No. 33-366
IN THE SUPREME COURT OF THE STATE OF MONTANA
1984
K. ROBERT FOSTER,
Plaintiff and Respondent,
REALTY TITLE COMPANY, INC.,
a Montana Corp.,
Defendant and Appellant.
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S A L T Y TITLE COMPANY, INC.,
a Montana Corp. ,
Third Party Plaintiff and Appellant,
CHICAGO TITLE INSURANCE CO.,
a corp., and LAND TITLE COMPANY,
a corp. ,
Third Party Defendants and Respondents.
APPEAL FROM: District Court of the Tenth Judicial District,
In and for the County of Fergus,
The Honorable Leonard H. Langen, Judge presiding,
and The Honorable Jack Shanstrom, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Moulton Law Firm; William S. Mather, Billings, Montana
For Respondents:
Anderson-Brown Law Firm; Richard F. Cebull, Billings,
Montana (Chicago Title Ins.)
Anderson, Edwards & Molloy; A. Clifford Edwards,
Billings, Montana (Foster & Land Title Co.)
Submitted on Briefs: January 5, 1984
Decided: April 9, 1984
Filed:
- -- -
Clerk
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
Realty Tit1.e Company appeals from a judgment in favor of
K. Robert Foster, Chicago Title Insurance Company, and Land
Title Company entered in the District Court for the Tenth
Judicial District, Fergus County. We affirm the District
Court.
In 1974, K. Robert and Barbara Foster together with
Robert and Anita Johnson, formed Realty Title Company, an
abstract and title insurance business. Each held 25 percent
of the stock of the corporation which maintained offices in
Fergus, Judith Basin and Petroleum counties. Realty Title
and Chicago Title Insurance Company entered into a
nonexclusive underwriting agreement whereby Realty Title
acted as Chicago Title's agent.
In 1979, K. Robert Foster (hereinafter Foster) and the
Johnsons entered into the following agreement:
"TENDER OF STOCK
"THE UNDERSIGNED, K. ROBERT FOSTER, owner of
twenty-five (25) shares of the capital stock of
REALTY TITLE COMPANY, a Montana corporation, of
Lewistown, Montana, herewith tenders that stock to
the corporation provided that the corporation
acknowledges that the book value of that stock on
the date of this tender is Sixty-five Thousand
Dollars ($65,000.00) and that the corporation agree
to pay said amount for said stock 29% down upon
acceptance of this tender with the remaining
balance amortized in equal monthly payments over
ten (10) years at 8% interest from date, the first
monthly installment to be January 1, 1980. Full
prepayment privileges will be granted on notice.
"It is acknowledged that the undersigned possesses
information and skills acquired in the course of
ownership of the shares tendered, and that a
substantial factor in computing the book value of
those sha-res is the assurance herewith given that
the undersigned will not for ten (10) years engage
directly or indirectly in the abstracting or title
insurance business in the Montana counties of
Fergus, Judith Basin and/or Petroleum nor will the
undersigned instigate, encourage, advise, or
participate a.s an employee or part owner of any
such competing business in any of those counties.
Accordingly the undersigned herewith proposes and
agrees that the remaining balance due for said
shares shall be reduced by one-third (1/3) in. the
event any such competing business establishes
offices in such county or counties, unless, upon
the esta.blishing of such office the undersigned
proves by affidavit that the terms of the foregoing
assurance have not been violated. The terms of
such assurance are independent of the terms of any
similar assurance provided the corporation by any
other stockholder.
"This tender is conditional upon the corporation's
execution of a Security Agreement in due form
pledging the assets of the corporation as security
for the payment of unpaid balances for the stock
tendered here and in any other tender of even date.
"The undersigned agrees that only the remaining
shareholders and directors of Realty Title Company
may vote upon the question of acceptance of this
tender, and that forthwith upon such acceptance the
the undersigned will assign in blank the share so
tendered and which are currently escrowed with the
Northwestern Rank of Lewistown.
"DATED this 30th day of September, 1979.
"/s/ K. R-ohertFoster"
" A C C E P T A N C E
"REALTY TITLE COMPANY, a Montana corporation
of Lewistown, Montana, upon due resolution by its
board of directors with ratification by the
stockholders, herewith accepts the foregoing tend-er
of stock on the conditions and obligations set
forth herewith.
"DATED This 30th day of September, 1979.
"ATTEST: REALTY TITLE COMPANY
"/s/Anita A. Johnson BY: /s/Robert L. Johnson
Secretary Vice President"
The agreement was prepared by Robert L. Johnson pursuant
to the desire of Foster to sell his shares and the desire of
the Johnsons to have "an effective no direct or indirect
competition" provision. There was also further agreement, as
noted in a September 28, 1979 letter from Foster's attorney
to Robert Johnson, that:
". . .
The non-competition provision shall be so
worded that any direct or indirect competition by
Bob Foster with Rea-lty Title Company during the
contract period will automatically result in a
reduction of the unpaid balance due under the
contract of one-third. However, such a red.uction
will not be applicable if Bob is not involved in a
competing title agency or was not involved in
promoting its establishment in Lewistown, either
directly or indirectly.. . ."
Sometime after the execution of the agreement, Foster
began to organize Land Title Company, a title insurance
business, and opened an office in Lewistown in the later part
of 1980. Chicago Title entered into an underwriting
agreement with Land Title and then canceled its agreement
with Realty Title.
On June 27, 1980, Foster filed a complaint asking for
declaratory relief as to the Tender of Stock Agreement. He
made three claims: (1) that the provision of the agreement
language regarding competition should be declared void
pursuant to section 28-2-703, MCA, which prohibits contracts
in restraint of trade; (2) that if the court does not find
the competition agreement void it should declare that the
rights of Realty Title Company are limited to those provided
in the agreement; and (3) that the court should declare the
amounts due under the agreement.
Realty Title answered a-nd counterclaimed, alleging that
Foster defrauded Realty Title and made misrepresentations by
agreeing to not compete and then proceeding to set up a
competing concern. Realty Title a.sked the court to reform
the agreement so as to make it lawful and equitable. Foster
answered, alleging again that the agreement should be
declared void.
Foster filed a motion for summary judgment on July 1 6 ,
1981, with respect to his claim that the agreement was void
according to Section 2 8 - 2 - 7 0 3 , MCA. Realty Title filed a
motion for summary judgment on the same issue. Foster then
conceded that Realty Title's position that the agreement was
valid and enforceable as a covenant not to compete was
correct and the court granted Realty Title's motion.
Foster then moved for summary judgment on his second
claim that the rights of the parties are limited to those
found in the agreement. On November 1 3 , 1981, Realty Title
filed a third party complaint asking that Chicago Title be
enjoined from underwriting any insurance in competition with
Realty Title. They also asked that Chicago Title and Land
Title be found jointly and severally liable with Foster for
damages due to breach of the covenant not to compete. Realty
Title then filed an answer and amended counterclaim adding
the claim against Foster which involved Chicago Title.
On April 1, 1 9 8 2 , Realty Title filed an application for
preliminary injunction to restrain Foster and Chicago Title
from engaging or competing in the title insurance business in
Fergus, Judith Basin and Petroleum counties. The District
Court on May 2 4 , 1982, granted Foster's motion for summary
judgment on his second claim, dismissed Realty Title's cl-aim
against Chicago Title and Land Title and denied Realty
Title's application for preliminary injunction. A judgment
to that effect was filed July 6, 1 9 8 2 .
The District Court continued the date of the trial in
this case pending the outcome of the application for writ of
supervisory control filed with this Court by Realty Title.
On December 1 3 , 1 9 8 2 , this Court denied the petition.
The District Court calculated the date from which the
one-third price reduction should be imposed on Foster in an
opinion and order dated May 19, 1983, and the corresponding
judgment was filed June 21, 1983. Realty Title appeals both
the July 6 and June 21 judgments, raising the following
issues:
1. Did the District Court err by granting Foster
summary judgment limiting Realty Title ' s remedy to that
provided in the agreement?
2. Did the District Court err by rejecting Realty
Title's application for a temporary injunction?
3. Did the District Court err by granting Foster's and
Chicago Title's summary judgments on the tort claims?
We will consider the first two issues together.
According to Rule 56 (c), M.R.Civ.P., the District Court
correctly granted the motion for summary judgment if there
were no genuine issues as to any material fact and the moving
party was entitled to the judgment as a matter of law.
R.ealty Title argues that, as a matter of law, it was entitled
to have Foster and Land Title temporarily enjoined from
competing with Realty Titl-e. It contends that the intention
of the parties, in executing the agreement, wa-s not to
preclude other remedies in the event of breach.
What is persuasive in this case is that the language of
the tender of stock agreement is clear and unambiguous. It
specifically provides an agreed-upon remedy for breach of the
agreement. The evidence shows that the provision was the
result of negotiations between the parties. Both K. Robert
Foster and Robert Johnson are attorneys and the agreement was
drafted by Johnson. Given the clear statement of the
parties' agreement a.s to an appropriate remedy upon breach by
Foster, we turn to the 1-aw regarding the granting of
injunctions.
"The universal test of the jurisdiction of a court
of equity to issue injunctions is the absence of a
legal or other remedy by which the complainant
might obtain the full relief to which the facts a.nd
circumstances entitle him, and this is likewise the
test of its power to restrain breaches of
contracts. If the court is satisfied that there is
another adequate remedy, it will generally leave
the complainant to it and refuse to interfere to
restrain viola-tion of the agreement.. 42. ."
Am.Jur. Injunctions § 93.
The remedy provided in the tender of stock agreement was an
adequate remedy in the event of breach and Realty Title was
therefore not entitled to an order restraining Foster and
Land Title.
We are not unaware of the rule of Glacier Campgrounds v.
Wild Rivers, Inc. (1978), 182 Mont. 389, 597 P.2d 689, which
states that in the absence of a contractual provision
expressly limiting the available remedies to that provided, a
party may pursue other available remedies. It could be said
that jn this agreement, the parties took the first step of
.
providing an agreed-upon remedy but that they did not take
the second step of specifically limiting the remedies to the
one provided. We hold tha.t it was not necessary for the
parties to take that second step in this case. Here, by
allowing the alternative of iniunctive relief, the District
Court would have in effect, nullified the remedy provision of
the agreement by allowing other remedies before it was shown
that the one provided was inadequate. It is undisputed that
a court must interpret a contract such that the intentions of
the parties a.re given effect and such that the contract will
be lawful, operative and definite. Sections 28-3-301 and
28-3-201, MCA. Applying the rule of Gla.cier here would
defeat the evident intentions of the parties. Thus, to
facilitate the intentions of the parties, the remedy provided
j-n the contract must be declared to be the proper remedy.
The summary judgment was properly granted.
As to the last issue, Realty Title contends that the
District Court erred by granting Foster's and Chicago Title's
summary judgments on the tort claims. In its original
answer, Realty Title alleged fraud by Foster and I.ater
charged Chicago Title with aiding and assisting Foster in
breaching the agreement and interfering with contract rights.
The District Court obviously found no material facts to
support Realty Title's claim that Foster was guilty of fraud
in executing the tender of stock agreement. The court did
conclude that:
". . . the language of the stock tender agreement
clearly and plainly provides for a reduction in the
purchase price of that stock . .
. and . . .
such
language is clear, plain, unambiguous, and all
other remedies sought by Realty Title Company are
inconsistent and barred--Realty Title Company,
through the agreement prepared sulostantially, if
not entirely, by Robert Johnson, expressly provided
a remedy for itself . . ."
The District Court also found that Chicago Title properly
terminated the nonexclusive agency agreement and properly
entered into an underwriting agreement with Land Title. The
court concluded that Realty Title's claims of conspiracy and
interference of contractual rights were unfounded. Again,
without a showing that there was a genuine issue as to a
material fact or that the parties were not entitled to the
summary judgments as a matter of law, they will stand. Rule
56 (c), M.R.Civ.P.
The judgment is affirmed.
/ Justice
We Concur:
4.&.&
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Chief J u s k i c e