NO. 84-233 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1984 

DONALD D. TODD and 3OSALIE M. TODD, 

Plaintiffs and Respondents. 

HARVEY F. RERNER and ALICE V. 

BERNER, 

Defendants and Appellants. 

APPEAL FROM: District Court of the Sixth Judicial District, 

In and for the County of Sweet Grass, 

The Honorable Byron Robb, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Gregory 0. Morgan, Rozeman, Montana 

For Respondent : 

Josephson & Fredricks; Conrad B. redr ricks, Rig Timber, 

Montana 

Submitted on Briefs: Sept. 27, 1984 

Decided: December 28, 1984 

DEC 2 .! 984 

Filed: 

Clerk 
Mr. Justice John Conway Harrison delivered. the Opinion of the 

Court. 

This is an appeal for the District Court of the Sixth 

Judicial- District of the State of Montana, in and for the 

County of Sweet 'Grass, involving a rescission of a contract 

for the purchase of a ranch. We affirm. 

In November of 1981, the respondents, Todds and defendants, Rerners entered into an agreement, whereby the Berners 

agreed to purchase the Todds' ranch for a total purchase 

price of $2,250,000, with a 29% down payment and the balance 

to be carried on the contract for deed by the sellers (Todds) 

at 118 on all but $300,C00 thereof for a period of twenty 

vears with a ten-year balloon. Marjorie Sizemore, a real 

estate agent, represented both parties in this transaction. 

Provisions were included to accommodate a "three-cornered 

exchange" of the Berners' Round Fiver Ranch if desired by the 

Berners. On the same date, Bob Siebrasse and Sons made an 

offer to the Berners on the Rou.nd River Ranch and deposited 

an earnest money check for $1.00,000 with Lyle Watson Realty. 

This information had been communicated to the Berners through 

their real estate agent, Marjorie Sizemore, before the 

Rerners signed the agreement with the Todds. The offer by 

Bob Siebrasse and Sons on the ranch was entirely consistent 

with the listing agreement that the Eerners had signed on 

their ranch. The sale of the Berners' Round River Ranch fell 

through one month later, through no fault of the Todds. 

On February 3, 1982, the Berners met with the Todds and 

Margorie Sizemore in Billings, Montana. The Berners' brief 

indicates, "At that time they (Berners) felt they owed Todds 

something for their (Todds ' ) hospi-tality and showing them 

(Berners) around the ranch." The Todds felt they had a lot 
more coming and asserted to the Berners that they had consulted an attorney and were entitled to the $100,000 

downpayment agreed upon in the contract. The. Todds qot the 

Rerners to sign a note in the amount of $32,500 to avoid a 

suit over the $100,000 downpayment. At that same time the 

agreement between the Todds and the Berners was marked "Void" 

and initialled by both parties. Thereafter the Rerners 

refused to pay the note when due, and this action ensued. 

The Todds filed a complaint to recover on the promissory note executed and delivered to them by the Berners. 

Thereafter, the Eerners interposed an answer, raising two 

affirmative defenses seeking rescission of the promissory 

note. Depositions were taken and the Todds filed a motion 

for summary judgment. No response to the motion for summary 

judgment was filed by the Berners. Neither the Berners nor 

their attorney appeared at the hearing on the motion. At 

that point the Todds presented their argument for summary 

judgment and the court took the motion under advisement. 

Thereafter, on March 15, 1984 the court, ex parte, entered an 

order giving the Berners until March 26 to respond to the 

motion by brief 2nd allowing the Berners to present oral 

argument on the motion on March 29, 1984. 

The Berners filed a motion for leave to file a thirdparty complaint against Marjorie Sizemore. On March 29, 

1984, the motion for summary judgment of the Todds was again 

argued to the court, with the Berners' counsel. present. On 

March 30, 1984, the trial court granted Todds' motion for 

summary judgment, denied motion for leave to file a thirdparty complaint against Sizemore and this appeal. ensued. 

Three issues are presented for review: 
Hon. John C. Harrison 

Justice, Supreme Court 

Room 414 Justice Building 

215 North Sanders 

Helena, Montana 59620 

CORRECTION. In preparing this opinion for publication, we noted in our verification of titles and 

citations the matters listed below. Corrections have 

been made on our copy of the opinion. 

January 25, 1985 

Todd v. Berner, No. 84-233, Dec. 28, 1984 

Page 4, line 4 from bottom --- 280 P. 761 should read 228 P. 761. 

Page 7, line 11 from bottom --- section 28-2-1725 should read section 

28-2-1715. 

WEST PUBLISHING COMPANY 

Box 43526 

St. Paul. MN 55lfiA 
(1) Does mistake or fraud as to the enforceability of 

the buy/sell constitute grounds for rescinding or voiding the 

compromise and settlement? 

(2) Are facts regarding fraud and/or mistake in dispute 

which prevent summary iudgment? 

(3) Should the third-party co~.pI.aint have been 

permitted? 

It should be noted that the respondents, Todds, filed a 

complaint to recover on a promissory note executed and delivered to them by the defendants, Berners. Thereafter, the 

Eerners interposed an answer, raising two affirmative defenses seeking rescissi.on of the promissory note. Depositions 

were taken of the T0dd.s and. P3a.rjori.e Sizemore. The Tod.ds 

then filed a motion for summary iudgment and served the same 

within ten days before the time fixed for the hearing. As 

previously noted, there was no response to the Todds' motion 

for summary judqment by the Berners and neither they nor 

their attorney appeared. However the court, upon learning 

the facts why the appellants' counsel overlooked this matter, 

al.J..owed Berners' counsel to present a brief and argue against 

the granting of summary judgment. 

While the Todds argue the District Court erred in 

al.lowing the Ferners to submit briefs and argue the summary 

judgment motion of the Todds late, we note there are no 

Montana cases on point in this matter. However, several 

cases such as Foster Apiary, Jnc. v. Hubbard Apiaries, Inc., 

(Mont. 1981), 630 P.2d 1213, 38 St.Rep. 1025; Pacific Accep2 a2 

tance Corp. v. McCue (1924), 71 Mont. 99, 24-0 P. 761; and 

Robinson v. Peterson (1922), 63 Mont. 247, 206 P. 1092, 

recognized that there is judicial discretion invol-ved by the 

trial court and it may set aside a iudgment committed in 
error or because of excusable neglect under Rule GOlb) , 

M.R.Civ.P. 

For the above reason we find no merit in the argument 

of respondents that the trial court erred in allowing appellants to brief and argue the point. 

We find, however, it is clear from the depositions that 

appellants issued an? delivered the promissory note, which is 

the subject of this action, as a compromise settlement of the 

respondents' claims against the appellants, arising from an 

agreement of the Berners to buy the Todds' ranch. Whether or 

not the "earnest money receipt and agreement to sell or 

purchase," considered as an exhibit to the depositions, might 

have ultimately been proved, after litjqation, to be unenforceable against appe13ants is immaterial under the 

circumstances. 

We fjnd the relinquishment of the Todds' claim against 

the Berners, even though the claim may not have been ul-timately proved valid, is sufficient consideration of the 

promissory note. See Murray v. White (1910), 42 Mont. 423, 

113 P. 754, and Brown v. Jennett (Iowa 1906), 106 N.W. 747. 

The court found the Todds were in good faith when they 

alleged they had a valid claim under the "earnest money 

receipt and agreement to sell and purchase" referred to in 

the depositions. Whether this qood faith on their part came 

from the fact that they consulted an attorney or not, the 

record indicates the contract was enforceable against both 

parties. As the record indicates if the Todds had not felt 

they had an enforceable agreement, they would not have sold 

their cattle; they would have kept their hay; they would not 

have dispossessed their tenants; and they would not have 
ta.ken their ranch off the market. See 15A Arl.Jur.2~3 

Compromise and Settlement, 5s 16 and 17 at 789, ?90. 

The appellants argue the stake neutral to the parties 

as to the enforceability of a buy/sell was material to the 

compromise and settlement between the two parties. They 

argue that the Todds could not, in good faith, assert the 

validity of the buy/sell and Eerners would not agree to pay 

$32,500 unless they thought the buy/sell was enforceable. 

The validity of the buy/sell was the substance upon which the 

compromise was based. 

Appellants further argue there was fraud. as a qrounds 

for the rescission of the compromise and settlement. In 

Rclqers v. Swingley (Mont. 1983) 670 P.2d 1386, 40 St..Rep. 

1676, this Court reversed a summary judgment in an action 

based upon a compromise of a written lease which was rep]-aced. 

with a. promissory note. We find the above case not applicable in view of the fact there is no showing of any fraud in 

the procurement of the agreement hetween the two parties. 

As to the second defense in the Berners' answer, they 

allege there was a mutual mistake upon which the "promissory 

note" could be rescinded. However, nowhere in the complaint 

do the Rerners allege, nor is a~ything revealed in the depositions and admissions before the court, that they complied 

with the pertinent statutes with regard to any rescission. 

Section 28-2-1713, MCA, is specific with regard to 

rescission, and provides as follows: 

"Rescission, when not effected by consent, can he accomplished only by the use 

on the part of the party rescinding of 

reasonable diligence to comply with the 

following rules: 

1) He must rescind promptly upon discovering the facts which entitle him to 

rescind if he is free from duress, 
menace, undue influence, or disability 

and is aware of his right to rescind. 

"(2) He must restore to the other party 

everything of value which he has received 

from him under the contract or must offer 

to restore the same, upon condition that 

such party shall do likewise, unless the 

latter is unable or positively refuses to 

do SO. " 

Here there is no allegation or showing that the Berners 

used reasonabl-e diligence to comply with the statute. There 

is no allegation or proof that the defendants rescinded. 

promptly upon discovering the fact which allegedly entitled 

them to rescind. As noted by the trial court in its order 

granting the plaintiffs' motion for summary judgment, the 

Eerners took no legal action to dispute this note until the 

Todds filed suit. 

In addition, there is no allegation or proof that the 

Serners have restored to the Todds everything of value which 

the Berners received from them under the contract, or that 

the Eerners offered to restore the same as provided by 

statute. 

Further, concerning the second defense of the Berners, 

sect.ion 28-2 , MCA, provri.des: "Rescission cannot be 

adjudged for mere mistake unless the party against whom it is 

adjudged can be restored to substantially the same posj-tion 

as if the contra-ct had not been made." 

It should be noted there is no allegation or proof 

before the District Court that the Todds can be restored to 

substantially the same position as if the promissory note had 

not been made. 

For the foregoing reasons alone, the District Court was 

correct in granting the Todds' mot.ion for summary judgment 

and its ruling is affirmed. 
In addition, it should be noted i.n the second defense 

of the Berners' answer, the Berners admit in their brief that 

the promissory note was a compromise settlement of the Todds' 

claim on the buy/se11. Whether or not the buy/se11 was 

enforceable or might ultimately prove, after litigation, to 

be unenforceable against the Berners is immaterial. 

The relinquishment of the Todds' claim on the buy/sell, 

even though the claim might not have ultimately proved valid, 

is sufficient consideration for the promissory note and the 

court so found. 

From the depositjons of the parties, it is clear that 

at t.he time of the compromise and settlement--the promissory 

note with which this litigation is concerned--the Berners 

felt they owed the Todds something for the Todds' hospitality 

in showing them the ranch. The Todds felt they had much more 

coming to them which resulted in the compromise note. 

Tn addition, it would appear the Berners' argument in 

their brief to the court regarding the enforceability of the 

buy/sell agreement, is not only misleading but inaccurate. 

The terms of the sale of the ranch were specified with specific certainty: The purchase price was $2,250,000. The 

land sold was sufficiently described. The downpayment, 29% 

of the purchase price, was provided for. The balance of the 

;purchase price was to be carried on a contract for deed 

payable on a twenty-year amortization basis with a ten-year 

balloon. Interest on all but $300,000 of the balance of the 

purchase price was set at 11%. The $300,000 was an assumption of a contract with the Todds' predecessor in interest 

and it was to carry the same interest rate as the underlying 

contract of 8%. 
In addition it should be noted that as to the 

appellants' fraud argument, the District Court in an "Explanatory Note" granted the motion for summary judgment and 

stated: "I further conclude that there are no facts showing 

fraud or misrepresentation on plaintiffs [sic] part ascertainable from the entire record so as to give defendants a 

valid defense to the promissory note." 

From the record, we find the court made no error in so 

finding. 

The third issue is whether the third-party complaint 

should have been permitted by the trial court. Having found 

the trial court did not err in gra-nting summary judgment, we 

find it unnecessary to discuss this issue. That matter can be 

disposed of by the appellants in any further action they 

desire. 

The judgment of the District Court in granting summary 

judgment is affirmed. 

We concur: / 

Justices 

Mr. Justice Fred J. Weber, specially concurring: 

I concur in the result.