Sorlie v. Ness
| Decision Date | 17 August 1982 |
| Docket Number | No. 10114,10114 |
| Citation | 323 N.W.2d 841 |
| Parties | Alton Glenn SORLIE, Plaintiff and Appellee, and The Bismarck Tribune Company, Involuntary Plaintiff and Appellee, v. Dale Sorlie NESS, Clayton O. Panter, Bradley F. Henke, Dale V. Ness, and Logansport Newspapers, Inc., a corporation; and Dale S. Ness and Dale V. Ness as Trustees under the Will of Evelyn Irene Ness, Defendants and Appellants. Civ. |
| Court | North Dakota Supreme Court |
John A. Zuger and Lyle W. Kirmis, of Zuger & Bucklin, Bismarck, for plaintiff and appellee.
A. William Lucas, of Lundberg, Conmy, Nodland, Lucas & Schulz, Bismarck, for involuntary plaintiff and appellee.
Christine A. Hogan and Harold L. Anderson, of Pearce, Anderson & Durick, Bismarck, for defendants and appellants.
This is an appeal from a declaratory judgment entered pursuant to Chapter 32-23, N.D.C.C., construing a document entitled "Stock Transfer Agreement With Option," dated April 3, 1956 ("1956 Agreement"), and signed by Stella Mann and Evelyn Ness. We affirm.
The 1956 Agreement provides, in its entirety:
Subsequent to the execution of the 1956 Agreement there was a stock division of Bismarck Tribune Company stock into Class A voting stock and Class B nonvoting stock, a recapitalization of the stock, and a dividend distribution upon both classes of stock on a ratio of 20 to 1. As a result of those actions each share of Bismarck Tribune Company stock became 21 shares of Class A voting stock and 21 shares of Class B nonvoting stock. Thus the ten shares of stock referred to in the 1956 Agreement became the equivalent of 210 shares of Class A stock and 210 shares of Class B stock.
Subsequent to the stock division, recapitalization, and dividend distribution the total authorized and outstanding stock of the Bismarck Tribune Company consisted of 2,541 shares of Class A voting stock and 2,541 shares of Class B nonvoting stock held by the shareholders as follows:
Class A Class B
Shares Shares
------- -------
Stella Mann 1,449 1,449
Glenn Sorlie 546 546
Evelyn Ness 483 483
Others 63 63
------- -------
2,541 2,541
During 1971 Glenn Sorlie exercised an option to purchase 800 shares of Class A voting stock from Stella for a total price of $28,568. During 1972 Glenn purchased 21 shares of Class A voting stock and 21 shares of Class B nonvoting stock from William Moeller, and Glenn transferred 13 shares of his Class A voting stock to Helen Sorlie.
Stella died in 1973. At the time of her death she held 649 shares of Class A Bismarck Tribune Company voting stock, all of which she requeathed to Evelyn. She also held 1,449 shares of Class B nonvoting Bismarck Tribune Company stock which she bequeathed to Evelyn and Glenn, with each receiving one-half of those shares.
Evelyn died in 1976. She did not sell or otherwise transfer during her lifetime any of the Bismarck Tribune Company stock that she had acquired, but she bequeathed all of that stock to her husband, Dale V. Ness, her son, Dale S. Ness, and the Evelyn Sorlie Ness Trust. Glenn, as president of the Bismarck Tribune Company, issued stock certificates to Evelyn's beneficiaries with no restrictions endorsed on the face of the certificates.
During July 1978 Glenn contracted to sell 2,545.5 shares of Bismarck Tribune Company stock to Lee Enterprises, Inc., at $1,800 per share, for a total price of $4,581,900. By that sale Lee Enterprises, Inc., purchased all of Glenn's stock in the Bismarck Tribune Company except 100 shares of Class A stock to which it received an option to purchase from Glenn. During August 1978 the beneficiaries of Evelyn's Bismarck Tribune Company stock gave Logansport Newspapers, Inc., an option to purchase all their stock (922 Class A shares and 997.5 Class B shares) with the exception of 210 shares of Class A and 210 shares of Class B stock which were labeled "tainted shares," the sale of which was to depend upon the ultimate determination of the various parties' rights under the 1956 Agreement. Logansport Newspapers, Inc., agreed to pay them, upon exercise of its purchase option, $1,997.94 per share for a total price of $3,835,045.83.
During October 1978 Glenn was notified that Dale S. Ness desired to transfer two shares of Bismarck Tribune Company stock which he had inherited from Evelyn: one share to Bradley F. Henke and one share to Clayton O. Panter. Upon receiving notice of the attempted transfer of those two shares, Glenn advised Dale S. Ness that he was going to exercise his option to purchase the two shares of stock pursuant to the 1956 Agreement. The Nesses responded that in their opinion the 1956 Agreement no longer was valid, and thereafter Glenn filed a declaratory-judgment action requesting the district court to construe the agreement.
The district court, by allowing the introduction of parol evidence to explain the 1956 Agreement, impliedly determined that it was ambiguous. See National Bank of Harvey v. Pauly, 280 N.W.2d 85 (N.D.1979). The district court construed paragraph No. 3 of the 1956 Agreement as giving Glenn an option to purchase Evelyn's stock covered by the agreement if that stock was sold or transferred by a Ness to a third party outside the Ness family. The district court concluded that the option to Glenn was not triggered by a devolution of the stock under Evelyn's will to her husband, her son, and the Evelyn Sorlie Ness Trust and that the 1956 Agreement survived Evelyn's death so that the sale of Evelyn's stock by one of her beneficiaries to a third party triggered Glenn's option to purchase the stock. The district court further concluded that the Nesses' sale of the Bismarck Tribune Company stock to Logansport Newspapers, Inc., triggered Glenn's option rights under the 1956 Agreement, entitling him to purchase 210 shares of Class A stock and 210 shares of Class B stock from Dale V. Ness, Dale S. Ness, and the Evelyn Sorlie Ness Trust on a pro rata basis according to the number of shares each had received from Evelyn. 1 The parties stipulated that the book value of the Bismarck Tribune Company stock, for purposes of ascertaining the purchase price at which Glenn could acquire the stock through his option under the 1956 Agreement, is $322.75 per share.
On appeal the Nesses assert that the district court incorrctly construed the 1956 Agreement and further assert that the 1956 Agreement no longer is in effect nor binding upon them.
The construction of a written contract to determine its legal effect is a question of law for the court to decide. Metcalf v. Security International Ins. Co., 261 N.W.2d 795 (N.D.1978). The determination of whether or not a contract is ambiguous is also a question of law for the court to decide. Schulz v. Hauck, 312 N.W.2d 360 (N.D.1981); Grove v. Charbonneau Buick-Pontiac, Inc., 240 N.W.2d 853 (N.D.1976). Pursuant to Section 9-07-04, N.D.C.C., the intention of the parties under a written contract is to be ascertained from the writing alone if possible. If the parties' intentions can be ascertained from the writing alone, without reference to extrinsic evidence, then the interpretation of the contract is entirely a question of law, and this court will independently examine and construe the contract to determine whether or not the district court erred in its interpretation of it. Metcalf v. Security International Ins. Co., supra; Stetson v. Blue Cross of North Dakota, 261 N.W.2d 894 (N.D.1978). But, if the parties' intentions cannot be determined from the writing alone and reference must be made to extrinsic evidence, then those questions in regard to which extrinsic evidence is adduced are questions of fact to be determined by the trier of fact. Farmers Elevator Company v. David, 234 N.W.2d 26 (N.D.1975); Stetson v. Investors Oil, Inc., 140 N.W.2d 349 (N.D.1966).
Upon reviewing the 1956 Agreement we agree that the provisions relevant to this litigation are ambiguous and...
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