No. 14930
I N THE SUPREME C U T O THE STATE O M N A A
O R F F OTN
1981
LEOLA VAN ATTA,
P l a i n t i f f and Respondent,
CLAIR SCHILLINGER,
Defendant and A p p e l l a n t .
Appeal from: D i s t r i c t Court of t h e Seventh 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 McCone.
Honorable L. C . Gulbrandson, J u d g e p r e s i d i n g .
C o u n s e l o f Record:
For A p p e l l a n t :
McDonough, Cox & Simonton, G l e n d i v e , Montana
D a l e Cox a r g u e d , G l e n d i v e , Montana
Habedank, Cumrning and B e s t , S i d n e y , Montana
O t t o Habedank a r g u e d , S i d n e y , Montana
For Respondent :
B a x t e r L a r s o n a r g u e d , Wolf P o i n t , Montana
Submitted: J u n e 20, 1980
Decided: March 20, 1981
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Filed: MAR 2 0 1981
Mr. Justice Daniel J. Shea delivered the Opinion of the
Court.
Defendant Clair Schillinger appeals from a judgment of
the McCone County District Court granting specific performance
of an option agreement to plaintiff Leola Van Atta, and
ordering the defendant to convey the property involved to
the plaintiff.
Defendant raises several issues. He first contends
that the writing involved was not an option agreement because
it failed to meet the essential requirements for the validity
of a contract. In particular, he contends that there was a
lack of consent, and that the consideration was legally in-
sufficient. Second, he contends that the tender and demand
made under the option agreement was not a legal tender. In
particular, he contends that the claimed tender was actuslly
a counteroffer and therefore, he was at liberty to ignore
the counteroffer or to impose other terms in response to
this counteroffer. Third, he contends that because the
terms were not definite enough, specific performance could
not be granted. Fourth, and last, he contends that the
court erred in excluding testimony under the parol evidence
rule. He argues that his testimony was offered to challenge
the validity of the claimed option agreement, and therefore
that it was admissible as an exception to the parol evidence
rule. We affirm.
This case arose when a family-owned farming cor~oration
decided to liquidate. Plaintiff, Leola Van Atta, and defendant,
Clair Schillinger, are brother and sister. Since 1954, they
and their brother and sisters owned equally all the stock of
Paul Schillinger, Inc., a farming corporation. The brother
is Clyde Schillinger, and the sisters are Cleon Sass and
Thelma O'Donnell.
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In Dece&er 1973, the owners began discussions on the
dissolution and liquidation of the corporations. On May 19,
1974, all the shareholders, except Thelma O'Donnell, attended
a corporate meeting in Circle, Montana. The disputed option
agreement was discussed and signed at that time.
During the meeting, defendant Schillinger, and Leola
and James Van Atta (Leola's husband) discussed the purchase
of a half-section of farmland located in McCone County. This
property was owned by defendant Schillinger individually,
and was not a corporate asset. A handwritten memorandum on
the sale of the land was included in the corporate minutes
and it was signed by all the shareholders, either in person
or by proxy. The writing gave plaintiffs Leola and James
Van Atta an exclusive option to purchase the land for $200
per acre. The option was not to be exercised until after
the 1976 farming season and was to expire January 10, 1977.
As consideration, the writing recited the various agree-
ments for disposition of and payment for the land held in the
name of the family corporation. The option was, as the trial
court found, also supported by additional consideration in the
form of Leola Van Atta's participation in the agreed division
of the family corporation as well as by the actual payment of
$1.00 by James Van Atta to Schillinger.
On November 23, 1976, plaintiffs James and Leolz Van
Atta sent a document to defendant Clair Schillinger labeled
"Tender and Demand." Its purpose was to exercise the May 19
option to purchase the land mentioned in the option agreement.
This document stated that $64,000 ($200 per acre) was on
deposit at the Citizens First National Bank of Wolf Point,
and that the bank would immediately pay that sum to Clair
Schillinger when he delivered a joint tenancy warranty deed
to James and Leola Van Atta.
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The first response from Clair Schillinger was on December
7, 1976, when he wrote James and Leola Van Atta. He questioned
the validity of the option but also indicated his willingness
to sell the land--with added terms: the reservation of
mineral rights, an installment payment plan, a $14,000
increase in the purchase price (representing the value he
placed on the building located on the land); and that the
crops planted during the 1976 season would go two-thirds to
the tenant actually farming the land, and one-third to
himself. James and Leola Van Atta did not answer this
letter but instead filed suit on January 4, 1977, seeking
specific performance of the option agreement. They also
asked for attorney fees because they claimed defendant Clair
Schillinger acted in bad faith in backing out of the option
agreement. James Van Atta died before trial of the case.
Trial was held on November 21, 1978, and the trial
court entered its findings and conclusions on May 14, 1979,
holding that an enforceable option contract existed between
the Van Atta's and Schillinger. However, the court denied
attorney fees because he found that defendant Schillinger had
not acted in bad faith.
Defendant first attacks the judgment by claiming that
the corporate minutes signed on May 19, 1974, did not create
an enforceable option contract. He contends he did not
consent to the agreement acting in his individual capacity
and that the consideration was legally insufficient. The
trial court found consent. It also found that the $1.00
paid by Leola Van Atta, together with her participation in
the dissolution of the corporation and disposition of the
corporate lands, was sufficient consideration.
The actual payment of $1.00 and the actual participation
in the family corporate dissolution was sufficient con-
sideration for the agreement. This consideration falls
within the meaning of consideration contained in section
28-2-801, MCA. We note also that even under defendant's
argument, the memorandum would at least be construed as an
offer by him, and that offer remained until either withdrawn
or acted upon. Once the Van Atta's acted on the offer, a
binding agreement resulted. See, Raiche v. Morrison (1913),
47 Mont. 127, 130 P. 1074, 1075; and Ide v. Leiser (1890),
10 Mont. 5, 24 P. 695, 696.
Before the May 19 agreement, the owners of the family
corporation had agreed to transfer certain assets to certain
parties. However, Leola Van Atta could not assert any right
to the transfer as such because there was never any agreement
in writing. It was not until the May 19 agreement that 2
written agreement was signed that entitled Leola Van Atta to
any money or any land as a result of the corporation dissolution.
Defendant argues that even though Leola Van Atta might
have intended to sign a contract by signing the corporate
minutes, he did not intend to sign a contract, and therefore
mutual assent is lacking. He also argues that the parties
had been negotiating after the May 19 meeting on the terms
of the sale, but that they could not agree on the terms. The
trial court found, on the other hand, that he intended to
sign a contract. The court noted that defendant was a
director of the Sidney Federal Land Bank and certainly could
not claim ignorance about the requirements for land contracts.
Also, Leola Van Atta testified that the May 19 writing
incorporated all the terms of the agreement, that she regarded
it as binding, and that they discussed no other terms beyond
those contained in the option agreement. Although the
evidence conflicted, the trial court clearly chose to believe
plaintiffs' version.
Under the second issue, defendant lumps together
several attacks on the actual terms of the "tender and
demand" sent to him by the plaintiffs. He argues that the
plaintiffs did not accept the terms of the option agreement
because it was conditioned on terms not mentioned in that
agreement. In the tender, the plzintiffs demanded that
Schillinger supply a warranty deed, and that this deed be
signed by defendant's wife. However, the option agreement
was silent on the kind of deed, and there was no requirement
that defendant's wife also signed the deed. Also, the tender
and demand asked that the deed be deposited with the Citizen's
First National Bank in Wolf Point, that bank which also held
the $64,000 in payment. Defendant argues that because no
place of payment was specified in the option agreement, that
payment at his own residence is implied. Finally, defendant
argues that although $64,000 was deposited in the Citizen's
First National Bank, it was not available to him because it
was actually in a joint passbook savings account in the name
of the plaintiffs, and subject to withdrawal only by the
written request of the plaintiffs. Defendant contends that
all of these conditions actually amount to a counteroffer
rather than an acceptance of an option agreement. He, therefore,
argues that it was proper for him in his December 7 response,
to insist on additional terms before he would sell the land.
We hold, however, that the tender and demand created a
binding agreement to convey the land.
Matters which are subsidiary, collateral, or which do
not go to the performance of the contract, are not essential
and do not have to be exprezsed in the contract. Steen v.
Rustad (1957), 132 Mont. 96, 313 P.2d 1014, 1020.
It is true that the plaintiffs had no right to obtain a
warranty deed, and they had no right to obtain the signat~re
of defendant's wife on the deed. But we do not regard this
demand as a fatal variance from the terms of the option
agreement. The option agreement did not specify the kind of
deed, and in such case, it is presumed that a fee simple is
intended to pass. See, section 70-20-301, MCA. In Morris
v. Goldthort (1945), 390 Ill. 147, 60 N.E.2d 857, the court
held that the demand for a warranty deed, where one was not
specified in the agreement, was a material variance of an
option agreement. This may be true in a particular case,
but we do not adopt such a hard and fast rule here. When
defendant Schillinger responded on December 7, he did not
object to plaintiffs' demand for a warranty deed. Although
the court could not order that plaintiffs get a warranty
deed, we have no doubt that a court of equity can properly
grant specific performance by ordering only that a deed
passing the fee simple estate, without the warranties, pass
by the terms of the option agreement.
Defendant Schillinger did mention in his December 7
response that his wife did not sign the option agreement.
Undoubtedly, the plaintiffs were proceeding with an abundance
of caution when they asked also that defendant's wife sign
the deed. They were concerned, as all careful parties would
be, that defendant's wife would perhaps claim an interest in
the land, and therefore, wanted to eliminate this possibility.
We believe, however, that a court of equity could properly
order that only defendant Clair Schillinger sign the deed to
the plaintiffs. We hold the demand that defendant's wife
also sign the deed is not a material variance from an option
agreement such as to defeat specific performance.
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Nor can we say that the plaintiffs were not ready,
willing and able to perform because the $64,000 was in their
name in a joint passbook savings account, which, by the
rules of the bank, the bank acted only as the plaintiffs'
collecting agent. In their "tender and demand" the plaintiffs
asked that the deed be deposited with this same bank. Although
there may have been some minor mechanical problems involved
in the transfer of the money to the defendant upon his
depositing a deed, there can be no doubt that the plaintiffs
demonstrated their intent to be bound by the option agreement,
and were ready, willing and able to pay $64,000 to the
defendant.
Defendant next argLes that specific performance can be
defeated because the plaintiffs should have sent the $64,000
to his home. He relies on law stating that when no place of
payment or delivery is specified, it is implied that payment
is to be at the seller's home. He cites 3 A.L.R.2d 256,
263. He therefore argues that an acceptance which specifies
a different place of payment does not create a contract
because it- is a conditional acceptance. He cites 77 Am.Jur.2d
Vendor and Purchaser, 5 16. Plaintiff, on the other hand,
cites section 28-1-1206, MCA, and contends by this statute
that when no place of performance is specified, the offer of
performance can be made at the debtor's option "wherever the
person to whom the offer ought to be made can be found."
Defendant Schillinger lived near Wolf Point, Montana, and
the deposit was made in a bank at Wolf Point, Montana.
Clearly, the plaintiffs made a most reasonable effort to
find the defendant and tender the $64,000.
Defendant Schillinger next contends that the terms of
the option agreement are so indefinite that specific performance
cannot be granted as a remedy. As already stated, the place
of payment, when the contract is silent, is wherever the
seller (creditor) can be found. Section 28-1-1206 (2), MCA.
The option agreement expressly provides for the manner of
payment and the amo~ntof payment: cash at $200 per acre.
Further, although the interest to be conveyed is not mentioned
in the option agreement, section 70-20-301, MCA, provides
that where the contract or terms of the grant are silent, a
fee simple is presumed to be intended to pass. Surely,
defendant Schillinger did not contend that any less interest
should pass, and if he so intended, he did not prove it.
Finally, defendant Schillinger contends the judgment
must be reversed because the trial court erroneously excluded
his testimony on three important matters going to the validity
of the contract. Defendant contends the trial court excluded
testimony that: he had no authority to sign the agreement;
he had no intent to sign a contract; and, whether anyone
directed that a writing be made. The trial court excluded
this offered evidence at one point in the trial because it
would violate the parol evidence rule. Defendant, however,
contends that the offered testimony, because it goes to the
validity of the contract, constitutes an exception to the
parol evidence rule, citing section 28-2-905(1) (b), MCA.
While we agree with defendant's analysis of the law, there
was no prejudice here because such testimony was admitted
later in the trial. Defendant testified that he signed the
writing only in his capacity as a shareholder, that he
intended only to sign corporate minutes rather than a contract,
and that no one directed that the discussions be reduced to
writing. For this reason, we see no prejudice in the earlier
ruling of the trial court. The testimony was admitted,
although the trial cocrt clearly rejected it.
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The judgment of the District Court ordering specific
performance is affirmed.
We Concur:
Chief.justice
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on. Peter G. M
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District Judge, %;ting
For Mr. ~ u s t i c eJohn CI
Sheehy