KLEIN v BRODIE

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No. 12816 I N T E SUPREME COURT O T E STATE OF M N A A H F H OTN 1975 PETER D, KLEIN and DANA KLEIN, P l a i n t i f f s and Respondent, STEPHEN D, BRODIE and MARILYN G. BRODIE, Defendants and Appellants. Appeal from: D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , Honorable J a c k L. Green, Judge p r e s i d i n g . Counsel o f Record : For A p p e l l a n t s : G a r l i n g t o n , Lohn and Robinson, Missoula, Montana Sherman V. Lohn argued, Missoula, Montana For Respondent : Robert L. Deschamps, County Attorney, argued, Missoula, Montana - - Submitted: Decided : A p r i l 10, 1975 I #/; ?' J u s r i c e John Zorlway Harrison d e l i v e r e d t h e Opinion of t h e Court. flk. T h i s i s a n a p p e a l by d e f e n d a n t s Stephen D . G. and M a r i l y n B r o d i e from a n a d v e r s e judgment e n t e r e d i n t h e d i s t r i c t c o u r t , Missoula County, i n a n a c t i o n f o r t h e b r e a c h of a p r e ernptive r i g h t p r o v i s i o n c o n t a i n e d i n a b u y - s e l l agreement. P l a i n t i f f s P e t e r D. and Dana K l e i n c r o s s - a p p e a l on t h e i s s u e of t h e amount of damages awarded by t h e d i s t r i c t c o u r t . The r e l e v a n t , u n d i s p u t e d f a c t s a r e : the p a r t i e s entered i n t o a buy-sell O J u l y 25, 1 9 6 6 , n agreement whereby d e f e n d a n t s a g r e e d t o convey a p a r c e l of l a n d l o c a t e d i n Swan V a l l e y , Missoula County, f o r t h e c o n s i d e r a t i o n of $ 5 , 0 0 0 . An approximate d e s c r i p - t l o n of t h e l a n d was c o n t a i n e d i n t h e b u y - s e l l agreement, b u t t h e exact boundary was t o he d e t e r m i n e d by a s u r v e y . P a r a g r a p h 8 of cne b u y - s e l l agreement c o n t a i n e d t h i s c l a u s e which i s t h e b a s i s of t h e p r e s e n t l i t i g a t i o n : "Buyers t o nave f i r s t r e f u s a l on any a d d i t i o n a l t r a c t s S e l l e r may o f f e r . " P u r s u a n t t o t h e t e r m s of t h e a g r e e m e n t , a s u r v e y of t h e u r o p e r t y was e f f e c t e d and a p p r o x i m a t e l y 2 2 . 2 a c r e s of l a n d were conveyed. Thereupon, p l a i n t i f f s p a i d t h e p u r c h a s e p r i c e and t o o k possession. However, sometime i n t h e f a l l 1970, p l a i n t i f f s d i s c o v e r e d that a 9 0 a.cre p a r c e l of l a n d l o c a t e d s o u t h of t h e i r l a n d had been s o l d by d e f e n d a n t s t o one Robert OIConner. Thereupon p l a i n t i f f s , t h r o u g h t h e i r a t t o r n e y , s e r v e d a demand upon d e f e n d a n t s t h a t t h e y be g i v e n an o p p o r t u n i t y t o e x e r c i s e t h e i r pre-emptive r i g h t . Following d e f e n d a n t s ' r e f u s a l , an a c t i o n was b r o u g h t i n s p e c i f i c performance, o r i n t h e a l t e r n a t i v e , damages f o r b r e a c h of t h e p r e emptive r i g h t p r o v i s i o n . T r i a l w i t h o u t a j u r y was h e l d b e f o r e Hon. J a c k L . Green i n t h e d i s t r i c t c o u r t , Missoula County. Judgment was r e n d e r e d i n f a v o r of p l a i n t i f f s and damages were a s s e s s e d a t $8,550. From t h i s judgment d e f e n d a n t s a p p e a l and r a i s e t h i s i s s u e : Is the pre-emptive right agreement unenforceable because the 'iiescriptionof the land to which it applies is incomplete and ambiguous? Plaintiffs on their cross-appeal raise this issue: Did the district court correctly determine the amount of damages for the breach of the pre-emptive agreement? We hold in the affirmative on defendants' issue. Accord- ingly, a consideration of plaintiffs' issue is unnecessary. In Weintz v. Bumgarner, 150 Mont. 306, 313, 434 P.2d 712, this Court examined the nature of a pre-emptive right and distinguished it from an option with these words: "The distinction between the two is well explained in Volume VI, American Law of Property, B 26.64 p. 507: "'A pre-emption differs materially from an option. A 1 option creates in the optionee a power to 1 compel the owner of property to sell it at a stipulated price whether or not he be willing to part with ownership. A pre-emption does not give to the pre-emptioner the power to compel an unwilling owner to sell; it merely requires the owner, when a i if he decides to sell, to offer the proprd erty first to the person entitled to the pre-emption, at the stipulated price. Upon receiving such an offer, the pre-emptioner may elect whether he will buy. If he elects not to buy, then the owner of the property may sell to anyone."' Property that is the subject of the pre-emptive agreement s h o u l d be adequately described and the price must be stated or otherwise made determinable. 1A Corbin on Contracts, S 261. In the instant case, the fact that no price was mentioned at which the pre-emptive right was to be exercised does not make the agreement void for uncertainty, since the use of the words "first refusal" is technical. Consequently, these words imply that the holder of the right may purchase at the same price offered by a third party when the agreement is silent as to price. Jurgensen v. Morris, 194 App.Div. 92, 185 N.Y.S. See: 386; Tamura v. ile~uliis,203 Or. 619, 281 P.2d 469; Brenner v. Duncan, 318 Mich. 1, 27 N.W.2d 320; Barling v. Horn, (Mo. 1956) 296 S.W.2d 94. Here, cne s r e - e m p t i v e r i g n t agreement i s f a t a l l y d e f e c t i v e how eve^ b e c a u s e i t i s impossible t o d e t e r m i n e t h e d e s c r i p t i o n of prope r t y t o which t h e r i g h t a p p l i e s w i t h a c c u r a c y , even though r e s o r t i s had t o e x t r i n s i c e v i d e n c e . I n Mercer v . Lemmens, 4 0 C a l . R p t r . 803, 230 C.A.2d 167, where t h e s u f f i c i e n c y of a d e s c r i p t i o n c o n t a i n e d w i t h i n a pre-empt i v e agreement was a t t a c k e d by t h e d e f e n d a n t i n a b r e a c h of cont r a c t a c t i o n , t h e d e s c r i p t i o n r e f e r r e d t o t h e " a d j o i n i n g " 50 Eoot Lot. The C a l i f o r n i a c o u r t upheld t h e agreement a f t e r ex- t r i n s i c e v i d e n c e d i s c l o s e d t h e s e l l e r owned no o t h e r r e a l p r o p e r t y a d j o i n i n g o r c o n t i g u o u s t o t h e t r a c t owned by p l a i n t i f f and t h e c o a r t was a b l e t o d e t e r m i n e w i t h a c c u r a c y t h e d e s c r i p t i o n o f t h e p a r c e l of p r o p e r t y t o which t h e pre-emptive r i g h t a p p l i e d . The f a c t s i n t h e i n s t a n t c a s e a r e f a r d i f f e r e n t and compel a ~ i f f e r e n t esult. r The r e c o r d d i s c l o s e s t h e p r o p e r t y p u r c h a s e d by p l a i n t i f f s was i n c l u d e d w i t h i n a l a r g e r p a r c e l of l a n d owned by d e f e n d a n t s . Defendants were t h e r e c o r d owners of t h e Southwest and S b u t h e a s t q u a r t e r s of s e c t i o n 4 , Township 2 0 North, Range 1 6 west. P l a i n t i f f s ' a c q u i r e d l a n d was l o c a t e d i n t h e S o u t h e a s t quarter. Defendants a l s o owned r e s i d e n t i a l p r o p e r t y i n t h e jlissoula a r e a a s w e l l a s p r o p e r t y i n t h e N o r t h e a s t q u a r t e r of 3 e c t i o n 5 , Township 1 2 North, Range 1 9 West; p r o p e r t y i n S e c t i o n 2, Township 1 2 N o r t h , Range 1 9 West; and p r o p e r t y i n S e c t i o n 1 9 , Yownship 1 5 North, Range 7 West. Thus, t h e r a t i o n a l e of Mercer i s n o t a p p l i c a b l e and t h e agreement must f a i l because o f i t s ; cenr + indefiniteness. Here, a t t e m p t i n g t o a s c e r t a i n t h e i n t e n t of t h e p a r t i e s d~ C L I ~ t i m e t h e c o n t r a c t was e n t e r e d i n t o , we l o o k t o s t a t u t e s dealing with the i n t e r p r e t a t i o n of c o n t r a c t s . S e c t i o n 13-709, K.Z.M. 1 9 4 7 , r e q u i r e s i n t e r p r e t a t i o n of a c o n t r a c t i n s u c h a manner a s t o make i t o p e r a t i v e , i f s u c h can 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 of t h e p a r t i e s . S e c t i o n 13-720, R.C.M. 1947, zouipels i r ~ c e r p r e t a c ~ o a i t h e c o n t r a c t most s t r o n g l y a g a i n s t sf the party causing t h e uncertainty t o e x i s t , (here, t h e defend- ant). W a r e c o g n i z a n t o f t h e above r u l e s , however, w e c a n n o t e i g n o r e t h e p l a i n i m p l i c a t i o n o f s e c t i o n 13-402, R.C.M. 1947, which s t a t e s : "The o b j e c t o f t h e c o n t r a c t must be l a w f u l when t h e c o n t r a c t i s made, and p o s s i b l e a n d a s c e r t a i n a b l e by t h e t i m e t h e . c o n t r a c t i s t o be p e r f o r m e d . " (Emphasis s u p p l i e d . ) To t h e same e f f e c t , s e e T h r a s h e r v . S c h r e i b e r , 77 Mont. 221, 2 5 0 P . 600. 1 C o r b i n on C o n t r a c t s , 5 9 5 , p . 394, s t a t e s : "A c o u r t c a n n o t e n f o r c e a c o n t r a c t u n l e s s it c a n d e t e r m i n e what i t i s . I t i s n o t enough t h a t t h e p a r t i e s t h i n k t h a t t h e y have made a c o n t r a c t ; t h e y must have e x p r e s s e d t h e i r i n t e n t i o n s i n a manner t h a t i s c a p a b l e o f u n d e r s t a n d i n g . It is n o t even enough t h a t t h e y h a v e a c t u a l l y a g r e e d , i f t h e i r e x p r e s s i o n s when i n t e r p r e t e d i n t h e l i g h t o f accompanying f a c t o r s a n d c i r c u m s t a n c e s , a r e n o t s u c h t h a t t h e c o u r t c a n d e t e r m i n e what t h e t e r m s of t h a t a g r e e m e n t a r e . Vagueness o f e x p r e s s i o n , i n d e f i n i t e n e s s and u n c e r t a i n t y a s t o a n y of t h e e s s e n t i a l t e r m s of a n agreement, have o f t e n been h e l d t o p r e v e n t t h e c r e a t i o n o f a n enforceable contract." A c c o r d i n g l y , t h e judgment o f t h e d i s t r i c t c o u r t i s rev e r s e d and t h i s Y Justi W e concur: ,. J u s t i c e s \) 1 /

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