Court Opinion

ID: 6477125
Source: CourtListenerOpinion
Date Created: 2022-06-26 22:44:07.255023+00
Date Added: 2024-06-11T15:54:00.245687
License: Public Domain

HOWARD, Chief Judge,
dissenting.
Prior to November 1972, Lazy V-P Ranches, Inc., the predecessor in interest to Melson, owned what is known as the Willow Springs Ranch. This was an extremely large holding, extending from the San Pedro River on the east, to and across U.S. Highway 60 (the Tueson-Florence highway) on the west, from Oracle Road on the south, north for approximately seven miles. This ranch contained both patented lands and lands leased from the State of Arizona.
In October 1972, Smith expressed an interest in purchasing the east end of the Willow Springs Ranch. He was shown the property which included approximately 600 acres of patented land along the San Pedro River.
In November, Lazy V-P applied to the state land department to exchange 5,000 acres of patented land for 5,000 acres of state land. This application was given No. 61-14. The 5,000 acres of patented land offered by Lazy V-P included the 600 acres which are in dispute here. These 600 acres are located along and in the bed of the San Pedro River and are, and were, an integral part of the operation of the east end of the ranch.
In December the Smiths looked at the land again, including the 600 acres and offered to purchase the property. During the negotiations between Smith and Lazy V-P, Smith was informed of the exchange application and was assured by Lazy V-P that if the exchange went through, Smith would get state leases to the 600 acres, and if the exchange did not go through, Smith would be sold the 600 acres for $25,000.
The parties entered into a sales transaction whereby Smith bought the east end of the ranch, excluding the 600 acres, for $400,000. They also entered into a “Range and Pasturing Agreement.” Since the language of this agreement is crucial to the decision of this case I set it out fully:
“This Agreement made and entered into this 15th day of January, 1973, by and between Lazy V-P Ranches, Inc., an Arizona Corporation, and John E. and Mary Lou Smith, husband and wife.
WITNESSETH:
WHEREAS, on the 15th day of January, 1973, Lazy V-P Ranches, Inc., as Seller, entered into an Escrow, being Escrow No. 06016596-0, Transamerica Title Insurance Company, Phoenix, Arizona, with John E. and Mary Lou Smith, husband and wife, as Buyers, for the purchase of what is known as the East End of the Willow Springs Ranch located near Oracle, Arizona, and
WHEREAS, the parties wish to establish certain continuing range and pasturing rights during the term of the note and mortgage which is the security for *139the unpaid balance of the purchase price in said Escrow No. 06016596-0, said note and mortgage not being fully due until 1980.
NOW, THEREFORE, for and in consideration of the terms, covenants and conditions contained in the said Escrow Instructions, which Instructions are a binding contract by and between the parties hereto, and for and in consideration of the mutual promises, covenants and conditions herein contained, it is mutually agreed as follows: [emphasis in original]
1. During the term of the said note and mortgage from John E. and Mary Lou Smith to Lazy V-P Ranches, Inc., the said John E. and Mary Lou Smith shall continue to have grazing rights on the remaining six hundred (600) acres of Patented land owned by Lazy V-P Ranches, Inc., said lands being located in Townships 7 and 8 S, Range 16 E, GSRB & M, Arizona, along the San Pedro River and within the current fence lines of the Willow Springs Ranch. Lazy V-P Ranches, Inc., contemplates disposing of this 600 acres, more or less, of Patented lands before the said note and mortgage are fully paid and/or satisfied. If Title is acquired to these 600 acres by the State of Arizona, Lazy V-P Ranches, Inc., agrees to exercise its preferential right to lease these lands, if any, and thereafter to assign the State Lease, or Leases, to Mr. & Mrs. Smith, without additional compensation. If, because they hold the adjoining State Leases, Mr. & Mrs. Smith have a better and prior right to lease these lands, Lazy V-P Ranches, Inc., agrees to assist Mr. & Mrs. Smith in any way possible to facilitate Mr. & Mrs. Smith’s acquisition of these State Leases. If the Exchange with the State of Arizona for the 600 acres, more or less, of Patented land is not approved, or for anv reason fails or is withdrawn, then Lazy V-P Ranches, Inc., agrees to sell to Mr. & Mrs. Smith and Mr. & Mrs. Smith agree to purchase the said 600 acres of land, more or less, at a price of $24,000.00, said price to include all improvements together with waters, water rights and other appurtenances to the said 600 acres.
If the Exchange with the State of Arizona is not consummated at the time the purchase price under said Escrow No. 06016596-0 is paid in full, then Lazy V-P Ranches, Inc., will sell and Mr. & Mrs. Smith will buy the said 600 acres, more or less, at a price of $24,000.00, said price to include all improvements, waters, water rights and appurtenances thereto to the said 600 acres. The terms of this sale shall be 28% down in cash and the balance in seven equal annual installments, together with 7% per annum interest in addition to principal.
2. Lazy V-P Ranches, Inc., shall continue to have stock-watering rights from the Tunnel Spring and Well located in the EV2 of Section 3, Township 8 S, Range 15 E, the said Tunnel Spring and Well being part of the State leased lands being assigned by Lazy V-P Ranches, Inc., to John E. and Mary Lou Smith. This right shall continue until the said note and mortgage are fully paid and satisfied.
3. John E. and Mary Lou Smith shall have stockwatering rights from the Cow-head waters located in the WV^SWVi of Section 23, Township 7 S, Range 15 E, which waters are necessary to effectively graze some of the lands being purchased by Mr. & Mrs. Smith from Lazy V-P Ranches, Inc. This right shall continue until the said note and mortgage are fully paid and satisfied.
The aforementioned Tunnel Spring and Well and the Cowhead waters are located on State lands, but it is the intention of the parties hereto to allow the continued use of water for stockwatering purposes from these wells, springs and waters as set forth in paragraphs 2 and 3 next above despite the fact that they may be a part of the lands being assigned under the said Escrow.
This Agreement shall be binding on the heirs, executors, administrators and assigns of the parties hereto.” (Emphasis added)
This agreement was amended in 1974 to provide for a more accurate description of *140the 600 acres. In 1975, the Arizona State Land Department was notified of the existence of the agreement and the amended legal description.
After filing the exchange application in 1972, Lazy V-P, and its successor, Melson, amended the application several times, always decreasing the acreage involved, but always keeping the 600 acres in the amended applications. In the seventh year after filing, on February 23, 1979, the state land commissioner entered his order rejecting application 61-14 and all amendments thereto. He further entered an order reclassifying the state land described in 61-14, thus leaving no identifiable state lands available for the proposed exchange.
Melson sought a rehearing of the order denying the exchange which was denied on February 23, 1979, and on April 9, 1979, Melson filed notices of appeal of both the order denying the exchange and the order denying the petition for rehearing. Melson did nothing further to perfect the appeals of these orders. He did not file a notice of appeal of the order re-classifying the state land.
On April 20,1979, Smith tendered to Mel-son escrow instructions and demanded performance of the land sale contract contained in the agreement. This tender was refused by Melson. Five days later, Melson delivered a letter to the state land department proposing the transfer to the state of the title to the 600 acres and receiving in return a four-year extension on the term of an existing state lease held by Melson. This proposal was not acceptable to the state.
The next day, Melson submitted another proposal to the state land department. In this proposal, he offered to deed the state the 600 acres in return for a one-year’s rental credit on two existing grazing leases held by Melson and a new ten-year grazing lease on an unidentified section of state land. This letter was not considered by the state land department to be an amendment of application of 61-14. However, it triggered negotiations between the state and Melson, which resulted in the state accepting a proposal whereby it agreed to accept the 600 acres in exchange for a one-year, rent-free extension of a grazing lease. Mel-son also agreed to dismiss his notices of appeal.
I believe that the majority has engaged in an unwarranted re-writing of the contract rather than merely interpreting it. At the time this agreement was entered into, the parties knew that application 61-14 was pending before the state land department. The agreement uses the word “the Exchange.” It also states that, “If the Exchange with the State of Arizona for'the 600 acres, more or less, of Patented land is not approved, or for any reason fails or is withdrawn ...” Lazy V-P Ranches, Inc., agrees to sell the land to the Smiths. It is clear to me that what is referred to in the agreement is the pending exchange application 61-14. The trial court and the majority have re-written this agreement to read: “any exchange” instead of “the Exchange” even though the majority apparently agrees with the trial court in its conclusion that the contract is unambiguous. It is also clear that the parties agreed that if application 61-14 or any amendments thereto did not result in an exchange of land, the Smiths were entitled to purchase it. The majority interprets the contract to read that if any exchange takes place, then the right to purchase the acreage is lost. If the parties had meant “any exchange” they could have easily said so.
I would reverse and remand the case with instructions to enter a judgment granting Smiths’ specific performance of the land sales contract embodied in the range and pasturing agreement.