Northway v. Whiting, C2-88-2088
| Decision Date | 07 March 1989 |
| Docket Number | No. C2-88-2088,C2-88-2088 |
| Citation | 436 N.W.2d 796 |
| Parties | Edward NORTHWAY, et al., Appellants, v. Jean S. WHITING, as Executor of the Estate of James G. Whiting, Respondent. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
1. The trial court was correct in granting summary judgment, though on grounds other than failure to satisfy the statute of frauds.
2. The trial court properly exercised its discretion in denying respondent's request for attorney fees, costs, and disbursements.
Donald J. Brown, Joseph C. Nauman, Winthrop & Weinstine, St. Paul, for appellants.
Paul G. Neimann, Mitchell H. Cox, Moss & Barnett, P.A., Minneapolis, for respondent.
Heard, considered and decided by FOLEY, P.J., and FORSBERG and MULALLY, * JJ.
Appellants Edward Northway and Jean Stiegemeier seek reversal of the trial court's summary judgment on the failure to satisfy the statute of frauds on the contract claim. Respondent Jean S. Whiting, as Executor of the Estate of James G. Whiting, seeks reversal of the denial of the motion for attorney fees, costs, and disbursements. We affirm.
In August or September 1985, appellants discussed the possibility of buying the Nisswa State Bank. Appellant Northway in November or December 1985 then contacted James Whiting ("Whiting") as majority shareholder to arrange a meeting with him so they could discuss the possibility of buying the bank. The initial meeting was held in Nisswa and Whiting disclosed his stock holdings in the bank and suggested payment terms in the event of a sale. At a second meeting, Whiting indicated the "classified" (higher risk) loans would be under $100,000 at the next examination.
After the meeting, Whiting received a letter dated January 10, 1986. Some changes were made, and the letter was retyped with the same date and signed by Whiting. There were several conditions precedent as part of appellants' offer including that (1) on the closing date the classified loans would not exceed $100,000 and the capital would not be less than present capital, (2) the parties would enter into a definitive stock purchase agreement with standard representations and warranties, and (3) appellants would review and approve the loan portfolio.
Appellants had their banking expert examine the bank's loan portfolio on approximately January 16, 1986. The examination showed the classified loans were closer to $1,000,000 than $100,000. As a result, the parties negotiated the issue of who should be liable for the classified loans that would be required to be written off or written down after the sale.
Appellants state that Whiting agreed to guarantee the post-sale loan losses up to the amount of the note due him from appellants. They contend this agreement was reached at a meeting of the parties prior to May 23, 1986, when appellants' counsel sent a letter to Whiting. Whiting disputes agreeing to the loan guarantee/note setoff provisions. He claimed that he expressed his inability to agree to the terms of the stock purchase agreement which accompanied a July 1, 1986 letter from appellants' counsel. Whiting claimed there was a meeting sometime during July 7 to 10, 1986, at which he told appellants he could not agree to the terms of the stock purchase agreement. Whiting stated there was a second meeting on approximately July 18 or 19, 1986, at which he indicated he was not in accord with the provisions of the proposed stock purchase agreement, in particular the loan guarantee.
The parties agree there was at least one meeting after appellants' counsel mailed the July 1, 1986 letter and stock purchase agreement to Whiting. Appellant Northway in his deposition indicated that appellants went to the bank to sign the stock purchase agreement in July (1986), and that after some small talk Whiting announced
According to Whiting, at the July 18 or 19 meeting appellants tried to force him to sign the stock purchase agreement. He said he would not sign it, was threatened with a lawsuit, and concluded he would not be comfortable continuing discussion.
Appellants brought suit in August 1986 requesting specific performance for breach of contract for the sale of securities and for damages for fraud and misrepresentation. Whiting's motion for summary judgment was granted in June 1987 on the breach of contract claim based on appellants' failure to satisfy the statute of frauds, but denied as to the fraud claim. Appellants moved and were granted a motion to dismiss their fraud and misrepresentation claim.
Respondent moved for an award of costs, disbursements, and attorney fees, which was denied in September 1988.
1. Did the trial court err in granting Whiting's motion for summary judgment based on the statute of frauds?
2. Did the trial court abuse its discretion in denying respondent's motion for attorney fees under Minn.Stat. Sec. 549.21, subd. 2?
In reviewing a grant of summary judgment, an appellate court must determine whether there are any genuine issues of material fact and whether trial court erred in its application of the law. Betlach v. Wayzata Condominium, 281 N.W.2d 328, 330 (Minn.1979). The evidence is viewed in the light most favorable to the party who lost the motion below. Franklin Auto Body Co. v. Wicker, 414 N.W.2d 509, 511 (Minn.Ct.App.1987).
1. Even if appellants could show satisfaction of one of the alternative provisions under Minn.Stat. Sec. 336.8-319 (1986) for statute of frauds purposes, they would still have the burden of proving the existence of an enforceable contract for the sale of securities. Respondent asserts that if appellants are not precluded from enforcing the contract by the statute of frauds, the contract is still not enforceable because the parties made the execution of a "definitive stock purchase agreement with standard representations and warranties" a condition precedent for the contract.
Appellants argue that whether the contract is unenforceable for reasons other than the statute of frauds is not an issue properly before this court. However, we may affirm a summary judgment if there are no genuine issues of material fact and if the decision is correct on other grounds. Braaten v. Midwest Farm Shows, 360 N.W.2d 455, 457 (Minn.Ct.App.1985) ().
In the January 10, 1986 letter, which the parties' attorneys signed, appellants' offer was contingent upon, inter alia, "entering into a definitive stock purchase agreement with standard representations and warranties." Respondent asserts that this clause means the parties made the "execution" of a definitive stock purchase agreement a condition precedent. The construction of the terms "entering into a definitive stock purchase agreement" could arguably mean either agreeing orally or in writing.
In the July 1, 1986 letter appellants' attorney stated with reference to the stock purchase agreements:
Section 7 dealing with representations and warranties is quite lengthy, but is a good checklist to make sure that all items are covered. Certainly it is beneficial from both sides of the transaction to make sure that full and complete disclosure is made prior to the entering into of this agreement.
(Emphasis added.) This letter was drafted after the date which appellants claim Whiting agreed to sell them the bank stock on their terms. The emphasized language shows that appellants believed the stock purchase agreement had not yet been "entered into" because it had not been duly executed by the parties. The nature of the transaction, the length and detail of the stock purchase document, the designated spaces for signatures on the document, and the blank space for the effective date of the transfer also suggest that appellants considered "entering into" to mean the execution of a written stock purchase agreement. Moreover, in their brief on appeal, appellants interpret "entering into a definitive stock purchase agreement" as meaning " * * * the execution by the parties of a definitive stock purchase agreement * * *." (Emphasis added.)
There is thus very little doubt that the parties intended "entering into a definitive stock purchase agreement" to mean execution of such a document. All the parties intended the agreement not to be binding until the execution...
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