Kramer v. William F. Murphy Self-Declaration of Trust

2012 S.D. 53, 2012 SD 53, 816 N.W.2d 813, 2012 WL 2512939, 2012 S.D. LEXIS 85
CourtSouth Dakota Supreme Court
DecidedJune 27, 2012
Docket26072
StatusPublished
Cited by6 cases

This text of 2012 S.D. 53 (Kramer v. William F. Murphy Self-Declaration of Trust) is published on Counsel Stack Legal Research, covering South Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kramer v. William F. Murphy Self-Declaration of Trust, 2012 S.D. 53, 2012 SD 53, 816 N.W.2d 813, 2012 WL 2512939, 2012 S.D. LEXIS 85 (S.D. 2012).

Opinions

SEVERSON, Justice.

[¶ 1.] Randy Kramer initiated a breach of contract action against Mike D. Murphy and the William F. Murphy Self-Declaration of Trust (Trust). The circuit court dismissed the case, finding that it was precluded from hearing the case under the terms of a forum-selection clause incorporated into the parties’ contract. Kramer appeals. We affirm.

[814]*814BACKGROUND

[If 2.] Tri-State Ethanol, LLC owned an ethanol plant in Rosholt, South Dakota. Kramer was one of the members and managers of Tri-State Ethanol. Kramer was also a member of White Rock Pipeline, LLC, which owned a pipeline that supplied natural gas to Tri-State Ethanol. The other individuals and entities that held membership interests in White Rock Pipeline included Murphy, Walter Woods, TriState Ethanol, and the Trust.

[¶ 3.] In order to comply with various federal regulations, Tri-State Ethanol determined it was necessary to purchase the membership interests of Kramer, Murphy, Woods, and the Trust. To accomplish this, Tri-State Ethanol entered into a loan agreement (Loan Agreement) with Murphy and the Trust. Tri-State Ethanol’s duty to repay the loan was evidenced by a $2,100,000 secured promissory note (Promissory Note) and a $380,000 secured balloon promissory note (Balloon Note).1 The two notes were attached to the Loan Agreement.

[¶ 4.] The Loan Agreement contained a forum-selection clause, which stated, “[TriState Ethanol] ... agrees that at the sole election of [Murphy and the Trust], the jurisdiction and venue for any suit hereon shall be the Fourteenth (14th) Judicial District in Rock Island County, Illinois.” The Promissory Note and the Balloon Note also contained similar forum-selection clauses.

[¶ 5.] To compensate the members who held an interest in White Rock Pipeline, an agreement to disburse funds (Disbursement Agreement) was also executed. The parties to the Disbursement Agreement included Murphy, Woods, Kramer, and the Trust.2 The Disbursement Agreement provided that 79.3% of each monthly payment Tri-State Ethanol made on the Balloon Note was to be disbursed to Murphy, Walter Woods, Kramer, and the Trust until they were each fully compensated for the value of their respective interests.

[¶ 6.] The Disbursement Agreement was attached to the Loan Agreement along with the Balloon Note and the Promissory Note. However, the Disbursement Agreement did not contain a forum-selection clause.

[¶ 7.] Tri-State Ethanol was unable to meet its financial obligations and eventually filed for Chapter II bankruptcy. During the course of the bankruptcy proceedings, Murphy and the Trust reached a settlement agreement regarding payment of the Loan Agreement and the Disbursement Agreement. Murphy and the Trust, through its trustee, represented to the bankruptcy court that they would use the settlement proceeds to pay Kramer the amounts owed under the Disbursement Agreement. The bankruptcy court approved the settlement agreement.

[¶ 8.] After the settlement proceeds from Tri-State Ethanol’s bankruptcy estate were distributed, Murphy and the Trust refused to pay Kramer the full [815]*815amount listed in the Disbursement Agreement. Kramer then filed a complaint against Murphy and the Trust for breach of the Disbursement Agreement. The complaint was filed in the Second Judicial Circuit of South Dakota.

[¶ 9.] Murphy filed a motion to dismiss on the grounds of improper venue. He claimed that the forum-selection clauses contained in the Loan Agreement, the Balloon Note, and the Promissory Note controlled for any suit brought on the Disbursement Agreement. The circuit court agreed and dismissed the case. It found that while the Disbursement Agreement itself had no forum-selection clause, the other three agreements contained forum-selection clauses providing that the Fourteenth Judicial District in Rock Island County, Illinois was the proper forum. The circuit court reasoned that the agreements must be considered as a whole.

STANDARD OF REVIEW

[¶ 10.] To determine whether the circuit court erred in dismissing this case, we must interpret the terms of the parties’ agreements. “The interpretation of a contract is a question of law, which is reviewed de novo.” Kernelburner, LLC v. MitchHart Mfg., Inc., 2009 S.D. 33, ¶ 7, 765 N.W.2d 740, 742 (quoting Arch v. Mid-Dakota Rural Water Sys., 2008 S.D. 122, ¶ 7, 759 N.W.2d 280, 282).

DECISION

[¶ 11.] Kramer argues that the circuit court erred in granting Murphy’s motion to dismiss. He emphasizes that the Distribution Agreement did not contain specific language incorporating the terms of the Loan Agreement, the Promissory Note, or the Balloon Note. In the absence of any such express language, Kramer argues that the agreements cannot be construed as a single contract.

[¶ 12.] Kramer’s argument is contrary to this Court’s holding in Baker v. Wilburn, 456 N.W.2d 304 (S.D.1990). In Baker, we recognized that “[a]ll writings that are executed together as part of a single transaction are to be interpreted together.” Id. at 306 (citing Restatement (Second) Contracts § 202 (1981)). Thus, “[w]hen two or more instruments are executed at the same time by the same parties, for the same purpose and as part of the same transaction, the court must consider and construe the instruments as one contract.” Id. (quoting GMS, Inc. v. Deadwood Social Club, Inc., 333 N.W.2d 442, 444 (S.D.1983)).

[¶ 13.] Here, in accordance with our holding in Baker, several facts exist which demonstrate that the documents at issue were executed together as a part of a single transaction. The documents were executed on the same day in order to transfer ownership of White Rock Pipeline to Tri-State Ethanol. In addition, the Disbursement Agreement was dependant upon the execution of the Loan Agreement, the Promissory Note, and the Balloon Note. Dakota Gasification Co. v. Natural Gas Pipeline Co. of Am., 964 F.2d 732, 735 (8th Cir.1992) (“[Hanging one contract upon the execution of another contract ... heightens the need for joint interpretation.”). Finally, the documents were attached to each other and labeled sequentially. In light of these facts, the separate documents cannot be viewed in isolation, but “must be construed together as a single contract involving the same transaction.” Baker, 456 N.W.2d at 306. See Talley v. Talley, 1997 S.D. 88, ¶ 23, 566 N.W.2d 846, 851 (construing four contracts together because they were executed simultaneously as part of a transaction to transfer a mother’s interest in a ranch, ranch equipment, and certain tools to her son, and to provide for the mother and her [816]*816cattle); GMS, 333 N.W.2d at 444 (construing a contract for deed and a bill of sale as one contract because they “were executed simultaneously, by the same parties, as part of the same transaction — the sale and purchase of ... [certain] property”). Cf Ponderosa-Nevada, Inc. v. Venners, 90 S.D. 579, 243 N.W.2d 801

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Bluebook (online)
2012 S.D. 53, 2012 SD 53, 816 N.W.2d 813, 2012 WL 2512939, 2012 S.D. LEXIS 85, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kramer-v-william-f-murphy-self-declaration-of-trust-sd-2012.