Knecht v. Evridge

Citation940 N.W.2d 318
Decision Date26 February 2020
Docket Number#28781,#28780
Parties Michael J. KNECHT, Plaintiff and Appellee, v. Gayle EVRIDGE and Linda Evridge, Defendants and Appellants. Michael J. Knecht, Plaintiff and Appellant, v. Gayle Evridge and Linda Evridge, Defendants and Appellees.
CourtSupreme Court of South Dakota

BRIAN DONAHOE, DANIEL B. WEINSTEIN of Donahoe Law Firm, P.C., Sioux Falls, South Dakota, Attorneys for appellee and appellant Michael J. Knecht.

CASSIDY M. STALLEY, THOMAS G. FRITZ, DANA VAN BEEK PALMER of Lynn, Jackson, Shultz & Lebrun, P.C., Rapid City, South Dakota, Attorneys for appellants and appellees Gayle and Linda Evridge.

SALTER, Justice

[¶1.] Michael Knecht and Gayle and Linda Evridge (Evridges) entered into two similar three-year lease agreements that allowed Knecht to rent the Evridges’ ranch. The leases also referenced the possibility that Knecht would obtain the Evridges’ permit to graze cattle on an adjoining national grassland. Following a series of disputes between the parties, the Evridges refused Knecht’s lease payments for the second year. Knecht filed suit, seeking a declaratory judgment and alleging breach of contract, negligent misrepresentation, deceit, and fraud. The Evridges counterclaimed seeking damages under the agreements.

[¶2.] The parties stipulated to a preliminary court trial to determine their rights under the lease agreements and a subsequent jury trial to resolve the remaining factual issues. The court found one lease valid and binding, and the other lease valid but voidable. A jury later awarded damages to both parties. The Evridges appeal, alleging the circuit court abused its discretion in its evidentiary rulings and in its jury instructions. Knecht also appeals and argues the circuit court erred when it found the second lease voidable instead of void and dismissed his fraud and deceit claims. We have consolidated the appeals and now reverse the circuit court’s dismissal of Knecht’s deceit claim, which is remanded for trial, and affirm all other issues.

Background

[¶3.] Mike Knecht is a rancher from Lodgepole, South Dakota, who was interested in leasing ranchland for his growing cattle herd. He ran an advertisement in a local newspaper, and Linda Evridge responded, indicating that she and her husband were interested in leasing their 3,070-acre ranch as they transitioned into retirement.

[¶4.] The Evridge ranch lies adjacent to the Grand River National Grassland in Perkins County. The national grassland is owned by the federal government and is managed by the United States Forest Service, which has a cooperative agreement with the Grand River Grazing Association (Grazing Association) to administer grazing rights among nearby ranchers with base property.1 The grazing permits allow qualifying ranchers to graze their livestock on the national grassland during the summer months. The Evridges have received an annual grazing permit from the Grazing Association for over 40 years and were familiar with its rules. At the time of their negotiations with Knecht, the Evridges told him that their ranch was tied to the national grassland, and they held a permit to graze 200 animal units (AUs)2 during the summer months. The Evridges further advised Knecht that they could transfer their permit to him with the Grazing Association’s approval.

[¶5.] Knecht and the Evridges reached an agreement under which Knecht would lease the Evridges’ ranch for three years3 in exchange for an annual rent of $157,000. However, the Evridges insisted that Knecht execute two leases for the same property with an aggregated annual rent that totaled the agreed-upon amount of $157,000. Knecht acceded, and on December 3, 2013, the parties signed two leases prepared by the Evridges’ attorney.

[¶6.] The leases were entitled an "Agricultural Lease" and a "Supplemental Agricultural Lease" (Supplemental Lease), with only slight substantive differences. One apparent difference concerned the description of the lease price. The Agricultural Lease listed a lease price of $28.55 per acre, or $87,648.50 annually, while the Supplemental Lease listed only a lump sum yearly rent of $69,351.50. Knecht later alleged that when he inquired about the reason for the two leases, the Evridges told him two leases were necessary—one for the Evridge ranch, itself, and one for the ability to graze cattle, or AUs, on the national grassland. Knecht later testified that the Evridges told him "the units were worth something" and instructed him to keep the Supplemental Lease a secret because they did not want "anyone knowing their financial business." Knecht did not seek the advice of counsel before signing the leases.

[¶7.] Knecht moved approximately 200 head of cattle onto the Evridge ranch in February 2014. The Evridges filed only the Agricultural Lease with the Grazing Association before its March 1, 2014 deadline. Upon receipt of the Agricultural Lease, the Grazing Association transferred the Evridges’ grazing permit to Knecht.

[¶8.] The Evridges knew the Grazing Association could restrict the price they could charge to lease their ranch because it had rejected their previous request to approve a $30.00 per acre lease. The Evridges also knew the Supplemental Lease violated the Grazing Association’s rules, which expressly prohibit subleasing grazing rights. Knecht, however, testified that he was unaware of these details before signing the leases. He also claimed he was surprised when he received a bill from the Grazing Association for $14,047 to obtain a 2014 grazing permit because he believed his Supplemental Lease payments were for the purpose of receiving the permit. The Evridges had only advised him that he would receive a "small bill" from the Grazing Association for "salt, oilers, and fencing."

[¶9.] During 2014, disputes arose between the parties regarding Knecht’s ability to move his cattle between the Evridges’ pastures, Knecht’s refusal to adopt the Evridges’ intensified grazing program,4 fence repair, and the Evridges’ continued use of the ranch for their own cattle and horses. When the Evridges refused Knecht’s lease payments for the 2015 year, Knecht deposited the first half of the 2015 lease payments with the Perkins County Clerk of Courts and filed suit, alleging breach of contract and requesting a declaratory judgment establishing the parties’ rights under the lease agreements.

[¶10.] In response to the lawsuit, the Evridges alleged that Knecht had materially breached the lease agreements "and/or complete[ly] repudiated the terms of the agreement(s)." In March 2015, the Grazing Association became aware of the Supplemental Lease and suspended Knecht’s grazing permit for 2016. After this suspension, Knecht amended his complaint to add the claims of negligent misrepresentation, deceit, and fraud.

[¶11.] The parties agreed to resolve the claims through separate, sequential trials. Their stipulation contemplated an initial court trial on the declaratory judgment action concerning the lease agreements and a jury trial for the remaining claims.

[¶12.] During the course of the three-day court trial, the parties offered divergent testimony about their negotiations and alleged the existence of additional oral agreements. The circuit court issued findings of fact, conclusions of law, and declaratory orders, concluding, in part:

The consideration for the Agricultural Lease was annual rent of $87,648.50 to the Evridges in exchange for the right to graze cattle and farm the 3,070 acres comprising the Ranch ... [and] is a valid contract ... legally binding on the parties as of December 3, 2013 for a term of three years.
The consideration for the Supplemental ... Lease was annual rent of $69,351.50 in exchange for the right to graze an additional 200 cows and calves and six bulls directly tied to the Grand River Grazing Association permit. The Supplemental ... Lease allows for grazing on the Grand River Grazing Association land. It states: "In the event the permit is not transferred, LESSEE may terminate or renegotiate this lease." The power to terminate in the event the permit does not transfer is not available in the Agricultural Lease.
The Supplemental ... Lease has all the essential elements of a valid contract and is legally binding. However, Knecht may, pursuant to the written terms of the Supplemental ... Lease choose to terminate this lease because the grazing rights ... did not transfer to Knecht for 2016. Therefore, the Supplemental ... Lease is a voidable contract.

As to the latter determinations regarding the Supplemental Lease, the circuit court effectively decided that Knecht’s exclusive remedy in the event the grazing permit was not transferred was termination.

[¶13.] The circuit court acknowledged that a written contract takes precedence over any oral agreements and ambiguities in contract language are resolved against the drafter. The court ordered that: (1) Knecht was not obligated to implement an intensified grazing plan as alleged by the Evridges; (2) the Evridges could use Section 36 of their ranch from the beginning of October to the beginning of December under the "shared use" provision in the leases; (3) the Evridges could keep the same number of horses and bulls on the ranch that were on the ranch when Knecht took possession; and (4) the evidence did not establish the leases were subject to rescission.

[¶14.] Following the court trial, the circuit court ordered the clerk of courts to release Knecht’s rent payments to the Evridges. The court also ordered Knecht to pay the second half of the annual rent due under the 2015 Agricultural and Supplemental Leases, as well as the first half of the 2016 Agricultural Lease obligation, totaling $122,325.25. Knecht filed a notice of appeal, alleging that the circuit court’s order was final and appealable, and contending the circuit court erred when it ordered the release of the rent money and additional payments. After the notice of appeal, the circuit court entered an order...

To continue reading

Request your trial
15 cases
  • Suvada v. Muller
    • United States
    • Supreme Court of South Dakota
    • 14 Diciembre 2022
    ...we been the jury.'" Wright, 2021 S.D. 15, ¶ 28, 956 N.W.2d at 446 (alteration in original) (quoting Knecht v. Evridge, 2020 S.D. 9, ¶ 37, 940 N.W.2d 318, 329). "Rather, we determine whether 'there [is] any legal evidence upon which the verdict can properly be based, and [whether] the conclu......
  • Wright v. Temple
    • United States
    • Supreme Court of South Dakota
    • 3 Marzo 2021
    ...and testimony, or what verdict we would have rendered had we been the jury." [956 N.W.2d 447 Knecht v. Evridge , 2020 S.D. 9, ¶ 37, 940 N.W.2d 318, 329 (alteration in original) (quoting Roth v. Farner-Bocken Co. , 2003 S.D. 80, ¶ 25, 667 N.W.2d 651, 661 ). Rather, we determine whether "ther......
  • Godbe v. City of Rapid City
    • United States
    • Supreme Court of South Dakota
    • 5 Enero 2022
    ...to the nonmoving [969 N.W.2d 218 party and resolve reasonable doubts against the moving party. See Knecht v. Evridge , 2020 S.D. 9, ¶ 51, 940 N.W.2d 318, 333 (citation omitted). Further, "[w]e will affirm only when there are no genuine issues of material fact and the legal questions have be......
  • Wright v. Temple
    • United States
    • Supreme Court of South Dakota
    • 3 Marzo 2021
    ...viewed the evidence and testimony, or what verdict we would have rendered had we been the jury." Knecht v. Evridge, 2020 S.D. 9, ¶ 37, 940 N.W.2d 318, 329 (alteration in original) (quoting Roth v. Farner-Bocken Co., 2003 S.D. 80, ¶ 25, 667 N.W.2d 651, 661). Rather, we determine whether "the......
  • Request a trial to view additional results

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