No. 01-759
IN THE SUPREME COURT OF THE STATE OF MONTANA
2002 MT 124N
ROBERT L. JOHNSON and ANITA A. JOHNSON,
Plaintiffs and Respondents,
v.
ALEX E. SMITH, TRUDY L. SMITH
and GEORGE S. HAMILTON,
Defendants and Appellants.
APPEAL FROM: District Court of the Tenth Judicial District,
In and For the County of Fergus,
Honorable John C. McKeon, Judge Presiding
COUNSEL OF RECORD:
For Appellants:
William E. Berger, Attorney at Law, Lewistown, Montana
For Respondents:
Robert L. Johnson, Attorney at Law, Lewistown, Montana
Submitted on Briefs: February 28, 2002
Decided: June 11, 2002
Filed:
__________________________________________
Clerk
Justice W. William Leaphart delivered the Opinion of the Court.
¶1 Pursuant to Section I, Paragraph 3(c) Montana Supreme Court 1996 Internal
Operating Rules, the following decision shall not be cited as precedent but shall be filed as a
public document with the Clerk of the Supreme Court and shall be reported by case title,
Supreme Court cause number and result to the State Reporter Publishing Company and to
West Group in the quarterly table of noncitable cases issued by this Court.
¶2 Alex Smith, Trudy Smith and George Hamilton (collectively Appellants) appeal from
the judgment of the Tenth Judicial District Court, Fergus County, granting partial rescission
of a Contract for Deed between the Smiths and Robert and Anita Johnson. We affirm.
¶3 We address the following issues on appeal:
¶4 1. Did the District Court err in concluding that the Smiths’
use of the contract for deed was unlawful as contrary to
good morals?
¶5 2. Did the District Court err in concluding that the
contract for deed can be partially rescinded?
Facts and Procedural Background
¶6 This litigation involves several adjoining properties outside
of Lewistown, Montana. The Johnsons originally owned three parcels
of land. In 1989, the Smiths purchased two of these parcels from
the Johnsons: a 6.2 acre parcel which included a house (Smiths’
Parcel) and an 87 acre parcel (Tract 1). The Johnsons retained a
parcel adjoining in part both Tract 1 and the Smiths’ Parcel. This
property is listed in the National Registry of Historic Places and
is known as the Mill House. Tract 1 includes a 55 foot strip of
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land (the Strip) across which is a road to the Mill House.
Although the access road has been in existence for approximately
one hundred years, there is no recorded easement for it across the
Strip, and the Johnsons did not reserve an easement in the contract
for deed to the Smiths.
¶7 Hamilton holds legal title to a parcel of land adjoining the
Strip (West Tract). Access roads from Highway 466 cross the West
Tract and the Strip, leading to both the Smiths’ Parcel and the
Mill House. In 1959, A.W. Johnson, Robert’s father, and Hamilton
agreed to a land exchange wherein Hamilton would convey to Johnson
the West Tract in exchange for a one acre tract of land owned by
Johnson (East Tract). Because of a disparity in value between the
tracts, Johnson also agreed to pay Hamilton $1600.00 in cash.
Johnson and Hamilton walked the two parcels and partially staked
the perimeters and took possession of the respective tracts. After
the exchange, Johnson built a road to access the Smiths’ Parcel and
began landscaping the West Tract to provide an aesthetically
pleasing entrance to both the Mill House and the Smiths’ Parcel.
Although both Hamilton and Johnson took possession of the exchanged
properties, legal title to the tracts was never transferred.
¶8 In 1995, the Smiths filed suit against the Johnsons to enforce
a provision in the contract for deed which required the Johnsons to
provide the Smiths with insurable access to the Smiths’ Parcel. At
that time, Johnson contacted Hamilton and requested his cooperation
in completing the paperwork to legally transfer the exchanged
tracts of land. Johnson had been in possession of the West Tract
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since inheriting it from his father. Hamilton, for the first time,
asserted that there was no agreement concerning the land exchange.
In order to settle the dispute with the Smiths, Johnson obtained
an easement from Hamilton across the West Tract for the access
roads to both Mill House and the Smiths’ Parcel. However, this
easement did not extend from the West Tract across the Strip to
Mill House.
¶9 In 1999, Johnsons filed suit against Hamilton to enforce the
oral agreement to exchange the West Tract and East Tract. After a
trial, the court ordered specific performance of the 1959 oral
contract to exchange the land. The court also entered a decree
“forever barring [Hamilton] from interfering with the passage and
landscaping rights granted [Johnsons] in the Easements agreement.”
Again, this guaranteed the Johnsons access across the West Tract
but did not include the portion of their access road that crossed
the Strip.
¶10 Hamilton testified that he was angry about the result of the
litigation. About one month after the judgment was entered, the
Johnsons discovered survey stakes, flags and fencing material along
the borders of the Strip between the Mill House and the West Tract.
Anita Johnson contacted the Smiths and was told that they had
given Hamilton an option to buy the Strip subject to reserving an
easement. Anita then contacted Hamilton, and he responded that he
had bought the Strip and was preparing to bulldoze off the trees
and brush located on it and that he would also enclose it with the
fencing material.
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¶11 Soon after, the Johnsons initiated this action requesting
partial rescission or modification of the contract for deed between
the Johnsons and the Smiths as to the Strip. A trial was held
before the District Court, and the court ultimately ordered the
partial rescission. Smiths and Hamilton appeal.
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Standard of Review
¶12 Our standard of review in equity cases is set forth in § 3-2-
204(5), MCA. Under that provision, we have a “duty to determine
all of the issues of the case and to do complete justice.” Glacier
Park Co. v. Mountain, Inc. (1997), 285 Mont. 420, 427,
949 P.2d
229, 233.
Issue One
¶13 Did the District Court err in concluding that the Smiths’ use
of the contract for deed was unlawful as contrary to good morals?
¶14 Appellants argue that the proposed surveying, fencing and
clearing of brush on land is not an infringement of an adjoining
landowner’s rights and, therefore, those actions cannot form the
basis for finding the contract for deed unlawful. Appellants
further argue that this is a case about the rights of an owner to
use land as he desires. In this case, they argue, selling the
Strip, clearing it of brush and trees, and fencing it, are not
illegal, immoral or beyond the realm of rights of ownership.
¶15 Johnsons argue that the sale of the Strip by Smiths to
Hamilton was meant to harass them and to provide leverage for
Smiths to get a wider access over their existing road and that the
District Court correctly prevented them from doing so.
¶16 The District Court found that the Smiths have never used the
Strip for any purpose, that the Strip does not provide Hamilton
access to any other property he owns and that the Strip is of no
significant agricultural value to any of the Appellants.
Additionally, the court found that the transfer of the Strip to
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Hamilton would unduly harass Johnsons and frustrate the Judgment in
the previous case between the Johnsons and Hamilton, and that the
only credible and practical reason offered for the sale was to
harass the Johnsons and provide leverage for Smiths.
¶17 Based on these findings, the court concluded that the
“contemplated sale of the strip by Smiths to Hamilton constitutes
an unlawful result of the contract between Johnsons and Smiths as
the same is contrary to good morals.”
¶18 Unlawful is defined as that which is “contrary to good
morals.” Section 28-2-701(3), MCA. Although “contrary to good
morals” is not further defined, “good moral character” is defined
in the code as “a personal history of honesty, trustworthiness, and
fairness; a good reputation for fair dealings; and respect for the
rights of others and for the laws of this state and nation.”
Section 39-8-202(5)(c), MCA (providing that applicants for
licensure as a professional employer organization provide
information to show their “good moral character”). This definition
is similar to the one relied on by the District Court that
“contrary to good morals” can include “conduct considered wrong, as
opposed to right, under principles of ethics or good conscience,
such as the taking [of] undue advantage of the weakness of
another.”
¶19 There is substantial evidence in the record supporting the
District Court’s finding that the transfer of the Strip to Hamilton
will harass the Johnsons. Hamilton wrote a letter to the Johnsons
indicating that he would bulldoze the brush and trees from the
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Strip and at trial he admitted that he was angry about the outcome
of the previous litigation. Additionally, there was substantial
testimony concerning the fact that the Strip had no intrinsic
value, the Smiths had never used it for any purpose and it did not
border any of Hamilton’s property. There is simply no credible
reason why Hamilton would pay two thousand dollars for this
particular 55 foot strip of land, if not simply to harass the
Johnsons.
¶20 After reviewing the record, we conclude that the sale of the
Strip by Smiths to Hamilton had no other purpose than to harass the
Johnsons and to fuel a neighborhood feud which has now resulted in
three separate lawsuits. We conclude that the District Court’s
findings and conclusions are correct.
Issue Two
¶21 Did the District Court err in concluding that the contract for
deed can be partially rescinded?
¶22 Section 28-2-1714, MCA, states that rescission of a written
contract may be adjudged “where the contract is unlawful for causes
not apparent upon its face and the parties were not equally in
fault.” Here, the court concluded that the contract was unlawful
and that the Smiths “are primarily the cause of and at fault for
the circumstances that gave cause to this action. Those
circumstances were not apparent on the face of the land sales
contracts between these parties.”
¶23 Appellants argue that rescission is a harsh remedy and
injunctive relief is a more appropriate remedy in this case. They
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argue that they have never used the Strip in any way to harm the
Johnsons and that the court’s finding that transfer of the Strip to
Hamilton will unduly harass the Johnsons is speculative.
¶24 As noted above, the District Court correctly concluded that
the contract was unlawful for causes not apparent upon its face and
the parties were not equally in fault. Therefore, rescission was
an appropriate remedy.
¶25 Additionally, a court sitting in equity is empowered to
fashion an equitable result. Blaine Bank of Montana v. Haugen
(1993), 260 Mont. 29, 35,
858 P.2d 14, 18. We note that in
addition to partially rescinding the contract, the District Court
also ordered the Johnsons to (1) pay $2000 for the Strip; (2) upon
written request of Smiths, to extend the width of the access
easement given to Smiths from 16 feet wide to 30 feet wide; and (3)
to provide Hamilton with a written stockwater easement upon certain
conditions.
¶26 We conclude that the District Court correctly determined all
of the questions involved in this case and fashioned an equitable
remedy.
¶27 Affirmed.
/S/ W. WILLIAM LEAPHART
We concur:
/S/ KARLA M. GRAY
/S/ JAMES C. NELSON
/S/ TERRY N. TRIEWEILER
/S/ JIM REGNIER
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