Annotations to the Montana code annotated

2006·186.3 MB·English

by  Helena, MT : Published and distributed by Montana Legislative Services Division

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Montana Code Annotated
Annotations
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MONTANA CODE ANNOTATED 008
Code Commissioner & Director of a eas Ser vide ttN DraA NA
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2006 ANNOTATIONS to the MONTANA CODE ANNOTATED
CONTENTS
Volume 1
Table of Session Law to Code — 2005 36. Reserved
Table of 2004 Ballot Issues to Code 37. Professions and Occupations
Official Report of the Montana Code 38. Reserved
Commissioner — 2005
Enabling Act Volume 8
Constitution of Montana Titles
Title 39. Labor
1. General Laws and Definitions 40. Family Law
41. Minors
Volume 2 42. Adoption
Titles 43. Reserved
2. Government Structure and Administration
3. Judiciary, Courts Volume 9
4. Reserved Titles
5. Legislative Branch 44, Law Enforcement
6. Reserved 45. Crimes
7. Local Government 46. Criminal Procedure
8 and 9. Reserved 47. Access to Legal Services
10. Military Affairs and Disaster and ‘48. Reserved
Emergency Services
11 and 12. Reserved Volume 10
13. Elections Titles
14. Reserved 49. Human Rights
50. Health and Safety
Volume 3 51. Reserved
Titles 52. Family Services
15. Taxation 53. Social Services and Institutions
16. Alcohol and Tobacco 54-59. Reserved
17. State Finance 60. Highways and Transportation
18. Public Contracts 61. Motor Vehicles
19. Public Retirement Systems 62-66. Reserved
20. Education 67. Aeronautics
21. Reserved 68. Reserved
22. Libraries, Arts, and Antiquities 69. Public Utilities and Carriers
Volume 4 Volume 11
Titles . Titles
23. Parks, Recreation, Sports, and Gambling 70. Property
24. Reserved 71. Mortgages, Pledges, and Liens
25. Civil Procedure _ 72. Estates, Trusts, and Fiduciary Relationships
73 and 74. Reserved
Volume 5 75. Environmental Protection
Titles
26. Evidence Volume 12
27. Civil Liability, Remedies, and Limitations Titles
76. Land Resources and Use
Volume 6 77. State Lands
Titles 78 and 79. Reserved
28. Contracts and Other Obligations 80. Agriculture
29. Reserved 81. Livestock
30. Trade and Commerce 82. Minerals, Oil, and Gas
83 and 84. Reserved
Volume 7 85. Water Use
Titles 86. Reserved
31. Credit Transactions and Relationships 87. Fish and Wildlife
32. Financial Institutions 88 and 89. Reserved
33. Insurance and Insurance Companies 90. Planning, Research, and Development
34. Reserved 91-99. Reserved
35. Corporations, Partnerships, and Associations

PREFACE TO VOLUME 7
(Annotations — May 2006)
Annotations to this volume include case notes of applicable court decisions through public
domain citation 2006 MT 36, volume 331 Montana Reports page 166, volume 130 Pacific
Reporter (3rd Series) page 1256, volume 412 Federal Supplement (2nd Series) page 1357,
volume 441 Federal Reporter (8rd Series) page 703, and volume 126 Supreme Court Reporter
page 1493. Digests of Montana Attorney General’s opinions are provided through volume 51
opinion number 16 of the Report and Official Opinions of Attorney General. Citations to the
Administrative Rules of Montana implementing or authorized by a section of law and adopted
through Issue 7 of the 2006 Montana Administrative Register are also included.
Amendment notes listed under compiler’s comments are intended to explain only
amendments made in the year indicated and may not accurately reflect current statutory
language because of subsequent amendment.
The annotations are provided as a convenience to the user and are not intended to be an
exhaustive compilation of the law under a given statute or in a given area.

TITLE 31
CREDIT TRANSACTIONS AND RELATIONSHIPS
CHAPTER 1
CREDIT TRANSACTIONS
Part 1
Loans of Money — Interest Rates
Part Law Review Articles
Montana Legislature Summary, 1959 (Consumer Loan Act), 20 Mont. L. Rev. 135 (1959).
Searching for the Truth in Lending: Identifying Some Problems in the Truth in Lending Act
and Regulation Z, Griffith, 52 Baylor L. Rev. 265 (2000).
Proving Fraud in Credit Card Dischargeability Actions: A Permanent State of Flux?, Cain,
102.Com. L.J:.233 (1997).
New Federal Regulation of Home Equity Credit: The Home Ownership and Equity Protection
Act of 1994, Jones, 113 Banking L.J. 328 (1996).
Rights of Subrogation in Letters of Credit Transactions, White, 41 St. Louis U.L.J. 47 (1996).
Consumer Borrowing, 11 Tax Mgmt. Fin. Plan. J. 239 (1995).
“Fair Lending” Requirements: The Intervention of a Governmental Social Agenda Into Bank
Supervision and Bank Regulation, Norton, 49 Consumer Fin. L.Q. Rep. 17 (1995).
Truth in Lending Commentary: 1995 Update, Ahrens, 49 Consumer Fin. L.Q. Rep. 90 (1995).
Overview of Recent Developments in Truth in Lending, Dawes, 48 Consumer Fin. L.Q. Rep.
450 (1994).
Truth in Lending: The Right to Rescind and the Statute of Limitations, Rothstein, 14 Pace L.
Rev. 633 (1994).
An Economic Perspective on Interest Rate Limitations, Durkin, 9 Ga. St. U.L. Rev. 821
(1993).
Letters of Credit: Curbing Bad-Faith Dishonor, Macintosh, 25 U.C.C. L.J. 3 (1992).
Truth in Lending Developments in 1991, Mabbitt, 47 Bus. Law. 1237 (1992).
Part Collateral References
Applicability of waiver or estoppel to preclude claim of nonconformance of documents as
ground for dishonor of presentment under letter of credit under UCC §5-114. 53 ALR 5th 667.
Liability of secured creditor under Uniform Commercial Code to third party on ground of
unjust enrichment. 27 ALR 5th 719.
Sufficiency, as to content, of notice of garnishment required to be served upon garnishee. 20
ALR 5th 229.
“Unconscionability,” under UCC §2-302, of bank’s letter of credit or other financing
arrangements. 15 ALR 5th 365.
What constitutes compliance of documents presented with terms of letter of credit so as to
require honor of draft under UCC §5-114. 8 ALR 5th 463.
Creditor’s duty of disclosure to surety or guarantor after inception of suretyship or guaranty.
63 ALR 4th 678.
Credit card issueyr’s liability, under state laws, for wrongful billing, cancellation, dishonor, or
disclosure. 53 ALR 4th 281.
Recoverability of compensatory damages for mental anguish or emotional distress for breach
of contract to lend money. 52 ALR 4th 826.
31-1-101. Loan of money — what constitutes.
Case Notes
Sale With Option to Repurchase Not Considered Loan — Factors Not Met: Dillree initially
requested a loan from Devoe, but Devoe stated he did not make loans and the request was denied.
Dillree then suggested he could sell Devoe certain property with an option to repurchase within 6
months. Two such transactions occurred, but the obligations were not timely repaid and Devoe
demanded surrender of the property. District Court awarded the property to Devoe, but on
appeal Dillree contended the transactions were not sales, pointing out the four factors listed in
Murray v. Butte-Monitor Tunnel Mining Co., 41 M 449, 110 P 497 (1910), which tend to confirm
2006 Annotations to the MCA
31-1-102 CREDIT TRANSACTIONS AND RELATIONSHIPS 2
that a transaction is a security arrangement or mortgage and not a sale. The factors are: (1) the
transaction in its inception had for its purpose a loan, not a sale; (2) the grantor was in financial
distress at the time of the transaction; (3) the price appears to have been grossly inadequate;
and (4) according to the grantee’s own theory, the transaction did not amount to an absolute sale
but to a conditional sale. The Supreme Court affirmed the trial court’s findings that factors (1)
and (3) were not present and that therefore the transactions could not be considered loans but
were contracts for sale of property with the opportunity for repurchase. Dillree v. Devoe, 223 M
47,724 P2d 171, 43 St. Rep. 1521 (1986). See also Campbell v. Campbell, 223 M 124, 725 P2d 207,
43 St. Rep. 1584 (1986).
Transaction Based on Contingency: A loan of money is a temporary letting for a temporary
use, the term implying an obligation to repay. If such obligation is based on a contingency or a
condition, the transaction is not a loan. One of several joint adventurers agreed to furnish the
money for testing land for deposits of placer gold, he to be repaid if the venture should prove
successful. The transaction did not constitute a loan, as contended in an action to recover wage
claims, but rather was an investment. Rae v. Cameron, 112 M 159, 114 P2d 1060 (1941), followed
in Nyquist v. Nyquist, 255 M 149, 841 P2d 515, 49 St. Rep. 927 (1992).
Collateral References
Money Lent key 1.
42 C.J.S. Implied and Constructive Contracts §7.
31-1-102. Loan to be repaid in current money.
Collateral References
53A Am. Jur. 2d Money §§1, 5, 6.
31-1-103. Loan presumed to be on interest.
Case Notes
Accounting of Guardian: A guardian, without an order of the court, loaned the funds of his
ward on an interest-bearing note. At the final accounting of the guardian, the ward refused to
accept the note. In his final report the guardian treated the total sum of the note as cash, charged
himself with that amount as included in the total receipts, and made no mention of the note or
the interest. The guardian was properly directed to account for the interest due on the note at the
date of final settlement, even though the ward refused to accept the note in lieu of cash. In re
Allard Guardianship, 49 M 219, 141 P 661 (1914).
Law Review Articles
Interest-Free Loans Are No Longer Free: Tax Consequences of Gift Loans, Willbanks, 47
Mont. L. Rev. 39 (1986).
Rules on Below-Market and Interest-Free Loans, Pisem, 217 N.Y.L.J. 5 (1997).
Imputed Interest on Charity Loan Is Investment Interest, 24 Tax’n for Law. 186 (1995).
Collateral References
Interest key 67.
47 C.J.S. Interest and Usury §135.
Time from which interest is recoverable on demand note or like demand instrument
containing no provision as to interest. 45 ALR 2d 1202.
31-1-104. Interest defined.
Compiler’s Comments
2005 Amendment: Chapter 125 at end inserted “and includes loan origination fees, points,
and prepaid finance charges, as defined in 12 CFR 226.2”. Amendment effective March 24, 2005.
Retroactive Applicability — Applicability: Section 5, Ch. 125, L. 2005, provided: “[This act]
applies retroactively, within the meaning of 1-2-109, to loans subject to [this act] made on or after
October 1, 1985, the effective date of Chapter 406, L. 1985.”
Section 8, Ch. 272, L. 2005, amended sec. 5, Ch. 125, L. 2005, to provide: “(1) Except as
provided in subsection (2), [Fis this act] applies retroactively, within the meaning of 1-2-109, to
loans subject to [this act] made on or after October 1, 1985, the effective date of Chapter 406,
Laws of 1985.
(2) [This act] does not apply to loans that are the subject of a lawsuit filed prior to [the
effective date of this act].” Chapter 125 effective March 24, 2005. Chapter 272 effective April 19,
2005.
2006 Annotations to the MCA