Ragen v. Weston

• Court: Montana Supreme Court
• Decided: March 24, 1981
• Docket: 80-313
• Status: Published

Opinion

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.--

f 4 L . d -"'>I/&//- - < . . -.