Sherburne County District Court File No. C3-02-1588
Considered and decided by Klaphake, Presiding Judge, Peterson, Judge,
and Halbrooks, Judge.
1. The cancellation provisions of Minn. Stat. § 559.21 (2002) inform and are statutorily implied into a contract for the conveyance of real estate, but they do not become express terms of the contract.
2. Minn. Stat. § 559.21 does not enable a buyer who has defaulted under the terms of a purchase agreement to perform the agreement in accordance with its terms, but, instead, allows a buyer to enforce the agreement in spite of its terms.
The opinion of the court was delivered by: Halbrooks, Judge
On appeal from summary judgment, appellant argues that the district court erred in holding that it did not have the right to exercise its option under an option agreement because appellant did not fulfill all of the conditions of a separate agreement to purchase 162 acres of land. Because we conclude that the district court did not err, we affirm.
Respondents Larry Hurrle, Carol Hurrle, and Timothy Hurrle are family farmers. They own and rent farmland in Sherburne, Stearns, and Wright counties where they conduct business under the name Hurrle Farms. Hurrle Farms is primarily a cash-crop operation.
In 1996, Hurrle Farms planted over 5,000 acres of crops, including over 2,000 acres of corn. Later that year, herbicide was over-applied to parts of respondents' land, destroying much of respondents' corn crop and resulting in a major reduction in yield. Respondents never recovered from the financial impact of the lost crops, and in 1998, they filed for chapter 11 bankruptcy relief. Respondents were forced to enter into various amendment and extension agreements with their major creditor, Ag Services of America, Inc. Part of the agreement required respondents to execute and deliver into escrow warranty deeds for certain pieces of property and provided that Ag Services would be allowed to record the deeds if certain specified defaults occurred.
In an attempt to relieve some of the growing financial pressure, respondents decided to sell portions of their farmland. On October 13, 1999, respondents agreed to sell some parcels of land located in Sherburne County to appellant Edina Development Corporation. The parties entered into three separate agreements. The first was a purchase agreement for approximately 438 acres (438-acre agreement); the second was a purchase agreement for approximately 162 acres (162-acre agreement); and the third was an exclusive-option agreement (option agreement) that gave appellant the option to purchase an additional 914 acres. The purchase price was $10,000 per acre under all three agreements.
The agreements were subject to the approval of Ag Services. In approving the agreements between respondents and appellant, Ag Services required respondents to "take prompt action to enforce all remedies available" under the purchase agreements and the option agreement. The dates for the debt payments from respondents to Ag Services were designed to correspond with the dates for appellant's payments to respondents under the two purchase agreements.
The option agreement gave appellant the option to purchase an additional 914 acres if written notice of its election of purchase was provided to respondents by May 15, 2002. The option agreement included the following language, which is of significance in resolving the primary issue on appeal: "Notwithstanding anything else apparently to the contrary in this agreement, buyer may exercise this option only if it is not in default under the purchase ...