No. 81-225 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

WENDY'S OF MONTANA, a Mont. Corp., 

Plaintiff and Appellant, 

-vsWILLIAM T. LARSEN and HELEN J. LARSEN, 

Defendants and Respondents. 

Appeal from: District Court of the Fourth Judicial District, 

In and for the County of Missoula, 

The Honorable James B. Wheelis, Judge presiding. 

Counsel of Record; 

For Appellant; 

Hibbs, Sweeney, Colberg, Jensen & Koessler, 

Billings, Plontana 

For Respondent : 

Boone, Karlberg & Haddon, Missoula, Montana 

Submitted on Briefs: July 24, 1981 

Decided: f~fili~~ 

Filed : FEB 11 'I??? 
Mr. Justice Daniel J. Shea delivered the Opinion of the 

Court. 

Plaintiff, Wendy's of Montana, appeals from a summary 

judgment granted by Missoula District Court, the effect of 

which was to permit the defendants, William T. and Helen J. 

Larsen, to keep a $22,750 earnest money payment which Wendy's 

had paid to the Larsens under a contract to purchase land. 

The Larsens, in turn, were purchasing the land under a 

contract for deed from William and Dorothy Riggert and Anita 

Taylor. 

Wendy's contends that summary judgment was improperly 

granted because the Larsens failed to perform a condition 

precedent to the contract. This contention is based on a 

contingency clause which Wendy's agent inserted into the 

buy-sell agreement. Wendy's also contends that summary 

judgment was improperly granted because a material fact 

exists as to whether the Larsens or Wendy's had the duty to 

obtain the consents of the Riggerts and Taylor. 

In July 1979, Wendy's agent, Sam McDonald, an experienced 

businessman and real estate broker, approached the Larsens 

concerning the purchase of real property located in Missoula 

County. The Larsens indicated they were willing to sell, 

but told McDonald that their interest was subject to a 

contract for deed between themselves and the Riggerts and 

Taylor. This contract carried a balance of $120,000 with 

payments running until November 1986. The contract contained 

a clause prohibiting the Larsens from selling or assigning their 

interest in the property without Zirst obtaining the written 

consent of the Riggerts and Taylor, and provided that such 

consent could not be unreasonably withheld. 

McDonald proceeded with arrangements for a sale knowing 

that the consent of the Riggerts and Taylor would be required. 
Before this consent was obtained, the Larsens and Wendy's 

signed an earnest money receipt and agreement to sell and 

purchase real property. Wendy's paid the $22,750 as earnest 

money. This buy-sell agreement provided for a total purchase 

price of $342,750. The $200,000 was to be paid to the Larsens 

on or before October 15 in addition to the earnest money 

already paid and Wendy's was to assume the $120,000 outstanding 

on the Riggert-Taylor contract. McDonald inserted a typewritten 

clause into the buy-sell agreement stating that the agreement 

was contingent upon Wendy's obtaining a contract for deed 

from the Riggerts and Taylor in the amount of $120,000, at 

an annual interest rate of 8 1/2 percent for seven years. 

The buy-sell agreement also contained a forfeiture 

clause which provided that, upon the sellers' tendering 

merchantable title, and the buyer's inability to pay the 

balance of the purchase price, the earnest money would be 

forfeited as liquidated damages and the buy-sell agreement 

would terminate. 

The buy-sell agreement provided for a closing date of 

October 15, 1979, at which time Wendy's was to pay to the 

Larsens, in cash or certified check, in the amount of $200,000. 

Wendy's assumed responsibility for obtaining the consent of 

the Riggerts and Taylor. Sometime after this agreement was 

signed, McDonald met with Harry Haines, the attorney for the 

Riggerts. Haines told McDonald that the Riggerts would 

consent to the sale provided that the $120,000 would be paid 

off in one year, rather than the seven years set out in the buy-sell 

agreement. McDonald was satisfied with the terms proposed 

by Haines and proceeded to make arrangements to close the 

deal. Nothing in the record indicates that McDonald contacted 

Ms. Taylor. McDonald did tell Haines that there would be 

"no problem" with the Riggerts' proposal. 
McDonald told the Larsens that he would be ready to 

close on or before October 15, but he was not ready on that 

date. The Larsens extended the agreement until November 15, 

without demanding additional consideration. The Larsens 

granted another extension, until December 15, again without 

additional consideration. McDonald was still unable to 

complete the transaction, and the Larsens refused any further 

extension. 

Attorneys for McDonald and the Larsens discussed some 

alternative terms, but never reached an agreement. Nonetheless, 

McDonald later tendered a check for $72,750 to the Larsens, 

apparently in an attempt to comply with one of the alternative 

terms that had been discussed but never agreed to. The 

Larsens received the check on January 3, 1980 but returned 

it to McDonald. After having the check returned to him, 

McDonald then demanded the return of the entire $22,750 

earnest money which had been paid to the Larsens on August 

7, 1979. The Larsens refused and Wendy's then filed an 

action to recover the full amount of the earnest money 

payment . 

The forfeiture clause of the buy-sell agreement is 

clear. These clauses have been upheld, absent grounds for 

equitable relief. Brigham v. 1st Nat. Bank of Arizona 

(Ariz. 1981), 629 P.2d 996; Coble v. Scherer (1979), 3 Kan.2d 

572, 598 P.2d 561; Lundstrom v. Hack1 (Colo. 1978), 579 P.2d 

85. It is true that McDonald inserted a "contingency clause" 

into the agreement, and that this may have been a necessary 

prerequisite to closing the transaction, but it was not a 

condition precedent that requires the return of the earnest 

money. The Larsens complied with the purpose of the earnest 

money agreement--the land was tied up and removed from the 
marketplace for five months. Peterson Sheep & Cattle Co. v. 

Moss (1970), 155 Mont. 311, 471 P.2d 546. In addition to 

taking their land off the market during the existence of the 

buy-sell agreement, the Larsens also extended the term 

within which Wendy's was to perform, and on each occasion 

the Larsens did not receive additional consideration. 

Wendy's received the benefit of the earnest money agreement 

and should not now be relieved of the obligations of the 

agreement. The Larsens fully performed their part of the 

agreement by withholding the land from sale for five months, 

and they are entitled to the earnest money payment as liquidated 

damages for Wendy's failure to perform. 

Assuming, furthermore, that obtaining the consent of 

the Riggerts and Taylor under the "contingency clause" 

created a condition precedent, Wendy's has waived its right 

to rely on a failure of that condition. A condition may, of 

course, be waived by the party for whose benefit it is made. 

Hallman v. Safety Stores, Incorporated (5th Cir. 1966), 368 

F.2d 400; 3A Corbin Contracts, 5 761. McDonald knew that 

the Riggerts and Taylor would consent to the sale only on 

terms different from those contained in the buy-sell agreement. 

But McDonald accepted the different terms and said there 

would be "no problem" in performing them. Although he did 

not tell the Larsens that the Riggerts and Taylor had imposed 

different sale terms in getting their own contract paid off, 

McDonald tried to arrange financing on the basis of the 

condition imposed by the Riggerts. Failure of Wendy's to 

secure adequate financing does not constitute a failure of 

any condition precedent created by the "contingency clause." 

Further, by accepting the different terms proposed by the 
Riggerts as a condition of consent to the sale, Wendy's 

waived any right to rely on the terms of the "contingency 

clause. " 

Wendy's next contends that whether the Larsens or 

Wendy's had the duty of securing the consent of the Riggerts 

and Taylor to the sale, is a material fact in dispute precluding 

summary judgment. The trial court found that on the basis 

of depositions (both the depositions of the Larsens and 

McDonald were before the trial court), Wendy's had "assumed 

responsibility for securing the consent of the underlying 

obligees of the property.. . ." This fact is not in dispute. 

The Larsens testified that McDonald had agreed to obtain the 

consent of the Riggerts and Taylor, and McDonald also admitted 

that he had agreed to assume the responsibility of obtaining 

the consent of the Riggerts and Taylor to the sale. McDonald 

negotiated with the Riggerts through attorney Haines, and on 

behalf of Wendy's, McDonald accepted the proposed terms. 

Clearly no material fact exists on the issue of which party 

had the duty of obtaining the consent. 

The order granting summary judgment to the Larsens is 

aff irmed. 

We Concur: 

Chief Justice