Title: VANUDEN v HENDRICKSEN
Citation: N/A
Docket Number: 80-090
State: Montana
Issuer: Montana Supreme Court
Date: August 13, 1980

No. 80-90 IN THE SUPREME COURT OF THE STATE OF MONTANA 1980 HERMAN H . VAN UDEN et al., Plaintiffs and Appellants, VS . STANLEY C. HENDRICKSEN, et al., Defendant and Respondent. Appeal from: District Court of the Fourth Judicial ~istrict, In and for the County of Ravalli. Honorable James B. Wheelis, Judge presiding. Counsel of Record: For Appellants: John M. McRae, Hamilton, Montana For Respondent: Recht and Greef, Hamilton, Montana Submitted on briefs: July 22, 1980 M r . J u s t i c e John Conway Harrison d e l i v e r e d t h e Opinion of t h e Court. P l a i n t i f f s appeal from a decision of t h e D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , R a v a l l i County, which granted p a r t i a l summary judgment a g a i n s t p l a i n t i f f s and de- nied a motion f o r summary judgment a g a i n s t defendants i n a c o n t r a c t f o r deed d i s p u t e . P l a i n t i f f s Herman H. VanUden and Delores M. VanUden purchased r e a l property on a c o n t r a c t f o r deed from defen- d a n t s Stanley C. Hendricksen and Maxine J. Hendricksen. R e s t r i c t i v e covenants a f f e c t i n g t h e property w e r e recorded p r i o r t o t h e time of signing a c o n t r a c t f o r deed. Plain- t i f f s i n i t i a t e d t h i s a c t i o n t o remove t h e e f f e c t of the covenants from t h e i r property. The events leading t o t h i s d i s p u t e a r e a s follows: O n October 13, 1974, t h e p a r t i e s signed an e a r n e s t money agree- ment on which t h e following language was handwritten: " R e s t r i c t i o n s a r e a g a i n s t r a i s i n g p i g s o r ofensive [ s i c ] business such a s wrecking yard, s l a u t e r [ s i c J house, e t c . " On October 15, 1974, a c o n t r a c t f o r deed was drawn which in- cluded t h e following language: "The buyers agree t o comply with covenants placed on t h e property and recorded with t h e Clerk and Recorder of R a v a l l i County. I1 . . . The c o n t r a c t f o r deed was n o t signed' on October 15, 1974. O n October 18, 1974, r e s t r i c t i v e covenants were f i l e d a f f e c t i n g the real property i n question and o t h e r r e a l property i n defendants' development. On October 28, 1974, t h e c o n t r a c t f o r deed and n o t i c e of purchaser's i n t e r e s t w e r e signed by t h e p a r t i e s before a notary public. The n o t i c e of purchaser's i n t e r e s t was recorded on t h e same day. On June 20, 1978, defendants s e n t a n o t i c e of d e f a u l t t o p l a i n t i f f s enumerating s p e c i f i c covenants of t h e f i l e d r e s t r i c t i v e covenants t h a t were deemed t o be v i o l a t e d by p l a i n t i f f s . On September 1 4 , 1978, p l a i n t i f f s f i l e d s u i t asking t h a t t h e covenants f i l e d a g a i n s t t h e property be declared n o t applicable. O n December 15, 1978, i n response t o t h e complaint f i l e d by p l a i n t i f f s , defendants f i l e d an answer and counterclaim. The counterclaim a l l e g e d breach of cove- nants a s set f o r t h i n t h e n o t i c e of d e f a u l t and sought c a n c e l l a t i o n of t h e c o n t r a c t pursuant t o t h e terms of t h e c o n t r a c t . Cross-motions f o r summary judgment and f o r p a r t i a l summary judgment were f i l e d by t h e p a r t i e s and argued before t h e District Court. On December 7, 1979, t h e D i s t r i c t Court found (1) t h a t p l a i n t i f f s had n o t i c e of t h e covenants re- corded on October 18, 1974, and ( 2 ) t h a t t h e e a r l i e r docu- ment w a s merged i n t o t h e l a t e r on a l l t e r m s covered i n both. Defendants' motion f o r p a r t i a l summary judgment was granted, thereby dismissing p l a i n t i f f s ' complaint. The c o u r t a l s o denied p l a i n t i f f s ' motion f o r summary judgment and l e f t defendants' counterclaim still a t i s s u e t o be t r i e d a t a l a t e r date. P l a i n t i f f s appeal. Two i s s u e s a r e presented by p l a i n t i f f s : Whether t h e D i s t r i c t Court was c o r r e c t (1) i n granting defendants' mo- t i o n f o r p a r t i a l summary judgment, and ( 2 ) i n denying plain- t i f f s ' motion f o r summary judgment. Rule 5 6 ( c ) , M.R.Civ.P., provides t h a t summary judgment s h a l l be rendered i f : ". . . the pleadings, depositions, answers t o i n t e r r o g a t o r i e s , and admissions on f i l e , to- gether with t h e a f f i d a v i t s , i f any, show t h a t t h e r e i s no genuine i s s u e a s t o any m a t e r i a l f a c t and t h a t t h e moving p a r t y is e n t i t l e d t o a judgment as a matter of l a w . " The purpose of Rule 56 i s t o promptly dispose of ac- t i o n s t h a t do n o t p r e s e n t genuine i s s u e s of m a t e r i a l f a c t . This procedure e l i m i n a t e s unnecessary t r i a l delay and ex- pense. Bonawitz v. Bourke (1977), 173 Mont. 179, 567 P.2d 32; Silloway v. Jorgenson (1965), 146 Mont. 307, 406 P.2d 167. This Court has held t h a t t h e burden of proof is on t h e moving p a r t y t o show he i s e n t i t l e d t o summary judgment. Audit Services, Inc. v. Haugen (1979), Mont. , 591 P.2d 1105, 36 St.Rep. 451; Harland v. Anderson (1976), 169 Mont. 447, 548 P.2d 613. This burden is s a t i s f i e d when t h e moving p a r t y shows t h e absence of any genuine i s s u e as t o a l l m a t e r i a l f a c t s which, under a p p l i c a b l e p r i n c i p l e s of s u b s t a n t i v e law, e n t i t l e s him t o judgment a s a matter of l a w . Kober v. Stewart (1966), 148 Mont. 117, 417 P.2d 476. I n o t h e r words, t h e moving p a r t y must make a showing t h a t i s q u i t e c l e a r what t h e t r u t h i s and exclude any real doubt a s t o t h e existence of any genuine i s s u e of material f a c t . Kober , supra. W e f i n d t h a t defendants have met t h a t burden. The v a l i d i t y and genuineness of a l l t h e documents i n question w e r e admitted by both p a r t i e s . The s i g n a t u r e s and d a t e s of t h e documents were admitted. The recording d a t e s of t h e documents were admitted. These documents, t h e r e f o r e , stand f o r themselves. The D i s t r i c t Court c o r r e c t l y granted sum- mary judgment. P l a i n t i f f s argue t h a t they w e r e n o t provided with e i t h e r c o n s t r u c t i v e o r a c t u a l n o t i c e of t h e r e s t r i c t i v e covenants p r i o r t o t h e i r signing of t h e c o n t r a c t f o r deed and were, t h e r e f o r e , unaware of t h e a d d i t i o n a l burden on t h e property. W e f i n d t o t h e contrary. P l a i n t i f f s had a t least c o n s t r u c t i v e n o t i c e of t h e r e s t r i c t i v e covenants. P l a i n t i f f s argue t h a t t h e e a r n e s t money agreement l i s t of r e s t r i c t i v e covenants applicable t o t h e property was exclusive. They claim they were unaware of any a d d i t i o n a l covenants. Our reading of t h e e a r n e s t money agreement does n o t support t h a t conclusion. The agreement reads n o t a s an exclusive l i s t i n g b u t as examples of t h e type of covenants t h a t a r e t o be found on t h e property. The words "such a s " and "etc." c l e a r l y i n d i c a t e t h a t t h e p a r t i e s intended t h a t t h e s e w e r e not t h e exclusive l i s t i n g s . Further, t h e con- tract f o r deed r e f e r s t o r e s t r i c t i v e covenants on record-- n o t covenants of t h e e a r n e s t money agreement. The c o n t r a c t f o r deed s t a t e d , " [ t ] he buyers agree t o comply with cove- nants placed on -- t h e property - and recorded with t h e Clerk and Recorder of Ravalli County. . ." (Emphasis added.) The c o n t r a c t placed t h e p a r t i e s on n o t i c e t h a t i n f a c t r e s t r i c t i v e covenants w e r e on f i l e . Inquiry should have been made t o determine t h e s p e c i f i c s of t h e r e s t r i c t i v e covenants. It i s t h e o b l i g a t i o n of purchasers of r e a l property t o check t h e record t o determine whether t h e r e are r e s t r i c t i v e covenants t h e property . The c o n t r a c t f o r deed was executed on October 28, 1974. The covenants w e r e f i l e d on October 18, 1974. Ten days lapsed between t h e t i m e of t h e f i l i n g of t h e covenants and t h e signing of t h e con- t r a c t . The c o n t r a c t made reference t o t h e s e covenants. A l l of t h e p a r t i e s had c o n s t r u c t i v e notice. "Every conveyance of r e a l property acknowledged o r proved and c e r t i f i e d and recorded as pre- scribed by law, from t h e t i m e it i s f i l e d with t h e county c l e r k f o r record, i s c o n s t r u c t i v e n o t i c e of t h e contents thereof t o subsequent purchasers and mortgagees." Section 70-21- 302(1), MCA. ". . . 'conveyance' . . . embraces every i n - strument i n w r i t i n g by which any estate o r i n t e r e s t i n real property i s . . . encumbered o r by which t h e t i t l e t o r e a l property may be -- - -- -- a f f e c t e d . . ." Section 70-21-301, MCA. (Em- p h a s i s added. ) This d e f i n i t i o n of a conveyance of r e a l property is s u f f i - c i e n t l y comprehensive t o include t h e r e s t r i c t i o n s placed on t h e r e a l property which is t h e b a s i s of t h e p r e s e n t contro- versy. Kosel v. Stone (1965), 146 Mont. 218, 404 P.2d 894. "An instrument i s deemed t o be recorded when, being duly acknowledged o r proved and certi- f i e d , it i s deposited i n t h e county c l e r k ' s o f f i c e with t h e proper o f f i c e r f o r record." Section 70-21-209, MCA. "Once a n instrument is recorded a s prescribed by law, it imparted c o n s t r u c t i v e n o t i c e of its contents t o a subsequent purchaser of t h e property." Guerin v. Sun Burst O i l and Gas Co. (1923), 68 Mont. 365, 218 P. 949, 951. P l a i n t i f f s ' f a i l u r e t o i n q u i r e i n t o t h e record does n o t excuse them of t h e i r o b l i g a t i o n s here. Constructive n o t i c e i s imputed by t h e recording s t a t u t e . W e f i n d t h a t t h e l e n g t h of time between t h e f i l i n g of t h e r e s t r i c t i v e cove- nants and t h e signing of t h e c o n t r a c t f o r deed w a s s u f f i - c i e n t t o g i v e p l a i n t i f f s a reasonable opportunity t o make an inquiry. The i n i t i a l burden of proof on a motion f o r summary judgment a t t a c h e s t o t h e movant. That burden s h i f t s where t h e record d i s c l o s e s no genuine i s s u e s of material f a c t . The p a r t y opposing t h e motion must p r e s e n t f a c t s i n proper form r a i s i n g t h e i s s u e . Dooling v. Perry (1979), - Mont. , 600 P.2d 799, 36 St.Rep. 1518; National Gypsum Co. v. Johnson (1979) , - Mont. - , 595 P.2d 1188, 36 St.Rep. 1033; Harland v. Anderson, supra. The p a r t y opposing t h e motion must come forward with s u b s t a n t i a l evidence r a i s i n g t h e i s s u e . Rickard v. Paradis (1975), 167 Mont. 450, 539 P.2d 718; Roope v. Anaconda Company (1972), 159 Mont. 28, 494 P.2d 922. The f a c t s must be i n proper form and conclu- sions of law w i l l n o t s u f f i c e . The opposing p a r t y ' s f a c t s must be material and of a s u b s t a n t i a l nature, n o t f a n c i f u l , frivolous, gauzy o r merely suspicions. Silloway v. Jor- genson, supra. Once t h e burden has s h i f t e d , the p a r t y opposing t h e motion i s held t o a standard of proof which i s a s s u b s t a n t i a l as t h a t i n i t i a l l y imposed upon the moving party. Harland v. Anderson, supra. P l a i n t i f f s have n o t sustained t h e i r burden of proof by a l l e g i n g any f a c t s t h a t r a i s e an i s s u e of material fact. P l a i n t i f f s have alleged t h a t the f i l e d covenants were o t h e r than what they expected, b u t nowhere have they alleged o r shown by a f f i d a v i t o r by other means of submitting proof t h a t the e a r n e s t money agreement o r c o n t r a c t f o r deed isl i n v a l i d , ambiguous, imperfect o r mistaken. P l a i n t i f f s have a l s o f a i l e d t o show by a f f i d a v i t o r otherwise t h a t i n f a c t t h e r e s t r i c t i v e covenants were n o t recorded p r i o r t o t h e signing of the c o n t r a c t f o r deed. Finding defendants' motion f o r p a r t i a l summary judgment properly granted, w e now consider the d e n i a l of p l a i n t i f f s ' motion f o r summary judgment. Defendants a l l e g e i n t h e i r counterclaim a breach of c o n t r a c t by v i o l a t i o n of t h e covenants contained therein. P l a i n t i f f s deny v i o l a t i o n of t h e covenants. Defendants have provided a f f i d a v i t s which a l l e g e f a c t s t h a t would e s t a b l i s h , i f proved, a v i o l a t i o n of t h e covenants. The f a c t s alleged before t h e D i s t r i c t Court were i n dispute, and t h e D i s t r i c t Court refused t o g r a n t p l a i n t i f f s ' motion f o r summary judgment. P l a i n t i f f s d i d n o t dispute t h e existence of an i s s u e of material f a c t but argued t h a t summary judgment should have been granted be- cause t h e remedy sought by defendants was allegedly i m - proper. Defendants counterclaimed t o t h e complaint a l l e g i n g t h a t p l a i n t i f f s v i o l a t e d c e r t a i n r e s t r i c t i v e covenants and because of such v i o l a t i o n s , the c o n t r a c t f o r deed should have been declared f o r f e i t and canceled. There a r e no a l l e g a t i o n s t h a t p l a i n t i f f s were i n d e f a u l t of t h e i r pay- ments toward t h e purchase p r i c e . The D i s t r i c t Court held t h a t p l a i n t i f f s were n o t e n t i t l e d t o a summary judgment as a matter of l a w on t h e counterclaim. Such r u l i n g i s incon- s i s t e n t with our decision i n Reinke v. Biegel (1979), - Mont. , 604 P.2d 315, 36 St.Rep. 2322. The c o n t r a c t f o r deed was made and entered i n t o by t h e p a r t i e s , s u b j e c t t o r e s t r i c t i v e covenants. The n a t u r e of t h e covenants i s being contested herein, b u t whatever they a r e deemed t o be, t h e covenants w e r e n o t t h e main purpose of t h e c o n t r a c t and only i n c i d e n t a l t h e r e t o . The primary purpose of t h e c o n t r a c t i s defendants' d e l i v e r y of a deed i n exchange f o r p l a i n t i f f s ' payment of t h e t o t a l purchase p r i c e . W e held i n Reinke t h a t , where t h e a l l e g e d breach of covenants was n o t so s u b s t a n t i a l and fundamental a s t o d e f e a t t h e main o b j e c t o r purpose i n making t h e c o n t r a c t f o r deed and could be compensated f o r i n damages, a breach of t h e covenants does n o t warrant a remedy i.n f o r f e i t u r e . Defendants' pleadings i n d i c a t e t h a t such prayer f o r r e l i e f was made. W e a f f i r m t h e D i s t r i c t Court's d e c i s i o n with regard t o defendants' motion f o r p a r t i a l summary judgment. W e r e v e r s e t h e D i s t r i c t Court with r e s p e c t t o defendants' counterclaim f o r c a n c e l l a t i o n o r f o r f e i t u r e and remand t h e cause f o r f u r - t h e r proceedings c o n s i s t e n t with t h i s opinion. h W e concur: %&4p % & Chief J u s t i c e