Buhl v. Bak

400 N.W.2d 903, 92 Oil & Gas Rep. 346, 1987 S.D. LEXIS 229

Opinions

FOSHEIM, Retired Justice.

A partnership known as BAM (plaintiffs) brought this action for a declaratory judgment to determine their ownership rights to minerals, gravel, and sand on a twenty-acre piece of property in Hughes County known as Outlot H-3. Plaintiffs also sought injunctive relief to prevent the defendants from removing any sand, gravel or minerals from the property. After a trial to the court, the court declared that plaintiffs were the owners of all minerals, sand, and gravel located on the property and enjoined defendants from removing any of these materials. The court declared that defendant Bothwell had no legal title to the property but only had a possessory interest for the sole purpose of pasturage. Bothwell appeals.

Footnotes

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* We affirm.

FACTS

In 1979 James and Betty Hunt executed a contract for deed to convey a 400 acre tract of land to Bobby Jones. This contract reserved Hunts’ right to remove sand and gravel from the property for a period of three years. In 1981 Jones assigned his interest in this property to plaintiffs. The assignment from Jones to plaintiffs contained the following recitation regarding twenty acres of the tract:

It is further agreed Buyers [plaintiffs] will deed, on April 1, 1989, twenty (20) acres to John Bothwell. Said twenty (20) acres shall be directly behind Bothwell’s existing 2.9 acre homesite, described as follows: Outlot H-l, in the SW ¼ of Section 17, Township 110 North, Range 77 West of the Fifth Principal Meridian, Hughes County, South Dakota.

It is agreed such twenty (20) acres shall not include the existing house, barn, corrals, or highway frontage to a depth of five hundred feet (500'). Both-well shall, at his expense, prepare a survey of said twenty (20) acres, pay all closing costs, including title insurance if desired. If such survey is not prepared prior to June 1, 1981, Buyers shall have no obligation to transfer any property to John Bothwell. This right shall be a personal right to John Bothwell and shall not in any manner run to the benefit of any other person, mortgage holder, or any transferee by any means.

These two paragraphs are the only reference to any interest in the property created in Bothwell’s favor. No other documents refer to any alleged interest of Bothwell’s in the property that was transferred between the Hunts, Jones, and plaintiffs.

The twenty-acre tract to be deeded to Bothwell was later described as Outlot H-3 in a plat prepared by Bothwell.

Bothwell desired to purchase some of the property for grazing livestock because the property was located near his home. Because he lacked any financing to buy the entire tract, plaintiffs were located as purchasers of the larger tract, less the twenty acres Bothwell desired. Although Both-well was present during some of the negotiations between Jones and plaintiffs, and managed to have Jones mention the twenty acres in the assignment to plaintiffs, there was no evidence that any of the parties discussed the subject of mineral rights at that time. Bothwell paid no consideration to anyone, nor was he a party to the assignment to plaintiffs or to any document executed by Jones.

In 1983 plaintiffs placed a deed to Both-well in escrow to be delivered in 1989. The deed was for twenty acres described as Outlot H-3 and reserved all of the mineral interests in plaintiffs.

Bothwell pastured livestock on the twenty acres pursuant to an oral lease with plaintiffs. Although plaintiffs and Both-well discussed the mineral interests in the twenty acres, no other agreements, written or oral, were ever reached between Both-well or any of the other parties.

Sometime in 1982 Bothwell fenced Outlot H-3. That same year he and defendant Bak signed a lease agreement purportedly giving Bak the right to mine gravel on Outlot H-3. Bak mined and removed some material from the property.

ISSUE

Appellant Bothwell’s brief states the issue as: “Did Bothwell become the owner of the twenty acres known as Outlot H-3 when Bobby L. Jones assigned his interest in an executory real estate contract to [plaintiffs]?” As we read the brief, we have more accurately determined the issue to be whether the intent of the parties in making the assignment from Jones to plaintiffs was to make Bothwell the present owner of Outlot H-3, including the mineral interests.

Bothwell’s statement of the issue and a portion of his brief appears to argue that the assignment from Jones to plaintiffs entitled Bothwell to present ownership of Outlot H-3, including the mineral rights. The trial court’s conclusions of law and its judgment also contain recitations concerning Bothwell’s right to title in 1989, including the mineral rights. But a final determination of the issue of Bothwell’s right to full ownership of the lot may not be ripe for adjudication because many contingencies exist before Bothwell can gain title. The issue of Bothwell’s right to title in the future was not clearly framed by the pleadings, nor was it tried by implied consent. See SDCL 15-6-15(b); Western Petroleum Co. v. First Bank Aberdeen, 367 N.W.2d 773 (S.D.1985). Because we are reluctant to determine an issue that was not fully presented to and considered by the trial court, we issue this caution about our decision and make it clear that we have only decided Bothwell’s present interest to the minerals and not the nature of the interest he may be entitled to in 1989 when all of the contingencies have been removed.

To determine the rights to the minerals we must examine the intent of the parties to the assignment, which in this case is a contract. In construing contracts courts are to ascertain and give effect to the parties’ mutual intentions, which are to be derived from the entire contract. See, e.g., S & S Trucking v. Whitewood Motors Inc., 346 N.W.2d 297 (S.D.1984); Chord v. Pacer Corp., 326 N.W.2d 224 (S.D.1982). Bothwell argues that the intent of plaintiffs and Jones was that Bothwell was to receive equitable title to the twenty acres known as Outlot H-3, including the mineral rights. Bothwell further argues that the assignment to plaintiffs is ambiguous and is to be construed most strongly against plaintiffs, who had the document drafted. See, e.g., Northwestern Engineering Co. v. Thunderbolt Enterprises, 301 N.W.2d 421 (S.D.1981); City of Sioux Falls v. Henry Carlson Co., 258 N.W.2d 676 (S.D.1977).

The trial court made several findings and conclusions regarding Bothwell’s rights arising from the assignment. The court found that Bothwell was not a party to any of the instruments between Jones, Hunts or plaintiffs and that he had paid no consideration to anyone. The court further found there was no explanation as to any agreement between Jones and Bothwell, and that Bothwell had no written or oral authority from plaintiffs to remove materials from the property. The court concluded that Bothwell had possession of the property at the sufferance of Jones solely for the purpose of pasturage and that Bothwell’s legal title would not ripen into a perfected legal title until 1989.

Bothwell failed to propose or object to any of the trial court’s findings, and he does not attack any of the findings as clearly erroneous. The trial court’s findings support its conclusions that Bothwell did not have possession of any gravel or mineral rights, and that he had possession of the property only for pasturage of his livestock. Any question of the nature of Bothwell’s interest that was intended to be created by the contract between the parties is a question for the fact finder, in this case the court. See North River Ins. Co. v. Golden Rule Constr. Inc., 296 N.W.2d 910 (S.D.1980). The trial court’s findings on these factual issues are not clearly erroneous. See S & S Trucking, supra; Burke v. Bubbers, 342 N.W.2d 18 (S.D.1984) (action for reformation of instrument to conform to parties’ intent).

Any question of law of whether any agreements were ambiguous, as Bothwell argues, must also be resolved in plaintiffs’ favor. The question of whether a contract is ambiguous is a question of law for the court. North River Ins. Co., supra. Although Bothwell did not propose any conclusions on the question of an ambiguity, the written and oral agreements between Jones, plaintiffs, and Bothwell clearly gave Bothwell no present interest in the minerals. Because the assignment is not reasonably capable of being understood in any sense as a grant to Bothwell of a present possessory right to the minerals, it is not ambiguous. See Jones v. American Oil Co., 87 S.D. 384, 209 N.W.2d 1 (1973); North River Ins. Co., supra; Estate of Olson, 332 N.W.2d 711 (S.D.1983). Because the assignment is not ambiguous about Bothwell’s present interest in the minerals, we have no need to resort to the rule to be applied when an ambiguous contract exists. See, e.g., City of Sioux Falls, supra, at 679 (ambiguous contract to be interpreted most strongly against the one who drafted the contract and caused the uncertainty to exist).

The judgment of the trial court is affirmed.

WUEST, C.J., and MORGAN and HENDERSON, JJ., concur. SABERS, J., dissents. MILLER, J., not having been a member of the court at the time this action was submitted to the court, did not participate.

A separate jury trial was held on the issue of plaintiffs’ damages resulting from defendants’ wrongful removal of sand and gravel from the property. Although the judgment entered by the trial court in this appeal does not include the determination and direction required for the judgment to be a final appealable judgment under SDCL 15-6-54(b), a final judgment on the remaining issue of damages has been entered.