### No. 14607 INTHESwREBEmUfiTOFTHEsrmOFMX;1TANA 

### 1979

HUBEEiT

### C. RUMPH andMARGEW 

### RUMPH, PlaintiffsandRespondents,



### -vsDALF: INC.

## ,aPbntanaCorporation, DefendantsandAppellants.

Appeal fm: DistrictCourtof the 

### SixteenthJudicial ~istrict, HomrableAlfredB. Coate,Judgepresiding. Counselof Record: 

### ForAppellants: Sandall & 

### Cavan, 

### Billings,Mntana JohnR. Carr, 

### Miles City,Mntana ForRespondents: Lucas andhbnaghan,Miles City,mntana

Submittedonbriefs: April 25, 

### 1979

Filed:

## JUN 

# 6 

# 1979Mr. Justice John Conway Harrison delivered the Opinion of the Court.

The controlling issue inthis appeal 

### is the propriety of the District Court's decision to grant summary judgment infavor of respondents. As evidenced by the DistrictCourt fileand the parties' briefs herein, 

### we find that absolutely

no genuine issues of material fact arepresent in this lawsuit and that respondents are entitled tojudgment 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 toSeptember 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 

### isnow deceased, was not living on hisranch inthe spring of 1965. Heallowed Hubert Rumph, one of the respondents herein, tomove 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 

### termof fiveyears from and afterApril 

### 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 topurchase theproperty: "That the Lessor does hereby give and grant to theLessee, his heirs, executors, administrators and assigns, the exclusive right, privilege and option of purchasing thehereinabove 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 

### timeafterApril 1, 1968 and not 

### later than April 

### 1, 1970, by giving written notice to the Lessor within the 

### time setforthherein for the exerciseof thisoption. That said notice shall be sentby registered 

### mail to the Lessor at Broadus, Montana."InFebruary 1969, Rumph decided to exercise his option topurchase the property. This decision was duly communicated toHubbard who acquiesced to the planned sale. Hubbard and Rumph concluded that the 

### sale could not be completed inFebruary 1969. Both Hubbard and Rumph became concerned with the possibility that the sale could not be completed prior toApril 1, 1970, the expiration date of the option topurchase found inthe lease agreement. Therefore, on February 13, 1969, Hubbard and Rumph 

### metatthe Hubbard home toresolve thisproblem. Itwas mutually agreed that the best way to solve the problem 

### was toextend the lease and option topurchase for an additional ten years. During this conversation, Rumph made notes of the parties' understandings. Later that evening, hiswife Margery prepared a document entitled "leaserider" according to the mutually agreed upon terms. The following day the Rumphs returned to the Hubbard home toexecute the lease rider. Bonnie Rumph, a Notary Public, accompanied them tonotarize the signatures. Hubbard and Rumph then examined the leaserider to confirm that 

### it properly reflected the agreement reached the previous day. One significantchange contemplated by the parties 

### was an increase inthe annual leasepayment from $523 to $623. The leaserider provides inpertinent part that: 

# ".

. . this 

### lease shall run for ten (10) more years, expiring on April 1, 1980, instead of April 1, 1970." The Rumphs' option topurchase 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 torenew this 

### lease as 

### well asthe option tobuy."3⁄4 he 

### sum of $523 was paid toHubbard for the years 1965 through 1969. Pursuant tothe 

### termsof the lease rider, the consideration paid in 1970 and 

### all subsequent years 

### was increased to $623. R. C. Hubbard died on January 7, 1971. Atthe 

### timeof his death, the property inquestion had not yetbeen conveyed tothe Rumphs. For economic reasons, the decision 

### was made by the attorney and the administrator of Hubbard's estate to 

### sell theproperty 

### ata public sale. The administrator's salewas duly and properly carried out. The notice of saleof real property was duly published. That notice stated inpertinent part that: "Ranch subject tosurface lease toH. C. Rumph." While no reference was made inthe notice torespondents' interest, the purchaser



### was aware of his interest. The administrator's salewas conducted inthe courtroom of the Powder River County courthouse on October 27, 1972. Prior tothatdate, Rumph spoke with the attorney for the estate, Robert J. Brooks, and was assured by Brooks that the purchaser atthe administrator's 

### sale would take the land subject toRumphs' lease and option topurchase. The record alsoreflects thatDale Edwards, thepresident of the appellant corporation, DaleEdwards, 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 tothe date of the sale. Prior tothe 

### sale, oral announcements 

### weremade by the attorney for the 

### estate tothe effect that the salewas subject to the Rumphs' lease and option topurchase. Copies of the 

### lease agreement and lease rider 

### were circulated among prospective purchasers atthe 

### sale. Questions

### were askedregarding the validity of the 

### lease and option topurchase and Brooks deferred his answers toother attorneys who 

### were present and representing prospective bidders. These facts indicate it was unnecessary toinclude 

### it inthe notice for 

### sale. Purchaser had ample notice. The property was purchased by Dale Edwards, on behalf of Dale Edwards, Inc. The purchase pricewas $21,173.40, which was 90 percent of the appraised value of the property. Subsequent tothe sale, but prior tothe actual closing, Edwards' attorney, Mr. Carr, reviewed an abstract of 

### title tothe property. Certain titlework had tobe done including the acquisition of 

### a quitclaim deed from a Mr. Dahl, who held a lien on the property. Considerable difficulty



### was encountered by Brooks and Carr inobtaining thisdeed from Dahl. In fact, 

### atone point, cash consideration was offered toDahl for the deed. Atno 

### timewas any question raised as tothe validity of the Rumphs' lease and option to purchase. The Rumphs have been incontinuous possession of the property sinceApril 1965. They have performed allof 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., asrequired for any breach of the lease agreement. Allannual 

### lease payments have been made by the Rumphs toDale 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 topurchase the property for the sum of $27,500. Dale Edwards, Inc., refused toperform under the lease agreement and lease rider and willnot convey the property totheRumphs. The amount of $27,500, representing fullpayment for the property, has been tendered tothe Clerk of the Powder River County DistrictCourt by means of an irrevokable letter of credit. This suitfor specific performance followed Edwards' refusal to convey the property to the Rumphs. Summary judgment infavor of the Rumphs was entered by the District Court from which DaleEdwards, Inc., appeals to this Court. Before considering the individual issues, 

### we 

### will discuss the validity of the District Court entertaining summary judgment motions in thismatter. Rule 56(c),M.R.Civ.P., provides that summary judgment isproper if: 

# ".



# . . the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue astoany material fact and that themoving party 

### is entitled to a judgment 

### as a matter of law." Thus, summary judgment 

### isappropriate when themoving party shows a complete absence of any genuine issue as to all factswhich arematerial in light of those substantive principles which entitlehim 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 initialburden 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 

### itsburden 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), 148Mont. 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 initialburden of proof must attach to the moving party, thatburden shiftswhere the record discloses

no genuine issue of material fact. Under these circumstances, the party opposing themotion 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 themotion 

### 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. at310, 406 P.2d at169, where this Court stated: present 

### lawwill the party opposing [the]motion must facts inproper form--conclusions of

not suffice; and the opposing party's factsmust be material and of a substantial nature, not fanciful, frivolous, gauzy, nor merely suspicions.'" We find that allfactsmaterial tothe legal issues involved inthis appeal have been presented. There areno genuine issues of fact. The parties concede that no issues of fact exist inthis case. The individual issues presented to this Court are: 1. Did the District Court properly construe and interpret the 

### termsof the lease agreement and lease rider?2. Did the DistrictCourt 

### err in

### its adoption of certainoral testimony concerning the circumstances of the execution of the lease rider? 3. Did the DistrictCourt 

### err inholding that respondents' option topurchase 

### 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 topurchase? The firstissue concerns the construction and interpretation of the lease agreement and 

### lease rider. Both parties indicate that 

### a primary question tobe answered here 

### is "what do the terms of the contract provide?" We agree. The intent of the parties tothe contracts 

### is determined by reading the lease agreement and leaserider in full. Appellant chooses todissect the contracts, takes certain isolated words and phrases from them, and argues that theseminute pieces express the true intent of the parties rather than an analysis of the contracts infull. We find that the intentof the contracts 

### is clear. The Rumphs were granted the option topurchase the property in question which 

### will, by 

### its 

### terms, expire on April 1, 1980. Initially, 

### it is important tonote that the lease rider 

### ismerely an extension of the lease agreement with certain enumerated changes. Inview of the close relationship between these documents, they must be construed together to determine the true intent of Hubbard and Rumph regarding the option topurchase. Section 13-708, R.C.M. 1947, now section 28-3-203 MCA, provides: "Several contracts relating tothe 

### samematters, between the 

### sameparties, and made asparts of substantiallyone transaction, 

### are tobe taken together."Therefore, indiscussing the rules of interpretation, the two contracts herein 

### willbe referred to as one. The following rules of construction arecontrolling 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 atthe 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 orphraseology 

### isreasonably subject to two different interpretations. S-W Company 

### v. Schwenk (1977), Mont. 

## , 568 P.2d 145, 34 St.Rep. 865; Williamsv. Insurance Company of North America (1967), 150Mont. 292, 434 P.2d 395. Where the 

### termsof an agreement areuncertain and ambiguous, par01 evidence 

### is admissible toprove the interpretation meant by the parties. Sutton v. Masterson (1930), 86 Mont. 530, 284 P. 264. In addition, where the language of the contract isdoubtful 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 inKintner v. Harr (1965), 146 Mont. 461, 472, 408 P.2d 487, 494, that: 

# ".

. . It 

### is a fundamental rule that inthe 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 inview. The words employed, if capable of more than one meaning, are tobe given thatmeaning which it 

### is apparent the parties intended them tohave. 

### 1Beach on Modern Law of Contracts, 702. See Smith v. School DistrictNo. 18, 115Mont. 102, 139 P.2d 518; 12Am Jur, SS 236, 249." It 

### is 

### a well-established principle of contractual construction that ininterpreting 

### a written instrument, the court 

### willnot isolate certainphrases of the instrument to garner the intent of theparties, but 

### willgrasp the instrument by 

### its four corners and in the lightof the entire instrument, ascertain the paramount and guiding intentof the parties. Mere isolated tracts, clauses and words 

### will not be allowed toprevail over the general language utilized inthe instrument. Ward v. Mattuschek (1958), 134 Mont. 307, 330 P.2d 971; Steen v. Rustad (1957), 132Mont. 96, 313 P.2d 1014. The words of the contract are tobe understood intheir ordinary and proper sense. Section 13-710, R.C.M. 1947, now section 28-3-501 MCA. Particular clauses of the agreement are subordinate tothe general intent of the contract. Section 13-716, R.C.M. 1947, now section 28-3-307 MCA. Any repugnancies inthe contractmust be reconciled, if possible, by an interpretation which 

### willgive 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 ina contract which are inconsistentwith the general nature of the contract or themain intention of the parties are tobe rejected. Section 13-719, R.C.M. 1947, now section 28-3-503 MCA

# . One finalrule of contractual construction 

### is involved herein. In case of an ambiguity, the language of the contract 

### is tobe 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 inthe 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 

### isundisputed that Rumph and Hubbard jointly drew up the 

### terms of the lease rider. Thereafter, Margery Rumph transcribed the agreement reached into

### itspresent form. After this transcription, both Rumph and Hubbard reviewed the document toconfirm 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 alsobe noted that the original lease agreement was drafted by an unknown attorney atthe request of Hubbard. It 

### is interesting to note that appellant devotes approximately eightpages of 

### itsbrief to a discussion of the differences between a "lease" and "option topurchase." By

means of an extremely technical and somewhat imaginative argument, appellant concludes that the use and placement of the words, "lease" and "option topurchase", indicates that the option topurchase ended with the 

### termof the original

### lease agreement and was not extended toApril 1, 

### 1980 by the lease rider. Appellant is

### picking isolated words and phrases from the two contracts and attempting torebut their clear and convincing general intent. It 

### certainly is 

### true that the 

### terms "lease" and "option topurchase" have differentmeanings. However, allparties interested inthis transaction with the exception of Dale Edwards, Inc., considered the option topurchase tobe 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 topurchase is

### not a part of that lease. In addition, the notice of sale indicated that the salewas subject tothe surface lease to Rumph. Therefore, 

### we find that the term "lease" as found in the lease rider should be interpreted tomean lease and option topurchase. If it 

### is

### necessary todissect the agreements inquestion todetermine their true intent, 

### we find that this dissection is

### more accurate than the one suggested by appellant. Appellant comments atlength on the Rumphs' financial condition. Appellant indicates that they 

### were unable to arrange financing for the purchase of the land until assistedby their attorney. There is 

### absolutely no evidence inthe record to support this assertion. In fact, there is 

### absolutely no conclusive evidence concerning the Rumphs' financial condition. In any event, this entirediscussion is

### moot inthat themoney was available when the Rumphs ultimately decided toexercise their option topurchase. In conclusion, when thisCourt reads the lease agree- and ment and lease rider intotal/interprets them by graspingthem by their four corners todetermine their overall intent, the conclusion 

### is inescapable that the Rumphs' option topurchase 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 faultwith Findings Of Fact Nos. 3 through 6. Appellant's attack 

### is two pronged, claiming that the evidence 

### is inadmissible firstunder 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

### willnot allow parol evidence. Safeco Insurance Company v. Munroe (1974), 165Mont. 185, 527 P.2d 64; 

### Merritt v. 

### Merritt (1974), 165Mont. 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 leaserider 

### are clear and unambiguous, giving respondents a lease and option topurchase until ~pril 

### 1, 1980. The intent of the parties is clear, and the ~istrict Court could so find in

### its Finding of Fact No. 6without 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 thispoint. It should be pointedout, however, that the dead man's statute, which was formerly codified atsection 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 leaserider 

### isinvalid and void asbeing 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 inquestion 

### 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 leaserider was executed on February 

### 14, 1969. Appellant makes an issue of the fact that approximately one year and sixweeks 

### were remaining on the 

### termof 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 ineffect for the period February 15, 1969 through April 1, 1970. On this basis, appellant alleges that the leaserider 

### is a lease of agricultural lands formore than ten years. It 

### is interesting tonote, 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 leaserider. This increased consideration took effecton April 1, 1970, the date the leaserider became effective. In addition, the lease rider contains a provision granting Hubbard the privilege of placing a trailer house on the premises. This provision wasnot contained inthe original lease agreement. Furthermore, Margery Rumph 

### is a party tothe lease rider while only Hubbard and Hubert Rumph 

### were parties to the original lease agreement. By 

### its terms, the language of the leaserider indicates change from the original lease agreement. The initial and closing paragraphs of the document speak to "changes" inthe original lease. The leaserider 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, inallowing the Rumphs to place substantial improvements upon itsproperty after appellant purchased the same, waived 

### its right 

### to contest thevalidity or existence of the option. The leading case on abandonment inMontana 

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

was there defined as: 

# ".



# .. the relinguishment of a right; the giving up of something towhich one 

### is entitled. In determining whether one has abandoned his property orrights 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



# . . ." 108Mont. at306, 89 P.2d at1029. This definitionwas recently affirmed inMcEwen v. Big Sky of Montana, Inc. (1976), 169 Mont. 141, 545 P.2d 665. The 

### term "abandonment" 

### is further explained in 1Am Jur 2d Abandoned Property 81:"The term 'abandonment' as applied toproperty and property rights has acquired a well-defined and technical meaning which 

### isnot tobe confused with the doctrine of laches or estoppel. In 

### its general sense, abandonment means the actof intentionally relinquishing 

### a known right absolutely and without reference to any particular person or for any particular purpose. Abandoned property 

### is that towhich the owner has voluntarily 

### relinquished allright, 

### title, 

### claim, and possession, with the intention of terminating his ownership, but without vesting 

### it inany other person and with the intention of not reclaiming futurepossession or resuming 

### its ownership, possession or enjoyment. 

# . ." To establish an abandonment of property, actual acts of relinquishment accompanied by the intention toabandon must be shown. The primary elements 

### are the intention to abandon and the external actby which that intention 

### is carried into effect. 

### 1Am Jur 2d Abandoned Property S15. There isno proof that Dale Edwards, Inc., ever intended toabandon its rights inthe leased property. To the contrary, 

### it never recognized thevalidity of the option, and, indeed, in 1973 following her husband's death, Mrs. Dale Edwards toldMargery Rumph that "under no circumstances" would she ever want to 

### sell. From the 

### timeMrs. Edwards told the Rumphs she did not recognize their right toexercise the option, the question

was not raised again until March 1977. Atthat 

### time, the Rumphs sought to exercise their option and appellant 

### immediately refused todo so. This action ensued. The Rumphs' improvements consisted of certain repairs upon the leased premises. They 

### were entitled todo so under their tenancy. The repairs and improvements which the Rumphs made upon the property were not inconsistent with their tenancy and inno way gave them any greater rights in the land.Under these circumstanceswe find that appellant did not waive 

### its right to contest the validity or existence of the option topurchase. Be that as 

### itmay, this 

### is only harmless error and cannot be a basis for reversing the DistrictCourt. Halko v. Anderson (1939), 108 Mont. 588, 93 P.2d 956; Hillv. Chappel Bros. (1934), 97 Mont. 305, 33 P.2d 819. Therefore, the summary judgment granted respondents by the DistrictCourt 

### is affirmed.

We concur: 

# w

- Chief Justice

---. '%

# &a,- ,/'/Justices 

## C/