945 N.W.2d 534
S.D.2020Background
- In 2000 Hanna, facing debt (including unpaid federal payroll taxes), conveyed 240 acres to Midwest R & S Corp; Midwest simultaneously contracted to sell the same land to Landsman. Landsman arranged and signed several documents and notarized the deed.
- Hanna executed an option and a two‑year lease (prepared by Landsman) purporting to allow Hanna to repurchase the property by certain dates; Hanna remained in possession after the lease expired.
- The IRS filed tax liens in November 2000 (after the conveyance); Hanna and Landsman purportedly met with IRS representatives who said liens would not be enforced so long as taxes were kept current.
- Hanna made payments over time (including a $30,433.15 payment at closing and a $56,600 check in 2010) and alleges he fully paid the amount owed so Landsman agreed to reconvey title.
- Hanna sued Landsman for breach of contract (and other claims); the circuit court granted summary judgment for Landsman, concluding the agreement: violated the statute of frauds, lacked consideration, and had an unlawful object (intent to defraud the IRS).
- The Supreme Court reversed and remanded: it held the writings, read together, satisfied the statute of frauds and found genuine factual disputes on waiver/promissory estoppel, consideration, and whether the object was unlawful or barred by in pari delicto.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether writings satisfy the statute of frauds for an agreement to reconvey land | Hanna: multiple writings (purchase, option, lease, bank comment sheet) read together disclose land, price, parties and satisfy the statute | Landsman: no single writing embodies essential terms; oral agreement unenforceable | Court: Writings construed together sufficiently describe land, price, and parties; statute of frauds issue contains factual disputes about timing/terms — summary judgment improper |
| Whether the contract is unenforceable because its object was to defraud the IRS | Landsman: primary purpose was to defeat IRS collection; illegal object voids contract | Hanna: documents on their face are lawful; liens filed after transfer; he negotiated with IRS and made payments | Court: whether the object was unlawful is disputed; trial court improperly weighed facts; remand for factfinder to decide unlawful object and any in pari delicto issues |
| Whether promissory estoppel or waiver can overcome statute of frauds/time‑for‑performance provisions | Hanna: Landsman orally waived/extended time and made promises; Hanna relied and made payments | Landsman: oral modifications barred by statute of frauds; no enforceable promise | Court: oral waiver/estoppel claims raise triable issues; prior case law permits waiver or estoppel regarding time of performance despite statute of frauds |
| Whether lack of consideration defeats Hanna’s claim | Landsman: tenant rents and third‑party rents are preexisting duties and cannot be consideration | Hanna: he made additional payments not required by lease/option and payments were applied to Landsman’s loan | Court: third‑party tenant rents cannot be consideration, but Hanna’s own extra payments (e.g., $30,433.15, $56,600) are sufficient to create fact issues on consideration — summary judgment improper |
Key Cases Cited
- Millard v. City of Sioux Falls, 589 N.W.2d 217 (1999) (standard of review for summary judgment)
- Wiggins v. Shewmake, 374 N.W.2d 111 (1985) (statute of frauds satisfied by writings read together or disjointed memoranda)
- Amdahl v. Lowe, 471 N.W.2d 770 (1991) (memorandum for sale of land must describe land, price, and parties)
- Johnson v. Sellers, 798 N.W.2d 690 (2011) (oral waiver of time for performance may be effective despite statute of frauds)
- Garrett v. BankWest, Inc., 459 N.W.2d 833 (1990) (elements and requirements for promissory estoppel)
- Cowan Bros., LLC v. American State Bank, 743 N.W.2d 411 (2007) (in pari delicto requires mutual participation in wrongdoing)
- Massey Ferguson Credit Corp. v. Bice, 450 N.W.2d 435 (1990) (application of in pari delicto where parties conspired to defraud a creditor)