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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