o n s t o t h e c o r - p o r a t i o n and s t o c k h o l d e r s h e s e r v e s . S t a t e d q u i t e simply, a d i r e c t o r cannot use h i s p o s i t i o n t o b e n e f i t himself t o t h e detriment of t h e corporation. A d i r - e c t o r occupies a f i d u c i a r y r e l a t i o n s h i p t o t h e cor- p o r a t i o n and i t s s t o c k h o l d e r s and h i s a c t s must b e f o r t h e b e n e f i t of t h e c o r p o r a t i o n and n o t h i s own. (Emphasis added) "Under t h e law, s t o c k h o l d e r s have a r i g h t t o b r i n g l e g a l a c t i o n a g a i n s t o f f i c e r s and d i r e c t o r s o f a c o r - p o r a t i o n i n t h e r i g h t of t h a t c o r p o r a t i o n based upon t h e o f f i c e r s o r d i r e c t o r s b r e a c h of l e g a l d u t y t o t h e corporation. 11 The s t o c k h o l d e r s who have c o n t a c t e d me a r e y o u r f r i e n d s and n e i g h b o r s who have worked w i t h you o v e r t h e y e a r s t o d e v e l o p B r i d g e r Bowl S k i Area a s a com- munity p r o j e c t . Your c o n t r i b u t i o n i n d e v e l o p i n g t h i s a r e a i s w i d e l y acknowledged ard i t i s d i f f i c u t f o r t h e s e men t o b e l i e v e you would u s e y o u r p o s i t i o n i n t h e c o r p o r a t i o n f o r your own b e n e f i t . For t h i s r e a - s o n , t h e s e p e o p l e a r e a n x i o u s t o have t h e a i r c l e a r e d and t h e rumors s t o p p e d . T h i s c a n b e done by a t r a n s f e r of t h e land t o t h e corporation.

"It i s t h e f e a r o f t h e s e s t o c k h o l d e r s t h a t i f t h i s l a n d were t o be t r a n s f e r r e d t o a n e n t i r e l y commercially o r i e n t e d p a r t y , t h a t t h e c h a r a c t e r of t h e s k i h i l l would be g r e a t l y a l t e r e d o r a t l e a s t t h e community would l o s e c o n t r o l of i t s f u t u r e development. 11 I n o r d e r t o a v o i d any m i s u n d e r s t a n d i n g , I w i s h t o p o i n t o u t t h a t i f a n a g r e e a b l e arrangement i s n o t reached i m m e d i a t e l y , we have been i n s t r u c t e d t o commence a l a w s u i t i n t h e D i s t r i c t Court t o have t h e l a n d t r a n s - ferred t o t h e corporation.

"A copy of t h i s l e t t e r i s b e i n g s e n t t o t h e Corpora- t i o n a t i t s p r i n c i p a l o f f i c e , and c o p i e s t o e a c h o f t h e members of t h e Board o f D i r e c t o r s , and i s t o b e c o n s i d e r e d a demand upon them t o t a k e a l l s t e p s n e c e s - s a r y t o i n s u r e r e c o v e r y o f t h e r e a l p r o p e r t y and t h e r e t u r n t h e r e o f t o Bozernan S t a t e Park R e c r e a t i o n a l A s s o c i - a t i o n , I n c . W e f u r t h e r w i s h by t h i s l e t t e r t o p u t a l l p r o s p e c t i v e p u r c h a s e r s o f t h e l a n d on n o t i c e t h a t t i t l e t o t h e l a n d i s d i s p u t e d . (Emphasis added) "We w i l l be a v a i l a b l e t o d i s c u s s t h i s m a t t e r w i t h your A t t o r n e y a t any t i m e . Since time i s o f t h e e s - s e n c e , w e would a p p r e c i a t e h e a r i n g somethilgon t h i s m a t t e r w i t h i n f i v e days i n o r d e r t o a v o i d l i t i g a t i o n . II Yours v e r y t r u l y ,

GILBERT

"BY: / s / GENE I. BROWN II Gene I. Brown

II c c : Bozeman S t a t e Park R e c r e a t i o n a l Association, Inc. Bozeman, Montana 59715

To a l l members of t h e Board of D i r e c t o r s of t h e Bozeman S t a t e Park R e c r e a t i o n a l Association, Inc. Bozeman, Montana 59715

United Agencies 1602 West Main Bozeman, Montana 59715

T h i s l e t t e r was followed up by a n o t h e r l e t t e r , d a t e d

February 3 , 1971, d i r e c t e d t o Robert E . Heath, a t t o r n e y f o r

B r i d g e r Bowl :

F e b r u a r y 3 , 1971

" ~ r Robert E. Heath, . A t t o r n e y a t Law H o l t e r & Heath 1 6 N . Tracy Avenue Bozeman, Montana 59715

"Dear M r . Heath : 11 I am w r i t i n g i n r e p l y t o your correspondence d a t e d January 28, 1971. I would l i k e t o f u r n i s h you w i t h t h e names of o u r c l i e n t s . They a r e a s f o l l o w s : 1) Dick F r a n c i s , 2) Volney S t e e l e , 3 ) Morris J a f f e , 4 ) D r . S i p p e l , 5) D r . L e n s i n k , 6 ) D r . P r u n t y , 7) Dave Vaughn, and 8 ) B i l l Merrick.

"These above s t a t e d s t o c k h o l d e r s a r e concerned w i t h t h e p r e s e r v a t i o n and f u r t h e r development of t h e f a m i l y t y p e s k i a r e a a t B r i d g e r Bowl. The Bozeman S t a t e Park Recreational Associational, Inc., conceived, financed, and promoted B r i d g e r Bowl on t h e p r e m i s e . I t a p p e a r s now t h a t u n l e s s some immediate changes a r e made, t h e atmosphere a t B r i d g e r Bowl may change from a f a m i l y t y p e r e c r e a t i o n a r e a t o one t h a t i s p r i m a r i l y commer- c i a l i n c h a r a c t e r . The t r a c t o f l a n d , l e s s t h e S a i n t B e r n a r d , p r e s e n t l y owned by Simkins and H a g g e r t y , s h o u l d b e a c q u i r e d by t h e Bozeman S t a t e Park R e c r e a - t i o n a l A s s o c i a t i o n . The v a l u e f o r t h e b a s i s of t h i s a c q u i s i t i o n s h o u l d b e based on t h e o r i g i n a l p u r c h a s e p r i c e of $34,000.00 p l u s i n t e r e s t s u b s e q u e n t t o t h e September, 1966, p u r c h a s e d a t e . I n t h e e v e n t t h a t t h e a s s o c i a t i o n i s n o t now i n a p o s i t i o n t o assume t h i s f i - n a n c i a l r e s p o n s i b i l i t y , t h e above named s t o c k h o l d e r s c a n a r r a n g e f o r t h e f i n a n c i n g . I t c a n be s u b s t a n t i a t e d by t h o s e knowledgeable o f t h e l a n d purchased by Simkins and Haggerty from M r . N e u f f e r t h a t t h e l a n d was t o have been purchased f o r t h e a s s o c i a t i o n , and n o t f o r them a s i n d i v i d u a l s . (Emphasis added)

"There i s t o o u r knowledge no e v i d e n c e t h a t t h e A s - s o c i a t i o n e v e r s u g g e s t e d t h a t Haggerty and Simkins a c - q u i r e t h i s l a n d i n t h e i r own names. The t e r m s of t h i s p u r c h a s e i n September, 1966, by Simkins and Haggerty from N e u f f e r , were a p p r o x i m a t e l y $9,000 down and $5,100 a n n u a l l y f o r 5 y e a r s . I t would n o t have been d i f f i c u l t t o have t h i s money pledged by i n t e r e s t e d members o f t h e A s s o c i a t i o n , had a n a t t e m p t been made t o do s o .

"It i s most d e s i r a b l e t h a t t h e l a n d i n q u e s t i o n b e - l o n g t o t h e A s s o c i a t i o n . U l t i m a t e l y , much o f t h i s l a n d w i l l be u t i l i z e d f o r p a r k i n g , c h a l e t and l i f t e x p a n s i o n . The b a l a n c e w i l l s e r v e a s a n e x c e l l e n t b u f f e r zone f o r commercial development on a d j a c e n t p r i v a t e l y owned l a n d s . The a p p r e c i a t i o n i n t h e v a l u e o f t h i s t r a c t o f l a n d c a n be a t t r i b u t e d almost e n t i r e l y t o t h e s k i l i f t f a c i l i t i e s l o c a t e d t h e r e o n . The a s s o c i a t i o n b u i l t t h e s k i l i f t s , s o i t would seem o n l y l o g i c a l t h a t t h e A s s o c i a t i o n own t h e l a n d t h a t i s t h e c u r r e n t hub of t h i s development.

"It i s t h e above named p a r t i e s s i n c e r e hope t h a t Simkins and Haggerty w i l l a g r e e t o s e l l t h i s l a n d t o t h e A s s o c i a t i o n on t h e terms s e t f o r t h above. A s i m p l e p e a c e f u l s o l u t i o n i s p r e f e r r e d t o more d r a s t i c a c t i o n , which t h e above named a r e p r e p a r e d t o t a k e i f n e c e s s a r y .

"YOU have i n q u i r e d f o r a n e x p l a n a t i o n of how t h e d i r e c t o r s have b r e a c h e d t h e i r d u t i e s t o t h e c o r p o r a t i o n . It should be pointed out t h a t it i s n o t o u r p o s i t i o n t h a t t h a t a l l o f t h e d i r e c t o r s have b r e a c h e d a d u t y t o t h e C o r p o r a t i o n . W a r e o n l y concerned w i t h t h e a c t i o n s of e W e r t y and Simkins i n a c q u i r i n g t h i s p r o p e r t y which i s s o v i t a l t o t h e f u t u r e of t h e corporation.(Emphasis added) -5- "It h a s become o b v i o u s t h a t o u r exchange o f l e t t e r s h a s o n l y c a u s e d c o n f u s i o n and s u s p i c i o n , f o r t h i s r e a - s o n , I wish t o make t h e s u g g e s t i o n t h a t t h e s e v e n neu- t r a l board members meet w i t h o u r g r o u p a t t h e e a r l i e s t possible date. This w i l l give us an opportunity t o p r e s e n t o u r p o s i t i o n and t h e f a c t s a s we know them and t o answer any q u e s t i o n s t h e d i r e c t o r s may have. S i n c e everyone h a s i n mind t h e b e s t i n t e r s t s of t h e s k i h i l l , i t seems a p p r o p r i a t e t h a t a n e f f o r t be made t o r e s o l v e t h i s problem i n some r e a s o n a b l e manner.

"I s u g g e s t t h a t we meet t h i s Thursday o r F r i d a y , o r i f t h i s i s n o t f e a s i b l e , t h e n n e x t Tuesday, a t t h e meet- i n g room o f t h e Chamber o f Commerce a t 8:00 P.M. A copy o f t h i s l e t t e r i s b e i n g s e n t t o each member o f t h e Board.

"It i s d i f f i c u l t t o a r r a n g e a meeting w i t h t h i s number o f p e o p l e , s o i f t h i s meeting i s n o t a g r e e a b l e , p l e a s e l e t me know. P l e a s e c o n t a c t me a s soon a s p o s s i b l e t o arrange f o r a time f o r t h i s meeting. It Yours v e r y t r u l y ,

"BROWN & GILBERT

"BY : /s / GENE I . BROWN I1 Gene I . Brown

I'GIB :s h 11 cc : Board members"

T h e r e a f t e r on J u n e 2 , 1971, a t t h e a n n u a l meeting o f

t h e s t o c k h o l d e r s o f B r i d g e r Bowl, a r e s o l u t i o n was passed which

i n e s s e n c e a u t h o r i z e d t h e board of d i r e c t o r s t o t a k e w h a t e v e r

s t e p s necessary t o gain t i t l e t o the disputed land.

On June 4 , 1971, p l a i n t i f f s made a p r o p o s a l i n a n a t t e m p t

t o s a t i s f y t h e d i s s i d e n t s t o c k h o l d e r s and on J u n e 11, 1971,

e n t e r e d i n t o a c o n t r a c t w i t h B r i d g e r Bowl whereby t h e y conveyed

t o B r i d g e r Bowl a p p r o x i m a t e l y 70 a c r e s of t h e d i s p u t e d l a n d a t

i t s 1966 p u r c h a s e p r i c e , p l u s i n t e r e s t and t a x e s .

On September 6 , 1971, p l a i n t i f f s b r o u g h t t h i s s l a n d e r

of t i t l e a c t i o n . On J a n u a r y 1 4 , 1972, B r i d g e r Bowl b r o u g h t

-6- s u i t a g a i n s t Simkins and Haggerty a l l e g i n g a b r e a c h o f f i d u -

c i a r y d u t y and s e e k i n g r e c o v e r y o f t h e b a l a n c e of t h e d i s p u t e d

land. A s a r e s u l t of t h e l a t t e r s u i t , B r i d g e r Bowl a c q u i r e d

a n a d d i t i o n a l 20 a c r e s o f l a n d , t h u s i n c r e a s i n g i t s t o t a l

h o l d i n g s i n t h e d i s p u t e d l a n d t o 90 a c r e s . O August 3 , 1973, n

t h e d i s t r i c t c o u r t e n t e r e d i t s Order and Judgment w i t h r e s p e c t

t o t h e s l a n d e r of t i t l e a c t i o n . T h i s Order d e c l a r e d , i n t e r a l i a ,

t h a t t h e c o n t e n t s o f t h e l e t t e r s of J a n u a r y 1 4 , and F e b r u a r y 3 ,

1971, were t r u e , n o t f a l s e , and t h a t a s a r e s u l t o f t h o s e l e t t e r s

and t h e s t o c k h o l d e r s ' r e s o l u t i o n of J u n e 2 , 1971, p l a i n t i f f s

t r a n s f e r r e d 70 a c r e s o f t h e d i s p u t e d l a n d t o B r i d g e r Bowl p u r -

s u a n t t o t h e J u n e 11, 1971, argeement. The O r d e r , on t h e t h e o r y

o f r e s j u d i c a t a , a l s o a d o p t e d c e r t a i n amended f i n d i n g s o f f a c t

and c o n c l u s i o n s o f law o f t h e d i s t r i c t c o u r t i n t h e B r i d g e r Bowl

c a s e a g a i n s t Simkins and Haggerty; namely, t h a t t h e agreement of

J u n e 11, 1971, was a good and s u f f i c i e n t a c c o r d and s a t i s f a c t i o n

o f t h e l a n d and t i t l e d i s p u t e between t h e p a r t i e s , and t h a t B r i d g e r

Bowl was due a n a d d i t i o n a l 20 a c r e s of l a n d . Summary judgment

was t h e r e u p o n e n t e r e d f o r d e f e n d a n t s .

The e l e m e n t s of a c a u s e o f a c t i o n f o r s l a n d e r o f t i t l e

a r e s e t f o r t h i n 50 Am.Jr.2d, L i b e l and S l a n d e r , § 541, p. 1060:

"One who m a l i c i o u s l y p u b l i s h e s f a l s e m a t t e r which b r i n g s i n question o r disparages t h e t i t l e t o property, thereby c a u s i n g s p e c i a l damages t o t h e owner, may be h e l d l i a b l e i n a c i v i l a c t i o n for damages. The e s s e n t i a l e l e m e n t s o f t h e c a u s e o f a c t i o n , which a r e s u b s e q u e n t l y d i s c u s s e d , a r e t h e u t t e r i n g and p u b l i c a t i o n of t h e s l a n d e r o u s words t h e d e f e n d a n t , t h e f a l s i t y o f t h e words, m a l i c e , and s p e c i a l damages. The a c t i o n i s n o t f o r t h e words spoken, b u t f o r s p e c i a l damages f o r t h e l o s s s u s t a i n e d by r e a s o n of t h e s p e a k i n g and p u b l i c a t i o n of t h e s l a n d e r . " The c r u c i a l element i n t h i s c a s e i s t h e f a l s i t y of t h e

words. Defendants chose t o s t a n d on t h e f i n d i n g of t h e d i s -

t r i c t c o u r t t h a t t h e l e t t e r s were t r u e . P l a i n t i f f s take the

p o s i t i o n t h a t e n t r y of summary judgment i n f a v o r o f t h e d e f e n -

d a n t s was improper, s i n c e t h e d i s t r i c t c o u r t i n t h e B r i d g e r

Bowl c a s e a g a i n s t p l a i n t i f f s found no b r e a c h of f i d u c i a r y duty

on t h e i r p a r t , and t h e r e f o r e a m a t e r i a l q u e s t i o n of f a c t has n o t

been r e s o l v e d . We. t h i n k p l a i n t i f f s ' p o s i t i o n on t h i s p o i n t i s

unsound. For one t h i n g , t h e B r i d g e r Bowl c a s e a g a i n s t them i n -

volved d i f f e r e n t f a c t s and d i f f e r e n t l e g a l p r i n c i p l e s t h a n t h e

i n s t a n t c a s e ; a f i n d i n g of one c o u r t could v e r y w e l l d i f f e r from

a f i n d i n g of t h e o t h e r c o u r t . For a n o t h e r , t h e r e i s s u b s t a n t i a l

c r e d i b l e evidence i n t h e r e c o r d t o s u p p o r t t h e f i n d i n g t h a t t h e

l e t t e r s were t r u e . Approximately s i x months a f t e r t h e l e t t e r s

were w r i t t e n , and f o l l o w i n g passage of t h e r e s o l u t i o n by t h e

B r i d g e r Bowl s t o c k h o l d e r s , 70 a c r e s o f t h e d i s p u t e d land was

deeded t o Bridger Bowl by p l a i n t i f f s . The B r i d g e r Bowl c a s e

a g a i n s t p l a i n t i f f s r e s u l t e d i n B r i d g e r Bowl r e c e i v i n g a n o t h e r 20

a c r e s of t h i s l a n d . A very p l a u s i b l e explanation f o r these events

i s t h a t p l a i n t i f f s had o b l i g a t i o n s toward B r i d g e r Bowl and were

compelled t o recognize i t s c l a i m s .

S i n c e we have concluded t h a t p l a i n t i f f s have f a i l e d t o

s u s t a i n t h e i r c a s e w i t h r e s p e c t t o t h e element of f a l s i t y , i t

i s unnecessary t o c o n s i d e r t h e o t h e r elements of a s l a n d e r of

t i t l e action.

The judgment i s a f f i r m e d . - - - - - e m - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Chief J u s t i c e

We c o n c u r :