Johnson v. Smith

2002 MT 124N

• Court: Montana Supreme Court
• Decided: June 11, 2002
• Docket: 01-759
• Status: Published

Opinion

No. 01-759

IN THE SUPREME COURT OF THE STATE OF MONTANA

2002 MT 124N

ROBERT L. JOHNSON and ANITA A. JOHNSON,

Plaintiffs and Respondents,

v.

ALEX E. SMITH, TRUDY L. SMITH and GEORGE S. HAMILTON,

Defendants and Appellants.

APPEAL FROM: District Court of the Tenth Judicial District, In and For the County of Fergus, Honorable John C. McKeon, Judge Presiding

COUNSEL OF RECORD:

For Appellants:

William E. Berger, Attorney at Law, Lewistown, Montana

For Respondents:

Robert L. Johnson, Attorney at Law, Lewistown, Montana

Submitted on Briefs: February 28, 2002

Decided: June 11, 2002

Filed:

__________________________________________ Clerk Justice W. William Leaphart delivered the Opinion of the Court.

¶1 Pursuant to Section I, Paragraph 3(c) Montana Supreme Court 1996 Internal

Operating Rules, the following decision shall not be cited as precedent but shall be filed as a

public document with the Clerk of the Supreme Court and shall be reported by case title,

Supreme Court cause number and result to the State Reporter Publishing Company and to

West Group in the quarterly table of noncitable cases issued by this Court.

¶2 Alex Smith, Trudy Smith and George Hamilton (collectively Appellants) appeal from

the judgment of the Tenth Judicial District Court, Fergus County, granting partial rescission

of a Contract for Deed between the Smiths and Robert and Anita Johnson. We affirm.

¶3 We address the following issues on appeal:

¶4 1. Did the District Court err in concluding that the Smiths’

use of the contract for deed was unlawful as contrary to

good morals?

¶5 2. Did the District Court err in concluding that the

contract for deed can be partially rescinded?

Facts and Procedural Background

¶6 This litigation involves several adjoining properties outside

of Lewistown, Montana. The Johnsons originally owned three parcels

of land. In 1989, the Smiths purchased two of these parcels from

the Johnsons: a 6.2 acre parcel which included a house (Smiths’

Parcel) and an 87 acre parcel (Tract 1). The Johnsons retained a

parcel adjoining in part both Tract 1 and the Smiths’ Parcel. This

property is listed in the National Registry of Historic Places and

is known as the Mill House. Tract 1 includes a 55 foot strip of

2 land (the Strip) across which is a road to the Mill House.

Although the access road has been in existence for approximately

one hundred years, there is no recorded easement for it across the

Strip, and the Johnsons did not reserve an easement in the contract

for deed to the Smiths.

¶7 Hamilton holds legal title to a parcel of land adjoining the

Strip (West Tract). Access roads from Highway 466 cross the West

Tract and the Strip, leading to both the Smiths’ Parcel and the

Mill House. In 1959, A.W. Johnson, Robert’s father, and Hamilton

agreed to a land exchange wherein Hamilton would convey to Johnson

the West Tract in exchange for a one acre tract of land owned by

Johnson (East Tract). Because of a disparity in value between the

tracts, Johnson also agreed to pay Hamilton $1600.00 in cash.

Johnson and Hamilton walked the two parcels and partially staked

the perimeters and took possession of the respective tracts. After

the exchange, Johnson built a road to access the Smiths’ Parcel and

began landscaping the West Tract to provide an aesthetically

pleasing entrance to both the Mill House and the Smiths’ Parcel.

Although both Hamilton and Johnson took possession of the exchanged

properties, legal title to the tracts was never transferred. ¶8 In 1995, the Smiths filed suit against the Johnsons to enforce

a provision in the contract for deed which required the Johnsons to

provide the Smiths with insurable access to the Smiths’ Parcel. At

that time, Johnson contacted Hamilton and requested his cooperation

in completing the paperwork to legally transfer the exchanged

tracts of land. Johnson had been in possession of the West Tract

3 since inheriting it from his father. Hamilton, for the first time,

asserted that there was no agreement concerning the land exchange.

In order to settle the dispute with the Smiths, Johnson obtained

an easement from Hamilton across the West Tract for the access

roads to both Mill House and the Smiths’ Parcel. However, this

easement did not extend from the West Tract across the Strip to

Mill House.

¶9 In 1999, Johnsons filed suit against Hamilton to enforce the

oral agreement to exchange the West Tract and East Tract. After a

trial, the court ordered specific performance of the 1959 oral

contract to exchange the land. The court also entered a decree

“forever barring [Hamilton] from interfering with the passage and

landscaping rights granted [Johnsons] in the Easements agreement.”

Again, this guaranteed the Johnsons access across the West Tract

but did not include the portion of their access road that crossed

the Strip. ¶10 Hamilton testified that he was angry about the result of the

litigation. About one month after the judgment was entered, the

Johnsons discovered survey stakes, flags and fencing material along

the borders of the Strip between the Mill House and the West Tract.

Anita Johnson contacted the Smiths and was told that they had

given Hamilton an option to buy the Strip subject to reserving an

easement. Anita then contacted Hamilton, and he responded that he

had bought the Strip and was preparing to bulldoze off the trees

and brush located on it and that he would also enclose it with the

fencing material.

4 ¶11 Soon after, the Johnsons initiated this action requesting

partial rescission or modification of the contract for deed between

the Johnsons and the Smiths as to the Strip. A trial was held

before the District Court, and the court ultimately ordered the

partial rescission. Smiths and Hamilton appeal.

5 Standard of Review

¶12 Our standard of review in equity cases is set forth in § 3-2-

204(5), MCA. Under that provision, we have a “duty to determine

all of the issues of the case and to do complete justice.” Glacier

Park Co. v. Mountain, Inc. (1997), 285 Mont. 420, 427, 949 P.2d

229, 233.

Issue One

¶13 Did the District Court err in concluding that the Smiths’ use

of the contract for deed was unlawful as contrary to good morals? ¶14 Appellants argue that the proposed surveying, fencing and

clearing of brush on land is not an infringement of an adjoining

landowner’s rights and, therefore, those actions cannot form the

basis for finding the contract for deed unlawful. Appellants

further argue that this is a case about the rights of an owner to

use land as he desires. In this case, they argue, selling the

Strip, clearing it of brush and trees, and fencing it, are not

illegal, immoral or beyond the realm of rights of ownership.

¶15 Johnsons argue that the sale of the Strip by Smiths to

Hamilton was meant to harass them and to provide leverage for

Smiths to get a wider access over their existing road and that the

District Court correctly prevented them from doing so.

¶16 The District Court found that the Smiths have never used the

Strip for any purpose, that the Strip does not provide Hamilton

access to any other property he owns and that the Strip is of no

significant agricultural value to any of the Appellants.

Additionally, the court found that the transfer of the Strip to

6 Hamilton would unduly harass Johnsons and frustrate the Judgment in

the previous case between the Johnsons and Hamilton, and that the

only credible and practical reason offered for the sale was to

harass the Johnsons and provide leverage for Smiths.

¶17 Based on these findings, the court concluded that the

“contemplated sale of the strip by Smiths to Hamilton constitutes

an unlawful result of the contract between Johnsons and Smiths as

the same is contrary to good morals.”

¶18 Unlawful is defined as that which is “contrary to good

morals.” Section 28-2-701(3), MCA. Although “contrary to good

morals” is not further defined, “good moral character” is defined

in the code as “a personal history of honesty, trustworthiness, and

fairness; a good reputation for fair dealings; and respect for the

rights of others and for the laws of this state and nation.”

Section 39-8-202(5)(c), MCA (providing that applicants for

licensure as a professional employer organization provide

information to show their “good moral character”). This definition

is similar to the one relied on by the District Court that

“contrary to good morals” can include “conduct considered wrong, as

opposed to right, under principles of ethics or good conscience,

such as the taking [of] undue advantage of the weakness of

another.” ¶19 There is substantial evidence in the record supporting the

District Court’s finding that the transfer of the Strip to Hamilton

will harass the Johnsons. Hamilton wrote a letter to the Johnsons

indicating that he would bulldoze the brush and trees from the

7 Strip and at trial he admitted that he was angry about the outcome

of the previous litigation. Additionally, there was substantial

testimony concerning the fact that the Strip had no intrinsic

value, the Smiths had never used it for any purpose and it did not

border any of Hamilton’s property. There is simply no credible

reason why Hamilton would pay two thousand dollars for this

particular 55 foot strip of land, if not simply to harass the

Johnsons.

¶20 After reviewing the record, we conclude that the sale of the

Strip by Smiths to Hamilton had no other purpose than to harass the

Johnsons and to fuel a neighborhood feud which has now resulted in

three separate lawsuits. We conclude that the District Court’s

findings and conclusions are correct. Issue Two

¶21 Did the District Court err in concluding that the contract for

deed can be partially rescinded?

¶22 Section 28-2-1714, MCA, states that rescission of a written

contract may be adjudged “where the contract is unlawful for causes

not apparent upon its face and the parties were not equally in

fault.” Here, the court concluded that the contract was unlawful

and that the Smiths “are primarily the cause of and at fault for

the circumstances that gave cause to this action. Those

circumstances were not apparent on the face of the land sales

contracts between these parties.”

¶23 Appellants argue that rescission is a harsh remedy and

injunctive relief is a more appropriate remedy in this case. They

8 argue that they have never used the Strip in any way to harm the

Johnsons and that the court’s finding that transfer of the Strip to

Hamilton will unduly harass the Johnsons is speculative.

¶24 As noted above, the District Court correctly concluded that

the contract was unlawful for causes not apparent upon its face and

the parties were not equally in fault. Therefore, rescission was

an appropriate remedy.

¶25 Additionally, a court sitting in equity is empowered to

fashion an equitable result. Blaine Bank of Montana v. Haugen

(1993), 260 Mont. 29, 35, 858 P.2d 14, 18. We note that in

addition to partially rescinding the contract, the District Court

also ordered the Johnsons to (1) pay $2000 for the Strip; (2) upon

written request of Smiths, to extend the width of the access

easement given to Smiths from 16 feet wide to 30 feet wide; and (3)

to provide Hamilton with a written stockwater easement upon certain

conditions. ¶26 We conclude that the District Court correctly determined all

of the questions involved in this case and fashioned an equitable

remedy.

¶27 Affirmed.

/S/ W. WILLIAM LEAPHART

We concur:

/S/ KARLA M. GRAY /S/ JAMES C. NELSON /S/ TERRY N. TRIEWEILER /S/ JIM REGNIER