Schlosser v. Norwest Bank South Dakota, N.A., No. 18081

• Court: Supreme Court of South Dakota
• Writing for the Court: KEAN; HENDERSON; SABERS; MILLER, C.J., and WUEST; KEAN, Circuit Judge, for AMUNDSON; SABERS; WUEST; MILLER
• Citation: 506 N.W.2d 416
• Parties: Jim C. SCHLOSSER and Katherine M. Schlosser, Plaintiffs and Appellants, v. NORWEST BANK SOUTH DAKOTA, N.A., as Trustee of the Estate of Otto Borchgrevink, and Valley National Bank, as Executor of the Estate of Phyllis Borchgrevink, Defendants and Appellees.
• Decision Date: 08 September 1993
• Docket Number: No. 18081

Page 416

506 N.W.2d 416 Jim C. SCHLOSSER and Katherine M. Schlosser, Plaintiffs and Appellants,
v.
NORWEST BANK SOUTH DAKOTA, N.A., as Trustee of the Estate of
Otto Borchgrevink,
and
Valley National Bank, as Executor of the Estate of Phyllis
Borchgrevink, Defendants and Appellees. No. 18081. Supreme Court of South Dakota. Sept. 8, 1993.
Rehearing Denied Oct. 15, 1993.

Harlan A. Schmidt, Spearfish, for plaintiffs and appellants.

Ronald E. Clabaugh of Bangs, McCullen, Butler, Foye & Simmons, Rapid City, for defendant and appellee Norwest Bank South Dakota, N.A.

Kenneth L. Heisterkamp and William A. May of Costello, Porter, Hill Heisterkamp & Bushnell, Rapid City, for defendant and appellee Valley Nat. Bank.

KEAN, Circuit Judge.

Otto and Phyllis Borchgrevink (Borchgrevinks) were owners of a large ranch which straddled the Wyoming and Montana state line. Three thousand one hundred fifty-five acres were in Crook County, Wyoming, and 4002 acres were in Carter County, Montana. The ranch was sold in 1979 on a contract for deed to Jim C. and Katherine M. Schlosser (Schlossers). Annual installments were payable through 1994. A clause in the contract allowed the Borchgrevinks to reserve a joint life interest in the brick dwelling house (and other surrounding area) which house was located on the Montana property.

Otto Borchgrevink died in 1982. Phyllis Borchgrevink remained in possession of the brick dwelling until December 16, 1988, when the dwelling was destroyed by a fire. Neither the Borchgrevinks nor the Schlossers had purchased insurance to cover the fire loss. Prior to Phyllis Borchgrevink's death in 1992, the Schlossers made demand upon her and Norwest Bank of South Dakota, which had succeeded to Otto Borchgrevink's interest in the contract as trustee under his will, for a reduction in the balance due on the contract commensurate with the value of the brick dwelling. That request was refused. After Phyllis Borchgrevink's death, Valley National Bank became her executor.

The refusal to adjust the contract brought on this legal proceeding. The Schlossers allege two grounds for relief. First, the Borchgrevinks had the obligation under the contract to maintain insurance upon the now destroyed dwelling. Second, regardless of the contract, common and statutory law placed the risk of loss with the Borchgrevinks (now their legal successors). The Schlossers seek as relief a reduction in the contract amount corresponding to the value of the structure or its replacement upon the Montana land.

After service of the summons and complaint and before an answer was filed, the defendants (Norwest Bank and Valley National Bank as trustee of Otto's estate and executor of Phyllis' estate respectively) separately moved for judgment of dismissal under SDCL 15-6-12(b) asserting that the complaint failed to state a claim upon which relief can be granted. A separate hearing upon the motion was held on each motion, but there was no record of those hearings. In separate opinions the trial court concluded that each motion should be granted. In so ruling the court concluded: (1) the Borchgrevinks had only a life estate in the dwelling; (2) the contract did not require the Borchgrevinks to maintain insurance on the dwelling; and, (3) under Montana case law the risk of loss is with the buyer once the contract is signed citing the decision of Sharbono v. Darden, 220 Mont. 320, 715 P.2d 433, 435 (1986). The trial count also made a separate ruling as to Norwest Bank, Otto Borchgrevink's trustee, holding that upon his death any obligation he might have had terminated any obligation of the trustee.

In the case of Janklow v. Viking Press, 378 N.W.2d 875, 877 (S.D.1985), this Court in ruling upon a dismissal under a Rule 12(b)(5) motion held:

We first examine the issue on granting the SDCL 15-6-12(b)(5) motion. A motion under SDCL 15-6-12(b)(5) is identical to a motion under FRPC 12(b)(6). For convenience hereafter, defendants' motions will be referred to as Rule 12(b)(5) motions. We hold that the trial judge did err in granting it.

In its decision, the trial court correctly noted that, for the purposes of the motion,

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the complaint is construed in the light most favorable to the pleading party, facts "well pled" and not mere conclusions may be accepted as true and doubts are resolved in favor of the pleader. It is also noted, "pleadings should not be dismissed merely because the court entertains doubts as to whether the pleader will prevail in the action as this is a matter of proof, not pleadings. The rules of procedure favor the resolution of cases upon the merits by trial or summary judgment rather than on failed or inartful accusations." Citing 5 C. Wright & A. Miller, Federal Practice and Procedure, Sec. 1357 (1971). The trial court then points out the exception noted in Wright & Miller for traditionally disfavored causes of action such as libel.

In a concurring opinion Justice Henderson opined:

This appeal is not a case deciding whether Janklow is right or wrong or the publisher, author, or book sellers are right or wrong; or whether Janklow was or was not libeled; it is only to decide, in law, if his complaint states a cause of action for libel.

* * * * * *

"A motion to dismiss ... tests the law of a plaintiff's claim and not the facts which support it." Hunt v. Hunt, 309 N.W.2d 818, 820 (S.D.1981).

Id. at 882. In accord, Johnson v. Kreiser's, Inc. 433 N.W.2d 225, 226 (S.D.1988) (a case involving wrongful termination under the public policy exception to the at-will employment doctrine under SDCL 60-4-4) and Akron Savings Bank v. Charlson, 83 S.D. 251, 158 N.W.2d 523 (1968).

In determining whether to grant the Rule 12(b)(5) motion, the court considers the complaint's allegations and any exhibits which are attached. The court accepts the pleader's description of what happened along with any conclusions reasonably drawn therefrom. The motion may be directed to the whole complaint or only specified counts contained in it. The motion "is viewed with disfavor and is rarely granted." The test most often applied is found in the leading case of Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80, 84 (1957):

In appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.

The question is whether in the light most favorable to the plaintiff, and with doubt resolved in his or her behalf, the complaint states any valid claim of relief. The court must go beyond the allegations for relief and "examine the complaint to determine if the allegations provide for relief on any possible theory." 5 C....