No. 12898 INTHE SUPREME COURT OF THE STATE OF MONTANA 1975

DERRALL PIPKIN and BETTY PIPKIN, husband and wife, Plaintiffs and Respondents,

GERALD CONNOLLY and EMILIE CONNOLLY, husband and wife, Defendants and Appellants,

Appeal from: District Court of the SixthJudicialDistrict, Honorable Jack D, Shanstrom, Judge presiding. Counsel of Record: For Appellants: Lee Overfelt argued, Billings, Montana For Respondents: Joseph T. Swindlehurst argued, Livingston, Montana Huppert and Swindlehurst, Livingston, Montana

Submitted: May 

### 6, 1975 Decided

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t- _.c 44Mr. Justice Gene B. Daly delivered the Opinion of the Court:

This 

### is an appeal from a judgment of the district court, Sweet Grass County, sittingwithout a jury, holding defendants' lease terminated upon failure to exercise their right of first refusal topurchase farmland and further that defendants were accountable to plaintiffs inunlawful detainer. Defendants Gerald and Emilie Connolly, husband and wife, and plaintiffs Derrall and Betty Pipkin, husband and wife, entered into an agricultural lease agreement drawn by defendants' attorney John R. Glenn, Esq. The leasewas for a fiveyear period beginning March 1, 1973 and terminating February 28, 1978. The 

## CGr-~r-ubCC -7 that Pipki*'day $4,000 a year as rent for the property. reserved the dwelling house located on the property for their personal

use. Pipkins further agreed togive Connollys the right to meet any offer tobuy the farmland and Pipkins agreed to accept the Connollys' offerwhich would meet any offer or offers tobuy from any source. On March 28, 1974, Pipkins received a written offer for the purchase of the premises, together with earnest money of $10,000 from Rainbow Ranch, Inc. of Fort Collins, Colorado, upon these terms: "The total purchase price 

### isTwo Hundred Thousand

Dollars ($200,000.00) payable as follows: "Sixty Thousand Dollars ($60,000.00) paid down; "The Balance payable over a period of Thirty (30) years, with interest amortized out at Six per cent 

### (6%)

### ; "Contract for Deed tobe carriedby Seller;

11

Interest tocommence as of date of possession; "Earnest money of Ten Thousand Dollars ($10,000.00); "The closing date of the sale shallbe on orbefore June 

### 1, 1974."On April 

### 25, 1974, Pipkins served upon Connollys notice of the offer, giving them the right tomeet the offer on orbefore May 31, 1974. Connollys failed toaccept the offer or to deliver possession of the premises, as requested. Pipkins brought action inunlawful detainer torecover possession of the premises. Connollys cross-complained praying for the court to amend the lease toread as they claimwas the original intention of the contracting parties--that any saleof the farmland was subject to the lease. The proposed salewas not completed due to the pending litigation. Pipkins insist they wanted the right to sellthe property atanytime and that the leasewould terminate upon such sale. The lease did not provide for its termination upon sale of the premises, but provided in pertinent part: "The Landlords [Pipkins] agreed to give Tenants [Connollys] the right tomeet any offer tobuy the above described real estate and Landlords agree toaccept 

### ena ants' offerwhich does meet an offer, or offers, tobuy from any source whatsoever.

"Jc 

# * %TheTenants recognize 

### and lords' right to sellthe above described real estateduring the term of this lease or any future leaseproviding that Tenants be given the rights hereinbefore mentioned. If Mr. Glenn, Connollys' attorney, testified therewas no provision made for forfeiture of the lease for failure to exercise the right of firstrefusal because itwas fullyunderstood inhis discussions with the parties that the land could be sold, but Connollys would remain in possession under the lease. In its findings of fact the district court found: that ' at the timethe leasewas made Pipkins strongly emphasized the fact that they wanted toreserve the right to sellthe farmland and upon such sale the leasewould terminate; Pipkins had received a bona fide offer for the purchase of the premises from Rainbow Ranch, Inc.; that Connollys refused tomeet the offer; and, therefore, the lease

was terminated on June 

### 1, 1974. In itsconclusions of law the courtheld that the Connollys unlawfully detained the premises sinceJune 1, 1974, and awarded Pipkins judgment for treble damages. ~onnollys' cross-complaint was denied. Connollys present nine issues for this Court's review. Briefly stated, the issues are: 

### 1. Did the district court err in finding that the lease terminated upon the saleof the farmland and ~onnollys' failure to exercise their right of firstrefusal? 2. Did the court errin admitting an unacknowledged buy-sell agreement into evidence as proof of an offer tobuy the farmland in question? Lessees Connolly argue that in light of the testimony of the attorneywho drew up the contract, Mr. Glenn, therewas no such intent on the part of the parties that the leasewould terminate upon the saleof the land; that lessors Pipkin testified Connollys wanted a lease so that they could borrow money from thebank and, in light of the fact the law does not favor forfeiture, Pipkins have failed in theirburden of proof, therefore the district court erred in finding for them. The leasewas drawn by the attorney for Connollys. The terms of the leasewhen ambiguous willbe construed most strongly against him whose words they are. Bickford v. Kirwin, 

### 30 Mont. 1, 75 P. 518. The lease clause allowing the sale of the farmland and giving lessees theright of firstrefusal 

### is, atbest, incomplete

as it relates to the problem here. If allPipkins wanted todo was tobe able to sell their farmland, subject to the leasehold, there would have been no need for the clause. Connollys stated they included the clause because Pipkins demanded it, even though in their opinion itwas not necessary. Connollys argue that ifthe lease could be terminated upon the sale of the farmland, what* bank would lend money

on that type of lease? Pipkins statetheywere adamant about beingable to sell their farmland anytime they wanted to, and not have the sale subject to the lease. Pipkins alsopoint out that Connollys agreed that they could move from California to the farmland, and that would terminate the lease although that was not included in the lease. That type of agreement Pipkins argue 

### is contradictory to the type of lease Connollys claim they received. In Lunke v. Egeland, 46 Mont. 403,410, 128 P. 610, while construing an agricultural leasewhich contained additional elements, this Court did reach the problem of the effect of a clause giving the lessor the right to sell and the lessee the right of first refusal. The Court held:

IIThere was no necessity of reserving the right to sellif such salewas not toaffect the lease. [Lessor] had such right inany event. I? 2j.7 The California Supreme Court in Garetson v. Wester, 

### 39' Cal.R+r. P.2d 863, 864, 865, construed this language of the lease involved tkre: "'1t 

### ismutually understood and agreed that the property covered by this lease 

### is subject to sale; however, the lessor agrees that in the event of an offer to purchase that lessee 

### is tobe given first opportunity tobuy. I I1 The Court stated: "Obviously, the property was subject to salewithout the insertion of any such clause. The Lessor atanytime had the right to sell theproperty subject, of course, to the lease, and the effect of the salewould have been merely to substitute the vendee to allof the rights of the original lessor. 

# ** The clause must, therefore, have an important intended.meaning. The placing of the option in this clause indicated very clearly that it was the intention of the parties, and insisted upon by the lessees, the appellants herein, that the lessees be protected in the event of the sale and be given the firstopportunity to purchase. If it was not intended by the parties that a bona fide offer topurchase with a subsequent refusalby lessees to purchase should terminate the leases, there would have been no occasion whatsoever for this sort of an option. If the purpose of the clausewas merely togrant an option to the lessees tobuy the property during the lifeof the leases, it would not have been coupled with the clause reserving the property for sale. The two expressions together clearly indicate that itwas intended by allparties that the sale of the land would terminate the leases. In no otherway can the presence of the clausebe explained.IIConnollys allege the language of the lease in question here, and the language of the leases inLunke and Garetson are distinguishable. They point out therewas a provision inLunke for payment to the lesseeupon termination of the lease for the crops planted. In Garetson there was additional language in the leasewhich Connollys argue make that lease different from the one inquestion here, it provided: "The leases further I provided that atthe 'end of the term of lease, which term could inferentiallymean when it was terminated atthe end of the leasehold period orby failure of the lessee I toexercise his option topurchase, he might be permitted to

# *

# ** remove any improvements or structures' and topay the

rent for such further timeas the lessees might hold the property." (Emphasis added.) Connollys argue this language, construed along with the

### rest of the lease in Garetson made it possible to interpret the contract

asbeing one inwhich the parties intended that failure toexercise the right of firstrefusal could amount to loss of the lease. True, each lease must be construed separately, depending upon 

### its own language. However, the instant case, Lunke and Garetson, allinvolve a leasewhich includes a clause reserving the right to sell, but makes no mention of the termination of the lease. It 

### is the language of that clause we areinterpretinghere. 

### It 

### is that language which was interpreted inLunke and Garetson. In Garetson the California court didnot rely on the emphasized language cited here-by Connollys toreach 

### itsconclusion. Too, although inLunke the reimbursement for acreage planted clause was

an added factor in the court's reaching 

### its decision, that court reiterated our major premise here, that therewas no need for the clause reserving the right to sellif such rightwas subject tothe lease. Therefore, Lunke and Garetson cannot be distinguished on the point in issuehere. Connollys condemn the harsh forfeitureand lack of any consideration given for their growing crops or improvements. In this regard the Court notes the notice to the Connollys of April 

### 25,1974, advises that they would have untilMay 31, 1974 to exercise their right topurchase and remit a down payment of $60,000; that the property would be sold on June 

### 1, 1974, if Connollys did not exercise theirright topurchase, and they would be expected to deliverup peaceful possession on orbefore June 

### 1, 1974. No further demand from Pipkins or their successor in interestwas ever made. Suit inunlawful detainer was filedJune 12, 1974. Connollys technicallywere holding over aftermidnight May 31, 1974. Section 93-9703(2), R.C.M. 1947, provides relief for this type of forfeiture. While allother tenancies speak of holding over without permission of the landlord, and this Court 

### ismindful of the cases holding three day notice topay or quit

11 satisfies without permission" impliedly, agricultural leases require demand afterholding over after the expiration of the lease term. This problem was treatedby this Court ina case involving

a lesseewho attempted to exercise an option to purchase after the term of his leasehad expired. In Miller v. Meredith, Hilland Whitfield, 149 Mont. 125, 129, 423 P.2d 595, the Court stated: "Under the common law the holdover tenant was

considered a trespasser and in order toget away from the harshness of such a rule, and toconform toagricultural practices of the state, our Code specificallyprovided for agricultural lessees in section 93-9703, R.C.M. 1947. Under this section a holdover tenant for sixtydays without notice who invests time and seed 

### willnot lose this investment to the landlord. However, the statute gives him no more than the right toharvest his crop to protect his investment and protects him from liabilityinan action forunlawful detainer. " (Emphasis supplied.) As statedheretofore, no notice or demand was ever given Connollys after the expiration of the lease. They remained on the property sixty days after the lease terminated and planted their crops. Therefore, under section 93-9703(2), they had a right to harvest those crops and areprotected from liability forunlawful detainer

# . Finally, concerning whether the buy-sell agreement has to be acknowledged before it can be admitted into evidence, Connollysargue that such agreement has tobe acknowledged tobe admitted into evidence to ascertain whether the signer 

### is the president of theRainbow Ranch Inc., and whether he has the authority to bind the corporation to the contract topurchase as provided in section 39-117, R.C.M. 1947. Testimony of 

### A1Whiteside, the real estatebroker involved, establishes that he witnessed the signature of Ronald W. Miller, President of the corporation, and Coreen M. Miller, SecretaryTreasurer. Under section 93-1101-12, R.C.M. 1947, that was sufficient foundation to admit the contract into evidence. Sinceneither party tothe contract challenges the contract, we see no reason to entertain any challenge to

### its authenticity. The judgment of the district court is affirmed asto its conclusions of law Nos. 

### 1, 2, and 

### 5 regarding termination of the lease. Judgment 

### isreversed as to

### its conclusions of law Nos. 

### 3 and 

### 4, as they relate tounlawful detainer and damages. The cause 

### isremanded to the district court toenterjudgment accordingly.

Justice. f

Chief Justice