Hoffman v. Johnson

• Citation: 374 N.W.2d 117
• Decision Date: 06 September 1985
• Docket Number: No. 14523,14523
• Parties: Terrance HOFFMAN, as Special Administrator of the Estate of Hilda Johnson, Deceased, Terrance Hoffman, as Special Administrator of the Estate of James McGuffin, Deceased; James Olson; Andrew McGuffin or the heirs of Andrew McGuffin and the heirs of Oscar Olson, Plaintiffs and Appellees, v. Edwin L. JOHNSON, Defendant and Appellant, and Jean R. JOHNSON and Western Surety Company, a corporation of Sioux Falls, South Dakota, Defendants, v. Harry R. STEPHENS, Third-Party Defendant and Appellee.
• Court: Supreme Court of South Dakota

Page 117

374 N.W.2d 117

Terrance HOFFMAN, as Special Administrator of the Estate of

Hilda Johnson, Deceased, Terrance Hoffman, as Special

Administrator of the Estate of James McGuffin, Deceased;

James Olson; Andrew McGuffin or the heirs of Andrew

McGuffin and the heirs of Oscar Olson, Plaintiffs and Appellees, v. Edwin L. JOHNSON, Defendant and Appellant, and Jean R. JOHNSON and Western Surety Company, a corporation of

Sioux Falls, South Dakota, Defendants, v. Harry R. STEPHENS, Third-Party Defendant and Appellee.

No. 14523.

Supreme Court of South Dakota.

Argued Oct. 22, 1984.

Decided Sept. 6, 1985.

Glen H. Johnson of Banks & Johnson, Rapid City, for plaintiffs and appellees.

Charles Rick Johnson of Johnson, Eklund & Davis, Gregory, for defendant and appellant.

William G. Porter of Costello, Porter, Hill, Nelson, Heisterkamp & Bushnell, Rapid City, for third-party defendant and appellee.

WOLLMAN, Justice.

This is an appeal from a judgment directing the payment of money and the delivery of mineral deeds and from an earlier summary judgment dismissing defendants' third-party complaint and determining certain other interlocutory matters. We affirm.

The procedural history of this case is rather complex, involving as it does numerous heirs of several estates. All but a few of the parties settled with the appellant during the course of litigation; consequently, we will identify in detail only those parties who are involved in this appeal.

Edgar McGuffin, a bachelor, died intestate in Harding County, South Dakota, on December 27, 1963. Surviving him were a sister, Hilda Johnson, and two brothers, James and McMillan. Edgar was predeceased by three brothers and one sister who left surviving them a total of sixteen children.

Edgar's estate consisted principally of two parcels of land in Harding County, Tract I and Tract II, consisting, respectively, of some 190 acres and some 153 acres.

Hilda Johnson had six children: Edwin Johnson, appellant in this action, Mary Hoffman, Willard Johnson, Merle Johnson Ray, Ethel Johnson Hagley, and Carroll Johnson.

Hilda Johnson and her brother James asked Edwin to serve as the administrator of Edgar's estate. Edwin agreed to do so and retained his long-time personal attorney, Harry Stephens of Belle Fourche, to assist him with the legal matters connected with the administration of the estate. Edwin was duly appointed as administrator on March 17, 1963. On May 12, 1964, the appraisers filed their inventory and appraisement of the estate property, valuing Tract I and Tract II at twenty dollars per acre.

On June 18, 1964, Edwin petitioned the court for an order permitting the sale of the real estate. Only one bid was received on each tract. Travers Land & Cattle Co. submitted a bid of twenty-one dollars per acre on Tract I, and one Clair C. Janvrin submitted a bid of twenty-five dollars per acre on Tract II.

Edwin testified that he was disappointed in the bids and suspected some collusion between the two bidders. He met with attorney Stephens and told him that he was going to confront the bidders to try to get some more money for the estate. Edwin testified that he spoke with John Travers, owner of Travers Land & Cattle Co., and suggested that the land should be worth more than the amount bid and that the mineral rights alone should be worth some money. Travers allegedly responded that he would not give a dime for all of the mineral rights because there was nothing there but that as a token of his seriousness he would give the mineral rights to Edwin if he, Travers, ultimately obtained the property. Travers raised the bid on Tract I to twenty-five dollars per acre, and the tract was ultimately sold to Travers Land & Cattle Co.

Edwin had a similar conversation with Janvrin, who agreed with Travers' assessment of the value of the mineral rights. According to Edwin, Janvrin also suggested that he would give the mineral rights to Edwin, if he, Janvrin, ultimately was the successful bidder on Tract II. Janvrin raised his bid to thirty dollars per acre and was given an administrator's deed to Tract II.

According to Edwin, when he told Stephens of his success in getting the bids raised and of the mineral rights offer, Stephens congratulated him on his success on getting the higher bids and advised him that the mineral rights would have to be taken in the name of Edwin's wife, Jean.

On November 4 or 5, 1964, Travers came to Stephens' law office and accepted delivery of the administrator's deed to Tract I. At the same time, Travers gave Edwin a mineral rights deed on Tract I naming Jean R. Johnson as grantee. Janvrin conveyed seventy-five percent of the mineral rights on Tract II to Jean R. Johnson.

Edwin promptly recorded the mineral rights deeds. He testified that he then told his mother and his uncle James and his sister Merle Ray about the transaction. Mrs. Ray acknowledged at trial that she recalled that Edwin had told her about the mineral deeds.

James McGuffin died in 1965. Hilda Johnson died on December 25, 1966.

On August 20, 1970, Edwin and Jean executed an oil and gas lease covering the property in Tract I in favor of Depco, Inc.

Sometime in 1972 or 1973, Edwin's brother Willard offered to pay $7.50 per acre to lease the mineral rights on the property. Edwin testified that at one time in 1972 or 1973 he had told Willard that he and Jean had purchased the mineral rights on the property.

In 1973 an oil well was completed on the Travers' property. Included within the production area was the Tract I property. The well began producing in mid 1974. Jean Johnson was notified that she would share in the royalties from the production. Edwin testified that during 1974 inquiries were made by his two brothers and one of his sisters regarding their interest in the oil royalties. Edwin testified that he went to see Stephens, who told him that everything was legal and that he had nothing to worry about.

In May of 1977 the three children of Edgar McGuffin's deceased brother Fred McGuffin brought an action against Edwin and Jean with respect to the mineral rights on Tract I and Tract II. This action was dismissed pursuant to a stipulation and agreement for settlement on July 31, 1979.

On May 23, 1980, the present action was commenced by Mary Hoffman in her capacity as the special administratrix of the estates of Hilda Johnson, James McGuffin, and McMillan McGuffin. Edwin and Jean Johnson filed a third-party complaint against attorney Stephens based upon his alleged negligence in advising Edwin that title to the mineral rights could be taken in Jean's name. On May 3, 1982, the trial court entered a summary judgment dismissing the third-party complaint against Stephens.

On February 8, 1984, the trial court entered a judgment against Edwin and Jean in the total amount of $119,760.37 in favor of Mary Hoffman in her capacity as special administratrix of the several estates and to the other non-settling heirs of Edgar McGuffin. The judgment also ordered Jean to convey certain fractional interests in the mineral rights to Mary Hoffman and to the other non-settling heirs. ^*

Only Edwin Johnson has appealed from the judgment.

I. Applicable Statute of Limitations

Edwin contends that the trial court erred in applying the six-year statute of limitations set forth in SDCL 15-2-13(6), rather than the three-year statute provided by SDCL 30-22-67. We do not agree.

At the outset, we note that clearly the purported conveyance of the mineral rights in Edgar's land violated SDCL 30-22-50, which provides:

Unless otherwise specifically provided in decedent's will, no executor or administrator may, directly or indirectly, purchase any property of the estate he represents, nor may he be interested in any sale.

That the conveyance was to Edwin's wife rather than to himself was of no legal significance, of course, for this court held in Cooper v. Burchett, 66 S.D. 162, 279 N.W. 598 (1938), that the provisions of what is now SDCL 30-22-50 prohibit a sale of estate property to an administrator's wife.

SDCL 30-22-67 provides:

No action for the recovery of any property of an estate sold by the executor or administrator, under the provisions of this chapter, can be maintained by any heir or other person claiming under the decedent, or by any creditor of the decedent, unless it be commenced within three years next after the sale. Provided that an action to set aside the sale upon the ground of fraud may be commenced at any time within three years from the discovery of the facts constituting the fraud.

This section shall not apply to minors, or others under any legal disability to sue at the time when the right of action first accrues; but all such persons may commence an action at any time within three years after the removal of the disability.

The trial court correctly held that this statute was inapplicable inasmuch as plaintiffs were not seeking to set aside the sale of property to the Travers Land & Cattle Co. or to Janvrin. See Halladay v. Verschoor, 381 F.2d 100 (8th Cir.1967).

The trial court held that because plaintiffs were seeking to impress a trust upon the holder of the mineral rights, the applicable statute of limitations was that set forth at SDCL 15-2-13(6), which provides:

Except where, in special cases, a different limitation is prescribed by statute, the following civil actions other than for the recovery of real property can be commenced only within six years after the cause of action shall have accrued:

....

(6) An action for relief on the ground of fraud, in cases which heretofore were solely cognizable by the court of chancery....

SDCL 15-2-3 provides: "In an action for relief on the ground of fraud the cause of action shall not be deemed to have accrued until the aggrieved party discovers, or has actual or constructive notice of, the facts constituting the fraud."

Edwin contends that plaintiffs were given constructive notice of the transactions by the recordation...