VANUDEN v HENDRICKSEN
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No. 80-90 IN THE SUPREME COURT OF THE STATE OF MONTANA 1980 HERMAN H. VAN UDEN et al., Plaintiffs and Appellants, VS . STANLEY C. HENDRICKSEN, et al., Defendant and Respondent. Appeal from: District Court of the Fourth Judicial ~istrict, In and for the County of Ravalli. Honorable James B. Wheelis, Judge presiding. Counsel of Record: For Appellants: John M. McRae, Hamilton, Montana For Respondent: Recht and Greef, Hamilton, Montana Submitted on briefs: July 22, 1980 J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion of t h e Court. Mr. P l a i n t i f f s a p p e a l from a d e c i s i o n o f t h e D i s t r i c t C o u r t o f t h e F o u r t h J u d i c i a l D i s t r i c t , R a v a l l i County, which g r a n t e d p a r t i a l summary judgment a g a i n s t p l a i n t i f f s and den i e d a motion f o r summary judgment a g a i n s t d e f e n d a n t s i n a c o n t r a c t f o r deed d i s p u t e . P l a i n t i f f s Herman H. VanUden and D e l o r e s M. VanUden purchased r e a l p r o p e r t y on a c o n t r a c t f o r deed from d e f e n d a n t s S t a n l e y C. Hendricksen and Maxine J . Hendricksen. R e s t r i c t i v e covenants a f f e c t i n g t h e property w e r e recorded p r i o r t o t h e t i m e o f s i g n i n g a c o n t r a c t f o r deed. Plain- t i f f s i n i t i a t e d t h i s a c t i o n t o remove t h e e f f e c t of t h e c o v e n a n t s from t h e i r p r o p e r t y . The e v e n t s l e a d i n g t o t h i s d i s p u t e a r e a s f o l l o w s : On October 1 3 , 1974, t h e p a r t i e s s i g n e d a n e a r n e s t money a g r e e ment on which t h e f o l l o w i n g language was h a n d w r i t t e n : "Restrictions a r e against raising pigs or o f e n s i v e [ s i c ] b u s i n e s s such a s wrecking y a r d , s l a u t e r [ s i c J house, e t c " . On October 1 5 , 1974, a c o n t r a c t f o r deed was drawn which i n c l u d e d t h e f o l l o w i n g language: "The b u y e r s a g r e e t o comply w i t h c o v e n a n t s p l a c e d on t h e p r o p e r t y and r e c o r d e d w i t h t h e C l e r k and Recorder of R a v a l l i County. ... I1 The c o n t r a c t f o r deed was n o t s i g n e d ' on October 1 5 , 1974. On October 1 8 , 1974, r e s t r i c t i v e c o v e n a n t s were f i l e d a f f e c t i n g t h e r e a l p r o p e r t y i n q u e s t i o n and o t h e r r e a l p r o p e r t y i n d e f e n d a n t s ' development. On October 2 8 , 1974, t h e c o n t r a c t f o r deed and n o t i c e of p u r c h a s e r ' s i n t e r e s t w e r e s i g n e d by t h e p a r t i e s b e f o r e a notary public. The n o t i c e of p u r c h a s e r ' s i n t e r e s t was r e c o r d e d on t h e same day. On J u n e 2 0 , 1978, d e f e n d a n t s s e n t a n o t i c e of d e f a u l t t o p l a i n t i f f s e n u m e r a t i n g s p e c i f i c c o v e n a n t s of t h e f i l e d r e s t r i c t i v e c o v e n a n t s t h a t were deemed t o be v i o l a t e d by plaintiffs. On September 1 4 , 1978, p l a i n t i f f s f i l e d s u i t a s k i n g t h a t t h e c o v e n a n t s f i l e d a g a i n s t t h e p r o p e r t y be d e c l a r e d not applicable. On December 1 5 , 1978, i n r e s p o n s e t o t h e c o m p l a i n t f i l e d by p l a i n t i f f s , d e f e n d a n t s f i l e d a n answer and c o u n t e r c l a i m . The c o u n t e r c l a i m a l l e g e d b r e a c h o f cove- n a n t s a s s e t f o r t h i n t h e n o t i c e of d e f a u l t and s o u g h t c a n c e l l a t i o n of t h e c o n t r a c t p u r s u a n t t o t h e terms of t h e contract. Cross-motions f o r summary judgment and f o r p a r t i a l summary judgment were f i l e d by t h e p a r t i e s and a r g u e d b e f o r e t h e District Court. On December 7 , 1979, t h e D i s t r i c t C o u r t found (1) t h a t p l a i n t i f f s had n o t i c e of t h e c o v e n a n t s rec o r d e d on October 1 8 , 1974, and ( 2 ) t h a t t h e e a r l i e r document w a s merged i n t o t h e l a t e r on a l l t e r m s c o v e r e d i n b o t h . D e f e n d a n t s ' motion f o r p a r t i a l summary judgment was g r a n t e d , thereby dismissing p l a i n t i f f s ' complaint. The c o u r t a l s o d e n i e d p l a i n t i f f s ' motion f o r summary judgment and l e f t d e f e n d a n t s ' c o u n t e r c l a i m s t i l l a t i s s u e t o be t r i e d a t a l a t e r date. P l a i n t i f f s appeal. Two i s s u e s a r e p r e s e n t e d by p l a i n t i f f s : Whether t h e D i s t r i c t C o u r t was c o r r e c t (1) i n g r a n t i n g d e f e n d a n t s ' mot i o n f o r p a r t i a l summary judgment, and ( 2 ) i n denying p l a i n t i f f s ' motion f o r summary judgment. Rule 5 6 ( c ) , M.R.Civ.P., p r o v i d e s t h a t summary judgment s h a l l be rendered i f : ". . . t h e p l e a d i n g s , d e p o s i t i o n s , answers t o i n t e r r o g a t o r i e s , and a d m i s s i o n s on f i l e , t o g e t h e r w i t h t h e a f f i d a v i t s , i f a n y , show t h a t t h e r e i s no g e n u i n e i s s u e a s t o any m a t e r i a l f a c t and t h a t t h e moving p a r t y i s e n t i t l e d t o a judgment as a matter of l a w . " The p u r p o s e of Rule 56 i s t o promptly d i s p o s e of act i o n s t h a t do n o t p r e s e n t g e n u i n e i s s u e s of m a t e r i a l f a c t . T h i s p r o c e d u r e e l i m i n a t e s u n n e c e s s a r y t r i a l d e l a y and expense. Bonawitz v . Bourke ( 1 9 7 7 ) , 173 Mont. 179, 567 P.2d 32; S i l l o w a y v. J o r g e n s o n ( 1 9 6 5 ) , 146 Mont. 307, 406 P.2d 167. T h i s C o u r t h a s h e l d t h a t t h e burden of proof i s on t h e moving p a r t y t o show h e i s e n t i t l e d t o summary judgment. A u d i t S e r v i c e s , I n c . v. Haugen ( 1 9 7 9 ) , P.2d 1105, 36 St.Rep. Mont. , 591 451; Harland v . Anderson ( 1 9 7 6 ) , 169 Mont. 447, 548 P.2d 613. T h i s burden i s s a t i s f i e d when t h e moving p a r t y shows t h e a b s e n c e of any g e n u i n e i s s u e as t o a l l m a t e r i a l f a c t s which, under a p p l i c a b l e p r i n c i p l e s of s u b s t a n t i v e law, e n t i t l e s him t o judgment a s a matter of law. Kober v. S t e w a r t ( 1 9 6 6 ) , 148 Mont. 117, 417 P.2d 476. I n o t h e r words, t h e moving p a r t y must make a showing t h a t i s q u i t e c l e a r what t h e t r u t h i s and e x c l u d e any r e a l d o u b t a s t o t h e e x i s t e n c e of any g e n u i n e i s s u e of material f a c t . Kober , s u p r a . W f i n d t h a t d e f e n d a n t s have met t h a t burden. e The v a l i d i t y and g e n u i n e n e s s of a l l t h e documents i n q u e s t i o n w e r e a d m i t t e d by b o t h p a r t i e s . t h e documents were a d m i t t e d . documents were a d m i t t e d . f o r themselves. The s i g n a t u r e s and d a t e s of The r e c o r d i n g d a t e s of t h e These documents, t h e r e f o r e , s t a n d The D i s t r i c t C o u r t c o r r e c t l y g r a n t e d sum- mary judgment. P l a i n t i f f s argue t h a t they w e r e n o t provided with e i t h e r c o n s t r u c t i v e o r a c t u a l n o t i c e of t h e r e s t r i c t i v e c o v e n a n t s p r i o r t o t h e i r s i g n i n g of t h e c o n t r a c t f o r deed and were, t h e r e f o r e , unaware of t h e a d d i t i o n a l burden on t h e property. W e f i n d t o t h e contrary. P l a i n t i f f s had a t l e a s t c o n s t r u c t i v e n o t i c e of t h e r e s t r i c t i v e covenants. P l a i n t i f f s a r g u e t h a t t h e e a r n e s t money agreement l i s t of r e s t r i c t i v e c o v e n a n t s a p p l i c a b l e t o t h e p r o p e r t y was exclusive. They c l a i m t h e y were unaware of any a d d i t i o n a l covenants. Our r e a d i n g of t h e e a r n e s t money agreement d o e s n o t support t h a t conclusion. The agreement r e a d s n o t a s a n e x c l u s i v e l i s t i n g b u t a s examples of t h e t y p e of c o v e n a n t s t h a t a r e t o be found on t h e p r o p e r t y . The words " s u c h a s " and " e t c . " c l e a r l y i n d i c a t e t h a t t h e p a r t i e s i n t e n d e d t h a t these w e r e not the exclusive l i s t i n g s . F u r t h e r , t h e con- t r a c t f o r deed r e f e r s t o r e s t r i c t i v e c o v e n a n t s on record-n o t c o v e n a n t s of t h e e a r n e s t money agreement. f o r deed s t a t e d , The c o n t r a c t " [ t ] h e b u y e r s a g r e e t o comply w i t h cove- n a n t s p l a c e d on -e p r o p e r t y - r e c o r d e d w i t h t h e C l e r k and - th and Recorder of R a v a l l i County. . ." (Emphasis added.) The c o n t r a c t p l a c e d t h e p a r t i e s on n o t i c e t h a t i n f a c t r e s t r i c t i v e c o v e n a n t s w e r e on f i l e . I n q u i r y s h o u l d have been made t o d e t e r m i n e t h e s p e c i f i c s of t h e r e s t r i c t i v e covenants. I t i s t h e o b l i g a t i o n of p u r c h a s e r s of r e a l p r o p e r t y t o check t h e r e c o r d t o d e t e r m i n e whether t h e r e a r e r e s t r i c t i v e covenants the property . deed was e x e c u t e d on October 28, 1974. f i l e d on October 1 8 , 1974. The c o n t r a c t f o r The c o v e n a n t s w e r e Ten d a y s l a p s e d between t h e t i m e of t h e f i l i n g of t h e c o v e n a n t s and t h e s i g n i n g of t h e contract. The c o n t r a c t made r e f e r e n c e t o t h e s e c o v e n a n t s . of t h e p a r t i e s had c o n s t r u c t i v e n o t i c e . "Every conveyance of r e a l p r o p e r t y acknowledged o r proved and c e r t i f i e d and r e c o r d e d as p r e s c r i b e d by law, from t h e t i m e i t i s f i l e d w i t h t h e county c l e r k f o r r e c o r d , i s c o n s t r u c t i v e n o t i c e of t h e c o n t e n t s t h e r e o f t o s u b s e q u e n t p u r c h a s e r s and mortgagees." S e c t i o n 70-213 0 2 ( 1 ) , MCA. ". . . ... 'conveyance' embraces e v e r y i n s t r u m e n t i n w r i t i n g by which any e s t a t e o r encumbered i n t e r e s t i n real property i s ... All o r by the to re - - which - t i t l e - -a l p r o p e r t y may-e - b . . ." affected p h a s i s added. ) S e c t i o n 70-21-301, MCA. (Em- T h i s d e f i n i t i o n of a conveyance of r e a l p r o p e r t y i s s u f f i c i e n t l y comprehensive t o i n c l u d e t h e r e s t r i c t i o n s p l a c e d on t h e r e a l p r o p e r t y which i s t h e b a s i s of t h e p r e s e n t c o n t r o versy. Kosel v . S t o n e ( 1 9 6 5 ) , 146 Mont. 218, 404 P.2d 894. "An i n s t r u m e n t i s deemed t o b e r e c o r d e d when, b e i n g d u l y acknowledged o r proved and c e r t i f i e d , it i s deposited i n t h e county c l e r k ' s o f f i c e with t h e proper o f f i c e r f o r record." S e c t i o n 70-21-209, MCA. "Once a n i n s t r u m e n t i s r e c o r d e d a s p r e s c r i b e d by law, i t i m p a r t e d c o n s t r u c t i v e n o t i c e of i t s c o n t e n t s t o a s u b s e q u e n t p u r c h a s e r of t h e property." G u e r i n v . Sun B u r s t O i l and Gas Co. ( 1 9 2 3 ) , 68 Mont. 365, 218 P. 949, 951. Plaintiffs' f a i l u r e t o i n q u i r e i n t o t h e record does n o t e x c u s e them of t h e i r o b l i g a t i o n s h e r e . i s imputed by t h e r e c o r d i n g s t a t u t e . Constructive notice W e find that the l e n g t h of t i m e between t h e f i l i n g o f t h e r e s t r i c t i v e coven a n t s and t h e s i g n i n g o f t h e c o n t r a c t f o r deed w a s s u f f i c i e n t t o g i v e p l a i n t i f f s a r e a s o n a b l e o p p o r t u n i t y t o make a n inquiry. The i n i t i a l burden o f proof on a motion f o r summary judgment a t t a c h e s t o t h e movant. T h a t burden s h i f t s where t h e r e c o r d d i s c l o s e s no g e n u i n e i s s u e s of material f a c t . The p a r t y opposing t h e motion must p r e s e n t f a c t s i n p r o p e r form r a i s i n g t h e i s s u e . , Dooling v. P e r r y ( 1 9 7 9 ) , 600 P.2d 799, 36 St.Rep. Johnson (1979) , - Mont. 1518; N a t i o n a l Gypsum Co. v . - Mont. - 595 P.2d 1188, 36 St.Rep. , 1033; Harland v . Anderson, s u p r a . The p a r t y opposing t h e motion must come forward w i t h s u b s t a n t i a l e v i d e n c e r a i s i n g the issue. Rickard v. P a r a d i s ( 1 9 7 5 ) , 167 Mont. 450, 539 P.2d 718; Roope v . Anaconda Company ( 1 9 7 2 ) , 159 Mont. 28, 494 P.2d 922. The f a c t s must b e i n p r o p e r form and c o n c l u - s i o n s of law w i l l n o t s u f f i c e . The opposing p a r t y ' s f a c t s must be m a t e r i a l and of a s u b s t a n t i a l n a t u r e , n o t f a n c i f u l , f r i v o l o u s , gauzy o r m e r e l y s u s p i c i o n s . genson, s u p r a . S i l l o w a y v. J o r - Once t h e burden h a s s h i f t e d , t h e p a r t y opposing t h e motion i s h e l d t o a s t a n d a r d of proof which i s a s s u b s t a n t i a l a s t h a t i n i t i a l l y imposed upon t h e moving party. Harland v . Anderson, s u p r a . P l a i n t i f f s have n o t s u s t a i n e d t h e i r burden of proof by a l l e g i n g any f a c t s t h a t r a i s e an i s s u e o f m a t e r i a l f a c t . P l a i n t i f f s have a l l e g e d t h a t t h e f i l e d c o v e n a n t s were o t h e r t h a n what t h e y e x p e c t e d , b u t nowhere have t h e y a l l e g e d o r shown by a f f i d a v i t o r by o t h e r means of s u b m i t t i n g proof t h a t t h e e a r n e s t money agreement o r c o n t r a c t f o r deed i s l i n v a l i d , ambiguous, i m p e r f e c t o r m i s t a k e n . P l a i n t i f f s have a l s o f a i l e d t o show by a f f i d a v i t o r o t h e r w i s e t h a t i n f a c t t h e r e s t r i c t i v e c o v e n a n t s were n o t r e c o r d e d p r i o r t o t h e s i g n i n g of t h e c o n t r a c t f o r deed. F i n d i n g d e f e n d a n t s ' motion f o r p a r t i a l summary judgment p r o p e r l y g r a n t e d , w e now c o n s i d e r t h e d e n i a l of p l a i n t i f f s ' motion f o r summary judgment. Defendants a l l e g e i n t h e i r c o u n t e r c l a i m a b r e a c h o f c o n t r a c t by v i o l a t i o n of t h e covenants contained therein. t h e covenants. P l a i n t i f f s deny v i o l a t i o n of Defendants have p r o v i d e d a f f i d a v i t s which a l l e g e f a c t s t h a t would e s t a b l i s h , i f p r o v e d , a v i o l a t i o n of t h e covenants. The f a c t s a l l e g e d b e f o r e t h e D i s t r i c t C o u r t were i n d i s p u t e , and t h e D i s t r i c t C o u r t r e f u s e d t o g r a n t p l a i n t i f f s ' motion f o r summary judgment. Plaintiffs did not d i s p u t e t h e e x i s t e n c e of a n i s s u e of m a t e r i a l f a c t b u t a r g u e d t h a t summary judgment should have been g r a n t e d bec a u s e t h e remedy s o u g h t by d e f e n d a n t s was a l l e g e d l y i m proper. Defendants c o u n t e r c l a i m e d t o t h e c o m p l a i n t a l l e g i n g t h a t p l a i n t i f f s v i o l a t e d c e r t a i n r e s t r i c t i v e c o v e n a n t s and b e c a u s e of s u c h v i o l a t i o n s , t h e c o n t r a c t f o r deed s h o u l d have been d e c l a r e d f o r f e i t and c a n c e l e d . There a r e no a l l e g a t i o n s t h a t p l a i n t i f f s were i n d e f a u l t of t h e i r payments toward t h e p u r c h a s e p r i c e . The D i s t r i c t C o u r t h e l d t h a t p l a i n t i f f s were n o t e n t i t l e d t o a summary judgment a s a m a t t e r of l a w on t h e c o u n t e r c l a i m . Such r u l i n g i s incon- s i s t e n t w i t h o u r d e c i s i o n i n Reinke v . B i e g e l ( 1 9 7 9 ) , , Mont. 604 P.2d 315, 36 St.Rep. - 2322. The c o n t r a c t f o r deed was made and e n t e r e d i n t o by t h e p a r t i e s , s u b j e c t t o r e s t r i c t i v e covenants. The n a t u r e of t h e c o v e n a n t s i s b e i n g c o n t e s t e d h e r e i n , b u t whatever t h e y a r e deemed t o be, t h e c o v e n a n t s w e r e n o t t h e main p u r p o s e of t h e c o n t r a c t and o n l y i n c i d e n t a l t h e r e t o . The p r i m a r y p u r p o s e o f t h e c o n t r a c t i s d e f e n d a n t s ' d e l i v e r y of a deed i n exchange f o r p l a i n t i f f s ' payment of t h e t o t a l p u r c h a s e price. W e h e l d i n Reinke t h a t , where t h e a l l e g e d b r e a c h of c o v e n a n t s was n o t s o s u b s t a n t i a l and fundamental a s t o d e f e a t t h e main o b j e c t o r p u r p o s e i n making t h e c o n t r a c t f o r deed and c o u l d be compensated f o r i n damages, a b r e a c h of t h e c o v e n a n t s d o e s n o t w a r r a n t a remedy i.n f o r f e i t u r e . D e f e n d a n t s ' p l e a d i n g s i n d i c a t e t h a t such p r a y e r f o r r e l i e f was made. W affirm the D i s t r i c t Court's decision with regard t o e d e f e n d a n t s ' motion f o r p a r t i a l summary judgment. W e reverse t h e D i s t r i c t Court with r e s p e c t t o defendants' counterclaim f o r c a n c e l l a t i o n o r f o r f e i t u r e and remand t h e c a u s e f o r f u r t h e r proceedings c o n s i s t e n t with t h i s opinion. h W concur: e %&4p % & Chief J u s t i c e
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