No. 82-126

IN THE SUPREME COURT OF THE STATE OF MONTANA

1982 CHARLES STENERSON and F. W. SCHMIDT, joint venturers the name of STENERSON & SCHMIDT, Co-Partners,

Plaintiffs and Respondents, THE CITY OF KALISPELL,

Defendant and Respondent, GLACIER NATIONAL BANK,

Claimant and Respondent, COLONIAL TERRACE ASSOCIATES,

Claimant and Appellant Appeal from: District Court of the Eleventh Judicial District,

In and for the County of Flathead

Honorable J. M. Salansky, Judge presiding. Counsel of Record: For Plaintiffs:

James A. Cumrning, Columbia Falls, Montana For Defendant:

Merritt N. Warden, Kalispell, Montana For Claimant:

Chris G. McEwan, Columbia Falls, Montana For Appellant:

Worden, Thane & Haines; Ronald A, Bender, Missoula, Montana

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Submitted on briefs: July 15, 1982

Decided: September 2, 1982

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" Clerk Mr. J u s t i c e J o h n C. Harrison delivered t h e f o l l o w i n g O p i n i o n of the Court.

This appeal involves two competing creditors to F.W. Schmidt's portion of a judgment obtained from the City of Kalispell . The D i s t r i c t C o u r t of the Eleventh J u d i c i a l District i n F l a t h e a d C o u n t y o r d e r e d t h e a l l o c a t i o n of t h e judgment be p a i d first to Glacier National Bank to satisfy its claim and the b a l a n c e p a i d t o C o l o n i a l T e r r a c e Associates. Appellant, Colonial Terrace Associates, appeals the determination of priority.

T h i s a c t i o n , as w i l l be n o t e d f u r t h e r i n t h i s o p i n i o n , is o n e of two a c t i o n s now b e f o r e t h i s C o u r t i n v o l v i n g j u d g m e n t s of two District Courts concerning construction work done by the appellant. In the other case, Schmidt et al. v. Colonial Terrace, now on a p p e a l from t h e F i r s t J u d i c i a l D i s t r i c t of the State of Montana, the appellants are appealing a judgment of $128 ,278 , p l u s i n t e r e s t , c o s t s and a t t o r n e y f e e s . A supersedeas bond has been filed for this amount in the District Court.

I n addition, t h i s Court is c a l l e d upon t o d e c i d e t h e issue r a i s e d w i t h o n l y t h e b r i e f s of a p p e l l a n t . The r e s p o n d e n t s waived f i l i n g o f b r i e f s i n t h e case.

I n April of 1 9 7 5 , S t e n e r s o n and S c h m i d t c o n t r a c t e d w i t h t h e C i t y of K a l i s p e l l t o do work a t t h e B u f f a l o H i l l s G o l f Course. When t h e c i t y r e f u s e d t o p a y f o r work w h i c h had b e e n c o m p l e t e d b u t n o t computed i n t o t h e b i d p r i c e , S t e n e r s o n and S c h m i d t f i l e d suit in Flathead County. Following judgment and appeal, on June 30, 1981, t h i s C o u r t remanded the case to F l a t h e a d C o u n t y w i t h o r d e r s t o e n t e r judgment i n f a v o r of S t e n e r s o n and S c h m i d t in the amount of $28,359.21 plus interest (the Kalispell j udgment ) .

Just prior to the Kalispell judgment, on June 22, 1982, Colonial Terrace Associates obtained a judgment (the Helena judgment) , against F.W. Schmidt, Leonard Knutson and Roberta Knutson in the amount of $128 , 2 7 8 , plus interest, costs and attorney's fees in the District Court of the First Judicial D i s t r i c t o f t h e S t a t e o f Montana, i n and f o r t h e County of L e w i s and Clark. A transcript of the Helena judgment was f i l e d in M i s s o u l a C o u n t y on J u n e 23, 1 9 8 1 , and i n F l a t h e a d C o u n t y on J u n e 24, 1981. On J u l y 2 , 1 9 8 1 , C o l o n i a l f i l e d a w r i t of e x e c u t i o n i n Flathead County. On the same d a y , J u l y 2, 1981, F.W. Schmidt individually executed a note in the amount of $10,532.79 to G l a c i e r N a t i o n a l Bank d u e December 29, 1 9 8 1 . G l a c i e r and S c h m i d t signed a security a g r e e m e n t which describes the collateral as assignment of funds from the City of Kalispell.

On J u l y 10, 1981, the City of Kalispell delivered to the clerk of court of Flathead County the sum of $37,788.76 in exchange for a satisfaction of judgment in the Kalispell judgment. The f u n d s were d e p o s i t e d w i t h t h e c l e r k of c o u r t w i t h instructions to hold subject to further instructions .

On J u l y 2 2 , 1 9 8 1 , C o l o n i a l ' s w r i t of e x e c u t i o n was r e t u r n e d i n d i c a t i n g t h a t a l l m o n i e s due F.W. S c h m i d t had b e e n p a i d t o t h e District Court of F l a t h e a d County. On J u l y 23, 1981, Colonial f i l e d a p e t i t i o n f o r a c h a r g i n g o r d e r i n M i s s o u l a County w h i c h is the principal place of business of the Stenerson and Schmidt partnership and where the partners reside. On that same d a y , J u d g e Green of the Fourth J u d i c i a l District i n M i s s o u l a County issued the charging order pursuant to section 35-10-505, MCA. The o r d e r c h a r g e s t h e i n t e r e s t o f F.W. Schmidt i n t h e p a r t n e r s h i p of S t e n e r s o n and S c h m i d t and o r d e r e d any proceeds t h a t Schmidt m i g h t r e c e i v e f r o m t h e K a l i s p e l l judgment be used t o t h e H e l e n a judgment i n f a v o r of C o l o n i a l .

The Flathead District Court ordered t h a t the a l l o c a t i o n of t h e K a l i s p e l l judgment t o F.W. S c h m i d t be r e t a i n e d by t h e c l e r k of court i n F l a t h e a d C o u n t y and t h a t G l a c i e r and C o l o n i a l file claims and proof of priority. Glacier filed its claim on September 3, 1 9 8 1 , and C o l o n i a l filed i t s claim o n S e p t e m b e r 4 , 1981.

On September 3, 1981, Schmidt, et al., filed a notice of a p p e a l i n t h e H e l e n a j u d g m e n t and a s k e d f o r a s t a y o f execution p u r s u a n t t o Rule 7 , M.R.App.Civ.P. On O c t o b e r 6 , 1 9 8 1 , S c h m i d t filed a supersedeas bond equal to the amount of the Helena judgment. On November 3 , 1 9 8 1 , J u d g e Meloy of t h e D i s t r i c t C o u r t of the First Judicial District i n H e l e n a d i s s o l v e d t h e s t a y of execution. Upon application to t h i s C o u r t i t was a g a i n s t a y e d and ordered stayed until further order of this Court.

On December 11, 1 9 8 1 , t h e D i s t r i c t Court i n F l a t h e a d County o r d e r e d S c h m i d t ' s a l l o c a t i o n of t h e K a l i s p e l l judgment be p a i d to G l a c i e r N a t i o n a l Bank, w i t h t h e b a l a n c e p a i d , i f any, t o Colonial T e r r a c e Associates. Colonial Terrace Associates appeals.

Appellant r a i s e s seven i s s u e s f o r review. The s u b s t a n c e of those issues is w h e t h e r t h e District C o u r t ' s o r d e r of priority w a s erroneous.

Pursuant t o R u l e 7 ( a ) , M.R.App.Civ.P., a n a p p e l l a n t may be g r a n t e d a s t a y o f e x e c u t i o n of j u d g m e n t on a p p e a l i f t h e D i s t r i c t Court approves of appellant's supersedeas bond. Rule 6(a) M.R.App.Civ.P., requires the bond be executed by at least two securities. Here, S c h m i d t d i d p r e s e n t t h e D i s t r i c t C o u r t w i t h a supersedeas bond which met the requirements of Rule 6(a), M.R.App.Civ.P., on October 6 , 1981. Although t h e District Court o r d e r e d t h e s t a y o f e x e c u t i o n d i s s o l v e d on November 3 , 1 9 8 1 , t h i s C o u r t g r a n t e d a s t a y on November 1 2 , 1 9 8 1 , and o r d e r e d t h e s t a y t o remain i n e f f e c t u n t i l f u r t h e r o r d e r .

Appellant, Colonial Terrace Associates, claims the Flathead District Court erred in awarding Schmidt's allocation of the K a l i s p e l l judgment be a p p l i e d f i r s t t o G l a c i e r N a t i o n a l Bank. We disagree. C o l o n i a l was s t a y e d f r o m t a k i n g a n y a c t i o n t o e x e c u t e on their judgment pending a final determination of the Helena judgment. T h e r e f o r e , t h e c h a r g i n g o r d e r i s s u e d by J u d g e G r e e n i n M i s s o u l a C o u n t y was v a c a t e d upon o u r g r a n t i n g of t h e s t a y o f e x e - c u t i o n pending a p p e a l .

S c h m i d t ' s s u p e r s e d e a s bond i s e q u a l to t h e f u l l amount of t h e Helena judgment. If that judgment is affirmed , Colonial may execute upon the bond to recover the amount of the judgment. T h u s , C o l o n i a l is a s s u r e d of s a t i s f y i n g t h e i r j u d g m e n t s h o u l d t h e a p p e a l o n t h e H e l e n a j u d g m e n t be a f f i r m e d .

W e remand t o t h e D i s t r i c t C o u r t w i t h i n s t r u c t i o n s to release S c h m i d t ' s a l l o c a t i o n o f t h e K a l i s p e l l j u d g m e n t and o r d e r t h a t t h e charging order from Missoula County be vacated . W e concur:

Chief ~ u s t i c e