Hahne v. Burr

• Citation: 705 N.W.2d 867,2005 SD 108
• Decision Date: 26 October 2005
• Docket Number: No. 23461.,No. 23448.,23448.,23461.
• Parties: Bill HAHNE, Plaintiff and Appellant, v. Clarence W. BURR, Clarence W. Burr, Trustee of Clarence W. Burr 1994 Living Trust, Defendant, Third-Party, Plaintiff and Appellee, and Mark Burr, Defendant and Third-Party Plaintiff, v. Steve Schneider, Third-Party Defendant.
• Court: Supreme Court of South Dakota

705 N.W.2d 867

2005 SD 108

Bill HAHNE, Plaintiff and Appellant, v. Clarence W. BURR, Clarence W. Burr, Trustee of Clarence W. Burr 1994 Living Trust, Defendant, Third-Party, Plaintiff and Appellee, and Mark Burr, Defendant and Third-Party Plaintiff, v. Steve Schneider, Third-Party Defendant.

No. 23448.

No. 23461.

Supreme Court of South Dakota.

Considered on Briefs August 30, 2005.

Decided October 26, 2005.

COPYRIGHT MATERIAL OMITTED

Thomas M. Tobin of Tonner, Tobin and King, Aberdeen, South Dakota, Attorneys for appellant.

Reed Rasmussen of Siegel, Barnett and Schutz, Aberdeen, South Dakota, Attorneys for appellee.

ZINTER, Justice.

[¶ 1.] A dispute arose between Bill Hahne and Clarence Burr concerning an oral agreement for the sale of land. Hahne sued for specific performance of the agreement. The trial court denied relief, entering summary judgment against Hahne because of the statute of frauds. Hahne appeals the statute of frauds determination, and Burr appeals (by notice of review) the trial court's refusal to grant Rule 11 sanctions. We affirm the trial court on all issues.

Facts and Procedural History

[¶ 2.] On February 23, 2000, Hahne and Steve Schneider (lessees) entered into a three-year lease of real property with Burr (lessor). At the end of the lease, Hahne and Burr discussed a possible sale of the land. Although there is a dispute about the content of those discussions and who initiated them, there is no dispute that the parties discussed a sale to Hahne. Although money was subsequently exchanged, some closing documents were drawn, and further conversations occurred concerning the sale, Burr ultimately declined to sell the property, and this suit was commenced.

[¶ 3.] Under Hahne's version of the facts, by December 2002, Burr and Hahne orally agreed to all aspects of the sale, including the price. Later that month, the parties realized that a sale could not be completed before January 1, 2003, and therefore, Hahne agreed to pay further rent for the period of time between the first of the year and the eventual closing.

[¶ 4.] In early January 2003, purportedly upon Burr's request, Hahne retained attorney Andrew Aberle to prepare closing documents. Hahne asserts that Aberle talked to Burr and that all of the terms of the agreement were verified. Aberle also prepared letters, a deed, and a certificate of value, which he sent to Burr to close the sale. Hahne also tendered a $15,000 check, which he contends was partially for rent and partially for a down payment on the land.¹ Hahne finally asserts that, during this period of time, he did not purchase or lease other land needed in his farming operation because of his reliance on the agreement.

[¶ 5.] However, in February 2003, Burr's grandson, allegedly acting as Burr's agent, sent Hahne an e-mail informing him that Burr had decided not to sell the property. Hahne sued Burr for specific performance of the alleged agreement. The trial court granted summary judgment in favor of Burr based upon the statute of frauds. The trial court denied Burr's request for sanctions and attorney's fees. Hahne appeals the following issues:

(1) Whether there were sufficient writings regarding the sale of real estate to satisfy the statute of frauds;

(2) Whether the trial court erred in granting summary judgment on the issues of partial performance and estoppel.

By notice of review, Burr appeals the following issue:

(3) Whether the trial court erred in denying Burr's request for Rule 11 sanctions and attorney's fees.

Analysis and Decision

[¶ 6.] In reviewing summary judgment, "we decide only whether genuine issues of material fact exist and whether the law was correctly applied. If any legal basis exists to support the trial court's ruling, we will affirm." Schulte v. Progressive N. Ins. Co., 2005 SD 75, ¶ 5, 699 N.W.2d 437, 438 (citations omitted). All reasonable inferences "must be viewed in favor of the non-moving party." Northstream Invs., Inc. v. 1804 Country Store Co., 2005 SD 61, ¶ 11, 697 N.W.2d 762, 765 (citation omitted). Furthermore, "[t]he burden is on the moving party to clearly show an absence of any genuine issue of material fact and an entitlement to judgment as a matter of law." Id. (citations omitted).

Sufficiency of Writings to Bind Burr

[¶ 7.] Under the statute of frauds, a contract for the sale of land must be in writing to be enforceable. Jacobson v. Gulbransen, 2001 SD 33, ¶ 15, 623 N.W.2d 84, 88. The statute, SDCL 53-8-2, provides in relevant part:

The following contracts are not enforceable by action unless the contract or some memorandum thereof is in writing and subscribed by the party to be charged or his agent, as authorized in writing:

...

(3) An agreement for sale of real estate or an interest therein, or lease of the same, for a period longer than one year. However, this does not abridge the power of any court to compel specific performance of any agreement for sale of real estate in case of part performance thereof....

We have stated that "[t]he role of the statute of frauds is evidentiary in nature, and serves to remove uncertainty by requiring `written evidence of an enforceable obligation.'" Harriman v. United Dominion Indus., Inc., 2005 SD 18, ¶ 15, 693 N.W.2d 44, 48 (citations omitted).

[¶ 8.] Although there is a significant dispute whether there was an agreement, for purposes of summary judgment we assume there was an oral agreement to sell the real estate. With respect to the sufficiency of writings, Hahne contends that his attorney, Aberle, personally verified all of the terms of the contract with Burr. Hahne also points out that Aberle drafted a letter forwarding a deed and certificate of value attempting to close the transaction. Hahne finally relies upon an e-mail sent by Burr's alleged agent reflecting an awareness that a sale was pending.

[¶ 9.] However, Aberle's conversations are not writings, and Hahne did not produce any writing signed by Burr (or his agent) confirming an agreement to the sale of the land. This is significant because an agreement for the sale of real property is not enforceable unless the document is "subscribed by the party to be charged." SDCL 53-8-2; Wiggins v. Shewmake, 374 N.W.2d 111, 114 (S.D.1985). Here, Aberle was not the agent of the party to be charged, and the e-mail, even if signed by Burr's agent, did not confirm an agreement. On the contrary, the e-mail expressly disavowed Burr's intent to sell the property. Therefore, the trial court correctly determined that these conversations and writings by others were not sufficient to satisfy the statute of frauds.

Statute of Frauds Exceptions-Partial Performance and Estoppel

[¶ 10.] Even if there is no agreement in writing, SDCL 53-8-2(3) allows a "court to compel specific performance of any agreement for sale of real estate in case of part performance...." SDCL 53-8-2(3). Estoppel may also justify specific performance.

An oral promise to convey real property is enforceable by specific performance where the grantee has partially performed or has acted in reliance upon the promise of the grantor in such manner that it would invoke a fraud or prejudice against the grantee not to grant specific performance thereon.

Durkee v. Van Well, 2002 SD 150, ¶ 21, 654 N.W.2d 807, 815 (citations omitted).

Partial Performance

[¶ 11.] Hahne asserts that a number of actions constituted partial performance. He first relies on his "down payment." We initially note that there is a dispute whether the $15,000 Hahne paid to Burr was a down payment on the sale or whether it was a lease payment for 2003.² However, even assuming that it was a down payment, this Court has long held that "payment of the whole or a part of the purchase price is not sufficient in itself to take a case out of the operation of the statute of frauds." Boekelheide v. Snyder, 71 S.D. 470, 473, 26 N.W.2d 74, 75 (1947). See also Ells v. Ells, 245 N.W.2d 498, 500 (S.D.1976) (stating that payment of a portion of the purchase price is "an act that has long been held insufficient to take a contract out of the ... statute of frauds") (citation omitted). Therefore, the trial court correctly concluded that the payment, in and of itself, "would not constitute partial payment or partial performance of the purchase price."

[¶ 12.] Hahne recognizes this rule and, therefore, contends that his possession of the land must also be considered. This Court has indicated "that the most important acts to constitute sufficient part performance are actual possession and permanent improvements made on the land." Williams v. Denham, 83 S.D. 518, 523, 162 N.W.2d 285, 288 (1968) (citation omitted). However, in this case Hahne's possession of the land is irrelevant because he was in continued possession after expiration of a written lease. See Skjoldal v. Myren, 86 S.D. 111, 119, 191 N.W.2d 809, 813 (1971) (concluding that where an option to purchase property had expired, but the lessee retained possession and farmed the land on a crop share basis, partial performance had not been established); Shaw v. George, 82 S.D. 62, 66, 141 N.W.2d 405, 407 (1966) (stating that where one party was in possession under an existing lease, the continued possession could not be regarded as an act of partial performance). Furthermore, there is no evidence Hahne made permanent improvements to the property. Therefore, we agree with the trial court that Hahne's possession of the land was not "sufficient to constitute partial performance because ... [h]e was ... there under a written lease and [thus,] he was a holdover tenant."

[¶ 13.] Hahne next contends that he partially performed because he incurred attorney and title policy fees in an attempt to close the transaction. However, in order for an act by the plaintiff "to be sufficient to constitute part performance, it `must be unequivocally referable to the contract.'" Morton v. Lanier, 311 Mont. 301, 55 P.3d 380, 385 (2002) (citations omitted).³ What conduct constitutes...