No. 12898 

IN THE 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 Sixth Judicial District, 

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 : "" 7' ? ;?; t- _.c 44 
Mr. Justice Gene B. Daly delivered the Opinion of the Court: 

This is an appeal from a judgment of the district court, 

Sweet Grass County, sitting without a jury, holding defendants' 

lease terminated upon failure to exercise their right of first 

refusal to purchase farmland and further that defendants were 

accountable to plaintiffs in unlawful 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 lease was for a five year period beginning 

March 1, 1973 and terminating February 28, 1978. The 

C G r-~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 to give Connollys the right to meet 

any offer to buy the farmland and Pipkins agreed to accept the 

Connollys' offer which would meet any offer or offers to buy 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 is Two 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 to be carried by Seller; 

11 Interest to commence as of date of possession; 

"Earnest money of Ten Thousand Dollars ($10,000.00); 

"The closing date of the sale shall be on or before 

June 1, 1974." 
On April 25, 1974, Pipkins served upon Connollys notice 

of the offer, giving them the right to meet the offer on or before 

May 31, 1974. Connollys failed to accept the offer or to deliver 

possession of the premises, as requested. Pipkins brought action 

in unlawful detainer to recover possession of the premises. 

Connollys cross-complained praying for the court to amend the lease 

to read as they claim was the original intention of the contracting 

parties--that any sale of the farmland was subject to the lease. 

The proposed sale was not completed due to the pending litigation. 

Pipkins insist they wanted the right to sell the property 

at anytime and that the lease would 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 to meet any offer to buy 

the above described real estate and Landlords agree 

to accept ena ants' offer which does meet an offer, 

or offers, to buy from any source whatsoever. 

"Jc * %The Tenants recognize and lords' right to 

sell the above described real estate during the 

term of this lease or any future lease providing 

that Tenants be given the rights hereinbefore 

mentioned. If 

Mr. Glenn, Connollys' attorney, testified there was no 

provision made for forfeiture of the lease for failure to exercise 

the right of first refusal because it was fully understood in his 

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 time the lease was made Pipkins strongly emphasized the fact 

that they wanted to reserve the right to sell the farmland and upon 

such sale the lease would terminate; Pipkins had received a bona 

fide offer for the purchase of the premises from Rainbow Ranch, Inc.; 

that Connollys refused to meet the offer; and, therefore, the lease 

was terminated on June 1, 1974. In its conclusions of law the court 
held that the Connollys unlawfully detained the premises since June 

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 sale of the farmland and ~onnollys' failure to 

exercise their right of first refusal? 

2. Did the court err in admitting an unacknowledged buy-sell 

agreement into evidence as proof of an offer to buy the farmland in 

question? 

Lessees Connolly argue that in light of the testimony 

of the attorney who drew up the contract, Mr. Glenn, there was no 

such intent on the part of the parties that the lease would terminate 

upon the sale of the land; that lessors Pipkin testified Connollys 

wanted a lease so that they could borrow money from the bank and, 

in light of the fact the law does not favor forfeiture, Pipkins 

have failed in their burden of proof, therefore the district court 

erred in finding for them. 

The lease was drawn by the attorney for Connollys. The 

terms of the lease when ambiguous will be 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 the right of first refusal is, at best, incomplete 

as it relates to the problem here. If all Pipkins wanted to do was 

to be 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 

it was not necessary. Connollys argue that if the lease could be 

terminated upon the sale of the farmland, what* bank would lend money 

on that type of lease? Pipkins state they were adamant about being 
able to sell their farmland anytime they wanted to, and not have 

the sale subject to the lease. Pipkins also point 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 lease which 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: 

I I There was no necessity of reserving the right 

to sell if such sale was not to affect the lease. 

[Lessor] had such right in any 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 is mutually 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 to be given first 

opportunity to buy. I I1 

The Court stated: 

"Obviously, the property was subject to sale without 

the insertion of any such clause. The Lessor at anytime had the right to sell the property subject, of 

course, to the lease, and the effect of the sale would 

have been merely to substitute the vendee to all of 

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 first opportunity to purchase. If it 

was not intended by the parties that a bona fide offer 

to purchase with a subsequent refusal by 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 clause was merely to grant an 

option to the lessees to buy the property during the 

life of the leases, it would not have been coupled with 

the clause reserving the property for sale. The two 

expressions together clearly indicate that it was intended by all parties that the sale of the land would 

terminate the leases. In no other way can the presence 

of the clause be explained. I I 
Connollys allege the language of the lease in question 

here, and the language of the leases in Lunke and Garetson are 

distinguishable. They point out there was a provision in Lunke 

for payment to the lessee upon termination of the lease for the 

crops planted. In Garetson there was additional language in the 

lease which Connollys argue make that lease different from the one 

in question here, it provided: 

"The leases further I provided that at the 'end of the 

term of lease, which term could inferentially mean 

when it was terminated at the end of the leasehold 

period or by failure of the lessee I to exercise his 

option to purchase, he might be permitted to * * * 

remove any improvements or structures' and to pay the 

rent for such further time as 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 

as being one in which the parties intended that failure to exercise 

the right of first refusal 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, all involve a lease which 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 are interpreting here. 

It is that language which was interpreted in Lunke and Garetson. 

In Garetson the California court did not rely on the emphasized 

language cited here-by Connollys to reach its conclusion. Too, 

although in Lunke 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 there was no need for the 

clause reserving the right to sell if such right was subject to the 

lease. Therefore, Lunke and Garetson cannot be distinguished on 

the point in issue here. 

Connollys condemn the harsh forfeiture and 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 until May 31, 1974 to exercise 

their right to purchase and remit a down payment of $60,000; that 

the property would be sold on June 1, 1974, if Connollys did not 

exercise their right to purchase, and they would be expected to 

deliver up peaceful possession on or before June 1, 1974. No 

further demand from Pipkins or their successor in interest was ever 

made. Suit in unlawful detainer was filed June 12, 1974. Connollys 

technically were holding over after midnight May 31, 1974. 

Section 93-9703(2), R.C.M. 1947, provides relief for 

this type of forfeiture. While all other tenancies speak of 

holding over without permission of the landlord, and this Court 

is mindful of the cases holding three day notice to pay or quit 

11 satisfies without permission" impliedly, agricultural leases 

require demand after holding over after the expiration of the lease 

term. This problem was treated by this Court in a case involving 

a lessee who attempted to exercise an option to purchase after 

the term of his lease had expired. In Miller v. Meredith, Hill and 

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 to get away 

from the harshness of such a rule, and to conform 

to agricultural practices of the state, our Code 

specifically provided for agricultural lessees in 

section 93-9703, R.C.M. 1947. Under this section 

a holdover tenant for sixty days without notice who 

invests time and seed will not lose this investment 

to the landlord. However, the statute gives him no 

more than the right to harvest his crop to protect 

his investment and protects him from liability in an 

action for unlawful detainer. " (Emphasis supplied. ) 

As stated heretofore, 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 are protected from liability for unlawful 

detainer . 

Finally, concerning whether the buy-sell agreement has to 

be acknowledged before it can be admitted into evidence, Connollys 
argue that such agreement has to be acknowledged to be admitted 

into evidence to ascertain whether the signer is the president 

of the Rainbow Ranch Inc., and whether he has the authority to 

bind the corporation to the contract to purchase as provided in 

section 39-117, R.C.M. 1947. 

Testimony of A1 Whiteside, the real estate broker 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. Since neither 

party to the contract challenges the contract, we see no reason 

to entertain any challenge to its authenticity. 

The judgment of the district court is affirmed as to its 

conclusions of law Nos. 1, 2, and 5 regarding termination of the 

lease. Judgment is reversed as to its conclusions of law Nos. 3 

and 4, as they relate to unlawful detainer and damages. The cause 

is remanded to the district court to enter judgment accordingly. 

Justice. f 

Chief Justice