No. 79-120 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1980 

GERALD BERRY, 

Plaintiff and Appellant, 

VS . 

BETTY L. MANN, 

Defendant and Respondent. 

Appeal from: District Court of the Fourth Judicial District, 

In and for the County of Lake. 

Honorable Jack L. Green, Judge presiding. 

Counsel of Record: 

For Appellant: 

Daniels & Mizner, Deer Lodge, Montana 

For Respondent: 

Turnage and McNeil, Polson, Montana 

Submitted on briefs: April 25, 1980 

Decided: M-kY 12 198D 

Filed: - my; Y~CCJ 
Mr. Justice John Conway Harrison delivered the Opinion of 

the Court. 

This is an appeal from a judgment of the District Court 

of the Fourth Judicial District, County of Lake, the Honorable Jack L. Green presiding without a jury, entered in 

favor of defendant, Betty L. Mann. Appellant brought this 

action in the District Court (1) to rescind the contract 

dated April 30, 1976, that he had entered into with respondent for the purchase of certain property, and (2) to enforce 

the option to purchase the same property at a lower price 

under a contract previously entered into by respondent and 

Gordon M. Williams and his wife dated February 18, 1975, for 

which appellant gave $2200 to obtain an assignment dated 

February 4, 1977. The District Court found that appellant 

was not entitled to a rescission of his April 30, 1976 contract with respondent, nor was he entitled to exercise the 

Williamses' option contract. 

Respondent Betty L. Mann is the owner of a combination 

restaurant-motel business known as the "Alpine Cafe & Motel" 

located at Swan Lake, in Lake County, Montana. On February 

18, 1975, she entered into an option contract with Gordon M. 

and Darlene L. Williams for the sale of the business, and at 

the same time, executed a separate lease of the business to 

the Williamses for a period of three years beginning May 1, 

1975, at a rental of $6000 per year. The option contract 

was assignable and provided that the Williamses could exercise 

the option to purchase at a purchase price of $68,000 by 

paying $12,000 down on or before May 1, 1978, and by paying 

the balance in monthly payments of $500 which included 

interest commencing on June 1, 1978. In consideration for 

this option, the option contract recited that the Williamses 
had paid $6000, which represented one-third of the amount 

due under the three-year lease, and which would be credited 

towards payment of the option price if the option was exercised. 

The accompanying lease provided that the $6000 annual 

rental would be paid by a $500 downpayment made on the date 

of execution, February 18, 1975; $2700 due on March 1, 1975; 

and the balance of $2800 due in monthly payments of $100 

beginning on March 1, 1975, which would rise to $433.30 per 

month on May 1, 1975, until the full $6000 sum was paid. 

The Williamses failed to pay the balance of the consideration recited in the option contract, stopped making lease 

payments, and closed the business and vacated the property 

on September 1, 1975. Subsequently, on April 30, 1976, Mann 

entered into an agreement with Berry for the sale of the 

same property for a purchase price of $75,000 with a downpayment of $20r000 and the balance to be paid in monthly 

payments of $500, including interest on the unpaid principal 

balance at the rate of 8-1/2 percent annually. Berry had no 

actual notice of the Mann-Williams option agreement at this 

time. Mann considered the agreement and the lease to have 

been terminated by mutual agreement and to be void by reason 

of the Williamses' default and failure of consideration. 

Berry learned of the previous agreement only when a 

title insurance policy showed merchantable title was not 

forthcoming, as required under his contract with Mann. 

Berry employed an attorney and a title insurance policy was 

received December 20, 1976, which showed the ~illiamses' 

option and lease as exceptions to merchantable title, 

Berry, acting on advice of counsel, paid the Williamses 

$2200 and received an assignment of the Williamses' interest 
under the option contract on February 4, 1977. On April 25, 

1977, Berry brought this suit for a cancellation and rescission of his April 30, 1976 agreement with Mann and for 

specific enforcement of the Williamses' option agreement in 

his (Berry's) name as assignee. In her answer dated September 14, 1977, Mann alleged that the Williamses' option and 

lease were cancelled and invalid prior - to her entering the 

contract with Berry. She also asserted a cross-complaint 

against the Williamses because of their default in the lease 

payments after March 1, 1975, and the failure of consideration for the option contract. The District Court struck 

this cross-complaint from her answer on Berry's motion. 

Mann then filed a separate action against Williams and 

his wife on August 31, 1978, for cancellation and termination of the Williamses' option and lease which option had 

been assigned to Berry on February 4, 1977. The Williamses 

were served on September 20, 1978, and their default was 

entered in an October 11, 1978 judgment declaring the lease 

and option to be void. The option was found to be void and 

cancelled as of March 1, 1975, for failure of consideration, 

and the lease was found to be void and cancelled as of 

August 15, 1975, for default in making payments thereunder. 

On the basis of this default judgment, the ~istrict Court 

found that the assignment of the option to Berry was of no 

effect. 

The District Court found further that the contract of 

April 30, 1976, between Berry and Mann remains in full force 

and effect, and that Mann has provided a title insurance 

report dated October 17, 1978, showing good and merchantable 

title in property free and clear of all liens and encumbrances, a:; rcquired under their contract. 
The sole issue on appeal is: Did the District Court 

err in finding, based on the default judgment against the 

Williamses and in favor of Mann (to which Berry was not 

party), that the option contract between the Williamses and 

Mann was void at the time of its assignment by the Williamses 

to Berry. 

This Court in a long series of opinions, many of which 

are cited in Harrison v. City of Missoula (1965), 146 Mont. 

420, 407 P.2d 703, has held that there is a presumption that 

the trial court's findings of fact, conclusions of law, 

judgment and decree are correct, and that the burden is upon 

the appellant to show reversible error. 

In addition, the evidence is to be viewed in a light 

most favorable to the prevailing party, and this Court will 

not interfere with the findings of the trier of fact if they 

are supported by substantial evidence. 

(1962), 140 Mont. 181, 368 P.2d 917. 

We note that appellant's position and sole issue is 

that the finding that the Williamses' option contract was 

void at the time of its assignment to Berry is contrary to 

the law and not supported by the evidence. However, the 

brief presented and the authority contained therein is void 

of any support for that contention. The trial court took 

judicial notice of the District Court judgment in Civil 

Action No. 10443 and determined that, based on this judgment, the option contract of February 18, 1975 between the 

Williamses and Mann became void on March 1, 1975. It was, 

therefore, void at the time of the assignment from the 

Williamses to Berry on February 4, 1977. Appellant does not 

claim that the judgment in Cause No. 10443 is invalid but 

merely states in his issues and statement of case that Berry 
was not a party to that action. This is certainly not 

sufficient argument to overturn the District Court's finding 

that the Williamses' contract was void. 

Respondent Mann in her counterclaim tried to bring the 

Williamses into this lawsuit. However, the counterclaim was 

dismissed in this suit on motion by Berry. The evidence 

shows that the separate lawsuit filed by respondent against 

the Williamses, that appellant now complains he was not a 

party to, contains the same allegations that were in the 

counterclaim against the Williamses in the instant case and 

were dismissed on appellant's motion. 

Independent of the judgment in the Civil Action No. 

10443, which found that the option and lease were void, 

there was substantial evidence presented before Judge Green 

in the instant case to support the conclusion that the 

optic-I was void. The uncontradicted testimony of the respondent is that the Williamses did not pay the full $6000 

consideration referred to in the option contract and that 

the Williamses still owed respondent $2800 that was to have 

been paid on or before March 1, 1975, but was never paid. 

Respondent also testified that the Williamses left the 

property on or about August 15, 1973, and made no further 

payments on the lease. She further testified that she 

received a letter along with the keys to the property sometime in early September. Respondent operated the property 

after that time and was operating the property at the time 

she entered into the contract with appellant. 

Appellant has failed in his burden of proving that the 

trial court's finding that the option contract was void at 

the time it was assigned to Berry was in error. The record 

contains substantial evidence to support the finding both in 
the trial court's having taken judicial notice of the judgment in Civil Action No. 10443 and in the uncontradicted 

testimony of respondent as to the failure of consideration 

and default in the payment in the option and lease which 

occurred prior to the assignment to appellant. 

In support of his position appellant cites Miller v. 

Meredith, Hill and Whitfield (1967), 149 Mont. 125, 423 P.2d 

595, as authority that the terms and conditions of a lease 

are not the terms and conditions of an option. That case 

held that a tenant holding over after expiration of lease 

was not entitled to exercise his option to purchase. Applying that authority to the facts in the instant case, neither 

Williamses nor their assignee, the appellant, would be entitled to exercise the option because of the failure of 

consideration of payment upon the option and because of the 

default in the lease payment. We find no basis to rely upon 

this case in support of appellant's position that the lease 

was not in default. 

Next appellant cites Ogg v. Herman (1924), 71 Mont. 10, 

227 P. 467, and Connor v. Helvik (1937), 105 Mont. 437, 73 

P.2d 541, as authority con.cerning merchantable title being 

given appellant by respondent at the time of the agreement 

entered into between appellant and respondent. The facts in 

this case do not support the appellant's position on the 

delivery of merchantable title. The facts indicate that once 

the matter was brought to respondent's attention, she immediately did everything that was necessary to clear the title 

and present a good and merchantable title to appellant, free 

and clear of all liens and encumbrances. The trial court so 

found in Finding of Fact No. 4, and this finding was not 

as 

even raised/an issue by appellant on appeal. 
For the foregoing reasons the judgment of the District 

Court is a£ firmed. 

We concur: