No. 81-225 INTHE SUPREME COURT OF THESTATE 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: 

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Filed: 

## FEB11'I???Mr. JusticeDaniel J. Shea delivered the Opinion of the Court. Plaintiff, Wendy's of Montana, appeals from a summary judgment granted by Missoula DistrictCourt, the effect of which was topermit the defendants, WilliamT. and Helen J. Larsen, tokeep a $22,750 earnestmoney payment which Wendy's had paid totheLarsens under a contract topurchase land. The Larsens, inturn, were purchasing the land under a contract for deed from Williamand Dorothy Riggert and Anita Taylor. Wendy's contends that summary judgment was improperly granted because theLarsens failed toperform a condition precedent tothe contract. This contention is based on a contingency clausewhich Wendy's agent inserted intothe buy-sell agreement. Wendy's also contends that summary judgment was improperly granted because a material fact exists as towhether theLarsens orWendy'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 estatebroker, approached the Larsens concerning thepurchase of real property located inMissoula County. The Larsens indicated they werewilling tosell, but toldMcDonald that their interestwas subject toa contract fordeed between themselves and the Riggerts and Taylor. This contract carried a balance of $120,000 with payments running untilNovember 1986. The contract contained

a clause prohibiting the Larsens from sellingorassigning their interest intheproperty without Zirstobtaining the written consent of the Riggerts and Taylor, and provided that such consent could not be unreasonably withheld. McDonald proceeded with arrangements for a saleknowing that the consent of the Riggerts and Taylor would be required.Before this consentwas obtained, the Larsens and Wendy's signed an earnestmoney receipt and agreement to sell and purchase realproperty. Wendy's paid the $22,750 as earnest money. This buy-sell agreementprovided for a total purchase price of $342,750. The $200,000was 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 contingentupon 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 sevenyears. The buy-sell agreement also contained a forfeiture clausewhich 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 agreementprovided for a closing date of October 15, 1979, atwhich timeWendy'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 agreementwas 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 $120,000would be paid off in one year, rather than the sevenyears 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 "noproblem" 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 forMcDonald 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 complywith 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 earnestmoney 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 earnestmoney payment

# . The forfeiture clause of the buy-sell agreement is clear. These clauses have been upheld, absent grounds for equitable relief. Brigham v. 1stNat. Bank of Arizona

(Ariz. 1981), 629 P.2d 996; Coble v. Scherer (1979),3 Kan.2d 572, 598 P.2d 561; Lundstromv. 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 itwas not a conditionprecedent 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 themarketplace for fivemonths. Peterson Sheep & Cattle Co. v. Moss (1970),155Mont. 311, 471 P.2d 546. In addition to taking their land off themarket 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 Larsensdid 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 fivemonths, and they are entitled to the earnestmoney payment as liquidated damages forWendy's failure to perform. Assuming, furthermore, that obtaining the consent of the Riggerts and Taylor under the "contingencyclause" created a condition precedent, Wendy's has waived its right to rely on a failure of that condition. A conditionmay, of course,be waived by the party forwhose benefit it ismade. Hallman v. Safety Stores, Incorporated (5thCir. 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 "noproblem" in performing them. Although he did not tell the Larsens that the Riggerts and Taylor had imposed different sale terms in getting their own contractpaid off, McDonald tried to arrange financing on the basis of the condition imposedby the Riggerts. Failure of Wendy's to secure adequate financingdoes not constitute a failure of any condition precedent created by the "contingencyclause." Further,by accepting the different termsproposed by theRiggerts 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 thatwhether the Larsens or Wendy's had the duty of securing the consent of the Riggerts and Taylor to the sale, is amaterial fact in dispute precluding summary judgment. The trial court found that on the basis of depositions (boththe depositionsof 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 thatMcDonald 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 affirmed.

We Concur:

Chief Justice