Thomas v. Dudrey ( 1972 )

The opinion of the court was delivered by

Fromme, J.:

This action was brought to recover damages for the violation of the rights of a tenant-operator of land under a conservation reserve contract. The trial court entered judgment in favor of the tenant-operator against the purchaser of the land and her husband. The husband had been substituted as tenant-operator in a revised contract in place of the plaintiff.

Some background facts are necessary.

In 1949 Ruth Oden, a non-resident, owned the NW % of Section 2, Township 24, Range 14, in Stafford County, Kansas. She leased the land for two years to the plaintiff, Elbum G. Thomas, under the ordinary crop share lease for one-third of all crops raised on the premises. Thereafter the plaintiff continued in possession of this land through 1959 as an ordinary farm tenant without any written renewal lease.

In 1960 the parties placed the land in the “soil bank” by making application and by executing a ten year conservation reserve contract with the secretary of agriculture. The plaintiff cultivated and seeded the land to grass and performed such maintenance and weed control as was required by the contract. The annual soil bank payment of $2,119.00 was to be shared equally during the term of the contract.

Ruth Oden died and a revised or modified contract was executed on November 16, 1960, by her administrator, the plaintiff and the secretary of agriculture. This contract covered the same period as the previous contract, ending in 1969, and contained the same terms and conditions as before.

After the estate of Ruth Oden was settled, her son, Ivan A. Oden, became the new owner and he entered into another revised contract on October 31, 1962. The contract was signed by Ivan A. Oden, the plaintiff and a member of the county committee for the secretary of agriculture. It covered the same period, ending in 1969, and contained the same terms and conditions as before.

In 1966 the land was sold. The agreement to sell was between Ivan A. Oden and W. H. Dudrey. The deed, executed and delivered under the contract, named the wife of W. H. Dudrey as grantee. The land was transferred subject to the rights of the agricultural tenant and the deed mentioned that the premises were under contract in the conservation reserve program.

Thereafter W. H. Dudrey and Elsie Dudrey, bis wife, succeeded in obtaining a revised soil bank contract for the balance of the original ten year term which eliminated the plaintiff as tenant-operator. For the balance of the term W. H. Dudrey as tenant-operator and Elsie Dudrey as owner received the'entire amount of the soil bank payments. The change was made July 31, 1966.

This change in the tenant-operator was protested by plaintiff to the county committee on August 15, 1966. His protest was based upon a claimed right to continue as tenant-operator for the entire ten year period ending in 1969, under the prior soil bank agreements with Ruth Oden and Ivan A. Oden. He asserted the change of tenant was not bona fide, that the title of the real estate was placed in the wife’s name by W. H. Dudrey so that W. H. Dudrey might take over the plaintiff’s rights as tenant-operator. Plaintiff further asserted that the land was purchased and sold subject to his rights under the conservation reserve contract and that the Dudreys violated his rights by obtaining the revised soil bank contract for the balance of the ten year term.

Plaintiff first pursued his administrative remedies. Review of the action of the county committee was sought on both the state and the federal levels. These attempts to require the county committee to recognize him as the rightful tenant-operator in place of W. H. Dudrey were unsuccessful. The state office ruled that any question as to the private rights of plaintiff and W. H. Dudrey “is determinable under applicable state law and the circumstances of the particular case.” In Washington, D. C. the acting deputy administrator of state and county affairs refused to enter the controversy. In a letter, otherwise ambiguous, he stated the matter “is a question between him [Thomas] and the landlord [Dudrey] to be resolved by the Kansas courts.”

Plaintiff then brought the present action to recover damages from the Dudreys in the amount of the tenant-operator’s share of the annual soil bank payments received by them from 1966 to the end of the contract period in 1969.

The action was tried before the district court without a jury. Judgment was entered in favor of plaintiff and against the defendants, Elsie Dudrey and W. H. Dudrey. The Dudreys have appealed.

Although appellants set forth in the record 14 separate alleged errors in their statement of points their argument in the brief is not separated or directed toward these 14 alleged errors. Those points neither briefed nor argued on appeal will be deemed abandoned. (State, ex rel., v. Doerschlag, 197 Kan. 302, 304, 416 P. 2d 257.)

The questions to be answered in this appeal are set out by the appellants in their brief as follows:

“The questions presented in this case are: Did Thomas have any rights in and to any soil bank payments under the Soil Bank Contract in question after the sale of this property by Mr. Oden to Elsie Dudrey, the termination of such contract by the Stafford County A. S. C. Committee, and the approval by the County Comittee of W. H. Dudrey as operator of this land? If Thomas had any such rights, then the further question arises: Do such rights give rise to a cause of action in his favor against the Dudreys, or either of them, or must he pursue his remedy against the U. S. Department of Agriculture?”

The trial court made comprehensive findings of fact and conclusions of law. Pertinent portions of these findings and conclusions are as follows:

“. . . Both W. H. and Elsie Dudrey knew that plaintiff was the tenant in possession under this program. Before the deed was executed, both W. H. and Elsie Dudrey conferred about plaintiff’s status. They believed that plaintiff could be removed as tenant without incurring any liability to him. They believed the record title owner could not be the tenant under this program.

“The purchase of this land was a joint venture of W. H. and Elsie Dudrey. The written contract to purchase was in favor of W. H. alone. . . .

“. . . In any event, the conviction that they could substitute W. H. Dudrey for the plaintiff as soil bank tenant was a consideration that entered into the final determination of the Dudreys to take the land in the name of Mrs. Dudrey. This finding is legally permissible since the trier of fact is permitted to use that knowledge common to men in general. In this connection, all of the circumstances indicate that the Dudreys were guided by a desire to secure the tenant’s soil bank payments for themselves, a trait common to man, the desire for financial gain. . . .

“Throughout, the sale proceedings, Mr. Oden advised the County Committee and the Dudreys that plaintiff had tenancy rights under this program in an attempt to protect plaintiff’s interest for the full ten-year period. This included putting a provision in both the contract and deed which stated that the sale was subject to the rights of tenancy under the Soil Bank Program. He, as well as his mother, fully intended plaintiff should have tenancy throughout the ten-year term.

“Plaintiff performed all of his obligations relative to compliance with the Soil Bank Program up until the time he was advised by the County Committee that they would not recognize him as tenant after 1966 but would so recognize W. H. Dudrey. The work done by or on behalf of W. H. Dudrey as tenant in the years 1967 through 1969 was minimal as grass cover was by then well established. It consisted chiefly, if not entirely, of a small amount of weed control around the boundary of the land. No evidence was offered as to the value of this work.”

The trial court further concluded:

“Applying Kansas law relating to landlords and tenants, the factual finding made herein would indicate the following as proper legal conclusions:

“1. At the time Mrs. Oden and plaintiff agreed to put this land in the soil bank program, plaintiff was a year-to-year tenant as a permissive holdover under an earlier-written lease.

“2. Upon the execution of the papers for the program by Mrs. Oden and the plaintiff, plaintiff became a tenant for a ten-year period to begin January 1, 1960, and to terminate by its terms on December 31, 1969.

“3. In addition to the general considerations that are common to landlord-tenant relationships, there were considerations introduced at the time of entering the program which were changes from pre-existing considerations and which furnished adequate legal considerations between the parties. Chief among these were the landowner’s grant of possession for a ten-year period, the modification of remuneration to equal shares, and the obligation of the tenant to do the extra beginning work to establish grass cover.

“4. The tenancy is legally valid as against any claim of not satisfying the Statute of Frauds. The agreement was followed by almost seven years of performance thereunder. The signing of the various forms necessary to obtain acceptance in the program constituted a legally sufficient ‘writing.’

“5. Plaintiff was a tenant in possession at the time the purchase was made by the Dudreys. They were chargeable with notice as to his rights. They actually knew he was a tenant. They were obliged to discharge any rights he had whether they did or did not know the extent of those rights. Since they were obliged to ascertain the quality and quantity of his tenancy, they could not evade this obligation by accepting the unauthorized legal advice given by Mr. Barker. They breached this obligation when they secured tenancy payments for Mr. Dudrey for the years 1967, 1968 and 1969.”

On the basis of the record presented on appeal these findings are supported by the evidence. It likewise appears that the trial court’s findings justified its conclusions.

Appellant quarrels with certain findings of the trial court quoting statements made by W. H. and Elsie Dudrey in discovery depositions concerning their joint acquisition of the land. These depositions are not included in the record and it does not appear from the record they were ever introduced in evidence. The statements were included by the trial court to corroborate other evidence which adequately supported the material findings of the court and no prejudicial error resulted even though we assume they were improperly considered by the trial court.

Some question is raised by appellants in their brief as to the taxing of costs of the depositions. This was not included in their statement of points. Matters not included in the statement of points will not be considered on appeal. (Shinkle v. State Highway Commission, 202 Kan. 311, Syl. ¶ 3, 448 P. 2d 12.)

The federal law on conservation reserve contracts states:

“In the formulation and administration of programs under this chapter, the Secretary shall provide adequate safeguards to protect the interests of tenants and sharecroppers, including provision for sharing, on a fair and equitable basis, in payments or compensation under this chapter, and including such provision as may be necessary to prevent them from being forced off the farm. . . (7U.S.C.A. § 1810.)

The Dudreys, after purchasing this land subject to plaintiff’s rights, in violation of their agreement with Ivan A. Oden were able to squeeze plaintiff off the land with the aid of the county committee. This kind of scheme is frowned on in Caulfield v. U. S. Department of Agriculture, 293 F. 2d 217, where it is said:

“Indeed, the legislative history supports the view that in effectuating the vigorous policy against the use of any devious schemes by landowners as a means of discriminating against tenants Congress looked to the County Committees as the means of positive enforcement.” (p. 220)

The appellants here rely heavily upon the conclusiveness of the action of the county committee in recognizing W. H. Dudrey as the tenant-operator for the balance of the term of the revised soil bank contract. It should be noted that their function is not judicial. They have no jurisdiction to determine the rights of private parties arising from the purchase and sale of Kansas real estate. This fact was recognized on both the state and federal levels when the action of the county committee was submitted for review through the administrative processes.

The appellants argue that plaintiff’s rights, which he pursues in this action, are dependent upon the continuance of his status as a holdover tenant under the written agricultural lease executed between Ruth Oden and plaintiff in 1949. Plaintiff’s claim is not based upon any rights as a holdover tenant. His present claim arose by reason of the original conservation reserve contract and the rights in the subsequent revised contracts which were reserved to him when Ivan A. Oden sold the land to the Dudreys subject to his rights.

Testimony of the employees in the Stafford County ASCS office indicates that the four contracts were continuations under the original application executed by Ruth Oden and plaintiff in 1960. They were considered revised contracts. At the time the Dudreys purchased the land in 1966, the Soil Bank Program had terminated and new soil bank contracts could not be intiated by applications. The only contractual matters then permitted were those that related to continuance or modification of existing contracts.

The revised conservation reserve contract was a complete written agreement. It provided in part as follows:

“The undersigned producers hereby agree to the terms and conditions of this contract and certify that all of the producers having any control of the farm during the entire contract period and all of the producers who are entitled to payment under this contract are shown in this Part III, or on the continuation sheet attached hereto, and each undersigned producer certifies that he has not entered into conservation reserve contracts, including this contract, under which the aggregate of his shares of the annual payments for any year for all farms in which he has an interest will exceed $5,000.00.”

The agreement covered the NW % of Section 2, Township 24, Range 14. The contract period was stated to begin in 1960 and to continue through 1969. The annual payment of $2,119.00 was to be paid during this period, one-half to Elburn G. Thomas and one-half to Ivan A. Oden. As hereinafter pointed out certain land practices were required to earn the payments. The agreement was signed by an ASC county committeeman and by Mr. Thomas and Mr. Oden. This contract did not refer to any farm lease between Thomas and Oden and was in no way dependent upon such a lease.

In 1959 the farm lease between plaintiff and Ruth E. Oden had spent its force. It was not renewed after the first conservation reserve contract was entered into. It could not have been continued because such would have violated the terms of the conservation reserve contract. The former farm lease and the contract covered only one quarter of land. The farm lease required crops to be planted on the land by plaintiff and crops were to be shared on a one-third rental basis. The contract with the secretary of agriculture required both the landlord and tenant to take the land out of production. No crops could be grown on the land.

Termination and surrender of a farm lease may be either by agreement of the parties or by operation of law. (Christenson v. Ohrman, 159 Kan. 565, 156 P. 2d 848.) Here the lease was terminated by the new agreement of the parties.

A tenant from year to year holds over with the assent of the landlord under the same terms and conditions as stated in the original lease. (Martin v. Hamersky, 63 Kan. 360, 65 Pac. 637; see also 49 A. L. R. 2d, p. 480.) In the present case after the landlord and tenant had signed the conservation reserve contract the holdover tenancy was terminated. The new agreement required plaintiff to establish a grass cover on the land by seeding. He was obligated to protect the land and control weeds. In return it was agreed he was to receive fifty percent of the cash soil bank payment over a period of ten years.

When a third conservation reserve contract was signed two persons held rights in this land. They were Mr. Oden and Mr. Thomas. Oden held legal title. Thomas was in possession and was obligated to care for the land. The contract created certain rights and obligations. So long as they kept the land in compliance with the terms of the agreement they were to receive annual payments during the terms of the contract ending in 1969.

When W. H. Dudrey contracted to purchase this quarter of land from Ivan A. Oden in 1966, he agreed as follows:

“It is understood and agreed that the aforesaid Real Estate is presently in the Conservation Reserve Program.”

No attempt was made by him to purchase or acquire the rights of plaintiff Thomas in this land. When the purchase was completed W. H. Dudrey took the deed in the name of Elsie Dudrey, his wife. The deed contained the following reservation or exception inserted below the description of the land in the granting clause:

“Subject also to the rights of the agricultural tenant, said premises now being under contract in the Conservation Reserve Program of the United States Department of Agriculture.”

Further on in the habendum clause of this deed appeared the following:

“. . . [T]hat the same are free, clear, discharged and unincumbered of and from all former and other grants, titles, charges, estates, judgements, taxes, assessments and incumbrances, of what nature or kind soever: except easements, if any, of record, and rights of agricultural tenant— . . .” (Emphasis added.)

The conservation reserve contract which assured the plaintiff of his rights as tenant-operator was on file as a public record in the ASC office of the county. The purchaser had notice of these rights. Under both the contract of purchase and the deed the property was sold subject to the rights of the plaintiff created by the conservation reserve contract. The rights of the tenant-operator were recognized and the Dudreys took title to the land subject to those rights. The Dudreys merely stepped into the shoes of the former owner, Ivan A. Oden.

When property is sold subject to contractual obligations arising from a soil bank contract, such burdens follow and attach to the title of the purchaser.

In Murfin Drilling Co. v. Poe, 191 Kan. 637, 383 P. 2d 972, this court said:

. . When property is sold subject to encumbrances and contractual obligations, such burdens follow and attach to the title of the purchaser. . . (p. 640)

In Dillon Investment Co. v. Kinikin, 172 Kan. 523, 241 P. 2d 493, this court said:

“. . . [T]he plaintiff accepted a deed in which validity of the exceptions and reservations as to a right of way were recognized and made part and parcel of it. Under the circumstances the grantee, appellee herein, is estopped to question validity of the exceptions and reservations. . . .” (p. 528)

The appellants lay much stress on provision 8 (b) of the conservation reserve contract relating to loss of control of the farm by sale, death or otherwise.

Section 8 (b) reads as follows:

“The loss of control of all or part of the farm by sale, death, or otherwise (a lease shall not be considered a loss of control) shall terminate the contract with respect to the acreage over which control is lost. In the event of such termination, unless the land is continued in the Conservation Reserve Program under the conditions specified in the Regulations, Federal cost-shares paid or payable with respect to the acreage over which control is lost shall be forfeited or refunded. In such case, each contract signer shall not only be obligated to refund all Federal cost-shares received by him but shall also be jointly and severally obligated with the other contract signers to refund all Federal cost-shares received by any person with respect to such acreage under this contract or any previous contract.”

It should be noted that plaintiff retained control of the farm as tenant-operator after the death of Ruth Oden and when the land was acquired by Ivan A. Oden. In both instances the ten year contract was not terminated for revised contracts were recognized by the county committee.

Under the conservation reserve contract it is the “loss of control of the land” which terminates the contract, not the death or the sale. The plaintiff’s control of the land as an agricultural tenant was x'etained, not lost, when this land was sold to the Dudreys. It is true that the seller Ivan A. Oden lost control of his rights by the sale. The rights passed to the Dudreys. It possibly lay in the Dudreys’ power under other provisions of the conservation reserve contract to have terminated the contract with the secretary of agriculture and in such case the tenant and Ivan A. Oden, as former producers, might have been required to refund to the secretary all cost-shares paid by the government.

But this was not the case here for the purchasers continued the land in the conservation reserve program under a revised contract, and by the simple rase of taking title to the land in the wife’s name and notifying the ASC committee that the husband was the new agricultural tenant they obtained the operator’s and the owner’s share of the annual $2,119,000 payment. This violated both the purpose and spirit of the soil bank program. This further violated the terms of the sale by which the Dudreys acquired title.

The rights of a tenant-operator under a soil bank contract may be effectively reserved to him in a deed of conveyance by the owner of the land, and purchasers who accept a deed to the land subject to the rights of the tenant have a duty to the tenant to honor his rights if a revised soil bank contract is issued.

The soil bank payments due the operator were wrongfully obtained by the Dudreys and suit was properly brought to recover the same from them. Plaintiff performed all necessary obligations to comply with the soil bank program up until the time he was forced out by the actions of W. H. Dudrey and of die county committee. There was no evidence of the value of any work performed by W. H. Dudrey on the land to keep the land in compliance. His work was minimal at most, for a grass cover had been previously established on the land at the expense of and by the labors of the plaintiff.

The appellants cite the regulations and soil bank law at length in support of the authority of the local county committee to accept W. H. Dudrey as the new tenant-operator. Its authority can no longer be questioned. But the right or the wrong of the committee’s action is not subject of plaintiff’s lawsuit. Plaintiff is suing Dudrey for wrongfully violating a duty which Dudrey assumed when he purchased the land.

Although a tenant-operator under the Soil Bank Program (7 U. S. C. A. § 1801 et seq.) may be precluded from pursuing a judicial remedy against the officials who administer the soil bank act, yet a judicial remedy remains available in the state courts against a landlord or a purchaser for violation of a legal duty owed to the tenant.

Two federal circuit court cases, Dickson v. Edwards, 293 F. 2d 211 and Caulfield v. U. S. Department of Agriculture, supra, fully support the jurisdiction of this court to decide the claims of private parties arising from a violation of duties and obligations under contracts executed by them.

It was pointed out in Caulfield a tenant has only limited rights in obtaining a judicial review of an administrative determination under the Soil Bank Act. Federal courts have no jurisdiction of a tenant’s action to review an administrative determination that the landlord had not violated the Act in the manner of securing an acreage reserve contract.

However, it is crystal clear from the opinion in Caulfield that although the tenant may be precluded from pursuing a judicial remedy against the officials who administer the Act, yet a judicial remedy remains available against the landlord or a purchaser for violation of a legal duty owed to the tenant.

In Dickson this was pointed out by the following paragraph:

“While we therefore fully approve the District Court’s holding that this was not a termination because of an asserted violation and accordingly beyond the power of the District Court to adjudicate, we wish to make doubly clear that nothing said or unsaid is to be understood as an approval or disapproval by us of the propriety of the action of the County Committee, the State Committee, the Secretary, the Landowner or the new Tenants. The rights under the law of Texas between Dickson and the Landowner or between him and the successor Tenants with respect to Soil Bank payments received in 1958 and subsequent years are matters for subsequent adjudication in Texas courts. Such matters were not before the District Court nor are they before us.” (293 F. 2d 211, 215)

It may be noted in passing that the federal court in Dickson was confronted with a claim somewhat similar to the one in the present case. It held the federal court was without jurisdiction and that the claim was one for the state courts to resolve.

The appellants quote from and rely on Hill v. Schuhart, 391 S. W. 2d 579 (Tex. Civ. App.) for language to support their argument. The case is factually dissimilar to the present case. It was decided upon the basis of the laws of Texas and is not controlling here.

In this Texas case the tenant Hill had leased the farm on a yearly basis. The farm was placed under a soil bank contract. The owner then died. Hill’s annual lease expired. The new owner, a Mrs. Steele, apparently inherited the farm. She evicted Hill and leased the farm to Schuhart who was recognized by the county committee as the tenant-operator. Hill then sued Schuhart to recover the 1963-64-65 soil bank payments from him. The Texas court held that Hill had no enforceable rights against Schuhart for the only lease Hill had on the land had terminated. It is apparent that the owner Steele did not acquire the land with any reservation of rights in favor of Hill. Therefore she violated no duty or obligation to Hill when she leased the farm to Schuhart. It was clear that Hill had no cause of action against Schuhart. The case is not persuasive for it is factually dissimilar.

In the present case plaintiff’s rights in the soil bank contract were recognized.by the Dudreys when they purchased the land subject to those rights. Plaintiff’s cause of action for damages is based upon the obligation placed upon the Dudreys by the contract of sale and the deed from Ivan A. Oden. The Dudreys intentionally violated a duty owed to plaintiff. Plaintiff was damaged thereby and the amount of his damages was correctly determined by the trial court.

Other contentions are advanced by appellants on appeal. Some of these were not included in their statement of points. As to the others it has not been made to appear that prejudicial error resulted therefrom.

The judgment is affirmed.

O’Connor and Prager, JJ., not participating.