Hager v. Devils Lake Public School Dist., 9813

• Decision Date: 23 January 1981
• Docket Number: No. 9813,9813
• Parties: Jack HAGER, Plaintiff and Appellant, v. The DEVILS LAKE PUBLIC SCHOOL DISTRICT, a public corporation, Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 630

301 N.W.2d 630

Jack HAGER, Plaintiff and Appellant, v. The DEVILS LAKE PUBLIC SCHOOL DISTRICT, a public

corporation, Defendant and Appellee.

Civ. No. 9813.

Supreme Court of North Dakota.

Jan. 23, 1981.

Degnan, McElroy, Lamb, Camrud, Maddock & Olson, Grand Forks, for plaintiff and appellant; argued by Gerald J. Haga, Grand Forks.

Traynor & Rutten, Devils Lake, for defendant and appellee; argued by Thomas Rutten, Devils Lake.

SAND, Justice.

This is an appeal by the plaintiff, Jack Hager (Hager), from a judgment entered in his favor in the amount of $1,149.00, plus interest.

On 13 Mar 1973 the Director of Institutions for the benefit of the North Dakota School for the Deaf of the State of North Dakota (State) and Hager entered into a written lease whereby Hager was to rent approximately 48.26 acres of land in Ramsey County, North Dakota, owned by the State. The lease was to last from 15 Mar 1973 until 31 Dec 1975 with annual rent payments of $528.00 payable on 15 Mar 1973; 15 Feb 1974; and 15 Feb 1975.

The lease provided in part that:

"The first party (State) hereby expressly reserves the right to sell said premises, and the party of the second part (Hager) does hereby agree that in the event of the sale of said premises that he will vacate said premises forthwith providing a crop has not been sowed, however, if a crop has been sowed prior to sale, second party shall have the right to harvest and remove the growing crop from said premises prior to vacating same."

On 7 Jan 1975 House Bill No. 1537 was introduced into the North Dakota Legislature. It was passed as an emergency Act and was approved and became effective 25 Mar 1975. This Bill authorized the Director of Institutions for the State of North Dakota to sell approximately 30.2 acres of the land leased by Hager to the Devils Lake School District (school district). The Bill authorized the Director of Institutions to have the land appraised and to negotiate the sale of the land at an amount not less than the appraised value set by the Board of University and School Lands.

Two appraisals were done on the land. The County Board appraised the land at $12,080.00, and the Land Department appraised the land at $18,120.00. On 24 Apr 1975 the Board of University and School Lands recommended to the Director of Institutions that there be an appraisal of $15,100.00 on the land.

On 25 Apr 1975 the school district submitted a written bid of $15,100.00 on the land and also made a payment of $500.00. On the same day a written agreement was entered into whereby the Director of Institutions acting on behalf of the State of North Dakota agreed to accept the bid by the school district.

The State executed a quitclaim deed, dated 5 May 1975, to the school district. The quitclaim deed bearing the signature of the Governor and the Attorney General was notarized on 26 June 1975 and recorded in the Ramsey County Register of Deeds' office on 23 July 1975.

The attorney for the school district, John T. Traynor, wrote a letter dated 30 Apr 1975 to Hager which informed him that the school district had acquired some of the property that he had leased from the State. A subsequent letter, dated 20 May 1975, from Traynor to Hager pointed out the provision in the lease requiring Hager, in the event of a sale, to vacate the premises providing a crop had not been sowed.

The substance of a conversation between Hager and a representative of the school district, Duane Olson, during the early part of May 1975 is in dispute as to whether or not Hager was informed that all or merely a portion of the 48.26 acres had been purchased by the school. Hager seeded 12 of the 18 acres not acquired by the school district on 2 June 1975 and asserted that the remaining 6 acres could not be seeded because of sloughs and a dirt pile resulting from construction on the land purchased by the school district. Hager testified that he would have ordinarily seeded on April 25th but because of the amount of moisture received that spring, he would have seeded the entire acreage by May 10th if there had been no delays arising out of uncertainties attributed to the sale.

Hager brought this action and alleged that the school district wrongfully deprived him from farming the entire 48.26 acres by misrepresenting that the land was sold on or before 30 Apr 1975 when, as he alleged, the sale did not occur until at least when the quitclaim deed was notarized on 26 June 1975 and possibly as late as when the quitclaim deed was recorded in the office of the Ramsey County Register of Deeds on 23 July 1975. Hager also alleged that the school district, by taking possession of the 30.2 acres, did wrongfully damage his remaining leasehold.

The district court, Judge Olson, ¹ issued a memorandum opinion dated 7 Jan 1980 in which Hager was awarded $1,149.00 in damages for the 6 acres not farmed by him. Pursuant to Hager's motion for reconsideration, the court allowed interest at 6% per annum on the $1,149.00 from 23 Aug 1975. Judgment was entered on 20 May 1980, and Hager appealed from that judgment to this Court.

The first issue Hager raises on appeal concerns the proper construction of the term "sale" as used in the lease. A resolution of this issue is necessary to determine the date of the sale of the 30.2 acres and the termination of the lease.

The school district asserts the agreement to sell on 25 Apr 1975 constituted a "sale" and was the date of the sale. Therefore, the lease was terminated prior to when a crop was, or could have been, sown by Hager.

Hager asserts the sale could not occur until the delivery of a properly executed deed from the State to the school district because the term "sale" contemplates a situation in which a completed sale has occurred and title to the property has passed. Thus, Hager contends that the land was sold after a crop could have been sown and, therefore, he was wrongfully prevented from farming the entire leased premises and was entitled to damages for the lost profits on the 30.2 acres.

The construction of a written contract to determine its legal effect is always a question of law for the court to decide. Olson v. Peterson, 288 N.W.2d 294 (N.D.1980).

The district court made the following conclusion of law concerning the termination of the lease:

"1. Jack Hager's lease with the State of North Dakota was terminated with respect to 30.2 acres of the leased premises by the sale of said premises to the Defendant Devils Lake School District pursuant to the binding sales agreement of April 25, 1975."

On appeal to this Court, conclusions of law are fully reviewable. Northwestern Bell Telephone Co. v. Board of Commissioners of Fargo, 211 N.W.2d 399 (N.D.1973).

The construction of terms in a lease is governed by the rules of construction of a contract. Olson v. Peterson, supra.

In interpreting a written contract the intention of the parties is to be determined from the writing alone, if possible. Section 9-07-04, NDCC. The circumstances under which a contract is made and the matter to which it relates may be used to explain a contract. Section 9-07-12, NDCC.

We also note that the requisites of a sale necessary to terminate a lease have been described as follows:

"Under a provision in a lease for its termination on a sale of the premises, the character of sale necessary to render the provision operative depends on a proper construction of the lease as a whole, viewed in the light of the intention of the parties. A completed sale which leaves the lessor with no further claim to, or interest in, the premises will suffice to terminate the lease. Unless the contract when properly construed provides otherwise the sale need not have been finally consummated, or the title actually transferred, in order to terminate or permit termination of the lease." 51C C.J.S. Landlord & Tenant, § 93(3).

Thus, a sale terminating a lease may be either by a conveyance of title or, in some circumstances, without an actual or consummated transfer of title. West v. Brenner, 88 Idaho 44, 396 P.2d 115 (1964). See also 49 Am.Jur.2d Landlord and Tenant, § 1004.

In this instance the term "sale" was not defined or given a special meaning in the lease. The term "sale" is not a word of fixed and invariable meaning. It may be given a narrow or broad meaning as may be indicated by the context or surrounding circumstances in which it is used. The circumstances of this lease, and the subject matter of the whole lease, and this particular clause, leads us to conclude that its purpose was to provide notice to Hager of a sale so that a crop would not be planted after the sale. Additionally, we note that the agreement to sell on 25 Apr 1975 was a binding agreement on the State to execute a conveyance in form sufficient to pass the title of the property. See § 47-10-02, NDCC. With this in mind, we conclude that the technical aspect of a delivery of a deed and a recording of the instrument were not necessary to effectuate a sale as contemplated by the parties. Therefore, Hager was not entitled to farm the 30.2 acres in 1975 because the land was sold before the crop was, or could have been, sown.

The next issue raised by Hager deals with three related aspects of the award of damages by the district court.

First, Hager asserts that the district court erred in refusing to allow the recovery of summer-fallowing expenses for 1974 in the amount of $35.00 per acre for the entire 48 acres. Hager points to the provision of the lease that required him not to "do or permit to be done anything that shall lessen the value of said premises." Thus, Hager asserts that this provision required him to farm the land in a "husbandly manner" which meant summer-fallowing the land in 1974 and not planting a crop in that year. Therefore, Hager asserts that he should have recovered the cost for summer-fallowing...