No. 90-451
IN THE SUPREME COURT OF THE STATE OF MONTANA
1991
PAYNE REALTY AND HOUSING, INC,
Plaintiff,
-v-
FIRST SECURITY BANK OF LIVINGSTON,
A Montana Corporation,
Defendant and Respondent,
and
CLERK OF SUPRCS:: CQLI-
STATE OF I f r , g , t ; : i i
HARRY JOE BROWN, JR.,
Defendant and Appellant.
APPEAL FROM: District Court of the Sixth Judicial District,
In and for the County of Park,
The Honorable Byron Robb, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Carl A. Hatch; Small, Hatch, Doubek & Pyfer; Helena,
Montana
For Respondent:
John T. Jones; Moulton, Bellingham, Longo & Mather;
~illings,Montana
Submitted on Briefs: January 17, 1991
Decided: March 4, 1991
Filed:
~usticeR. C. McDonough delivered the opinion of the Court.
This is an appeal from the Montana Sixth Judicial District
Court, Park County involving a real estate transaction. Harry Joe
Brown (Buyer) appeals the order of the District Court granting
summary judgment to First Security Bank of Livingston (Bank) and
ordering that the Buyer forfeit $50,000.00 in earnest money
deposited with Payne Realty (Realtor) on the grounds that the Buyer
breached a buy-sell agreement. We reverse and remand for further
proceedings.
The Buyer raises the following issues on appeal:
(1) Did the District Court err in granting summary judgment
to the Bank and ordering a forfeiture of Buyer's earnest money to
the Bank and dismissing all other claims raised by the pleadings?
(2) Did the District Court err in awarding the Bank its
attorney fees and costs as prevailing party?
In reviewing a motion for summary judgment, we view the
evidence in the light most favorable to the party opposing the
motion, the Buyer in this case. See Lorash v. Epstein (1989), 236
Mont. 21, 24, 767 P.2d 1335, 1337; Cerek v. Albertson's, Inc.
(1981), 195 Mont. 409, 411, 637 P.2d 509, 511. The evidence
indicates that after reviewing some properties listed with Payne
Realty (the Realtor), the Buyer became interested in some real
estate known as the Riverside Ranch, located in the Paradise Valley
about 15 miles south of Livingston. The Buyer arranged with the
owner of Riverside Ranch, First Security Bank of Livingston (the
Bank) , to view the property. While touring the property, the Buyer
2
was told of another piece of property, the Elkhorn ~ i d g eRanch,
located about 32 miles northeast of Bozeman, which the Bank also
had for sale. Buyer later viewed a videotape of this property at
the Bank.
The Bank and Buyer entered into a buy/sell agreement for the
Riverside Ranch on August 29, 1988. Buyer deposited $50,000.00 in
earnest money with the Realtor. The agreement provided that the
Bank would provide financing for the Buyer. It also provided the
Buyer with an option to the buy the Elkhorn Ridge Ranch. The
Bank's sole remedy for breach of the agreement by the Buyer was
forfeiture of the earnest money. Finally, the agreement provided
for a closing date on the sale on October 1, 1988.
At the closing date on October 1, the Buyer allegedly informed
the Bank that he was "disenchantedvvwith the sale. A one-day
extension of the closing date was requested by Buyer and granted
by the Bank so that the Buyer's counsel could review the closing
documents, including a mortgage proposed by the Bank. A second one
-week extension was also granted so that the Buyer could have
Montana counsel review the documents. Meanwhile, on October 4,
1988, the Bank provided Buyer with a title commitment. Twenty days
after the last extension of the closing date, the Buyer's attorney
requested the return of the earnest money and listed objections to
the Bank-furnished mortgage documents. The Realtor eventually
filed this interpleader action to obtain a court ruling concerning
disposition of the earnest money.
After discovery, the Bank and Buyer stipulated to the
Realtor's dismissal from the suit and the realignment of the
parties with Buyer as plaintiff and Bank as defendant. The Bank
filed a motion for summary judgment requesting forfeiture of the
earnest money which the court granted in Bank1s favor on May 23,
1989. The court also awarded the Bank its costs and attorney fees.
The Buyer now appeals.
We begin our review by setting forth the standard for summary
judgment. Summary judgment is proper only if the record discloses
no genuine issues of material fact and the moving party is entitled
to judgment as a matter of law. Rule 56 (c), M.R.Civ.P. ; Reaves v.
Reinbold (1980), 189 Mont. 284, 287, 615 P. 2d 896, 898. While it
is true that the purpose of summary judgment is to encourage
judicial economy, it is also true that the procedure is never to
be a substitute for trial if a material factual controversy
exists. Reaves, 615 P.2d at 898.
The Buyer contends that the terms of the mortgage offered by
the Bank are onerous and excuse him from completing the sale as
set forth in the buy/sell. He alleges that there are genuine
issues of material fact regarding whether the terms of the mortgage
were agreed upon between the parties.
We agree with the Buyer's contention that the terms of the
mortgage are questionable. As such, it is unlikely that there was
mutual assent or a "meeting of the minds" necessary to form a
binding contract for the sale of Riverside Ranch. See Chadwick v.
Giberson (1980), 190 Mont. 88, 92, 618 P.2d 1213, 1215. In this
regard, Buyer's argument that he was denied his right to exercise
his option to purchase Elkhorn Ridge rather than Riverside Ranch
is immaterial. Regardless of whether exercising this option was
contingent upon first purchasing Riverside Ranch, the option
provides that its terms are the same as those for the Riverside
Ranch purchase, and if there was no "meeting of the mindsv1as to
the first transaction, there was likewise no agreement on the
option.
The courtlsprincipal ground for granting the motion was that
the parties entered an llordinary,
complete and unambiguous buy/sell
agreement" which the Buyer was now seeking to avoid. The District
Court also correctly concluded that Itthe contract specifically
obligated the Bank to finance the purchase upon certain terms if
Brown wished to finance it there. . ..II Those terms provided
as follows:
First Security Bank to carry a note mortgage over 10
years, interest rate to be prime rate plus -0- with a cap
rate of 12%, no cap on floor, & no points. Buyer to pay
monthly payments. Prime Rate is fixed by City Bank of
New York.
Said mortgages are assumable on sale of all, or if in
part, pro rata on acreage basis.
At closing, however, the Bank presented the Buyer with a mortgage
containing terms different then those set forth in the buy/sell.
Specifically, the mortgage contained a "due on salegf
clause making
the entire balance due upon sale of the property. This effectively
precludes the mortgage from being assumable, as required by the
buy/sell agreement.
Other alleged onerous terms include: (1) the mortgage provided
that the Buyer's death would be a default, (2) the mortgage allows
the Bank to declare a default whenever it deems itself insecure,
and (3) the mortgage grants a security interest in all personal
property attached to the premises even though no personal property
was to be sold by the Bank to Mr. Brown. Furthermore, the
financing terms provided in the buy/sell are silent regarding
amortization of the payments or equal principal payments on the
loan. Thus, there is at least a question of material fact
regarding the intent of the parties in the calculation of interest
payments.
In reversing the court's order, we note that the Buyer did not
file a cross motion for summary judgment in this case. The
interpretation of the buy/sell agreement involves questions of law;
upon resolving these questions we conclude that the Bank was not
entitled to summary judgment as a matter of law. However, we will
not enter summary judgment in favor of the Buyer in addition to
reversing this case due to the sparse record before us. Generally,
no formal cross-motion is necessary at the district court level for
the court to enter judgment for the non-moving party if the law so
entitles it. However, the court must be careful that the original
movant had a full and fair opportunity to meet the proposition that
there is no genuine issue of material fact and the other party is
entitled to judgment as a matter of law. Hereford v. Hereford
(1979), 183 Mont. 104, 107-08, 598 P.2d 600, 602; 6 Moore's Federal
Practice, 5 56.12, pp. 56-331 and 56-334. Accordingly we reverse
and remand this case for further proceedings.
In light of our holding above, we need not address the second
issue concerning attorney fees and costs raised by the buyer on
this appeal. The order of the District Court is
REVERSED.
We Concur: /
Chief Justice