No. 81-194 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1982 

IRVIN S. NAYLOR, 

Plaintiff and Appellant, 

VS. 

JOHN P. HALL, SHERRILL HALL, 

and SKI YELLOWSTONE, INC., 

Defendan.ts and Respondents. 

Appeal from: Gistrict Court of the Eighteenth Judicial District, 

In and for the County of Gallatin 

Honorable W. W. Lessley, Jud-qe presiding. 

Counsel of Record: 

For Appellant: 

Gregory 0. Morgan argued, Bozeman, Montana 

Albert G. Blakey, I11 arqued,vork, Pa. 

For Respondents : 

Landoe, Brown Law Firm, Bozeman, Montana 

J. Robert Planalp argued, Bozeman, Montana 

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Submitted: ~uly 8, 1982 

Decised: October 7, 1982 

J t .~82 Filed. 
Mr. Justice Fred J. Weber delivered the Opinion of the 

Court. 

Plaintiff, Irvin Naylor (Naylor), sought specific 

performance of a contract for the purchase of real property 

from defendants Hall, and Ski Yellowstone, Inc., herein 

referred to as Hall. The District Court of the Eighteenth 

Judicial District, Gallatin County, tried the case without a 

jury, and refused to grant Naylor specific performance. We 

reverse the District Court. 

This case is a companion to Supreme Court case No. 81- 

222, Ski Roundtop, Inc., individually and derivatively in 

behalf of Ski Yellowstone, Inc. v. John P. Hall and others, 

to be decided at a later date by this Court. 

Naylor raises a single issue on review: Whether the 

agreements between the parties constituted a specifically 

enforceable, valid option contract. 

The individuals involved in this action were all 

shareholders and officers in the Montana corporation, Ski 

Yellowstone, which is developing a four-seasons resort in 

the Hebgen Lake area in Gallatin County. Plaintiff Naylor 

was chairman of the board of directors in 1975-76. Defendant 

John Hall was a director and is presently the chief executive 

officer and majority stockholder. Hans Geier was president 

at the time the disputed agreements were made and, under the 

corporation's bylaws, was authorized to execute contracts 

for the corporation. Fred Pack is a Bozeman realtor, whose 

agency was authorized to sell lots in the Bear Trap Subdivision 

owned by Ski Yellowstone. 

Fred Pack wrote Naylor and offered him the opportunity 

to purchase lots in the Bear Trap Subdivision at the listed 
price less a ten percent commission. On February 25, 1975, 

Naylor replied: 

"Thank you for your letter of February 20, inviting me to acquire at a 10% discount any of 

the lots that are shown on the plats that were 

enclosed with that letter. I am pleased to 

make the following offer on lot #7 in Sear Trap 

Ranch subdivision #1: 

"1. A purchase price of $11,700. 

"2. A deposit now of $500.00 cash. 

"3. $5,000 to be paid at the time my $5,000 

'bonus' has been offered to me by Ski Yellowstone, Inc. 

"4. The balance of $6,200 to be paid in cash 

within 90 days of the accomplishment of ?!3 

above. At this time the lot is to be transferred to me with good, insurable, fee-simple, 

marketable title. 

"If this proposal is acceptable as presented, 

please have Hans sign the enclosed copy of 

this letter as President of Ski Yellowstone, 

Inc., and return it to me in the enclosed 

self-addressed and stamped envelope, upon 

receipt of which I will promptly send you 

the $500.00 deposit." 

The letter was marked "Approved March 5, 1975, Hans 

Geier, President, Ski Yellowstone, Inc." and returned to 

Naylor. On May 8, 1975, Pack acknowledged receipt of the 

$500 deposit forwarded by Naylor, and informed Naylor that 

he (Pack) had placed the deposit in a trust account "to be 

held there until the conditions as set forth in your letter 

of February 25, 1975 have been complied with and we will be 

able to deliver to you a title to said lot free of all 

encumbrances." 

On March 29, 1976, Naylor mailed the following "clarification" to Hans Geier: 

"It occurred to me a couple of days ago that a 

point of clarification in my proposal to you 

of February 25, 1975 referring to my offer 

(which you accepted) on lot #7 in Bear Trap 

Ranch subdivision #1 should be noted: 
"If by January 1, 1980 the '$5,000 bonus has 

(not) been offered to me by Ski Yellowstone, 

Inc.', then I should have the prerogative of 

either acquiring the lot for a cash payment of 

$11,200 within 90 days of January 1, 1980 or 

a return of my $500.00 cash deposit (without 

interest) . 

"I selected the date of January 1, 1980 as 

being totally arbitrary - a time by which I 

hopefully assume the problems relating to the 

obtainment of the Forest Service Permit will 

have been resolved. 

"If you agree to this clarification of our 

agreement as reflected in my letter of February 25, 1975, I would appreciate it if you 

would execute the enclosed copy of this letter 

and return it to me in the self-addressed and 

stamped, enclosed envelope." 

The letter was returned to Naylor with Geier's approval 

written on it as follows: 

"I accept the above clarification. 

Hans Geier, President 

Ski Yellowstone, Inc. 

April 11, 1976 

Verbal Approval by F. L. Pack. . ." 

On January 10, 1977, John Hall, who had in 1976 gained 

control of Ski Yellowstone, and was Executive Vice-President 

of the corporation, agreed to purchase the same lot (Lot 7, 

in Block 2) from Ski Yellowstone for $11,000. Payment was 

to be settled within six months by the application to the 

purchase price of corporate credit issued to John Eall for 

services rendered. A $10,300 corporate credit was subsequently applied to the purchase price of the lot. 

On May 2, 1977, Naylor filed a notice of purchaser's 

interest with the Gallatin County Clerk and Recorder. 

On June 21, 1977, John and Sherrill Hall, acting as 

officers of Ski Yellowstone, conveyed the Rear Trap lot to 

themselves as joint tenants, by warranty deed, and the next 

day filed the deed with the Gallatin County Clerk and Recorder. 
The Forest Service permit had not issued by January 1, 

1980. On January 7, 1980, Naylor, through his attorney, 

notified Pack that he "elected to exercise his option to 

purchase the lot in Bear Trap Ranch Subdivision." Naylor 

demanded that Ski Yellowstone specifically perform its 

contract for the sale of the lot, and supply him with "a 

copy of a title report showing a marketable title." Ski 

Yellowstone did not meet Waylor's demands, and on ?4arch 7, 

1980, Naylor filed this action for specific performance in 

the District Court. 

The case was heard, in combination with several connected 

cases, in September of 1980. The District Court entered 

findings of fact and conclusions of law on January 2, 1981- 

The District Court held that following the "clarification" 

of March 29, 1976, there was no mutually binding contract 

because Naylor could, "at his sole prerogative, relieve 

himself from any liability to purchase the lot." In addition, 

the District Court concluded that there was no consideration 

because Naylor could, at his election, demand the return of 

the $500 deposit. An analysis of the contract compels a 

different conclusion. 

Under the February 25, 1975, letter agreement, Naylor 

was obligated to purchase the lot when Ski Yellowstone paid 

him his $5,000 bonus, which in turn depended upon the 

issuance by the Forest Service of its permit for Slci Yellowstone. 

This obligation continued as to Naylor without limit in 

time. In addition, there was no means by which he could 

purchase at an earlier date than the date on which Ski 

Yellowstone offered him his bonus. As to Ski Yellowstone, 

under this letter agreement, it was obligated to hold open 

the purchase of the lot until such time as the permit was 

issued by the Forest Service, which again had no limit in 

the future, and therefore left Ski Yellowstone with an 

obligation to sell not limited in time. 

-5- 
By the letter agreement of Xarch 29, 1976, several 

changes were introduced into the contract relationship. 

Through December 31, 1979, the arrangement was the same as 

between the parties, as it had been under the old agreement. 

However, the effect of the agreement was to terminate this 

obligation on the part of Ski Yellowstone to sell in the 

event that by January 1, 1980, the Forest Service permit had 

not been issued. At that point in time, an option arrangement came into effect, under which Naylor could either have 

his $500 back or purchase the lot for an additional cash 

payment of $11,200. Clearly, the March 29, 1976, letter 

agreement was mutually beneficial to the parties. As to Ski 

Yellowstone, its obligation to continue to hold the lot for 

the future purchase was terminated as of January 1, 1980, 

unless, within ninety days, Naylor elected to purchase. In 

addition, if Naylor did elect to purchase, he was required 

to pay $11,200 of his own cash, without applying a $5,000 

bonus which would have been furnished by Ski Yellowstone 

upon issuance of the Forest Service permit under the prior 

agreement. As to Naylor, he now acquired for the first time 

the capacity to purchase the lot immediately for cash after 

January 1, 1980, even though no Forest Service permit had 

been issued. He also acquired the right to elect to have 

his $500 cash deposit returned if he wished to surrender his 

right to purchase the lot. 

We find that the benefits and obligations on the part 

of each of the parties under the letter agreement of March 

29, 1976, were sufficient to constitute a mutually binding 

contract between the parties. 

We also find that there was consideration for the Pqarch 

29, 1976, letter agreement. The relinquishment of a legal 

or contract right is sufficient consideration to support a 
contract. Rickett v. Doze (1979), Nont. -- I 603 P.2d 

679, 36 St.Rep. 2170; 17 Arn.Jur.2d Contracts § 119, at 465; 

S~nburst Oil and Gas Company v. Neville (1927), 79 Yont. 

550, 257 P. 1016. It is also well-established that a 

contract may be modified by subsequent agreement if that 

subsequent agreement also complies with the requirements of 

a contract. Edwards v. Peavey Company (1976), 170 Nont. 45, 

549 P.2d 1082. The 1976 letter agreement, as proposed by 

Naylor and accepted by Ski Yellowstone, was a mutually 

acceptable modification of the 1975 contract. The consideration 

in terms of the changes in rights and obligations on the 

part of both Naylor and Ski Yellowstone constitutes adequate 

consideration for the 1976 agreement. We find that the 1976 

agreement was supported by consideration and sufficiently 

complied with contract requirements to constitute a modification 

of the original agreement. That agreement was in effect 

when John and Sherrill Hall purchased the lot from Ski 

Yellowstone. 

Upon the failure of the Forest Service to issue its 

permit by January 1, 1980, the option rights of Naylor came 

into effect. At that time, Naylor properly exercised his 

right to purchase the lot for a cash purchase price of 

$11,200 (in addition to the $500 deposit) as authorized 

under the 1976 letter agreement. Hall has argued at length 

that Naylor had no right to specific performance by Ski 

Yellowstone under the 1976 agreement because it could not 

compel Naylor to purchase, and because Naylor had the right 

to ask for his money back, and that as a result, specific 

~erformance could not be awarded to Naylor because Ski 

Yellowstone was not also entitled to specific performance. 

This argument, based upon the original 1976 agreement, 
ignores the position in which the parties found themselves 

on January 1, 1980. The portion of the contract under which 

Naylor then acted is the option portion which came into 

effect on January 1, 1980. As is true with all option 

agreements, the party to whom the option is granted has the 

power to determine when and if he will purchase in accordance 

with the option. Until a decision to purchase is made by 

the option holder, the owner of the property does not have a 

right of specific performance, although as was the case 

here, the option holder may be required to choose between 

the options within a given period. When, as Naylor did, the 

option holder exercises his option to purchase, we then 

find a binding contractual arrangement under which the 

option holder (Naylor) is obligated to purchase and the 

owner (Ski Yellowstone) is obligated to sell. At that 

point, both parties have a binding contractual obligation 

under which specific performance can be awarded under section 

27-1-414, MCA, and cases interpreting the same. 

We therefore conclude that there was a mutually binding 

contract under the March 29, 1976, letter agreement for 

which there was adequate consideration, and which was of a 

nature which would allow specific performance on the part of 

either party. 

Hall argues that the 1976 agreement is too uncertain to 

be specifically enforced because it was not known when, if 

ever, the Forest Service permit would issue, and it was not 

clear which option Naylor would elect if the permit was not 

issued by January 1, 1980. 

Absolute certainty in every detail is not a prerequisite 

for specific performance. Keaster v. Bozik (1981), - Mont. 
, 623 P.2d 1376, 1381, 38 St.Rep. 194, 201; Gropp v. 

Lotton (1972), 160 Mont. 415, 503 P.2d 661; Steen v. Rustad 

(1957), 132 Mont. 96, 313 P.2d 1014. Here the parties and 

property are identified, the price is established, and the 

substantive terms of the agreement are clear. Indeed, the 

1976 clarification renders the agreement more certain and 

more easily enforceable. We do not find the agreement to be 

so uncertain as to preclude specific performance. 

This Court has recognized specific performance as an 

appropriate remedy for the breach, by the seller, of a 

contract to sell real property. Brown v. Griffin (1968), 

150 Mont. 498, 436 P.2d 695; Section 27-1-419, MCA. 

In Myhre v. Ivlyhre (1976), 170 Mont. 410, 419, 554 P. 2d 

276, 281, we stated: 

"The rule seems to be that one who acquires 

or purchases property, knowing that the property is subject to a contract to be sold to 

another, may be compelled to perform the contract in the same manner and to the same extent as his grantor would have been liable to 

do had the grantor not made the transfer to 

him. Moore v. Crawford, 130 U.S. 122, 32 L.Ed. 

878, 9 S.Ct. 447; 71 Am.Jur.2d Specific Performance. " 

Here the record shows that Hall, managing officer, 

director and stockholder of Ski Yellowstone, in those capacities, 

as well as individually, was aware of the agreement between 

Ski Yellowstone and Naylor. Notwithstanding that knowledge, 

Hall and his wife, acting as executive officers of Ski 

Yellowstone, sold and conveyed the property to themselves as 

individuals. As a result, they individually are liable to 

perform the contract in the same manner that Ski Yellowstone 

was obligated prior to the sale of the lot to Hall. Naylor 

therefore is entitled to specific performance against 

defendants Hall. 

We reverse the District Court and remand the case for 

judgment by the District Court which is consistent with this 

opinion. 
We Concur: 

- Chief Justice