Sleep v. Steele

#31120-a-SPM
2026 S.D. 31

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA

RICHARD D. SLEEP and KAREN E.
SLEEP, husband and wife; JEFFREY E.
SLEEP and JODI K. SLEEP, husband and
wife; MATTHEW R. SLEEP; MELISSA A.
DEAN; SLEEP RANCHES, LLC, a South
Dakota Limited Liability Company; SLEEP
LAND AND LIVESTOCK COMPANY, LLC,
a South Dakota Limited Liability Company;
IRONCREEK LAKE CAMPGROUND & STORE,
LLC, a South Dakota Limited Liability
Company; and IRON CREEK, LLC, a
South Dakota Limited Liability Company, Plaintiffs and Appellees,

v.

GLORIA SLEEP STEELE, a/k/a
GLORIA G. STEELE, and STEELE
REAL ESTATE, LLC, a South Dakota
Limited Liability Company, Defendants and Appellants.

APPEAL FROM THE CIRCUIT COURT OF
THE FOURTH JUDICIAL CIRCUIT
LAWRENCE COUNTY, SOUTH DAKOTA

THE HONORABLE MICHELLE K. COMER
Judge

CONSIDERED ON BRIEFS
MARCH 17, 2026
OPINION FILED 05/20/26
JEFFREY G. HURD
EMILY M. SMORAGIEWICZ of
Bangs, McCullen, Butler, Foye
& Simmons, L.L.P.
Rapid City, South Dakota Attorneys for defendants and
appellants.

KENNETH E. BARKER
Belle Fourche, South Dakota Attorney for plaintiffs and
appellees.
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MYREN, Justice

[¶1.] Richard Sleep and Gloria Steele inherited a ranch and a campground

from their father. Throughout the years, Richard has operated the ranch and

campground and delivered Gloria an annual check based on her ownership interest.

In 2018, Richard filed this action, seeking a partition of the properties and a

declaration that he and Gloria had not formed a general partnership. Gloria

resisted Richard’s claims, arguing that she and Richard created a partnership. The

circuit court determined the parties did not create a partnership. The circuit court

also determined that the parties had reached an enforceable agreement for the sale

of Gloria’s interest in a cattle herd to Richard. Gloria appeals. We affirm.

Factual and Procedural Background

[¶2.] Eugene and Ruth Sleep owned land and raised cattle in Lawrence

County (Sleep Ranch). They also owned a campground near Spearfish (Iron Creek

Lake) (Sleep Ranch and Iron Creek Lake are collectively referred to as “Estate

Property”). Eugene and Ruth had two children, Richard Sleep and Gloria Steele.

[¶3.] While growing up, Richard helped Eugene with the ranching

operation. Gloria participated less in the ranching activities but helped Ruth

around the home and in the operation at Iron Creek Lake. In the early 1960s,

Richard left Sleep Ranch to attend college. After returning to Sleep Ranch, Richard

was paid as an employee, received a W-2, and was given a small herd of cattle as a

wedding gift. Eugene operated both Sleep Ranch and Iron Creek Lake as a single

business.

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[¶4.] Eugene died intestate in 1967. Under the intestacy laws at that time,

Ruth, Richard, and Gloria each received a one-third interest in Eugene’s estate,

which consisted of real estate, cattle, and ranching equipment. Following Eugene’s

death, Richard assumed responsibility for operating Sleep Ranch. Ruth oversaw

the bookkeeping and continued to pay Richard as an employee.

[¶5.] In the summer of 1968, the first camping season following Eugene’s

death, Gloria and Ruth managed Iron Creek Lake. From 1969 to 1975, Gloria and

her husband, Bob Steele, managed Iron Creek Lake. Gloria and her husband

received and retained all the profit from Iron Creek Lake over those six years.

During this time, Gloria did not receive any share of the profit from the cattle

operation. In 1975, Gloria and Bob decided to step away from managing Iron Creek

Lake, and Richard and his wife, Karen, agreed to assume that task. They have

exercised sole control over Iron Creek Lake since then.

[¶6.] Also in 1975, Richard bought Ruth’s interest in Eugene’s estate. The

contract between Ruth and Richard clarified that it did not create a partnership

between them and that it did not disturb Gloria’s one-third interest in Eugene’s

estate. Gloria was not a party to this contract and was unaware of it until after it

was executed. The day after Richard purchased Ruth’s interest in Eugene’s estate,

Richard’s attorney drafted a proposed lease, addressing Gloria’s one-third interest

in the Estate Property. Richard testified that he presented the lease to Gloria and

told her he did not intend to be partners. Gloria testified that she did not recall

having any discussion with Richard about a proposed lease and never signed one.

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[¶7.] After purchasing Ruth’s one-third interest, Richard began managing

the books and accounts of Sleep Ranch and Iron Creek Lake. He testified that he

consulted an accountant regarding the handling of tax matters for the operations,

and the accountant recommended that Richard file a Form 1065 partnership tax

return. Richard has filed a partnership tax return each year. Richard testified that

he believed tenants in common must file partnership tax returns. He also testified

that his main concern regarding tax matters was that the Internal Revenue Service

accepted the forms he submitted.

[¶8.] Richard and Karen created a checking account for Sleep Ranch. Only

Richard and Karen have access to this account. From 1975 to 2004, Richard

distributed one-third of the proceeds from the Estate Property to Gloria, with

checks drawn on the Sleep Ranch checking account. Each year, Richard provided

Gloria with a Schedule K-1 form documenting her distribution.1 Richard testified

that the amount that Gloria received each year included “deductions for typical

carrying costs of land, such as weed control, taxes and insurance,” but that “Gloria

never paid any bills, purchased equipment, materials, or supplies.” Richard also

testified that when Sleep Ranch operated at a loss, operational reserves covered the

losses, and he did not personally cover them or ask Gloria to do so.

[¶9.] Since Eugene’s death, Richard has exercised sole control over the

Sleep Ranch operation, and since 1975, over the Iron Creek Lake operation. Gloria

1. A Schedule K-1 form is the Internal Revenue Service Form for reporting a
“Partner’s Share of Income, Deductions, Credits, etc.”
https://www.irs.gov/pub/irs-pdf/f1065sk1.pdf.

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has not participated in the day-to-day management of these operations, though she

has suggested ways Richard could improve profitability.

[¶10.] In the late 1990s, Richard and Gloria began discussions with an

attorney about organizing the Estate Property into a business or businesses. In a

letter to Richard and Gloria, the attorney explained the purpose of creating the

business entities as “providing a mechanism to manage family assets under one

umbrella organization.” As a result of these discussions, the parties’ attorney

formed several business entities. The parties did not file operating agreements for

these entities, did not transfer property into them, and held no meetings to manage

these businesses. The business entities were eventually canceled or

administratively dissolved when no annual reports were filed with the Secretary of

State.

[¶11.] In the early 2000s, Richard and Gloria began discussing the possibility

of Richard acquiring Gloria’s interest in the Estate Property. In 2003, they

discussed the sale of Gloria’s interest in the cattle herd (80 head) to Richard for

$60,000. Believing that an agreement had been reached, Richard delivered a

$60,000 check to Gloria in December 2003 for “80 mixed age cows.” However, Gloria

did not cash the check. In December 2004, Richard sent Gloria an additional

$6,032.47 check for “3 bulls & profit on calves.” Gloria did not cash this check

either and explained, “I have not sold my cattle to you and your checks in the

amounts of $60,000 and $6,032.47 have not been cashed.” In May 2004, Gloria

wrote a letter to Richard, which read, in part: “I’m returning your check until we

have an opportunity to complete the tax file information and have a purchase

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agreement drawn for the cattle.” Later, in a 2008 letter, Gloria explained, “The sale

of the cattle, separate from the rest of the ranch, Iron Creek Lake operation and

other estate properties had never been discussed and we have not discussed the

cattle, except in regard to tax implications[.]”

[¶12.] In 2004, Richard converted his payments to Gloria from payments

based on her interest in the herd to “rent” payments based on her one-third interest

in the real property. To calculate that rental value, Richard testified that he

assessed comparable rental rates that he had paid other landowners as well as

prevailing agricultural lease rates in neighboring counties. He did not consult with

Gloria about the appropriate rental amount for her interest in the real property.

[¶13.] Richard testified that around 2004, Gloria began to refer to Richard as

her “partner” and suggested that their relationship was a “partnership.” In several

letters to Richard, Gloria referred to herself as his partner and described the trust

she had placed in him as the manager of the operations at Sleep Ranch and Iron

Creek Lake. However, in other correspondence, in which Gloria proposed a

partition of the estate property, Gloria described her intentions: “Specifically, I am

not interested in being part of a business entity with you or your family such as an

LLC or partnership. I have made known to you my interest in retaining all of

Beaver Creek and retaining half or more of the value of Iron Creek Lake as a way of

partitioning the value of my 1/3 interest.” Later, in 2010, Gloria proposed leasing

her interest in the estate property. The proposed lease agreement read, “No

partnership intended. It is particularly understood and agreed that this lease

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shall not be deemed to be or intended to give rise to a partnership relation.”

(Emphasis in original).

[¶14.] Throughout the late 2000s and 2010s, Richard and Gloria were unable

to reach an agreement on dividing the Estate Property. In 2018, Richard filed this

lawsuit requesting partition of the Estate Property and a circuit court declaration

that he and Gloria had not formed a partnership. In her counterclaim, Gloria

requested the circuit court to declare they were partners and that “Sleep Ranch

Partnership did not sell its cattle operation to Richard.” After exchanging initial

pleadings, the parties agreed to bifurcate the partnership and partition issues.

[¶15.] A court trial on the partnership issue was held before the circuit court

in December 2020. Both Richard and Gloria testified. They each described their

understanding of the Sleep family history, how the family had acquired the

properties, how Sleep Ranch and Iron Creek Lake had operated over time, and their

relationship to one another.

[¶16.] Following the trial, the parties submitted post-trial briefing and

proposed findings of fact and conclusions of law. The circuit court found the parties

did not have the intent to associate for the purpose of carrying on a business jointly.

It ultimately determined that “Gloria has failed to meet her burden of proving by a

preponderance of the evidence that she and Richard formed a partnership under

South Dakota law.” “Instead, [the circuit court] concludes Sleeps have established

as a matter of fact and law, no partnership between Richard Sleep and Gloria Steele

was ever formed.” The circuit court also concluded that “Gloria sold her interests in

the Estate livestock and thereafter, received ‘rent’ payments.” It explained that

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“Richard’s acceptance of Gloria’s offer is established in his delivery of the check for

the agreed-upon amount” and that “[a]fter the fact, Gloria disavowed that she had

agreed to the sale of the cattle.”

[¶17.] The circuit court subsequently conducted a second trial to resolve the

partition dispute and then issued a “Final Judgment (Trials I and II)” that resolved

all claims. Gloria then appealed, claiming the circuit court made clearly erroneous

factual findings, that it erred when it concluded that the parties had not formed a

partnership, and that it clearly erred when it found that Gloria agreed to sell her

interest in the cattle herd.

Decision

1. Whether the circuit court erred in concluding that
Richard and Gloria had not formed a partnership.

[¶18.] The parties disagree about the applicable standard of review. Citing

this Court’s decision in McGregor v. Crumley, 2009 S.D. 95, ¶ 20, 775 N.W.2d 91, 97,

which explained “[t]he existence of a partnership is an issue of fact,” Richard

suggests the clear error standard is the applicable standard of review. Conversely,

Gloria suggests that whether a partnership is formed is a mixed question of law and

fact. She asserted that “[i]n this case, almost all the facts are undisputed.” She

asserts “[t]he question is whether those facts establish the existence of a

partnership,” and is a question of law reviewed de novo.

[¶19.] In describing the mixed question standard, this Court has explained,

“[w]hen deciding cases involving a mixed question of law and fact, the proper

standard of review is dependent upon the nature of the inquiry.” In re Est. of

Simon, 2024 S.D. 47, ¶ 17, 11 N.W.3d 36, 40. “If application of the rule of law to the

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facts requires an inquiry that is ‘essentially factual’— one that is founded ‘on the

application of the fact-finding tribunal’s experience with the mainsprings of human

conduct’—the concerns of judicial administration will favor the [trial] court, and the

[trial] court’s determination should be classified as one of fact reviewable under the

clearly erroneous standard.” Id. (alterations in original) (quoting Stockwell v.

Stockwell, 2010 S.D. 79, ¶ 16, 790 N.W.2d 52, 59). “If, on the other hand, the

question requires us to consider legal concepts in the mix of fact and law and to

exercise judgment about the values that animate legal principles, then the concerns

of judicial administration will favor the appellate court, and the question should be

classified as one of law and reviewed de novo.” Id. (quoting Stockwell, 2010 S.D. 79,

¶ 16, 790 N.W.2d at 59).

[¶20.] We review the circuit court’s factual findings for clear error. Whether

a partnership was or was not formed under SDCL 48-7A-202 “requires us to

consider legal concepts in the mix of fact and law and to exercise judgment about

the values that animate legal principles[.]” See In re Est. of Simon, 2024 S.D. 47,

¶ 17, 11 N.W.3d at 40 (quoting Stockwell, 2010 S.D. 79, ¶ 16, 790 N.W.2d at 59).

Accordingly, we will review the circuit court’s conclusion that a partnership was or

was not formed as a question of law, subject to the de novo standard.

[¶21.] Under SDCL 48-7A-202(a), a partnership is formed by “the association

of two or more persons [who] carry on as co-owners a business for profit . . .,

whether or not the persons intend to form a partnership.”2

2. The facts relating to this appeal date back to the late 1960s. Both parties
relied on the Uniform Partnership Act (UPA) in their appellate briefing.
(continued . . .)
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In determining whether a partnership is formed, the following
rules apply:
(1) Joint tenancy, tenancy in common, tenancy by the
entireties, joint property, common property, or part
ownership does not by itself establish a partnership, even if
the co-owners share profits made by the use of the property.
(2) The sharing of gross returns does not by itself establish a
partnership, even if the persons sharing them have a joint or
common right or interest in property from which the returns
are derived.
(3) A person who receives a share of the profits of a business
is presumed to be a partner in the business, unless the
profits were received in payment:
(i) Of a debt by installments or otherwise;
(ii) For services as an independent contractor or of wages
or other compensation to an employee;
(iii) Of rent;
(iv) Of an annuity or other retirement or health benefit to
a beneficiary, representative, or designee of a deceased or
retired partner;
(v) Of interest or other charge on a loan, even if the
amount of payment varies with the profits of the business,
including a direct or indirect present or future ownership
of the collateral, or rights to income, proceeds, or increase
in value derived from the collateral; or
(vi) For the sale of the goodwill of a business or other
property by installments or otherwise.

SDCL 48-7A-202(c).

[¶22.] This Court has also explained that “there is no arbitrary test for

determining the existence of a partnership.” McGregor, 2009 S.D. 95, ¶ 20, 775

N.W.2d at 97–98 (quoting Ins. Agents, Inc. v. Zimmerman, 381 N.W.2d 218, 220

(S.D. 1986)). “[E]ach case must be governed by its own peculiar facts[.]” Id. ¶ 20,

775 N.W.2d at 98 (citation omitted). Still, various principles may guide the circuit

court’s assessment of whether a partnership exists.

________________________
(. . . continued)
Neither party contends that partnership law in place before the adoption of
the UPA controls this case.

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[¶23.] For instance, while the parties’ subjective intent to form a partnership

is not dispositive, they must nonetheless intend to associate to carry on a business

for profit jointly. See SDCL 48-7A-202(a) (declaring that “the association of two or

more persons to carry on as co-owners a business for profit forms a partnership,

whether or not the persons intend to form a partnership” (emphasis added)). In

Ziegler v. Dahl, 691 N.W.2d 271, 276 (N.D. 2005), the North Dakota Supreme Court

explained that the phrase “whether or not the persons intend to form a partnership”

was not meant to “change the elements of partnership formation.”3 Instead, “[t]he

purpose of the phrase was to clarify that a partnership could be created regardless

of the parties’ subjective intent, making it possible for individuals to inadvertently

create a partnership despite their expressed subjective intent not to do so.” Id. at

276 (emphasis added); see also Uniform Partnership Act § 202, cmt. 1 (1997). The

Ziegler court observed that intent to form a partnership is “[o]ne of the most

important tests of whether a partnership exists[,]” 691 N.W.2d at 275, but also

noted that “this element focuses ‘on the intent of the participants to be part of a

relationship which includes the other essential elements of [a] partnership,’” id. at

276 (alteration in original) (citation omitted). A writing or oral communication may

3. Under SDCL 48-7A-1201, the UPA “shall be applied and construed to
effectuate its general purpose to make uniform the law with respect to the
subject of [SDCL chapter 48-7A] among the states enacting it.” Although this
Court has an obligation to independently interpret South Dakota’s version of
the UPA, decisions from other jurisdictions that have also adopted the UPA
can prove helpful to that task. Much of this Court’s case law regarding the
formation of general partnerships predates the adoption of the UPA. Other
jurisdictions have more developed bodies of post-UPA case law.

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evidence such intent, or it may be “derived from the actions of the parties.” Id.

(citation omitted).

[¶24.] Similarly, the parties’ joint ability to manage and control the business

may indicate a partnership relationship. See In re KeyTronics, 744 N.W.2d 425, 441

(Neb. 2008) (describing “control sharing” as “objective indicia” of the existence of a

partnership); Gangl v. Gangl, 281 N.W.2d 574, 580 (N.D. 1979) (“Control is an

indispensable component of co-ownership which, when combined with profit

sharing, strongly suggests the existence of a partnership.”). Proof of direct day-to-

day involvement is unnecessary, but “[e]vidence that one party has sole control and

management of the business supports a finding that a partnership does not exist.”

68 C.J.S. Partnership § 72 (April 2026 Update); Ziemann v. Grosz, 10 N.W.3d 801,

810–11 (N.D. 2024) (“A partner does not have to actually exercise control ‘but only

needs to have the right to exercise control in the management of the business.’”

(citation omitted)). Ability to control or manage the business separates

partnerships from “passive co-ownership of property[.]” Uniform Partnership Act

§ 202, cmt. (1997). Thus, it follows that “[j]oint tenancy, tenancy in common,

tenancy by the entireties, joint property, common property, or part ownership does

not by itself establish a partnership, even if the co-owners share profits made by the

use of the property.” SDCL 48-7A-202(c)(1).

[¶25.] Profit sharing and capital contributions are also appropriate

considerations in assessing whether a partnership exists. McGregor, 2009 S.D. 95,

¶ 20, 775 N.W.2d at 98 (The existence of a partnership “may also be supported by

evidence that the [partners] shared profits from the business.” (citation omitted)).

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However, “[t]he sharing of gross returns does not by itself establish a partnership,

even if the persons sharing them have a joint or common right or interest in

property from which the returns are derived.” SDCL 48-7A-202(c)(2). At the same

time, the right to share in a partnership’s profits also entails a responsibility to

share in its losses.

[¶26.] Much of Gloria’s appellate briefing is devoted to assessing the circuit

court’s finding that the parties lacked the intent to form a partnership. The

question of intent is a question of fact, reviewed for clear error. See In re Est. of

Simon, 2024 S.D. 47, ¶ 18, 11 N.W.3d at 41 (“Treating issue of intent as factual

matters for the trier of fact is commonplace.” (quoting Pullman-Standard v. Swint,

456 U.S. 273, 288 (1982))); see also Ziemann, 10 N.W.3d at 810 (assessing whether

the parties had the requisite intent to form a partnership as a question of fact,

applying the clearly erroneous standard).

[¶27.] On appeal, Gloria highlights the evidence she believes demonstrates

that they had the necessary intent and that the circuit court’s factual finding to the

contrary was clearly erroneous. Specifically, she notes that Richard filed

partnership tax returns for decades, that they attempted to form other business

entities together, and that they occasionally referred to each other as partners.

Gloria advanced each of these arguments before the circuit court. Conversely,

Richard presented evidence that described a different understanding of the same

evidence. He also presented evidence showing that he had exercised complete

control over the operation of the Estate Property and had merely shared gross

returns in proportion to Gloria’s ownership interest.

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[¶28.] The circuit court carefully considered each of Gloria’s arguments and

all the evidence associated with them. It entered 47 specific factual findings related

to the considerations previously identified when assessing the existence of a

partnership. Each of these findings is supported by evidence in the record and is

not clearly erroneous. Based on these specific findings regarding the appropriate

considerations, the circuit court ultimately found that the parties did not intend to

associate as co-owners in a business for profit.

[¶29.] When assessing the circuit court’s factual findings for clear error, this

Court reviews the evidence in the record in its entirety and in the context in which

it was presented to the circuit court. Gloria’s arguments turn on her own perception

of how the evidence in the record could have been weighed. However, Richard’s

arguments reveal that the same evidence could be viewed differently and be

afforded different weight than Gloria suggests. The circuit court’s factual findings

are not clearly erroneous, and based on these findings, the circuit court did not err

when it concluded that no partnership existed between these parties.

2. Whether the circuit court erred when it concluded
Richard and Gloria created an enforceable contract
for the sale of 80 head of cattle.

[¶30.] “The existence of a contract is a question of law.” Nelson v. Est. of

Campbell, 2023 S.D. 14, ¶ 28, 987 N.W.2d 675, 685 (quoting Harvey v. Reg’l Health

Network, Inc., 2018 S.D. 3, ¶ 55, 906 N.W.2d 382, 398). This Court reviews

questions of law de novo. See Alexander v. Est. of Hobart, 2025 S.D. 39, ¶ 16, 24

N.W.3d 758, 764.

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[¶31.] Gloria argues that she did not consent to the sale of her interest in the

cattle herd. She contends that she and Richard were negotiating a global

agreement, and that Richard mistakenly believed she had agreed to sell her interest

in the herd. In her view, there was no mutual assent to support an agreement.4

[¶32.] “To form a contract, there must be a meeting of the minds or mutual

assent on all essential terms.” Suvada v. Muller, 2022 S.D. 75, ¶ 28, 983 N.W.2d

548, 558 (quoting Jacobson v. Gulbransen, 2001 S.D. 33, ¶ 22, 623 N.W.2d 84, 90).

“Consent of the parties to the contract must be free, mutual and communicated by

each to the other.” Paweltzki v. Paweltzki, 2021 S.D. 52, ¶ 29, 964 N.W.2d 756, 765

(quoting SDCL 53-3-1). “Consent is not mutual unless the parties all agree upon

the same thing in the same sense.” Paweltzki, 2021 S.D. 52, ¶ 29, 964 N.W.2d at

765 (citation omitted); see also SDCL 53-3-3. “[W]hen in dispute, ‘[w]hether the

parties had a meeting of the minds is a question of fact’ for the circuit court to

determine[.]” Paweltzki, 2021 S.D. 52, ¶ 30, 964 N.W.2d at 765 (second alteration in

original) (citation omitted).

[¶33.] The circuit court’s factual findings regarding the parties’ agreement for

Richard to buy Gloria’s interest in the cattle herd are less detailed than its findings

4. The circuit court found that Gloria consented to sell 80 head of cattle,
representing her interest in the herd. Some courts have held that contracts
for the sale of cattle are contracts for the sale of goods, implicating Article 2
of the Uniform Commercial Code (UCC). See Albrecht v. Fettig, 932 N.W.2d
331, 338 (Neb. 2019) (“This matter involves a sale of cattle, which are
movable at the time of identification in the parties’ purchase agreement.
Thus, the U.C.C. governs this matter.”). The parties have not addressed
whether the UCC was applicable in this case. Given the nature of Gloria’s
claim, it is unnecessary to decide whether the UCC applied or to perform a
technical UCC analysis because mutual assent principles apply to all
contracts.

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related to the partnership issue. Despite their imprecision, it is evident that the

circuit court found that Gloria had agreed to sell her share of the cattle to Richard

for $60,000, only to try to back out of the deal. The circuit court was presented with

evidence that the parties began negotiating a sale of Gloria’s interest in the Estate

Property in 2003. Richard emphasized that after the parties began negotiating,

they reached an agreement regarding the cattle and that he had delivered a check

to Gloria for her interest in the herd. Gloria acknowledged that they had discussed

the sale of her share of the cattle on the terms identified by Richard. Still, she

asserted that it was only part of an incomplete negotiation over the distribution of

the entire estate. Gloria asserted that no part of the negotiation was final until

there was an agreement on the entire Estate Property. To support her position,

Gloria introduced letters she wrote to Richard following the delivery of his check.

The circuit court was required to weigh the conflicting testimony and evidence, and

it clearly rejected Gloria’s version of the events. Consequently, the circuit court’s

finding that the parties agreed to the terms of a contract for the sale of Gloria’s

interest in the cattle is not clearly erroneous. Based on its factual findings, the

circuit court did not err in concluding that the parties formed an enforceable

contract for the sale of the cattle.

[¶34.] We affirm.

[¶35.] JENSEN, Chief Justice, and GUSINSKY, Justice, concur.

[¶36.] SALTER and DEVANEY, Justices, concur in part and dissent in part.

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DEVANEY, Justice (concurring in part and dissenting in part).

[¶37.] I agree with the majority opinion’s determination that the circuit court

did not err when concluding that a partnership did not exist. However, I

respectfully disagree with the majority opinion’s resolution of the second issue

presented in this appeal. In my view, the circuit court clearly erred in finding that

Richard and Gloria had reached an agreement for the sale of Gloria’s interest in the

livestock.

[¶38.] On this issue, the circuit court found that, “In 2003, Richard and

Gloria negotiated the sale of Gloria’s interest in her 80 head of cows” and that

“Richard’s acceptance of Gloria’s offer is established in his delivery of the check for

the agreed-upon amount.” Notably absent, however, is a finding that Gloria made

such an offer. More importantly, there was no testimony or evidence from either

Gloria or Richard that would support such a finding. Gloria provided the full

context of what led to Richard giving her a check for the cattle when testifying at

trial. She also provided significant documentary evidence corroborating her version

of the events, none of which was included in the circuit court’s findings.

[¶39.] Gloria explained that in the late ‘90s she and Richard started to

discuss ways to divide their interests in the Estate Property and determine the

value of its various components. At that time, they determined that the market

value of 80 head of cattle was $60,000. Years later, in 2003, Gloria and Richard had

discussions with her accountant regarding tax implications associated with the sale

of land or cattle and Gloria’s concerns about the absence of documentation to

support Richard’s accounting of her 1/3 ownership share in the K1 Partnership tax

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returns. According to Gloria, she never expressed, during these discussions, that

she was willing to sell her share of the cattle separate from the rest of the Estate

Property.

[¶40.] Gloria testified that she was surprised when Richard gave her a

$60,000 check for the cattle at a meeting in December 2003 during which they were

discussing a potential settlement relating to other parts of the estate. During her

testimony, Gloria referred to a letter, admitted as an exhibit, that she had written

to Richard in 2008 detailing their interactions over the years with respect to their

attempts to settle their interests in the estate. In the letter, she explained that she

initially kept the check because she thought they were getting close to reaching an

agreement with respect to the rest of the estate. Gloria testified that she gave

Richard a proposed agreement, in January 2004, relating to the division of the rest

of the property. She stated that there were several other pieces that they were

considering, including a “1031 exchange,”5 and they had also been discussing how

the rest of the cattle were accounted for.

[¶41.] Gloria explained that after further discussions, Richard rejected her

proposal. She then sent him a letter on May 10, 2004, stating that she was

returning the $60,000 check “until we have an opportunity to complete the tax file

information and have a purchase agreement drawn for the cattle.” The circuit court

entered a finding stating that, in this letter, Gloria “admitted an agreement was

reached but that it merely needed to be endorsed in writing.” This characterization

5. A “1031 exchange” is “a like-kind property exchange” that allows one “to
receive tax deferred benefits under 26 U.S.C. § 1031.” Kreisers Inc. v. First
Dakota Title Ltd. P’ship, 2014 S.D. 56, ¶ 1, 852 N.W.2d 413, 415.

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is clearly erroneous, particularly when considering the testimony from both Gloria

and Richard and the related documentation admitted as evidence that explains the

events leading up to and following this letter.

[¶42.] At trial, Richard provided testimony that was consistent with Gloria’s.

He testified that he and Gloria had agreed on the $60,000 price, but he never clearly

expressed that they agreed to anything else with respect to the cattle. Richard’s

counsel asked him if Gloria ever said, “I will take $60,000 for my 80 head of cows.”

He responded, “No, she didn’t say that. I just paid her that much there.” When

pressed on what made him believe they had an agreement, he kept referring to

their agreement as to the price. His counsel then asked him, “Did she say ‘I agree

that that’s the price I will accept’ or words to that effect?” Richard responded,

“Well, she agreed on the price of $60,000, and that. Yes, she agreed to that and

nothing further.” When asked what he meant by “nothing further”, he stated,

“Well, I didn’t – well, the last part you said there, I’m not sure that was included in

the agreement.”

[¶43.] On cross-examination, Richard provided further testimony that was

consistent with Gloria’s account:

Counsel: You and Gloria were talking about buying out her
interest in the ranch, true?

Richard: That’s right.

Counsel: You were talking about buying the land, the cattle,
and the equipment; true?

Richard: We were, yeah. That would be right.

Counsel: Okay. Did she ever once say to you she was willing
to sell her cattle without selling everything else?

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Richard: She agreed on the price and that was – that was
the only part we talked about.

...

Counsel: Did she ever say, though, “I’m willing to sell you
my cattle, sell out of the ranching business, and
simply own real estate and equipment”? Did she
ever agree to that?

Richard: Not in those particular words that you said.

Counsel: What particular words would she have said that
with?

Richard: Well, she agreed on that part there, and we were
talking about everything at the time. When we
agreed on something, why, that was it.

Counsel: Well, but she never agreed to sell one piece just by
itself, did she?

Richard: Well, I don’t know that she had the terminology
there, but I had anticipated that she agreed to sell
her cattle and that we agreed on the price, and
that. If it wasn’t to be sold then, why, we’d have
waited until later because the price changes every
week.
...

Counsel: It is true Gloria never once agreed to sell her cattle
separate and apart from the land and the
equipment; true?

Richard: I guess separate and apart from land and
equipment was never in there.

Counsel: And you never reached an agreement on the land or
the equipment, true?

Richard: That’s right.

[¶44.] Aside from the findings related to the $60,000 check, the circuit court

additionally found that “Richard delivered a second check to Gloria on December 30,

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2004 representing the remaining interest in the cattle.” This finding is also clearly

erroneous to the extent it implies that some other agreement relating to the calves

and bulls had been reached. Gloria testified that after she returned the $60,000

check in May 2004, she heard nothing from Richard for several months. She

testified that in December 2004, she and Richard were together moving furniture

out of their mother’s apartment and he made no mention of the check she had

returned. Then later that same day, he left the $60,000 check, along with another

check purportedly for bulls and calves, at Gloria’s home when she was not there.

She never accepted either check and did not find out until later that Richard

believed she had sold him her cattle.

[¶45.] When relating what had occurred the day Richard left the returned

check and this second check at her home, Gloria noted, in her 2008 letter to

Richard, that they had never discussed her ownership interest in the calves and

bulls and that she had no input as to the amount paid for them. She also noted that

the first time Richard indicated that he thought she had sold her cattle to him was

at a meeting in January 2008. Richard did not provide testimony or evidence

refuting these claims.

[¶46.] Other documentation admitted at trial supports Gloria’s claim that she

had not agreed to separately sell her cattle in 2003 or 2004 to Richard. In a

proposal Gloria provided to Richard in December 2008 for how the Estate Property

could be partitioned, the section relating to the personal property that needed to be

divided contains the following language: “Gloria agrees to sell eighty head of cattle

for a sum of $60,000.00. In exchange for her interest in calves and bulls, Gloria

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acquires 80 additional acres of the 120 Harding County, South Dakota real estate

giving her sole ownership of this property.” Richard’s son, Jeff, took notes of a

family meeting in January 2009 regarding this proposal. The meeting minutes

include a discussion about Gloria’s suggestion that she receive this Harding County

property in exchange for her share of the calves and bulls. The notes state that

Richard asked Gloria why she was interested in this property, and she responded

that it would be a way to settle the cattle issue which has tax implications for her.

Richard then commented that he had never traded real estate for personal property,

and when Jeff asked him if he would ever consider it, Richard stated he did not like

the idea. Notably, there was no mention in these minutes that Richard had already

purchased eighty head of cattle from Gloria or her share of the calves and bulls.

[¶47.] The majority opinion generally notes some of the evidence in the record

supporting Gloria’s position and states that the circuit court “was required to weigh

the conflicting testimony and evidence.” But on the discrete topic of the purported

cattle sale, there was no conflicting testimony. Neither Gloria nor Richard testified

that Gloria agreed to sell her interest in the cattle in the absence of a global

agreement to purchase her entire interest, or otherwise divide their respective

interests, in the Estate Property. In fact, the evidence points only to the opposite

conclusion.

[¶48.] Based on my review of the trial record in its totality, I am “left with the

definite and firm conviction that a mistake has been committed.” Fuoss v. Dahlke

Fam. Ltd. P’ship, 2023 S.D. 3, ¶ 22, 984 N.W.2d 693, 701 (citation omitted). I would

therefore reverse the circuit court’s determination that Gloria had agreed to sell her

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interest in the cattle separate from the rest of her 1/3 interest in the estate, and

remand for further proceedings to adjust the division of the Estate Property

accordingly.

[¶49.] SALTER, Justice, joins this writing.

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