### No. 12734 INTHE SUPREME COURT OF THE STATE OF MONTANA 19 74

RICHARD 

### E. LYNCH, Plaintiff and Appellant,

J. 

### PAUL SHIELDS and JESSIE 

### I. SHIELDS, husband and wife, Defendants and Respondents.
Appeal from: District Court of the SixthJudicialDistrict, Honorable Jack 

### D. Shanstrom, Judge presiding. Counsel of Record : 

### For Appellant: 

### Berg, Angel, Andriolo and Morgan, Bozeman, Montana Richard 

### J

# .Andriolo argued, Bozeman

## ,Montana 

### For Respondents: Landoe, Gary and Donald E. White, Bozeman, Montana 

### H. B. Landoe argued, Bozeman, Montana

Submitted: November 

### 20, 

### 1974 Decided: =--. 

### - L:!.- - 

### 3.4

=-. 

### Filed

### :Mr. JusticeWesley Castles delivered the Opinion of the Court.
Plaintiff appeals from a judgment fordefendants entered
on findings of fact and conclusions of law after denial of a motion to alterand amend those findings and conclusions. The
case was tried tothe court inthe sixthjudicial district, county of Park, the Hon. Jack D. Shanstrom, presiding without a jury. Plaintiff,Richard E. Lynch, brought the action torecover the sum of $10,000 which he had paid todefendants J. Paul Shields and Jessie I. Shields, husband and wife, allegedly as a good faith deposit inconnection with negotiations topurchase the OTO ranch inPark County. Defendants answered denying the payment was simply a good faithdeposit, but rather that it was payment for
an option topurchase. The issues on appeal are: 1. The districtcourt erred inrefusing tofind that
an alleged oralcontract oroption agreement was not enforceable by way of defense as it violated the statuteof fraud. 2. The court erred infinding a legally binding contract existed between the parties. To answer the issues, the facts are important. One Bud Bellis, who had hunted on the Shields' property, called Paul and Jessie Shields inMarch 1970 saying that he had
a group of people interested inbuying their ranch and asking them towait before selling it. On April 23, 1970, plaintiff Lynch and Bellisflew toMontana for the purpose of viewing the ranch. Mr. Lynch described himself as a "stockbroker part time,
a securities salesman". Prior tohispresent position he worked
as a merger consultant assisting inthe sale of corporations, and before that asa securities salesman. The Shields

### werewilling to sellthe entire ranch for$500,000, but atthis firstmeeting they reached an agreement whereby they would retain a controlling interest inthe ranch by selling 49%of the OTO Corporation, which would have tobe expanded. The total price agreed upon was $245,000 for 49% interest, 29%of which 

### was tobe paid on delivery of the stock, with $10,000 of that 29%figure to be paid on execution of an instrument. The remainder was tobe paid inequal yearly installments. They discussed the transaction day and night for three days, agreeing on what Paul Shields considered tobe all the aspectsof 

### the deal, and the details 

### were never changed. Jessie Shields testified thiswas the agreement reached and so did Lynch, who leftMontana with the intention of consummating the deal if investors could be found. The Shields had given him 

### timetoobtain investors. Shortly after returning toArizona, the interestedmen received the proposed "Agreement toSell and Buy Capital Stock" and "Transactions Involved in Sale of Capital Stock of OTO Ranch" which Lynch expected and which Lynch and Bellishad requested
so that the sale could be consummated. The interest figure, for which a blank was left, was testified toby Paul and Jessie Shields tohave been decided on as7%. The documents set out the 

### terms asagreed upon and the Shields believed that they were entirely satisfactory tothemen because the Shields did not hear from them. On May 11, 1970, Jessie Shields wrote a letter to Bellis and Lynch inwhich she stated, because she had not heard from them ina long time, she supposed they were no longer interested. This letter prompted a call from Lynch followed by another visit
so that theranch could be shown toa prospective investor and
on May 15Lynch brought a doctor tolook over the ranch. When the doctor leftafter spending only 

### a short 

### timeon the ranch,Lynch stayed for two days talking over his plans with the Shields 

### as if the agreement 

### was soon tobe signed. Atthis

### timePaul told Lynch that since somany people


### were interested in the ranch, Lynch would have toput up $10,000 for an option. Concerned about the possibility that enough investors could not be found, Paul did not want Lynch tohave to forfeit the consideration for an option. He asked Lynch if he could raise the downpayment on his own because, as Lynch testified Paul told him: "He said, well, if the rest of your syndicate doesn't get together then the only way you can get that $10,000.00 back is if you put up the whole downpayment." Paul Shields testified: "And I asked him, I said, well, Dick, tomake this a deal you 

### willhave toput up an option of $10,000.00 toknow that we have got something. We want tosellthis deal and we can't set here all summer and lose the people who were wanting tobuy all of the 

### timeatthat time." Jessie's testimony agreed with Paul's, and the parties agreed that on payment of the $10,000 the option would run untilAugust 1, 1970. Lynch testified that when he returned toPhoenix he "got nervous" and sent a check for $10,000 tothe Shields. He thought that this would give him the first chance tobuy. He thought he had accomplished something by sending the check and the Shields would hold the deal for him. In the letter accompanying his check he wrote: "This is only the first step inwhat should be a long and friendly business relationship. We are alllooking forward tobeing stockholders in OTO Ranch 

## * * * Wewill forward the agreement once we have legally established our (Bud's and mine) power of attorney to sign for the group. I hope our check is sufficient for now." It seemed as though the signed Agreement was forthcoming. The Shields refrained from showing the valuable ranch, and although many people inquired about 

### its possible purchase,they were told that it was not for sale. In a letter of May 29, 1970, Jessie Shields assured the two men that they were properly managing theranch and wanted tokeep them informed of what was happening. She asked if their wives could come up togive her ideas on fixingup the houses, which she 

### was readying for them. On June 26, 1970, she again wrote and expressed concern for themanagement of the ranch inthe future; since theAgreement would give the investors a 49%interest, there was much planning and trustwhich would be needed. 

### In one part she wrote: "Gretchen leftthe house up on the OTO property just in perfect shape. We could rent it but didn't think we had better till we found out what you boys wanted todo." She ended by reminding Bud Bellis that he still had topick out the house he wanted. On July 31 orAugust 1, 1970, Richard Lynch called the Shields because the ninety days which the Shields had given them inApril were up. Actually, the sixtyday option period which the Shields had agreed togive inexchange for the $10,000 consideration had expired. When asked who he talked toon the telephone, he answered, "Jessie". He did not recall any talk about forfeiting the $10,000. He then testified that he was not
sure if it was Jessie he talked to, remarking that it had been three years since the conversation. When asked whether he was
sure about what was said intheconversation, he answered, "not dead positive, no". He did recall that the person he talked to, whoever itwas, offered toallow him more time. Paul and Jessie testified they were surethat Lynch had talked toPaul. Paul offered toextend the option to September 15, a month and a half, and Lynch said that he appreciated that very much and it might do thejob. Shields wanted tobe fair and did not want Lynch tohave to forfeithismoney if there was

### a chance of going through with the deal. They had an extension drawn up and after signing it, sent it to Richard Lynch. Lynch\ admitted receiving it. The documentwas prepared simply to assure Lynch that he had until September 15 to return the signed Agreement. The Shields never received a response from Lynch--they did not hear from him again until the law suit was filed--and assumed that the extension was acceptable to him. Defendants
were prepared, from the time of the negotiations which took place inApril 1970, to comply literallywith the terms and conditions set forth in the agreement to sell and were ready, willing and able to convey the property as agreed. The district court concluded: 

### "I. "Thatas a result of the oral conversationsbetween plaintiff and defendants on April 23rd and 24th, 1970,a written proposal in the form of a purchase agreement was prepared and delivered to plaintiff by mail on or about May 1, 1970, the receipt of which was acknowledged by the plaintiff, which document constituted an offer to sell.

"Thaton or about May 29th, 1970,plaintiff, following a meeting with defendants at defendantst ranch in Park County, Montana, addressed a letter to defendants enclosing a 

### check for $10,000.00 as part payment in acceptance of the offer and to obtain an option to hold the deal for him and his associates for a certainperiod of time, and acknowledged acceptance of the terms of the written contract by assuring defendants that the agreement would be forwarded as soon as power of attorney could be established, by which plaintiff implied that he was acting for himself as well as certain undisclosed associates.
"That defendants, Paul Shields and Jessie Shields, construed said $10,000.00 payment, together with written assurance by plaintiff that the agreement would be forwarded as soon as power of attorney could be established to sign the agreement, in the nature of an option to hold the deal for the plaintiff until he had perfected his power of attorney.I'

### IV. "That the foregoing actsand conduct on the part of plaintiff and defendants, including part payment of $10,000.00, constitute an offer and acceptance, 

### as defined in Section 87A.8-319, 

### R.C.M. 1947, under Subsections 

### (a), (b)

## ,and (c) thereof, as

### wellas Section 13-606-4, 

### R.C.M. 1947.

"That payment of the sum of $10,000.00 constitutes part performance, which removed said transaction from the Statuteof Frauds, and placed an obligation upon the defendants inthe nature of an option tohold the deal for theplaintiff, and that the defendants did so.

"That by reason of the failure of the plaintiff tocomply with the agreement inthe nature of an option within the agreed 

### timeorwithin a reasonable 

### time, plaintiff forfeited hisright toreclaim the consideration paid by him for the option toconsummate said purchase within a certainperiod of time or within a reasonable time." Referring now tothe issues raised. Insofar asthe statuteof frauds 

### isconcerned, under sections 13-606(4), 93- 1401-7, 74-203, or 87A-8-319, R.C.M. 1947, it is clear that a fullyexecuted option contract was fullyperformed and outside the statutes enumerated. Appellant Lynch does not dispute this general statement but argues thatthe evidence 

### was insufficient toestablish the existence of an option agreement. By our recitation of the facts here and our quotation of the trial court's conclusions, we find there was sufficient evidence toestablish the option agreement as well asto show that there was fullperformance. The parties had discussed and agreed upon allthe essential terms of the sale, most of which were incorporated into the two instruments. The Shields had an offer which they held open foran entiremonth. On Lynch's visit tothe ranch on May 23, 1970, Paul informed him that some payment would be necessary tohold the deal any longer, whereupon the two agreed on$10,000. Returning toPhoenix, Lynch sent the check and a letter dated May 29, 1970 inwhich he wrote "We willforward the agreement once 

### we have legally established our (Buds and mine) power of attorney tosign for the group. I hope our check is sufficient for now." In other words, Lynch was buying and received 

### time. The Shields considered themselves bound and held the property off themarket. These transactions created an option contract asthe trialcourt found. InPeterson Sheep and Cattle Co. 

### v. Moss, 155Mont. 311, 471 P.2d 546, an option 

### was created by payment of consideration on an agreement to "tieup the property". Finding substantial evidence to support the findings of thetrialcourt, and finding no merit inthe issues raised on appeal, we affirmthejudgment.

T concur:

### t

. Chief Justice

Justices