NO. 94-308

IN THE SUPREME COURT OF THE STATE OF MONTANA

1995

RONALD W. JOHNSON, d/b/a

JOHNSON REALTY,'

Plaintiff and Respondent,

APPEAL FROM: District Court of the Fifth Judicial District,

In and for the County of Beaverhead,

The Honorable Frank M. Davis, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

J. Robert Planalp, Landoe, Brown

Planalp & Braaksma, Bozeman, Montana

For Respondent:

W. Cecil Jones and Calvin J. Erb,

Attorneys at Law, Dillon, Montana

Submitted on Briefs: November 17, 1994

Filed:

Decided: February 8, 1995
Justice William E. Hunt, Sr., delivered the opinion of the Court.

Respondent Ronald Johnson, doing business as Johnson Realty,

brought suit in the Fifth Judicial District Court, Beaverhead

County, to collect a real estate broker's commission from sellers.

Johnson moved for summary judgment. The District Court granted the

motion and entered judgment in favor of Johnson. Appellants Jerry

Nyhart and Nyhart Ranches, Inc., appeal. We affirm in part and

vacate the judgment as it pertains to Clarajo Nyhart.

We frame the issues on appeal as follows:

1 . Did the District Court err in granting summary judgment?

2 . Did the District Court err by awarding prejudgment

interest to Johnson?

3 . Did the District Court err by entering judgment against

Clarajo Nyhart?

Ronald Johnson is a licensed real estate broker doing business

as Johnson Realty in Dillon, Montana. In 1984, Jerry and Clarajo

Nyhart owned and ranched land in Beaverhead and Deer Lodge

Counties. In the spring of 1984, the Nyharts wanted to sell

approximately 2000 acres of their land located in the Big Hole

Valley. On May 29, 1984, Jerry and an agent of Johnson Realty

executed a standard listing contract for the land, listing the

selling price at $800,000, and stating that the terms of the sale

would "be negotiated at time of sale." The agreement provided that

the listing contract would expire on May 29, 1985. The listing

contract also provided:
FOR VALUE RECEIVED, you and your agents are employed to

find a buyer ready and willing to purchase or exchange

the property described above at the price and terms noted

or at such other price and terms as I/we accept. . In

the event a written agreement is executed for the sale or

exchange of said property, I/we agree to pay you in cash

a commission equal to 6% of the selling price for your

services in securing or procuring a purchaser.

Johnson obtained an offer to purchase the property from Keith

Swenson. Johnson presented Swenson's offer to the Nyharts, and on

June 29, 1984, Swenson, Jerry, and Clarajo signed an earnest money

receipt and agreement to sell and purchase. The earnest money

receipt and agreement provided in part:

The TOTAL PURCHASE PRICE is Seven hundred thousand

dollars ($700,000) to be paid by Purchaser as follows:

Total of $70,000 at closing including $10,000

earnest money paid this date. Balance to be

paid in escrow. Purchaser to have the right

of unlimited prepayment on escrow and

Travelers Real Estate loan. Seller will then

receive $50,000 on January 1, 1985. Balance

to be agreed upon at closing.

. . .

The date of closing is on or before July 30, 1984 or

30 days beyond this date shall be allowed for completion

of financing.

The agreement also provided:

The Seller shall at his expense, furnish Purchaser

an abstract of title to the above described property,

certified to date, or a title insurance policy as

evidenced by a title commitment in an amount equal to the

purchase price, insuring title thereto vested in

Purchaser, free and clear of all liens and encumbrances

except Zoning ordinances, building and use restrictions,

reservations in federal patents, beneficial utility

easements of record, and mortgage to Travelers Insurance

in amount of $550,000.
The scheduled closing did not occur on July 30. Oil

November 19, 1984, pursuant to the agreement for sale and purchase,

Leonard Pelullo, Swenson's assignee in interest, executed two

promissory notes payable to the Nyharts on February 1, 1985, and

July 1, 1994, in the amounts of $80,000 and $100,000, respectively.

To secure the notes, Pelullo granted the Nyharts a mortgage on the

2000 acres. The promissory notes and the mortgage were

subsequently recorded in Beaverhead County.

On December 19, 1984, the Nyharts' attorney, Max Hansen, sent

a letter to the general manager of the Boise, Idaho, branch of

Travelers Insurance Company. Hansen's letter stated in pertinent

part:

It was always our understanding that at the time of

closing this transaction [between the Nyharts and

Pelullol , the [mortgage] assumption papers would be

signed by Mr. Pelullo and the only further obligation Mr.

and Mrs. Nyhart would have to Travelers would be to make

the payment on the remaining balance. . .

Since the assumption papers are not available at this

time, my clients are faced with a rather unfortunate

chain of circumstances. If they do not close the

transaction, default interest is going to continue to

accrue on past due payments owing to Travelers. However,

if they do close out the transaction and make the l/1/84

payment together with default interest, Mr. Pelullo will

be placed in possession of the property while we are

tying up the loose ends of getting the assumption papers

signed by Mr. Pelullo. I am rather uncomfortable with

that situation to say the least. We have determined that

my clients don't have any real choice in the matter and

are going to close the transaction with an eye to getting

the assumption papers signed by Mr. Pelullo just as soon

as possible and hopefully having the whole matter

resolved by February 1, 1985.

4
The Nyharts' attorney prepared a deed transferring title of

the 2000 acres to Pelullo, and on December 21, the Nyharts signed

the deed and delivered it to Pelullo. The deed was subsequently

recorded in Beaverhead County. In addition to the two promissory

notes, Pelullo paid the Nyharts $70,000. The remaining balance of

the purchase price consisted of a mortgage held by Travelers in the

amount of $550,000. Jerry claims that he and his attorney "were

under the belief that Travelers Insurance Company would allow an

assumption of the real estate mortgage." Following the transfer of

title, however, difficulties arose between the Nyharts, Pelullo,

and Travelers regarding Pelullo's assumption of the $550,000

mortgage.

On December 21, the Nyharts paid Johnson a commission of

$11,967.27 out of the $70,000 they received from Pelullo. The

Nyharts' attorney also prepared, and the Nyharts signed, a

promissory note for the balance of the commission, payable to

Johnson on or before February 1, 1985, in the amount of $30,032.73.

The total amount paid and promised to Johnson equalled $42,000, or

exactly six percent of the $700,000 selling price. Johnson was not

present at the December 21 transaction, nor was he represented by

counsel at that meeting. The note was not signed by Johnson,

although Jerry claims that Johnson orally agreed to the terms of

the note.

Following the transfer of title, Travelers refused to allow

Pelullo to assume the $550,000 mortgage and brought suit to

5
foreclose. Additionally, Pelullo failed to make payment on the

promissory note due February 1, 1985. Two separate sets of

litigation followed, the first between the Nyharts and Pelullo, and

the second between Travelers, the Nyharts, Pelullo, and Pintler

Creek Range, Inc. Those cases were filed in the Fifth Judicial

District Court, Beaverhead County, and the Third Judicial District

Court, Deer Lodge County, respectively.

In April 1987, the Nyharts and Pelullo settled their

litigation against one another. They entered into a written

agreement mutually releasing and discharging each other from

all manner of action and actions, cause or causes of

action, suits, debts, dues, sums o f money, notes,

mortgages, accounts, reckonings, covenants, contracts,

controversies, promises, damages, judgments, claims and

demands whatsoever, in law or in equity . regarding

either the Beaverhead litigation, or the Deer Lodge

litigation, or the subject matter of anything set forth

in said lawsuits.

The agreement was also signed by David Hellhake, president of

Pintler Creek Range, Inc. According to the agreement, Pintler

Creek Range, Inc., was the current owner of the "property

previously deeded to PELULLO by the NYHARTS." The agreement

provided that the Nyharts would receive the use of and income

generated by the 2000 acres for a period of five years and that,

during the five years, Pelullo would pay the property taxes.

Pelullo also agreed to pay up to $1000 to improve the cabin located

on the land. A third cause of action was instituted by the Nyharts

and Pelullo against Travelers. The District Court in this case

6
presided over and took judicial notice of the proceedings in that

case.

On December 11, 1987, the Second Judicial District Court,

Silver Bow County, issued a decree dissolving Jerry and Clarajo's

marriage. Pursuant to the property settlement agreement in the

dissolution proceedings, Jerry released Clarajo from liability for

all notes, obligations, and debts which were presently owed or

incurred by Jerry Itincluding, but not limited to, property taxes,

mortgages, and the debt to Travelers Insurance Company."

Our standard of review on a grant or denial of summary

judgment is identical to that of the district court. Klawitter v.

Dettmann (Mont. 1994), 51 St. Rep. 1296, 1297. Summary judgment is

proper only when no genuine issue of material fact exists and the

moving party is entitled to judgment as a matter of law. Rule

56(c), M.R.Civ.P.; Klawitter, 51 St. Rep. at 1297; Spain-Morrow

Ranch, Inc. v. West (1994), 264 Mont. 441, 444, 872 P.Zd 330,

331-32.

ISSUE 1

Did the District Court err in granting summary judgment?

Jerry Nyhart signed a standard listing contract with Johnson

Realty. The contract provides in pertinent part:

FOR VALUE RECEIVED, you and your agents are employed to

find a buyer ready and willing to purchase or exchange

the property described above at the price and terms noted

or at such other price and terms as I/we accept. . . . In

the event a written agreement is executed for the sale or

exchange of said property, I/we agree to pay you in cash

a commission equal to 6% of the selling price for your

services in securing or procuring a purchaser.

7
In its order granting summary judgment, the District Court, with

regard to this provision, concluded that:

The language in the agreement is clear and

unambiguous. There were no qualifying conditions.

Johnson was entitled to a broker's commission when he

found a buyer, ready and willing to purchase.

Jerry provides three arguments in support of his assertion

that the District Court improperly granted summary judgment:

(1) The District Court improperly construed the standard listing

contract; (2) the buy/sell agreement was a conditional contract and

binding only upon the assumption of the mortgage; and (3) material

facts existed that precluded summary judgment.

The crux of Jerry's first argument is that the District Court

incorrectly concluded that Johnson was entitled to a broker's

commission when he found a buyer ready and willing to purchase the

land. According to Jerry, the standard listing contract required

Johnson "to sell, make or effect a sale" and not "to merely find a

purchaser." In support of his argument, Jerry points to the word

"executed" as it appears in the paragraph regarding the commission.

Citing Black's Law Dictionary and the Random House Dictionary of

the English Language, he argues that "[tlhe word 'executed' clearly

means completed or carried into full effect" and that the agreement

provides for the payment of a commission only "when the transaction

is completed or carried into full effect."

Jerry's first argument fails for two reasons. First, the

standard listing contract in this case did not require the

transaction to be completed or carried into full effect. Secondly,

8
even if the contract did require the execution of a sale, the

District Court correctly pointed out that a sale was, in fact,

executed.

In Sayegusa v. Rogers (1993), 256 Mont. 269, 271, 846 P.2d

1005, 1006, we stated:

It is well-established law in Montana that a

broker's right to recover a commission is conditioned on

the broker's ability to accomplish that which he or she

undertook to do in the contract of employment.

See Diehl and Associates, Inc. v. Houtchens (1977), 173 Mont. 372,

377, 567 P.2d 930, 933; First Trust Co. of Montana v. McKenna

(1980), 188 Mont. 534, 541, 614 P.2d 1027, 1031; Ehly v. Cady

(19841, 212 Mont. 82, 101, 687 P.2d 687, 697.

The contract provision at issue in Savequsa provided:

FOR VALUE RECEIVED, you and your agents are employed

to find a buyer ready and willing to purchase or exchange

the property described above at the price and terms noted

or at such other price and terms as I/we accept. . . In

the event I/we sell or exchange the property, or a

written agreement is executed for the sale or exchange of

the property during the term of this agreement, I/we

agree to pay you in cash a commission equal to 10% of the

selling price.

The Savesusa contract provision is virtually identical to the

contract provision at issue in the instant case. In Savesusa, we

affirmed the district court's conclusion that the language of the

listing contract was clear and unambiguous that the broker was

entitled to a commission when he found a ready and willing buyer.

Likewise, we agree with the District Court in the instant case that

the listing contract employed Johnson simply to find a buyer ready

and willing to purchase the Nyhart property. Pursuant to the clear

9
and unambiguous language of the listing contract, Johnson became

entitled to his commission when Pelullo, through Pelullo's agent,

entered into a written contract to purchase the land.

Moreover, the record reveals that Johnson not only found a

person who was ready and willing to purchase the land; the record

reveals that Johnson located a person who, in fact, purchased the

land. As the Nyharts' attorney wrote on December 19, 1984:

We have determined that my clients don't have any real

choice in the matter and are qoinq to close the

transaction with an eye to getting the assumption papers

signed by Mr. Pelullo just as soon as possible and

hopefully having the whole matter resolved by February 1,

1985.

Two days later, the Nyharts delivered a deed of conveyance to

Pelullo, and Pelullo delivered to the Nyharts $70,000 and two

promissory notes. The District Court correctly concluded that the

December 21 transaction between the Nyharts and Pelullo constituted

the sale and purchase of the 2000 acres.

Jerry further contends that, because Pelullo's assumption of

the Travelers mortgage was a condition precedent to the sale, when

Travelers did not permit the assumption, the sale was not completed

and Johnson was not entitled to a commission. This argument fails,

because a careful review of the listing contract reveals that no

conditional language exists regarding the accrual of Johnson's

commission. Nowhere in the standard listing contract is there any

mention of the Travelers mortgage. We, therefore, agree with the

District Court that, once Johnson found a buyer ready and willing

10
to purchase the land, there were no qualifying conditions placed

upon his entitlement to a commission.

Finally Jerry contends that the buy/sell agreement was

ambiguous and the question of the parties' intentions should have

been submitted to the trier of fact. However, the intent of the

parties to an agreement is only looked to when the agreement is not

clear on its face. Klawitter, 51 St. Rep. at 1298; Bain v.

Williams (1990), 245 Mont. 228, 232, 800 P.2d 693, 695; Derrenger

v. City of Billings (1984), 213 Mont. 469, 475, 691 P.2d 1379,

1382.

As a general rule, construction and interpretation of written

agreements, including contracts, is a question of law for the court

to decide. Klawitter, 51 St. Rep. at 1298; First Sec. Bank of

Anaconda v. Vander Pas (1991), 250 Mont. 148, 152-53, 818 P.2d 384,

387. Likewise, it is a question of law whether ambiguity exists in

a contract. Klawitter, 51 St. Rep. at 1298; Audit Services, Inc.

v. Systad (19921, 252 Mont. 62, 65, 826 P.2d 549, 551.

Where the question of intent depends upon the construction of

an unambiguous contract, the question is one for the court alone.

Klawitter, 51 St. Rep. at 1298; Gray v. City of Billings (1984),

213 Mont. 6, 10, 689 P.2d 268, 270. As we discussed above, the

District Court correctly determined that “[tl he language in the

agreement is clear and unambiguous." Johnson was entitled to a

commission when he found a ready and willing buyer. We, therefore,

11
reject Jerry's argument that the parties' intentions constituted

genuine issues of material fact.

We hold that the District Court properly granted summary

judgment.

ISSUE 2

Did the District Court err by awarding prejudgment interest to

Johnson?

The District Court entered judgment in this matter on

April 14, 1994, and ordered in pertinent part as follows:

That the Plaintiff, Ronald Johnson, recover from the

Defendants, Jerry Nyhart, Clarajo Nyhart and Nyhart

Ranch, Inc., the following:

Principal in the amount of THIRTY THOUSAND

THIRTkTWO AND 73/100 DOLLARS ($30,032.73).

2 . Interest at the rate of six percent (6%) from

December 22, 1984, through September 30, 1985 in the

amount of ONE THOUSAND FOUR HUNDRED TWO AND 70/100

($1,402.70).

3 . Interest at the rate of ten percent (10%) from

October 1, 1985 through April 13, 1994, in the amount of

TWENTY-FIVE THOUSAND AND SIX HUNDRED NINETEEN AND 99/100

($25,619.99).

4 . Interest at the rate of ten percent (10%) from

April 14, 1994, until the judgment is paid in full in the

amount of $8.23 per diem.

Jerry objected to paragraph three of the judgment because it

ordered payment of interest to Johnson prior to the date of entry

of the judgment. According to Jerry, the promissory note that he

and Clarajo executed on December 21 "reveals that the obligation

was not to accrue interest." The promissory note provides in

pertinent part as follows:

12
PROMISSORY NOTE

$30,032.73 December 21, 1984

Dillon, Montana

FOR VALUE RECEIVED, we, JERRY NYHART AND CLARAJO

NYHART, husband and wife, of Twin Bridges, Montana,

promise to pay to RONALD W. JOHNSON d/b/a JOHNSON REALTY,

of Dillon, Montana, the sum of THIRTY THOUSAND THIRTY-TWO

& SEVENTY-THREE/lOOTH DOLLARS ($30,032.73) lawful money

of the United States of America, with intcrcct therm

the rztc of twclvc aad VAIL h;lf pcrcxt :12::%) i;c-r ;Kffttttff

payable to the payee on or before February 1, 1985.

IF DEFAULT shall be made in the payment due

hereunder . . the entire amount of said note, both

principal and intc&, shall at once become immediately

due and payable.

. .

THE MAKERS hereof are hereby granted the right to

pay all or any part of the unpaid principal ar.d i;,tcrcct

on this note at any time after the date hereof.

. . .

/s/ Jerry Nyhart

/s/ Clarajo Nyhart

The stricken language was crossed out in writing, and above or

beside each stricken portion, the initials "J.N. " and 'I C N )'

appear. Jerry contends that because he and Clarajo struck out and

initialed the language regarding the payment of interest from the

promissory note, interest on the note was not to accrue. Jerry,

however, cites no authority in support of his contention.

Johnson, on the other hand, argues that: (1) the District

Court awarded interest pursuant to the standard listing contract,

the earnest money receipt and agreement to sell and purchase, and

§ 27-l-211, MCA, and not pursuant to the promissory note; and

(2) even if the District Court awarded interest based on the

13
promissory note, the Nyharts' unilaterally created and altered the

promissory note without the written approval or consent of Johnson.

This Court's decision in Byrne v. Terry (19871, 228 Mont. 387,

741 P.2d 1341, is dispositive of this issue. Pursuant to

5 27-l-211, MCA, we set forth three criteria under which

prejudgment interest may be awarded: (1) the existence of an

underlying monetary obligation; (2) the amount of the obligation is

certain or capable of being made certain by calculation; and

(3) the right to recover the obligation vests on a particular day.

Bvrne, 741 P.2d at 1343. All three of these criteria are met in

the instant case: (1) the monetary obligation consists of the real

estate commission owed to Johnson in the amount of $42,000; (2) the

Nyharts paid Johnson $11,967.27 on December 21; therefore, the

outstanding balance owed on the commission is $30,032.73; and

(3) Johnson's right to recover the commission vested on

December 21, 1984, the date that the deed to the 2000 acres was

delivered to Pelullo.

Additionally, 'I [tlhe fact that a claim is disputed does not

make it uncertain and thus unable to support an award of

prejudgment interest." Byrne, 741 P.2d at 1343. Jerry's various

assertions, including the fact that he and Clarajo altered the

promissory note, do not change our analysis under Bvme. "When the

debtor knows of his debt and also knows when it is due, 'no demand

is necessary to start the running of interest from the date the

payment should have been made."' Bvme, 741 P.2d at 1343 (citing

14
W.J. Lake & Co. v. Montana Horse Products Co. (1939), 109 Mont.

434, 443, 97 P.Zd 590, 594). When the Nyharts transferred title to

Pelullo on December 21, 1984, the provisions of 5 27-l-211, MCA,

were triggered. On that date, the Nyharts owed Johnson a

commission equal to six percent of the selling price, or $42,000.

The Nyharts paid only one-third of the total amount owed. No

demand was required by Johnson to enforce the remaining obligation

owed. Neither of the two exceptions provided in 5 27-l-211, MCA,

apply in this case, i.e., neither the force of law nor the acts of

the creditor, Johnson, prevented the Nyharts from paying the full

amount of the real estate commission. Furthermore, there is no

evidence in the record supporting Jerry's assertion that Johnson

agreed to either the creation or subsequent alteration of the

promissory note.

We hold that the District Court correctly awarded prejudgment

interest to Johnson.

ISSUE 3

Did the District Court err by entering judgment against

Clarajo Nyhart?

The District Court's April 14, 1994, judgment states in

pertinent part:

That the Plaintiff, Ronald Johnson, recover from the

Defendants, Jerry Nyhart, Clarajo Nvhart and Nyhart

Ranch, Inc., the following:

(Emphasis added.) On appeal, Jerry "admits that the Plaintiff

obtained personal jurisdiction over him, but is unaware if personal

15
jurisdiction was obtained over Clara Jo [sic] Nyhart" and "is

unable to verify if the Plaintiff ever obtained service upon his

former wife." Jerry argues that the judgment against Clarajo is

invalid because (1) the District Court lacked personal jurisdiction

over her due to Johnson's failure to serve her with a summons and

complaint, or (2) if service was made, the District Court failed to

give "any notice of entry of default" against her.

Johnson concedes that he did not serve Clarajo because she was

not a necessary party to the resolution of the case. Our review of

the record confirms that Clarajo was not served with a summons or

complaint in this case. We conclude that the District Court lacked

personal jurisdiction over her and erroneously entered judgment

against her. We, therefore, vacate the District Court's judgment

as it pertains to Clarajo.

Affirmed as to Issues 1 and 2; the judgment as to Clarajo

Nyhart is hereby vacated.