NO. 85-127 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1985 

ALMA EDGAR, 

Plaintiff and Respondent, 

ERNEST EMMETT HUNT and JACQUELINE 

M. HUNT, husband & wife, 

Defendant and Appellant. 

APPEAL FROM: District Court of the Third Judicial District, 

In and for the County of Granite, 

The Honorable Robert Boyd, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Ken H. Grenfell, Missoula, Montana 

For Respondent : 

Skelton & Cooley; Robert Skelton, Pdissoula, Montana 

Submitted on Briefs: June 6, 1985 

Decided: September 10, 1985 

I ;J 1985 

Filed: 

Clerk 
Mr. Justice L. C. Gulbrandson delivered the Opinion of the 

Court. 

Hunts appeal from an order granting plaintiff Edgars' 

motion for summary judgment by the District Court, Third 

Judicial District, Granite County in this quiet title action. 

Hunts contend that adequate consideration supported the 

repurchase option and that the option did not violate either 

the rule against perpetuities or the rule against restraints 

on alienation. We reverse and remand for trial. 

On August 13, 1964, the Hunts sold th.e subject real 

property by warranty deed to Alma and Omer Edgar in joint 

tenancy. Apparently, the parties entered into a notarized 

agreement contemporaneously with the execution of the deed. 

Under this agreement, Edgars had the right to use sewer 

facilities on Hunts' land and to take water from a well on 

the adjacent Hunt land. The agreement also stated: 

Whereas, said real property was sold to 

First Parties [Edgars] by Second Parties 

[Hunts] with the understanding that 

Second Parties [Hunts] would have first 

option to purchase said property should 

First Parties [Edgars] desire to sell 

said property in their respective 

lifetimes; 

That should First Parties [Edgars] sell 

said real property, Second Parties 

[Hunts] are hereby granted an option to 

repurchase said premises for the sum of 

Seven Thousand Dollars ($7,000.00) ; 

provided always that First Parties 

[Edgars] shall give to Second Parties 

[Hunts] thirty (30) days written notice 

of their intention to sell said premises, 

and that Second Parties [Hunts] shall 

before the expiration of said thirty (30) 

day period have the right to repurchase 

said premises for the sum of Seven 

Thousand Dollars ($7,000.00) cash. 

Thereafter, Omer Edgar died, terminating the joint 

tenancy. His widow, Alma Edgar, now the sole owner of the 
property, on June 13, 1984, brought this quiet title action 

to invalidate the option agreement. After the Hunts answered 

her request for admissions, she filed a motion for summary 

judgment contending; (1) that there was no consideration for 

the repurchase option; and (2) that the repurchase option 

violated section 70-1-405, MCA and is thus invalid. 

On January 29, 1985, the court granted Alma Edgar's 

motion for summary judgment. The court ruled that there was 

no consideration to support the option, and secondly, that it 

was a condition restraining alienation, and therefore void. 

On February 5, 1985, the District Court entered judgment 

quieting title to the property. From this order and judgment 

Hunts appeal, raising the following issues: 

(1) Whether the District Court properly granted summary 

judgment holding that there was no consideration supporting 

the repurchase agreement. 

(2) Whether the District Court properly granted summary 

judgment holding that the repurchase agreement was invalid 

because it violated the rule against restraints on 

alienation, or the rule against perpetuities. 

As to the first issue, the District Court erred in 

hol-ding the agreement unenforceable for a lack of mutual 

consideration. The court's order reasoned " [ilt is obvious 

from reading the preamble to the mutual agreement that any 

consideration was to be paid by the Edgars to the Hunts and 

not vice versa." In this respect, the court failed to 

construe the contract according to section 28-3-202, MCA, 

which requires that "[tlhe whole of a contract is to be taken 

together so as to give effect to every part if reasonably 

practicable, each clause helping to interpret the other." 

The agreement, read in its entirety, set up obligations 
running both ways. The Hunts were to provide the Edgars with 

water and access to their sewer facility. In return, the 

Edgars paid a nominal consideration of one dollar "and other 

valuable consideration," agreed to help maintain the sewer 

and water facilities, and granted to the Hunts the repurchase 

option. Further, this Court has ruled that even nominal 

consideration is adequate to support an option contract. Van 

Atta v. Schillinger (Mont. 1981), 625 P.2d 73, 38 St.Rep. 

426; Keaster v. Bozik (Mont. 1981), 623 P.2d 1376, 38 St.Rep. 

194. We hold that the repurchase agreement was supported by 

adequate consideration as part of the original contract to 

purchase. 

The District Court erred in holding that the 

pre-emptive right held by the Hunts was void as a matter of 

law and in granting summary judgment on that ground. The 

court correctly noted that the rule against perpetuities, 

5 70-1-407, 408, MCA, did not apply to the fixed price 

pre-emptive right at issue. In re Murphy's Estate (1935), 99 

Mont. 114, 43 P.2d 233. The error was in interpreting 

section 70-1-405, MCA as an absolute prohibition against any 

restraint on the alienation of real property. That section 

states: "Conditions restraining alienation, when repugnant 

-- to the interest created, are void." (Emphasis added.) This 

Court reads that provision as a statement of the majority 

common law rule that restraints on alienation, when 

reasonable, are valid. Lawson v. Redmoor Co. (Wash-App. 

1984), 679 P.2d 972. 61 AmJur.2d, Perpetuities 5121, p. 129 

(1981). The question is whether the particular restraint is 

reasonable under the circumstances. Lawson, 679 P.2d at 974. 

The Restatement of Property, in section 406, comment 

"i", sets forth various factors that may be considered when 
determining the reasonableness of any particular restraint. 

In addition to the Restatement factors, case law has 

articulated two others to be considered when determining 

reasonableness. The type of price set is important. If the 

price is fixed and greatly disproportionate to the market 

value of the property, this supports a finding of 

unreasonableness. Ross v. Poneman (N.J.Super. 1970), 263 

A. 2d 195, 199; Iglehart v. Phillips (Fla. 1980) , 383 So. 2d 

610, 614, 615. Secondly, the intent of the parties 

contracting for the preemptive right is a factor. If, from 

the circumstances, it appears that the particular restraint, 

or the price set thereby, is primarily for the purpose of 

restraining the alienability of the property, it will weigh 

heavily against the validity of the restraint. On the other 

hand, if the circumstances suggest that the restraint was 

freely entered into by mutual consent as a normal incident of 

an equal bargaining relationship in order to promote the 

original transfer of the property, the scales will tip back 

towards the reasonableness of the restraint, see Lawson, 679 

P.2d at 974-975. We hold that the repurchase option did not 

violate the rule against restraints on alienation. 

Respondent contends that this Court should follow the 

California Court of Appeals decision in Wharton v. Mollinet 

(Cal.App. 1951), 229 P.2d 861. In Wharton, the California 

court interpreted section 711 of the California Civil Code, 

which Montana adopted as B 70-1-405, MCA, as an absolute rule 

against any restraint on the alienation of property. Wharton, 

229 P.2d at 863. Respondent contends this Court is bound to 

follow the Wharton rule because of our holding in State v. 

Murphy (1977), 174 Mont. 307, 570 P.2d 1103, that: 
Montana follows the rule of statutory 

construction where in adopting a statute 

from a sister state, the court adopts the 

construction placed upon it by the 

highest court of the state from which it 

was adopted. 

Murphy, 570 P.2d at 1105. 

Though we recognize the continuing validity of the rule 

in Murphy, it does not, require this Court to adopt the rule 

in Wharton in this case. First, § 70-1-405 was adopted in 

1895, prior to the Wharton holding. Second, Wharton was not 

decided by the "highest court" of California. Thirdly, 

Wharton appears to be no longer followed in California, see 

Budny v. Bank of America (Cal.App. 1959), 333 P.2d 812; 

lilogman v. Wells Fargo Rank and Union Trust Co. (Cal. App. 

The order of the District Court granting summary 

judgment to the plaintiff is reversed, and this case is 

7' remanded. 

5- qy C ,& / 

I Justice ,' 

Chief Justice