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In re Matheny Family Trust

Supreme Court of South Dakota

January 28, 2015

IN THE MATTER OF THE MATHENY FAMILY TRUST

Considered on Briefs: January 12, 2015.

APPEAL FROM THE CIRCUIT COURT OF THE FIFTH JUDICIAL CIRCUIT SPINK COUNTY, SOUTH DAKOTA. THE HONORABLE TONY L. PORTRA Judge.

Affirmed.

ZACHARY W. PETERSON of Richardson, Wyly, Wise, Sauck & Hieb LLP, Aberdeen, South Dakota, Attorneys for petitioner and appellant Karen Bridges.

MICHAEL J. SCHAFFER, PAUL H. LINDE of Schaffer Law Office Prof. LLC, Sioux Falls, South Dakota, Attorneys for respondents and appellees C. Wayne Matheny and Donna Matheny.

KONENKAMP, Retired Justice. GILBERTSON, Chief Justice, and ZINTER, SEVERSON, and WILBUR, Justices, concur. KERN, Justice, not having been a member of the Court at the time this action was assigned to the Court, did not participate.

OPINION

Page 610

KONENKAMP, Retired Justice

[¶1] In this Trust action, one trustee (the sister) sued her co-trustee (the brother) for undue influence on his contract for deed with their mother. Granting summary judgment for the brother, the circuit court held that the sister's claim was barred by the statute of limitations. In addition, the court ruled that the statute of frauds barred the sister's later-asserted claim that an oral agreement existed between the parties.

Background

[¶2] C. Wayne Matheny and Karen Bridges are siblings. Their mother and father (Annabelle and Carroll) established the Matheny Family Trust (Trust) in 1993 and were the designated trustees. After Carroll's death in 1997, Annabelle continued as trustee. In July 2004, Annabelle entered into a contract for deed with Wayne for the sale of 480 acres of trust farmland in Spink County, South Dakota for $600 an acre. Karen was aware of the contract and the sale price. In January 2009, Annabelle died. Wayne and Karen became co-trustees. Although Wayne initially resisted, the parties eventually stipulated for court supervision of the Trust.

[¶3] Within the Trust action, Karen sued Wayne and his wife, Donna. Karen alleged that the sale price in the contract for deed between Wayne and Annabelle in 2004 " was grossly disproportionate to the subject real estate's actual value." She claimed that Wayne and Donna exercised undue influence for the purpose of gaining an unfair advantage in the purchase. Karen asserted that because of the undue influence, Wayne and Donna " became implied trustees of the subject real estate[,]" and as implied trustees, they breached their fiduciary duties when they exercised undue influence and failed to preserve the assets of the Trust. She sought, among other things, a judgment against Wayne and Donna for rescission and damages.

[¶4] Wayne moved for summary judgment on the grounds that the statute of limitations expired on Karen's claim of undue influence and that any oral agreement associated with the contract for deed was barred by the statute of frauds. In his statement of undisputed material facts, Wayne claimed that Karen was aware of and did not object to the 2004 contract for deed and its terms. He also denied that an oral side agreement existed with Karen. Karen conceded that she was aware of the contract for deed and its terms in 2004. But she " consented to this sale on the condition that an appraisal be conducted at the time of Annabelle's death and that the parties receive an equal share of the estate based upon that appraisal despite the contract for deed price."

[¶5] In granting summary judgment, the court concluded that there was no material issue of fact in dispute that Karen knew of the terms of the contract for deed in 2004 and did not object to those terms. Because Karen did not assert her claim of undue influence until more than six years from the time ...


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