Gropp v. Lotton

• Court: Montana Supreme Court
• Decided: November 14, 1972
• Docket: 12220
• Status: Published

Opinion

No* 12220

I N THE SUPREME COURT O THE STATE O M N A A F F OTN

KENNETH A. GROPP and BETTY L. GROPP , husband and w i f e ,

P l a i n t i f f s and A p p e l l a n t s ,

-vs - KENNETH R. LOTTON e t a l . ,

Defendants and Respondents.

Appeal from: D i s t r i c t Court o f t h e Twelfth J u d i c i a l D i s t r i c t , Honorable R. W. Thomas, Judge p r e s i d i n g .

Counsel of Record:

For Appellants :

Smith, Emmons and B a i l l i e , G r e a t F a l l s , Montana. Marvin J. Smith a r g u e d , G r e a t F a l l s , Montana.

F o r Respondents:

G r a y b i l l , G r a y b i l l , O s t r e m and Warner, G r e a t F a l l s , Montana. H a r r i s o n , Loendorf and P o s t o n , Helena, Montana. Jerome T. Loendorf a r g u e d , Helena, Montana.

Submitted: September 25, 1972

Decided : # O V ~ ,-

Filed: NQV 1 I:! i M r , J u s t i c e John Gonway 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 Kenneth A. Gropp and Betty L. Gropp, husband and wife, brought t h i s a c t i o n i n t h e d i s t r i c t c o u r t of t h e t w e l f t h j u d i c i a l d i s t r i c t , county of H i l l , t o q u i e t t i t l e t o c e r t a i n ranch property leased with an option t o buy t o de- fendants, Kenneth R; Lotton and Mary K. Lotton, husband and wife. Defendants counterclaimed f o r s p e c i f i c performance o r t h e r e - payment of money paid by them t o p l a i n t i f f s . The cause was t r i e d before Hon. B. W. Thomas, s i t t i n g without a jury, Findings of f a c t , conclusions of law and judgment were entered f o r de- fendants. Exceptions were f i l e d by p l a i n t i f f s and denied by the t r i a l court, P l a i n t i f f s now appeal from t h e judgment. On September 25, 1965, p l a i n t i f f s , a s vendors, agreed t o

s e l l and defendants, a s vendees, agreed t o purchase c e r t a i n ranch p r o p e r t i e s l o c a t e d i n Chouteau and H i l l c o u n t i e s . The c o n t r a c t provided f o r an escrow of deed, merchantable t i t l e , a schedule of payments, d e f a u l t provisions and a provision t o p r o t e c t p l a i n t i f f s i n t h e event of a crop f a i l u r e . In a d d i t i o n , t h e c o n t r a c t provided t h a t p l a i n t i f f s would l e a s e t o defendants f o r f i v e y e a r s , under s p e c i f i e d terms and c o n d i t i o n s , c e r t a i n acreage i n H i l l County with an o p t i a n t o purchase some of t h e leased lands, O October 1, 1965, pursuant t o t h e c o n t r a c t f o r deed, t h e n p a r t i e s entered i n t o a farm l e a s e which incorporated t h e terms of t h e c o n t r a c t , The l e a s e r a n from October 1, 1965 t o October 1, 1970. T r a c t I of t h e leased lands was made s u b j e c t t o t h e option t o purchase, t h e t e r m s of which were: "The r i g h t t o purchase s h a l l be a t a p r i c e of Eighty Thousand D o l l a r s ($80,000.00) with a re- quired down payment of 29% and t h e balance, with i n t e r e s t a t t h e r a t e of four percent (4%) p e r annum, t o be amortized over a f i f t e e n (15) year period. The Lessees s h a l l be e n t i t l e d t o t h e c r e d i t of t h e excess of t h e r e n t payments made hereunder, i n - cluding Federal Crop payments, over t h e r e a l property taxes incurred on s a i d Tract I during the term of t h i s lease. This c r e d i t s h a l l f i r s t be applied i n payment f o r t h e e x i s t i n g summerfallow, hereby agreed t o be 300 a c r e s a t a p r i c e of $10.00 per a c r e , and then t h e remaining c r e d i t s h a l l be applied on t h e purchase p r i c e of $80,000.00 by reducing t h e necessary down payment such amount, "IT IS F R H R AGREED AND U D R T O t h a t t h e two UT E N ESO D s t e e l g r a n e r i e s of 2250 bushel c a p a c i t y and t h e wooden granery approximately 16' x 20' i n s i z e w i l l be included with t h e r e a l property i n Tract I i n t h e event of t h e e x e r c i s e of t h e option by t h e Lessees. "IT IS FURTHER U D R T O AND AGREED t h a t t h e Lessees N ESO D may e x e r c i s e t h e option t o purchase Tract I by giving t h e Lessors n o t i c e of t h e i r i n t e n t i o n t o e x e r c i s e t h e option i n w r i t i n g a t l e a s t t h i r t y (30) days p r i o r t o t h e e x p i r a t i o n of t h e term of t h i s l e a s e . It i s f u r t h e r agreed and understood t h a t t h e a f o r e s a i d option does n o t apply t o Tract I1 hereinbefore des- cribed. " A t t r i a l , defendants t e s t i f i e d t h a t without t h e land covered by t h e o p t i o n , T r a c t I , t h e ranch u n i t of some 480 a c r e s i s an uneconomic u n i t and they would n o t have purchased the ranch u n i t without t h e option t o purchase Tract I. A f t e r some two years of operation on t h e ranch, c e r t a i n d i f f e r e n c e s a r o s e between t h e p a r t i e s and l e g a l counsel was obtained t o i r o n out the d i f f i c u l t i e s . On March 29, 1969, an

agreement was signed by t h e p a r t i e s , s e t t l i n g t h e i r d i f f e r e n c e s and r e a f f i r m i n g t h e o r i g i n a l l e a s e and option agreement. By t h i s r e l e a s e agreement t h e p a r t i e s agreed on t h e amount and value of t h e 1966 and 1967 crop s h a r e s received by p l a i n t i f f s and provided f o r t h e payment by defendants of $3,829 t o p l a i n t i f f s . I t f u r t h e r provided t h a t t h i s sum would be applied t o t h e 29% down payment, i n t h e event defendants exercised t h e option t o purchase Tract I. I n November 1969, defendants d i r e c t e d t h e i r counsel t o prepare a w r i t t e n n o t i c e of t h e i r i n t e n t i o n t o e x e r c i s e t h e option t o purchase Tract I. Both defendants signed t h e n o t i c e , had i t acknowledged, and returned i t t o t h e i r counsel i n Great Falls. W n o t e h e r e t h a t one copy of t h e signed n o t i c e was e recorded i n H i l l County with t h e farm l e a s e on November 13, 1969, by defendant Kenneth Lotton. The o t h e r copy was forward t o h i s a t t o r n e y i n Great F a l l s . -. .. .. Defendants' counsel t e s t i f i e d he received the signed n o t i c e of i n t e n t i o n t o e x e r c i s e t h e option t o purchase from t h e defendants and t h a t on November 19, 1969, he forwarded i t , along with a cover l e t t e r , t o t h e p l a i n t i f f s a t t h e i r address i n Lusk, Wyoming. Both he and h i s s e c r e t a r y t e s t i f i e d t h a t t o t h e b e s t of t h e i r knowledge t h e l e t t e r and n o t i c e were processed on t h a t d a t e and mailed, b u t n e i t h e r r e c o l l e c t e d why i t was s e n t by ordinary mail. P l a i n t i f f , Kenneth Gropp, denied ever r e c e i v i n g t h e n o t i c e of i n t e n t i o n t o e x e r c i s e t h e option and t e s t i f i e d t h a t t h e f i r s t time he knew of t h i s n o t i c e was on October 5 , 1970, when he went t o t h e ranch t o s e e what t h e defendants intended t o do about T r a c t I. A t t h a t time, h e was informed by defendant Kenneth Lotton t h a t t h e option had been exercised n e a r l y a year before and t h a t a copy of t h e n o t i c e had been f i l e d a t t h e H i l l County courthouse, W n o t e h e r e t h a t although t h e p a r t i e s involved had signed e a r e l e a s e agreement i n 1969, t o s e t t l e t h e i r d i f f e r e n c e s up t o t h a t p o i n t , bad f e e l i n g continued and although they had seen each o t h e r s e v e r a l times between 1969 and 1970, no communications, v e r b a l o r otherwise, took p l a c e d i r e c t l y between t h e p a r t i e s . over a month a f t e r t h e e x p i r a t i o n d a t e of t h e o p t i o n , It was on October 5 , 1970, / t h a t p l a i n t i f f Gropp went t o t h e ranch t o f i n d out why defendant was n o t o f f of T r a c t I. There i s a c o n f l i c t i n t h e evidence a s t o what happened on t h a t d a t e , October 5 , 1970. Defendant Lotton t e s t i f i e d he informed Gropp t h a t he had exercised t h e option and had f i l e d t h e n o t i c e a t t h e H i l l County courthouse, That p l a i n t i f f Gropp then l e f t t h e ranch, saying t h a t he would c o n t a c t defendants' counsel and l a t e r be i n touch with defendants. P l a i n t i f f Gropp denied t h a t t h i s happened. H t e s t i f i e d he went t o t h e courthouse t o v e r i f y t h a t e t h e n o t i c e had been f i l e d ; then sought counsel and f i l e d a q u i e t t i t l e a c t i o n on October 7, 1970. Following t h e i r s e t t l e m e n t of d i f f e r e n c e s i n March 1969, defendants made no tender on t h e balance remaining on t h e down payment and pointed o u t t h a t no determination of t h a t balance -. could be made u n t i l t h e end of t h e 1970 h a r v e s t . Further, that i n order t o compute t h e remaining balance due on t h e down payment i t was necessary f o r defendants t o have t h e f i g u r e s f o r t h e cash

p r i c e received by t h e p l a i n t i f f s on t h e i r share of t h e 1969 and 1970 crops. Figures f o r previous years had been furnished t o them by p l a i n t i f f s , and although they had made an e f f o r t t o g e t those f i g u r e s from t h e e l e v a t o r s where t h e s h a r e s were s t o r e d , they had been unable t o g e t such cash f i g u r e s . P l a i n t i f f s admitted they d i d n o t give t h i s information t o defendants f o r t h e 1969 and 1970 crops, saying t h a t t h e defendants d i d not ask f o r them. The t r i a l c o u r t found defendants owed p l a i n t i f f s t h e sum of $7,023.15 on t h e down payment. It f u r t h e r found t h a t a t t h e time t h e c o n t r a c t and l e a s e were entered i n t o i t was t h e i n t e n t of t h e p a r t i e s , i f t h e option was e x e r c i s e d , t h a t a c o n t r a c t f o r deed would be n e g o t i a t e d and entered i n t o by t h e p a r t i e s incor- p o r a t i n g t h e purchase terms s e t f o r t h i n t h e option and o t h e r terms s i m i l a r t o those included i n t h e c o n t r a c t f o r deed dated September 25, 1965. While p l a i n t i f f s s e t f o r t h some f i f t e e n i s s u e s f o r review upon appeal, w e f i n d those i s s u e s can be combined i n t o four controlling issues. 1. Whether t h e c o n t r a c t r e s u l t i n g from acceptance of t h e option o f f e r i n question i s s u f f i c i e n t l y d e f i n i t e and c e r t a i n a s t o be s u b j e c t t o s p e c i f i c performance.

2. Whether t h e provision of t h e option o f f e r with r e s p e c t t o n o t i c e of i n t e n t t o e x e r c i s e t h e option was s u f f i c i e n t l y complied with. 3. Whether delay i n tender of t h e balance due on t h e down payment f o r t h e option was excused and waived by t h e i m p o s s i b i l i t y of i t s computation and t h e conduct of p l a i n t i f f s . 4. Whether t h e c o u r t e r r e d i n s t r i k i n g testimony r e l a t i v e t o a polygraph examination of p l a i n t i f f Kenneth Gropp. I s s u e 1 questions whether t h e c o n t r a c t r e s u l t i n g from acceptance of t h e option o f f e r i n question i s s u f f i c i e n t l - y de- f i n i t e and c e r t a i n a s t o be s u b j e c t t o s p e c i f i c perfor;l+:~:s,c-e. -. -- - 0

A s a preface t o our d i s c u s s i o n , we n o t e some fundamental r u l e s regarding c o n t r a c t s . I f t h e language of t h e c o n t r a c t i s such t h a t the i n t e n t of t h e p a r t i e s i s c l e a r l y and unequi- v o c a l l y expressed, i t must be a p p l i e d according t o t h e terms of the c o n t r a c t . Conversely, i f t h e r e i s a b a s i s i n i t s language upon which the p a r t i e s reasonably could have had a misunder- standing with r e s p e c t t o i t s i n t e n t , then evidence can be received and considered t o a s c e r t a i n t h e meaning of t h e language used. Warner v. Johns, 122 Mont, 283, 201 P.2d 986. The c o u r t i n making a determination of i n t e n t i s not bound by any s i n g l e provision o r expression, but looks t o t h e whole c o n t r a c t and i t s purpose. McNussen v. Graybeal, 146 Mont, 173, 405 P.2d 447; Dooling v. Bright-Holland Co., 152 Mont. 267, 448 P.2d 749; Williams v. Ins. Co. of North America, 150 Mont. 292, 434 P,2d 395. P l a i n t i f f s argue t h a t t h e option c o n t r a c t i s an agreement t o agree and t h e r e f o r e void. With t h i s contention we f i n d no merit. The r e a l question i s whether o r n o t t h e acceptance of t h e option o f f e r by defendants r e s u l t e d i n an agreement s u f f i c i e n t l y d e f i n i t e and c e r t a i n t o c r e a t e a binding c o n t r a c t . Here, t h e p a r t i e s negotiated a c o n t r a c t f o r deed f o r t h e purchase of c e r t a i n ranch property s e t t i n g f o r t h t h e r e i n t h e extension of a l e a s e and option t o purchase a d d i t i o n a l land and terms a p p l i c a b l e , i f t h e option was exercised. The l e a s e , which was executed within a week of t h e d a t e of t h e c o n t r a c t f o r deed, contained t h e option t o purchase a s set f o r t h i n t h e c o n t r a c t , t h e r e f o r e t h e two instruments should be construed together. / -- t / - Hodgkiss v. Northland Petroleum Consol., 104 Mont. 328, 349, P,2d 811; United S t a t e s Nat. Bank of Red Lodge v. Chappell, 7 1 Mont. 553, 230 P. 1084. Testimony i n d i c a t e d t h e p a r t i e s a t t h e time of t h e making of t h e option agreement contemplated a c o n t r a c t s i m i l a r t o "farm c o n t r a c t s " i n use f o r t h e s a l e of farm land i n t h e a r e a and on l i k e terms a s t h e i n i t i a l c o n t r a c t f o r deed. Here, t h e c o n t r a c t - L -. -- for deed sets forth the consideration upon which plaintiffs extended the lease-option. Defendants considered the base unit of 480 acres uneconomic and would not have purchased it without the option for Tract I. Terms of the option agreement provided for a fifteen year term following the five year lease term, which coincided with the contract for deed, with the same interest rate and the same final payment year. It can be fairly implied, as the trial court did, from the language of the two agreements, that the parties considered the properties to be purchased in one concurrent harmonious transaction, This Court in Steen v. Rustad, 132 Mont, 96, 106, 313 P.2d 1014, held: "It is equally well-settled that absolute certainty and completeness in every detail is not a prerequisite of specific performance, only reasonable certainty and completeness being required. Those matters which are merely subsidiary, collateral, or which go to the performance of the contract are not essential, and therefore need not be expressed in the informal agree- . ment II Issue No. 2 questions whether or not the provision of the option offer with respect to notice of intent to exercise the option was sufficiently complied with. Plaintiffs contend that since neither defendants' counsel nor his secretary could speci- ficially remember mailing the letter and notice, and because it was not sent by either registered or certified mail, there was insufficient evidence before the court to sustain a finding that the letter and notice was mailed. We cannot agree with this contention. The question of what is a proper mailing has been before the Court on several occasions, the latest being Crissey v. State Highway Comrn'n, 147 Mont. 374, 413 P,2d 308. There, as here, testimony was introduced by the writer of the letter that he had signed the letter and placed it in the outgoing mail basket, Here, we have the additional testimony of the secretary, who typed and addressed the letter, and who testified that to the best of her knowledge the letter was mailed along with other -. o f f i c e mail a t t h e end of t h e business day. The t r i a l c o u r t found t h e presumption of r e c e i p t was a p p l i c a b l e , though p l a i n t i f f s denied r e c e i p t . The t r i a l c o u r t e i t h e r believed p l a i n t i f f s were mistaken; t h a t they had f o r g o t t e n , o r they were n o t t e l l i n g t h e t r u t h ; and r e l i e d upon t h e c i r c u m s t a n t i a l evidence i n making i t s decision. The t r i a l c o u r t i s t h e trier of t h e f a c t s . Here, t h e t r i a l c o u r t ' s conclusion t h a t the option was exercised i s supported n o t only by t h e f i n d i n g t h a t t h e n o t i c e was mailed t o p l a i n t i f f s , b u t a l s o by a d d i t i o n a l evidence t h a t p l a i n t i f f s may have had a c t u a l n o t i c e of defendants' i n t e n t . P l a i n t i f f s d i d g e t a c t u a l n o t i c e when they v i s i t e d defendants a t t h e ranch, s h o r t l y following t h e termination d a t e of September 1, 1970. Here, no hardship r e s u l t e d , such a s the i n t e r v e n t i o n of a t h i r d p a r t y ; defendants stand w i l l i n g and ready t o perform;

and t h e question of t h e r e c e i p t of t h e mailed l e t t e r should not cause a f o r f e i t u r e of t h e option t o purchase where no hardship resulted. 72 ALR2d 1122; Pomeroy's S p e c i f i c Peformance of Contracts, 3rd Ed., 5 371, p. 793. I s s u e 3 questions whether t h e delay i n tender of t h e balance due on t h e downpayment f o r t h e option was excused and waived by t h e i m p o s s i b i l i t y of i t s computation by conduct of t h e p l a i n - t i f f s . The t r i a l c o u r t found so, and we agree. P l a i n t i f f s argue t h a t t h e tender of t h e balance due was of t h e essence t o t h e contract, A c a r e f u l study of t h e evidence r e v e a l s t h a t p r i o r t o 1969, p l a i n t i f f s gave defendants t h e necessary f i g u r e s t o compile t h e amounts due yearly. T h e r e a f t e r , due t o a breakdown i n communications between the p a r t i e s , f o r which p l a i n t i f f s a r e a t l e a s t e q u a l l y r e s p o n s i b l e , t h e s e f i g u r e s were n o t furnished. A s t o 1970, f i n a l computation could n o t be made u n t i l t h e 1970

crop w a s s o l d , P l a i n t i f f s requested t h e amount be f i g u r e d on October 5 , 1970, Considering t h e terms of t h e c o n t r a c t , p l u s p l a i n t i f f s ' lack of d i l i g e n c e i n g i v i n g t h e defendants t h e necessary f i g u r e s , t h e month i n t e r v e n i n g between t h e d a t e when defendants were e i t h e r t o have exercised t h e option o r be o f f L. - ?.

t h e property, and t h e d a t e of October 5 , 1970, we cannot f i n d t h a t an unreasonable time f o r tender had passed. Plaintiffs' f o u r t h and f i n a l i s s u e concerns whether o r n o t t h e c o u r t e r r e d i n s t r i k i n g testimony r e l a t i v e t o a polygraph examination of t h e p l a i n t i f f Kenneth Gropp. I n a sense, t h i s i s s u e i s connected t o i s s u e 2, whether o r not t h e r e was a mailing t o p l a i n t i f f s of t h e n o t i c e of i n t e n t t o e x e r c i s e t h e option. P l a i n t i f f Kenneth Gropp, i n order t o prove he d i d not r e c e i v e t h e l e t t e r containing t h e n o t i c e of i n t e n t t o e x e r c i s e t h e option t o purchase, submitted himself t o a polygraph t e s t . The r e s u l t s of t h i s t e s t were submitted t o t h e c o u r t t o a s s i s t i t i n determining whether o r not p l a i n t i f f s received t h e l e t t e r , b u t were excluded by t h e t r i a l c o u r t . Plaintiffs assert that t h e t e s t was given by a competent polygraph o p e r a t o r ; t h a t Kenneth Gropp was a f i t person f o r t h e t e s t ; t h a t t h e test i s from 75% t o 80% a c c u r a t e on a nationwide b a s i s ; and, t h a t e l e c t r o - encephalograms, electrocardiograms and o t h e r e l e c t r i c a l recordings f o r medical diagnosis a r e admissible. Anno, 66 ALR2d 536, For these reasons, p l a i n t i f f s contend such o f f e r e d evidence should have been received, W do n o t agree, e Few j u r i s d i c t i o n s allow t h e polygraph t e s t s i n criminal actions. S t a t e v , Hollywood, 138 Mont. 561, 358 P.2d 437; S t a t e v. Cor, 144 Mont, 323, 396 P.2d 86; S t a t e v. Freeland, 255 Iowa 1334, 125 N.W.2d 825; S t a t e v. Trimble, 68 N. Mex. 406, 362 P.2d 788; S t a t e v. LaForest, 106 N,Hamp. 159, 207 A.2d 429. A extensive r e s e a r c h r e v e a l s fewer j u r i s - n d i c t i o n s have considered such evidence i n c i v i l a c t i o n s . Stone v, Earp, 331 Mich, 606, 50 N,W.2d 172; Rotheimer v. Rotheimer, 34 Ill.App.2d 1, 180 N.E.2d 3 5 6 ; People v. Schneemilch, 65 111. App.2d 337, 213 N,E.2d 50; C a l i f o r n i a I n s . Co. v , Allen, 235 F.2d 178; Herman v. Eagle S t a r I n s . Co,, 283 Fed. Supp, 33. Here, a f t e r hearing t h e evidence o f f e r e d by t h e polygraph e x p e r t a t t h e t r i a l , t h e c o u r t properly excluded h i s testimony. The judgment of t h e d i s t r i c t court- i s affirmed. ,

7L?Lf,?-&9.h As o c i a t e J u s t i c e

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M r , Chief J u s t i c e James T. Harrison took no p a r t i n t h e foregoing opinion,