                                      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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Filed: d. p
       C'
        k.
              - 2 1982

                 I/               #               -
                 Y
                                 "    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
