Speck v. Anderson, 13054

• Decision Date: 15 January 1981
• Docket Number: No. 13054,13054
• Parties: Donald SPECK and Joan Speck, Plaintiffs and Appellants, v. George ANDERSON, Defendant and Appellee. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 339

318 N.W.2d 339

Donald SPECK and Joan Speck, Plaintiffs and Appellants, v. George ANDERSON, Defendant and Appellee.

No. 13054.

Supreme Court of South Dakota.

Considered on Briefs Jan. 15, 1981.

Decided April 21, 1982.

Leonard E. Andera of Andera, Margadant & Erickson, Chamberlain, for plaintiffs and appellants.

John B. Wehde and Douglas G. Fosheim of Benson, Wehde & Severson, Huron, for defendant and appellee.

WOLLMAN Chief Justice (on reassignment).

This is an action for specific performance of an option agreement to purchase certain real estate. The trial court granted appellee's motion for summary judgment. ¹ We reverse and remand.

Appellants, Donald and Joan Speck (Specks), operate a farming and ranching operation in Buffalo County, South Dakota. George Anderson (appellee) is the only son of Howard and Wilma Anderson. As a young man, appellee left home and moved to California.

As he grew older and his wife's health began to deteriorate, Howard Anderson became less interested in actively farming his 800 acres of grass and farm land. Accordingly, in 1972 he began renting this land to the Specks.

On December 8, 1976, Howard Anderson signed an agreement that gave the Specks until March 1, 1981, to exercise the right to purchase the 800 acres at $100 per acre.

Howard Anderson died testate on February 8, 1977. By the terms of his will, the land covered by the option was left to appellee. The final decree of distribution was entered on June 19, 1978. Wilma Anderson died on September 25, 1978. No claims were ever filed against either estate regarding the land covered by the option. It was not until October 31, 1978, that the option was filed for record in the office of the Buffalo County Register of Deeds.

On January 11, 1979, the Specks gave notice of acceptance of the option and made tender of the purchase price in full to appellee as successor in interest to Howard Anderson. Appellee refused to accept the tender and refused to deliver a deed to the Specks, whereupon the Specks commenced this action praying for specific performance of the option or, in the alternative, for $40,000 in compensation for services rendered in increasing the value of the land.

The first question raised by this appeal is whether the Specks were obligated to file a claim against the estate of Howard Anderson pursuant to SDCL 30-21-17 in order to preserve their right to enforce the option. SDCL 30-21-17 provides:

The time expressed in the notice to creditors for filing claims shall be two months after the first publication.

All claims arising upon contract whether the same be due, not due, or contingent, shall be filed within the time limited in the notice, and any claim not so filed is forever barred.

In Olsen v. First National Bank, 76 S.D. 605, 613, 83 N.W.2d 842, 847 (1957), this court held that the term "claims," as used in SDCL 30-21-17, refers only to "debts or demands which are collectible from an estate by virtue of having been claims against the decedent in his lifetime." See also Hirning v. Kurle, 54 S.D. 334, 223 N.W. 212 (1929). The purpose of the claims statute is to insure a timely arrangement for full or pro rata payment of claims during the course of administration. Olson v. Altemus, 77 S.D. 429, 93 N.W.2d 7 (1958); Fish v. De Laray, 8 S.D. 320, 66 N.W. 465 (1896).

In Estate of Randall v. McKibben, 191 N.W.2d 693 (Iowa 1971), the Supreme Court of Iowa held that a claim to recover specific property is not the type of claim that must be filed against a decedent's estate.

Likewise, in Johnson v. Johnson, 87 Colo. 207, 286 P. 109 (1930), in holding that the holder of an option to purchase corporate stock was not required to file a claim against the estate of the optionor, the Supreme Court of Colorado stated:

Defendant's counsel contend that, as the plaintiff's demand was not filed with the county court, it is barred by the statute of nonclaim, C.L. Sec. 5331. So far as his rights against the defendant are concerned, it was not necessary for the plaintiff to assert his rights in the probate proceeding. He had an option--a right to purchase--that he did not exercise during the time the estate was being administered. He could have exercised his option while the estate was being administered, in which event he could have enforced the contract against the executor, assuming of course, that he exercised his option while it was still in force ... but he was not obliged to proceed in that way, and he chose not to do so.

286 P. at 111 (citation omitted).

In Newberger v. Rifkind, 28 Cal.App.3d 1070, 104 Cal.Rptr. 663 (1972), the plaintiffs sought to exercise stock options three years after the optionor's death. The court, interpreting a statutory provision similar to SDCL 30-21-17, noted that the word "claim" refers to debts or demands that might have been enforced against the decedent during the decedent's lifetime. The court then held that since the cause of action arose three years following the optionor's death, the plaintiffs were not required to file a claim with the probate court.

In rejecting the contention that the vendee of a contract to convey real estate was obligated to file a claim against the estate of the deceased vendor, the Supreme Court of Wyoming made an extensive review of the case law on the issue in reaching its conclusion that such filing was unnecessary:

Counsel for appellant seem to contend that it was necessary for the plaintiff to file a claim with the administratrix of the estate of [the vendor] in connection with the contract here in question. The contention is not well taken.... In Mix v. Yoakum, 200 Cal. 681, 254 P. 557, 558, the court said: "There is a clear distinction between the cause of action of one who claims specific property held and claimed by the estate adversely to the claimant and a cause of action founded upon a claim against the estate. In the one case the claimant is in no sense a creditor of the estate, and in the other he occupies the position of a creditor." In the case of In re Bailey's Estate, 42 Cal.App.2d 509, 109 P.2d 356, 357, the court after quoting from Mix v. Yoakum, supra, stated: "One who claims as his own specific property held by an estate cannot be called a creditor of the estate. [In re ] Estate of Dutard, 147 Cal. 253, 81 P. 519; Newport v. Hatton, 195 Cal. 132, 231 P. 987. In an action against the executor of an estate to recover specific real property as the owner thereof it is not necessary to file a claim. Cohn v. Cohn, 100 Cal.App. 746, 281 P. 504." To the same effect are In re Bank's Estate, 80 Mont. 159, 260 P. 128; Johnson v. Johnson, 87 Colo. 207, 286 P. 109. Harris v. Craven, 162 Or. 1, 91 P.2d 302, was an action for the purpose of securing specific performance of an alleged oral promise which the plaintiff claimed her husband had made. And it was held that it was unnecessary to file a claim with the estate in order to have the contract specifically performed. The contention of appellant in this connection accordingly must be overruled....

Keystone Sheep Co. v. Grear, 72 Wyo. 189, 263 P.2d 138, 144 (1953). In Crockett v. Lowther, 549 P.2d 303 (Wyo.1976), the Supreme Court of Wyoming reaffirmed the holding in Keystone Sheep Company by stating that the "case also stands for the concept, which we continue to approve, that it is not necessary for a purchaser under a contract to convey realty to file a claim with the personal representative of the decedent in order to assert his rights under the contract." 549 P.2d at 307.

We agree with the reasoning of the above-cited cases. Accordingly, we hold that the Specks were not required to file a claim against Howard Anderson's estate as a condition precedent to exercising the option and maintaining the present suit for specific performance. ²

Appellee contends that SDCL 43-28-17 and 43-25-3 bar the Specks from maintaining this action inasmuch as they failed to record the option. We do not agree.

SDCL 43-28-17 provides in part:

Every conveyance of real property other than a lease for a term not exceeding one year is void as against any subsequent purchaser or encumbrancer including an assignee of a mortgage, lease, or other conditional estate of the same property, or any part thereof in good faith and for a valuable consideration whose conveyance is first duly recorded.

SDCL 43-25-3 provides:

Every grant of an estate in real property is conclusive against the grantor and everyone subsequently claiming under him, except a purchaser or encumbrancer who, in good faith, and for a valuable consideration, acquires a title or lien by an instrument that is first duly recorded.

Putting aside the questions whether appellee was a "purchaser" within the meaning of SDCL 43-28-17 and whether the distribution to him by the final decree was a "grant" within the meaning of SDCL 43-25-3, we are satisfied that appellee is bound by the terms of the option pursuant to SDCL 43-25-14, which provides:

The heirs and devisees of any person who has made any covenant or agreement in reference to the title of, in, or to any real property, are answerable upon such covenant or agreement to the extent of the land descended or devised to them, in the cases and in the manner prescribed by law.

In Woods v. Ely, 7 S.D. 471, 475, 64 N.W. 531, 532-33 (1895), this court interpreted the provisions of SDCL 43-25-14 (at that time S.D.Comp.Laws Sec. 3254) as follows:

We understand it to be the purpose of these and similar provisions in other states not to create a new cause of action, but simply to declare a remedy which may be pursued upon a claim, upon the covenant or agreement of the ancestor. If the heir has succeeded to real property which, as assets of the estate, should be subject to claims against the ancestor on account of such broken covenant or agreement, then the heir so taking such real estate shall be liable to the extent of its value "in the cases and in the manner prescribed by law." See Hill v....