Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Kathy Thorson, et al., claimants,
Inez Breiter, personal representative,
Filed March 3, 1998
File No. P196405
Jeffrey Eugene Thompson, 2258 Marion Rd. SE, Rochester, MN 55904 and David R. Haugen, Moulton Law Office, 976 14th Ave. SW, Rochester, MN 55902 (for respondents)
Charles K. Frundt, Frundt, Johnson & Roverud, Ltd., 117 West Fifth Street, Blue Earth, MN 56013 (for appellant)
Considered and decided by Willis, Presiding Judge, Davies, Judge, and Holtan, Judge.*
*Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.
Appellant contends the district court erred in concluding that the document signed by decedent and respondents relating to decedent's real estate is an offer to sell that survived her death. We reverse.
The Thorsons had told both Severtson and her husband on several occasions that they would be interested in purchasing the Severtsons' property if they ever wanted to sell it. On February 16, 1996, Severtson and the Thorsons signed a typed document that provides:
I, Helen Severtson, give Mark and Kathy Thorson first option to purchase my farmsite, all buildings, including the quonset home, rock quarry, including any leased quarry rights, and adjoining farm land. * * * *
Purchase price agreed upon is $100,000, to be paid to Helen Severtson if living or to the Estate of Helen Severtson if she is deceased or incapacitated to deal with sale of above listed property.
Any persons occupying the quonset home will vacate and leave property in good repair before or upon closure date on above property.
There is a hand-written addendum, initialed by the parties, that provides:
In the event that Helen Severtson should die suddenly, persons in the quonset home will be given three months to vacate all premises and to leave them in good repair, otherwise under any other conditions the above will apply.
Myron Danielson, another of Severtson's neighbors, testified that he drafted the typewritten portion of the document but was not actually present when the Thorsons or Severtson signed it. Danielson also testified that he drafted the document for Severtson so "[t]hat there would be some legal document that her wishes would be carried out" and so there would not be litigation over the matter.
Severtson died on August 4, 1996. The Thorsons recorded the document with the Dodge County Recorder in September 1996 as an option contract. On October 17, 1996, the Thorsons notified Inez Breiter, the personal representative of Helen Severtson's estate, of their intent to purchase Severtson's property. When the estate's representative disallowed their claim, the Thorsons petitioned the district court for relief.
After a hearing, the district court rejected the Thorsons' argument that the document signed by Severtson and the Thorsons is an option to purchase property, concluding that there was no consideration separate and distinct from a promise to pay the purchase price. But the court found that a bilateral contract for the purchase of land was created because (1) Severtson offered to sell her property; (2) the offer to sell survived her death; and (3) the Thorsons accepted the offer by notifying the estate's representative of their intent to purchase. The Thorsons and the estate's representative both moved the court for amended findings, and the court issued its amended findings of fact, conclusions of law, order, and judgment on June 30, 1997. The court concluded that "the Thorsons were entitled to possession [of the property] within 90 days of [Severtson's] death or their acceptance of the offer." Because both of those dates had already passed, the court ordered that Thorsons were entitled to possession of the property within 90 days after the date of its order. This appeal followed.
The estate's representative argues that the district court erred in concluding that Severtson offered to sell her property to the Thorsons, based on the fact that the document they signed gives the Thorsons a "first option to purchase" the Severtson property. An offer is conduct that empowers an offeree to create a contract by his or her acceptance. League General Ins. Co. v. Tvedt, 317 N.W.2d 40, 43 (Minn. 1982). Where we can ascertain the parties' intent from the written contract, we do not "remake the contract" by construing it differently. Art Goebel, Inc. v. North Suburban Agencies, Inc., 567 N.W.2d 511, 516 (Minn. 1997). The document signed by Severtson and the Thorsons recites no conditions precedent to the exercise of the Thorsons' "first option to purchase"; it unambiguously manifests Severtson's intent to sell her property to the Thorsons. The district court, therefore, did not err in concluding that Severtson offered to sell her property to the Thorsons.
The estate's representative argues that if Severtson did offer to sell her property, the district court erred in finding that the offer did not terminate on Severtson's death. The district court relied on the Restatement (Second) of Contracts § 36 (1981), which provides that
(1) An offeree's power of acceptance may be terminated by
* * *
(d) death or incapacity of the offeror or offeree.
See also Cooke v. Belzer, 413 N.W.2d 623, 627 (Minn. App. 1987) (citing section 36 of the restatement). Noting that section 36 states that an offeror's death may terminate an offeree's power to accept, the district court concluded that an offeror's death does not automatically terminate an offer. The court found that the offer did not terminate here because Severtson intended her offer to remain open even if she died before it was accepted. But section 36 of the restatement simply lists alternative methods by which an offeree's power to accept is terminated, while sections 36-49 discuss the specific circumstances under which each method applies. Restatement (Second) of Contracts § 36 cmt. a. Section 48 provides that
[a]n offeree's power of acceptance is terminated when the offeree or offeror dies or is deprived of legal capacity to enter into the proposed contract.
Restatement (Second) of Contracts § 48 (1981); see also Heideman v. Northwestern Nat'l Life Ins. Co., 546 N.W.2d 760, 764 (Minn. App. 1996) (adopting section 48 of the restatement), review denied (Minn. June 7, 1996).
The basis for the rule is described by Professor Williston in his treatise on contracts:
Assuming that the formation of a contract require[s] mutual mental assent of the parties, and offer and acceptance [are] merely evidence of such assent, it would be obviously impossible that a contract should be formed where either party to the transaction died before this assent was obtained. That such assent was formerly thought necessary seems probable, and as to death, this theory is still maintained. Accordingly, it is generally held that the death of the offeror terminates the offer.
1 Samuel Williston, A Treatise on the Law of Contracts § 62 (3d ed. 1957). Although Severtson may have intended for her offer to survive her death, we cannot harmonize that intent with the established legal principle that an offer terminates on the death of the offeror.
The Thorsons cite, as did the district court, Frederick v. Peoples State Bank of Madison Lake, 385 N.W.2d 11 (Minn. App. 1986), review denied (Minn. May 29, 1986). The court in Frederick, in turn, cites the New Jersey Superior Court for the proposition that
where the owner of real property enters into a contract of sale and then dies before executing a deed * * *, the other party may enforce the contract against the owner's estate, the theory being that equitable title to the property vests in the vendee as soon as the contract was executed, subject, however, to a lien in favor of the vendor for the unpaid purchase price. * * * Such contracts, therefore, are enforceable, even though one of the parties thereto may die before performance is had.
Id. at 15 (quoting In re Beier, 137 A.2d 617, 618 (N.J. Super. 1958)) (second ellipsis in original). But because the Thorsons did not accept Severtson's offer before she died, there was no contract for sale at the time of Severtson's death. The issue is not whether a contract for sale survives Severtson's death, but whether her offer to enter into a contract for sale survives her death. Because the document signed by Severtson and the Thorsons is properly characterized as an offer to sell, the Thorsons' power to accept the offer terminated when Severtson died.
The Thorsons argue that the document should be treated as an option to purchase. But the district court found that it is not an option, and because the Thorsons did not raise this issue in a notice of review, it is not properly before this court. See Minn. R. Civ. App. P. 106 (explaining respondent's right to obtain review); see also Arndt v. American Family Ins. Co., 394 N.W.2d 791, 793 (Minn. 1986). Nevertheless, we note that the record supports the district court's determination that there was no legal consideration here separate and distinct from the promise to pay the purchase price. And the district court correctly concluded that without such consideration, the document is not an option to purchase. See Country Club Oil Co. v. Lee, 239 Minn. 148, 152, 58 N.W.2d 247, 250 (1953). The Thorsons also suggest that the document might be characterized as a purchase agreement, in which case, they argue, it is binding on the estate. Because the Thorsons did not present this argument to the district court, and the court did not rule on it, the issue is not properly before this court. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating appellate courts refuse to address issues and theories not raised before or decided by the district court).
Because the document at issue was an offer to sell that terminated on Severtson's death, the district court erred in finding that a bilateral contract for the purchase of real estate was created when the Thorsons gave the personal representative of Severtson's estate notice of their intent to purchase the Severtson property.
[ 1] The Thorsons argue that the Restatement (Second) of Contracts § 37 (1981) applies to the document. Section 37 provides that under an option contract, the right to accept "is not terminated * * * by death * * * of the offeror, unless the requirements are met for the discharge of a contractual duty." Id. Because the document is not an option contract, section 37 does not apply.