NO. 94-308
IN THE SUPREME COURT OF THE STATE OF MONTANA
1995
RONALD W. JOHNSON, d/b/a
JOHNSON REALTY,'
Plaintiff and Respondent,
APPEAL FROM: District Court of the Fifth Judicial District,
In and for the County of Beaverhead,
The Honorable Frank M. Davis, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
J. Robert Planalp, Landoe, Brown
Planalp & Braaksma, Bozeman, Montana
For Respondent:
W. Cecil Jones and Calvin J. Erb,
Attorneys at Law, Dillon, Montana
Submitted on Briefs: November 17, 1994
Decided: February 8, 1995
Filed:
Justice William E. Hunt, Sr., delivered the opinion of the Court.
Respondent Ronald Johnson, doing business as Johnson Realty,
brought suit in the Fifth Judicial District Court, Beaverhead
County, to collect a real estate broker's commission from sellers.
Johnson moved for summary judgment. The District Court granted the
motion and entered judgment in favor of Johnson. Appellants Jerry
Nyhart and Nyhart Ranches, Inc., appeal. We affirm in part and
vacate the judgment as it pertains to Clarajo Nyhart.
We frame the issues on appeal as follows:
1. Did the District Court err in granting summary judgment?
2. Did the District Court err by awarding prejudgment
interest to Johnson?
3. Did the District Court err by entering judgment against
Clarajo Nyhart?
Ronald Johnson is a licensed real estate broker doing business
as Johnson Realty in Dillon, Montana. In 1984, Jerry and Clarajo
Nyhart owned and ranched land in Beaverhead and Deer Lodge
Counties. In the spring of 1984, the Nyharts wanted to sell
approximately 2000 acres of their land located in the Big Hole
Valley. On May 29, 1984, Jerry and an agent of Johnson Realty
executed a standard listing contract for the land, listing the
selling price at $800,000, and stating that the terms of the sale
would "be negotiated at time of sale." The agreement provided that
the listing contract would expire on May 29, 1985. The listing
contract also provided:
FOR VALUE RECEIVED, you and your agents are employed to
find a buyer ready and willing to purchase or exchange
the property described above at the price and terms noted
or at such other price and terms as I/we accept. . In
the event a written agreement is executed for the sale or
exchange of said property, I/we agree to pay you in cash
a commission equal to 6% of the selling price for your
services in securing or procuring a purchaser.
Johnson obtained an offer to purchase the property from Keith
Swenson. Johnson presented Swenson's offer to the Nyharts, and on
June 29, 1984, Swenson, Jerry, and Clarajo signed an earnest money
receipt and agreement to sell and purchase. The earnest money
receipt and agreement provided in part:
The TOTAL PURCHASE PRICE is Seven hundred thousand
dollars ($700,000) to be paid by Purchaser as follows:
Total of $70,000 at closing including $10,000
earnest money paid this date. Balance to be
paid in escrow. Purchaser to have the right
of unlimited prepayment on escrow and
Travelers Real Estate loan. Seller will then
receive $50,000 on January 1, 1985. Balance
to be agreed upon at closing.
. . .
The date of closing is on or before July 30, 1984 or
30 days beyond this date shall be allowed for completion
of financing.
The agreement also provided:
The Seller shall at his expense, furnish Purchaser
an abstract of title to the above described property,
certified to date, or a title insurance policy as
evidenced by a title commitment in an amount equal to the
purchase price, insuring title thereto vested in
Purchaser, free and clear of all liens and encumbrances
except Zoning ordinances, building and use restrictions,
reservations in federal patents, beneficial utility
easements of record, and mortgage to Travelers Insurance
in amount of $550,000.
The scheduled closing did not occur on July 30. Oil
November 19, 1984, pursuant to the agreement for sale and purchase,
Leonard Pelullo, Swenson's assignee in interest, executed two
promissory notes payable to the Nyharts on February 1, 1985, and
July 1, 1994, in the amounts of $80,000 and $100,000, respectively.
To secure the notes, Pelullo granted the Nyharts a mortgage on the
2000 acres. The promissory notes and the mortgage were
subsequently recorded in Beaverhead County.
On December 19, 1984, the Nyharts' attorney, Max Hansen, sent
a letter to the general manager of the Boise, Idaho, branch of
Travelers Insurance Company. Hansen's letter stated in pertinent
part:
It was always our understanding that at the time of
closing this transaction [between the Nyharts and
Pelullol , the [mortgage] assumption papers would be
signed by Mr. Pelullo and the only further obligation Mr.
and Mrs. Nyhart would have to Travelers would be to make
the payment on the remaining balance. . .
Since the assumption papers are not available at this
time, my clients are faced with a rather unfortunate
chain of circumstances. If they do not close the
transaction, default interest is going to continue to
accrue on past due payments owing to Travelers. However,
if they do close out the transaction and make the l/1/84
payment together with default interest, Mr. Pelullo will
be placed in possession of the property while we are
tying up the loose ends of getting the assumption papers
signed by Mr. Pelullo. I am rather uncomfortable with
that situation to say the least. We have determined that
my clients don't have any real choice in the matter and
are going to close the transaction with an eye to getting
the assumption papers signed by Mr. Pelullo just as soon
as possible and hopefully having the whole matter
resolved by February 1, 1985.
4
The Nyharts' attorney prepared a deed transferring title of
the 2000 acres to Pelullo, and on December 21, the Nyharts signed
the deed and delivered it to Pelullo. The deed was subsequently
recorded in Beaverhead County. In addition to the two promissory
notes, Pelullo paid the Nyharts $70,000. The remaining balance of
the purchase price consisted of a mortgage held by Travelers in the
amount of $550,000. Jerry claims that he and his attorney "were
under the belief that Travelers Insurance Company would allow an
assumption of the real estate mortgage." Following the transfer of
title, however, difficulties arose between the Nyharts, Pelullo,
and Travelers regarding Pelullo's assumption of the $550,000
mortgage.
On December 21, the Nyharts paid Johnson a commission of
$11,967.27 out of the $70,000 they received from Pelullo. The
Nyharts' attorney also prepared, and the Nyharts signed, a
promissory note for the balance of the commission, payable to
Johnson on or before February 1, 1985, in the amount of $30,032.73.
The total amount paid and promised to Johnson equalled $42,000, or
exactly six percent of the $700,000 selling price. Johnson was not
present at the December 21 transaction, nor was he represented by
counsel at that meeting. The note was not signed by Johnson,
although Jerry claims that Johnson orally agreed to the terms of
the note.
Following the transfer of title, Travelers refused to allow
Pelullo to assume the $550,000 mortgage and brought suit to
5
foreclose. Additionally, Pelullo failed to make payment on the
promissory note due February 1, 1985. Two separate sets of
litigation followed, the first between the Nyharts and Pelullo, and
the second between Travelers, the Nyharts, Pelullo, and Pintler
Creek Range, Inc. Those cases were filed in the Fifth Judicial
District Court, Beaverhead County, and the Third Judicial District
Court, Deer Lodge County, respectively.
In April 1987, the Nyharts and Pelullo settled their
litigation against one another. They entered into a written
agreement mutually releasing and discharging each other from
all manner of action and actions, cause or causes of
action, suits, debts, dues, sums o f money, notes,
mortgages, accounts, reckonings, covenants, contracts,
controversies, promises, damages, judgments, claims and
demands whatsoever, in law or in equity . regarding
either the Beaverhead litigation, or the Deer Lodge
litigation, or the subject matter of anything set forth
in said lawsuits.
The agreement was also signed by David Hellhake, president of
Pintler Creek Range, Inc. According to the agreement, Pintler
Creek Range, Inc., was the current owner of the "property
previously deeded to PELULLO by the NYHARTS." The agreement
provided that the Nyharts would receive the use of and income
generated by the 2000 acres for a period of five years and that,
during the five years, Pelullo would pay the property taxes.
Pelullo also agreed to pay up to $1000 to improve the cabin located
on the land. A third cause of action was instituted by the Nyharts
and Pelullo against Travelers. The District Court in this case
6
presided over and took judicial notice of the proceedings in that
case.
On December 11, 1987, the Second Judicial District Court,
Silver Bow County, issued a decree dissolving Jerry and Clarajo's
marriage. Pursuant to the property settlement agreement in the
dissolution proceedings, Jerry released Clarajo from liability for
all notes, obligations, and debts which were presently owed or
incurred by Jerry Itincluding, but not limited to, property taxes,
mortgages, and the debt to Travelers Insurance Company."
Our standard of review on a grant or denial of summary
judgment is identical to that of the district court. Klawitter v.
Dettmann (Mont. 1994), 51 St. Rep. 1296, 1297. Summary judgment is
proper only when no genuine issue of material fact exists and the
moving party is entitled to judgment as a matter of law. Rule
56(c), M.R.Civ.P.; Klawitter, 51 St. Rep. at 1297; Spain-Morrow
Ranch, Inc. v. West (1994), 264 Mont. 441, 444, 872 P.Zd 330,
331-32.
ISSUE 1
Did the District Court err in granting summary judgment?
Jerry Nyhart signed a standard listing contract with Johnson
Realty. The contract provides in pertinent part:
FOR VALUE RECEIVED, you and your agents are employed to
find a buyer ready and willing to purchase or exchange
the property described above at the price and terms noted
or at such other price and terms as I/we accept. . . . In
the event a written agreement is executed for the sale or
exchange of said property, I/we agree to pay you in cash
a commission equal to 6% of the selling price for your
services in securing or procuring a purchaser.
7
In its order granting summary judgment, the District Court, with
regard to this provision, concluded that:
The language in the agreement is clear and
unambiguous. There were no qualifying conditions.
Johnson was entitled to a broker's commission when he
found a buyer, ready and willing to purchase.
Jerry provides three arguments in support of his assertion
that the District Court improperly granted summary judgment:
(1) The District Court improperly construed the standard listing
contract; (2) the buy/sell agreement was a conditional contract and
binding only upon the assumption of the mortgage; and (3) material
facts existed that precluded summary judgment.
The crux of Jerry's first argument is that the District Court
incorrectly concluded that Johnson was entitled to a broker's
commission when he found a buyer ready and willing to purchase the
land. According to Jerry, the standard listing contract required
Johnson "to sell, make or effect a sale" and not "to merely find a
purchaser." In support of his argument, Jerry points to the word
"executed" as it appears in the paragraph regarding the commission.
Citing Black's Law Dictionary and the Random House Dictionary of
the English Language, he argues that "[tlhe word 'executed' clearly
means completed or carried into full effect" and that the agreement
provides for the payment of a commission only "when the transaction
is completed or carried into full effect."
Jerry's first argument fails for two reasons. First, the
standard listing contract in this case did not require the
transaction to be completed or carried into full effect. Secondly,
8
even if the contract did require the execution of a sale, the
District Court correctly pointed out that a sale was, in fact,
executed.
In Sayegusa v. Rogers (1993), 256 Mont. 269, 271, 846 P.2d
1005, 1006, we stated:
It is well-established law in Montana that a
broker's right to recover a commission is conditioned on
the broker's ability to accomplish that which he or she
undertook to do in the contract of employment.
See Diehl and Associates, Inc. v. Houtchens (1977), 173 Mont. 372,
377, 567 P.2d 930, 933; First Trust Co. of Montana v. McKenna
(1980), 188 Mont. 534, 541, 614 P.2d 1027, 1031; Ehly v. Cady
(19841, 212 Mont. 82, 101, 687 P.2d 687, 697.
The contract provision at issue in Savequsa provided:
FOR VALUE RECEIVED, you and your agents are employed
to find a buyer ready and willing to purchase or exchange
the property described above at the price and terms noted
or at such other price and terms as I/we accept. . . In
the event I/we sell or exchange the property, or a
written agreement is executed for the sale or exchange of
the property during the term of this agreement, I/we
agree to pay you in cash a commission equal to 10% of the
selling price.
The Savesusa contract provision is virtually identical to the
contract provision at issue in the instant case. In Savesusa, we
affirmed the district court's conclusion that the language of the
listing contract was clear and unambiguous that the broker was
entitled to a commission when he found a ready and willing buyer.
Likewise, we agree with the District Court in the instant case that
the listing contract employed Johnson simply to find a buyer ready
and willing to purchase the Nyhart property. Pursuant to the clear
9
and unambiguous language of the listing contract, Johnson became
entitled to his commission when Pelullo, through Pelullo's agent,
entered into a written contract to purchase the land.
Moreover, the record reveals that Johnson not only found a
person who was ready and willing to purchase the land; the record
reveals that Johnson located a person who, in fact, purchased the
land. As the Nyharts' attorney wrote on December 19, 1984:
We have determined that my clients don't have any real
choice in the matter and are qoinq to close the
transaction with an eye to getting the assumption papers
signed by Mr. Pelullo just as soon as possible and
hopefully having the whole matter resolved by February 1,
1985.
Two days later, the Nyharts delivered a deed of conveyance to
Pelullo, and Pelullo delivered to the Nyharts $70,000 and two
promissory notes. The District Court correctly concluded that the
December 21 transaction between the Nyharts and Pelullo constituted
the sale and purchase of the 2000 acres.
Jerry further contends that, because Pelullo's assumption of
the Travelers mortgage was a condition precedent to the sale, when
Travelers did not permit the assumption, the sale was not completed
and Johnson was not entitled to a commission. This argument fails,
because a careful review of the listing contract reveals that no
conditional language exists regarding the accrual of Johnson's
commission. Nowhere in the standard listing contract is there any
mention of the Travelers mortgage. We, therefore, agree with the
District Court that, once Johnson found a buyer ready and willing
10
to purchase the land, there were no qualifying conditions placed
upon his entitlement to a commission.
Finally Jerry contends that the buy/sell agreement was
ambiguous and the question of the parties' intentions should have
been submitted to the trier of fact. However, the intent of the
parties to an agreement is only looked to when the agreement is not
clear on its face. Klawitter, 51 St. Rep. at 1298; Bain v.
Williams (1990), 245 Mont. 228, 232, 800 P.2d 693, 695; Derrenger
v. City of Billings (1984), 213 Mont. 469, 475, 691 P.2d 1379,
1382.
As a general rule, construction and interpretation of written
agreements, including contracts, is a question of law for the court
to decide. Klawitter, 51 St. Rep. at 1298; First Sec. Bank of
Anaconda v. Vander Pas (1991), 250 Mont. 148, 152-53, 818 P.2d 384,
387. Likewise, it is a question of law whether ambiguity exists in
a contract. Klawitter, 51 St. Rep. at 1298; Audit Services, Inc.
v. Systad (19921, 252 Mont. 62, 65, 826 P.2d 549, 551.
Where the question of intent depends upon the construction of
an unambiguous contract, the question is one for the court alone.
Klawitter, 51 St. Rep. at 1298; Gray v. City of Billings (1984),
213 Mont. 6, 10, 689 P.2d 268, 270. As we discussed above, the
District Court correctly determined that “[tl he language in the
agreement is clear and unambiguous." Johnson was entitled to a
commission when he found a ready and willing buyer. We, therefore,
11
reject Jerry's argument that the parties' intentions constituted
genuine issues of material fact.
We hold that the District Court properly granted summary
judgment.
ISSUE 2
Did the District Court err by awarding prejudgment interest to
Johnson?
The District Court entered judgment in this matter on
April 14, 1994, and ordered in pertinent part as follows:
That the Plaintiff, Ronald Johnson, recover from the
Defendants, Jerry Nyhart, Clarajo Nyhart and Nyhart
Ranch, Inc., the following:
Principal in the amount of THIRTY THOUSAND
THIRTkTWO AND 73/100 DOLLARS ($30,032.73).
2. Interest at the rate of six percent (6%) from
December 22, 1984, through September 30, 1985 in the
amount of ONE THOUSAND FOUR HUNDRED TWO AND 70/100
($1,402.70).
3. Interest at the rate of ten percent (10%) from
October 1, 1985 through April 13, 1994, in the amount of
TWENTY-FIVE THOUSAND AND SIX HUNDRED NINETEEN AND 99/100
($25,619.99).
4. Interest at the rate of ten percent (10%) from
April 14, 1994, until the judgment is paid in full in the
amount of $8.23 per diem.
Jerry objected to paragraph three of the judgment because it
ordered payment of interest to Johnson prior to the date of entry
of the judgment. According to Jerry, the promissory note that he
and Clarajo executed on December 21 "reveals that the obligation
was not to accrue interest." The promissory note provides in
pertinent part as follows:
12
PROMISSORY NOTE
$30,032.73 December 21, 1984
Dillon, Montana
FOR VALUE RECEIVED, we, JERRY NYHART AND CLARAJO
NYHART, husband and wife, of Twin Bridges, Montana,
promise to pay to RONALD W. JOHNSON d/b/a JOHNSON REALTY,
of Dillon, Montana, the sum of THIRTY THOUSAND THIRTY-TWO
& SEVENTY-THREE/lOOTH DOLLARS ($30,032.73) lawful money
of the United States of America, with intcrcct therm
the rztc of twclvc aad VAIL h;lf pcrcxt :12::%) i;c-r ;Kffttttff
payable to the payee on or before February 1, 1985.
IF DEFAULT shall be made in the payment due
hereunder . . the entire amount of said note, both
principal and intc&, shall at once become immediately
due and payable.
. .
THE MAKERS hereof are hereby granted the right to
pay all or any part of the unpaid principal ar.d i;,tcrcct
on this note at any time after the date hereof.
. . .
/s/ Jerry Nyhart
/s/ Clarajo Nyhart
The stricken language was crossed out in writing, and above or
beside each stricken portion, the initials "J.N. " and 'I C N )'
appear. Jerry contends that because he and Clarajo struck out and
initialed the language regarding the payment of interest from the
promissory note, interest on the note was not to accrue. Jerry,
however, cites no authority in support of his contention.
Johnson, on the other hand, argues that: (1) the District
Court awarded interest pursuant to the standard listing contract,
the earnest money receipt and agreement to sell and purchase, and
§ 27-l-211, MCA, and not pursuant to the promissory note; and
(2) even if the District Court awarded interest based on the
13
promissory note, the Nyharts' unilaterally created and altered the
promissory note without the written approval or consent of Johnson.
This Court's decision in Byrne v. Terry (19871, 228 Mont. 387,
741 P.2d 1341, is dispositive of this issue. Pursuant to
5 27-l-211, MCA, we set forth three criteria under which
prejudgment interest may be awarded: (1) the existence of an
underlying monetary obligation; (2) the amount of the obligation is
certain or capable of being made certain by calculation; and
(3) the right to recover the obligation vests on a particular day.
Bvrne, 741 P.2d at 1343. All three of these criteria are met in
the instant case: (1) the monetary obligation consists of the real
estate commission owed to Johnson in the amount of $42,000; (2) the
Nyharts paid Johnson $11,967.27 on December 21; therefore, the
outstanding balance owed on the commission is $30,032.73; and
(3) Johnson's right to recover the commission vested on
December 21, 1984, the date that the deed to the 2000 acres was
delivered to Pelullo.
Additionally, 'I [tlhe fact that a claim is disputed does not
make it uncertain and thus unable to support an award of
prejudgment interest." Byrne, 741 P.2d at 1343. Jerry's various
assertions, including the fact that he and Clarajo altered the
promissory note, do not change our analysis under Bvme. "When the
debtor knows of his debt and also knows when it is due, 'no demand
is necessary to start the running of interest from the date the
payment should have been made."' Bvme, 741 P.2d at 1343 (citing
14
W.J. Lake & Co. v. Montana Horse Products Co. (1939), 109 Mont.
434, 443, 97 P.Zd 590, 594). When the Nyharts transferred title to
Pelullo on December 21, 1984, the provisions of 5 27-l-211, MCA,
were triggered. On that date, the Nyharts owed Johnson a
commission equal to six percent of the selling price, or $42,000.
The Nyharts paid only one-third of the total amount owed. No
demand was required by Johnson to enforce the remaining obligation
owed. Neither of the two exceptions provided in 5 27-l-211, MCA,
apply in this case, i.e., neither the force of law nor the acts of
the creditor, Johnson, prevented the Nyharts from paying the full
amount of the real estate commission. Furthermore, there is no
evidence in the record supporting Jerry's assertion that Johnson
agreed to either the creation or subsequent alteration of the
promissory note.
We hold that the District Court correctly awarded prejudgment
interest to Johnson.
ISSUE 3
Did the District Court err by entering judgment against
Clarajo Nyhart?
The District Court's April 14, 1994, judgment states in
pertinent part:
That the Plaintiff, Ronald Johnson, recover from the
Defendants, Jerry Nyhart, Clarajo Nvhart and Nyhart
Ranch, Inc., the following:
(Emphasis added.) On appeal, Jerry "admits that the Plaintiff
obtained personal jurisdiction over him, but is unaware if personal
15
jurisdiction was obtained over Clara Jo [sic] Nyhart" and "is
unable to verify if the Plaintiff ever obtained service upon his
former wife." Jerry argues that the judgment against Clarajo is
invalid because (1) the District Court lacked personal jurisdiction
over her due to Johnson's failure to serve her with a summons and
complaint, or (2) if service was made, the District Court failed to
give "any notice of entry of default" against her.
Johnson concedes that he did not serve Clarajo because she was
not a necessary party to the resolution of the case. Our review of
the record confirms that Clarajo was not served with a summons or
complaint in this case. We conclude that the District Court lacked
personal jurisdiction over her and erroneously entered judgment
against her. We, therefore, vacate the District Court's judgment
as it pertains to Clarajo.
Affirmed as to Issues 1 and 2; the judgment as to Clarajo
Nyhart is hereby vacated.