No. 92-607
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993
IN THE MATTER OF THE ESTATE OF
FRED PELZHAN,
Deceased.
APPEAL PROM: District Court of the Ninth Judicial District,
In and for the County of Teton,
The Honorable R. D. McPhillips, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Greg A. Luinstra, Jardine, Stephenson, Blewett &
Weaver, Great Falls, Montana
For Respondent:
R. L . "StoneyW Burk, Choteau, Montana; John
P. Wuerthner, Great Falls, Montana
Submitted on Briefs: July 20, 1993
Justice Fred J. Weber delivered the Opinion of the Court.
This is an appeal from an order of the Ninth Judicial
District, Teton County, determining that Joe and Floie Lee (the
Lees) have waived their right of first refusal to the sale of the
Pelzman ranch for a price of $120,000, and approving the sale of
the same property to Cloyd and Lloyd Stott. We affirm.
We consider the following issues on appeal:
1. Did the District Court err in determining that the Lees waived
their right of first refusal to the Pelzman ranch?
2. Did the District Court err in returning $120,000 tender money
to the Lees and substituting a Bank Letter of Credit?
This is the second appeal of this action. This appeal
revolves around the sale of a ranch in Teton County. The Lees
moved to the area in 1977 and began operating an 800-acre ranch for
Fred Pelzman (Pelzman) under a lease/management arrangement.
Pelzman had suffered a stroke at age 80 and was unable to manage
the property himself
On March 20, 1978, Pelzman and the Lees executed a written
agreement which contained the following language:
I, Fred Pelzman, Sr., agree to give Joe R. and Floie N.
Lee first option to purchase property I own in the above
legal Description upon or before my passing for the sum
of one hundred and twenty thousand dollars. It is agreed
by the undersigned that the option holders will reside
and maintain the said property until time of sale. A
ledger of time and improvements will be kept for the
purpose of reimbursement by the landowner. Upon
notification of intent to sell, a period of 45 days will
be allowed for payment.
The Lees remained in possession and currently remain in possession
of the ranch. Mr. Pelzman died on May 18, 1986. The Lees notified
the attorney for the Pelzman estate that they were exercising their
option to buy the ranch under the above clause. The estate
representative refused to sell. The Lees filed a district court
action for specific performance. Upon appeal, this Court
determined that the agreement did not constitute an "option
contractw but did constitute a "right of first refusal1*
which could
entitle the Lees to buy the Pelzman ranch for $120,000. In
substance this Court determined that the right of first refusal
became operable when the estate notified the Lees the ranch was for
sale. Lee v. Shaw (1992), 251Mont. 118, 123, 822 P.2d 1061, 1064.
Shortly after the foregoing appeal was final, the Lees through
their attorney entered into extensive sale negotiations with the
personal representative of the Pelzman estate. During these
negotiations the Lees attempted to settle all pending claims
between them and the estate, and intended to include both the
purchase of the ranch property and the purchase of the ranch
cattle. The parties agreed to the basic price of $200,000 with
$120,000 allocated to the ranch and $80,000 to the cattle. While
none of the various proposed contracts was signed by all of the
parties, agreement was reached to complete the sale on a specified
closing date. The Lees failed to show up for that closing and
requested extensions. The Lees failed to show up at subsequent
extensions. As a result, the estate representative entered into a
purchase and sale agreement with Cloyd and Lloyd Stott (the Stotts)
for the sale of the Pelzman ranch for $165,000 and sought court
approval of that agreement. On July 21, 1992, a hearing was held
on the petition regarding the Stott purchase. Lees filed an
objection to the sale based upon their right of first refusal.
They contended that the Stotts' offer of purchase brought their
right of first refusal into existence and they offered to purchase
for $120,000. While the District Court agreed that the Stotts'
offer had ripened the Lees' right of first refusal, it found that
the Lees had waived their right of first refusal when they failed
to show up at the closings for the sale of the property.
The Lees argue they had not reached final agreement with the
Pelzman estate on the purchase of the property and therefore had
not waived the right of first refusal. The Pelzman estate contends
that the court was correct in finding waiver because the Lees had
successfully negotiated a sale and then failed to show up at the
closing for such sale.
I
Did the District Court err in determining that the Lees waived
their right of first refusal to the Pelzman ranch?
In Lee v. Shaw, this Court determined that the above quoted
language of the agreement constituted a right of first refusal to
the sale of the Pelzman ranch. Lee, 251 Mont. at 123, 822 P.2d at
1064. A "right of first refusal11 preemptive right does not give
or
to the preemptioner the power to compel an unwilling owner to sell-
-it merely requires the owner, when and if he decides to sell, to
offer the property first to the person entitled to the preemption
at the stipulated price. & , 251 Mont. at 121, 822 P.2d at 1063.
&
The record indicates that negotiations for the sale of the
4
Pelzman ranch began in earnest during February of 1992. On
February 27, 1992, the Lees made a $200,000 offer for the ranch,
the ranch cattle, and other considerations. The consent of all
heirs for the $200,000 sale price of which $120,000 was for the
Pelzman ranch itself was given on April 8, 1992. We stated in Lee:
[Hlad such notification of intent been aiven bv the P.R.
Jwersonal rewresentative of the estate1 to the Lees, they
had the right to purchase the property for the $120,000
less any credits as indicated by the agreement from the
ledger, with payment to be made within 45 davs from
notification. (Emphasis added*)
Lee, 251 Mont. at 123, 822 P.2d at 1064.
The necessary notification from the estate's attorney came on
April 8, 1992 when he notified the Lees' attorney that all heirs
had now agreed to the sale and that $120,000 of the $200,000
selling price should be allocated as the price of the land. From
this date, the 45 day period began to run. That period ended the
end of May 1992.
Yet, the closing was not set until July 1, 1992 and despite
assurances from the Lees1 attorney that they would appear, the Lees
did not show up. Nor did they appear after being granted a twenty-
four hour extension to 4 p.m. July 2, 1992. Another extension was
sought to August 1, 1992. In the meantime, the Stotts offered
$165,000 for the ranch and the estate sought a judicial
determination of the appropriateness of the estate's acceptance of
this offer.
At the July 21, 1992 hearing in which the court considered the
Stott offer in light of the surrounding circumstances, the Lees
gave notice they would exercise their right of first refusal to buy
the ranch for $120,000. Following the hearing, the District Court
determined that the Lees had waived their right of first refusal by
failing to show up at the closing. However, the District Court
determined that it was the subsequent offer by the Stotts which
triggered the Lees' preemptive right and began the running of the
45 day period. While the District Court correctly determined that
the Lees had waived their right, it did not correctly determine the
triggering incident. We will affirm a district court when its
conclusion is correct, regardless of whether the court has used the
correct analysis to reach that conclusion. Shimskey v. Valley
Credit Union (1984), 208 Mont. 186, 676 P.2d 1308.
Waiver is an equitable doctrine, applicable where there is
intentional or voluntary relinquishment of a known right, claim, or
privilege, or such conduct as warrants inference of relinquishment
of such right. Sperry v. Montana State University (1989), 239
Mont. 25, 778 P.2d 895. We conclude that the Lees failed to tender
the sum of $120,000 within a period of 45 days from receiving the
notification of intent to sell, and as a result failed to comply
with the specific requirements of the above quoted contract
provision. We also conclude the record supports the determination
of the District Court that the Lees failed to show up for the
closing of the sale by the estate personal representative on two
different occasions. We further conclude that such conduct on the
part of the Lees constitutes an intentional relinquishment of their
right of first refusal and constitutes a waiver of that right.
We hold the District Court correctly determined that the Lees
waived their right of first refusal to the Pelzman ranch. Because
of this dispositive issue, we need not consider the Lees' other
issues.
11.
Did the District Court err in returning $120,000 tender money to
the Lees and substituting a Bank Letter of Credit?
While legal questions exist as to the propriety of the conduct
of the District Court in allowing a substitution of a letter of
credit for the $120,000 purchase price tendered by the Lees, in
view of our holding in this case, we do not find it necessary to
consider such issues. We note that the letter o f credit which has
been substituted by the Lees provides that the credit expires 30
days after this matter is remanded by this Court to the Teton
County Clerk of Court's office. As a result, no further action is
required on our part.
Affirmed.
f
November 10, 1993
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:
Greg A. Luinstra, Esq.
Jardine, Stephenson, Blewett & Weaver
P.O. Box 2269
Great Falls, MT 59403-2269
R.L. "Stoney" Burk
Attorney at Law
P.O. Box 70
Choteau, MT 59422
JOHN P. WUERTHNER
Attorney at Law
P.O. Box 2503
Great Falls, MT 59403
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA