Coffee Cup Fuel Stops & Convenience Stores, Inc. v. Donnelly, 20611

Citation592 N.W.2d 924,1999 SD 46
Decision Date24 February 1999
Docket NumberNo. 20611,20611
CourtSupreme Court of South Dakota
PartiesCOFFEE CUP FUEL STOPS & CONVENIENCE STORES, INC., a corporation, Plaintiff and Appellant, v. Diane L. DONNELLY and George Donnelly, Trustees of the Diane L. Donnelly Living Trust, and Diane Donnelly, individually, Defendants and Appellees. . Considered on Briefs

Carlyle Richards, Richards & Oliver, Aberdeen, South Dakota, for plaintiff and appellant.

Gary J. Pashby, Lisa Hansen Marso, Boyce, Murphy, McDowell & Greenfield, Sioux Falls, South Dakota, for defendants and appellees.

MILLER, Chief Justice.

¶1 Coffee Cup Fuel Stops and Convenience Stores, Inc. brought an action against Diane and George Donnelly seeking specific performance of an option contract to purchase real property. The trial court granted summary judgment to Donnellys. We reverse and remand.

FACTS

¶2 Coffee Cup, a closely held South Dakota corporation, is engaged in the convenience store and petroleum business in South Dakota, North Dakota, and Wyoming. One of its South Dakota businesses is located in Union County, near Vermillion, at the southwest corner of the junction of Interstate 29 and South Dakota Highway 50.

¶3 In 1994, Coffee Cup became interested in purchasing land adjacent to its Union County facility. It contacted the South Dakota Department of Transportation (DOT), which owned a fourteen-acre parcel of property east of the facility. DOT was not interested in selling the property outright, but indicated it would consider an exchange for similar property.

¶4 Tom Heinz, one of Coffee Cup's shareholders and directors, began searching for available property to purchase and then exchange with DOT. During his search, Heinz approached George Donnelly to inquire if Donnellys were interested in selling a fourteen-acre parcel of property. Donnelly and his wife Diane owned approximately 1,200 acres of farmland in Union and Clay Counties. Donnelly offered to sell a fourteen-acre parcel located north of Highway 50 for $3,500 per acre. 1

¶5 On June 10, 1994, Donnelly and Heinz visited an attorney, explained the nature of the land transaction to him, and had him prepare an agreement. Both parties signed the option contract and Heinz paid Donnellys $1,000 as consideration. The agreement provided that Coffee Cup had a 90-day option to purchase the property described as:

Approximately fourteen (14) acres located in the extreme South end of the Southeast Quarter of the Northwest Quarter (SE 1/4NW 1/4) of Section Eight (8), Township Ninety-two (92) North, Range Fifty (50), West of the 5th P.M., Union County, South Dakota[.]

The agreement further provided that the exact dimensions of the property would be determined by survey.

¶6 On August 8, 1994, the parties agreed to extend the option until January 1, 1995. Heinz paid an additional $20 as consideration for the extension.

¶7 On December 21, 1994, the parties executed a second option contract. The terms of the second contract included a 180-day option period, an increase in the sale price by $100 per acre, and an additional $1,000 as consideration. The property description remained unchanged.

¶8 In May 1995, Heinz informed Donnellys that the property description was incorrect, listing the section as eight instead of eighteen. The parties corrected the error, initialed the change, and agreed to extend the option period of the second contract for an additional thirty days.

¶9 Also, during May 1995, Heinz and Donnelly physically explored the property to determine the proper configuration of the tract of land to be sold. Heinz suggested that the property's boundary run in a straight line east and west of the north boundary of Lot N, a property owned by Coffee Cup. This suggestion was taken to an official at the ASCS office, who determined that this configuration included only 12.4 acres, not fourteen as the parties desired. Heinz claims that Donnelly then suggested the parcel could become fourteen acres by moving the north boundary seventy-five feet north.

¶10 By letter dated July 15, 1995, Heinz informed Diane that Coffee Cup was exercising its option to purchase the property as described in the December 21, 1994 agreement, with the exact dimensions to be determined by survey. In response, on July 24, Donnelly directed surveyor Jerry Flannery to survey the property he intended to sell to Coffee Cup. There is evidence that he instructed Flannery as to exactly what parcel he anticipated selling to Heinz. Flannery followed Donnelly's directions and produced a survey plat, labeling the tract to be conveyed as "Lot P." 2

¶11 Coffee Cup claims it was ready to close the transaction in July 1995, but Donnellys delayed the completion of the sale. In November 1995, when Heinz asked Donnelly when the transaction could be closed, Donnelly informed him that he was unsure if he was still interested in the agreement and that Heinz should contact him after January 1, 1996.

¶12 Also in November, Heinz obtained a copy of the survey diagram from Flannery. Heinz delivered the diagram to Donnellys and requested that they contact the Union County Abstract and Title Company regarding title insurance on Lot "P." He also indicated Coffee Cup would like a warranty deed on the property by January 15, 1996.

¶13 On October 8, 1996, Coffee Cup informed Diane that it was proceeding with the platting and would contact her when it was completed so that she could provide her signature. Diane responded, by letter on November 4, 1996, stating that Coffee Cup had no enforceable rights under the agreement and that she had no legal responsibility to it.

¶14 In response, Coffee Cup demanded that Diane tender a warranty deed within ten days. It informed her that if the deed was not tendered an action for specific performance would be commenced. The demand letter, which was dated December 13, 1996, included the property description as stated in the option contract and, for the first time, a metes and bounds description.

¶15 In January 1997, Coffee Cup brought an action seeking specific performance of the option contract. Donnellys moved for summary judgment. The trial court granted their motion, finding that the option contract was unenforceable because it did not contain the essential elements of a contract. Coffee Cup appeals.

ISSUE

¶16. Did the trial court err in concluding that the parties' option contract was unenforceable because there was no meeting of the parties' minds as to precisely what property was being bought and sold?

STANDARD OF REVIEW

¶17 Our review of a trial court's order granting summary judgment is well settled.

In reviewing a grant or a denial of summary judgment under SDCL 15-6-56(c), we must determine whether the moving party demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law. The evidence must be viewed most favorably to the nonmoving party and reasonable doubts should be resolved against the moving party. The nonmoving party, however, must present specific facts showing that a genuine, material issue for trial exists. Our task on appeal is to determine only whether a genuine issue of material facts exists and whether the law was correctly applied. If there exists any basis which supports the ruling of the trial court, affirmance of a summary judgment is proper.

Walther v. KPKA Meadowlands Ltd. Partnership, 1998 SD 78, p 14, 581 N.W.2d 527, 531 (citing Specialty Mills, Inc. v. Citizens State Bank, 1997 SD 7, p 7, 558 N.W.2d 617, 620 (citation omitted)).

DECISION

¶18. The trial court erred in granting summary judgment to Donnellys.

¶19 SDCL 53-1-2 sets forth the elements of a contract. It provides as follows:

Elements essential to existence of a contract are:

(1) Parties capable of contracting;

(2) Their consent;

(3) A lawful object; and

(4) Sufficient cause or consideration.

¶20 The trial court found that the option contract entered into by Coffee Cup and Donnellys lacked one of the essential elements of a contract, the consent element. It determined that, because the description of the property to be conveyed was inadequate, the contract was not enforceable by specific performance.

¶21 Coffee Cup, however, claims the trial court erred in its determinations. It argues that the parties mutually agreed as to which parcel of land was to be conveyed; therefore, it should have been permitted to present evidence to support its meeting of the minds claim. We agree.

¶22 An enforceable contract requires mutuality of consent. See SDCL 53-1-2(2); Braunger v. Snow, 405 N.W.2d 643, 646 (S.D.1987). "There must be mutual assent or a meeting of the minds on all essential elements or terms in order to form a binding contract." 17A Am.Jur.2d Contracts § 26 (1991); see Miller v....

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    ...which supports the ruling of the trial court, affirmance of a summary judgment is proper. Coffee Cup Fuel Stops & Convenience Stores, Inc., v. Donnelly et al., 1999 SD 46, 17, 592 N.W.2d 924 (citing Walther v. KPKA Meadowlands Ltd. Partnership, 1998 SD 78, 14, 581 N.W.2d 527, ANALYSIS AND D......
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