NO. 95-272

IN THE SUPREME COURT OF THE STATE OF MONTANA

1996

APPEAL FROM: District Court of the Ninth Judicial District,

In and for the County of Teton,

The Honorable Marc G. Buyske, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Gorham E. Swanberg and Matthew Hutchison,

James, Gray & McCafferty, Great Falls, Montana

For Respondent:

John P. Wuerthner, Wuerthner & Wuerthner,

Great Falls, Montana

Kenneth R. Olson, Attorney at Law,

Great Falls, Montana

Filed:

Submitted on Briefs: February 15, 1996

Decided: April 9, 1996

Clrerk
Justice Charles E. Erdmann delivered the opinion of the Court.

This is an appeal from a decision of the Ninth Judicial

District Court, Teton County, granting summary judgment on the

claim of unlawful detainer in favor of Stanley Rasmussen, personal

representative of the estate of Fred Pelzman (the estate). We

affirm.

Joe Lee has requested that we strike certain evidence

referenced in the estate's brief. The evidence referred to was not

considered by this Court in our decision. Lee's request is

therefore moot and we choose not to rule on his motion to strike.

We restate the issues as follows:

1 . Did the District Court err in granting summary judgment

in favor of the estate on the estate's claim of unlawful detainer?

2 . Did the District Court err in requiring Lee to post a

$60,000 supersedeas bond?

FACTS

Fred Pelzman owned an 800 acre ranch in Teton County, north of

Choteau. Lee and his wife moved to Choteau in 1977. Lee struck up

an acquaintance with Pelzman and subsequently entered into a series

of transactions with him. They apparently entered into a

work/share agreement in 1977, but no copy of that agreement was

produced.

On July 25, 1978, Lee prepared a lease between his wife and

Pelzman covering a two-year period which began in November 1977 and

ended in November 1980. The lease covered the ranch, fifty-five

cows, and two bulls for an annual rental of $3,000. Lee also

2
drafted a "Right of First Refusal," dated February 15, 1978,

purporting to grant to Lee the right to purchase the Pelzman ranch

for fair market value. Five weeks later, Lee drafted another

document which was also entitled a "Right of First Refusal"

granting to him the right to purchase the ranch for $120,000.

After the lease between Lee's wife and Pelzman expired, Lee

drafted another lease. The second lease was between himself and

Pelzman and covered the ranch, fifty cows, and two bulls for $3,000

per year. The lease commenced January 1, 1981, and expired by its

own terms on December 31, 1985.

Pelzman died in May 1986. Following his death, his estate

wrote two letters to Lee giving Lee notice that his lease would be

terminated on December 31, 1986, which included a one-year

extension by implication. The estate demanded possession of the

ranch and cattle on or before January 1, 1987. Lee refused to

relinquish the property.

In September 1986, Lee filed an action for specific

performance to exercise his option in purchasing Pelzman's ranch

and cattle for fair market value. The district court determined

that Lee had no option, but rather a right of first refusal which

had not come into effect because there was no notice of any intent

by Pelzman or his estate to sell. The district court's decision

was affirmed by this Court in Lee v. Shaw (1991), 251 Mont. 118,

822 P.2d 1061.

In March 1987, the estate filed an action asking that Lee's

lease be terminated. The complaint was amended in April 1989 to

3
allege an action for unlawful detainer. The issue of Lee's right

to possession of the ranch was bifurcated from the damage issue

pursuant to Lee's motion.

In the meantime, the estate executed a purchase and sell

agreement dated July 10, 1992, with another party. Lee brought an

action against Pelzman's estate for specific performance to enforce

the agreement giving Lee the right of first refusal to buy the

ranch for a specified price. The district court concluded, and we

agreed, that Lee waived his right of first refusal and therefore

the ranch was available for other offers. Estate of Pelzman

(1993), 261 Mont. 461, 863 P.2d 1019.

As for the present bifurcated action, the District Court found

there was no genuine issue of material fact and concluded that

summary judgment was appropriate for the unlawful detainer action.

The court found that Lee was notified by the estate in June 1986

that his lease would terminate on January 1, 1987. The court

concluded that the continued holding by Lee of the property from

that date triggered the unlawful detainer statute. Accordingly,

the District Court granted summary judgment in favor of Pelzman's

estate on April 21, 1995, and ordered Lee to vacate the premises.

From that decision, Lee appeals.

Lee requested a stay of the District Court's order pending

appeal. The District Court granted Lee's request and set a

supersedeas bond in the amount of $60,000 to cover damages incurred

by the estate due to Lee's continuous possession of the ranch

4
during the course of this appeal. Lee also appeals from the

court's setting of the supersedeas bond.

ISSUE 1

Did the District Court err in granting summary judgment in

favor of the estate on the estate's claim of unlawful detainer?

We review a district court's grant of summary judgment using

the same evaluation as the district court based on Rule 56,

M.R.Civ.P. Bruner v. Yellowstone County (1995), 272 Mont. 261,

264, 900 P.2d 901, 903.

The movant must demonstrate that no genuine issue of

material fact exists. Once this has been accomplished,

the burden then shifts to the non-moving party to prove,

by more than mere denial and speculation, that a genuine

issue does exist. Having determined that genuine issues

of fact do not exist, the court must then determine

whether the moving party is entitled to judgment as a

matter of law. We review the legal determinations made

by a district court as to whether the court erred.

Bruner, 900 P.2d at 903 (citations omitted)

In its order granting summary judgment and requiring

restitution of premises, the District Court found that "Lee has

presented no sworn evidence that demonstrates any genuine issue of

material fact as to his claimed right to continued possession of

the property in question, as is his burden in a summary judgment

proceeding, once the proponent of summary judgment has demonstrated

the lack of such issues of fact."

On appeal, Lee claims a question of fact exists as to whether

the estate consented to his remaining on the property. Such

consent would be fatal to a claim of unlawful detainer. In

reviewing Lee's brief in opposition to the summary judgment motion

5
and the transcript of the District Court hearing, we have

determined that Lee did not present to the District Court the

argument that the estate consented to Lee's possession of the

property. We will not address an issue presented for the first

time on appeal. Fandrich v. Capital Ford Lincoln Mercury (19951,

272 Mont. 425, 431, 901 P.2d 112, 115-16. Therefore, the issue of

the estate's consent is not before us.

Lee also claims a question of fact exists as to whether the

agreement between him and Pelzman dated March 20, 1978, provided

for Lee's possession of the property until time of sale. Lee

contends the estate could not unilaterally terminate the lease

where its term was set forth in the March 20 agreement, and

therefore, the estate's June 1986 termination notice was

ineffectual.

The March 20, 1978, agreement provides in pertinent part:

I, Fred Pelzman, Sr., agree to give Joe R. and Floie N.

Lee first option to purchase property I own in the above

Legal Description upon or before my passing for the sum

of one hundred and twenty thousand dollars. It is agreed

by the undersigned that the option holders will reside

and maintain the said property until time of sale. A

ledger of time and improvements will be kept for the

purpose of reimbursement by the landowner. Upon

notification of intent to sell, a period of 45 days will

be allowed for payment.

In Lee, we determined that the March 20 agreement granted a

right of first refusal to the sale of the Pelzman property which is

effective upon notice of intent to sell. Lee, 822 P.2d at 1064.

The estate received an offer to purchase by another party and

entertainment of that offer ripened Lee's right of first refusal.

6
Pelsman, 863 P.2d at 1021. We concluded, however, that Lee waived

his right of first refusal and the estate could accept the other

offer. Pelzman, 863 P.2d at 1022.

The only obstruction to the sale was Lee's refusal to deliver

possession of the property to the estate. "We have long held that

one cannot benefit from his own wrong." Payne v. Stratman (19881,

229 Mont. 377, 382, 747 P.2d 210, 213 (citing Roundup Cattle

Feeders v. Horpstad (1979), 184 Mont. 480, 485, 603 P.2d 1044,

1047, and § l-3-208, MCA). Accordingly, Lee cannot claim his

possession of the property was lawful based upon the March 20

agreement. We conclude that the District Court did not err in

finding there was no question of fact as to whether the March 20

agreement gave Lee possession of the property, and therefore, the

estate's notice of June 1986 effectively terminated the lease

agreement.

The District Court found that the unlawful detainer statute,

§ 70-27-108(l), MCA, applied in this case due to Lee's continued

possession of the property after his rights were terminated. The

District Court then concluded the estate was entitled to

restitution of the premises pursuant to § 70-27-205(l), MCA. Lee

asserts that if he was found to have possessed the property without

permission, § 70-27-108(2), MCA, and its special notice provision

for agricultural property would apply instead. Section 70-27-108,

MCA, provides as follows:

A tenant of real property or mining claim, for a term

less than life, is guilty of unlawful detainer:

7
(1) when he continues in possession, in person or

by subtenant, of the property or any part thereof after

the expiration of the term for which it is let to him

without the permission of the landlord or the successor

in estate of his landlord, if any there be, but in case

of a tenancy at will, it must first be terminated by

notice, as prescribed in 70-27-104;

(2) where he continues in possession, in person or

by subtenant, without permission of his landlord or the

successor in estate of his landlord, if any there be,

after default in the payment of rent, pursuant to the

lease or agreement under which the property is held, and

3 days' notice in writing requiring its payment, stating

the amount which is due, or possession of the property

shall have been served upon him . . In all cases of

tenancy upon aaricultural lands where the tenant has held

over and retained possession for more than 60 days after

the expiration of his term without any demand of

possession or notice to auit bv the landlord or the

successor in estate of his landlord, if any there be, he

shall be deemed to be holdinq by permission of the

landlord or the successor in estate of his landlord and

shall be entitled to hold under the terms of the lease

for another full year and shall not be quiltv of an

unlawful detainer during said year, and such holdinq over

for the period aforesaid shall be taken and construed as

a consent on the part of a tenant to hold for another

yeaT;

(3) when he continues in possession, in person or

by subtenant, after a neglect or failure to perform other

conditions or covenants of the lease or agreement under

which the property is held . . . .

(Emphasis added).

Lee argues that since he held over and retained possession of

agricultural lands for more than sixty days after the expiration of

the lease term without a demand or notice to quit by the estate, he

is entitled to hold over under the terms of the prior lease for

another year. The estate contends that subsection (2) applies only

to tenants who have defaulted in the payment of rent. In

opposition, Lee relies on our decisions in Holliday Land &

Livestock Co. v. Pierce (1977), 174 Mont. 393, 571 P.2d 93, and
Hamilton v. Rock (1948), 121 Mont. 245, 191 P.2d 663, where we

applied § 70-27-108(2), MCA, to cases involving agricultural

tenants where default in rent was not at issue. Those cases are

distinguishable on their facts and are also based upon an erroneous

interpretation of law.

In Hamilton, the tenant had a one-year lease. At the

expiration of that lease, the landlord informed the tenant "all

deals were off." However, the landlord also said "[iIn the future

if you wish to rent or buy the place, you have to see . . my

agent." Hamilton, 191 P.2d at 665. The tenant cut the hay crop

after the expiration of the lease and the landlord claimed

possession of the hay crop. Considering the landlord's reference

to continued possession of the land, the jury found the tenant was

provided no notice to quit, and therefore, had a right to continued

possession of the land and its crop for one year pursuant to

5 9889, RCM (now codified at 5 70-27-108(2), MCA). In contrast,

Lee was provided notice of the termination of his lease and the

unequivocal expectation by the estate that they sought possession

of the property.

In Holliday, an agricultural tenant obtained a one-year lease

which was extended to two years. After the end of the second lease

term, the tenant remained on the property but paid no advance

rental. Six months later, after the tenant's crops had been

planted, the landlord served the tenant notice to pay rent or

abdicate possession of the property. The landlord subsequently

filed a complaint for unlawful detainer. Hollidav, 571 P.2d at 94.

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1n that case, this Court applied § 93-9703(Z), RCM (the

predecessor of § 70-27-108(Z), MCA), and concluded that the tenant

was presumed to have permission of the landlord for the full year

and could not be found liable for unlawful detainer. Hollidav, 571

P.2d at 95. The present case is distinguished from Hollidav in

that the estate did not request payment of rent in return for

continuation of the lease but explicitly demanded possession of

property as of January 1, 1987. Possession of property in this

case is not due to default in rent, where in Hollidav it was. In

fact, Lee tendered the annual 1986 rent of $3000 to the estate in

December 1986. Therefore, our decision in Hollidav does not apply.

In Hollidav, however, we referred to our decision in Pipkin v.

Connolly (1975), 167 Mont. 284, 538 P.2d 347, where we applied

§ 93-9703 (21, RCM, to a holdover agricultural tenant who had not

defaulted in rent. Pipkin, 538 P.2d at 348-49. The tenant was

found liable for unlawful detainer by the district court and was

ordered to deliver possession of the property with its crops to the

landlord. Pipkin, 538 P.2d at 348. In that decision we stated:

Under [§ 93-9703(2), RCM] a hold-over tenant for sixty

days without notice who invests time and seed will not

lose this investment to the landlord. However, the

statute gives him no more than the right to harvest his

crop to protect his investment and protects him from

liability in an action for unlawful detainer.

Piokin, 538 P.2d at 351 (citing Miller v. Meredith, Hill and

Whitfield (1967), 149 Mont. 125, 129, 423 P.2d 595, 597). W e

concluded that:

[The tenant] remained on the property sixty days after

the lease terminated and planted their crops. Therefore,

10
under section 93-9703(Z), they had a right to harvest

those crops and are protected from liability for unlawful

detainer.

Pipkin, 538 P.2d at 351.

While this Court in Hamilton and Pipkin used § 70-27-108(2),

MCA, to attain equitable results, we consider the application of

that subsection in cases other than for default of rent to be in

error. Section 70-27-108, MCA, provides three situations where a

tenant can be found liable for unlawful detainer. Subsection (1)

provides for continued possession "after expiration of the term for

which it is let to him without the permission of the landlord."

Subsection (2) provides for continued possession "after default in

the payment of rent." Subsection (3) provides for continued

possession "after a neglect or failure to perform other conditions

or covenants of the lease."

"[Wlhen interpreting a statute all parts must be construed

together without according undue importance to a single or isolated

portion." Sutherland Stat. Const. § 46.05. The provision Lee

relies upon--the exception for agricultural property--is part of

subsection (2). It is not referenced in any other part of that

statute. Accordingly, the agricultural exception is applicable

only to subsection (2) which is in the context of default of rent,

and we overrule our holdings in Hamilton, 191 P.2d at 666, and

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Piokin, 538 P.2d at 351, to the extent they are inconsistent with

this interpretation of § 70-27-108(2), MCA.l.

Section 70-27-108(2), MCA, does not apply to the present case

since the unlawful detainer action was not for default of rent.

Notice subsequent to termination of the lease was not required.

Lee was in possession of the property after expiration of the term

for which it was let to him without the estate's permission. Lee

is therefore liable for unlawful detainer pursuant to § 70-27-

108(1), MCA.

W e conclude the District Court did not err in its

interpretation of law, and we affirm the District Court's grant of

summary judgment in favor of the estate.

ISSUE 2

Did the District Court err in requiring Lee to post a $60,000

supersedeas bond?

The District Court granted to Lee a stay of execution pending

appeal as to the unlawful detainer judgment and the matter of

possession of the property involved. In connection with the stay,

the District Court required Lee to post a supersedeas bond in the

amount of $60,000.

The District Court based the bond amount on the estate's loss

of interest on the sale price agreed to by the third party. The

1 By our interpretation of 5 70-27-108(2), MCA, we also

overrule the holdings in Miller v. Meredith, Hill and Whitfield

(1967), 149 Mont. 125, 423 P.2d 595, Kenfield v. Curry (1965), 145

Mont. 174, 399 P.2d 999, and Enott v. Hinkle (1962), 140 Mont. 206,

369 P.2d 413, to the extent they are inconsistent with our opinion.

12
court figured a reasonable rate of return of eight percent over a

four-year period. The court also took into consideration costs the

estate would incur on appeal and the damage the estate would suffer

from the delay caused by appeal as it must maintain the property

without reimbursement from any source when, without this

proceeding, the property would be in the possession of the third

party buyer who would bear such costs.

Lee contends the court erred in calculating the bond amount.

According to the court's calculations, eight percent interest on

the agreed upon sale price of $165,000 for four years is $52,000.

Lee maintains that this amount should be deducted from the

supersedeas bond because it was improper for the court to presume

the sale to the third party would come to fruition. Lee stresses

that a buy/sell agreement is merely an agreement to agree and

therefore speculative.

We review a district court's order setting the amount of a

supersedeas bond to determine whether the district court acted

arbitrarily without employment of conscientious judgment or

exceeded the bounds of reason. Safeco Ins. Co. v. Lovely Agency

(19851, 215 Mont. 420, 426, 697 P.2d 1354, 1358.

Previously, Lee asked this Court to exercise supervisory

control and reduce the amount of supersedeas bond Lee was required

to post. In our order of September 18, 1995, we determined there

was no compelling reason why we should reduce the amount of Lee's

supersedeas bond. "The purpose of a supersedeas bond as a

condition for staying enforcement and execution on a judgment is to

13
secure the rights of the judgment creditor during the appeal

process." Safeco, 697 P.2d at 1358 (citing Paulsen v. Treasure

State Industries, Inc. (1979), 183 Mont. 439, 442, 600 P.2d 206,

208).

The only event preventing the closing of the sale to the third

party was Lee's possession of the property. The District Court

calculated the amount of interest the estate lost from its

inability to reinvest any sale proceeds, the cost of taxes, and

appeal expenses. We conclude now as we did then--there was a

reasonable basis for the amount of the bond that the court

established. Therefore, the District Court did not err in

requiring Lee to post a $60,000 supersedeas bond.

We affirm.

aa

Justice

We concur:
April 9, 1996

CERTIFICATE OF SERVICE

I hereby certify that the following certified order was sent by United States mail, prepaid, to the

following named:

Gorham E. Swanberg

Matthew Hutchison

James, Gray & McCafferty, P.C.

Box 2885

Great Falls MT 59403-2885

Wuerthner & Wuerthner

John P. Wuerthner

Attorneys at Law

Box 2503

Great Falls MT 59403-2503

Kenneth R. Olson

Attorney at Law

600 Central Plaza, Suite 316

Great Falls MT 59401

Stoney Burke

Attorney at Law

Box 70

Choteau MT 59422-0070

Joe Sullivan

Attorney at Law

410 Central Ave., Strain Bldg.

Great Falls MT 59401

ED SMITH

CLERK OF THE SUPREME COURT

STATE! OF MONTANA