Title: GROPP v LOTTON

State: montana

Issuer: Montana Supreme Court

Document:

No* 12220 I N T H E SUPREME C O U R T O F THE STATE O F M O N T A N A 1972 KENNETH A. GROPP and BETTY L. GROPP , husband and wife, P l a i n t i f f s and Appellants, -vs - K E N N E T H R. L O T T O N e t a l . , Defendants and Respondents. Appeal from: D i s t r i c t Court of t h e Twelfth J u d i c i a l D i s t r i c t , Honorable R. W. Thomas, Judge presiding. Counsel of Record: For Appellants : Smith, Emmons and B a i l l i e , Great F a l l s , Montana. Marvin J. Smith argued, Great F a l l s , Montana. For Respondents: Graybill, Graybill, O s t r e m and Warner, Great F a l l s , Montana. Harrison, Loendorf and Poston, Helena, Montana. Jerome T. Loendorf argued, Helena, Montana. Submitted: September 25, 1972 Decided : # O V ~ ,- Filed: NQV 1 I : ! ! i M r , Justice John Gonway Harrison delivered the Opinion of the Court, Plaintiffs Kenneth A. Gropp and Betty L. Gropp, husband and wife, brought t h i s action i n the d i s t r i c t court of the twelfth judicial d i s t r i c t , county of H i l l , t o quiet t i t l e t o certain ranch property leased with an option t o buy t o de- fendants, Kenneth R; Lotton and Mary K. Lotton, husband and wife. Defendants counterclaimed for specific performance o r the re- payment of money paid by them t o plaintiffs. The cause was t r i e d before Hon. B. W. Thomas, s i t t i n g without a jury, Findings of fact, conclusions of law and judgment were entered for de- fendants. Exceptions were f i l e d by p l a i n t i f f s and denied by the t r i a l court, P l a i n t i f f s now appeal from the judgment. On September 25, 1965, plaintiffs, a s vendors, agreed t o sell and defendants, a s vendees, agreed t o purchase certain ranch properties located i n Chouteau and H i l l counties. The contract provided for an escrow of deed, merchantable t i t l e , a schedule of payments, default provisions and a provision t o protect p l a i n t i f f s i n the event of a crop failure. In addition, the contract provided that p l a i n t i f f s would lease t o defendants for five years, under specified terms and conditions, certain acreage i n H i l l County with an optian t o purchase some of the leased lands, O n October 1, 1965, pursuant t o the contract f o r deed, the parties entered i n t o a farm lease which incorporated the terms of the contract, The lease ran from October 1, 1965 t o October 1, 1970. Tract I of the leased lands was made subject t o the option t o purchase, the t e r m s of which were: "The right t o purchase shall be a t a price of Eighty Thousand Dollars ($80,000.00) with a re- quired down payment of 29% and the balance, with interest a t the r a t e of four percent (4%) per annum, t o be amortized over a fifteen (15) year period. The Lessees shall be entitled t o the credit of the excess of the rent payments made hereunder, in- cluding Federal Crop payments, over the r e a l property taxes incurred on said Tract I during the term of t h i s lease. This credit s h a l l f i r s t be applied i n payment for the existing summerfallow, hereby agreed to be 300 acres a t a price of $10.00 per acre, and then the remaining credit s h a l l be applied on the purchase price of $80,000.00 by reducing the necessary down payment such amount, "IT IS F U R T H E R AGREED AND U N D E R S T O O D that the two s t e e l graneries of 2250 bushel capacity and the wooden granery approximately 16' x 20' i n size w i l l be included with the r e a l property i n Tract I i n the event of the exercise of the option by the Lessees. "IT IS F U R T H E R U N D E R S T O O D AND AGREED that the Lessees may exercise the option t o purchase Tract I by giving the Lessors notice of their intention t o exercise the option i n writing a t least t h i r t y (30) days prior t o the expiration of the term of t h i s lease. It i s further agreed and understood that the aforesaid option does not apply t o Tract I1 hereinbefore des- cribed. " A t t r i a l , defendants t e s t i f i e d that without the land covered by the option, Tract I, the ranch unit of some 480 acres i s an uneconomic unit and they would not have purchased the ranch unit without the option t o purchase Tract I. After some two years of operation on the ranch, certain differences arose between the parties and legal counsel was obtained t o iron out the difficulties. On March 29, 1969, an agreement was signed by the parties, s e t t l i n g t h e i r differences and reaffirming the original lease and option agreement. B y t h i s release agreement the parties agreed on the amount and value of the 1966 and 1967 crop shares received by p l a i n t i f f s and provided for the payment by defendants of $3,829 t o plaintiffs. It further provided that t h i s sum would be applied t o the 29% down payment, i n the event defendants exercised the option t o purchase Tract I. I n November 1969, defendants directed their counsel t o prepare a written notice of their intention t o exercise the option t o purchase Tract I. Both defendants signed the notice, had it acknowledged, and returned it totheir counsel i n Great Falls. W e note here that one copy of the signed notice was recorded i n H i l l County with the farm lease on November 13, 1969, by defendant Kenneth Lotton. The other copy was forward t o h i s attorney i n Great Falls. . . . . -. Defendants' counsel t e s t i f i e d he received the signed notice of intention t o exercise the option t o purchase from the defendants and that on November 19, 1969, he forwarded it, along with a cover l e t t e r , t o the p l a i n t i f f s a t t h e i r address i n Lusk, Wyoming. Both he and h i s secretary t e s t i f i e d that t o the best of t h e i r knowledge the l e t t e r and notice were processed on that date and mailed, but neither recollected why it was sent by ordinary mail. Plaintiff, Kenneth Gropp, denied ever receiving the notice of intention t o exercise the option and t e s t i f i e d that the f i r s t time he knew of t h i s notice was on October 5 , 1970, when he went t o the ranch t o see what the defendants intended t o do about Tract I. A t that time, he was informed by defendant Kenneth Lotton that the option had been exercised nearly a year before and that a copy of the notice had been f i l e d a t the H i l l County courthouse, W e note here that although the parties involved had signed a release agreement i n 1969, t o settle t h e i r differences up t o that point, bad feeling continued and although they had seen each other several times between 1969 and 1970, no communications, verbal or otherwise, took place directly between the parties. over a month a f t e r the expiration date of the option, It was on October 5, 1970, /that p l a i n t i f f Gropp went t o the ranch t o find out why defendant was not off of Tract I. There i s a conflict i n the evidence a s t o what happened on that date, October 5, 1970. Defendant Lotton t e s t i f i e d he informed Gropp that he had exercised the option and had f i l e d the notice a t the H i l l County courthouse, That p l a i n t i f f Gropp then l e f t the ranch, saying that he would contact defendants' counsel and l a t e r be i n touch with defendants. Plaintiff Gropp denied that t h i s happened. H e t e s t i f i e d he went t o the courthouse t o verify that the notice had been filed; then sought counsel and f i l e d a quiet t i t l e action on October 7, 1970. Following t h e i r settlement of differences i n March 1969, defendants made no tender on the balance remaining on the down payment and pointed out that no determination of that balance -. could be made u n t i l the end of the 1970 harvest. Further, that i n order t o compute the remaining balance due on the down payment i t was necessary for defendants t o have the figures for the cash price received by the p l a i n t i f f s on t h e i r share of the 1969 and 1970 crops. Figures for previous years had been furnished t o them by p l a i n t i f f s , and although they had made an e f f o r t t o get those figures from the elevators where the shares were stored, they had been unable t o get such cash figures. Plaintiffs admitted they did not give t h i s information t o defendants for the 1969 and 1970 crops, saying that the defendants did not ask for them. The t r i a l court found defendants owed p l a i n t i f f s the sum of $7,023.15 on the down payment. It further found that a t the time the contract and lease were entered into it was the intent of the parties, i f the option was exercised, that a contract for deed would be negotiated and entered into by the parties incor- porating the purchase terms s e t forth i n the option and other terms similar t o those included i n the contract for deed dated September 25, 1965. While p l a i n t i f f s s e t forth some fifteen issues for review upon appeal, w e find those issues can be combined i n t o four controlling issues. 1. Whether the contract resulting from acceptance of the option offer i n question i s sufficiently definite and certain a s t o be subject t o specific performance. 2. Whether the provision of the option offer with respect t o notice of intent t o exercise the option was sufficiently complied with. 3. Whether delay i n tender of the balance due on the down payment for the option was excused and waived by the impossibility of i t s computation and the conduct of plaintiffs. 4 . Whether the court erred i n striking testimony relative t o a polygraph examination of plaintiff Kenneth Gropp. Issue 1 questions whether the contract resulting from acceptance of the option offer i n question i s sufficientl-y de- f i n i t e and certain a s t o be subject t o specific perfor;l+:~:s,c-e. -. - 0 - - A s a preface t o our discussion, we note some fundamental rules regarding contracts. I f the language of the contract i s such that the intent of the parties i s clearly and unequi- vocally expressed, it must be applied according t o the terms of the contract. Conversely, i f there i s a basis i n i t s language upon which the parties reasonably could have had a misunder- standing with respect t o i t s intent, then evidence can be received and considered t o ascertain the meaning of the language used. Warner v. Johns, 122 Mont, 283, 201 P.2d 986. The court i n making a determination of intent i s not bound by any single provision or expression, but looks t o the whole contract and i t s purpose. McNussen v. Graybeal, 146 Mont, 173, 405 P.2d 447; Dooling v. Bright-Holland Co., 152 Mont. 267, 448 P.2d 749; Williams v. Ins. Co. of North America, 150 Mont. 292, 434 P,2d 395. Plaintiffs argue that the option contract i s an agreement t o agree and therefore void. With t h i s contention we find no merit. The r e a l question i s whether or not the acceptance of the option offer by defendants resulted i n an agreement sufficiently definite and certain t o create a binding contract. Here, the parties negotiated a contract for deed for the purchase of certain ranch property setting forth therein the extension of a lease and option t o purchase additional land and terms applicable, i f the option was exercised. The lease, which was executed within a week of the date of the contract for deed, contained the option t o purchase as set forth i n the contract, therefore the two instruments should be construed together. / -- t - / Hodgkiss v. Northland Petroleum Consol., 104 Mont. 328, 349, P,2d 811; United States Nat. Bank of Red Lodge v. Chappell, 7 1 Mont. 553, 230 P. 1084. Testimony indicated the parties a t the time of the making of the option agreement contemplated a contract similar t o "farm contracts" i n use for the sale of farm land i n the area and on l i k e terms as the i n i t i a l contract for deed. Here, the contract - L -. - - for deed sets forth the consideration upon which plaintiffs extended the lease-option. Defendants considered the base unit of 480 acres uneconomic and would not have purchased it without the option for Tract I . Terms of the option agreement provided for a fifteen year term following the five year lease term, which coincided with the contract for deed, with the same interest rate and the same final payment year. It can be fairly implied, as the trial court did, from the language of the two agreements, that the parties considered the properties to be purchased in one concurrent harmonious transaction, This Court in Steen v . Rustad, 132 Mont, 96, 106, 313 P . 2 d 1014, held: "It is equally well-settled that absolute certainty and completeness in every detail is not a prerequisite of specific performance, only reasonable certainty and completeness being required. Those matters which are merely subsidiary, collateral, or which go to the performance of the contract are not essential, and therefore need not be expressed in the informal agree- men t . I I Issue No. 2 questions whether or not the provision of the option offer with respect to notice of intent to exercise the option was sufficiently complied with. Plaintiffs contend that since neither defendants' counsel nor his secretary could speci- ficially remember mailing the letter and notice, and because it was not sent by either registered or certified mail, there was insufficient evidence before the court to sustain a finding that the letter and notice was mailed. We cannot agree with this contention. The question of what is a proper mailing has been before the Court on several occasions, the latest being Crissey v . State Highway C o m r n ' n , 147 Mont. 374, 413 P,2d 308. There, as here, testimony was introduced by the writer of the letter that he had signed the letter and placed it in the outgoing mail basket, Here, we have the additional testimony of the secretary, who typed and addressed the letter, and who testified that to the best of her knowledge the letter was mailed along with other -. office mail a t the end of the business day. The t r i a l court found the presumption of receipt was applicable, though p l a i n t i f f s denied receipt. The t r i a l court either believed p l a i n t i f f s were mistaken; that they had forgotten, or they were not t e l l i n g the truth; and relied upon the circumstantial evidence i n making i t s decision. The t r i a l court i s the trier of the facts. Here, the t r i a l court's conclusion that the option was exercised i s supported not only by the finding that the notice was mailed t o p l a i n t i f f s , but also by additional evidence that p l a i n t i f f s may have had actual notice of defendants' intent. Plaintiffsdid get actual notice when they visited defendants a t the ranch, shortly following the termination date of September 1, 1970. Here, no hardship resulted, such a s the intervention of a third party; defendants stand willing and ready t o perform; and the question of the receipt of the mailed l e t t e r should not cause a forfeiture of the option to purchase where no hardship resulted. 72 ALR2d 1122; Pomeroy's Specific Peformance of Contracts, 3rd Ed., 5 371, p. 793. Issue 3 questions whether the delay i n tender of the balance due on the downpayment for the option was excused and waived by the impossibility of its computation by conduct of the plain- t i f f s . The t r i a l court found so, and we agree. Plaintiffs argue that the tender of the balance due was of the essence t o the contract, A careful study of the evidence reveals that prior t o 1969, p l a i n t i f f s gave defendants the necessary figures t o compile the amounts due yearly. Thereafter, due t o a breakdown i n communications between the parties, for which p l a i n t i f f s are a t least equally responsible, these figures were not furnished. A s t o 1970, f i n a l computation could not be made u n t i l the 1970 crop w a s sold, Plaintiffs requested the amount be figured on October 5, 1970, Considering the terms of the contract, plus p l a i n t i f f s ' lack of diligence i n giving the defendants the necessary figures, the month intervening between the date when defendants were either t o have exercised the option o r be off - ? . L . the property, and the date of October 5, 1970, we cannot find that an unreasonable time for tender had passed. Plaintiffs' fourth and f i n a l issue concerns whether or not the court erred i n striking testimony relative t o a polygraph examination of the plaintiff Kenneth Gropp. In a sense, t h i s issue i s connected to issue 2, whether o r not there was a mailing to p l a i n t i f f s of the notice of intent t o exercise the option. Plaintiff Kenneth Gropp, i n order t o prove he did not receive the l e t t e r containing the notice of intent t o exercise the option t o purchase, submitted himself t o a polygraph t e s t . The results of t h i s t e s t were submitted t o the court to a s s i s t it i n determining whether or not p l a i n t i f f s received the l e t t e r , but were excluded by the t r i a l court. Plaintiffs assert that the t e s t was given by a competent polygraph operator; that Kenneth Gropp was a f i t person f o r the t e s t ; that the test i s from 75% t o 80% accurate on a nationwide basis; and, that electro- encephalograms, electrocardiograms and other e l e c t r i c a l recordings for medical diagnosis are admissible. Anno, 66 ALR2d 536, For these reasons, p l a i n t i f f s contend such offered evidence should have been received, W e do not agree, Few jurisdictions allow the polygraph t e s t s i n criminal actions. State v, Hollywood, 138 Mont. 561, 358 P.2d 437; State v. Cor, 144 Mont, 323, 396 P.2d 86; State v. Freeland, 255 Iowa 1334, 125 N.W.2d 825; State v. Trimble, 68 N . Mex. 406, 362 P.2d 788; State v. LaForest, 106 N,Hamp. 159, 207 A.2d 429. A n extensive research reveals fewer juris- dictions have considered such evidence i n c i v i l actions. Stone v, Earp, 331 Mich, 606, 50 N,W.2d 172; Rotheimer v. Rotheimer, 34 Ill.App.2d 1, 180 N.E.2d 356; People v. Schneemilch, 65 1 1 1 . App.2d 337, 213 N,E.2d 50; California Ins. Co. v, Allen, 235 F.2d 178; Herman v. Eagle Star Ins. Co,, 283 Fed. Supp, 33. Here, a f t e r hearing the evidence offered by the polygraph expert a t the t r i a l , the court properly excluded h i s testimony. The judgment of the d i s t r i c t court- , i s affirmed. 7L?Lf,?-&9.h As ociate Justice W e Concur: fl n M r , Chief Justice James T. Harrison took no part i n the foregoing opinion,