#24969-a-SLZ 

2009 SD 49

IN THE SUPREME COURT 

OF THE 

STATE OF SOUTH DAKOTA 

* * * * 

M. SCOTT SPRANG and 

CHRISTINA R. SPRANG, Plaintiffs and Appellees, 

v. 

DOUG ALTMAN, Defendant and Appellant. 

* * * * 

APPEAL FROM THE CIRCUIT COURT OF 

THE FIRST JUDICIAL CIRCUIT 

DAVISON COUNTY, SOUTH DAKOTA 

* * * * 

HONORABLE SEAN M. O’BRIEN 

Judge 

* * * * 

JODY ODEGAARD SMITH of 

Morgan, Theeler, LLP 

Brookings, South Dakota Attorneys for plaintiffs 

and appellees. 

MIKE C. FINK 

Bridgewater, South Dakota Attorney for defendant 

 and appellant. 

* * * * 

CONSIDERED ON BRIEFS 

ON APRIL 27, 2009 

 OPINION FILED 06/24/09
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ZINTER, Justice 

[¶1.] M. Scott Sprang and Christina R. Sprang purchased real property from 

Doug Altman. Under the conditions of sale, Altman retained a qualified right of 

repurchase. A few years after the sale, Sprangs commenced this action seeking a 

declaration that Altman’s right of repurchase was personal to Altman and did not 

run with the land. Altman counterclaimed for reformation of the condition. The 

circuit court denied reformation and concluded that the condition was a personal 

contract that did not run with the land. Altman appeals both issues. We affirm. 

Facts and Procedural History 

[¶2.] In March 2004, Altman offered to sell, and Sprangs agreed to purchase 

19.5 acres of land for a homesite. Shortly thereafter, Mr. Sprang contacted Jeff 

Larson of Quality Homes to purchase an off-site-constructed house and install it on 

the property. At Quality Homes’ request, Custom Touch Homes constructed the 

house at its facility.1

[¶3.] In May 2004, Larson applied to the Davison County Zoning 

Administrator, Dan Sudrla, for a building permit. Sudrla informed Larson that 

Sudrla could not issue a building permit because the house was not being sited on a 

twenty-five acre lot. A Davison County zoning ordinance prohibited non-farm single 

lots containing less than twenty-five acres. See infra ¶11 & note 3. Larson 

subsequently informed Mr. Sprang that Sprangs needed twenty-five acres in order 

1. Custom Touch Homes constructs homes in a controlled environment. Once 

the home is constructed, it is shipped to the customer’s building site. 
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to obtain a building permit. Larson also informed Mr. Sprang that under the zoning 

ordinance, Sprangs could build if the 19.5 acres were subdivided. Sprangs were not 

interested in subdividing the property because they wanted to locate the house in 

the middle of the 19.5 acre parcel. 

[¶4.] Prior to closing on the real property, Mr. Sprang informed Altman 

about the problem with the building permit. Altman orally agreed to sell an 

additional 5.5 acres. Mr. Sprang testified that when Altman offered to sell the 

additional 5.5 acres, Altman expressed concern over subdivision of the property, but 

he did not mention repurchasing the 5.5 acres if the Sprangs ever sold the entire 

twenty-five acres. Following the agreement to sell the additional 5.5 acres, Sudrla 

issued the building permit. 

[¶5.] On July 29, 2004, Sprangs closed on the sale of the twenty-five acres. 

At the closing, Altman presented Sprangs with a document entitled, “Conditions for 

Sale of Land,” which Altman had drafted. Paragraph 4 of the document contained a 

condition of repurchase providing: 

If the 25 acre minimum zoning would change in the future or if 

M. Scott or Christina R. Sprang would ever separate the 25 

acres, Doug Altman would have first opportunity to repurchase 

the additional 5.5 acres that [Altman] agreed to sell M. Scott or 

Christina R. Sprang due to the tax savings. 

Altman also executed a warranty deed conveying the twenty-five acres to the 

Sprangs. The warranty deed and the Conditions for Sale of Land were recorded 

with the Davison County register of deeds. 

[¶6.] Sprangs moved into the home in June 2004, and lived on the property 

for four years. During that time, Sprangs allowed Altman to use the 5.5 acres for 
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pasture at no cost. It is undisputed that the Sprangs did not use the 19.5 acres for 

agricultural purposes. 

[¶7.] In 2007, Sprangs decided to sell their home and the twenty-five acres. 

Following Sprangs’ entry into a purchase agreement with a buyer, a title problem 

was discovered regarding the meaning of the condition allowing Altman to 

repurchase the 5.5 acres. As a result, Sprangs commenced this declaratory action 

asking the circuit court to determine that the repurchase condition was personal to 

Altman and did not run with the land. Altman counterclaimed, contending that the 

condition ran with the land. He also asked for reformation of the condition and the 

warranty deed to provide that, in addition to the provision allowing repurchase for 

certain zoning changes or subdividing, Altman could repurchase if Sprangs did not 

receive an agricultural property tax benefit from owning the additional 5.5 acres. 

Altman finally requested specific performance of the reformed repurchase 

condition.2

[¶8.] At trial Mr. Sprang testified that when the agreement for the sale of 

the 5.5 acres was negotiated, the parties never discussed that twenty-five acres was 

needed to obtain an agricultural property tax assessment to reduce Sprangs’ 

property taxes. On the other hand, Altman testified that Mr. Sprang had agreed 

that if Sprangs no longer received the agricultural tax benefit, Altman would have a 

right of repurchase. After hearing this conflicting evidence, the circuit court 

resolved the dispute, finding that the condition was not intended to allow a 

2. Because we affirm the circuit court’s denial of reformation, we do not reach 

Altman’s counterclaim for specific performance of the reformed condition. 
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repurchase if the Sprangs no longer received an agricultural tax benefit from 

owning the twenty-five acre parcel. Instead, the court found: “It’s pretty clear to 

the court that [the condition] was necessary that the [Sprangs] purchase the 

additional 5.5 acres just to meet the minimum zoning requirements in order to 

construct a house[.]” The circuit court concluded that the condition as written set 

forth the intent of the parties and, therefore, reformation was not warranted. The 

court finally concluded that the condition was a personal contract between Sprangs 

and Altman that did not run with the land. 

Reformation 

[¶9.] Reformation is a “remedy in equity by means of which a written 

instrument is made or construed to express or conform to the real intention of the 

parties, when some error or mistake has been committed.” Enchanted World Doll 

Museum v. Buskohl, 398 NW2d 149, 152 (SD 1986). See also SDCL 21-11-1 

(providing that “[w]hen through fraud or mutual mistake of the parties, or a 

mistake of one party which the other at the time knew or suspected, a written 

contract does not truly express the intention of the parties, it may be revised . . . so 

as to express that intention[.]”). We review a circuit court’s grant or denial of 

reformation under the abuse of discretion standard. LPN Trust v. Farrar Outdoor 

Adver., Inc., 1996 SD 97, ¶13, 552 NW2d 796, 799.

[¶10.] Altman argues that the circuit court abused its discretion when it 

failed to reform the condition to specifically provide that Altman had a right of 

repurchase if the Sprangs no longer received a tax benefit from owning a twentyfive acre parcel. Altman claims that the condition he drafted mistakenly refers to 
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the “25 acre minimum zoning” and subdivision restrictions, when the parties’ real 

intent was to allow a repurchase if there were a change in the tax assessment rules. 

(Appellant’s Br. 19-20) However, Altman concedes that the condition is silent 

regarding his right of repurchase in the event the additional acres become 

unnecessary to provide an agricultural tax benefit to Sprangs. He admits that he 

“could have drafted the document using better language.” (Appellant’s Br. 30) 

[¶11.] Sprangs respond that if they had wanted to qualify for the agricultural 

tax classification, they would not have initially purchased only 19.5 acres. Sprangs 

point out that although they initially discussed tax implications with Altman and 

realized that the 19.5 acres did not qualify for an agricultural tax classification, 

they went ahead with the 19.5 acre purchase. They further point out that Altman 

conceded the point at trial. 

Q: Mr. Altman, you testified that when Scott Sprang came to 

you about purchasing the 19 and a half acres you had advertized 

for sale that you had a discussion with him regarding the 

difference between ag property and residential property and the 

taxes that go along with that. Correct? 

 A: Yes. 

Q: And Scott still went forward and purchased the 19 and a half 

acres, didn’t he? 

 A: Yes. 

Additionally, Larson, of Quality Homes, indicated that the reason for the purchase 

of the 5.5 acres was to obtain a building permit. Larson testified: 

Q: Did anything unusual happen when you went in to apply for 

the building permit? 

A: We work quite a bit with [Sudrla]; so we send our plans over, 

a sketch to where we’re going to put the house and stuff – we 
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sent that over to him[.] He sent [it] back stating, you know, 

we’ve got to have 25 acres or divide it up into sections in order to 

build a house on it. 

Q: So, at that time, he did not issue a building permit? 

A: Correct. 

Q: What did you do with that information from [Sudrla]? 

A: I just went back to Scott and Christina and told them, you 

know, we’re going to need 25 acres in order to get the building 

permit or section off the pieces. 

Mr. Sprang confirmed that this was the nature of the issue necessitating the 

purchase of the additional property: 

Q: When Jeff Larson told you that information [about being 

turned down for a building permit because you did not have 25 

acres], what did you do? 

A: I went back and talked to Doug Altman about that. 

Q: What did your conversation with Doug Altman entail? 

A: That I couldn’t – wouldn’t be able to build a home on 19 and 

a half acres because I would not be able to acquire a building 

permit. 

Sprangs finally point out that they would not have purchased the 5.5 acres for tax 

benefits because it is undisputed that they never farmed the acreage, and therefore, 

they could not have qualified for the agricultural tax assessment, even if they had 

owned twenty-five acres at the outset. See SDCL 10-6-31.3.3 For all these reasons, 

3. Sprangs could not have qualified for the agricultural classification because 

they did not satisfy either of the first two requirements of SDCL 10-6-31.3, 

which provides in relevant part: 

For tax purposes, land is agricultural land if it meets two of the 

following three criteria: 

 (continued . . .) 
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Sprangs contend that the circuit court correctly found that the parties did not 

intend that the repurchase condition would apply in the event of changes in the 

agricultural tax assessment benefit. 

[¶12.] A plaintiff must overcome the “presumption [ ] that the writing 

accurately reflects the intent of the parties.” Enchanted World Doll Museum, 398 

NW2d at 152. A plaintiff seeking reformation must prove their “cause of action by 

clear, unequivocal and convincing evidence.” Northwestern Nat’l Bank of Sioux 

Falls v. Brandon, 88 SD 453, 458-59, 221 NW2d 12, 15 (1974). In this case, Altman 

did not present clear and convincing evidence that the condition failed to express 

the intent of the parties. On the contrary, based on the evidence presented to the 

circuit court, it appears that the concern of the parties giving rise to the right of 

repurchase was the zoning restriction and possible subdivision rather than the 

agricultural tax assessment.4 Under these circumstances, the circuit court did not 

abuse its discretion in refusing to reform the condition.5

_________________________ 

(. . . continued) 

(1) At least thirty-three and one-third percent of the total family 

gross income of the owner is derived from the pursuit of 

agriculture as defined in subdivision (2) of this section[.] 

(2) Its principal use is devoted to the raising and harvesting of 

crops . . . for intended profit pursuant to subdivision (1) of this 

section[.] 

(3) It consists of not less than twenty acres of unplatted land[.] 

However, the board of county commissioners may increase the 

minimum acre requirement up to one hundred sixty acres. 

4. Altman also contends that the parties had agreed Altman had the exclusive 

right to use the 5.5 acres “indefinitely.” Altman, however, concedes that he 

did not put such a provision in the condition he drafted. Moreover, we affirm 

 (continued . . .) 
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Whether the Condition Ran with the Land 

[¶13.] Sprangs argued that the condition was a personal contract running to 

Altman rather than a covenant running with the land. The circuit court agreed. 

“On appeal we read a covenant as we would a contract, that is, without any 

presumption that the trial court was correct.” Kling v. Stern, 2007 SD 51, ¶5, 733 

NW2d 615, 617 (citation omitted). 

[¶14.] SDCL 43-12-2 sets forth the requirements for covenants running with 

the land: 

The only covenants which run with the land are: 

(1) Those made for the direct benefit of the property or some part 

of it, then in existence; 

(2) Covenants of warranty for quiet enjoyment or for further 

assurance, on the part of the grantor; 

(3) Covenants for the payment of rent or of taxes or assessments 

upon the land, on the part of a grantee; and 

(4) All covenants incidental to any of the foregoing covenants. 

_________________________ 

(. . . continued) 

the circuit court’s determination that the conditions did not run with the 

land. Therefore, we need not consider Altman’s argument that the condition 

also included an indefinite use provision. 

5. It is also noteworthy that Altman drafted the condition. We have stated that 

one who “writes a contract can by exactness of expression more easily 

prevent mistakes in meaning than one with whom he is dealing, therefore 

any doubts arising from ambiguity of language are resolved in favor of the 

latter.” Enchanted World Doll Museum, 398 NW2d at 152.
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(Emphasis added.) Only subdivision (1) is implicated here. The circuit court 

concluded that the condition “was meant to relate only to the parties,” not for the 

direct benefit of the property. We agree for a number of reasons. 

[¶15.] First, Altman did not draft the condition as a reversionary interest. 

Instead, he drafted it so that it only gave him the first opportunity to repurchase. 

By only retaining the first right of purchase, Altman evidently contemplated that 

others could purchase the 5.5 acres, an occurrence that would have made it 

unavailable for the benefit of Altman’s property. This evidence suggests that the 

condition was only intended to facilitate Altman’s personal use of the property while 

he was in possession. Second, although conditions were recorded, they were not 

incorporated into the warranty deed. Finally, we observe that the condition failed 

to contain the usual and customary language providing that the condition was to 

run with the land. Under the circumstances, we affirm the circuit court’s finding 

that the condition was intended only for Altman’s benefit and not for the direct 

benefit of the property. See Hyde v. Liebelt, 394 NW2d 888, 890 n1 (SD 1986) 

(involving a grantor’s restriction that prevented competition with the grantor’s

business, but “[f]or a covenant to run with the land . . . the covenant must have been 

made for the direct benefit of existing property”); Caullett v. Stanley Stilwell & 

Sons, Inc., 67 NJ Super 111, 118, 170 A2d 52, 56 (1961) (providing that when “the 

[b]urden is placed upon the land, and the [b]enefit is personal to one of the parties 

and does not extend to his or other lands, the burden is generally held not to run 

with the land at law”). 
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[¶16.] GILBERTSON, Chief Justice, and KONENKAMP, MEIERHENRY, 

and SEVERSON, Justices, concur.