Spitzer v. Bartelson

• Decision Date: 13 October 2009
• Docket Number: No. 20090124.,20090124.
• Citation: 773 N.W.2d 798,2009 ND 179
• Parties: Harold SPITZER, Plaintiff and Appellant v. Neil R. BARTELSON and Delila Bartelson, Defendants and Appellees.
• Court: North Dakota Supreme Court

773 N.W.2d 798

2009 ND 179

Harold SPITZER, Plaintiff and Appellant v. Neil R. BARTELSON and Delila Bartelson, Defendants and Appellees.

No. 20090124.

Supreme Court of North Dakota.

October 13, 2009.

Kent A. Reierson, Williston, ND, for plaintiff and appellant.

Bruce A. Selinger, Dickinson, ND, for defendants and appellees.

KAPSNER, Justice.

[¶ 1] Harold Spitzer appeals from a district court amended judgment dismissing his complaint seeking to reform a quitclaim deed on the basis of a mutual mistake. We hold the district court did not abuse its discretion by admitting parol evidence to determine whether a mutual mistake existed, and the district court was not clearly erroneous to find Harold Spitzer failed to establish a mutual mistake sufficient to support reformation. We affirm.

I.

[¶ 2] John Bartelson Sr. and Hattie Spitzer, formerly Hattie Bartelson, were the parents of four sons: John Bartelson Jr., George Bartelson, Glen Bartelson, and Ralph Bartelson. Defendants Neil and Delila Bartelson are Ralph Bartelson's son and daughter-in-law. In 1918, John Bartelson Sr. died. After his death, Hattie Bartelson married George Spitzer, and the couple had one son: plaintiff Harold Spitzer.

[¶ 3] In 1921, Hattie Spitzer purchased a quarter section of land in Mountrail County. Fifty years later, on February 19, 1971, Hattie and George Spitzer entered into a contract for deed with Neil and Delila Bartelson to sell the quarter section for $6,000. Although George Spitzer signed the contract, he owned no interest in the property at that time. Attorney Q.R. Schulte drafted the contract for deed, which called for Neil and Delila Bartelson to make a down payment of $1,500 and to pay the remainder at a rate of $500 per year plus five percent interest. Upon full payment, the contract required Hattie Spitzer to provide Neil and Delila Bartelson with a general warranty deed. The contract for deed also contained the following mineral reservation: "Grantors reserve a 50% mineral interest including gas and oil, in, on, or under the above described premises with the right of ingress and egress for the purpose of mining, drilling, or exploring for the same."

[¶ 4] Hattie Spitzer died intestate on December 10, 1973. On March 5, 1976, the Mountrail County court distributed the quarter section to her heirs. George Spitzer inherited one-half, while each of Hattie Spitzer's four living sons, including Harold Spitzer, inherited a one-eighth interest. On April 1, 1976, the four sons simultaneously conveyed their interests to George Spitzer by quitclaim deed. Following the conveyance, George Spitzer owned the entire quarter section and its minerals, subject to the contract for deed. Shortly thereafter, on April 19, 1976, George Spitzer conveyed the entire quarter section to Neil and Delila Bartelson by quitclaim deed. Attorney Gary Lerberg drafted the deed, which did not contain any reservation of mineral interests.

[¶ 5] Under the contract for deed's original payment schedule, Neil and Delila Bartelson were not required to fully pay until 1978. The contract for deed called for a general warranty deed, not a quitclaim deed. In 1974, after Hattie Spitzer's death but before they received the deed from George Spitzer, Neil and Delila Bartelson executed an oil and gas lease for 100 percent of the minerals underlying the quarter section. The couple also executed similar leases in 1995 and 2005. George Spitzer never leased any mineral interests in the quarter section.

[¶ 6] George Spitzer died intestate on June 25, 1985, and Harold Spitzer was named as his sole heir. On May 16, 2007, Harold Spitzer filed a complaint against Neil and Delila Bartelson, alleging George Spitzer's failure to include the reservation of mineral interests in the quitclaim deed was the result of a mutual mistake and seeking to reform the deed on that basis. In their Answer to the complaint, Neil and Delila Bartelson denied any mutual mistake took place.¹

[¶ 7] The parties went to trial on December 9, 2008. Harold Spitzer testified he was not aware his parents had entered into a contract for deed with Neil and Delila Bartelson in 1971. Similarly, he stated he did not know George Spitzer executed a quitclaim deed to the couple in 1976. Harold Spitzer testified he first learned Neil and Delila Bartelson received all of the quarter section's mineral rights from his brother, John Bartelson Jr., in approximately 1979. Harold Spitzer stated John Bartelson Jr. told him Neil Bartelson had "talked my dad out of the minerals."

[¶ 8] Neil Bartelson testified the parties to the contract for deed agreed Hattie Spitzer would reserve a fifty percent mineral interest for her life and the minerals would "go with the land" after her death. According to Neil Bartelson, he never discussed the mineral reservation with Hattie Spitzer or George Spitzer after executing the contract for deed. Neil Bartelson testified he met George Spitzer at attorney Lerberg's office on the day George Spitzer executed the quitclaim deed, but he does not recall the details of the meeting. Neil Bartelson affirmatively answered that George Spitzer executed the quitclaim deed in fulfillment of the contract for deed. When asked why George Spitzer executed it in 1976, Neil Bartelson testified he did not recall whether he paid the full amount before it was due under the contract. Lastly, Neil Bartelson stated he and his wife did not pay any consideration beyond the $6,000 plus interest required by the contract for deed.

[¶ 9] John Bartelson Jr. testified he knew about the parties' negotiations over the contract for deed while they were ongoing, although he was not present. Like Neil Bartelson, John Bartelson Jr. stated the parties intended for the mineral rights Hattie Spitzer reserved in the contract "to go back to the land [when she passed on]." John Bartelson Jr. also testified that, after inheriting fractional interests in the quarter section following Hattie Spitzer's death, he and his brothers did not discuss the mineral rights before deeding their interests to George Spitzer. "[E]verybody knew [the mineral rights] were supposed to go back to the land. There was never a discussion about it." Finally, John Bartelson Jr. denied telling Harold Spitzer that Neil Bartelson had talked George Spitzer out of the mineral rights.

[¶ 10] The district court found Neil Bartelson and John Bartelson Jr. were the only witnesses with personal knowledge of the intentions of the parties to the contract for deed and quitclaim deed. While the court found Neil Bartelson's testimony self-serving, it noted that "John [Bartelson Jr.] really does not `have a dog in this fight', as he has never made any claim to the minerals in question." Therefore, the court found John Bartelson Jr.'s testimony "particularly persuasive." The court also found the quitclaim deed contains no language that ties it to the contract for deed. Rather, the court stated the quitclaim deed "is a document wherein George [Spitzer] . . . conveys any interest he has in the property to Neil and Delila[] [Bartelson], consistent with all parties understandings." Based upon these findings, the district court held Harold Spitzer failed to prove "by evidence that is clear, satisfactory, specific, and convincing" that the quitclaim deed did not express the true intentions of the parties. As a result, the district court dismissed Harold Spitzer's complaint with prejudice.

II.

[¶ 11] At trial, Harold Spitzer objected to the admission of Neil Bartelson and John Bartelson Jr.'s testimony about the intent of the parties to the contract for deed and quitclaim deed. On appeal, Harold Spitzer argues the district court abused its discretion by admitting their testimony because it violated the parol evidence rule and constituted hearsay.

[¶ 12] When reviewing decisions to admit evidence, this Court applies an abuse of discretion standard. In re J.S.L., 2009 ND 43, ¶ 18, 763 N.W.2d 783. "The district court abuses its discretion only when it acts in an arbitrary, unreasonable, or unconscionable manner, or when its decision is not the product of a rational mental process leading to a reasoned determination." State v. Schmidkunz, 2006 ND 192, ¶ 15, 721 N.W.2d 387.

[¶ 13] A deed is a written contract subject to the parol evidence rule. Des Lacs Valley Land Corp. v. Herzig, 2001 ND 17, ¶ 9, 621 N.W.2d 860. "The parol evidence rule is a rule of substantive law and precludes use of evidence of prior oral negotiations and agreements to vary the terms expressed in a written contract." Id. at ¶ 7. Section 9-06-07, N.D.C.C., codifies the parol evidence rule in part. It provides:

Written contract supersedes oral negotiations. The execution of a contract in writing, whether the law requires it to be written or not, supersedes all the oral negotiations or stipulations concerning its matter which preceded or accompanied the execution of the instrument.

The rule seeks to give certainty to a transaction that parties have reduced to writing by protecting against "the doubtful veracity and the uncertain memory of interested witnesses." Des Lacs Valley Land Corp., at ¶ 8 (quoting Gajewski v. Bratcher, 221 N.W.2d 614, 626 (N.D.1974)).

[¶ 14] However, "it is well-established that parol evidence is admissible in a suit to reform a written instrument on the grounds of fraud or mutual mistake of the parties." Ell v. Ell, 295 N.W.2d 143, 149 (N.D.1980). Accord Heart River Partners v. Goetzfried, 2005 ND 149, ¶ 12, 703 N.W.2d 330; City of Fargo v. D.T.L. Properties, Inc., 1997 ND 109, ¶ 12, 564 N.W.2d 274; Mau v. Schwan, 460 N.W.2d 131, 134 (N.D.1990); Ives v. Hanson, 66 N.W.2d 802, 805 (N.D.1954). "The nature of [a reformation] action is such that it is outside the field of operation of the parol evidence rule, since the court does not receive parol testimony to vary the contract of the parties but to show what their contract really was." 66 Am.Jur.2d Reformation of Instruments § 114 (2001)...