NO. 93-236

IN THE SUPREME COURT OF THE STATE OF MONTANA

1994

DENNIS THORNTON,

Plaintiff/Appellant,

-vSUSAN NISWANGER SONGSTAD,

SALLY NISWANGER, MICHELLE

NISWANGER LYTLE, RITA LAWSON,

and NORWEST CAPITAL MANAGEMENT

TRUST CO., f/k/a/ UNION

BANK AND TRUST CO., as Trustee,

Defendants/Respondents.

APPEAL FROM: District Court of the Eleventh Judicial District,

In and for the County of Flathead,

The Honorable Michael H. Keedy, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Chris Christensen, Kalispell, Montana

For Respondents:

James C. Bartlett, Hash, O'Brien & Bartlett,

Kalispell, Montana

Filed:

Submitted on Briefs: December 16, 1993

Decided: February 15, 1994
Justice James c. Nelson delivered the Opinion of the Court.

This is an appeal from an Eleventh Judicial District Court,

Flathead County order, granting the defendants' motion for summary

judgment. We affirm.

The sole issue on appeal is whether the District Court erred

in granting the defendants' motion for summary judgment.

According to Plaintiff/Appellant Dennis Thornton's

(Thornton's) deposition, he became interested in the property at

issue (160 acres - up Ashley Lake Road in Kalispell) in April of

1990. The property was shown to Thornton by Dave Bailey (Bailey),

a real estate agent for Glacier Realty, who also stated that he

could sell the property because it was listed through the Multiple

Listing Service. The property was owned by Norwest Capital

Management and Trust Company (Norwest), Trustee, as to an undivided

one-half and by Susan Niswanger Songstad, Sally Niswanger, Michelle

Niswanger Lytle and Rita Lawson (in undivided fractional shares) as

to the remaining undivided one-half.

Thornton sought out American Timber and proposed that he

borrow the money to purchase the land from that company and that he

deliver the timber to American in order to pay off the loan. When

Thornton secured the loan commitment for the property, he went to

Bailey's office to make an offer of $60,000. Bailey handwrote an

offer in the form of a proposed buy/sell agreement and told

Thornton that he would have to put up $500 in earnest money. The

offer also provided that the seller or agent would point out the

property corners to buyer's satisfaction and that the seller would

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demonstrate that roadway and utility easements to the property

existed. The offer was dated April 27, 1990. The offer was given

to Susan Niswanger Songstad (Songstad), one of the defendant/owners

of the land.

The offer was returned with some sections deleted and new

sections added, making a counteroffer. Songstad wanted $1,500

earnest money to which Thornton agreed if the listing agent would

take him to the property to ensure that he had been viewing the

correct property. Thornton signed the counteroffer on May 7, 1990

and closing was set for May 27, 1990. The sellers did not,

however, appear at the closing. Accordingly, the buy/sell

agreement/offer was rewritten on May 30, 1990. The proposed May 30

offer incorporated the terms of the previous offer along with some

new terms and was intended to supersede all prior agreements.

Thornton stated in his deposition that he wanted all the

signatures of the people involved on the May 30 agreement. At the

time Glacier Realty typed the May 30 agreement, Thornton gave

Bailey a check for $1,500. Bailey telephoned Songstad in

Washington, read the new agreement to her and, when she had agreed

to all the new terms, Thornton signed the agreement. The agreement

was then sent to Songstad for the signatures of all the owners.

The agreement was signed by Susan Niswanger Songstad, Sally

Niswanger, Rita Lawson and Michelle Niswanger Lytle, four of the

five co-owners of the 160 acres. Norwest did not sign the

agreement.

For a second time, the land sale did not close. Thornton then

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filed a six-count complaint against the defendants, alleging breach

of the May 30 buy/sell agreement and seeking specific performance

and damages against the four women who signed the agreement and

against Norwest. In due course, the defendants filed a motion for

summary judgment, which the District Court granted on February 10,

1993.

"Under Rule 56(c), M.R.Civ.P., summary judgment is proper if

the record discloses no genuine issues of material fact, and the

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

Construction - The Craftsman v. State (Mont. 1993), 851 P.2d 1037,

1038, 50 St.Rep. 321, 321-22, citing Kaseta v. N. Western Agency of

Gr. Falls (1992), 252 Mont. 135, 138, 827 P.2d 804, 806. The

standard that this Court, as an appellate court, applies in

reviewing a grant of summary judgment is the same as that initially

utilized by the trial court under Rule 56, M.R.Civ.P. McCracken v.

City of Chinook (1990), 242 Mont. 21, 24, 788 P.2d 892, 894.

Thornton offered to purchase 160 acres of land from the

defendants. However, only four of the five co-owners signed the

buy/sell agreement. Thornton claims that the four owners who

signed the buy/sell agreement can bind the fifth co-owner, and he

demands specific performance - the sale of the entire 100%

ownership interest in the 160 acres. The defendants contend that

since all the owners of the real property did not sign the buy/sell

agreement, a valid contract does not exist, and Thornton cannot

compel the defendants to sell the property to him by the remedy of

specific performance. The District Court agreed with the

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defendants.

DISCUSSION

It is axiomatic that a purchaser may not be granted the remedy

of specific performance in connection with the claimed breach of a

purported agreement for the sale of land unless it is first

established that there is a valid contract in existence. In

Schwedes v. Romain (1978), 179 Mont. 466, 587 P.2d 388, we cited

with approval the general rule that:

[w]hile it is universally recognized that equitable

relief by way of specific performance does not follow as

a matter of course by establishing the existence and

validity of the contract, the performance of which is

sought, the existence of a valid contract is essential to

the remedy of specific performance. In order for equity

to decree specific performance, it is necessary that

there be in existence and in effect a contract valid at

law and binding upon the parties against whom performance

is sought, for specific performance is never applicable

where there is no obligation to perform. (Citation

omitted.

Schwedes, 587 P.2d at 391.

It is black-letter law that, essential to the existence of a

contract, there be:

(1) identifiable parties capable of contracting;

(2) their consent;

(3) a lawful object: and

(4) a sufficient cause or consideration.

Section 28-2-102, MCA. The element that defendants contend is

absent here is consent. The Agreement to Sell and Purchase dated

May 30, 1990 (the buy/sell agreement), contains the signature of

the four women co-owners but does not contain the signature of

Norwest, owner of the other 50% of the 160-acre tract.

If Thornton's offer was to purchase 100% ownership of the land

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but owners of only 50% of the ownership interest of the land signed

the contract and thus accepted his offer, then a valid contract did

not come into existence because Thornton did not have the consent

of all the owners of the title to the property which was the object

of the contract.

In Weigand v. Mt. Land & Real Estate Inv., Inc. (1986), 223

Mont. 137, 724 P.2d 194, we held that "[t]he Earnest Money Receipt

and Agreement to Sell and Purchase [was] not a legally enforceable

contract because sellers failed to sign it," noting that one of the

essential elements for a valid contract required by g 28-2-102,

MCA, -- consent -- was lacking. "Had sellers consented to the

Agreement, they needed only to sign it. They did not. There is

nothing in the record to show they consented to the Agreement."

Weisand, 724 P.2d at 196.

Accordingly, we must first determine the percentage of

ownership interest for which Thornton was contracting -- 100%

including the interest of Norwest or simply the 50% interest owned

by the four co-owners who signed the May 30 buy/sell agreement.

Thornton stated numerous times in his deposition that he

wanted the signatures of u the owners of the property. He stated

that he was "under the impression on the 27th of May that [he] was

going to be the owner of the property."

In his deposition Thornton testified:

Q. And there's no doubt in your mind that you gave

specific and explicit instructions to Mr. Bailey that

your offer needed to be signed by everyone who owned the

property and that he understood that?

A. Yes, I believe that is the way it was.

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Additionally, he stated:

A. I had told Dave Bailey that I wanted all of the

signatures of the owners of the property on the new

buy/sell agreement.

Q. What did he say in response?

A. Well, he had talked to them on the phone, and I had

told him that I wanted everybody to sign that and that I

was going to make a new -- that I would make a new offer

and that I wanted all the signatures on it. If I

remember right, after we had it typed up, Dave Bailey

called Susan Songstad and read it to her over the phone.

. . .

Q. But you explicitly told him you wanted all the owners

to sign the buy/sell?

A. YS, I did.

Thornton wanted to purchase the land so he could log it. That

would have been impossible without complete ownership of 100% of

the title to the property, or, at least, some authority from

Norwest, absent its agreement to sell. See 93 70-16-107 and 108,

MCA.

Further evidence that Thornton was contracting for 100% of the

ownership interest in the subject property is derived from the fact

that he was aware of Norwest's undivided 50% ownership interest

before he signed the May 30 buy/sell agreement. During his

deposition, Thornton stated that he received the commitment for

title insurance "somewhere around the 15th of May" and "learned

that title was held by more than Susan Songstad, the only

individual [he] had seen paperwork on...." The commitment for

title insurance states that:

Title to the Fee Simple estate or interest in said land

is at the effective date hereof vested in:

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NORWEST CAPITAL MANAGEMENT AND TRUST COMPANY, formerly

the UNION BANK AND TRUST COMPANY, as Trustee, as to an

undivided l/2 interest.

SALLY NISWANGER, as to an undivided l/12 interest.

SUSAN NISWANGER SONGSTAD, as to an undivided l/12

interest.

MICHELLE NISWANGER LYTLE, as to an undivided l/12

interest.

RITA LAWSON, as to an undivided l/4 interest.

Thornton's deposition reveals that he knew or should have known

that Norwest was one of the co-owners of the land. However,

Norwest did not sign the buy/sell agreement, and Thornton did not

attempt to obtain its signature.

It is generally conceded that when someone purchases land

under circumstances which suggest outstanding equities in

third parties, there is imposed on the purchaser a duty

to make a reasonable investigation as to the existence of

outstanding claims against the property, and one who

fails to use due diligence to ascertain the facts within

his reach is not an innocent purchaser.

Rose v. Castle Mountain Ranch, Inc. (1981), 193 Mont. 209, 218, 631

P.2d 680, 685. Thornton did not use reasonable diligence and

investigate to determine who the co-owners of the land were and

ensure that all of the co-owners signed the buy/sell agreement.

Finally, the allegations by Thornton in his complaint lead

inescapably to the conclusion that his intention was to purchase

100% of the ownership interest in the property, and nothing less

than 100%. The general rule, applicable here, and in accord with

our decision in Weiqand, is set forth at 71 Am. Jur. 2d, Specific

Performance 9 175 as follows:

. . . In many cases the negotiations and the contract

prepared for execution are construed as contemplating a

joint sale only, or at least conditioned on all nominal

vendors becoming bound. Where such is the construction

it is considered that [when one or more vendors fail or

8
refuse to sign] no contract of sale came into existence,

in which event, or course, the vendee cannot obtain a

decree of specific performance against any of the signers

nor recover damages as for the breach of a sales

contract.

Thornton, nevertheless, argues that his oral requests to have

a& of the co-owners sign the buy/sell agreement were superseded by

the written buy/sell agreement itself, which did not make any

provision requiring the signatures of all the owners. Although §

28-2-904, MCA, does provide that any oral negotiations or

stipulations which precede or accompany the execution of the

written instrument are superseded by the written instrument, parol

evidence can be considered if the validity of the agreement is the

matter which is in dispute. Section 28-2-905(1)(b), MCA. Here,

because the essential question is whether the agreement is a valid

contract, parol evidence can be considered. "'[Wlhere the validity

of the agreement is the fact in dispute,' par01 evidence is

admissible, not to vary the terms of the instrument, but to show

that what appears on its face as a valid, binding contract is, in

fact, no such thing." Smith v. Fergus County (1934), 98 Mont. 377,

390, 39 P.2d 193, 197.

Finally, Thornton states that he was under the impression that

the four women co-owners could bind the trust to the buy/sell

agreement, and that the manager of the trust told him that he [the

manager] would go along with any plan for the land the four women

decided. Thornton argues that those are material facts in dispute

which defeat summary judgment.

In support of their motion for summary judgment, the

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defendants established: (1) that there was a written offer signed

by Thornton and accepted by the four women for the sale and

purchase of the 160 acres: (2) that the four women owned an

undivided 50% interest and that Norwest owned the remaining

undivided 50% interest as trustee: (3) that Thornton knew before

signing the buy/sell agreement that there were five undivided

owners and that to obtain 100% of the ownership interest he would

have to have all five co-owners sign the agreement; and (4) that

Thornton was contracting for 100% ownership interest in the

property.

Having established those material facts, the burden shifted to

Thornton to raise his claimed material factual issue -- namely that

Norwest, as trustee, was controlled by the four women co-owners and

that they could compel Norwest to sign the buy/sell agreement. That

was his theory: proving that theory would benefit his case and

defeat the defendants' motion for summary judgment; and,

accordingly, he had the affirmative duty to bring before the court

substantial evidence and specific material facts supporting his

theory by filing affidavits or through sworn deposition testimony

or interrogatory answers in the record. Gross v. Myers (1987), 229

Mont. 509, 514-15, 748 P.2d 459, 462-63.

Fatal to Thornton's claim in that regard, however, is his

failure to adequately raise, in opposition to defendants' motion

for summary judgment, any disputed material fact as to the four

women co-owners' exercise of control over the trust. "[W]hile the

initial burden of proof [on a summary judgment motion] must attach

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to the movant, that burden shifts where the record discloses no

genuine issue of material fact. Under these circumstances, the

party opposing the motion must come forward with substantial

evidence raising the issue." (Citations omitted. Emphasis added.)

Downs v. Smyk (1979), 185 Mont. 16, 21, 604 P.2d 307, 310.

"Further, the non-moving party must set forth specific facts and

cannot simply rely upon their pleadings, nor upon speculative,

fanciful, or conclusorv statements." (Citations omitted. Emphasis

added.) Thomas v. Hale (1990), 246 Mont. 64, 67, 802 P.2d 1255,

1257.

In the instant case, Thornton did nothing more than offer his

own conclusory hearsay statements from his July 29, 1992 affidavit

claiming that the trust manager told him that he [the manager]

would agree to any decision of the four women co-owners. His

assertion that the manager would follow any decision of the four

women co-owners is not otherwise supported in the record. Kronen

v. Richter (1984), 211 Mont. 208, 213, 683 P.2d 1315, 1318.

Rule 56(e) M.R.Civ.P., provides in pertinent part that:

Supporting and opposing affidavits shall be made on

personal knowledge, shall set forth such facts as would

be admissible in evidence, and shall show affirmatively

that the affiant is competent to testify to the matters

stated therein. . . .

Thornton's affidavit dated July 29, 1992, filed in opposition to

defendants' motion for summary judgment consists almost entirely of

statements allegedly made to Thornton by other persons regarding

Susan Niswanger Songstad's supposed authority to sell the property

and the four women co-owners' control over the trust. Those

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statements in Thornton's affidavit are not of his own personal

knowledge and fit within the definition of hearsay -- statements,

other than ones made by the declarant while testifying at the trial

or hearing, offered in evidence to prove the truth of the matters

asserted. Rule 801(c), M.R.Evid.

In Eberlv. Scofield (1990), 244 Mont. 515, 519, 798 P.2d 536,

538, we held that it was proper for the district court to strike

the affidavit of a party filed in a summary judgment proceeding,

noting that the statements made in the affidavit which related to

the issue on summary judgment were not of the affiant's personal

knowledge but were all hearsay.

While the statements attributed by Thornton to non-parties are

clearly hearsay and, therefore, inadmissible under Eberl, the

statements in Thornton's affidavit attributed to the trust manager

might, nevertheless, still be admissible as an exception to the

hearsay rule inasmuch as the trust was a party defendant to the

action. With respect to the trust, Thornton states as follows in

his affidavit:

. . .

5 . After filing this lawsuit and being informed that

Norwest Capital Management and Trust Co. was not willing

to sell the property I found out the individual's name

and telephone number who was managing the trust interests

of Susan Niswanger Songstad, Sally Niswanger, Michelle

Niswanger Lytle, and Rita Lawson, (hereafter referred to

as the Niswangers).

6 . I contacted the individual identified as the manager

of the Niswangers trust interests. Upon questioning him

about the sale of the property he informed me that Susan

Niswanger Songstad was in charge of the property and that

whatever the Niswangers agreed to do with the property

was fine with him as manager of the trust.

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7 . Subsequently, I made contacts with this trust

manager concerning terms to settle this matter but was

always told by him to contact Susan Niswanger Songstad,

that she was in charge of selling the property, that he

only did what she told him to do.

The statements purportedly made by the trust manager appear to be

admissions of a party-opponent, and therefore not considered

hearsay under Rule 801(d)(2), M.R.Evid., which states that a

statement is not hearsay if "[t]he statement is offered against a

party and is...(D) a statement by the party's agent or servant

concerning a matter within the scope of the agency or employment,

made during the existence of that relationship."

However, there is nothing in Thornton's affidavit or in the

record identifying the trust manager or demonstrating that the

person Thornton spoke with had the authority as an agent or

employee of the trust to make binding statements about the trust or

concerning the beneficiaries' control over the trust's management

of the property.

The court in Passovoy v. Nordstrom, Inc. (Wash. 1988), 758

P.2d 524, 527, dealt with an almost identical issue as that posed

here. There the appellate court held that the trial court properly

struck as hearsay and not as admissions of a party-opponent, that

portion of a summary judgment affidavit which contained statements

attributed by the affiant to the defendant-store's employee where

there was neither independent verification of the existence of the

agency between the party opponent and the employee nor independent

evidence as to the scope of the agency relationship. The

Washington court held that the fact and scope of the agency could

13
not be proved from the hearsay statements alone. PassovoY, 758

P.2d at 528.

Similarly, here, Thornton's affidavit fails to lay any

foundation for the use of the trust manager's statements as

substantive evidence. The affidavit contains no statements to

establish the actual identity of the trust manager or to establish

his authority to speak on behalf of the trust or its beneficiaries.

Thornton provided no more than his own bare assertion that he spoke

with the trust manager and that the manager stated that whatever

the four women "agreed to do with the property was fine with him."

The testimony provided in Thornton's affidavit does not provide a

sufficient indicia of credibility: "independent proof of the

existence of the agency and its scope must be shown." Passovov,

758 P.2d at 528. Clearly, the information concerning the manager's

statements found in Thornton's affidavit does not qualify as a

statement of a party-opponent, and therefore consists of hearsay to

which Thornton himself was not competent to testify. Accordingly,

w e conclude that Thornton's affidavit does not meet the

requirements of Rule 56(e), M.R.Civ.P., and fails to properly raise

the disputed issues of material fact that he claims are critical to

his case.

Thornton could have deposed the manager of the trust or he

could have filed an affidavit from the manager establishing his

authority and stating that he [the manager] would agree with any

decision made by the four women co-owners. He did neither.

Thornton produced nothing in writing whereby Norwest authorized any

14
of the four women co-owners to act on its behalf or to sell its

interest in the property, or to bind the trust to the buy/sell.

See 55 28-2-903(1)(d) and 28-10-203, MCA. Thornton did not offer

the trust instrument of which the four women co-owners were

purportedly the beneficiaries which might have conceivably showed

their power or control over the trust.

While Thornton offered evidence of other transactions between

the trust and the four women co-owners, that evidence did nothing

in the way of proving the fact of their control over the trust in

the land sale at issue here and which Thornton claimed was material

and dispositive of defendants' motion for summary judgment.

In short, Thornton simply did not come forward with any

substantial evidence that would raise a genuine issue of material

fact as to the four women co-owners' control over the trust.

Kronen, 683 P.2d at 1318. See also Downs -I 604 P.2d at 310. If

Thornton possessed such evidence, it was his burden to produce

it. He did not, and his hearsay affidavit statements were

inadequate to carry his burden.

Ultimately, the defendants carried their burden to show that

there were no genuine issues of material fact, and, when the burden

shifted to Thornton, he did not come forward with specific facts

and substantial evidence to support his theory of the case. The

District Court correctly concluded there was no genuine issue of

material fact concerning the four women's control over the trust.

Kronen, 683 P.2d at 1318. As we have previously stated,

[flailure of the party opposing the motion to either

raise or demonstrate the existence of a genuine issue of

15
material fact, or to demonstrate that the legal issue

should not be determined in favor of the movant, is

evidence that the party's burden was not carried.

Summary judgment is then proper, the court being under no

duty to anticipate proof to establish a material and

substantial issue of fact.

Taylor v. Anaconda Federal Credit Union (1976), 170 Mont. 51, 57,

550 P.2d 151, 154.

The facts presented to the District Court demonstrate that

Thornton was contracting for 100% of the title to the land at issue

and that he knew that he must obtain the signature of the trust or

prove that the trust was under the control of the four other coowners. Thornton failed in his burden to establish material

disputed facts, and accordingly, we hold that the District Court

was correct in concluding that no contract was in existence, and

that defendants were entitled, as a matter of law, to summary

judgment in their favor.

Affirmed.

We Concur:

&k

Justice

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