Johnson v. Johnson

14 N.W.3d 316, 2024 S.D. 69
South Dakota Supreme Court·Decided November 20, 2024·No. 30500·Published

Opinion

#30500-a-MES 2024 S.D. 69

IN THE SUPREME COURT

OF THE

STATE OF SOUTH DAKOTA

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MARY A. JOHNSON, Plaintiff and Appellee, v.

GREGORY M. JOHNSON, Defendant and Appellant.

and

ROBERT JOHNSON, CAROL A. LINDER, and BARBARA LAFEVER, Defendants.

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APPEAL FROM THE CIRCUIT COURT OF THE SEVENTH JUDICIAL CIRCUIT PENNINGTON COUNTY, SOUTH DAKOTA

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THE HONORABLE JOSHUA HENDRICKSON Judge

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ROBERT J. GALBRAITH of Nooney & Solay, LLP Rapid City, South Dakota Attorneys for defendant and appellant.

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CONSIDERED ON BRIEFS

JUNE 4, 2024

OPINION FILED 11/20/24

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HEATHER M. LAMMERS BOGARD PHILLIP STILES GARRETT J. KEEGAN of Costello, Porter, Hill, Heisterkamp, Bushnell & Carpenter, LLP Rapid City, South Dakota Attorneys for plaintiff and appellee.

SALTER, Justice [¶1.] Mary Johnson entered into an oral agreement with her parents under which they conveyed a parcel of real property to her so that she could obtain financing to construct a small home for them on the property. In exchange, Mary and her family were able to live in a larger home previously occupied by her parents on a separate parcel. Once she satisfied the mortgage, Mary was obligated under the agreement to transfer the property to herself and her siblings in equal shares in accordance with her parents’ wishes. Despite satisfying the mortgage, Mary advised her siblings in 2008 that she would not convey the land to them. [¶2.] In this action, Mary’s brother, Greg Johnson, sought to enforce the oral agreement to convey the property and reformation of the deed from his parents to Mary. The circuit court granted Mary’s motion for summary judgment, determining Greg’s breach of contract claim was barred by the statute of limitations and that he was not entitled to reformation because he was unable to establish that the deed failed to reflect the parties’ intent. Greg appeals, and we affirm.

Factual and Procedural Background [¶3.] Carl and Pearl Johnson owned two pieces of property in the Black Hills area near Hill City. The parcels are former mining claims and are known as the 7.49-acre Spaniard Lode and the Gertie Lode, which is 10 acres. Carl and Pearl lived in a large house located on the Spaniard Lode; it had become difficult for Carl to maintain due to his deteriorating health in the mid-1990s. Still, he did not want to move into a town or city.

[¶4.] Carl and Pearl ultimately developed a plan that would allow them to remain on the property through an agreement with Mary, who was living with her parents at the Spaniard Lode home. Under the agreement, Carl and Pearl would deed Mary the Gertie Lode for the purpose of obtaining financing to build a small home on that property, and, in exchange, Mary and her family could live rent-free in the larger Spaniard Lode home. The agreement also contemplated that Mary would transfer the Gertie Lode equally to her four siblings and herself once she satisfied the mortgage on the Gertie Lode home. [¶5.] Pursuant to the terms of what the parties agree was an oral contract, Carl and Pearl transferred the Gertie Lode to Mary in fee simple in 1995 through a warranty deed. Mary, in turn, obtained a loan in 1996 and constructed a home on the Gertie Lode where her parents then lived. Carl only lived there for a little over a year before he passed away. Pearl continued to live in the home for approximately a year and a half longer before she remarried and moved to Rapid City. [¶6.] Carl and Pearl were keenly aware that the agreement with Mary could have been reduced to writing but was not. Instead, it appears Carl and Pearl believed that the agreement would be honored if they made their intentions clear to their children. And they did so at various times, including at the outset of the agreement when they conveyed the Gertie Lode to Mary in 1995, telling their children of their plan for the Gertie Lode during a family gathering. [¶7.] In 2005, Pearl confirmed that the oral agreement reflected her and Carl’s shared intent in a letter:

Our intention amongst the three of us was to sign over the Gertie Lode to Mary so the building could begin. . . . At a later time the acreage would be divided properly with a surveyor. . . .

The transactions had nothing to do with a favorite son or daughter, it was done for proper living conditions for dad and the time he had left. I know action needs to be taken with a lawyer to secure the properties before something intervenes and may be lost to a regrettable act or transaction.

[¶8.] And, again, in a 2009 letter, Pearl wrote: “This is a note to clarify the intent of how the Gertie Lode was to be divided. The original intent is still the same and has not changed. The property is to be divided equally between [the five children].” She and Carl had, in fact, done this for the Spaniard Lode in 1996, transferring ownership by quitclaim deed to their children to share equally as tenants in common and reserving a life estate for themselves. [¶9.] Mary paid off the original loan to build the small house on the Gertie Lode in 2006, and the satisfaction was recorded with the Pennington County Register of Deeds. But before that, in 2004, Mary acted on her own to obtain a home equity line of credit secured by a mortgage on the Gertie Lode to finance some repairs on the Spaniard Lode home. The line of credit mortgage remains as an encumbrance on the Gertie Lode property. [¶10.] Over the years, Mary expressed her belief that she should be compensated for taking care of the Gertie Lode and the Spaniard Lode. And in 2008, Mary met with her mother, Pearl, her brother, Greg, and a sister to discuss the division of both the Spaniard Lode and the Gertie Lode and possible compensation to Mary. Mary indicated during the meeting that she did not intend to carry out her obligations under the oral agreement and, instead, was going to

keep the Gertie Lode for herself. She confirmed this in a September 12, 2008 letter to her siblings:

I know it was not the “INTENTION” of the folks for [me] to have all of the 10 acres, but I feel that if it would have been any different none of us would have this property.

By November 1st I will be moved into the little house . . . . I will be keeping the 10 acres in one piece. . . . I feel there should be some buy out from me to you but that is yet to be determined. . . . You guys need to come up with a plan of action[.]

(Emphasis added.) [¶11.] In September 2018, Mary filed suit to partition the separate Spaniard Lode parcel that Carl and Pearl had previously conveyed to their children. Greg filed an answer, counterclaim, and crossclaim relating to the Gertie Lode property. 1 Greg alleged the 1995 warranty deed conveying the Gertie Lode to Mary should be reformed and that Mary breached the oral agreement made with their parents which, Greg claimed, could be enforced through specific performance and partition of the Gertie Lode or, in the alternative, an award of damages. 2 [¶12.] Mary filed for summary judgment on Greg’s claims, which the circuit court granted, concluding that the breach of contract claim was time-barred because

1. Greg’s claims are characterized as a counterclaim against Mary and crossclaims against the remaining siblings.

2. Greg claims he is entitled to enforce the oral agreement because he is a thirdparty beneficiary of the contract between the parties’ parents and Mary. See SDCL 53-2-6 (“A contract made expressly for the benefit of a third person may be enforced by him at any time before the parties thereto rescind it.”).

Mary did allege a lack of standing as an affirmative defense in her reply to Greg’s breach of contract claim, but she has not developed that theory further beyond the pleadings.

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Johnson v. Johnson, 14 N.W.3d 316, 2024 S.D. 69 (S.D. 2024).

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