No. 86-495
I N THE SUPREME COURT O F THE S T A T E O F MONTANA
1987
ROBERT A. HILLSTROM a n d P A T R I C I A
A. HILLSTR.OM,
P l a i n t i f f s and R e s p o n d e n t s ,
-vs-
STEVEN J. O ' N E I L L ,
D e f e n d a n t and A p p e l l a n t .
A P P E A L FROM: D i s t r i c t C o u r t of t h e E i g h t e e n 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 G a l l a t i n ,
T h e H o n o r a b l e Joseph G a r y , Judge p r e s i d i n g .
COUNSEL O F RECORD:
For A p p e l l a n t :
P e t e r M. M e l o y , H e l e n a , M o n t a n a
For R e s p o n d e n t :
J. R o b e r t P l a n a l p , Bozeman, Montana
S u b m i t t e d on B r i e f s : March 12, 1987
Decided: April 21, 1987
Filed: APk i
9570
Clerk
Mr. Justice John Conway Harrison delivered the Opinion of the
Court.
Defendant Steven O'Neil appeals the October 29, 1985,
order of the Eighteenth Judicial District Court granting
summary judgment in favor of plaintiffs Robert and Patricia
Hillstrom. We affirm.
This case involves breach of a buy-sell contract.
Robert and Patricia Hillstrom were the sellers and Steven
OINeil the buyer. Hillstroms desired to sell a ten acre
tract of land located in Gallatin County, Montana. OINeil
sought land in the area for development purposes. On June 2,
1983, O'Neil executed a document entitled "Earnest Money
Receipt and Agreement to Sell and Purchase". Hillstroms
signed the agreement on June 9, 1983.
The buy-sell agreement provided for a purchase price of
$225,000 with $6,000 in earnest money due upon execution of
the contract, $69,000 due at the time of closing, assumption
of an $18,000 underlying contract, and the balance of
$132,000 due in monthly installments with interest accruing
from the date of closing at 10%. The contract further
provided for two partial releases. Upon Hillstroms' receipt
of $100,000 of principal from OINeil, Hillstroms would "deed
property east of road and west of river" to OINeil. Upon
receipt of $50,000 of the principal amount, Hillstroms were
required to deed property west of the road to O'Neil. OINeil
had choice of first release and was required to pay for all
costs of releases and surveys.
The buy-sell contract was drawn by O'Neil's real estate
agent and contained wording in large print, "THIS IS A
LEGALLY BINDING CONTRACT, IF NOT UNDERSTOOD, SEEK COMPETENT
ADVICE". Closing was set for August 1, 1983. O'Neil wired a
telegram to Hillstroms stating, "Your acceptance on June 9,
1983, is considered by me to create a valid and binding
agreement."
Prior to closing O'Neil became concerned about securing
the necessary approval of county authorities regarding his
subdivision plans. The closing date was extended to August
4, 1983, by agreement of the parties. On August 4, 1983,
O'Neil refused to close. O'Neil proposed that closing be
postponed until a survey of the tract could be performed.
O'Neil also requested documents showing consent by Corcoran
and Spain to O'Neil's assumption of the contract, and
transferring all appurtenant water rights to O'Neil.
Hillstroms provided O'Neil with Corcoran and Spain's
consent to assignment but refused to delay closing to allow
survey as requested by O'Neil. The parties were unable to
come to terms and Hillstroms filed an action for specific
performance August 19, 1983. Following discovery, both
parties filed motions for summary judgment. Hearing was held
and the District Court entered its order October 30, 1985,
granting summary judgment in favor of Hillstroms. O'Neil
appeals and raises the following issues:
1) Whether the District Court erred in granting summary
judgment?
2) Whether the District Court erred in granting
specific performance?
3) Whether rescission was proper for failure of
Hillstroms to permit surveying to be completed?
4) Whether there was a mutual mistake of fact as to
subdivisibility of the land covered by the contract?
5) Whether the District Court erred in granting
specific performance of the buy-sell agreement without
reference to the proposed closing agreement?
O'Neil contends there were genuine issues of material
fact precluding summary judgment in this case. Pursuant to
Rule 56 (c), Mont. R.Civ. P. , summary judgment is proper where
the record discloses no genuine issue of material fact and
the moving party is entitled to judgment as a matter of law.
All reasonable inferences that may be drawn from the offered
proof are to be drawn in favor of the party opposing summary
judgment. Abell v. Travelers Insurance Co. (Mont. 1983), 663
P.2d 335, 40 St.Rep. 738. A review of the record in this
case reveals no genuine issue of material fact and supports
the summary judgment in favor of Hillstroms.
O'Neil next contends that specific performance should
not have been granted because Hillstroms had not fully
complied with their obligations under the contract. Section
27-1-416, MCA, requires a party to perform all material
conditions precedent before specific performance may be
enforced. O'Neil claims Hillstroms failed to satisfy 3
conditions prior to closing: 1) failure to allow O'Neil to
perform a survey; 2) failure to secure a consent to
assignment from Corcoran and Spain; 3 ) failure to provide
title insurance.
As noted by the District Court, none of these provisions
are listed in the contract as conditions precedent. Of these
3 items only title insurance is mentioned but there is no
requirement that it be due upon closing. In fact, it was
O'Neills real estate agent who was involved in securing title
insurance and it was completed July 29, 1983, and delivered
to O'Neil August 5, 1983. We find no support for OINeills
contention that failure to have title insurance in hand on
August 4, 1983, excused his performance nor were there any
conditions precedent which Hillstroms failed to perform.
Section 27-1-411(4), MCA, provides that specific
performance may be compelled when the parties to a contract
have expressly agreed in writing that specific performance
shall be an available remedy. The buy-sell agreement signed
by the parties expressly provided for a remedy of specific
performance and Hillstroms were entitled to pursue this
remedy.
The third issue is whether O'Neil was entitled to
rescission due to Hillstroms' refusal to permit survey prior
to closing. O'Neil asserts that subdivisibility of the tract
is a contractual condition implied by the partial release
clause of the buy-sell agreement. The release clause allows
OfNeil to acquire deed to a portion of the land upon payment
of a percentage of the entire principal owing to Hillstroms.
However, before partial release can occur, state law requires
the land to be surveyed, platted, and approved for
subdivision.
This issue is merely a rephrasing of O'Neil's previous
argument that survey was a condition precedent to closing.
There is no language in the contract indicating completion of
a survey to be a condition precedent. We find no support in
the record for O'Neilfs contention that closing should have
been delayed to permit a survey to be accomplished.
The fourth issue is whether there was a mutual mistake
of fact as to subdivisibility of the land covered by the
contract. The District Court found O'Neil's claim of mistake
of fact to be meritless because O'Neil has never attempted to
have the property subdivided. We agree. Mistake of fact as
found in S 28-2-409(1), MCA, requires, "Unconscious ignorance
or forgetfulness of a fact, past or present, material to the
contract." To succeed on a mistake of fact defense, OfNeil
would have to show that the land cannot be subdivided.
O'Neil admits he has not made such a showing.
O'Neil contends that mistake of fact is applicable
because neither party understood the extent and complexity of
the regulations concerning subdivision approval. While
Hillstroms contend O'Neil raises this argument for the first
time on appeal, we find it was presented in O'Neil's
supplemental brief filed with the District Court. At any
rate, O'Neil's argument fails on its merits.
O'Neil was under the duty to execute the buy-sell
agreement with the prudence and care of a reasonable and
cautious businessman. Quinn v. Briggs (1977), 172 Mont. 468,
5 6 5 P.2d 297. The record shows O'Neil is an experienced
businessman who has operated 6 silver companies including the
largest silver recycling company in the country, purchased
and sold numerous homes, and he is the sole stockholder of a
corporation which owns a ranch in Gallatin County adjacent to
the land under dispute in this case.
O'Neil's deposition testimony reveals that he was aware
of the obstacles to subdivision approval because he was
experiencing difficulties obtaining subdivision approval for
the ranch at the time he negotiated the contract with
Hillstroms. He cannot now claim that he entered the buy-sell
agreement intending to develop the land yet was unaware of
the requirements of subdivision approval.
The final issue is whether the District Court erred in
granting specific performance of the buy-sell agreement
without reference to the proposed closing agreement. We find
no error. The proposed closing agreement was never signed by
O'Neil and is not enforceable without his consent. Section
28-2-102, MCA. The District Court order granted specific
performance of the buy-sell agreement and does not mention
the proposed closing agreement.
O'Neil argues both sides on this issue, stating that he
refused to sign the closing contract yet he is entitled to
the protections of a closing contract. In this instance, we
find the essential terms of the parties' agreement are
contained in the buy-sell agreement and it is specifically
enforceable. This Court has previously upheld specific
enforcement of buy-sell agreements. See Chadwick v. Giberson
(Mont. 1980), 618 P.2d 1213, 37 St.Rep. 1723; ~ a l c r ov. Moon,
,
(Mont. 1987), - P.2d - 44 St.Rep. 504.
The District Court is affirmed.
Justices