EDGAR v HUNT

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NO. 85-127 IN THE SUPREME COURT OF THE STATE OF MONTANA 1985 ALMA EDGAR, Plaintiff and Respondent, ERNEST EMMETT HUNT and JACQUELINE M. HUNT, husband & wife, Defendant and Appellant. APPEAL FROM: District Court of the Third Judicial District, In and for the County of Granite, The Honorable Robert Boyd, Judge presiding. COUNSEL OF RECORD: For Appellant: Ken H. Grenfell, Missoula, Montana For Respondent : Skelton & Cooley; Robert Skelton, Pdissoula, Montana Submitted on Briefs: June 6, 1985 Decided: September 10, 1985 Filed: I J; 1985 Clerk M r . J u s t i c e L. Court. Gulbrandson d e l i v e r e d C. t h e Opinion of Hunts a p p e a l from a n o r d e r g r a n t i n g p l a i n t i f f motion for summary judgment by the District the Edgars' Court, Third J u d i c i a l D i s t r i c t , G r a n i t e County i n t h i s q u i e t t i t l e a c t i o n . Hunts contend that adequate consideration supported the r e p u r c h a s e o p t i o n and t h a t t h e o p t i o n d i d n o t v i o l a t e e i t h e r the rule against perpetuities o r the rule against restraints on a l i e n a t i o n . W e reverse and remand f o r t r i a l . O August n 13, 1964, p r o p e r t y by w a r r a n t y deed tenancy. Apparently, t h e Hunts t o Alma s o l d th.e s u b j e c t r e a l and O m e r Edgar i n j o i n t t h e p a r t i e s entered i n t o a notarized agreement contemporaneously w i t h t h e e x e c u t i o n of t h e deed. Under this agreement, f a c i l i t i e s on H u n t s ' Edgars had the right to use sewer l a n d and t o t a k e w a t e r from a w e l l on t h e a d j a c e n t Hunt l a n d . The a g r e e m e n t a l s o s t a t e d : Whereas, s a i d r e a l p r o p e r t y was s o l d t o F i r s t P a r t i e s [ E d g a r s ] by Second P a r t i e s [Hunts] with the understanding that Second P a r t i e s [ H u n t s ] would h a v e f i r s t o p t i o n t o purchase s a i d p r o p e r t y should F i r s t P a r t i e s [Edgars] d e s i r e t o s e l l said property in their respective lifetimes; That should F i r s t P a r t i e s [Edgars] s e l l said real property, Second Parties [ H u n t s ] a r e h e r e b y g r a n t e d an o p t i o n t o r e p u r c h a s e s a i d p r e m i s e s f o r t h e sum o f Seven Thousand Dollars ($7,000.00) ; provided always that First Parties [ E d g a r s ] s h a l l g i v e t o Second P a r t i e s [Hunts] t h i r t y (30) days w r i t t e n n o t i c e of t h e i r i n t e n t i o n t o sell s a i d premises, and t h a t Second P a r t i e s [ H u n t s ] s h a l l b e f o r e t h e e x p i r a t i o n o f s a i d t h i r t y (30) d a y p e r i o d have t h e r i g h t t o r e p u r c h a s e s a i d premises for the sum o f Seven Thousand D o l l a r s ( $ 7 , 0 0 0 . 0 0 ) c a s h . Thereafter, tenancy. Omer H i s widow, Edgar died, Alma E d g a r , terminating the joint now t h e s o l e owner o f t h e property, on J u n e 1 3 , 1 9 8 4 , b r o u g h t t h i s q u i e t t i t l e a c t i o n t o i n v a l i d a t e t h e o p t i o n agreement. h e r request f o r admissions, judgment the contending; repurchase she f i l e d a motion f o r summary (1) t h a t t h e r e was no c o n s i d e r a t i o n f o r option; and 29, (2) t h a t the repurchase option MCA and i s t h u s i n v a l i d . v i o l a t e d s e c t i o n 70-1-405, On J a n u a r y A f t e r t h e Hunts answered 1985, the motion f o r summary judgment. court granted Alma Edgar's The c o u r t r u l e d t h a t t h e r e was no c o n s i d e r a t i o n t o s u p p o r t t h e o p t i o n , and s e c o n d l y , t h a t it was a c o n d i t i o n r e s t r a i n i n g a l i e n a t i o n , and t h e r e f o r e v o i d . On February 5, 1985, the District quieting t i t l e t o t h e property. Court entered judgment From t h i s o r d e r and judgment Hunts a p p e a l , r a i s i n g t h e f o l l o w i n g i s s u e s : (1) Whether t h e D i s t r i c t C o u r t p r o p e r l y g r a n t e d summary judgment h o l d i n g t h a t t h e r e was no c o n s i d e r a t i o n s u p p o r t i n g t h e repurchase agreement. ( 2 ) Whether t h e D i s t r i c t C o u r t p r o p e r l y g r a n t e d summary judgment holding t h a t because it t h e repurchase violated the rule a g r e e m e n t was i n v a l i d against restraints on alienation, o r the rule against perpetuities. As to hol-ding t h e the first agreement consideration. issue, the Court District unenforceable for a The c o u r t ' s o r d e r r e a s o n e d lack erred of in mutual " [ i l t i s obvious from r e a d i n g t h e p r e a m b l e t o t h e m u t u a l a g r e e m e n t t h a t any c o n s i d e r a t i o n was t o b e p a i d by t h e E d g a r s t o t h e Hunts and not vice construe versa." the In contract this respect, according to the court section failed 28-3-202, to MCA, which r e q u i r e s t h a t " [ t l h e whole o f a c o n t r a c t i s t o b e t a k e n together s o a s t o g i v e e f f e c t t o e v e r y p a r t if r e a s o n a b l y practicable, The each agreement, clause read in helping its to interpret entirety, set up the other." obligations The Hunts w e r e t o p r o v i d e t h e E d g a r s w i t h r u n n i n g b o t h ways. water and a c c e s s t o t h e i r sewer facility. In return, the E d g a r s p a i d a nominal c o n s i d e r a t i o n o f o n e d o l l a r "and o t h e r valuable consideration," agreed t o help maintain the sewer and w a t e r f a c i l i t i e s , and g r a n t e d t o t h e Hunts t h e r e p u r c h a s e option. Further, this Court has ruled that even nominal c o n s i d e r a t i o n i s adequate t o support an o p t i o n c o n t r a c t . Atta v. Schillinger (Mont. 1 9 8 1 ) , 625 P.2d 73, 426; K e a s t e r v . Bozik (Mont. 1 9 8 1 ) , 623 P.2d 194. Van 38 St.Rep. 1376, 38 St.Rep. W e h o l d t h a t t h e r e p u r c h a s e a g r e e m e n t was s u p p o r t e d by adequate consideration a s p a r t of the original contract t o purchase. The Court District erred holding in that the pre-emptive r i g h t h e l d by t h e Hunts was v o i d a s a m a t t e r o f law and g r a n t i n g summary judgment court in correctly 5 70-1-407, that the rule MCA, did not apply 408, 114, 43 P.2d Court "Conditions 233. The error common law reasonable, that restraining 679 P.2d 1984), (1981). provision rule are fixed in alienation, that valid. 972. as a price interpreting when v. 6 1 AmJur.2d, repugnant (Emphasis a d d e d . ) restraints Lawson That s e c t i o n statement of on the majority alienation, Redmoor This Co. when (Wash-App. P e r p e t u i t i e s 5121, p . 129 The q u e s t i o n i s w h e t h e r t h e p a r t i c u l a r r e s t r a i n t i s reasonable under t h e circumstances. The was property. i n t e r e s t c r e a t e d , a r e void." reads the I n re Murphy's E s t a t e ( 1 9 3 5 ) , 99 r e s t r a i n t on t h e a l i e n a t i o n o f r e a l t o th - -e perpetuities, to The MCA a s a n a b s o l u t e p r o h i b i t i o n a g a i n s t a n y s e c t i o n 70-1-405, states: ground. against noted pre-emptive r i g h t a t i s s u e . Mont. on t h a t Restatement o f Property, Lawson, 679 P.2d a t 974. in comment section 406, "i", sets f o r t h v a r i o u s f a c t o r s t h a t may b e c o n s i d e r e d when determining t h e reasonableness of addition In to articulated two value is and 610, 195, the considered property, this when v. Poneman Phillips Ross 615. Secondly, the o r the price has I f the t h e market a finding of 1970), 263 (N.J.Super. 1980) , 383 So. 2d (Fla. intent of the contracting for the preemptive right is a factor. t h e circumstances, law determining to supports I g l e h a r t v. 199; 614, be case greatly disproportionate unreasonableness. A. 2d to factors, restraint. The t y p e o f p r i c e s e t i s i m p o r t a n t . fixed of Restatement others reasonableness. price the any p a r t i c u l a r parties If, from it a p p e a r s t h a t t h e p a r t i c u l a r r e s t r a i n t , is primarily s e t thereby, f o r t h e purpose of restraining t h e a l i e n a b i l i t y of the property, i t w i l l weigh heavily a g a i n s t t h e v a l i d i t y of t h e r e s t r a i n t . O the other n hand, if the circumstances suggest t h a t the restraint was f r e e l y e n t e r e d i n t o by m u t u a l c o n s e n t a s a normal i n c i d e n t o f an equal bargaining relationship in original transfer of t h e property, order to promote the t h e s c a l e s w i l l t i p back t o w a r d s t h e r e a s o n a b l e n e s s of t h e r e s t r a i n t , see Lawson, 679 P.2d a t 974-975. W e hold t h a t t h e repurchase o p t i o n did not v i o l a t e t h e r u l e a g a i n s t r e s t r a i n t s on a l i e n a t i o n . Respondent c o n t e n d s t h a t t h i s C o u r t s h o u l d f o l l o w t h e C a l i f o r n i a C o u r t o f A p p e a l s d e c i s i o n i n Wharton v. (Cal.App. 1 9 5 1 ) , 229 P.2d 861. I n Wharton, Mollinet the California c o u r t i n t e r p r e t e d s e c t i o n 711 o f t h e C a l i f o r n i a C i v i l Code, which Montana a d o p t e d a s B 70-1-405, MCA, a s an a b s o l u t e r u l e a g a i n s t any r e s t r a i n t on t h e a l i e n a t i o n o f p r o p e r t y . Wharton, 229 P.2d a t 863. Respondent c o n t e n d s t h i s C o u r t i s bound t o f o l l o w t h e Wharton r u l e b e c a u s e o f Murphy ( 1 9 7 7 ) , 174 Mont. o u r holding i n S t a t e v. 307, 570 P.2d 1103, t h a t : Montana f o l l o w s t h e r u l e o f s t a t u t o r y c o n s t r u c t i o n where i n a d o p t i n g a s t a t u t e from a s i s t e r s t a t e , t h e c o u r t a d o p t s t h e construction placed upon it by the h i g h e s t c o u r t o f t h e s t a t e from which i t was a d o p t e d . a t 1105. Murphy, 570 P . 2 d Though w e r e c o g n i z e t h e c o n t i n u i n g v a l i d i t y o f t h e r u l e i n Murphy, it d o e s n o t , r e q u i r e t h i s C o u r t t o a d o p t t h e r u l e i n Wharton i n t h i s case. First, § 1 8 9 5 , p r i o r t o t h e Wharton h o l d i n g . decided by the "highest court" 70-1-405 was a d o p t e d i n S e c o n d , Wharton was n o t of California. Thirdly, see Wharton a p p e a r s t o b e no l o n g e r f o l l o w e d i n C a l i f o r n i a , Budny v. Bank lilogman v. Wells The of order judgment to the America F a r g o Rank of the plaintiff and Union District is 333 1959), (Cal.App. T r u s t Co. Court reversed, and 812; ( C a l . App. granting this summary case is ' 7 remanded. qy C J u s t i c e ,' Chief J u s t i c e P.2d 5& , / I

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