Court Opinion

ID: 878295
Source: CourtListenerOpinion
Date Created: 2013-06-04 22:32:16.305921+00
Date Added: 2024-06-11T13:13:32.000781
License: Public Domain

NO. 84-233
               IN THE SUPREME COURT OF THE STATE OF MONTANA
                                      1984

DONALD D. TODD and 3OSALIE M. TODD,
                Plaintiffs and Respondents.

HARVEY F. RERNER and ALICE V.
BERNER,
                Defendants and Appellants.

APPEAL FROM:    District Court of the Sixth Judicial District,
                In and for the County of Sweet Grass,
                The Honorable Byron Robb, Judge presiding.

COUNSEL OF RECORD:

         For Appellant:
                Gregory 0 . Morgan, Rozeman, Montana

         For Respondent :
                Josephson   &   Fredricks; Conrad B.   redr ricks, Rig Timber,
                Montana

                                      Submitted on Briefs: Sept. 27, 1984
                                        Decided:   December 28, 1984

           DEC 2 . 984
                 !
Filed:

                                      Clerk
Mr. Justice John Conway Harrison delivered. the Opinion of the
Court.
         This is an appeal for the District Court of the Sixth
Judicial- District of the State of Montana, in and for the
County of Sweet 'Grass, involving a rescission of a contract
for the purchase of a ranch.           We affirm.
         In November of 1981, the respondents, Todds and defen-
dants, Rerners entered into an agreement, whereby the Berners
agreed    to purchase the Todds' ranch for a total purchase
price of $2,250,000, with a 29% down payment and the balance
to be carried on the contract for deed by the sellers (Todds)
at 118 on all but $300,C00 thereof for a period of twenty
vears with a ten-year balloon.             Marjorie Sizemore, a real
estate agent, represented both parties in this transaction.
Provisions were      included to accommodate a         "three-cornered
exchange" of the Berners' Round Fiver Ranch if desired by the
Berners.     On the same date, Bob Siebrasse and Sons made an
offer to the Berners on the Rou.nd River Ranch and deposited
an earnest money check for $1.00,000 with Lyle Watson Realty.
This information had been communicated to the Berners through
their     real   estate   agent,   Marjorie     Sizemore, before   the
Rerners signed the agreement with the Todds.             The offer by
Bob Siebrasse and Sons on the ranch was entirely consistent
with the listing agreement that the Eerners had signed on
their ranch.     The sale of the Berners' Round River Ranch fell
through one month later, through no fault of the Todds.
         On February 3, 1982, the Berners met with the Todds and
Margorie Sizemore in Billings, Montana.             The Berners' brief
indicates, "At that time they (Berners) felt they owed Todds
something for their        (Todds' )    hospi-tality and showing them
(Berners) around the ranch."            The Todds felt they had a lot
more coming and asserted to the Berners that they had con-
sulted       an   attorney   and    were    entitled     to   the   $100,000
downpayment agreed upon in the contract.                The. Todds qot the
Rerners to sign a note in the amount of $32,500 to avoid a
suit over the $100,000 downpayment.                 At that same time the
agreement between the Todds and the Berners was marked "Void"
and   initialled by      both      parties.        Thereafter the Rerners
refused to pay the note when due, and this action ensued.
        The Todds filed a complaint to recover on the promisso-
ry    note    executed   and    delivered     to    them by   the Berners.
Thereafter, the Eerners interposed an answer, raising two
affirmative defenses seeking rescission of the promissory
note.    Depositions were taken and the Todds filed a motion
for summary judgment.          No response to the motion for summary
judgment was filed by the Berners.                 Neither the Berners nor
their attorney appeared at the hearing on the motion.                    At
that point the Todds presented their argument for summary
judgment and        the court took the motion under advisement.
Thereafter, on March 15, 1984 the court, ex parte, entered an
order giving the Berners until March 26 to respond to the
motion by brief 2nd allowing the Berners to present oral
argument on the motion on March 29, 1984.
        The Berners filed a motion for leave to file a third-
party complaint against Marjorie              Sizemore.       On March 29,
1984, the motion for summary judgment of the Todds was again
argued to the court, with the Berners' counsel. present.                 On
March 30, 1984, the trial court granted Todds' motion for
summary judgment, denied motion for leave to file a third-
party    complaint against Sizemore and this appeal. ensued.
        Three issues are presented for review:
Hon. John C. Harrison                     CORRECTION. In preparing this opinion for pub-
Justice, Supreme Court                    lication, we noted in our verification of titles and
Room 414 Justice Building                 citations the matters listed below. Corrections have
215 North Sanders                         been made on our copy o the opinion.
                                                                       f
Helena, Montana 59620

     January 25, 1985

     Todd v. Berner, No. 84-233, Dec. 28, 1984

Page 4, line 4 from bottom --- 280 P. 761 should read 228 P .                761.

Page 7, line 11 from bottom --- section 28-2-1725 should read section
     28-2-1715.

                                           WEST PUBLISHING COMPANY
                                                       Box 43526
                                                  St. Paul. MN 5 5 l f i A
      (1) Does mistake or fraud as to the enforceability of
the buy/sell constitute grounds for rescinding or voiding the
compromise and settlement?
      (2) Are facts regarding fraud and/or mistake in dispute
which prevent summary iudgment?
      (3)     Should   the     third-party   co~.pI.aint have   been
permitted?
      It should be noted that the respondents, Todds, filed a
complaint to recover on a promissory note executed and deliv-
ered to them by the defendants, Berners.           Thereafter, the
Eerners interposed an answer, raising two affirmative defens-
es seeking rescissi.on of the promissory note.           Depositions
were taken of the T0dd.s and. P3a.rjori.e Sizemore.       The Tod.ds
then filed a motion for summary iudgment and served the same
within ten days before the time fixed for the hearing.            As
previously noted, there was no response to the Todds' motion
for summary judqment by the Berners and neither they nor
their attorney appeared.         However the court, upon learning
the facts why the appellants' counsel overlooked this matter,
al.J..owed
         Berners' counsel to present a brief and argue against
the granting of summary judgment.
      While    the Todds argue the District Court erred           in
al.lowing the Ferners to submit briefs and argue the summary
judgment motion of the Todds late, we note there are no
Montana cases on point in this matter.            However, several
cases such as Foster Apiary, Jnc. v. Hubbard Apiaries, Inc.,
(Mont. 1981), 630 P.2d 1213, 38 N.Y. St. Rep. 1025; Pacific Accep-
                                                  2 a2
tance Corp. v. McCue      (1924), 71 Mont. 99, 24-0 P. 761; and
Robinson v.    Peterson      (1922), 63 Mont. 247, 206 P .    1092,
recognized that there is judicial discretion invol-ved by the
trial court and it may set aside a           iudgment committed in
error or because of excusable neglect under Rule             GOlb) ,
M.R.Civ.P.
         For the above reason we find no merit in the argument
of respondents that the trial court erred in allowing appel-
lants to brief and argue the point.
      We find, however, it is clear from the depositions that
appellants issued an? delivered the promissory note, which is
the subject of this action, as a compromise settlement of the
respondents' claims against the appellants, arising from an
agreement of the Berners to buy the Todds' ranch.        Whether or
not the "earnest money receipt and agreement to sell or
purchase," considered as an exhibit to the depositions, might
have ultimately been proved, after litjqation, to be unen-
forceable     against     appe13ants   is   immaterial   under   the
circumstances.
      We fjnd the relinquishment of the Todds' claim against
the Berners, even though the claim may not have been ul-ti-
mately    proved   valid,   is   sufficient consideration of     the
promissory note.        See Murray v. White (1910), 4 2 Mont. 423,
113 P. 754, and Brown v. Jennett (Iowa 1906), 106 N . W .        747.
         The court found the Todds were in good faith when they
alleged they had        a valid claim under the "earnest money
receipt and agreement to sell and purchase" referred to in
the depositions. Whether this qood faith on their part came
from the fact that they consulted an attorney or not, the
record indicates the contract was enforceable against both
parties.     As the record indicates if the Todds had not felt
they had an enforceable agreement, they would not have sold
their cattle; they would have kept their hay; they would not
have dispossessed their tenants; and they would not have
ta.ken their    ranch   off   the   market.   See   15A   Arl.Jur.2~3
Compromise and Settlement, 5 s 16 and 17 at 789, ?90.
      The appellants argue the stake neutral to the parties
as to the enforceability of a buy/sell was material to the
compromise and settlement between the two parties.             They
argue that the Todds could not, in good faith, assert the
validity of the buy/sell and Eerners would not agree to pay
$32,500 unless they thought the buy/sell was enforceable.
The validity of the buy/sell was the substance upon which the
compromise was based.
      Appellants further argue there was fraud. as a qrounds
for the rescission of the compromise and            settlement.   In
Rclqers v. Swingley     (Mont. 1983) 670 P.2d 1386, 40 St..Rep.
1676, this Court reversed a summary judgment in an action
based upon a compromise of a written lease which was rep]-aced.
with a. promissory note.      We find the above case not applica-
ble in view of the fact there is no showing of any fraud in
the procurement of the agreement hetween the two parties.
      As to the second defense in the Berners' answer, they
allege there was a mutual mistake upon which the "promissory
note" could be rescinded.       However, nowhere in the complaint
do the Rerners allege, nor is a~ythingrevealed in the depo-
sitions and admissions before the court, that they complied
with the pertinent statutes with regard to any rescission.
      Section 28-2-1713, MCA,        is specific with regard to
rescission, and provides as follows:
               "Rescission, when not effected by con-
               sent, can he accomplished only by the use
               on the part of the party rescinding of
               reasonable diligence to comply with the
               following rules:
               1 ) He must rescind promptly upon dis-
               covering the facts which entitle him to
               rescind if he is free from duress,
                menace, undue influence, or disability
                and is aware of his right to rescind.
                "(2) He must restore to the other party
                everything of value which he has received
                from him under the contract or must offer
                to restore the same, upon condition that
                such party shall do likewise, unless the
                latter is unable or positively refuses to
                do SO. "
      Here there is no allegation or showing that the Berners
used reasonabl-e diligence to comply with the statute.      There
is no allegation or proof        that the defendants rescinded.
promptly upon discovering the fact which allegedly entitled
them to rescind.     As noted by the trial court in its order
granting the plaintiffs' motion for summary judgment, the
Eerners took no legal action to dispute this note until the
Todds filed suit.
      In addition, there is no allegation or proof that the
Serners have restored to the Todds everything of value which
the Berners received from them under the contract, or that
the Eerners offered       to restore the same as provided by
statute.
      Further, concerning the second defense of the Berners,
sect.ion 28-2       ,   MCA, provri.des:   "Rescission cannot be
adjudged for mere mistake unless the party against whom it is
adjudged can be restored to substantially the same posj-tion
as if the contra-cthad not been made."
      It should be noted there is no allegation or proof
before the District Court that the Todds can be restored to
substantially the same position as if the promissory note had
not been made.
      For the foregoing reasons alone, the District Court was
correct in granting the Todds' mot.ion for summary judgment
and its ruling is affirmed.
      In addition, it should be noted i n the second defense
                                       .
of the Berners' answer, the Berners admit in their brief that
the promissory note was a compromise settlement of the Todds'
claim on the buy/se11.       Whether or not the buy/se11 was
enforceable or might ultimately prove, after litigation, to
be unenforceable against the Berners is immaterial.
      The relinquishment of the Todds' claim on the buy/sell,
even though the claim might not have ultimately proved valid,
is sufficient consideration for the promissory note and the
court so found.
      From the depositjons of the parties, it is clear that
a t t.he time of the compromise and settlement--the promissory
note with which this litigation is concerned--the Berners
felt they owed the Todds something for the Todds' hospitality
in showing them the ranch.   The Todds felt they had much more
coming to them which resulted in the compromise note.
      Tn addition, it would appear the Berners' argument in
their brief to the court regarding the enforceability of the
buy/sell agreement, is not only misleading but inaccurate.
The terms of the sale of the ranch were specified with spe-
cific certainty:   The purchase price was $2,250,000.     The
land sold was sufficiently described.    The downpayment, 29%
of the purchase price, was provided for.   The balance of the
;purchase price was to be carried on a contract for deed
payable on a twenty-year amortization basis with a ten-year
balloon.   Interest on all but $300,000 of the balance of the
purchase price was set at 11%.    The $300,000 was an assump-
tion of a contract with the Todds' predecessor in interest
and it was to carry the same interest rate as the underlying
contract of 8%.
      In   addition   it   should   be    noted   that   as   to   the
appellants' fraud argument, the District Court in an "Explan-
atory Note" granted     the motion       for summary judgment and
stated:    "I further conclude that there are no facts showing
fraud or misrepresentation on plaintiffs [sic] part ascer-
tainable from the entire record so as to give defendants a
valid defense to the promissory note."
      From the record, we find the court made no error in so
finding.
      The third issue is whether the third-party complaint
should have been permitted by the trial court.           Having found
the trial court did not err in gra-nting summary judgment, we
find it unnecessary to discuss this issue. That matter can be
disposed of by the appellants in any further action they
desire.
      The judgment of the District Court in granting summary
judgment is affirmed.

We concur:   /

Justices

Mr. Justice Fred J. Weber, specially concurring:
     I concur in the result.