934 N.W.2d 891
S.D.2019Background
- The Mealys loaned Bruce and Corrine Prins $1,187,000 between 1999–2008 via 55 promissory notes; a mortgage dated Sept. 21, 2000 listed a $325,000 note in its recital and included a future-advances clause.
- Thirty notes were executed after the mortgage; several notes listed Investment Enterprises, Inc. as creditor; parties jointly held a buffalo herd with disputed ownership percentages.
- In 2009 a subordination agreement with Dacotah Bank referenced the mortgage and a $325,000 note but did not list the 55 notes; Prins later defaulted and paid nothing on the notes.
- Mealys sued in March 2015 for breach of contract, conversion, and unjust enrichment; Prins counterclaimed for conversion and unjust enrichment.
- Circuit court granted Prins partial summary judgment, ruling 48 notes time‑barred and the mortgage unenforceable; seven demand notes remained.
- At trial jury awarded Mealys $196,000 on the seven enforceable notes (with prejudgment interest dates set by jury), rejected Mealys’ conversion claim and awarded Prins $135,000 on their conversion counterclaim, and returned an advisory verdict awarding Mealys $135,000 for unjust enrichment (which the court adopted). Mealys appealed; Prins filed a notice of review concerning unjust enrichment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Partial summary judgment: were 48 notes time‑barred and mortgage unenforceable? | Mealys: subordination agreement revived notes by acknowledgment or estoppel/waiver via post‑default conduct. | Prins: notes fell outside applicable statutes of limitations; subordination did not acknowledge or revive the underlying notes; mortgage didn’t secure a valid listed debt. | Affirmed: 48 notes are time‑barred; subordination agreement did not revive notes; no review of waiver/estoppel theories not raised below. |
| 2) Missing‑witness instruction for excluded buffalo‑ownership expert (Fraiser) | Mealys: instruction improper because Fraiser was excluded (not merely absent) and his deposition made him equally available; giving it prejudiced Mealys. | Prins: Mealys referenced the expert and non‑production justified inference; instruction was proper. | Reversed: instruction was erroneous and, in all probability, prejudicial; new trial ordered on conversion and unjust enrichment claims. |
| 3) Use of Prins’s special verdict form requiring jury to set prejudgment interest start date | Mealys: jury should not decide interest dates because notes themselves specify execution dates and contractual interest rates. | Prins: no dispute SDCL 21‑1‑13.1 applies; issue preserved only by post‑trial motion. | Reversed in part: court abused discretion by submitting interest date to jury; trial court must recalculate prejudgment interest per note terms. |
| 4) (Notice of review) May jury consider time‑barred notes in unjust enrichment award? | Mealys: unjust enrichment award could compensate for loans or buffalo proceeds, possibly including amounts from time‑barred notes. | Prins: unenforceable/time‑barred notes cannot support restitution; allowing them would circumvent statute of limitations. | Remanded with instruction: time‑barred notes cannot be used to support unjust enrichment; unjust enrichment claim must not unwind statute of limitations. |
Key Cases Cited
- Strassburg v. Citizens State Bank, 581 N.W.2d 510 (S.D. 1998) (burden‑shifting when summary judgment is based on statute of limitations)
- Rodriguez v. Miles, 799 N.W.2d 722 (S.D. 2011) (accrual is question of law; limitations issues reviewed de novo)
- Wipf v. Blake, 28 N.W.2d 881 (S.D. 1947) (writing must be clear, unambiguous acknowledgment to revive barred debt)
- Work v. Allgier, 915 N.W.2d 859 (S.D. 2018) (statute of limitations is a personal defense that may be subject to estoppel)
- Vetter v. Cam Wal Elec. Coop., Inc., 711 N.W.2d 612 (S.D. 2006) (abuse of discretion standard for jury instructions)
- Rapid City v. Brown, 252 N.W.2d 323 (S.D. 1977) (limits and purpose of missing‑witness instruction)
- Johnson v. Larson, 779 N.W.2d 412 (S.D. 2010) (when an enforceable contract exists, remedy is generally limited to contract terms)
- Holzworth v. Rother, 101 N.W.2d 393 (S.D. 1960) (unjust enrichment unavailable when an adequate legal remedy exists)
- Grynberg v. Citation Oil & Gas Corp., 573 N.W.2d 493 (S.D. 1997) (verdict forms treated like jury instructions; errors must be objected to when settling instructions)
- Granite Buick GMC, Inc. v. Ray, 856 N.W.2d 799 (S.D. 2014) (requirements when using an advisory jury and need for findings of fact and conclusions of law)