Court Opinion

ID: 877593
Source: CourtListenerOpinion
Date Created: 2013-06-04 21:33:37.547424+00
Date Added: 2024-06-11T08:52:08.322741
License: Public Domain

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. D a l y d e l i v e r e d t h e O p i n i o n o f t h e C o u r t .

            This      appeal        arises       from a         partial       summary j u d g m e n t

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 o f t h e p l a i n t i f f

b y t h e D i s t r i c t C o u r t o f 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 o f B r o a d w a t e r .

            Plaintiff,            formerly          Kathern       Hunsaker,         now       Kathern

Ragen,      was t h e e q u i t a b l e owner o f               certain real property in

Townsend, Montana, w h e r e s h e c o n d u c t e d a d r y g o o d s b u s i n e s s .

On J u l y 2 0 ,      1 9 7 8 , Ragen e n t e r e d         i n t o an a g r e e m e n t t o s e l l

t h e i n v e n t o r y of h e r 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 a g r e e m e n t , w h i c h e x p i r e d on F e b r u a r y 1 5 , 1 9 7 9 ,

defendants            were        also       granted      an     irrevocable          option         to

purchase        the        building       and    fixtures         for    a     sum o f       $75,000,

less     all     rentals          previously         paid.        The        agreement        further

provided        that,        if    the       option     was      exercised,         the      Westons

would p a y t o Ragen 29 p e r c e n t o f t h e t o t a l p u r c h a s e 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 b e p a i d o v e r a

period of t e n years.

           The W e s t o n s ,         i n an a p p a r e n t    effort        t o exercise the

option,        advised        Ragen          that    they       had     forwarded        a    $17,000

c h e c k t o t h e S t a t e Bank o f Townsend t o b e u s e d 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 e x e c u t e d 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 F e b r u a r y 2 2 ,          1979,

in    accordance            with       the     terms    provided          in    the      lease      and

option         to     purchase.                The     Westons          paid      their        first

i n s t a l l m e n t of    $500 u n d e r t h e c o n t r a c t on o r a b o u t March 1,

1979.          However,           when       Ragen     went      to     the     State        Bank   of

Townsend        to    pick        up     the    $17,000         downpayment        on March          9,

1 9 7 9 , s h e was i n f o r m e d t h a t t h e c h e c k would n o t b e h o n o r e d
because         there      were     insufficient            funds       in     the   account       on

which i t 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 a g r e e d 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 , 1 9 7 9 , 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 o f March.                     Plaintiff

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 p r e m i s e s on o r

b e f o r e March 3 1 , 1 9 7 9 .

            On November 7 , 1 9 7 9 , Ragen f i l e d a c o m p l a i n t a g a i n s t

t h e Westons s e e k i n g payment                 for r e a l property taxes levied

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 t e r m o f

t h e l e a s e a s provided                i n t h e l e a s e agreement;           payment     for

t h e r e a s o n a b l e v a l u e o f 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 p r e m i s e s ;              and payment f o r t h e

reasonable           value     of       a     typewriter          defendants         refused       to

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 W e s t o n s d e n i e d a n y

indebtedness 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

that     Ragen         had     wrongfully            rescinded           the     agreement         to

purchase         the     property           which     resulted          in    damages      in    the

amount o f          $25,000.           In addition,             t h e Westons a l l e g e d     that

during        the      term    of      the        lease    they      placed      approximately

$ 6 , 0 0 0 w o r t h o f 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 r e a s o n

of    the      wrongful        rescission            and    plaintiff's           retention       of

these       fixtures,          they         had     been    further          damaged      in    that

amount    .
            Following         discovery,            plaintiff          filed     a   motion      for

summary         judgment          on    all       liability          issues.         Defendants

responded           with      their         motion        for    summary       judgment         with

r e s p e c t t o Ragen's         claim for the r e a l property taxes.                          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       as     to     her     claim     for     the     real      property

taxes,      w i t h t h e e x a c t amount o f t h e t a x e s t o be d e t e r m i n e d
a t t r i a l o r a t an e v i d e n t i a r y hearing.                 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 m o t i o n f o r summary j u d g m e n t on t h e i s s u e o f
defendants'          l i a b i l i t y for       t h e value of       the typewriter             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 o f f a c t s t i l l

remain.          The      court       then        granted      summary          judgment         for
plaintiff         on    both     of     defendants'           claims      for       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 .     J u d g m e n t was

s o e n t e r e d on May 2 8 , 1 9 8 0 , 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 o u r r e v i e w :

           1.      Did t h e D i s t r i c t C o u r t 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 o f d e f e n d a n t s '                   l i a b i l i t y for

t h e payment o f t h e r e a l p r o p e r t y t a x e s ?
           2.          Did     the     District          Court        err      in     rejecting
defendants'            counterclaims               f o r damages r e s u l t i n g          from a
wrongful         rescission           of     the     purchase         agreement          and     for
damages         resulting        from        a     wrongful      retention          of      certain

fixtures?
           This        Court     has       consistently          held       that      the    party
moving f o r       summary j u d g m e n t         has t h e burden of              showing t h e

a b s e n c e o f any g e n u i n e i s s u e o f m a t e r i a l f a c t and t h a t t h e
movant i s e n t i t l e d t o j u d g m e n t a s a m a t t e r o f l a w .                Reaves

v.     Reinbold         (1980),                  Mont.            ,   615 P.2d 896,     37
St.Rep.      1 5 0 0 ; H a r l a n d v . A n d e r s o n ( 1 9 7 6 ) , 1 6 9 Mont. 447, 548
P.2d 613; Kober v.            S t e w a r t ( 1 9 6 6 ) , 1 4 8 Mont. 1 1 7 , 4 1 7 P.2d
476.
           Here,       the     District          Court    could       properly        grant      the
summary j u d g m e n t 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 for

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 p u r c h a s e a g r e e m e n t 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 p a y m e n t s .          The a g r e e m e n t is c l e a r and

s p e c i f i c a l l y provides a s follows:
             "By r e a s o n o f c o n c e s s i o n s made b y H u n s a k e r
             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 p r e m i s e s 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 pay H u n s a k e r ' s f i r e
             insurance for t h e period of s a i d lease.
             H u n s a k e r s h a l l b e e n t i t l e d upon r e c e i p t o f
             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 o f W e s t o n s f o r payment o f t h e s e
             i t e m s , and W e s t o n s a g r e e t o p a y t h e same."
            Defendants              maintain         that    the    agreement             to       pay    the
real     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                 their       exercising

the     option           to    purchase         and     that,       as        a    result          of    this

a s s e r t i o n , a m a t e r i a l i s s u e o f f a c t r e m a i n s t o be r e s o l v e d .
W e must d i s a g r e e .

            It     is     fundamental            that       the    language of                a    contract
w i l l g o v e r n i t s i n t e r p r e t a t i o n i f t h a t l a n g u a g e is c l e a r and

e x p l i c i t and d o e s 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;        D a n i e l s o n v.   D a n i e l s o n ( 1 9 7 7 ) , 1 7 2 Mont. 55,
5 8 , 560 P.2d 8 9 3 , 894; N e l s o n v.         Combined I n s u r a n c e Company
of America          ( 1 9 7 0 ) , 1 5 5 Mont. 1 0 5 , 1 1 3 , 467 P.2d 707,   712.

The     pertinent             language         in     this       instance          is    unequivocal,
unambiguous,                  and       requires            no     interpretation.                         It

specifically              states        that        "Westons      agree           to    pay       the    real

property          taxes         levied       and      assessed       against            the        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 p u r c h a s e f i r s t
be e x e r c i s e d .
            The     applicable             provision         must        be       given       effect       as

w r i t t e n by    the parties;               thus,        t h e District Court properly
granted          plaintiff         summary         judgment          on     the      issue     of

liability.

           The     second        issue      concerns          defendants1            claim     of

wrongful t e r m i n a t i o n .      S e c t i o n 28-2-1711,        MCA,    provides 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 consent 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 t h r o u g h
           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 c o n n i v a n c e o f t h e
           p a r t y a s t o whom h e r e s c i n d s o r o f any o t h e r
           party t o the contract j o i n t l y interested with
           such p a r t y ;

           " ( 2 ) i f , t h r o u g h 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        entirely
           v o i d from a n y c a u s e ; "

           In t h i s instance, p l a i n t i f f ,          a f t e r b e i n g i n f o r m e d by

defendants         that     the     agreed       downpayment          on     the     option     to

p u r c h a s e had been d e p o s i t e d a t t h e S t a t e Bank o f Townsend,

executed t h e c o n t r a c t a t i s s u e .         This c o n t r a c t provided t h a t

t h e $ 7 5 , 0 0 0 p u r c h a s e p r i c e was t o be p a i d a s f o l l o w s :

           "A.       The sum o f T h r e e Thousand two h u n d r e d
           f i f t y Dollars ($3,250.00),                  t h e r e c e i p t of
           which is h e r e b y a c k n o w l e d g e d 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 b u y e r s
           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 o f J u l y 2 0 , 1978.

           "B.        The sum o f S e v e n t e e n t h o u s a n d D o l l a r s
           ( $ 1 7 , 0 0 0 ) upon e x e c u t i o n o f t h i s a g r e e m e n t ,
           t h e r e c e i p t t h e r e o f b e i n g h e r e b y acknowledged
           by s e l l e r .

           "C.      The b a l a n c e o f F i f t y - f o u r t h o u s a n d s e v e n
           hundred f i f t y D o l l a r s ( $ 5 4 , 7 5 0 . 0 0 ) , t o g e t h e r
           w i t h interest         . . .          t o be p a i d i n r e g u l a r
           m o n t h l y i n s t a l l m e n t s , e a c h i n t h e amount o f
           F i v e hundred D o l l a r s ( $ 5 0 0 . 0 0 ) , t h e f i r s t
           m o n t h l y i n s t a l l m e n t b e i n g d u e and p a y a b l e on
           t h e 1st d a y o f March, 1 9 7 9 . "

           Upon     reading        the    contract,         it    is o b v i o u s    that    the

$ 1 7 , 0 0 0 c h e c k d e p o s i t e d i n t h e S t a t e Bank o f Townsend was a n
essential          part      of      the     consideration          to     be     received         by

p l a i n t i f f and an i n d u c e m e n t f o r e x e c u t i n g t h e a g r e e m e n t .     It

is u n c o n t r o v e r t e d ,    however,       that    plaintiff           never    obtained
t h i s money b e c a u s e t h e c h e c k was d i s h o n o r e d d u e t o t h e l a c k
of   s u f f i c i e n t funds.            Since the consideration f a i l e d ,                  the
remedy o f 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 i s

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 ,
            c a n be a c c o m p l i s h e d o n l y b y t h e u s e 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 o f 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)         He       must      rescind       promptly       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 i s a w a r e
            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 o f v a l u e which h e h a s r e c e i v e d
            from him u n d e r t h e c o n t r a c t o r m u s t 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 s u c h
            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 p r o m p t .      W i t h i n t h r e e d a y s of

h a v i n g t h e downpayment c h e c k 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    written        notice         of   rescission         to    defendants            and   their

attorney          setting           forth      the     grounds           for     the     action.
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 p u r c h a s e was p r e s e r v e d i n t h a t t h e $ 5 0 0 i n s t a l l m e n t p a i d
b y 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 1 9 7 9 , a l l o w i n g

them t o r e m a i n on t h e p r e m i s e s u n t i l t h e e n d o f t h e month.
S e c t i o n 28-2-1713,           MCA, m u s t be deemed s a t i s f i e d .

            Defendants argue t h a t w e should look                            solely t o the
default        clause       contained         in     the   agreement t o purchase                  in
determining            Ragen's          proper       remedy.         In    rejecting             this
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             i n v o l v e a mere
d e f a u l t i n t h e payment o f                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
the contract.                The c o n s i d e r a t i o n h a v i n g f a i l e d ,       t h e remedy

of     rescission             was     available             and,     when       exercised,           the

contract,         including           the default            clause,        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            further         argue      that        the     State       Bank     of
Townsend         erroneously            refused        to    honor        the    $17,000          check;

thus,       it    was      the       Bank's        fault,          not    theirs,          that     this
consideration            failed.            W acknowledge
                                             e                           t h i s contention but
must      conclude        that        any     claim      for       damages       based        on    this
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 w r o n g f u l d i s h o n o r m e n t ,
not     against plaintiff                    for      wrongful           termination           of    the

contract a t issue.
            W 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 o f
             e

defendants'             claims         for     damages         based           upon    a     wrongful
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'        final        claim      for        damages       arises       from
p l a i n t i f f ' s a l l e g e d w r o n g f u l r e t e n t i o n o f f i x t u r e s p l a c e d on

the     premises        by      defendants            during        their       occupancy.           The
District         Court       dismissed          this        claim,       finding        it    without

basis.       W agree with t h e c o u r t ' s conclusion.
              e

            Defendants           contend        that plaintiff                 will    be    unjustly
enriched         if    she     is a l l o w e d     to retain            the    fixtures.           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
definition,           is p a r t of         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 o f         t h e premises a t t h e e x p i r a t i o n of                    the lease.
S e e s e c t i o n s 70-15-101,            70-15-103,        and 70-18-101,               MCA.

            Defendants           argue       that      even        though       the    fixture        is

considered            part      of     the      realty,        a     tenant       under       certain
circumstances             is    still        entitled          to     its    removal,       citing

s e c t i o n 70-18-102,         MCA:

            "A      t e n a n t may r e m o v e f r o m t h e d e m i s e d
            p r e m i s e s , 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 o f
            h i s term, anything affixed t h e r e t o f o r t h e
            purposes of t r a d e , manufacture, ornament, o r
            d o m e s t i c u s e i f t h e removal c a n be e f f e c t e d
            without injury t o t h e premises unless the
            t h i n g h a s , by t h e manner i n w h i c h it i s
            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."

            We    agree        that     a    tenant      is     generally       accorded        the
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 ; h o w e v e r , t h i s r i g h t
is    not     without          limitation.             As      the      above-cited      statute
indicates,          the     removal         is t o be         accomplished d u r i n g         "the
c o n t i n u a n c e of h i s term."

            Defendants          have        alleged       no        effort    being     made     to

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 p r e m i s e s ; n o r h a v e
they alleged 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 w a i t e d u n t i l J a n u a r y 2 , 1980 (some n i n e
months       after      leaving         the premises),               to   a s s e r t any claim.
Furthermore,              the     claim        finally          asserted        was     for    the

r e a s o n a b l e v a l u e o f t h e f i x t u r e s b a s e d upon a n a l l e g a t i o n o f
w r o n g f u l r e s c i s s i o n and n o t f o r r e m o v a l o f t h e i m p r o v e m e n t s

as    trade       fixtures.             On     the      submitted            record,    section
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 j u d g m e n t o f t h e D i s t r i c t C o u r t i s a f f i r m e d .

                                                            Justice
                                                                            J
We concur:

              Chief Justice
                   L.--

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