Hofmann v. George

No. 93-465
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
EDWARD L. HOFMANN, JR.,
Plaintiff and Respondent,
DAVID E. GEORGE and
MARJORIE F. GEORGE,
Defendants and Appellants.
MARCH 3 , 1994)
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Robert W. Holmstrom, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Leo Graybill, Jr., Graybill, Ostrem & Crotty,
Great Falls, Montana
For Respondent:
Pierre L. Bacheller, Pierre L. Bacheller, Inc.,
Billings, Montana
Submitted on Briefs: February 10, 1994
Decided: March 3, 1994
Filed:
Chief Justice J. A. Turnage delivered the Opinion of the Court.
David E. George and Marjorie F. George (the Georges) appeal
from a decision of the Thirteenth Judicial District Court,
Yellowstone County. The court ruled that a buy and sell contract,
wherein the Georges agreed to sell land to Edward L. Hofmann, Jr.,
was valid; the court further ordered specific performance of the
contract. We affirm.
The dispositive issue on appeal is rephrased as whether the
District Court erred in determining that the parties' buy and sell
contract was specifically enforceable.
During 1992, the Georges sought to sell a tract of land they
owned which is located between Billings and Laurel, Montana. The
land was listed with area realtors, and realtor James Hoffman,
located Edward L. Hofmann, Jr. (Hofmann), as an interested buyer in
June 1992.
Hofmann made the Georges an offer to purchase the land for
$160,000, and the Georges rejected the offer. Approximately one
month later, however, the Georges approached Hofmann at Hofmannrs
business address and asked if he was still interested in purchasing
their land for $160,000. The Georges explained that their contract
with the realtors had terminated, and they could now sell the land
to Hofmann, avoiding $11,200 in realtor fees.
Hofmann agreed to purchase the land under these conditions.
Marjorie George picked up a buy and sell agreement at a local
business, typed it out, and both parties signed it on July 29,
2
1992. The agreement provided, in relevant part, that payment was
due as follows:
$1,000.00 earnest money to be applied at closing . . .
$159,000.00 balance of the purchase price will be paid as
follows: proceeds from loan buyer is acquiring from
First Federal Savings and Loan. Sale contingent upon
buyer being able to obtain financing.
The parties signed another, supplemental agreement on July 30,
1992, which provided:
DAVID D, and MARlORIE F, GEORGE (Sellers) agree to split
with EDWARD L. HOFMANN, Jr. (buyer) any part of the
$11,200 that is not paid to the realitors [sic] as
commission at time of closing of the property at:
4316 Christinson Rd., Billings, Montana 59101.
/s/ Marjorie I?. George
/s/ David D. George
/s/ Edward L. Hofmann, Jr.
Hofmann presented the Georges with a $1,000 personal check dated
August 1, 1992. He asked the Georges to notify him when they
planned to cash it in order to ensure that sufficient funds would
be in his personal checking account. The Georges attempted without
success to reach Hofmann; they did not cash the check.
Instead, after the Georges had learned that realtors had
initiated court proceedings to recover the $11,200 fee, the Georges
asserted that the buy and sell agreement was invalid because the
check was not valid earnest money. Additionally, the Georges
asserted that the contract was not specifically enforceable because
it was dependent upon Hofmann obtaining financing, and Hofmannls
lending institution had yet to finalize the financing procedures.
Hofmann asserted that the $1,000 check was valid earnest money
and that the only reason financing had not been completed was
because his lender's appraisal agent could not contact the Georges
to make an appraisal appointment. Hofmann asserted that the
appraiser felt he was "being avoided" by the Georges. The District
Court agreed with Hofmann and ordered specific performance of the
contract. The Georges appeal.
Did the District Court err in determining that the partiest
buy and sell contract was specifically enforceable?
Reviewing this civil case tried by the court without a jury,
we examine whether the court's findings of fact are clearly
erroneous and whether its conclusions of law are correct. Steer,
Inc. v. Dep't of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d
601, 603.
The Georges make two attacks on the validity of the buy and
sell agreement. First, they maintain that Hofmann's $1,000 earnest
money check was insufficient because the check was not cashed,
because Hofmann's personal checking account at times did not have
sufficient funds to cover the check and because the check was not
tendered at the time the parties signed the contract. Second, the
Georges assert that the contract could not be specifically
performed because Hofmann's lending institution failed to finalize
the financing process by not performing an appraisal of the
property. The Georgest arguments are without merit.
4
A personal check is valid consideration. See 5 28-2-801, MCA.
Here, where the contract stated that "$1,000 earnest money" was due
"to be applied at closing," Hofmann's check, rendered after the
contract was signed, constituted valid consideration.
The courts look to substance over form. Section 1-3-219, MCA.
While normally the conditions of a contract which can be instantly
performed are to be performed upon the signing of the contract
unless otherwise specifically stated, see 3 28-3-601, MCA, here we
conclude that the District Court did not err in determining that
the parties intended to enter into a valid, binding contract at the
time Hofmann tendered the $1,000 earnest money check to the
Georges. See generally, Ragland v. Sheehan (1993), 256 Mont. 322,
326-27, 846 P.2d 1000, 1003; Keesun Partners v. Ferdig Oil Co.
(1991), 249 Mont. 331, 816 P.2d 417. Whether the Georges actually
cashed the check is irrelevant to our review of its adequacy.
Concerning their second argument, the Georges essentially
attack the validity of the contract itself by attacking the court's
authority to order specific performance. There is no dispute that
the equitable remedy of specific performance may be had on a valid
contract for the purchase and sale of real property. Section 27-1-
411(2), MCA: see also Keaster v. Bozik (1981), 191 Mont. 293, 623
P.2d 1376.
Hofmann asserts that he obtained adequate financing and the
only remaining event to occur in order to finalize the financing
process is an appraisal of the Georges' property. The appraiser,
5
stated Hofmann, had tried to perform an appraisal with no success.
In its findings of fact, the court noted that
[alfter execution of the agreement to sell and purchase,
[Hofmann] made application for a loan through First
Federal Savings and Loan Association; as part of his loan
application, he was requested to provide a profit and
loss statement for his business; he employed an accoun-
tant to prepare such a statement at the cost of Six
Hundred and No/lOOths Dollars ($600.00); he understood
that the only thing left to be done with his loan
application was to obtain an appraisal of the property;
the appraiser employed by the lending institution called
him and asked that he help make an appointment to
appraise the property because the appraiser was unable to
make arrangements for an appointment with the [Georges]
for purposes of the appraisal.
After reviewing the record, we conclude that Hofmann was "able
to obtain financingw as required by the buy and sell agreement. We
therefore hold that the District Court did not err in determining
that the contract was valid and specifically enforceable. See
Larson v. Undem (1990), 246 Mont. 336, 805 P.2d 1318.
Affirmed.
We concur:
March 3, 1994
CERTIFICATE O F SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:
Leo Graybill, Jr.
Graybill, Ostrem & Crotty
#18 Sixth St. No., Ste. 200
Great Falls. MT 59401
Pierre L. Bacheller, Esq.
Pierre L. Bacheller, Inc.
P.O. Box 2078
Billings, MT 59103-2078
ED SMITH
CLERK O F THE SUPREME COURT
ST'4TE O F MONTANA
October 20. 1994
CERTIFICATE OF SERVICE
1 hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:
Leo Graybill, Jr. K e n n e t h R. N e i l 1
LARSEN & NEILL
Graybill, Ostrem & Crotty
Box 1692
#18 Sixth St. No., Ste. 200 Great Falls M 5 9 4 0 3 - 1 6 9 2
T
Great Falls, MT 59401
Pierre L. Bacheller, Esq.
Pierre L. Bacheller, Inc.
P.O. Box 2078
Billings, MT 59103-2078
ED SMITH
CLERK OF THE SUPREME COURT
ST.4TE ! MONTANA
X