Case Title: HARBECK v ORR

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1981-04-30T00:00:00Z

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N o . 14884 I N T H E SUPREME COURT O F T H E STATE O F MONTANA 1381 H E L E N HARBECK , P l a i n t i f f and Respondent, LOUISE T. ORR, MYRON C . ORR, JUANITA L. ORR and T H E FIRST MONTANA TITLE INSURANCE C O M P A N Y , Defendants and Appellants. Appeal from: D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , I n and f o r t h e County of Missoula, The Eon. Jack L. Green, Judge presiding. Counsel of Record: For Appellant; Norman C. Robb argued, Missoula, Montana J a m e s , Sogard & ~ j l c ~ a f f e r t ~ , Great F a l l s , !lantana Lee A . Jordan argued, Missoula, Montana For Respondent: Milodragovich, Dale & Dye, Missoula, Montana Michael J. Milodragovich argued, Yissoula, Montana F i l e d : Submitted2 February 19, 1981 Decided: April 30, 1981 M r . J u s t i c e Fred Weber delivered t h e Opinion of t h e Court. Defendants Louise O r r (mother) and Myron and J u a n i t a O r r (son and daughter-in-law) appeal from the f i n a l order of t h e Fourth J u d i c i a l D i s t r i c t , granting p a r t i a l summary judgment t o the p l a i n t i f f , Helen Harbeck (Harbeck). Based upon the p a r t i e s ' agreed statement of f a c t s , summary judgment was entered decreeing t h a t the l i f e estate claimed by t h e mother, through her n o t i c e of l i f e e s t a t e a s recorded i n Missoula County, was void and of no f o r c e o r e f f e c t . The c o u r t reserved various o t h e r matters f o r t r i a l t o the c o u r t . Defendant F i r s t Montana T i t l e Insurance Company does n o t j o i n i n t h i s appeal. I s s u e s discussed i n t h i s opinion a r e a s follows: 1. Did the D i s t r i c t Court err i n concluding t h a t the mother does n o t have a l i f e e s t a t e i n t e r e s t i n the property? 2. A r e the mother, son and daughter-in-law barred by estoppel from claiming a l i f e i n t e r e s t i n favor of t h e mother? The D i s t r i c t Court concluded t h a t t h e mother could n o t have a l i f e estate because she could n o t have reserved a l i f e e s t a t e i n the 1974 c o n t r a c t f o r deed between h e r s e l f and her son and daughter-in-law. The c o u r t found t h a t the mother d i d n o t then hold l e g a l t i t l e t o the property, thus precluding any r e s e r v a t i o n i n favor of h e r s e l f . W e hold t h a t the D i s t r i c t Court e r r e d i n adopting such a narrow conclusion based upon the f a c t s of t h i s case. The following i s a summary of t h e complex f a c t s i n order of date: 1. The mother owned r e a l property i n Missoula which included a duplex apartment house and space f o r parking mobile homes. I n 1971, t h e mother entered i n t o an o r a l agreement with her son and daughter-in-law t o s e l l t h e property t o the s a i d son and daughter-in-law. The p a r t i e s o r a l l y agreed t h a t t h e mother would remain l i v i n g i n one of t h e apartments " f o r f r e e " f o r the r e s t of her l i f e . 2. The son and daughter-in-law attempted t o o b t a i n financing t o accomplish t h i s s a l e , b u t w e r e unable t o do so because of c r e d i t problems. For c r e d i t purposes, a t the r e q u e s t of the son and daughter-in-law, t h e mother deeded t h e property by warranty deed t o t h e daughter-in-law's parents. A mortgage loan then was granted by a bank t o t h e daughter-in-law's parents, the record t i t l e holders. The son and daughter-in-law received the loan proceeds. 3 . Six months l a t e r i n 1971, t h e mother a s s e l l e r and t h e son and daughter-in-law a s buyers reduced the o r a l agreement t o a handwritten c o n t r a c t of s a l e . The c o n t r a c t included a provision s t a t i n g t h a t t h e mother had t h e r i g h t t o l i v e i n t h e duplex " r e n t f r e e " f o r a s long a s she d e s i r e d . The handwritten c o n t r a c t was executed by the p a r t i e s even though t i t l e t o t h e property a t t h a t time was held by t h e daughter-in-law's parents. 4. The son and daughter-in-law were unable t o keep up t h e payments required t o be made t o t h e mother under t h e terms of the handwritten c o n t r a c t . I n 1974, the mother f i l e d s u i t sounding i n fraud a g a i n s t t h e son, daughter-in- law, and t h e daughter-in-law's parents. S u i t was s e t t l e d when t h e daughter-in-law' s parents quitclaimed t i t l e t o t h e property t o the son and daughter-in-law, s u b j e c t t o the e x i s t i n g mortgage. The son and daughter-in-law thereupon entered i n t o a formal, w r i t t e n c o n t r a c t f o r deed with t h e mother. With regard t o the l i f e e s t a t e , the c o n t r a c t f o r deed contained t h e following provisions: "A. I t i s agreed the [mother] now l i v e s i n the north u n i t of the duplex building located upon t h e property and t h a t she i s e n t i t l e d t o remain i n possession t h e r e o f , r e n t f r e e , f o r t h e rest of her l i f e ; provided, however, it i s mutually agreed by the p a r t i e s t h a t i f the [mother] should change her place of residence p r i o r t o her death then her s a i d r i g h t t o the use and possession of t h e north u n i t of the duplex building s h a l l thereupon terminate and t h e [son and daughter-in-law] s h a l l then be e n t i t l e d t o the use, possession and enjoyment of s a i d north u n i t . . . "VI. . . . "B. The [mother] agrees t h a t a s long a s she l i v e s i n the north u n i t of the duplex building located upon s a i d r e a l property she w i l l be responsible f o r and t h a t she w i l l pay and do t h e following: (1) she w i l l pay f o r a l l gas, l i g h t s , e l e c t r i c i t y , water, heat, phone, t e l e - v i s i o n , u t i l i t i e s used, consumed o r charged upon o r a g a i n s t s a i d north u n i t ; ( 2 ) she w i l l pay f o r any r e p a i r s , maintenance, upkeep and p a i n t i n g of the i n s i d e of the s a i d north u n i t ; ( 3 ) she w i l l pay a l l taxes t h a t may be l e v i e d , assessed o r imposed upon or a g a i n s t her personal property located i n s i d e the s a i d north u n i t of t h e duplex o r which may be located elsewhere upon s a i d r e a l property; ( 4 ) it i s her o b l i g a t i o n t o secure and pay f o r such insurance a s she may d e s i r e t o c a r r y upon her personal property t h a t she may have o r l o c a t e upon s a i d r e a l property o r i n the north u n i t of the duplex building." The c o n t r a c t f o r deed was executed by t h e mother a s s e l l e r and by t h e son and daugher-in-law a s buyers. A t t h e t i m e of the c o n t r a c t ' s execution i n 1974, t h e record t i t l e t o the property was held by the son and daughter-in-law. Notice of t h e c o n t r a c t f o r deed was n o t placed on record. 5. The son and daughter-in-law l a t e r p u t the property up f o r s a l e . Harbeck, through her r e a l e s t a t e agent and daughter, S a l l y Lucas (Lucas), made an o f f e r on t h e property. After extensive n e g o t i a t i o n s an agreement was executed between t h e son and daughter-in-law a s sellers and Harbeck a s buyer f o r s a l e of t h e property. The agreement contained a "rent-back" provision, under which t h e son and daughter- in-law agreed t o pay a monthly r e n t t o Harbeck f o r the apartment occupied by t h e mother f o r a t e r m of f i v e years, with an option t o extend f o r an a d d i t i o n a l f i v e years. During the negotiations f o r the s a l e of the property, Lucas received t h e f u l l d e t a i l s of t h e mother's l i f e e s t a t e both by examination of the w r i t t e n c o n t r a c t and by meeting with and t a l k i n g t o t h e mother and son and daughter-in-law. The agreed statement of f a c t s includes t h e following: "11. Myron C. and J u a n i t a L. O r r informed S a l l y Lucas of the r i g h t of Louise T. O r r t o remain i n possession of and l i v e r e n t f r e e f o r t h e r e s t of her l i f e i n t h e north u n i t of t h e duplex building and they delivered t h e i r copy of the c o n t r a c t f o r deed of March 2 2 , 1974, containing t h e provision quoted above i n Paragraph 17 above and S a l l y Lucas -- read the same a t l e a s t twice before she made an o f f e r -- --- on behalf of Helen Harbeck t o purchase t h e - s u b j e c t property. S a l l y Lucas a l s o talked t o Louise T. O r r about the property and Louise T. O r r informed S a l l y Lucas of her s a i d r i g h t t o l i v e r e n t f r e e f o r t h e rest of her l i f e . " (Emphasis added.) Subsequently, t h e mother caused t o be recorded i n Missoula County a n o t i c e of l i f e e s t a t e which s e t f o r t h her claim of i n t e r e s t . The p r e s e n t a c t i o n was brought by Harbeck a f t e r the son and daughter-in-law had f a i l e d t o make t h e r e n t a l payments required under t h e "rent-back" provisions of t h e i r agreement with Harbeck. The p a r t i e s s t i p u l a t e d a s t o the agreed f a c t s . Harbeck moved f o r summary judgment i n her favor. The D i s t r i c t Court entered p a r t i a l summary judgment f o r Harbeck. The t r i a l c o u r t a l s o had t h e a u t h o r i t y t o render summary judgment f o r t h e opposing p a r t i e s . I n Hereford v. Hereford (1979) , Mont. , 598 P.2d 600, 602, 36 St.Rep. 1454, 1.456, t h i s Court s t a t e d : "The invocation of t h e power of a c o u r t t o render summary judgment i n favor of t h e moving p a r t y gives t h e c o u r t power t o render summary judgment f o r h i s adversary provided t h e case warrants t h a t r e s u l t . However, t h e c o u r t must be very c a r e f u l t h a t t h e o r i g i n a l movant had a f u l l and f a i r opportunity t o meet the proposition, t h a t t h e r e i s no genuine i s s u e of m a t e r i a l f a c t and the o t h e r p a r t y i s e n t i t l e d t o judgment a s a matter of law." W e f i n d t h a t p l a i n t i f f Harbeck d i d have a f u l l and f a i r opportunity t o m e e t t h e s t a t e d proposition. Harbeck' s motion was extensively b r i e f e d by a l l p a r t i e s . I n t h e b r i e f of defendants, t h e son and daughter-in-law, t h e c o u r t was s p e c i f i c a l l y asked t o render summary judgment f o r t h e defendants, based upon t h e grounds discussed herein. Harbeck had an opportunity t o r e p l y t o defendants' b r i e f s and the arguments t h e r e i n . I n a d d i t i o n , a l l f a c t s m a t e r i a l t o the a c t i o n w e r e s t i p u l a t e d t o by Harbeck i n the agreed statement of f a c t s upon which t h e D i s t r i c t Court r e l i e d . A l l requirements of Hereford a r e met here. A c o n t r a c t must r e c e i v e such an i n t e r p r e t a t i o n a s w i l l make it o p e r a t i v e and capable of being c a r r i e d i n t o e f f e c t , i f it 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 , under former s e c t i o n 13-709, R.C.M., 1947, now s e c t i o n 28-3-201, MCA. A c o n t r a c t must be i n t e r p r e t e d so a s t o g i v e e f f e c t t o t h e mutual i n t e n t i o n of t h e p a r t i e s a s it e x i s t e d a t t h e t i m e of contracting. Former s e c t i o n 13-702, R.C.M., 1947, now s e c t i o n 28-3-301, MCA. The w r i t i n g i t s e l f governs i n t e n t i o n . Former s e c t i o n 13-705, R.C.M., 1947, now s e c t i o n 28-3-303, MCA. Where the c o n t r a c t is c l e a r and e x p l i c i t i n i t s t e r m s , w e must look t o i t s language alone t o f i n d the i n t e n t i o n of t h e p a r t i e s . Former s e c t i o n 13-704, R.C.M., 1947, now s e c t i o n 28-3-401, MCA; Batey Land & Live- stock Co. v. Nixon (1977), 172 Mont. 99, 106, 560 P.2d 1334, 1337. Frank v. Butte & Boulder Mining & Lumber Co. (1913)r 48 Mont. 83, 89-90, 135 P. 904, 905. W e hold t h a t t h e words " e n t i t l e d t o remain i n possession thereof, r e n t - f r e e , f o r t h e rest of her l i f e " a r e c l e a r and unambiguous. P l a i n l y , they d i s c l o s e t h e i n t e n t i o n t o g i v e t o t h e mother a l i f e e s t a t e i n t h e property. The balance of t h e 1974 c o n t r a c t provisions c l e a r l y show an i n t e n t i o n t o c r e a t e such a l i f e e s t a t e by providing a s t o a l l of the d e t a i l s of such e s t a t e , including the matter of r e p a i r s , replacement, taxation, u t i l i t i e s and o t h e r provisions. The c o n t r a c t u a l o b l i g a t i o n t o g r a n t a l i f e e s t a t e t o t h e mother a r e c l e a r l y expressed i n the c o n t r a c t . See annotation, 4 5 A.L.R. 2d 699. Harbeck argues t h a t t h e c o n t r a c t provision is void ,'c c/ according f o former s e c t i o n 13-4435, R.C.M., 1947, now s e c t i o n 28-2-603, MCA, because performance i s wholly impossible. Harbeck claims t h a t it i s impossible f o r t h e reason t h a t t h e mother cannot reserve a l i f e e s t a t e t o h e r s e l f when t h e t i t l e is a c t u a l l y already held by t h e son and daughter-in- law. The 1974 c o n t r a c t answers t h i s argument. I t c l e a r l y i n d i c a t e s t h e agreed i n t e n t i o n on t h e p a r t of the t i t l e holders, t h e son and daughter-in-law, t h a t t h e mother be e n t i t l e d t o remain i n possession of t h e property, r e n t - f r e e f o r t h e r e s t of her l i f e . A r e s e r v a t i o n need not be implied on t h e p a r t of t h e mother. This Court properly may enforce t h e c o n t r a c t provisions which so c l e a r l y s e t f o r t h t h e i n t e n t i o n of t h e p a r t i e s . Pursuant t o t h e provisions of t h e 1974 c o n t r a c t , pay- ment of the e n t i r e c o n t r a c t balance was made by t h e son and daughter-in-law t o t h e mother, i n exchange f o r which t h e mother d e l i v e r e d a warranty deed. Such deed does n o t contain a s p e c i f i c r e s e r v a t i o n of l i f e e s t a t e . The c o n t r a c t f o r deed between t h e mother and son and daughter-in-law and t h e l i f e e s t a t e contracted f o r t h e r e i n , a r e e f f e c t i v e and enforceable a s a g a i n s t t h e p a r t i e s and a l s o a g a i n s t subsequent purchasers who have n o t i c e of t h e c o n t r a c t . Former s e c t i o n 73-205, R.C.M., 1947, now s e c t i o n 70-21-102, MCA. Harbeck argues t h a t she had no n o t i c e of t h e l i f e e s t a t e . Lucas, the duly authorized agent f o r Harbeck, a t r a i n e d r e a l e s t a t e agent, acted f o r her through- o u t the transaction. A s previously described, Lucas read t h e c o n t r a c t twice and a l s o discussed the existence of t h e l i f e e s t a t e with t h e mother and with t h e son and daughter- in-law. The r e s u l t i s t h a t Harbeck, through her agent, had a c t u a l n o t i c e of the c o n t r a c t and t h e l i f e e s t a t e granted t h e r e i n . Former s e c t i o n 19-105, R.C.M., 1947, now s e c t i o n 1-1-217, MCA. Harbeck argues t h a t , although she may have seen and read t h e c o n t r a c t , she misunderstood t h e meaning of the l i f e e s t a t e provisions and was misadvised a s t o t h e e f f e c t . Apparently Harbeck b e l i e v e s such a misapprehension shows a lack of knowledge o r notice. The c o n t r a c t i s c l e a r , e x p l i c i t and unambiguous. Any misunderstanding on the p a r t of Harbeck a s t o l e g a l e f f e c t cannot a s s i s t her. Quirk v. Rich (1910), 40 Mont. 552, 565, 107 P. 821, 826. Harbeck argues t h a t t h e mother and son and daughter-in- law should be estopped from a s s e r t i n g t h e l i f e e s t a t e , because they acted a t a l l t i m e s a s i f t h e mother was a tenant, prompting Harbeck t o r e l y thereon t o her detriment. Harbeck c i t e s t h e rent-back provision i n t h e c o n t r a c t between Harbeck and the son and daughter-in-law, and a l s o the mother's n o t being responsible f o r taxes, u t i l i t i e s and maintenance expenses. Harbeck argues t h a t such a c t i o n s a r e more i n keeping with a tenancy r a t h e r than with a l i f e e s t a t e . Whether o r n o t t h e d o c t r i n e of e q u i t a b l e estoppel w i l l apply t o bar the mother and son and daughter-in-law from a s s e r t i n g t h e mother's claim t o a l i f e e s t a t e i s dependent upon t h e p a r t i c u l a r f a c t s of the case. Lindblom v. Employers' L i a b i l i t y Assur. Corporation (1930), 88 Mont. 488, 494' 295 P. 1007, 1009. The general elements which must be e s t a b l i s h e d i n order t o invoke e q u i t a b l e estoppel have been o f t e n s t a t e d by t h i s Court. One of the elements i s lack of knowledge and lack of a r e a d i l y a v a i l a b l e means of knowledge a s t o t h e t r u e f a c t s on the p a r t of t h e person claiming estoppel. Matter of Shaw (1980), - Mont. , 615 P.2d 910, 914, 37 St.Rep. 1480, 1484; I n R e Marriage of Adams (1979), - Mont. - , 604 P.2d 332, 334, 36 St.Rep. 2374, 2377. Ig- noring t h e o t h e r elements, it is c l e a r t h a t t h i s required element i s n o t p r e s e n t under the f a c t s . The 1974 c o n t r a c t was read and studied by Lucas, t h e authorized agent f o r Harbeck. The c o n t r a c t language i s c l e a r and unambiguous a s t o t h e mother's l i f e e s t a t e . The c o n t r a c t s p e c i f i c a l l y provides t h a t t h e mother i s responsible f o r a l l u t i l i t y and maintenance expenses incurred because of her use of t h e north u n i t of the duplex. P l a i n l y , Harbeck has f a i l e d i n proving an element e s s e n t i a l t o the a p p l i c a t i o n of t h e d o c t r i n e of e q u i t a b l e estoppel. W e r e v e r s e t h e order of the D i s t r i c t Court granting p a r t i a l summary judgment t o Harbeck. W e hold t h a t summary judgment s h a l l be granted t o t h e mother and son and daughter-in-law. W e remand the case t o the D i s t r i c t Court f o r appropriate a c t i o n t o accomplish t h e following: 1. Execution and d e l i v e r y of a deed from the son and daughter-in-law t o t h e mother granting a l i f e e s t a t e a s required under t h e 1974 c o n t r a c t . 2 . Reformation of the deed from the son and daughter- in-law to Harbeck in order to provide that such deed is subject to the life estate from the mother to the son and daughter-in-law. We concur: