No. 88-30

INTHE SUPREME COURT OF THE STATE OFMONTANA

1988

DAVID TURNER and PATRICIAM. TURNER, Plaintiffsand Appellants,-vsSTEVEW. FERRIN and DEBRA A. FERRIN

### , Defendantsand Respondents.

APPEAL FROM: DistrictCourtof the SixteenthJudicial District, Inand forthe Countyof Custer, TheHonorableA. B. Martin, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

J. B. Wheatcroft, MilesCity, Montana
For Respondent:

BruceBrown; Brown & Huss, MilesCity, Montana

Submittedon Briefs: March 31, 1988
Decided: May 24, 1988
Filed: 

### YAY24

### 1988'Mr. Justice L. C. Gulbrandson delivered the Opinion of the Court.

This is an appeal from a judgment and final order denying plaintiffs/appellants David and Patricia Turners'

(Turners)motion to amend findingsof fact and conclusions of law issued by the District Court of the Sixteenth Judicial District Court, Custer County, Montana. Following a bench trial, the courtdisallowed rescission of a contract for deed entered intoby the Turners with defendants/respondentsSteve and Debra Ferrin (Ferrins). We affirm. Appellants raise two issues for our review: 1. Whether theDistrictCourt erred in failing to find the Turners were entitled to rescission? 2. Whether the court erred by declaring a forfeiture when Ferrins could not provide title?
In the judgment, issued on October 21, 1987, the District Court found that the sale of property involved in this casewas a sale in gross with an approximate sixpercent acreage variation that was not a material nor substantial lack of consideration that would entitle the Turners to rescission. The court found the Turners guilty of laches, and that the Ferrinshad givendue notice ofdefault thatwas not cured. Finally, the court ordered the Turners to cure the default within thirty days of entry of the judgment at which time the Ferrins were to deliver a deed to the Turners and that failurewould result in termination of the contract with the Ferrins entitled to immediate possession of the property. The Turners filed consolidated post-trial motions moving for amendment of the findings of fact,conclusions of law and judgment or in the alternative, a new trial onOctober 30, 1987. It is from this final order denying these motions and the judgment that the Turners appeal. Steve and Debra Ferrin owned an irrigated ranch near Miles City, Montana. The size of the parcel is in dispute, either approximately 96 acres or, as the Turners claim, as small as 90 acres. A buy-sell agreement, prepared by Steve Ferrin, who is also a real estate broker, was signed by the Turners on September 13, 1982. The total purchase price was $230,000 with a $100,000 down payment paid previous to the closing on October 12, 1982. A contract for deed was executed by all parties. The Turners were represented by counsel. Attached to the contract for deed as exhibit "A"

was a descriptionof the realproperty as follows: Township 8North,Range 48 East,M.P.M. Section 5: N$SW$andNWiSEi,LESS thatportion described as Tract 3, containing 19.26 acres, more or less, in accordance with the Certificate of Survey filed for record asDocument No. 60202 in Envelope No. 191 of the PlatCabinet, recordsof Custer County, Montana, and LESS that portion of the NW$SWi which lies north and west of the right-of-way of the Burlington Northern Railroad

(formerlyNorthern PacificRailroad Company)

# . Section 6: That portion of the NEiSEi which lies south and east of the rightof-way of the Burlington Northern Railroad (formerly the Northern PacificRailroad Company). Containing 96.73 acres, more or less. This description was exactly the same as that contained in the buy-sell agreement. Paragraph nine of the contract fordeed referred to title insurance and stated the property was subject to easements and rights of way of record and other visible easements. However, the warranty deed placed in

escrow from the Ferrins to the Turners contained no reservations or exceptions for any servitudes. Thewarranty deed did contain the exact description of theproperty as in the contract fordeed and thebuy-sell agreement. The Turnersmoved onto the property in October of 1982 and Patricia Turner testified that they thereafter spent $26,815.69 on improvements on the property. Both annual payments of $16,133.97 were timely made in 1983 and 1984, however, the 1985 payment was not made. The Turners and Ferrins entered into an accommodation agreement on December 24, 1985 extending the time to make the annual payment but the default was not cured. Prior to the scheduled date of forfeiture, the Turners filed an action for declaratory judgment attempting to have the contractdeclared amortgage thereby entitling them to a right of redemption and occupancy. The Ferrins were granted summary judgment on this issue. The Turners then filed for relief under Chapter 11 in Bankruptcy Court. The Turners pursued rescission of the contract in Bankruptcy Court but the cause was remanded to the Montana State District Court because of mandatory abstention under Section 28 U.S.C. 1334(c)(2)

# . An amended complaintwas filedMarch 19, 1987 inwhich it was alleged for the first time that an acreage shortfall

was present in the sale of the property. The Turners empl-oyed a survey company to survey the property and the company's report disclosed that less than 96.73 acres existed. The amended complaint alleged that no exceptions

were made in the warranty deed for a right of way. Itwas alleged that a portion of the property actually contained aright of way for a state highway and this easement was "on file and of record." The complaint also alleged that due to the fact the premises described in thewarranty deed did not describe the property as "an aliquot part as defined by the subdivision lawsof the State of Montana and is otherwise not suldiect to a certificateof survey" the deed was "ineligible for filing for record if the warranty deed were delivered to plaintiffs." A bench trial was held September 18, 1987 and both parties presented testimony and exhibits. Although the Turners presented the survey they had recorded,they did not call the surveyors themselves. The Ferrins also presented two unofficial surveys that were not recorded and did not call a surveyor. The Turners' survey shows the tract contained 90.73 acres. This survey gave the recorded right of way for U.S. Highway 10 as a boundary rather than the Burlington Northern Railroad right of way stated in the description. TheFerrins' exhibitswere also admitted into evidence. These exhibits show, and Steve Ferrin testified to, the possible mistake that occurred in this case. The Ferrins' exhibit number two shows the property involved as an undivided 115.99 acre tract, only a portion of which was subject to the contract for deed. The Ferrins

### ' exhibit number one shows tract three as a 19.26 acre plot that had been sold earlier by the Ferrins. The remainder of the property, 115.99 minus the 19.26 acres, is theunit thatwas sold to the Turners. Itwas in this manner that the figure, 96.73 acres, was determined. The District Court adopted the Ferrins' proposed findings of fact and conclusions of law. The court stated that the sale was one "in gross" because the contract provided for the sale of 96.73 acres "more or less" and thesixpercent acreagevariationwas notmaterial. Further,the court concluded, the Turners did not prove "by a preponderance of the evidence that there was in fact any acreagediscrepancy." This Court's standard of review of a lower court's findings of fact is whether the findings are supported by substantial evidence. Where conflicting evidence is presented, the trial court will not be overturned unless there is a clear preponderance of the evidence against the findings. Taylor et al. v. Cannaday (Mont. 1988)

## , 749 P.2d 63, 66, 45 St.Rep. 102, 105. We have held numerous times that a trial court's verbatim adoption of all proposed findings and conclusions is acceptable if they are comprehensive and detailed, are supported by the evidence before the court, and are not clearly erroneous. Olsen v. McQueary (Mont. 1984), 687 P.2d 712, 716, 41 St.Rep. 1669; R.L.S. v. Barkhoff (Mont. 1983), 674 P.2d 1082, 1085, 40 St.Rep. 1982. The Turners' argument that the District Court erred is based on two theories. First, that the presence of the easement not referred to in the warranty deed entitles them to the equitable remedy of rescission of the contract for deed and return of all the money they have paid. Secondly, the Turners contend forteiture was not properly granted and they are entitled to rescission because the title to be conveyed by the Ferrins was unmerchantable as it was unrecordable. Initially, we note that this sale indeed seems to be for a "sale in gross." The Ferrins appropriately point out that this Court has stated in Hardin v. Hill (1967), 149 Mont. 68, 74, 423 P.2d 309, 312, that "[glenerally when land is sold in gross, a variation in acreage from what the parties had contemplated is not grounds for rescission orother relief." Therewas sufficient evidence to support the findingof theDistrict Court that theproperty was a sale in gross. However, not only does this rule require determinationof whether theproperty in question is sold in gross,where the relief requested is equitable in nature as is rescission, we should also consider whether the acreaqe shortfallismaterial. In Parcel v. Myers (Mont. 1985), 697 P.2d 92, 93, 42 St.Rep. 352, the words "in gross" were not actually used in the sale document but we held the district court properly found a bulk real estate transaction occurred and the property was sold "in gross." The purchaser in Parcel, "lookedat theproperty at least three (3)times;" walked the property boundary which was fenced on its borders; and was told "you are looking at what you get." No conversation about price per acre occurred and negotiations centralized around the total purchase price and buildings. Here, the Ferrins fixed a purchase price of $240,000 and the Turners bargained for and received a unit price of $230,000. At trial, no evidence was ever presented that a per acre price

was negotiated. Most importantly,David Turner admitted that he inspected the premises at least three times and that he

was shown theboundaries. The Ferrins' counsel has directed the Court to an annotation in 1A.L.R.2d 9dealing with relief tobe granted when there is a mistake in the quantity of land sold. This annotation suggests a number of factors to be used to determine whether a sale is "in gross" or by the acre. The importance of making this determination is that the general rule calls for refusal of relief, in the absence of fraud, where the sale is ingross. 1A.L.R.2d at 19. The annotation suggests a sale in gross is favored where the statement of price is a lump sum as in this case,rather than a statement of price as a specified rate per
acre. 1A.L.R.2d at 28-38. Some courts even go so far as to say that the presence of the words "more or less" makes a prima facie showing or raises the presumption that the sale is one in gross. The reason for this tendency isvery easy todetect. The use of the words "more or less" excludes the assumption of an exact number of acres and makes it clear that the precise dimensions of the property are not of the essence of the contract, theparties either not knowing themselves the exact number ofacres in the land, or purposely not intending to state it.
1A.L.R.2d at 47-48. Finally, and this is applicable to the

case at bar due to the wording of the description, use of the term "more or less" tends to show the sale is "in gross." Although we do not hold that the use of the language "more or less" alone creates a "sale in gross,"we do hold that it is sufficient, combined with the observation of the property by the Turners, the sale price as a negotiated lump
sum,and the lack of a statementofprice per acre, to create

a "sale ingross." We next look todeterminewhether the alleged variation of acreage in this case was sufficiently material or substantial to hold that the District Court erred indenying rescission. Under $ 28-2-1711, MCA, rescission may occur only in certaincircumstances: A party to a contract may rescind the same in the following casesonly: 

### (I) if the consent of the party rescinding or of any party jointly contractingwith himwas givenby mistake or obtained through duress, menace, fraud, or undue influence exercisedby or with the connivance of the party as towhomhe rescinds or of any otherparty to the contract jointly interestedwith such party;

(2) if, through the fault of the party as towhomhe rescinds, the consideration of his obligation fails in whole or in part

# .. . Section 28-2-1711,MCA. In this instance, the District Court stated in its order that there was not a "material or substantial lack of consideration by the [Ferrins]

# ." No fraud, duress, menace, or undue influencewas alleged or proven by the Turners. In Careyv. Wallner (Mont.1986), 725 P.2d 557, 44 St.Rep. 1778,

we discussed the grounds for rescission under this statute. As in Carev. the resolution of this issue turns on whether there was a mistake and/or failure of consideration. Consideration isdefined as: [alnybenefit conferred or agreed to be conferred upon the promisor by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered or agreed tobe sufferedby such person, other than such as he is at the time of consent lawfullybound to suffer, as an inducement to the promisor is a good consideration for apromise. Section 28-2-801, MCA. Here, the Turners received the property. There was never any statement that they needed exactly 96.73 acres or that this was the most important object, the essence, of the sale. At any rate, the District Courtproperly determined therewas no lack of consideration. In Carey,we held that rescission of the contractwas properbecause the Careyshad purchased the propertywith the express intention of operating an adult foster care home. Upon further investigation, it was discovered that the area in which the property was located was zoned such that afoster home would violate the zoning ordinances. Therefore,

we stated the Careysdid not receivewhat theybargained for. The Turners received what they bargained for, 96.73 acres
more or less. It is important to note that thispropertywas both irrigated and dry land and the acreage discrepancy could have been amistake due to the differences in acreage stated

on surveys Steve Ferrin had and the survey done for Dave Turner. The Turners' survey, although recorded, is only important if he could have proved the mistake was material. We stated in Carey,that rescission of the contractwas proper because of material mistake. The Court considered § 28-2-409, MCA, which states: [mlistakeof fact is amistake not caused by the neglect of a legal duty on the part of theperson making the mistake and consisting in:

(2) belief in thepresent existence of a thingmaterial to the contractwhich does not exist or in the past existence of such a thingwhich has not existed.

Wewent on to state: A mistake is an unintentional act or omission arising from ignorance, surprise, or misplaced confidence.

(Citationomitted.) The mistake 

### -- must be material, or, in other words, so substantialand fundamental

### -- as 

### - to defeat the object 

### - of theparties. (Emphasis added.) Carey, 725 P.2d at 560-561. In this case, assuming the alleged discrepancy exists, the missing acreage was approximately six percent of the total sale as the District Court noted. Equitywill provide

a remedy when by mutualmistake the land contains materially

more or less acreage than the parties believed. A slightdisparitywill justify equitablerelief if the sale isby the acre, but, if the sale is in gross a great disparity must exist to authorize relief. Steward v. Jones (Tex.Ct.App. 1982), 633 S.W.2d 544, 546. In Steward, the court granted rescission of the contract when the sellers discovered that the property they sold contained forty-eight percent more property than what they believed. Ordinarily, when a sale of land is in gross, deficiencies of ten to twenty percent and even more than thirty percent have not been considered sufficientlymaterial to entitle a buyer to relief. Seyden v. made (Nev. 1972)I 494 P.2d 1281, 1283, citing 1 A.L.R.2d 9. The annotation states that rescission is granted only where the acreage deficiency ismaterial: In a number of jurisdictions the general rule appears to be that equity will rescind a contract for the sale of land in gross because of a mutual mistake of the parties as to the quantity of the land, where the deficiency is a material one, even if the statement as to area is followed by the term "more or less." Generally, such material deficiency has been said to exist only where the discrepancy closely approached, or exceeded, 50percent,though this rule is notuniform.

In this case,we find that the District Court did not

err in denying the Turners a rescission on grounds therewas not a material or substantial lack of consideration. Further, it is clear that the Turners were put on notice to look for easements of record and visible easements by paragraph nine of the contract fordeed. The agreed facts in the pretrial order state that the right of way for U.S. Highway 10 is aproperty interest of record and on filewiththe Custer County Clerk and Recorder. David Turner admitted that he was aware of the road and that he was shown the property boundaries. Under these circumstances this statement is sufficientto at leastput the Turners, who were represented by counsel, on notice to inquire as to possible easements. Finally, the Turners argue they are entitled to rescission, or at aminimum that the District Court erred in granting a forfeiture under the contract for deed because merchantable title could not have been conveyed by the Ferrinsdue to failure to have aproper description according to the cases ofMcCarthyv. TimberlandResources,Inc. (Mont. 1985), 712 P.2d 1292, 1294, 42 St.Rep. 2016; and Timberland Resources, Inc. v. Vaught (Mont. 1987), 738 P.2d 1277, 44 St.Rep. 1054. These cases turned on interpretation of 

### 5 76-3-401, MCA, which requires a survey prior to the recording of property "one thirty-second or larger aliquot parts of a United States government section." We will not address the above interpretation as was attempted in both McCarthy

## , and Vaught

# . However, both cases are distinguishable because therewas a refusal to record by the county in McCarthy and a challengeby the county attorney as to the recording practice inVaught. No challengeto or refusalof recording has occurred in this case. The Turners allege that the warranty deed could not be recorded but have not proven this as fact and the allegation alone does not make the titleunmerchantable. As

was said by this Court, 

### "[tlhecrux of the issue iswhether theproperty is identifiable. '[Dleeds

# . . .must containan adequate description of the property to be conveyed.'" Vaught, 738 P.2d at 1279. In Sharbonov. Darden (Mont. 1986), 715 P.2d 433, 436, 43 St.Rep. 400,weheld that avendee is excused from failureto make a balloon payment because the vendor might never be in the position to convey title because the vendor had a condition precedent of satisfaction of a mortgage of the property prior to receiving clear title. We recently reiterated this standard in Starkv. Borner (Mont. 1987), 735

This Court is concerned, however, about the lack of any findings regarding the sellers' ability to convey title after they accelerated payment. The established rule of law is that a vendor cannot, while unable to tender good title, enforce a forfeiture provision of a contract on default of the vendee.

(Citationomitted.) 

# ".

.. the mere failureof the purchasers to make the deferred payments did not ipso facto entail a forfeiture of their rights under the contract, and,when the vendor elected to give the notice which would effect that result, the forfeiture could only be declared if, at the time she demanded final payment, she could convey marketable title. (Citations omitted.)" Silfvastv. Asplund, 93Mont. at 595, 20 P.2d at 636. This rulewas enunciated most recently in Sharbonov. Darden (Mont. 1986), 715 P.2d 433, 43 St.Rep. 400, wherewe agreedwith the Fourth Judicial District's finding that- the vendee's "failure to make the balloon payment when due is excused by Sharbono's [vendors] inability to convey title.

### "
Stark, The Turners admit "[a? survey such aswasundertakenby [the] Turners, at their own expense, might enable [the] Ferrins to be able to deliver a recordabledeed

# . . . " The District Court noted that the Ferrinswerewilling topay for the cost of the survey in its findings of fact andconclusions of law. Itwas not shownby a preponderance of the evidence to the District Court that thedeed involvedwas truly defective and that titlewas not merchantable. Absent proof of the fact that the Ferrinsdid not have merchantable title, the District Court did not err in granting a forfeiture in this case. The judgment and order of the District Court are A affirmed. 

### ,/'

We concur: 

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