Opinion
No. 109,024.
2013-11-22
Scott SHRAUNER, Appellant, v. Bob BOALDIN and Dian Boaldin, Appellees.
Appeal from Morton District Court; Clint B. Peterson, Judge. Derek S. Casey, of Triplett, Woolf & Garretson, LLC, of Wichita, and Jeff L. Todd and Lauren Barghols Hanna, of McAfee & Taft A Professional Corporation, of Oklahoma City, Oklahoma, for appellant. Wayne R. Tate, of Hugoton, for appellees.
Appeal from Morton District Court; Clint B. Peterson, Judge.
Derek S. Casey, of Triplett, Woolf & Garretson, LLC, of Wichita, and Jeff L. Todd and Lauren Barghols Hanna, of McAfee & Taft A Professional Corporation, of Oklahoma City, Oklahoma, for appellant. Wayne R. Tate, of Hugoton, for appellees.
Before ATCHESON, P.J., ARNOLD–BURGER, J., and BUKATY, S.J.
MEMORANDUM OPINION
PER CURIAM.
Scott Shrauner, as the holder of an option to purchase land from Bob and Dian Boaldin, gave notice in a letter to the Boaldins of his intent to exercise his option. The option contract set forth a formula for establishing the purchase price. When the parties could not agree on what the price should be under the formula, Shrauner sued the Boaldins seeking a declaratory judgment to determine the purchase price and enforce the sale. The district court's ruling on those issues is not part of this appeal. However, the Boaldins had planted a corn crop on the land after Shrauner gave his notice, but they harvested it prior to the closing of the sale on the property. During the course of the litigation, the Boaldins filed a motion for summary judgment on the issue of who owned the proceeds from this corn crop. The district court ruled in favor of the Boaldins and Shrauner filed this appeal.
We conclude the district court reached the correct result in awarding the proceeds from the crop sale to the Boaldins and, therefore, affirm. But we rely on a different reason. Specifically, we hold that the option contract did not address the issue of who owned a corn crop planted after Shrauner gave his notice but harvested before completion of the sale. Both sides agree that Kansas common law should then determine the ownership issue in the absence of such a contractual term. Since that law provides that growing crops are conveyed with the land—while crops harvested prior to conveyance are not—the Boaldins are the owners of the crop, and the district court's rationale matters not. We affirm.
Facts
In 2001, Shrauner sold several tracts of farmland located in Morton County and in the state of Oklahoma to the Boaldins. At the same time the parties entered into an option contract whereby, Shrauner had the option to purchase the tracts back at a later date. The contract provided that the price Shrauner would pay to repurchase any tracts would be determined by a rather complicated formula which included an amount for the depreciated value of any improvement value the Boaldins added to the tracts. The price also included other prepayment penalty costs and interest expenses the Boaldins had incurred. In order to exercise his right to repurchase a particular tract, paragraph 2.1.2 of the option contract required Shrauner to “give BUYER written notice of such intent at least ninety (90) days prior to the exercise of his repurchase.”
On March 17, 2011, Shrauner, through his counsel, sent the Boaldins a letter expressing his intent to exercise his option to repurchase tract 7. Because the purchase price had to be calculated based on the applicable formula, the letter asked the Boaldins to respond with information regarding the depreciated value of any improvements that they had made. The letter also contained information concerning the farming of the tract. In particular, the letter stated:
“There are a couple of additional issues that arise between now and the closing that my client would like to address. First, the property will need to be farmed until the transaction closes. Mr. Shrauner would be willing and able to undertake the farming obligations on Tract 7 immediately if that is acceptable to you. If that is not acceptable to you, we would expect you to utilize normal and customary farming practices and to maintain and provide proof of all expenses since at the time of closing, Mr. Shrauner will be required to reimburse you for those expenses.
“Even if you elect to farm the property yourselves prior to closing, Mr. Shrauner would like the opportunity to participate in the selection of seed and fertilizer, etc. since ultimately my client will own the crop. Of course, under no circumstances should the land remain idle, and a corn crop needs to be planted in the next few weeks. Finally, the crop needs to be properly insured, and the insurance assigned to my client at the time of closing.”
On June 15, 2011, the Boaldins, through their counsel, responded with their own letter itemizing the components that they believed comprised the purchase price for tract 7. The letter stated that under the formula in the contract, the purchase price would be $664,837.21. Shrauner disagreed with this calculation, and he submitted a response on July 21, 2011, claiming the purchase price should be $498,152.78. Shrauner's counter offer gave the Boaldins 2 weeks to respond and accept the counter or he would initiate legal action to enforce the option.
The Boaldins did not agree with Shrauner's calculation and in the absence of further negotiations, Shrauner filed suit seeking a declaratory judgment to determine the land's purchase price and for specific performance of the option. Shrauner's petition also maintained that “the crops planted on Tract 7 after receipt of the March 17, 2011, notice are the rightful property of Mr. Shrauner.”
Well before the date of the conveyance of the tract, and as the case proceeded through the judicial process, the Boaldins harvested the corn crop that they had planted on tract 7 after they had received Shrauner's March 17, 2011, letter. They stored the crop in a grain elevator. In December 2011, the Boaldins sold the crop for $245,608.91 and deposited the proceeds in an escrow account until the conclusion of the lawsuit.
After hearing arguments from the parties concerning the appropriate purchase price, the district court reached its decision on September 11, 2012, determining the contractual purchase price for tract 7 to be $521,342.19.
Prior to the district court's decision on the purchase price, the Boaldins moved for partial summary judgment arguing they were the rightful owners of the proceeds from the corn crop because they harvested it before Shrauner had closed on tract 7.
The district court agreed with the Boaldins' position and awarded them the $245,608.91 in proceeds from the crop. In reaching its decision, the court concluded that Shrauner's notice to repurchase tract 7 was an attempted notice “insufficient to trigger the Paragraph 2.1.2 of the Option. At best, that notice was abandoned by [Shrauner] for failing to pursue [negotiations] with the [Boaldins].” Moreover, the court reasoned that Shrauner's “position in this matter is rather unreasonable.”
Shrauner timely filed a notice of appeal from the decision granting the Boaldins title to the proceeds from the crop. As we previously noted, neither party appeals from the district court order that determined the purchase price for tract 7 and then ordered specific performance of the option contract.
Shrauner's Issues on Appeal
In his first issue, Shrauner argues the district court erred in finding that his March 17, 2011, letter was insufficient to give notice of his intent to exercise his option to buy tract 7 and thus trigger “Paragraph 2.1.2 of the Option.” In his second issue, he argues the court also erred in finding he had abandoned the notice “for failing to pursue negotiations” with the Boaldins. In his third issue, Shrauner argues the parties expressly agreed that the date of his notice to exercise his option would determine the ownership of the corn crop and not the later date of the actual conveyance. Based on this agreement he then asserts that since the crop was planted after he gave notice of his intent to exercise his option, he is entitled to the proceeds from the crop.
The Boaldins argue the district court correctly determined that Shrauner had given insufficient notice to trigger paragraph 2.1.2 of the option and Shrauner had also abandoned the notice of March 17, 2011. They further argue the contract is silent on the issue of ownership of the corn crop under these facts.
We will first consider Shrauner's third issue. If Shrauner is not entitled to the proceeds from the corn crop under the terms of the contract, his first and second issues then become moot since he acknowledges that the common law would provide that the Boaldins would receive the proceeds from any crops harvested prior to the conveyance in the absence of a prior agreement that provided otherwise.
Parties' Contentions
Regarding his third issue, Shrauner argues that his claim of ownership for the crop was consistent with the unambiguous option contract and established law. In particular, he maintains: “The contract expressly established the date of notice as the operative date to determine ownership of any crop growing at notice or planted after notice.” The Boaldins agree that the applicable contract language was unambiguous. They disagree that the language established the date of notice as determinative of who owned a crop planted after notice. They maintain they were entitled to the proceeds from the crop because the option was silent as to ownership of crops planted after an effective notice of intent to repurchase has been given. As such, the Boaldins maintain that Kansas common law controls in this scenario and because the common law provides that crops harvested before conveyance belong to the property seller, they are entitled to keep the proceeds from the crop. As we noted, Shrauner concedes the common law provides for this in the absence of an agreement between the parties that provides otherwise. He asserts, however, that such an agreement exists in this case in paragraph 2.1.2 of the option contract. That paragraph provides:
“At such times as SELLER intends to exercise the right of repurchase he shall first give BUYER written notice of such intent at least (90) days prior to the exercise of his repurchase. BUYER shall have the right to complete and harvest any crops growing at the time of such notice and shall be entitled to reimbursement for other expenses incurred in the normal and customary farming practices of the land so repurchased at reasonable rates and amounts .”
Our Scope of Review and Applicable Legal Principles
Where there are no disputed facts and the appellate court must interpret and give legal effect to a written contract, appellate review of an order of summary judgment is de novo. Wittig v. Westar Energy, Inc., 44 Kan.App.2d 216, 221, 235 P.3d 535 (2010).
A written contract is amenable to interpretation as a matter of law by the court. See, e.g., McGinley v. Bank of America, N.A., 279 Kan. 426, 431, 109 P.3d 1146 (2005). Similarly, the question of whether the language in a written contract is ambiguous is one of law for the court. See National Bank of Andover v. Kansas Bankers Surety Co., 290 Kan. 247, 264, 225 P.3d 707 (2010); Mobile Acres Inc. v. Kurata, 211 Kan. 833, 839, 508 P.2d 889 (1973). The parties' agreement or lack of agreement on the existence of ambiguity does not compel the court to arrive at the same conclusion. See 211 Kan. at 836–37, 839.
Also, “[t]he primary rule for interpreting written contracts is to ascertain the parties' intent. If the terms of the contract are clear, the intent of the parties is to be determined from the language of the contract without applying rules of construction.” Osterhaus v. Toth, 291 Kan. 759, 768, 249 P.3d 888 (2011) (citing, e.g., Anderson v. Dillard's, Inc., 283 Kan. 432, 436, 153 P.3d 550 [2007] ).
Analysis
The problem with Shrauner's argument is that the option contract clause on which he relies mentions nothing about who has ownership of crops planted and harvested between the dates he gives notice of his intent to exercise an option and the actual conveyance of the tract later. While the language specifically provides that the Boaldin's may harvest any crop planted before Shrauner gives any notice, it is silent as to crops planted after notice. In our view this amounts to a total omission of terms and not an ambiguity as to what happens in such a scenario. Shrauner seems to argue that because the contract provides that the Boaldins would retain ownership of crops planted before notice, there is an implication that Shrauner owns any crop planted after notice. We believe this adds a meaning to the contract that the language does not provide for.
The fact a contract is silent on a point does not necessarily render the contract ambiguous requiring that parol evidence be received to construe it. In Quenzer v. Quenzer, 225 Kan. 83, 85–86, 587 P.2d 880 (1978), our Supreme Court stated:
“The property settlement agreement is silent or incomplete as to the issue of whether the mortgage payments should be paid to the wife when the mortgage is satisfied by a third party. In Wood v. Hatcher, 199 Kan. at 242, we said, The words incomplete and ambiguous are not synonymous.... Ambiguity does not arise from total omission' In Berg v. Scully, 120 Kan. 637, Syl. ¶ 2, 245 Pac. 119 (1926), the court stated, ‘[W]here the contract is silent or ambiguous concerning a vital point incident thereto, parol evidence will be received to aid in its construction.’ A corollary to the foregoing is that if the contract is silent as to a point not considered vital, parol evidence is not admissible.”
Here, we are unable to say the issue of ownership of a crop planted after notice and harvested before conveyance was a vital point to the parties' option contract. The deposition testimony of William Graybili, the attorney apparently hired by both parties to draft the contract, reveals that he never thought about it nor did the parties, according to his recollection, ever mention it.
“Q. [SHRAUNER'S TRIAL COUNSEL] Did you have any intention as it related to any crops that would be planted after notice was given by Mr. Shrauner to Mr. Boaldin to repurchase?
...
“A. [WILLIAM GRAYBILL] That particular clause was directed at crops that were planted before notice was given. Throughout this transaction, and [Shrauner] and [Mr. Boaldin] seemed to get along pretty well, they were easy to work with trying to put it together, there were a lot of changes, but there were a lot of issues that came up. But it was—as I recall, I think everybody thought that once these notices were given it would be completed in ninety days and that would be that.
“Q. So is it fair to say from your testimony then that nobody really gave any thought to the fact that crops may be planted after notice was given?
“A. It certainly wasn't anything that I thought about.
“Q. And you don't recall anybody discussing that with you?
“A. I have no recollection of it, no.”
Apparently, everyone took for granted that the closing (conveyance) would take place about 90 days after Shrauner gave notice of his intent to exercise his option and the scenario giving rise to this dispute would never occur, namely, that a crop would be both planted and harvested between the date of notice and date of conveyance. Additionally, this issue has no relevance to any essential term of the contract such as purchase price, timing requirements, or any other factors that must be spelled out in order for the parties to accomplish the primary purpose of the contract which was to transfer the tract of land.
As we previously noted, Shrauner acknowledges that in the absence of an agreement, crops in the ground go with title to the land. Under K.S.A. 58–2202: “[E]very conveyance of real estate shall pass all the estate of the grantor therein, unless the intent to pass a less estate shall expressly appear or be necessarily implied in the terms of the grant.” Indeed, our Supreme Court has specifically held that growing crops are conveyed with the real estate unless expressly reserved by the grantor. In Jones v. Anderson, 171 Kan. 430, 436, 233 P.2d 483 (1951), our Supreme Court declared:
“In this state it has been held a conveyance of land by voluntary deed or judicial sale, without reservations, carries all growing crops with the title to the land. ... This general rule has been stated in decisions involving varied facts. Some of them are Garanflo v. Cooley, 33 Kan. 137, 5 Pac. 766 [1885];Goodwin v. Smith, 49 Kan. 351, 31 Pac. 153 [1892];National Bank v. Beegle, 52 Kan. 709, 35 Pac. 814 [1894];Brendle v. Hudson, 146 Kan. 924, 73 P.2d 1013 [1937].” (Emphasis added.)
Clearly then, under Kansas statutory law and common law, since the parties' contract omitted any clause that provided ownership to Shrauner of any crop harvested on the land before he took title to it, the Boaldins are entitled to the proceeds from the crop as the landowners at the time of harvest.
The district court did not address this issue of whether the language of the option contract gave Shrauner title to the corn crop. Instead, it found in favor of the Boaldins on the grounds that Shrauner's notice was not sufficient to exercise his option and Shrauner had abandoned his notice. As our opinion reflects we also find in favor of the Boaldins but for a different reason, namely, that the parties' contract was silent on the issue of who owned the corn crop that was planted after any notice but harvested before conveyance. While we do not address the propriety of the district court's reasons for finding in favor of the Boaldins, we note that if a district court reaches a correct result, its decision will be upheld even though it relied upon the wrong ground or assigned erroneous reasons for its decision. See Hockett v. The Trees Oil Co., 292 Kan. 213, 218, 251 P.3d 65 (2011).
In light of our opinion, it matters not whether the district court's conclusions about the insufficiency of Shrauner's notice and his abandonment of it were correct. We need not then address the merits of Shrauner's arguments on these points.
Affirmed.