Northstream v. 1804 Country Store, 24232.

Citation2007 SD 93,739 N.W.2d 44
Decision Date29 August 2007
Docket NumberNo. 24232.,No. 24257.,24232.,24257.
PartiesNORTHSTREAM INVESTMENTS, INC., Plaintiff and Appellant, v. 1804 COUNTRY STORE CO., Defendant and Appellee.
CourtSupreme Court of South Dakota

Timothy M. Engel and Brittany L. Novotny of May, Adam, Gerdes & Thompson, Pierre, South Dakota, Attorneys for plaintiff and appellant.

James E. Carlon of Carlon Law Office Attorney, Pierre, South Dakota, for defendant and appellee.

JENSEN, Circuit Judge.

[¶ 1.] This is the second appeal by Northstream Investments Inc. (Northstream) in its action to enforce a secured loan made by Security Bank N.A. (Security) to the 1804 Country Store Co. (1804 Store). The continuing question is the validity of a purported assignment of the 1804 Store loan from Security to Northstream. In Northstream Inv., Inc. v. 1804 Country Store Co., 2005 SD 61, ¶ 23, 697 N.W.2d 762, 768 (Northstream I), the Court remanded the case for trial after reversing the trial court's summary judgment decision determining the assignment was invalid. This appeal is from the trial court's decision on remand invalidating the assignment following trial. We reverse and remand to the trial court with instructions to enter judgment in favor of Northstream.

FACTS

[¶ 2.] In September 1991 the 1804 Store executed two promissory notes evidencing a loan obligation to Security. The notes were secured by a real estate mortgage, security agreement and stock pledge agreement. On June 10, 1992, Security's shareholders voted to voluntarily liquidate the bank's assets. The shareholders appointed Paul Nordstrom (Nordstrom) as liquidating agent for the bank and authorized Security's board of directors to continue their duties until the bank's assets were liquidated. Nordstrom controlled the majority interest in Security as the majority shareholder of Northstream, the bank's holding company. The shareholders also approved the sale of substantially all of Security's assets to First National Bank of Pierre (First National) as a part of the liquidation. First National chose not to purchase the 1804 Store loan and a number of other loans from Security.

[¶ 3.] After the sale to First National was completed, Security held its final directors meeting on December 22, 1992. Security continued to hold the loans rejected by First National, including the 1804 Store loan, at the time of the meeting. The directors unanimously approved the following resolution at the meeting:

A motion was made by Gaylord Norman to appoint Paul Nordstrom to serve as liquidating agent to transfer the remaining assets of [Security] to the bank's holding company, Northstream Investments, the sole remaining shareholder, for exchange of stock.

[¶ 4.] The December 22, 1992 Minutes (Minutes) were typewritten and contain the typewritten words "Secretary" and "Marcie Nordstrom" at the bottom of the Minutes. No handwritten signature appears on the Minutes. Marcie Nordstrom was the corporate secretary for Security at this time. She testified that she did not sign the Minutes, but intended the typewritten name to be her signature on the document.

[¶ 5.] Trial testimony was undisputed that Security's directors intended and believed that they assigned the remaining assets, including the 1804 Store loan, to Northstream at the December 22, 1992 meeting. Nordstrom testified that Northstream gave written notice to each borrower, including the 1804 Store, of the loans transferred from Security to Northstream. A written notice purportedly sent to all such borrowers was introduced into evidence, but no documentation was introduced to show that the notice was actually sent to the 1804 Store.

[¶ 6.] Harvey Wald (Wald), the sole shareholder of the 1804 Store, testified that the 1804 Store did not receive written notice of the assignment. Wald testified that the 1804 Store was aware of Security's liquidation and began making payments to First National in January 1993 believing the loan was included in the First National sale. The 1804 Store was subsequently notified by phone that its loan had been transferred to Northstream and that loan payments should be made to Northstream. The 1804 Store then began making monthly payments to Northstream and continued to do so for more than six years.

[¶ 7.] The 1804 Store defaulted on its monthly payments in October 1999 and Northstream commenced this action for foreclosure of the mortgage; replevin of the personal property; and a judgment on the notes. Following a trial on remand from the first appeal, the trial court determined that the 1804 Store loan was a valid loan, but Northstream had no right to enforce the loan obligation because it was not properly assigned to Northstream. The trial court entered findings of fact and conclusion of law and dismissed the action. Northstream appeals the trial court's decision arguing that Security's directors assigned the 1804 Store loan to Northstream at the December 22, 1992 director's meeting and that the Minutes reflect that transfer.

SCOPE OF REVIEW

[¶ 8.] On appeal the trial court's findings of fact are reviewed under the clearly erroneous standard of review. Myers v. Eich, 2006 SD 69, ¶ 18, 720 N.W.2d 76, 82 (additional citations omitted). Conclusions of law are reviewed under the de novo standard of review. Credit Collection Services, Inc. v. Pesicka, 2006 SD 81, ¶ 5, 721 N.W.2d 474, 476. Mixed questions of law and fact are reviewed de novo. Johnson v. Light, 2006 SD 88, ¶ 10, 723 N.W.2d 125, 127.

DECISION

[¶ 9.] The trial court invalidated the purported assignment between Security and Northstream for three reasons, all of which related to the statute of frauds defense raised by the 1804 Store. First, the trial court concluded the Minutes did not satisfy the signature requirement of the statute of frauds because they were not hand signed by Security's corporate secretary. Second, the trial court reasoned that the Minutes did not clearly show a present intent by Security to assign the 1804 Store loan to Northstream. Finally, the trial court determined that the subject matter of the assignment was not sufficiently described in the Minutes. Northstream claims that the trial court erred as to all of these determinations.

[¶ 10.] The 1804 Store does not contest the validity of its loan obligation in this litigation. It only disputes the validity of the purported assignment between Security and Northstream. Neither party has addressed the question of whether the 1804 Store has standing to assert the statute of frauds defense as it relates to the purported assignment between Security and Northstream.1

[¶ 11.] We do not decide this appeal on the standing issue because it has not been properly raised. Nor do we adopt the authorities discussed in the footnote below. Nonetheless, the standing issue bears mentioning because it highlights the difficulty of the 1804 Store as a stranger to the purported assignment relying upon the statute of frauds defense. "The primary purpose of the statute of frauds is evidentiary in nature." Northstream I, 2005 SD 61, ¶ 17, 697 N.W.2d at 766. The writing requirement of the statute of frauds ensures reliable evidence is presented before a contract obligation is enforced against one of the parties to the contract. See SDCL 53-8-2. In this instance, the two parties to the purported assignment, Security and Northstream, both agree that the 1804 Store loan was assigned to Northstream on December 22, 1992. This undisputed fact, along with the writing relied upon by Northstream, is ultimately dispositive of this appeal.

Signature Requirement

[¶ 12.] The Court concluded in Northstream I that the mortgage assignment must be in writing because it involves an interest in real estate. 2005 SD 61, ¶¶ 12-15, 697 N.W.2d at 765-66. The statute of frauds contained in SDCL 53-8-2 provides that those contracts required to be in writing are not enforceable unless the contract or some memorandum thereof is in writing and subscribed by the party to be charged. . . . (emphasis added). The trial court's decision seems to interpret the statute of frauds as requiring a handwritten signature on the document. While the Court has not previously addressed the meaning of the term subscribed under SDCL 53-8-2, the term is inclusive of more than a handwritten signature.

[¶ 13.] Courts from other jurisdictions have consistently approved of a typewritten signature to authenticate a memorandum or contract if the party intended the typewritten name or symbol to be his or her act authenticating the document. Joseph Denunzio Fruit Co. v. Crane, 188 F.2d 569 (9th Cir.1951), cert denied 342 U.S. 820, 72 S.Ct. 37, 96 L.Ed. 620 (1951); Rader Co. v. Stone, 178 Cal. App.3d 10, 223 Cal.Rptr. 806, 812 (1986); Irving v. Goodimate Co., 320 Mass. 454, 458, 70 N.E.2d 414, 416 (1946); Hansen v. Hill, 215 Neb. 573, 579, 340 N.W.2d 8, 12 (1983); Radke v. Brenon, 271 Minn. 35, 40, 134 N.W.2d 887, 891 (1965); Hillstrom v. Gosnay, 188 Mont. 388, 394, 614 P.2d 466, 469 (1980); Weber v. DeCecco, 1 N.J.Super. 353, 356, 61 A.2d 651, 653 (1948); Frohn v. Central Trust Co., 72 N.E.2d 303, 304 (Ohio Ct.App.1946); see also Restatement Contracts (Second) § 210 (1932); Restatement (Second) Contracts § 134 (1981). The traditional form of signature is, of course, the handwritten name of the signer. But initials or any symbol may also be used; and the signature may be written in pencil, typed, printed, made with a rubber stamp or impressed into the paper. George W. Watkins Family v. Messenger, 115 Idaho 386, 766 P.2d 1267, 1270 (1988). "It is generally held that a typewritten `signature' may be sufficient to satisfy the requirements of the Statute of Frauds, but only if the party intends to authenticate the instrument by that act." Jerry Harmon Motors, Inc. v. First National Bank and Trust Co., 472 N.W.2d 748, 753 (N.D.1991) (citations omitted).

[¶ 14.] We hold that the term subscribed contained in SDCL 53-8-2 may...

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4 cases
  • Tolle v. Lev
    • United States
    • Supreme Court of South Dakota
    • November 15, 2011
    ...is enforced against one of the parties to the contract.” Northstream Invs., Inc. v. 1804 Country Store Co., 2007 S.D. 93, ¶ 11, 739 N.W.2d 44, 48. “[T]he term ‘subscribed’ contained in SDCL 53–8–2 may include a typewritten name or other symbol of authentication where the party intends such ......
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    ......Northstream Investments, Inc. v. 1804 Country Store Co., 739 N.W.2d 44, ......

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