Pederson v. Mcguire

333 N.W.2d 823 (1983)

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Nature of the Case

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Facts

The City of Sioux Falls granted to the Railroad an irrevocable easement for a railway right-of-way, which is contiguous with Cargill Tract #1. The sole method of ingress and egress to Cargill Tract #1 is over the Railroad easement. Railroad traffic on the easement ceased in 1975. P acquired Cargill Tract #1 in 1978 and negotiated an agreement with the Railroad granting a license to install a private roadway crossing over the easement. Numerous conditions were contained in the license, including the ability of the Railroad to cancel the license on 30 days' notice. The agreement was filed on public record on February 17, 1978. A major portion of the railroad track was removed in 1980. On February 23, 1981, D executed a real estate purchase agreement for Cargill Tract #1. D was to purchase Cargill Tract #1 for $135,000.00. Payment terms called for: (1) $1,000.00 in earnest money at the signing of the agreement; (2) $29,000.00 cash on closing; (3) a $42,000.00 first mortgage to be obtained from First Service Mortgage Corporation with no specified date for payment of proceeds to appellees; and (4) the balance of the purchase price, approximately $63,000.00, to be carried by P as a second mortgage. Closing was set for May 1, 1981. P was required to furnish title insurance showing good and merchantable title on closing. P was to provide a warranty deed upon full payment of the purchase price which was not due at closing. The agreement provided: 'TIME is the essence of this contract.' D's attorney discovered the 1946 easement and 1978 license. P had never mentioned the 1978 license to D or the realtor. D's president, Mr. McGuire had previously visited Cargill Tract #1 several times and had observed a portion of railroad track in the parking area of the tract. On May 7, 1981, D notified the realtor that because of the 1978 license, the closing was canceled and D was canceling the purchase agreement. P proposed to amend the 1978 license to remove the 30-day cancellation clause and reduce the insurance requirements. D refused. On June 10, 1981, P offered to have the 1978 license terminated, and on August 19, 1981, appellees filed with the Register of Deeds an addendum to the 1978 license which granted a permanent roadway crossing. P sued for specific performance. The trial court required P to terminate the Railroad's interest in the easement in order to get specific performance. On July 23, 1982, P filed with the Register of Deeds an agreement to cancel the right of the Railroad in the easement. D appealed. D claimed that time was of the essence and that term had been breached by P.