No. 86-120
I N THE SUPREME COURT O F THE S T A T E O F MONTANA
1986
RONALD L . NORDWICK,
P l a i n t i f f and R e s p o n d e n t ,
GEORGE W. BERG,
D e f e n d a n t and A p p e l l a n t ,
S T A T E CREEK M I N I N G GROUP, RONALD
TOOMER, DONALD MARSHALL, p a r t n e r s ;
R & R PROSPECTORS, I N C . , a M o n t a n a
corporation,
D e f e n d a n t s and T h i r d P a r t y
Plaintiffs,
-vs-
SURETY T I T L E COMPANY,
T h i r d Party Defendant.
A P P E A L FROM: D i s t r i c t C o u r t of t h e F i f t h 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 C o u n t y of J e f f e r s o n ,
T h e H o n o r a b l e F r a n k D a v i s , Judge p r e s i d i n g .
COUNSEL O F RECORD:
For A p p e l l a n t :
A l l e y & B u r d e t t ; K e l l y J. V a r n e s , B i l l i n g s , M o n t a n a
D i c k A. Weber, J r . , H a m i l t o n , M o n t a n a
K e l l e r , R e y n o l d s , D r a k e , S t e r n h a g e n & Johnson; G l e n
Drake, Helena, Montana
For R e s p o n d e n t :
P a u l B. Smith, Boulder, Montana
S u b m i t t e d on B r i e f s : July 24, 1986
Decided: October 2, 1986
Filed: o@l" - 1986
2
Clerk
Mr. Justice John Conway Harrison delivered the Opinion of the
Court.
This is an appeal from an order of the Fifth Judicial
District, in and for the County of Jefferson, Montana,
granting partial summary judgment. We affirm.
The case involves a dispute over the ownership of
potential mining claims known as the State Creek mining
claims located near Boulder, Montana. Plaintiff Nordwick and
defendant Berg entered into a written agreement June 3, 1980,
to purchase some unimproved property in Jefferson County.
The agreement provided that Nordwick was to enter into an
earnest money and buy/sell agreement with the owner of the
property and negotiate a price not to exceed $46,500. Berg
was to pay $1,500 earnest money and the balance of the
purchase price.
The agreement provided that Berg would have title to
the surface and exclusive right to all the timber on the
property. Each party was to own one-half of all of the
mineral rights. Nordwick had the "right to mine, explore, or
otherwise develop mineral deposits on the property," and an
option to repurchase from Berg one-half of the surface rights
on payment to Berg of one-half of the price paid for the
property.
Nordwick was successful in securing a buy/sell with one
Phil Marthens for a negotiated purchase price of $43,000.
Berg paid Marthens the earnest money and Berg's name was
placed on a contract for deed. A warranty deed from Marthens
to Berg was recorded August 7, 1984. Rerg has since refused
to convey to Nordwick a one-half interest in the mineral
rights.
In May, 1983, Berg entered into a contract with R & R
Prospectors "to mine, test and develop property" for 120
days, paying Berg 5 percent of the net mill or smelter
returns of the ore concentrates. R & R moved equipment onto
the property and began to work the claims. Nordwick
indicated to R & R that he owned a 50 percent interest in the
claims. Berg, however, assured R & R Nordwick had no
interest in the property and promised to resolve the matter.
In November R & R ordered a title search which did not
indicate any interest or claim by Nordwick.
In March, 1984, Berg entered into an earnest money
agreement and receipt with State Creek Mining Group, Ronald
Toomer and Donald Marshall, partners, wherein Berg agreed to
convey the subject properties to State Creek. Berg again was
requested, to no avail, to clarify Nordwick's interest in the
property. Nordwick filed a complaint in September, 1984,
alleging Berg had wrongfully refused to recognize his
interest in the property and that both State Creek and R & R
should have known of his interest, but nevertheless they
entered into a contract with Berg and refused to give
Nordwick an accounting or any of the proceeds.
Subsequently State Creek Mining, Ronald Toomer, Donald
Marshall, and R & R Prospectors cross-claimed against Berg
alleging fraudulent misrepresentation for failure to disclose
any right or claim which might be asserted by Nordwick. Berg
then filed a cross-claim against the other defendants
alleging breach of contract. R & R filed a complaint against
Surety Title Company of Helena for negligence in failing to
discover the document on which Nordwick bases his claim. The
action against Surety has been severed and is not germane for
purposes o f this opinion.
Nordwick moved the District Court for partial summary
judgment as to the fact he owns one-half interest in the
mineral rights on the property in question. The motion was
argued orally and granted. Berg's subsequent motion to amend
the summary judgment, which requires Berg to warrant title to
one-half of the mineral rights rather than execute a
quitclaim deed, was denied. Berg appeals the partial summary
judgment.
The only issue on appeal is whether the District Court
erred in granting plaintiff Nordwick's motion for partial
summary judgment.
If there is no genuine issue of material fact, the
prevailing party is entitled to judgment as a matter of law.
Rule 56 (c), M.R.Civ.P. Cerack v. Albertsons, Inc. (1981),
195 Mont. 409, 411, 637 P.2d 509, 510. This Court will
uphold a summary judgment issued by a District Court unless
we find it to be clearly erroneous. The District Court
determined there was no genuine issue of material fact on the
question of ownership of the property.
Resolution of the question before us turns on whether
the agreement between Berg and Nordwick was a valid
partnership agreement granting Nordwick a one-half interest
in the minerals on the property. We find it was.
Berg argues failure of consideration and failure to
provide promised consideration results in an invalid
contract. A basic principle of contract law, that there must
be consideration to have a valid contract, is codified at
S 28-2-102 (4), MCA. The written agreement of June 3 between
Berg and Nordwick creates a presumption of consideration.
Section 28-2-804, MCA. Consideration is defined as " [a]ny
benefit conferred or agreed to be conferred upon the promisor
by any other person, to which the promisor is not lawfully
entitled, ... " Section 28-2-801, MCA. The burden of
showing a want of consideration sufficient to support the
June 3 agreement falls on Berg. Section 28-2-805, MCA. He
fails to meet this burden.
Berg asserts the agreement did not "recite" any
consideration. The terms of the agreement speak for
themselves, however. The agreement provides in pertinent
part:
It is agreed George W. Berg shall pay
earnest money in the amount of $1,500,
and Ron L. Nordwick will enter into an
earnest money and buy-sell agreement with
the owner of the property.
Pursuant to the terms of the agreement, Nordwick agreed
to and did negotiate a buy/sell agreement with the seller,
Marthens, at a bargained for price. He thereby secured a
legal right to buy the property pursuant to the buy/sell
agreement between himself and Marthens. Berg agreed to and
did pay the earnest money to Marthens. Nordwick then
relinquished any rights to the surface to Berg. Each party
fulfilled his obligation under the unambiguous terms of the
contract. Clearly the agreement "recites" consideration.
There is no evidence in the record indicating this was not a
fully bargained for exchange between the parties constituting
good consideration pursuant to 5 28-2-801, MCA.
If an agreement containes a bargained for exchange in
legal position between the parties, the agreement becomes a
legally enforceable contract. State ex rel. Stafford v.
Fox-Great Falls Theater Corp. /1943), 114 Mont. 52, 67, 132
P.2d 689, 697.
[Nor] is it essential that the
consideration should impose a certain
gain or loss to either party. It i.s
sufficient that a party in whose favor
the contract is made foregoes some
advantage or benefit, or parts with a
right he might otherwise exert.
Schnierle v. Schnierle (Ohio 1940), 33 N.E.2d 674, 675.
Berg's defense that the failure of consideration
relates to consideration different than that set forth in the
June 3 agreement is totally without merit. This is a
misapplication of the defense. Failure of consideration
relates to failure of the consideration recited in the
written terms of the contract, and not to failure of alleged
oral consideration subsequent to and different from the
written. Berg is attempting to introduce evidence of terms
different than those recited in the contract. This he cannot
do.
The principle is well established and of
general application, subject to certain
exceptions, that when a contract --
-- has been
reduced to writinq the contents - - of such
writing cannot be added to, contradicted,
a l t e r e - ., m r S d by parole or extrinsic
d
evidence, and that sucx writing
supercedes all oral -
neqotiations
concerning its matter which preceded,
accompanied, or led up to its execution.
This was the rule of common law, and has
been embodied in the statute law of this
state. (Emphasis in original.)
West River Equipment Co. v. Holzworth Const. Co. (1959), 134
Mont. 582, 588, 335 P.2d 298, 302; Perez-Lizano v. Ayers
(Mont. 1985), 695 P.2d 467, 470, 42 St.Rep. 208, 212-213.
The exceptions to this rule are found in S 28-2-905, MCA,
which provides in pertinent part:
(1) Whenever the terms of an agreement
have been reduced to writing by the
parties, it is to be considered as
containing all those terms. Therefore,
there can be between the parties and
their representatives or successors in
interest no evidence of the terms of the
agreement other than the contents of the
writing except in the following cases:
(a) when a mistake or imperfection of
the writing is put in issue by the
pleadings;
(b) when the validity of the agreement
is the fact in dispute.
(2) This section does not exclude other
evidence of the circumstances under which
the agreement was made or to which it
relates, as described in 1-4-102, or
other evidence to explain an extrinsic
ambiguity or to establish illegality or
fraud ...
Berg did not plead any of the exceptions as required by
Rule 8 (c), M.R.Civ.P. Although he admitted that pursuant to
the written terms of the agreement Nordwick had no duty to
mine, explore, or otherwise develop the mineral deposits on
the property, he also claimed the writing was modified later
changing Nordwick's obligation. "Any matter admitted
. . . is conclusively established unless the court on motion
permits withdrawal or amendment of the admission. " Rule
36 (b), M.R.Civ.P.
Even if Berg were allowed to introduce parole evidence
that the written consideration was modified orally after June
3, the evidence would have no effect by virtue of
5 28-2-1602, MCA: "A contract in writing may be altered by a
contract in writing or by an executed oral agreement, and not
otherwise." Berg did not offer as an affirmative defense and
did not allege facts that an oral agreement was in fact
executed, altering the June 3 agreement.
The evidence being clear there was a bargained for
agreement and valuable consideration, the agreement between
Nordwick and Berg is valid. When a contract exists, the duty
of the court is to enforce it. Gray v. City of Billings
(Mont. 1984), 689 P.2d 268, 271, 41 St..Rep. 1910, 1913;
Maxted v. Barrett (1982), 198 Mont. 81, 87, 643 ~ . 2 d1161,
1164. Consequently, b e c a u s e t h e r e i s no g e n u i n e i s s u e of
f a c t a s t o t h e ownership o f t h e p r o p e r t y , t h e D i s t r i c t Court
p r o p e r l y g r a n t e d summary judgment on t h e i s s u e o f o w n e r s h i p .
We affirm.