                            No.   91-055
          IN THE SUPREME COURT OF THE STATE OF MONTANA




GARDNER C. WAITE,
         Plaintiff and Respondent,
                                                                                ,   ..
    v.                                              ..
                                                   .JlJi.. . Z, 1991
DAVID ANDREASSI and
JEFFERSON Z. AMACKER,                      J ' J,            t,!
                                                              i,
                                                    r     d ; 3 : : ~ ,
                                           CLERK OF      SUP:..;:  ,:,- : :_;:, ...
         Defendants and Appellants.                                           .I.
                                              STATE OF i t i ~ , ~ . : . ~ ~ ~ . ~




APPEAL FROM:   District Court of the Eighteenth Judicial District,
               In and for the County of Gallatin,
               The Honorable Larry W. Moran, Judge presiding.


COUNSEL OF RECORD:
          For Appellant Jefferson Z. Amacker:
               Stephen M. Barrett, Kirwan      &    Barrett,
               Bozeman, Montana
          For Respondent:
               H. A. Bolinger, Bolinger & Quist,
               Bozeman, Montana


                                  Submitted on Briefs:                     May 10, 1991
                                                    Decided: july 2, 1991
Filed:
Justice Terry N. Trieweiler delivered the opinion of the Court.
    Jefferson Amacker appeals from the order of the District Court
of the Eighteenth Judicial District in Gallatin County, granting
summary judgment to the plaintiff.        We affirm the District Court.
     The sole issue is whether the District Court erred when it
concluded, as a matter of law, that the parties' subordination
agreement did not constitute a novation which extinguished the
original agreement between the parties.
     In October         1984, David   Andreassi   and Jefferson Amacker
purchased property in Manhattan, Montana from Gardner C. Waite.
Andreassi and Amacker paid $5000 down and secured payment of the
balance of    $50,000    by executing and delivering a trust indenture
note.    The borrowers desired to remodel the property and sought a
loan of    $105,000   from American Federal Savings   &   Loan Association
of Bozeman. American Federal informed the borrowers that it would
not make the loan unless it had a first mortgage on the property.
The borrowers persuaded Waite to subordinate his claims to that of

American Federal, and a subordination agreement was executed by the
parties.
        The borrowers subsequently defaulted in their payments, and
American Federal enforced the default provision of their note and
sold the property.         Waite then sued on the original promissory
note.     Default judgment was entered against Andreassi for failure
to appear.      Amacker answered, asserting affirmative defenses of
accord and satisfaction and election of remedies.              Motion for
summary judgement was made by Waite.   In his brief in opposition
to summary judgment, Amacker abandoned his accord and satisfaction
defense in favor of a novation defense.     He did not amend his
answer to reflect that change.
     The District Court ruled that Amackerls novation defense
failed to meet both the statutory and common law criteria for
novation, and that he had not amended his answer to plead novation
as an affirmative defense. In addition, the court found that there
was no new consideration for a novation, or an extinguishment of
Waitets right to sue on the note. The court granted Waitels motion
for summary judgment, and found Amacker and Andreassi jointly and
severally liable for principal, interest, costs, and attorney fees.
Amacker appeals from that judgment.
     Amacker contends that the subordination agreement executed by
the parties constituted a novation ofthe original promissory note.
He states that the language contained within the subordination
agreement clearly sets out the options available to Waite, and that
Waite did not pursue them.    The provision of the subordination
agreement relied upon by the defendant reads in pertinent part:
          4.   COLLECTION OF THE CREDITOR'S CLAIMS. Borrowers
     shall have the right, at any time, to pay all or part of
     the debt owed by them to Creditor provided that American
     Federal Savings and Loan consents, in writing, to such
     payment. On or after April 1, 1988, Creditor shall have
     the right, upon ninety (90) days notice to Borrowers, to
     demand payment in full of Borrowers1 debt to Creditor
     and, in the event such payment is not made, to (1) assume
     Borrowers' existing indebtedness to American Federal
     savings and Loan or, in the alternative, to (2) pay the
     debt owed by Borrowers to American Federal Savings and
     Loan; provided that, in either event, Borrowers shall
     have no further interest in the above-described real
     property and Borrowers' interest shall vest in Creditor.
     A novation is the substitution of a new obligation between
the same parties with intent to extinguish the old obligation.
Section 28-1-1502(1),   MCA.   The subordination agreement executed
by the parties does not disclose any intent by the parties to
extinguish the old obligation.       In fact, other terms in the
contract make     it clear that the parties' intent was to the
contrary.   Paragraph 13 provided as follows:
            13.PAYMENT OF DEBT OWED CREDITOR. Creditor and
     Borrowers agree that the debt owed Creditor by Borrowers
     shall be due and payable on April 1, 1988, or any time
     thereafter, as provided in paragraph 4, but, in no event,
     shall payment in full be made later than one year after
     all claims of American Federal Savings & Loan are paid
     in full.
     Paragraph 13 preserves defendants' obligation to pay the
balance due under the original note, even after American Federal
was paid in full
     As we stated in Harrison et al. v. Fregger et al., 88 Mont.


     In order to effect a novation there must be a clear and
     definite intention on the part of all concerned that such
     is the purpose of the agreement, for it is a well-
     settled principle that novation is never to be presumed
     * * * ; the point in every case, then, is, did the
     parties intend by their arrangement to extinguish the old
     debt or obligation and rely entirely on the new, or did
     they intend to keep the old alive and merely accept the
     new as further security, and this question of intention
     must be decided from all of the circumstances.
     The defendant contends that since the parties submitted
conflicting affidavits       regarding what      they   intended   by   the
subordination agreement, there was an issue of fact which should
have been decided by a jury.          However, 5 28-3-303, MCA, provides
in relevant part that tf[w]hena contract is reduced to writing, the
intention of the parties is to be ascertained from the writing
alone if possible   ..   .   .   II



     In this case, it was possible for the District Court to

determine the intention of the parties from the terms of the
subordination agreement itself. A review of that agreement reveals
no genuine issue of material fact, and accordingly, Waite was
entitled to a judgment a s a m a t t e r of law.
     We affirm the judgment of the District Court.




We Concur:
                                            July 2, 1991

                            CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:


Stephen M. Barrett
Kirwan & Barrett
P.O. Box 1348
Bozeman. MT 59771-1348

H. A. Bolinger
Bolinger & Quist
P.O. Box 1047
Bozeman, MT 59715

                                               ED SMITH
                                               CLERK O F THE SUPREME COURT
                                               STATE OF MONTANN
