No. 83-88 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1983 

MARY JANE IIARDY, MARY JOAN FOX, 

DAN FOX, and L.O. RANCH CO., a 

Mont. corp. , 

Plaintiffs and Appellants, 

and 

ROBERT JOHN HARDY and BARBARA ANN HARDY, 

Defendants and Appellants, 

LEWIS JOHN KRUTZFELDT, JUNE FRANCIS RAFFERTY, 

WILLIAM J. KRUTZFELDT, JULIE ANN KRUTZFELDT, 

KAREN JOYCE KRUTZELDT, EDWIN DUDLEY HARDY, 

BARBARA MARIE HARDY, and GEORGE RAFFERTY, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Sixteenth Judicial District, 

In and for the County of Custer, 

The Honorable A. B. Martin, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

Bruce Brown argued; Brown and HUSS, Miles City, 

Montana 

Thomas Monaghan; Lucas & Monaghan, Miles City, 

Montana 

For Respondents: 

Bruce Toole argued; Crowley, Haughey, Hanson, Toole 

& Dietrich, ,Billings, Montana 

Submitted: October 26, 1983 

Decided : November 21, 1983 

Filed: ?'4gS13. ,,: !$:kd 

Clerk 
Mr. Justice John C. Sheehy delivered the Opinion of the 

Court. 

Mary Jane Hardy, Mary Joan Fox, Dan Fox, and L. 0. Ranch 

Co., plaintiffs, and Robert John Hardy and Barbara Ann Hardy, 

defendants, appeal from a judgment of the District Court of 

the Sixteenth Judicial District, Custer County, granting 

summary judgment in favor of the other defendants and 

refusing to adjudge that the right of first refusal in an 

agreement between the parties was invalid. 

The issue here is whether an agreement providing for a 

right of refusal before property is offered for sale is void 

as constituting an unreasonable restraint on alienation and 

against public policy. 

We hold that no justiciable controversy is presented on 

the facts before us in this case. 

The parties to this action are the heirs of Robert F. 

Hardy. In his lifetime he created certain trusts, and upon 

his death, the trusts became operative. Later the trusts 

were terminated and the Hardy heirs entered into negotiation 

for the division of the ranch properties which constituted 

the corpus of the trusts. The negotiations culminated in an 

agreement dated November 22, 1977. That agreement divides 

the Hardy ranch properties into seven tracts and provides for 

the di-stribution of the seven tracts of land among seven 

persons designated as grantees. A right of first refusal to 

purchase is provided for the parties, summarized by the 

District Court as follows: 

1. Should one or more of the named grantees desire to 

sell his tract, he must first offer it to any one or more of 

the remaining grantees, until all have refused to purchase; 
the grantees upon receiving the offer have 60 days to accept 

and arrange financing; if the offer is made to more than one 

of the remaining grantees, the first to accept in writing is 

accorded priority. 

2. Only after first offering to sell to all the 

remaining grantees can the selling grantee offer the lands to 

a third party. 

3. If the selling grantee enters into a contract for 

the sale of a tract with a third party purchaser, the selling 

grantee must again offer to sell the lands to one or more of 

the other grantees until all have refused to purchase upon 

the contract terms; again the first grantee to accept in 

writing is accorded priority, and the grantee or grantees 

receiving the contract offer have 60 days to accept and 

arrange financing. 

4. The preemption right is conditioned to bind any 

third party purchasers, successors or assigns of the oriqinal 

seven grantees. 

5. The preemption right is to descend to the spouse and 

the descendants of the seven grantees named. 

6. The restraint on alienation embodied in the 

preemption is to terminate upon the death of the last of the 

seven named grantees. 

The plaintiffs filed a complaint for declaratory relief 

on March 26, 1981, in which they requested the District Court 

to declare t.hat portion of the November 22, 1977 agreement 

relating to first refusal rights invalid and void as an 

unreasonable restraint on alienation. Defendants Robert 

John Hardy and Barbara Ann Hardy joined with the plaintiffs 

in this contention. The District Court granted defendants' 

motion for summary judgment on April 9, 1982, denying the 
plaintiffs1 motion, holding in effect, that the first refusal 

right was valid and not an unreasonable restraint on 

alienation. It is from that holding that this appeal ensued. 

The basic contention of the appellants here is that the 

procedures for exercising the preemptive refusal provisions 

of the agreement are so awkward and time consuming that they 

render the property of the grantees unmarketable. 

As far as the record here shows, there is no pending 

sale or offer for sale of the ranch properties, or purchase 

or offer to purchase the lands involved in this case which is 

affected by the first refusal rights in the contract. Nor 

does any third party appear before the court in this cause 

contending that the preemptive clauses are invalid as to him. 

We have before us only a suit for declaratory judgment under 

the Uniform Declaratory Judgments Act. 

It is true that the purpose of the Uniform Declaratory 

Judgments Act is remedial, to "settle and to afford relief 

from uncertainty and insecurity with respect to rights, 

status, and other legal relations;" and is to be liberally 

construed and administered. Section 27-8-102, MCA. It is 

also true that the powers vested by the statute in the courts 

to render declaratory judgments includes "power to declare 

rights, status and other legal relations whether or not 

further relief is or could be claimed." Section 27-8-201, 

MCA . 

Nevertheless, this Court has on occasion refused to 

entertain a declaratory judgment action on the ground that no 

controversy is pending which the judgment would affect, and 

this Court attempts to avoid rendering advisory opinions. 

The District Court in this case touched on the problem of 
justiciability in its order granting summary judgment, 

stating: 

". . . It goes without saying that a Court will 

not declare a provision of a contract invalid 

because of conjecture. Anticipated or 

unanticipated problems may arise in the future 

which the parties might or might not then resolve, 

but if not, then the court by stipulation could 

imply conditions necessary to reasonably carry out 

provisions of the contract which the agreeing 

parties felt were important in the formulation of 

the written contract. In this case the parties by 

the agreement, believed tha.t the lands should be 

kept in the family until the last of the seven 

grantees died." 

The order of the District Court granting summary 

judgment here can in the circumstances be construed to mean 

that as far as the records here show, there was no reason for 

the District Court to determine that the preemptive first 

refusal clause was invalid. 

The only thing before this Court in this case is a 

difference of opinion among lawyers on the legal effect of 

the preemptive first refusal clause. We do not have before 

us any litigants involved in an actual controversy who are 

deprived of a property right in seeking redress. Our 

decision here will not affect any party to the contract 

directly, because on this record there has not been any 

intent by any party to sell property outside the preemptive 

clause, nor any third party seeking to be relieved from the 

preemptive clause. 

In support of their complaint, the appellants attacking 

the preemptive clause have postulated a series of horribles, 

each of which may be speculatively true, if the clause is 

permitted to govern. In opposition to appellant's position, 

the respondents have pooh-poohed the horribles, and have 

insisted on the legality of the clause which so far has not 

detrimentally affected anybody. The respondents liken the 
preemptive clause to a.n ordinary trust where the corpus 

includes 1a.n.d. 

No concrete controversy is here, and we are asked by the 

parties on each side to give an opinion merely upon 

hypothetical facts and abstract propositions. No litigant 

bef ore immediate danger of sustaining direct in jury 

from the preemptive clause. Therefore we do not have a 

justiciable controversy over which the judicial power to 

determine real controversies may be exercised. Rroad 

language in the Uniform Declaratory Judgments Act, section 

27-8-101, et seq., MCA, may not be used as a platform for 

courts in this state to plunge into indefinite amorphous 

ponds of contract interpretation. In Chovanak v. Matthews 

(1948), 120 Mont. 520, 525-26, 188 P.2d 582, this Court said: 

"It is by reason of the fact that it is only 

judicia.1 power that the courts possess, that they 

are not permitted to decide mere differences of 

opinion between citizens, or between citizens and 

the state, or the administrative officials of the 

state, as to the validity of statutes. 

Particularly is it true where a statute, 

regular[ly] enacted by the lawmaking branch of the 

government, is attacked by the citizen as being in 

violation of some provision or provisions of the 

Constitution. 

"The judicial power of the United States is vested 

in 'one Supreme Court and in such inferior Courts 

as the Congress may from time to time ordain and 

establish.' Sec. 1, Art. 111, of the United States 

Constitution. The judicial power vested in the 

district courts and the Supreme Court of Montana, 

by the provisions of the Montana Constitution, 

extend to such 'cases at law and in equity' as are 

within the judicial cognizance of the state 

sovereignty. Article 8, secs. 3, 11, [I889 Montana 

Constitution.] By 'cases' and 'controversies' 

within the judicial power to determine, is meant 

real controversies and not abstract differences of 

opinion or moot questions. Neither federal nor 

state Constitution has granted such power." 

The summary judgment of the District Court, insofar as 

it may be construed to determine by the rights of the parties 

under the preemptive purchase agreement, is reversed. The 
cause is remanded to the District Court with instructions to 

dismiss without prejudice. ") '-4,-jic5!&3&4$ 

We Concur: 

%-, Chief Ju'stice &/@a& 

Justices A 

District Judge, sitting 

for Mr. Justice Frank B. 

Morrison, Jr. 

Mr. Justice L. C. Gulbrandson, Mr. Justice Daniel J. Shea 

and Mr. Justice Fred J. Weber dissent and will file written 

dissents later. 
IN THE SUPREME COURT OF THE STATE OF MONTANA 

No. 83-88 

HARDY v. KRTJTZFELDT 

DISSENT 

Submitted: November 23, 1983 
4. Justice Fred J. Weber respectfully dissents as 

follows: 

I respectful-ly dissent from the applicati-on of our 

declaratory judgment law to the facts of this case. This is 

an ideal case for a declaratory judgment. 

The plaintiffs contend that the right of first refusal 

summarized in the majority opinion is void as an unreasonable 

restraint on alienation. Deposition testimony shows that the 

right of first refusal was intended to keep the ranch 

property in the family. Because the first refusal right 

decends to the spouse and descendants of a deceased party and 

terminates only upon the death of the last named party, there 

are 39 people who potentially have a right of first refusal 

and therefore constitute the persons to whom notice is 

required in the event of an attempted sale. Each of such 

persons has a right to purchase. Even if a sale does take 

place to a third party purchaser, the same right extends to 

the remainder of such 39 persons and continues until the 

death of the last of the seven named grantees. 

From the admitted facts, I conclude there is a 

significant restraint on the right of sale of each of the 

seven parties involved in the contract. Where a party 

contends this is an unreasonable restraint, that contention 

appears sufficient to warrant declaratory judgment. 

Section 27-8-202, MCA, (a part of the Uniform 

Declaratory Judgment Act) in pertinent part states: 

"Any person interested under a . . . written 

contract . . . or whose rights . . . are affected 

by a . . . contract . . . may have determined any 

question of construction or validity under the . . . contract . . . and obtain a declaration of 

rights . . ." 
With regard to the interpretation of a contract, the 

foregoing is buttressed by section 27-8-203, MCA, which 

provides : 

"A contract may he construed either before or after 

there has been a breach thereof." 

This appears to negative a requirement fcr something in the 

nature of breach. It seems clear that under the specific 

wording of the statute, the parties are entitled to a 

declaration of their rights under the present facts. 

Apparently the majority is suggesting that there should have 

been a showing of an intention. to sell. property by one of the 

parties and of some type of adverse effect, or a completed 

sale and a.n objection by a third party seeking to be relieved 

from the preemptive clause. I do not find that type of a 

fact situation is necessary in order to determine that a 

justiciable controversy exists under the Act. As stated by 

this Court in Lee v. State (Mont. 1981), 635 P,2d 1282 at 

"The test of whether a iusticiable controversy 

exists is set forth in Matter - of Secret Grand Jury - 

Inquiry (1976), 170 Mont. 354, 357, 553 P.2d 987, 

990. There this Court said: 

"'First, a justiciable controversy requires that 

parties have existing and genuine, as distinguished 

from theoretical, rights or interest. Second, the 

controversy must be one upon which the judgment of 

the court may effectively operate, as distinguished 

from a debate or argument invoking a purelv 

political, administrative, philosophical or 

academic conclusion. Third, must be a controversy 

the judicial determination of which will have the 

effect of a final judgment in law or decree in 

equity upon the rights, status or legal 

relationships of one or more of the real parties in 

interest, or lacking these qualities be of such 

overriding public moment as to constitute the legal 

equivalent of all of them.'" 

First, the parties here have a genuine and existing property 

interest which on its face is affected by a restraint on the 
power of sale, and therefore meets the first test. Second, 

the judgment of this Court could effectively operate because 

it would determine that the restraint on alienation was to 

remain controlling or was in fact void. That is clearly not 

a philosophical or academic conclusion. Third, a conclusion 

by the court as to the validity or invalidity of the 

restraint would certainly be a judicial determination which 

would have the effect of a final judgment in law upon the 

rights of these parties. At that point it seems to me that 

the parties have met the tests previously stated by this 

Court. 

In City of Billinas v. Public Service Commission (Mont. 

1981), 631 P.2d 1295, the City requested the court to decide 

whether a 1963 contract with a District was valid and binding 

and whether this contract required the City to supply water 

mains and to serve an increased district area without 

Limitation, as well as other requests. The District Court 

concluded the contract was valid and binding. This Court 

approved that determination. We did not suggest that the 

City had to wait until requested to supply additional water 

mains or until asked to serve an increased area of the 

District before determining the respective rights of the 

parties to the contract. 

In a similar manner, 1 do not think it is appropriate 

here to require a party to attempt to sell the property, to 

give the very extensive notices required, and to somehow 

prove that the restraint has reduced the value of the 

property. That would be difficult, time consuming and 

expensive. 
Here we have a very real restraint on the right of sale 

which on its fzce will have an adverse affect on sale. The 

question is whether that restraint should be maintained or 

not. That constitutes a justiciable controversy under the 

Uniform Declartory Judgment Act, similar to City - of Billings. 

I would decide the case on its merits. 

Wjoin in the foregoing dissent of Justi '%eber. 

/c&*