### 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~CCJMr. 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 HonorableJack L. Green presiding without a jury, entered in favor of defendant, Betty L. Mann. Appellant brought this action inthe 

### District Court (1)torescind the contract dated April 30, 1976, thathe had entered intowith respondent for the purchase of certainproperty, and (2) to enforce the option topurchase the 

### same property 

### ata lower price under 

### a contract previously entered intoby respondent and Gordon M. Williamsand hiswife dated February 18, 1975, for which appellant gave $2200 toobtain an assignment dated February 

### 4, 1977. The DistrictCourt found that appellant

was not entitled toa rescission of hisApril 30, 1976 contractwith 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 

### atSwan Lake, inLake 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, 

### ata rental of $6000 per year. The option contract


### was assignable and provided that the Williamses could exercise the option topurchase ata purchase price of $68,000 by paying $12,000 down on orbefore May 1, 1978, and by paying the balance inmonthly payments of $500 which included interest commencing on June 1, 1978. In consideration for thisoption, the option contract recited that the 

### Williamseshad 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 leaseprovided 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 inmonthly 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 topay 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 $20r000and the balance tobe paid inmonthly payments of $500, including intereston the unpaid principal balance 

### atthe rate of 8-1/2 percent annually. Berry had no actual notice of theMann-Williams option agreement 

### atthis time. Mann considered the agreement and the lease tohave been terminated by mutual agreement and tobe void by reason of the Williamses' default and failure of consideration. Berry learned of the previous agreement only when a titleinsurance policy showed merchantable 

### titlewas not forthcoming, asrequired 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 tomerchantable title, Berry, acting on advice of counsel, paid the

### Williamses $2200 and received an assignment of the Williamses' interestunder the option contract on February 

### 4, 1977. On April 25, 1977, Berry brought this suitfor 

### a cancellation and rescission of hisApril 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 alsoasserted 

### a cross-complaint against theWilliamses because of their default in the lease payments afterMarch 1, 1975, and the failure of consideration for the option contract. The DistrictCourt struck this cross-complaint from her answer on Berry's motion. Mann then filed a separate action against

### Williams and hiswife on August 31, 1978, for cancellation and termination of the Williamses' option and leasewhich option had been assigned toBerry on February 4, 1977. The 

### Williamses

were served on September 20, 1978, and their default

### was entered inan October 11, 1978 judgment declaring the lease and option tobe void. The option 

### was found to be void and cancelled asof March 1, 1975, for failure of consideration, and the 

### lease was found tobe void and cancelled asof August 15, 1975, for default inmaking 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 DistrictCourt found further that the contract of April 30, 1976, between Berry and Mann remains infull force and effect, and thatMann has provided a 

### title insurance report dated October 17, 1978, showing good and merchantable title inproperty free and clear of 

### all liens and encumbrances, 

### a:; rcquired under their contract.The sole issue on appeal is: Did the 

### District Court



### err infinding, based on the default judgment against the Williamses and infavor of Mann (towhich Berry was not party), that the option contractbetween the Williamses and Mann was void atthe 

### timeof 

### its assignment by the Williamses toBerry. This Court ina long seriesof opinions, many of which



### are cited inHarrison 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 

### isupon the appellant to show reversible error. In addition, the evidence 

### is tobe viewed in a light most favorable to the prevailing party, and this Court 

### will not interferewith the findings of the 

### trier of factif they

are supported by substantial evidence. (1962), 140Mont. 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 

### atthe time of 

### its assignment to Berry 

### iscontrary to the law and not supported by the evidence. However, the brief presented and the authority contained therein 

### isvoid of any support for that contention. The 

### trial court took judicial notice of the District Court judgment inCivil Action No. 10443 and determined that, based on thisjudgment, the option contract of February 18, 1975 between the Williamses and Mann became void on March 1, 1975. It 

### was, therefore, void atthe 

### timeof the assignment from the Williamses toBerry on February 

### 4, 1977. Appellant does not claim that the judgment inCause No. 10443 

### is invalid but merely states inhis issues and statement of case that Berry

### was not a party to that action. This 

### is certainlynot sufficient argument to overturn the DistrictCourt's finding that the

### Williamses' contract was void. Respondent Mann inher counterclaim tried tobring the Williamses into this lawsuit. However, the counterclaim

### was dismissed inthis suiton motion by Berry. The evidence shows that the separate lawsuit filed by respondent against the

### Williamses, that appellantnow complains he 

### was not a party to, contains the 

### same allegations thatwere in the counterclaim against theWilliamses in the instant case and



### were dismissed on appellant's motion. Independent of the judgment in the CivilAction No. 10443, which found that the option and lease were void, therewas substantial evidence presented before Judge Green inthe instant case to support the conclusion that the optic-I

### was void. The uncontradicted testimony of the respondent 

### is that theWilliamses did not pay the full $6000 consideration referred to inthe option contract and that theWilliamses 

### still owed respondent $2800 thatwas tohave been paid on or before March 

### 1, 1975, but

### was never paid. Respondent also testified that the Williamses leftthe 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 some

### timein early September. Respondent operated the property after that 

### timeand was operating the property atthe 

### time she entered into the contract with appellant. Appellant has failed inhisburden of proving that the trial court's finding that the option contract was void at the 

### timeit was assigned toBerry 

### was inerror. The record contains substantial evidence to support the finding both inthe trialcourt's having taken judicial notice of the judgment inCivilAction No. 10443 and inthe uncontradicted testimony of respondent as to the failure of consideration and default in the payment inthe option and lease which occurred prior to the assignment to appellant. In support of hisposition appellant 

### cites Millerv. Meredith, Hilland Whitfield (1967), 149Mont. 125, 423 P.2d 595, 

### as authority that the 

### terms and conditions of a lease

arenot the terms and conditions of an option. That case held that a tenant holding over after expiration of 

### lease

was not entitled to exercise hisoption 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 inthe 

### lease payment. We find no basis torely upon this case in support of appellant's position that the 

### lease



### was not indefault. Next appellant

### cites Ogg v. Herman (1924), 71Mont. 10, 227 P. 467, and Connor v. Helvik (1937), 105Mont. 437, 73 P.2d 541, asauthority con.cerningmerchantable 

### titlebeing given appellant by respondent atthe 

### timeof the agreement entered intobetween appellantand respondent. The facts in this case do not support the appellant's position on the delivery of merchantable 

### title. The facts indicate thatonce thematter was brought torespondent's attention, she 

### immediatelydid everything thatwas necessary to clear the title and present a good and merchantable title to appellant, free and clear of allliens and encumbrances. The 

### trial court so found inFinding of FactNo. 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: