This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
STATE OF MINNESOTA
IN COURT OF APPEALS
Lester Skogberg, et al.,
Harlen Huisman, et al.,
Affirmed in part, reversed in part, and remanded
Renville County District Court
File No. C9-00-315
John E. Mack, Mack & Daby P.A., 26 Main Street, P.O. Box 302, New London, MN 56273 (for appellants)
Thomas W. Van Hon, Van Hon Law Office, 19 Southeast Second Avenue, P.O. Box N, Fairfax, MN 55332 (for respondents)
Considered and decided by Willis, Presiding Judge, Shumaker, Judge, and Parker, Judge.
U N P U B L I S H E D O P I N I O N
In May 1997, appellant-landlords Lester Skogberg (“Skogberg”) and his wife Eleanor Skogberg executed a series of leases and options that would allow respondent-tenants Harlan Huisman (“Huisman”) and his wife Pamela Kubesh-Huisman to purchase the Skogbergs’ property in the future: (1) lease of the farmland; (2) option to buy the farmland; (3) lease of the homestead; and (4) option to buy the homestead. The option to buy the farmland and the lease of the homestead are not at issue here. At issue in this action is the lease of the Skogbergs’ farmland and the option to purchase the homestead. In April 2000, the Skogbergs filed suit against the Huismans, alleging the Huismans breached the farmland lease and abandoned the option, and requesting the relief of rescinding the lease and option. After a bench trial, the court found that the Huismans did not breach the lease and had not waived their rights under the option. The Skogbergs challenge the district court’s determination that the Huismans (1) did not breach the lease; and (2) did not abandon the option. Because we conclude the district court’s finding that the Huismans did not breach the lease was clearly erroneous and not supported by the record, we reverse in part and remand to the district court to determine whether the breach was material.
D E C I S I O N
The Skogbergs contend that the district court erred by finding that the Huismans did not breach the farmland lease. The district court’s findings of fact underlying the determination will not be disturbed unless clearly erroneous. Minn. R. Civ. P. 52.01; Kornberg v. Kornberg, 542 N.W.2d 379, 386 (Minn. 1996). A finding is clearly erroneous if the reviewing court is “left with the definite and firm conviction that a mistake has been made.” Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (quotation omitted). When determining whether findings are clearly erroneous, an appellate court views the record in the light most favorable to the district court’s findings. Frauenshuh v. Giese, 599 N.W.2d 153, 156 (Minn. 1999). In general, if the district court had reasonable evidence to support its findings, the reviewing court should not disturb those findings. Fletcher, 589 N.W.2d at 101.
First, the Skogbergs argue that the Huismans breached the farm lease when Huisman farmed the land with his brother-in-law in 1999. The farm lease prohibits the tenant from assigning or subletting the lease. But to effectuate an assignment “an intent to transfer must be manifested and the assignor must not retain any control * * *.” Guaranty State Bank of St. Paul v. Lindquist, 304 N.W.2d 278, 280-81 (Minn. 1981) (citation omitted).
The record shows that in February 1999, Huisman told Skogberg that he planned to farm the land with his brother-in-law, Bradley Kubesh. Skogberg did not object to that arrangement. That year, Huisman and Kubesh pooled their machinery, labor, and land to make their farming more efficient, and they each performed a variety of tasks relating to the farmland. The record reflects that Huisman made all the major decisions, such as what crops to plant on the Skogbergs’ farmland. Because the record supports that Huisman retained control of the farmland, the district court’s finding that the Huismans did not assign or sublet the land to Kubesh is not clearly erroneous.
Second, the Skogbergs assert that the Huismans breached the lease by failing to pay rent on the due date. The right to rescind a contract “may be waived by continuing to treat the contract as a subsisting obligation.” Gaertner v. Rees, 259 Minn. 299, 303, 107 N.W.2d 365, 368 (Minn. 1961). The district court concluded that Skogberg accepted Huisman’s lease payment, and thus, waived the right to rescind the farm lease on that basis and that the parties’ course of conduct excused untimely payment. The record shows that Huisman paid the 1998 rent after the due date, and Skogberg accepted the payment. Likewise, Huisman paid the 1999 rent late, and Skogberg again accepted the payment. Therefore, we conclude the district court’s finding is not clearly erroneous.
Finally, the Skogbergs argue that the Huismans breached the lease by installing a new tile line without first receiving Skogberg's written consent. Section 7 of the lease of the farmland states:
(a) Alterations. Tenant shall not make, nor cause any alterations, or improvements to the Leased Premise, nor incur expenses for such purpose, without the prior written consent of Landlord.
(b) Repairs and maintenance. Tenant shall at its sole cost, undertake necessary and appropriate maintenance and repairs of the Leased Premise and all improvements thereon.
The lease requires the tenant to obtain written permission before making improvements. Huisman installed seepage tile on Skogberg’s land, at a cost of $4,000 to $5,000. Seepage tiles remove subsurface moisture from soil that remains moist even with intake draining systems. The seepage tile was installed on portions of the land that were not previously tiled. Therefore, the seepage tile was an improvement, not maintenance or repair.
Huisman admits he did not ask for Skogberg’s written permission to install the new tile. Huisman testified that he did not have a specific agreement with Skogberg about tiling the property, but that he had discussed “in earlier years” improvements that could be made to the tiling system. Huisman testified that Skogberg had pointed out the areas that needed tiling, and thus, he believed Skogberg thought it would be a good idea. Because the tiling constituted an improvement, and because Huisman admitted he did not obtain Skogberg’s permission before tiling the farmland, we hold that the evidence requires a finding that Huisman’s actions breached paragraph (a), and the district court clearly erred in its finding that no breach occurred.
The district court based the conclusion that no breach occurred on a determination that the course of dealings between Skogberg and Huisman rendered strict adherence to the written terms of the lease agreement unnecessary. Specifically, the court stated:
The Parties’ course of dealing throughout their relationship, and throughout the life of the Farm Lease, can be used to supplement the written terms of the Farm lease to support the conclusion that strict adherence with the written terms of the Farm Lease was not required to undertake improvements.
The court cited Trollen v. City of Wabasha, 287 N.W.2d 645 (Minn. 1979), to support this result. In Trollen, the tenant failed to give six months’ notice of intent to renew his lease as required by the contract. Id. The court relieved the tenant of strict adherence to the notice requirement because the tenant had renewed the lease once before and had not given timely notice and the landlord had accepted the notice. Id. at 647-48. The court concluded the tenant was entitled to equitable relief because
in cases of mere neglect in fulfilling a condition precedent of a lease * * * equity will relieve when the delay has been slight, the loss to the lessor small, and when not to grant relief would result in such hardship to the tenant as to make it unconscionable to enforce literally the condition precedent of the lease.
Id. at 648 (emphasis added). But under Trollen, equity will never relieve “cases of wilful or gross negligence in failing to fulfill a condition precedent of a lease.” Id.
The decision to grant equitable relief is within the sound discretion of the trial court and only an abuse of discretion will warrant reversal. Nadeau v. Ramsey County, 277 N.W.2d 520, 524 (Minn. 1979). The Huismans do not qualify for the equitable relief allowed in Trollen. Although Huisman may have believed Skogberg wanted the tiling completed because they had discussed the tiling in previous years, Huisman also testified that he did not ask for permission because he did not “appreciate confrontation” and relations between the parties “were rather acrimonious at that point.” Deliberately failing to obtain the required written permission to avoid confrontation is not the “mere neglect” described in Trollen. Rather, by Huisman’s own testimony, he intentionally did not ask for permission. Therefore, it was an abuse of discretion for the district court to apply Trollen to these facts.
The court also erroneously considered parol evidence. Parol evidence is admissible to resolve ambiguities in a contract. Mrozik Constr., Inc. v. Lovering Assocs., Inc., 461 N.W.2d 49, 52 (Minn. App. 1990). A court may only consider parol evidence after it determines ambiguity exists and may not create an ambiguity with such evidence. Kenko Inc. v. Lowry Hill Constr. Co., 392 N.W.2d 18, 20 (Minn. App. 1986).
In the court’s order denying a motion for new trial, the court, citing Flynn v. Sawyer, 272 N.W.2d 904, 907 (Minn. 1978), concluded it did not improperly rely on parol evidence:
The parol evidence rule prevents a court from considering evidence of prior or contemporaneous agreements. It does not, however, exclude evidence of subsequent oral modification to a contract.
But in applying Trollen, the court concluded that the parties’ course of dealing throughout their relationship and the life of the farm lease could be used to supplement the written terms of the farm lease. Moreover, in its findings of fact, the court found that “[b]ased on the early discussions, and the obvious improvement to the land caused by the tiling, the Court finds that [Skogberg] did consent to these improvements.” (Emphasis added.) The court made no specific findings of conduct that occurred after the written lease that showed a course of dealing between the parties regarding improvements that could have established Skogberg’s consent.
Although Trollen considered the parties’ conduct occurring after the existence of the written lease, Trollen does not support considering conduct occurring before the parties entered into the written lease. Because the district court did not find the contract ambiguous, the district court erred in considering parol evidence. Without the parol evidence, the district court’s conclusion that Huisman did not tile without Skogberg’s permission is clearly erroneous.
“[O]nly a material breach of a contract or a substantial failure in its performance justifies” rescinding a contract. Gaertner, 259 Minn. at 303, 107 N.W.2d at 368; see also Cloverdale Foods, Inc. v. Pioneer Snacks, 580 N.W.2d 46, 49 (Minn. App. 1998) (breach of lease must be material to warrant termination of lease). The district court did not address this issue. Because materiality is a fact issue, we remand to the district court to determine whether the Huismans’ breach by tiling without written permission was a material breach of the lease agreement.
The Skogbergs assert that the district court erred by concluding that the Huismans did not waive their homestead option rights under the contract.
A “party seeking to prove abandonment of a contract must present clear and convincing evidence of an intention by the other party to abandon its rights.” Nat’l Life Ins. Co, v. Marquette Bank & Trust Co. of Rochester, 295 N.W.2d 89, 93 (Minn. 1980) (citations omitted). An intention to abandon such rights may be found “from the facts and circumstances surrounding the transactions and may be implied from the acts of the parties.” Id. (citation omitted). Moreover, abandonment “must be clearly expressed, and acts and conduct of the parties to be sufficient must be positive, unequivocal, and inconsistent with the existence of the contract.” Desnick v. Mast, 311 Minn. 356, 365, 249 N.W.2d 878, 884 (1976). The district court’s findings of fact underlying the determination will not be disturbed unless clearly erroneous. Minn. R. Civ. P. 52.01.
In February 1999, Skogberg and Huisman met and discussed the option. Skogberg claimed that Huisman stated he was not interested in the option to buy the homestead. But Huisman testified that he stated he was not interested in exercising the option at the increased price demanded by Skogberg’s son. Moreover, Huisman sent a letter to John Skogberg and although he did offer to purchase the homestead at a price higher than the option price, Huisman stated that under the contract, the option could not be accelerated until April 30, 2002.
The record supports the district court’s finding that the quitclaim deed on the homestead, signed by the Huismans in anticipation of a settlement agreement, was never delivered, and thus did not operate to waive their rights under the option. During 1999, the Skogbergs and Huismans negotiated the release of the homestead option. In anticipation of settlement, the Huismans signed a quitclaim deed for release of the option and their attorney was to hold the deed until a settlement was reached. The parties orally reached a settlement, and, at the office designated, the Huismans signed the settlement papers and left the deed. The Skogbergs, however, did not sign the settlement agreement. The deed has not been recorded and has not been returned to the Huismans.
Finally, the record supports that Pamela Kubesh-Huisman did not take any action that would abandon her option right. Any discussions between appellants and Pamela Kubesh-Huisman were attempts to settle the dispute and not an abandonment of her rights under the contract. Because the evidence supports the district court’s finding that the Huismans did not abandon or waive their rights under the building site option contract, the court’s conclusion was not clearly erroneous.
The Skogbergs also argue that they must prevail under the doctrine of promissory estoppel, or justifiable reliance because they relied on Huisman’s promise to abandon the property. “Promissory estoppel is the name applied to a contract implied in law where no contract exists in fact.” Del Hayes & Sons, Inc. v. Mitchell, 304 Minn. 275, 283, 230 N.W.2d 588, 593 (1975) (footnote omitted). Because Skogberg has not established that Huisman made any promise regarding his intent to abandon the option, promissory estoppel does not apply.
Affirmed in part, reversed in part, and remanded.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.
 In November 1997, the Skogbergs placed their property in trust, retained a life estate in the trust, and gave the remainder to their children, John Skogberg, Donna Dirnberger, and Elizabeth Emary, who are also appellants in this action. This does not affect our analysis.