Case Title: BERRY v MANN

Citation: 

Docket Number: 79-120

State: montana

Court: Montana Supreme Court

Date: 1980-05-12T00:00:00Z

Document:
No. 79-120 IN THE SUPREME COURT OF THE STATE OF MONTANA 1980 GERALD BERRY, Plaintiff and Appellant, VS . BETTY L. MANN, Defendant and Respondent. Appeal from: District Court of the Fourth Judicial District, In and for the County of Lake. Honorable Jack L. Green, Judge presiding. Counsel of Record: For Appellant: Daniels & Mizner, Deer Lodge, Montana For Respondent: Turnage and McNeil, Polson, Montana Submitted on briefs: April 25, 1980 Decided: M - k Y 1 2 1 9 8 D Filed: - m y ; Y~CCJ M r . J u s t i c e John Conway Harrison d e l i v e r e d t h e Opinion of t h e Court. This i s an appeal from a judgment of t h e District Court of t h e Fourth J u d i c i a l D i s t r i c t , County of Lake, t h e Honor- a b l e Jack L. Green presiding without a jury, entered i n favor of defendant, Betty L. Mann. Appellant brought t h i s a c t i o n i n t h e District Court (1) t o r e s c i n d t h e c o n t r a c t dated A p r i l 30, 1976, t h a t he had entered i n t o with respon- d e n t f o r t h e purchase of c e r t a i n property, and (2) t o enforce t h e option t o purchase t h e same property a t a lower p r i c e under a c o n t r a c t previously entered i n t o by respondent and Gordon M. W i l l i a m s and h i s wife dated February 18, 1975, f o r which a p p e l l a n t gave $2200 t o o b t a i n an assignment dated February 4 , 1977. The D i s t r i c t Court found t h a t a p p e l l a n t was n o t e n t i t l e d t o a r e s c i s s i o n of h i s A p r i l 30, 1976 con- t r a c t with respondent, nor w a s he e n t i t l e d t o e x e r c i s e t h e W i l l i a m s e s ' option c o n t r a c t . Respondent Betty L. Mann i s t h e owner of a combination restaurant-motel business known a s t h e "Alpine Cafe & Motel" located a t Swan Lake, i n Lake County, Montana. On February 18, 1975, she entered i n t o an option c o n t r a c t with Gordon M. and Darlene L. Williams f o r t h e s a l e of t h e business, and a t t h e same time, executed a s e p a r a t e l e a s e of t h e business t o t h e W i l l i a m s e s f o r a period of t h r e e y e a r s beginning May 1, 1975, a t a r e n t a l of $6000 per year. The option c o n t r a c t w a s assignable and provided t h a t t h e Williamses could e x e r c i s e t h e option t o purchase a t a purchase p r i c e of $68,000 by paying $12,000 down on o r before May 1, 1978, and by paying t h e balance i n monthly payments of $500 which included i n t e r e s t commencing on June 1, 1978. I n consideration f o r t h i s option, t h e option c o n t r a c t r e c i t e d t h a t t h e W i l l i a m s e s had paid $6000, which represented one-third of t h e amount due under t h e three-year l e a s e , and which would be c r e d i t e d towards payment of t h e option p r i c e i f t h e option w a s exer- cised. The accompanying l e a s e provided t h a t t h e $6000 annual r e n t a l would be paid by a $500 downpayment made on t h e d a t e of execution, February 18, 1975; $2700 due on March 1, 1975; and t h e balance of $2800 due i n monthly payments of $100 beginning on March 1, 1975, which would r i s e t o $433.30 p e r month on May 1, 1975, u n t i l t h e f u l l $6000 sum was paid. The W i l l i a m s e s f a i l e d t o pay t h e balance of t h e considera- t i o n r e c i t e d i n t h e option c o n t r a c t , stopped making l e a s e payments, and closed t h e business and vacated the property on September 1, 1975. Subsequently, on A p r i l 30, 1976, Mann entered i n t o an agreement with Berry f o r t h e s a l e of t h e same property f o r a purchase p r i c e of $75,000 with a down- payment of $20r000 and t h e balance t o be paid i n monthly payments of $500, including i n t e r e s t on t h e unpaid p r i n c i p a l balance a t t h e r a t e of 8-1/2 percent annually. Berry had no a c t u a l n o t i c e of t h e Mann-Williams option agreement a t t h i s time. Mann considered t h e agreement and t h e l e a s e t o have been terminated by mutual agreement and t o be void by reason of t h e Williamses' d e f a u l t and f a i l u r e of consideration. Berry learned of t h e previous agreement only when a t i t l e insurance policy showed merchantable t i t l e was n o t forthcoming, a s required under h i s c o n t r a c t with Mann. Berry employed an a t t o r n e y and a t i t l e insurance policy was received December 20, 1976, which showed t h e ~ i l l i a m s e s ' option and l e a s e as exceptions t o merchantable t i t l e , Berry, a c t i n g on advice of counsel, paid t h e W i l l i a m s e s $2200 and received an assignment of t h e Williamses' i n t e r e s t under t h e option c o n t r a c t on February 4 , 1977. O n A p r i l 25, 1977, Berry brought t h i s s u i t f o r a c a n c e l l a t i o n and r e s c i s - s i o n of h i s A p r i l 30, 1976 agreement with Mann and f o r s p e c i f i c enforcement of t h e Williamses' o p t i o n agreement i n h i s (Berry's) name as assignee. I n her answer dated Septem- ber 1 4 , 1977, Mann a l l e g e d t h a t t h e W i l l i a m s e s ' option and l e a s e w e r e cancelled and i n v a l i d p r i o r - t o her e n t e r i n g t h e c o n t r a c t with Berry. She a l s o a s s e r t e d a cross-complaint a g a i n s t t h e Williamses because of t h e i r d e f a u l t i n t h e l e a s e payments a f t e r March 1, 1975, and t h e f a i l u r e of considera- t i o n f o r t h e option c o n t r a c t . The D i s t r i c t Court s t r u c k t h i s cross-complaint from her answer on Berry's motion. Mann then f i l e d a s e p a r a t e a c t i o n a g a i n s t W i l l i a m s and h i s wife on August 31, 1978, f o r c a n c e l l a t i o n and termina- t i o n of t h e Williamses' option and l e a s e which option had been assigned t o Berry on February 4 , 1977. The W i l l i a m s e s w e r e served on September 20, 1978, and t h e i r d e f a u l t w a s entered i n an October 11, 1978 judgment d e c l a r i n g t h e l e a s e and option t o be void. The option w a s found t o be void and cancelled a s of March 1, 1975, f o r f a i l u r e of consideration, and t h e lease was found t o be void and cancelled a s of August 15, 1975, f o r d e f a u l t i n making payments thereunder. On t h e b a s i s of t h i s d e f a u l t judgment, t h e ~ i s t r i c t Court found t h a t t h e assignment of the option t o Berry was of no e f f e c t . The D i s t r i c t Court found f u r t h e r t h a t t h e c o n t r a c t of A p r i l 30, 1976, between Berry and Mann remains i n f u l l f o r c e and e f f e c t , and t h a t Mann has provided a t i t l e insurance r e p o r t dated October 17, 1978, showing good and merchantable t i t l e i n property f r e e and c l e a r of a l l l i e n s and encum- brances, a:; rcquired under t h e i r c o n t r a c t . The s o l e i s s u e on appeal is: Did t h e District Court err i n finding, based on t h e d e f a u l t judgment a g a i n s t t h e Williamses and i n favor of Mann ( t o which Berry was n o t p a r t y ) , t h a t t h e option c o n t r a c t between t h e Williamses and Mann was void a t t h e t i m e of i t s assignment by t h e Williamses t o Berry. This Court i n a long s e r i e s of opinions, many of which are c i t e d i n Harrison v. C i t y of Missoula (1965), 146 Mont. 420, 407 P.2d 703, has held t h a t t h e r e i s a presumption t h a t t h e t r i a l c o u r t ' s f i n d i n g s of f a c t , conclusions of l a w , judgment and decree are c o r r e c t , and t h a t t h e burden i s upon t h e a p p e l l a n t t o show r e v e r s i b l e e r r o r . I n a d d i t i o n , t h e evidence i s t o be viewed i n a l i g h t most favorable t o t h e p r e v a i l i n g p a r t y , and t h i s Court w i l l n o t i n t e r f e r e with t h e findings of t h e trier of f a c t i f they a r e supported by s u b s t a n t i a l evidence. (1962), 140 Mont. 181, 368 P.2d 917. W e note t h a t a p p e l l a n t ' s p o s i t i o n and s o l e i s s u e i s t h a t t h e finding t h a t t h e Williamses' option c o n t r a c t was void a t t h e time of i t s assignment t o Berry i s c o n t r a r y t o t h e law and n o t supported by t h e evidence. However, t h e b r i e f presented and t h e a u t h o r i t y contained t h e r e i n i s void of any support f o r t h a t contention. The t r i a l c o u r t took j u d i c i a l n o t i c e of t h e District Court judgment i n C i v i l Action No. 10443 and determined t h a t , based on t h i s judg- ment, t h e option c o n t r a c t of February 18, 1975 between t h e Williamses and Mann became void on March 1, 1975. It w a s , t h e r e f o r e , void a t t h e t i m e of t h e assignment from t h e Williamses t o Berry on February 4 , 1977. Appellant does n o t claim t h a t t h e judgment i n Cause No. 10443 i s i n v a l i d b u t merely s t a t e s i n h i s i s s u e s and statement of case t h a t Berry w a s n o t a p a r t y t o t h a t a c t i o n . This i s c e r t a i n l y n o t s u f f i c i e n t argument t o overturn t h e D i s t r i c t Court's f i n d i n g t h a t t h e W i l l i a m s e s ' c o n t r a c t was void. Respondent Mann i n her counterclaim t r i e d t o bring t h e Williamses i n t o t h i s lawsuit. However, t h e counterclaim w a s dismissed i n t h i s s u i t on motion by Berry. The evidence shows t h a t t h e separate l a w s u i t f i l e d by respondent a g a i n s t t h e W i l l i a m s e s , t h a t a p p e l l a n t now complains he w a s n o t a p a r t y t o , contains t h e same a l l e g a t i o n s t h a t were i n t h e counterclaim a g a i n s t t h e Williamses i n t h e i n s t a n t case and w e r e dismissed on a p p e l l a n t ' s motion. Independent of t h e judgment i n t h e C i v i l Action No. 10443, which found t h a t t h e option and l e a s e were void, t h e r e was s u b s t a n t i a l evidence presented before Judge Green i n t h e i n s t a n t case t o support t h e conclusion t h a t t h e optic-I w a s void. The uncontradicted testimony of t h e respon- d e n t i s t h a t t h e Williamses d i d n o t pay t h e f u l l $6000 consideration r e f e r r e d t o i n t h e option c o n t r a c t and t h a t t h e Williamses s t i l l owed respondent $2800 t h a t was t o have been paid on o r before March 1, 1975, b u t w a s never paid. Respondent a l s o t e s t i f i e d t h a t t h e Williamses l e f t t h e property on o r about August 15, 1973, and made no f u r t h e r payments on t h e l e a s e . She f u r t h e r t e s t i f i e d t h a t she received a l e t t e r along with t h e keys t o t h e property some- t i m e i n e a r l y September. Respondent operated t h e property a f t e r t h a t t i m e and was operating t h e property a t t h e t i m e she entered i n t o t h e c o n t r a c t with a p p e l l a n t . Appellant has f a i l e d i n h i s burden of proving t h a t t h e t r i a l c o u r t ' s finding t h a t t h e option c o n t r a c t was void a t t h e t i m e it was assigned t o Berry w a s i n e r r o r . The record contains s u b s t a n t i a l evidence t o support t h e finding both i n t h e t r i a l c o u r t ' s having taken j u d i c i a l n o t i c e of t h e judg- ment i n C i v i l Action No. 10443 and i n t h e uncontradicted testimony of respondent a s t o t h e f a i l u r e of consideration and d e f a u l t i n t h e payment i n t h e option and l e a s e which occurred p r i o r t o t h e assignment t o a p p e l l a n t . I n support of h i s p o s i t i o n a p p e l l a n t cites M i l l e r v. Meredith, H i l l and Whitfield (1967), 149 Mont. 125, 423 P.2d 595, as a u t h o r i t y t h a t t h e terms and conditions of a l e a s e a r e n o t t h e terms and conditions of an option. That case held t h a t a t e n a n t holding over a f t e r e x p i r a t i o n of lease w a s n o t e n t i t l e d t o e x e r c i s e h i s option t o purchase. Apply- i n g t h a t a u t h o r i t y to t h e f a c t s i n t h e i n s t a n t case, n e i t h e r W i l l i a m s e s nor t h e i r assignee, t h e a p p e l l a n t , would be en- t i t l e d t o e x e r c i s e t h e option because of t h e f a i l u r e of consideration of payment upon the option and because of t h e d e f a u l t i n t h e lease payment. W e f i n d no b a s i s t o r e l y upon t h i s case i n support of a p p e l l a n t ' s p o s i t i o n t h a t t h e lease w a s n o t i n d e f a u l t . Next a p p e l l a n t cites Ogg v. Herman (1924), 71 Mont. 10, 227 P. 467, and Connor v. Helvik (1937), 105 Mont. 437, 73 P.2d 541, a s a u t h o r i t y con.cerning merchantable t i t l e being given a p p e l l a n t by respondent a t t h e t i m e of t h e agreement entered i n t o between a p p e l l a n t and respondent. The f a c t s i n t h i s case do n o t support t h e a p p e l l a n t ' s p o s i t i o n on t h e d e l i v e r y of merchantable title. The f a c t s i n d i c a t e t h a t once t h e matter was brought t o respondent's a t t e n t i o n , she imme- d i a t e l y d i d everything t h a t was necessary t o c l e a r t h e t i t l e and p r e s e n t a good and merchantable t i t l e t o a p p e l l a n t , f r e e and c l e a r of a l l l i e n s and encumbrances. The t r i a l c o u r t so found i n Finding of F a c t No. 4 , and t h i s finding was not a s even raised/an i s s u e by a p p e l l a n t on appeal. For the foregoing reasons the judgment of the District Court is a£ firmed. We concur: