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Real Property Annotations (Agricultural Law and Tax)

This page contains summaries of significant recent court opinions involving legal issues related to the use of real property of importance to agricultural producers and rural landowners

Posted December 1, 2017

Mooring Of Boats In Front Of Lakefront Property Is Trespass. The plaintiffs in this case own neighboring lakefront properties separated by a 9-foot strip of land located on the western nine feet of one of the tracts which the plaintiffs use to access the lake. The defendants are backlot owners, and they constructed a split rail fence along two sides of the nine-foot strip of land. The defendants also erected a dock where they moored their boats at the end of the nine-foot strip of land. According to the plaintiffs, the placement of the dock caused the defendants’ boats to extend beyond the nine-foot strip onto water above the bottomlands in front of plaintiffs’ respective properties. The plaintiffs maintained that the defendants left their boats in front of the plaintiffs’ homes for long periods of time, and overnight each and every night during the summer. The plaintiffs filed suit alleging trespass and seeking a permanent injunction requiring the defendants to remove the dock, take down the fence, stop docking boats in front of plaintiffs’ property, and to refrain from future trespasses. In their complaint, the plaintiffs claimed that their trust owned the nine-foot strip of land in question. The defendants filed a motion for summary disposition arguing that plaintiffs’ claims for trespass and a permanent injunction must fail because the plaintiffs did not own the nine-foot strip of land in question and, thus, the plaintiffs could not assert a claim of trespass relating to the strip nor could they seek to enjoin defendant’s use of the strip. The trial court granted the defendant’s motion for summary judgment on the ground that plaintiffs did not have any ownership interest in the nine-foot strip and, therefore, lacked standing to bring the suit. The plaintiffs appealed. The appellate court examined determined that the evidence did not support the contention that the trust held title to the nine-foot strip of land on which the fence is located. From the deeds, the court determined that the nine-foot strip is owned by whoever in the trust’s chain of title first conveyed the lots except for the nine-foot access. Thus, none of the plaintiffs showed an ownership interest in the strip and could not show a trespass resulting from the fence on the nine-foot strip. However, the court held that the plaintiffs were undoubtedly riparian owners of the bank adjacent to their properties of the lake because they owned the property neighboring the disputed dock. Thus, they had the absolute right to control their bottomlands, and a right of access to the water from anywhere their property touched the lake waters. The court held that by indefinitely keeping boats in front of plaintiffs’ homes, the defendants had trespassed on the plaintiffs’ riparian rights to make use of their bottomlands and to access the lake from portions of their lakefront properties. Moreover, as riparian owners, plaintiffs had the right to make reasonable use of the entire surface and sub-surface of the lake. The court held that the placement of the dock interfered with this right and constituted a potential nuisance. As a result, the court reversed the decision of the trial court grating summary judgment to the defendants on the basis of trespass and nuisance and remanded for further proceedings. Gunther v. Apap, No. 333169, 2017 Mich. App. LEXIS 1641 (Mich. Ct. App. Oct. 17, 2017).

Posted October 27, 2017

Railroad Right Of Way Reverted to Adjacent Owners Upon Abandonment.  In 1886, five individuals executed a single deed “granting, bargaining, selling and conveying real estate. . . to the Chicago, Kansas and Nebraska Railway Company.” Thereafter a railway was operated on the property. At some point the railway was abandoned and in 1985 the Chicago, Kansas and Nebraska Railway Company’s successor-in-interest quitclaimed its interest in the property to Dirt & Gravel, Inc. The plaintiff acquired her interest through a 1994 quitclaim deed from Dirt & Gravel. The legal description of the property as stated in her 1994 deed was “all that portion of the abandoned Chicago, Rock Island and Pacific Railroad right of way” in the lots located in Holton, Kansas. In 2012, the plaintiff sued to quiet adverse claims against her title, seeking a determination that she was legally vested with fee simple ownership. She advanced two legal theories: 1) the quitclaim deed conveyed fee title to her; or 2) she acquired title through adverse possession. The four different landowners whose properties abut the abandoned right of way answered her petition claiming ownership. The defendants moved for summary judgment on the plaintiff’s quiet title claim. They argued that the 1886 deed conveyed only a right of way that would have reverted to the abutting landowners when it was abandoned. The trial court entered summary judgment against the plaintiff and divided the property among the defendants and declared the plaintiff the owner of the remainder interest. In addition, the trial court ruled that the plaintiff’s adverse possession claims were moot. The plaintiff appealed and the appellate court affirmed. The plaintiff again appealed. The Supreme Court determined that when a railroad company acquires a strip of land for a right of way it generally takes only an easement. The court determined that this is the rule whether the strip is acquired by condemnation or deed. When the railroad abandons that right of way, the estate reverts to the adjacent landowners. The Supreme Court pointed out that prior caselaw consistently held that when the source of the railroad company’s interest is a deed, the railroad acquires only an easement if the deed expressly or impliedly conveyed the property for use as a right of way. Even covenants of warranty in the railroad company’s deed and language designating the right acquired as a fee are not necessarily controlling. In addition, the court determined that the original 1886 deed described the property in a way that could be construed as a right of way. For these reasons the Supreme Court held that the trial court and the appellate court correctly concluded that the original 1886 deed conveyed only an easement because the deed reflects the property conveyed as the right of way for the grantee’s planned railroad. Jenkins v. Chicago Pac. Corp., No. 113,104, 2017 Kan. LEXIS 725 (Kan. Sup. Ct. Oct. 27, 2017).

Posted October 20, 2017

Comparable Sales Apply to Determine Property Tax Assessment on Hunting Club Parcels. The plaintiff owned several tracts of land that constituted a hunting club. The plaintiff challenged the property tax assessment on the parcels primarily on the basis that the club was the true owner of the land. The court determined that the applicable statutory and case law required an examination of the substantive rights of the parties even though the plaintiff held legal title. Based on a review of the facts, the court noted that the plaintiff did not enjoy unrestricted use of the properties. In fact, the plaintiff’s ownership interest gave the plaintiff a membership in the hunting club and equal access to all of the club land, but the plaintiff was restricted from building a residence on the land, subdividing it or conducting mining or drilling operations. Instead, the club maintained the exclusive right to maintain roads, lakes, ditches and fences across all of the parcels, exclusive hunting and fishing rights and several other rights. In addition, the plaintiff’s access to the land was contingent on being in good standing with the club. Because the club maintained control over the land and because the petitioner was subject to the club’s control when using the property, the court deemed the club to be the true owner of the land. Accordingly, the plaintiff’s “ownership” was more akin to a license. As a result, the proper valuation of the property should have been based on comparable sales rather than on the sale of licenses to members. HDH Partnership et al. v. Hinsdale County Bd. of Equalization, No. 16CA1723, 2017 Colo. App. LEXIS 1339 (Colo Ct. App. Oct. 19, 2017).

Posted October 18, 2017

Existence of Prescriptive Easement Altered Water Drainage Rules. The plaintiff purchased a tract in 2005. The defendant purchased an adjacent tract of land in 1990, and has been farming the land since 1966. A berm sits on the defendant’s land which lies to the west of the plaintiff’s property. Both the plaintiff and the defendant are included in the same watershed that drains from southeast to northwest (from the plaintiff’s property to the defendant’s property). The plaintiff’s land and the adjoining land to the east drains into what was referred to during trial as the “lateral” ditch across the plaintiff’s property. That water continues to drain west into a north-south ditch that runs between the parties’ land, then the water continues north to the east-west “road ditch”, which borders both properties to the north. Eventually the water drains west into the Nishnabotna River. A fence, a ditch, and the disputed berm divide the parties land. In the late 1940’s, the previous landowners agreed to dig the ditch to solve drainage issues between the two properties. In the 1970’s, the defendant began to farm the property. Over time the combination of the farming of the berm and floods reduced the height of the berm. In 2013, the defendant raised the berm a couple of feet. In 2014, he obtained a permit from the Iowa Department of Natural Resources to further increase the height of the berm. The plaintiff sued, alleging that in constructing the berm the defendant raised the elevation of his land causing excess water to flow onto or remain on the plaintiff’s parcel for a longer period of time. The plaintiff asked the court to enjoin the defendant from current and future conduct elevating the height of the berm. The district court concluded that the defendant did not create a nuisance or trespass on the plaintiff’s property. In addition, the district court determined that the defendant did not breach common law or statutory duties because of a long existing easement for the berm. For these reasons, the injunction was denied. The plaintiff appealed. The appellate court determined that the parties’ predecessors had created a prescriptive easement when they created the berm and that the plaintiff acknowledged that he knew of the berm’s existence prior to his acquisition of the adjacent property, and that the plaintiff failed to prove that the defendant had abandoned the prescriptive easement. Accordingly, natural drainage of the two properties had been waived by the prescriptive easement established decades ago. Thus, the plaintiff failed to prove that the defendant violated any common law or statutory duties. In addition, the court pointed out that both parties’ experts agreed that during a flood the plaintiff’s property would flood to the level of the river. The appellate agreed with the district court that the berm will keep the defendant’s land try but will not increase the area of the plaintiff’s land affected by floodwater. As a result, the berm itself did not present a nuisance to the property or cause a trespass by backing rainwater onto the plaintiff’s land. The court determined that because there was no apparent invasion or threatened invasion of a right, the trial court properly denied the injunction. C&D Mount Farms Corp., v. R &S Farms, Inc., No. 16-1586, 2017 Iowa App. LEXIS 1085 (Iowa Ct. App. Oct. 11, 2017).

Posted October 7, 2017

Temporary Easement Method For Calculating Trespass Damages For Gas Wells Invalid. The plaintiff owns the surface estate in two parcels of land that is used primarily for agricultural purposes. The plaintiff also has a residence on the property. The defendant holds the subsurface mineral estate underlying the property. Between 2006 and 2011 the defendant drilled a total of seven vertical gas wells on the plaintiff’s property and installed roads, flow lines and other appurtenances of those wells. The plaintiff acknowledged that the defendant’s possession of the mineral estate gave it some right to occupy the surface estate with the wells and associated structures and conceded that the defendant was within its right to drill two wells. However, the plaintiff claimed that by choosing to drill seven vertical wells instead of two multi-directional horizontal wells, the defendant exceeded the scope of its rights to reasonably occupy the surface estate. Consequently, the plaintiff argued that five of the defendant’s wells trespass on the property under state (CO) law. As the case proceeded to trial, both parties raised objections to certain anticipated expert testimony by means of a joint motion. In that motion, the defendant challenged the adequacy of the calculation of damages proffered by the plaintiff’s expert witness. The expert used three methods to calculate the plaintiff’s trespass damages. First, he attempted to determine what the compensation would be for a temporary easement over the property. His methodology entailed determining the fair market value of the plaintiff’s entire property and using those to determine what a fair market sale of the plaintiff’s property would generate. He then multiplied that per-acre cost by the number of acres he believed comprised the area trespassed on by the defendant. The court found that this temporary easement model was conceptually inconsistent with the measure of trespass damages under the facts. The court pointed out that this opinion assumed that each property had a similar value, that the wells and operations affected every nook and cranny of both parcels, that every part of the property was similarly affected, that all wells were drilled at the same time, and that all adverse effects were caused by the five trespassing wells as compared to the two permitted wells. As a result, the court found the expert’s opinion to be so overbroad as to make it irrelevant. The second method the expert used was based on the practice of oil and gas developers to offer to compensate the landowner with a one-time payment in exchange for all of the property damage and inconvenience resulting from the creation and maintenance of the well over its lifetime. The expert testified that the rate of compensation offered landowners was currently about $25,000 per well, with anywhere from six to 10 wells being drilled per pad. The expert then calculated the per-acre value of such a payment and multiplied that by the number of acres he believed were affected by the trespass. The court determined that this evidence could potentially be relevant. The expert’s third method compared the defendant’s use of the property to a pipeline easement that the plaintiffs granted to an entity called Saddlehorn Pipeline Company in 2016. The easement granted Saddlehorn the right to run a pipeline across a portion of the South Farm, in exchange for a one-time payment of roughly $202,000. The expert divided the easement price by the number of acres affected by the Saddlehorn easement to determine a per-acre cost for the easement. He then multiplied that per-acre cost by the number of acres he believed comprised the area trespassed on by the defendant. The Court found that this model had the potential to be relevant, but that relevance is conditioned upon testimony that demonstrates that the Saddlehorn lands and the trespassed lands are sufficiently similar as to warrant equivalent valuations. As a result, the court found that the expert’s first method of calculating damages to be invalid and stipulated that the other two methods could be relevant if more information is suppled. A-W Land Co. L.L.C., v. Anadarko E&P Co. L.P., No. 09-cv-022293-MSK-MJW, 2017 U.S. Dist. LEXIS 152980 (D. Colo. Sept. 20, 2017).

Posted September 8, 2017

‘Timber’ Is Not Considered ‘Crops’ Under Deed Of Trust Act. The plaintiff operated a logging and scrap metal operation on his property. The defendant loaned the plaintiff money in June 2007 and secured the loan by a deed of trust on the parcel he purchased from his parents. A deed of trust is a deed where legal title is transferred to a trustee which holds it as security for a loan between the borrower and lender, with equitable title remaining in the borrower. The plaintiff defaulted on the loan and then tried to contest the deed of trust on the basis that the parcel was agricultural land and, as a result, state law barred a nonjudicial foreclosure. Subsequently, a new deed of trust was issued in 2009 and a new loan was renegotiated to cure the default. In this new document, the parties stipulated that the land was not used for agriculture. The plaintiff again defaulted and the matter was set for nonjudicial foreclosure. The plaintiff again claimed that nonjudicial foreclosure was not an option. The trial court dismissed the action finding that the plaintiff could not contest the nature of the property given the stipulation in the 2009 deed of trust. The Washington Supreme Court reversed, finding that the requirements of the deed of trust act (Act) could not be waived by the parties. The case was remanded with the requirement that the trial court hold a hearing to determine whether the property was primarily agricultural at relevant times. The trial court distinguished between crop and timber and ruled that the land was primarily used for non-agricultural timber operations. The plaintiff appealed that ruling. The appellate court pointed out that the Uniform Commercial Code (UCC) definition of “crop” does not include timber. In addition, the appellate court found that an executive summary prepared by the working group that drafted the 1998 Amendments to the Act provide evidence that the legislature expected that the UCC would apply to the Act. Consequently, the appellate court determined that the trial court did not err in considering the current UCC definition of crops when construing the meaning of that term in the Act. As a result, the judgment of the trial court was affirmed. Schroeder v. Haberthur, No. 33336-1-III, 2017 Wash. App. LEXIS 1942 (Wash. Ct. App. Aug. 15, 2017).

Posted September 4, 2017

Grain Bin Lease Provisions Clear. A father was the general partner of a family limited partnership (FLP) and in 2006 leased a grain bin site that the FLP owned to his four sons for $400 annually. The lease also contained provisions regarding property use, repairs and default. The term of the lease was the life of all of the tenants. The FLP later conveyed the bin site to one of the sons who became the landlord under the lease. In 2014, the landlord son demanded additional rent of $400 from each of the tenant brothers. He also demanded that repairs be made to the bin site, including the removal of small trees and the repairing of electrical panels and boxes. The landlord also claimed that the lease became voidable on its 10-year anniversary in 2016 under N.D.C.C. §47-16-02 which provides for a 10-year limit on leases of ag land. The landlord brother moved to evict his tenant brothers. Two of the tenant brothers moved for partial judgment on the pleadings. They claimed that the lease required a total rent of $400 annually from all tenants combined, and that the lease was not an ag lease subject to the 10-year limit because the area subject to the lease was not used for crop or livestock production. They also claimed that the lease repair provisions were limited in meaning to cover repairs necessary to keep the bins in working order. The trial court determined that the lease was not an ag lease that was subject to the 10-year limit because no crop or livestock production was involved and the lease was clear that the leased property was not suitable for farming. The trial court also dismissed the plaintiff’s eviction action, was clear that the total rent was $400 annually and that the tenants made appropriate repairs based on testimony that repairs were to be made to keep the bins functioning. Cosmetic repairs were not covered by the lease. The trial court awarded partial attorney fees to the tenants. On appeal, the appellate court affirmed on all points except as to attorney fees. The appellate court only awarded the tenants fees for defending the landlord’s frivolous eviction counterclaim. The court remanded the matter for further proceedings and instructed the trial court that it could receive additional evidence related to attorney’s fees for the tenants on their motion for judgment on the pleadings. Zundel v. Zundel, No. 20170003, 2017 N.D. LEXIS 221 (N.D. Sup. Ct. Sept. 1, 2017).

Posted September 3, 2017

State Considered Party To Quiet Title Action. The defendant owned and and operated a cattle ranching business in western Nebraska, and the plaintiffs owned adjacent property. For many years, approximately 80 acres of the defendant’s land had been fenced-in with the plaintiff’s. In 2014, the defendant and the Nebraska Game and Parks Commission (State) entered into a purported purchase agreement for the sale of a parcel of the defendant’s land which included the part fenced-in with the plaintiff’s. Before the closing of the purchase agreement between the defendant and the state, the plaintiff filed a quiet title action against the defendant alleging ownership by adverse possession of the 80 acres. The plaintiff subsequently filed a formal notice with the State of the pending legal action against the defendant. The State then moved for leave to intervene in the quiet title action. The district court allowed the State to intervene over the plaintiff’s objection. The court acknowledged that the State had an interest in the outcome of the quiet title action sufficient to support intervention, but agreed with the plaintiff that the State’s interest was statutorily limited to that of a subsequent purchaser. As a result, the trial court did not dismiss the State from the action, but its role was limited to that of a subsequent purchaser. That meant that the State was not allowed to present evidence or question witnesses at trial related to the claim of adverse possession. The trial court quieted title to the defendant, and the State appealed. The Supreme Court determined that the purpose of the lis pendens statute (the notice provision) is to hold disputed property within the court’s jurisdiction until the parties’ rights are finally determined. In addition, the appellate court found that the plain language of Neb. Rev. Stat. § 25-328 provides that one who intervenes becomes a party to the action. As a party to the litigation, it is generally recognized that intervenors can engage in discovery, file motions, introduce evidence and examine witnesses. As a result, when a subsequent purchaser under the lis pendens statue becomes a party in an action involving the disputed property, the subsequent purchaser can question the plaintiff’s right to recover in the same manner as the original defendant. Consequently, when the State intervened in this quiet title action, it became a party. For these reasons, the appellate court reversed and remanded the matter for a new trial. Brown v. Jacobsen Land & Cattle Co., No. S-16-604, 2017 Neb. LEXIS 149 (Neb. Sup. Ct. Aug. 18, 2017).

Posted August 25, 2017

Planting Trees Does Not Violate Conservation Easement. The defendants own property that is divided into two lots that are subject to a conservation easement. The easement limits disturbance, clearing, construction and other activities to protect environmentally sensitive areas. In April 2007, the defendants hired a landscaper to plant 10-12 Leyland Cypress trees in the easement for the purpose of creating privacy and to control erosion. In 2013, the defendants put their house on the market. The defendants’ neighbors, the plaintiffs in this case, asked the defendants to include in any contract of sale a provision that they buyers agreed to trim the trees on a periodic basis. The defendants refused because at that time they were already under a contract to sell their home. The plaintiffs subsequently filed a complaint alleging that the defendants violated the terms of the conservation easement by planting the trees. They demanded that the trees be removed and the area in the easement restored to its natural condition. The trial court found that the planting of the trees violated the conservation easement because the easement’s purpose was to protect steep slopes from erosion and the evidence showed that Leyland Cypress trees do not prevent erosion. As a result, the court ordered the trees removed and efforts be undertaken to restore the area to its natural state. The defendants appealed. The appellate court determined that the trial court’s finding that the Leyland Cypress trees do not prevent erosion was not supported by the evidence. The expert witnesses testified that Leyland Cypress is not commonly used to prevent soil erosion, but did not state that Leyland Cypress cannot prevent soil erosion. In addition, the trial court did not provide a reason why the trees should be removed when there was no evidence that the integrity of the slope was being compromised. As a result, the appellate court reversed the lower court’s decision that the trees should be removed. Matthies v. Dietrich, No. A-0765-15T3, 2017 N.J. Super. Unpub. LEXIS 1968 (N.J. Super. Ct. Aug. 3, 2017).

Posted August 24, 2017

Court Says Requirements For Adverse Possession Satisfied, Even Though Case Technically Involved Boundary by Acquiescence. The defendants purchased a home in 1977. The tract on which the home was located bordered the plaintiff’s property. The parties accessed their properties via a common driveway on the north side of their tracts which was slightly south and parallel with a public road. The defendants paved the driveway and the plaintiff’s predecessor-in-interest built a fence along the driveway’s south side in 1979. The defendant participated with the construction of the fence and also maintained it. The defendants claimed ownership of the sliver of property between the fence and a public road, and had erected structures on the sliver in 2002 and 2006, and used it in other ways that illustrated they believed they owned the sliver. In 2015, the plaintiff had his tract surveyed and the survey revealed that the driveway and structures were on the plaintiff’s property. The plaintiff sued to quiet title to the disputed sliver and associated structures. The trial court ruled for the defendants. On appeal, the appellate court affirmed on the basis that the defendants had established all of the elements under Iowa law for adverse possession for the statutory time period of 10 years. The defendants had asserted titled to the disputed strip in a manner that was contrary to the actual title holder, in a manner that was exclusive in a clear and convincing manner and under a claim of right which the plaintiff did not rebut. While the court classified the case as an adverse possession case, the fact that the defendants had no knowledge of the adjacent owners’ ownership rights until the survey would mean that the case was actually a boundary by acquiescence case. The result would have been the same, however. Summit Veterinary Services v. Tindle, No. 16-2077, 2017 Iowa App. LEXIS 855 (Iowa Ct. App. Aug. 16, 2017).

Posted August 18, 2017

State Reserves Fifty Percent Of Minerals On Land Transfers. In 1957, the Board of University and School Lands of the state of North Dakota and the defendants entered into an installment sale contract for the purchase of land in North Dakota. The contract for sale provided that the defendants would pay a down payment and then pay a specific amount per year until fulfilling the contract price. Upon paying the full contract price, a patent for the premises the state would issue a patent. The contract also provided that the patent reserved to the state all the coal, oil, natural gas, uranium, gravel, clay and other minerals. In 1967, before the patent was issued the defendants conveyed the same property to Hans Hanson, which included a provision that reserved all the oil and gas to the defendants. In October 1971, Hans Hanson conveyed the land to the plaintiffs. Later in 1971, the state of North Dakota issued a patent for the same parcel of land to Hans Hanson which conveyed the surface and indicated that the state had reserved 50% of all the oil and natural gas. The defendants entered into oil and gas leases on July 9, 2013 with Continental Resources. The plaintiffs contended they had title to an undivided 50% mineral interest under the property and brought a quiet title action. The trial court entered an order granting the defendants’ motion for summary judgment and the plaintiffs appealed. The text of the 1957 contract for sale provided that the state would transfer ownership of the surface land while reserving all of the minerals. However, N.D.C.C. § 38-09-01 provides that “in every transfer of land by the State of North Dakota fifty percent of all oil, natural gas, or minerals is reserved to the state and any deed, contract, lease or other transfer of any such land which does not contain such reservation must be construed as if such reservation were contained therein.” On further review, the appellate court affirmed, determining that despite the fact that the 1957 contract provided that the state reserved all minerals it must be read to reserve 50% of all minerals to the State. The appellate court also determined that an installment sales contract for patent is no different than a contract for deed with regard to the vendee’s ability to convey and reserve an equitable interest obtained under the contract. As a result, a vendee may transfer equitable interest in real property and reserve a severable portion upon transfer. The appellate court concluded that when the defendants conveyed the surface and reserve the minerals they reserved equitable title to 50% of the minerals. Hokanson v. Zeigler, No. 20160359, 2017 N.D. LEXIS 189 (N.D. Jul. 31, 2017).

Lack Of Parties’ Intent For Easement Prevents Building Of Dock. In 1977, Camp-O-Dalhi, Inc. (C-O-D) purchased land adjacent to Lake Delhi in Delaware County, Iowa. In 1984, the land was platted as the C-O-D subdivision. The subdivision consists of some 92 lots, lake frontage area and also road area. In 1984, C-O-D also recorded restrictive covenants for the subdivision. In 1985 Delhi Lakeview Estates Landowners Association, Inc., the defendant in this case, was formed and became successor to C-O-D. The defendant purchased from C-O-D the lake frontage area which is a strip of land between the shoreline and the lakefront lots (basically the beach area) called the Waterfront Access Area. The defendant also purchased C-O-D’s docks. In 2005, the defendants recorded restrictive covenants for the subdivision. The covenants provide that lake frontage will be owned and maintained by the lot owners’ association and cannot be sold; docks will be owned by the owners’ association and may be rented by the year; and all roads and easements within the C-O-D will be owned and maintained by the lot owners’ association. The plaintiff purchased on contract a portion of lot 89 in 2006. The lake side of the lot the plaintiff purchased abuts the Waterfront Access Area of Lake Delhi. At the time of purchase, the plaintiff obtained the property’s abstract containing its chain of title. The deed noted it was subject to all restrictive covenants of record. In June 2010, the plaintiff filed suit against DLE seeking the district court to declare that he had a right of easement across shoreline property and Waterfront Access Area to build a dock, and for other relief under theories of easement by prescription and easement by implication. The trial court denied the plaintiff’s claim for easement by prescription and/or by implication. The court found that the plaintiff, having paid the defendant’s dock rental fees and yearly assessments from 2006-2009 did not take any affirmative action to demonstrate open and hostile use of the docks which would have been necessary to establish a prescriptive easement. In addition, the court found no easement by implication. On appeal, the appellate court determined that the issue was whether the circumstances of the transaction evidenced an intent by the parties to grant or reserve an easement in the land. The court determined that the covenants predated the sale and evidenced the parties’ intent. As a result, the court determined that at the time of severance of the unity of title, the parties did not intend to grant or reserve an easement of access to the lake, at least by dock to the owner of lot 89. Consequently, the court found that the plaintiff’s quest for an easement by implication was merely a thinly veiled attempt to circumvent the covenants to which he was bound. Because an easement by implication was not intended to be reserved or granted at the time of the separation of title, the plaintiff was not entitled to one. As a result, the appellate court affirmed the trial court. Holocomb v. Helhi Lakeview Estates, Inc., No. 16-2137, 2017 Iowa App. LEXIS 804 (Iowa Ct. App. Aug. 2, 2017).

Posted August 14, 2017

Disputed Boundary Adversely Possessed. In 1987, the defendant acquired title to two twenty-acre adjacent parcels. The plaintiffs subsequently acquired property adjacent to the southern boundary of the defendant’s parcels. A 2014 survey disclosed that a fence located south of the southern boundary of the defendant’s parcels encroached upon the plaintiffs’ tracts. On September 11, 2014, the plaintiffs sued for a declaration of interest claiming title ownership of the disputed property. The trial court determined that the plaintiffs had been put on notice of potential evidence of the fencing before 1987. In addition, the court concluded that the evidence established that the defendant would be able to show use or cultivation of the disputed property by his predecessors in interest before 1987. The trial court jury found that the defendant and his predecessors in title adversely possessed the disputed property for more than twenty years (the statutory requirement). The plaintiffs appealed, but the appellate court affirmed. Busch v. Schuebel, No: 2016AP674, 2017 Wisc. App. LEXIS 571 (Wisc. Ct. App. Aug. 1, 2017).

Posted August 12, 2017

Perpetual Easement Survives Fifty Years After Creation. The parties are adjoining property owners in rural area. The predecessors in title to their properties entered into an easement and agreement allowing for the construction of a dam on the defendant’s property that resulted in the creation of a 14-acre lake, which spilled onto and covered a portion of both properties. The easement is a perpetual easement that giving the plaintiffs the perpetual right to erect and maintain the dam and the right to fish on the waters and use the area for their own proper lawful and individual purposes. In addition, the plaintiffs did not have the right to commercialize the area nor permit the use of the water by parties other than them or their successors in ownership of the land. Finally, the agreement provided that if the plaintiffs sold their premises, the owner of the defendants’ property will have the first right and option to purchase the area on which the lake sets along with a strip of land surrounding it no to exceed 20 feet from the shoreline. After more than 50 years, the parties disputed the extent of each other’s rights to access and use the lake as well as the boundary line between the properties. The court concluded that the use restriction in the easement and agreement had expired and was no longer enforceable under Iowa Code §614.24 because more than 21 years has passed since the parties entered into the agreement. The court also determined that the right of first refusal violated the rule against restraints on the alienation of land was unenforceable. However, the court determined that the plaintiffs had established the existence of a prescriptive easement to use the entire lake, and rejected the defendants’ claim of a boundary by acquiescence through and on the south side of the lake due to the lack of clear evidence to support the claim. Finally, the court determined that there was no requirement for the defendants to maintain the dam in perpetuity. Franklin v. Johnston, No. 15-2047, 2017 Iowa App. LEXIS 278 (Mar. 22, 2017).

Posted August 3, 2017

Nebraska Court Can’t Affect Title To Kansas Farmland. Kirk Hahn and Cheri Ward, a married couple, were lived in Nebraska. Hahn owned a one-half undivided interest in real property located in Osborne County, Kansas, the title to which was in his name alone. Hahn’s parents, Clifford and Iris Hahn, owned the other one-half undivided interest in that property. When Ward filed for divorce in Nebraska, the Nebraska court divided Hahn and Ward’s property. The Nebraska court directly awarded the Kansas property to Ward stating: “The above described real estate is now the property of [Ward], and its order “shall be recorded in the real estate records of Osborne County, Kansas to effectuate the transfer”. Ward subsequently petitioned the Kansas district court to enforce the Nebraska court’s order and to partition the land between her and Hahn’s parents. The district court found that the Nebraska order assigning the Kansas real estate had no effect on the legal title to the Kansas real estate and was not entitled to enforcement. However, it nonetheless enforced the Nebraska order under the principle of comity, which permits a court to enforce a foreign judgment even though the court is not required to do so. Clifford and Iris Hahn appealed. The appellate court determined that the courts of one state generally cannot directly affect the legal title to land situated in another state. The appellate court pointed out that a sister state may indirectly affect title to land located in another state by ordering a litigant over whom it exercises personal jurisdiction to transfer title to another. If that party does not comply, the court may enforce the order by holding the disobedient party in contempt. However, the appellate court also determined that nothing in the record suggested the Nebraska court ordered Hahn to transfer the property to Ward. In addition, given the Nebraska court’s purported direct transfer of title, ordering Hahn to sign the deed would have been superfluous. The court also pointed out that where public policy is not violated it is generally recognized that a court should exercise comity over a foreign judgment in order to avoid expense, harassment and inconvenience to the litigants. However, because the Nebraska court directly affected the legal title to land in Kansas, it squarely conflicts with Kansas law which prohibits sister states from directly affecting title to Kansas land. As a result, the Nebraska court order violated Kansas public policy. For these reasons, the appellate reversed the district court’s order. Ward v. Hahn, No. 116,654, 2017 Kan. App. LEXIS 56 (Kan. Ct. App. Jul. 28, 2017).

Posted July 26, 2017

Development Rights Are Real Property Under State Law.  The plaintiff held a qualified life estate in a farm that had been in his family for more than 240 years. The life estate was contingent on the son farming the land. If he ceased farming before his death, the life estate ceased and he would own the remainder equally with his three sisters. The plaintiff and two of his sisters sought authorization pursuant to NY CS RPAPL §1602 to sell the development rights to the property in order preserve its future as a farm, however the third sister opposed selling her share of the development rights. Under §1602 the owner of a possessory interest in real property may apply to the court for an order directing that the "real property, or a part thereof, be mortgages, leased or sold". The court determined that development rights constituted an interest within the metaphorical "bundle of rights" that comprises a fee interest in real property. In addition, in drafting §1602, the court determined that the NY legislature gave the court the authority to compel the mortgage, lease or sale of "real property, or a part thereof", without placing any limitation on which "parts" of the bundle of rights are subject to the statute. Accordingly, the court determined that development rights constitute real property for purposes of §1602. However, because the plaintiffs did not present any evidence of a proposed buyer for the development rights or a value of the underlying property with and without the development rights the court also determined that the plaintiffs' failed to establish that stripping the development rights from the underlying land would be expedient. As a result, even while the plaintiffs' application to the court for an order directing that the development rights be sold is valid, the court denied the application for a lack of expediency and dismissed the action. Hahn v. Hagar, No. 2015-06560 2017 N.Y. App. Div. LEXIS 5643 (N.Y. Ct. App. Jul. 19, 2017).

Posted July 22,2017

Longstanding Fence Established Boundary Between Tracts. In January 1991, the plaintiff and his wife acquired tracts of land in Louisiana. The defendant owned land immediately south of the plaintiff’s property. When the plaintiff acquired the land, there was an existing fence which had been in place for more than 30 years, which ran from East to West between the parties’ tracts. In 2014, the defendant commissioned a survey of its tract which showed that, under the deeds, the property line was the section line which was north of the existing fence. The defendant removed the original fence and bulldozed the section line in preparation for building a new fence. The plaintiffs filed a petition for possession, temporary restraining order, permanent injunction and damages against the defendant. The trial court found that the fence line between the parties' tracts of land had remained in the same location in excess of 50 years at the time of defendant’s removal in 2014 and that there was insufficient evidence to support defendant’s contention that a wagon road which ran along the section line created a boundary. The trial court’s judgment recognized the plaintiffs’ possession of the property and established the original fence line as the boundary between the two tracts. The appellate court reviewed the testimony from multiple sources discussing the history of the fence line and the old wagon road. It noted that even the witnesses who remembered a road gave conflicting testimony regarding whether that roadway was actually fenced on either side. In addition, the testimony suggested that if there was a road it had fallen into disuse for a period exceeding 40 years, whereas the old fence remained in the same location during that time period and was the visible boundary between the two tracts. In addition, the testimony established that the plaintiffs’ used the property up the fence in ways consistent with a wooded, wetland area, including hunting and walking along the fence line to maintain the fence. The court noted that the plaintiffs’ maintenance of the fence also served as an action of possession by keeping defendant’s cattle off their land. As a result, the appellate court affirmed the trial court’s judgment. Madden v. L.L. Golson, Inc., No. 51,366-CA 2017 La. App. LEXIS 1203 (La. Ct. App. Jul. 5, 2017).

Posted July 18, 2017

Trial Court Decision Ordering Partition and Sale of Property Upheld. The defendant owed a one-eighth fee simple interest in a parcel of real property in Wichita County, Texas. The plaintiff owned the remaining seven-eighths fee simple interest. The property contained several buildings and once served as the location for Carter Wind Systems (CWS) a wind turbine company whose shares were owned by the defendant and several other individuals. CWS dissolved in 1994 and since then the property was used but not owned by Carter Wind Energy (CWE) a company formed by the defendant and his son. CWE placed a turbine on the property which provided electricity for the buildings. The defendant's son owned the turbine. In October 2014, the plaintiff sued for a partition of the real property. He claimed that the property was not susceptible to a partition in-kind because it contained substantial improvements and valuable industrial fixtures. The defendant raised a claim for equitable adjustment, arguing that the improvements on the property and buildings had been constructed by CWS and that he owned a 27 percent interest in CWS upon dissolution and could assert an equitable adjustment claim. The plaintiff filed a motion for partial summary judgment with regards to the equitable adjustment claim and the trial court agreed. Following a bench trial, the trial court also concluded that the property was not subject to a partition in-kind because it would significantly impair the value of the land. As a result, the trial court ordered the property to be sold and the net proceeds divided between the defendant and plaintiff in accordance with their respective interests. The defendant appealed, claiming that the trial court erred by granting summary judgment against his equitable adjustment claim. The court of appeals held that upon the expiration of the three-year period for winding up the prosecution of CWS's legal rights, the defendant lost the ability to pursue the claim for equitable adjustment. As a result, the defendant was barred from bringing an equitable adjustment claim. The defendant also claimed that the trial court erred by ordering a sale of the property rather than partitioning the property in-kind. He claimed that the evidence at trial showed that a partition in-kind was possible. The court of appeals determined that although the evidence showed that an in-kind partition was theoretically possible, it could not conclude that he trial court erred by implicitly deciding that such a partition was not feasible, fair, practical or equitable. The court held that the evidence was legally and factually sufficient to support the trial court's judgment ordering a sale of the property. Carter v. Harvey, No. 02-16-00153-CV, 2017 Tex. App. LEXIS 5977 (Tex. Ct. App. Jun. 29, 2017).

Posted June 17, 2017

Neither Boundary by Acquiescence Nor Adverse Possession Established. The defendant appeals from a district court order resolving a boundary dispute with his neighbors after he built a farm lane and a deer fence without first obtaining a survey. The defendant contended that the western boundary of his property was determined through either adverse possession or boundary by acquiescence. The court rejected this argument because the western boundary of his property was routinely and historically determined by a tree line before the defendant built his fence. Therefore, there was no clear or positive evidence that he adversely possessed the area before he built the fence. There was also no clear evidence that the plaintiffs gave their permission before the defendant built the fence. Therefore, the defendant’s boundary-by-acquiescence claim was rejected. There was also insufficient evidence to prove that the owners of the property to the north of the defendant’s agreed to the placement of the boundary line. Consequently, the defendant’s argument of estoppel also failed. The court ordered the defendant to remove the deer fence and alter the farm lane so that it does not encroach on his neighbors, all at his own expense. Mixdorf v. Mixdorf, No. 16-0596, 2017 Iowa App. LEXIS 558 (Iowa Ct. App. Jun. 7, 2017).

Publication In Newspaper Insufficient To Obtain Treasurer’s Tax Deed. The plaintiff is a 99-year-old woman represented by her son, who is her power of attorney. The plaintiff moves to set aside a treasurer’s tax deed for her family farm for failure to provide proper notice. The defendant sent notice to the plaintiff by certified mail to an incorrect address which was returned as ‘unclaimed’. The defendant then published notice of its intent to apply for a treasurer’s tax deed in the newspaper. However, pursuant to Neb. Rev. Stat. § 77-1834, the defendant did not meet the requirements for notice by publication, because the plaintiff’s address and where she could be found was available to the defendant (both the county assessor and the court treasurer’s records included the correct address for the plaintiff). Consequently, the defendant never completed service of a notice and the plaintiff was entitled to recover the real property because the defendant failed to comply with the notice requirements relating to the treasurer’s tax deeds. Wisner v. Vandelay Investments, L.L.C., No. A-16-451, 2017 Neb. App. LEXIS 112 (Neb. Ct. App. May 30, 2017).

Mineral Owner’s Permission Not Required For Horizontal Drilling Of Minerals on Adjacent Tract. The plaintiff owns mineral rights associated with a tract on which the defendant wants to drill an oil well to reach the minerals under an adjacent tract of land. The plaintiff owns only the mineral rights and the owner of the surface rights agreed to allow the defendant to drill on the property. The plaintiff claimed that the defendant also needs the plaintiff’s permission before drilling could begin because the wellbore will pass through portions of its mineral estate before kicking-off horizontally. The court held that the surface overlying a leased mineral estate is the surface owner’s property, and those ownership rights include the geological structures beneath the surface. While the court acknowledged that there would be a small loss in minerals that the plaintiff could have produced during drilling, the loss not sufficient of an injury to support a claim for trespass. Therefore, the only permission necessary for an oil and gas operator to drill through a mineral estate it does not own to reach minerals under an adjacent tract of land is the owner of the surface rights. Lightning Oil Co. v. Andarko E&P Onshore, LLC, No. 15-0910, 2017 Tex. LEXIS 463 (Tex. Sup. Ct. May 19, 2017).

Posted June 10, 2017

Landlord’s Duty To Mitigate Damages Doesn’t Apply When Tenant Still In Possession. The plaintiff orally leased 35 acres of pasture from the defendant and used it to grow and harvest brome grass and graze cattle. The lease annually renewed under the same terms and conditions. The plaintiff failed to pay the rent amount for the 2015-2016 lease term, and later claimed that the due date of the rent amount was unclear. Because of the failure to pay rent and in an attempt to mitigate damages, the defendant allowed a neighbor’s four horses to graze the pasture in the late summer of both 2014 and 2015, and denied the plaintiff access to the pasture for three months from late 2015 to early 2016. In early 2016, the plaintiff sued alleging that the defendant breached the plaintiff’s exclusive right of possession and sought damages for half of the cost of fertilizing the pasture in 2014 and 2015, half the rent for those years, the cost of feeding the cattle instead of grazing them on the pasture, and an amount for lack of access. The small-claims court denied the plaintiff’s claims and granted the defendant’s claim for the unpaid rent of $1,000. On appeal, the trial court affirmed without making any factual findings. On further review, the appellate court reversed. The appellate court noted that the duty under state (KS) law to mitigate damages only applied when the tenant had surrendered possession of the property. In that instance, the landlord has a duty to find a new tenant. But, when the issue is the non-payment of rent and the tenant hasn’t surrendered possession, there is no duty to mitigate and the landlord cannot interfere with the tenant’s exclusive right of possession (implied covenant of quiet enjoyment). Instead, the landlord can give the tenant notice of lease termination if the rent isn’t paid within 10 days (K.S.A. §58-2507), or can place a lien on crops growing on the leased premises for the unpaid rent. Miller v. Burnett, No. 116,373, 2017 Kan. App. LEXIS 43 (Kan. Ct. App. Jun. 9, 2017).

Posted June 9, 2017

Tenant Cannot Adversely Possess Leased Tract. The plaintiff claimed title ownership to a tract of land on the basis that he had been in open, continuous and uninterrupted possession of the subject tract for more than the 30-year statutory requirement for adverse possession. The plaintiff claimed that he began possessing the property as an owner when he began using it to graze his cows in 1955. However, the representatives of the trust that owned the land claimed that the plaintiff signed a lease for the property in 1955, thereby acknowledging that his possession of the property was as a lessee and could not be adverse to the trust. The trial court agreed with the trust because there were questions as to whether the plaintiff’s testimony was accurate. The plaintiff claimed that he didn’t think anyone owned the land, yet when he first entered the property there was barbed wire all around it. On appeal, the appellate court affirmed, finding that the trial court’s factual determination that the plaintiff did not possess the property as an owner for 30-years was entitled to great deference. The appellate could not say that the trial court committed a manifest error or was clearly wrong in its determination. King v. Dola ease Pierce Jenkins Trust, 2017 La. App. Unpub. LEXIS 193 (La. Ct. App. Jun. 2, 2016).

Posted May 29, 2017

Farmland Cannot Be Equitably Partitioned. The decedent died leaving a will in which he left, in pertinent part, his real estate to his wife for life for as long as she remained unmarried. Upon the wife’s death, or upon her subsequent remarriage, her interest in the real estate would passed to his four children for their lives. The children came into ownership of the farm as co-equal owners and the two daughters claimed that their two brothers were misusing the property and also using it to their advantage at the daughters’ expense. The daughters sought an equitable partition of the five parcels. The court appointed a commissioner to determine whether the property could be partitioned. The commissioner viewed the properties and issued a report that did not set forth a plan for equitably dividing the farm or a finding that it cannot be divided “without manifest injury to its value” as required by state (OH) law. The trial court upheld the commission’s finding, and the appellate court affirmed. The appellate court noted that the parcels were not contiguous and were two to four miles apart. The court noted that each parcel had different production potential and one parcel had road frontage. The court also concluded that partitioning the tracts among the four siblings would decrease the value of the entire farm because it would result in fields too small for modern farming practices. In addition, the commission was determined to have provided a “sufficient factual analysis” to permit the trial court to independently determine the possibility of an equitable partition. Simon v. Underwood, No. 2016-CA-18, 2017 Ohio App. LEXIS 1939 (Ohio Ct. App. May 19, 2017).

Posted May 27, 2017

Fact That Zoning Records Are Public Does Not Bar Fraud Claim. The defendants, a married couple, bought a 34-acre tract in 1998 that was zoned for agricultural use. The defendants used the tract to store equipment and inventory from the husband’s telecommunications and classic car sales business. They later wanted to sell a portion of the tract and hired a real estate agent to that effect. The agent provided the defendants with a form stating that the property was zoned as industrial. The zoning error was spotted by the wife and the husband told her that that he had asked the agent to make the correction. However, the tract was later advertised online as being zoned as industrial. The plaintiff responded to the ad and met with the defendants and the real estate agent. The plaintiff signed a purchase agreement to buy 10 acres. But, after the plaintiff discovered that an adjacent airport was going to place a runway protection zone on the tract, the plaintiff exercised its option to terminate the purchase agreement. Later, the plaintiff signed a new purchase agreement for 16 acres, and put up $150,000 in earnest money. The contract contained a liquidated damages provision that provided for $150,000 if either party breached the contract. After the contract was executed, the defendants and the real estate agent noted that the zoning error in the ad had not been corrected. The plaintiff was not informed of the error for another two months and, when discovering the error, advised the plaintiffs that the purchase was off unless the property was rezoned and the price lowered. After affirming the denial of summary judgment to northern Indiana landowners who misrepresented a property zoning to a potential buyer, the Indiana Court of Appeals also reversed the denial of attorney fees and prejudgment and post-judgment interest to the buyer. The defendants refused to correct the error and reduce the price and the plaintiff terminated the purchase contract within a 180-day due diligence period. The plaintiff sought the return of his earnest money, but the defendants refused. The plaintiff sued for actual and constructive fraud, breach of contract and rescission. The defendants counterclaimed. On cross motions for summary judgment, and the trial court denied both parties’ motions. The jury then returned a verdict for the plaintiff of $150,000. The defendants moved to correct errors and the plaintiff sought to recover attorney fees and pre and post-judgment interest and post-trial attorney fees. The trial court denied all motions. On appeal, the appellate court noted that the plaintiffs had not preserved the argument that the second contract did not allow termination for improper zoning. The appellate court also upheld the denial of the defendant’s summary judgment motion on the actual fraud claim, finding that the plaintiffs could rely on the defendants’ representation of the zoning status of the property. The court also upheld the trial court’s denial of summary judgment on the plaintiff’s constructive fraud charges. The court noted that simply because zoning status of a property is public record does not preclude a constructive fraud claim. The appellate court also upheld the trial court’s denial of the defendants’ summary judgement motion on the breach of contract issue. The court remanded on the issue of whether the plaintiff was entitled to attorney fees. The appellate court also determined that prejudgment interest might be allowed, and remanded on that issue. Song v. Iatarola, No. 64A03-1609-PL-2094, 2017 Ind. App. LEXIS 197 (Ind. Ct. App. May 10, 2017).

Posted April 5, 2017

Honey Bees Are “Livestock.” Legislation in Montana specifies that honey bees are included in the definition of “livestock” for purposes of the per capita fee on livestock. The fee also applies to poultry and swine three months of age or older, and all other livestock nine months of age or older in each county. H345, effective Oct. 1, 2017.

Posted March 31, 2017

Coal Mining Permit Approval Upheld. The plaintiff ranches on several thousand acres and entered into a surface and coal lease agreement covering 3,509 acres that granted the right to mine the land in return for compensation. The lessee sought state approval for a surface coal mining permit for a new mine about 10 miles covering over 8,000 acres of land in the same county as the plaintiff’s ranch. The permit application was conditionally approved subject to the right of interested persons to request a formal hearing. The conditional approval was based on a finding that the proposed mining operations would not interrupt, discontinue or preclude farming on alluvial valley floors that are irrigated or naturally sub-irrigated or materially damage the quantity or quality of water in surface or underground water systems that supply the alluvial valley floors. The plaintiff requested an administrative hearing as an owner of much of the land in the eastern half of the permit area, raising concerns about the size of the permit area, the reclamation practices to be used on the mined land, and his loss of agricultural production due to mining activities. Public hearings were held and the approval was upheld, but the plaintiff was granted some relief regarding reclamation issues. The plaintiff challenged the approval citing violations of state law in concluding that the mining would not harm alluvial valley floors, and appealed to the trial court. The trial court upheld the defendant’s decision to approve the permit, and the plaintiff appealed. The appellate court affirmed on the basis that ample evidence supported the finding that the defendant’s order complied with applicable state law and sufficiently addressed the plaintiff’s evidence. The court also rejected the plaintiff’s request for attorney fees. Voigt v. North Dakota Public Service Commission, No. 20160046, 2017 N.D. LEXIS 61 (N.D. Sup. Ct. Mar. 30, 2017).

Posted March 29, 2017

Pipeline Ordered Removed From Tribal Land. The defendant owned and operated a network of natural gas transmission pipelines across Oklahoma. On pipeline crossed a 137-acre tract which had originally been an Indian allotment held in trust by the Bureau of Indian Affairs (BIA). 38 Indians and the Kiowa Tribe own undivided interests in the tract in varying percentages. In late 1980, the BIA approved the grant of a .73-acre easement across a part of the tract for a 20-year term in exchange for $1,925 for the construction and operation of the pipeline. In 2002, the defendant’s predecessor-in-interest submitted a right-of-way offer to the BIA and made an offer to the plaintiffs for a new 20-year easement. A majority of the landowners rejected the offer after the defendant had obtained the written consent of five tenant-in-common landowners (who collectively owned about 10 percent of the tract) which was submitted to the BIA with the offer. The BIA approved the offer to renew the right-of-way easement for another 20 years. The plaintiffs appealed and the BIA vacated its decision on the basis that it did not have the authority to approve the right-of-way without the consent of the majority of the interest holders in the tract, and remanded the case for further negotiation and instructed that if approval a right-of-way was not timely secured that the pipeline should be removed. The pipeline was not removed and the defendant continued to operate it. The plaintiffs sued for continuing trespass and injunctive relief. On the trespass issue, the defendant claimed that the written consents constituted a complete defense under OK law. However, the court determined that federal law (25 U.S.C. §323) controlled which required owners of a majority of the interests in the tract to consent, and that the consent of the proper tribal officials also be obtained under 25 U.S.C. §324. On the injunction issue, the court entered a permanent injunction. The defendant’s continuing trespass was not unintentional. The court ordered the defendant to move the pipeline within six months. Davilla v. Enable Midstream, No. CIV-15-1262-M, 2017 U.S. Dist. LEXIS 45010 (W.D. Okla. Mar. 28, 2017).

Posted March 25, 2017

Per-Acre Diminution Applied in “Taking” Case Involving Abandoned Railway. The plaintiffs were 16 landowners that had their farms bisected by a railroad line that was abandoned and converted to a recreational trail under 16 U.S.C. §1247(d). The defendant, admitted liability for the taking of private property upon the issuance of a “Notice of Interim Trail Use” (NITU) and that the plaintiffs were owners of the fee interest underlying the right-of-way at the time the NITU was issued (the time of the taking). Thus, the sole issue before the court was the determination of the “just compensation” due the plaintiffs for the taking under the Fifth Amendment. The court noted that just compensation was to be measured by the market value of the property at the time of the taking based on the highest and most profitable use of the land at issue. Thus, the court had to calculate the difference between what the plaintiffs had before the issuance of the NITU and what they retained afterward. The court also noted that the plaintiffs bore the burden of proof to establish both the before and after values. The issues involved were the value of the land under the corridor, the cost to reclaim the corridor (i.e., make it usable for farming) among other things. The court determined that the plaintiffs did not sustain damages with respect to “access to and over the right-of-way, landlocking or crossing maintenance.” However, the court applied a per-acre drop in value approach with respect to the acreage of an affected parcel after the taking in determining the just compensation due. Sears, et al. v. United States, No. 12-889L, 2017 U.S. Claims LEXIS 167 (Fed. Cl. Mar. 8, 2017).

Posted March 21, 2017

Faulty Mineral Tax Assessment Made Resulting Deed Voidable, But not Void. In this title dispute case the land in question was among lands that the U.S. granted by patent deed to the Union Pacific Railroad in 1901. In 1911, the county made a tax assessment against the railroad’s non-producing mineral interests. The railroad did not pay the assessment, and the following year the county put the minerals up for bid at a tax sale. The railroad did not exercise its right to redeem the minerals or seek to recover the property after the 1912 sale. In 1919, the minerals were sold to a buyer, but the tax deed for the minerals was not issued until 1949. The railroad still considered itself to own the minerals and, in 1914, conveyed the surface estate in the subject tract to the buyer, reserving the minerals. After the 1912 tax sale, two chains of title emerged – one tied to the railroad’s claim of ownership of the minerals and one tied to the county’s tax sale of the minerals and issuance of a tax deed. The plaintiff claimed title to the minerals via a conveyance from the railroad. In 1971, the railroad quitclaimed its interest in the minerals to it’s own land resources entity, the plaintiff’s predecessor in interest. Thus, the plaintiff’s claim to ownership of the minerals originated with the 1901 patent deed and the 1914 reservation of the mineral interest. The defendant entered into an oil and gas lease on the property in 2010 and claimed titled via the 1919 sale of the minerals to a buyer all the way through to a 2014 mineral grant deed where the defendant was the grantee to one-half of the minerals. At trial, the plaintiff claimed that the county’s 1911 tax assessment against the railroad’s minerals was unconstitutional and invalid resulting in the resulting tax deed to be void. The defendant claimed that the tax assessment was valid and that the plaintiff could not challenge the assessment and resulting deed because of the six-year statute of limitations. The trial court ruled for the defendant and unified the surface and mineral estates under the “after-acquired” doctrine. The plaintiff appealed, and the appellate court affirmed. The appellate court determined that the plaintiff’s argument that the Wyoming Constitution prohibited the taxation of minerals in place and that the county’s 1911 tax assessment violated that Constitutional prohibition resulting in a void tax deed was too broad. The court determined that the error was only one of the manner in which the tax was imposed rather than a jurisdictional error. The result, the appellate court determined, was that the tax deed was voidable rather than void. Thus, the plaintiff’s challenge to the tax deed was barred by the six-year statute of limitations and the tax deed remained fully operative. Anadarko Land Corp. v. Family Tree Corp., No. S-16-0131, 2017 WY 24 (Wyo. Sup. Ct. Mar. 3, 2017).

Posted March 13, 2017

Reversed and Vacated - Feeding One Horse Does Not Make the Owner a Farm Tenant Entitled to Statutory Notice of Termination Applicable to Farm Leases. The plaintiffs owned a small acreage with a residence that they leased to the defendants. They leased other portions of the acreage to other parties. The defendants lived in the residence and did not conduct farming activities on the portion of the acreage that they leased along with the house. The defendants had lived in the residence located on the tract for over two decades. The defendants had tried to purchase the property, but the deal went south and in a different lawsuit the court determined that no enforceable contract for sale of the acreage existed. After that litigation ended, the plaintiffs gave the defendants a 30-day notice of termination in accordance with the termination rules for residential tenancies, and then a 3-day notice to quit after the 30-day period expired. That was then followed- up with a forcible entry and detainer action. The defendants filed an answer claiming that they were “farm tenants” entitled to the six-month notice of termination under Iowa Code §562.5 because they grazed a 38-year old horse (which could never be used for agricultural purposes) on the premises. The trial court determined that the grazing of a horse did not constitute a “farm tenancy” and that the plaintiffs had appropriately terminated a tenancy at will. On appeal, in an opinion written by Anuradha Vaitheswaran, the Iowa Court of Appeals reversed. The court noted that the applicable statute (Iowa Code §562.1A(2)) defined “farm tenancy” as “a leasehold interest in land held by a person who produces crops or provides for the care and feeding of livestock on the land, including by grazing or supplying feed to the livestock.” The court also noted that Iowa Code §717.1(4) defined “livestock” as “an animal belonging to the . . . equine . . . species.” The court also claimed that the 2013 change in the farm lease termination statute to make it also applicable to pasture leases along with crop leases supported the defendants’ contention that they were “farmers” because there was no longer an exclusive requirement that the tenant, to be a tenant in a “farm tenancy,” cultivate the leased land. Another statute providing that a tenant leasing less than 40 acres can be terminated on 30-days’ notice was held to not apply because the leased property did not also involve an “animal facility” as that statutory provision required (Iowa Code §562.6), but merely involved a residential tenancy. The court, reversing the trial court’s decision and remanding the case for dismissal of the forcible entry and detainer action, blamed the absurd outcome of the case, where a non-farmer could be deemed to be a farm tenant entitled to the statutory six-months notice of termination, on the “clear legislative language” of the statutory provisions at issue. Unfortunately, the appellate court never bothered to analyze the reason the statutory timeframe for terminating a farm lease differs from that required to terminate a residential lease – to provide sufficient time for a farmer to secure a different tract to rent for crops or livestock. The tenant in the present case had no such concern if the lease were to be terminated. The Iowa legislature clearly never intended the farm lease termination statute to apply to residential parcels where the tenant has a garden and therefore is engaged in “crop production,” or where the tenant keeps a pet that happens to meet the definition of “livestock,” or where the tenant would never be able to file a Schedule F as a farmer, utilize farm income averaging, qualify as a beginning farmer under Iowa law or meet the USDA definition of a “farmer” for USDA purposes. The court never bothered to reason its way through any of these points. Ironically (or maybe not ironically), Judge Vaitheswaran was appointed to the Iowa Court of Appeals by current USDA Secretary Tom Vilsack. Porter v. Harden, 884 N.W.2d 225 (Iowa Ct. App. 2016).

On further review, the Iowa Supreme Court reversed and vacated the opinion of the Court of Appeals. The Court held that the Court of Appeals overemphasized “an animal” without properly looking at the entire context of the statutory language surrounding the phrase. The Supreme Court also noted that the farm tenancy statute (IA Code §562.1(2)) requires that the land under lease must be used for producing crops or the care and feeding of livestock. As such, the Court reasoned that the statute requires that the land be “mostly or primarily devoted to crops or livestock.” The Court also presumed that the legislature intended a “reasonable result,” and that the Court should “hesitate from veering too far” from the common understanding of the statute. Accordingly, the mere keeping of a single horse at a residence did not establish a farm tenancy that triggered the termination statute for a farm tenancy. However, the Court did note that the presence of a single animal could constitute a farm tenancy if that animal was the primary purpose for the tenancy – such as for a “champion stallion.” A dissenting judge (Wiggins) believed that the statute was clear and that “[b]y rewriting the plain language of the statute, the majority is imposing its policy on the people of this state.” The dissent believed that the Court made the farm tenancy notice of termination statute unclear in its application of the “primary purpose” test to hobby farmers. Porter v. Harden, No. 15-0683, 2017 Iowa Sup. LEXIS 27 (Iowa Sup. Ct. Mar. 10, 2017).

Posted March 7, 2017

Breach of Easement Terms At Issue. The plaintiff’s predecessor in title conveyed a conservation easement to the defendant that covered a 60-acre tract. The terms of the easement designated a 100-foot-wide strip along the edge of the Little River. The strip was designated as a “riparian buffer.” When the plaintiff acquired the tract, it removed trees and did grading work within the buffer strip as part of its commercial forest operations. The defendant, a land trust, sought an injunction that would require the plaintiff to return the buffer strip to the condition that it was in before the tree removal and grading work on the basis that the plaintiff had breached the terms of the easement. The easement terms allowed for “No more than one new opening or clearing, and no new opening or clearings greater than 1,000 square feet, in the forest are permitted for noncommercial purposes, unless approved in advance by writing…”. The plaintiff claimed that merely disturbing more than 1,000 square feet of earth does not constitute the creation of “new opening or clearing” in the context of forest management under the terms of the easement. The trial court granted partial summary judgment to the plaintiff on the liability issue. On further review, the state (VA) Supreme Court reversed. The Supreme Court determined that material fact issues remained that precluded summary judgment on whether the plaintiff had breached the terms of the easement. Mount Aldie, LLC v. Land Trust of Virginia, Inc., No. 160305, 2017 Va. LEXIS 20 (Va. Sup. Ct. Mar. 2, 2017).

Posted February 8, 2017

County Can’t Enjoin Skydiving Business on Farm. The plaintiffs, a married couple, and started operating a skydiving business on their 290-acre farm in 2008. On two occasions, they had sought permission from the county to operate the business, but were denied and told it violated county zoning. A court cited the plaintiffs for continuing their business and, in 2015, the county initiated an enforcement action before the county enforcement board. After a hearing, the board rejected the county’s position and concluded that the plaintiffs’ business did not violate county zoning rules. The county did not appeal. However, before the board rendered its decision, the plaintiffs sought a judicial declaration that they could run the skydiving business under the state agritourism statute which they claimed would exempt the skydiving business from local land use regulations. The court did not issue the declaration, and the county filed a cross-claim in that action to stop the skydiving business. But, after the board ruled for the plaintiffs, the court granted the injunction for the county and the plaintiffs appealed. On appeal, the appellate court reversed. The appellate court noted that the board had ruled in favor of the plaintiffs and the trial court ignored the board’s determination. In addition, the appellate court determined that the county zoning rules were ambiguous and didn’t clearly establish the county’s position for an injunction. The zoning code allowed “outdoor recreational activities such as hunting or fishing camps…”. Skydiving was neither specifically included or excluded from the list of permissible land uses. Nipper v. Walton County, No. 1D16-512, 2017 Fla. App. LEXIS 361 (Jan. 17, 2017).

Posted February 7, 2017

Land Used for Arboretum Is Not “Agriculture” in Iowa; Long-Term Lease Valid. The plaintiff owns a 40-acre tract of land in Iowa and the defendant owns an adjacent 300-acre tract also in Iowa. The 300-acre tract was zoned “agricultural” and was rented out by the plaintiff for use as an arboretum. The parties entered into a written lease for the tract in 1969. In 1980, the parties entered into a cash-rent lease as a supplement to an existing memorandum of understanding that was for a term of 99 years. The 300-acre tract contained 250 acres of timber which the plaintiff leased for $1.00/year, and the remaining 50 acres was tillable which the plaintiff could lease any portion of. In 1990, the plaintiff notified the defendant of its intent to lease a portion of the tillable ground to restore it to native grass. In 1992, the lease was again approved. In 2013, the defendant notified the plaintiff that it was terminating the lease and the plaintiff responded that the lease was invalid on the basis that it violated the state constitutional provision barring an ag lease exceeding 20 years. On cross motions for summary judgment, the trial court granted the plaintiff declaratory relief finding that the land was not “agricultural” and that the lease was valid. The court ordered the defendant to comply with the lease terms. On appeal, the court affirmed. Iowa Arboretum v. Iowa 4-H Foundation, 886 N.W.2d 695 (Iowa Ct. App. 2016).

Posted January 27, 2017

Aviculture is Agriculture for Property Tax Purposes. The defendant, county property appraiser, denied the plaintiff’s request for an ag tax classification on all of the plaintiff’s property. The plaintiff owns a five-acre tract and uses the land to raise wild birds for sale as pets – aviculture. The plaintiff spent about $50,000 to buy cages, sheds, fences, feeders and structures for storage. From 2006-2012, the defendant classified the property as agriculture because of its dual use for aviculture and cattle. In 2012, the defendant denied an ag tax classification for the requested 4.5 acres, instead issuing it for 2.25 acres. The plaintiff appealed to the Value Adjustment Board (VAB) which held that the entire 4.5 acres should have ag classification. In 2013, the defendant denied ag classification to the portion of the property used for aviculture, which decision was reversed by the VAB. The defendant appealed the VAB’s decision and also denied ag classification for tax year 2014. Both parties motioned for summary judgment. The trial court ruled for the defendant on the basis that only poultry qualified as ag under the applicable statute and entered summary judgment for the defendant. On further review, the appellate court reversed. The appellate court held that if, on remand, the plaintiff could establish that aviculture is useful to humans, then agricultural classification should apply. The court reached that conclusion because the applicable statute defined “farm product” as “any…animal…useful to humans.” McLendon v. Nikolits, No. 4D15-4003, 2017 Fla. App. LEXIS 765 (Fla. Ct. App. Jan. 25, 2017).

Posted January 25, 2017

Tract Properly Classified as Residential. The plaintiff bought land that the planned to develop into a residential subdivision. The land had been zoned “agricultural” at the time of the purchase, but was rezoned as “residential” three years after the purchase. About that same time, the plaintiff agreed to various restrictive covenants on the property, one of which barred its development from being used solely for agricultural purposes. When the plaintiff was not able to sell the tract in lots for development, he began using it for agricultural purposes, and the defendant (local town) sued to enforce the restrictive covenant. The tract was still assessed as “agricultural” for tax purposes until 2013 even though it was zoned “residential.” The tax classification was changed for 2014 as the result of a court order which resulted in a higher assessed value of the tract for property tax purposes. The plaintiff challenged the change in the assessment, but the Board of Review upheld it and the trial court upheld the Board’s decision. On further appeal, the appellate court affirmed. The appellate court noted that the plaintiff did not farm the land in 2014 and said he was only maintaining ground cover. There was no assertion made that “maintaining ground cover amounted to an “agricultural use” under the applicable statute, guidelines and rules. Thoma, et al. v. Village of Slinger, No. 2015AP1970, 2017 Wisc. App. LEXIS 24 (Jan. 18, 2017).

Posted January 14, 2017

Company Has Right of Eminent Domain to Build Pipeline. The plaintiff, an independent oil and natural gas company, sought to build a carbon dioxide pipeline from Louisiana to southeast Texas and declared itself a “common carrier” via a Railroad Commission form. A “common carrier” has the power of eminent domain. Under the state (TX) law, a common carrier is on that “owns, operates, or manages, wholly or partially, pipelines for the transportation of carbon dioxide…to or for the public for hire…”. The trial court ruled for the plaintiff on the basis of testimony that the pipeline would be available for public use once operational. On appeal, the appellate court affirmed. On further review, the Texas Supreme Court reversed on the basis that the Constitutional protection against having private property taken for public use couldn’t be so easily eliminated by checking a box on a form. Instead, the Court determined that there had to be a “reasonable probability” that the pipeline will at some point serve the public by transporting gas for customers who will either retain ownership of their gas or sell it to parties other than the carrier.” The Court determined that the plaintiff had not met that standard and remanded the case to the trial court to decide the case based on the standard the Court established. On the remand, the plaintiff showed that it was the only CO2 pipeline in the area and that the pipeline was near numerous refineries and that it was already carrying product for affiliated and non-affiliated companies. The trial court held that the plaintiff was a common carrier and the appellate court reversed. The appellate court determined that when the plaintiff intended to build the pipeline there was not a clear reasonable probability that the plaintiff intended to have the pipeline be available for public use and, therefore, serve the public. The plaintiff appealed, and the Texas Supreme Court reversed the appellate court. The Court determined that the plaintiff established by a “reasonable probability” that there was a “reasonable probability” that the pipeline will serve the public. The Court based its opinion on evidence showing the plaintiff’s pre-construction intent and post-construction contracts and the lack of other existing pipelines in the area. Thus, the plaintiff had the power of eminent domain under TX law. Danbury Green Pipeline, LLC v. Texas Rice Land Partners, Ltd., No. 15-0225, 2017 Tex. LEXIS 1 (Tex. Sup. Ct. Jan. 6, 2017).

Posted January 14, 2017

Right of First Refusal Did Not Violate Rule Against Perpetuities. The plaintiff bought some real estate from a married couple in 1986. The purchase contract contained a right of refusal stating that if the defendants offered to sell the land adjoining the land the plaintiffs purchased, the plaintiff would be offered a right to buy the land at a price and on terms that the parties mutually agreed upon. The adjoining land contained the couple’s home. The right of refusal was to lapse if the parties could not agree on purchase terms. The purchase contract was also “binding upon the heirs, legal representatives, and assigns of the parties hereto.” The husband-seller died in 2013 and his surviving wife sought to sell the adjoining tract later that same year. As a result, her lawyer sent a letter to the plaintiff offering to sell it to him for $289,000. The plaintiff did not respond to the offer, and the surviving wife listed the tract with a real estate company for $295,000. The plaintiff did not make an offer on the property. The tract did not sell and was taken off of the market. The surviving wife then sold 64 of the 73 acres of the adjoining tract (not including the house) to her daughter and a third party for $91,125. Upon learning of the sale, the plaintiff sued to enforce the right of refusal and to have the property transferred to himself. The surviving wife, her daughter and the third party motioned for summary judgment. The trial court determined that the right of refusal violated the rule against perpetuities, but did not violated the Statute of Frauds because the adjoining tract could be identified. On appeal, the court reversed on the perpetuities issue, finding that the right of refusal was personal right to the plaintiff that expired on his death. In addition, the court determined that the contract language making the contract binding on the “heirs, legal representatives and assigns” made the contract binding on the seller’s heirs, legal representatives and assigns as long as the plaintiff was living. In addition, the right of refusal was not voided by the plaintiff’s failure to act on the surviving wife’s first offer of the property to the plaintiff. There had not yet been an offer from anyone else for the property at the time it was offered to the plaintiff. Thus, the right of refusal had not been triggered. However, the appellate court upheld the trial court’s determination that the contract satisfied the Statute of Frauds. The contract was in writing, the material terms were stated with reasonable certainty and the adjoining tract could be identified. The court denied the summary judgement motion. Trear v. Chamberlain, et al., No. 115,819, 2017 Kan. App. LEXIS 56 (Kan. Ct. App. Jan. 13, 2017).

Posted January 4, 2017

No Partition In-Kind For Farmland. The parties, brother and sister, owned two parcels of farmland with each of them owning an undivided one-half interest in each tract. They received complete ownership in the tracts upon the last of their parents to die. Tract A contained 315 acres with 157 of those acres tillable, and had been the parents homestead. The brother had farmed Tract A for over 40 years and a portion of it continued to be leased to the brother. Tract A contained 5 grain bins, three of which the brother put up. The bins were valued at $59,000 and one expert appraiser valued Tract A at $929,000 and the other expert appraiser valued Tract A at $778,000. Tract B contained 163 acres, 110 of which were tillable and had some developmental potential. The expert appraisers valued the tracts at $1,200,000 and $620,000 respectively. The brother sought a partition and sale of the tracts and the sister sought a partition in-kind, seeking to retain ownership of Tract A and having her brother own Tract B with an equalization payment. The trial court determined that the sister had not established that a partition in-kind would be equitable and practical and that such a partition would involve "too much guesswork" and dismissed the sister's proposal that she retain Tract A coupled with an equalization payment to her brother of $75,000. The trial court held that the Tracts should be partitioned by sale via public auction unless the parties agreed otherwise. The sister appealed, and the appellate court reversed. The court noted that any sale of Tract A would trigger approximately $150,000 of capital gain tax if it were to be sold, but Tract B would not trigger capital gain tax due to its high basis. The court determined that it would not be equitable to divide Tract A due to the need to construct fencing and because livestock would not have a water source. Thus, the court held that the sister had met her burden to establish that an in-kind partition would be equitable if she retained Tract A, her brother retained Tract B and she paid him a $75,000 "equalization payment believing that this resulted in each party retaining one-half of the farmland value. A dissenting judge pointed out that the two properties, according to the expert appraisers, had a difference in value of $580,000 and that a $75,000 equalization payment was nowhere close to evening out value. Accordingly, the dissent would have affirmed the trial court that a sale and split of the proceeds was the only equitable result for the parties. On further review the Iowa Supreme Court reversed. The Court noted that Iowa law favored partition by sale (which actually is an incorrect way to state the concept– the land is sold in its entirety and then the proceeds are split between the parties at issue. There is no such thing as “partition” by sale. Thus, Iowa law, in partition actions, favors sale of the land and a splitting of the proceeds of sale rather than an in-kind partition of the land. Any party objecting to a sale of the land in a partition action bears the burden to establish why a sale should not occur by showing that it would be equitable and practicable to partition the property in-kind. The Court noted that a partition in kind is not allowed when the partition would cause a drop in the aggregate value of the properties or a partition could not take place without a loss in value and wouldn’t be in the best interest of all of the parties involved. The Court determined that the sister’s proposal was impractical and inequitable. The brother had claimed that separating the tracts would cause a drop in the value of the pasture ground and the sister had failed to overcome that claim. The Court also rejected the cash equalization payment as inequitable. Newhall v. Roll, No. 14-1622, 2016 Iowa Sup. LEXIS 113 (Iowa Sup. Ct. Dec. 23, 2016), vacating, 872 N.W.2d 199 (Iowa Ct. App. 2015).

Posted December 6, 2016

Separate Property Tax Assessment for Saltwater Disposal Wells. At issue in this case was whether a saltwater disposal well can be assessed and taxed separately from and in addition to the land on which the well is located. At trial, the court held that they could not because doing so would amount to double taxation that violated the Texas Constitution. Accordingly, the trial court granted summary judgment to the landowner. On further review, the appellate court reversed, reasoning that the bar on double taxation applies to some taxpayers rather than having application to taxing the same property twice. The appellate court also noted that existing Texas caselaw and statutes allow separate assessment of saltwater wells from the land on which they are drilled on the basis that such assessments do not violate the equal and uniform provision of the Texas Constitution. Parker County Appraisal District v. Bosque Disposal Systems, LLC et al., No. 02-15-00343-CV, 2016 Tex. App. LEXIS 12780 (Tex. Ct. App. Dec.1, 2016).

Posted November 26, 2016

Special Real Property Ag Valuation Inapplicable. The county assessed real estate tax on two properties that the plaintiff owned. The tracts total approximately 40 acres with eight of the acres leased to a tenant for hay production and two of the acres leased for the raising of apples. The plaintiff also owned other properties adjacent to the two tracts at issue. The tracts are owned by the plaintiff’s single-member LLC. The LLC submitted an application for the two tracts to be classified under the state (MN) Green Acres statute (Minn. Stat. §273.111) which would tax the properties at a lower rate applicable to agricultural properties that are owned by individuals. The county denied the application and the state tax court affirmed on the basis that the tracts were not owned individually, but by a single-member LLC. The plaintiff appealed and the MN Supreme Court affirmed. The court noted that the statute applies to parcels owned by individuals except for a family farm entity or authorized farm entity or an entity where a majority of the ownership interests are held by related persons (or at least one of the owners resides on the tract or actively operates the land. The statute also can potentially apply to corporations that derive 80 percent or more of their gross receipts from the wholesale or retail sale of horticultural or nursery stock. The court held that the phrase “owned by individuals” did not encompass tracts owned by a single-member LLC, but was limited to tracts owned by a “natural person” or the entities specifically listed in the statute. Further, the court reasoned, because MN law only allows a disregarded entity status only with respect to specific sections of the MN Code which do not include the Green Acres statute. Because the plaintiff did not live on the subject tracts, the Green Acres statutory valuation did not apply. Strib IV, LLC v. Hennepin County, No. A16-0423, 2016 Minn. LEXIS 714 (Minn. Sup. Ct. Nov. 9, 2016).

Posted November 12, 2016

No Agricultural Use Classification for Tract. The taxpayer owned a tract of land in Colorado that had been previously farmed and classified as “agricultural use” for tax purposes. But, for the tax year at issue, 2014, the tract was denied “agricultural use” classification. The tract had not been cropped for a number of prior years before 2014. Under CO law, a tract must be used for the prior two years preceding the valuation year for an agricultural purpose or be in the process of being restored through conservation practices. However, the taxpayer did not provide any evidence that satisfied either of those requirements. The taxpayer testified that for the three years preceding 2014 the tract was left fallow to allow the tract to qualify for organic certification. However, the testimony of the tract’s supervisor showed that the land need not remain fallow to be certified for the raising of organic crops, and that most tracts that are certified as organic do raise some crops. The Board of Assessment Appeals denied the agricultural use classification based on the evidence and testimony. Maltby v. Arapahoe County Board of Commissioners, No. 68907 (Bd. Assess. App. Nov. 10, 2016).

Posted October 5, 2016

In-Kind Partition of Farmland Upheld. Three siblings inherited approximately 300 acres of farmland as tenants in common when their father died. The land was divided into several parcels and two of the siblings brought partition actions seeking to have the properties sold and the proceeds divided. The other sibling (the defendant) wanted an in-kind division with respect to her share of about 79 acres and the homestead. The trial court ordered the entire property sold with the proceeds divided equally. The defendant appealed. An appraiser had testified at trial that if the property were sold at auction he would recommend selling it in separate parcels to bring a higher total selling price. The appraiser also testified that the tract that the defendant sought would be worth approximately one-third of the total value of the 300-acre tract. He also testified that an in-kind division would be fair and equitable. Another appraiser testified that it would be better to sell the entire tract together, but still another appraiser testified that more money could be realized on sale if separate tracts were sold. The appellate court noted that the trial court had concluded that the defendant had failed to prove that the division of the properties in kind was equitable and practicable based on the testimony of two of the appraisers. But, the appellate court disagreed, noting that an appraisal is much more certain than speculation and that, in this case, the appraiser’s opinion was well supported. Accordingly, the court held that the defendant had proved that the division of the property was equitable and practicable. The court remanded the case for an in-kind partition of the property that the defendant requested, and for partition by sale of the balance with the proceeds split by the other siblings. Wihlm v. Campbell, No. 15-0011, 2016 Iowa App. LEXIS 943 (Iowa Ct. App. Sept. 14, 2016).

Posted September 27, 2016

Upon Death, Ownership Rights to Minerals Pass Immediately to Descendants. The plaintiffs, a married couple, owned surface rights and part of the mineral rights to land located in western Kansas. They filed a quiet title action claiming that the mineral rights owned by others had lapsed for non-use. Pursuant to the Kansas mineral lapse statute, they published notice of the potential lapse in a local newspaper and attached the notice to their petition. The petition named about 20 people believed to have a claim to the mineral rights. After publication of the notice many people filed claims to the mineral rights. The trial court was requested to hold a hearing to sort out the ownership issue, and several claimants (the defendants) filed answers to the quiet title suit, reasserting that they owned the mineral rights at issue. The plaintiffs moved for summary judgment on the basis that the defendants provided no proof of ownership due to a lack of a judicial decree of descent or a probate proceeding. The defendants claimed that the mineral interests passed directly from the prior owners to them under intestacy which did not require a judicial determination of their rights. The trial court determined that the defendants' claims were valid and that they could file a claim of ownership which would then require the court to determine ownership via a quiet title action. That finding was upheld on appeal. The owner of an unused mineral right is simply one who has acquired the right to possess, use and control the mineral interests at issue. Thus, when the ancestors died intestate, their ownership rights passed immediately to the defendants and gave them possession and use of the mineral rights making them owners capable of filing a valid claim and preventing their interests from lapsing. Nickerson v. Bell, et al., No. 114,507 (Kan. Ct. App. Sept. 16, 2016).

Posted September 11, 2016

Evidence Lacking To Support Boundary By Acquiescence. The plaintiffs, a married couple with a long history of court litigation in Iowa, sued a family member (the defendant) claiming that the defendant had acquiesced to the location of a boundary line. The trial court dismissed the petition for lack of evidence. On appeal, the court affirmed, noting that the trial court did not err in finding a lack of evidence that the parties mutually recognized a marked boundary for 10 years. There was no exclusive maintenance of the disputed area, and no clear evidence that a partial fence had been treated as a boundary for 10 years. Baculis v. Baculis, No. 15-1873, 2016 Iowa App. LEXIS 926 (Iowa Ct. App. Aug. 31, 2016).

Posted August 20, 2016

Farm Tenant Entitled to Damages From Landlord’s Conduct. Under Iowa law (Iowa Code §562.5A), a farm tenant is entitled to “aboveground parts of the plant” unless a written lease specifies otherwise. In this case, the prior owner of the leased ground sold it without giving proper statutory notice of lease termination. Thus, the oral cash lease renewed on the same terms and conditions without being impacted by the sale. After the defendant (the farm tenant) harvested the corn crop, the new landlord (the plaintiff) entered the leased premises to chisel-plow the ground in preparation for spring planting. The defendant had entered into an agreement with a third party to bale the stalks for $10/bale after the defendant harvested the corn crop. The defendant believed that he could get somewhere between $25 and $40 dollars/bale. However, the plaintiff entered the ground and chisel-plowed the cornstalks before they could be baled. The defendant sued for damages based on being able to obtain three bales per acre at a net return of $22.50/bale on 84 acres for a total damage amount of $5,670. The trial court ruled for the plaintiff, completely ignoring Iowa Code §562.5A. On appeal of that decision, the appellate court reversed for a determination of damages. Slach v. Heick, 864 N.W. 2d 553 (Iowa Ct. App. 2015). On the damage issue, the defendant claimed that he only plowed 64 acres, and the trial court agreed based on the testimony that showed that the defendant left a border unplowed. On appeal, the court affirmed. The appellate court noted that the defendant presented a conservation plan and maps that showed the need to retain an unplowed border area because the defendant was removing trees and fences. The defendant also testified that the plaintiff could have bailed the unplowed area, but chose not to. That testimony was not challenged. The court determined that, based on the evidence, the trial court decision awarding damages to the plaintiff based on 64 acres of plowing should be affirmed. Slach v. Heick, No. 15-1460, 2016 Iowa App. LEXIS 831 (Iowa Ct. App. Aug. 17, 2016).

Boundary by Acquiescence Established. The parties are neighbors that own adjoining tracts. A boundary dispute arose and the trial court determined that the defendants had acquired a part of the plaintiff’s property by acquiescence. The trial court quieted title to the disputed portion of the tract in the defendants. On appeal, the court noted that under state (IA) law (Iowa Code §650.14) a boundary line contrary to that stated in the tract’s legal description can be established if it is determined that the boundaries and corners were acquiesced to by both parties for at least 10 years. Acquiescence requires no affirmative claim of right and can be unintentional, and is largely based on the facts of the particular situation. It can even be inferred by silence or inaction of one party who knows where the true boundary to the property is, knows of the other party’s conduct and doesn’t dispute it for the statutory timeframe. Here, the plaintiff bought her tract in 1972 and the defendants bought their adjoining tract in 1993. In 1999, the defendants had vinyl fencing installed. In 2012, the county highway next to the tracts was repaved and the plaintiff conveyed her tract into a trust. The plaintiff requested a survey, and the survey showed that the defendants had built their fence and driveway on the plaintiff’s property. The plaintiff made an offer to the defendants to buy the disputed tract and the defendants declined, asserting ownership. The plaintiff sued and the defendants counterclaimed. Testimony at trial revealed that the parties had often discussed the boundary between the tracts, that the plaintiff knew the true location of the boundary and told that to the defendant and that the defendants continued to mow the disputed area without the plaintiff doing anything about it, even after the fencing and draining tile was installed. The appellate court affirmed the trial court’s determination that the plaintiff had acquiesced to the defendants’ conduct and that title to the disputed tract should rest in the defendants. Albert v. Conger, No. 15-1638, 2016 Iowa App. LEXIS 840 (Iowa Ct. App. Aug. 17, 2016).

Posted August 8, 2016

Presence of Crops Does Not Establish Possession of the Land. Almost 2,000 acres of farmland was leased to a tenant. The tenant subleased the property via multiple agreements to the plaintiff for the 2011 crop season or “for the year 2011.” The plaintiff did not reside on the leased premises, and planted winter wheat on the tract in the fall of 2011. In April of 2012, the tenant subleased the property to the defendant. During preparation for planting, the defendant determined that about 10 percent of the property contained winter wheat that was not maintained or fertilized. The defendant went ahead and fertilized the wheat and later harvested a small amount. The defendant informed the Farm Service Agency that he was the “operator” of the leased tract and that he had no knowledge of the sublease involving the plaintiff. In the spring of 2015, the plaintiff sued the defendant for conversion, civil theft, and unjust enrichment. The defendant moved for summary judgment and the trial court granted the motion. On further review, the appellate court affirmed. The court upheld the trial court’s determination that the plaintiff was not a holdover tenant because he had not remained in possession of the property after his tenancy expired at the end of 2011. Thus, the tenant only held a tenancy at sufferance. The court noted that the presence on the land of unharvested winter wheat did not give the tenant the power to hold the property or exercise dominion over it. Instead, the court held that growing crops are part of the land, and loss of possession meant loss of title to the crops. The court also determined that a tenancy at will did not exist because the lease had a fixed ending date. The court also held that the facts did not support a promissory estoppel argument. Raden v. Hess, No. A16-0169, 2016 Minn. App. Unpub. LEXIS 772 (Minn. Ct. App. Aug. 8, 2016).

Wood Chipping and Grinding Activity Is Not “Agricultural.” The plaintiff developed a process of grinding and chipping stumps, trees and wood waste into shreds that could be composted and turned into a usable and valuable agricultural commodity that could be used for landscaping and fertilizer. The defendant required the plaintiff barred the plaintiff’s activities absent a special permit. The plaintiff claimed that the permit requirement impermissibly interfered with agricultural activities protected by state (MA) law and the defendant’s zoning laws. The court upheld the permit requirement on the basis that the plaintiff’s activity was not “agricultural” because the plaintiff’s production process was not agricultural and was not incidental to any other agricultural or farming use. Cotton Tree Service v. Zoning Board of Appeals of Westhampton, No. 15-P-1441, 2016 Mass. App. Unpub. LEXIS 791 (Mass. Ct. App. Aug. 5, 2016).

Elements of Adverse Possession Established. A tract of farmland was only accessible by vehicle via a narrow private gravel road over an adjacent tract of land that the defendant’s owned. The defendants farmed the disputed tract for decades until learning of a third party’s claim of ownership. The plaintiffs filed a quiet title action to quiet title by adverse possession. The defendants maintained a levy on the tract to protect the field and occasionally granted permission for others to hunt on the property. The court quieted title to the tract in the plaintiffs via adverse possession on the basis of their use of about 12 acres of unfarmed wooded land that was part of the larger tract. The court noted that the actual possession element of adverse possession was less strict when undeveloped, wild land was involved and that usage sufficed for possession. The plaintiffs’ working of the land as their own also satisfied the “open and notorious” requirement of adverse possession. In addition, neighbors testified that they believed that the plaintiffs owned the property. The court also determined that the plaintiffs had not received permission to farm the disputed tract. As such, the “hostility” requirement of adverse possession was satisfied. Thus, the court concluded that the plaintiffs’ possession the property in an actual, open and notorious and hostile manner. Tiemann v. Nunn, NO. ED102920, 2016 Mo. App. LEXIS 744 (Mo. Ct. App. Aug. 2, 2016).

Posted July 4, 2016

No County or Public Road or Right-of-Way Easement In Existence. The parties own adjacent properties and a dispute arose concerning the existence of a county road, public road or right-of-way easement over the plaintiff’s tract. The trial court determined that a public road, county road and right-of-way easement existed. On review, the appellate court reversed. The appellate court determined that a county road could only be established by a formal act of the fiscal court and that had not happened. The appellate court also believed that the evidence indicated a clear intent to by the plaintiff (or predecessors in title) to abandon their interest in the alleged passway and dedicate it to public use. As for a right-of-way easement, the court agreed that such an easement had existed over the plaintiff’s property, but that the defendant had, based on the evidence, abandoned the easement by virtue of six years of non-use which was coupled with evidence of an intent to abandon – the use of an alternate route. Becraft v. Ellington, No. 2014-CA-001214-MR, 2016 Ky. App. Unpub. LEXIS 442 (Ky. Ct. App. Jul. 1, 2016).

Posted June 13, 2016

Entire Leased Tract To Be Classified as “Agricultural” or “Agricultural Use Waste.” At issue was the proper tax classification of a three-acre parcel of land that was part of a larger 16-acre tract. The full tract was subject to a farm lease and the majority of the entire parcel was used for ag purposes. However, the county classified the three-acres as “mixed-use” vacant property. Before the Board of Tax Appeals (BOTA), the BOTA determined that a 2013 directive and memorandum by the Division of Property Valuation mirrored Kan. Stat. Ann. §79-1476 and required a county appraiser to assume that non-productive areas of an “operating unit” were devoted to the production of crops and animals. Such a presumption, BOTA noted, could only be overcome with evidence that the area at issue is actively and routinely used for recreational, commercial or residential purposes. Here, there was no evidence that the three-acre tract were used for any purpose other than agricultural purposes. Thus, the BOTA concluded that the entire tract should be classified as “agricultural” and that the three-acre portion should be classified as “agricultural use waste” for real property tax purposes. In re Equalization Appeal of Regnier Family Limited Partnership II, No. 2015-2535-EQ, KS. Bd. Of Tax Appeals (Mar. 11, 2016).

Proper Valuation of New Oil Leases At Issue. New oil leases started production in the last half of 2013. For 2014 appraisal purposes, the county asserted that the 2014 Kansas Oil and Gas Guide should be followed by annualizing the 2013 production, applying an assumed 30 percent decline rate and a 40 percent discount rate in accordance with Kan. Stat. Ann. §79-331(b). The taxpayer requesed that the decline rate be set at the 50% maximum and that flush production (the initial "rush" of production from a producing well after it has come on line) be disregarded.  A small-claims hearing officer agreed. The county admitted that its original appraised values were not the result of properly appraising the subject properties, but rather were the result of using the taxpayer's data to set values in an attempt to discourage the taxpayer from appealing while the county appraier's office had a vacancy.  The taxpayer agreed with the small-claims hearing officer's decisision, but the Kansas Board of Tax Appeals (BOTA) determined that In re Tax Appeals of EOG, 263 P.3d 1207 (Kan. Ct. App. 2011) was instructive on the issue insomuch as it established how oil leases are to be appraised when only a few months of flush production exists before the appraisal date. Under that approach, all production before April 1, 2014, on the leases was to be calculated and a 40 percent discount set by Kan. Stat. Ann. §79-331 was to be applied to income and expenses. The result was that the decline rate exceeded 30 percent and the assumed decline rate of 30 percent was not to be utilized. The BOTA noted that the decline rate was probably over 50 percent, thus necessitating the present worth factor be based on the decline rate maximum of 50 percent. In re Protests of Trego County Appraiser, et al., No. 2015-5988-PR, KS. Bd. of Tax Appeals (Mar. 25, 2016).

Posted May 23, 2016

City’s Anti-Fracking Ordinance Struck Down. The plaintiff enacted a five-year moratorium on hydraulic fracturing and waste disposal within the city limits. However, the state (CO) had a detailed regulatory system as established by the Colorado Oil and Gas Conservation Commission. Such regulatory system, the court reasoned, was developed to further CO’s interest in the efficient and responsible development of oil and gas resources. The court reasoned that while CO cities had home rule powers that gave them sovereign authority over certain matters of local concern, the plaintiff’s moratorium involved a matter of mixed state and local concern and was, therefore, subject to preemption by state law by operational conflict – the impeding of the state’s interest in the efficient and responsible development of oil and gas resources. Accordingly, the ordinance was invalid and unenforceable because it rendered compliance with state rules and regulations superfluous for a lengthy period of time. City of Fort Collins v. Colorado Oil and Gas Association, No. 15SC668, 2016 Colo. LEXIS 443 (Colo. Sup. Ct. May 2, 2016). In another case decided the same day, the court also invalidated a similar city ban on fracking under the same rationale. City of Longmont v. Colorado Oil and Gas Association, No. 15SC667, 2016 Colo. LEXIS 442 (Colo. Sup. Ct., May 2, 2016).

Written Farm Lease Construed. In early 2007, the parties entered into a written cash lease for 85 acres of farmland that the defendant owned. The lease called for an annual cash rent of $17,680 ($208/acre), and specified that the tenant (the plaintiff) was to (among other inputs) acquire lime and trace minerals for use on the farmland and that the landlord (the defendant city) would reimburse the plaintiff for such expenditures with the cost amortized over seven years and the tenant being reimbursed for the non-amortized cost if the lease were terminated before the end of the seven-year period. The lease also specified that the plaintiff was to farm the land in accordance with good husbandry practices and was not to “remove… or burn any straw, stalks, stubble or similar plant material.” For expenses incurred on the landlord’s behalf (not counting input costs and expenses incurred for the tenant’s behalf), the tenant was to seek the landlord’s prior written consent. The lease stated that it would annually renew on the same terms and conditions unless proper notice to terminate was given (by September 1 to effectively terminate the lease as of the end of the next February under state (IA) law). In February of 2013, the city council held a budget meeting and suggested that the defendant terminate the lease and put the farmland out for bids in order to get a higher rent amount. In March of 2013, the city council approved the budget which included terminating the lease. However, it wasn’t until August 19, 2013, that the defendant gave the plaintiff notice of termination via certified letter. In December of 2013, the city council discussed the plaintiff’s baling of stalks and that the plaintiff had notified them that lime had been spread in the past. In January of 2014, the plaintiff’s attorney notified the defendant that the plaintiff was owed almost $5,000 for reimbursement of residual value of the lime expense and that the plaintiff was entitled to the value of the crop stover remaining after harvest of the 2013 crop. Effective March 1, 2014, the property was leased to another party. The defendant moved for summary judgment and the trial court determined that the lease had been properly terminated (formal vote of the city council was not necessary), that the plaintiff was not entitled to any reimbursement for expenditures for lime, and that the defendant’s counterclaim for damages for the improper removal of corn stover should be transferred to small claims court. On appeal, the appellate court determined that a city ordinance requiring the city council to make or authorize the making of all contracts did not apply because a lease termination was involved. Thus, the statutory notice of termination could be properly given by the city clerk carrying out the directive of the city council in sending notice of termination. The appellate court reversed on the lime expense reimbursement issue, noting that the lease did not require prior written authorization for input costs such as lime. As for the corn stove, the appellate court held that the lease clearly specified that the plaintiff was not to remove “stalks and stubble” as such items belonged to the defendant. Accordingly, IA Code §562.5A did not apply. That provision allows a tenant to take any part of an aboveground part of a plant associated with a crop unless the parties otherwise agree in writing. Here, the court held, the parties had clearly agreed otherwise. While the plaintiff argued entitlement to the corn stover on the basis that he had been removing it after harvest for several years (equitable estoppel) without complaint because the trial court had not addressed the issue and the appellate court was only reviewing the trial court’s opinion for errors. Hettinger v. City of Strawberry Point, No. 15-0610, 2016 Iowa App. LEXIS 467 (Iowa Ct. App. May 11, 2016).

Posted May 11, 2016

Feeding a Horse Makes the Owner a Farm Tenant Entitled to Statutory Notice of Termination Applicable to Farm Leases. The plaintiffs owned a small acreage with a residence that they leased to the defendants. They leased other portions of the acreage to other parties. The defendants lived in the residence and did not conduct farming activities on the portion of the acreage that they leased along with the house. The defendants had lived in the residence located on the tract for over two decades. The defendants had tried to purchase the property, but the deal went south and in a different lawsuit the court determined that no enforceable contract for sale of the acreage existed. After that litigation ended, the plaintiffs gave the defendants a 30-day notice of termination in accordance with the termination rules for residential tenancies, and then a 3-day notice to quit after the 30-day period expired. That was then followed- up with a forcible entry and detainer action. The defendants filed an answer claiming that they were “farm tenants” entitled to the six-month notice of termination under Iowa Code §562.5 because they grazed a 38-year old horse (which could never be used for agricultural purposes) on the premises. The trial court determined that the grazing of a horse did not constitute a “farm tenancy” and that the plaintiffs had appropriately terminated a tenancy at will. On appeal, in an opinion written by Anuradha Vaitheswaran, the Iowa Court of Appeals reversed. The court noted that the applicable statute (Iowa Code §562.1A(2)) defined “farm tenancy” as “a leasehold interest in land held by a person who produces crops or provides for the care and feeding of livestock on the land, including by grazing or supplying feed to the livestock.” The court also noted that Iowa Code §717.1(4) defined “livestock” as “an animal belonging to the . . . equine . . . species.” The court also claimed that the 2013 change in the farm lease termination statute to make it also applicable to pasture leases along with crop leases supported the defendants’ contention that they were “farmers” because there was no longer an exclusive requirement that the tenant, to be a tenant in a “farm tenancy,” cultivate the leased land. Another statute providing that a tenant leasing less than 40 acres can be terminated on 30-days’ notice was held to not apply because the leased property did not also involve an “animal facility” as that statutory provision required (Iowa Code §562.6), but merely involved a residential tenancy. The court, reversing the trial court’s decision and remanding the case for dismissal of the forcible entry and detainer action, blamed the absurd outcome of the case, where a non-farmer could be deemed to be a farm tenant entitled to the statutory six-months notice of termination, on the “clear legislative language” of the statutory provisions at issue. Unfortunately, the appellate court never bothered to analyze the reason the statutory timeframe for terminating a farm lease differs from that required to terminate a residential lease – to provide sufficient time for a farmer to secure a different tract to rent for crops or livestock. The tenant in the present case had no such concern if the lease were to be terminated. The Iowa legislature clearly never intended the farm lease termination statute to apply to residential parcels where the tenant has a garden and therefore is engaged in “crop production,” or where the tenant keeps a pet that happens to meet the definition of “livestock,” or where the tenant would never be able to file a Schedule F as a farmer, utilize farm income averaging, qualify as a beginning farmer under Iowa law or meet the USDA definition of a “farmer” for USDA purposes. The court never bothered to reason its way through any of these points. Ironically (or maybe not ironically), Judge Vaitheswaran was appointed to the Iowa Court of Appeals by current USDA Secretary Tom Vilsack. Porter v. Harden, No. 15-0683, 2016 Iowa App. LEXIS 478 (Iowa Ct. App. May, 11, 2016).

Posted May 10, 2016

Partial Partition Not Allowed Due to Lack of Possessory Interest. One of the defendants held fee simple ownership in a 255-acre farm which included a house and a garage. In early 2007, he entered into an installment sale contract for the sale of the farm with the other defendants and the plaintiffs. The contract called for $100,000 down and the balance paid in equal installments over 10 years. The contract also specified that the seller retained a life estate in the house and garage and that the buyers would not receive full legal title to the farm until the purchase price was fully paid. The contract also stated that the buyers could not assign their interest without the approval of the seller or lease the farm without the seller’s approval. The contact gave the buyers immediate possession of the farm upon signing, but not the house and the garage. Seven years later, two of the buyers sought a partition of the farm subject to the seller’s life estate. The trial court, however, granted the seller’s (and two of the buyer) motion to dismiss. The other two buyers appealed. The plaintiffs argued that they and the other buyers were all tenants in common with respect to the farm and, thus, had standing to seek a partition. However, the appellate court pointed out that none of the buyers yet had legal title to the farm. While they held equitable title and had the right to possession of the farm, the seller retained a contractual right to regain possession of the farm if the buyers defaulted. Thus allowing a partition, and possible sale, of the property, would not be permissible where the buyers didn’t have legal title to the property. The court also noted that state (IN) law also did not allow a partition action to be brought by remaindermen during the existence of a life estate. In addition, there is no authority allowing a partial partition of the farmland only but not the house and the garage. Also, the court reasoned that partitioning would be contrary to the contract provision barring assignment or sale of the property without the seller’s consent. Marvel v. Althoff, No. 63A05-1512-PL-2167, 2016 Ind. App. Unpub.  LEXIS 525 (Ind. Ct. App. May 6, 2016).

Posted April 28, 2016

Court Selects Route to Landlocked Parcel in Private Condemnation Action. The defendants owned a parcel of agricultural land, a portion of which was cut-off by a river and thereby landlocked. The defendants had grazed cattle on the landlocked parcel, and then later leased it out to others for cattle grazing purposes and recreational hunting. For many years, the defendants and their tenants accessed the property via a route along a tree line at the north side of the adjacent owner’s property. The tenant of the adjacent owner, the plaintiff in this case, planted row crops up to the tree line, but never objected to the use of the path. In 2012, the farm tenant of the adjacent property bought the adjacent property and again planted crops on the access, but this time blocked the defendant from using the path to gain access to their landlocked parcel. The blockage created a problem for the defendants when they wanted to sell the property. The defendants offered the property to the plaintiff, but the plaintiff refused to respond to the offer. The following year the defendants sold the property to a third party, contingent on the defendants obtaining an easement for access to the tract. The plaintiffs refused to grant an easement and the sale was not completed. The defendants then brought a condemnation action pursuant to state (IA) law and the plaintiff responded by filing a motion for declaratory judgment. The parties agreed that the court should select the condemned route out of three that were proposed. The plaintiff favored a route that didn’t interfere with their crops, but needed a grade and drainage work done, and the defendant favored the historic route. The third route was not deemed feasible. The trial court determined that the route not interfering with the plaintiff’s crops was the most feasible route. The defendants appealed. On appeal, the appellate court affirmed. The statute at issue, Iowa Code §6A.4(2), required the condemned public way to be located on or adjacent to a division line and along a line that is the nearest feasible route to an existing public road, or along a route established for a period of 10 years or more by an easement of record or by use by the property owner and the general public. The appellate court determined that the 10-year provision had not been satisfied due to lack of evidence that the general public used the route. The plaintiff’s proposed route, the court determined, ran adjacent to a division line, was nearest to a public road and satisfied the statute. While the cost of construction of the plaintiff’s route was more expensive for the defendant and required grading and needed drainage improvements, it also had the least impact on the plaintiff’s farming practices and would not cause permanent economic loss to the plaintiff as would the defendant’s proposed route. Thus, the appellate court determined that the trial court did not err in selecting the plaintiff’s proposed route and the condemned route. The dissent argued that the plaintiff’s proposed route was not a feasible route that did not provide reasonable access, and that the plaintiff had not met its burden of proof. The dissent pointed out that the review should have been de novo rather than simply a review for errors at law. Middle River Farms, LLC v. Antrim, No. 15-0044, 2016 Iowa App. LEXIS 366 (Iowa Ct. Ap. Apr. 27, 2016).

County Zoning Bars Rezoning of Parcel So As to Protect Farmland. The plaintiffs applied to have their nine-acre tract rezoned from A1 (agricultural) to A-2 (agricultural residential). The plaintiffs wanted to parcel out 1.08 acres that had a house on it from the nine acres and then build a new home on the 7.92 acre-tract. The plaintiffs then planned to sell the 1.08-acre tract to their son. A-1 classification prevented them from building a new residence without tearing the old residence down. The county zoning commission approved the zoning change request. On further review, the defendant (county board of supervisors), pointed out that the intent of the A-2 classification was to split farmable ground from an existing house so that the acres could be kept in production, not allow the subdividing of land in the county. The A-2 classification was not meant to enable more houses to be built. Accordingly, the defendant denied the rezoning application. The trial court held that the defendant did not have the ability to deny the application, but instead needed to ratify a new definition of A-2. Any ambiguity in a zoning ordinance was to be construed in favor of the landowner. On appeal, the appellate court reversed. The appellate court held that the plaintiffs did not have an absolute right to have their property rezoned, which the appellate court believed the trial court had concluded. The appellate court determined that the county zoning commission didn’t need to rewrite the A-2 classification to more clearly carry out its intent, and that the defendant acted properly in denying the rezoning request because rezoning would be contrary to the intent of the zoning ordinance, based on oral statements by members of the defendant as to the purpose of the A-2 provision. Riniker v. Dubuque County Board of Supervisors, No. 15-0926, 2016 Iowa App. LEXIS 407 (Iowa Ct. App. Apr. 27, 2016).

Posted April 17, 2016

Estoppel By Deed Applies to Oil and Gas Leases – No Windfall For Landowners Doing What They Were Already Obligated To Do. The plaintiffs, a married couple, owned a 62-acre tract. They entered into a five-year oil and gas lease with the defendant. At the time of entering into the lease, they believed that they owned all of the oil and gas rights on the entire 62 acres, but their predecessors-in-interest had reserved by deed in 1894 one-half of the oil and gas rights to the property. Under the lease, the landowners were entitled to a bonus payment of $80/acre. However, the defendant conducted a preliminary title search and discovered the extent of the plaintiffs’ ownership of the oil and gas rights before paying the bonus payment. Thus, the bonus payment paid on only half of the 62 acres, but the lease was not amended to reflect the one-half ownership of the plaintiffs. Two years after entering into the lease, the landowners, via a quiet title action, became the owners of the oil and gas rights on the full 62 acres. Three years later, the defendant exercised its option to extend the lease for an additional term and tendered a bonus payment of $70/acre for the full 62 acres. The plaintiffs refused the renewal payment and did not cash the bonus payment. The plaintiffs then sought a court declaration that the lease only applied to the oil and gas on the 31 acres that they actually owned at the time of original lease execution and, therefore, the remaining 31 acres were unleased and could be leased to another party for the then higher prevailing market rate. They also claimed that the defendant’s revised bonus payment of $80 on 31 acres of the property amounted to a modification of the lease and that the defendant, as a result, could extend the primary term of the lease only as to those 31 acres. The trial court granted summary judgment for the defendant and dismissed the plaintiffs’ motion for declaratory judgment on the basis that the lease covered the entire 62 acres and that the primary term was timely and validly extended. Thus, the lease remained in effect according to its terms. The court focused on the lease language that “[I]f LESSOR owns less than all of the oil and gas rights in the premises, LESSOR shall be entitled to only a share of the rentals and royalties equivalent to the proportion of such oil and gas rights owned by LESSOR.” In addition, under the theory of estoppel by deed, the plaintiffs’ subsequent acquisition of title to the previously-reserved one-half interest in the oil and gas rights to the property passed to the defendant under the terms of the lease, and the plaintiffs’ warranty under the lease estopped them from arguing otherwise. The Superior Court affirmed, and on further review, the PA Supreme Court also affirmed on the basis of the “proportionate reduction” clause in the lease and the plaintiffs’ general warranty of title. PA law, the court noted, barred the plaintiffs’ from denying the lease on the basis that they did not have ownership over the entire property subject to the lease at the time the lease was executed but which they subsequently acquired ownership of. The general warranty of title applied to the full 62 acres. That meant that the plaintiffs were obligated to quiet title in the 31 acres they did not own, and the “proportionate reduction” clause meant that the defendant did not have to make full payment until such time as the plaintiffs acquired full ownership. Once the plaintiffs perfected ownership to the oil and gas on the remaining 31 acres, the lease became vested in its entirety as to the defendant and the plaintiffs could not deny the validity of the initial conveyance. Shedden v. Anandarko E. & P. Co., L.P. No. 103 MAP 2014, 2016 Pa. LEXIS 689 (Pa. Sup. Ct. Mar. 29, 2016).

Posted April 6, 2016

Elements to Establish Equitable Mortgage Not Established As a Matter of Law. The plaintiffs owned and operated a family farm. However, the farm ran into financial problems, and two of the family members forged a creditor’s endorsement on checks made jointly payable to the farm and the creditor and then deposited the checks in the farm account. In mid-2010, the creditor began foreclosure proceedings against the farm, and the plaintiffs entered into a consulting agreement with an ag services firm that provided for advice on reorganization and debt restructuring from a third party. The agreement also required that the plaintiffs buy their crop inputs from the ag services firm, and specified that the plaintiff would pay the third party two percent of the gross loan amount or amount of credit applied for/restructured, amount/reduced, amount arranged for, obtained by or obtained from the results of the third party. The agreement also stated that any unpaid amount would attach as a first secured party to loans that the plaintiff obtained and the plaintiff’s property used to receive the loan(s) or restructuring. A decree of foreclosure was entered in early 2011, with the creditor sending the plaintiff a payoff schedule by mail. The creditor had become aware of the forgeries and misappropriated funds, and the payoff schedule incorporated an amount compensating the creditor for the forgery loss. A few days later, the plaintiffs entered into a repurchase agreement providing that they would sell their farm to the owner of the ag services business in exchange settling all debts with the creditor. Under the agreement, the ag services firm got a first secured interest on the farm including crops, crop insurance and all crops intended to be grown in 2011. The plaintiffs could remain on the property as tenants through 2011. The third party sent the plaintiffs an invoice for services, and days later, the plaintiffs executed warranty deeds conveying their property to the buyer’s irrevocable trust for $1.8 million in exchange for settling their debts. The plaintiffs didn’t pay the third party, and in early 2012, the trust sold the farm to a buyer for $3.25 million. The plaintiffs sued the trust and others based on the alleged existence of an equitable mortgage and fraudulent inducement and misrepresentation. The defendants claimed that the plaintiffs had acted with unclean hands – misleading the defendant about the forgeries. The trial court determined that an equitable mortgage existed as a matter of law. On appeal, the appellate court reversed. The court determined that fact issues existed as to whether there was inadequate consideration (a factor indicating the existence of a mortgage). While the plaintiffs retained possession (indication of mortgage), the court determined that factor was also not conclusive by itself. As to the existence of a debtor-creditor relationship, the court determined that one existed, but that it was just one of several factors. While the plaintiffs had the right to repurchase the property (indicating a mortgage), that was another factor in a list of numerous factors. While the defendants claimed that an absolute conveyance was intended, the court determined that was an issue to be determined based on all of the facts and circumstances that could help determine the parties’ intent. On the whole, the appellate court determined that it could not conclude that the plaintiffs had established the existence of an equitable mortgage as a matter of law. The court remanded the case. Brownlee, et al. v. Jamison, et al., No. 14-1862, 2016 Iowa App. LEXIS 300 (Iowa Ct. App. Apr. 6, 2016).

Posted April 2, 2016

Wildlife Rehab Facility Not a Proper Use in Residential Development. The plaintiffs owned just over 10 acres in a residential development. At the time the area was developed, the developer did not seek to change the existing zoning from agriculture to residential. The plaintiff had USDA permits to engage in wildlife rehab of injured animals and operated such a business on about one-third of the acreage where she has cages in a former pool house for raccoons, squirrels, bats, and other small animals. When the plaintiff applied to the defendant for a building permit to build an outdoor cage, the neighbors complained and the county planning and development commission ruled that a wildlife rehabilitation facility was an improper use. On appeal the defendant affirmed, and no further action was taken. Later, the plaintiffs were cited for code violations for the continued use of a portion of their property as a wildlife rehabilitation facility. The plaintiff then filed for a conditional use permit (CUP) on the basis that their facility was the same thing as a veterinary hospital which is an allowable conditional use. The CUP was denied and, on appeal, the trial court upheld the denial. On further review, the appellate court affirmed. The court noted that the prior action involved whether a wildlife rehabilitation facility was an acceptable use and is was determined not to be, and the plaintiffs did not appeal that decision. As to whether the denial of the CUP for the operation of the facility as a veterinary hospital was arbitrary and capricious, the court held that it was not. The plaintiffs were not denied a fair hearing and the Board’s decision was supported by substantial evidence. The hearing lasted five hours and many witnesses testified. In addition, the plaintiffs’ proposed use was neither essential nor desirable to the community. Indeed, 25 of the 28 property owners in the subdivision had signed a nuisance petition. There was substantial evidence to support the Board’s decision. Williams v. Oldham County Board of Adjustment & Appeals, No. 2013-CA-000999-MR, 2016 Ky. App. Unpub. LEXIS 212 (Ky. Ct. App. Mar. 18, 2016).

Posted April 1, 2016

Out-Of-State, Residency-Based Homestead For Spouse Voids Homestead For Other Spouse. The plaintiff and her husband were married in 1944 until his death in 2007. They jointly owned two properties, one in Florida and the other in Indiana until 1986 when she transferred her interest in the Indiana property to him and he transferred his interest in the Florida property to her. Thus, from 1986 on, the husband owned the Indiana property solely in his name and the plaintiff owned the Florida property in her name. The husband received a homestead exemption for the Indiana property and the wife received an exemption for the Florida property. In 2006, the county appraiser for the Florida property removed the plaintiff’s exemption for tax years 1996-2005 based on a state (FL) Constitutional provision that bars more than one exemption being claimed by a family unit. The husband cancelled his exemption in 2006 and the FL exemption was restored in 2007. The removal of the exemption on the FL property caused the appraiser to reset the value of the FL property to market value. The plaintiff sued to recover the additional taxes paid for 2002-2005 and a revaluation for 2007 forward. The plaintiff also challenged the constitutional provision as unconstitutional. The trial court granted the appraiser’s motion for summary judgment. The appellate court upheld the trial court’s determination based on the plain language of the provision that only one exemption could be claimed regardless of location. Endsley v. Broward County, No. 4D14-3997, 2016 Fla. App. LEXIS 4528 (Fla. Ct. App. Mar. 23, 2016).


Production and Storage Aspects of Oil and Gas Lease Not Severable. The successors to the plaintiff, married landowners, entered into an oil and gas lease with the defendant on their 250-acre property. Under the terms of the lease, the defendant acquired the right to produce oil and gas and “to inject gas for storage or repressuring in the substrata and to remove same there from by pumping or otherwise.” The lease was entered into in 1966. In 2013, the plaintiffs sought a trial court declaration that all production-related rights under the lease were terminated due to lack of production and that the production rights and storage rights were severable under the terms of the lease. The defendant claimed that the lease did not sever production rights from the storage rights, and the court agreed. The court determined that the lease was still in effect because the defendant continued to pay the storage rents. On appeal, the court affirmed. The court noted that the lease terms clearly provided that the lease would continue in effect as long as the land was operated for exploration or production of gas or oil, or it was found in paying quantities, or it was used for the storage of gas or the protection of gas storage. The court noted that language was clearly written in the disjunctive and there was no intent to sever production from storage. Also, the court noted that the lease allowed the defendant to be the “sole judge” with respect to whether the leased premises were being used for gas storage or for the protection of stored gas. Thus, a related impact of the court’s ruling was that a dual-purpose lease is a valid and enforceable lease. Loughman v. Equitable Gas Co., LLC, No. 155 WDA 2015, 2016 Pa. Super. LEXIS 183 (Penn. Sup. Ct. Mar. 22, 2016).


Township Ordered To Issue Permits For Barn and Other Structures. The defendants (a married couple) own 40 acres and built a greenhouse, gazebo and hay barn without first obtaining zoning permits from the plaintiff. The plaintiff claimed that the structures were not built in compliance with the zoning ordinance and requested a trial court order that the structures be removed. The trial court refused to issue the order because the ordinance was invalid and unenforceable because it hadn't been filed with the county clerk. On appeal, however, the appellate court noted that state law proclaimed that any structure that is built before a zoning permit is obtained is a nuisance per se and the court is to order the nuisance abated. While the appellate court determined that the structures were a nuisance per se, the court noted that it had the equitable power to eliminate the nuisance. The court determined that it could either order the structures razed or the necessary permits issued. The court ordered the permits issued. The court did so primarily because the plaintiffs had tried to get permits for the greenhouse and gazebo but were refused because the fine levied of $3,100 had not been paid. The court held that the plaintiff's position of paying the fine which it did not have the authority to impose or destroy the buildings was inequitable and in bad faith. Thus, the appellate court affirmed the trial court and ordered the permits to be issued for the standard fee. The plaintiff was also ordered to pay the defendants' attorney fees because of their conduct and the fact that the evidence supported the conclusion that the plaintiff brought the present action for the purpose of harassing and injuring the defendants after they failed to pay the illegally imposed fee. Claybanks Township v. Feorene, No. 322043, 2015 Mich. App. LEXIS 2258 (Mich. Ct. App. Dec. 8, 2015).


No Reversion To Adjacent Landowners When Railroad Initially Granted Fee Simple. The plaintiffs owned land abutting a railroad corridor. A railroad operated a 12.43 mile long line in Florida from 1910 through 1941. Through a series of deed transfers, the abutting owners transferred their interests in the northern part of the corridor via deeds. The railroad relocated the southern portion of the corridor in 1926-1927 and received deeds pertaining to the relocation. In 2003, the railroad then operating the line, petitioned the Surface Transportation Board (STB) to abandon the entire corridor. Pursuant to the STB's order the railroad granted the right to convert the railroad corridor to a public trail to the Trust for Public Land. The abutting landowners sued claiming that the conversion was a compensable taking of their private property interests in the corridor. The Court of Federal Claims, in 2012, determined that the 1927 deed for the southern portion of the corridor conveyed a fee simple interest to the railroad corridor to the railroad and that the 1910 deeds also did likewise with respect to the northern part of the corridor. As such, the abutting landowners had no compensable property interest that was taken that entitled them to compensation. On appeal, the court affirmed. The court noted that the deed language in all of the deeds clearly conveyed a fee simple interest on its face and contained no reference to an easement. In addition, the court noted that the Florida Supreme Court, on certification, that the railroad's interest in the corridor was not limited because the deeds were executed for valuable consideration and there was no state policy that limited the railroad's interest. Rogers v. United States, No. 2013-5098, 2015 U.S. App. LEXIS 22732 (Fed. Cir. Dec. 28, 2015).


New Rules in South Dakota For Determining Ag Classification of Property For Tax Purposes. The South Dakota legislature has modified the criteria used in determining whether real property is to be classified as “agricultural” for property tax purposes. Under the revised system, agricultural land must satisfy two out of three of the following criteria: (1) generate at least $2,500 of gross income from agricultural activities for at least three of the immediately prior five years that constitutes at least 10 percent of the taxable value of the bare land that is assessed as ag property (not counting improvements) and counting income from both the landlord and tenant under a crop share lease; (2) the property’s principal use is for the raising and harvesting of crops or timber or fruit trees or the raising of livestock, poultry, fish or nursery stock, or bees and apiary products, or horticulture with the intent to make a profit; and (3) the tract at issue contains at least 20 acres of unplatted land or is part of a management unit of at least 80 acres of unplatted land. The revised statute says that the same acreage restrictions apply to platted land (but not land platted as a subdivision, which is in an unincorporated area. Also, a board of county commissioners can increase the minimum acre requirement. S. 3, effective Mar. 10, 2016).


Unclear Will Language and Oral Farm Lease Undermine Adverse Possession Claim. The parents in this case had two children, a son and a daughter. The children were the adverse parties in the case. Before the father’s death in 2000, he farmed with his son on the tract at dispute and they utilized the outbuildings on the tract. Upon the father’s death the farmland passed outright to the surviving spouse, the parties’ mother. Mom died in 2004 with a will that conveyed all of the pasture and tillable ground to the son, the forest/timber land equally to the parties, the rental house to the son and the family house located on the disputed tract to the daughter. The rental house and the family house shared a common driveway and well, and the mother’s will specified that the driveway and well were to be shared equally. Unfortunately, the will language conveying the family house to the daughter simply stated that it was “the family house legally described as follows: Lot Seventeen (17), Block Two (2), in the Village of Giard, Clayton County, Iowa. Lot 17 was the disputed tract. In 2006, the mother’s estate conveyed Lot 17 to the daughter in fee simple. Both parties signed the deed as co-executors of their mother’s estate. The son continued to farm the disputed tract and utilize the outbuildings located on it. In 2012, the sister had the property surveyed and evicted her brother. The son sued to quiet title to the farmable portion of the tract and the outbuildings under a theory of adverse possession, claiming that he had occupied the tillable portion and outbuildings in a manner that was “hostile, actual, open, exclusive and continuous, under claim of right or color of title for at least 10 years.” The trial court agreed and quieted title to the tillable portion of the tract and the associated outbuildings in the son. On appeal, the court reversed. The court determined that the son had actually been using the land permissibly as a farm tenant under an oral lease with his father, and continued after his father died until his sister gave him notice of termination in August of 2012. The court determined that the evidence was insufficient to support the son’s claim of ownership of the farmland since the 1980s based on his rotational grazing and improvements he put on the property, and his ownership of the outbuildings since he was a child. The court also that the son’s claim of ownership based on equitable principles was not pleaded at trial and could not be considered on appeal. The court also noted that when the parties formed an LLC in 2005, they transferred all of the land into the LLC except the disputed tract, and that the son did not list the tract in his schedule of assets in his 2013 dissolution proceeding. The record also showed that the sister paid all of the property tax on the tract since it was conveyed to her in 2006, and he couldn’t have satisfied the 10-year adverse possession requirement in any event. Koether v. Elliott, No. 15-0172, 2016 Iowa App. 220 (Iowa Ct. App. Mar. 9, 2016).


Inadmissible Evidence Fouls Up Basic Trespass Claim. The plaintiff shared a one-half mile farmland boundary with an adjacent owner that was marked by a fence line consisting of trees, grass, shrubs and berry bushes designed to provide erosion control and benefit wildlife. The tenants of the adjacent owner partnered with a large-scale, award winning Iowa farming operation that actually farmed the adjacent land. The vegetation along the fence line was plugging field drain tiles on the adjacent farmland and causing other problems for the farming operation being conducted there. As a result, the farming operation contacted the defendant, a local excavation and dirt work company, to remove the trees and brush and fence remnants from the boundary line. The defendant did the work, clearing about 12 feet of land on each side of the boundary. The defendant assumed that the tenant had obtained the plaintiff’s permission to excavate on the plaintiff’s property, but that was not true. The plaintiff sent the defendant a letter requesting $57,750 as reimbursement for damage to his property and the letter was forwarded to the farming operation which accepted responsibility for the excavation without permission or consent. The farming operation declined to make the requested payment, instead, offering to reestablish the property line, grade the soil and perform “other work required to restore the productivity of the land affected.” The affected land was approximately one-half acre. The plaintiff, who has on prior occasions used the court system to file pleadings for the purposes of intimidation and harassment, has been sanctioned by a court and has also defaulted on promissory notes in other situations, refused the offer and sued for trespass, and the jury returned a verdict of $55,000 for loss of use and enjoyment, $40,000 for trees and shrubs (the cost of purchasing, planting and caring for them), $18,900 for a fence (materials, labor and surveying) and $5,000 for drain tile repair (materials and labor). A claim for lost profits from crop production from 2012 through 2014 caused by failure of field drain tile to work properly was rejected. The defendant appealed. The appellate court noted that the trial court entered evidence that the farming operation had agreed to indemnify the defendant against any judgment entered against the defendant. The defendant’s counsel had objected to that evidence at trial as irrelevant and claimed that the trial court abused its discretion in allowing it as evidence as irrelevant and prejudicial. The appellate court agreed and reversed the trial court’s jury verdict and award, and remanded the case for a new trial. On the issue of prejudice, the court noted that the evidence would tend to influence jurors to render a verdict based on insufficient evidence, and a verdict that would be larger than it otherwise would be if the jurors believed the defendant would be required to pay it. Buhr v. Mayer’s Digging Co., et al., No. 15-0211, 2016 Iowa App. LEXIS 215 (Iowa Ct. App. Mar. 9, 2015).


Oil and Gas Lease Not Void as Against Public Policy for Being Perpetual. This case involved a standard oil and gas lease requiring the producer to begin drilling operations on the leased property within 12 months or pay a delay rental of between $1 and $5 per acre. The specific lease language at issue stated, “This lease shall continue in force and the rights granted hereunder be quietly enjoyed by the Lessee for a term of ten years and so much longer thereafter as oil and gas or their constituents are produced or are capable of being produced on the premises in paying quantities, in the judgment of the Lessee, or as the premises shall be operated by the Lessee in the search for oil and gas.” In a separate provision, the lease stated, “This lease, however, shall become null and void and all rights of either party hereunder shall cease and terminate unless, within ___ months from the date hereof, a well shall be commenced on the premises, or unless the Lessee shall hereafter pay a delay rental of ___ Dollars each year, payments to be made quarterly until the commencement of a well. A well shall be deemed commenced when preparations for drilling have been commenced.” The lessor (landowner) claimed that the lease was void because it violated public policy as a perpetual lease. The lessor claimed that was the case because it didn’t state that development had to occur during the lease’s primary term which meant that the lessee could indefinitely extend the lease beyond the initial ten-year term even without taking any action to develop the property. The lessor claimed the lessee could do that by subjectively determining that oil or gas could be produced in paying quantities and paying the delay rental. The lessor also claimed that the lessee had breached implied covenants to develop the leased property. The trial court ruled for the lessor and the lessor moved to certify a class of over 700 landowners, which the court approved. On appeal, the appellate court affirmed class certification but otherwise reversed the trial court. On further review, the state (OH) Supreme Court affirmed. The Court reasoned that delay rental could only be paid during the 10-year primary term of the lease. That meant, therefore, that the lease couldn’t be extended indefinitely by the lessee paying delay rentals. Also, the Court held that the lease language stating “capable of being produced” and “in the judgment of the lessee” did not mean that the lease could be extended indefinitely without production because that language related to actual production rather than the possibility of production. The Court also noted that the lease language disclaimed any implied warranties which meant that there was no covenant to develop the property. Thus, the lease was not perpetual in nature and there was no breach of any implied covenant to develop. However, the Court did deny the lessee’s motion to toll the terms of the lease. State ex rel. Claugus Family Farm, L.P. v. Seventh District Court of Appeals, No. 2014-0423, 2016 Ohio LEXIS 91 (Ohio Sup. Ct. Jan. 21, 2016).


Expansion Activities at Vineyard Do Not Violate Conservation Easement. The plaintiff, a supporting entity to Ducks Unlimited, claimed that the defendant, the holder of a conservation easement for Ducks Unlimited on a 200-acre tract containing a vineyard, violated the terms of the easement when a vineyard on the property began expansion plans on the property. Those plans included the construction of a farm building housing a creamery, a bakery and a tasting room. The plans also included the construction of a small bridge and roads leading to the farm building and a parking lot to accommodate customers. Grapes would be planted on the property and dairy cows would also graze in pasture areas to produce milk for the creamery. A land trust expressed concern that the expansion plans violated the conservation easement on the property and the operator was questioned by Ducks Unlimited, but went ahead with the plans to expand the business. The plaintiff charged the defendant with 14 violations of the easement agreement. The trial court found no violations, noting that nothing in the easement agreement barred a farm building on the property containing a creamery and tasting room. Based on caselaw, the court determined that the bridge roads and parking lot also did not violate the easement terms. The court noted in particular the agricultural nature of the business and that it complied with the easement. Various land trust challenged the trial court’s decision and filed friends of the court briefs in support of the plaintiff. They claimed that the trial court’s ruling violated the state (VA) Constitution, the VA Conservation Easement Act, and the Open Space Lands Act by deciding the case on the basis of common law standards of restrictive covenants. On appeal, the court affirmed. The court first noted that any ambiguous terms in the easement would be construed against the plaintiff and in favor of the defendant. The court also determined that the barn and associated activities were within the definition of a “farm building” which was permitted under the terms of the easement, and that the plaintiff did not carry its burden of proof to establish that the barn was built in a prohibited “highly erodible area.” Similarly, the defendant had the authority to alter the topography to construct a parking lot, and the plaintiff was precluded from challenging the construction of the bridge. Wetlands America Trust, Inc. v. White Cloud Nine Ventures, L.P., No. 141577, 2016 Va. LEXIS 12 (Va. Sup. Ct. Feb. 12, 2016).


Proper Tax Classification For Residential Acreage Used for Growing Hay Is “Suburban Residential.” A married couple owned a home and 10.4 acres of surrounding land that they had acquired in 1994. The property had been used for agricultural purposes before 1994, and the couple built their home on the property in 1995. They grew hay for sale on 9 acres of the 10.4 acres. However, the county changed the tax classification of the property to “suburban residential” for the 2012 and 2013 tax years in accordance with Kan. Stat. Ann. §79-1476. The couple appealed the classification to the Board of Tax Appeals (BOTA) attempting to change the classification to “agricultural” to get a lower ad valorem tax rate. However, the BOTA upheld the county’s “residential” classification concluding that the property’s primary function was for residential purposes. The couple sought judicial review of BOTA’s decision, claiming that the BOTA misinterpreted Kan. Stat. Ann. §79-1476 and that a mixed-use classification should be allowed, and that the BOTA lacked substantial evidence to support its decision. The court, however, upheld the BOTA’s determination. The court noted that the statute at issue excludes from ag land classification land that is primarily used for residential purposes regardless of whether the land has a subordinate ag use. The court determined that the primary function of the entire property was for residential purposes and that determination was supported by substantial evidence primarily because the wife testified that the primary use of the property was for residential purposes and because they only started raising hay in 2011. The court also noted that the tract contained a pond, driveway and detached garage, all of which benefitted the home and couldn’t be used for ag purposes. The court also noted that the county (Wyandotte) was one of the three most-populated Kansas counties. The husband was also not a farmer, but a financial services professional. In re Jones, No. 113,157, 2016 Kan. App. LEXIS 8 (Kan. Ct. App. Feb. 12, 2016).


No Private Condemnation Allowed For Landlocked Parcel. The defendant owned tracts of real estate, one of which was landlocked but was bisected by a creek that would occasionally have substantial water flow in it as opposed to its normal status as a dry creek-bed. The 40-acre tract in issue came out of the Conservation Reserve Program in 2008 and was put into row crop production. While in the CRP, the defendant maintained weed control on the tract by accessing it on foot. The defendant obtained estimates from local contractors as to the cost of constructing a low water crossing and went with the low estimate of $10,000. The low water crossing that was constructed failed within weeks and the contractor advised the defendant that any repair would simply fail again. Consequently, the defendant brought a private condemnation proceeding seeking to acquire a public way over the plaintiff’s neighboring property pursuant to state (IA) law. The plaintiff objected to the proceeding on the basis that the property was not landlocked because modifications could be made to the property that would provide reasonable access. The trial court agreed with the plaintiff, determining that the plaintiff had met its burden of proof that the defendant was not authorized to gain a private right of way via condemnation. On appeal, the court affirmed. While the court noted that a party is not entitled to a way of necessity over land of another unless his own way is not reasonably adequate or its cost is prohibitive, the court went on to say that mere cost is not a factor in determining whether a private right of condemnation should be granted. Instead, the court said when reasonable access does not exist, the right to a private condemnation turned on whether the land can be changed by the owner to provide reasonable access. The court then adopted a proportionality test to be applied in cases where a natural obstruction makes land privately inaccessible. Under that test, if the cost of making the land reasonable accessible is disproportionate to the value of the land, the a private condemnation will be allowed. The court then viewed the testimony of one of the high bidders on the low water crossing as persuasive. That bidder testified that he could repair the low water crossing for $15,000 and that it would require about $500 of annual maintenance. The defendant’s expert testified that it would cost about $96,000 to construct a “vented ford” low water crossing and about $2,000 to $3,000 to annually maintain the crossing. The defendant also testified that his land was worth $8,000 per acre. That is an unusually high value given that substantially exceeds county average sale data. Based on that number, and the testimony of one of the high bidders, the court concluded that the cost of construction would be less than 5% of the total value of the farm. Thus, while the court stated that “mere cost is not a factor” in determining whether a private condemnation should be granted, its opinion turned on cost. The private right of way was denied. Evans v. Worth, No. 14-2009, 2016 Iowa App. LEXIS 89 (Iowa Ct. App. Feb. 10, 2016).


Farm Lease Violates State Constitutional Provision Where Farm Tenant Had Unilateral Ability to Lease Land For More Than 20 Years. A trust contained two tracts of agricultural land and entered into identical leases with the plaintiff effective March 1, 1997. The leases provided for an initial term of five years, but also contained an “option to renew” that said that the leases automatically renewed for four additional five-year terms unless the plaintiff provided written notice to the trust at least six months before termination of the current lease term, or within 30 days of the new lease term, that the tenant was electing not to lease the property for an additional five-year term. The lease also stated that the annual rent amount was to be adjusted annually by mutual agreement, but if they didn’t reach an agreement by August 1, then the previous year’s rent would apply. In a prior action, the parties initially battled over the rent clause, with the trust claiming that the tenant failed to negotiate in good faith and, as a result, had breached the lease. The court determined that the tenant had failed to negotiate in good faith, but that the lease had not been breached. The court established a fair rental rate for the property. On appeal, that determination was largely upheld. In a subsequent action, the parties were again at odds over a rental rate for the leased property, and the trustee moved for partial summary judgment on the basis that the lease violated a state (IA) Constitutional provision (Art. I, section 24) stating that no lease of agricultural lands “shall be valid for a longer period than twenty years.” The trial court concluded that to the extent the leases allowed the tenant to continue to lease the property beyond 20 years, the leases violated the Constitutional provision. On further review, the state Supreme Court affirmed. The court noted that the lease provisions could lock the landlord into the leases for a 25-year period, but not necessarily the tenant, and that the Constitutional provision was sufficiently broad to advance the larger purpose of promoting the alienation of agricultural lands by not excluding them from its terms. While the lease didn’t actually bar alienation of the leased land and the court did not analyze whether the lease provision involved a “renewal” or an “extension”, the Court appeared to be saying that any lease provision, regardless of how it is structured or labeled, that effectively gives the tenant the unilateral ability to tie up land for farming purposes longer than 20 years would be invalid beyond twenty years from its inception under the Constitutional provision. The Court also made no mention of how the Constitutional provision might apply to mineral and/or wind leases on agricultural lands that contain an initial term and then renewal options that extend the lease well beyond the 20 years from inception. However, the Court did rule in 1995 that a mineral lease is not a “lease or grant of agricultural lands” under the Constitutional provision (Howard v. Schildberg Construction Company, 528 N.W.2d 550 (Iowa 1995). In that case, the Court stated that “[O]ur constitutional agricultural land alienation restriction does not apply to agricultural land leased purely for non-agricultural purposes.” That language would also seem to apply to wind energy leases. Gansen v. Gansen, No. 14-2006, 2016 Iowa Sup. LEXIS 7 (Iowa Sup. Ct. Jan. 22, 2016).


Boundary By Acquiescence Established. The plaintiff owned a tract of land separated by a fence from another tract that the defendant sought to purchase from the neighboring owner. The plaintiff, however, claimed that the fence was not on the boundary between the tracts instead claiming that the surveyed boundary was properly set forth in the legal description to their tract, thirty-three feet onto the tract being sold. The plaintiffs sued to establish the boundary between the tracts, and the trial court determined that the fence had become the boundary by acquiescence. On appeal, the court noted that the fence had been in existence since at least 1992 and had been treated as the boundary between the tracts by the plaintiff’s predecessors and, as a result, the fence established a boundary by acquiescence. Nafziger v. Pender, et al., No. 15-0327, 2016 Iowa App. LEXIS 23 (Iowa Ct. App. Jan. 13, 2016).


Prescriptive Easement Not Established. The parties owned adjacent tracts of agricultural land. The plaintiffs purchased their tract in 1999. Their tract was divided by a creek with the only reasonable access to part of their property being by a pathway across land owned by the defendant’s predecessor. The predecessor provided the plaintiff with a key to the padlock on the gate to the pathway and the plaintiffs used the pathway for many years until being blocked by the defendant when the defendant acquired ownership after the predecessor’s death. The plaintiffs sued seeking to enjoin the defendant from denying access and seeking a declaratory judgment that they had acquired a prescriptive easement. The trial court rejected the plaintiffs’ claim, and the appellate court affirmed on the basis that the plaintiffs’ use of the pathway via permission or consent and that a relaxed standard that could apply under state (IA) common law also did not apply because the plaintiffs could not show that they had expended substantial sums or labor in reliance on the owner of the servient estate’s consent or oral agreement for usage. Van Hall v. Skunk River Block & Pallet, Inc., No. 14-1804, 2015 Iowa App. LEXIS 1163 (Iowa Ct. App. Dec. 9, 2015).


Wooded Portion of Small Acreage Properly Reclassified as “Agricultural.” The defendants bought a 5.18 tract in 1980 for $2,500 that contained woods, a mobile home, a detached garage and three pole barns. The plaintiff assessed the acre proximate to the mobile home as a residential homesite, the 2.72 acres of woods as excess residential, .68 acres as a ditch and .78 acres as a public road for a total assessed value of $44,000. The defendants appealed, and the county Property Tax Assessment Board of Appeals (PTAOB) reduced the assessment to $32,800. The defendants further appealed to the state board where the defendants claimed that the 2.72 acres of woods should be classified as “agricultural” because they purchased the property as a woods that he intended to grow and harvest. However, none of the trees had been harvested as of 2013, the year of assessment. The state board reclassified the woods as agricultural and the plaintiff appealed. The plaintiff claimed that because the defendants had no formal plans for harvesting trees the land was not devoted to an agricultural use. However, the court noted that the property tax assessment guidelines noted that a timber management plan was only one factor in determining the use of the property. The plaintiff also pointed out that the defendants had never harvested trees from the tract, but the court again pointed out that was only one factor out of several in determining the use of the property. The court noted that the board gave significant weight to the defendants’ testimony that when they purchased the property that the intended to harvest timber as had the prior owner, and that the defendants had not changed the use of the property that would indicate no intent to harvest timber. Accordingly, the court upheld the board’s determination. Dekalb County Assessor v. Chavez, No. 49T10-1502-TA-00006, 2016 Ind. Tax LEXIS 4 (Ind. Tax Ct. Jan. 29, 2016).


No Legal Malpractice For Title Work Where Client Didn’t Read Deed and Mortgage Before Signing. The plaintiffs, a married couple, bought a farm in late 2010 and closed on the purchase on December 15, 2010. The deed and mortgage specifically referenced a reservation of a passway over the farm in favor of adjoining property. The reservation was also referenced in a Certificate of Title that was prepared by the same attorney retained by the plaintiffs’ lender that did the title work for the farm and prepared the deed and mortgage. Eight months after the closing, a third party claimed a right to use the passway, citing the reservation in the deed. In April of 2012 the plaintiffs sued the attorney for malpractice, and paid $26,000 to the third party resulting in the third party retaining a license for life to use the passway over the farm. The attorney moved for summary judgment on the basis that the plaintiffs’ claim against him was time-barred. The trial court agreed and dismissed the claim. On appeal, the court affirmed. The court noted that the plaintiffs’ suit had to be brought within one year of the occurrence of the alleged malpractice. The alleged negligence occurred at the time of closing when the attorney didn’t inform the plaintiffs of the reserved passway, and the damage occurred at the time of purchase of the farm with the reserved passway. At that time, any damages were fixed and non-speculative as the difference in value of the farm without any deed reservation language and the value of the farm with the reservation. While the plaintiffs were unaware of the reserved passway until the third party made a usage claim, the plaintiffs admitted to not having read the deed and mortgage at closing or requesting that the language be explained to them. Thus, the plaintiffs failed to exercise reasonable diligence. Thus, the legal malpractice claim was time-barred as having been filed more than a year after closing. Curtsinger v. Patrick, No. 2014-CA-000609-MR, 2016 Ky. App. Unpub. LEXIS 94 (Ky. Ct. App. Jan. 29, 2016).


Court Refuses To Grant Private Road Across Farm. The plaintiff leased its 320-acre farm to a large-scale operator whose equipment weight exceeded a bridge load limit on a county road that lead to the plaintiff’s farm. As a result, the plaintiff sought to establish a mile-long private road across the defendant’s neighboring farm based on Rev. Stat. Mo. §228.342. That statute allows a private road to be established (or widened) in favor of any owner or owners of real property for which there is no access, or insufficiently wide access, from such property to a public road if the private road sought to be established or widened is a way of strict necessity. The court denied the petition on the basis that the plaintiff’s farm had access to a public road, and Missouri courts had consistently interpreted the statute to require a plaintiff to show that there weren’t any public roads through or alongside the land and that the private road requested is mandated by strict necessity. The court determined that the statute at issue was to be strictly construed because it was against the common law and common rights. Westrich Farms, L.L.C. v. East Prairie Farm, L.L.C., No. SD33826, 2015 Mo. App. LEXIS 1247 (Dec. 2, 2015).


Adverse Possession Claim Fails. The parties owned adjacent tracts of agricultural land separated by a fence. The tracts were originally owned by the defendant and her spouse at the time, with the plaintiff buying her tract in 1988. A fence ran was located on the boundary between the tracts in accordance with the legal description, but deviated away from the boundary line onto the defendant’s tract leaving a 1.1-acre parcel south of the boundary line. That disputed 1.1-acre parcel was on the plaintiff’s side of the fence, but was within the legal description to the defendant’s property. In 2014, the plaintiff filed a petition to quiet title in the disputed tract. That action was dismissed, but the plaintiff filed a separate action claiming ownership of the tract by adverse possession, claiming that she had occupied the disputed tract for more than 15 years and that her possession of it was open and obvious via the pasturing of horses and cattle, mowing and haying it. The trial court ruled against the plaintiff based on evidence that the defendant had told the plaintiff at the time of sale that the fence jogged south of the boundary and that orange survey flags marked the actual boundary, but that the plaintiff had permission to use the disputed tract. The defendant also used the tract to dove hunt and burn hay. On appeal, the court affirmed. The court determined that the plaintiff’s possession had not been exclusive and that she never claimed exclusive rights to the land as the adverse possession statute (K.S.A. §60-503) required. Bradford v. Parlett, et al., No. 113,391, 2015 Kan. App. Unpub. LEXIS 1031 (Kan. Ct. App. Dec. 4, 2015).


Oil and Gas Lease Not Abandoned Because It Was Not Severable. At issue is a 180-acre tract subject to an oil and gas lease that was entered into between each of parties’ predecessor in interest. The plaintiff, the current lessor claimed that the defendant (the current lessee) had abandoned the lease for failure to engage in oil and gas exploration for a five-year period. The lease durational provision specified that it lasted as long as drilling operations commenced or the leasehold used for the storage or protection of gas storage on the lands in the general vicinity of the leasehold. Since entering into the lease more than five years earlier, the defendant did not commence operations on the leasehold, but the Federal Energy Regulatory Commission established a 2,000-foot buffer zone around a gas storage facility which the leasehold was within. Thus, the leasehold was being used for the protection of natural gas. The plaintiff claimed that the defendant had abandoned the lease so as to allow the plaintiff to enter into a new lease agreement with another party. The plaintiff claimed it was entitled to a rebuttable presumption of abandonment under state (WV) law because there had been no production and sale or use of gas or oil on from the tract for more than 24 months. The trial court rejected that argument on the basis that the state law in issue did not apply to leases for gas storage purposes. However, the trial court determined that the lease was divisible (severable) and had two purposes, production and storage, and held that the portion of the lease related to production of oil and gas had lapsed for non-exploration and non-production after the initial five-year term, but that fact issues remains on how much of the property was being utilized for storage. The trial court later issued a final ruling that drilling by a new party could commence on areas not within the gas storage protection area and which extend horizontally under the gas storage protection area to the Marcellus Shale area. On appeal, the court reversed on the basis that the plain language of the lease unambiguously specified that only either production needed to commence within the initial five-year term or gas protection storage activities commenced within that same timeframe. As such the lease was not severable. K&D Holdings, LLC v. Equitrans, L.P., et al., No. 15-1166, 2015 U.S. App. LEXIS 22703 (4th Cir. Dec. 28, 2015).