Kern v. Kelner , 75 N.D. 292 ( 1947 )

The respondent has filed a petition for rehearing and therein asserts that on the argument on appeal this court "was not advised of the effect of Chapter 151 of the 1933 Session Laws on the lease involved, which statute provides that:

`It shall be unlawful for any person, firm, corporation or association to solicit or procure bills of sale, or transfers ofwhatever nature, for the purpose of obtaining title to, or liens upon growing crops for the year 1933, and thereafter in circumvention of the Crop Mortgage Law. . . .' The reason we believe this was not considered by the Court is that this section was not mentioned either in the memorandum opinion of the trial court nor in the decision of the Supreme Court nor in the briefs or arguments of counsel, . . . ."

He also urges that the "reservation of title in the printed form applied only to indebtedness due. Therefore the landlord had no interest or title to tenant's share of the crop under this provision but acquired whatever right or interest he had in such crop solely under the typed-in provision in the contract, which did not contain a reservation of title. . . ."

In the opinion we specifically refer to the "crop mortgage law" as it is set forth in § 35-0501 of the Rev Code. Chapter 151 of the Session Laws of 1933 purports to supplement and strengthen the "Crop Mortgage Law enacted by the people . . . at the primary election in June 1932" in this that it makes it a misdemeanor "to solicit or procure bills of sale or transfers of whatever nature,for the purpose of obtaining . . . liens upon growing crops for the year 1933, and thereafter, in circumvention of the CropMortgage Law passed by the people of North Dakota on June 29, 1932." The 1939 amendment is of no moment here.

Section 1 of this Chap 151, from which this quotation is taken is set forth in § 35-0503 of the Rev Code and other sections; but these sections must be considered together and as affected by subsequent legislation. This "Crop Mortgage Law" provides in § 2:

"That all mortgages on growing and unharvested crops are abolished, and that any and all mortgages on growing and unharvested crops hereafter taken shall be held null and void and of no effect."

It will be noted that Ch 151 refers only to the taking of liensfor the purpose of circumventing the law against crop mortgages.

This instrument under consideration, Ex. A., does not purport to be a crop mortgage nor is it a crop mortgage.

It is lawful for the parties to such a contract as the one involved to contract as they see fit with reference to the title to the produce of the land; (Angell v. Egger, 6 N.D. 391, 71 NW 547) and the stipulation reserving the title to the crops in the appellant does not, in itself, constitute a chattel mortgage. McFadden v. Thorpe Elevator Co. 18 N.D. 93, 118 N.W. 242. Neither does it divest the respondent of any rights he had under this contract, as the various provisions became discharged.

Respondent could not give a crop mortgage on this crop of 1942 to defeat appellant's rights. It would be useless for respondent to give the appellant a crop mortgage to secure the debt he owed the latter, for the crop raised in 1942 was not respondent's crop, at least so long as the indebtedness was unpaid, even though he might have had an equitable interest in any surplus of the three-quarters, if such surplus existed. There was nothing to divide until the debt was paid. After that, if respondent farmed the land, he could insist on division according to terms.

The 1942 crop was as much the crop of the appellant as if the latter had hired the respondent to sow and harvest it. The parties made a deal whereby, in actuality, the respondent farmed this land and was paid for his work by crediting on his indebtedness the value of services which, in each year until the debt was paid, amounted to the value of three-fourths of the crop as ascertained on the first day of October, unless the parties agreed on another date.

These laws cited do not prevent a vendor and vendee from making such a contract with reference to the sale of land, the farming of land, payment for services, etc., as they see fit.

We have shown already how this instrument involved and termed the farm contract is one and indivisible. It is not only a contract whereby a debtor may pay his debt by farming appellant's land, but it is also an instrument providing for the sale of the land under certain conditions; yet even if Ex. A. be designated a farm lease, and portions thereof construed as such, Chap 5 of SL of 1941 recognizes that a farm lease may contain a provision reserving title to all of the crops "in the lessor until the conditions of the lease have been complied with by the lessee and a division made of the crop. . . ." In the main opinion we refer to this Chap 5 of SL 1941, which is as follows:

"FILING OF A FARM LEASE An Act to Require the Filing of a Farm Lease Containing a Reservation of Title to Crop in the Lessor and Providing for a Waiver of Rights by the Lessor Upon Failure to File Such Lease.

BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF THE STATE OF NORTH DAKOTA:

Sec. 1. (Filing Farm Lease Containing Reservation of Title to Crop: Waiver of Rights on Failure to File.) When a lease of a farm contains a provision reserving title to all or any part of the crops in the lessor until the conditions of the lease have been complied with by the lessee and a division made of the crop, such lease must be on file in the office of the register of deeds in the county in which the lands described in such lease are located prior to July first in the years in which the crops are raised to render such reservation of title to crops effective as to subsequent purchasers or encumbrancers of the lessee of the grain raised upon the lands described in such lease. The failure to file such lease or contract in accordance with the requirements of this section shall constitute a waiver by the lessor of all rights reserved by him in such crops as against any subsequent purchaser or encumbrancer of the lessee. This Act shall not be operative until January 1st, 1942.

Approved March 14, 1941."

Part of this statute is found in § 47-1603 Rev Code. The title is not quoted and at the time of codification the date of effectiveness had no significance so far as this case is concerned; but we cannot appreciate the full import of § 47-1603 of the Rev Code without consideration of the entire act.

By the enactment of this statute the legislature recognized that theretofore such reservation of title was valid as against the world. Thereafter, when the law became operative, the lessor, to protect himself against subsequent purchasers or encumbrancers in good faith, would be required to have his contract on file. However, as between the parties the right of reservation of title in the lessor still remained good without filing.

The statute expressly provided that this limitation of the lessor's right did not become operative until January 1, 1942. This delayed application of provision for filing is further evidence of such legislative recognition.

It is significant the title to this act (Ch 5 SL 1941) recognizes that such reservations were valid without filing, for the title outlines the purpose and indicates the intent is to restrict the lessor's right against third parties only, a right already in existence. It was enacted March 1941, and continues this right without restriction until January 1, 1942. Thereafter failure to file is a waiver by the lessor of such rights; but only as against subsequent purchasers or encumbrancers in good faith of the lessee. The statute does not make a reservation of title void.

In so far as § 47-1604 of the Rev Code is concerned it is clear it deals only with situations where there is nothing in the contract with reference to the products of the land. This latter section cited provides: "The products received from real property during the term of a lease belong to the lessee." That does not prevent the parties from agreeing otherwise. The lessee may waive that right and be a party to a contract governed by § 47-1603.

This law was in effect when the crop of 1942 was sown. If the lessor failed to file the instrument, his interest, and his alone, is the interest affected even if we construe Ex. A. merely a lease so as to make the relationship that of landlord and tenant only.

The contract does not pretend to be a mortgage of respondent's interest, and it is clear it is not an attempt to circumvent the "Crop Mortgage Law." The parties entered into an agreement whereby all of the crop raised on the land was to be the appellant's crop and title to all of it was in him until the conditions of the contract had been complied with. We set this forth in the main opinion. We did not overlook the provisions of this Chapter 151 of the SL of 1933 nor the provisions of Chap 5 of SL of 1941.

Petitioner states: "If the landlord was the owner (of the crop) then the tenant had no legal or equitable interest in the crop. The landlord could sell it and the tenant would have no recourse except to sue the landlord for a money judgment on the contract and be subject to the claims of prior execution creditors or lienholders. In the event of the landlord's insolvency the tenant in such case would get nothing."

There is no such holding in the opinion. The parties agreed the crop was to be the crop of the owner of the land, that its value was to be determined as of the market value of such crops on the first day of October of the year in which delivered and the value of three-fourths of that crop was to be applied upon a certain debt. It was immaterial to the respondent whether or not the appellant sold the grain. The value of that crop on the first day of October was a payment on the note. There would be no necessity for the respondent to sue to recover the value of the three-fourths of the crop of 1942, and it would be immaterial to him that the creditors of the appellant might seize the crop. A creditor of the appellant might seize all of the crop for a debt due from him; but that would not affect the rights of the respondent. In the case at bar the debt was not paid. The respondent was not interested in the one-fourth that was to be considered payment for the use of the land or what was called rental, nor was he affected by any possible seizure of the three-fourths which was applied upon the indebtedness. It was immaterial to respondent what the appellant did with that crop or its proceeds. A portion of the value was to be applied on his indebtedness, even if no endorsement thereof was made on the note.

Petitioner contends strenuously that the typewritten section of the contract, set forth in the opinion, "entirely varies the previous provision" with reference to ownership of the crop. He insists that the insertion of the typewritten provision shows "the landlord has abandoned his general reservation of title in the printed portion and entered into another agreement where there was no reservation of title as to this particular debt or for paying this particular debt. . . ." We do not so consider it. As noted in the opinion if there be a conflict between the printed provision of the contract and the typewritten insertion the typewritten statement prevails. This is our holding in Hagen v. Dwyer, 36 N.D. 346, 162 N.W. 699. But there is no conflict on the point urged by petitioner. The title to or ownership of the crop is fundamental to the discharge of the indebtedness. The contract, as we hold, covers more than a mere lease of land. In so far as the ownership of the crop is concerned there is no conflict between the printed provisions and the typewritten provision. The petition for rehearing is denied.

CHRISTIANSON, Ch. J., and NUESSLE, BURKE and MORRIS, JJ., concur.