Klein v. Brodie

No. 12816
I N T E SUPREME COURT O T E STATE OF M N A A
H F H OTN
1975
PETER D, KLEIN and
DANA KLEIN,
P l a i n t i f f s and Respondent,
STEPHEN D, BRODIE and MARILYN G. BRODIE,
Defendants and Appellants.
Appeal from: D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t ,
Honorable J a c k L. Green, Judge p r e s i d i n g .
Counsel o f Record :
For A p p e l l a n t s :
G a r l i n g t o n , Lohn and Robinson, Missoula, Montana
Sherman V. Lohn argued, Missoula, Montana
For Respondent :
Robert L. Deschamps, County Attorney, argued,
Missoula, Montana
- -
Submitted: A p r i l 10, 1975
Decided : I #/; ?'
flk.J u s r i c e John Zorlway Harrison d e l i v e r e d t h e Opinion of t h e
Court.
T h i s i s a n a p p e a l by d e f e n d a n t s Stephen D . and M a r i l y n
G. B r o d i e from a n a d v e r s e judgment e n t e r e d i n t h e d i s t r i c t
c o u r t , Missoula County, i n a n a c t i o n f o r t h e b r e a c h of a p r e -
ernptive r i g h t p r o v i s i o n c o n t a i n e d i n a b u y - s e l l agreement.
P l a i n t i f f s P e t e r D. and Dana K l e i n c r o s s - a p p e a l on t h e i s s u e of
t h e amount of damages awarded by t h e d i s t r i c t c o u r t .
The r e l e v a n t , u n d i s p u t e d f a c t s a r e : O J u l y 25, 1 9 6 6 ,
n
the p a r t i e s entered i n t o a buy-sell agreement whereby d e f e n d a n t s
a g r e e d t o convey a p a r c e l of l a n d l o c a t e d i n Swan V a l l e y , Missoula
County, f o r t h e c o n s i d e r a t i o n of $ 5 , 0 0 0 . An approximate d e s c r i p -
t l o n of t h e l a n d was c o n t a i n e d i n t h e b u y - s e l l agreement, b u t t h e
exact boundary was t o he d e t e r m i n e d by a s u r v e y . P a r a g r a p h 8 of
cne b u y - s e l l agreement c o n t a i n e d t h i s c l a u s e which i s t h e b a s i s
of t h e p r e s e n t l i t i g a t i o n :
"Buyers t o nave f i r s t r e f u s a l on any a d d i t i o n a l
t r a c t s S e l l e r may o f f e r . "
P u r s u a n t t o t h e t e r m s of t h e a g r e e m e n t , a s u r v e y of t h e
u r o p e r t y was e f f e c t e d and a p p r o x i m a t e l y 2 2 . 2 a c r e s of l a n d were
conveyed. Thereupon, p l a i n t i f f s p a i d t h e p u r c h a s e p r i c e and t o o k
possession.
However, sometime i n t h e f a l l 1970, p l a i n t i f f s d i s c o v e r e d
that a 9 0 a.cre p a r c e l of l a n d l o c a t e d s o u t h of t h e i r l a n d had been
s o l d by d e f e n d a n t s t o one Robert OIConner. Thereupon p l a i n t i f f s ,
t h r o u g h t h e i r a t t o r n e y , s e r v e d a demand upon d e f e n d a n t s t h a t
t h e y be g i v e n an o p p o r t u n i t y t o e x e r c i s e t h e i r pre-emptive r i g h t .
Following d e f e n d a n t s ' r e f u s a l , an a c t i o n was b r o u g h t i n s p e c i f i c
performance, o r i n t h e a l t e r n a t i v e , damages f o r b r e a c h of t h e p r e -
emptive r i g h t p r o v i s i o n .
T r i a l w i t h o u t a j u r y was h e l d b e f o r e Hon. J a c k L . Green
i n t h e d i s t r i c t c o u r t , Missoula County. Judgment was r e n d e r e d
i n f a v o r of p l a i n t i f f s and damages were a s s e s s e d a t $8,550.
From t h i s judgment d e f e n d a n t s a p p e a l and r a i s e t h i s i s s u e :
Is the pre-emptive right agreement unenforceable because
the 'iiescriptionof the land to which it applies is incomplete
and ambiguous?
Plaintiffs on their cross-appeal raise this issue:
Did the district court correctly determine the amount
of damages for the breach of the pre-emptive agreement?
We hold in the affirmative on defendants' issue. Accord-
ingly, a consideration of plaintiffs' issue is unnecessary.
In Weintz v. Bumgarner, 150 Mont. 306, 313, 434 P.2d 712,
this Court examined the nature of a pre-emptive right and distin-
guished it from an option with these words:
"The distinction between the two is well explained
in Volume VI, American Law of Property, B 26.64
p. 507:
"'A pre-emption differs materially from an option.
A 1 option creates in the optionee a power to
1
compel the owner of property to sell it at a
stipulated price whether or not he be willing to
part with ownership. A pre-emption does not give
to the pre-emptioner the power to compel an unwill-
ing owner to sell; it merely requires the owner,
when a i if he decides to sell, to offer the prop-
rd
erty first to the person entitled to the pre-emption,
at the stipulated price. Upon receiving such an
offer, the pre-emptioner may elect whether he will
buy. If he elects not to buy, then the owner of the
property may sell to anyone."'
Property that is the subject of the pre-emptive agreement
s h o u l d be adequately described and the price must be stated or
otherwise made determinable. 1A Corbin on Contracts, S 261. In
the instant case, the fact that no price was mentioned at which
the pre-emptive right was to be exercised does not make the agree-
ment void for uncertainty, since the use of the words "first
refusal" is technical. Consequently, these words imply that the
holder of the right may purchase at the same price offered by a
third party when the agreement is silent as to price. See:
Jurgensen v. Morris, 194 App.Div. 92, 185 N.Y.S. 386; Tamura v.
ile~uliis,203 Or. 619, 281 P.2d 469; Brenner v. Duncan, 318 Mich.
1, 27 N.W.2d 320; Barling v. Horn, (Mo. 1956) 296 S.W.2d 94. Here,
how eve^ cne s r e - e m p t i v e r i g n t agreement i s f a t a l l y d e f e c t i v e
b e c a u s e i t i s impossible t o d e t e r m i n e t h e d e s c r i p t i o n of prop-
e r t y t o which t h e r i g h t a p p l i e s w i t h a c c u r a c y , even though
r e s o r t i s had t o e x t r i n s i c e v i d e n c e .
I n Mercer v . Lemmens, 4 0 C a l . R p t r . 803, 230 C.A.2d 167,
where t h e s u f f i c i e n c y of a d e s c r i p t i o n c o n t a i n e d w i t h i n a pre-emp-
t i v e agreement was a t t a c k e d by t h e d e f e n d a n t i n a b r e a c h of con-
t r a c t a c t i o n , t h e d e s c r i p t i o n r e f e r r e d t o t h e " a d j o i n i n g " 50
Eoot Lot. The C a l i f o r n i a c o u r t upheld t h e agreement a f t e r ex-
t r i n s i c e v i d e n c e d i s c l o s e d t h e s e l l e r owned no o t h e r r e a l p r o p e r t y
a d j o i n i n g o r c o n t i g u o u s t o t h e t r a c t owned by p l a i n t i f f and t h e
c o a r t was a b l e t o d e t e r m i n e w i t h a c c u r a c y t h e d e s c r i p t i o n o f t h e
p a r c e l of p r o p e r t y t o which t h e pre-emptive r i g h t a p p l i e d .
The f a c t s i n t h e i n s t a n t c a s e a r e f a r d i f f e r e n t and compel
a ~ i f f e r e n t esult.
r The r e c o r d d i s c l o s e s t h e p r o p e r t y p u r c h a s e d
by p l a i n t i f f s was i n c l u d e d w i t h i n a l a r g e r p a r c e l of l a n d owned
by d e f e n d a n t s . Defendants were t h e r e c o r d owners of t h e Southwest
and S b u t h e a s t q u a r t e r s of s e c t i o n 4 , Township 2 0 North, Range 1 6
west. P l a i n t i f f s ' a c q u i r e d l a n d was l o c a t e d i n t h e S o u t h e a s t
quarter. Defendants a l s o owned r e s i d e n t i a l p r o p e r t y i n t h e
jlissoula a r e a a s w e l l a s p r o p e r t y i n t h e N o r t h e a s t q u a r t e r of
3 e c t i o n 5 , Township 1 2 North, Range 1 9 West; p r o p e r t y i n S e c t i o n
2, Township 1 2 N o r t h , Range 1 9 West; and p r o p e r t y i n S e c t i o n 1 9 ,
Yownship 1 5 North, Range 7 West. Thus, t h e r a t i o n a l e of Mercer
i s n o t a p p l i c a b l e and t h e agreement must f a i l because o f i t s
; cenr
+ indefiniteness.
Here, a t t e m p t i n g t o a s c e r t a i n t h e i n t e n t of t h e p a r t i e s
d~ C L I ~ t i m e t h e c o n t r a c t was e n t e r e d i n t o , we l o o k t o s t a t u t e s
dealing with the i n t e r p r e t a t i o n of c o n t r a c t s . S e c t i o n 13-709,
K.Z.M. 1 9 4 7 , r e q u i r e s i n t e r p r e t a t i o n of a c o n t r a c t i n s u c h a
manner a s t o make i t o p e r a t i v e , i f s u c h can be done w i t h o u t v i o -
l a t i n g t h e i n t e n t of t h e p a r t i e s . S e c t i o n 13-720, R.C.M. 1947,
zouipels i r ~ c e r p r e t a c ~ o a i t h e c o n t r a c t most s t r o n g l y a g a i n s t
sf
the party causing t h e uncertainty t o e x i s t , (here, t h e defend-
ant).
W a r e c o g n i z a n t o f t h e above r u l e s , however, w e c a n n o t
e
i g n o r e t h e p l a i n i m p l i c a t i o n o f s e c t i o n 13-402, R.C.M. 1947,
which s t a t e s :
"The o b j e c t o f t h e c o n t r a c t must be l a w f u l when
t h e c o n t r a c t i s made, and p o s s i b l e a n d a s c e r t a i n -
a b l e by t h e t i m e t h e . c o n t r a c t i s t o be p e r f o r m e d . "
(Emphasis s u p p l i e d . )
To t h e same e f f e c t , s e e T h r a s h e r v . S c h r e i b e r , 77 Mont.
221, 2 5 0 P . 600. 1 C o r b i n on C o n t r a c t s , 5 9 5 , p . 394, s t a t e s :
"A c o u r t c a n n o t e n f o r c e a c o n t r a c t u n l e s s it c a n
d e t e r m i n e what i t i s . I t i s n o t enough t h a t t h e
p a r t i e s t h i n k t h a t t h e y have made a c o n t r a c t ;
t h e y must have e x p r e s s e d t h e i r i n t e n t i o n s i n a
manner t h a t i s c a p a b l e o f u n d e r s t a n d i n g . It is
n o t even enough t h a t t h e y h a v e a c t u a l l y a g r e e d , i f
t h e i r e x p r e s s i o n s when i n t e r p r e t e d i n t h e l i g h t
o f accompanying f a c t o r s a n d c i r c u m s t a n c e s , a r e
n o t s u c h t h a t t h e c o u r t c a n d e t e r m i n e what t h e
t e r m s of t h a t a g r e e m e n t a r e . Vagueness o f e x p r e s -
s i o n , i n d e f i n i t e n e s s and u n c e r t a i n t y a s t o a n y
of t h e e s s e n t i a l t e r m s of a n agreement, have
o f t e n been h e l d t o p r e v e n t t h e c r e a t i o n o f a n en-
forceable contract."
A c c o r d i n g l y , t h e judgment o f t h e d i s t r i c t c o u r t i s re-
v e r s e d and t h i s
Y
Justi
W e concur: ,. 1 /
J u s t i c e s \)