Case Name: Arlene T. TALLEY, Plaintiff and Appellee, v. Harmon Anthony TALLEY, Defendant and Appellant
Court: South Dakota Supreme Court
Jurisdiction: South Dakota
Decision Date: 1997-07-16
Citations: 566 N.W.2d 846
Docket Number: No. 19739
Parties: Arlene T. TALLEY, Plaintiff and Appellee, v. Harmon Anthony TALLEY, Defendant and Appellant.
Judges: [¶ 38.] AMUNDSON, KONENKAMP, and GILBERTSON, JJ., concur.
Reporter: North Western Reporter 2d
Volume: 566
Pages: 846–857

Head Matter:
1997 SD 88
Arlene T. TALLEY, Plaintiff and Appellee, v. Harmon Anthony TALLEY, Defendant and Appellant.
No. 19739.
Supreme Court of South Dakota.
Argued March 24, 1997.
Decided July 16, 1997.
Randall L. Macy of Buckmaster & Macy, Belle Fourehe, for plaintiff and appellee.
Frank J. Driscoll of DeMersseman Jensen, Rapid City, for defendant and appellant.

Opinion:
MILLER, Chief Justice.
[¶ 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.
FACTS
[¶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. 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.
[¶ 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.
[¶ 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.
[¶ 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. Following the sale, Arlene's herd consisted of seventy-two cows and no replacement heifers.
[¶ 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.
[¶ 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 to the tools or return them as a $20,000 credit towards the money owed Arlene. Lastly, Anthony's claim for specific performance was denied. He appeals all adverse holdings.
STANDARD OF REVIEW
[¶ 19.] A trial court's findings of fact will not be disturbed unless they are clearly erroneous. Jasper v. Smith, 540 N.W.2d 399, 401 (S.D.1995); Knudsen v. Jensen, 521 N.W.2d 415, 418 (S.D.1994). Under this standard, we will not disturb the trial court's findings unless, after a review of all the evidence, we are firmly and definitely convinced a mistake has been made. Cordell v. Codington County, 526 N.W.2d 115, 116 (S.D.1994). We review conclusions of law under a de novo standard and give no deference to the trial court's conclusions of law. Id.
DECISION
[¶ 20.] I. Did Anthony materially breach the contracts?
[¶21.] Anthony contends the trial court erred by failing to weigh the breaches alleged by Arlene against his actual performance under the agreements. He argues that individually none of the breaches are material in relation to his timely payments and his performance of a majority of the terms of each agreement. He maintains the trial court's cumulative application of the breaches of each individual agreement to support a finding of material breaches of all the agreements was in error. We disagree.
[¶22.] "The primary rule in the construction of contracts is that the court must, if possible, ascertain and give effect to the mutual intention of the parties." Huffman v. Shevlin, 76 S.D. 84, 89, 72 N.W.2d 852, 855 (1955). Another fundamental rule of construction is that all writings executed as part of a single transaction must be interpreted together. Baker v. Wilburn, 456 N.W.2d 304, 306 (S.D.1990). See also 49 AmJur2d Landlord and Tenant § 56 (1995); Restatement (Second) Contracts § 202 (1981). "[W]hen two or more instruments are executed at the same time by the same parties, for the same purpose and as part of the same transaction, the court must consider and construe the instruments as one contract." GMS, Inc. v. Deadwood Social Club, Inc., 333 N.W.2d 442, 444 (S.D.1983). Writings connected by internal references to each other and involving the same subject matter constitute a single contract for the entire transaction. Baker, 456 N.W.2d at 306 (citing Hampton Roads Shipping Ass'n v. International Longshoremen's Ass'n, 597 F.Supp. 709, 716 (E.D.Va.1984), remanded on other grounds, 746 F.2d 1015 (4th Cir.1984), cert. denied, 471 U.S. 1017, 105 S.Ct. 2022, 85 L.Ed.2d 304 (1985), cert. denied, 471 U.S. 1102, 105 S.Ct. 2327, 85 L.Ed.2d 845 (1985).
[¶ 23.] The four contracts executed by Arlene and Anthony cannot be separated and must be considered as one contract for the entire transaction. They were executed simultaneously, by the same parties as part of a transaction to transfer an interest in the ranch, equipment and tools to Anthony and to provide for Arlene and her cattle. Arlene and Anthony agreed this was their intent in executing the contracts. The equipment lease and grazing agreement internally reference the real estate lease and provide for their termination in the event the real estate lease is terminated. Anthony acknowledged that Arlene would not have executed the real estate lease without also executing the equipment lease and grazing agreement. Therefore, we consider these instruments as one contract and, accordingly, a material breach of one aspect of the contract constitutes a material breach of the whole contract.
[¶ 24.] The trial court specifically found that Anthony materially breached the contracts by refusing to pay Arlene the appropriate trade-in credits received for her baler and v-rake in a timely fashion; physically separating the herds; refusing to care for Arlene's calves and yearlings; permanently damaging the mobile home; and engaging in a course of conduct contrary to the intent of the executed agreements by unilaterally increasing the wintering fees. These findings have not been challenged as clearly erroneous, only as cumulative. The parties intended and the contracts contemplated that Arlene would be provided for and the family ranch would be operated as in the past. Anthony's performance did not comply with these intentions or the contractual terms. The record supports the trial court's determination that Anthony's breaches of the contracts were material, numerous, and in direct contradiction of the terms and spirit of the parties' agreement. His material breach of one aspect of the contracts constitutes a material breach of the whole contract. See Baker, 456 N.W.2d at 306. The trial court's determination that Anthony materially breached the contracts was not clearly erroneous.
[¶25] II. Was the trial court's rescission of the real estate lease, equipment lease and grazing agreement proper?
[¶ 26.] The trial court concluded the breaches by Anthony justified rescission of the contracts pursuant to SDCL 53-11-2(2). Rescission is an equitable remedy granted in the discretion of the court. Knudsen, 521 N.W.2d at 420; Jones v. Bohn, 311 N.W.2d 211, 213 (S.D.1981). "[Rescission is not generally permitted for casual, technical, or unimportant breaches of the contract. The breach must be substantial and relate to a material part of the contract." S & S Trucking v. Whitewood Motors, Inc., 346 N.W.2d 297, 300 (S.D.1984) (citing Kary v. Arnold, 252 N.W.2d 326, 329 (S.D.1977); Dusek v. Reese, 80 S.D. 96, 102, 119 N.W.2d 656, 660 (1963)).
[¶ 27.] The breaches by Anthony were not casual, technical or unimportant. The trial court concluded Anthony systematically reduced his mother's herd through physical separation, reduction in quality, and forced sales. He purposefully failed to abide by the express terms of the equipment lease, which required him to pay Arlene for any trade-in credits received on her machinery. Additionally, he permanently damaged the mobile home and unilaterally acted to increase wintering fees for Arlene's calf crop. His numerous and material breaches of the express terms of the contracts and the spirit and intent of the contracts justified rescission of the real estate lease, equipment lease and grazing agreement in this situation. The trial court's grant of rescission was not an abuse of its discretion.
[¶ 28.] III. Is Anthony entitled to specific performance?
[¶ 29.] Specific performance is an equitable remedy. Amdahl v. Lowe, 471 N.W.2d 770, 773 (S.D.1991); Wiggins v. Shewmake, 374 N.W.2d 111, 115 (S.D.1985). A party seeking equity in the court must do equity, including entering the court with clean hands. Shedd v. Lamb, 1996 SD 117, ¶ 26, 553 N.W.2d 241, 245. "A [person] who does not come into equity with clean hands is not entitled to any relief herein, but should be left in the position in which the court finds him." Kane v. Schnitzler, 376 N.W.2d 337, 341 (S.D.1985) (citations and quotations omitted).
[¶ 30.] Anthony materially breached several substantial terms of the contract. He cannot now seek enforcement of those contractual provisions which benefit him when he has failed to comply with express terms as well as the intent of the parties' contracts. Anthony has not entered the court with clean hands; accordingly, he is not entitled to the equitable remedy of specific performance to compel the sale of the ranch and equipment.
[¶ 31.] IV. Was Arlene entitled to a refund of the payment for the sale of her 1990 calf crop?
[¶ 32.] Believing the 1990 calf crop to be governed by the agreements executed by the parties in November, 1990, Arlene paid Anthony fifty percent of the proceeds following the sale of the cattle in the fall of 1991. The trial court concluded Arlene was entitled to restitution for this payment less the reason able costs to Anthony for wintering the 1990 calf crop and entered judgment against Anthony for $20,912.82.
[¶ 33.] It is a general principle of equity that a party may not be unjustly enriched at the expense of another party. Thurston v. Cedric Sanders Co., 80 S.D. 426, 429-30, 125 N.W.2d 496, 498 (1963). Enrichment is unjust if it is a result of money paid by mistake. A.G. Edwards & Sons, Inc. v. Northwest Realty Co., 340 N.W.2d 187, 189 (S.D.1983); 66 AmJur2d Restitution and Implied Contracts § 3, 8, 118 (1973). Restitution for unjust enrichment is appropriate for "[a] person who has paid another an excessive amount of money because of an erroneous belief induced by a mistake of fact that the sum was necessary for the discharge of a duty[.]" Restatement of Restitution § 20 (1936).
[¶ 34.] Anthony contends Ai-lene is not entitled to restitution because the payment was made voluntarily, not mistakenly, pursuant to an oral agreement by the parties. He claims the oral agreement between the parties required a fifty-fifty split of the 1990 calf crop in exchange for wintering services. Anthony points to Arlene's payment of fifty percent of the total sale, not sixty percent as required by the grazing agreement, as evidence of a separate agreement concerning the 1990 calf crop. Arlene, however, testified that she believed a fifty-fifty split of the proceeds for the 1990 calf crop, rather than the sixty-forty split specified by the grazing agreement, was appropriate because Anthony was feeding her hay to the cattle.
[¶ 35.] Each party presented the trial court with a plausible theory as to the circumstances of Arlene's fifty-percent payment to Anthony. The trial court concluded she mistakenly paid half of the proceeds from the 1990 calf crop to Anthony because of her belief that the grazing agreement applied. The trial court specifically found no oral agreement existed concerning the wintering fees for the 1990 calf crop. We will not seek reasons to reverse a trial court's findings of fact. R & S Construction Co. v. BDL Enterprises, 500 N.W.2d 628, 630 (S.D.1993); Insurance Agents, Inc. v. Zimmerman, 381 N.W.2d 218, 219 (S.D.1986). While we may not have resolved the conflicting evidence as the trial court did, we are not firmly convinced the trial court's determination that Arlene mistakenly made the payment was clearly erroneous. In re S.A.H., 537 N.W.2d 1, 5 (S.D.1995).
[¶ 36.] Anthony was enriched by Arlene's mistake. He received $35,180.82 for wintering one calf crop. This payment was $20,912.82 more than his normal wintering fees for an equal number of cattle. We find no error in the trial court's determination that this enrichment was unjust. Under the circumstances of this case, the trial court's award of restitution in the amount of $20,-912.82 was appropriate.
[¶ 37.] Affirmed.
[¶ 38.] AMUNDSON, KONENKAMP, and GILBERTSON, JJ., concur.
[¶ 39.] SABERS, J., dissents.
. The lease also reserved all mineral rights to Arlene and required her permission before breaking additional ground for farming.
. The parties agree the tool contract was fully performed. The trial court's rulings concerning the tool contract are not at issue on appeal.
. Anthony testified he paid Arlene the trade-in credit because "it was getting to be a problem."
. Anthony's payment for the v-rake trade-in was made ten months after Arlene filed this lawsuit.
. Only four of the yearlings sold. The other seven did not sell because of inadequate prices.
. Arlene's original herd consisted of one hundred twelve cattle.
. The trial court denied Anthony's claim for alleged unpaid wintering fees. He has not challenged this denial on appeal.
. SDCL 53-11-2(2) provides for the rescission of. a contract '[i]f through fault of the party as to whom he rescinds, the consideration for his obligation fails in whole or in part."
. Anthony has not challenged the amount set by the trial court for wintering the 1990 calf crop as inappropriate.