Johnson Farms v. McEnroe

2002 ND 122, 656 N.W.2d 1, 2002 WL 31957971

• Court: North Dakota Supreme Court
• Decided: January 22, 2003
• Docket: 20010148
• Status: Published

Opinions

NEUMANN, Justice.

[¶ 1] Johnson Farms, a general partnership, appealed a judgment dismissing its causes of action against George G. McEnroe and Donna McEnroe (collectively, “McEnroe”). We reverse and direct entry of judgment for Johnson Farms.

I

[¶ 2] This is the third appeal in Johnson Farms’ litigation to enforce an alleged oral agreement to purchase from McEn-roes real property adjacent to Grand Forks. See Johnson Farms v. McEnroe, 2000 ND 137, 613 N.W.2d 497 (“Johnson Farms II ”); Johnson Farms v. McEnroe, 1997 ND 179, 568 N.W.2d 920 (“Johnson Farms I ”).

[¶ 3] In a February 12, 1996, complaint, Johnson Farms alleged it and McEnroe agreed Johnson Farms would purchase 59.17 acres of land from McEnroe for $9,000 per acre, for a total of $532,530, to be structured as a “like kind” exchange. Johnson Farms alleged it bought Ryehart farmland on November 16, 1993, for $373,000, and exchanged it for 30.61 acres of McEnroe land, which was equivalent to $12,185.56 per acre, on January 18, 1994, and that George McEnroe later gave Johnson Farms an option, until April 1,1995, to pay the balance by providing “like kind” property acceptable to McEnroe or depositing $159,530.¹ Johnson Farms alleged that in January 1996, George McEnroe advised he would no longer honor the option. Johnson Farms sued for specific performance of the parties’ oral agreement or for a return of the $97,510 overpayment it paid for the 30.61 acres it acquired in the exchange for the Ryehart land.

[¶ 4] The trial court granted McEnroe’s motion for summary judgment. Johnson Farms appealed. To decide whether summary judgment had been appropriately granted we reviewed the evidence in the light most favorable to Johnson Farms, the party who opposed the summary judgment. Johnson Farms I, 1997 ND 179, ¶ 2, 568 N.W.2d 920. Viewing the evidence in that light, we noted the Ryehart transaction “resulted in Johnson Farms effectively paying $3,185.56 per acre more than the agreed $9,000 per acre sale price for that 30.61 acres of property” and “Johnson Farms then owed the McEn-roes $159,530 for the balance of the 59.17 acres.” Id. at ¶ 3. We also said:

If Johnson Farms does not succeed on its claim for specific performance, it has a claim against the McEnroes for a refund of the difference in value of the amount paid for the Ryehart property and the value of the McEnroe property it received in exchange.

Id. at ¶ 22. We reversed the summary judgment and remanded for trial. Id. at ¶ 31.

[¶ 5] After a trial, the trial court found the parties’ only oral agreement was for the purchase of 30.61 acres, and found Johnson Farms overpaid $91,930 for the 30.61 acres conveyed to it:

[T]he only oral contract that ever existed between the parties, that is material to this case, is their oral agreement by which Johnson Farms agreed to exchange the Rychart property it purchased in November of 1993 for 30.61 acres of property described above. The Court further finds that the oral agreement for such exchange included an agreement of the parties that the property exchanged by the Defendants had an agreed value of $9,000 per acre, and that the Plaintiff intended to convey to the Defendants in exchange for Defendants’ property a tract of land having a value corresponding to the 30.61 acres of the Defendants’ land valued at $9,000 per acre.

[T]he tract of land traded by the Defendants to the Plaintiff pursuant to the oral agreement between the parties was valued at the agreed price of $9,000 per acre, or a value of $281,070.00. The price paid by the Plaintiff for the Ryc-hart property traded to the Defendant George McEnroe was $373,000.00, $91,930.00 more than the agreed value of the land traded by Defendants to Plaintiff for said property. This constituted an overpayment by the Plaintiff of $91,930.00.

Johnson Farms II, 2000 ND 137, ¶ 4, 613 N.W.2d 497. We found the trial court’s findings were inconsistent, id. at ¶ 7, and said:

It is evident the trial court found the parties agreed to a purchase price of $9,000 per acre for the January 1994 transaction based solely upon the purchase price set forth in the option added to the amount paid by Johnson Farms for the Rychart property, divided by 59.17 acres. This is tantamount to a finding that the Rychart property exchange was only the first part of an overarching agreement for the purchase of the entire 59.17 acres. The trial court’s use of this method to calculate the overpayment is internally inconsistent with its finding that the only agreement between the parties was for the purchase of the 30.61 acres of land in January 1994.

Id. at ¶ 11. We continued:

The pivotal issue in this case is whether there was an oral agreement for the purchase of the entire 59.17 acres of the McEnroe property. The trial court’s express finding and its method of determining Johnson Farms’ overpayment for the initial 30.61 acre exchange provide opposite answers to this question.... We conclude the trial court’s inconsistent findings do not support the judgment, and we reverse and remand for a new trial on all issues.

Id. at ¶ 13.

[¶ 6] After a retrial, the trial court readopted some of its earlier findings of fact, withdrew others, made new or additional findings of fact, and ordered dismissal of Johnson Farms’ claims for specific performance or damages for overpayment. The court made the following findings of fact:

“10. FOUND the only oral contract that ever existed between the parties, that is material to [t]his case, is their oral agreement by which Johnson Farms agreed to exchange the Rychart property it purchased in November of 1993 for 30.61 acres of property described above.”

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32. FOUND that the Plaintiff has failed to provide convincing proofs of the elements ... necessary to show the existence of an oral contract between the parties under which Johnson Farms had agreed to buy all 60 of the McEnroe’s available acres, before the Rychart property became available for exchange.

33. FOUND that the price of $373,000 for the property deeded by the McEnroe’s to Johnson Farms in January and July of 1994² was fair and reasonable in exchange for the Rychart property which had been purchased at auction on November 16, 1993 by Johnson Farms in the name of Nor Agra, Inc for that same price.

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37. FOUND that the tracts deeded by the McEnroe’s to Johnson Farms in January and July 1994 were then of greater value per acre to Johnson Farms for their development purposes than were the northerly and westerly acres retained by George McEnroe because the easterly acres were adjacent to installed streets and sewers and closer to already developed residential property.

The trial court explained its earlier inconsistent findings:

The inconsistency arose from the trial Court’s application, in the 1998 trial, of the last sentence in ¶ 22 of Johnson Farms v. McEnroe, 1997 ND 179, 568 N.W.2d 920 which stated:

“If Johnson Farms does not succeed on its claim for specific performance, it has a claim against the McEnroes for a refund of the difference in value of the amount paid for the Rychart property and the value of the McEnroe property received in exchange.”

At the 1998 trial this court understood the Supreme Court’s statement, just quoted, as a directive to be literally applied .... Had the Court not believed itself bound to award that money judgment to plaintiff under those circumstances it would not have done so.

Johnson Farms appealed from a judgment dismissing its causes of action.

II

[¶ 7] On appeal, Johnson Farms challenges the trial court’s findings of fact. Johnson Farms argues the trial court’s finding no oral agreement for the sale of sixty acres and that the exchange of the Rychart property was a fair and reasonable exchange is clearly erroneous.

[¶ 8] We review a trial court’s findings of fact under the clearly erroneous standard of N.D.R.Civ.P. 52(a). Center Mut. Ins. Co. v. Thompson, 2000 ND 192, ¶ 20, 618 N.W.2d 505. A trial court is required, under N.D.R.Civ.P. 52(a), to make findings of fact and conclusions of law to enable the appellate court to understand the trial court’s factual determinations and the basis for its conclusions of law and judgment. Webster v. Regan, 2000 ND 18, ¶ 6, 605 N.W.2d 808. A trial court’s findings of fact and conclusions of law should be stated with sufficient specificity to assist us in our review and to afford a clear understanding of the trial court’s decision. Radspinner v. Charlesworth, 346 N.W.2d 727, 730 (N.D.1984). A finding of fact is clearly erroneous when, although there is some evidence to support it, a reviewing court is left with a definite and firm conviction that a mistake has been made. Rassier v. Houim, 488 N.W.2d 635, 638 (N.D.1992).

[¶ 9] On a case remanded without specific instructions, the general rule is a trial court has the power to reverse its findings of fact without receiving new evidence. See Imperial Chem. Indus. Ltd. v. National Distillers & Chem. Corp., 354 F.2d 459 (2d Cir.1965); see also V.G. Lewter, Annotation, Power of the Trial Court, On Remand for Further Proceedings, to Change Prior Fact Findings as to Matter Not Passed Upon By Appellate Court, Without Receiving Further Evidence, 19 A.L.R.3d 502 (1968). However, a concern is raised when the trial court’s explanation for changing its findings of fact is its supposed misunderstanding of our prior opinion, rather than the evidence or facts of the case.

[¶ 10] In the present case, the trial court changed its findings of fact on remand. At the conclusion of the trial following our first remand, the court found Johnson Farms established an oral contract had been made between Johnson Farms and McEnroe for a trade of property. The trial court also determined Johnson Farms had made an overpayment for the 30.61 acres it received, and was due $91,930 from McEnroe for the overpayment. Following our second remand, the trial coui’t reversed that finding, holding that the facts now indicate the exchange was for property of equal value, and no refund for overpayment was due Johnson Farms.

[¶ 11] The trial court’s explanation for the reversal of its finding was a claimed misunderstanding of a sentence in Johnson Farms I, 1997 ND 179, ¶ 22, 568 N.W.2d 920. The last sentence of paragraph 22 states, “If Johnson Farms does not succeed on its claim for specific performance, it has a claim against the McEn-roes for a refund of the difference in value of the amount paid for the Ryehart property and the value of the McEnroe property it received in exchange.” Id. The trial court explained in its March 19, 2001, opinion that it felt bound by our directive to award Johnson Farms a judgment for overpayment after concluding the claim for specific performance failed. The trial court further explained that had it not felt so bound by our first opinion, it would have held that Johnson Farms “was not entitled to any refund on the Ryehart exchange because the evidence showed that the Ryehart and McEnroe properties were found to be of equal value.”

[¶ 12] We hold the trial court’s finding on this point is clearly erroneous. A review of the evidence presented indicates there existed an oral contract between the parties. Bert Johnson has claimed there was an agreement between Johnson Farms and McEnroe for the exchange of 59.17 acres at $9,000 per acre. Johnson’s testimony was supported by a number of witnesses who testified that an agreement was reached between the parties. Tim Crary testified both Johnson and McEnroe told him they had reached an agreement, and that he had attended auctions with McEnroe, who attempted to purchase land to trade. Terry Longtin testified McEnroe told him he traded sixty acres to Johnson and was looking for some land to complete the trade. Douglas Herzog testified that at a city planning meeting McEnroe said he had completed a sixty acre deal with Johnson. John Botsford testified Johnson told him about the agreement, and that Tom McEnroe submitted a bid on behalf of his father for land to complete part of the trade at one of Botsford’s auctions.

[¶ 13] McEnroe’s actions after the option allegedly expired support the conclusion that there was an oral agreement between the parties. McEnroe claims the option expired on April 1, 1995. -However, the evidence clearly indicates McEnroe continued to look for property to complete the transaction after the option expired. See Johnson Farms I, 1997 ND 179, ¶ 7, 568 N.W.2d 920. Tim Crary testified he went with Johnson and McEnroe to look at some Hagen property to complete the sale in June 1995, after the option had expired. McEnroe decided he did not want the Ha-gen property because it was too expensive. Crary also testified that in November 1995, McEnroe refused a trade for property near Thompson, North Dakota, because he wanted cash to complete the deal. Crary also indicated McEnroe requested in November 1995, that Johnson release some of the 59.17 acres so he could include it in a sale with another party. Terry Longtin testified that in the late fall of 1995, McEnroe told him he was still looking for property to complete the transaction.

[¶ 14] Perhaps the most convincing evidence indicating an oral agreement between the parties is contained in the numbers in this case. Johnson Farms has maintained throughout these proceedings that McEnroe orally agreed in 1993 to sell Johnson Farms 59.17 acres of land for $9,000 per acre, for a total purchase price of $532,530. See Johnson Farms II, 2000 ND 137, ¶ 7, 613 N.W.2d 497. In the trial court’s second memorandum opinion, it found the parties agreed to a purchase price of $9,000 per acre for the January 1994 transaction based solely upon the purchase price set forth in the option added to the amount paid by Johnson Farms for the Rychart property, divided by the 59.17 acres. Id. at ¶ 11. We agree that the evidence supports Johnson' Farms’ claim that the separate transaction theory is preposterous because McEnroe offered to sell the remaining 27.94 acres in the option for $159,530, or $5,585.78 per acre, only one month after McEnroe sold 30.61 acres for $12,185.56 per acre. Id. at ¶ 9. Any reasonable inferences that can be drawn from this evidence support Johnson Farms’ claim that an agreement existed to sell 59.17 acres for a price of $9,000 per acre.

[¶ 15] Even though there may have been some slight evidence to support the trial court’s revised finding that the parties had exchanged properties of equal value, in reviewing all of the evidence in this case, we are left with a definite and firm conviction a mistake has been made. The evidence is overwhelmingly to the contrary. We conclude it was error for the trial court to find the parties had exchanged properties of equal value based only on its new interpretation of our opinion. We reverse the trial court’s judgment dismissing Johnson Farms’ claims against the McEnroes, and direct entry of a judgment in favor of Johnson Farms and against the McEnroes for $91,930.00, the amount the trial court found on remand to be an overpayment for the McEnroe property, plus interest from January 18, 1994, to date of entry of judgment, at the rate of 6 percent per year.

[¶ 16] GERALD W. VANDE WALLE, C.J., and THOMAS J. SCHNEIDER, D.J., and MARY MUEHLEN MARING, JJ., concur. [¶ 17] The Honorable THOMAS J. SCHNEIDER, D.J., sitting in place of SANDSTROM, J., disqualified.

1 . The trial court found the option was not exercised in either way before April 1, 1995.

2 . "[I]n July 1994, the McEnroes conveyed an additional .62 acres of land to Johnson Farms as part of the transaction.” Johnson Farms v. McEnroe, 2000 ND 137, ¶ 10 n. 1, 613 N.W.2d 497.