Court Opinion

ID: 9657166
Source: CourtListenerOpinion
Date Created: 2023-08-23 20:16:24.775179+00
Date Added: 2024-06-11T18:13:41.667507
License: Public Domain

SABERS, Justice
(dissenting).
I dissent. Bothwell was to receive twenty acres behind his home subject to a condition precedent, (i.e., having it platted and surveyed prior to June 1, 1981). Bothwell satisfied this condition, and at that moment, he became the equitable owner of those twenty acres. Bothwell was to receive legal title to Outlot H-3 in 1989 when legal title was conveyed from Hunt to BAM and Bothwell.
*907Because Jones was not entitled to a deed to the real estate until April 1, 1989, he could not pass legal title to BAM and Both-well until then. However, Jones did assign his equitable ownership to BAM and Both-well. “The equitable estate of the vendee is alienable, descendable and divisible in like manner as real estate held by legal title.” Lewis v. Hawkins, 90 U.S. 119, (28 Wall. 437), 23 L.Ed. 113 (1875); Lebrecht v. Beckett, 96 Ariz. 389, 396 P.2d 13, 15-16 (1964). One who buys from the vendee and assumes payment of the purchase money stipulated to be paid takes the property subject to the same liabilities, legal and equitable, to which it was subject in the hands of the vendee. Lewis, supra. The Hunts and Jones were the grantors and assignor respectively, and nowhere did any one of them reserve the mineral rights in themselves.
A simple review of the facts in question establishes that Bothwell is the equitable owner to the twenty acres in question even though he is not yet the legal owner. Because he was promised the deed to the twenty acres without any reservation whatsoever as to any mineral rights, he is the equitable owner of the twenty acres now without any reservation for mineral rights. “[T]he equitable estate, in its entirety, passes immediately to the vendee at the moment the contract goes into effect, and the bare legal title for security purposes remains in the vendor.” Petition of S.R.A., 219 Minn. 493, 18 N.W.2d 442, 449 (1945). See also: Farmers State Bank v. Slaubaugh, 366 N.W.2d 804, 807 (N.D.1985); DeBoer v. Oakbrook Home Ass’n, Inc., 218 Neb. 813, 359 N.W.2d 768, 771 (1984); First Federal Sav. & Loan Ass’n v. Wick, 322 N.W.2d 860, 862 (S.D.1982) (Vendee acquires equitable title, not merely equitable interest, in an executory contract for sale of land); Foreclosure of Tax Liens, Etc. v. Young, 106 Wis.2d 244, 316 N.W.2d 362, 365 (1982). Therefore, it was error for the trial court to award the mineral rights to BAM.
On April 20, 1979, James H. and Betty M. Hunt entered into an executory real estate contract with Bobby L. Jones for the sale of approximately 387.28 acres. In this contract, the Hunts reserved the right to mine minerals and gravel from the above described property for a period of three years after the signing of the agreement but made no reservation of any other rights to the mineral, sand, or gravel.
On January 15, 1981, seller Bobby Jones and buyer Harvey Buhl entered into a real estate purchase agreement entitled “Deposit Receipt and Agreement” (Exhibit 14). This is a legally enforceable document and provides, “Harvey Buhl will deed John Bothwell twenty acres at the end of this contract directly behind his house or three acres.” In respect to this exhibit, the realtor, Mr. Bourk, was asked what he said to Harvey Buhl that day; he testified: “I just asked him if he would be interested in buying the land if there was twenty acres removed from it for Bothwell and he said he would.” There was no discussion whatsoever concerning any reservation of mineral rights on those twenty acres at that time, nor was there at the time of the signing of Exhibit 14.
On January 27, 1981, pursuant to this real estate purchase agreement, Jones assigned his interest in the property (except for twenty acres) and the real estate contract to Tom Maher, Harvey Buhl, and Rick Anderson doing business as BAM. Despite the fact that this “assignment” was prepared by one of the partners, attorney Tom Maher, no reservation of mineral rights was contained therein.
Jones’ intention is paramount in this entire matter. He testified as follows:
Question: What is it that you sold to Mr. Maher, Mr. Buhl and Mr. Anderson under the assignment?
Answer: Everything that I had bought from Jim Hunt except twenty acres.
Question: Okay. And who was supposed to get the twenty acres?
Answer: Johnny Bothwell.
Question: Did you put any restriction on the twenty acres to John Bothwell?
Answer: No.
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*908Question: Did you want to keep the mineral rights on any of that property in yourself?
Answer: No. I didn’t keep anything. Question: And did you intend John to have whatever it was that you had in those twenty acres?
Answer: Yes.
This last question was objected to on the basis that it was attempting to impeach a written document. The court sustained the objection if in fact it went to impeach the document. However, it does not impeach the document because no reservation of mineral rights was reserved in the assignment of the contract.
Bothwell platted the twenty acres as Outlot H-3. On January 25, 1983, BAM entered into an agreement with the State of South Dakota Department of Transportation. This agreement allowed the State to take gravel, sand, and rock from the entire real property except from Outlot H-3. Only after the land was platted, fenced and possessed by John Bothwell, did attorney Maher prepare a deed, have it signed by the BAM partners and place it in escrow. This was on August 22, 1983. For the first time, BAM, as the sellers “expressly retained all gravel, sand, oil and gas or any other mineral rights, the full right of ingress and egress to obtain and process same without cost and all rights useful to the removal of any of the above rights as to said Outlot H-3 (the twenty acres).” This was too little, too late, and too self-serving. '
“The primary rule in construction of contracts is that the court must, if possible, ascertain and give effect to the mutual intention of the parties.” S & S Trucking v. Whitewood Motors, Inc., 346 N.W.2d 297, 299 (S.D.1984) citing GMS, Inc. v. Deadwood Social Club, Inc., 333 N.W.2d 442 (S.D.1983); Forester v. Weber, 298 N.W.2d 96 (S.D.1980). The intent of the participating parties is the salient factor in determining the true relationship between parties to a monetary transaction. Ned Nastrom Motors, Inc. v. Nastrom-Peterson-Neubauer Co., 338 N.W.2d 64, 67 (N.D.1983). A party’s intent is ascertained not only from his testimony but also from the circumstances surrounding the transaction. Id. In arriving at the intent of the parties, we consider the entire contract, S & S Trucking, 346 N.W.2d at 299, and those factors occurring before and after the signing of an agreement. Board of Regents v. Mussallem, 94 Wis.2d 657, 289 N.W.2d 801, 808 (1980); Central Auto Co. v. Reichert, 87 Wis.2d 9, 273 N.W.2d 360, 365 (App.1978); H & R Truck Leasing Corp. v. Allen, 26 Wis.2d 158, 131 N.W.2d 912, 914 (1965).
The assignment of the real estate contract does not specifically address the issue of when Bothwell was to become entitled to possession of Outlot H-3. Nor does it specify whether Bothwell was to receive only surface rights in Outlot H-3 or both surface and mineral rights. Although the intention of the parties to a written contract should be determined from the writing alone, if the contract is ambiguous in any respect it is proper in construing its terms to look to the circumstances under which it was executed and the matters to which it relates. Oakes Farming Ass’n v. Martinson Bros., 318 N.W.2d 897, 907-908 (N.D.1982). Thus, the trial court erred in failing to allow testimony which addressed the intention of the parties.
Limited testimony was allowed concerning some of the negotiations leading to the signing of the assignment and the intention of the parties as to the extent of Bothwell's interest in Outlot H-3. Some of this testimony was offered by BAM itself. The trial court refused to allow similar testimony from Bothwell based upon the parol evidence rule. As asserted by Bothwell, however, it appears patently unfair that the party offering parol evidence about the terms of a written agreement should be permitted to object when the opposing party offers parol evidence concerning the same issue. Furthermore, “where an ambiguous contract exists, it should be interpreted most strongly against the one who drafted the contract and caused the uncertainty to exist.” City of Sioux Falls v. *909Henry Carlson Co., 258 N.W.2d 676 (S.D.1977). Therefore, it was clearly error to exclude evidence of the intentions of the parties as expressed before the signing of the agreement. “The surrounding circumstances from which a contract stems are to be considered when interpreting its provisions.” Mitzel v. Hauck, 78 S.D. 543, 547, 105 N.W.2d 378, 380 (1960).
More importantly, however, SDCL 43-26-2 states in part:
An agreement on the part of a seller of real property to give the usual covenants, binds him to deliver a warranty deed in the form prescribed by § 43-25-5
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BAM agreed to deed Outlot H-3 to Both-well on April 1, 1989. No exceptions or reservations of title were expressed in any agreement transferring the property. Therefore, BAM is required to deliver Bothwell a warranty deed for both the surface and mineral interests on Outlot H-3 as of April 1, 1989. However, Bothwell is now and has been since 1981, the equitable owner of both the surface and mineral interests of Outlot H-3.
The trial court was overly impressed with the purpose or use that Bothwell had for the land. The fact that his main purpose for getting the land was to pasture livestock does not constitute a rejection of either fee title or mineral rights, especially when both were intended, granted, and not reserved. No restrictions or limitations were put on the grant or gift by the grant- or/seller Jones. Even the requirements concerning surveying and platting were superimposed on the “assignment” by counsel for BAM.
Accordingly, I would reverse the trial court.