922 N.W.2d 1
S.D.2018Background
- In 1998 IRAM (a South Dakota nonprofit) and The Nature Conservancy negotiated an option and then a deed granting a conservation easement over IRAM land; documents set the purchase price at $230,000 and incorporated a draft (Exhibit B) that vested a "property right" in The Nature Conservancy described as 50% of fair market value upon certain future events.
- Hyde, IRAM's longtime president, signed the option, amendments, the easement-documentation report, and attended/was notarized at the December 3, 1998 closing where The Nature Conservancy paid $230,000 and recorded the deed.
- Eighteen years later IRAM sued to void the deed, alleging (1) fraud in procurement, (2) Hyde acted ultra vires/lacked corporate authority, (3) failure of consideration/no meeting of the minds regarding the property-interest clause.
- Both parties moved for summary judgment. The circuit court entered summary judgment for The Nature Conservancy on all claims, finding the fraud claim time-barred, that IRAM ratified Hyde's actions (and/or Hyde had apparent authority), and that $230,000 constituted consideration and established mutual assent.
- The Supreme Court affirmed: IRAM had constructive/actual notice of the easement terms from the option and related documents (statute of limitations), the 2013 corporate resolution ratified prior officer acts (or Hyde had authority), Hyde’s signing without reading the deed was negligence not fraud, and the $230,000 was adequate consideration as a matter of undisputed evidence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute of limitations on fraud | Fraud claim did not accrue until IRAM discovered deed terms in 2013 (employee told them Conservancy owned half) | Option and incorporated Exhibit B and closing gave IRAM actual/constructive notice in 1998; statute began then | Fraud claim time-barred; summary judgment for defendant |
| Ultra vires / authority to sign deed | Hyde lacked authority under bylaws; 2013 ratification ambiguous and may not cover the easement | 2013 resolution broadly ratified past officer acts; Hyde had apparent authority as acting corporate president | Court found ratification and/or apparent authority; summary judgment for defendant |
| Meeting of the minds re: property-interest clause | No mutual assent to grant the Conservancy a property interest; clause allegedly inserted in final deed | Option and draft deed (Exhibit B) contained the provision; Hyde signed and manifested assent | No genuine issue of material fact; assent established; summary judgment for defendant |
| Failure of consideration (was $230,000 a donation?) | Hyde testified he thought payment was a donation — so no consideration | Closing statement, IRAM financial records, and option called $230,000 the purchase price; shifts burden to IRAM | Evidence established consideration; plaintiff failed to offer probative contrary evidence; summary judgment for defendant |
Key Cases Cited
- Strassburg v. Citizens State Bank, 581 N.W.2d 510 (discovery rule for accrual of fraud claims)
- Aimonetto v. Rapid Gas, Inc., 126 N.W.2d 116 (presumption president has authority to act in management absent contrary evidence)
- LPN Trust v. Farrar Outdoor Adv., Inc., 552 N.W.2d 796 (party who accepts a written contract is presumed to know and assent to its contents absent fraud)
- Scotland Vet Supply v. ABA Recovery Serv., Inc., 583 N.W.2d 834 (allowing a signatory to disavow reading a written contract would undermine contract enforceability)
- In re Ricard Family Trust, 886 N.W.2d 326 (negligent failure to investigate or read documents does not prevent imputation of knowledge)