Gropp v. Lotton

• Decision Date: 14 November 1972
• Docket Number: No. 12220,12220
• Parties: Kenneth A. GROPP and Betty L. Gropp, husband and wife, Plaintiffs and Appellants, v. Kenneth R. LOTTON et al., Defendants and Respondents.
• Court: Montana Supreme Court

Page 661

503 P.2d 661

160 Mont. 415

Kenneth A. GROPP and Betty L. Gropp, husband and wife, Plaintiffs and Appellants, v. Kenneth R. LOTTON et al., Defendants and Respondents.

No. 12220.

Supreme Court of Montana.

Submitted Sept. 25, 1972.

Decided Nov. 14, 1972.

Smith, Emmons & Baillie, Great Falls, Marvin J. Smith Argued, great Falls, for plaintiffs and appellants.

Graybill, Graybill, Ostrem & Warner, Great Falls, Harrison, Loendorf & Poston, Helena, Jerome T. Loendorf argued, Helena, for defendants and respondents.

JOHN C. HARRISON, Justice.

Plaintiffs Kenneth A. Gropp and Betty L. Gropp, husband and wife, brought this action in the district court of the twelfth judicial district, county of Hill, to quiet title to certain ranch property leased with an option to buy to defendants, kenneth R. Lotton and Mary K. Lotton, husband and wife. Defendants counterclaimed for specific performance or the repayment of money paid by them to plaintiffs. The cause was tried before Hon. B. W. Thomas, sitting without a jury. Findings of fact, conclusions of law and judgment were entered for defendants. Exceptions were filed by plaintiffs and denied by the trial court. Plaintiffs now appeal from the judgment.

On September 25, 1965, plaintiffs, as vendors, agreed to sell and defendants, as vendees, agreed to purchase certain ranch properties located in Chouteau and Hill counties. The contract provided for an escrow of deed, merchantable title, a schedule of payments, default provisions and a provision to protect plaintiffs in the event of a crop failure. In addition, the contract provided that plaintiffs would lease to defendants for five years, under specified terms and conditions, certain acreage in Hill County with an option to purchase some of the leased lands.

On October 1, 1965, pursuant to the contract for deed, the parties entered into a farm lease which incorporated the terms of the contract. The lease ran from October 1, 1965 to October 1, 1970. Tract I of the leased lands was made subject to the option to purchase, the terms of which were:

'The right to purchase shall be at a price of Eighty Thousand Dollars ($80,000.00) with a required down payment of 29% and the balance, with interest at the rate of four percent (4%) per annum, to be amortized over a fifteen (15) year period. The Lessees shall be entitled to the credit of the excess of the rent payments made hereunder, including Federal Crop payments, over the real property taxes incurred on said Tract I during the term of this lease. This credit shall first be applied in payment for the existing summerfallow, hereby agreed to be 300 acres at a price of $10.00 per acre, and then the remaining credit shall be applied on the purchase price of $80,000.00 by reducing the necessary down payment such amount.

'IT IS FURTHER AGREED AND UNDERSTOOD that the two steel graneries of 2250 bushel capacity and the wooden granery approximately 16 20 in size will be included with the real property in Tract I in the event of the exercise of the option by the Lessees. sut'IT IS FURTHER UNDERSTOOD AND AGREED that the Lessees may exercise the option to purchase Tract I by giving the Lessors notice of their intention to exercise the option in writing at least thrity (30) days prior to the expiration of the term of this lease. It is further agreed and understood that the aforesaid option does not apply to Tract II hereinbefore described.'

At trial, defendants testified that without the land covered by the option, Tract I, the ranch unit of some 480 acres is an uneconomic unit and they would not have purchased the ranch unit without the option to purchase Tract I.

After some two years of operation on the ranch, certain differences arose between the parties and legal counsel was obtained to iron out the difficulties. On March 29, 1969, an agreement was signed by the parties, settling their differences and reaffirming the original lease and option agreement. By this release agreement the parties agreed, on the amount and value of the 1966 and 1967 crop shares received by plaintiffs and provided for the payment by defendants of $3,829 to plaintiffs. It further provided that this sum would be applied to the 29% down payment, in the event defendants exercised the option to purchase Tract I.

In November 1969, defendants directed their counsel to prepare a written notice of their intention to exercise the option to purchase Tract I. Both defendants signed the notice, had it acknowledged, and returned it to their counsel in Great Falls. We note here that one copy of the signed notice was recorded in Hill County with the farm lease on November 13, 1969, by defendant Kenneth Lotton. The other copy was forwarded to his attorney in Great Falls.

Defendants' counsel testified he received the signed notice of intention to exercise the option to purchase from the defendants and that on November 19, 1969, he forwarded it, along with a cover letter, to the plaintiffs at their address in Lusk, Wyoming. Both he and his secretary testified that to the best of their knowledge the letter and notice were processed on that date and mailed, but neither recollected why it was sent by ordinary mail.

Plaintiff, Kenneth Gropp, denied ever receiving te notice of intention to exercise the option and testified that the first time he knew of this notice was on October 5, 1970, when he went to the ranch to see what the defendants intended to do about Tract I. At that time, he was informed by defendant Kenneth Lotton that the option had been exercised nearly a year before and that a copy of the notice had been filed at the Hill County courthouse.

We note here that although the parties involved had signed a release agreement in 1969, to settle their differences up to that point, bad feeling continued and although they had seen each other several times between 1969 and 1970, no communications, verbal or otherwise, took place directly between the parties.

It was on October 5, 1970, over a month after the expiration date of the option, that plaintiff Gropp went to the ranch to find out why defendant was not off of Tract I. There is a conflict in the evidence as to what happened on that date, October 5, 1970. Defendant Lotton testified he informed Gropp that he had exercised the option and had filed the notice at the Hill County courthouse. That plaintiff Gropp then left the ranch, saying that he would contact defendants' counsel and later be in touch with defendants. Plaintiff Gropp denied that this happened. He testified he went to the courthouse to verify that the notice had been filed; then sought counsel and filed a quiet title action on October 7, 1970.

Following their settlement of differences in March 1969, defendants made no tender on the balance remaining on the down payment and pointed out that no determination of that balance could be made until the end of the 1970 harvest. Further, that in order to compute the remaining balance due on the down payment it was necessary for defendants to have the figures for the cash price received by the plaintiffs on their share of the 1969 and 1970 crops. Figures for previous years had been furnished to them by plaintiffs, and although they had made an effort to get those figures from the elevators where the shares were stored, they had been unable to get such cash figures. Plaintiffs admitted they did not give this information to defendants for the 1969 and 1970 crops, saying that the defendants did not ask for them.

The trial court found defendants owed plaintiffs the sum of $7,023.15 on the down payment. It further found that at the time the contract and lease were entered into it was the intent of the parties, if the option was exercised, that a contract for deed would be negotiated and entered into by the parties incorporating the purchase terms set forth in the option and other terms similar to those included in the contract for deed dated September 25, 1965.

While plaintiffs set forth some fifteen issues for review upon appeal, we find those issues can be combined into four controlling issues.

1. Whether the contract resulting from acceptance of the option offer in question is sufficiently definite and certain as to be subject to specific performance.

2. Whether the provision of the option offer with respect to notice of intent to exercise the option was sufficiently complied with.

3. Whether delay in tender of the balance due on the down payment for the option was excused and waived by the impossibility of its computation and the conduct of plaintiffs.

4. Whether the court erred in striking testimony relative to a polygraph examination of plaintiff Kenneth Gropp.

Issue 1 questions whether the contract resulting from acceptance of the option offer in question is sufficiently definite and certain as to be subject to specific performance

As a preface to our discussion, we note some fundamental rules regarding contracts. If the language of the contract is such that the intent of the parties is clearly and unequivocally expressed, it must be applied according to the terms of the contract. Conversely, if there is a basis in its language upon which the parties reasonably could have had a...