Title: RAGEN v WESTON
Citation: N/A
Docket Number: 80-313
State: Montana
Issuer: Montana Supreme Court
Date: March 24, 1981

No. 80-313 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981 KATHERN We HUNSAKER RAGEN, Plaintiff, Cross-Defendant and Respondent, ARLO B. WESTON AND VERNETTA C. WESTON, Husband and wife, Defendant and Appellant. Appeal from: District Court of the First Judicial District, In and for the County of Broadwater, The Honorable Cardon Bennett, Judge presiding. Counsel of Record: For Appellant: Small, Hatch and Doubek, Helena, Montana For Respondent: IIooks & Budewitz, Townsend, Nontana Submitted on Briefs: January 22, 1981 Decided: MAR 2 5 1981 Mr. J u s t i c e Gene B. Daly d e l i v e r e d t h e Opinion of t h e Court. T h i s appeal a r i s e s from a p a r t i a l summary judgment e n t e r e d a g a i n s t t h e d e f e n d a n t s and i n f a v o r of t h e p l a i n t i f f by t h e D i s t r i c t Court of t h e F i r s t J u d i c i a l D i s t r i c t , i n and f o r t h e County of Broadwater. P l a i n t i f f , f o r m e r l y Kathern Hunsaker, now Kathern Ragen, was t h e e q u i t a b l e owner o f c e r t a i n r e a l p r o p e r t y i n Townsend, Montana, where s h e conducted a d r y goods b u s i n e s s . On J u l y 20, 1978, Ragen e n t e r e d i n t o an agreement t o s e l l t h e i n v e n t o r y of her b u s i n e s s and t o l e a s e f o r $500 a month t h e r e a l p r o p e r t y t o d e f e n d a n t s , A r l o and V e r n e t t a Weston. I n t h e l e a s e agreement, which e x p i r e d on February 1 5 , 1979, d e f e n d a n t s w e r e a l s o g r a n t e d a n i r r e v o c a b l e o p t i o n t o p u r c h a s e t h e b u i l d i n g and f i x t u r e s f o r a sum of $75,000, less a l l r e n t a l s p r e v i o u s l y p a i d . The agreement f u r t h e r provided t h a t , i f t h e o p t i o n was e x e r c i s e d , t h e Westons would pay t o Ragen 29 p e r c e n t of t h e t o t a l purchase p r i c e i n t h e year of t h e s a l e and t h e b a l a n c e would be p a i d over a p e r i o d of t e n y e a r s . The Westons, i n an a p p a r e n t e f f o r t t o e x e r c i s e t h e o p t i o n , advised Ragen t h a t t h e y had forwarded a $17,000 check t o t h e S t a t e Bank of Townsend t o be used a s a p o r t i o n of t h e downpayment. The p a r t i e s t h e n executed a c o n t r a c t f o r t h e s a l e of t h e r e a l p r o p e r t y , d a t e d February 22, 1979, i n accordance w i t h t h e terms provided i n t h e l e a s e and o p t i o n t o p u r c h a s e . The W e s t o n s p a i d t h e i r f i r s t i n s t a l l m e n t of $500 under t h e c o n t r a c t on o r about March 1, 1979. However, when Ragen went t o t h e S t a t e Bank o f Townsend t o pick up t h e $17,000 downpayment on March 9, 1979, s h e was informed t h a t t h e check would n o t be honored because t h e r e were i n s u f f i c i e n t funds i n t h e account on which it was w r i t t e n . F a i l i n g t o r e c e i v e t h e agreed upon downpayment, Ragen n o t i f i e d d e f e n d a n t s i n w r i t i n g on March 1 3 , 1979, t h a t t h e c o n t r a c t was deemed r e s c i n d e d and t h a t s h e was t r e a t i n g t h e $500 a l r e a d y p a i d a s r e n t f o r t h e month of March. P l a i n t i f f f u r t h e r demanded t h a t d e f e n d a n t s v a c a t e t h e premises on o r b e f o r e March 3 1 , 1979. On November 7 , 1979, Ragen f i l e d a complaint a g a i n s t t h e Westons s e e k i n g payment f o r r e a l p r o p e r t y t a x e s l e v i e d and a s s e s s e d a g a i n s t t h e p r o p e r t y f o r and d u r i n g t h e term of t h e l e a s e a s provided i n t h e l e a s e agreement; payment f o r t h e r e a s o n a b l e v a l u e of c e r t a i n f i x t u r e s s o l d by d e f e n d a n t s d u r i n g t h e i r occupancy of t h e premises; and payment f o r t h e r e a s o n a b l e v a l u e of a t y p e w r i t e r d e f e n d a n t s r e f u s e d t o r e t u r n upon v a c a t i n g t h e p r o p e r t y . The Westons denied any i n d e b t e d n e s s t o p l a i n t i f f and f i l e d a c o u n t e r c l a i m a l l e g i n g t h a t Ragen had w r o n g f u l l y r e s c i n d e d t h e a g r e e m e n t t o purchase t h e p r o p e r t y which r e s u l t e d i n damages i n t h e amount of $25,000. I n a d d i t i o n , t h e Westons a l l e g e d t h a t d u r i n g t h e term of t h e l e a s e t h e y p l a c e d approximately $6,000 worth of f i x t u r e s i n t h e b u i l d i n g and t h a t by reason of t h e wrongful r e s c i s s i o n and p l a i n t i f f ' s r e t e n t i o n of t h e s e f i x t u r e s , t h e y had been f u r t h e r damaged i n t h a t amount . Following d i s c o v e r y , p l a i n t i f f f i l e d a motion f o r summary judgment on a l l l i a b i l i t y i s s u e s . D e f e n d a n t s r e s p o n d e d w i t h t h e i r m o t i o n f o r summary judgment w i t h r e s p e c t t o Ragen's c l a i m f o r t h e r e a l p r o p e r t y t a x e s . The D i s t r i c t C o u r t , on May 22, 1980, g r a n t e d Ragen's motion f o r summary judgment a s t o her c l a i m f o r t h e r e a l p r o p e r t y t a x e s , w i t h t h e e x a c t amount of t h e t a x e s t o be determined a t t r i a l o r a t an e v i d e n t i a r y h e a r i n g . The c o u r t f u r t h e r o r d e r e d t h a t t h e motion f o r summary judgment on t h e i s s u e of d e f e n d a n t s ' l i a b i l i t y f o r t h e v a l u e of t h e t y p e w r i t e r and t h e f i x t u r e s be d e n i e d i n t h a t m a t e r i a l i s s u e s of f a c t s t i l l r e m a i n . The c o u r t t h e n g r a n t e d summary judgment f o r p l a i n t i f f on both of d e f e n d a n t s ' c l a i m s f o r damages and o r d e r e d t h a t t h e c o u n t e r c l a i m s be d i s m i s s e d . Judgment was s o e n t e r e d on May 28, 1980, and d e f e n d a n t s now a p p e a l . The f o l l o w i n g i s s u e s a r e p r e s e n t e d f o r our review: 1. Did t h e D i s t r i c t Court e r r i n g r a n t i n g p l a i n t i f f summary judgment on t h e i s s u e of d e f e n d a n t s ' l i a b i l i t y f o r t h e payment of t h e r e a l p r o p e r t y t a x e s ? 2. Did t h e D i s t r i c t C o u r t e r r i n r e j e c t i n g d e f e n d a n t s ' c o u n t e r c l a i m s f o r damages r e s u l t i n g f r o m a w r o n g f u l r e s c i s s i o n o f t h e p u r c h a s e a g r e e m e n t and f o r damages r e s u l t i n g from a wrongful r e t e n t i o n of c e r t a i n f i x t u r e s ? T h i s Court h a s c o n s i s t e n t l y h e l d t h a t t h e p a r t y moving f o r summary judgment has t h e burden o f showing t h e absence of any genuine i s s u e of m a t e r i a l f a c t and t h a t t h e movant is e n t i t l e d t o judgment a s a m a t t e r o f law. Reaves v. Reinbold ( 1 9 8 0 ) , Mont. , 615 P.2d 896, 37 St.Rep. 1500; Harland v. Anderson ( 1 9 7 6 ) , 169 Mont. 447, 548 P.2d 613; Kober v. S t e w a r t ( 1 9 6 6 ) , 148 Mont. 117, 417 P.2d 476. Here, t h e D i s t r i c t Court could p r o p e r l y g r a n t t h e summary judgment on t h e i s s u e o f d e f e n d a n t s ' l i a b i l i t y f o r t h e p r o p e r t y t a x e s o n l y by f i n d i n g t h a t t h e l e a s e and o p t i o n t o purchase agreement e n t e r e d i n t o by t h e p a r t i e s r e q u i r e d d e f e n d a n t s t o make t h e payments. The agreement is c l e a r and s p e c i f i c a l l y p r o v i d e s a s f o l l o w s : "By r e a s o n of c o n c e s s i o n s made by Hunsaker w i t h r e s p e c t t o t h e o p t i o n t o p u r c h a s e below set f o r t h , Westons a g r e e t o pay t h e r e a l p r o p e r t y t a x e s l e v i e d and a s s e s s e d a g a i n s t t h e premises d u r i n g t h e term o f t h e i r l e a s e , and a l s o a g r e e t o p a y H u n s a k e r ' s f i r e i n s u r a n c e f o r t h e p e r i o d o f s a i d l e a s e . Hunsaker s h a l l be e n t i t l e d upon r e c e i p t of t a x n o t i c e o r i n s u r a n c e premiums o r b o t h , t o make demand of Westons f o r payment o f t h e s e i t e m s , and Westons a g r e e t o pay t h e same." Defendants m a i n t a i n t h a t t h e agreement t o pay t h e r e a l p r o p e r t y t a x e s was c o n d i t i o n e d upon t h e i r e x e r c i s i n g t h e o p t i o n t o purchase and t h a t , a s a r e s u l t o f t h i s a s s e r t i o n , a m a t e r i a l i s s u e of f a c t remains t o be r e s o l v e d . W e must d i s a g r e e . I t is fundamental t h a t t h e language of a c o n t r a c t w i l l govern its i n t e r p r e t a t i o n i f t h a t language is c l e a r and e x p l i c i t and does n o t r e s u l t i n an a b s u r d i t y . See s e c t i o n 28-3-401, MCA; Danielson v. Danielson ( 1 9 7 7 ) , 172 Mont. 55, 58, 560 P.2d 893, 894; Nelson v. Combined I n s u r a n c e Company of America ( 1 9 7 0 ) , 155 Mont. 105, 113, 467 P.2d 707, 712. The p e r t i n e n t language i n t h i s i n s t a n c e is unequivocal, unambiguous, and r e q u i r e s no i n t e r p r e t a t i o n . I t s p e c i f i c a l l y s t a t e s t h a t "Westons a g r e e t o pay t h e r e a l p r o p e r t y t a x e s l e v i e d and a s s e s s e d a g a i n s t t h e premises d u r i n g t h e term of t h e i r l e a s e . " Nowhere i n t h e c o n t r a c t is t h e r e a d d i t i o n a l language i n d i c a t i n g t h a t t h i s p r o v i s i o n is q u a l i f i e d by a c o n d i t i o n t h a t t h e o p t i o n t o purchase f i r s t be e x e r c i s e d . The a p p l i c a b l e p r o v i s i o n must be g i v e n e f f e c t a s w r i t t e n by t h e p a r t i e s ; t h u s , t h e D i s t r i c t Court p r o p e r l y g r a n t e d p l a i n t i f f summary judgment on t h e i s s u e o f l i a b i l i t y . The s e c o n d i s s u e c o n c e r n s d e f e n d a n t s 1 c l a i m o f wrongful t e r m i n a t i o n . S e c t i o n 28-2-1711, MCA, p r o v i d e s t h a t a p a r t y may r e s c i n d a c o n t r a c t i n t h e f o l l o w i n g c a s e s : " ( 1 ) i f t h e c o n s e n t of t h e p a r t y r e s c i n d i n g o r of any p a r t y j o i n t l y c o n t r a c t i n g w i t h him was g i v e n by m i s t a k e o r o b t a i n e d through d u r e s s , menace, f r a u d o r undue i n f l u e n c e e x e r c i s e d by o r w i t h t h e connivance of t h e p a r t y a s t o whom he r e s c i n d s o r of any o t h e r p a r t y t o t h e c o n t r a c t j o i n t l y i n t e r e s t e d w i t h such p a r t y ; " ( 2 ) i f , through t h e f a u l t of t h e p a r t y a s t o whom he r e s c i n d s , t h e c o n s i d e r a t i o n f o r h i s o b l i g a t i o n f a i l s i n whole o r i n p a r t ; " ( 3 ) i f such c o n s i d e r a t i o n becomes e n t i r e l y void from any c a u s e ; " I n t h i s i n s t a n c e , p l a i n t i f f , a f t e r being informed by d e f e n d a n t s t h a t t h e agreed downpayment on t h e o p t i o n t o purchase had been d e p o s i t e d a t t h e S t a t e Bank of Townsend, executed t h e c o n t r a c t a t i s s u e . T h i s c o n t r a c t provided t h a t t h e $75,000 purchase p r i c e was t o be p a i d a s follows: "A. The sum of Three Thousand two hundred f i f t y D o l l a r s ($3,250.00), t h e r e c e i p t of which is hereby acknowledged by s e l l e r , s a i d sum r e p r e s e n t i n g t h e c r e d i t g i v e n t o buyers f o r r e n t a l s h e r e t o f o r e p a i d under t h e l e a s e and o p t i o n of J u l y 20, 1978. "B. The sum of Seventeen thousand D o l l a r s ($17,000) upon e x e c u t i o n of t h i s agreement, t h e r e c e i p t t h e r e o f being hereby acknowledged by s e l l e r . "C. The b a l a n c e of F i f t y - f o u r thousand seven hundred f i f t y D o l l a r s ($54,750.00), t o g e t h e r w i t h i n t e r e s t . . . t o be p a i d i n r e g u l a r monthly i n s t a l l m e n t s , each i n t h e amount of Five hundred D o l l a r s ($500.00), t h e f i r s t monthly i n s t a l l m e n t being due and payable on t h e 1st day of March, 1979." Upon reading t h e c o n t r a c t , it is obvious t h a t t h e $17,000 check d e p o s i t e d i n t h e S t a t e Bank of Townsend was an e s s e n t i a l p a r t of t h e c o n s i d e r a t i o n t o be r e c e i v e d by p l a i n t i f f and an inducement f o r e x e c u t i n g t h e agreement. I t is u n c o n t r o v e r t e d , however, t h a t p l a i n t i f f never o b t a i n e d t h i s money because t h e check was dishonored due t o t h e l a c k of s u f f i c i e n t funds. S i n c e t h e c o n s i d e r a t i o n f a i l e d , t h e remedy of r e s c i s s i o n was p r o p e r l y a v a i l a b l e . S e c t i o n 28-2-1713, MCA, s p e c i f i e s how r e s c i s s i o n is accomplished : " R e s c i s s i o n , when n o t a f f e c t e d by c o n s e n t , can be accomplished o n l y by t h e use on t h e p a r t of t h e p a r t y r e s c i n d i n g of r e a s o n a b l e d i l i g e n c e t o comply w i t h t h e f o l l o w i n g r u l e s : " ( 1 ) H e m u s t r e s c i n d p r o m p t l y upon d i s c o v e r i n g t h e f a c t s which e n t i t l e him t o r e s c i n d i f he is f r e e from d u r e s s , menace, undue i n f l u e n c e , o r d i s a b i l i t y and is aware of h i s r i g h t t o r e s c i n d . " ( 2 ) H e must r e s t o r e t o t h e o t h e r p a r t y e v e r y t h i n g of v a l u e which he h a s r e c e i v e d from him under t h e c o n t r a c t o r must o f f e r t o r e s t o r e t h e same, upon c o n d i t i o n t h a t such p a r t y s h a l l do l i k e w i s e , u n l e s s t h e l a t t e r is unable or p o s i t i v e l y r e f u s e s t o do so." Here, r e s c i s s i o n was prompt. Within t h r e e d a y s of having t h e downpayment check d i s h o n o r e d , p l a i n t i f f d e l i v e r e d a w r i t t e n n o t i c e of r e s c i s s i o n t o d e f e n d a n t s and t h e i r a t t o r n e y s e t t i n g f o r t h t h e g r o u n d s f o r t h e a c t i o n . Furthermore, t h e s t a t u s quo e x i s t i n g p r i o r t o t h e c o n t r a c t t o purchase was p r e s e r v e d i n t h a t t h e $500 i n s t a l l m e n t p a i d by d e f e n d a n t s was c r e d i t e d a s r e n t f o r March 1979, a l l o w i n g them t o remain on t h e premises u n t i l t h e end of t h e month. S e c t i o n 28-2-1713, MCA, must be deemed s a t i s f i e d . Defendants argue t h a t w e should look s o l e l y t o t h e d e f a u l t c l a u s e c o n t a i n e d i n t h e agreement t o purchase i n d e t e r m i n i n g R a g e n ' s p r o p e r remedy. I n r e j e c t i n g t h i s argument, we n o t e t h a t t h i s c a s e d o e s n o t involve a mere d e f a u l t i n t h e payment of an i n s t a l l m e n t b u t concerns t h e t o t a l f a i l u r e of c o n s i d e r a t i o n e s s e n t i a l f o r t h e v a l i d i t y of t h e c o n t r a c t . The c o n s i d e r a t i o n having f a i l e d , t h e remedy o f r e s c i s s i o n was a v a i l a b l e a n d , when e x e r c i s e d , t h e c o n t r a c t , i n c l u d i n g t h e d e f a u l t c l a u s e , was e x t i n g u i s h e d . See s e c t i o n 28-2-1701(2), MCA. Defendants f u r t h e r argue t h a t t h e S t a t e Bank o f Townsend e r r o n e o u s l y r e f u s e d t o honor t h e $17,000 check; t h u s , it was t h e Bank's f a u l t , n o t t h e i r s , t h a t t h i s c o n s i d e r a t i o n f a i l e d . W e acknowledge t h i s c o n t e n t i o n b u t must conclude t h a t any c l a i m f o r damages based on t h i s a s s e r t i o n l i e s a g a i n s t t h e Bank f o r wrongful dishonorment, n o t a g a i n s t p l a i n t i f f f o r w r o n g f u l t e r m i n a t i o n o f t h e c o n t r a c t a t i s s u e . W e f i n d no e r r o r i n t h e D i s t r i c t C o u r t ' s d i s m i s s a l of d e f e n d a n t s ' c l a i m s f o r damages b a s e d upon a w r o n g f u l r e s c i s s i o n and t e r m i n a t i o n o f t h e c o n t r a c t . The Westons' f i n a l c l a i m f o r damages a r i s e s from p l a i n t i f f ' s a l l e g e d wrongful r e t e n t i o n of f i x t u r e s p l a c e d on t h e premises by d e f e n d a n t s d u r i n g t h e i r occupancy. The D i s t r i c t Court d i s m i s s e d t h i s c l a i m , f i n d i n g it w i t h o u t b a s i s . W e a g r e e w i t h t h e c o u r t ' s c o n c l u s i o n . Defendants contend t h a t p l a i n t i f f w i l l be u n j u s t l y e n r i c h e d i f she is allowed t o r e t a i n t h e f i x t u r e s . What d e f e n d a n t s f a i l t o r e a l i z e , however, is t h a t a f i x t u r e , by d e f i n i t i o n , is p a r t o f t h e r e a l p r o p e r t y t o be r e t a i n e d by t h e owner of t h e premises a t t h e e x p i r a t i o n of t h e l e a s e . See s e c t i o n s 70-15-101, 70-15-103, and 70-18-101, MCA. Defendants a r g u e t h a t even though t h e f i x t u r e is c o n s i d e r e d p a r t o f t h e r e a l t y , a t e n a n t under c e r t a i n c i r c u m s t a n c e s is s t i l l e n t i t l e d t o its removal, c i t i n g s e c t i o n 70-18-102, MCA: "A t e n a n t may remove f r o m t h e d e m i s e d premises, any t i m e d u r i n g t h e c o n t i n u a n c e of h i s term, a n y t h i n g a f f i x e d t h e r e t o f o r t h e purposes of t r a d e , manufacture, ornament, o r domestic use i f t h e removal can be e f f e c t e d w i t h o u t i n j u r y t o t h e p r e m i s e s u n l e s s t h e t h i n g has, by t h e manner i n which it is a f f i x e d , become a n i n t e g r a l p a r t o f t h e premises." W e a g r e e t h a t a t e n a n t is g e n e r a l l y accorded t h e r i g h t t o remove c e r t a i n t r a d e f i x t u r e s ; however, t h i s r i g h t is n o t w i t h o u t l i m i t a t i o n . A s t h e above-cited s t a t u t e i n d i c a t e s , t h e removal is t o be accomplished d u r i n g " t h e c o n t i n u a n c e of h i s term." Defendants have a l l e g e d no e f f o r t being made t o remove t h e f i x t u r e s p r i o r t o v a c a t i n g t h e premises; nor have t h e y a l l e g e d t h a t p l a i n t i f f i n t e r f e r e d w i t h such an e f f o r t . I n f a c t , d e f e n d a n t s waited u n t i l J a n u a r y 2, 1980 (some n i n e months a f t e r l e a v i n g t h e p r e m i s e s ) , t o a s s e r t any c l a i m . F u r t h e r m o r e , t h e c l a i m f i n a l l y a s s e r t e d was f o r t h e r e a s o n a b l e v a l u e of t h e f i x t u r e s based upon an a l l e g a t i o n of wrongful r e s c i s s i o n and n o t f o r removal of t h e improvements a s t r a d e f i x t u r e s . On t h e s u b m i t t e d r e c o r d , s e c t i o n 70-18-102, MCA, h a s no a p p l i c a t i o n t o t h i s p r o c e e d i n g , and d e f e n d a n t s ' c l a i m was p r o p e r l y r e j e c t e d . The judgment of t h e D i s t r i c t Court is a f f i r m e d . J J u s t i c e We concur: Chief L Justice . . - - f 4 L . d . . . - < - " ' > I / & / / - -.