Title: J Bar H, Inc. v. Martin

State: wyoming

Issuer: Wyoming Supreme Court

Document:

J Bar H, Inc. v. Martin1994 WY 45872 P.2d 1174Case Number: 93-177Decided: 04/22/1994Supreme Court of Wyoming
J 
BAR H, INC. a Wyoming corporation,

Appellant 
(Plaintiff),

 

v.

 

Merrill 
J. MARTIN, an individual; Carol B. Martin, an individual; and The Martin Family 
Limited Partnership, a Wyoming Limited Partnership,

Appellees 
(Defendants).

 

Appeal 
from the District Court, Teton County,

Elizabeth 
A. Kail, J.

 

Representing 
Appellant:

David 
K. Larson and Curt A. Haws of Mullikin, Larson & Swift, 
Jackson.

Representing 
Appellees:

Timothy 
J. Bommer, Jackson.

 

Before 
MACY, C.J., and THOMAS, CARDINE, GOLDEN and TAYLOR, 
JJ.

GOLDEN, 
Justice.

[¶1]      This appeal 
arises from an unsuccessful exercise of an option to purchase property in Teton 
County, Wyoming. Appellant instituted an action seeking a declaratory judgment, 
specific performance and injunctive relief. The district court granted summary 
judgment to appellees because appellant failed to comply strictly with the terms 
of the contract. The contract required payment in "U.S. Currency" and at closing 
appellant presented a check instead of cash for payment. At the closing, 
appellees had refused to convey without specifying any reason. Wyoming precedent 
requires a specific refusal on this issue at the time of closing. Appellees' 
general refusal does not comply with case law. Consequently, we reverse and 
remand.

[¶2]      Appellant 
presents this statement of the issues:

1. 
Whether the Trial Court erred in finding that Appellant was required to tender 
cash to satisfy the purchase option provision of the Modified and Assigned Lease 
Agreement where the undisputed testimony established that Appellees failed to 
object to the form of payment at the time the purchase price was 
tendered.

2. 
Whether the Trial Court erred in finding that Appellant was required to tender 
cash to satisfy the purchase option provision of the Modified and Assigned Lease 
Agreement where the undisputed testimony was that other payments required under 
the Modified and Assigned Lease Agreement had, during the term of the lease, 
been made by means of a check drawn on Appellant's 
account.

3. 
Whether the Appellees breached their implied covenant of good faith and fair 
dealing by refusing to accept payment of the purchase option price tendered by 
Appellant without stating the basis for that refusal so that Appellant had no 
opportunity to cure the objectionable tender.

[¶3]      Appellee restates 
the issues as:

I. 
Was J Bar H required to exercise the option to purchase in strict compliance 
with its terms?

II. 
Does the record reveal any course of dealing indicating that the parties 
intended to disregard the express requirements of the 
option?

III. 
Is J Bar H barred from raising a theory of bad faith by its failure to raise 
that theory at the trial level?

IV. 
Was J Bar H's claim barred by its execution of a Release?

FACTS

[¶4]      In 1983, J Bar H 
bought the assets of a business owned by the Martins. Disputes between the 
Martins and J Bar H arose over a lease agreement which J Bar H considered one of 
the assets. This lease was executed in 1980 for certain real property located in 
Teton County, Wyoming. Litigation resulted and was resolved by a settlement 
agreement and a modification and assignment of the lease agreement executed in 
December of 1986. The modified lease agreement contained an option to purchase 
provision which stated in part:

Landlord 
hereby grants tenant an option to purchase the leased property from landlord at 
any time during the term of this Lease which shall end December 31, 1991. The 
purchase price for the leased property shall be $40,000.00 in U.S. currency, 
payable at closing.

[¶5]      On December 11, 
1991, J Bar H notified the Martins of its intention to exercise the option. 
Because another dispute had arisen between the Martins and J Bar H over who 
would pay for assessed road and sewer improvements to the leased property, the 
notice stated that the disputed amount would be paid to the district court and 
paid out according to the court's direction. The notice proposed a closing date 
of December 30, 1991.

[¶6]      The closing was 
held on that date, but the Martins did not attend. The J Bar H representative 
was accompanied by a bank official. The Martins' attorney was present and 
demanded that the disputed assessment costs be paid. J Bar H's representative 
presented a check written to the Clerk of Court for the disputed amount, and J 
Bar H offered the Martins' attorney a check in the amount of $40,000 as payment 
in full for the option purchase price. The attorney refused the check, but the 
record indicates the attorney did not state the form of payment tendered to him 
was not acceptable to the Martins. Because of the Martins' failure to convey, J 
Bar H filed a complaint seeking a declaratory judgment of the rights and duties 
of the parties, specific performance, and an injunction to prevent J Bar H's 
eviction from the leased premises. At the same time, J Bar H presented the check 
for the disputed assessment costs to the Clerk of the Court. The Martins filed a 
motion to dismiss or for summary judgment under two theories. In one theory, 
they asserted the lawsuit was precluded because the 1986 settlement agreement 
released the option claim; in the other theory, they asserted that J Bar H had 
failed to comply strictly with the contract by presenting payment in check form 
rather than "U.S. currency" - cash.

[¶7]      The district 
court granted the Martins' motion for summary judgment because J Bar H had 
failed to abide by the specific requirements to exercise the option. The court 
stated that it did not need to address the validity of the release and 
settlement agreement. In a clarifying order, the court held that the Martins' 
motion was granted because J Bar H failed to tender United States currency as 
specified in the option contract. This appeal followed.

STANDARD 
OF REVIEW

[¶8]      Summary judgment 
is proper when no genuine issues of material fact exist, and the prevailing 
party is entitled to judgment as a matter of law. When reviewing the propriety 
of a grant of summary judgment, we review the record in the light most favorable 
to the party opposing the motion, giving that party all favorable inferences 
that can be drawn from the facts contained in the submitted material 
accompanying the motion. Lynch v. Norton Constr., 861 P.2d 1095, 1097 
(Wyo. 1993); Miller v. Campbell County, 854 P.2d 71, 75 (Wyo. 1993). In 
reviewing a summary judgment the Supreme Court first considers whether or not 
there is a genuine issue of material fact underlying the granting of the summary 
judgment; if there is no issue of material fact, the court then decides whether 
the substantive law was correctly applied by the trial court. Sutherland v. 
Bock, 688 P.2d 157, 158 (Wyo. 1984).

DISCUSSION

[¶9]      Appellants 
contend the district court incorrectly applied the substantive law in this case 
to the issue of nonconforming tender. Appellees contend the district court 
correctly found that our holding in Covey v. Covey's Little America, 
Inc., 378 P.2d 506 (Wyo. 1963), which requires strict compliance with 
contract terms, is dispositive of this case. Covey did acknowledge that 
the general rule of law required strict compliance with option terms, but 
determined the particular facts in question permitted substantial rather than 
strict compliance with the option term. Covey, 378 P.2d  at 513. We need 
not consider Covey in this appeal, however, because of another line of 
cases which directly addresses the issue of nonconforming 
tender.

[¶10]   In the early case of H.E. Wright 
& Co. v. Douglas, 26 Wyo. 305, 313, 183 P. 786, 789 (Wyo. 1919), the 
creditor held a note which by its express terms was payable in gold coin. The 
creditor refused debtor's tender of payment in the form of a bank draft. The 
refusal was because the holder stated additional interest and commissions were 
due. No objection was made because gold coin was not tendered. Later, the 
creditor raised the debtor's failure to tender gold coin as a further reason for 
the refusal to accept payment. This court held in Wright that the creditor 
waived the "gold coin" objection and could not thereafter insist that tender was 
not good for that reason. Wright, 26 Wyo. at 313, 183 P.  at 789. 

[¶11]   The Wright court stated the 
well-settled rule of law that "if a tender is refused on grounds and for reasons 
other than that it does not constitute an offer of lawful money, or is not the 
kind of money or property in which payment is to be made by the terms of the 
contract, the creditor waives that objection and cannot thereafter insist that 
the tender was not good for that reason." Wright, 26 Wyo. at 313, 183 P. 
at 789.

[¶12]   The rule was reaffirmed in 
Larsen v. Sjogren, 67 Wyo. 447, 226 P.2d 177, 181 (1951) and Parkinson 
v. Roberts, 78 Wyo. 478, 329 P.2d 823, 827-28 (1958). In Larsen, the 
holders of an option to purchase property "for the sum of Two Thousand 
($2000.00)" attempted to exercise it and tendered a check in that amount. 
Larsen, 226 P.2d  at 179. The owners refused to convey. The owners "merely 
made a general refusal without specifying any specific grounds for such 
refusal." Larsen, at 181. During litigation, the owners objected that the 
tender was not "for lawful money." This court rejected the argument for the 
reason that a creditor may not merely make a general refusal and not specify any 
specific grounds for such refusal. Larsen, at 
181-82.

[¶13]   Similarly, in Parkinson, 
this court rejected an argument that a cashier's check was not good tender 
because the contract term specified "$7,400.00 cash upon delivery." The court 
found the sellers had not refused the $7,400 for the reason it was not tendered 
in the proper form. Parkinson, 329 P.2d  at 828.

[¶14]   As Justice Blume explained in 
Larsen, the wide acceptance of checks requires a specific objection to 
the form of payment as unacceptable under the contract terms or the right is 
waived. The rule's purpose is to permit the offeror an opportunity to tender the 
proper form of payment because usually an offeror can readily obtain the money 
and tender it in time. Larsen, 226 P.2d  at 182. From the Larsen 
and Wright decisions, we derive the rule that the party to a contract 
who is to receive payment in a certain form must expressly reject any 
nonconforming payment for that precise, specific reason. That party's failure to 
specifically object will be deemed, as a matter of law, to have waived that 
precise, specific reason. In other words, a general refusal, where a specific 
one exists in the written contract, waives the specific 
refusal.

[¶15]   Appellees urge that this court 
sustain their summary judgment on the issue of the settlement agreement and 
release. The district court found no need to address this issue because of its 
determination there was not strict compliance with an option term. That ruling 
judged the exercise of the option invalid, and there was no purpose in 
proceeding on the release issue. Because we hold the summary judgment was 
improperly granted, appellees are free in future proceedings to reassert the 
release issue. May v. McCormick By and Through Swallow, 704 P.2d 709, 713 
(1985).

[¶16]   We reverse the district court's 
grant of appellees' summary judgment motion and remand for proceedings 
consistent with this opinion.