### NO. 85-127 

### INTHE SUPREME COURTOF THE STATEOF 

### MONTANA 1985

ALMA EDGAR, Plaintiff and Respondent,

ERNEST EMMETT HUNT and JACQUELINE M. 

### HUNT,husband & 

### wife, Defendant and Appellant.

APPEAL FROM: DistrictCourt of the Third Judicial District, Inand for the County of Granite, The Honorable Robert Boyd, Judgepresiding.
COUNSEL OF RECORD:
ForAppellant:

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:

ClerkMr. 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 inthisquiettitleaction. Hunts contend that adequate consideration supported the repurchase option and that the option did not violate either the rule against perpetuities orthe rule against restraints
on alienation. We

### reverse and remand fortrial. 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 adjacentHunt 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 tosell saidpremises, and that Second Parties [Hunts] shall before theexpirationof 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 theproperty, on June 13, 1984, brought this quiet title action toinvalidate theoptionagreement. AftertheHunts answered her request for admissions, she filed a motion for summary judgment contending; (1)that therewas no consideration for the repurchase option; and (2) that the repurchase option violated section 70-1-405, MCA and 

### isthus invalid. On January 29, 1985, the court granted Alma Edgar's motion for summary judgment. The court ruled that therewas
no consideration tosupport theoption, and secondly, that 

### it
was a condition restraining alienation, and therefore void. On February 5, 1985, the District Court entered judgment quietingtitletotheproperty. From thisorder and judgment Hunts appeal, raising the following issues: (1)Whether theDistrictCourtproperly granted summary judgment holding that there was no consideration supporting therepurchase agreement. (2)Whether the

### District Courtproperly granted summary judgment holding that the repurchase agreement was invalid because 

### it violated the rule against restraints on alienation, orthe ruleagainst 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 tobe paid by the Edgars tothe 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 "[tlhewhole of a contract 

### istobe 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 obligationsrunning both ways. The Hunts 

### weretoprovide 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 totheHunts therepurchase option. Further, this Court has ruled that even nominal consideration 

### isadequatetosupport an option contract. Van Atta 

### v. Schillinger (Mont. 1981), 625 P.2d 73, 38 St.Rep. 426; Keasterv. 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 atissue. 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 tothe interestcreated, arevoid." (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 

### iswhether theparticular restraint 

### is reasonable under the circumstances. Lawson, 679 P.2d at974. The Restatement of Property, in section 406, comment 

### "i", sets forthvarious factors that may be considered whendetermining 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 thepreemptive 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 

### willweigh heavily against the validity of the restraint. On the other hand, if the circumstances suggest that the restraint was freelyentered intoby mutual consent asa normal incidentof
an equal bargaining relationship in order to promote the original transfer of the property, the scales

### will tipback towards the reasonableness of the restraint, see Lawson, 679 P.2d at974-975. Wehold 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 inWharton 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, asan absoluterule against any restrainton thealienationof property. Wharton, 229 P.2d at863. Respondent contends thisCourt 

### isbound to follow the Wharton rule because of our holding in State v. Murphy (1977), 174Mont. 307, 570 P.2d 1103, that:Montana follows the rule of statutory construction where in adopting a statute from a 

### sister state, thecourt adopts the construction placed upon 

### it by the highest court of the state from which 

### it was adopted. Murphy, 570 P.2d at1105. Though 

### we recognize the continuing validityof the rule in Murphy, 

### it does not, require thisCourt toadopt the rule in Wharton in this case. First, § 70-1-405 was adopted in 1895, prior totheWharton holding. Second, Wharton was not decided by the "highest court" of California. Thirdly, Wharton appears tobe 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