LPN Trust v. Farrar Outdoor Advertising, Inc., s. 19128

• Decision Date: 30 November 1995
• Docket Number: Nos. 19128,19147,s. 19128
• Citation: 552 N.W.2d 796,1996 SD 97
• Parties: LPN TRUST, Plaintiff and Appellee, v. FARRAR OUTDOOR ADVERTISING, INC., Defendant and Appellant. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 796

552 N.W.2d 796

1996 SD 97

LPN TRUST, Plaintiff and Appellee, v. FARRAR OUTDOOR ADVERTISING, INC., Defendant and Appellant.

Nos. 19128, 19147.

Supreme Court of South Dakota.

Considered on Briefs Nov. 30, 1995.

Decided July 31, 1996.

Jon W. Mattson, Deadwood, for plaintiff and appellee.

Doyle D. Estes and Nora K. Kelley, Rapid City, for defendant and appellant.

AMUNDSON, Justice.

¶1 Farrar Outdoor Advertising, Inc. (Lessee) appeals the trial court's decision to reform the lease and evict Lessee. LPN Trust (Trust) filed a notice of review as to the trial court's denial of double damages. We affirm in part, reverse in part and remand as to the issue of reformation.

FACTS AND PROCEDURAL HISTORY

¶2 Nick Leveque, Sr., (Nick) and Lessee entered into the lease on November 8, 1991. Prior to this agreement, said parties had made similar lease arrangements. The lease allowed Lessee to maintain two existing advertising display (billboard) sites and to erect a third display site on Nick's land in Boulder Canyon adjacent to U.S. Highway 14A leading to Deadwood, South Dakota. Commencement of this lease began on May 1, 1991, and was to run for ten years. At Nick's request, however, Lessee wrote a two over the ten, changing the length of the lease to two years. Nick signed the lease himself. Immediately following the initial term, is the following language in the same print size:

... and shall continue thereafter, at the option of the Lessee, for a second term of ten years, and thereafter from year to year, on the same terms, until terminated as of any subsequent anniversary of the effective date by written notice of termination given not less than sixty days prior to such anniversary date by either the Lessor or Lessee.

The lease did not limit the number of billboards to be placed on each site.

¶3 At the time the agreement was signed, Nick was suffering from terminal cancer. However, Nick still handled all of his own business affairs. Nick passed away in July 1992. Trust was established shortly prior to Nick's death, with Nick's three sons, Vic, Nick, Jr., and Mike, as trustees. Trust took possession of all of Nick's property, including the land that was leased to Lessee. By this time, Lessee had invested $30,000 to $50,000 in these three sites and twelve advertisements. Trust next contacted Lessee to renegotiate Lessee's lease payment. Lessee sent Trust a copy of the lease, stating that the lease provided Lessee with a ten-year option. After negotiations to increase the lease payments broke down, Trust sent a notice to quit to Lessee. Originally, Trust commenced suit to evict Lessee on August 19, 1993, alleging the lease expired on April 30, 1993, so Lessee was holding over. On April 28, 1994, Trust amended its complaint to reallege the forcible entry and detainer action and to also seek reformation, or alternatively, rescission or termination of the lease.

¶4 Prior to trial, Lessee made a motion in limine to prohibit Trust from eliciting any parol evidence regarding any alleged oral agreement which modified the written lease. The trial court issued its first memorandum opinion denying Lessee's motion in limine. This decision was based on the trial court's rationale that: (1) the lease was ambiguous, and (2) Trust was alleging the lease was obtained through duress, fraud, undue influence, or mistake. In addition, Lessee requested a separate trial on the forcible entry and detainer action from the reformation proceeding. The trial court originally granted Lessee's request to bifurcate the two actions.

¶5 A court trial was held on August 30, 1994, on the reformation claim. Immediately before the reformation trial, Trust moved to consolidate the two actions. The trial court did not rule on the matter, but indicated that it would hear evidence regarding the forcible entry and detainer action in conjunction with the reformation trial and reserve its ruling. The trial court heard parol evidence from Nick's paramour, Abbie McGillivray, who was present in Nick's car when he signed the lease while standing outside the vehicle, and from two of Nick's sons. This evidence consisted of statements that Nick would not have entered into a long-term lease and that the lease he signed was for two years. Also, there was testimony from Trust claiming that Nick did not intend to allow more than one billboard on each site. However, none of the testimony elicited explicitly contradicted the ten-year option. The trial court issued its second memorandum decision finding that, based upon mistake, Nick signed the lease believing it to be for two years with no option and for only three signs. Therefore, the trial court reformed the original lease to remove the ten-year option. In addition, the trial court consolidated the action for reformation and forcible entry. It awarded $13,846.00 in damages to Trust for Lessee's wrongful use of the property from May 1, 1993, through January 1, 1994. The trial court did not find the holdover to be willful, so it did not award double damages pursuant to SDCL 21-3-8. ¹

ISSUES

I. Did the trial court err by joining the reformation and forcible detainer actions?

II. Whether the trial court correctly admitted parol evidence about the lease?

III. Was mistake present to allow reformation?

IV. Did the trial court correctly assess damages?

V. Are attorney fees and travel expenses properly included as costs?

In addition, Trust filed a notice of review as to the trial court's denial of double damages.

ANALYSIS

¶6 I. Did the trial court err by joining the reformation and forcible detainer actions?

¶7 Lessee argues that the trial court erred by joining the forcible entry and reformation actions because the reformation matter is equitable in nature and, therefore, not permitted in an action for forcible entry and detainer. Trust claims that the action is a forcible detainer action. The record shows this to be a forcible detainer action based on the fact that the parties agreed to proceed under the forcible detainer procedure. Since this was a forcible entry and detainer action, we must now determine if the joinder of this action to the reformation hearing was proper.

¶8 The construction and application of statutes are reviewed de novo, without deference to the trial court. In re Estate of Pierce, 531 N.W.2d 573, 575 (S.D.1995); Muhlenkort v. Union County Land Trust, 530 N.W.2d 658, 660 (S.D.1995). The statute at issue is SDCL 21-16-4 which states: "An action under the provisions of this chapter cannot be brought in connection with any other except for rents and profits or damages[.]"

¶9 In Heiser v. Rodway, 247 N.W.2d 65, 68 (S.D.1976), we stated that "inquiry may be made into equitable considerations in an unlawful detainer action, as long as those considerations are relevant to the right of possession." Distinction between suits in equity and law was abolished in this state by SDCL 15-6-2. ² This action was commenced in circuit court, which has jurisdiction over both equitable actions and actions at law by virtue of SDCL 16-6-8. ³ Forcible detainer actions are intended to prevent protracted litigation by limiting the scope so collateral issues not connected with the question of possession do not burden the proceeding. Heiser, 247 N.W.2d at 67 (citing Rosewood Corp. v. Fisher, 46 Ill.2d 249, 263 N.E.2d 833 (1970), cert. denied, 401 U.S. 928, 91 S.Ct. 924, 28 L.Ed.2d 209 (1971)).

¶10 Trust has raised equitable issues relevant to the question of rightful possession. We are aware that to admit evidence of such matters, even on a limited basis, will interfere with the summary nature of the remedy. We agree with the trial court that interference is warranted in this case. "[The] right ... to be heard on relevant matters ... as well as the desirable purpose of preventing a multiplicity of suits, is, and must be, superior to the desire to provide a speedy remedy for possession." Heiser, 247 N.W.2d at 68 (quotations omitted). This court previously has allowed equitable issues to be raised in forcible entry and detainer actions. See Heiser, 247 N.W.2d at 68 (inquiry was allowed into equitable defenses in a forcible entry and detainer action); Shaw v George, 82 S.D. 62, 67, 141 N.W.2d 405, 407 (1966) (forcible entry and detainer action where court allowed consideration of equitable estoppel issue to determine if lease was valid); Federal Land Bank of Omaha v. Matson, 68 S.D. 538, 541, 5 N.W.2d 314, 315 (1942) (court considered equitable estoppel to prevent invocation of statute of frauds to ascertain if valid lease existed). We affirm the trial court's joinder of the actions.

¶11 II. Was mistake present to allow reformation?

¶12 We will next address the issue of mistake, since this will dispose of the remaining issues. The trial court determined that a unilateral mistake had been made by Nick when he signed the contract, for he did not understand the effect of the ten-year option and did not know that more than one sign would be placed on each site. The trial court revised the lease under SDCL 21-11-1.

¶13 We review a trial court's grant or denial of reformation under an abuse of discretion standard. Knudsen v. Jensen, 521 N.W.2d 415, 420 (S.D.1994). " 'As a general principle, one who accepts a written contract is conclusively presumed to know its contents and to assent to them, in the absence of fraud, misrepresentation, or other wrongful act by another contracting party.' " Flynn v. Lockhart, 526 N.W.2d 743, 746 (S.D.1995) (quoting 17A AmJur2d Contracts § 224 (1991) (emphasis added) (citing Johnson v. Allis Chalmers Corp., 162 Wis.2d 261, 470 N.W.2d 859, 868 (1991))). In granting the reformation, the court merely revises the writing to express their prior agreement. Burke v. Bubbers, 342 N.W.2d 18, 20 (S.D.1984) (citing Garber v. Haskins, 84 S.D. 459, 464, 172 N.W.2d 721, 723 (1969); Essington v. Buchele, 79 S.D. 544, 548-49, 115 N.W.2d 129, 131 (1962)).

"A mistaken party's fault in failing...