No. 14607 

INTHESwREBEmUfiTOFTHEsrmOFMX;1TANA 

19 79 

HUBEEiT C. RUMPH and MARGEW RUMPH, 

Plaintiffs and Respondents, 

-vsDALF: INC. , a Pbntana Corporation, 

Defendants and Appellants. 

Appeal fm: District Court of the Sixteenth Judicial ~istrict, 

Homrable Alfred B. Coate, Judge presiding. 

Counsel of Record: 

For Appellants: 

Sandall & Cavan, Billings, Mntana 

John R. Carr, Miles City, Mntana 

For Respondents: 

Lucas and hbnaghan, Miles City, mntana 

Submitted on briefs: April 25, 1979 

Filed: JUN 6 1979 
Mr. Justice John Conway Harrison delivered the Opinion of 

the Court. 

The controlling issue in this appeal is the propriety 

of the District Court's decision to grant summary judgment 

in favor of respondents. As evidenced by the District Court 

file and the parties' briefs herein, we find that absolutely 

no genuine issues of material fact are present in this 

lawsuit and that respondents are entitled to judgment as a 

matter of law. 

The purpose of this appeal is to determine the rightful 

owner of a small ranch located adjacent to the Powder River 

near Broadus, Montana. For many years prior to September 

22, 1965, this ranch, which consists of approximately 523 

acres of land and a residence, was owned by R. C. Hubbard of 

Broadus, Montana. Hubbard, who is now deceased, was not 

living on his ranch in the spring of 1965. He allowed 

Hubert Rumph, one of the respondents herein, to move onto 

the ranch that spring. A formal lease agreement, dated 

September 22, 1965, was later executed by Hubbard and Rumph. 

This lease agreement provided for a term of five years from 

and after April 1, 1965. The annual consideration for the 

lease of the property was $523 or $1.00 per acre. The lease 

agreement contained the following provision granting Rumph 

the exclusive option to purchase the property: 

"That the Lessor does hereby give and grant to 

the Lessee, his heirs, executors, administrators 

and assigns, the exclusive right, privilege and 

option of purchasing the hereinabove described 

real property for the sum of Twenty Seven Thoussand Five Hundred Dollars ($27,500.00). That 

this option may be exercised by the Lessee at 

any time after April 1, 1968 and not later than 

April 1, 1970, by giving written notice to the 

Lessor within the time set forth herein for the 

exercise of this option. That said notice shall 

be sent by registered mail to the Lessor at 

Broadus, Montana." 
In February 1969, Rumph decided to exercise his option 

to purchase the property. This decision was duly communicated to Hubbard who acquiesced to the planned sale. 

Hubbard and Rumph concluded that the sale could not be 

completed in February 1969. Both Hubbard and Rumph became 

concerned with the possibility that the sale could not be 

completed prior to April 1, 1970, the expiration date of the 

option to purchase found in the lease agreement. Therefore, 

on February 13, 1969, Hubbard and Rumph met at the Hubbard 

home to resolve this problem. It was mutually agreed that 

the best way to solve the problem was to extend the lease 

and option to purchase for an additional ten years. During 

this conversation, Rumph made notes of the parties' understandings. Later that evening, his wife Margery prepared a 

document entitled "lease rider" according to the mutually 

agreed upon terms. 

The following day the Rumphs returned to the Hubbard 

home to execute the lease rider. Bonnie Rumph, a Notary 

Public, accompanied them to notarize the signatures. 

Hubbard and Rumph then examined the lease rider to 

confirm that it properly reflected the agreement reached the 

previous day. One significant change contemplated by the 

parties was an increase in the annual lease payment from 

$523 to $623. 

The lease rider provides in pertinent part that: 

". . . this lease shall run for ten (10) more 

years, expiring on April 1, 1980, instead of 

April 1, 1970." 

The Rumphs' option to purchase the property was extended 

until April 1, 1980, by the following language of the Lease 

rider: 

"That the lessee, Hubert C. Rumph and/or Margery 

Rumph, has the option to renew this lease as 

well as the option to buy." 
3⁄4 he sum of $523 was paid to Hubbard for the years 1965 

through 1969. Pursuant to the terms of the lease rider, the 

consideration paid in 1970 and all subsequent years was 

increased to $623. 

R. C. Hubbard died on January 7, 1971. At the time of 

his death, the property in question had not yet been conveyed to the Rumphs. For economic reasons, the decision was 

made by the attorney and the administrator of Hubbard's 

estate to sell the property at a public sale. The administrator's sale was duly and properly carried out. 

The notice of sale of real property was duly published. 

That notice stated in pertinent part that: "Ranch subject 

to surface lease to H. C. Rumph." While no reference was 

made in the notice to respondents' interest, the purchaser 

was aware of his interest. 

The administrator's sale was conducted in the courtroom 

of the Powder River County courthouse on October 27, 1972. 

Prior to that date, Rumph spoke with the attorney for the 

estate, Robert J. Brooks, and was assured by Brooks that the 

purchaser at the administrator's sale would take the land 

subject to Rumphs' lease and option to purchase. The 

record also reflects that Dale Edwards, the president of the 

appellant corporation, Dale Edwards, Inc., also spoke with 

Brooks prior to the sale. In addition, Edwards was provided 

with a copy of both the lease agreement and lease rider 

prior to the date of the sale. 

Prior to the sale, oral announcements were made by the 

attorney for the estate to the effect that the sale was 

subject to the Rumphs' lease and option to purchase. Copies 

of the lease agreement and lease rider were circulated among 

prospective purchasers at the sale. Questions were asked 
regarding the validity of the lease and option to purchase 

and Brooks deferred his answers to other attorneys who were 

present and representing prospective bidders. These facts 

indicate it was unnecessary to include it in the notice for 

sale. Purchaser had ample notice. 

The property was purchased by Dale Edwards, on behalf 

of Dale Edwards, Inc. The purchase price was $21,173.40, 

which was 90 percent of the appraised value of the property. 

Subsequent to the sale, but prior to the actual closing, 

Edwards' attorney, Mr. Carr, reviewed an abstract of title 

to the property. Certain title work had to be done including the acquisition of a quit claim deed from a Mr. Dahl, 

who held a lien on the property. Considerable difficulty 

was encountered by Brooks and Carr in obtaining this deed 

from Dahl. In fact, at one point, cash consideration was 

offered to Dahl for the deed. At no time was any question 

raised as to the validity of the Rumphs' lease and option to 

purchase. 

The Rumphs have been in continuous possession of the 

property since April 1965. They have performed all of their 

obligations under both the lease agreement and the lease 

rider. No notice of default has ever been served upon the 

Rumphs by Dale Edwards, Inc., as required for any breach of 

the lease agreement. All annual lease payments have been 

made by the Rumphs to Dale Edwards, Inc., by cashier's 

checks. 

On March 15, 1977, pursuant to the terms of the lease 

agreement and lease rider, the Rumphs exercised their option 

to purchase the property for the sum of $27,500. Dale 

Edwards, Inc., refused to perform under the lease agreement 

and lease rider and will not convey the property to the 
Rumphs. The amount of $27,500, representing full payment 

for the property, has been tendered to the Clerk of the 

Powder River County District Court by means of an irrevokable letter of credit. 

This suit for specific performance followed Edwards' 

refusal to convey the property to the Rumphs. Summary 

judgment in favor of the Rumphs was entered by the District 

Court from which Dale Edwards, Inc., appeals to this Court. 

Before considering the individual issues, we will 

discuss the validity of the District Court entertaining 

summary judgment motions in this matter. 

Rule 56(c), M.R.Civ.P., provides that summary judgment 

is proper if: 

". . . the pleadings, depositions, answers to 

interrogatories, and admissions on file, together 

with the affidavits, if any, show that there is 

no genuine issue as to any material fact and that 

the moving party is entitled to a judgment as a 

matter of law." 

Thus, summary judgment is appropriate when the moving 

party shows a complete absence of any genuine issue as to 

all facts which are material in light of those substantive 

principles which entitle him to a judgment as a matter of 

law. Harland v. Anderson (1976), 169 Mont. 447, 548 P.2d 

613. This Court has consistently held that, under Rule 56, 

the party moving for summary judgment has the initial burden 

of establishing the complete absence of any genuine issue of 

material fact. Mustang Beverage Co., Inc. v. Jos. Schlitz 

Brewing Co. (1973), 162 Mont. 243, 511 P.2d 1. To satisfy 

its burden the moving party must make a showing that is 

quite clear of what the truth is, and exclude any real doubt 

as to the existence of any genuine issue of material fact. 

Kober v. Stewart (1966), 148 Mont. 117, 417 P.2d 476. 
The primary policy and general purpose underlying Rule 

56 is to encourage judicial economy through the prompt 

elimination of questions not deserving of resolution by 

trial. Silloway v. Jorgenson (1965), 146 Mont. 307, 406 

While the initial burden of proof must attach to the 

moving party, that burden shifts where the record discloses 

no genuine issue of material fact. Under these circumstances, the party opposing the motion must come forward 

with substantial evidence raising the issue. Rickard v. 

Paradis (1975), 167 Mont. 450, 539 P.2d 718; Roope v. Anaconda Company (1972), 159 Mont. 28, 494 P.2d 922; Flansberg 

v. Montana Power Company (1969), 154 Mont. 53, 460 P.2d 263. 

Once the burden has shifted, the party opposing the motion 

is held to a standard of proof which is as substantial as 

that initially imposed upon the moving party. Harland v. 

Anderson, supra. 

This standard of proof was clearly defined in Silloway 

v. Jorgenson, 146 Mont. at 310, 406 P.2d at 169, where this 

Court stated: 

present 

law will 

the party opposing [the] motion must 

facts in proper form--conclusions of 

not suffice; and the opposing party's 

facts must be material and of a substantial 

nature, not fanciful, frivolous, gauzy, nor 

merely suspicions.'" 

We find that all facts material to the legal issues 

involved in this appeal have been presented. There are no 

genuine issues of fact. The parties concede that no issues 

of fact exist in this case. 

The individual issues presented to this Court are: 

1. Did the District Court properly construe and interpret the terms of the lease agreement and lease rider? 
2. Did the District Court err in its adoption of certain oral testimony concerning the circumstances of the 

execution of the lease rider? 

3. Did the District Court err in holding that respondents' option to purchase was not extinguished by the terms 

of section 67-408, R.C.M. 1947, now section 70-26-207 MCA? 

4. Did appellant waive its right to contest the 

validity or existence of the option to purchase? 

The first issue concerns the construction and interpretation of the lease agreement and lease rider. Both 

parties indicate that a primary question to be answered here 

is "what do the terms of the contract provide?" We agree. 

The intent of the parties to the contracts is determined by reading the lease agreement and lease rider in 

full. Appellant chooses to dissect the contracts, takes 

certain isolated words and phrases from them, and argues 

that these minute pieces express the true intent of the 

parties rather than an analysis of the contracts in full. 

We find that the intent of the contracts is clear. The 

Rumphs were granted the option to purchase the property in 

question which will, by its terms, expire on April 1, 1980. 

Initially, it is important to note that the lease rider 

is merely an extension of the lease agreement with certain 

enumerated changes. In view of the close relationship 

between these documents, they must be construed together to 

determine the true intent of Hubbard and Rumph regarding the 

option to purchase. Section 13-708, R.C.M. 1947, now section 28-3-203 MCA, provides: 

"Several contracts relating to the same matters, 

between the same parties, and made as parts of 

substantially one transaction, are to be taken 

together." 
Therefore, in discussing the rules of interpretation, 

the two contracts herein will be referred to as one. 

The following rules of construction are controlling 

upon this Court in its determination of the intent of the 

contract. A contract must be construed according to the 

intention of the parties to the contract at the time of 

contracting. Section 13-702, R.C.M. 1947, now section 28-3- 

301 MCA; Brown v. Griffin (1968), 150 Mont. 498, 436 P.2d 

695. The language of a written contract governs its interpretation if the language is clear and explicit and does not 

involve an ambiguity. Section 13-704, R.C.M. 1947, now 

section 28-3-401 MCA. In the event of an ambiguity, sections 13-702 and 13-713, R.C.M. 1947, now sections 28-3-301 

and 28-3-402 MCA, explicitly allow the introduction of 

extrinsic evidence to explain the true intention of the 

parties. McNussen v. Graybeal (1965), 146 Mont. 173, 405 

P.2d 447. 

An ambiguity exists when, taken as a whole, the contract's wording or phraseology is reasonably subject to two 

different interpretations. S-W Company v. Schwenk (1977), 

Mont. , 568 P.2d 145, 34 St.Rep. 865; Williams v. 

Insurance Company of North America (1967), 150 Mont. 292, 

434 P.2d 395. Where the terms of an agreement are uncertain 

and ambiguous, par01 evidence is admissible to prove the 

interpretation meant by the parties. Sutton v. Masterson 

(1930), 86 Mont. 530, 284 P. 264. In addition, where the 

language of the contract is doubtful and ambiguous, the 

conduct of the parties under the contract is one of the best 

indications of their true intent. Brown v. riff in, supra; 

Musselshell Valley Farming & Livestock Co. v. Cooley (1929), 

86 Mont. 276, 283 P. 213. 
This Court stated in Kintner v. Harr (1965), 146 Mont. 

461, 472, 408 P.2d 487, 494, that: 

". . . It is a fundamental rule that in the construction of contracts the courts may look not 

only to the language employed, but to the subject-matter and the surrounding circumstances, 

and may avail themselves of the same light 

which the parties possessed when the contract 

was made. See Merriam v. United States, 107 

U.S. 437, 441, S.Ct. 536, 540, 27 L.Ed. 531, 

533. To ascertain the intention, regard must 

be had to the nature of the instrument itself, 

the condition of the parties executing it, and 

the objects which they had in view. The words 

employed, if capable of more than one meaning, 

are to be given that meaning which it is apparent the parties intended them to have. 

1 Beach on Modern Law of Contracts, 702. See 

Smith v. School District No. 18, 115 Mont. 102, 

139 P.2d 518; 12 Am Jur, SS 236, 249." 

It is a well-established principle of contractual 

construction that in interpreting a written instrument, the 

court will not isolate certain phrases of the instrument to 

garner the intent of the parties, but will grasp the instrument by its four corners and in the light of the entire 

instrument, ascertain the paramount and guiding intent of 

the parties. Mere isolated tracts, clauses and words will 

not be allowed to prevail over the general language utilized 

in the instrument. Ward v. Mattuschek (1958), 134 Mont. 

307, 330 P.2d 971; Steen v. Rustad (1957), 132 Mont. 96, 313 

P.2d 1014. The words of the contract are to be understood 

in their ordinary and proper sense. Section 13-710, R.C.M. 

1947, now section 28-3-501 MCA. Particular clauses of the 

agreement are subordinate to the general intent of the 

contract. Section 13-716, R.C.M. 1947, now section 28-3-307 

MCA. Any repugnancies in the contract must be reconciled, 

if possible, by an interpretation which will give some 

effect to the repugnant clauses, subordinate to the general 

intent and purpose of the contract. Section 13-718, R.C.M. 
1947, now section 28-3-204 MCA. Furthermore, words in a 

contract which are inconsistent with the general nature of 

the contract or the main intention of the parties are to be 

rejected. Section 13-719, R.C.M. 1947, now section 28-3-503 

MCA . 

One final rule of contractual construction is involved 

herein. In case of an ambiguity, the language of the contract is to be interpreted most strongly against the party 

causing the uncertainty to exist. Section 13-720, R.C.M. 

1947, now section 28-3-206 MCA. Appellant indicates that 

since Rumph assisted in the composition of the lease rider 

and his wife typed the agreement, the agreement should be 

construed most strongly against the Rumphs. However, this 

rule of construction has little, if any, applicability in 

the instant case. The testimony is undisputed that Rumph 

and Hubbard jointly drew up the terms of the lease rider. 

Thereafter, Margery Rumph transcribed the agreement reached 

into its present form. After this transcription, both Rumph 

and Hubbard reviewed the document to confirm that it corresponded to their agreement. It appears that any ambiguity 

created was jointly created and that Rumph should not at 

this point be solely chargeable with the ambiguity. It 

should also be noted that the original lease agreement was 

drafted by an unknown attorney at the request of Hubbard. 

It is interesting to note that appellant devotes approximately eight pages of its brief to a discussion of the 

differences between a "lease" and "option to purchase." By 

means of an extremely technical and somewhat imaginative 

argument, appellant concludes that the use and placement of 

the words, "lease" and "option to purchase", indicates that 

the option to purchase ended with the term of the original 
lease agreement and was not extended to April 1, 1980 by the 

lease rider. Appellant is picking isolated words and phrases 

from the two contracts and attempting to rebut their clear 

and convincing general intent. 

It certainly is true that the terms "lease" and "option 

to purchase" have different meanings. However, all parties 

interested in this transaction with the exception of Dale 

Edwards, Inc., considered the option to purchase to be a 

portion of the lease. The lease agreement is titled just 

that: Lease Agreement, not Lease Agreement and Option to 

Purchase. There certainly is no contention, even by Dale 

Edwards, Inc., that the option to purchase is not a part of 

that lease. In addition, the notice of sale indicated that 

the sale was subject to the surface lease to Rumph. 

Therefore, we find that the term "lease" as found in 

the lease rider should be interpreted to mean lease and 

option to purchase. If it is necessary to dissect the 

agreements in question to determine their true intent, we 

find that this dissection is more accurate than the one 

suggested by appellant. 

Appellant comments at length on the Rumphs' financial 

condition. Appellant indicates that they were unable to 

arrange financing for the purchase of the land until assisted by their attorney. There is absolutely no evidence 

in the record to support this assertion. In fact, there is 

absolutely no conclusive evidence concerning the Rumphs' 

financial condition. In any event, this entire discussion 

is moot in that the money was available when the Rumphs 

ultimately decided to exercise their option to purchase. 

In conclusion, when this Court reads the lease agree- and 

ment and lease rider in total/interprets them by grasping 
them by their four corners to determine their overall intent, the conclusion is inescapable that the Rumphs' option 

to purchase survives until April 1, 1980. 

Issue No. 2 involves the propriety of certain oral 

testimony. Appellant complains that the District Court 

erred by incorporating certain evidence into its findings of 

fact. Specifically, appellant finds fault with Findings Of 

Fact Nos. 3 through 6. Appellant's attack is two pronged, 

claiming that the evidence is inadmissible first under the 

parol evidence rule and second under the rules of evidence, 

specifically the dead man's statute. 

We find that the evidence which is the basis of Findings of Fact Nos. 3 through 5 is inadmissible under the 

parol evidence rule. Montana courts, when called upon to 

interpret the terms of contracts, have long held that where 

the terms of the contract are clear and unambiguous the 

court will not allow parol evidence. Safeco Insurance 

Company v. Munroe (1974), 165 Mont. 185, 527 P.2d 64; 

Merritt v. Merritt (1974), 165 Mont. 172, 526 P.2d 1375; and 

Kielmann v. Mogan (1970), 156 Mont. 230, 478 P.2d 275. 

We have held under Issue No. 1, however, that the lease 

agreement and lease rider are clear and unambiguous, giving 

respondents a lease and option to purchase until ~pril 1, 

1980. The intent of the parties is clear, and the ~istrict 

Court could so find in its Finding of Fact No. 6 without the 

use of parol evidence. 

Appellant further contends that the evidence underlying 

Findings of Fact Nos. 3 through 5 is also inadmissible under 

the dead man's statute. Because of our ruling that this 

evidence is inadmissible under the parol evidence rule, we 

need not make a finding on this point. It should be pointed 
out, however, that the dead man's statute, which was formerly codified at section 93-701-3(3), R.C.M. 1947, has been 

abolished by Rule 601, Mont.R.Evid. 

Issue No. 3 concerns possible violation of section 67- 

408, R.C.M. 1947, now section 70-26-207 MCA. Appellant 

alleges that the lease rider is invalid and void as being in 

violation of section 67-408, which limits the duration of 

leases of agricultural lands to ten years. There is certainly no doubt that the lands in question are agricultural 

lands and that the rental arrangement did exist. However, 

we find that by its terms the lease rider extended the 

original lease for a term of ten years and ten years only. 

It is uncontested that the lease rider was executed on 

February 14, 1969. Appellant makes an issue of the fact 

that approximately one year and six weeks were remaining on 

the term of the lease agreement on the date of execution of 

the lease rider. This, it argues, supports its contention 

that the lease rider was the document in effect for the 

period February 15, 1969 through April 1, 1970. On this 

basis, appellant alleges that the lease rider is a lease of 

agricultural lands for more than ten years. It is interesting to note, however, that the lease rider, while an 

extension of the original lease agreement, contains terms 

and parties significantly different from the original lease 

agreement. 

As indicated previously, the consideration for the 

lease was increased by the lease rider. This increased 

consideration took effect on April 1, 1970, the date the 

lease rider became effective. In addition, the lease rider 

contains a provision granting Hubbard the privilege of 

placing a trailer house on the premises. This provision was 
not contained in the original lease agreement. Furthermore, 

Margery Rumph is a party to the lease rider while only 

Hubbard and Hubert Rumph were parties to the original lease 

agreement. 

By its terms, the language of the lease rider indicates 

change from the original lease agreement. The initial and 

closing paragraphs of the document speak to "changes" in the 

original lease. The lease rider was clearly an extension of 

the original lease, but upon significantly changed terms. 

The case involves a five-year lease with a ten-year renewal 

upon substantially changed conditions. There is no violation of section 67-408. 

The final issue, No. 4, involves possible waiver of 

certain rights by appellant. In its findings of fact the 

court determined that appellant, in allowing the Rumphs to 

place substantial improvements upon its property after 

appellant purchased the same, waived its right to 

contest the validity or existence of the option. 

The leading case on abandonment in Montana is Conway v. 

Fabian (1939), 108 Mont. 287, 89 P.2d 1022. "~bandonment" 

was there defined as: 

". . . the relinguishment of a right; the 

giving up of something to which one is entitled. 

In determining whether one has abandoned his 

property or rights the intention is the first 

and paramount object inquiry. This intention 

is ascertained not only from the statements 

which may have been made by the owner of the 

property, but also from the acts of the owner 

. . ." 108 Mont. at 306, 89 P.2d at 1029. 

This definition was recently affirmed in McEwen v. Big Sky 

of Montana, Inc. (1976), 169 Mont. 141, 545 P.2d 665. 

The term "abandonment" is further explained in 1 Am Jur 

2d Abandoned Property 81: 
"The term 'abandonment' as applied to property 

and property rights has acquired a well-defined 

and technical meaning which is not to be confused 

with the doctrine of laches or estoppel. In its 

general sense, abandonment means the act of intentionally relinquishing a known right absolutely 

and without reference to any particular person or 

for any particular purpose. Abandoned property 

is that to which the owner has voluntarily relinquished all right, title, claim, and possession, 

with the intention of terminating his ownership, 

but without vesting it in any other person and 

with the intention of not reclaiming future possession or resuming its ownership, possession or 

enjoyment. . ." 

To establish an abandonment of property, actual acts of 

relinquishment accompanied by the intention to abandon must 

be shown. The primary elements are the intention to abandon 

and the external act by which that intention is carried into 

effect. 1 Am Jur 2d Abandoned Property S15. 

There is no proof that Dale Edwards, Inc., ever intended 

to abandon its rights in the leased property. To the contrary, it never recognized the validity of the option, and, 

indeed, in 1973 following her husband's death, Mrs. Dale 

Edwards told Margery Rumph that "under no circumstances" 

would she ever want to sell. 

From the time Mrs. Edwards told the Rumphs she did not 

recognize their right to exercise the option, the question 

was not raised again until March 1977. At that time, the 

Rumphs sought to exercise their option and appellant immediately refused to do so. This action ensued. 

The Rumphs' improvements consisted of certain repairs 

upon the leased premises. They were entitled to do so under 

their tenancy. The repairs and improvements which the 

Rumphs made upon the property were not inconsistent with 

their tenancy and in no way gave them any greater rights in 

the land. 
Under these circumstances we find that appellant did 

not waive its right to contest the validity or existence of 

the option to purchase. Be that as it may, this is only 

harmless error and cannot be a basis for reversing the 

District Court. Halko v. Anderson (1939), 108 Mont. 588, 93 

P.2d 956; Hill v. Chappel Bros. (1934), 97 Mont. 305, 33 

P.2d 819. 

Therefore, the summary judgment granted respondents by 

the District Court is affirmed. 

We concur: w 

- 

Chief Justice 

- --. 

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,/'/ Justices 

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