Berry-Iverson Co. of North Dakota, Inc. v. Johnson

• Decision Date: 12 May 1976
• Docket Number: No. 9182,BERRY-IVERSON,9182
• Citation: 242 N.W.2d 126
• Parties: TheCO. OF NORTH DAKOTA, INC., a corporation, Plaintiff-Appellee, v. Robert J. JOHNSON et al., Defendants-Appellees, and Virgil Locken and David Locken, Defendants-Appellants. Civ.
• Court: North Dakota Supreme Court

Page 126

242 N.W.2d 126

The BERRY-IVERSON CO. OF NORTH DAKOTA, INC., a corporation Plaintiff-Appellee, v. Robert J. JOHNSON et al., Defendants-Appellees and Virgil Locken and David Locken, Defendants-Appellants.

Civ. No. 9182.

Supreme Court of North Dakota.

May 12, 1976.

Rehearing Denied June 10, 1976.

Syllabus by the Court

1. Findings of fact by the district court, in a case tried without a jury, will not be set aside by this Court unless they are clearly erroneous.

2. Courts will not enforce a contract which is vague, indefinite, and uncertain, nor will they make a new contract for the parties.

3. A clause in a lease agreement, which gives the tenant a preferential right to purchase the leased premises if the owner desires to sell such premises, is valid and enforceable by the courts, where the terms and conditions of sale are determined by reference to the terms and conditions which the owner may obtain and is willing to accept from a bona fide third-party purchaser. Failure of the owner to provide the tenant with an opportunity to exercise the preferential right to purchase with reference to the sale of the leased premises, where the leased premises are sold as part of a larger parcel, is a breach of the contractual agreement between the parties.

4. No lease or grant of agricultural land reserving any rent or service of any kind for a longer period than ten years shall be valid. § 47--16--02, N.D.C.C.

5. The rental of a tract of land for use as a site for a radio transmitter tower and associated equipment for a term greater than ten years is not a lease which violates § 47--16--02, N.D.C.C., relating to the lease of agricultural land.

6. Where the owner has breached a tenant's preferential right to purchase leased premises by selling such leased premises as part of a larger parcel, without first giving the tenant an opportunity to exercise his preferential right to purchase, a court may order specific performance compelling conveyance of the leased premises to the tenant.

7. In the instant case, the district court's factual determination of the price at which the tenant should be permitted to exercise its preferential right to purchase leased premises is not clearly erroneous; therefore such finding will not be set aside by this Court on appeal.

Lester J. Trnka, Oakes, for Virgil and David Locken, defendants and appellants.

Tenneson, Serkland, Lundberg & Erickson, Ltd., Fargo, for defendants and appellees, Robert J. Johnson, Wanda C. Johnson, and Ardys N. Sand; argued by Jack G. Marcil, Fargo.

MacKenzie & Jungroth, Jamestown, for plaintiff and appellee; argued by James R. Jungroth, Jamestown.

PAULSON, Justice.

This is an appeal by the defendants, Virgil Locken and David Locken (hereinafter the Lockens), from a judgment which compelled specific performance by the defendants to convey a four-acre radio transmitter tower site to the plaintiff, The Berry-Iverson Company of North Dakota, Inc., a corporation (hereinafter Berry-Iverson), which tract is located in Dickey County, North Dakota. The defendants, Robert J. Johnson, Wanda C. Johnson, and Ardys N. Sand, predecessors in interest to the Lockens, have not separately appealed from the judgment, although they did appear on this appeal and, in general, support the positions advanced by the Lockens.

The tract which is the subject matter of this action is a four-acre parcel of land contained in a farm consisting of approximately 390.43 acres of land, located about one mile south of the City of Oakes, in Dickey County. Berry-Iverson, which owns and operates radio station KDDR in Oakes, uses the four-acre tract as the site for its radio transmitter tower.

On June 11, 1959, Robert J. Johnson and Wanda C. Johnson (two of the defendants in this action), owners of the 390.43-acre farm, entered into a lease agreement with Interstate Broadcasting Corporation for the four-acre tract of land on which the radio transmitter tower is situated. Such lease is for a 20-year term, expiring on May 31, 1979. The rental fee was set at $10 per month. The lease expressly states that all the provisions thereof, including the 'option to purchase' clause, were to:

'. . . inure to the benefit of and be binding upon the heirs and assigns of the owners to the same extent as it inures to the benefit of and is binding upon the owners themselves and that it inures to the benefit of and is binding upon the successors and assigns of the lessee to the same extent that it inures to the benefit of and is binding upon the lessee itself.'

Finally, the 'option to purchase' clause in the lease agreement states:

'IT IS FURTHER AGREED as a part of the consideration of this lease that the lessee is hereby given during any and all time that this lease is in full force and effect and is not in default, the sole and exclusive right and option to purchase said premises at any time the owners desire to and are willing and able to sell the same for such price and on such terms that said owners are then and there able to obtain and are willing to accept from a bonafide purchaser.'

Such lease agreement was duly filed for record in the office of the Dickey County Register of Deeds on October 19, 1965, at 3:00 p.m., and recorded in Book C--1 of Miscellaneous, at page 479.

On June 30, 1964, Interstate Broadcasting Company assigned its interest in such lease to Farm States Radio Company of Mobridge, South Dakota. On December 31, 1972, Farm States Radio Company assigned its interest in the lease to the plaintiff herein, Berry-Iverson, which now owns and operates such radio station in Oakes.

The 390.43-acre farm, of which four acres is the tract in question, was owned by Albert T. Johnson and Hilma Johnson, his wife. On March 26, 1951, by warranty deed, they transferred title to the farm to Robert James Johnson and Wanda C. Johnson, his wife. Wanda is the daughter of Albert T. and Hilma Johnson. On August 29, 1961, Robert J. Johnson and Wanda C. Johnson, husband and wife, by quit claim deed, reconveyed title to the farm to Albert T. Johnson. Three years later, on August 31, 1964, by quit claim deed, Albert T. Johnson and Hilma A. Johnson, husband and wife, conveyed the farm to Wanda C. Johnson and Ardys N. Sand. Ardys is also a daughter of Albert T. and Hilma Johnson. On February 22, 1973, Wanda C. Johnson and Ardys N. Sand entered into a contract for deed with the Lockens for the sale of the entire 390.43 acres of land, including the four-acre tract under lease of Berry-Iverson pursuant to the assignment of the lease originally entered into between Interstate Broadcasting Company and the Johnsons in 1959. Berry-Iverson thereafter commenced suit, contending that the defendants breached the terms of the 1959 lease agreement by conveying the property to the Lockens without first permitting Berry-Iverson to exercise its option to purchase; and also requesting punitive damages. The district court dismissed Berry-Iverson's claim for punitive damages (from which dismissal Berry-Iverson did not cross-appeal), but the court concluded that all of the defendants had breached a valid option to purchase contained in the 1959 lease agreement, and ordered that Berry-Iverson be permitted to exercise such option at the price of $149.84 per acre, if it so desired; and further ordered that, if Berry-Iverson tendered such purchase price, title to the four-acre tract be conveyed to it. From such judgment the Lockens appeal.

The Lockens present four issues for our review in this appeal:

1. Did the trial court err in concluding that the 'option to purchase' clause contained in the lease agreement was valid?

2. Is the twenty-year term of the lease agreement a violation of § 47--16--02, N.D.C.C., which prohibits leasing of agricultural land for more than ten years?

3. Did the trial court err in granting specific performance as the appropriate remedy in this case?

4. Did the trial court err in concluding that Berry-Iverson should be permitted to purchase the four-acre tract at a price of $149.84 per acre?

Findings of fact by the district court, in a case tried upon the facts without a jury, will not be set aside by this Court unless they are clearly erroneous. Rule 52(a), N.D.R.Civ.P.; Eakman v. Robb, Syll. 2, 237 N.W.2d 423 (N.D.1975); Kleinjan v. Knutson, 207 N.W.2d 247 (N.D.1973). Furthermore, in Eakman v. Robb, supra 237 N.W.2d at 424, in paragraphs 4 and 5 of the syllabus, we held:

'4. A finding is 'clearly erroneous' only when, although there is some evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been made. The mere fact that the appellate court might have viewed the facts differently, if it had been the initial trier of the case, does not entitle it to reverse the lower court.

'5. Questions of fact decided by the trial court upon conflicting evidence are not subject to reexamination by the Supreme Court.'

The Lockens' first contention is that the 'option to purchase clause' contained in the lease agreement is neither definite nor certain enough to permit the courts to enforce it. The lease agreement provides that the lessee (Berry-Iverson) is given 'the sole and exclusive right and option to purchase' the four-acre tract at any time that the owners (Johnson and Sand) 'desire to and are willing and able to sell the same' during the term of such lease (20 years). Furthermore, the lessee (Berry-Iverson) may effect purchase of the four-acre tract 'for such price and on such terms' that the owners (Johnson and Sand) are 'then and there able to obtain and willing to accept from a bonafide purchaser'.

In Hughes Realty Company v. Breitbach, 98 N.W.2d 374 (N.D.1959), this Court, in paragraph 1 of the syllabus, held:

'1. Courts will not enforce a contract which is vague, indefinite, and uncertain, nor will they make a new contract for the parties.'

In Hughes Realty, supra, this Court upheld an option to renew contained in a...