Gold Pan Partners, Inc. v. Madsen
| Decision Date | 01 May 1991 |
| Docket Number | No. 17173,17173 |
| Citation | 469 N.W.2d 387 |
| Parties | GOLD PAN PARTNERS, INC., Plaintiff and Appellant, v. Julie K. MADSEN, Defendant and Appellee. |
| Court | South Dakota Supreme Court |
George Bangs, Joseph M. Butler, Patrick Duffy, Bangs, McCullen, Butler Foye & Simmons, Rapid City, for plaintiff and appellant.
George Beal, Beal Law Office, Rapid City, for defendant and appellee.
Gold Pan Partners, Inc. appeals an order of the circuit court which vacated an order confirming the sale of certain real estate of the estate of Thomas W. Madsen. We affirm.
Thomas W. Madsen died testate on May 14, 1989. He was survived by his wife and three sons from a previous marriage. His wife, Julie Madsen, was appointed executrix of the estate. Included in the assets of the estate was Gold Pan Pizza, a retail pizza parlor business located on Main Street, Deadwood, South Dakota. This property was formerly a gasoline service station. The decedent and his wife operated the business together from the time of their marriage in November 1983 until the date of his death.
The executrix tried to sell the property. In September 1989, she discussed selling the business with Mr. John Gable. A draft Agreement to Purchase the business was prepared by Mr. Gable's attorney. According to her testimony, the executrix presented the draft to the estate attorney 1 for review and approval. He denies seeing the purchase agreement until after its execution. The court found he did, in fact, review or should have reviewed the agreement prior to its execution. The Agreement to Purchase was signed by the executrix and Mr. Gable on September 28, 1989. She signed the agreement personally and as Executrix of the Estate.
The agreement contained a provision that it was subject to confirmation by the court. It provided for a purchase price of $125,000, with $1,000 paid down and the balance paid upon closing. It also contained a provision whereby the executrix permitted Mr. Gable access to the property for testing the underground fuel tanks located on the property. In the event the test results were not satisfactory to Mr. Gable, he had the right to terminate the Agreement and be refunded his down payment. It further provided the executrix continue working at Gold Pan Pizza for 60 days after the sale. Mr. Gable knew Gold Pan Pizza was property of the estate.
The estate attorney had the property appraised in contemplation of an estate sale. It was appraised at $125,000.
In October 1989, the attorney sent to each of decedent's three sons, legatees under decedent's will, a Consent and Waiver of notice of hearing. The legatee sons were advised they could appear and contest the contemplated sale of Gold Pan Pizza as not being a reasonable sum, but that by signing the Consent and Waiver they would be agreeing to the sale price and waiving the notice of hearing. The sons were further counseled that the decision on whether to sell the business was that of the executrix and were each advised to sign a Consent and Waiver and return it to the estate attorney. He also contacted the executrix and instructed her to contact decedent's sons and instruct them to each sign a Consent and Waiver.
However, in November 1989, Tim Madsen, one of decedent's sons, advised the estate attorney that he was not satisfied with the sale price and would not sign a Consent and Waiver. Mr. Madsen returned to Deadwood in December 1989, and discussed the estate sale with the attorney. Mr. Madsen expressed dissatisfaction with the sale price and inquired of the attorney what would happen if he refused to sign a Consent and Waiver. The attorney advised Mr. Madsen that by not signing a Consent and Waiver the estate would be sued for failing to perform the purchase agreement. 2 Notwithstanding such advice, Mr. Madsen refused to sign the Consent and Waiver.
Subsequently, Mr. Madsen met with his stepmother, the executrix, and proposed contacting the buyer, Mr. Gable, directly and requesting him to increase the purchase price. The executrix then telephoned the estate attorney regarding contacting Mr. Gable and the attorney advised the executrix that such an effort would be futile because the contract price was firm and binding upon the estate. Mr. Madsen then returned to the attorney's office and signed the Consent and Waiver. On December 26, 1989, the executrix also signed a Consent and Waiver and a Petition for Order Confirming Sale prepared by the estate attorney. Prior to signing the Petition, the executrix again expressed her dissatisfaction with the sale price of the real estate, but was again instructed by the attorney that she had no choice but to proceed with the sale or the estate would be sued. The Order Confirming Sale was entered on December 27, 1989.
Meanwhile, Mr. Gable had a preliminary site evaluation of the property prepared. At the recommendation of the testing company, further site testing was conducted whereby monitoring wells were installed on the property. Mr. Gable also conducted an independent appraisal of the property; the property was appraised at $210,000 as of December 21, 1989. On December 22, 1989, Mr. Gable's attorney contacted the attorney for the estate and expressed Mr. Gable's intention to complete the sale. Mr. Gable then assigned his interest in the sales contract to Gold Pan Partners, Inc.
The attorney for the estate never advised the executrix that a verified return of proceedings on all probate sales of real estate must be made pursuant to SDCL 30-22-54. No such verified return of proceedings of sale was ever filed in this case, nor was a copy of the purchase agreement with Mr. Gable ever filed or reported to the circuit court judge prior to entry of the Order Confirming Sale on December 27, 1989. Furthermore, the attorney for the estate utilized the Consent and Waiver procedure at the suggestion of Mr. Gable's attorney.
The value of commercial real estate on Main Street, Deadwood increased substantially after the advent of legalized gambling in Deadwood on November 1, 1989. The evidence fully and totally substantiates the fact that the estate real estate could have been sold for a price in excess of $125,000. It was substantiated by the testimony of a realtor who had a prospect ready, willing and able to buy the real estate for $250,000 cash. This offer was communicated to the attorney by the executrix. The executrix also received a written offer to purchase the property for $200,000 cash. Indeed, the attorney for the estate admitted that had the purchase agreement of Mr. Gable gone to a public confirmation hearing, the real estate would have been sold for a price in excess of $125,000.
The trial court found the real estate confirmation proceedings were defective in a number of aspects: there was no verified return of sale as required by SDCL 30-22-54; the Petition for Order Confirming Sale 3 signed by the executrix and the Order Confirming Sale presented to the court were all prepared by the estate attorney without input from the executrix and did not relate the executrix' personal position and belief; the Petition for Order Confirming Sale did not set forth the particulars of the agreement between the executrix and Mr. Gable, nor was the Agreement to Purchase attached, and the Petition recited the property was sold to Gold Pan Partners, Inc., not a party to the purchase agreement; the Agreement did not set forth any assignment rights of Mr. Gable. Thus, the trial court had no basis on which to make a determination that the confirmation of sale should be finalized and an order confirming sale entered.
The trial court also found that the advice and representations made by the estate attorney to the executrix and the estate legatees was totally inadequate and defective. 4 He found the waivers of the heirs and legatees of the estate were obtained under misapprehension of law and under an environment of coercion in that their failure to sign the waivers would subject the estate to suit. He further found the legatees were never advised of their rights under the South Dakota Probate Procedures pertaining to sales of estate real property. The attorney for the estate was aware of the rights of the legatees to a hearing on confirmation, but never advised any of the heirs, including the executrix. They were never advised that at a confirmation hearing the court is authorized to auction the real estate to the highest bidder for cash. 5 The estate attorney failed to advise the court of the substantial increase in the real estate's value and that better offers for the property had been received. The executrix was never advised of her fiduciary obligation to inform the court of the increase in value of the property. The court held the estate attorney was neglectful and such neglect was not excusable.
However, the court found the inexcusable neglect of the estate attorney should not be imputed to the executrix: she was persistent and consistent in her expressions to the estate attorney of dissatisfaction over the sale price of the real estate; throughout the course of the estate proceedings, she sought and followed the advice of her attorney; she had a right to place her faith in him and had a right to be dubious; upon the entry of the Order Confirming Sale, she acted promptly to set aside the confirmation. Thus, under the circumstances, she acted as a prudent person would be expected to act.
Based on these findings of fact, the court vacated the Order Confirming Sale under SDCL 15-6-60(b)(1), (4), (5), and (6), and under its authority as a Court of Equity, unencumbered by SDCL 15-6-60(b). Gold Pan Partners, Inc. (Gold Pan), the assignee of Mr. Gable and appellant in this appeal, contends the trial court's decision was a clear error of law and must be reversed.
SDCL 15-6-60(b) provides:
On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order,...
To continue reading
Request your trial
-
Barnaud v. Belle Fourche Irr. Dist.
...the sound discretion of the trial court and will not be disturbed on appeal except for abuse." Id. at 311 (citing Gold Pan Partners, Inc. v. Madsen, 469 N.W.2d 387 (S.D.1991); Tingle v. Parkston Grain Co., 442 N.W.2d 252 (S.D. 1989); Clarke v. Clarke, 423 N.W.2d 818 (S.D.1988); Haggar v. Ol......
- Mid-Western Elec., Inc. v. DeWild Grant Reckert & Associates Co.
-
Rabo Agrifinance, Inc. v. Rock Creek Farms
...1 relating to mistake, inadvertence, surprise, or excusable neglect, under that theory, under that statute, an overriding principle from the Gold Pan case is that a client should not suffer the misfortunes of counsel's technical error as it was in this case. So we believe that this situatio......
-
Christie v. Dold
...aside the confirmation. Thus, under the circumstances, she acted as a prudent person would be expected to act. Gold Pan Partners, Inc. v. Madsen, 469 N.W.2d 387, 391 (S.D.1991). In determining whether Millers supervised Dold in the manner which a reasonably prudent person would in regard to......