                                  No. 12974

       I N T E SUPREME C U T O THE STATE O MONTANA
            H           OR    F           F

                                     1975



WILLIAM G. MITCHELL,

                          P l a i n t i f f and Appellant,

       -vs   -
H R L F. MITCHELL,
 AOD

                          Defendant and Respondent.



Appeal from:     D i s t r i c t Court of t h e Third J u d i c i a l D i s t r i c t ,
                 Honorable John B e McClernan, Judge p r e s i d i n g .

Counsel of Record:

     For Appellant:

             William R. Taylor argued, Deer Lodge, Montana
             Radonich and Reardon, Anaconda, Montana
             John N. Radonich appeared, Anaconda, Montana

     For Respondent:

             Knight, Dahood and Mackay, Anaconda, Montana
             C. F, Mackay argued, Anaconda, Montana



                                            Submitted:        November 6, 1975

                                               Decided : J&&       1.6   qftYR
                                                                         ,3!h
M r . J u s t i c e Gene B . Daly d e l i v e r e d t h e Opinion of t h e Court.

                 T h i s i s an a p p e a l from a judgment i n an accounting
a c t i o n from t h e d i s t r i c t c c u r t , Deer Lodge County, s i t t i n g w i t h o u t
a jury.
                 P l a i n t i f f William G. M i t c h e l l i s t h e son of defendant
Harold F. M i t c h e l l .        I n August 1970, t h e son                 f i l e d a complaint
a l l e g i n g t h e e x i s t e n c e of an o r a l p a r t n e r s h i p between himself and
h i s f a t h e r , and seeking t o o b t a i n a f u l l accounting of p a r t n e r s h i p
funds and a s s e t s .         The complaint s t a t e d : (1) t h a t t h e purpose o f
t h e p a r t n e r s h i p was t o a c q u i r e c e r t a i n d e s c r i b e d r e a l p r o p e r t y ,
commonly known a s Yanlcee F l a t s , west of Anaconda, Montana, and
t h a t b o t h t h e son and t h e f a t h e r had advanced monies t o apply on
t h e c o n t r a c t f o r purchase;         (2) t h a t t h e f a t h e r now claims an
e x c l u s i v e r i g h t i n and t o t h e r e a l p r o p e r t y and d e n i e s t h e son
has any r i g h t t o t h e u s e , o r ownership i n t h e p r o p e r t i e s ; and
(3) t h a t a demand f o r an accounting o f t h e monies advanced by
t h e son f o r t h e purchase of t h e r e a l p r o p e r t y has been denied by
the father.
                Answer and demand f o r a j u r y t r i a l was f i l e d by t h e
f a t h e r i n September 1971, more than a y e a r a f t e r t h e f i l i n g of t h e
complaint.           I n t h a t answer t h e f a t h e r denied t h e e x i s t e n c e of an
o r a l p a r t n e r s h i p agreement; denied t h e son had advanced money on
a c o n t r a c t f o r deed t o purchase t h e r e a l p r o p e r t y ; and denied t h e
son had any r i g h t t o t h e u s e , o r ownership i n t h e r e a l p r o p e r t y .
The answer s t a t e d t h a t t h e reason no accounting was e v e r given was
II
     t h a t t h e r e has never been a p a r t n e r s h i p and t h e r e f o r e t h i s
answering defendant was n o t under any o b l i g a t i o n t o t h e p l a i n t i f f . "
                I n A p r i l 1973, Judge Robert J. Boyd of t h e t h i r d j u d i c i a l
d i s t r i c t was d i s q u a l i f i e d and Judge John B. McClernan, o f t h e
second j u d i c i a l d i s t r i c t , assumed j u r i s d i c t i o n .
             On J u l y 23, 1973, a t r i a l w i t h o u t j u r y was h e l d i n Deer
Lodge County.              Immediately b e f o r e t r i a l and a period of one
y e a r and t e n months a f t e r t h e o r i g i n a l answer, t h e d e f e n s e
c o u n s e l handed c o u n s e l f o r t h e p l a i n t i f f an amended answer and
demand f o r a j u r y t r i a l .       P l a i n t i f f ' s counsel o b j e c t e d t o t h e
o f f e r of t h e amended answer on t h e grounds t h a t i t was untimely,
p r e j u d i c i a l and would cause a d e l a y i n t h e t r i a l .         The d e l a y i n
t h e t r i a l was o b j e c t e d t o because t h i s was t h e second t r i p
p l a i n t i f f had made from S t . Louis, Missouri, a t c o n s i d e r a b l e ex-
pense.
             The c o u r t o v e r r u l e d t h e o b j e c t i o n and g r a n t e d l e a v e t o
f i l e t h e amended answer.            The demand f o r a j u r y t r i a l was denied.
This exchange then took p l a c e between c o u n s e l f o r p l a i n t i f f and
the court:
             "14JX. TAYLOR: Your Honor, i n view o f t h e Court ' s
           r u l i n g , may we r e c e s s t o r e a d t h e answer?
             "THE COURT: You may s i t down and r e a d t h e answer
             M. Taylor, 11
               r
             M r . Taylor then renewed h i s o b j e c t i o n and added:
           11~;   J;
                       *
                  t h e Defendant i n t h i s amended answer h a s
             completely changed h i s defense i n t h e a c t i o n .
              "THE COURT: The Court w i l l t a k e t h a t i n t o c o n s i d e r a -
           t i o n , M r . Taylor. I I
             L a t e r , d u r i n g t h e c o u r s e of t r i a l , M, Taylor r e q u e s t e d
                                                                       r
a r e c e s s t o a n a l i z e and t o a d j u s t t o t h e amended answer, and t h e
following allowance was made:
             "THE COURT:           Very w e l l , we w i l l r e c e s s f o r t e n minutes.
             "THE COURT:           Court i s i n s e s s i o n .     You may proceed.
                                                                                                        II
             "MR.      TAYLOR:      You may r e t u r n t o t h e s t a n d , M r . M i t c h e l l .
The t r i a l then proceeded u n t i l f i n i s h e d , a p e r i o d of two days.
           The amended answer, f i l e d t h e day of t r i a l , admits t h e
e x i s t e n c e of t h e p a r t n e r s h i p and t h a t t h e son had made advances of
money towards t h e purchase of Yankee F l a t s .                    The answer t h e n con-
t i n u e s with these defenses:             (I)     P l a i n t i f f " f a i l e d t o keep h i s
end of t h e agreement which was t o r e t u r n t o Montana and h e l p
w i t h t h e ownership u s e and l a b o r s on s a i d r e a l p r o p e r t i e s and
f a i l e d t o c o n t i n u e t o make t h e payments agreed upon and t o put
i n an e q u a l amount of c a p i t a l . "                 (2) That "the defendant d e n i e s
t h a t he h a s f a i l e d t o o f f e r an accounting                    9
                                                                            :   f:."   (3) The
?defendant admits t h a t he has possession o f t h e premises and
records     9
            :     **          and defendant s t a n d s ready t o account t o p l a i n t i f f
f o r h i s contributions               *   9
                                            :   +:.'I


                 O June 24, 1974, almost a y e a r a f t e r t r i a l , an i n t e r -
                  n
l o c u t o r y o r d e r s e t t l i n g p a r t n e r s h i p accounts and d i s s o l v i n g t h e
p a r t n e r s h i p was signed and f i l e d by t h e d i s t r i c t c o u r t .               In
September 1974, a judgment was e n t e r e d which made f i n a l t h e terms
of t h e interlocutory order.                           In the interlocutory order, the d i s t r i c t
c o u r t made t h e s e f i n d i n g s of f a c t :
             I      Jc   2k  t h e p a r t n e r s h i p remains i n f u l l f o r c e and
                 e f f e c t , and a l l p r o p e r t y i n t h e 'Yankee F l a t s 1
                 t r a c t i s , i n f a c t , partnership property.
                   hat t h e agreement between t h e p a r t n e r s r e q u i r e d
                 each t o s h a r e e q u a l l y i n t h e amount of c a p i t a l i n -
                 v e s t e d , and e q u a l l y i n t h e l a b o r s of t h e p r o j e c t .
                 The p l a i n t i f f ' s ( s o n ' s ) s h a r e of c a p i t a l investment
                 i s n o t f u l l y p a i d , and he owes t h e Defendant ( f a t h e r )
                 t h e sum of $2,949.29 i n money. That from t h e d a t e o f
                 t h e p a r t n e r s h i p agreement (May, 1964) u n t i l t h e d a t e
                 of t h e i n s t i t u t i o n of t h i s s u i t (August 4 , 1970),
                 t h e Defendant ( f a t h e r ) , on weekends and h o l i d a y s , con-
                 t r i b u t e d approximately 302 days of l a b o r ( c l e a r i n g
                 b r u s h , r o c k s , b u i l d i n g r o a d s , mending f e n c e s , e t c . ) ,
                 and t h e P l a i n t i f f ( s o n ) , d u r i n g s a i d p e r i o d , c o n t r i b u t e d
                 approximately two days of l a b o r ; t h a t t h e P l a i n t i f f
                 (son) owes t h e Defendant ( f a t h e r ) 300 days of l a b o r
                 on t h e p a r t n e r s h i p p r o p e r t y , payable e i t h e r i n kind
                 o r i n cash a t t h e p r e v a i l i n g r a t e f o r common l a b o r .
                 "That t h e r e l a t i o n s h i p between t h e P l a i n t i f f (son)
                 and t h e Defendant ( f a t h e r ) i s s o s t r a i n e d , u n f r i e n d l y
                 and i r r e c o n c i a b l e t h a t t h e f u r t h e r continuance of t h e
                 p a r t n e r s h i p i s i m p r a c t i c a l . 11
                 The c o u r t then d i s s o l v e d t h e p a r t n e r s h i p and o f f e r e d :
                 It*     **   upon a p p l i c a t i o n of e i t h e r p a r t y , t h e Court w i l l
                 proceed t o determine t h e r e s p e c t i v e i n t e r e s t s of t h e
                 p a r t i e s i n t h e p a r t n e r s h i p p r o p e r t y , and p a r t i t i o n t h e
                 same i n accordance t h e r e w i t h . 11
                 From t h a t judgment p l a i n t i f f a p p e a l s .
              S e v e r a l i s s u e s a r e presented on appeal b u t t h e d e c i s i v e
i s s u e i s whether t h e amended answer was p r o p e r l y allowed t o be
f i l e d under Rule 1 5 ( a ) , M.R.Civ.P.
              The a p p l i c a b l e   p o r t i o n of Rule 15 ( a ) , M.R. Civ. P.      ,
provides :
              "*   **  Otherwise a p a r t y may amend h i s pleading
              only by l e a v e o f c o u r t o r by w r i t t e n consent of
              t h e adverse p a r t y ; and l e a v e s h a l l be f r e e l y given
              when j u s t i c e so r e q u i r e s .  *I1*
For t h e purpose of p l a c i n g t h e i s s u e i n t h e proper frame work, we
examine t h e r e a s o n s f o r and t h e background of Rule 1 5 ( a ) .                  That
r u l e c o n t a i n s language i d e n t i c a l t o Rule 1 5 ( a ) of t h e f e d e r a l
rules.
              I n 6 Wright & M i l l e r , F e d e r a l P r a c t i c e and Procedure:
C i v i l $ 5 1487, 1488, t h e r e a r e comments and r e a s o n s f o r Rule
15 ( a ) .
              $1487        The l i b e r a l amendment p o l i c y p r e s c r i b e d by
Rule 1 5 ( a ) does n o t mean t h a t l e a v e w i l l be granted i n a l l c a s e s .
Indeed, t h e t e x t of t h e r u l e makes i t c l e a r t h a t permission t o
amend i s n o t t o be given a u t o m a t i c a l l y b u t i s allowed only
I1
 when j u s t i c e so r e q u i r e s " .   Perhaps t h e most f r e q u e n t reason
given f o r denying l e a v e t o amend i s t h a t t h e opposing p a r t y w i l l
be p r e j u d i c e d i f t h e movant i s permitted t o a l t e r h i s pleading.
Thus, t h e f a c t s of each c a s e must be examined t o determine i f t h e
t h r e a t of p r e j u d i c e i s s u f f i c i e n t t o j u s t i f y denying l e a v e t o
amend.       This e n t a i l s an i n q u i r y i n t o t h e h a r d s h i p t o t h e moving
p a r t y i f l e a v e t o amend i s denied, t h e r e a s o n s f o r t h e moving
p a r t y f a i l i n g t o i n c l u d e t h e m a t e r i a l t o be added i n t h e o r i g i n a l
p l e a d i n g , and t h e i n j u s t i c e r e s u l t i n g t o t h e p a r t y opposing t h e
motion should i t be g r a n t e d .
              The c o u r t a l s o may c o n s i d e r t h e good f a i t h of t h e p a r t y
seeking t h e amendment and t h e reasons f o r t h e movant's d e l a y .
               $1488 Rule 1 5 ( a ) does n o t p r e s c r i b e any time l i m i t
w i t h i n which a p a r t y may apply t o t h e c o u r t f o r l e a v e t o amend.
The p o l i c y of allowing amendments t o be made a t any time d u r i n g
t h e l i t i g a t i o n i s sound.        I t would be unreasonable t o r e s t r i c t
a p a r t y ' s a b i l i t y t o amend t o a p a r t i c u l a r s t a g e of t h e a c t i o n
inasmuch a s t h e need t o amend may n o t appear u n t i l a f t e r d i s -
covery h a s been completed o r testimony h a s been taken a t t r i a l .
Nonetheless, i n keeping w i t h t h e purpose of Rule 1 5 ( a ) , which i s
t o f a c i l i t a t e a d e t e r m i n a t i o n of t h e a c t i o n on i t s m e r i t s , a motion
t o amend should be a s soon a s t h e n e c e s s i t y f o r a l t e r i n g t h e
p l e a d i n g becomes a p p a r e n t .
              In addition t o considering t h e possible prejudice r e s u l t i n g
from t h e moving ~ a r t y ' sd e l a y i n making h i s amendment, some
c o u r t s a l s o have decided a motion f o r l e a v e t o amend on t h e b a s i s
o f t h e r e a s o n given f o r t h e i n a c t i o n .     I f t h e p a r t y can demonstrate
t o t h e c o u r t t h a t t h e d e l a y was n o t e x c e s s i v e and was excusable
o r t h a t h i s f a i l u r e t o i n c l u d e t h e amendment i n t h e o r i g i n a l
pleading was due t o an o v e r s i g h t , t h e amendment may be allowed.
However, i n t h e absence o f o v e r s i g h t o r excusable n e g l e c t , c o u r t s
have denied l e a v e t o amend when t h e moving p a r t y knew about t h e
f a c t s on which t h e proposed amendment was based b u t omitted t h e
n e c e s s a r y a l l e g a t i o n s from t h e o r i g i n a l pleading. Some c o u r t s a l s o
have h e l d t h a t a long d e l a y by t h e movant c o n s t i t u t e s l a c h e s s o
t h a t a r e f u s a l t o permit an amendment i s warranted.
              I n t h e i n s t a n t c a s e , t h e o r i g i n a l answer denied t h e
e x i s t e n c e of a p a r t n e r s h i p ; denied a c o n t r i b u t i o n of c a p i t a l by
t h e p l a i n t i f f son and r e f u s e d t o give an accounting o f p a r t n e r s h i p
funds and a s s e t s .       The amended answer turned t h e s i t u a t i o n around
by a d m i t t i n g both t h e p a r t n e r s h i p and a c o n t r i b u t i o n of c a p i t a l
by p l a i n t i f f son and s t a t e d t h e defendant f a t h e r now was ready
t o g i v e a f u l l accounting.             The amendment then placed i n i s s u e
how much l a b o r had been c o n t r i b u t e d by each p a r t n e r .
                  When t h e amended answer was o f f e r e d , t h e d i s t r i c t c o u r t
    made no i n q u i r y a s t o t h e reasons why t h e s e new f a c t s were n o t
    pleaded i n t h e o r i g i n a l answer o r why t h e r e was a d e l a y of n e a r l y
    two y e a r s i n o f f e r i n g t h e amendment, o r whether t h e amendment would
    impose a p r e j u d i c i a l burden on p l a i n t i f f .          The d i s t r i c t c o u r t
    i n f a c t r e f u s e d t o g r a n t even a continuance f o r p l a i n t i f f ' s
    counsel t o study t h e amendment and p r e p a r e h i s c a s e a c c o r d i n g l y .
    Thus, following a l i b e r a l p o l i c y of amendment of p l e a d i n g s a s
    p r e v i o u s l y d i s c u s s e d , o p p o r t u n i t y must be a f f o r d e d t h e opposing
    party t o adjust accordingly.                      F a i l u r e t o permit t h i s i s e r r o r and
    demands a new t r i a l .
                  The judgment of t h e d i s t r i c t c o u r t i s vacated and t h e
    cause i s remanded t o t h e d i s t r i c t c o u r t f o r a new t r i a l .




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