Title: EDGAR v HUNT
Citation: N/A
Docket Number: 85-127
State: Montana
Issuer: Montana Supreme Court
Date: September 10, 1985

NO. 85-127 IN THE SUPREME COURT OF THE STATE OF MONTANA 1985 ALMA EDGAR, Plaintiff and Respondent, ERNEST EMMETT HUNT and JACQUELINE M. HUNT, husband & wife, Defendant and Appellant. APPEAL FROM: District Court of the Third Judicial District, In and for the County of Granite, The Honorable Robert Boyd, Judge presiding. COUNSEL OF RECORD: For Appellant: Ken H . Grenfell, Missoula, Montana For Respondent : Skelton & Cooley; Robert Skelton, Pdissoula, Montana Submitted on Briefs: June 6, 1985 Decided: September 10, 1985 I ; J 1985 Filed: Clerk M r . J u s t i c e L. C. Gulbrandson d e l i v e r e d t h e Opinion of t h e Court. Hunts appeal from an o r d e r g r a n t i n g p l a i n t i f f Edgars' motion f o r summary judgment by t h e District Court, Third J u d i c i a l D i s t r i c t , Granite County i n t h i s q u i e t t i t l e a c t i o n . Hunts contend t h a t adequate c o n s i d e r a t i o n supported t h e repurchase o p t i o n and t h a t t h e o p t i o n d i d n o t v i o l a t e e i t h e r t h e r u l e a g a i n s t p e r p e t u i t i e s o r t h e r u l e a g a i n s t r e s t r a i n t s on a l i e n a t i o n . W e reverse and remand f o r t r i a l . O n August 13, 1964, t h e Hunts s o l d th.e s u b j e c t r e a l p r o p e r t y by warranty deed t o Alma and O m e r Edgar i n j o i n t tenancy. Apparently, t h e p a r t i e s e n t e r e d i n t o a n o t a r i z e d agreement contemporaneously w i t h t h e execution of t h e deed. Under t h i s agreement, Edgars had t h e r i g h t t o use sewer f a c i l i t i e s on Hunts' land and t o t a k e water from a w e l l on t h e a d j a c e n t Hunt land. The agreement a l s o s t a t e d : Whereas, s a i d r e a l p r o p e r t y was s o l d t o F i r s t P a r t i e s [Edgars] by Second P a r t i e s [Hunts] w i t h t h e understanding t h a t Second P a r t i e s [Hunts] would have f i r s t o p t i o n t o purchase s a i d p r o p e r t y should F i r s t P a r t i e s [Edgars] d e s i r e t o s e l l s a i d p r o p e r t y i n t h e i r r e s p e c t i v e l i f e t i m e s ; That should F i r s t P a r t i e s [Edgars] s e l l s a i d r e a l p r o p e r t y , Second P a r t i e s [Hunts] a r e hereby granted an o p t i o n t o repurchase s a i d premises f o r t h e sum o f Seven Thousand D o l l a r s ($7,000.00) ; provided always t h a t F i r s t P a r t i e s [Edgars] s h a l l g i v e t o Second P a r t i e s [Hunts] t h i r t y (30) days w r i t t e n n o t i c e o f t h e i r i n t e n t i o n t o sell s a i d premises, and t h a t Second P a r t i e s [Hunts] s h a l l b e f o r e t h e e x p i r a t i o n of s a i d t h i r t y (30) day period have t h e r i g h t t o repurchase s a i d premises f o r t h e sum o f Seven Thousand D o l l a r s ($7,000.00) cash. T h e r e a f t e r , O m e r Edgar d i e d , t e r m i n a t i n g t h e j o i n t tenancy. H i s widow, Alma Edgar, now t h e s o l e owner o f t h e p r o p e r t y , on June 13, 1 9 8 4 , brought t h i s q u i e t t i t l e a c t i o n t o i n v a l i d a t e t h e o p t i o n agreement. A f t e r t h e Hunts answered h e r r e q u e s t f o r admissions, she f i l e d a motion f o r summary judgment contending; (1) t h a t t h e r e was no c o n s i d e r a t i o n f o r t h e repurchase option; and (2) t h a t t h e repurchase option v i o l a t e d s e c t i o n 70-1-405, MCA and i s t h u s i n v a l i d . O n January 29, 1985, t h e c o u r t granted Alma Edgar's motion f o r summary judgment. The c o u r t r u l e d t h a t t h e r e was no c o n s i d e r a t i o n t o support t h e o p t i o n , and secondly, t h a t it was a c o n d i t i o n r e s t r a i n i n g a l i e n a t i o n , and t h e r e f o r e void. O n February 5 , 1985, t h e D i s t r i c t Court e n t e r e d judgment q u i e t i n g t i t l e t o t h e property. From t h i s o r d e r and judgment Hunts appeal, r a i s i n g t h e following i s s u e s : (1) Whether t h e D i s t r i c t Court p r o p e r l y granted summary judgment holding t h a t t h e r e was no c o n s i d e r a t i o n s u p p o r t i n g t h e repurchase agreement. (2) Whether t h e District Court p r o p e r l y granted summary judgment holding t h a t t h e repurchase agreement was i n v a l i d because it v i o l a t e d t h e r u l e a g a i n s t r e s t r a i n t s on a l i e n a t i o n , o r t h e r u l e a g a i n s t p e r p e t u i t i e s . A s t o t h e f i r s t i s s u e , t h e D i s t r i c t Court e r r e d i n hol-ding t h e agreement unenforceable f o r a lack o f mutual c o n s i d e r a t i o n . The c o u r t ' s o r d e r reasoned " [ i l t i s obvious from reading t h e preamble t o t h e mutual agreement t h a t any c o n s i d e r a t i o n was t o be p a i d by t h e Edgars t o t h e Hunts and n o t v i c e v e r s a . " I n t h i s r e s p e c t , t h e c o u r t f a i l e d t o c o n s t r u e t h e c o n t r a c t according t o s e c t i o n 28-3-202, MCA, which r e q u i r e s t h a t " [ t l h e whole of a c o n t r a c t i s t o be t a k e n t o g e t h e r s o a s t o g i v e e f f e c t t o every p a r t if reasonably p r a c t i c a b l e , each c l a u s e h e l p i n g t o i n t e r p r e t t h e o t h e r . " The agreement, read i n i t s e n t i r e t y , set up o b l i g a t i o n s running both ways. The Hunts w e r e t o provide t h e Edgars with water and a c c e s s t o t h e i r sewer f a c i l i t y . I n r e t u r n , t h e Edgars paid a nominal c o n s i d e r a t i o n o f one d o l l a r "and o t h e r v a l u a b l e c o n s i d e r a t i o n , " agreed t o h e l p maintain t h e s e w e r and water f a c i l i t i e s , and granted t o t h e Hunts t h e repurchase option. F u r t h e r , t h i s Court has r u l e d t h a t even nominal c o n s i d e r a t i o n i s adequate t o support an o p t i o n c o n t r a c t . Van Atta v. S c h i l l i n g e r (Mont. 1981), 625 P.2d 73, 38 St.Rep. 426; Keaster v. Bozik (Mont. 1981), 623 P.2d 1376, 38 St.Rep. 194. W e hold t h a t t h e repurchase agreement was supported by adequate c o n s i d e r a t i o n a s p a r t o f t h e o r i g i n a l c o n t r a c t t o purchase. The D i s t r i c t Court e r r e d i n holding t h a t t h e pre-emptive r i g h t held by t h e Hunts was void a s a m a t t e r o f law and i n g r a n t i n g summary judgment on t h a t ground. The c o u r t c o r r e c t l y noted t h a t t h e r u l e a g a i n s t p e r p e t u i t i e s , 5 70-1-407, 408, MCA, d i d n o t apply t o t h e f i x e d p r i c e pre-emptive r i g h t a t i s s u e . I n re Murphy's E s t a t e (1935), 99 Mont. 1 1 4 , 43 P.2d 233. The e r r o r was i n i n t e r p r e t i n g s e c t i o n 70-1-405, MCA a s an a b s o l u t e p r o h i b i t i o n a g a i n s t any r e s t r a i n t on t h e a l i e n a t i o n o f r e a l p r o p e r t y . That s e c t i o n s t a t e s : "Conditions r e s t r a i n i n g a l i e n a t i o n , when repugnant t o t h e i n t e r e s t c r e a t e d , a r e void." (Emphasis added.) This -- Court r e a d s t h a t provision a s a statement o f t h e m a j o r i t y common law r u l e t h a t r e s t r a i n t s on a l i e n a t i o n , when reasonable, a r e v a l i d . Lawson v. Redmoor Co. (Wash-App. 1 9 8 4 ) , 679 P.2d 972. 61 AmJur.2d, P e r p e t u i t i e s 5121, p. 129 (1981). The question i s whether t h e p a r t i c u l a r r e s t r a i n t i s reasonable under t h e circumstances. Lawson, 679 P.2d a t 974. The Restatement o f Property, i n s e c t i o n 406, comment "i", sets f o r t h v a r i o u s f a c t o r s t h a t may be considered when determining t h e reasonableness of any p a r t i c u l a r r e s t r a i n t . I n a d d i t i o n t o t h e Restatement f a c t o r s , c a s e law has a r t i c u l a t e d two o t h e r s t o be considered when determining reasonableness. The type o f p r i c e set is important. I f t h e p r i c e i s f i x e d and g r e a t l y d i s p r o p o r t i o n a t e t o t h e market v a l u e o f t h e p r o p e r t y , t h i s s u p p o r t s a f i n d i n g o f unreasonableness. Ross v. Poneman (N.J.Super. 1 9 7 0 ) , 263 A. 2d 195, 199; I g l e h a r t v. P h i l l i p s (Fla. 1980) , 383 So. 2d 610, 614, 615. Secondly, t h e i n t e n t of t h e p a r t i e s c o n t r a c t i n g f o r t h e p r e e m p t i v e r i g h t i s a f a c t o r . I f , from t h e circumstances, it appears t h a t t h e p a r t i c u l a r r e s t r a i n t , o r t h e p r i c e s e t t h e r e b y , i s p r i m a r i l y f o r t h e purpose o f r e s t r a i n i n g t h e a l i e n a b i l i t y o f t h e p r o p e r t y , it w i l l weigh h e a v i l y a g a i n s t t h e v a l i d i t y of t h e r e s t r a i n t . O n t h e o t h e r hand, i f t h e circumstances suggest t h a t t h e r e s t r a i n t was f r e e l y e n t e r e d i n t o by mutual consent a s a normal i n c i d e n t o f an e q u a l bargaining r e l a t i o n s h i p i n o r d e r t o promote t h e o r i g i n a l t r a n s f e r o f t h e p r o p e r t y , t h e s c a l e s w i l l t i p back towards t h e reasonableness of t h e r e s t r a i n t , see Lawson, 679 P.2d a t 974-975. W e hold t h a t t h e repurchase o p t i o n d i d n o t v i o l a t e t h e r u l e a g a i n s t r e s t r a i n t s on a l i e n a t i o n . Respondent contends t h a t t h i s Court should follow t h e C a l i f o r n i a Court o f Appeals d e c i s i o n i n Wharton v. M o l l i n e t (Cal.App. 1951), 229 P.2d 861. I n Wharton, t h e C a l i f o r n i a c o u r t i n t e r p r e t e d s e c t i o n 711 of t h e C a l i f o r n i a C i v i l Code, which Montana adopted a s B 70-1-405, MCA, a s an a b s o l u t e r u l e a g a i n s t any r e s t r a i n t on t h e a l i e n a t i o n o f property. Wharton, 229 P.2d a t 863. Respondent contends t h i s Court i s bound t o follow t h e Wharton r u l e because o f o u r holding i n S t a t e v. Murphy (1977), 174 Mont. 307, 570 P.2d 1103, t h a t : Montana follows t h e r u l e of s t a t u t o r y c o n s t r u c t i o n where i n adopting a s t a t u t e from a sister s t a t e , t h e c o u r t adopts t h e c o n s t r u c t i o n placed upon it by t h e h i g h e s t c o u r t o f t h e s t a t e from which it was adopted. Murphy, 570 P.2d a t 1105. Though w e recognize t h e continuing v a l i d i t y o f t h e r u l e i n Murphy, it does n o t , r e q u i r e t h i s Court t o adopt t h e r u l e i n Wharton i n t h i s case. F i r s t , § 70-1-405 was adopted i n 1895, p r i o r t o t h e Wharton holding. Second, Wharton was n o t decided by t h e " h i g h e s t c o u r t " o f C a l i f o r n i a . T h i r d l y , Wharton appears t o be no longer followed i n C a l i f o r n i a , see Budny v. Bank o f America (Cal.App. 1 9 5 9 ) , 333 P.2d 812; lilogman v. Wells Fargo Rank and Union T r u s t Co. (Cal. App. The o r d e r o f t h e D i s t r i c t Court g r a n t i n g summary judgment t o t h e p l a i n t i f f i s r e v e r s e d , and t h i s c a s e i s 7 ' remanded. 5- q y C , & / I J u s t i c e ,' Chief J u s t i c e