Opinion
No. C9-98-2316.
Filed June 15, 1999.
Appeal from the Hennepin County District Court, No. 97-20094
Erik M. Johnson, (for appellants)
Kay N. Hunt, (for respondents)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Roger Johnson, et al. (sellers) challenge the district court's order granting Micah Garber, et al. (buyers) summary judgment on a real estate contract claim and ordering the return of buyers' earnest money. We affirm.
FACTS
Sellers brought an action seeking damages for breach of a purchase agreement for a two-story office building located in Golden Valley. Buyers brought a motion for summary judgment claiming that sellers failed to provide marketable title to the property as required by the purchase agreement, and that an undisclosed interest held by the City of Golden Valley created a title defect rendering the title unmarketable. Buyers also sought return of their $5,000 earnest money.
The district court ordered summary judgment in favor of buyers and granted buyers' counterclaim awarding them $5,000 together with prejudgment interest from the date of the commencement of the action, as well as costs.
DECISION
A motion for summary judgment shall be granted when there are no issues of material fact and when either party is entitled to judgment as a matter of law. Fabio v. Bellomo , 504 N.W.2d 758, 761 (Minn. 1993). Whether a letter of agreement constitutes an enforceable contract is a question of law, which this court determines de novo. Morhrenweiser v. Blomer , 573 N.W.2d 704, 706 (Minn.App. 1998).
Waiver
Sellers argue that buyers waived their right to object to title because they did not raise their objection within the time designated by the clear language of the purchase agreement. Sellers assert that a provision in the real estate purchase agreement afforded the purchaser a limited time period to deliver written objections to title or waive any objection not made. Reliance by sellers on Miller v. Snedeker , 257 Minn. 204, 101 N.W.2d 213, (1960), for this assertion is misplaced. Miller cites two cases to support the proposition that in order for the buyer to waive his rights the seller must not be at fault. Id. at 223, 101 N.W.2d at 217; see Brendemulh v. Schwager , 155 Minn. 321, 193 N.W. 455 (1923) (explaining that where the buyer was in possession of the abstract, which demonstrated faulty title, and he did not raise an objection to the title until after he defaulted, then buyer was deemed to have waived his right to object); see also John v. Timm , 153 Minn. 401, 405-06, 190 N.W. 890, 892 (1922) (finding that where an abstract was prepared and delivered to buyer and defects were communicated to seller and corrected, buyer now cannot urge other defects in the title, the objection comes too late and is waived).
[T]he abstracts were turned over to the defendant vendee at the date of the contract. He later turned them over to a friend for examination, who in turn delivered them to an attorney for examination. No serious objection was made to the title until after default on the part of the defendant. It was held that defendant, having had the abstracts in his possession from the date of the contract, and not having raised or specified any defects of a material character until in his answer, was deemed to have waived the same.
Miller , at 217, 101 N.W.2d at 223 (citing Brendemulh v. Schwager , 155 Minn. 321, 193 N.W. 455 (1923)).
Here, buyers furnished sellers with their title opinion within ten days of receipt of the abstract, and the title opinion reported the quitclaim title defect. Any delay raised by sellers was due to sellers' failure to promptly give a copy of the abstract to buyers. The purchase agreement states that the "seller shall, within a reasonable time after acceptance of this agreement, furnish an abstract."
Additionally, buyers' argument that waiver cannot be demonstrated unless knowingly and intentionally relinquished is persuasive. For an action to constitute a waiver, there must be an intentional relinquishment of a known right, and it must clearly be made to appear from the facts disclosed. Citizens Nat. Bank v. Mankato Implement , Inc., 441 N.W.2d 483, 487 (Minn. 1989) (citations omitted.) Buyers did not even have the abstract in their possession to know whether there were any title defects, and once they obtained the abstract they responded promptly and within the ten-day time limitation. Sellers' argument that buyers waived their right to object to title is not meritorious.
Easement
Sellers further argue that the easement is a benefit, and therefore is not an encumbrance to title. Buyers that sellers admitted they could not convey marketable title as promised on April 30, 1997, and therefore, any further inquiry is irrelevant. Buyers also argue that even if Golden Valley had only an easement, which was not the case at the time suit was filed, summary judgment still must be affirmed.
Whether a title is marketable — i.e., a title that is free from reasonable doubt — must be tested from the prospective purchaser's standpoint, and not from the viewpoint either of the seller or of the court.
Lucas v. Independent Sch. Dist. No. 284 , 433 N.W.2d 94, 97 (Minn. 1988). An outstanding easement makes title to realty unmarketable in a situation where the title to be conveyed as specified in the purchase agreement has not been made subject to such easement. Wertheimer v. Byrd , 278 Minn. 150, 152, 153 N.W.2d 252, 253 (1967). The purchase agreement was not made subject to an easement. Buyers had the right to know of the easement prior to signing the purchase agreement. Sellers' failure to disclose the easement, and buyers' later discovery, makes the realty unmarketable. Id. Marketable title is condition precedent to enforcing a contract. In an executory contract for the sale of land, compliance with an agreement by the seller to furnish the buyer with an abstract showing a good and marketable title to the land, is a condition precedent to his right to enforce the contract. Knudson v. Trebesch , 152 Minn. 6, 7, 187 N.W. 613, 614 (1922).
Sellers argue that they negotiated with the city to transform the quitclaim deed into a beneficial easement and therefore, buyers cannot claim that the title was unmarketable. However, sellers did not get the deed changed to an easement until after this suit was filed. Further, buyers had a right to know, prior to signing the purchase agreement, that the entire property bargained for was not available. Failure to convey title to the entire contracted property is just cause for terminating the contract. Finally, even if there was an easement, buyers had a right to determine whether they considered it beneficial before being obligated to the contract.