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Sprang v. Altman

June 24, 2009

M. SCOTT SPRANG AND CHRISTINA R. SPRANG, PLAINTIFFS AND APPELLEES,
v.
DOUG ALTMAN, DEFENDANT AND APPELLANT.



APPEAL FROM THE CIRCUIT COURT OF THE FIRST JUDICIAL CIRCUIT DAVISON COUNTY, SOUTH DAKOTA HONORABLE SEAN M. O'BRIEN Judge.

The opinion of the court was delivered by: Zinter, Justice

CONSIDERED ON BRIEFS ON APRIL 27, 2009

[¶1.] M. Scott Sprang and Christina R. Sprang purchased real property from Doug Altman. Under the conditions of sale, Altman retained a qualified right of repurchase. A few years after the sale, Sprangs commenced this action seeking a declaration that Altman's right of repurchase was personal to Altman and did not run with the land. Altman counterclaimed for reformation of the condition. The circuit court denied reformation and concluded that the condition was a personal contract that did not run with the land. Altman appeals both issues. We affirm.

Facts and Procedural History

[¶2.] In March 2004, Altman offered to sell, and Sprangs agreed to purchase 19.5 acres of land for a homesite. Shortly thereafter, Mr. Sprang contacted Jeff Larson of Quality Homes to purchase an off-site-constructed house and install it on the property. At Quality Homes' request, Custom Touch Homes constructed the house at its facility.*fn1

[¶3.] In May 2004, Larson applied to the Davison County Zoning Administrator, Dan Sudrla, for a building permit. Sudrla informed Larson that Sudrla could not issue a building permit because the house was not being sited on a twenty-five acre lot. A Davison County zoning ordinance prohibited non-farm single lots containing less than twenty-five acres. See infra ¶11 & note 3. Larson subsequently informed Mr. Sprang that Sprangs needed twenty-five acres in order to obtain a building permit. Larson also informed Mr. Sprang that under the zoning ordinance, Sprangs could build if the 19.5 acres were subdivided. Sprangs were not interested in subdividing the property because they wanted to locate the house in the middle of the 19.5 acre parcel.

[¶4.] Prior to closing on the real property, Mr. Sprang informed Altman about the problem with the building permit. Altman orally agreed to sell an additional 5.5 acres. Mr. Sprang testified that when Altman offered to sell the additional 5.5 acres, Altman expressed concern over subdivision of the property, but he did not mention repurchasing the 5.5 acres if the Sprangs ever sold the entire twenty-five acres. Following the agreement to sell the additional 5.5 acres, Sudrla issued the building permit.

[¶5.] On July 29, 2004, Sprangs closed on the sale of the twenty-five acres. At the closing, Altman presented Sprangs with a document entitled, "Conditions for Sale of Land," which Altman had drafted. Paragraph 4 of the document contained a condition of repurchase providing:

If the 25 acre minimum zoning would change in the future or if M. Scott or Christina R. Sprang would ever separate the 25 acres, Doug Altman would have first opportunity to repurchase the additional 5.5 acres that [Altman] agreed to sell M. Scott or Christina R. Sprang due to the tax savings.

Altman also executed a warranty deed conveying the twenty-five acres to the Sprangs. The warranty deed and the Conditions for Sale of Land were recorded with the Davison County register of deeds.

[¶6.] Sprangs moved into the home in June 2004, and lived on the property for four years. During that time, Sprangs allowed Altman to use the 5.5 acres for pasture at no cost. It is undisputed that the Sprangs did not use the 19.5 acres for agricultural purposes.

[¶7.] In 2007, Sprangs decided to sell their home and the twenty-five acres. Following Sprangs' entry into a purchase agreement with a buyer, a title problem was discovered regarding the meaning of the condition allowing Altman to repurchase the 5.5 acres. As a result, Sprangs commenced this declaratory action asking the circuit court to determine that the repurchase condition was personal to Altman and did not run with the land. Altman counterclaimed, contending that the condition ran with the land. He also asked for reformation of the condition and the warranty deed to provide that, in addition to the provision allowing repurchase for certain zoning changes or subdividing, Altman could repurchase if Sprangs did not receive an agricultural property tax benefit from owning the additional 5.5 acres. Altman finally requested specific performance of the reformed repurchase condition.*fn2

[ΒΆ8.] At trial Mr. Sprang testified that when the agreement for the sale of the 5.5 acres was negotiated, the parties never discussed that twenty-five acres was needed to obtain an agricultural property tax assessment to reduce Sprangs' property taxes. On the other hand, Altman testified that Mr. Sprang had agreed that if Sprangs no longer received the agricultural tax benefit, Altman would have a right of repurchase. After hearing this conflicting evidence, the circuit court resolved the dispute, finding that the condition was not intended to allow a repurchase if the Sprangs no longer received an agricultural tax benefit from owning the twenty-five acre parcel. Instead, the court found: "It's pretty clear to the court that [the condition] was necessary that the [Sprangs] purchase the additional 5.5 acres just to meet the minimum zoning requirements in order to construct a house[.]" The circuit court concluded that ...


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