Olsen v. Johnston

• Decision Date: 05 February 2013
• Docket Number: No. DA 12–0266.,DA 12–0266.
• Citation: 301 P.3d 791,368 Mont. 347
• Parties: Judy D. OLSEN, Plaintiff and Appellee, v. Kristy K. JOHNSTON and Dave Johnston, Defendants and Appellants.
• Court: Montana Supreme Court

368 Mont. 347

301 P.3d 791

Judy D. OLSEN, Plaintiff and Appellee,

v.Kristy K. JOHNSTON and Dave Johnston, Defendants and Appellants.

No. DA 12–0266.

Supreme Court of Montana.

Submitted on Briefs Nov. 7, 2012.

Decided Feb. 5, 2013.

For Appellants: Robert J. Quinn, Quinn Law Office, Bozeman, Montana.

For Appellee: John R. Christensen, Ben T. Sather, Christensen Fulton & Filz, PLLC, Billings, Montana.

Justice BRIAN MORRIS delivered the Opinion of the Court.

[368 Mont. 348]¶ 1 Appellants Kristy K. Johnston (Johnston) and Dave Johnston (Dave) appeal from an order of the Fourteenth Judicial District Court, Meagher County, that granted summary judgment to Appellee Judy D. Olsen (Olsen). The District Court determined that Olsen and Johnston had contracted for Olsen to purchase Johnston's interest in real property that they jointly owned as tenants in common. The court awarded specific performance to Olsen under the contract. We affirm.

¶ 2 We address on appeal only whether the District Court properly concluded that Olsen and Johnston had formed an enforceable contract.

PROCEDURAL AND FACTUAL BACKGROUND

¶ 3 Olsen and Johnston are sisters. Olsen, Johnston, and their mother, Joyce Johnston (Joyce), owned as tenants in common 78 acres of real property on Eagle Creek in Meagher County (the property). Joyce left her one-third interest in the property to Johnston when she died in 2008.

¶ 4 Johnston sent a letter to Olsen on July 17, 2009, in which she offered either to buy Olsen's interest in the property, or to sell her own interest to Olsen. In relevant part, the letter read:

Judy,

As tenants in common with irreconcilable differences, I feel a termination of joint ownership of the cabin property is unavoidable.

I propose that you sell me your 1/3 share of the 78 acre Eagle Creek property for $150,000.00. If you choose not to sell, you may purchase my 2/3 share for $300,000.00.

...

Please respond to Bruce Townsend by August 15, 2009 or I will be forced to seek partitioning of the property.

Johnston sent copies of the letter to Bruce Townsend (Townsend), and to her attorney, Shane Reely (Reely).

¶ 5 Olsen did not respond to Townsend as Johnston had requested. Olsen instead sent the following response letter directly to Johnston on July 24, 2009:

Kristy,

In your letter to me of July 17, 2009 regarding the ownership of the 78 acre cabin property on Eagle Creek, you offered to sell your [368 Mont. 349]2/3 interest to me for $300,000.

I accept your offer to sell and will purchase your interest for $300,000. You may consider this letter as my confirmation of acceptance of your offer to sell....

Johnston sent a letter to Olsen on July 28, 2009, in which she acknowledged that she had received Olsen's response. Johnston attempted to reject Olsen's acceptance and revoke her own offer to sell. Johnston informed Olsen that she already had agreed to sell her interest in the property to their brother, Dave. Johnston told Olsen that she had made the same offer to sell her interest in the property to Dave, and that he had accepted her offer by telephone before she had received Olsen's letter.

¶ 6 Olsen enlisted the assistance of counsel after she received Johnston's second letter. Olsen's counsel, John Christensen (Christensen), sent a letter to Johnston and to Reely on August 17, 2009, in which he asserted that Olsen and Johnston had created a binding contract. Christensen made it clear that Olsen was prepared to seek judicial enforcement of the contract, if necessary.

¶ 7 After Christensen's letter, the parties and their counsel seemed to be working towards closing the sale. Reely informed Christensen on September 21, 2009, however, that Johnston had hired Dave's attorney to handle the matter and that Johnston was refusing to honor the contract. Olsen filed her complaint later that day.

¶ 8 Olsen filed a summary judgment motion on July 15, 2010. The court granted Olsen's motion on March 19, 2012. The court determined that the letters exchanged between Olsen and Johnston had created an enforceable contract that satisfies the statute of frauds. The court awarded Olsen specific performance of the contract. Johnston appeals.

STANDARD OF REVIEW

¶ 9 We review de novo a district court's grant of summary judgment. Kaufman Brothers v. Home Value Stores, Inc., 2012 MT 121, ¶ 6, 365 Mont. 196, 279 P.3d 157. The party moving for summary judgment must establish that no genuine issue exists as to any material fact and entitlement to judgment as a matter of law. M.R. Civ. P. 56(c). The burden then shifts to the non-moving party to present substantial evidence that raises a genuine issue of material fact. Bruner v. Yellowstone Co., 272 Mont. 261, 264, 900 P.2d 901, 903 (1995).

DISCUSSION

¶ 10 Johnston argues that her offer required Olsen to reply to Townsend. Johnston contends that Olsen rejected the terms of her offer when she replied directly to Johnston. Johnston argues that Olsen instead presented a counteroffer when Olsen replied directly to Johnston. Johnston denies having accepted Olsen's counteroffer. Thus she contends that the parties formed no enforceable contract.

¶ 11 To form a legally enforceable contract, there must be (1) identifiable parties capable of contracting; (2) their consent; (3) a lawful object; and (4) a sufficient cause or consideration. Section 28–2–102, MCA. The parties' consent must be free, mutual, and communicated by each to the other. Section 28–2–301, MCA. Consent is not determined by the subjective, undisclosed intent of the parties. Miller v. Walter, 165 Mont. 221, 226, 527 P.2d 240, 243 (1974). We determine consent by the parties' outward, objective manifestations. Bitterroot Int'l Sys. v. W. Star Trucks, Inc., 2007 MT 48, ¶ 33, 336 Mont. 145, 153 P.3d 627;Miller, 165 Mont. at 226, 527 P.2d at 243. Parties have consented if, based on their words and conduct, a reasonable person would conclude that they intended to be bound by the contract. Bitterroot Int'l Sys., ¶ 33.

¶ 12 Parties usually give mutual consent in the form of an offer and an acceptance. Bitterroot Int'l Sys., ¶ 33. “ ‘An offer is a promise; it is a statement made by the offeror of what he will give in return for some promise or act of the offeree.’ ” City of Bozeman v. Taylen, 2007 MT 256, ¶ 19, 339 Mont. 274, 170 P.3d 939 (quoting Sunburst Oil & Gas Co. v. Neville, 79 Mont. 550, 563, 257 P. 1016, 1019 (1927)).

¶ 13 Acceptance communicated to the offeror completes mutual consent. An offeree generally can communicate her acceptance to the offeror in any reasonable and usual manner. Section 28–2–512(2), MCA. As master of the offer, however, the offeror may limit the time, place, or manner in which an offeree can accept. Section 28–2–501(2), MCA; see also, Miller, 165 Mont. at 227, 527 P.2d at 244;Steinbrenner v. Minot Auto Co., 56 Mont. 27, 180 P. 729 (1919).

¶ 14 If the offer so limits the mode of acceptance, the offeree must comply with those terms as a condition precedent to acceptance. Section 28–2–501(2), MCA. Noncompliance with such a condition constitutes a rejection of the offer. AAA Constr. of Missoula, LLC v. Choice Land Corp., 2011 MT 262, ¶ 23, 362 Mont. 264, 264 P.3d 709. An offeree's noncomplying response should be characterized as a counteroffer. AAA Constr. of Missoula, LLC, ¶ 23. An offer also may suggest a time, place, or manner of acceptance that would be satisfactory to the offeror. See Restatement (Second) of Contracts § 60 (1981). Other reasonable modes of acceptance are not precluded if the offer merely suggests a time, place, or manner of acceptance. Restatement (Second) of Contracts § 60.

¶ 15 In other words, an offeror that prescribes an exclusive mode of acceptance does not consent to be bound by the contract unless the offeree communicates acceptance in that particular manner. Section 28–2–501(2), MCA. An offeror who merely suggests one satisfactory manner of acceptance, however, consents to be bound by the offer as long as the offeree communicates acceptance in any reasonable manner. Restatement (Second) of Contracts § 60.

¶ 16 We consider only the offeror's objective manifestations of consent as expressed by words and conduct. Bitterroot Int'l Sys., ¶ 33. An offer must exclude clearly and definitively all other modes of acceptance to create a condition precedent to acceptance. Restatement (Second) of Contracts § 60 illus. 1–5; Samuel Williston, Williston on Contracts vol. 2, § 6:12, 130 (Richard A. Lord ed., 4th ed., West 2007); see also, David J. Tierney, Jr., Inc. v. T. Wellington Carpets, Inc., 8 Mass.App.Ct. 237, 240–41, 392 N.E.2d 1066, 1069 (1979); Overman v. Brown, 220 Neb. 788, 791, 372 N.W.2d 102, 105 (1985); Panhandle E. Pipe Line Co. v. Smith, 637 P.2d 1020, 1022 (Wyo.1981).

¶ 17 The District Court correctly determined that Johnston's offer did not limit Olsen's potential modes of acceptance. First, and most importantly, Johnston's offer did not use words of limitation when she requested that Olsen reply to Townsend. Johnston could have used language like “You must reply to Bruce Townsend to accept this offer,” or “You can accept this offer, if at all, by responding to Bruce Townsend.” Such language would have made clear that Olsen could accept the offer only by replying to Townsend. The District Court also noted that the offer did not include Townsend's address or contact information. According to the District Court, the offer's failure to include Townsend's contact information coupled with Johnston's failure to use words of limitation likely would lead a reasonable person to believe that any reasonable manner of acceptance would be satisfactory.

¶ 18 Johnston's conduct also did not make clear that the offer had prescribed an exclusive mode of acceptance. Johnston personally sent the letter that contained her offer to Olsen. Johnston did not have Townsend send the letter on her behalf. Johnston failed to convey objectively an unwillingness to communicate directly with Olsen.

[368 Mont. 352]¶ 19...