Hollas v. McLeod

No. 90-429
IN THE SUPREME COURT OF THE STATE OF MONTANA
1990
JOHN HOLLAS and SHEILA HOLLAS, ; a
s ,
Plaintiffs and Appellants,
-v-
JACK L. McLEOD, JACK McLEOD, and JAN 1 5 1991
ASSOCIATES, INC., and GLENN PRYOR
and LOIS PRYOR,
CLERK OF 8 U * r $ g ~ g
Defendants and Respondents. UP IWU``PAN;B
APPEAL FROM: District Court of the Second Judicial District,
In and for the County of Silver Bow,
The Honorable Mark P. Sullivan, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
David N. Hull, Helena, Montana
For Respondent:
James E. Purcell, Butte, Montana
Submitted on Briefs: November 29, 1 9 9 0
Decided: January 15, 1991
Filed:
Justice Fred J. Weber delivered the Opinion of the Court.
Plaintiffs John Hollas and Sheila Hollas sought specific
performance of a contract for deed, naming Jack L. McLeod, Jack
McLeod and Associates, Inc., (McLeods) realtors in the transaction,
and Glenn Pryor and Lois Pryor, sellers in the transaction, as
defendants. The District Court for the Second Judicial District,
Silver Bow County, granted summary judgment to the McLeods.
Plaintiffs appeal. We affirm.
The sole issue for our review is whether the District Court
erred in granting summary judgment in favor of the McLeods.
On January 20, 1986, the Pryors listed their real property
for sale with the McLeods. The plaintiffs made several offers to
purchase the property, which resulted in the execution of a
Contract for Deed on February 14, 1986 between the plaintiffs and
the Pryors. Note that the Pryors were never sewed and are not
parties to this appeal.
The Contract for Deed was executed on February 14, 1986 and
provided that the purchase price of $30,000 was payable $20,000
upon execution of the agreement, with the balance of $10,000
payable in monthly installments of $192.65 at 9% over 5 1/2 years.
The contract also obligated the Pryors to provide the plaintiffs
with an owner's title insurance policy within 90 days after the
execution of this agreement, guaranteeing that the Pryors owned the
real property in fee simple absolute, free and clear of liens and
encumbrances. In its review of the uncontested facts, the District
Court summarized the same by pointing out that the plaintiffs went
into possession of the property on March 7, 1986; and the McLeods
did not set up the escrow because the Pryors went into bankruptcy.
The District Court referred to the various steps in the bankruptcy
court which culminated in the 1989 petition to reopen the Pryor
bankruptcy on the part of McLeods and resulted in a bankruptcy
court order authorizing the sale of the property in question free
and clear of any liens. At that point the McLeods had a title
insurance policy issued which did show clear title as of that time
in the Pryors.
In December, 1986, the McLeods dispersed the $20,000 retained
in its trust account since February 20, 1986. Plaintiffs'
complaint against the McLeods alleges that they orally advised
McLeod not to disburse the $20,000 down payment until there was a
clear title. The plaintiffs also claim a breach of fiduciary duty
to them by disbursing without clear title. The defendants moved
for summary judgment, maintaining that the plaintiffs have not been
damaged as they now have a policy showing clear title so that the
Pryors had fulfilled their obligation to give clear title; and also
contending that the McLeods had no contractual relationship with
the plaintiffs.
Relying on Scheitlin v. R. D. Minerals (1985), 217 Mont. 8, 701
P.2d 1388, the District Court held that plaintiffs waived the 90-
day clear title provision of the Contract for Deed. It pointed out
that McLeod was employed by the Pryors, not the plaintiffs and thus
McLeod did not owe a fiduciary duty to the plaintiffs. It further
pointed out that any agreement regarding the disbursal of the down
payment funds should have been memorialized in the buy-sell
agreement or the Contract for Deed. The District Court concluded
that there were no genuine issues of fact. It stated:
This case is governed by the provisions of the Contract
for Deed between Sellers and Buyers concerning the
subject real estate and in this case the Buyers did
absolutely nothing from February 14, 1986, until after
the Escrow was set up in late December, 1986, following
the original bankruptcy order. Other than said Contract
for Deed, there was nothing in writing evidencing any
agreement between the Plaintiffs and the Defendants
McLeod regarding dispersal of funds.
Pursuant to Rule 56 (c), M.R. Civ.P., the District Court granted
summary judgment in favor of defendants. From that judgment,
plaintiffs appeal.
We affirm the holding of the District Court that the
plaintiffs waived the provision by their failure to object until
after the McLeods disbursed the $20,000 down payment. We emphasize
that as a result of the issuance of the title insurance policies,
the Pryors as sellers have fulfilled their obligation to provide
clear and marketable title to the plaintiffs. As a result, the
question of the waiver of the 90-day marketable provision is moot
for practical purposes.
We affirm the District Court.
Justices I\