Title: MAXTED v STENBERG
Citation: N/A
Docket Number: 12808
State: Montana
Issuer: Montana Supreme Court
Date: April 25, 1975

No. 12808 I N T H E S U P R E M E C O U R T O F THE STATE O F MONTANA 1975 ROY A. M A X T E D , P l a i n t i f f and Appellant, S T A N L E Y STENBERG, Defendants and Respondents. Appeal from: D i s t r i c t Court of the Sixth J u d i c i a l D i s t r i c t , Honorable Jack D. Shanstrom, Judge presiding. Counsel of Record : For Appellant : Grant and Heard, Columbus, Montana Richard W. Heard argued, Columbus, Montana Berger, Anderson, S i n c l a i r & Murphy, Billings, Montana Richard W. Anderson argued, Billings, Montana For Respondents : Huppert and Swindlehurst, Livingston, Montana Joseph T. Swindlehurst argued, Livingston, Montana 0. J. Paulson, Big Timber, Montana Submitted : January 13, 1975 Decided : g g > W 2 5 1975 F i l e d : jqp~ % 5 1975 M r . Justice Gene B. Daly delivered the Opinion of the Court, This i s an appeal from a judgment entered i n the d i s t r i c t court, Sweetaass County, denying p l a i n t i f f specific performance f o r an alleged breach of contract because of defendants' f a i l u r e t o s e l l t h e i r ranch t o p l a i n t i f f a f t e r execution of a buy-sell agreement. O n September 23, 1970, defendants Stanley and Ann Stenberg, hereinafter referred t o a s s e l l e r s , l i s t e d t h e i r ranch consisting of approximately 315 acres located west of Big Timber, Montana, for s a l e with r e a l e s t a t e broker Harold Mjolsness, hereinafter referred t o a s r e a l t o r , for the price of $70,000. The l i s t i n g expired March 1, 1971. With the consent of s e l l e r s , the r e a l t o r continued t o show the property t o interested parties but was unable t o find a buyer, In the summer 1972, p l a i n t i f f Roy Maxted, a resident of the s t a t e of California, hereinafter referred t o a s purchaser, decided t o s e t t l e i n Montana and purchase a ranch. He inquired of the r e a l t o r and was advised that s e l l e r s ' ranch was on the market. After negotiations, a buy-sell agreement was executed on July 7, 1972, by purchaser and r e a l t o r , and by s e l l e r s on August 3 , 1972. The agreement provided i n part: 1) The purchaser pay a $1,000 deposit a s earnest money and a s part payment of the purchase price of $75,000. The balance i n the amount of $74,000 t o be paid $1,000 on o r before August 7, 1972, and additional payments each month u n t i l purchaser had paid a t o t a l of $15,000, on or before January 1, 1973, Purchaser thereafter t o make annual payments of $6,000 which w i l l include i n t e r e s t a t the current r a t e charged by the federal land bank for the duration of the contract a period of f i f t e e n years, and, a t that time the unpaid balance w i l l be due and payable i n one sum. 2) A legal description of the land purchased, including a l l recorded water r i g h t s ; s e l l e r s t o r e t a i n one-half of the existing mineral r i g h t s and purchaser the remaining one-half, u n t i l f i n a l payment. Upon f i n a l payment s e l l e r s agreed t o re- lease a l l mineral r i g h t s t o purchaser. 3) A l l i r r i g a t i o n f i x t u r e s , heating f i x t u r e s and equipment, including water heaters e t c . , were t o be l e f t a s part of the pro- perty purchased. 4) S e l l e r s a t t h e i r expense s h a l l furnish an a b s t r a c t of t i t l e or a t t h e i r option t i t l e insurance showing merchantable t i t l e vested i n s e l l e r s , f r e e and c l e a r of a l l l i e n s and encumbrances, with no exceptions. 5) The r e a l property was t o be conveyed by warranty deed and personal property by b i l l of s a l e , f r e e and c l e a r of a l l encumbrances, except zoning reservations i n the federal patent, 6 ) S e l l e r s s h a l l pay a l l taxes f o r 1972 and p r i o r years. Purchaser s h a l l pay a l l taxes and assessments thereafter. Encum- brances may be paid out of purchase p r i c e by s e l l e r s a t t h e date of closing. 7) Time is of the essence and purchase r i g h t s a r e not assign- able without written consent of s e l l e r s . 8) S e l l e r s agreed t o remove a l l old machinery before possession date. 9) S e l l e r s agree t o t r a n s f e r present private leases [including the description] t o purchaser a t t h e time of closing sale. 10) Harold Mjolsness i s agent f o r s e l l e r s and s e l l e r s agree t o convey t o purchaser the property described and on t h e terms con- tained i n the agreement. S e l l e r s agree t o pay t h e i r agent $2,500 f o r services rendered i n the transaction, and further provided: "* fc 2 k 1/we authorize said agent t o pay out of the cash proceeds of s a l e t h e expense of furnishing evidence of t i t l e , of recording fees and revenue stamps, i f any, a s well a s any encumbrances on s a i d premises payable by m e a t / o r before closing.* * 9:" There was no provision i n t h i s buy-sell agreement t o e n t e r i n t o any other contract agreement a t any future time. The agreement, i n f a c t , r e c i t e s a s it r e l a t e s t o purchaser and o r a l promises, t h a t the purchaser enters i n t o t h i s agreement i n f u l l reliance upon h i s independent investigation and judgment. There a r e no verbal o r other agreements which modify o r a f f e c t t h e buy-sell agreement. Following the execution of the buy-sell agreement purchaser sold h i s home and liquidated h i s construction business i n California. The r e a l t o r did not use h i s regular attorney but hired M r . Richard Heard of Columbus, Montana, t o prepare a contract f o r deed, because r e l a t o r ' s regular attorney was not s a t i s f a c t o r y t o s e l l e r s . In November 1972, purchaser returned t o Montana and met with s e l l e r s and , i n M r . ~ e a r d ' s law o f f i c e t o discuss terms and refinements t o be included i n a formal contract f o r deed t o be prepared by Heard. A t t h i s meeting purchaser ,offered t o pay the remaining balance on the buy-sell agreement, but was requested by s e l l e r s t o withhold payment u n t i l a f t e r January 1, 1973, because of s e l l e r s ' tax problems f o r 1972. In court, s e l l e r s did not d i r e c t l y admit making t h i s request, but neither did they deny it completely. They allowed a s t o the t a x problem, but maintained the money could have been placed i n escrow. I n any event, the par- t i e s agreed the new date f o r payment of the $14,000 t o be January 5 , 1973. A t t h i s point the p a r t i e s were l e f t alone by the attorney t o discuss and agree on the terms of the proposed contract. After an hour he returned t o the conference room and discussed the o r a l agreement. Thereafter, he prepared a contract f o r deed, submitted t o the purchaser i n California where it was signed by him on December 11, 1972. In order t o construct a home on the ranch, purchaser*needed f i v e acres released t o him t o s a t i s f y the financial arrangements f o r the home. Sellers refused t o sign the contract f o r deed because the urovision granting t h e f i v e acres t o purchaser on closing was unacceptable t o them. Purchaser was so informed by telephone on December 9, 1972. A n amendment t o t h e contract was prepared, but s e l l e r s continued t o object t o any release of f i v e acres p r i o r t o payment of a more substantial sum than the $15,000 down payment. A t t h i s point there were several telephone c a l l s between r e l a t o r and purchaser concerning the $14,000 due on January 5 , 1973, under t h e buy-sell agreement. Purchaser t e s t i f i e d he had nothing i n hand ardno t i t l e report, e t c . , and therefore he chose t o come t o Montana and close the matter personally, but did not a r r i v e i n time t o make the payment on January 5 , 1973. O n January 8, 1973, s e l l e r s requested r e a l t o r t o n o t i f y pur- chaser "to get some money up here so t h a t I know they were going t o go through with this". Purchaser, driving a truckload of furniture, arrived i n Montana on January 19, 1973. H e tendered a c a s h i e r ' s check f o r $14,000 t o s e l l e r s ' agent, who accepted the check although s e l l e r s apparently considered "the deal was o f f . I l Purchaser and r e a l t o r t e s t i f i e d t h a t on January 19, 1973, the p a r t i e s were t o meet i n r e a l t o r ' s o f f i c e but s e l l e r s excused t h e i r absence due t o c a t t l e being out, e t c . Purchaser and r e a l t o r f i n a l l y went t o t h e ranch l a t e i n the afternoon of the same day and s e l l e r s explained they had t o see about financing i n Bozeman and could not close the deal a t t h a t time. Sellers maintain they t o l d purchaser and r e a l t o r the "deal was off", y e t , s e l l e r s came t o another meeting the evening of the 19th a t r e a l t o r ' s office. Another con- ference was had then between the p a r t i e s , but no positive r e s u l t s came of the meeting. Purchaser returned t o California and had a written demand served on s e l l e r s , which was refused. Subsequently purchaser brought the i n s t a n t action f o r specific performance which was t r i e d t o t h e court s i t t i n g without a jury. The court denied purchaser r e l i e f and i n i t s conclusions of law s t a t e d i n p a r t : "That the Buy-Sell Agreement constituted an agreement t o enter i n t o a contract i n the f u t u r e and was not an enforceable contract. r I That, i n any event, the P l a i n t i f f abandoned the Buy- S e l l Agreement by f a i l i n g t o pay the balance of the down payment a s i n i t i a l l y agreed; by i n s i s t i n g upon the release provision, which materially changed the agreement; and, f i n a l l y , by f a i l i n g t o pay the down payment o r t o come t o Montana t o resolve matters on o r before January 5, 1973." O n appeal, the controlling issues a r e : (1) Was the buy-sell agreement a binding and enforceable contract? (2) I f so, does the purchaser's breach prevent recovery? (3) Was the buy-sell agreement abandoned by the purchaser? The r e a l t o r involved i n t h i s transaction was the agent of s e l l e r s . H i s agency i s express and contained i n the contract document. H i s authority t o disburse funds i s expressly given and he would have apparent authority t o receive the purchase price. 1 2 Am J u r 2d Brokers $81, p. 833. His agency expressly went beyond the mere a c t of finding a purchaser. This agency had not been revoked o r expired during t h e times pertinent t o t h i s matter. H i s agency s t a t u s was not questioned i n the record. S e l l e r s c i t e Dineen v. Sullivan, 123 Mont. 195, 213 P.2d 241, a s principal authority i n support of t h e i r argument t h a t the nine e s s e n t i a l elements i n Dineen t h a t were not included i n the memorandum i n t h a t case, constituted some kind of guide a s t o the requirements necessary t o have an enforceable memorandum. They ask t h i s Court t o make these comparisons with the buy-sell agreement i n the i n s t a n t case and somehow use the proposed contract f o r deed here a s a control reference. S e l l e r s have misread Dineen and the holding therein. Dineen i s distinguishable i n several respects. It involved an admittedly bland agreement t o s e l l and purchase r e a l property which contained an agreement t o enter i n t o a formal contract containing the terms agreed upon by the p a r t i e s and designated an attorney t o prepare t h e formal contract document. In Dineen the amended complaint plead eight e s s e n t i a l elements of the o r a l agreement t h a t were reduced t o writing and contained i n the memorandum. In t h e complaint i n Dineen p l a i n t i f f plead nine e s s e n t i a l elements o r a l l y agreed upon but not contained i n the memorandum agreement. The t r i a l court sustained a "demurrer" t o the complaint and i t s judgment was appealed. This Court merely reviewed t h e law of contracts i n Williston on Contracts 2d Ed.; specific performance contained i n Pomeroy's Work Specific Perform- ance of Contracts, 3rd Ed.; Restatement of the Law of Contracts; and case authority. It then concluded t h a t every written contract presupposed a prior verbal agreement, the writing is the evidence of t h a t agreement and must contain the e s s e n t i a l executory o r a l agreements of the p a r t i e s o r it w i l l not be enforced. The Court held t h a t the complaint on i t s face demonstrated the memorandum did not contain a l l of the p a r t i e s ' e s s e n t i a l verbal agreements there- fore the complaint was defective on i t s face and subject t o demurrer. The Court sustained the judgment of the t r i a l court and i n essence the cause was dismissed. The agreements of the p a r t i e s contained i n o r l e f t out of the memorandum i n Dineen were never discussed i n the context of require- ments t o c o n s t i t u t e a valid o r an enforceable contract i n specific performance. The question there decided was ---Did it contain the e s s e n t i a l elements of the verbal agreements of the p a r t i e s i n t h a t case? O n t h i s point i n t h e i n s t a n t case, s e l l e r s i n t h e i r answer and counterclaim did not plead t h i s defense t o the buy-sell agreement. They plead bad f a i t h and fraud i n t h e November 1972 tender. They considered the agreement terminated, and "did enter i n t o new negotia- tions f o r the s a l e of the same property * Jc *. ''(Emphasis ours). ~ h e ' h e w negotiations" r e f e r t o the contract f o r deed negotia- tions. They a l l e g e they did not sign the contract f o r deed because it contained a f i v e acre release not agreed t o by the s e l l e r s . Sub- sequently s e l l e r s t r i e d t h e i r case on the same theory. It would be somewhat d i f f i c u l t on appeal t o adopt t h e r a t i o n a l e of Dineen, even ii permitted under Rule 8 ( c ) , M.R.Civ.P. : A much b e t t e r reasoned case f o r the proposition we must face t o determine i f t h e buy-sell agreement i n t h i s cause i s an enforceable contract i s Steen v. Rustad, 132 Mont. 96, 106, 313 P.2d 1014, c i t e d by both p a r t i e s . Steen concerns a lease with option t o buy containing two plans of payment, one f o r r e n t and the other f o r down payment t o exercise an option t o purchase. I f the down payment plan was selected a contract would be drawn a t t h a t time and contain t h e terms s t a t d i n the memorandum i n the lease-option agreement. Those terms were i n l e s s d e t a i l than those contained i n t h e buy-sell agreement under consideration here. The Court i n Steen f i r s t draws t h e d i s t i n c t i o n t h a t t o be enforced i n equity a contract must be one wherein t h e p a r t i e s intend t o s e t down t h e e s s e n t i a l elements of a contract f o r t h e purchase and s a l e of r e a l t y and not a contract t o agree on these terms i n the future. Then, assuming it is intended t o be a binding contract and a more formal agreement i s contemplated i n the future, equity w i l l grant specific perform- ance of the l e s s formal instrument. The Court then went on t o say: "* * * It is of course well-settled t h a t a contract t o be s p e c i f i c a l l y enforceable must be complete and c e r t a i n i n a l l e s s e n t i a l matters included within i t s scope. Nothing ,must be l e f t t o conjecture or surmise, o r be so vague a s t o make it impossible f o r the court t o glean the i n t e n t of the p a r t i e s from the instrument, o r the a c t s sought to be enforced. [Citations] "It i s equally well-settled t h a t absolute c e r t a i n t y and completeness i n every d e t a i l i s not a prerequisite of specific performance, only reasonable c e r t a i n t y and completeness being required. Those matters which a r e merely subsidiary, c o l l a t e r a l , o r which go t o the per- formance of the contract a r e not e s s e n t i a l , and therefore need not be expressed i n the informal agreement. [Citations] "fc 9 ; *The defendant stressed the f a c t there was no mention of taxes, i n t e r e s t , security, acreage t o be planted o r time of performance. However there a r e many cases holding t h a t these a r e a11 c o l l a t e r a l matters which a r e not e s s e n t i a l t o the v a l i d i t y of t h e contract. [Citations]" (Emphasis ours). A close examination of the buy-sell agreement involved here reveals by i t s terms, t h a t a l l of the agreed provisions a r e con- tained therein. The conduct of the p a r t i e s , the admissions i n the pleadings, the t r i a l record, and t h e f a c t the agreement was prepared by t h e s e l l e r s ' agent leaves no doubt t h a t it contained che o r a l agreements of the p a r t i e s and i s complete and c e r t a i n i n all e s s e n t i a l matters, a s required under Montana law, and is there- f o r e enforceable by specific performance. Issues 2 and 3 concern alleged abandonment by the purchaser and ~ u r c h a s e r ' s alleged breach i n so f a r a s it would prevent recovery based on not having made f i n a l payment on o r before January 5 , 1973, "time being the essence of the contract1', Reviewing the conduct of the parties: keeping i n mind t h a t purchaser had a problem liquidating h i s business and s e l l i n g h i s home i n California, t h a t purchaser promptly proceeded t o do so a f t e r execution of the buy-sell agreement, H e came back t o Montana i n November 1972 and was led t o believe t h a t these negotiations would lead t o a more formal contract f o r deed. A t t h a t time purchaser offered t o pay the e n t i r e $14,000 but consented t o another date t o accommodate s e l l e r s . It was conceded a t t r i a l t h a t purchaser had the a b i l i t y t o pay. Purchaser returned t o California and executed there the new contract when it was presented. Purchaser was then advised t h e s e l l e r s refused t o enter i n t o the contract f o r deed based on the f i v e acre release provision. S e l l e r s 1 agent assured purchaser the contract could be and would be amended, and an agree- ment would be reached, Thereafter, purchaser was pressed t o make the $14,000 payment due under the only contract he had, the buy-sell agreement. Purchaser complained he had no t i t l e assurance and was somewhat leery. He decided t o come t o Montana with a new truck, purchased f o r the ranch operation and loaded with f u r n i t u r e , t o personally close the deal. A l l p a r t i e s knew purchaser was enroute and purchaser was never advised not t o proceed, o r t h a t t h e contract was considered cancelled by s e l l e r s . There i s a dispute a s t o what was said a t the ranch the day the ~ a r t i e s met there, but they continued t o negotiate the same ~ evening on the contract f o r deed. Purchaser had alreay tendered the $14,000 cashier's check t o r e a l t o r and it was accepted by him. N o instructions t o return the money were given r e a l t o r by s e l l e r s u n t i l purchaser had returned t o California. There i s no evidence i n the record t h a t purchaser ever in- tended t o abandon the contract nor f o r t h a t matter the s e l l e r s . S e l l e r s kept pressing f o r payment which resulted i n bringing pur- chaser t o Montana, again. The record reveals r e a l t o r had d i f f i - c u l t y with s e l l e r s when s e l l e r s were asked t o produce merchantable t i t l e evidence. A s a matter of f a c t , neither s e l l e r s nor t h e i r agent ever produced evidence of good t i t l e f o r purchaser, even though t h e contract required s e l l e r s t o furnish such evidence. Considering purchaser's change of position t o h i s detriment, and constant urging and assurances given by s e l l e r s ' agent and s e l l e r s ' f a i l u r e t o advise purchaser t o the contrary o r put pur- chaser on notice, s e l l e r s would be estopped not t o comply with the contract. This would be p a r t i c u l a r l y t r u e a f t e r accepting payment. 17 Am J u r 2d, Contracts $ 9. So f a r a s t h e l a t e payment i s concerned Brown v. Griffin, 150 Mont. 498, 505, 436 P.2d 695, examined a contract with t h e i d e n t i c a l wording on furnishing of t i t l e by t h e s e l l e r and t h e i d e n t i c a l language "Time i s of the essence". It further concerned making of a f i n a l payment under t h e buy-sell agreement. It is i d e n t i c a l t o the i n s t a n t case insofar a s language is concerned. In Brown t h e Court explained t h a t under a contract which does not expressly provide f o r the time of performance of s e l l e r s ' agreement t o furnish an a b s t r a c t o r t i t l e insurance, a reasonable t i m e w i l l be implied. The Court then said: " 9 : * 9 : What i s a reasonable time i n a given case depends upon the t o t a l i t y of the surrounding c i r - cumstances. A s a general r u l e a contract t h a t an a b s t r a c t showing merchantable t i t l e s h a l l be fur- nished without specifying a p a r t i c u l a r time i s con- strued t o require such a b s t r a c t a s a condition prece- dent t o any l i a b i l i t y of the purchaser t o pay f o r the property. (55 Am.Jur., Vendor & Purchaser, 5 293, p. 732, and 310, p. 742; 91 C.J.S. Vendor & Purchaser, 5 100 (b) ( 1 ) , pp. 990,991. )* * *". A t o t a l i t y of the surrounding circumstances i n the i n s t a n t case would be open t o no other suggestion than the l a t e payment was excused under Brown, a s i d e from a waiver of l a t e payment by acceptance of the payment by the s e l l e r s ' agent. Therefore, with a finding of an enforceable buy-sell agree- ment, never abandoned, and l a t e payment excused, the judgment of the t r i a l court i s reversed and the buy-sell agreement i s ordered enforced by a decree of specific performance. The contract f o r deed was never agreed upon o r executed and it is of no force o r e f f e c t . The cause is remanded t o the d i s t r i c t court f o r f u r t h e r pro- ceedings not inconsistent with t h i s opinion. J u s t i c e W e Concur: 4 " -- - > , ---------------.---------------- ' Chief J u s t i c e U ; ---,-ciL-Crr---r-rk-L,'-----*------ I Justices.