Turner v. Ferrin

No. 88-30

I N THE SUPREME COURT O F THE S T A T E O F MONTANA

1988

DAVID TURNER and P A T R I C I A M.
TURNER,
P l a i n t i f f s and A p p e l l a n t s ,
-vs-

S T E V E W. F E R R I N and DEBRA A.
FERRIN ,
D e f e n d a n t s and R e s p o n d e n t s .

A P P E A L FROM: D i s t r i c t C o u r t of t h e S i x 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 C u s t e r ,
T h e H o n o r a b l e A. B. M a r t i n , Judge p r e s i d i n g .

COUNSEL O F RECORD:

For A p p e l l a n t :

J. B. Wheatcroft, Miles C i t y , Montana

For R e s p o n d e n t :

B r u c e Brown; Brown & Huss, M i l e s C i t y , Montana

S u b m i t t e d on B r i e f s : M a r c h 31, 1988

Decided: May 24, 1988

Filed : YAY 2 4 1988'
Mr. Justice L. C. Gulbrandson delivered the Opinion of the
Court.

This is an appeal from a judgment and final order
denying plaintiffs/appellants David and Patricia Turners'
(Turners) motion to amend findings of fact and conclusions of
law issued by the District Court of the Sixteenth Judicial
District Court, Custer County, Montana. Following a bench
trial, the court disallowed rescission of a contract for deed
entered into by the Turners with defendants/respondents Steve
and Debra Ferrin (Ferrins). We affirm.
Appellants raise two issues for our review:
1. Whether the District Court erred in failing to find
the Turners were entitled to rescission?
2. Whether the court erred by declaring a forfeiture
when Ferrins could not provide title?
In the judgment, issued on October 21, 1987, the
District Court found that the sale of property involved in
this case was a sale in gross with an approximate six percent
acreage variation that was not a material nor substantial
lack of consideration that would entitle the Turners to
rescission. The court found the Turners guilty of laches,
and that the Ferrins had given due notice of default that was
not cured. Finally, the court ordered the Turners to cure
the default within thirty days of entry of the judgment at
which time the Ferrins were to deliver a deed to the Turners
and that failure would result in termination of the contract
with the Ferrins entitled to immediate possession of the
property.
The Turners filed consolidated post-trial motions
moving for amendment of the findings of fact, conclusions of
law and judgment or in the alternative, a new trial on
October 30, 1987. It is from this final order denying these
motions and the judgment that the Turners appeal.
Steve and Debra Ferrin owned an irrigated ranch near
Miles City, Montana. The size of the parcel is in dispute,
either approximately 96 acres or, as the Turners claim, as
small as 90 acres. A buy-sell agreement, prepared by Steve
Ferrin, who is also a real estate broker, was signed by the
Turners on September 13, 1982. The total purchase price was
$230,000 with a $100,000 down payment paid previous to the
closing on October 12, 1982. A contract for deed was
executed by all parties. The Turners were represented by
counsel. Attached to the contract for deed as exhibit "A"
was a description of the real property as follows:
Township 8 North, Range 48 East, M.P.M.
Section 5:
N$SW$ and NWiSEi, LESS that portion
described as Tract 3, containing
19.26 acres, more or less, in
accordance with the Certificate of
Survey filed for record as Document
No. 60202 in Envelope No. 191 of
the Plat Cabinet, records of Custer
County, Montana, and LESS that
portion of the NW$SWi which lies
north and west of the right-of-way
of the Burlington Northern Railroad
(formerly Northern Pacific Railroad
.
Company)
Section 6:
That portion of the NEiSEi which
lies south and east of the right-
of-way of the Burlington Northern
Railroad (formerly the Northern
Pacific Railroad Company).

Containing 96.73 acres, more or
less.
This description was exactly the same as that contained in
the buy-sell agreement. Paragraph nine of the contract for
deed referred to title insurance and stated the property was
subject to easements and rights of way of record and other
visible easements. However, the warranty deed placed in
escrow from the Ferrins to the Turners contained no
reservations or exceptions for any servitudes. The warranty
deed did contain the exact description of the property as in
the contract for deed and the buy-sell agreement.
The Turners moved onto the property in October of 1 9 8 2
and Patricia Turner testified that they thereafter spent
$26,815.69 on improvements on the property. Both annual
payments of $ 1 6 , 1 3 3 . 9 7 were timely made in 1 9 8 3 and 1 9 8 4 ,
however, the 1 9 8 5 payment was not made. The Turners and
Ferrins entered into an accommodation agreement on December
24, 1 9 8 5 extending the time to make the annual payment but
the default was not cured.
Prior to the scheduled date of forfeiture, the Turners
filed an action for declaratory judgment attempting to have
the contract declared a mortgage thereby entitling them to a
right of redemption and occupancy. The Ferrins were granted
summary judgment on this issue. The Turners then filed for
relief under Chapter 11 in Bankruptcy Court. The Turners
pursued rescission of the contract in Bankruptcy Court but
the cause was remanded to the Montana State District Court
because of mandatory abstention under Section 2 8 U.S.C.
.
1 3 3 4 (c)(2)
An amended complaint was filed March 1 9 , 1 9 8 7 in which
it was alleged for the first time that an acreage shortfall
was present in the sale of the property. The Turners
empl-oyed a survey company to survey the property and the
company's report disclosed that less than 9 6 . 7 3 acres
existed. The amended complaint alleged that no exceptions
were made in the warranty deed for a right of way. It was
alleged that a portion of the property actually contained a
right of way for a state highway and this easement was "on
file and of record." The complaint also alleged that due to
the fact the premises described in the warranty deed did not
describe the property as "an aliquot part as defined by the
subdivision laws of the State of Montana and is otherwise not
suldiect to a certificate of survey" the deed was "ineligible
for filing for record if the warranty deed were delivered to
plaintiffs."
A bench trial was held September 18, 1987 and both
parties presented testimony and exhibits. Although the
Turners presented the survey they had recorded, they did not
call the surveyors themselves. The Ferrins also presented
two unofficial surveys that were not recorded and did not
call a surveyor. The Turners' survey shows the tract
contained 9 0 . 7 3 acres. This survey gave the recorded right
of way for U.S. Highway 1 0 as a boundary rather than the
Burlington Northern Railroad right of way stated in the
description.
The Ferrins' exhibits were also admitted into evidence.
These exhibits show, and Steve Ferrin testified to, the
possible mistake that occurred in this case. The Ferrins'
exhibit number two shows the property involved as an
undivided 1 1 5 . 9 9 acre tract, only a portion of which was
subject to the contract for deed. The Ferrins ' exhibit
number one shows tract three as a 1 9 . 2 6 acre plot that had
been sold earlier by the Ferrins. The remainder of the
property, 1 1 5 . 9 9 minus the 1 9 . 2 6 acres, is the unit that was
sold to the Turners. It was in this manner that the figure,
96.73 acres, was determined.
The District Court adopted the Ferrins' proposed
findings of fact and conclusions of law. The court stated
that the sale was one "in gross" because the contract
provided for the sale of 96.73 acres "more or less" and the
six percent acreage variation was not material. Further, the
court concluded, the Turners did not prove "by a
preponderance of the evidence that there was in fact any
acreage discrepancy."
This Court's standard of review of a lower court's
findings of fact is whether the findings are supported by
substantial evidence. Where conflicting evidence is
presented, the trial court will not be overturned unless
there is a clear preponderance of the evidence against the
findings. Taylor et al. v. Cannaday (Mont. 1988) , 749 P.2d
63, 66, 45 St.Rep. 102, 105. We have held numerous times
that a trial court's verbatim adoption of all proposed
findings and conclusions is acceptable if they are
comprehensive and detailed, are supported by the evidence
before the court, and are not clearly erroneous. Olsen v.
McQueary (Mont. 1984), 687 P.2d 712, 716, 41 St.Rep. 1669;
R.L.S. v. Barkhoff (Mont. 1983), 674 P.2d 1082, 1085, 40
St.Rep. 1982.
The Turners' argument that the District Court erred is
based on two theories. First, that the presence of the
easement not referred to in the warranty deed entitles them
to the equitable remedy of rescission of the contract for
deed and return of all the money they have paid. Secondly,
the Turners contend forteiture was not properly granted and
they are entitled to rescission because the title to be
conveyed by the Ferrins was unmerchantable as it was
unrecordable.
Initially, we note that this sale indeed seems to be
for a "sale in gross." The Ferrins appropriately point out
that this Court has stated in Hardin v. Hill (1967), 149
Mont. 68, 74, 423 P.2d 309, 312, that "[glenerally when land
is sold in gross, a variation in acreage from what the
parties had contemplated is not grounds for rescission or
other relief." There was sufficient evidence to support the
finding of the District Court that the property was a sale in
gross. However, not only does this rule require
determination of whether the property in question is sold in
gross, where the relief requested is equitable in nature as
is rescission, we should also consider whether the acreaqe
shortfall is material.
In Parcel v. Myers (Mont. 1985), 697 P.2d 92, 93, 42
St.Rep. 352, the words "in gross" were not actually used in
the sale document but we held the district court properly
found a bulk real estate transaction occurred and the
property was sold "in gross." The purchaser in Parcel,
"looked at the property at least three (3) times;" walked the
property boundary which was fenced on its borders; and was
told "you are looking at what you get." No conversation
about price per acre occurred and negotiations centralized
around the total purchase price and buildings. Here, the
Ferrins fixed a purchase price of $240,000 and the Turners
bargained for and received a unit price of $230,000. At
trial, no evidence was ever presented that a per acre price
was negotiated. Most importantly, David Turner admitted that
he inspected the premises at least three times and that he
was shown the boundaries.
The Ferrins' counsel has directed the Court to an
annotation in 1 A.L.R.2d 9 dealing with relief to be granted
when there is a mistake in the quantity of land sold. This
annotation suggests a number of factors to be used to
determine whether a sale is "in gross" or by the acre. The
importance of making this determination is that the general
rule calls for refusal of relief, in the absence of fraud,
where the sale is in gross. 1 A.L.R.2d at 19.
The annotation suggests a sale in gross is favored
where the statement of price is a lump sum as in this case,
rather than a statement of price as a specified rate per
acre. 1 A.L.R.2d at 28-38.
Some courts even go so far as to say that
the presence of the words "more or less"
makes a prima facie showing or raises the
presumption that the sale is one in
gross.
The reason for this tendency is very easy
to detect. The use of the words "more or
less" excludes the assumption of an exact
number of acres and makes it clear that
the precise dimensions of the property
are not of the essence of the contract,
the parties either not knowing themselves
the exact number of acres in the land, or
purposely not intending to state it.
1 A.L.R.2d at 47-48. Finally, and this is applicable to the
case at bar due to the wording of the description, use of the
term "more or less" tends to show the sale is "in gross."
Although we do not hold that the use of the language
"more or less" alone creates a "sale in gross," we do hold
that it is sufficient, combined with the observation of the
property by the Turners, the sale price as a negotiated lump
sum, and the lack of a statement of price per acre, to create
a "sale in gross."
We next look to determine whether the alleged variation
of acreage in this case was sufficiently material or
substantial to hold that the District Court erred in denying
rescission. Under $ 28-2-1711, MCA, rescission may occur
only in certain circumstances:
A party to a contract may rescind the
same in the following cases only:

(I) if the consent of the party
rescinding or of any party jointly
contracting with him was given by mistake
or obtained through duress, menace,
fraud, or undue influence exercised by or
with the connivance of the party as to
 whom he rescinds or of any other party to
the contract jointly interested with such
party;
(2) if, through the fault of the party
as to whom he rescinds, the consideration
of his obligation fails in whole or in
part ...
Section 28-2-1711, MCA.
In this instance, the District Court stated in its
order that there was not a "material or substantial lack of
.
consideration by the [Ferrins] " No fraud, duress, menace,
or undue influence was alleged or proven by the Turners. In
Carey v. Wallner (Mont. 1986), 725 P.2d 557, 44 St.Rep. 1778,
we discussed the grounds for rescission under this statute.
As in Carev. the resolution of this issue turns on whether
there was a mistake and/or failure of consideration.
Consideration is defined as:
[alny benefit conferred or agreed to be
conferred upon the promisor by any other
person, to which the promisor is not
lawfully entitled, or any prejudice
suffered or agreed to be suffered by such
person, other than such as he is at the
time of consent lawfully bound to suffer,
as an inducement to the promisor is a
good consideration for a promise.
Section 28-2-801, MCA. Here, the Turners received the
property. There was never any statement that they needed
exactly 96.73 acres or that this was the most important
object, the essence, of the sale. At any rate, the District
Court properly determined there was no lack of consideration.
In Carey, we held that rescission of the contract was
proper because the Careys had purchased the property with the
express intention of operating an adult foster care home.
Upon further investigation, it was discovered that the area
in which the property was located was zoned such that a
foster home would violate the zoning ordinances. Therefore,
we stated the Careys did not receive what they bargained for.
The Turners received what they bargained for, 96.73 acres
more or less. It is important to note that this property was
both irrigated and dry land and the acreage discrepancy could
have been a mistake due to the differences in acreage stated
on surveys Steve Ferrin had and the survey done for Dave
Turner. The Turners' survey, although recorded, is only
important if he could have proved the mistake was material.
We stated in Carey, that rescission of the contract was
proper because of material mistake. The Court considered
§ 28-2-409, MCA, which states:

[mlistake of fact is a mistake not caused
by the neglect of a legal duty on the
part of the person making the mistake and
consisting in:

(2) belief in the present existence of a
thing material to the contract which does
not exist or in the past existence of
such a thing which has not existed.
We went on to state:
A mistake is an unintentional act or
omission arising from ignorance,
surprise, or misplaced confidence.
(Citation omitted.) The mistake - -be
must
material, or, in other words, so
substantial and fundamental -- - defeat
as to
the object - the parties.
of (Emphasis
added. )
Carey, 725 P.2d at 560-561.
In this case, assuming the alleged discrepancy exists,
the missing acreage was approximately six percent of the
total sale as the District Court noted. Equity will provide
a remedy when by mutual mistake the land contains materially
more or less acreage than the parties believed. A slight
disparity will justify equitable relief if the sale is by the
acre, but, if the sale is in gross a great disparity must
exist to authorize relief. Steward v. Jones (Tex.Ct.App.
1982), 633 S.W.2d 544, 546. In Steward, the court granted
rescission of the contract when the sellers discovered that
the property they sold contained forty-eight percent more
property than what they believed.
Ordinarily, when a sale of land is in gross,
deficiencies of ten to twenty percent and even more than
thirty percent have not been considered sufficiently material
to entitle a buyer to relief. Seyden v. m a d e (Nev. 1972) I
494 P.2d 1281, 1283, citing 1 A.L.R.2d 9. The annotation
states that rescission is granted only where the acreage
deficiency is material:
In a number of jurisdictions the general
rule appears to be that equity will
rescind a contract for the sale of land
in gross because of a mutual mistake of
the parties as to the quantity of the
land, where the deficiency is a material
one, even if the statement as to area is
followed by the term "more or less."
Generally, such material deficiency has
been said to exist only where the
discrepancy closely approached, or
exceeded, 50 percent, though this rule is
not uniform.

In this case, we find that the District Court did not
err in denying the Turners a rescission on grounds there was
not a material or substantial lack of consideration.
Further, it is clear that the Turners were put on
notice to look for easements of record and visible easements
by paragraph nine of the contract for deed. The agreed facts
in the pretrial order state that the right of way for U.S.
Highway 10 is a property interest of record and on file with
the Custer County Clerk and Recorder. David Turner admitted
that he was aware of the road and that he was shown the
property boundaries. Under these circumstances this
statement is sufficient to at least put the Turners, who were
represented by counsel, on notice to inquire as to possible
easements.
Finally, the Turners argue they are entitled to
rescission, or at a minimum that the District Court erred in
granting a forfeiture under the contract for deed because
merchantable title could not have been conveyed by the
Ferrins due to failure to have a proper description according
to the cases of McCarthy v. Timberland Resources, Inc. (Mont.
1985), 712 P.2d 1292, 1294, 42 St.Rep. 2016; and Timberland
Resources, Inc. v. Vaught (Mont. 1987), 738 P.2d 1277, 44
St.Rep. 1054. These cases turned on interpretation of
5 76-3-401, MCA, which requires a survey prior to the
recording of property "one thirty-second or larger aliquot
parts of a United States government section." We will not
address the above interpretation as was attempted in both
McCarthy , and Vaught. However, both cases are
distinguishable because there was a refusal to record by the
county in McCarthy and a challenge by the county attorney as
to the recording practice in Vaught.
No challenge to or refusal of recording has occurred in
this case. The Turners allege that the warranty deed could
not be recorded but have not proven this as fact and the
allegation alone does not make the title unmerchantable. As
was said by this Court, " [tlhe crux of the issue is whether
the property is identifiable. '[Dleeds ... must contain an
adequate description of the property to be conveyed.'"
Vaught, 738 P.2d at 1279.
In Sharbono v. Darden (Mont. 1986), 715 P.2d 433, 436,
43 St.Rep. 400, we held that a vendee is excused from failure
to make a balloon payment because the vendor might never be
in the position to convey title because the vendor had a
condition precedent of satisfaction of a mortgage of the
property prior to receiving clear title. We recently
reiterated this standard in Stark v. Borner (Mont. 1987), 735

This Court is concerned, however, about
the lack of any findings regarding the
sellers' ability to convey title after
they accelerated payment. The
established rule of law is that a vendor
cannot, while unable to tender good
title, enforce a forfeiture provision of
a contract on default of the vendee.
(Citation omitted.)
". . . the mere failure of the purchasers
to make the deferred payments did not
ipso facto entail a forfeiture of their
rights under the contract, and, when the
vendor elected to give the notice which
would effect that result, the forfeiture
could only be declared if, at the time
she demanded final payment, she could
convey marketable title. (Citations
omitted.)" Silfvast v. Asplund, 93 Mont.
at 595, 20 P.2d at 636.
This rule was enunciated most recently in
Sharbono v. Darden (Mont. 1986), 715 P.2d
433, 43 St.Rep. 400, where we agreed with
the Fourth Judicial District's finding
that- the vendee's "failure to make the
balloon payment when due is excused by
Sharbono's [vendors] inability to convey
title."
Stark,
The Turners admit "[a? survey such as was undertaken by
[the] Turners, at their own expense, might enable [the]
Ferrins to be able to deliver a recordable deed ... " The
District Court noted that the Ferrins were willing to pay for
the cost of the survey in its findings of fact and
conclusions of law. It was not shown by a preponderance of
the evidence to the District Court that the deed involved was
truly defective and that title was not merchantable. Absent
proof of the fact that the Ferrins did not have merchantable
title, the District Court did not err in granting a
forfeiture in this case.
The judgment and order of the District Court are
A
affirmed. ,/'

We concur: -