                            No. 13667

         IN THE SUPREI'TE COURT OF THE STATE OF MONTANA
                               1977


WILLIAM HENRY WHITTAKER and
LaVERNA WHITTAKER, husband and wife,
                   Plaintiffs and Respondents,


ALEXANDER SCHREINER and DAMNIE
SUE SCHREINER, husband and wife,
                    Defendants and Appellants.


Appeal from:       District Court of the Eighth Judicial District,
                   Honorable Paul G. Hatfield, Judge presiding.
Counsel of Record:
     For Appellants:
         A. Evon Anderson argued, Fort Benton, Montana
     For Respondents:
         Cameron Ferguson argued, Great Falls, Montana

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                      Submitted:    September 13, 1977

                         Decided:


Filed:
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Honorab1e.Leonard.H. Lan en, ~istrictJud e, sitting in-place
of Mr. Chlef Justlce ~ a u ?G. Hatfleld, deqlvered the oplnlon of
the Court.
        This is an appeal from a judgment entered in favor of
Whittakers (plaintiffs and respondents) and against
Schreiners (defendants and appellants) by the eighth judicial
district court, Cascade County.   The lawsuit between the parties
arose out of a contract for sale of land, Whittakers claiming
damages for breach of contract and for unjust enrichment of
Schreiners at the expense of Whittakers.
        On September 28, 1964, Schreiners mortgaged two separate
tracts of real property located in Cascade County with the Small
Business AdministrationF~f 00, one tract known as the Big Sky
                         2,0
Vista property and the other property located near Vaughn and
hereinafter referred to as the Vaughn property.
        On September 30, 1965, Schreiners and Whittakers entered
into a contract for deed whereby Schreiners agreed to convey the
Vaughn property to Whittakers by warranty deed upon payment of
the purchase price of $3,300 by way of monthly installment pay-
ments of $50 each with interest at 3% per annurn.
        The case was tried to the court without a jury.   In its
findings of fact the trial court found:    that under the contract
for sale Schreiners were required to apply Whittakers' monthly
installment payments on the monthly mortgage payments which
Schreiners were required to make to the Small Business Administra-
tion; that upon paying up the contract in full, Schreiners were
required to convey title to the Vaughn property free and clear
of the Small Business Administration mortgage.
        However, by September, 1969, Schreiners had become delin-
quent in their mortgage payments and in December, 1969, the
Whittakers learned the United States of America had filed a
mortgage foreclosure action on behalf of the Small Business Ad-
ministration in the United States District Court.   In said action,
both whittakers and Schreiners were named parties defendant.
          At this time Whittakers discontinued their monthly in-
stallment purchase payments, which up to this date had totaled
$2,500.
          On May 5, 1971, the Federal District Court entered judg-
ment of foreclosure and decreed deficiency judgment against
Schreiners for any deficiency following execution sale of the
mortgaged properties which included the Big Sky Vista property
plus the Vaughn property which had been sold to Whittakers.
          Pursuant to the federal forclosure decree the Big Sky
Vista property was sold at execution sale for $6,000, leaving a
deficiency judgment against Schreiners in the amount of $5,811.14.
          Between September 30, 1965, which was the date of the
sale of the Vaughn property to Whittakers, and December 1969,
when the Small Business Administration mortgage foreclosure action
was instituted, Whittakers had made substantial and costly improve-
ments to the Vaughn property.    In order to prevent execution sale
of said Vaughn property, Whittakers purchased it from the Small
Business Administration for $5,465.71 and executed a mortgage to
the Small ~usinessAdministration in this amount at 8% interest.
          On October 6, 1971, the Small Business ~dministrationfiled
satisfaction of judgment in the Federal ~istrictCourt action,
thus discharging Schreiners in full so far as the Small Business
Administration obligation was concerned.
          For the sake of argument it may be conceded that under
F.R.Civ.P.   13(g), Whittakers could have filed a cross-claim against
Schreiners in the federal forclosure action, but for some reason
not disclosed, this was not done.    Instead ~hittakerssubsequently
filed this action in the eighth judicial district court for Cascade
County and after trial the district court entered judgment in favor
of Whittakers and against Schreiners in the sum of $6,197.16,
and Schreiners were ordered to convey the Vaughn property to
Whittakers by quitclaim deed.
        It is from this judgment that Schreiners appeal.         In
their brief they state:
       "The issue is whether the rights of the WHITTAKERS
       to performance of the contract should have been
       litigated in the Federal foreclosure action, thus
       making this action res judicata."
        Rule 13 (g),F.R.Civ.P.    is identical to Rule 13 (g),
       M.R.Civ.P.   and reads:

                                                  -
       "Cross-Claim Against Co-Party. A pleading may
       state as a cross-claim any claim by one party
       against a co-party arising out of the transaction
       or occurrence that is the subject matter either
       of the original action or of a counterclaim therein
       or relating to any property that is the subject
       matter of the original action. Such cross-claim
       may include a claim that the party against whom
       it is asserted is or may be liable to the cross-
       claimant for all or part of a claim asserted in
       the action against the cross-claimant." (Emphasis
       added. )
       The Schreiners would have us change the word "may" appear-
ing in 13(g) to "must".      In their brief they state:
       "While the applicable Montana Rule, MRCP, Rule
       13g, regarding 'cross-claim against co-party' is
       couched in the 'may' term, it is apparent that the
       framers of that rule did not contemplate the sit-
       uation presented by the instant case. * * *"
       Later in their brief appellants argue:
       "To the well established rule that the doctrine
       of res judicata applies not only to those matters
       that were previously litigated but to those that
       'could have been litigated' or 'might have been
       litigated', it now appears that we must add the
       phrase 'Should have been litigated'."
       This Court cannot adopt the argument of appellants.
       Insofar as Rule 13(g) is concerned we agree with the
statement of 6 Wright   &   Miller, Federal Practice and Procedure:
Cross-claims, pp. 164, 165, where it is stated:
       "Several important distinctions between cross-claims
       and counterclaims should be kept in mind other
       than the obvious difference in the alignment of the
       parties. Rule 13 (g), unlike Rule 13 (a) , always is
       permissive. A party who decides not to bring his
       claim under Rule 13(g) will not be barred by res
            j u d i c a t a , w a i v e r , o r e s t o p p e l from a s s e r t i n g i t
            i n a l a t e r a c t i o n , a s he would i f t h e c l a i m were
            a compulsory c o u n t e r c l a i m under Rule 1 3 ( a ) . * * *"

            See S t . Paul F i r e I n s . Co. v. Thompson, 152 Mont. 396,

451 P.2d 98 ( 1 9 6 9 ) , where we h e l d t h a t c r o s s - c l a i m s were n o t

compulsory and t h a t under Rule 1 3 ( g ) , M.R.Civ.P.                    it i s d i s -

c r e t i o n a r y w i t h t h e p a r t y whether t o a s s e r t h i s c l a i m a s a c r o s s -

c l a i m o r t o r e s e r v e i t f o r l a t e r independent l i t i g a t i o n .

            I n accord i s Temperance I n s u r a n c e Exchange v. C a r v e r ,

365 P.2d 824, 83 Idaho 487 (1961).

            The judgment of t h e d i s t r i c t c o u r t i s a f f i r m e d .
                                                     I--"




                                           H O ~ . Leonard Langen, D i s t r i c t ~ u d ~ e ,
                                           s i t t i n g i n p l a c e of Mr. J u s t i c e Paul
                                           G.    Hatfield.
