No. 92-607 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1993 

IN THE MATTER OF THE ESTATE OF 

FRED PELZHAN, 

Deceased. 

APPEAL PROM: District Court of the Ninth Judicial District, 

In and for the County of Teton, 

The Honorable R. D. McPhillips, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Greg A. Luinstra, Jardine, Stephenson, Blewett & 

Weaver, Great Falls, Montana 

For Respondent: 

R. L. "StoneyW Burk, Choteau, Montana; John 

P. Wuerthner, Great Falls, Montana 

Submitted on Briefs: July 20, 1993 
Justice Fred J. Weber delivered the Opinion of the Court. 

This is an appeal from an order of the Ninth Judicial 

District, Teton County, determining that Joe and Floie Lee (the 

Lees) have waived their right of first refusal to the sale of the 

Pelzman ranch for a price of $120,000, and approving the sale of 

the same property to Cloyd and Lloyd Stott. We affirm. 

We consider the following issues on appeal: 

1. Did the District Court err in determining that the Lees waived 

their right of first refusal to the Pelzman ranch? 

2. Did the District Court err in returning $120,000 tender money 

to the Lees and substituting a Bank Letter of Credit? 

This is the second appeal of this action. This appeal 

revolves around the sale of a ranch in Teton County. The Lees 

moved to the area in 1977 and began operating an 800-acre ranch for 

Fred Pelzman (Pelzman) under a lease/management arrangement. 

Pelzman had suffered a stroke at age 80 and was unable to manage 

the property himself 

On March 20, 1978, Pelzman and the Lees executed a written 

agreement which contained the following language: 

I, Fred Pelzman, Sr., agree to give Joe R. and Floie N. 

Lee first option to purchase property I own in the above 

legal Description upon or before my passing for the sum 

of one hundred and twenty thousand dollars. It is agreed 

by the undersigned that the option holders will reside 

and maintain the said property until time of sale. A 

ledger of time and improvements will be kept for the 

purpose of reimbursement by the landowner. Upon 

notification of intent to sell, a period of 45 days will 

be allowed for payment. 

The Lees remained in possession and currently remain in possession 
of the ranch. Mr. Pelzman died on May 18, 1986. The Lees notified 

the attorney for the Pelzman estate that they were exercising their 

option to buy the ranch under the above clause. The estate 

representative refused to sell. The Lees filed a district court 

action for specific performance. Upon appeal, this Court 

determined that the agreement did not constitute an "option 

contractw but did constitute a "right of first refusal1* which could 

entitle the Lees to buy the Pelzman ranch for $120,000. In 

substance this Court determined that the right of first refusal 

became operable when the estate notified the Lees the ranch was for 

sale. Lee v. Shaw (1992), 251Mont. 118, 123, 822 P.2d 1061, 1064. 

Shortly after the foregoing appeal was final, the Lees through 

their attorney entered into extensive sale negotiations with the 

personal representative of the Pelzman estate. During these 

negotiations the Lees attempted to settle all pending claims 

between them and the estate, and intended to include both the 

purchase of the ranch property and the purchase of the ranch 

cattle. The parties agreed to the basic price of $200,000 with 

$120,000 allocated to the ranch and $80,000 to the cattle. While 

none of the various proposed contracts was signed by all of the 

parties, agreement was reached to complete the sale on a specified 

closing date. The Lees failed to show up for that closing and 

requested extensions. The Lees failed to show up at subsequent 

extensions. As a result, the estate representative entered into a 

purchase and sale agreement with Cloyd and Lloyd Stott (the Stotts) 

for the sale of the Pelzman ranch for $165,000 and sought court 
approval of that agreement. On July 21, 1992, a hearing was held 

on the petition regarding the Stott purchase. Lees filed an 

objection to the sale based upon their right of first refusal. 

They contended that the Stotts' offer of purchase brought their 

right of first refusal into existence and they offered to purchase 

for $120,000. While the District Court agreed that the Stotts' 

offer had ripened the Lees' right of first refusal, it found that 

the Lees had waived their right of first refusal when they failed 

to show up at the closings for the sale of the property. 

The Lees argue they had not reached final agreement with the 

Pelzman estate on the purchase of the property and therefore had 

not waived the right of first refusal. The Pelzman estate contends 

that the court was correct in finding waiver because the Lees had 

successfully negotiated a sale and then failed to show up at the 

closing for such sale. 

I 

Did the District Court err in determining that the Lees waived 

their right of first refusal to the Pelzman ranch? 

In Lee v. Shaw, this Court determined that the above quoted 

language of the agreement constituted a right of first refusal to 

the sale of the Pelzman ranch. Lee, 251 Mont. at 123, 822 P.2d at 

1064. A "right of first refusal11 or preemptive right does not give 

to the preemptioner the power to compel an unwilling owner to sell- 

-it merely requires the owner, when and if he decides to sell, to 

offer the property first to the person entitled to the preemption 

at the stipulated price. &&, 251 Mont. at 121, 822 P.2d at 1063. 

The record indicates that negotiations for the sale of the 

4 
Pelzman ranch began in earnest during February of 1992. On 

February 27, 1992, the Lees made a $200,000 offer for the ranch, 

the ranch cattle, and other considerations. The consent of all 

heirs for the $200,000 sale price of which $120,000 was for the 

Pelzman ranch itself was given on April 8, 1992. We stated in Lee: 

[Hlad such notification of intent been aiven bv the P.R. 

Jwersonal rewresentative of the estate1 to the Lees, they 

had the right to purchase the property for the $120,000 

less any credits as indicated by the agreement from the 

ledger, with payment to be made within 45 davs from 

notification. (Emphasis added*) 

Lee, 251 Mont. at 123, 822 P.2d at 1064. 

The necessary notification from the estate's attorney came on 

April 8, 1992 when he notified the Lees' attorney that all heirs 

had now agreed to the sale and that $120,000 of the $200,000 

selling price should be allocated as the price of the land. From 

this date, the 45 day period began to run. That period ended the 

end of May 1992. 

Yet, the closing was not set until July 1, 1992 and despite 

assurances from the Lees1 attorney that they would appear, the Lees 

did not show up. Nor did they appear after being granted a twentyfour hour extension to 4 p.m. July 2, 1992. Another extension was 

sought to August 1, 1992. In the meantime, the Stotts offered 

$165,000 for the ranch and the estate sought a judicial 

determination of the appropriateness of the estate's acceptance of 

this offer. 

At the July 21, 1992 hearing in which the court considered the 

Stott offer in light of the surrounding circumstances, the Lees 

gave notice they would exercise their right of first refusal to buy 
the ranch for $120,000. Following the hearing, the District Court 

determined that the Lees had waived their right of first refusal by 

failing to show up at the closing. However, the District Court 

determined that it was the subsequent offer by the Stotts which 

triggered the Lees' preemptive right and began the running of the 

45 day period. While the District Court correctly determined that 

the Lees had waived their right, it did not correctly determine the 

triggering incident. We will affirm a district court when its 

conclusion is correct, regardless of whether the court has used the 

correct analysis to reach that conclusion. Shimskey v. Valley 

Credit Union (1984), 208 Mont. 186, 676 P.2d 1308. 

Waiver is an equitable doctrine, applicable where there is 

intentional or voluntary relinquishment of a known right, claim, or 

privilege, or such conduct as warrants inference of relinquishment 

of such right. Sperry v. Montana State University (1989), 239 

Mont. 25, 778 P.2d 895. We conclude that the Lees failed to tender 

the sum of $120,000 within a period of 45 days from receiving the 

notification of intent to sell, and as a result failed to comply 

with the specific requirements of the above quoted contract 

provision. We also conclude the record supports the determination 

of the District Court that the Lees failed to show up for the 

closing of the sale by the estate personal representative on two 

different occasions. We further conclude that such conduct on the 

part of the Lees constitutes an intentional relinquishment of their 

right of first refusal and constitutes a waiver of that right. 

We hold the District Court correctly determined that the Lees 
waived their right of first refusal to the Pelzman ranch. Because 

of this dispositive issue, we need not consider the Lees' other 

issues. 

11. 

Did the District Court err in returning $120,000 tender money to 

the Lees and substituting a Bank Letter of Credit? 

While legal questions exist as to the propriety of the conduct 

of the District Court in allowing a substitution of a letter of 

credit for the $120,000 purchase price tendered by the Lees, in 

view of our holding in this case, we do not find it necessary to 

consider such issues. We note that the letter of credit which has 

been substituted by the Lees provides that the credit expires 30 

days after this matter is remanded by this Court to the Teton 

County Clerk of Court's office. As a result, no further action is 

required on our part. 

Affirmed. 

f 
November 10, 1993 

CERTIFICATE OF SERVICE 

I hereby certify that the following order was sent by United States mail, prepaid, to the 

following named: 

Greg A. Luinstra, Esq. 

Jardine, Stephenson, Blewett & Weaver 

P.O. Box 2269 

Great Falls, MT 59403-2269 

R.L. "Stoney" Burk 

Attorney at Law 

P.O. Box 70 

Choteau, MT 59422 

JOHN P. WUERTHNER 

Attorney at Law 

P.O. Box 2503 

Great Falls, MT 59403 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF MONTANA