Talley v. Talley
| Decision Date | 16 July 1997 |
| Docket Number | No. 19739,19739 |
| Citation | 1997 SD 88,566 N.W.2d 846 |
| Parties | Arlene T. TALLEY, Plaintiff and Appellee, v. Harmon Anthony TALLEY, Defendant and Appellant. |
| Court | South Dakota Supreme Court |
Randall L. Macy of Buckmaster & Macy, Belle Fourche, for plaintiff and appellee.
Frank J. Driscoll of DeMersseman Jensen, Rapid City, for defendant and appellant.
¶1 H. Anthony Talley appeals the trial court's judgment rescinding a series of contracts between him and his mother, Arlene Talley. The court also denied Anthony's counterclaim for specific performance. We affirm.
¶2 Donald and Arlene Talley owned a 4,300-acre ranch near Opal, South Dakota. Shortly after Donald's death, Arlene employed Anthony, their youngest son, to manage the ranch beginning in the fall of 1985. In return, he was paid a monthly wage, given an agreed number of cattle to start his own herd and provided with a mobile home. Anthony continued to manage the ranch as a cow/calf/yearling operation under this arrangement for five years.
¶3 In 1990, Anthony and Arlene discussed arrangements for Anthony to either purchase or acquire an interest in the ranch. At Arlene's suggestion, Anthony met with an attorney to discuss executing such an arrangement. The attorney drafted four contracts to allow Anthony to lease the ranch and equipment with the option to purchase, provide for grazing and care of Arlene's cattle and provide for the purchase of certain shop tools by Anthony. The contracts were executed by the parties on November 21, 1990, retroactive to November 1, 1990.
¶4 The "real estate lease" gave Anthony the right to lease the ranch for a period of ten years, from November 1, 1990, through October 31, 2000, with the option to purchase during that time for a fixed price with definite terms. Under the terms of the lease and option agreement, one-half of Anthony's lease payments would be credited to the purchase price of the ranch in the event he exercised the purchase option. The lease gave Arlene the right to use and occupy the house and garage located on the ranch rent-free. 1 In addition, the lease required the land be used for ranching purposes consistent with its past use and the buildings and fences on the property be maintained in their current state of repair.
¶5 The "equipment lease" gave Anthony the right to lease all the equipment owned by Arlene necessary to operate the ranch. This agreement was for a term of ten years and provided Anthony the option to purchase during that term. One-half of the payments made by Anthony prior to exercising the option to purchase the equipment was to be credited to the purchase of the equipment. Pursuant to the terms of the lease, Anthony was responsible for the maintenance and repair of the equipment and Arlene was responsible for insuring the equipment. The lease specifically provided for the replacement of equipment and stated:
VI.
That in the event, during the term of this Equipment Lease with Option to Purchase, any piece of equipment shall become unusable, stolen or destroyed, [Arlene] may, at her option, replace said equipment, which replacement equipment shall become part of this Equipment Lease with Option to Purchase.
VII.
That in the event, during the term of this Equipment Lease with Option to Purchase, should any piece of equipment be traded in on new equipment or traded in on other equipment, the replaced equipment shall become the property of [Anthony], and [Anthony] shall be responsible to pay to [Arlene] a sum equal to the amount allowed on the trade-in of that piece of leased equipment.
The parties agreed the equipment lease would terminate in the event the real estate lease terminated for any reason.
¶6 The third instrument executed by the parties, a "grazing agreement," required Anthony to pasture and care for Arlene's cattle in exchange for sixty percent of her annual calf crop. The agreement commenced on November 1, 1990, and was to continue on a year-to-year basis for a period of ten years. No provision for the costs of wintering Arlene's 1990 calf crop was specifically included in the agreement. The grazing agreement expressly provided for its termination in the event the real estate lease terminated.
¶7 Arlene and Anthony also executed a "tool contract" for the sale of certain shop tools. Pursuant to this contract, Anthony agreed to pay Arlene $20,000 over the course of five years in exchange for the immediate possession of certain tools located on the ranch and clear and marketable title to the tools upon final payment. The tool contract was executed at the same time as the other agreements. 2
¶8 In the fall of 1991, Arlene sold her 1990 calf crop as yearlings. She paid Anthony fifty percent of the proceeds ($35,180.82). Within two months of paying these proceeds, Arlene realized the 1990 yearlings were not provided for in the grazing agreement. She sent a letter to Anthony and spoke with him about the mistaken payment and requested it be returned. Anthony acknowledged the grazing agreement did not provide for the wintering of the 1990 calf crop but refused to return the money, claiming the payment was made pursuant to an oral agreement reached between the parties while signing the other contracts in November of 1990.
¶9 In 1992, Anthony complained about the condition of Arlene's swather. He informed her a new swather was needed but he was financially unable to purchase one. Arlene testified he convinced her to purchase a new swather by promising he would maintain her herd at one hundred head of cattle until the loan was fully paid. The new swather cost nearly $38,000 after a trade-in allowance for other equipment. Anthony failed to maintain Arlene's herd at the number promised during the duration of the loan.
¶10 In March of 1993, Anthony purchased a new baler. As part of the transaction, he traded Arlene's used baler and received a $5,500 trade-in credit. Arlene was not informed of the purchase or trade-in prior to the transaction. When she discovered Anthony had traded her baler, she requested the $5,500 trade-in credit. Anthony refused, but eventually paid Arlene in full without interest. 3
¶11 Anthony purchased a new v-rake in June of 1994, and received an $800 trade-in credit for Arlene's rake. Arlene immediately requested payment for the trade-in credit but Anthony refused to pay her for "that piece of junk." Eventually, he paid Arlene in full, without interest, on October 30, 1995. 4
¶12 Prior to 1994, the respective profits of the parties as outlined by the grazing agreement were calculated by selling the calves and yearlings and dividing the proceeds based on the average price of the animals. In 1994, however, Anthony began physically separating his percentage of calves and yearlings from Arlene's. She was not notified of the physical separation and discovered the change in practice only when she noticed Anthony separating the cattle in the summer of 1994. When she inquired as to what he was doing, he told her to leave and refused to work the cattle until she left the corral area.
¶13 That fall, Anthony separated the yearlings without informing Arlene. He separated nineteen yearlings as Arlene's and informed her he would no longer care for them. As a result, she was forced to sell the yearlings. Her neighbor purchased the yearlings but indicated they were not the same quality as previous years. Arlene confronted Anthony about the low quality of her cattle and he replied, "What did you expect to get, the best of the bunch?"
¶14 Arlene consequently requested she be notified and present for any physical separations of the cattle to ensure she received a fair representation of the herd. She subsequently received a letter informing her that Anthony planned to separate the herd for sale on October 25, 1995. She arrived at the ranch on that date and learned the calves had been separated and shipped before she arrived. Anthony told her he changed his plans and was unable to reach her prior to the separation. He kept sixteen heifer calves and allocated eleven to Arlene. He refused to care for Arlene's cattle and she was forced to sell them. 5 Following the sale, Arlene's herd consisted of seventy-two cows and no replacement heifers. 6
¶15 In November of 1994, Anthony unilaterally increased the fees for wintering Arlene's cattle. He sent a letter notifying her that the previously agreed price of $15 per head per month was increased to $20 per head per month. There was no discussion or agreement by the parties as to this increase.
¶16 Also that fall, Anthony and a carpenter removed the side of the mobile home provided by Arlene. The door of the mobile home, a window and a nine-to-ten-foot section of an outside wall were removed and thrown away without her knowledge. Supports were placed in the mobile home to keep the roof from collapsing. The mobile home was immovable because of the construction.
¶17 As a result of this series of events, Arlene brought suit against Anthony alleging breach of the contracts. She also sued to recover the money paid to him after the sale of her 1990 calf crop. Immediately after Arlene's commencement of her lawsuit, Anthony notified her that he was exercising his option to purchase the ranch and equipment. She refused to honor his request and he counterclaimed for specific performance and also sought to recover certain unpaid charges for wintering Arlene's calves in 1994-1995. 7
¶18 The trial court concluded Anthony materially breached the real estate, equipment and grazing contracts and terminated the contracts. The court further concluded that Arlene mistakenly paid Anthony wintering fees after the sale of her 1990 calf crop and ordered him to pay her $20,912.82, the amount of the mistaken payment less reasonable costs for care of the cattle during the winter. The court also determined the contract to purchase the tools was completed and allowed Anthony to retain title...
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