Case Study
In the case analysis, you are required to identify the major issue(s); determine the scope of the problem; analyze the issue(s) and the decision; and explain the procedure used for the decision or choose an alternative decision.
Be sure that you are identifying the major issue(s); determining the scope of the problem; and analyzing the issue(s) and the outcome(s) (do you agree; do you have alternate recommendations etc.). It is recommended that you incorporate course material and additional readings (i.e., journal articles, books, etc.) into your analysis to strengthen the content of your paper. It is a good idea to organize your paper in at least 4 sections:
1.) Summary of the case (key players; background)
2.) Identify the scope of the problem
3.) Analyze the issue/outcome (incorporate answers to any questions at the end into this section).
4.) Recommendations
The analysis should comment on the issue(s) and decision (this may already be in the case or you can take an alternative approach). The incorporation of course readings and additional research is mandatory.
The response to the assignment will be a minimum of 2 pages in length (not including cover and reference page) and should contain a cover page and reference page. Each case study is worth 100 points:
20 Points – Answers to the questions at the end of the case study.
20 Points – APA formatting/grammar.
25 Points – Identifying the major issue and scope of the problem.
35 Points – Analysis of the issue(s)/decision.

Facts
Loyd Kimble was the owner of a parcel of land in Yellowstone County, Montana. He borrowed $3,000.000 from Commerce Mortgage Company for he executed to Commerce a note and mortgage on the land parcel on May 12, 1980. The note and mortgage were assigned to American Guaranty Life Insurance Company, and the assignment was recorded on June 4, 1981. Loyd Kimble also borrowed an additional $150,000 using the same land parcel as security, and he executed a note and mortgage to Commerce Mortgage Company, which mortgage was recorded on July 1, 1981.
Loyd Kimble defaulted on his loan payments, and the mortgage went into default. American and Commerce obtained a judgment against Kimble on the mortgage loans on July 3, 1986. There was no sheriff’s sale of the land.
On July 21, 1986, Kimble entered into an option agreement for the purchase of the land parcel by North Point Square and others (defendants/appellants). The option was exercisable on or before January 24, 1987. An abstract of the option was recorded on July 24, 1986.
The escrow agreement with First Montana Title Company provided that First Montana (plaintiff and respondent) would hold a partial release of lis pendens (see Chapter 15, a legal document recorded to indicate litigation pending on a parcel of land), a release of the judgment in the foreclosure, and a release of American Guaranty’s and Commerce’s mortgages to clear the title to parcel if the option was exercised. In exchange, American and Commerce would receive the sale proceeds from the exercise of the option.
On August 22, 1986, First Interstate Bank of Billings obtained a judgment lien on the parcel for $77,041.01, and First Interstate Bank of Missoula obtained a judgment lien on the parcel for $27,000 on September 30, 1986. Interstate Production Credit Association obtained yet another judgment on the same parcel.
On January 21, 1987, North Point Square exercised the option by timely delivery of $336,674.05 to First Montana Title Company. Paragraph 6 of the escrow agreement provided:
Escrow agent is hereby authorized to use said funds to clear title to the property and to then distribute the balance of the funds to the two underlying mortgagees as follows.
(a) To American Guaranty Life Insurance Company – 97 percent
(b) Commerce Mortgage Company – 3 percent
When the option agreement had been exercised and the money received, First Montana Title took the position that under paragraph 6 it must pay off the judgment liens before distributing the balance of the funds to American and Commerce. American and Commerce disagreed with this interpretation. First Montana then interpleaded (deposited) the funds with the district court for a determination of which parties were entitled to them. The trial court entered a judgment for the judgment lien holders and against the mortgagees, and the mortgagees appealed.

Judicial Opinion
Sheehy, Justice. The position of American Guaranty Life Insurance Company and Commerce Mortgage Company is that an opinion which is recorded prior to the establishment of judgment liens on the same property gives the holder of the option a priority over such subsequent judgment liens. They contend that the escrow agreement had the effect of an assignment for consideration for prior to the entry of the judgments and that therefore under the escrow agreement the funds should pass to American Guaranty and Commerce Mortgage Company free of said judgment liens.
The controlling issue in the case is the contractual effect of the language in the escrow agreement. If the escrow holder was required to “clear title” before the mortgagees could receive the balance of the funds, the relative priorities between a recorded option and judgment liens become irrelevant. We hold it was the escrow holder’s duty to clear title for the optionee under the escrow agreement.
It is clear to us that the decision in this case should turn on the language of the escrow agreement, as a matter of contract. Under paragraph 6 above quoted, the escrow agent was authorized by all of the parties to the agreement to “use said funds to clear title to the property”, and then to distribute the proceeds to the mortgagees.
In Ogg v. Herman et al. (1924), 71 Mont. 10, 15-16, 227 P. 476, 477, this court said:
While provision is made that plaintiff shall furnish an abstract showing clear title, good title, and a marketable title, it is apparent that these terms were used interchangeably, and that they are in fact synonymous. A clear title means that the land is free from encumbrances. A good title is one free from litigation, palpable defects and grave doubts, comprising both legal and equitable titles, and fairly deducible of records. A clear title means a good title (citing authority) and a good title means a marketable title or merchantable title. A contract to convey in fee simple, clear off all encumbrances, implies a marketable title (citing authority), and a marketable title is one of such character as assures to the purchaser the quiet and peaceable enjoyment of the property and one which is free from encumbrances.
This Court further noted in Gantt v. Harper (1928), 82 Mont. 393, 405, 267 P. 296, 298 the following:
Webster’s definition of the word “clear” as here employed is “free from encumbrance, obstruction, burden, limitation”, etc. and the word “title” , in the sense here used, “union of all elements which constitutes ownership, at common law, divided into possession, right of possession, and right of property, the last two now, however, being considered essentially the same”.
In our opinion, the words, “clear title” as employed in the plaintiff’s letter, denied admission in evidence, means title the property free from any encumbrances, burden or litigation, uniting all the elements constituting ownership, including right of possession and right of property – i.e., fee-simple title. Such was in effect the contract upon which the defendant agreed to pay a brokerage commission on the sale of the property, and a tender of the performance was complete as in accordance with the defendant’s terms.
The contractual duty of the escrow agent in this case, agreed to by all the parties, was that the escrow holder should distribute the funds so as to deliver to clear title to the optionee upon the exercise of the option. The judgment liens were indeed clouds on the title, and clear title could not be delivered until those judgment liens were satisfied and removed.

Affirmed.

CASE QUESTIONS
1. Give a list and chronology of events regarding the parcel of land.
2. What did paragraph 6 require the escrow agent to do?
3. What was disputed about the escrow agent’s obligation under paragraph 6?
4. What definition of clear title does the court use?
5. Who will get paid first? How much will be left over for American and Commerce?