In re:  Kent Lewis, petitioner, Appellant, vs. Julie Lewis, n/k/a/ Julie Blumhoefer, Respondent, Human Service of Faribault and Martin Counties, Respondent.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (1998).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C1-00-321

 

Ethel Richter,

Appellant,

 

vs.

 

Estate of Roger Sipple, et al.,

Respondents.

 

Filed September 19, 2000

Affirmed in part and reversed in part

Huspeni, Judge*

 

Freeborn County District Court

File No. C4-98-857

 

Matthew L. Benda, Peterson, Savelkoul, Schlichting & Davies, Ltd., 211 South Newton, Albert Lea, MN  56007 (for appellant)

 

Phillip A. Kohl, Kevin H. Siefken, Christian & Peterson, P.A., 314 South Broadway, Albert Lea, MN  56007 (for respondents)

 

 

 

            Considered and decided by Crippen, Presiding Judge, Willis, Judge, and Huspeni, Judge.

U N P U B L I S H E D   O P I N I O N

HUSPENI, Judge

            Appellant Ethel Richter brought an action against respondents Estate of Roger Sipple and Lois Sipple, individually and as personal representative of the Estate of Roger Sipple, seeking specific performance of repurchase provisions and damages for breach of two contracts for deed entered into between Richter and decedent Roger Sipple involving an 80-acre and a 240-acre parcel of property.  The district court concluded that the repurchase provision was unenforceable as to 160 acres because Roger and Lois Sipple had been using the house on the 80-acre parcel as their homestead when Roger Sipple died, but concluded that the repurchase provision was enforceable as to the remaining 160 acres.

            Richter challenges the decision of the district court that 160 acres were entitled to homestead protection; respondents, by notice of review, challenge the decision of the district court that the repurchase provision as to the remaining 160 acres of property is enforceable.  Because we conclude that the repurchase provisions of the contracts for deed were enforceable as to the entire 320 acres of property, we affirm in part and reverse in part.

FACTS

            In February 1989, Richter and her son, Roger Sipple, entered into two contracts for deed by which Richter sold her 320-acre family farm to Roger Sipple.  One contract conveyed 80 acres, and the other contract conveyed 240 acres.  Richter lived in a house located on the 80-acre parcel, and she retained a life estate in the house.

            Each contract contained the following provision:

            In the event of the death of the Purchaser while this Contract is in existence the Seller shall have a right to purchase the above described property at a price of $800.00 per acre less any amounts unpaid on this contract.

 

Each contract provided that the repurchase provision would terminate January 1, 1999, if the contract was not in default.  Each contract prohibited Roger Sipple from

assigning any interest in this Contract, creating any encumbrance upon the above described real estate or any interest in this Contract.  In the event of any violation of this covenant the Seller shall have a right to re-purchase the above described property at a price of $800.00 per acre payable in cash less amounts due under the Contract within 30 days * * * .

 

            When the contracts for deed were executed, Roger and Lois Sipple were separated, and Roger Sipple was living on a 9-acre parcel of property near the farm.  Later in 1989, Roger and Lois Sipple reconciled, and Richter moved to St. Paul.  Richter and the Sipples agreed that the Sipples would live in the house on the 80-acre parcel while Richter was in St. Paul.  Richter stated in an affidavit that this arrangement was temporary, that she hoped to move back into the house on the 80-acre parcel, and that she did not relinquish her life estate in the house. 

Roger Sipple died intestate on October 29, 1997.  At the time of his death, he and Lois Sipple were still living in the house on the 80-acre parcel.[1]  The parties dispute whether Lois Sipple knew about the repurchase provisions; Richter claims that Lois Sipple learned about the contract terms after she and Roger Sipple reconciled and never objected to any of them; Lois Sipple claims she did not know about the repurchase provisions and never consented to them.

D E C I S I O N

            On appeal from a summary judgment, this court must review the record to determine whether any genuine issues of material fact exist and whether the district court erred in applying the law.  In re Estate of Palmen, 588 N.W.2d 493, 495 (Minn. 1999).  This court must view the evidence in the light most favorable to the nonmoving party.  Id.  This court will affirm a summary judgment if it can be sustained on any grounds.  Myers Through Myers v. Price, 463 N.W.2d 773, 775 (Minn. App. 1990), review denied (Minn. Feb. 4,  1991).

Although both parties cite statutory law extensively, and we will address the applicability of certain statutes, we conclude that any analysis of whether particular statutes govern or inform must include consideration of the unequivocal language of the contracts for deed entered into by Richter and Roger Sipple.  The district court's conclusions of law recognized, correctly we believe, the importance of the contractual provisions in resolving the issues raised in this case.  That court concluded, in part:

There was no breach of the right-to-purchase agreement against Lois Sipple with respect to the homestead property because she did not consent to it.  * * *  Lois Sipple breached the right-to-purchase agreement with respect to the non-homestead acreage.

 

We recognize at the outset that when conveying property by contract for deed, the seller may retain rights to the property.  See Stiernagle v. County of Waseca, 511 N.W.2d 4, 5-6 (Minn. 1994) (if seller had wished to retain life estate when conveying property by contract for deed, she could have done so).  Richter unquestionably retained rights under the contracts at issue here.  Further, the real property principle that a person can convey no greater interest in property than what he possesses applies in a probate proceeding.  In re Estate of Van Den Boom, 590 N.W.2d 350, 353 (Minn. App. 1999).  Thus, a proper inference follows:  One can inherit no greater interest in property than that enjoyed by the decedent.

1.         Homestead Property

            A.        Minn. Stat. § 507.02 (1998)

            Minn. Stat. § 507.02 (1998) provides:

            If the owner is married, no conveyance of the homestead, except a mortgage for purchase money unpaid thereon, a conveyance between spouses pursuant to section 500.19, subdivision 4, or a severance of a joint tenancy pursuant to section 500.19, subdivision 5, shall be valid without the signatures of both spouses.

 

The term "conveyance"

includes every instrument in writing whereby any interest in real estate is created, aliened, mortgaged, or assigned or by which the title thereto may be affected in law or in equity, except wills, leases for a term not exceeding three years, and powers of attorney.

 

Minn. Stat. § 507.01 (1998).

Lois Sipple argues, and the district court agreed, that Minn. Stat. § 507.02 renders the repurchase provisions of the contracts for deed unenforceable against her as to the 160 acres which constitute her homestead.  We disagree, and conclude that section 507.02 is inapplicable here.

            While Richter does not dispute that the Sipples were using the property where the house was located as their homestead when Roger Sipple died, she argues that because the Sipples were not using the property as their homestead when Richter and Roger Sipple executed the contracts for deed, their later use of the property as their homestead cannot defeat Richter's pre-existing contractual rights.  Richter's argument is persuasive.

            The rule prohibiting conveyance of the homestead "does not apply to conveyances made by a husband without the consent of the wife before the homestead right has been perfected according to the existing statutes."  Rufford Patton, Patton on Land Titles § 398, at 209 (2d ed. 1957) (citing Kurz v. Brusch, 13 Iowa 371 (1862) (holding that occupation of house as homestead after husband conveyed property by trust deed as security for a debt did not affect the validity of the trust deed); see also Rusch v. Lagerman, 194 Minn. 469, 471-72, 261 N.W. 186, 187 (1935) (holding judgment lien on property not defeated by later-acquired homestead right).  Therefore, because it is uncontested that the contract for deed, with the rights retained by Richter and the repurchase provisions, preceded the establishment of the Sipples' homestead, Lois Sipple cannot invoke Minn. Stat. § 507.02 in an attempt to defeat Richter's rights under the contracts.[2]

Sipple also cites M.L. Gordon Sash & Door Co. v. Mormann, 271 N.W.2d 436, 439 (Minn. 1979), to argue that Richter's option rights to repurchase did not vest until the option was exercised, and that the establishment of the homestead preceded that exercise.  We conclude that Sipple's reliance on Mormann is misplaced.  In Mormann, a very fact specific case, the court recognized the general principle that an option to purchase real property, prior to its exercise, conveys no interest in the land.  Id. at 439.  The Mormann court, however, in consideration of the fact that the option contract was an integral part of the entire transaction between the parties, declined to apply the general rule and concluded that the option agreement was enforceable.  Here, too, the contracts between Richter and Roger Sipple included provisions other than a mere option to purchase (Richter retained certain rights).  Mormann provides no support for the arguments Lois Sipple makes regarding the option to repurchase.

            B.        Minn. Stat. § 524.2-402 (1998)

            Lois Sipple also argues that Minn. Stat. § 524.2-402 (1998) bars Richter's claim to the homestead property.  Minn. Stat. § 524.2-402(a) provides:

            If there is a surviving spouse, the homestead * * * descends free from any testamentary or other disposition of it to which the spouse has not consented in writing or as provided by law[.]

 

Lois Sipple cites no bases, factual or legal, for applying a different analysis under Minn. Stat. § 524.2-402 than under Minn. Stat. § 507.02.  Because Richter's repurchase rights pre-existed the Sipples' occupancy of the property as their homestead, Minn. Stat. § 524.2-402 does not apply to this case.

C.        Minn. Stat. § 519.06 (1998)

            Lois Sipple makes a further argument, apparently invoked in connection with both the homestead and the non-homestead portions of the property.  She alleges that under Minn. Stat. § 519.06 (1998), a person cannot convey a spouse's interest in real property absent the spouse's permission and that Roger Sipple, by agreeing to a repurchase provision effective only at his death, conveyed not his interest but that of Lois Sipple and/or his heirs.  Minn. Stat. § 519.06 provides:

            No contract between husband and wife relative to the real estate of either, or any interest therein, shall be valid, except as provided in section 500.19, subdivisions 4 and 5; but, in relation to all other subjects, either may contract with the other.  A husband or wife may appoint the other as an attorney-in-fact with respect to all property of the principal, or any interest in the property, whether real, personal, or mixed.  Use  of  a  power  of  attorney  is  subject to section 518.58, subdivision 1a.  In all cases where the rights of creditors or purchasers in good faith come in question, each spouse shall be held to have notice of the contracts and debts of the other as fully as if a party thereto.

 

            This case, however, does not involve (a) a contract between Roger Sipple and Lois Sipple; (b) the appointment of Roger Sipple as attorney-in-fact for Lois Sipple; or (c) an argument about whether Richter is a good-faith creditor of Roger Sipple or buyer of the property. 

Moreover, Lois Sipple's reliance on Manderfeld v. Krovitz, 539 N.W.2d 802 (Minn. App. 1995), review denied (Minn. Jan. 25, 1996), to support her argument on the applicability of Minn. Stat. § 519.06 is misplaced.  There, this court invalidated an option to buy land because the seller had executed the option without his wife's knowledge.  That option, however, was executed after the parties had acquired all rights in the property.  See also Abrahamson v. Abrahamson, 613 N.W.2d 418, 424 (Minn. App. 2000) (purchaser's attempt to exercise purchase option on land by discharging husband's personal debt, of which wife was not aware, was ineffective).  Here, we must test Lois Sipple's arguments against the reality of what rights Roger Sipple acquired under the contracts for deed.  Richter retained a life estate; in the event Roger died while the contracts were in existence (and he did), Richter retained the right to repurchase the property for $800 per acre less any amounts unpaid on the contracts.  Roger's very right to acquire the property from Richter in the first place was subject to her right to repurchase that property if certain conditions were met.  It is undisputed that those conditions were, indeed, met.

2.         Non-Homestead Property

By notice of review, Lois Sipple challenges the district court decision that the repurchase provisions of the contracts between Richter and Roger Sipple are enforceable against the non-homestead property.  We conclude that the district court did not err in rejecting the arguments raised by Lois Sipple as they applied to non-homestead property.

While it may be argued that Lois Sipple's ability to defeat the repurchase provisions of the contracts rested solely on persuading the court that she was protected by statutory homestead provisions, and that a determination that the repurchase provisions were not defeated by protection afforded by statute obviated the need to address arguments made in connection with non-homestead property, we shall nonetheless address the issue raised in Lois Sipple's notice of review.  She argues, as she did in connection with the homestead property, that Minn. Stat. § 519.06 applies to defeat Richter's right to repurchase.  For the same reasons set forth in our discussion earlier, we decline to apply section 519.06 to the issue raised in connection with the non-homestead property.

            Lois Sipple also argues that she had inchoate marital rights in the property conveyed to Roger Sipple by Richter and that her inchoate rights were superior to Richter's repurchase rights.  This argument assumes that property interests held by Roger Sipple at the time of his death were conveyed back to Richter under the terms of the contracts for deed.  That assumption is flawed.  As we have noted, Richter could retain rights when she conveyed the property; she did so.  Also, any rights that Lois Sipple may have in the property cannot exceed those which Roger enjoyed at his death.  Roger's property interests under the contracts with Richter were subject to her right to repurchase if Roger died before January 1, 1999.  He died in 1997. 

            The party seeking reversal of the district court's decision must affirmatively show that the district court erred.  Midway Ctr. Assocs. v. Midway Ctr., Inc., 306 Minn. 352, 356, 237 N.W.2d 76, 78 (1975).  Lois Sipple cites no authority challenging the right of Richter to retain a repurchase right in a contract for deed.  In this case, by including the repurchase provisions in the contracts for deed, Richter limited the conveyance to Roger Sipple to the right to purchase the property during his lifetime.  Lois Sipple cites no authority indicating that Roger Sipple had any greater interest than this while the contracts for deed remained in existence.  Allowing any inchoate marital interest Lois Sipple may possess to defeat Richter's repurchase rights would effectively convey to Lois Sipple a greater property interest than that possessed by Roger Sipple during his lifetime.  In light of Lois Sipple's failure to provide legal authority or evidence in the record demonstrating the invalidity of the repurchase provisions, we cannot conclude that the district court erred in determining that the repurchase provisions were enforceable against non-homestead property.

The unjust enrichment and estoppel arguments raised by Richter were not addressed by the district court.  In view of our decision that the repurchase provisions of the contracts for deed entered into by Richter and Roger Sipple were enforceable against both homestead and non-homestead properties, we do not reach the unjust enrichment and estoppel arguments, except to note that if upon further review a determination is made that the repurchase provisions are unenforceable, Richter may seek remand to the district court for consideration of the issues that were not addressed either there or in this court.

Affirmed in part and reversed in part.

*  Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

 

[1]  Lois Sipple stated in an affidavit that after receiving the first amended complaint in this action alleging that she was unlawfully detaining the house, she moved out and had the keys delivered to Richter.

[2]  We agree, however, with Lois Sipple's argument that Minn. Stat. § 507.03 (1998) is inapplicable here.  That section addresses purchase money mortgages, and we are disinclined to extend the language of that statute to contracts for deed which are the documents involved in this case.