Nevala v. McKay

583 P.2d 1065, 178 Mont. 327, 1978 Mont. LEXIS 632
CourtMontana Supreme Court
DecidedAugust 30, 1978
Docket14172
StatusPublished
Cited by8 cases

This text of 583 P.2d 1065 (Nevala v. McKay) is published on Counsel Stack Legal Research, covering Montana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nevala v. McKay, 583 P.2d 1065, 178 Mont. 327, 1978 Mont. LEXIS 632 (Mo. 1978).

Opinions

MR. CHIEF JUSTICE HASWELL

delivered the opinion of the Court.

This is an appeal from a summary judgment entered in the District Court, Judith Basin County, Montana. Appellants (lessees) sought an order requiring respondent (lessor) to set a definite sale price for the leased land and enforcement of their claimed right of first refusal under the terms of the lease. The appeal involves a relatively complex set of facts which we detail herein to clarify our conclusion that the judgment of the District Court should be affirmed.

In 1964 Dr. David McKay leased a parcel of land in Judith Basin County, known as the Carl Thisted Ranch, to Raymond and Carrine Nevala. The agreement was executed on a standard Montana Livestock Share Lease form, the pertinent portions of which were the term of the lease and the owner’s agreements. The “term” provision was:

“2. TERM: This lease shall be in effect from December 1st, 1964 to 15 days after calves delivered, 1971, and shall, with such written modification as may be agreed to at the beginning of each year, continue from year to year thereafter unless terminated by written notice by either the owner or the tenant to the other at least 6 months before the expiration date of this lease or any extension.”

In the owner’s agreements, a right of first refusal was set out:

“14. OWNER AGREES:
“E. To give tenant written notice of specific intentions to sell the farm and to permit the tenant to have 60 days in which to arrange [329]*329purchase of the farm in case he indicates an interest in buying * * * >>

In 1971, after the original term of the lease had expired, and even though the lease would have automatically continued from year to year under the “term” provision quoted above, the parties made a notation on the back of the lease. The notation provided: “Lease is extended to December 1, 1974 — except Paddies 80 to be deleted.” The notation was dated “10.4.71” and signed by Dr. McKay and Ray Nevala. After the extension created by this notation expired in 1974, and with no notice to terminate ever having been given, the Nevalas stayed on the ranch and continued farming it. A settlement of accounts was made for the year 1975 on the terms provided for in the original lease agreement. Apparently, although it is not specifically stated in the record before us, accountings on those same terms were also made for the years 1976 and 1977. The Nevalas have remained in possession of the ranch at all times after the initiation of this action in 1976 and throughout its various stages, despite being served with notice of termination of their-tenancy by McKay on April 19, 1976. Due to this continued possession and the conflicting contentions of the parties concerning their rights in the property, we have advanced this matter on our calendar to expedite this appeal, clarify the status of the title to the land, and prevent any further possible inequity to either party.

The critical events that have culminated in this appeal began on September 26, 1975. On that day, McKay offered to sell the ranch to Nevala for $90 an acre. Nevala told McKay he would have the money or raise financing by the next Monday. However, early that Monday morning McKay telephoned Nevala and told him he was going to keep the ranch. Later that same day, McKay received an offer from third parties for the sale of the Carl Thisted Ranch and two other pieces of property which McKay owned. McKay, in a written instrument, dated September 29, 1975, agreed to sell the three ranches for $1.25 million.

The following day McKay notified Nevala that an agreement [330]*330had been reached to sell the property to third parties. Nevala objected that he and his wife'were still interested in purchasing the property covered by their lease under their right of first refusal. Whether the terms of the September 29, 1975, agreement were disclosed to Nevalas is in dispute; they contend that McKay told them that $600,000 of the $ 1.25 million purchase price was allocated to the “Carl Thisted” parcel.

On February 19, 1976, after numerous encounters and discussions had taken place between McKay, the Nevalas, and their respective counsel, McKay and the third parties with whom he had agreed on the three parcel sale, executed a document formally cancelling that agreement. Nonetheless, the Nevalas insisted that McKay had formed the requisite “specific intentions to sell the farm” within the meaning of the original lease provision and that therefore their right of first refusal had become absolute.

A complaint was filed in District Court by the Nevalas on March 18, 1976. The complaint sought an order requiring McKay to specifically perform under paragraph 14E of the lease, as quoted herein, by furnishing the Nevalas with a copy of McKay’s agreement of sale with the third parties or by otherwise informing them in writing of the terms and conditions of his intended sale, so that they could determine if they had an interest in purchasing the leased premises for the price allocated to it and under the same terms and conditions. The complaint was later amended, asking the court itself to set a price for and terms of sale of the Carl Thisted Ranch. Both parties subsequently moved for summary judgment. The Nevalas’ motion was denied, summary judgment was entered in favor of McKay, and this appeal by the Nevalas followed.

The issue on appeal is whether the District Court erred in granting McKay summary judgment and denying summary judgment to the Nevalas.

The effect to be given a right of first refusal under a lease has been the bone of contention in a vast number of cases. There is significant difference of opinion from jurisdiction to jurisdiction. A large body of law has evolved, discussing the topic in a myriad of [331]*331factual settings. See: Annot. 15 A.L.R.3d 470 for a representative sampling. Many of the cases cited as authority by the parties hereto are factually distinguishable and raise peripheral issues not involved in this appeal. We make no attempt to reconcile the split of authorities, but decide this matter in accordance with guidelines established in prior decisions of this Court.

The primary issue involved here, as we see it, is whether a right of first refusal carries over into a holdover tenancy. For the reasons discussed below, we hold that it does not. We conclude that the Nevalas were holdover tenants on September 29, 1975, when McKay entered the agreement to sell the leased property to third parties. As holdover tenants, the Nevalas, under the rule established by our decision in Miller v. Meredith (1967), 149 Mont. 125, 423 P.2d 595, no longer had a right of first refusal available to them. We affirm the summary judgment in favor of McKay.

We reach our conclusion that the Nevalas had become holdover tenants by September, 1975, by an analysis of the intent of the parties as reflected in the terms of their agreement. The tenancy created at the beginning of the lease was a term for years of December 1, 1964, to 15 days after calves were delivered in 1971, to be followed by a tenancy from year to year terminable by either party on six months notice. Under this initial “term” provision, the parties would not have had to do anything further to keep the lease in effect after the'term for year.

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Nevala v. McKay
583 P.2d 1065 (Montana Supreme Court, 1978)

Cite This Page — Counsel Stack

Bluebook (online)
583 P.2d 1065, 178 Mont. 327, 1978 Mont. LEXIS 632, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nevala-v-mckay-mont-1978.