Rasmussen v. Lee

NO. 95-272
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
APPEAL FROM: District Court of the Ninth Judicial District,
In and for the County of Teton,
The Honorable Marc G. Buyske, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Gorham E. Swanberg and Matthew Hutchison,
James, Gray & McCafferty, Great Falls, Montana
For Respondent:
John P. Wuerthner, Wuerthner & Wuerthner,
Great Falls, Montana
Kenneth R. Olson, Attorney at Law,
Great Falls, Montana
Submitted on Briefs: February 15, 1996
Decided: April 9, 1996
Filed:
Clrerk
Justice Charles E. Erdmann delivered the opinion of the Court.
This is an appeal from a decision of the Ninth Judicial
District Court, Teton County, granting summary judgment on the
claim of unlawful detainer in favor of Stanley Rasmussen, personal
representative of the estate of Fred Pelzman (the estate). We
affirm.
Joe Lee has requested that we strike certain evidence
referenced in the estate's brief. The evidence referred to was not
considered by this Court in our decision. Lee's request is
therefore moot and we choose not to rule on his motion to strike.
We restate the issues as follows:
1. Did the District Court err in granting summary judgment
in favor of the estate on the estate's claim of unlawful detainer?
2. Did the District Court err in requiring Lee to post a
$60,000 supersedeas bond?
FACTS
Fred Pelzman owned an 800 acre ranch in Teton County, north of
Choteau. Lee and his wife moved to Choteau in 1977. Lee struck up
an acquaintance with Pelzman and subsequently entered into a series
of transactions with him. They apparently entered into a
work/share agreement in 1977, but no copy of that agreement was
produced.
On July 25, 1978, Lee prepared a lease between his wife and
Pelzman covering a two-year period which began in November 1977 and
ended in November 1980. The lease covered the ranch, fifty-five
cows, and two bulls for an annual rental of $3,000. Lee also
2
drafted a "Right of First Refusal," dated February 15, 1978,
purporting to grant to Lee the right to purchase the Pelzman ranch
for fair market value. Five weeks later, Lee drafted another
document which was also entitled a "Right of First Refusal"
granting to him the right to purchase the ranch for $120,000.
After the lease between Lee's wife and Pelzman expired, Lee
drafted another lease. The second lease was between himself and
Pelzman and covered the ranch, fifty cows, and two bulls for $3,000
per year. The lease commenced January 1, 1981, and expired by its
own terms on December 31, 1985.
Pelzman died in May 1986. Following his death, his estate
wrote two letters to Lee giving Lee notice that his lease would be
terminated on December 31, 1986, which included a one-year
extension by implication. The estate demanded possession of the
ranch and cattle on or before January 1, 1987. Lee refused to
relinquish the property.
In September 1986, Lee filed an action for specific
performance to exercise his option in purchasing Pelzman's ranch
and cattle for fair market value. The district court determined
that Lee had no option, but rather a right of first refusal which
had not come into effect because there was no notice of any intent
by Pelzman or his estate to sell. The district court's decision
was affirmed by this Court in Lee v. Shaw (1991), 251 Mont. 118,
822 P.2d 1061.
In March 1987, the estate filed an action asking that Lee's
lease be terminated. The complaint was amended in April 1989 to
3
allege an action for unlawful detainer. The issue of Lee's right
to possession of the ranch was bifurcated from the damage issue
pursuant to Lee's motion.
In the meantime, the estate executed a purchase and sell
agreement dated July 10, 1992, with another party. Lee brought an
action against Pelzman's estate for specific performance to enforce
the agreement giving Lee the right of first refusal to buy the
ranch for a specified price. The district court concluded, and we
agreed, that Lee waived his right of first refusal and therefore
the ranch was available for other offers. Estate of Pelzman
(1993), 261 Mont. 461, 863 P.2d 1019.
As for the present bifurcated action, the District Court found
there was no genuine issue of material fact and concluded that
summary judgment was appropriate for the unlawful detainer action.
The court found that Lee was notified by the estate in June 1986
that his lease would terminate on January 1, 1987. The court
concluded that the continued holding by Lee of the property from
that date triggered the unlawful detainer statute. Accordingly,
the District Court granted summary judgment in favor of Pelzman's
estate on April 21, 1995, and ordered Lee to vacate the premises.
From that decision, Lee appeals.
Lee requested a stay of the District Court's order pending
appeal. The District Court granted Lee's request and set a
supersedeas bond in the amount of $60,000 to cover damages incurred
by the estate due to Lee's continuous possession of the ranch
4
during the course of this appeal. Lee also appeals from the
court's setting of the supersedeas bond.
ISSUE 1
Did the District Court err in granting summary judgment in
favor of the estate on the estate's claim of unlawful detainer?
We review a district court's grant of summary judgment using
the same evaluation as the district court based on Rule 56,
M.R.Civ.P. Bruner v. Yellowstone County (1995), 272 Mont. 261,
264, 900 P.2d 901, 903.
The movant must demonstrate that no genuine issue of
material fact exists. Once this has been accomplished,
the burden then shifts to the non-moving party to prove,
by more than mere denial and speculation, that a genuine
issue does exist. Having determined that genuine issues
of fact do not exist, the court must then determine
whether the moving party is entitled to judgment as a
matter of law. We review the legal determinations made
by a district court as to whether the court erred.
Bruner, 900 P.2d at 903 (citations omitted)
In its order granting summary judgment and requiring
restitution of premises, the District Court found that "Lee has
presented no sworn evidence that demonstrates any genuine issue of
material fact as to his claimed right to continued possession of
the property in question, as is his burden in a summary judgment
proceeding, once the proponent of summary judgment has demonstrated
the lack of such issues of fact."
On appeal, Lee claims a question of fact exists as to whether
the estate consented to his remaining on the property. Such
consent would be fatal to a claim of unlawful detainer. In
reviewing Lee's brief in opposition to the summary judgment motion
5
and the transcript of the District Court hearing, we have
determined that Lee did not present to the District Court the
argument that the estate consented to Lee's possession of the
property. We will not address an issue presented for the first
time on appeal. Fandrich v. Capital Ford Lincoln Mercury (19951,
272 Mont. 425, 431, 901 P.2d 112, 115-16. Therefore, the issue of
the estate's consent is not before us.
Lee also claims a question of fact exists as to whether the
agreement between him and Pelzman dated March 20, 1978, provided
for Lee's possession of the property until time of sale. Lee
contends the estate could not unilaterally terminate the lease
where its term was set forth in the March 20 agreement, and
therefore, the estate's June 1986 termination notice was
ineffectual.
The March 20, 1978, agreement provides in pertinent part:
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.
In Lee, we determined that the March 20 agreement granted a
right of first refusal to the sale of the Pelzman property which is
effective upon notice of intent to sell. Lee, 822 P.2d at 1064.
The estate received an offer to purchase by another party and
entertainment of that offer ripened Lee's right of first refusal.
6
Pelsman, 863 P.2d at 1021. We concluded, however, that Lee waived
his right of first refusal and the estate could accept the other
offer. Pelzman, 863 P.2d at 1022.
The only obstruction to the sale was Lee's refusal to deliver
possession of the property to the estate. "We have long held that
one cannot benefit from his own wrong." Payne v. Stratman (19881,
229 Mont. 377, 382, 747 P.2d 210, 213 (citing Roundup Cattle
Feeders v. Horpstad (1979), 184 Mont. 480, 485, 603 P.2d 1044,
1047, and § l-3-208, MCA). Accordingly, Lee cannot claim his
possession of the property was lawful based upon the March 20
agreement. We conclude that the District Court did not err in
finding there was no question of fact as to whether the March 20
agreement gave Lee possession of the property, and therefore, the
estate's notice of June 1986 effectively terminated the lease
agreement.
The District Court found that the unlawful detainer statute,
§ 70-27-108(l), MCA, applied in this case due to Lee's continued
possession of the property after his rights were terminated. The
District Court then concluded the estate was entitled to
restitution of the premises pursuant to § 70-27-205(l), MCA. Lee
asserts that if he was found to have possessed the property without
permission, § 70-27-108(2), MCA, and its special notice provision
for agricultural property would apply instead. Section 70-27-108,
MCA, provides as follows:
A tenant of real property or mining claim, for a term
less than life, is guilty of unlawful detainer:
7
(1) when he continues in possession, in person or
by subtenant, of the property or any part thereof after
the expiration of the term for which it is let to him
without the permission of the landlord or the successor
in estate of his landlord, if any there be, but in case
of a tenancy at will, it must first be terminated by
notice, as prescribed in 70-27-104;
(2) where he continues in possession, in person or
by subtenant, without permission of his landlord or the
successor in estate of his landlord, if any there be,
after default in the payment of rent, pursuant to the
lease or agreement under which the property is held, and
3 days' notice in writing requiring its payment, stating
the amount which is due, or possession of the property
shall have been served upon him . . In all cases of
tenancy upon aaricultural lands where the tenant has held
over and retained possession for more than 60 days after
the expiration of his term without any demand of
possession or notice to auit bv the landlord or the
successor in estate of his landlord, if any there be, he
shall be deemed to be holdinq by permission of the
landlord or the successor in estate of his landlord and
shall be entitled to hold under the terms of the lease
for another full year and shall not be quiltv of an
unlawful detainer during said year, and such holdinq over
for the period aforesaid shall be taken and construed as
a consent on the part of a tenant to hold for another
yeaT;
(3) when he continues in possession, in person or
by subtenant, after a neglect or failure to perform other
conditions or covenants of the lease or agreement under
which the property is held . . . .
(Emphasis added).
Lee argues that since he held over and retained possession of
agricultural lands for more than sixty days after the expiration of
the lease term without a demand or notice to quit by the estate, he
is entitled to hold over under the terms of the prior lease for
another year. The estate contends that subsection (2) applies only
to tenants who have defaulted in the payment of rent. In
opposition, Lee relies on our decisions in Holliday Land &
Livestock Co. v. Pierce (1977), 174 Mont. 393, 571 P.2d 93, and
Hamilton v. Rock (1948), 121 Mont. 245, 191 P.2d 663, where we
applied § 70-27-108(2), MCA, to cases involving agricultural
tenants where default in rent was not at issue. Those cases are
distinguishable on their facts and are also based upon an erroneous
interpretation of law.
In Hamilton, the tenant had a one-year lease. At the
expiration of that lease, the landlord informed the tenant "all
deals were off." However, the landlord also said "[iIn the future
if you wish to rent or buy the place, you have to see . . my
agent." Hamilton, 191 P.2d at 665. The tenant cut the hay crop
after the expiration of the lease and the landlord claimed
possession of the hay crop. Considering the landlord's reference
to continued possession of the land, the jury found the tenant was
provided no notice to quit, and therefore, had a right to continued
possession of the land and its crop for one year pursuant to
5 9889, RCM (now codified at 5 70-27-108(2), MCA). In contrast,
Lee was provided notice of the termination of his lease and the
unequivocal expectation by the estate that they sought possession
of the property.
In Holliday, an agricultural tenant obtained a one-year lease
which was extended to two years. After the end of the second lease
term, the tenant remained on the property but paid no advance
rental. Six months later, after the tenant's crops had been
planted, the landlord served the tenant notice to pay rent or
abdicate possession of the property. The landlord subsequently
filed a complaint for unlawful detainer. Hollidav, 571 P.2d at 94.
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1n that case, this Court applied § 93-9703(Z), RCM (the
predecessor of § 70-27-108(Z), MCA), and concluded that the tenant
was presumed to have permission of the landlord for the full year
and could not be found liable for unlawful detainer. Hollidav, 571
P.2d at 95. The present case is distinguished from Hollidav in
that the estate did not request payment of rent in return for
continuation of the lease but explicitly demanded possession of
property as of January 1, 1987. Possession of property in this
case is not due to default in rent, where in Hollidav it was. In
fact, Lee tendered the annual 1986 rent of $3000 to the estate in
December 1986. Therefore, our decision in Hollidav does not apply.
In Hollidav, however, we referred to our decision in Pipkin v.
Connolly (1975), 167 Mont. 284, 538 P.2d 347, where we applied
§ 93-9703 (21, RCM, to a holdover agricultural tenant who had not
defaulted in rent. Pipkin, 538 P.2d at 348-49. The tenant was
found liable for unlawful detainer by the district court and was
ordered to deliver possession of the property with its crops to the
landlord. Pipkin, 538 P.2d at 348. In that decision we stated:
Under [§ 93-9703(2), RCM] a hold-over tenant for sixty
days without notice who invests time and seed will not
lose this investment to the landlord. However, the
statute gives him no more than the right to harvest his
crop to protect his investment and protects him from
liability in an action for unlawful detainer.
Piokin, 538 P.2d at 351 (citing Miller v. Meredith, Hill and
Whitfield (1967), 149 Mont. 125, 129, 423 P.2d 595, 597). We
concluded that:
[The tenant] remained on the property sixty days after
the lease terminated and planted their crops. Therefore,
10
under section 93-9703(Z), they had a right to harvest
those crops and are protected from liability for unlawful
detainer.
Pipkin, 538 P.2d at 351.
While this Court in Hamilton and Pipkin used § 70-27-108(2),
MCA, to attain equitable results, we consider the application of
that subsection in cases other than for default of rent to be in
error. Section 70-27-108, MCA, provides three situations where a
tenant can be found liable for unlawful detainer. Subsection (1)
provides for continued possession "after expiration of the term for
which it is let to him without the permission of the landlord."
Subsection (2) provides for continued possession "after default in
the payment of rent." Subsection (3) provides for continued
possession "after a neglect or failure to perform other conditions
or covenants of the lease."
"[Wlhen interpreting a statute all parts must be construed
together without according undue importance to a single or isolated
portion." Sutherland Stat. Const. § 46.05. The provision Lee
relies upon--the exception for agricultural property--is part of
subsection (2). It is not referenced in any other part of that
statute. Accordingly, the agricultural exception is applicable
only to subsection (2) which is in the context of default of rent,
and we overrule our holdings in Hamilton, 191 P.2d at 666, and
11
Piokin, 538 P.2d at 351, to the extent they are inconsistent with
this interpretation of § 70-27-108(2), MCA.l.
Section 70-27-108(2), MCA, does not apply to the present case
since the unlawful detainer action was not for default of rent.
Notice subsequent to termination of the lease was not required.
Lee was in possession of the property after expiration of the term
for which it was let to him without the estate's permission. Lee
is therefore liable for unlawful detainer pursuant to § 70-27-
108(1), MCA.
We conclude the District Court did not err in its
interpretation of law, and we affirm the District Court's grant of
summary judgment in favor of the estate.
ISSUE 2
Did the District Court err in requiring Lee to post a $60,000
supersedeas bond?
The District Court granted to Lee a stay of execution pending
appeal as to the unlawful detainer judgment and the matter of
possession of the property involved. In connection with the stay,
the District Court required Lee to post a supersedeas bond in the
amount of $60,000.
The District Court based the bond amount on the estate's loss
of interest on the sale price agreed to by the third party. The
1
By our interpretation of 5 70-27-108(2), MCA, we also
overrule the holdings in Miller v. Meredith, Hill and Whitfield
(1967), 149 Mont. 125, 423 P.2d 595, Kenfield v. Curry (1965), 145
Mont. 174, 399 P.2d 999, and Enott v. Hinkle (1962), 140 Mont. 206,
369 P.2d 413, to the extent they are inconsistent with our opinion.
12
court figured a reasonable rate of return of eight percent over a
four-year period. The court also took into consideration costs the
estate would incur on appeal and the damage the estate would suffer
from the delay caused by appeal as it must maintain the property
without reimbursement from any source when, without this
proceeding, the property would be in the possession of the third
party buyer who would bear such costs.
Lee contends the court erred in calculating the bond amount.
According to the court's calculations, eight percent interest on
the agreed upon sale price of $165,000 for four years is $52,000.
Lee maintains that this amount should be deducted from the
supersedeas bond because it was improper for the court to presume
the sale to the third party would come to fruition. Lee stresses
that a buy/sell agreement is merely an agreement to agree and
therefore speculative.
We review a district court's order setting the amount of a
supersedeas bond to determine whether the district court acted
arbitrarily without employment of conscientious judgment or
exceeded the bounds of reason. Safeco Ins. Co. v. Lovely Agency
(19851, 215 Mont. 420, 426, 697 P.2d 1354, 1358.
Previously, Lee asked this Court to exercise supervisory
control and reduce the amount of supersedeas bond Lee was required
to post. In our order of September 18, 1995, we determined there
was no compelling reason why we should reduce the amount of Lee's
supersedeas bond. "The purpose of a supersedeas bond as a
condition for staying enforcement and execution on a judgment is to
13
secure the rights of the judgment creditor during the appeal
process." Safeco, 697 P.2d at 1358 (citing Paulsen v. Treasure
State Industries, Inc. (1979), 183 Mont. 439, 442, 600 P.2d 206,
208).
The only event preventing the closing of the sale to the third
party was Lee's possession of the property. The District Court
calculated the amount of interest the estate lost from its
inability to reinvest any sale proceeds, the cost of taxes, and
appeal expenses. We conclude now as we did then--there was a
reasonable basis for the amount of the bond that the court
established. Therefore, the District Court did not err in
requiring Lee to post a $60,000 supersedeas bond.
We affirm.
aa
Justice
We concur:
April 9, 1996
CERTIFICATE OF SERVICE
I hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:
Gorham E. Swanberg
Matthew Hutchison
James, Gray & McCafferty, P.C.
Box 2885
Great Falls MT 59403-2885
Wuerthner & Wuerthner
John P. Wuerthner
Attorneys at Law
Box 2503
Great Falls MT 59403-2503
Kenneth R. Olson
Attorney at Law
600 Central Plaza, Suite 316
Great Falls MT 59401
Stoney Burke
Attorney at Law
Box 70
Choteau MT 59422-0070
Joe Sullivan
Attorney at Law
410 Central Ave., Strain Bldg.
Great Falls MT 59401
ED SMITH
CLERK OF THE SUPREME COURT
STATE! OF MONTANA