IN THE SUPREME COURT OF THE STATE OF MONTANA
KATHRYN L. WYMAN, individually and
KATHRYN L. WYMAN and KAREN W. BAGEblAN,
Plaintiffs and Appellants,
HORACE C. WYI.IAN, Trustee, and G.
IiEIqNETH ALLEN & GLADYS K. ALLEN,
d/b/a MOTOR POWER EQUIPMENT CO. ,
Defendants and Respondents.
District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone
The Honorable William J. Speare, Judge presiding.
COUNSEL OF RECORD:
Guthals, Billings, Montana
Berger Law Firm; Arnold Berger, Billings, Montana
Moulton Law Firm; B. E. Longo, Billings, Montana
Submitted on Briefs:
November 3, 1983
January 26, 1984
Mr. Justice John C.
Sheehy delivered the Opinion of the
Kathryn Wyman and Karen Bageman appeal a summary judgment entered against them in the District Court for the
Thirteenth Judicial District, Yel-lowstone County.
the District Court.
husband and wife, entered into a lease agreement with G.
Kenneth and Gladys Allen.
The Allens became lessees of real
property located in Yellowstone County, a portion of which
was owned by the Burlington Northern Railway and leased to
The lease between the Wymans and the Allens had
a primary term of ten years with three consecutive three-year
options for renewal.
The lease also prescribed a penalty of
double rental as liquidated damages, in the event the lessees
In 1964, Hora.ce a.nd Kathryn Wyman were divorced. The
real property that was the subject of the lease agreement was
transferred to a trust, for the benefit of Horace Wyman and
Both Horace and Kathryn were made trustees,
along with their daughter Karen Bageman.
The trust agreement provided that the expenses of operation and maintenance of the trust were to be paid with checks
co-signed by Horace Wyman and Kathryn F7yman.
Two of the
three trustees could revoke the trust, as well as borrow
money for expenses and taxes.
The final paragraph of the
trust agreement read as follows:
"7. Generally speaking, the aforementioned Horace C. Wyman shall have general
charge of the operation of the business,
and shall receive no fees or additional
In addition to
the obligations hereinbefore set forth,
the said Horace C. Wyman shall be
obligated to report, at I-east quarterly,
to the aforementioned Kathryn L. Wyman,
of all receipts and expenditures of the
Although the lease was executed in August of 1956, the
Following the initial ten-year period of the lease, the three
period to January 31, 1976.
exercised, extending the
According to Kenneth Allen, the
renewals were exercised by his writing letters to Horace
Wyman, notifying Wyman of the extension.
During the early months of 1975, Horace Wyman and Kenneth Allen discussed modifying and extending the leasehold
They agreed that the terms of the leasehold
should remain the same as before, with a raise jn rent of
$400, for a term of three years.
In his answers to interrog-
atories, Horace Wyman stated that according to his recollection, a new lease agreement with the above provisions was
drafted, dated February 1, 3975, and sent to Kathryn Wyman.
claimed that he and Horace Wyman met and went over the mod-ifications of the lease agreement.
The modified document was
given to Wyman's attorney's secretary for typing.
thereafter, the attorney had a
meeting with Kenneth Allen at
which time he reported to Allen that the lease was being
prepared, along with manila envelopes to be used to send the
lease to Kathryn Wyman and Kenneth Allen.
testified that she never received a new lease agreement.
The Allens paid the increased rent starting in February
1975 and Kathryn Wyman received her portion of the payments.
She also continued to co-sign the checks paying Burlington
Northern an increased rent for the portion of the property
s u b l e a s e d t o t h e A l l - e n s , s u c h i n c r e a s e r e q u i r e d a f t e r 1974.
Karen Bageman was a l s o avrare o f t h e i n c r e a s e d r e n t a l payments
by t h e A l l e n s .
She t e s t i f i e d t h a t , between 1976 a n d 1980,
s h e a s k e d Horace Wyman numerous t i m e s what was t a k i n g p l a c e
with regard t o t h e r e n t a l property.
l e a s e was b e i n g
being taken care of.
claim t h a t
drawn a n d t h a t
e v e r y t h i n g was
Both Karen Baqeman a n d K a t h r y n Wyman
they w e r e misled
H e a l l e g e d l y answered
by Horace Wyman's
a d v i s i n g him t h a t t h e y w i s h e d t o renew t h e l e a s e f o r a n o t h e r
p e r i o d from F e b r u a r y 1, 1978 t o F e b r u a r y 1, 1981.
Horace Wyman w r o t e h a c k on J a n u a r y 3 1 ,
~ a y i n g , "The
o r i g i n a l 1-ease p r o v i d e d you a n o p t i o n t o r e q u e s t a t h r e e y e a r
e x t e n s i o n a n d t h i s l e t t e r i s t o i n f o r m you t h a t s u c h e x t e n s i o n i s hereby granted."
A g a i n , it was a s s e r t e d i n i n t e r r o g -
Horace Wyman was
a c t i n g under
t h a t a new l e a s e had b e e n e x e c u t e d .
I n March o f 1 9 8 0 , Karen Rageman a n d K a t h r y n Wyman s e n t a
l e t t e r t o G. Kenneth A l l e n i n f o r m i n g him t h a t " h e n s e f o r t h a n y
m a t t e r s r e l a t e d t o t h e t e r m and l e a s e payments o f y o u r t e n a n c y must b e p r e v i o u s l y a p p r o v e d , i n w r i t i n g , by any two o f t h e
who a s you know,
Wyman and Karen Bageman."
a r e Horace Wyman,
The l e t t e r n o t e d t h a t t h e o r i g i n a l
1-ease, w i t h a l l a v a i l a b l e e x t e n s i o n s ,
1975 a n d t h a t
no c u r r e n t w r i t t e n
e x p i r e d i n August o f
l e a s e agreement
The a u t h o r s assumed t h a t Kenneth A l l e n was n o t a
p a r t y t o a newly-written
and e x e c u t e d l e a s e and a s o f A u g u s t
1 9 7 5 , was " a t e n a n t u n d e r an o r a l a g r e e m e n t w i t h H o r a c e . "
The l e t t e r ended w i t h t h e s t a t e m e n t t h a t :
f a c t s assumed a b o v e a r e i n c o r r e c t ,
" I f any o f
p l e a s e advise u s accord-
i n g l y s o w e can determine t h e t r u e s t a t u s o f your tenancy."
By a letter dated September 17, 1980, Karen Bageman and
Kathryn. Wyman's attorney notified the Allens' attorney that
"deem Mr. Allen to have materially
hreached the lease agreement entered into
between himself and Horace and Kathryn
Wyman on August 6, 1.956, for his failure,
following the expiration thereof, to pay
the holdover rental provided for in that
document. I am writinq to further advise
that should P r
l . Allen be basing his
present tenancy of the property in question upon any writing other than the
original 1956 lease, that writing is void
as having been executed by only one of
two trustees required to bind the trust."
On November 25, 1980, Kathryn Wyman and Karen Rageman
filed a complaint in the District Court charging (1) breach
by Horace Wyman of his fiduciary duties, making him liable
for damages; (2) breach by G. Kenneth and Gladys Allen of the
1956 lease agreement, making them liable for damages; and (3)
unlawful detainer of the property by the Allens.
Wyman answered and dounterclaimed to recover damages arising
The Allens answered and
from the actions of the plaintiffs.
counterclaimed to recover damages, asserting breach by the
plaintiffs of their duties as trustees.
The Allens vacated the premises on Ja.nuary 30, 1981.
Motions for summary judgment filed by the defendants
were granted and findings and conclusions were filed March
Before the court were depositions of G. Kenneth
Allen, Karen Bageman and Kenneth Wyman, and answers to interr0ga.tori.e~
given by Horace Wyma.n.
the negotiations regarding the
The court found that all
leasehold extensions were
between Horace Wyman and Kenneth Allen and that by agreement
between Horace Wyman and the Allens, the lease was modified
The rental payments
through January 30, 1981, were made with the "knowledge" and
"consent" of, and were "acknowledged and accepted" by all of
The court concluded, inter alia, that (1)
Horace Wvman had the authority under the trust instrument to
extend the leasehold agreements; ( 2 ) the plaintiffs waived
any objection to the extension;
the plaintiffs were
estopped from claiming unauthorized actions by Horace Wyman;
(4) the plaintiffs ratified the extensions by
"conduct in receiving and accepting al.1 of the benefits
The appellants raise the following issue on appeal:
the District Court err in granting summary judgment where
there was a question as to whether the term of the lease was
properly extended by Hora.ce Wyman.
Kathryn Wyman and Karen Bageman contend that Horace
Wyman had no authority to unilaterally modify or extend the
lease, given the fact that both Kathryn and Horace signed the
The trust a.greement geve all three parties
to the agreement authority over the real property, to be
exercised by two of the three.
As to the summary judgment,
Kathryn Wyman and Karen Bageman feel there is an unresolved
issue as to whether Horace Wyman had authority to extend the
lease agreement without the consent of one of the other
They claim there was no waiver or acknowledgement
of Horace Wyman's acts on their part, as they were unaware of
their exact nature.
Horace Wyman claims specific authority, granted in the
trust agreement, to extend. and modify the lease with the
He contends that his acts were consistent with
previous practice, a.s he had always negotiated the lease
a-rrangementswith the Al.l.ens (including the extensi0n.sof the
The acceptance of the rental checks by
Kathryn Wyman past the acknowledged end of the original lease
constituted ratification by Kathryn Wyman of his actions.
argues that Kathryn Wyman and Karen Bageman are now estopped
from claiming improper acts by him.
The Al-lens contend that the intent of the trust agreement was to give Horace Wyman charge of the operation of the
trust, including the authority to lease the property.
thermore, any protests by the other trustees at this point
should not be persuasive, given the apparent ratification of
Horace Wyman's acts.
The Allens feel protected from Kathryn
Wyman and Karen Bageman's claims by the fact that they did
not know the trust existed.
It is undisputed that the languaqe of paragraph seven of
the trust agreement gave Horace Wyman general charge of the
operation of the business.
We are not to second guess the
intentions of the parties when the language of the instrument
Section 28-2-905, MCA; Spragqins v. Elvidge (Mont.
1981), 625 P.2d 1151, 38 St.Rep. 493.
We must give effect to
the parties' intentions, as evidenced by the words used, the
nature of the instrument, and the surrounding circumstances.
Mathis v. Daines (Mont. 1982), 639 P.2d 503, 39 St.Rep. 73.
Thus, upon examination of these factors, we find the language
in this trust agreement to be dispositive of whether Horace
Wyman had the authority to modify and extend the lease with
The language clearly expresses the intention of
the parties to allow Horace Wyman to continue to handle the
"business" which in this case is the lease of the property.
The fact that both Kathryn and Horace Wyman signed the original lease is not dispositive of this issue.
es, not the least of which was the marital status of the
parties, had changed since that time and the trust agreement
reflected those changes.
It is also undisputed that, prior to the expiration of
the original lease, Horace Wyman and Kenneth Allen agreed to
increa-se the amount of the rental payments and extend the
Both Kathryn Wyman
and Karen Bageman
testified that they knew of the increased payments.
was a period of time from the end of the ori.qi.na1 lease (by
any calculation) to March 1980, approximately three years,
during which Kathryn Wyman and Karen Eageman took no affirmative action.
They allegedly made numerous requests of Horace
Wyman, but did nothing to gain more positive answers to their
By such inaction,
they ratified the lease exten-
In Audit Services, Inc. v. Francis Tinda1.1 Const.
(1979), 183 Mont. 474, 477-78, 600 P.2d 811, 813, this Court
"Section 28-2-304, MCA, states:
"'Ratification of contract void for want
of consent. A contract which is voidable
solely for want of due consent may be
ratified by a subsequent consent.'
"Ratification may occur in either an
express oral manner or solely by means of
"Ratification is a form of equitable
strictly in an agency context, whereby a
principal approves the unauthorized act
of an agent. See Larson v. Marcy (1921),
61 Mont. I, 201 P. 685. However, it is
also applied in varying classes of cases
including contracts. Generally, contract
ratification is the adoption of a previously formed contract, notwithstanding a
quality that,rendered it relatively void
and by the very act of ratification the
party affirming becomes bound by it and
entitled to all the proper benefits from
it. Shagun v. Scott Mfg. Co. (8th Cir.
1908), 162 F. 209, 219. The contract is
obligatory from its inception and may be
signified from the commission or omission
East Cent. Okl. Elec. Coop.,
Inc. v. Oklahoma G. & E. Co. (Okl. 1977),
505 P.2d 1324, 1329.
"Montana case law also has held that the
subsequent recognition of a contract is
the equivalent of ratification.
Court has stated:
"'"Ratification" is defined to be the
confirmation of a previous act done
either by the party himself or by another. (Citing authority.) And a confirmation necessarily supposes knowledge of
the thing ratified.
(Citing authority. )
It follows that to constitute a ratification there must be an acceptance of the
results of the act with an intent to
ratify and with full knowledge of all the
Northern Pac. Ry. Co. (1919), 56 Mont.
511, 520, 186 P. 337, 340.
"It is the manifestation of the ratifying
party which controls.
outward expressions and actions judge of
his intention and his intent in the case
- judice is clear."
There can be no doubt that Kathryn Wyman and Karen
Bageman knew that the lease arrangements had. changed, at
Least in terms of the monthly payments, and that the payments
continued well past the term of the original lease.
Wyman accepted her portion of the payments without protest.
Both she and Karen Bageman were satisfied with Horace Wyman's
answers for approximately three years.
Such conduct is
consistent with ratification, not rescission of the contract.
They cannot now cla-im that Horace Wyman a.nd Kenneth Allen's
lease agreement violates the trust agreement.
Rule 56 (c), M.R.Civ.P.
requires that a motion for summa-
ry judgment be granted only if "the pleadings, depositions,
answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law."
We affirm the District
court.'^ grant of summary iudgment
as the alleged unresolved issues do not relate to material
facts, or are resolved according to our determination that
Horace Wyman had
the authority to extend the lease.
law, the defendants were
to a summary