Hagerman v. Yukon Energy Corp.

Decision Date23 March 1988
Docket NumberNo. 87-5092,87-5092
PartiesWilliam F. HAGERMAN, Appellee, v. YUKON ENERGY CORPORATION, Appellant, and David C. Tjosvold.
CourtU.S. Court of Appeals — Eighth Circuit

Samuel L. Hanson, Minneapolis, Minn., for appellant.

George R. Serdar, St. Paul, Minn., for appellee.

Before HEANEY, Circuit Judge, ROSS, Senior Circuit Judge, and WOLLMAN, Circuit Judge.

ROSS, Senior Circuit Judge.

Appellee William F. Hagerman brought this action against David C. Tjosvold and appellant Yukon Energy Corporation for breach of contract, alleging that defendants failed to honor a stock option agreement between the parties. The district court 1 entered summary judgment on behalf of Hagerman and awarded him $290,317 in damages. Yukon appeals. 2 For the reasons set forth below, we affirm the judgment of the district court.


Yukon manufactures furnaces for residential and commercial use. In 1983, Yukon purchased for $100,000 certain technology regarding the development of fuel efficient furnaces. Yukon and Hagerman subsequently negotiated an agreement for the funding of the technology. Pursuant to the agreement, which was drafted by Yukon's attorney, Hagerman purchased the technology from Yukon for $150,000. Hagerman then licensed the technology back to Yukon in exchange for royalties, subject to a minimum and maximum annual payment. Under the agreement, Yukon was given the option to repurchase the technology from Hagerman within ten years for $175,000. Additionally, in the event of a public offering of Yukon stock within ten years of the agreement, Hagerman was given the option to purchase at book value shares of Yukon stock in an amount equal to 5% of the shares owned by Yukon's president, David Tjosvold.

In October, 1984, Yukon exercised its option to repurchase the technology from Hagerman. On October 23, 1984, Tjosvold delivered to Hagerman a check for $175,000, the repurchase price, and a check for $18,000 for one year's royalties. On that same day, Hagerman gave Yukon written notice of his intent to exercise his stock option in the event of a public offering of Yukon stock.

In November, 1984, Yukon filed registration statements for a public offering of common stock with the Securities and Exchange Commission and the Minnesota Department of Commerce. Although the public offering was made in early 1985, Yukon never transferred shares to Hagerman. Hagerman brought this action seeking damages or specific performance of the parties' 1983 agreement.

A hearing was held on Hagerman's motion for summary judgment in April, 1986. Yukon opposed the motion by arguing that the parties had orally modified their agreement, eliminating Hagerman's stock option. Yukon further argued that in accordance with the modification, Yukon's tender of the two checks to Hagerman fulfilled all of Yukon's obligations under the agreement. After the summary judgment hearing, the district court ordered the parties to submit supplemental briefs on the issue of damages. The district court subsequently entered judgment for Hagerman.

As to Yukon's liability for breach of the stock option, the district court found that Yukon raised no genuine issue of material fact as to whether the parties orally modified the technology agreement. The district court found that Yukon's actions subsequent to the alleged modification indicated that the agreement was not actually modified. The district court determined Hagerman's damages by figuring the difference between the contract price of the stock, as the court determined was set forth in the technology agreement, and the fair market value as of the first day of the public offering, and awarded Hagerman $290,317.

Yukon filed a motion to alter or amend judgment, and a hearing was held. The district court denied the motion without an opinion. On appeal, Yukon argues that the district court erred in granting summary judgment because Yukon raised genuine fact issues as to whether it breached the stock option provision and as to the remedy to be awarded Hagerman.

Standard of Review

In reviewing a district court's grant of summary judgment, this court is to apply the same standard that the district court was to have applied. Stark v. St. Cloud State Univ., 802 F.2d 1046, 1048 (8th Cir.1986). The Supreme Court recently stated that:

[A]t the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.... [T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986) (citations omitted.)

In determining whether summary judgment should lie, the district court is to view the evidence in the light most favorable to the nonmoving party and give to that party the benefit of all inferences which reasonably may be drawn. AgriStor Leasing v. Farrow, 826 F.2d 732, 734 (8th Cir.1987).

Breach of Contract

Yukon argues that it raised a genuine issue of material fact as to whether it breached the technology agreement, such that summary judgment should have been precluded. In particular, Yukon contends that the stock option was terminated by an accord and satisfaction when Hagerman accepted the two checks from Yukon in full satisfaction of Yukon's obligations under the technology agreement. As evidence of the accord and satisfaction, Yukon presented Tjosvold's deposition testimony in which he stated that Yukon repurchased the technology from Hagerman at Hagerman's insistence. When Tjosvold gave Hagerman the two checks, Tjosvold told him "I understand that this ends our agreement, here is your money like you wanted, like you requested before. I suppose that's it." Hagerman did not reply at the time, but negotiated the two checks. Yukon now argues that an accord and satisfaction was accomplished because Yukon made clear that the checks were in full settlement of all of Yukon's obligations, and Hagerman accepted the checks without contradiction. Consequently, Yukon asserts, the stock option was terminated.

Yukon accurately states the Minnesota law of accord and satisfaction:

If there is an honest dispute between the parties, a tender with the explicit understanding of both parties that it is in full payment of all demands, and an acceptance by the creditor with the understanding that the tender is accepted in full payment results in accord and satisfaction. When a payment is made by check "which is offered in full satisfaction of the debt, retention and negotiation by the creditor, with knowledge of all the facts, constitutes an acceptance of the offer to settle the indebtedness * * *."

Acton Constr. Co., Inc. v. State, 363 N.W.2d 130, 133-34 (Minn.App.1985) (quoting Butch Levy Plumbing & Heating, Inc. v. Sallblad, 267 Minn. 283, 290, 126 N.W.2d 380, 385 (1964) (emphasis in original) (citation omitted)).

The agreement constituting the accord and satisfaction need not be express, but may be " 'implied from circumstances which clearly and unequivocally indicate the intention of the parties.' " Id. at 133 (quoting Roaderick v. Lull Eng'g Co., Inc., 296 Minn. 385, 389, 208 N.W.2d 761, 764 (1973)). In the absence of proof of an express agreement, the court is to consider the conduct of the parties. Becker v. F & H Restaurant Group, Inc., 413 N.W.2d 202, 205 (Minn.App.1987). "The supreme court has not held that an accord and satisfaction has been reached in any case where mutual agreement was lacking." Acton, supra, 363 N.W.2d at 133.

The district court determined, and we agree, that Yukon failed to raise a genuine issue of material fact as to whether the parties mutually agreed to terminate Hagerman's stock option. 3 In making its determination, the district court looked to the conduct of the parties and determined that, except for Yukon's breach, the parties' conduct indicated that there was not an oral modification of the contract or an accord and satisfaction. The district court found determinative certain statements made by Yukon in the prospectus and stock registration statements in which Yukon affirmed the validity of Hagerman's option.

The prospectus prepared by Yukon's attorneys and dated February 14, 1985, detailed the technology agreement between Yukon and Hagerman. The prospectus stated that Yukon had repurchased the technology and that Hagerman had informed Yukon of his intention to exercise his stock option. The prospectus continued: "Accordingly, the Company will issue up to 164,021 shares of its Common Stock to such individual at approximately $.23 per share upon receipt of payment therefor." 4 Hagerman's stock option is mentioned four other times in the prospectus. Nowhere in the prospectus is there any mention that Yukon disputed Hagerman's option or that Yukon had any defenses to the exercise of the option. The prospectus was incorporated into the registration statements filed with the Securities and Exchange Commission and the Minnesota Department of Commerce. Additionally, the parties' technology agreement was listed as an exhibit to the registration statement, again without qualification and without repudiation of the validity of Hagerman's stock option.

In order to explain the statements regarding Hagerman's option, Yukon offered the affidavit of one of the attorneys who prepared the prospectus. The attorney stated that shortly before February 15, 1985 (the date of the final prospectus), Tjosvold told the attorney that he disputed the validity of Hagerman's option because of certain conversations between Hagerman and Tjosvold. However, the prospectus was written as if no dispute existed because those...

To continue reading

Request your trial
491 cases
  • In re Gulf Oil/Cities Service Tender Offer Lit.
    • United States
    • U.S. District Court — Southern District of New York
    • October 30, 1989
    ...representations inconsistent with statements in SEC filings. See Lewis v. Atlas Corp., 158 F.2d 599 (3d Cir.1946); Hagerman v. Yukon Energy Corp., 839 F.2d 407 (8th Cir.), cert. denied, ___ U.S. ___, 109 S.Ct. 63, 102 L.Ed.2d 40 (1988); York v. Georgia Pacific Corp., 585 F.Supp. 1265 (N.D.M......
  • Laird v. Stilwill
    • United States
    • U.S. District Court — Northern District of Iowa
    • October 25, 1997
    ...the court may alter or amend its judgment only if it finds a "manifest" error of law or fact in its ruling. See Hagerman v. Yukon Energy Corp., 839 F.2d 407, 414 (8th Cir.) (quoting Rothwell Cotton Co. v. Rosenthal & Co., 827 F.2d 246, 251 (7th Cir.), as amended, 835 F.2d 710 (7th Cir.1987)......
  • In re Republic Fabricators, Inc.
    • United States
    • U.S. Bankruptcy Court — Northern District of Indiana
    • July 20, 1989
    ...835 F.2d 710 (7th Cir.1988); Hall v. Gus Const. Co., Inc., 842 F.2d 1010, 1017, 146 FEP 573 (8th Cir.1988); Hagerman v. Yukon Energy Corp., 839 F.2d 407, 414 (8th Cir.1988). In Evans, Inc. v. Tiffany & Co., 416 F.Supp. 224 (N.D.Ill.1976), the Court reminded us of the tension between finalit......
  • Sherman v. Kasotakis
    • United States
    • U.S. District Court — Northern District of Iowa
    • April 19, 2004
    ...Innovative Home Health Care, Inc. v. P.T.-O.T. Assocs. of the Black Hills, 141 F.3d 1284, 1286 (8th Cir.1998); see Hagerman v. Yukon Energy Corp., 839 F.2d 407, 413 (8th Cir.), cert. denied, 488 U.S. 820, 109 S.Ct. 63, 102 L.Ed.2d 40 (1988). "A district court has broad discretion in determi......
  • Request a trial to view additional results
1 books & journal articles
  • New Age Employee Compensation Issues: Or, it Used to Be So Simple
    • United States
    • Colorado Bar Association Colorado Lawyer No. 29-6, June 2000
    • Invalid date
    ...on date of failed delivery appropriate measure of damages, not market value of shares on judgment date); Hagerman v. Yukon Energy Corp., 839 F.2d 407 (8th Cir. 1988) (damages failure to honor stock option agreement equal difference between contract price and fair market value on date of bre......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT