Opinion
No. 92-607.
Submitted on Briefs July 20, 1993.
Decided November 10, 1993. As Modified on Denial of Rehearing December 22, 1993.
Appeal from the District Court of Teton County. Ninth Judicial District. Honorable R.D. McPhillips, Judge.
For Appellant: Greg A. Luinstra, Jardine, Stephenson, Blewett Weaver, Great Falls.
For Respondent: R.L. "Stoney" Burk, Choteau, and John P. Wuerthner, Great Falls.
This is an appeal from an order of the Ninth Judicial District, Teton County, determining that Joe and Floie Lee (the Lees) have waived their right of first refusal to the sale of the Pelzman ranch for a price of $120,000, and approving the sale of the same property to Cloyd and Lloyd Stott. We affirm.
We consider the following issues on appeal:
1. Did the District Court err in determining that the Lees waived their right of first refusal to the Pelzman ranch?
2. Did the District Court err in returning $120,000 tender money to the Lees and substituting a Bank Letter of Credit?
This is the second appeal of this action. This appeal revolves around the sale of a ranch in Teton County. The Lees moved to the area in 1977 and began operating an 800-acre ranch for Fred Pelzman (Pelzman) under a lease/management arrangement. Pelzman had suffered a stroke at age 80 and was unable to manage the property himself.
On March 20, 1978, Pelzman and the Lees executed a written agreement which contained the following language:
I, Fred Pelzman, Sr., agree to give Joe R. and Floie N. Lee first option to purchase property I own in the above legal Description upon or before my passing for the sum of one hundred and twenty thousand dollars. It is agreed by the undersigned that the option holders will reside and maintain the said property until time of sale. A ledger of time and improvements will be kept for the purpose of reimbursement by the landowner. Upon notification of intent to sell, a period of 45 days will be allowed for payment.
The Lees remained in possession and currently remain in possession of the ranch. Mr. Pelzman died on May 18, 1986. The Lees notified the attorney for the Pelzman estate that they were exercising their option to buy the ranch under the above clause. The estate representative refused to sell. The Lees filed a district court action for specific performance. Upon appeal, this Court determined that the agreement did not constitute an "option contract" but did constitute a "right of first refusal" which could entitle the Lees to buy the Pelzman ranch for $120,000. In substance this Court determined that the right of first refusal became operable when the estate notified the Lees the ranch was for sale. Lee v. Shaw (1992), 251 Mont. 118, 123, 822 P.2d 1061, 1064.
Shortly after the foregoing appeal was final, the Lees through their attorney entered into extensive sale negotiations with the personal representative of the Pelzman estate. During these negotiations the Lees attempted to settle all pending claims between them and the estate, and intended to include both the purchase of the ranch property and the purchase of the ranch cattle. The parties agreed to the basic price of $200,000 with $120,000 allocated to the ranch and $80,000 to the cattle. While none of the various proposed contracts was signed by all of the parties, agreement was reached to complete the sale on a specified closing date. The Lees failed to show up for that closing and requested extensions. The Lees failed to show up at subsequent extensions. As a result, the estate representative entered into a purchase and sale agreement with Cloyd and Lloyd Stott (the Stotts) for the sale of the Pelzman ranch for $165,000 and sought court approval of that agreement. On July 21, 1992, a hearing was held on the petition regarding the Stott purchase. Lees filed an objection to the sale based upon their right of first refusal. They contended that the Stotts' offer of purchase brought their right of first refusal into existence and they offered to purchase for $120,000. While the District Court agreed that the Stotts' offer had ripened the Lees' right of first refusal, it found that the Lees had waived their right of first refusal when they failed to show up at the closings for the sale of the property.
The Lees argue they had not reached final agreement with the Pelzman estate on the purchase of the property and therefore had not waived the right of first refusal. The Pelzman estate contends that the court was correct in finding waiver because the Lees had successfully negotiated a sale and then failed to show up at the closing for such sale.
I
Did the District Court err in determining that the Lees waived their right of first refusal to the Pelzman ranch?
[1, 2] In Lee v. Shaw, this Court determined that the above quoted language of the agreement constituted a right of first refusal to the sale of the Pelzman ranch. Lee, 251 Mont. at 123, 822 P.2d at 1064. A "right of first refusal" or preemptive right does not give to the preemptioner the power to compel an unwilling owner to sell — it merely requires the owner, when and if he decides to sell, to offer the property first to the person entitled to the preemption at the stipulated price. Lee, 251 Mont. at 121, 822 P.2d at 1063.
On February 27, 1992, the Lees made a $200,000 offer for the ranch, the cattle, and other considerations. On February 28, 1992, the attorney for the estate wrote to the attorney for the Lees accepting the sum of $200,000 and stating as follows with regard to the allocation of the price:
I must insist on an allocation of the purchase price of $120,000 representing the ranch and $80,000 for the cattle. . . .
Throughout negotiations this allocation of the $200,000 purchase price was unchanged. We state in Lee.
[H]ad such notification of intent been given by the P.R. [personal representative of the estate] to the Lees, they had the right to purchase the property for the $120,000 less any credits as indicated by the agreement from the ledger, with payment to be made within 45 days from notification. (Emphasis added.)
Lee, 251 Mont. at 123, 822 P.2d at 1064.
We conclude that the letter from the estate's attorney of February 28, 1992, constituted the offer to the Lees under their right of first refusal. As a result, commencement of the 45 day period was triggered by the February 28, 1992 letter. The 45 day period ended during April, 1992.
Yet, the closing was not set until July 1, 1992 and despite assurances from the Lees' attorney that they would appear, the Lees did not show up. Nor did they appear after being granted a twenty-four hour extension to 4 p.m. July 2, 1992. Another extension was sought to August 1, 1992. In the meantime, the Stotts offered $165,000 for the ranch and the estate sought a judicial determination of the appropriateness of the estate's acceptance of this offer.
[3] At the July 21, 1992 hearing in which the court considered the Stott offer in light of the surrounding circumstances, the Lees gave notice they would exercise their right of first refusal to buy the ranch for $120,000. Following the hearing, the District Court determined that the Lees had waived their right of first refusal by failing to show up at the closing. However, the District Court determined that it was the subsequent offer by the Stotts which triggered the Lees' preemptive right and began the running of the 45 day period. While the District Court correctly determined that the Lees had waived their right, it did not correctly determine the triggering incident. We will affirm a district court when its conclusion is correct, regardless of whether the court has used the correct analysis to reach that conclusion. Shimskey v. Valley Credit Union (1984), 208 Mont. 186, 676 P.2d 1308.
[4] Waiver is an equitable doctrine, applicable where there is intentional or voluntary relinquishment of a known right, claim, or privilege, or such conduct as warrants inference or relinquishment of such right. Sperry v. Montana State University (1989), 239 Mont. 25, 778 P.2d 895. We conclude that the Lees failed to tender the sum of $120,000 within a period of 45 days from receiving the notification of intent to sell, and as a result failed to comply with the specific requirements of the above quoted contract provision. We also conclude the record supports the determination of the District Court that the Lees failed to show up for the closing of the sale by the estate personal representative on two different occasions. We further conclude that such conduct on the part of the Lees constitutes an intentional relinquishment of their right of first refusal and constitutes a waiver of that right.
We hold the District Court correctly determined that the Lees waived their right of first refusal to the Pelzman ranch. Because of this dispositive issue, we need not consider the Lees' other issues.
II.
Did the District Court err in returning $120,000 tender money to the Lees and substituting a Bank Letter of Credit?
While legal questions exist as to the propriety of the conduct of the District Court in allowing a substitution of a letter of credit for the $120,000 purchase price tendered by the Lees, in view of our holding in this case, we do not find it necessary to consider such issues. We note that the letter of credit which has been substituted by the Lees provides that the credit expires 30 days after this matter is remanded by this Court to the Teton County Clerk of Court's office. As a result, no further action is required on our part.
Affirmed.
CHIEF JUSTICE TURNAGE, JUSTICES GRAY, NELSON and HUNT concur.