                                    No.    92-239

                 IN THE SUPREME COURT OF THE STATE OF MONTANA


C B   &   F DEVELOPMENT CORPORATION,
                 Plaintiff and Respondent,
          -vs-
CULBERTSON STATE BANK,
                 Defendant and Appellant.                                (2
                                                                 ~<i3mifL
                                                          C L E F P IOF S U P R E M E COURT
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                                                               STATE OF MONTANA




APPEAL FROM:         District Court of the Fifteenth Judicial District,
                     In and for the County of Roosevelt,
                     The Honorable M. James Sorte, Judge presiding.


COUNSEL OF RECORD:
                 For Appellant:
                     Ward E. Taleff, Floyd D. Corder, Alexander, Baucus
                     & Linnell, Great Falls, Montana

                 For Respondent:
                     Laura Christoffersen, Matthew W. Knierim, Gallagher,
                     Archambeault & Knierim, Wolf Point, Montana


                                   Submitted on Briefs:   September 24, 1992
                                               Decided:   December 17, 1992
Filed:



                                          Clerk
Justice Fred J. Weber delivered the Opinion of the Court.

     This is an appeal from a jury verdict in the Fifteenth
Judicial District Court, Roosevelt County, awarding damages of
$300,000 to C B     &   F Development Corporation in a contract action
against Culbertson State Bank.           We affirm.
     We address the following issues:
     1.    Was the evidence sufficient as a matter of law to justify
the verdict?
     2.    Did the District Court abuse its discretion by instructing
the jury on equitable estoppel and on a third-party beneficiary
theory?
     C B   &   F Development Corporation (C B     &   F) was a feed business
located in Culbertson, Montana.              It originated as an Economic
Development Corporation in the early 19601sand from its inception
maintained a twenty year relationship with Culbertson State Bank
(Bank). The Bank provided C B        &   F with an annual line of operating
credit, negotiated yearly.
     C B   &   F obtained one loan from the Bank involving the Small
Business Administration (SBA). This loan, SBA-H, made in 1983, was
for a total of $418,400, seventy percent of which was guaranteed by
the SBA through its Helena, Montana office. The loan term was for
ten years, with C B      &   F paying monthly payments.
     A second loan, SBA-S, was a direct loan from the SBA San
Francisco office under its disaster program.            C B   &   F applied for
the loan in order to alleviate its cash flow difficulties due to
the 1985 drought. The second loan for $140,000 was approved by the
                                         2
San Francisco SBA on June 2 7 , 1986. This loan was secured by real
and personal property and by the personal guarantees of several
directors of C B    &   F.
     The Loan Authorization and Agreement between SBA and C B       &   F
covering the second loan for $140,000 provided that prior to
disbursement of any loan proceeds C B     &   F will provide a letter of
commitment from Culbertson State Bank to the SBA which would state
that the Bank would grant borrower an operating line of credit for
1986 with      approximately the same terms, conditions, and credit
limit as granted to the Borrower prior to the disaster period."
The Bank wrote a letter of commitment to the SBA dated August 6,
1986, which stated in part:
     In reply to page 5 of the June 27, 1986 Loan
     Authorization and Agreement for the operating line for
     the balance of 1986, [tlhe Culbertson State Bank, in
     keeping with our lending limit of $140,000, can extend up
     to $41,000.00 to CB&F Dev., if the balance of the present
     operating line of $42,551.43 principal and $3,061.65
     interest to date, is paid. Also this would be subject to
     a subordination from SBA in Helena, under the original
     loan dated 2/1/83 covering all Real Estate (approx 5
     acres) and all Machinery, Equipment and Inventory,
     releasing the inventory to secure the needed capital
     needs. We have enclosed copies of the last years line of
     $71,000., which covered $25,000.00 from the draught (sic)
     of 1984, to show how we are sec[ur]ed to 8/13/86.
The proceeds of this loan were used to pay off the Bank as required
under the letter of commitment. The Bank accepted the payment, but
subsequently refused to provide the operating line of credit for


     C B   &   F brought suit against the Bank based on various tort
and contract theories.       The Bank answered and filed a third party
complaint against the SBA.        The case was removed to the United
States ~istrict Court for the ~istrict of Montana, Billings
Division.       By memorandum and order filed April 10, 1991, the
federal court granted SBAts combined motion for dismissal and for
summary judgment; the court then remanded the case to the state
district court because the Bank had failed to allege federal
jurisdictional issues or name the United States as a party.
     C B   &   F filed an amended complaint dated May 3, 1991, alleging
negligent misrepresentation, breach of express contract, breach of
implied contract, estoppel, and fraud and punitive damages.           The
case was tried before a jury on January 21, 1992. After submission
                     its case-in-chief, the District Court, pursuant
motion, limited the issues to a consideration of contract theories.
On January 24, 1992, the jury entered a verdict of $300,000 in
favor of C B     &   F.   The Bank moved for judgment notwithstanding the
verdict or in the alternative for a new trial.         The District Court
denied these motions and the Bank appealed.


     Was the evidence sufficient as a matter of law to justify the
verdict?
     The Bank contends that the record does not support the jury's
verdict for C B       &   F because no contract existed between it and SBA
or between it and C B         &   F.
     Our function on appeal from a jury verdict is to review the
evidence in the light most favorable to the prevailing party and to
determine whether substantial evidence supports the verdict.         Hash
v. State (1991), 247 Mont. 497, 807 P.2d 1363.            After a careful
review of the record, we conclude that substantial evidence was
presented supporting the jury verdict.
       The Bank contends that evidence of the requisite element of
contractual consent (offer and acceptance) is not contained in the
record.   According to the Bank, no written contract between C B          &

F and the Bank existed.     The Bank's position is that no meeting of
the minds on essential terms occurred, thus there could be no valid
offer or unconditional acceptance of that offer.       C B & F contends

that the Bank erroneously limits its consideration to the August 6,
1986 letter of commitment to the SBA as though that were the only

evidence to support a contractual relationship.       C B   &   F refers to
various other matters presented to establish the contract.
      This case involves two contracts made between three parties.
"A   contract is either express or implied.   An express contract is
one the terms of which are stated in words. An implied contract is
one the existence and terms of which are manifested by conduct."
Section 28-2-103, MCA.     The first contract, between SBA and C B       &

F, is an express contract.     A condition precedent to that express
contract, is the submission to SBA by the Bank of a letter of
intent to loan C B   &   F an operating line of credit.
      The second contract is that between C B     &   F and the Bank.
While no written contract existed here, plaintiff contends a
contract did exist.       As stated in 5 28-2-103, MCA, an implied
contract is one the existence and terms of which are manifested by
conduct. See Billings Clinic v. Peat Marwick Main and Co. (1990),
244 Mont. 324, 797 P.2d 899.     Here, we look to the Bank's and C B
&   F's conduct to see if it is sufficient to establish an implied
contract.
        The record shows that C B                 &   F specifically requested an
operating loan commitment letter from the Bank as a prerequisite to
obtaining the disaster loan from SBA.                   The record shows that the
Bank assured C B       &   F it would send this letter.              After a twenty
year business relationship in which the Bank had                          loaned it
operating money every year, C B           &       F had reason to, and did, accept
the assurance of the Bank's official.
      The record further shows that a Bank officer spoke personally
with an SBA officer on several occasions concerning its intent to
loan money to C B          &   F.   The record establishes that the Bank
understood that SBA needed a firm commitment and that the letter it
sent to SBA had been interpreted as such a commitment.                    SBA notes
indicate its understanding that the Bank would loan C B                     &   F the
money pursuant to its pre-1986 terms and conditions.
      C B   &   F also understood that the Bank would make an operating
loan for 1986.       As part of the conditions for such an operating
loan, the Bank required C B         &   F to repay its outstanding operating
debt.    The Bank argues that C B             &    F never received a copy of the
August 6 letter of commitment so it could not have agreed to any
contractual terms. The record shows that C B                 &   F had been informed
by SBA of the contents of the Bank letter.                  Subsequently, the Bank
accepted payment of the C B         &   F debt, knowing that the money came
from SBA, and fulfilled its own condition for the operating loan.
     The Bank's acceptance of the payment of C B        &   F v s operating
debt with SBA funds is evidence that the Bank agreed to loan C B              &

F money.   C B & F 1 sconduct in repaying the loan indicates that it

understood that in order to receive the new operating line of
credit, it would have to repay its existing operating debt.           Yet,
the Bank argues that there can be no contract between it and          C   B   &

F because essential terms such as the amount of the loan and the
rate of interest were not established.
     The letter of commitment from the Bank to SBA establishes a
$41,000 credit limit.         Testimony at trial established that over a
twenty year business history, the interest rates on the yearly
operating line of credit fluctuated with the amount borrowed and
general interest rate.
     In SBA1sLoan Authorization and Agreement to C B         &   F covering
the 1986 loan to C B      &   F, SBA states that the Bank must provide a
letter of commitment to SBA indicating an extension of an operating
line of credit to C B           &   F on llapproximatelythe same terms,
conditions, and credit limit as granted" prior to the 1986 loan.
The Bank and C B   &   F understood that the Bank's August 6 commitment
letter was written with these implied terms. As a result, the Bank
was required to make the loan on terms and conditions similar to
those of preceding years.
     The Bank contends that its second condition to extending the
line of credit was not completed because SBA did not subordinate
its loan. Testimony by the SBA at trial established that the Bank
failed to request the subordination so none was issued.
         The elements required to establish an implied contract are:
identifiable parties, consent, a lawful object and consideration.
Daniels v. Thomas, Dean      &   Hoskins, Inc. (1990), 246 Mont. 125, 804
P.2d 359. The parties to the implied contract were the Bank and C
B   &   F.   We have discussed, and the record evinces, consent by both
parties to the operating loan.              As   far as consideration is
concerned, C B        &   F received its disaster loan and paid the
delinquent current operating loan to the Bank; and the Bank
accepted the delinquent amount from the SBA funds.                  We conclude
that the implied contract between the Bank and C B                       &    F was
established by substantial evidence.
         C B & F argues that the evidence supports the contractual
theory of promissory estoppel. Because we conclude that an implied
contract existed between the Bank and C B          &   F, we do not find it
necessary to discuss promissory estoppel in detail.                 We do point
out that substantial evidence exists from which the jury could also
have concluded that promissory estoppel prevents the Bank from
denying a contractual relationship between it and C B                &   F.
        We therefore hold that the evidence presented was sufficient
to justify the jury verdict.
                                      11.

         Did the District Court err by           instructing the jury on
equitable estoppel and on a third party beneficiary theory?
        Both plaintiff and defendant provided the court with an
estoppel instruction which the court gave to the jury.                   The Bank
offered a promissory estoppel instruction.             C B   &   F's instruction
merely designated its instruction as one for llestoppel;ll Bank
                                                        the
contends     the   instruction was   really   an   equitable   estoppel
instruction.       As such, the Bank argues the instruction was
inappropriate because equitable estoppel is a defense theory. The
Bank further argues that the giving of both instructions was
confusing for the jury.     C B & F argues that its instruction was

not designated as an equitable estoppel instruction and that
nothing in the simultaneous giving of the two instructions was
confusing.
     C B & F's instruction with six elements specifically mentions

I1silencenas a possible conduct which could indicate the party is
estopped from denying a contract.     The Bank objects to use of the
"silence1'element; yet the facts of this case strongly suggest that
silence could have played a part in analyzing the Bank's conduct.
     This Court has recognized equitable estoppel, promissory
estoppel, and estoppel by silence. Northwest Potato Sales, Inc. v.
Beck (1984), 208 Mont. 310, 678 P.2d 1138.         But, in so doing we
have also determined that the lines separating all three kinds of
estoppel are blurry at best:
    Although we base our decision on estoppel by silence, we
    cannot deny that the facts may fit elements of estoppel
    also appropriate to equitable estoppel.      This is so,
    because as is so often the case in any branch of the law,
    each form of estoppel does not fall into a neatly
    packaged and exclusive category. Rather, the forms of
    estoppel also blend with each other.
Northwest Potato, 208 Mont. at 317, 678 P.2d at 1141.
    We have reviewed and compared both instructions and have
concluded that under the facts of this case, the jury could
properly have found for the plaintiff under both instructions. As
a result, we hold that the giving of both instructions does not
constitute reversible error.
      The Bank also objects to the District Courtts instruction on
the theory of third party beneficiary.           The basis for the Bank's
objection is that the federal district court found no contract to
exist between SBA and the Bank.         The Bank argues res judicata on
the issue of any contractual relationship between it and the SBA.
      First, we find res judicata inapplicable.              Res judicata
requires the same parties, the same subject matter, the same
issues, and the same capacities of the parties. Filler v. Richland
County (1991), 247 Mont. 285, 806 P.2d 537. The parties on appeal
are C B   &    F and the Bank.   The action in federal court was an
action by the Bank against the SBA. The parties are not the same.
      Further, the issues involved are different.         The Bank argued
to the federal court that SBA had breached an agreement with it to
subordinate and that this breach caused the Bank damage.            In the
underlying action now on appeal, C B         &   F argues that the Bank
breached its agreement with C B     &   F, causing C B   &   F damage.       We
conclude that the determination by the federal district court did
not constitute res judicata as to the issues in this case.
      We note that the transcript does contain the Bank's objection
to the third party beneficiary instruction as presented by C B           &   F.
The   record    also   shows that   following a       discussion   on    the
appropriateness of the theory to the case, the Court granted the
Bank's request for permission to write a limiting instruction to be
given with the original. The Bank never furnished the instruction
at the agreed upon time so the court gave the original instruction
by itself.   We conclude that the Bank's failure to provide the
instruction, which the court stated that it would give to the jury,
prevents the Bank from now arguing that the instruction on this
issue was deficient.
     We hold the District Court did not err by instructing the jury
on an equitable estoppel theory and on a third party beneficiary
theory.
     Affirmed.




We Concur:
