Berbos v. Krage

• Decision Date: 16 July 2008
• Docket Number: No. 24752.,24752.
• Citation: 2008 SD 68,754 N.W.2d 432
• Parties: Joe BERBOS, Plaintiff and Appellee, v. Harold KRAGE and Gwen Krage, Defendants and Appellants.
• Court: South Dakota Supreme Court

754 N.W.2d 432

2008 SD 68

Joe BERBOS, Plaintiff and Appellee, v. Harold KRAGE and Gwen Krage, Defendants and Appellants.

No. 24752.

Supreme Court of South Dakota.

Considered on Briefs May 19, 2008.

Decided July 16, 2008.

Kimberly A. Dorsett of Richards, Oliver & Dorsett Aberdeen, SD, for plaintiff and appellee.

Richard L. Russman of Richardson, Wyly, Wise, Sauck & Hieb, LLP, Aberdeen, SD, for defendants and appellants.

KONENKAMP, Justice.

[¶ 1.] Joseph Berbos purchased real property from Harold and Gwen Krage on a contract for deed. When the parties disputed ownership of a building encroaching onto land not sold in the contract, Berbos withheld his last payment and brought suit for specific performance. After a hearing, the circuit court granted summary judgment for Berbos, ruling that the parties intended to convey the entire building. On appeal, we conclude that because there are genuine issues of fact on the question of intent, the matter must be reversed and remanded for trial.

Background

[¶ 2.] On May 9, 2002, the Krages and Berbos entered into a contract for deed for the sale of certain real estate owned by the Krages in Brown County, South Dakota. The contract described the property in metes and bounds. No buildings were mentioned. The total purchase price was $854,000, to be paid in installments, with the final payment of $173,444.44 due on January 1, 2004.

[¶ 3.] Before the last installment became due, a dispute arose between the parties on the ownership of a building located partially on the land conveyed to Berbos in the contract (Lot 1) and partially on the Krages' adjoining property (Lot 2). Used for hunting purposes, the building is a large steel structure with bedrooms, a game room, bus storage, restrooms, a cleaning room, a shower, and a kitchen. There is no common wall by which the structure can be separated at the line of encroachment.

[¶ 4.] On December 24, 2003, an attorney for Berbos wrote the attorney for the Krages acknowledging that payment of $173,444.44 would be due from Berbos on January 1, 2004. The letter indicated that a check to the Krages was available for issuance when the Krages provided clear title. A photocopy of the check was included with the letter. In another letter, dated March 22, 2004, the Krages were again informed that Berbos was "willing to deliver" the check "as soon as clear title and possession of the real estate is delivered."

[¶ 5.] The parties could not resolve their dispute over the building, and, on August 23, 2004, Berbos brought suit for specific performance. Berbos asked the court to compel the Krages to deliver merchantable title, or in the alternative, to reform the deed. Berbos sought a summary judgment. In response, the Krages moved to amend their answer and include an omitted counterclaim for foreclosure. After a hearing, the court granted summary judgment for Berbos. It reasoned that because the Krages did not reserve an interest in any of the buildings located on Lot 1, the intent of the parties was that all buildings, including the encroaching structure, would pass with the conveyance. The Krages were ordered to deliver merchantable title, and Berbos was ordered to pay the Krages fair market value for the portion of Lot 2 the building encroached on.

[¶ 6.] For their part, the Krages sought accrued interest on the last payment Berbos withheld. Berbos responded that because he offered to make the final payment, the accrual of interest on the obligation was tolled. See SDCL 20-5-18. The court denied the Krages' request for interest, concluding that Berbos's tender of payment was an unconditional offer. The court further denied the Krages' motion to amend their answer and submit their omitted counterclaim. On appeal, the Krages assert that the court erred when it granted summary judgment for Berbos and abused its discretion when it denied their motion to amend their answer and submit an omitted counterclaim.

Analysis and Decision

[¶ 7.] "On appeal, we will affirm summary judgment when the facts and law are clear and no genuine issues of material fact exist." Citibank South Dakota, N.A. v. Schmidt, 2008 SD 1, ¶ 8, 744 N.W.2d 829, 832 (citing Bordeaux v. Shannon County Schools, 2005 SD 117, ¶ 11, 707 N.W.2d 123, 126). "Motions to amend engage the sound discretion of the trial court; thus decisions to grant or deny will not be disturbed absent a clear abuse of discretion resulting in prejudice to the nonmovant." Prairie Lakes Health Care Sys., Inc. v. Wookey, 1998 SD 99, ¶ 28, 583 N.W.2d 405, 417 (citing Ripple v. Wold, 1996 SD 68, ¶ 12, 549 N.W.2d 673, 676 (citing Kjerstad v. Ravellette Publications, Inc., 517 N.W.2d 419, 423 (S.D.1994))).

[¶ 8.] The Krages contend that summary judgment was improperly granted for two reasons: (1) an equitable claim is not "suited for summary disposition," see Ahl v. Arnio, 388 N.W.2d 532, 534 (S.D.1986); and (2) there are material issues of fact in dispute over what the parties intended for the disputed building. Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." SDCL 15-6-56(c). Even though this action sounds in equity, and such cases are not often susceptible to summary judgment, if there are no material issues of fact in dispute, summary judgment may be appropriate. Farm Credit Services of Am. v. Dougan, 2005 SD 94, ¶ 7, 704 N.W.2d 24, 27 ("summary judgment is a preferred method for disposing of any legally inadequate claim") (citing Horne v. Crozier, 1997 SD 65, ¶ 5, 565 N.W.2d 50, 52).

[¶ 9.] The Krages do not dispute that the contract for deed is silent on whether the buildings on Lot 1 were to be conveyed with the deed. They take issue, however, with the fact that the court "did not reference specific legal authority for the proposition that the absence of a written reservation constitutes the intent to transfer a fixture, or portion thereof, when the fixture is located outside the bounds of the legal description." The Krages further contend that when a portion of a building is not included in the legal description of the land conveyed, the intent of the parties cannot be ascertained solely from the four corners of the contract. Berbos, on the other hand, argues that a reading of several contracts surrounding the parties' agreement together with an understanding of the history of the parties' relationship, provide ample support for a conclusion that everyone intended that all buildings on Lot 1 be sold as part of the overall transaction, including that portion of the structure encroaching on Lot 2.

[¶ 10.] In granting summary judgment, the circuit court concluded that, as a matter of law, all the buildings located on Lot 1 were sold under the contract for deed because the deed did not include a reservation by the Krages of an interest in any building. The court then ruled that the Krages intended to sell the entire disputed building, including the part encroaching on Lot 2, based on its reading of the four corners of the parties' contract for deed, the earnest money agreement, and the fact that the Krages did not assert, in response to Berbos's motion for summary judgment, that they intended to retain a portion of the disputed building.

[¶ 11.] "Generally, absent a specific reservation in a deed, buildings and other improvements used in connection with realty in such a way as to constitute appurtenances or fixtures pass as a matter of course by the conveyance." N.P., Inc. v. Turboff, 111 S.W.3d 40, 44 (Tex.2003); see also Sheets v. Lessee of Selden et al., 2 Wall. 177, 69 U.S. 177, 17 L.Ed. 822 (1864); Milam v. Coleman, 418 S.W.2d 329, 331 (Tex.Civ.App. 1967); Baldwin v. Breed, 16 Conn. 60, 1843 WL 411; Van Wagner v. Van Nostrand, 19 Iowa 422, 1866 WL 388 (1865); Conner v. Coffin, 22 N.H. 538, 1851 WL 2098(NH). Buildings that belong to the grantor, "being part of the land, cannot be reserved by parol when the land is conveyed; the deed conveys them to the grantee, unless the reservation be in writing." Herzog v. Marx, 202 N.Y. 1, 94 N.E. 1063, 1064 (1911) (quoting Mott v. Palmer, 1 N.Y. 564, 569 (1848)). Here, the contract for deed contains no reservation, and therefore, the court did not err when it ruled that all the buildings located on Lot 1 passed with the conveyance.

[¶ 12.] As to the disputed building not located wholly within Lot 1, we must determine whether the court was correct in ruling that, as a matter of law, the parties intended the entire building to be conveyed under the contract. The court found no issue of material fact in dispute based in part on the four corners of the contract for deed and the earnest money agreement, and in part because "Mr. Krage's responding affidavit does not state that he intended to keep all or part of the building...."

[¶ 13.] "Where a portion of a building has not been embraced within the description of the land conveyed by the common owner of all the land covered by the building, and where it does not clearly appear from the grant that the parties intended the entire building to pass, the cases hold generally that such grantee has no right of ownership in, or right of possession to, the portion of the building on the adjoining land." Podlesny v. Baranko, 82 Pa. D & C 281, 284-85 (Pa.Com.Pl.1953) (emphasis added); see also Adams v. Marshall, 138 Mass. 228, 52 Am.Rep. 271 (1884); Whyte v. Builders' League of New York, 164 N.Y. 429, 58 N.E. 517, 518 (1900); Griffiths v. Morrison, 106 N.Y. 165, 12 N.E. 580, 581 (1887); Baker v. Zingelman, 259 Pa.Super. 441, 393 A.2d 908, 910 (1978) (citing Nestico v. Carnucci, 39 Northumberland L.J. 39 (1966)). In the contract for deed here, there is no mention of any buildings, let alone the disputed building. Therefore, the garage-office portion situated on Lot 2 is not embraced...