Case Title: TRIBBLE v REELY

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1976-12-13T00:00:00Z

Document:
No. 13032 I N THE SIJPREME C O U R T O F THE STATE O F M O N T A I 3 A 1976 L A R R Y N. TRIBBLE and LORETTA E. TRIBBLE, P l a i n t i f f s and Respondents, JOHN L . REELY , WITaLIAM E . S REELY , DELBERT C. F. ASHMORE, TRIBBLE RANCH CORPOPATION e t a l . , Defendants and Appellants. Appeal from: D i s t r i c t Court of t h e F i f t h J u d i c i a l D i s t r i c t , Hon. LeRoy L . McKinnon, Judge presiding. Counsel of Record: For Appellants : Datsopoulos & Macnonald, Missoula, Montana James B. Wheel-is argued, Missoul'q , Montana William E. G i l b e r t argued, Bozeman, Montana For Respondents : Morrow, Nash and Sedivy, Bozeman, Montana James H. 14orrow argued and Donald A. Nash appeared, Bozeman, Montana Submitted : September 9, 1976 Decided: DEC 13 im M r . Chief J u s t i c e James T. Harrison delivered t h e Opinion of t h e Court. This appeal a r i s e s o u t of an a c t i o n brought i n t h e d i s t r i c t c o u r t , f i f t h j u d i c i a l d i s t r i c t , J e f f e r s o n County, wherein p l a i n t i f f s Larry N. Tribble and Loretta E. Tribble alleged t h a t a lease executed t o them by defendants Katherine T r i b b l e and W i l l i a m Tribble, deceased, contained a r i g h t of f i r s t r e f u s a l t o purchase c e r t a i n property known a s t h e T r i b b l e farm. The a c t i o n w a s brought seeking d e c l a r a t o r y judgment t o determine t h e r e s p e c t i v e r i g h t s of t h e p a r t i e s i n view of t h e f a c t t h a t t h e r e had been executed a s a l e s agreement f o r t h e land i n question between defendants Tribble and defendants John and W i l l i a m Reely and t o compel defendants T r i b b l e t o e n t e r i n t o an agreement with p l a i n t i f f s t o sell t h e property on t h e same terms. The cause w a s t r i e d before t h e Hon. LeRoy McKinnon, s i t t i n g with- o u t a jury. Findings of f a c t , conclusions of law and judgment w e r e entered f o r p l a i n t i f f s . Defendants now appeal from t h a t judgment . The record r e v e a l s : O n April 6, 1971, defendants W i l l i a m and Katherine Tribble entered i n t o a lease agreement with t h e i r son and h i s wife, p l a i n t i f f s Larry and L o r e t t a Tribble. The p e r t i n e n t terms of t h a t l e a s e w e r e : "1. The Lessors are t h e owners and i n possession of t h e following mentioned property s i t u a t e i n J e f f e r s o n County, Montana, to-wit: "The property known a s t h e Tribble farm i n J e f f e r - son County, Montana, c o n s i s t i n g of approximately 1300 a c r e s of farm lands ( l e s s o r s r e s e r v e grazing lands) and hereby agree t o l e t t h e same t o t h e Lessees f o r t h e period of t h r e e y e a r s ending January 1, 1974. "7. It i s understood and agreed t h a t t h i s l e a s e i s made s u b j e c t t o s a l e by Lessors a t any time from d a t e hereof. It i s f u r t h e r understood, how- ever, t h a t i n t h e event of s a l e , t h e Lessees s h a l l have t h e f i r s t r e f u s a l under t e r m s s i m i l a r t o t h a t o f f e r e d any t h i r d p a r t y , and i n t h e event of such s a l e , then t h i s l e a s e s h a l l terminate upon t h e next January 1 succeeding such sale. "OPTION TO RENEW "1. I t is understood and agreed t h a t t h e Lessees s h a l l have t h e f i r s t option t o renew t h i s l e a s e under terms and conditions t h e same as above agreed f o r an a d d i t i o n a l t h r e e (3) years commencing Jan- uary 1, 1974, and terminating January 1, 1977. It is f u r t h e r agreed, however, t h a t i f t h e Lessors make a sale of t h e property o r any p o r t i o n t h e r e o f , then t h i s l e a s e and its option t o renew is s u b j e c t t o such sale a s above agreed with r i g h t of Lessees t o m e e t any o f f e r of any t h i r d p a r t y f o r t e n ( 1 0 ) days a f t e r n o t i c e t o Lessees i n w r i t i n g of inten- t i o n o r o f f e r t o sell t o a t h i r d p a r t y . "2. Time is expressly made of t h e essence of t h i s l e a s e . "3. This agreement s h a l l be binding upon t h e h e i r s , executors, administrators and a s s i g n s of t h e res- p e c t i v e p a r t i e s , with t h i s r e s e r v a t i o n : "A. That i f both of t h e Lessors should not survive t h e terms of t h i s lease, then t h i s l e a s e s h a l l terminate on t h e next anniversary thereof (Jan. 1) * * *." Subsequent t o t h e signing of t h e l e a s e , W i l l i a m T r i b b l e began t o consider t h e s a l e of h i s farm. Negotiations were c a r r i e d on with s e v e r a l p o t e n t i a l purchasers, a l l with p l a i n t i f f Larry T r i b b l e ' s knowledge. Ultimately i n t h e e a r l y p a r t of 1973, nego- t i a t i o n s began with defendants Reely b r o t h e r s , again with p l a i n t i f f Larry T r i b b l e ' s knowledge. I n f a c t an o f f e r made by t h e p l a i n t i f f s t o purchase t h e farm, dated April 13, 1973, was turned down by defendants Katherine and W i l l i a m Tribble. O n April 2 0 , 1973, defendants Tribble entered i n t o a w r i t t e n sale agreement with de- fendants Reely t o sell t h e e n t i r e farm c o n s i s t i n g of approximately 7,800 a c r e s a t a p r i c e of $410,000. A week l a t e r , a t t h e i n s i s t e n c e of William Tribble an addendum was made t o t h e s a l e s agreement t o include t h e lease agreement of April 6 , 1971 between defendants Tribble and p l a i n t i f f s Larry and L o r e t t a Tribble. N o complete copy of t h e s a l e s agreement was made a v a i l a b l e to plaintiffs until January 18, 1974. Thereafter on January 23, 1974, plaintiffs notified defendants Reely and Katherine Tribble of their intention to exercise their right of first refusal. De- fendant John Reely telephoned counsel for plaintiffs stating he had no duty towards plaintiffs. No written response was received from any of the defendants. The action for declaratory judg- ment and specific performance followed being filed on April 4, 1974. The judgment filed on March 11, 1975, declared that plaintiffs had a valid lease with the right of first refusal to buy the entire Tribble farm consisting of approximately 7,800 acres; that plaintiffs had exercised that right, and enjoined the defendants Reely from asserting any rights to the property excepting a right to an accounting for monies paid. In addition, defendants Tribble were ordered to enter into an agreement for sale with plaintiffs on the same terms and conditions as those that had been agreed upon with the defendants Reely. On May 27, 1975, a supplementary judgment based on the proceedings for accounting was filed ordering plaintiffs to reimburse defendants Reely in the amount of $34,143.01 for monies expended. Defendants appeal both judgments. Several issues are presented for review, but the follow- ing issues are controlling in the disposition of this appeal: 1) Whether the right of first refusal is sufficiently definite as to permit specific performance. 2) Whether plaintiffs Tribble received the requisite notice of the planned sale to defendants Reely. 3) Whether under the terms of the lease the rights of the plaintiffs Tribble were extinguished by the death of William Tribble. 4) Whether the judgments filed March 11, 1975 and May 27, 1975, a r e void f o r want of c e r t a i n t y . The d e f i n i t i o n of t h e r i g h t of f i r s t r e f u s a l o r preemptive r i g h t has been given by t h i s Court on s e v e r a l occasions beginning with t h e c a s e of Weintz v. Bumgarner, 150 Mont. 306, 313, 434 P.2d 712, wherein w e noted t h e following explanation given i n Volume V I , American Law of Property, S26.64, p. 507: " ' * * * A pre-emption does n o t g i v e t o t h e pre-emptioner t h e power t o compel an unwill- ing owner t o s e l l ; it merely r e q u i r e s t h e owner, when and i f he decides t o sell, t o o f f e r t h e property f i r s t t o t h e person e n t i t l e d t o t h e pre-emption, a t t h e s t i p u l a t e d p r i c e . Upon receiving such an o f f e r , t h e pre-emptioner may e l e c t whether he w i l l buy. I f he e l e c t s not t o buy, then t h e owner of t h e property may sell t o anyone.'" See a l s o Phalen v. R i l l e y , 159 Mont. 239, 496 P.2d 295. A s t o whether t h e r i g h t of f i r s t r e f u s a l i s s u f f i c i e n t l y d e f i n i t e i n t h e agreement i n question s o a s t o permit s p e c i f i c performance, w e f i r s t note t h a t property which i s t h e s u b j e c t of such a preemptive r i g h t must be adequately described t o be en- forceable. Klein v. Brodie, 167 Mont. 47, 534 P.2d 1251, 32 St.Rep. 488. Here t h e l e a s e agreement s t a t e s t h a t t h e lease is of " * * * t h e Tribble farm i n J e f f e r s o n County, Montana, con- s i s t i n g of approximately 1300 a c r e s of farm lands * * *." Y e t t h e record d i s c l o s e s t h a t t h e Tribble farm a c t u a l l y contains approximately 7,800 a c r e s . W e thus f i n d t h e amount of land intended t o be included uncertain because of an agreement ambiguous on its face. A s a means of resolving t h e problem before us w e note t h e s e fundamental r u l e s of c o n t r a c t . A c o n t r a c t must be con- s t r u e d s o a s t o c a r r y o u t t h e i n t e n t i o n s of t h e p a r t i e s a t t h e time of contracting i f such i n t e n t i o n s are a s c e r t a i n a b l e . Sec- t i o n 13-702, R.C.M. 1947. I f such a c o n t r a c t is ambiguous on i t s f a c e a s t o t h e i n t e n t i o n s of t h e c o n t r a c t i n g p a r t i e s , par01 evidence can be used t o a s c e r t a i n those i n t e n t i o n s . McNussen v. Graybeal, 146 Mont. 173, 405 P.2d 447; Kielmann v. Mogan, 156 Mont. 230, 478-P.2d 275; Lehrkind v. McDonnell, 51 Mont. 343, 153 P. 1012. And i n i n t e r p r e t i n g such par01 evidence w e note t h e s e r u l e s : The i n t e n t i o n of t h e p a r t i e s t o a c o n t r a c t is t o be a s c e r t a i n e d from t h e language thereof viewed i n i t s e n t i r e t y and not a s it is presented i n p a r t i c u l a r sentences o r paragraphs. Section 13-707, R.C.M. 1947. Also a c o n t r a c t should r e c e i v e t h a t i n t e r p r e t a t i o n which makes it reasonable as long a s t h e i n t e n t i o n of t h e c o n t r a c t i n g p a r t i e s is not v i o l a t e d and t h e c o n t r a c t is lawful, o p e r a t i v e , d e f i n i t e , and capable of performance. Section 13-709, R.C.M. 1947. Turning t o t h e s p e c i f i c problem of determining t h e amount of land intended by t h e c o n t r a c t i n g p a r t i e s t o be included i n a r i g h t of s p e c i f i c performance, t h i s Court i n i n t e r p r e t i n g a pre- emptive r i g h t i n Weintz v. Bumgarner, 150 Mont. 306, 314, 434 P.2d 712, s a i d : " * * * Applying t h e above r u l e s of c o n t r a c t con- s t r u c t i o n it seems apparent t h a t t h i s c o u r t should favor a construction t h a t g i v e s substance and meaning t o t h e provision on purchase r a t h e r than adopt a c o n s t r u c t i o n t h a t renders it meaningless and i l l u s o r y , provided such can be done without v i o l a t i n g t h e i n t e n t i o n of t h e p a r t i e s . * * *" I n view of t h e foregoing r u l e s and a u t h o r i t y w e hold t h a t t h e only reasonable i n t e r p r e t a t i o n t o be placed on t h e agreement between t h e e l d e r T r i b b l e s and Larry and Loretta T r i b b l e is t h a t t h e l e a s e w a s t o include t h e whole Tribble farm. To hold otherwise would render t h e r i g h t of f i r s t r e f u s a l "meaningless and i l l u s o r y " because of various f a c t s apparent i n t h e record. F i r s t no new or a d d i t i o n a l land d e s c r i p t i o n is i n t h e provisions i n t h e agree- ment on t h e r i g h t t o f i r s t r e f u s a l . Rather t h e r i g h t of f i r s t r e f u s a l r e f e r s t o and is s o l e l y dependent upon t h e i n t e r p r e t a t i o n given t o t h e d e s c r i p t i o n of t h e land contained i n t h e f i r s t paragraph of t h e agreement. Secondly, t h e record r e v e a l s t h e T r i b b l e farm t o be one v i a b l e economic u n i t with t h e 1,300 a c r e s of farmland interspersed with grazing land throughout the farm so as to make impractical any partition or farming of that land, separate and apart from the rest of the Tribble farm. Thus the only means of giving effect to the whole agreement is to con- strue the lease of the Tribble farm as including the entire 7,800 acres with the accompanying right of first refusal in that land belonging to the plaintiffs-lessees, and we so hold. The bracketed reservation of grazing land is also ambig- uous but from the evidence it appears that plaintiffs used the grazing land, not exclusively, but it was at all times considered a part of the leased lands. We next consider the issue of notice. The agreement requires written notice by defendants-lessors to plaintiffs-lessees of any intention or offer to sell the property to a third party. The plaintiffs-lessees then have 10 days after said notice to meet the offer of any third party. Admitting that the written sales agreement with defendants Reely dated April 20, 1973, was not made available in its entirety to plaintiffs until January 18, 1974, defendants on appeal cite several defenses that are intertwined with the written notice re- quirement. They first allege plaintiffs had actual notice of the sale and that was equivalent to written notice. In support of this contention they cite the fact that plaintiffs knew the defendants Reely were in the process of buying the farm, that plaintiffs showed the farm to the defendants Reely, knowing them to be pro- spective buyers and that plaintiffs even went as far as to try to negotiate a new lease with the defendants Reely. We find no merit in this contention for the reason that there is a difference between merely knowing of a sale and know- ing all the terms of that sale. Such a distinction is crucial here because without knowing t h e t e r m s of t h e s a l e , t h e p l a i n - t i f f s could not m e e t t h e o f f e r of defendants Reely and t h u s could not properly e x e r c i s e t h e i r r i g h t of f i r s t r e f u s a l . A s an a d d i t i o n a l defense t o t h e n o t i c e requirement, de- fendants claim t h e p l a i n t i f f s acquiesced i n t h e s a l e and a r e t h e r e f o r e now estopped from r e l y i n g on t h e n o t i c e provision i n an attempt t o e x e r c i s e t h e r i g h t of f i r s t r e f u s a l . However, t h e record r e v e a l s no acquiescence on t h e p a r t of p l a i n t i f f s but continued e f f o r t s t o e x e r c i s e t h e i r r i g h t s . P r i o r t o t h e s a l e t o defendants Reely, t h e a t t o r n e y f o r t h e p l a i n t i f f s informed t h e a t t o r n e y f o r defendants T r i b b l e t h a t p l a i n t i f f s expected t h e t e r m s of t h e l e a s e agreement t o be honored. O n September 2 1 , 1973, t h e p l a i n t i f f s ' a t t o r n e y wrote t o t h e defendants and demanded t h e r i g h t of f i r s t r e f u s a l , a copy of any o f f e r t o sell and w r i t t e n notice. Y e t t h e e n t i r e sales agreement with defend- a n t s Reely was not furnished t o p l a i n t i f f s u n t i l January 18, 1974, almost nine months a f t e r t h e s a l e had been completed. I t is t h e r u l e i n Montana t h a t estoppel i s n o t favored and w i l l only be sustained upon c l e a r and convincing evidence. F i e r s v. Jacobson, 123 Mont. 242, 2 1 1 P.2d 968. Such c l e a r and convincing evidence i s lacking i n t h e i n s t a n t case. A s t h e i r l a s t e q u i t a b l e defense t o p l a i n t i f f s ' preemptive r i g h t , defendants a s s e r t t h e d o c t r i n e of laches. W e hold t h e d o c t r i n e of laches does not apply t o t h e f a c t s of t h i s c a s e f o r two b a s i c reasons. F i r s t , and most obvious, p l a i n t i f f s could n o t e x e r c i s e t h e i r r i g h t of f i r s t r e f u s a l u n t i l they had access t o t h e terms of t h e s a l e . Such n o t i c e of t e r m s w a s not made a v a i l a b l e u n t i l January 18, 1974. Thereafter on January 23, 1974, p l a i n t i f f s gave n o t i c e t o defendants of t h e i r i n t e n t i o n t o e x e r c i s e t h e i r r i g h t of f i r s t r e f u s a l . Thus once proper n o t i c e w a s given t h e r e was no delay i n a s s e r t i n g t h e i r r i g h t s . Secondly, t h e record as h e r e t o f o r e discussed makes it obvious t h a t defendants knew p l a i n t i f f s were a s s e r t i n g t h e i r r i g h t t o n o t i c e and f i r s t r e f u s a l even before t h e s a l e s con- t r a c t was signed. See Montana Power Co. v. Park E l e c t r i c Co-op., 1 4 0 Mont. 293, 371 P.2d 1. Defendants next contend t h a t any r i g h t s under t h e l e a s e terminated on January 1, 1974, because of t h e d e a t h of l e s s o r W i l l i a m Tribble i n t h e preceding year. Defendants base t h i s con- t e n t i o n on t h a t p a r t of t h e l e a s e which states: "A. That i f both of t h e l e s s o r s should not survive t h e terms of t h i s l e a s e , then t h i s l e a s e s h a l l terminate on t h e next anniversary thereof (Jan. 1) .* * *" Without becoming entangled i n an i n t e r p r e t a t i o n of t h e word "both" s i n c e defendant Katherine T r i b b l e has survived her husband, w e merely note t h i s C o u r t ' s determination of when a r i g h t of f i r s t r e f u s a l accrues a s s t a t e d i n Weintz v. Bumgarner, 150 Mont. 306, 313, 434 P.2d 712: "Whatever language i s used t o d e s c r i b e t h e pro- v i s i o n i n question, it is c l e a r t h a t t h e r i g h t of t h e lessee t o purchase accrues a t such t i m e a s t h e l e s s o r forms a s p e c i f i c i n t e n t i o n t o sell t h e property f o r a d e f i n i t e p r i c e on d e f i n i t e t e r m s . A t such t i m e a s t h e owner forms such s p e c i f i c i n t e n t i o n t o s e l l , t h e provision i n question r i p e n s i n t o a present enforceable con- t r a c t r i g h t of t h e l e s s e e . " H e r e t h e s a l e s agreement between defendants Reely and defendants Tribble was dated April 20, 1973. Thus t h e p l a i n t i f f s ' r i g h t of f i r s t r e f u s a l ripened p r i o r t o January 1, 1974, and t h e r e f o r e could not be s u b j e c t t o termination simply because of t h e d e a t h of W i l l i a m Tribble. Defendants' f i n a l contention i s t h a t t h e judgmentsof March 1 1 and May 27, 1975, a r e void f o r want of c e r t a i n t y . De- fendants having f a i l e d t o demonstrate why they t h i n k t h e judg- ments a r e uncertain, w e simply hold t h e judgments as c l e a r l y advising t h e p a r t i e s of t h e i r r e s p e c t i v e r i g h t s and thus not void f o r want of c e r t a i n t y . Believing s u b s t a n t i a l evidence e x i s t s t o support t h e f i n d i n g s of t h e d i s t r i c t c o u r t , w e hereby a f f i r m t h e judgment of t h a t c o u r t . J u s t i c e s Hon. Robert syk/ed, D i s t r i c t Judge, s i t t i n g i n pla'd of M r . J u s t i c e Gene B. Daly.