Mattson v. Rachetto, 20543

• Court: South Dakota Supreme Court
• Writing for the Court: GILBERTSON
• Citation: Mattson v. Rachetto, 1999 SD 51, 591 N.W.2d 814 (S.D. 1999)
• Decision Date: 24 February 1999
• Docket Number: No. 20543,20543
• Parties: Jon W. MATTSON and Barbara Mattson, Plaintiffs and Appellees, v. Jerry C. RACHETTO and Joan Rachetto, Defendants and Appellants. . Considered on Briefs

Page 814

591 N.W.2d 814

1999 SD 51

Jon W. MATTSON and Barbara Mattson, Plaintiffs and Appellees, v. Jerry C. RACHETTO and Joan Rachetto, Defendants and Appellants.

No. 20543.

Supreme Court of South Dakota.

Considered on Briefs Feb. 24, 1999.

Decided April 21, 1999.

James S. Nelson and Paul S. Swedlund of Gunderson, Palmer, Goodsell & Nelson, Rapid City, for plaintiffs and appellants.

Jerry C. Rachetto, Deadwood, for defendants and appellants.

GILBERTSON, Justice.

¶1 Jon W. Mattson and Barbara Mattson (the Mattsons) filed suit against Jerry C. Rachetto and Joan Rachetto (the Rachettos) for rescission of a land contract. The Rachettos counterclaimed. Cross-motions for summary judgment were filed on all issues. The circuit court granted the Mattsons' motion for summary judgment on the Rachettos' counterclaims and the Mattsons' motion for summary judgment on their complaint for rescission. Evidentiary hearings on equitable adjustments and costs were held and the trial court entered its written findings of fact, conclusions of law and judgment. The Rachettos appeal. We affirm.

FACTS AND PROCEDURE

¶2 Jon and Barbara Mattson are husband and wife. Jerry and Joan Rachetto are husband and wife. Jerry Rachetto and Barbara Mattson are brother and sister. Additionally, Jon Mattson and Jerry Rachetto are both attorneys who shared a law office in Deadwood. The general facts are below, other relevant facts will be included in the respective issues.

¶3 In 1974 when Jerry Rachetto returned to Deadwood from law school, he went to work for Jon Mattson. He later expressed a desire to build a house on Tract A of the Mattson Ranch. The Mattsons deeded Tract A to Jerry and Joan Rachetto. Tract A consisted of 1.837 acres. No money was paid for this land. The Mattsons also gave the Rachettos an easement through their ranch property so the Rachettos could access their house from the highway. The easement passed through Tract C and the Ray Placer Sub-division.

¶4 In 1984, the Rachettos approached the Mattsons about buying Tract C so they could have a buffer zone between Rachettos' property and the Ray Placer Sub-division to ensure no future development adjacent to the Rachetto home. Tract C was composed of approximately eighteen (18) acres. The Mattsons were willing to sell Tract C but not without a specific leaseback provision that allowed them to cultivate hay and graze livestock on the tract for their lifetime. The Mattsons sold Tract C to the Rachettos for the consideration of $26,959.50 and the agricultural leaseback. The Mattsons also agreed to reimburse the Rachettos for the real property tax levied against the property for the term of the agricultural lease. ¹ The price charged was far less than the value of other lots on the ranch.

¶5 After several drafts of the agreement, the parties agreed to the terms for the sale. Neither party knew or realized the agricultural lease was void under SDCL 43-32-2. ² In 1996, Jerry Rachetto came across the decision of Commercial Trust & Sav. Bank v. Christensen, 535 N.W.2d 853 (S.D.1995), in which we interpreted part of SDCL 43-32-2. The Rachettos, without informing the Mattsons of this discovery, erected an electric fence around Tract C. The Mattsons did not discover the mistake until the Rachettos put up the electric fence. Jerry Rachetto, when confronted, brought the Christensen case to the Mattsons' attention.

¶6 When the Mattsons learned the agricultural lease was invalid as a matter of law, they attempted to negotiate some type of compromise. All offers were rejected by the Rachettos, as they wanted to use the land for their own purposes. ³ The Mattsons attempted to tender rescission offering the purchase price plus interest. The Rachettos refused.

¶7 The Mattsons then filed a complaint for rescission of the land contract. The Rachettos counterclaimed raising various issues concerning Tract C and issues over other lands in the area owned by the Mattsons. Cross-motions on summary judgment were filed on all issues. The trial court granted the Mattsons' motion for summary judgment on the complaint for rescission and also summary judgment dismissing Rachettos counterclaims. Evidentiary hearings on equitable adjustment and costs were held. The Rachettos appeal raising seven issues, of which we will consider two.

1. Whether the trial court erred or abused its discretion in granting the Mattsons' motion for summary judgment on their claim for rescission.

2. Whether the trial court erred or abused its discretion in not setting interest pursuant to statutory interest rates applicable to damages. ⁴

STANDARD OF REVIEW

¶8 Our standard of review for a trial court's grant of a motion for summary judgment is well settled. As we recently stated in Estate of Shuck v. Perkins County:

Summary judgment is authorized "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law." SDCL 15-6-56(c). We will affirm only when there are no genuine issues of material fact and the legal questions have been correctly decided. Bego v. Gordon, 407 N.W.2d 801, 804 (S.D.1987). All reasonable inferences drawn from the facts must be viewed in favor of the non-moving party. Morgan v. Baldwin, 450 N.W.2d 783, 785 (S.D.1990). The 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. Wilson v. Great N. Ry. Co., 83 S.D. 207, 212, 157 N.W.2d 19, 21 (1968).

1998 SD 32, p 6, 577 N.W.2d 584, 586 (1998) (citations omitted). "Summary judgment is a preferred process to dispose of legally unmeritorious claims." Kobbeman v. Oleson, 1998 SD 20, p 4, 574 N.W.2d 633, 635 (emphasis added) (citing Horne v. Crozier, 1997 SD 65, p 5, 565 N.W.2d 50, 52; Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 2555, 91 L.Ed.2d 265, 276 (1986)).

¶9 For equitable remedies, this Court's standard of review is abuse of discretion by the trial court after reviewing the facts and circumstances of the case. Amdahl v. Lowe, 471 N.W.2d 770, 773 (S.D.1991) (citing Wiggins v. Shewmake, 374 N.W.2d 111 (S.D.1985); Dolan v. Hudson, 83 S.D. 144, 156 N.W.2d 78, aff'd on rehearing, 83 S.D. 331, 159 N.W.2d 128 (1968)). "We determine that an abuse of discretion occurred only if no judicial mind, in view of the law and the circumstances of the particular case, could reasonably have reached such a conclusion." Gilkyson v. Wheelchair Express, Inc., 1998 SD 45, p 6, 579 N.W.2d 1, 3.

ANALYSIS AND DECISION

¶10 1. Whether the trial court erred or abused its discretion in granting the Mattsons' motion for summary judgment on their claim for rescission.

¶11 The Rachettos claim the trial court erred or abused its discretion in allowing summary judgment on the Mattsons' count for rescission of the 1984 land sale. They claim the Mattsons do not need the land for agricultural use but instead want it back because of its significant increase in value and their desire to sub-divide the land. The Rachettos also claim the Mattsons should not be allowed rescission because they come before the court with unclean hands as the Mattsons have an obvious, devious motive. The Rachettos claim these are genuine issues of material fact that should preclude summary judgment.

¶12. a. Rescission.

¶13 SDCL 21-12-1 provides:

The rescission of a written contract may be adjudged on the application of a party aggrieved:

(1) In any of the cases mentioned in § 53-11-2[.]

SDCL 53-11-2 creates grounds for rescission:

A party to a contract may rescind the same in the following cases only:

(1) If consent of the party rescinding or of any party jointly contracting with him was given by mistake ...;

(2) If through fault of the party as to whom he rescinds, the consideration for his obligation fails in whole or in part;

(3) If the consideration becomes entirely void from any cause;

(4) If such consideration before it is rendered to him fails in a material respect from any cause[.]

¶14 The Mattsons argue that SDCL 53-11-2 provides three separate justifications for rescission of the contract. First, they claim rescission is permissible due to a mistake of law. The Mattsons contend both parties made a mutual mistake of law--the lifetime agricultural leaseback in the contract. Second, they claim rescission is appropriate because the illegality of the agricultural leaseback provision of consideration renders the contract void under SDCL 53-6-5 ⁵ and SDCL 53-6-6. ⁶ As we agree that rescission is permissible due to mistake of law, we will not consider the Mattsons' second claim.

¶15 b. Mistake of Law.

¶16 The Mattsons claim that both parties made a mistake of law as defined in SDCL 53-4-10. This provision states:

A mistake of law in relation to consent to contract constitutes a mistake resulting in voidable consent only when it arises from:

(1) A misapprehension of the law by all parties, all supposing that they knew and understood it and all making substantially the same mistake as to the law[.]

¶17 "The equitable relief of rescission, being extraordinary, should never be granted, except where the evidence is clear and convincing." Vermilyea v. BDL Enterprises, Inc., 462 N.W.2d 885, 888 (S.D.1990) (citing Windedahl v. Harris, 37 S.D. 7, 156 N.W. 489 (1916)). In an equity case, we are required to read all the evidence produced and give consideration to the facts and circumstances in the record. Id.

¶18 The Mattsons had worked very hard over the years to build up their family ranch. They only acquired title to Tract C after a long struggle with the federal government. Tract C was the best hay and watering ground they had for their livestock. They sold Tract C to their relatives, the Rachettos, only because the Rachettos were close relatives, expressed their concerns over the encroaching...