Berry v. Mann ( 1980 )

No. 79-120
IN THE SUPREME COURT OF THE STATE OF MONTANA
1980
GERALD BERRY,
Plaintiff and Appellant,
VS .
BETTY L. MANN,
Defendant and Respondent.
Appeal from: District Court of the Fourth Judicial District,
In and for the County of Lake.
Honorable Jack L. Green, Judge presiding.
Counsel of Record:
For Appellant:
Daniels & Mizner, Deer Lodge, Montana
For Respondent:
Turnage and McNeil, Polson, Montana
Submitted on briefs: April 25, 1980
Decided: M-kY 1 2 198D
my; Y~CCJ
Filed: -
Mr. J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion o f
t h e Court.
T h i s i s a n a p p e a l from a judgment o f t h e D i s t r i c t C o u r t
of t h e F o u r t h J u d i c i a l D i s t r i c t , County of Lake, t h e Honor-
a b l e J a c k L. Green p r e s i d i n g w i t h o u t a j u r y , e n t e r e d i n
f a v o r of d e f e n d a n t , B e t t y L. Mann. Appellant brought t h i s
a c t i o n i n t h e D i s t r i c t C o u r t (1) t o r e s c i n d t h e c o n t r a c t
d a t e d A p r i l 30, 1976, t h a t h e had e n t e r e d i n t o w i t h r e s p o n -
d e n t f o r t h e p u r c h a s e o f c e r t a i n p r o p e r t y , and ( 2 ) t o e n f o r c e
t h e o p t i o n t o p u r c h a s e t h e same p r o p e r t y a t a lower p r i c e
under a c o n t r a c t p r e v i o u s l y e n t e r e d i n t o by r e s p o n d e n t and
Gordon M. W i l l i a m s and h i s w i f e d a t e d F e b r u a r y 1 8 , 1975, f o r
which a p p e l l a n t gave $2200 t o o b t a i n a n a s s i g n m e n t d a t e d
F e b r u a r y 4 , 1977. The D i s t r i c t C o u r t found t h a t a p p e l l a n t
was n o t e n t i t l e d t o a r e s c i s s i o n of h i s A p r i l 30, 1976 con-
t r a c t w i t h respondent, nor w a s he e n t i t l e d t o e x e r c i s e t h e
W i l l i a m s e s ' option contract.
Respondent B e t t y L. Mann i s t h e owner of a c o m b i n a t i o n
r e s t a u r a n t - m o t e l b u s i n e s s known a s t h e " A l p i n e Cafe & Motel"
l o c a t e d a t Swan Lake, i n Lake County, Montana. On F e b r u a r y
1 8 , 1975, s h e e n t e r e d i n t o a n o p t i o n c o n t r a c t w i t h Gordon M.
and D a r l e n e L. W i l l i a m s f o r t h e s a l e of t h e b u s i n e s s , and a t
t h e same t i m e , e x e c u t e d a s e p a r a t e l e a s e of t h e b u s i n e s s t o
t h e W i l l i a m s e s f o r a p e r i o d of t h r e e y e a r s b e g i n n i n g May 1,
1975, a t a r e n t a l of $6000 p e r y e a r . The o p t i o n c o n t r a c t
w a s a s s i g n a b l e and p r o v i d e d t h a t t h e W i l l i a m s e s c o u l d e x e r c i s e
t h e o p t i o n t o p u r c h a s e a t a p u r c h a s e p r i c e of $68,000 by
p a y i n g $12,000 down on o r b e f o r e May 1, 1978, and by p a y i n g
t h e b a l a n c e i n monthly payments of $500 which i n c l u d e d
i n t e r e s t commencing on J u n e 1, 1978. In consideration f o r
t h i s option, the option contract recited t h a t the W i l l i a m s e s
had p a i d $6000, which r e p r e s e n t e d o n e - t h i r d of t h e amount
due under t h e t h r e e - y e a r l e a s e , and which would be c r e d i t e d
towards payment of t h e o p t i o n p r i c e i f t h e o p t i o n w a s e x e r -
cised.
The accompanying l e a s e p r o v i d e d t h a t t h e $6000 a n n u a l
r e n t a l would be p a i d by a $500 downpayment made on t h e d a t e
of e x e c u t i o n , F e b r u a r y 1 8 , 1975; $2700 due on March 1, 1975;
and t h e b a l a n c e o f $2800 due i n monthly payments o f $100
b e g i n n i n g on March 1, 1975, which would r i s e t o $433.30 p e r
month on May 1, 1975, u n t i l t h e f u l l $6000 sum was p a i d .
The W i l l i a m s e s f a i l e d t o pay t h e b a l a n c e of t h e c o n s i d e r a -
t i o n r e c i t e d i n t h e o p t i o n c o n t r a c t , s t o p p e d making l e a s e
payments, and c l o s e d t h e b u s i n e s s and v a c a t e d t h e p r o p e r t y
on September 1, 1975. S u b s e q u e n t l y , on A p r i l 30, 1976, Mann
e n t e r e d i n t o a n agreement w i t h B e r r y f o r t h e s a l e of t h e
same p r o p e r t y f o r a p u r c h a s e p r i c e of $75,000 w i t h a down-
payment of $ 2 0 r 0 0 0 and t h e b a l a n c e t o be p a i d i n monthly
payments of $500, i n c l u d i n g i n t e r e s t on t h e unpaid p r i n c i p a l
b a l a n c e a t t h e r a t e of 8-1/2 percent annually. B e r r y had no
a c t u a l n o t i c e o f t h e Mann-Williams o p t i o n agreement a t t h i s
time. Mann c o n s i d e r e d t h e agreement and t h e l e a s e t o have
been t e r m i n a t e d by mutual agreement and t o be v o i d by r e a s o n
o f t h e W i l l i a m s e s ' d e f a u l t and f a i l u r e of c o n s i d e r a t i o n .
B e r r y l e a r n e d of t h e p r e v i o u s agreement o n l y when a
t i t l e i n s u r a n c e p o l i c y showed m e r c h a n t a b l e t i t l e was n o t
f o r t h c o m i n g , a s r e q u i r e d under h i s c o n t r a c t w i t h Mann.
B e r r y employed an a t t o r n e y and a t i t l e i n s u r a n c e p o l i c y was
r e c e i v e d December 20, 1976, which showed t h e ~ i l l i a m s e s '
o p t i o n and l e a s e a s e x c e p t i o n s t o m e r c h a n t a b l e t i t l e ,
B e r r y , a c t i n g on a d v i c e of c o u n s e l , p a i d t h e W i l l i a m s e s
$2200 and r e c e i v e d a n a s s i g n m e n t o f t h e W i l l i a m s e s ' i n t e r e s t
under t h e o p t i o n c o n t r a c t on F e b r u a r y 4 , 1977. On A p r i l 25,
1977, B e r r y b r o u g h t t h i s s u i t f o r a c a n c e l l a t i o n and r e s c i s -
s i o n of h i s A p r i l 30, 1976 agreement w i t h Mann and f o r
s p e c i f i c e n f o r c e m e n t of t h e W i l l i a m s e s ' o p t i o n agreement i n
h i s ( B e r r y ' s ) name a s a s s i g n e e . I n h e r answer d a t e d Septem-
b e r 1 4 , 1977, Mann a l l e g e d t h a t t h e W i l l i a m s e s ' o p t i o n and
l e a s e w e r e c a n c e l l e d and i n v a l i d p r i o r - h e r e n t e r i n g t h e
to
c o n t r a c t with Berry. She a l s o a s s e r t e d a c r o s s - c o m p l a i n t
a g a i n s t t h e Williamses because of t h e i r d e f a u l t i n t h e l e a s e
payments a f t e r March 1, 1975, and t h e f a i l u r e of c o n s i d e r a -
tion for the option contract. The D i s t r i c t C o u r t s t r u c k
t h i s c r o s s - c o m p l a i n t from h e r answer on B e r r y ' s motion.
Mann t h e n f i l e d a s e p a r a t e a c t i o n a g a i n s t W i l l i a m s and
h i s w i f e on August 31, 1978, f o r c a n c e l l a t i o n and t e r m i n a -
t i o n of t h e W i l l i a m s e s ' o p t i o n and l e a s e which o p t i o n had
been a s s i g n e d t o B e r r y on F e b r u a r y 4 , 1977. The W i l l i a m s e s
w e r e s e r v e d on September 20, 1978, and t h e i r d e f a u l t w a s
e n t e r e d i n a n October 11, 1978 judgment d e c l a r i n g t h e l e a s e
and o p t i o n t o b e v o i d . The o p t i o n w a s found t o be v o i d and
c a n c e l l e d a s of March 1, 1975, f o r f a i l u r e o f c o n s i d e r a t i o n ,
and t h e lease was found t o be v o i d and c a n c e l l e d a s o f
August 1 5 , 1975, f o r d e f a u l t i n making payments t h e r e u n d e r .
On t h e b a s i s of t h i s d e f a u l t judgment, t h e ~ i s t r i c Court
t
found t h a t t h e a s s i g n m e n t o f t h e o p t i o n t o B e r r y was of no
effect.
The D i s t r i c t C o u r t found f u r t h e r t h a t t h e c o n t r a c t of
A p r i l 30, 1976, between B e r r y and Mann r e m a i n s i n f u l l f o r c e
and e f f e c t , and t h a t Mann h a s p r o v i d e d a t i t l e i n s u r a n c e
r e p o r t d a t e d October 1 7 , 1978, showing good and m e r c h a n t a b l e
t i t l e i n p r o p e r t y f r e e and c l e a r of a l l l i e n s and encum-
b r a n c e s , a:; r c q u i r e d under t h e i r c o n t r a c t .
The s o l e i s s u e on a p p e a l i s : Did t h e D i s t r i c t C o u r t
err i n f i n d i n g , based on t h e d e f a u l t judgment a g a i n s t t h e
W i l l i a m s e s and i n f a v o r of Mann ( t o which B e r r y was n o t
p a r t y ) , t h a t t h e o p t i o n c o n t r a c t between t h e W i l l i a m s e s and
Mann was v o i d a t t h e t i m e o f i t s a s s i g n m e n t by t h e W i l l i a m s e s
t o Berry.
T h i s C o u r t i n a l o n g s e r i e s of o p i n i o n s , many of which
a r e c i t e d i n H a r r i s o n v . C i t y of Missoula ( 1 9 6 5 ) , 146 Mont.
420, 407 P.2d 703, h a s h e l d t h a t t h e r e i s a presumption t h a t
t h e t r i a l c o u r t ' s f i n d i n g s o f f a c t , c o n c l u s i o n s of l a w ,
judgment and d e c r e e a r e c o r r e c t , and t h a t t h e burden i s upon
t h e a p p e l l a n t t o show r e v e r s i b l e e r r o r .
I n a d d i t i o n , t h e e v i d e n c e i s t o be viewed i n a l i g h t
most f a v o r a b l e t o t h e p r e v a i l i n g p a r t y , and t h i s C o u r t w i l l
n o t i n t e r f e r e w i t h t h e f i n d i n g s o f t h e t r i e r of f a c t i f t h e y
a r e s u p p o r t e d by s u b s t a n t i a l e v i d e n c e .
( 1 9 6 2 ) , 140 Mont. 181, 368 P.2d 917.
W e n o t e t h a t a p p e l l a n t ' s p o s i t i o n and s o l e i s s u e i s
t h a t t h e f i n d i n g t h a t t h e W i l l i a m s e s ' o p t i o n c o n t r a c t was
v o i d a t t h e t i m e of i t s a s s i g n m e n t t o B e r r y i s c o n t r a r y t o
t h e law and n o t s u p p o r t e d by t h e e v i d e n c e . However, t h e
b r i e f p r e s e n t e d and t h e a u t h o r i t y c o n t a i n e d t h e r e i n i s v o i d
of any s u p p o r t f o r t h a t c o n t e n t i o n . The t r i a l c o u r t t o o k
j u d i c i a l n o t i c e of t h e D i s t r i c t C o u r t judgment i n C i v i l
A c t i o n No. 10443 and d e t e r m i n e d t h a t , b a s e d on t h i s judg-
ment, t h e o p t i o n c o n t r a c t o f F e b r u a r y 1 8 , 1975 between t h e
W i l l i a m s e s and Mann became v o i d on March 1, 1975. It was,
t h e r e f o r e , v o i d a t t h e t i m e of t h e a s s i g n m e n t from t h e
W i l l i a m s e s t o B e r r y on F e b r u a r y 4 , 1977. Appellant does n o t
c l a i m t h a t t h e judgment i n Cause No. 10443 i s i n v a l i d b u t
m e r e l y s t a t e s i n h i s i s s u e s and s t a t e m e n t of c a s e t h a t B e r r y
was not a party t o t h a t action. This i s c e r t a i n l y n o t
s u f f i c i e n t argument t o o v e r t u r n t h e D i s t r i c t C o u r t ' s f i n d i n g
t h a t the W i l l i a m s e s ' c o n t r a c t was v o i d .
Respondent Mann i n h e r c o u n t e r c l a i m t r i e d t o b r i n g t h e
Williamses i n t o t h i s l a w s u i t . However, t h e c o u n t e r c l a i m w a s
d i s m i s s e d i n t h i s s u i t on motion by B e r r y . The e v i d e n c e
shows t h a t t h e s e p a r a t e l a w s u i t f i l e d by r e s p o n d e n t a g a i n s t
the W i l l i a m s e s , t h a t a p p e l l a n t now complains he w a s n o t a
p a r t y t o , c o n t a i n s t h e same a l l e g a t i o n s t h a t were i n t h e
c o u n t e r c l a i m a g a i n s t t h e W i l l i a m s e s i n t h e i n s t a n t c a s e and
w e r e d i s m i s s e d on a p p e l l a n t ' s motion.
I n d e p e n d e n t o f t h e judgment i n t h e C i v i l A c t i o n No.
10443, which found t h a t t h e o p t i o n and l e a s e were v o i d ,
t h e r e was s u b s t a n t i a l e v i d e n c e p r e s e n t e d b e f o r e Judge Green
i n t h e i n s t a n t case t o support t h e conclusion t h a t t h e
optic-I w a s void. The u n c o n t r a d i c t e d t e s t i m o n y o f t h e r e s p o n -
d e n t i s t h a t t h e W i l l i a m s e s d i d n o t pay t h e f u l l $6000
c o n s i d e r a t i o n r e f e r r e d t o i n t h e o p t i o n c o n t r a c t and t h a t
t h e W i l l i a m s e s s t i l l owed r e s p o n d e n t $2800 t h a t was t o have
been p a i d on o r b e f o r e March 1, 1975, b u t w a s n e v e r p a i d .
Respondent a l s o t e s t i f i e d t h a t t h e W i l l i a m s e s l e f t t h e
p r o p e r t y on o r a b o u t August 1 5 , 1973, and made no f u r t h e r
payments on t h e l e a s e . She f u r t h e r t e s t i f i e d t h a t s h e
r e c e i v e d a l e t t e r a l o n g w i t h t h e k e y s t o t h e p r o p e r t y some-
t i m e i n e a r l y September. Respondent o p e r a t e d t h e p r o p e r t y
a f t e r t h a t t i m e and was o p e r a t i n g t h e p r o p e r t y a t t h e t i m e
she entered i n t o t h e c o n t r a c t with appellant.
A p p e l l a n t h a s f a i l e d i n h i s burden of p r o v i n g t h a t t h e
t r i a l c o u r t ' s f i n d i n g t h a t t h e o p t i o n c o n t r a c t was v o i d a t
t h e t i m e i t was a s s i g n e d t o B e r r y w a s i n e r r o r . The r e c o r d
contains s u b s t a n t i a l evidence t o support t h e finding both i n
t h e t r i a l c o u r t ' s having t a k e n j u d i c i a l n o t i c e of t h e judg-
ment i n C i v i l A c t i o n No. 10443 and i n t h e u n c o n t r a d i c t e d
t e s t i m o n y of r e s p o n d e n t a s t o t h e f a i l u r e of c o n s i d e r a t i o n
and d e f a u l t i n t h e payment i n t h e o p t i o n and l e a s e which
occurred p r i o r t o t h e assignment t o a p p e l l a n t .
I n s u p p o r t of h i s p o s i t i o n a p p e l l a n t c i t e s M i l l e r v .
M e r e d i t h , H i l l and W h i t f i e l d ( 1 9 6 7 ) , 149 Mont. 125, 423 P.2d
595, a s a u t h o r i t y t h a t t h e terms and c o n d i t i o n s of a l e a s e
a r e n o t t h e terms and c o n d i t i o n s of an o p t i o n . That case
h e l d t h a t a t e n a n t h o l d i n g o v e r a f t e r e x p i r a t i o n o f lease
w a s n o t e n t i t l e d t o e x e r c i s e h i s option t o purchase. Apply-
i n g t h a t a u t h o r i t y to t h e f a c t s i n t h e i n s t a n t c a s e , n e i t h e r
W i l l i a m s e s n o r t h e i r a s s i g n e e , t h e a p p e l l a n t , would be en-
t i t l e d t o e x e r c i s e t h e o p t i o n because o f t h e f a i l u r e o f
c o n s i d e r a t i o n o f payment upon t h e o p t i o n and b e c a u s e of t h e
d e f a u l t i n t h e lease payment. W f i n d no b a s i s t o r e l y upon
e
t h i s c a s e i n s u p p o r t of a p p e l l a n t ' s p o s i t i o n t h a t t h e lease
was not i n default.
Next a p p e l l a n t c i t e s Ogg v . Herman ( 1 9 2 4 ) , 71 Mont. 1 0 ,
227 P. 467, and Connor v . Helvik ( 1 9 3 7 ) , 105 Mont. 437, 73
P.2d 541, a s a u t h o r i t y con.cerning m e r c h a n t a b l e t i t l e b e i n g
g i v e n a p p e l l a n t by r e s p o n d e n t a t t h e t i m e of t h e agreement
e n t e r e d i n t o between a p p e l l a n t and r e s p o n d e n t . The f a c t s i n
t h i s c a s e do n o t s u p p o r t t h e a p p e l l a n t ' s p o s i t i o n on t h e
d e l i v e r y o f m e r c h a n t a b l e t i t l e . The f a c t s i n d i c a t e t h a t o n c e
t h e m a t t e r was b r o u g h t t o r e s p o n d e n t ' s a t t e n t i o n , s h e imme-
d i a t e l y d i d e v e r y t h i n g t h a t was n e c e s s a r y t o c l e a r t h e t i t l e
and p r e s e n t a good and m e r c h a n t a b l e t i t l e t o a p p e l l a n t , f r e e
and c l e a r of a l l l i e n s and encumbrances. The t r i a l c o u r t s o
found i n F i n d i n g of F a c t No. 4 , and t h i s f i n d i n g was n o t
as
even r a i s e d / a n i s s u e by a p p e l l a n t on a p p e a l .
For the foregoing reasons the judgment of the District
Court is a£ firmed.
We concur: