TRIBBLE v REELY

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No. 13032 I N THE SIJPREME COURT O THE STATE O M N A3 F F O T IA 1976 LARRY N. TRIBBLE and LORETTA E. TRIBBLE, P l a i n t i f f s and Respondents, . . J O H N L REELY , WITaLIAM E S REELY , DELBERT C. F. ASHMORE, TRIBBLE RANCH CORPOPATION e t a l . , Defendants and A p p e l l a n t s . Appeal from: D i s t r i c t Court of t h e F i f t h J u d i c i a l D i s t r i c t , Hon. LeRoy L. McKinnon, Judge p r e s i d i n g . Counsel of Record: For Appellants : Datsopoulos & Macnonald, M i s s o u l a , Montana James B. Wheel-is a r g u e d , Missoul'q , Montana W i l l i a m E. G i l b e r t a r g u e d , Bozeman, Montana For Respondents : Morrow, Nash and Sedivy, Bozeman, Montana James H. 14orrow argued and Donald A. Nash a p p e a r e d , Bozeman, Montana Submitted : Decided: September 9 , 1976 DEC 13 im M r . Chief J u s t i c e James T . 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 a p p e a l a r i s e s o u t of a n a c t i o n b r o u g h t i n t h e d i s t r i c t c o u r t , f i f t h j u d i c i a l d i s t r i c t , J e f f e r s o n County, wherein p l a i n t i f f s L a r r y N. T r i b b l e and L o r e t t a E . T r i b b l e a l l e g e d t h a t a lease e x e c u t e d t o them by d e f e n d a n t s K a t h e r i n e T r i b b l e and W i l l i a m T r i b b l e , d e c e a s e d , c o n t a i n e d a r i g h t o f f i r s t r e f u s a l t o p u r c h a s e c e r t a i n p r o p e r t y known a s t h e T r i b b l e farm. The a c t i o n w a s b r o u g h t s e e k i n g d e c l a r a t o r y judgment t o d e t e r m i n e t h e r e s p e c t i v e r i g h t s of t h e p a r t i e s i n view o f t h e f a c t t h a t t h e r e had been e x e c u t e d a s a l e s agreement f o r t h e l a n d i n q u e s t i o n between d e f e n d a n t s T r i b b l e and d e f e n d a n t s John and W i l l i a m Reely and t o compel d e f e n d a n t s T r i b b l e t o e n t e r i n t o a n agreement w i t h p l a i n t i f f s t o s e l l t h e p r o p e r t y on t h e same t e r m s . The c a u s e w a s t r i e d b e f o r e t h e Hon. LeRoy McKinnon, s i t t i n g w i t h o u t a jury. 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 o f law and judgment w e r e entered f o r p l a i n t i f f s . judgment Defendants now a p p e a l from t h a t . The r e c o r d r e v e a l s : On A p r i l 6 , 1971, d e f e n d a n t s W i l l i a m and K a t h e r i n e T r i b b l e e n t e r e d i n t o a lease agreement w i t h t h e i r son and h i s w i f e , p l a i n t i f f s L a r r y and L o r e t t a T r i b b l e . The p e r t i n e n t terms o f t h a t l e a s e w e r e : "1. The L e s s o r s a r e t h e owners and i n p o s s e s s i o n of t h e f o l l o w i n g mentioned p r o p e r t y s i t u a t e i n J e f f e r s o n County, Montana, t o - w i t : "The p r o p e r t y known a s t h e T r i b b l e farm i n J e f f e r son County, Montana, c o n s i s t i n g of a p p r o x i m a t e l y 1300 a c r e s of farm l a n d s ( l e s s o r s r e s e r v e g r a z i n g l a n d s ) and hereby a g r e e t o l e t t h e same t o t h e Lessees f o r t h e p e r i o d of t h r e e y e a r s ending J a n u a r y 1, 1974. "7. I t i s u n d e r s t o o d and a g r e e d t h a t t h i s l e a s e i s made s u b j e c t t o s a l e by L e s s o r s a t any t i m e from d a t e h e r e o f . I t i s f u r t h e r u n d e r s t o o d , howe v e r , t h a t i n t h e e v e n t of s a l e , t h e L e s s e e s s h a l l have t h e f i r s t r e f u s a l under t e r m s s i m i l a r t o t h a t o f f e r e d any t h i r d p a r t y , and i n t h e e v e n t of such s a l e , t h e n t h i s l e a s e s h a l l t e r m i n a t e upon t h e n e x t J a n u a r y 1 s u c c e e d i n g such sale. "OPTION TO RENEW "1. I t i s u n d e r s t o o d and a g r e e d t h a t t h e L e s s e e s s h a l l have t h e f i r s t o p t i o n t o renew t h i s l e a s e under t e r m s and c o n d i t i o n s t h e same a s above a g r e e d f o r a n a d d i t i o n a l t h r e e ( 3 ) y e a r s commencing J a n u a r y 1, 1974, and t e r m i n a t i n g J a n u a r y 1, 1977. I t i s f u r t h e r a g r e e d , however, t h a t i f t h e L e s s o r s make a s a l e o f t h e p r o p e r t y o r any p o r t i o n t h e r e o f , t h e n t h i s l e a s e and i t s o p t i o n t o renew i s s u b j e c t t o s u c h s a l e a s above a g r e e d w i t h r i g h t of L e s s e e s t o m e e t any o f f e r o f any t h i r d p a r t y f o r t e n ( 1 0 ) d a y s a f t e r n o t i c e t o L e s s e e s i n w r i t i n g of i n t e n tion o r offer t o sell t o a third party. "2. Time i s e x p r e s s l y made o f t h e e s s e n c e o f t h i s lease. "3. T h i s agreement s h a l l be b i n d i n g upon t h e h e i r s , e x e c u t o r s , a d m i n i s t r a t o r s and a s s i g n s of t h e respective parties, with t h i s reservation: "A. T h a t i f b o t h of t h e L e s s o r s s h o u l d n o t s u r v i v e t h e terms o f t h i s l e a s e , t h e n t h i s l e a s e s h a l l t e r m i n a t e on t h e n e x t a n n i v e r s a r y t h e r e o f ( J a n . 1) * * *." Subsequent t o t h e s i g n i n g of t h e l e a s e , W i l l i a m T r i b b l e began t o c o n s i d e r t h e s a l e of h i s farm. N e g o t i a t i o n s were c a r r i e d on w i t h s e v e r a l p o t e n t i a l p u r c h a s e r s , a l l w i t h p l a i n t i f f L a r r y T r i b b l e ' s knowledge. U l t i m a t e l y i n t h e e a r l y p a r t of 1973, nego- t i a t i o n s began w i t h d e f e n d a n t s Reely b r o t h e r s , a g a i n w i t h p l a i n t i f f L a r r y T r i b b l e ' s knowledge. I n f a c t a n o f f e r made by t h e p l a i n t i f f s t o p u r c h a s e t h e farm, d a t e d A p r i l 1 3 , 1973, was t u r n e d down by d e f e n d a n t s K a t h e r i n e and W i l l i a m T r i b b l e . On A p r i l 2 0 , 1973, d e f e n d a n t s T r i b b l e e n t e r e d i n t o a w r i t t e n s a l e agreement w i t h def e n d a n t s Reely t o s e l l t h e e n t i r e farm c o n s i s t i n g of a p p r o x i m a t e l y 7,800 a c r e s a t a p r i c e o f $410,000. A week l a t e r , a t t h e i n s i s t e n c e o f William T r i b b l e a n addendum was made t o t h e s a l e s agreement t o i n c l u d e t h e lease agreement of A p r i l 6 , 1971 between d e f e n d a n t s T r i b b l e and p l a i n t i f f s L a r r y and L o r e t t a T r i b b l e . N c o m p l e t e copy of t h e s a l e s agreement was made a v a i l a b l e o to plaintiffs until January 18, 1974. Thereafter on January 23, 1974, plaintiffs notified defendants Reely and Katherine Tribble of their intention to exercise their right of first refusal. De- fendant John Reely telephoned counsel for plaintiffs stating he had no duty towards plaintiffs. from any of the defendants. No written response was received The action for declaratory judg- ment and specific performance followed being filed on April 4, 1974. The judgment filed on March 11, 1975, declared that plaintiffs had a valid lease with the right of first refusal to buy the entire Tribble farm consisting of approximately 7,800 acres; that plaintiffs had exercised that right, and enjoined the defendants Reely from asserting any rights to the property excepting a right to an accounting for monies paid. In addition, defendants Tribble were ordered to enter into an agreement for sale with plaintiffs on the same terms and conditions as those that had been agreed upon with the defendants Reely. On May 27, 1975, a supplementary judgment based on the proceedings for accounting was filed ordering plaintiffs to reimburse defendants Reely in the amount of $34,143.01 for monies expended. Defendants appeal both judgments. Several issues are presented for review, but the following issues are controlling in the disposition of this appeal: 1) Whether the right of first refusal is sufficiently definite as to permit specific performance. 2) Whether plaintiffs Tribble received the requisite notice of the planned sale to defendants Reely. 3) Whether under the terms of the lease the rights of the plaintiffs Tribble were extinguished by the death of William Tribble. 4) Whether the judgments filed March 11, 1975 and May 27, 1975, a r e v o i d f o r want of c e r t a i n t y . The d e f i n i t i o n of t h e r i g h t o f f i r s t r e f u s a l o r p r e e m p t i v e r i g h t h a s been g i v e n by t h i s C o u r t on s e v e r a l o c c a s i o n s b e g i n n i n g w i t h t h e c a s e of Weintz v . Bumgarner, 150 Mont. 306, 313, 434 P.2d 712, w h e r e i n w e n o t e d t h e f o l l o w i n g e x p l a n a t i o n g i v e n i n Volume V I , American Law of P r o p e r t y , S26.64, p. 507: " ' * * * A pre-emption d o e s n o t g i v e t o t h e pre-emptioner t h e power t o compel a n u n w i l l i n g owner t o s e l l ; it m e r e l y r e q u i r e s t h e owner, when and i f h e d e c i d e s t o s e l l , t o o f f e r t h e property f i r s t t o t h e person e n t i t l e d t o t h e pre-emption, a t t h e s t i p u l a t e d p r i c e . Upon r e c e i v i n g such a n o f f e r , t h e pre-emptioner may e l e c t whether he w i l l buy. I f he e l e c t s n o t t o buy, t h e n t h e owner of t h e p r o p e r t y may sell t o anyone.'" See a l s o P h a l e n v . R i l l e y , 159 Mont. 239, 496 P.2d 295. A s t o whether t h e r i g h t of f i r s t r e f u s a l i s s u f f i c i e n t l y d e f i n i t e i n t h e agreement i n q u e s t i o n s o a s t o p e r m i t s p e c i f i c performance, w e f i r s t n o t e t h a t p r o p e r t y which i s t h e s u b j e c t o f s u c h a p r e e m p t i v e r i g h t must be a d e q u a t e l y d e s c r i b e d t o be enforceable. St.Rep. of " K l e i n v . B r o d i e , 167 Mont. 47, 534 P.2d 1251, 32 488. * * * Here t h e l e a s e agreement s t a t e s t h a t t h e lease i s t h e T r i b b l e farm i n J e f f e r s o n County, Montana, con- s i s t i n g o f a p p r o x i m a t e l y 1300 a c r e s o f farm l a n d s * * *." Yet t h e r e c o r d d i s c l o s e s t h a t t h e T r i b b l e farm a c t u a l l y c o n t a i n s a p p r o x i m a t e l y 7,800 a c r e s . W e t h u s f i n d t h e amount o f l a n d i n t e n d e d t o be i n c l u d e d u n c e r t a i n b e c a u s e of a n agreement ambiguous on i t s f a c e . A s a means o f r e s o l v i n g t h e problem b e f o r e u s w e n o t e t h e s e fundamental r u l e s o f c o n t r a c t . A c o n t r a c t must be con- s t r u e d s o a s t o c a r r y o u t t h e i n t e n t i o n s of t h e p a r t i e s a t t h e time of c o n t r a c t i n g i f such i n t e n t i o n s are a s c e r t a i n a b l e . t i o n 13-702, R.C.M. 1947. Sec- I f such a c o n t r a c t i s ambiguous on i t s f a c e a s t o t h e i n t e n t i o n s of t h e c o n t r a c t i n g p a r t i e s , par01 e v i d e n c e c a n be used t o a s c e r t a i n t h o s e i n t e n t i o n s . McNussen v. G r a y b e a l , 146 Mont. 1 7 3 , 405 P.2d 447; Kielmann v . Mogan, 156 Mont. 230, 478-P.2d 275; Lehrkind v. McDonnell, 51 Mont. 343, 153 P. 1012. And i n i n t e r p r e t i n g such p a r 0 1 e v i d e n c e w e note these r u l e s : The i n t e n t i o n of t h e p a r t i e s t o a c o n t r a c t i s t o be a s c e r t a i n e d from t h e l a n g u a g e t h e r e o f viewed i n i t s e n t i r e t y and n o t a s it i s p r e s e n t e d i n p a r t i c u l a r s e n t e n c e s o r paragraphs. S e c t i o n 13-707, R.C.M. 1947. Also a c o n t r a c t s h o u l d r e c e i v e t h a t i n t e r p r e t a t i o n which makes it r e a s o n a b l e as long a s t h e i n t e n t i o n of t h e c o n t r a c t i n g p a r t i e s i s n o t v i o l a t e d and t h e c o n t r a c t i s l a w f u l , o p e r a t i v e , d e f i n i t e , and c a p a b l e of performance. S e c t i o n 13-709, R.C.M. 1947. Turning t o t h e s p e c i f i c problem of d e t e r m i n i n g t h e amount of l a n d i n t e n d e d by t h e c o n t r a c t i n g p a r t i e s t o be i n c l u d e d i n a r i g h t of s p e c i f i c performance, t h i s C o u r t i n i n t e r p r e t i n g a p r e emptive r i g h t i n Weintz v . Bumgarner, 150 Mont. 306, 314, 434 P.2d 712, s a i d : " * * * Applying t h e above r u l e s of c o n t r a c t cons t r u c t i o n it seems a p p a r e n t t h a t t h i s c o u r t s h o u l d f a v o r a c o n s t r u c t i o n t h a t g i v e s s u b s t a n c e and meaning t o t h e p r o v i s i o n on p u r c h a s e r a t h e r t h a n a d o p t a c o n s t r u c t i o n t h a t r e n d e r s it m e a n i n g l e s s and i l l u s o r y , p r o v i d e d such c a n 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 i o n of t h e p a r t i e s . * * * " I n view o f t h e f o r e g o i n g r u l e s and a u t h o r i t y w e h o l d t h a t t h e o n l y r e a s o n a b l e i n t e r p r e t a t i o n t o be p l a c e d on t h e agreement between t h e e l d e r T r i b b l e s and L a r r y and L o r e t t a T r i b b l e i s t h a t t h e l e a s e w a s t o i n c l u d e t h e whole T r i b b l e farm. To h o l d o t h e r w i s e would r e n d e r t h e r i g h t o f f i r s t r e f u s a l " m e a n i n g l e s s and i l l u s o r y " because of v a r i o u s f a c t s a p p a r e n t i n t h e r e c o r d . F i r s t no new or a d d i t i o n a l land d e s c r i p t i o n i s i n t h e provisions i n t h e agree- ment on t h e r i g h t t o f i r s t r e f u s a l . R a t h e r t h e r i g h t of f i r s t r e f u s a l r e f e r s t o and i s s o l e l y d e p e n d e n t upon t h e i n t e r p r e t a t i o n g i v e n t o t h e d e s c r i p t i o n of t h e l a n d c o n t a i n e d i n t h e f i r s t p a r a g r a p h of t h e agreement. Secondly, t h e r e c o r d r e v e a l s t h e T r i b b l e farm t o be o n e v i a b l e economic u n i t w i t h t h e 1 , 3 0 0 a c r e s of farmland interspersed with grazing land throughout the farm so as to make impractical any partition or farming of that land, separate and apart from the rest of the Tribble farm. Thus the only means of giving effect to the whole agreement is to construe the lease of the Tribble farm as including the entire 7,800 acres with the accompanying right of first refusal in that land belonging to the plaintiffs-lessees, and we so hold. The bracketed reservation of grazing land is also ambiguous but from the evidence it appears that plaintiffs used the grazing land, not exclusively, but it was at all times considered a part of the leased lands. We next consider the issue of notice. The agreement requires written notice by defendants-lessors to plaintiffs-lessees of any intention or offer to sell the property to a third party. The plaintiffs-lessees then have 10 days after said notice to meet the offer of any third party. Admitting that the written sales agreement with defendants Reely dated April 20, 1973, was not made available in its entirety to plaintiffs until January 18, 1974, defendants on appeal cite several defenses that are intertwined with the written notice requirement. They first allege plaintiffs had actual notice of the sale and that was equivalent to written notice. In support of this contention they cite the fact that plaintiffs knew the defendants Reely were in the process of buying the farm, that plaintiffs showed the farm to the defendants Reely, knowing them to be prospective buyers and that plaintiffs even went as far as to try to negotiate a new lease with the defendants Reely. We find no merit in this contention for the reason that there is a difference between merely knowing of a sale and knowing all the terms of that sale. Such a distinction is crucial h e r e b e c a u s e w i t h o u t knowing t h e t e r m s of t h e s a l e , t h e p l a i n t i f f s c o u l d n o t m e e t t h e o f f e r of d e f e n d a n t s Reely and t h u s could not properly e x e r c i s e t h e i r r i g h t of f i r s t r e f u s a l . A s an a d d i t i o n a l defense t o t h e n o t i c e requirement, de- f e n d a n t s c l a i m t h e p l a i n t i f f s a c q u i e s c e d i n t h e s a l e and a r e t h e r e f o r e now e s t o p p e d from r e l y i n g on t h e n o t i c e p r o v i s i o n i n an attempt t o e x e r c i s e t h e r i g h t of f i r s t r e f u s a l . However, t h e r e c o r d r e v e a l s no a c q u i e s c e n c e on t h e p a r t o f p l a i n t i f f s b u t continued e f f o r t s t o e x e r c i s e t h e i r r i g h t s . Prior t o the sale t o d e f e n d a n t s Reely, t h e a t t o r n e y f o r t h e p l a i n t i f f s informed t h e a t t o r n e y f o r defendants T r i b b l e t h a t p l a i n t i f f s expected t h e t e r m s of t h e l e a s e agreement t o be honored. On September 2 1 , 1973, t h e p l a i n t i f f s ' a t t o r n e y w r o t e t o t h e d e f e n d a n t s and demanded t h e r i g h t of f i r s t r e f u s a l , a copy of any o f f e r t o s e l l and w r i t t e n n o t i c e . Y e t t h e e n t i r e sales agreement w i t h d e f e n d - a n t s Reely was n o t f u r n i s h e d t o p l a i n t i f f s u n t i l J a n u a r y 1 8 , 1974, a l m o s t n i n e months a f t e r t h e s a l e had been completed. It is the r u l e i n Montana t h a t e s t o p p e l i s n o t f a v o r e d and w i l l o n l y be s u s t a i n e d upon c l e a r and c o n v i n c i n g e v i d e n c e . 123 Mont. 242, 2 1 1 P.2d 968. F i e r s v. Jacobson, Such c l e a r and c o n v i n c i n g e v i d e n c e i s lacking i n t h e i n s t a n t case. A s t h e i r l a s t e q u i t a b l e defense t o p l a i n t i f f s ' preemptive r i g h t , defendants a s s e r t t h e d o c t r i n e of laches. W e h o l d t h e d o c t r i n e of l a c h e s d o e s n o t a p p l y t o t h e f a c t s o f t h i s c a s e f o r two b a s i c r e a s o n s . F i r s t , and most o b v i o u s , p l a i n t i f f s c o u l d n o t e x e r c i s e t h e i r r i g h t of f i r s t r e f u s a l u n t i l t h e y had a c c e s s t o t h e t e r m s o f t h e s a l e . Such n o t i c e of t e r m s w a s n o t made a v a i l a b l e u n t i l J a n u a r y 1 8 , 1974. January 23, T h e r e a f t e r on 1974, p l a i n t i f f s g a v e n o t i c e t o d e f e n d a n t s of t h e i r i n t e n t i o n t o e x e r c i s e t h e i r r i g h t of f i r s t r e f u s a l . Thus o n c e p r o p e r n o t i c e w a s g i v e n t h e r e was no d e l a y i n a s s e r t i n g t h e i r rights. Secondly, t h e r e c o r d a s h e r e t o f o r e d i s c u s s e d makes i t o b v i o u s t h a t d e f e n d a n t s knew p l a i n t i f f s were a s s e r t i n g t h e i r r i g h t t o n o t i c e and f i r s t r e f u s a l even b e f o r e t h e s a l e s cont r a c t was s i g n e d . See Montana Power Co. v . P a r k E l e c t r i c Co-op., 1 4 0 Mont. 293, 371 P.2d 1. Defendants n e x t c o n t e n d t h a t any r i g h t s under t h e l e a s e t e r m i n a t e d on J a n u a r y 1, 1974, b e c a u s e of t h e d e a t h of l e s s o r W i l l i a m Tribble i n t h e preceding year. Defendants b a s e t h i s con- t e n t i o n on t h a t p a r t o f t h e l e a s e which s t a t e s : "A. T h a t i f b o t h of t h e l e s s o r s s h o u l d n o t s u r v i v e t h e t e r m s of t h i s l e a s e , t h e n t h i s l e a s e s h a l l t e r m i n a t e on t h e n e x t a n n i v e r s a r y t h e r e o f ( J a n . 1).* * *" Without becoming e n t a n g l e d i n a n i n t e r p r e t a t i o n o f t h e word " b o t h " s i n c e d e f e n d a n t K a t h e r i n e T r i b b l e h a s s u r v i v e d h e r husband, w e m e r e l y n o t e t h i s C o u r t ' s d e t e r m i n a t i o n of when a r i g h t of f i r s t r e f u s a l a c c r u e s a s s t a t e d i n Weintz v . Bumgarner, 150 Mont. 306, 313, 434 P.2d 712: "Whatever l a n g u a g e i s used t o d e s c r i b e t h e prov i s i o n i n question, it i s c l e a r t h a t t h e r i g h t o f t h e lessee t o p u r c h a s e a c c r u e s a t such t i m e a s t h e l e s s o r forms a s p e c i f i c i n t e n t i o n t o s e l l t h e p r o p e r t y f o r a d e f i n i t e p r i c e on d e f i n i t e terms. A t such t i m e a s t h e owner forms such specific intention t o s e l l , the provision i n q u e s t i o n r i p e n s i n t o a p r e s e n t e n f o r c e a b l e cont r a c t r i g h t of t h e l e s s e e . " H e r e t h e s a l e s agreement between d e f e n d a n t s Reely and d e f e n d a n t s T r i b b l e was d a t e d A p r i l 20, 1973. Thus t h e p l a i n t i f f s ' r i g h t o f f i r s t r e f u s a l r i p e n e d p r i o r t o J a n u a r y 1, 1974, and t h e r e f o r e c o u l d n o t be s u b j e c t t o t e r m i n a t i o n s i m p l y b e c a u s e o f t h e d e a t h of W i l l i a m T r i b b l e . D e f e n d a n t s ' f i n a l c o n t e n t i o n i s t h a t t h e judgmentsof March 1 and May 27, 1975, a r e v o i d f o r want o f c e r t a i n t y . 1 De- f e n d a n t s having f a i l e d t o d e m o n s t r a t e why t h e y t h i n k t h e judgments a r e u n c e r t a i n , w e s i m p l y hold t h e judgments a s c l e a r l y a d v i s i n g t h e p a r t i e s of t h e i r r e s p e c t i v e r i g h t s and t h u s n o t v o i d f o r want of c e r t a i n t y . Believing s u b s t a n t i a l evidence e x i s t s t o support t h e f i n d i n g s of t h e d i s t r i c t c o u r t , w e hereby a f f i r m t h e judgment of t h a t c o u r t . Justices Hon. R o b e r t syk/ed, D i s t r i c t J u d g e , s i t t i n g i n p l a ' d of M r . J u s t i c e Gene B. Daly.

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