Opinion
No. C5-98-1681.
Filed April 20, 1999.
Appeal from the District Court, Sherburne County, File No. C4971549.
Paul W. Fahning, (for respondent)
Ronald G. Black, (for appellants)
Considered and decided by Lansing, Presiding Judge, Schumacher, Judge, and Willis, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
This appeal arises out of an action for specific performance brought by Town Country Development, LLC ("Town Country"), assignee of George Schlichting and Roger Schlichting, against Leroy S. Toth and Leroy S. Toth as Trustee of the Leroy S. Toth Trust (collectively "Toth" or "sellers"). On appeal from summary judgment for Town Country, Toth claims the district court erred in concluding that a purchase agreement signed by the parties was enforceable and in deciding factual issues. Toth also challenges the amount of the supersedeas bond as excessive. We affirm the district court and deny Toth's motion to reduce the amount of the supersedeas bond.
FACTS
On October 18, 1996, Leroy Toth and George Schlichting signed a purchase agreement that provided Toth would sell 150 acres of farmland to George Schlichting and Roger Schlichting for $555,000. The Schlichtings agreed to pay $150,000 as a down payment (including $5,000 in earnest money) and $405,000 on a contract for deed at eight percent annual interest. The agreement stated, in part, that it was contingent on Roger Schlichting's signature and that it could be modified only in writing. Roger Schlichting signed the purchase agreement on November 6, 1996. The Schlichtings gave $5,000 in earnest money to Larry Hennig, a realtor involved in the transaction, who deposited the money into his realtor's trust account.
In mid-November 1996, Toth's attorney reviewed the purchase agreement, and he drafted a Vacant Land Purchase Agreement ("VLP agreement"). The legal description, purchase price, down payment, contract-for-deed amount, and interest rate remained the same. But there were some modifications, including a term that provided for a closing on March 31, 1997. A contingency in favor of the Schlichtings that had been in the October 18, 1996, agreement was deleted. The VLP agreement made the Schlichtings' performance subject to only two contingencies: (1) obtaining acceptable percolation tests and (2) obtaining soil tests that indicated the property could be improved without extraordinary building methods or cost.
After executing two copies of the VLP agreement on November 22, 1996, Toth sent both to George Schlichting, who made two proposed changes on one copy, which the Schlichtings signed on December 2, 1996. The Schlichtings met with Toth's attorney to discuss the proposed changes, but he told them Toth would not agree to any modifications to the VLP agreement. On December 17, 1996, the Schlichtings executed the second, clean copy of the VLP agreement. They tendered the agreement to Toth's attorney, who, according to an eyewitness's affidavit, stated, "Well, we have a deal."
Toth thereafter had the abstract of title to the property updated and delivered to the Schlichtings for examination. In late March 1997, during the county planning staff's review of the plat application for the proposed subdivision, the Schlichtings' engineer learned that the property's drain-tile connections and private ditch were unauthorized. Because it was uncertain whether the county would allow these improvements, which were necessary for drainage, the Schlichtings were unsure whether the soil conditions would be acceptable for development. The county denied the plat application due, in part, to the unauthorized drain-tile connections and private ditch.
The parties met on April 1, 1997, at the office of Toth's attorney. Toth alleges that the purpose of the meeting was to close on the property and that the Schlichtings did not mention the tile system. The Schlichtings allege that they met to discuss the problems involving the unauthorized improvements and that they were not told the meeting was a proposed closing. Toth maintains that he then gave the Schlichtings a week to decide whether they wanted to proceed and to negotiate a different closing date.
On April 9, 1997, Toth's counsel sent the Schlichtings a cancellation agreement, which they did not sign. Toth then served a statutory cancellation notice on George Schlichting, but he failed to serve Roger Schlichting. Because the Schlichtings were prepared to start a lawsuit to enjoin cancellation, Toth agreed to take no further cancellation action while the parties attempted to negotiate an option agreement to replace the VLP agreement. Although the negotiations were unsuccessful, during the time they were taking place, Toth's attorney acknowledged to the county that the Schlichtings continued to have a legal interest in the property.
On August 27, 1997, Toth's counsel notified the Schlichtings that he intended to resume cancellation efforts. On August 29, 1997, the Schlichtings' counsel wrote to Toth's counsel, stating that his clients were ready, willing, and able to close on September 30, 1997, on the terms of the VLP agreement. Five days later, he again wrote to Toth's counsel, confirming their oral agreement that closing had been rescheduled for September 30, 1997, and that Toth would discontinue cancellation proceedings. Toth's counsel demonstrated his agreement by signing an acknowledgment at the bottom of the letter and returning it to the Schlichtings' counsel. But on September 17, 1997, Toth's counsel notified the Schlichtings' counsel that Toth refused to sell. The Schlichtings then offered to pay the entire purchase price, plus $5,000 cash, on September 30, 1997, but Toth again refused.
After his refusal to sell, Town Country, as assignee, sued Toth for specific performance of the "Purchase Agreement(s)." Toth counterclaimed, alleging that the VLP agreement executed on November 22, 1996, and December 17, 1996, constituted the parties' entire agreement and that the Schlichtings had breached that agreement by failing to close on March 31, 1997. Although Toth's counterclaim did not mention the agreement to reschedule closing, he did not dispute the validity of the letter that his attorney signed, agreeing to a new closing date. He requested dismissal of Town Country's action, rescission of the VLP agreement, payment to him of the $5,000 in earnest money held by the real estate agent, and damages for trespass. Both parties moved for summary judgment. The district court granted summary judgment to Town Country, ordered specific performance, denied Toth's motion, and dismissed Toth's counterclaim with prejudice. This appeal followed.
To stay enforcement of the judgment pending appeal, Toth requested that the district court determine the amount of a supersedeas bond. The district court conditioned a stay on (1) deposit by the parties of an executed contract for deed with the court administrator and (2) posting by Toth of a $555,000 supersedeas bond or deposit of $50,000 cash with the court administrator. When Toth moved this court to reduce the bond, we concluded that the amount of the bond appeared excessive and remanded for a determination of the amount of security necessary to compensate Town Country for Toth's occupancy of the property during this appeal. On remand, the district court amended the amount of the required supersedeas bond to $50,000. Toth has again moved this court to reduce the amount of the bond.
DECISION
1. Enforceability of purchase agreement. On appeal from summary judgment, a reviewing court asks whether genuine issues of material fact exist and whether the district court erred in its application of the law. State by Cooper v. French , 460 N.W.2d 2, 4 (Minn. 1990). An appellate court must view the evidence in the light most favorable to the nonmoving party. Hopkins by LaFontaine v. Empire Fire Marine Ins. Co. , 474 N.W.2d 209, 212 (Minn.App. 1991).
[T]here is no genuine issue of material fact for trial when the nonmoving party presents evidence which merely creates a metaphysical doubt as to a factual issue and which is not sufficiently probative with respect to an essential element of the nonmoving party's case to permit reasonable persons to draw different conclusions.
DLH, Inc. v. Russ , 566 N.W.2d 60, 71 (Minn. 1997). This court will affirm a grant of summary judgment if it can be sustained on any ground. Winkler v. Magnuson , 539 N.W.2d 821, 828 (Minn.App. 1995), review denied (Minn. Feb. 13, 1996).
The district court concluded that the October 18, 1996, purchase agreement was a binding contract that had been modified by the VLP agreement. Toth challenges this determination on several grounds. He claims that (1) he did not intend to be bound by the October 18, 1996, purchase agreement; (2) review by his attorney was a condition precedent to enforceability of the October 18, 1996, purchase agreement; (3) the Schlichtings abandoned the October 18, 1996, purchase agreement by their "subsequent offer of a new contract"; and (4) the VLP agreement was a "counteroffer" by Toth that also evidenced his rejection of the October 18, 1996, purchase agreement. We do not need to address these arguments because the VLP agreement is itself enforceable.
The statute of frauds provides that a contract for the sale of land must (1) be in writing, (2) state the consideration, and (3) be subscribed by the seller. Minn. Stat. § 513.05 (1998). In addition to these statutory requirements, the Minnesota Supreme Court
has required the contracting parties to be identified with reasonable certainty, the land to be sufficiently described, and the general terms and conditions of the transaction to be specified.
Greer v. Kooiker , 312 Minn. 499, 504, 253 N.W.2d 133, 138 (1977) (citations omitted). These elements are satisfied on the face of the VLP agreement, which states the consideration, identifies the parties, describes the land, details the terms of sale, and is signed by Toth.
Toth forwarded the VLP agreement to the Schlichtings, who accepted it. Toth admitted the validity of the VLP agreement in his verified answer. During the period following the alleged failure to close on March 31, 1997, Toth represented to the county, in support of the Schlichtings' efforts to obtain plat approval, that the Schlichtings continued to have a legal interest in the land. That interest could exist only by virtue of an enforceable contract to purchase land. Further, the parties subsequently agreed to a new closing date. Because the VLP agreement is enforceable, we conclude that the district court did not err in granting summary judgment for Town Country and ordering specific performance.
2. Alleged judicial error in deciding factual issues. In ruling on a motion for summary judgment, the district court must not decide issues of fact. DLH , 566 N.W.2d at 70. Toth claims the district court improperly decided disputed issues of material fact, thus requiring reversal of the order for summary judgment. We disagree.
First, Toth claims that the district court erred in stating in its memorandum that the transaction was contingent on preliminary plat approval. Although this contingency appeared in the October 18, 1996, purchase agreement, it was not included in the VLP agreement signed on November 22, 1996, and December 17, 1996. But to the extent this was error, it was not prejudicial, and "error without prejudice is not ground for reversal." Waters v. Fiebelkorn , 216 Minn. 489, 495, 13 N.W.2d 461, 465 (1944) (citations omitted). And in any event, a party may waive a contingency that exists for his or her sole benefit and protection and may compel performance by the other party who has no interest in the performance or nonperformance of the condition. Miracle Constr. Co. v. Miller , 251 Minn. 320, 326, 87 N.W.2d 665, 670 (1958). The record shows that Town Country waived the contingency of plat approval by signing the VLP agreement, which contained no such contingency.
Second, Toth claims the district court erred in finding that the Schlichtings were not obligated to close on March 31, 1997, because of the problems involving the drain-tile connections and private ditch. Toth alleges that he did not know that these unauthorized improvements might delay closing and that the district court erred in determining the reason for the parties' failure to close. But the reason for the alleged failure to close on March 31, 1997, is irrelevant because Toth's counsel agreed to reschedule the closing for September 30, 1997. It is undisputed that after rescheduling but before closing, Toth refused to sell the land. We conclude that any impermissible fact-finding by the district court was, in any event, neither prejudicial error nor material to the decision to grant summary judgment.
3. Supersedeas bond. An appeal stays enforcement of a district court's decision only if the appellant posts a supersedeas bond in the form and amount ordered by the district court. Minn.R.Civ.App.P. 108.01, subd. 1. Objections to the terms and conditions of a stay pending appeal must be presented, in the first instance, to the district court. David N. Volkmann Constr., Inc. v. Isaacs , 428 N.W.2d 875, 876-77 (Minn.App. 1988). An appellate court has inherent authority to reduce the amount of a bond that is clearly excessive, Sisto v. Housing Redev. Auth. , 258 Minn. 391, 395, 104 N.W.2d 529, 532 (1960), but it will not interfere with the district court's decision regarding the terms of a stay, absent an abuse of discretion. State by Clark v. Robnan, Inc. , 259 Minn. 88, 90, 107 N.W.2d 51, 53 (1960).
In determining the amount of a bond, a district court is guided by Minn.R.Civ.App.P. 108.01. On appeal from a decision requiring the transfer of real property, it is appropriate to require a bond in the amount that represents "the value of the use and occupation of the property" and that provides security for the appellant's undertaking to avoid the commission of waste while the property remains in the appellant's possession. Minn.R.Civ.App.P. 108.01, subd. 5. It is also appropriate to consider the costs of the appeal and "the damages sustained by the respondent in consequence of the appeal." Id. , subd. 2.
Toth argues that the $50,000 bond that the district court ordered is excessive because it is more than the rent he pays for "comparable" agricultural property. But because of Town Country's development plans, we cannot say that the district court erred in determining that the land's value to Town Country is greater than its agricultural value to Toth. The district court also relied on Town Country's assertions that it would face a "tremendous risk" if Toth caused or permitted waste on the property. Toth has failed, therefore, to demonstrate that the district court abused its discretion in setting the amount of the supersedeas bond at $50,000.