Opinion
No. C1-01-1673.
Filed April 16, 2002.
Appeal from the District Court, Hennepin County, File No.CT00-3210.
Thomas S. Montgomery, (for appellant)
Eric E. Jorstad, (for respondents)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant seeks review of a district court's judgment granting respondents' motion for summary judgment. The district court ruled that the six-year statute of limitations had run on appellant's claim for breach of contract. Appellant argues the district court erred, claiming (1) the statute of limitations did not begin to run until he received written notice of respondents breach, and (2) respondents are estopped from asserting a statute of limitations defense because of respondents' conduct and omissions. We affirm.
FACTS
Appellant Elroy Stock graduated from respondent Augsburg College in 1949. After graduation, appellant began contributing to respondent and consistently donated time and money. In the 1980's, respondent Augsburg College started the "21st Century Fund" to raise $25 million, planning to construct a new building. The brochure outlining the 21st Century Fund stated that "[n]amed gift opportunities are numerous." After sufficient funds were raised, construction began in 1987, and the Foss-Lobeck-Miles Center opened in September 1989.
During various fundraisers, respondent Augsburg College developed special recognition programs to encourage future donations from alumni and other donors. Previous programs included a membership in the school's President's Club or Maroon and Silver Society and an invitation to the school's annual Advent Vespers dinner and worship service.
Augsburg College's board of regents has the sole authority to name a building or a portion of a building after a donor or other individual.
In 1986, respondent Augsburg College's Director of Alumni Relations, Jeroy Carlson, approached appellant for a donation to the 21st Century Fund. Carlson suggested that appellant donate money to construct the communications wing of the new area and suggested that the wing could be named after appellant. Appellant's initial contribution was to be $100,000. Appellant believed the donation was too small for the honor of having the wing named after him and he increased his donation to $500,000. Augsburg College took the additional money.
A September 1986 letter from Carlson to appellant recognized appellant's "right to designate th[e] pledge to name the "Elroy Stock Communications Wing" and asked appellant to choose a payment plan. The letter further stated that the " PLEDGE IS GUARANTEED." Jeanne Narum, Vice President for Development and College Relations, confirmed appellant's donation and the "understanding that the major portion of [appellant's] gift is to be designated for the Elroy Stock Communication Wing" in the new building. Respondent Augsburg College's board of regents voted to name the wing after appellant.
At the time of the board of regent's vote, unknown to them, appellant had for years been secretly mailing anonymous letters to families and individuals of mixed race and religion. These letters denounced mixed marriages, professed a viewpoint based on racial purity, and, according to some recipients, produced fear in them.
Following a February 1988 news report that exposed appellant's letter-writing campaign, there was a great deal of unfavorable publicity about appellant. The publicity included articles about appellant and his ties to Augsburg, his large contribution, and Augsburg's intent to name a wing of the building after appellant. Augsburg quickly changed its mind, and Augsburg's President, Charles Anderson, told appellant that the wing would not be named after him. President Anderson then told appellant that Augsburg intended to keep his $500,000 donation and that it would not be returned to him. Appellant requested Anderson to reconsider that decision. In February 1988, the board of regents formally met and voted not to name the wing after appellant and to keep appellant's donation. The board of regents never formally notified appellant of that decision, but appellant learned of it through the media.
President Anderson, in August 1988, told Vice President for Development, Gregory Ritter, to find a form of recognition that was acceptable to both Augsburg and appellant. Appellant and Ritter discussed alternative forms of recognition, and in July 1989, Ritter proposed hosting a recognition dinner, placing a plaque at the entrance of the communications wing stating that appellant was a major donor, and listing appellant in the annual report as a major donor. Although appellant rejected the proposal as a substitution for naming the wing after him, the forms of recognition did take place. In February 1990, appellant told respondents that it had not fulfilled its agreement.
Between February 1990 and 1999, appellant had numerous contacts with respondents, and, as a loyal alumnus, continued to donate time and money. Appellant's donations between those dates are as follows: May 31, 1990, a donation to the Augsburg Fund of $1,000 and a donation for the Athletic Field of $1,000; December 31, 1990, a donation of $1,000 to the Augsburg Fund; May 8, 1991 a donation of $100 to the Augsburg Fund; July 23, 1991, a donation of $1,000 to the A-Club Special Fund; January 21, 1992, a donation of $1,000 to the Augsburg Fund; February 5, 1992, a donation of $1,000 to the A-Club Special Fund and a donation of $1,000 to the Augsburg Fund; December 31, 1992, a donation of $1,000 to the Augsburg Fund; June 16, 1993, a donation of $100 to the Dave Hagert Memorial Fund; January 20, 1994, a donation of $2,000 to the A-Club Special Fund; January 17, 1995, a donation of $1,000 to the A-Club Special Fund; January 22, 1996, a donation of $1,000 to the A-Club Special Fund; February 12, 1997, a donation of $1,000 to the Augsburg Fund; January 7, 1998, a donation of $1,000 to the Augsburg Fund; April 27, 1998, a donation of $10 to the General Memorial Fund; and on January 23, 1999, a donation of $2,000 to the Augsburg Fund.
Following the building's completion, appellant received numerous personal thank-you letters from the respondents. The correspondence is as follows:
1) a June 11, 1991, letter from Gordon Olson thanking appellant for his donation;
2) a July 23, 1991 thank-you letter from President Anderson with handwritten note stating, "Personal best wishes, Elroy — thanks — as always — Charles";
3) a January 21, 1992, thank-you letter from President Anderson with handwritten note stating, "Personal greetings thanks, Elroy — Good friends are hard to find — I'm glad you are a partner in this mission — Charles";
4) a January 12, 1993, thank-you letter from President Anderson with handwritten note stating, "Wonderful!! Personal greetings thanks, Elroy — Charles A";
5) a January 21, 1994, thank-you letter from President Anderson;
6) a January 19, 1995, thank-you letter from President Anderson with a handwritten note stating, "Best wishes, Elroy — Thanks for your continued friendship support. — Charles";
7) a January 22, 1996, thank-you letter from President Anderson with a handwritten note stating, "Personal best wishes, Elroy and thanks. Your continuing loyalty to the college support are wonderful and appreciated. — Charles"; and
8) a February 12, 1997, thank-you letter from President Anderson with handwritten note stating, "Greetings, Elroy — I hope everything is well with you — We continue to be very grateful for your support friendship. Charles."
Appellant also continued to attend functions at the college, such as A-Club dinners, Advent Vespers, special dinners for donors, homecoming, and the 50th anniversary of his graduating class in 1999. Additionally Carlson, in his deposition, states that until about March 2000 appellant called him "once or twice a month at least and [they] would talk for 45 minutes."
In February 1999, appellant approached Augsburg's newly appointed president, William Frame, about naming the wing after him. President Frame refused and told appellant that the naming would not occur and, for the first time, told appellant that he should not send any more money to Augsburg College.
In March 2000, Appellant brought suit in district court alleging breach of contract and misrepresentation. In March 2001, appellant filed a motion to amend to add a claim for a conditional trust. Respondents moved for summary judgment. In June 2001, the district court granted summary judgment in respondents' favor and denied appellant's motion to amend. The district court concluded that the statute of limitations on appellant's contract claim was six years, calculating that it began to run in September 1989 when the building was completed. The district court then concluded that if the statute had been tolled, the statute of limitations was not tolled beyond February 1990, when settlement negotiations ceased. The district court found that respondents' actions after February 1990 did not constitute representations. This appeal follows.
Appellant filed suit against Augsburg College, William Frame, and Augsburg College's Board of Regents.
DECISION
When reviewing a district court's grant of summary judgment, a reviewing court must determine (1) whether there are any genuine issues of material fact, and (2) whether the district court erred in its application of the law. Offerdahl v. Univ. of Minn. Hosps. Clinics, 426 N.W.2d 425, 427 (Minn. 1988). The evidence is viewed in the light most favorable to the party against whom the motion was granted. Id. The application of law to stipulated facts is a question of law, which an appellate court reviews de novo. Morton Bldgs, Inc . v. Comm'r of Revenue, 488 N.W.2d 254, 257 (Minn. 1992). All inferences must be resolved in favor of the nonmoving party. O'Malley v. Ulland Bros., 549 N.W.2d 889, 897 (Minn. 1996).
Statute of Limitations
The Minnesota contract statute of limitations provides that actions must be commenced within six years. Minn. Stat. § 541.05, subd. 1(1) (2000). Generally, a cause of action for breach of contract accrues when the contract's terms are breached. Bachertz v. Hayes-Lucas Lumber Co., 201 Minn. 171, 176, 275 N.W. 694, 697 (1937). "The construction and applicability of statues of limitations" are questions of law, which is reviewed de novo. Benigni v. County of St. Louis, 585 N.W.2d 51, 54 (Minn. 1998).
Appellant claims the district court erred when it determined that the cause of action accrued in 1989, when the building's construction was completed. Appellant claims that the breach did not occur until July 1999, when respondents notified the appellant, in writing, that the communications wing would not be named for him.
First, we agree with the district court that appellant could have brought an action against respondents seeking to recover his $500,000 donation for breach of contract when the building was completed in 1989. A failure to perform all or any substantial part of what is promised in a contract is a breach of that contract. 4 Minnesota Practice, CIVJIG 20.45 (1999). A breach occurs when one party fails to carry out part of the contract that required immediate performance. Id. An unconditional repudiation of a contract before the time of required performance constitutes an anticipatory breach of contract. In re Haugen, 278 N.W.2d 75, 79 n. 6 (Minn. 1979). Here, respondents promised to name the wing after appellant in exchange for appellant's $500,000 donation. Upon completion, the board of regents voted (because appellant's extra-curricular activities were now public) to name the building the Foss-Lobeck-Miles Center, without any "Elroy Stock Communications Wing."
We conclude that a cause of action for breach of contract accrued to appellant when the building was completed and the entire building named without any mention of appellant. Appellant's cause of action for breach of contract accrued in 1989 and the six-year statute of limitations began to run at that time. Appellant failed to bring suit until 2000, 10 years after his cause of action arose. Because appellant did not bring suit within six years after respondents' breach of contract, we agree with the district court that his contract claim was time-barred.
Promissory Estoppel
Appellant argues, in the alternative, that even if the statute of limitations began to run in 1989, the statute should be tolled under a theory of equitable estoppel because of respondents' conduct, misrepresentations, and omissions.
To prevail under a theory of equitable estoppel, appellant must prove a) that respondents made a knowing misrepresentation of material fact, b) respondents intended to induce reliance, c) appellant had no knowledge of the true facts, and d) appellant detrimentally relied on respondents' misrepresentation. Transamerica Ins. Group v. Paul, 267 N.W.2d 180, 183 (Minn. 1978). Misrepresentation can include silence or failure to disclose material fact. Rhee v. Golden Home Builders, Inc., 617 N.W.2d 618, 621 (Minn.App. 2000).
Appellant argues that the district court erred when it determined that respondents' actions did not amount to misrepresentation. The district court determined there was no "factual dispute regarding representations or inducements." The district court found that a fact question existed about whether the discussions between respondents and appellant about alternative forms of recognition constituted negotiations that may have tolled the statute of limitations for a time. The district court found that those discussions ended in February 1990, when the alternative forms of recognition occurred, and thus the statute of limitations still could not be tolled past February 1990 because respondents made "[n]o statements to the effect that the naming issue could be worked out or that [respondents] would take care of things if [appellant] kept giving money." We agree. The limitations period began to run when the building was completed in 1989, or at the very latest, February 1990. Appellant's suit was not brought until 2000, more than six years after the latest date that estoppel can be applied even viewing the evidence in appellant's favor.
Additionally, appellant's own statements establish that respondents made no representations after February 1990 that would toll the statute of limitations. First, appellant stated that respondents' did not make any representations that they would eventually change their mind and name the wing after the appellant. Second, he admitted that, he had no discussions, between 1990 and 1999, with anyone at the college regarding naming the wing. Third, appellant stated that he never told respondents that he expected that they would eventually change their mind and he never told the respondents that he expected the agreement to be fulfilled.
The district court correctly concluded that respondents' actions and conduct did not result in equitable tolling beyond 1990.
Respondents' alternative theory
Respondents claim that even if appellant timely filed an action, he would not be entitled to the return of his money because it was a charitable donation rather than a conditional gift. We disagree. A conditional gift is one that is conditioned on a donee's performance of an act; and if the condition is not fulfilled then the donor may recover the gift. Benassi v. Back Neck Pain Clinic, Inc., 629 N.W.2d 475, 484 (Minn.App. 2001) review denied (Minn. Sept. 11, 2001). The condition may be imposed by law or implied in fact in order to prevent unjust enrichment. Id.
Respondents argue that appellant made an outright gift and thus there is no legal obligation to return the gift even though appellant's hoped for recognition fell through. Minnesota law recognizes both an outright gift and a charitable trust when made to charitable institutions. See Schaeffer v. Newberry, 235 Minn. 282, 286, 50 N.W.2d 477, 480 (1951) (recognizing that a gift to charitable institution may create a charitable trust).
Minn. Stat. § 501B.31, subd. 4(b) (2000) states:
If a gift, trust, or devise has been made for a charitable, benevolent, educational, religious, or other public use or trust, or upon a condition, limitation, or restriction of any kind, the property given, entrusted, or devised may be used only for that use or trust and in accordance with the condition, limitation, or restriction. The grantee, devisee, trustee, or other holder of property may petition the court under section 501B.16 for determination of the legal rights and relationship of the holder, the public, the grantor, and the grantor's heirs, representatives, or assigns in and to the property.
The important factor in determining whether a charitable or conditional gift was established is the donor's intent. Schaeffer, 235 Minn. at 286, 50 N.W.2d at 480.
The following facts unequivocally support appellant's theory of the case, not the "alternative theory" that respondents' attorney offered at oral arguments. The record shows that when raising funds for the 21st Century Fund respondents' literature specifically stated, "Named gift opportunities are numerous." In 1986, Augsburg College's Director of Alumni Relations, Jeroy Carlson, approached appellant for a donation to the 21st Century Fund and suggested that appellant make a large donation to construct the communications wing of the new building and suggested that the wing could be named after appellant. Carlson, in September 1986, sent a letter to appellant that recognized the "right to designate th[e] pledge to name the "Elroy Stock Communications Wing" and asked respondent to choose a payment plan. The letter further stated that the " PLEDGE IS GUARANTEED." Jeanne Narum, Vice President for Development and College Relations, confirmed appellant's donation and the understanding that the major portion of [appellant's] gift is to be designated for the new building. Respondent's Board of Regents voted to name the wing after appellant. Appellant also increased his donation to $500,000 because he believed his donation was too small for the honor of having his name on a wing. Augsburg kept the increased donation. Respondents approached appellant and specifically solicited him for the money in exchange for respondents' promise to name the wing after him. Appellant's intent was not, as respondents tried to maintain, a donation to the general building fund.
Respondents' attorney also attempted to argue that, because the money had been spent on the building, it would be "improper and against Augsburg's mission" to use other funds to repay appellant. We disagree. Nonprofit corporations, for-profit corporations, and individuals, are expected to honor their commitments. Courts of law and equity enforce legal contracts. Had appellant timely sued, no harm would come to Augsburg, specifically, or society in general, if just debts were paid. The keeping of one's promise honors us all.
We suggest it would be startling news to Augsburg's alumni that their college's "charitable and educational mission" includes specifically soliciting contributions for a particular purpose, formalizing that solicitation by a specific vote of the board of regents, and then claiming the power to say, "Oops, we changed our mind. We are not going to give your money back, instead we are going to keep it."
It is not an issue, and appellant does not argue that his extracurricular activities did not give Augsburg College a legitimate reason to change its mind to not memorialize his name by naming an important wing of a new building after him. What appellant can claim is that once Augsburg changed its mind, it had a legal obligation to return his money, as the specific reason for giving the $500,000 no longer existed.
The evidence easily shows that when appellant and respondents negotiated the donation, it was done with the promise that the wing would be named after the appellant in exchange for his donation. Appellant intended that his $500,000 donation was in exchange for appellant's promise to name the wing after him. His intent was not, as respondents try to maintain, a donation to the general building fund.
Because we affirm the summary judgment in favor of respondents, on the statute of limitations and promissory estoppel issues, our analysis on respondents' alternative theory does not change the result. But respondents raised the theory at oral argument, and, therefore we address it.
We conclude that the district court did not err by granting summary judgment in respondents' favor. The applicable statute of limitations had expired and was not tolled past 1990 by respondents' conduct.
Because we affirm the district court's summary judgment on these issues, we do not address appellant's other arguments.