Madison v. Marlatt

• Decision Date: 13 November 1980
• Docket Number: No. 5285,5285
• Citation: 619 P.2d 708
• Parties: Eileen MADISON, Administratrix of the Estate of E. G. Madison, Appellant (Defendant), v. Russell MARLATT, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

Page 708

619 P.2d 708

Eileen MADISON, Administratrix of the Estate of E. G. Madison, Appellant (Defendant), v. Russell MARLATT, Appellee (Plaintiff).

No. 5285.

Supreme Court of Wyoming.

Nov. 13, 1980.

Douglas G. Madison and John E. Masters, Dray, Madison & Thomson, P.C., Cheyenne, on brief; W. Perry Dray, Cheyenne, for appellant.

Lowell H. Fitch (argued), and Gerald F. Murray, Murray & Fitch, Torrington, on brief, for appellee.

Before RAPER, C. J., and McCLINTOCK, THOMAS, ROSE and ROONEY, JJ.

PER CURIAM.

In his appeal, appellant-defendant presents the court with five challenges to the judgment of the district court entered on February 6, 1980 following a jury trial and verdict in favor of appellee-plaintiff. E. G. Madison, the defendant in the district court died on November 15, 1979 after trial but before judgment. His administratrix was regularly substituted. First, the question is raised as to whether the language of the "option clause" appearing in the lease executed by the parties was sufficiently plain and unambiguous so as to enable a court to decide its meaning as a matter of law. Second, appellant argues that where an option contract for the sale of realty was silent as to the type of deed to be passed upon the exercise of the option, the demand for a warranty deed constitutes a counter offer, and hence, a rejection of the offer contained in the option. Third, appellant contends that in view of appellee's knowledge of Madison's limited title, the refusal of co-owners to sell and the absence of a showing of bad faith on Madison's part, the benefit of the bargain ¹ was not the appropriate measure of damages. Fourth, under Rule 703, W.R.E., appellant challenges the district court's decision that the testimony of appellee's expert witness was admissible. And finally, appellant questions the propriety of recalling a jury following its discharge in order to clarify the meaning of its verdict.

We will reverse and remand for a new trial on the basis of an improvident entry of partial summary judgments related to appellant's third issue raised on appeal.

The dispute, here, arises out of a three-year written farm lease agreement, entered into by Russell and Alice Marlatt, lessees, and E. G. Madison, lessor, (Madison) on October 10, 1971. Paragraph 21 of said lease, among other things, provided that:

"With this lease the Lessor grants to Lessee a prior option to purchase place at an agreed price of $40,000.00, provided option is exercised and accepted within the same period as this lease."

Though Verl Guffey and Madison owned the property as tenants in common, there is no claim in this appeal that Guffey had authorized Madison to enter into an option agreement with appellee; Guffey is not a party to the action. We will more fully develop the facts in this regard in our discussion of our reason for reversal.

Following a transfer by Alice Marlatt to him of "all her interest in and to a lease * * * together with the option to purchase said property," appellee, on February 27, 1975, gave written notice to Madison of his desire to exercise the alleged option by tendering a cashier's check for $40,000.00, the purchase price, and demanding in exchange "a good and sufficient Warranty Deed." When Madison refused to convey the leased property, appellee, on April 14, 1975, instituted the action in district court, seeking damages for a breach of a contract.

In the course of the seemingly interminable court proceedings, the district court granted appellee two partial summary judgments. The first one, issued April 6, 1976, held that no genuine issue of material fact existed except as to the amount of damages suffered as a result of the breach. On September 20, 1979, during the course of the trial, the district court issued the second partial judgment. It held that the letter from lessee to lessor dated February 27, 1975, was "a sufficient manifestation of an election consistent with the power of acceptance created by the grant of option," and further that the appropriate measure of damages was "Loss of Bargain."

During the trial, appellee called a real estate appraiser to testify as an expert with regard to his valuation of the leased property. Following the testimony, Madison objected and asked that it be stricken from the record, claiming that the facts relied on by the expert were not of the sort reasonably relied upon by experts in the particular field, as required by Rule 703, W.R.E. The district court, however, denied the motion and held the testimony admissible.

Finally, on September 21, 1979, at 1:57 p.m., the case was submitted to the jury; a special verdict was returned at 10:43 p.m. Following the discharge of the jury, the trial judge, along with the parties, became concerned that the verdict might have contained inconsistencies. Within five minutes of its discharge, the jury was reassembled. After a brief explanation of the problem by the judge, the jury was sent out in order to reconsider its verdict. After deliberating less than ten minutes, the jury returned the special verdict with one correction effectively eliminating any inconsistency. Final judgment for appellee was in the sum of $32,751.00, the amount of damages found by the jury.

We will premise our reversal on the improper granting of the two partial summary judgments entered by the trial judge. They were too broad inasmuch as there existed issues of fact which arose out of the deficiency of the title of Madison to the premises, and which factual issues were material to the resolution of the complaint over and above the issue as to the amount of damages.

The effect of partial title in Madison was argued to the trial court in connection with the motion for the first partial summary judgment. Such judgment was rendered on April 6, 1976. The trial court there found:

" * * * that no triable issue of material fact exists except for the issue of the amount of damages for which judgment should be granted * * *." (Emphasis added.)

After a two-day hearing on motions for another partial summary judgment, the trial court made the following finding, among others, in the September 17, 1979 partial summary judgment:

" * * * that the plaintiff denies knowledge of the inability of the defendant to convey title to the property, although it is unrefuted that on June 30, 1971, prior to the execution of the lease and option that correspondence was directed to the plaintiff by the Farmers Home Administration giving notice that a co-owner was involved in the transaction; at all times the fact of co-ownership with Verl Guffy (sic) and the defendant was a matter of public record in the records of Goshen County, Wyoming * * *."

The legal implications resulting from the deficiency in his title are now argued by appellant in connection with the two issues framed as follows:

"If the option language is silent as to various terms, does demand for a 'good and sufficient Warranty Deed' constitute (sic) a counter-offer thereby rejecting the original offer?

"In view of Plaintiff knowledge of Defendant's limited estate, the refusal of the co-owners to sell, and of Defendant's lack of intent to create more than a right of first refusal, was Plaintiff entitled to damages measured by the 'benefit of the bargain' rule?"

Accepting the trial court's determination that an option was given and properly exercised and that Madison breached his agreement by not conveying the premises to appellee, the question remains as to the measure and amount of damages. There are two aspects to this question: (1) effect of the knowledge on the part of appellee-vendee at the time of contract that Madison had only partial title to the premises and had no intention of acquiring full title; and (2) the existence or nonexistence of an issue of fact concerning such knowledge and intention.

With reference to the second aspect, the existence of a factual issue is evidenced by the language of the second partial summary judgment, supra, and by the depositions of each party which were in the record at the time of the first partial summary judgment wherein appellee stated that he first learned of a co-owner's interest in "the second year of the written lease," and wherein Madison stated that the purpose of the lease with option was only to enable appellee to meet FHA requirements for a loan to be secured by other property of appellee, and that at the time appellee "picked up" the lease at Madison's office,

" * * * he was told at that time that the option didn't amount to much, but I thought it probably-when FHA approved the loan they approved it on condition that I give a three-year lease preferably with an option to purchase. Now I told him I couldn't give him a bona fide option because I had a partner on the place, and Russell was told this the day he picked up the lease." (Emphasis supplied.)

Also, at the hearing on the second motions for partial summary judgments, witness Franks testified that he had told appellee before the premises were leased that they were owned partially by one other than Madison, and witness Gerstner testified that he had furnished similar information to appellee before the premises were leased. Madison testified that appellee first indicated an intention to exercise the option when Madison told him he contemplated "breaking" the lease because of appellee's poor husbandry. The co-owner of the premises, ² Verl Guffey, stated in a deposition taken on October 14, 1977, that Madison did not have authority to sell his, Guffey's, interest in the premises and that he, Guffey, did not want to sell such interest.

In view of appellee's denial of knowledge, at the time of execution of the lease, of co-ownership of the premises and Madison's testimony that the sole purpose of the option was to satisfy FHA requirements on an application by appellee for a loan to be secured by other property of his, there were issues of fact as to such knowledge and intention. If such issues of...