Midway Center Associates v. Midway Center, Inc.

• Decision Date: 19 December 1975
• Docket Number: No. 45467,K-L-K,45467
• Citation: 237 N.W.2d 76,306 Minn. 352
• Parties: MIDWAY CENTER ASSOCIATES Successor toHomes, Inc., Respondent, v. MIDWAY CENTER, INC., et al., Appellants.
• Court: Minnesota Supreme Court

Page 76

237 N.W.2d 76

306 Minn. 352

MIDWAY CENTER ASSOCIATES Successor to K-L-K Homes, Inc., Respondent, v. MIDWAY CENTER, INC., et al., Appellants.

No. 45467.

Supreme Court of Minnesota.

Dec. 19, 1975.

Syllabus by the Court

1. Where contractual provisions of a written agreement are susceptible of variant interpretations in no way dependent upon a resolution of controverted extrinsic evidence, the issue of the parties' intention is one of law for the court to resolve.

2. In such cases, the objective of judicial interpretation is to seek to ascertain and give effect to the parties' intention by the trial court's, and upon appeal the reviewing court's, placing itself in the position of the parties at the time the agreement was negotiated and executed and, upon consideration of the agreement as a whole and the plain meaning of the language used, viewed in the light of the surrounding circumstances, endeavoring to arrive at what the parties must have reasonably contemplated.

3. Upon appeal from the trial court's interpretation of provisions concerning liability for the payment of real estate taxes in a written agreement for the sale and purchase of real estate, Held that the trial court's interpretation, whatever its shortcomings, did not result in prejudicial error to the appellants-sellers.

Maun, Hazel, Green, Hayes, Simon & Aretz, Richard E. Aretz, Geoffrey P. Jarpe, and Philip A. Pfaffly, St. Paul, for appellants.

Thiel, Sorenson & Hansing and Russell A. Sorenson, Minneapolis, for respondent.

Heard before SHERAN, C.J., and ROGOSHESKE and KNUTSON, JJ., and considered and decided by the court en banc.

ROGOSHESKE, Justice.

This appeal challenges the trial court's interpretation of provisions concerning liability for the payment of real estate taxes in a written agreement for the sale and purchase of a shopping center in St. Paul. The parties to the agreement are sellers-defendants, Midway Center, Inc., and Ellerbe Architects, Inc. (of which Midway Center, Inc., is a wholly owned subsidiary), and purchaser, K-L-K Homes, Inc., to which plaintiff, Midway Center Associates, is successor. The purchaser paid the taxes as originally assessed and by this action sought reimbursement from the sellers of $14,247.82, an amount claimed to be in excess of plaintiff's contractual liability. The trial court, upon stipulated facts and documents, awarded $7,123.91, and defendants appeal. Since we are not persuaded that the trial court's interpretation reflects an error prejudicial to the sellers, we affirm.

On December 10, 1969, the parties executed the agreement, which included the following provisions:

'8. CLOSING--SELLER'S PERFORMANCE

'At the Closing, Seller shall deliver to Purchaser the following:

'(m) An assignment of 50 per cent of Seller's rights and claims in respect of refunds on account of overassessment of real estate taxes in respect to the Center, for the 1969 real estate taxes payable in 1970.

'10. CLOSING--ADJUSTMENTS AND APPORTIONMENT

'(c) The Purchaser shall assume and agree to pay the real estate taxes for the Center for the year 1969 in a sum not in excess of $200,000.00 (in the event the 1969 taxes are in excess of $200,000.00, the Seller shall remit to Purchaser the amount of such excess within ten (10) days after receipt of a copy of the tax statement), and the Seller shall assign to the Purchaser all of its right, title and interest in respect of all escrow deposits, which as of the date of closing shall include not less than $50,000.00 in real estate tax escrows, made pursuant to the provisions of the TIAA Mortgage. In addition thereto Seller shall pay to Purchaser for and on behalf of the 1969 real estate taxes the sum of $6,250.00 each month commencing on the second day of January, 1970, until the sum of $56,250.00 has been so paid.'

At the time this agreement was negotiated and executed, the sellers, with the knowledge of the purchaser, had pending an abatement petition challenging the assessed value of the property for the purpose of seeking a reduction of 1969 real estate taxes. Based on the original assessed value and before a decision on the abatement petition, the tax authorities determined the 1969 taxes to be $214,247.82. Under Minn.St.1969, § 279.01, half of this amount was payable prior to June 1, 1970, and the remainder prior to November 1, 1970. However, the purchaser paid the entire amount on April 6, 1970, as a precondition under Minn.St.1969, § 272.12, to recording its conveyance of the property. Thereafter, the sellers' abatement petition resulted in a reduction of $34,725.28 in the 1969 taxes, so that the total tax was $179,522.54 rather than $214,247.82 already paid by the purchaser. Pursuant to paragraph 8(m) of the agreement, half of the refund, or $17,362.64 was remitted by the sellers to the purchaser on August 7, 1970. The sellers refused a demand for additional reimbursement of $14,247.82, the purchaser claiming under paragraph 10(c) that this amount was paid in excess of its $200,000 commitment. The purchaser sued.

The trial court appears to have adopted the purchaser's argument that when $214,247.82 was originally paid, the excess above $200,000 was an advance within the meaning of the parenthetical language in paragraph 10(c). However, it then held that the refund in which the purchaser...