Title: KLEIN v BRODIE

State: montana

Issuer: Montana Supreme Court

Document:

No. 12816 I N T H E S U P R E M E C O U R T O F T H E STATE O F M O N T A N A 1975 PETER D, KLEIN and DANA KLEIN, P l a i n t i f f s and Respondent, STEPHEN D, BRODIE and M A R I L Y N G. BRODIE, Defendants and Appellants. Appeal from: D i s t r i c t Court of the Fourth J u d i c i a l D i s t r i c t , Honorable Jack L. Green, Judge presiding. Counsel of Record : For Appellants : Garlington, Lohn and Robinson, Missoula, Montana Sherman V. Lohn argued, Missoula, Montana For Respondent : Robert L. Deschamps, County Attorney, argued, Missoula, Montana - - Submitted: April 10, 1975 Decided : I #/; ?' flk. J u s r i c e John Zorlway Harrison d e l i v e r e d t h e Opinion of t h e Court. This i s an appeal by defendants Stephen D. and Marilyn G. Brodie from an adverse judgment entered i n t h e d i s t r i c t c o u r t , Missoula County, i n an a c t i o n f o r t h e breach of a pre- ernptive r i g h t provision contained i n a buy-sell agreement. P l a i n t i f f s P e t e r D. and Dana Klein cross-appeal on t h e i s s u e of the amount of damages awarded by t h e d i s t r i c t c o u r t . The r e l e v a n t , undisputed f a c t s a r e : O n J u l y 25, 1 9 6 6 , t h e p a r t i e s entered i n t o a buy-sell agreement whereby defendants agreed t o convey a p a r c e l of land located i n Swan Valley, Missoula County, f o r t h e consideration of $5,000. A n approximate descrip- t l o n of t h e land was contained i n t h e buy-sell agreement, but t h e exact boundary was t o he determined by a survey. Paragraph 8 of cne buy-sell agreement contained t h i s c l a u s e which i s t h e b a s i s of t h e p r e s e n t l i t i g a t i o n : "Buyers t o nave f i r s t r e f u s a l on any a d d i t i o n a l t r a c t s S e l l e r may o f f e r . " Pursuant t o t h e t e r m s of t h e agreement, a survey of t h e uroperty was e f f e c t e d and approximately 2 2 . 2 a c r e s of land were conveyed. Thereupon, p l a i n t i f f s paid t h e purchase p r i c e and took possession. However, sometime i n t h e f a l l 1970, p l a i n t i f f s discovered that a 9 0 a.cre p a r c e l of land located south of t h e i r land had been sold by defendants t o one Robert OIConner. Thereupon p l a i n t i f f s , through t h e i r a t t o r n e y , served a demand upon defendants t h a t they be given an opportunity t o e x e r c i s e t h e i r pre-emptive r i g h t . Following defendants' r e f u s a l , an a c t i o n was brought i n s p e c i f i c performance, o r i n t h e a l t e r n a t i v e , damages f o r breach of t h e pre- emptive r i g h t provision. T r i a l without a jury was held before Hon. Jack L. Green i n t h e d i s t r i c t c o u r t , Missoula County. Judgment was rendered i n favor of p l a i n t i f f s and damages were assessed a t $8,550. From t h i s judgment defendants appeal and r a i s e t h i s i s s u e : Is the pre-emptive right agreement unenforceable because the 'iiescription of the land to which it applies is incomplete and ambiguous? Plaintiffs on their cross-appeal raise this issue: Did the district court correctly determine the amount of damages for the breach of the pre-emptive agreement? We hold in the affirmative on defendants' issue. Accord- ingly, a consideration of plaintiffs' issue is unnecessary. In Weintz v. Bumgarner, 150 Mont. 306, 313, 434 P.2d 712, this Court examined the nature of a pre-emptive right and distin- guished it from an option with these words: "The distinction between the two is well explained in Volume VI, American Law of Property, B 26.64 p. 507: "'A pre-emption differs materially from an option. A 1 1 option creates in the optionee a power to compel the owner of property to sell it at a stipulated price whether or not he be willing to part with ownership. A pre-emption does not give to the pre-emptioner the power to compel an unwill- ing owner to sell; it merely requires the owner, when a r i d if he decides to sell, to offer the prop- erty first to the person entitled to the pre-emption, at the stipulated price. Upon receiving such an offer, the pre-emptioner may elect whether he will buy. If he elects not to buy, then the owner of the property may sell to anyone."' Property that is the subject of the pre-emptive agreement should be adequately described and the price must be stated or otherwise made determinable. 1A Corbin on Contracts, S 261. In the instant case, the fact that no price was mentioned at which the pre-emptive right was to be exercised does not make the agree- ment void for uncertainty, since the use of the words "first refusal" is technical. Consequently, these words imply that the holder of the right may purchase at the same price offered by a third party when the agreement is silent as to price. See: Jurgensen v. Morris, 194 App.Div. 92, 185 N.Y.S. 386; Tamura v. ile~uliis, 203 Or. 619, 281 P.2d 469; Brenner v. Duncan, 318 Mich. 1, 27 N.W.2d 320; Barling v. Horn, (Mo. 1956) 296 S.W.2d 94. Here, how eve^ cne sre-emptive r i g n t agreement is f a t a l l y d e f e c t i v e because it is impossible t o determine t h e d e s c r i p t i o n of prop- e r t y t o which t h e r i g h t a p p l i e s with accuracy, even though r e s o r t i s had t o e x t r i n s i c evidence. I n Mercer v. Lemmens, 40 Cal.Rptr. 803, 230 C.A.2d 167, where t h e s u f f i c i e n c y of a d e s c r i p t i o n contained within a pre-emp- t i v e agreement was attacked by t h e defendant i n a breach of con- t r a c t a c t i o n , t h e d e s c r i p t i o n r e f e r r e d t o t h e "adjoining" 50 Eoot Lot. The C a l i f o r n i a c o u r t upheld t h e agreement a f t e r ex- t r i n s i c evidence d i s c l o s e d t h e seller owned no o t h e r r e a l property adjoining o r contiguous t o t h e t r a c t owned by p l a i n t i f f and t h e c o a r t was a b l e t o determine with accuracy t h e d e s c r i p t i o n of t h e p a r c e l of property t o which t h e pre-emptive r i g h t applied. The f a c t s i n t h e i n s t a n t case a r e f a r d i f f e r e n t and compel a ~ i f f e r e n t r e s u l t . The record d i s c l o s e s t h e property purchased by p l a i n t i f f s was included within a l a r g e r p a r c e l of land owned by defendants. Defendants were t h e record owners of t h e Southwest and Sbutheast q u a r t e r s of s e c t i o n 4 , Township 2 0 North, Range 1 6 west. P l a i n t i f f s ' acquired land was located i n t h e Southeast q u a r t e r . Defendants a l s o owned r e s i d e n t i a l property i n t h e jlissoula a r e a a s well a s property i n t h e Northeast q u a r t e r of 3ection 5 , Township 1 2 North, Range 1 9 West; property i n Section 2 , Township 1 2 North, Range 19 West; and property i n Section 1 9 , Yownship 15 North, Range 7 West. Thus, t h e r a t i o n a l e of Mercer i s not applicable and t h e agreement must f a i l because of i t s ; + cenr i n d e f i n i t e n e s s . Here, attempting t o a s c e r t a i n t h e i n t e n t of t h e p a r t i e s d~ C L I ~ time t h e c o n t r a c t was entered i n t o , w e look t o s t a t u t e s dealing with the i n t e r p r e t a t i o n of c o n t r a c t s . Section 13-709, K.Z.M. 1 9 4 7 , r e q u i r e s i n t e r p r e t a t i o n of a c o n t r a c t i n such a manner a s t o make it o p e r a t i v e , i f such can be done without vio- l a t i n g t h e i n t e n t of t h e p a r t i e s . Section 13-720, R.C.M. 1947, zouipels i r ~ c e r p r e t a c ~ o s i a f t h e c o n t r a c t most s t r o n g l y a g a i n s t t h e p a r t y causing t h e u n c e r t a i n t y t o e x i s t , (here, t h e defend- a n t ) . W e a r e cognizant o f t h e above r u l e s , however, w e cannot ignore t h e p l a i n i m p l i c a t i o n of s e c t i o n 13-402, R.C.M. 1947, which s t a t e s : "The o b j e c t of t h e c o n t r a c t must be lawful when t h e c o n t r a c t i s made, and p o s s i b l e and a s c e r t a i n - a b l e by t h e t i m e t h e . c o n t r a c t i s t o be performed." (Emphasis s u p p l i e d . ) To t h e same e f f e c t , s e e Thrasher v. S c h r e i b e r , 77 Mont. 221, 250 P. 600. 1 Corbin on C o n t r a c t s , 5 95, p. 394, s t a t e s : "A c o u r t cannot e n f o r c e a c o n t r a c t u n l e s s it can determine what it is. It is n o t enough t h a t t h e p a r t i e s t h i n k t h a t t h e y have made a c o n t r a c t ; t h e y must have expressed t h e i r i n t e n t i o n s i n a manner t h a t i s capable of understanding. I t i s n o t even enough t h a t they have a c t u a l l y agreed, i f t h e i r expressions when i n t e r p r e t e d i n t h e l i g h t o f accompanying f a c t o r s and circumstances, a r e n o t such t h a t t h e c o u r t can determine what t h e t e r m s of t h a t agreement a r e . Vagueness of expres- s i o n , i n d e f i n i t e n e s s and u n c e r t a i n t y a s t o any of t h e e s s e n t i a l t e r m s of an agreement, have o f t e n been held t o prevent t h e c r e a t i o n of an en- f o r c e a b l e c o n t r a c t . " Accordingly, t h e judgment of t h e d i s t r i c t c o u r t i s re- versed and t h i s Y J u s t i W e concur: ,. 1 / J u s t i c e s \)