Robert W. Miller and Patricia M. Miller, Harold R. Miller and Bernice Miller v. The Federal Land Bank of Spokane

In this civil action, jurisdiction rests upon diversity of citizenship. The plaintiffs (the Millers) are citizens and residents of Montana and the defendant is a federally chartered federal land bank having its principal office in Spokane, Washington.

The appeal is from a judgment in favor of the Millers, upon a verdict in their favor in a trial of certain issues to a jury, together with an earlier partial summary judgment.

I. The Facts.

The Millers were the owners of a 2,600 acre ranch in Treasure County, Montana. On June 5, 1966, they borrowed $47,800 from the defendant, the Federal Land Bank of Spokane (the Bank), at an interest rate of 5Vz%. As security for the loan, the Millers mortgaged the ranch to the Bank. The loan was payable in annual amortizing payments of $3,999.88, beginning on May 1, 1967, the last payment being due on May 1, 1986.

On August 28, 1972, the Burlington Northern Railroad (the Railroad) filed a condemnation action against the Millers, seeking to condemn a right of way easement for railroad purposes across 8 acres of the Millers’ land. The action named the Millers and the Bank as defendants. Shortly thereafter, the Millers negotiated a settlement with…