LBM, Inc. v. Rushmore State Bank

SABERS, J.

(dissenting).

[¶ 41] I dissent. This case was tried to a jury for two days on the basis that LBM had interests in the real and personal property resulting in a jury verdict of $130,000. That was the correct basis for trial because LBM did have rights in the property. Therefore, it was error for the trial court to grant judgment notwithstanding the verdict on the premise that LBM had no title or ownership rights in the property. The trial court overlooked the fact that at all material times, LBM had leasehold rights in the property, even if it no longer had title or ownership rights.

[¶42] LBM’s most recent lease for the racquetball club was dated October 18, 1988. The lease terms indicated it was for six months, and at the end of six months, on March 31, 1989, LBM was to surrender the property. However, LBM continued to operate the facility until September 20, 1990, when Plummer purchased and took over. The lease agreement included both real and personal property and LBM had possession of both throughout that time.

[¶43] In the purchase agreement with Plummer, First Interstate Bank indicated LBM’s lease expired June 30,1990.1

[¶ 44] SDCL 43-32-14 provides:

*787If a lessee of real property remains in possession thereof after the expiration of the hiring and the lessor accepts rent from him, the parties are presumed to have renewed the hiring on the same terms and for the same time, not exceeding one year.

[¶ 45] Because LBM’s lease was statutorily renewed at the end of each six-month period, LBM had leasehold rights in the racquetball club and equipment through September 30, 1990. After receiving authority from LBM to negotiate a settlement on his behalf for the sale of equipment,2 Rushmore State Bank released its hen on the property in exchange for a mere $12,500 on September 18, 1990 without further notice to or the consent of LBM.3 While the remaining leasehold rights may not be worth the amount necessary to pay LBM’s loan in full, the trial court should have considered them and erred in ruling LBM had no loss.

[¶ 46] The trial court may have found the jury’s award excessive based on the value of LBM’s leasehold rights. However, the proper solution would have been for the trial court to grant a new trial if the verdict was influenced by passion or prejudice, or for LBM to consent to a reduction in damages. Smith v. Highmore Farm Ltd. Partnership, 489 N.W.2d 908, 914 (S.D.1992) (citations omitted).

. The purchase agreement provided:

The closing date of this transaction shall be August 1, 1990, at which time Buyer shall *787obtain possession of the Real Property and the Personal Property; provided, however, the parties acknowledge that the Real Property and Personal Property are presently in the possession of LBM, Inc. djh/a the Supreme Courts Family Fitness Center pursuant to a lease agreement with Seller as lessor which expired June 30, 1990. In the event LBM, Inc. fails or refuses to surrender the Real Property and Personal Property to Seller voluntarily on or before August 1, 1990, or in the event Seller is required to initiate legal action to regain possession of the Real Property or Personal Property, the Closing Date may be extended at the option of Seller until not later than October 1, 1990. (Emphasis added).
In other words, even the purchase agreement acknowledged the rights of LBM in the real property and the personal property and the necessity of obtaining their consent to release of said rights.

. Loftus’ letter to Rushmore State Bank, dated September 5, 1990, stated:

I, Ronald James Loftus hereby authorize Rushmore State Bank to negotiate a settlement on my behalf for the sale of all equipment now located in the Supreme Courts Health Club at 2040 Jackson Blvd. I understand the entire debt is my responsibility and agree to continue payment as set forth by Rushmore State Bank.

. At the time Rushmore State Bank released its lien, LBM's outstanding loan balance was $144,-681.98. Appraiser John Widdoss had estimated the value of the personal property within the racquetball club at $75,570.