No. 84-297 C 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1984 

WILLIAM H . DERRENGER, 

plaintiff and Appellant, 

-VSCITY OF BILLINGS, a Municipal Corp., 

Defendant and Respondent. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In a.nd for the County of Yellowstone, 

The Honorable Charles Luedke, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Moses Law Firm; Jay F. Lansing, Billings, Montana 

For Respondent: 

James L. Tillotson, Billings, Montana 

Submitted on Briefs: Sept. 24, 1984 

Decided: December 6, 1984 

Filed: r r tjl: '.I 65 F: ': - . . ,<,.% 2.9 

Clerk 
Mr. Justice Frank B. Morrison delivered the opinion of 

the Court. 

This is an appeal from a summary judgment granted to the 

City of Bil-lings by the District Court of the Thirteenth 

Judicial District, of Yellowstone County. We reverse and 

remand. 

William H. Derrenger, filed a complaint for a declaratory judgment against the City of Billings on September 9, 

1983, requesting the district court to construe and interpret 

the written annexation agreement entered into with the City 

of Billings. Both parties filed a motion for summary judgment. The judgment entered April 12, 1984 denied Derrenger's 

motion and granted a summary judgment in favor of the City of 

Billings. 

Derrenger found that certain facts relied upon by the 

district court were clearly erroneous and filed a motion to 

amend the findings, conclusions and judgment. On June 22, 

1984, the district court amended its findings but refused to 

amend its earlier judgment. Derrenger appeals both 

judgments. 

In 1976 William H. Derrenger purchased a parcel of land 

in the Billings area which comprised three tracts, Certificates of Survey No. 334, No. 1566 and No. 1610. At the time 

of this action, Tract No. 334 was a part of the City of 

Billings and designated Residential-9600, a zone classification restricting use of the property to single-family residences. The remaining two tracts were zoned Agriculture Open 

Space under Yellowstone County zoning regulations. 

In 1978 the City of Billings expressed an interest in 

annexing Certificates of Survey No. 1566 and No. 1610. On 

August 28, 1978, the Salsburys, legal titleholders and sellers to Derrenger, and the City of Billings entered into a 
written agreement entitled "Waiver of Right to Protest Annexation and Agreement on Non-conforming Use," which is the 

subject of this appeal. The Agreement was approved by the 

City Council of Billings and signed by the mayor. Tracts No. 

1566 and No. 1610 were annexed on November 27, 1978, and 

rezoned R-96 on December 11, 1978. 

In 1983, Derrenger proposed to build a multi-family 

residential unit on his property, all portions of which were 

then zoned R-96. A controversy arose as to the construction 

of the 1978 annexation agreement and its effect upon the 

proposed multi-family residential use. Derrenger filed a 

complaint on September 9, 1983, for a declaratory judgment, 

requesting judicial construction of the annexation agreement 

to permit multi-family residential development on his property. Both the City and Derrenger believed the language of 

their agreement was unambiguous and supportive of their 

individual contentions and moved the district court for a 

summary judgment. In the judgment entered April 12, 1984, 

the trial court denied Derrenger's summary judgment and 

granted the summary judgment in favor of the City. Derrenger 

appeals and presents the following issues: 

1. Whether the district court erred in interpreting the 

language of the agreement, "Residential Purposes", to be only 

a single-family residential use in conformance with existing 

zoning on the property. 

2. Whether the district court erred in failing to give 

effect to the language of the agreement contained in paragraph l(d), page 2, in its interpretation and construction of 

the pertinent language of the agreement. 

3. Whether the district court erred in limiting the 

effect of the agreement to only those non-conforming uses 

which existed prior to or at the time of the agreement. 
Pertinent language of the August 78, 1979, annexation 

agreement describing accepted non-conforming uses, provides 

as follows: 

"WHEREFORE, on the basis of the above premises, the 

Owners agree to be annexed into the City of Billings and to waive any rights to protest said annexation upon the following conditions; and the City 

of Billings in consideration thereof agrees to said 

conditions: 

"1. That simultaneously with the annexation the 

following non-conforming use as to the above tracts 

be established, adopted, and recognized by the City 

of Billings: 

"(a) That the tracts, buildings, modification 

thereof, and future buildings may --- be used for 

residential purposes, for parking, and the purpose 

of receiving, storing, growing if applicable, 

processing, and selling produce, fruit, vegetables, 

nuts, grain and grain products which are dried, 

fresh or otherwise, lawn and garden items and parts 

thereof, flowers, trees, shrubs, seeds, and nursery 

stock, lawn ornaments, lawn furniture and gift 

items and specialty retail items, Christmas trees 

and ornaments and other holiday decorative items, 

and all related items; 

" (b) That the buildings and structures upon these 

tracts may be modified, enlarged, and repaired, and 

if destroyed in whole or part, rebuilt; and if need 

be, additional buildings and structures may be 

built upon this tract at the discretion of the 

Owners or future owners of the tract to accommodate 

the above-specified uses;" (emphasis added) 

In a memorandum accompanying the order of March 29, 

1983, the trial court found that the subject agreement was 

clear on its face and said: 

". . . A review of the agreement leads the Court to 

the Conclusion that the agreement is legal, in that 

it does not constitute contract zoning, and that it 

is not ambiguous. It speaks for itself, but from a 

consideration of the terms it contains, it speaks a 

different message than that contended for by 

plaintiff. l1 

The district court then interpreted the language of the 

agreement and imposed a limitation on the terms as follows: 

"It is apparent that the agreement is a recognition 

by the parties that, at the time of its execution, 

there were several uses being made of the premises 

which were non-conforming. The document was merely 

an agreement by the City to recognize and to allow 

the continuation of these already-established 
non-conforming uses and to provide a specific 

description of what those uses were. 

"At the time the agreement was entered into, and at 

all times prior thereto, the only residential use 

made or being made of the premises was a 

single-family residence. - See, Salsbury affidavit, 

Exhibit 'A' to Document No. 11. Therefore, since 

the agreement was only a recognition of the then 

non-conforming uses, and no non-conforming 

multi-family residential use was in effect, the 

only residential use which it allows is a conforming one, to-wit: Single-family dwellings." 

If the agreement is ambiguous, then summary judgment is 

not proper and the question of intention should be submitted 

to the jury. Schell v. Peters (1966), 147 Mont. 21, 410 P.2d 

152, 155. The issue reduced to simplest terms is whether 

"residential purposes" is so clear on its face as to preclude 

multi-family residential purposes. We think not. 

The Supreme Court of Ohio had occasion to make a similar 

interpretation in Hunt v. Held (1914), 107 NE 765. There the 

issue was whether multi-family use violated a restriction for 

"residence purposes only." The Court, in deciding against 

the more restrictive use, said: 

" [3] But is there any doubt as to the 

meaning of the words? The word 'residence, ' as we view it, is equivalent to 

'residential' and was used in 

contradistinction to 'business.' If a 

building is used as a place of abode and 

no business carried on, it would be used 

for residence purposes only whether 

occupied by one family or a number of 

families. Counsel say that the words 

were intended to describe a type of 

building. We think not. The word 'residence' has reference to the use or mode 

of occupancy to which the building may be 

put. If it had been intended that the 

building was to be for the use of one 

family only, words indicating such an 

intention would have been used, as is 

frequently done, such as 'a single residence,' 'a private residence,' 'a single 

dwelling house.'" 

Under the authority of the Ohio case, we could hold that 

"residential use" clearly allows for multi-family. However, 
after carefully reviewing the record in this case, we are 

convinced that there is a genuine factual controversy over 

what the parties intended by use of the subject language. 

The agreement on non-conforming use is confusing. At 

one point, the agreement recites that the three tracts in 

question were zoned R-9600, a residential classification for 

single-family. In fact, only one tract was so zoned. The 

tria.1 court reasoned that since the parties to the agreement 

believed all three tracts were limited to single-family and 

existing non-conforming uses, and since zoning limitations 

could not be changed by contract, then surely the itemized 

uses must have contemplated only existing uses. Perhaps that 

is true. But again, there is a fact question about what was 

intended. The parties may have intended to assure additional 

future uses in return for a.greeing to annexation. They may 

not have fully understood the limitations on contract zoning. 

Surely, they must have intended to receive some consideration 

for not protesting annexation. These questions must be 

resolved by the trier of fact. 

The trial court also must have found the agreement 

unclear on its face. After examining intent and going outside the four corners of the instrument by referencing an 

affidavit, the court said: "The intent of the parties when 

the agreement is entered into is controlling." 

Intent is only looked to when the agreement is not clear 

on its face. The court may have properly concluded the 

intent issue but that issue is one of fact and cannot be 

decided on summary judgment. 

We, therefore, vacate the judgment and remand for trial. 
We concur: 

?&.-4 4- +=-QQ 

Chief JusticeL, " 

Justices 
Mr. Justice L. C. Gulbrandson, dissenting. 

I respectfully dissent. 

The agreement is question was titled "Waiver of Right 

to Protest Annexation and Agreement -- on Non Conforming - Use," 

and contained the following language, in addition to that set 

forth in the majority opinion: 

"WHEREAS, the area immediately 

surroundins - the above-described tracts 

- and the tracts themselves are zoned - 

~6900, - a residential zoning 

classif icati%n; 

"WHEREAS, the above described tracts have 

historically -- and are currently being used 

-- for an aqricultural - use; 

"WHEREAS, --- the use now being --- made of the 

above-described tracts - is - a. 

non-conforming - use; 

"WHEREAS, the City of Billings is 

desirous of annexing said tracts on the 

conditions stated; and 

"WHEREAS, the Owners of said tracts are 

willing to waive any rights to protest 

said annexation on condition of obtaining 

a more certain land use classification." 

(Emphasis added. ) 

Section 28-3-201, MCA, provides as follows: 

"A contract must receive such an 

interpretation aswill ---- make it lawfur 

operative, definite, reasonable, and 

capable of being carried into effect if 

it can be done without violating the 

intention of the parties. (Emphasis 

added. ) 

The parcel of land contained in Certificate of Survey 

No. 334, located within the City of Billings and having been 

zoned R-9600 long before the date of the agreement, but 

hearing a non-residential non-conforming use could not 

legally be the subject of an agreement whereby the City would 

agree to grant a residential multi-family use variance. Such 

an agreement, in my view, would constitute contract zoning. 
In 82 Am. Jur. 2d, Zoning and Planninq, Section 17, the 

aversion to "contract zoning" is expla.ined: 

"When zoning power is delegated to a 

municipality, it is not contemplated that 

the municipality will ba.rqain away any 

part of that power to any private 

landowner. A contract made by the-zoning 

authorities to zone or rezone for the 

benefit of a private landowner is illegal 

and is denounced 9 the courts as 

- 'contract zoning' --- and asan ultra vir= 

bargaininq away -- of the police power. It 

- is reasoned that zonin9 restrictions and 

-- must be governed solely & 

interest, -- and not a - the 

an individual a~~licant." 

(~m~hasis added. ) L L 

The agreement itself recognizes the status and zoning 

of the land described in Certificate of Survey No. 334. The 

City of Billings had police power over that specific parcel 

and could not bargain such power away for the benefit of a 

private landowner. 

It is for that reason that I believe the majority to be 

in error when they state: "The parties may have intended to 

assure additional future uses in return for agreeing to 

annexation." In my view, such an additional future 

residential use would constitute illegal contract zoning. 

I also believe the majority to be in error when they 

state: "Surely, they must have intended to receive some 

consideration for not protesting annexation. These questions 

must be resolved by the trier of fact." The plaintiff 

clearly received something he had not had prior to the 

agreement, specifically: 

(a) a written agreement that the non-conforming 

commercial uses on parcel 334, zoned singl-e family 

residential, could continue and in fact be expanded within 

specified limits; 
(b) a written agreement that these same non-conforming 

uses would be granted for the remaining two tracts after 

annexation; and 

(c) a written agreement that the plaintiff would have a 

discontinuance of use period of three years, rather than the 

normal one year period. 

District Judge Luedke recognized that interpreting the 

agreement as requested by the plaintiff would render the 

agreement illegal by stating in his memorandum: 

"However, the overriding message which 

the terms of the agreement contains, when 

all term are considered together, is that 

the then-existing non-conforming uses 

were to be protected. The totality of 

such agreement does not support the 

position of plaintiff that use of the 

language, 'residential uses,' authorizes 

the establishment of new or different 

non-conforming uses. If it did, there 

would be a problem with respect to the 

defense of the City as to contract 

zoning. I' 

District Judge Luedke interpreted the agreement as referring 

to non-conforming uses which existed at the time the 

agreement was executed, the only interpretation which could 

make the agreement lawful as required by section 28-3-201, 

MCA . 

Finally, the majority opinion suggests that the trial 

court went outside the agreement when the trial court stated: 

"The intent of the parties when the agreement is entered into 

controlling." 

That statement was actually made in the trial court's 

second memorandum explaining its later order qrantinq the 

plaintiff's motion to amend findings to state that the other 

two parcels were in fact zoned a.gricultural open space on the 

date of the agreement, and denying plaintiff's motion to 

amend the judgment. 
The pertinent portion of the trial court's second 

memorandum explaining that order is as follows: 

"Regardless of the actual zoning of the 

property on the date of the 1978 

agreement, the parties to the agreement 

operated under the assumption that the 

tracts were zoned R-9600. The agreement 

makes this clear. The following 

statement appears on Page 1 of the 

agreement: 

"'WHEREAS, the area immediately 

surrounding the above-described tracts 

and the tracts themselves are zoned 

R-9600, a residential zoning 

classification [ .I ' 

"A reading of the agreement reveals that 

the parties were operating under the 

assumption that the uses listed in the 

agreement were at that time 

non-conforming ones. The tenor and 

purpose of the agreement is clear--the 

parties were attempting to insure that 

the uses then being made of the property 

would continue following annexation by 

the City. The fact that the parties 

mistakenly believed that the parcels were 

zoned R-9600 does not change the judgment 

of the Court. The intent of the parties 

when the agreement was entered into is 

controlling." 

I would affirm the judgment of the trial '