First National Properties, LLC v. Joel D. Hillstead Trust, dated February 25, 1982; Rosemary Hillstead Trust, dated February 24, 1982

Summary

The Montana Supreme Court addresses whether First National Properties, LLC fully performed its obligations after prepaying the balance of a real-estate purchase agreement and whether it owed additional taxes resulting from the prepayment. The Court held that the prepayment did not extinguish the buyer’s remaining obligations and that the tax provision required calculation of the Trusts’ total additional tax liability over the contract term, rather than only the taxes incurred in the prepayment year. The Court affirmed the denial of prejudgment interest, reversed the damages determination, and remanded.

Holdings

1. First National did not fully perform under the promissory note or trust indenture because its prepayment did not include payment of the additional taxes incurred by the Trusts as a result of the prepayment. Tendering the principal balance, and later tendering disputed tax amounts, did not extinguish its remaining contractual obligations.
2. The ambiguous prepayment clause required First National to pay the Trusts' total additional tax liability incurred over the term of the contract as a result of the prepayment, rather than only the additional taxes incurred in the year of prepayment.
3. The Trusts were not entitled to prejudgment interest because the amount of their damages was not certain or capable of being made certain until the court resolved the disputed method for calculating the additional tax liability.

Questions Presented

1. Whether First National fully performed under the promissory note or trust indenture by tendering the remaining principal balance, thereby extinguishing any further obligations.
2. Whether the prepayment clause required First National to pay additional taxes incurred by the Trusts in the year of prepayment or the total additional taxes incurred over the term of the contract.
3. Whether the Trusts were entitled to prejudgment interest.

Disposition

reversed_and_remanded