Opinion ID: 2136864
Heading Depth: 1
Heading Rank: 3

Heading: Delay for Depressed Prices

Text: Asbridges argue that the trial court misapplied statutes that authorize discretionary delays in foreclosure procedures during an agricultural depression. NDCC 28-29-04, [1] 28-29-05, [2] and 28-29-06. [3] In particular, Asbridges complain that the trial court unduly limited Thomas Asbridge's testimony by excluding evidence about commodity prices before 1989. Because they first asserted confiscatory-price defenses in 1985, Asbridges contend that they should be entitled to the benefits of that period, including a suspension of Farm Credit Bank's foreclosure efforts[] for the requisite period of time in which prices during that period were confiscatory. Furthermore, Asbridges argue, the confiscatory nature of agricultural prices should not be measured on a statewide basis. Instead, Asbridges insist, the determination of how the defense applies must be made as to the individual borrower. Finally, urging that there was [n]o evidence contradicting the fact that commodity prices were still confiscatory as they applied to the Asbridges, Asbridges ask us to conclude that the trial court misapplied the statutes. Early in Thomas Asbridge's direct testimony, the trial court sustained the Bank's objections to the relevance of questions about Asbridges' use of loan proceeds in 1983. In doing so, the trial court indicated that [w]e have to look at what is the situation today, but agreed that [t]here is a relevant period of time. Yet, Asbridge went on to testify that [t]he price for commodities I receive is insufficient to allow me enough income to repay my indebtedness. Indebtedness was based upon specifics that occurred in the early eighties and this is now substantially different. Thomas Asbridge testified that their current annual income from operating with 250 cows, as well as keeping their calves and yearlings, was only enough to currently pay annual operating expenses of $60,000 as well as family living expenses, and was not enough to pay an additional $80,000 or more in annual debt service. In addition to raising livestock, Asbridges raise oats and hay but only for livestock feed. Asbridge acknowledged that livestock prices in 1989 were pretty high at approximately 85 cents [per pound] on 870 pound steers, and that the 1990 livestock market was very good. Still, Asbridge testified that those prices received are far less than what is necessary to cover expenses..., including debt service. A summary of the mortgagors' assets, debts, and history of operations is important to proper consideration of procedural delays for depressed agricultural prices under the confiscatory-price statutes. See Gress v. Kocourek, 427 N.W.2d 815, 817 (N.D.1988). Still, Asbridge was allowed to testify at some length in comparing their current ranching operations with their operations in the late seventies and early eighties when, together with other land, the ranch operated with 1,600 yearlings. Asbridge contrasted those earlier operations with a current capacity to operate at 400 cows and their yield through yearlings, and with current operations at only 250 cows and their yield through yearlings. On the whole, Thomas Asbridge's testimony was not unduly restricted. The trial court has wide discretion to control the introduction of evidence. NDREv 403. Even relevant evidence may be excluded when other considerations of undue delay, waste of time, or needless cumulation outweigh its probative value. Explanatory Note, NDREv 403. It is seldom reversible error for a trial court to admit incompetent or irrelevant evidence in a trial without a jury. Fuhrman v. Fuhrman, 254 N.W.2d 97 (N.D.1977). Still, the trial court's broad discretion controls unless a substantial right is affected. NDREv 103. Since Asbridges are unable to identify the omission of any important information by the trial court's exclusion of some history of this debt, we conclude that the error, if any, was harmless. The judicial power of forbearance through procedural delays in executions and foreclosures is authorized by statutes, collectively called the confiscatory-price defenses, inherited from the great agricultural depression of the 1930s. Federal Land Bank of St. Paul v. Halverson, 392 N.W.2d 77 (N.D.1986). Asbridges disclaim reliance on NDCC 28-29-05, effectively acknowledging that their debt greatly exceeds the value of their property mortgaged as security. Asbridges chiefly rely on NDCC 28-29-04 which empowers a court, in its discretion, to delay foreclosure procedures when the prices of agricultural products are below the cost of their production. Federal Land Bank of St. Paul v. Lillehaugen, 404 N.W.2d 452, 456 (N.D.1987). This defense is not absolute. In applying a confiscatory-price defense, a court cannot relieve mortgagors from making payments, cannot compel a mortgagee to accept less than the amount due, and cannot discharge mortgagors from their obligations. Lillehaugen; Folmer v. State, 346 N.W.2d 731, 735 (N.D.1984). Whether or not a farm emergency exists, to authorize discretionary procedural delays, is a question of fact reviewable under the clearly-erroneous standard of NDRCivP 52(a). Asbridge, 414 N.W.2d at 601. These standards guide our analysis here. In addition to Thomas Asbridge's testimony about his circumstances, the trial court heard the testimony of the Bank's expert, Dr. Cole Gustafson, a professor of agricultural finance in the Agricultural Economics Department of North Dakota State University. From his research and studies, Dr. Gustafson opined that, for the vast majority of North Dakota's farmers and ranchers in recent years, agricultural revenues have exceeded production costs. For a rancher with a cow-calf operation, Dr. Gustafson testified that for 1988 the average gross income per cow was over $478 and the average expense per cow was $230. He testified that revenues and expenses of ranchers during 1989 and 1990 were comparable. In Dr. Gustafson's opinion, the price of all farm products produced in this state during these same years exceeded the costs of production. From the evidence, the trial court found that prices of farm products within the State of North Dakota at this time are not confiscatory. The trial court determined that [t]here does not now exist an economic hardship or crisis in North Dakota's agricultural economy, and that foreclosure of this mortgage would not forc[e] the sale of farm commodities on a ruinous market. The trial court also found that, [g]iven the limited profitability of the defendant Asbridge's farming operation, a stay of reasonable length would not be effective to permit the defendants Asbridges to satisfy the debt owed.... The trial court concluded that additional delays of the foreclosure against Asbridges should not be granted since there is no reasonable likelihood that [As bridges] would be able to fulfill [their] entire obligations under the mortgage within a reasonable period of time. Foreclosure was decreed without additional delay. Whatever the cumulative effects and current realities of drought and low prices may be for other agricultural producers in this state, the evidence in this record supports the trial court's findings and conclusions. Of course, there are both generalized and individualized aspects to an agricultural depression. In general, economic conditions for livestock operators have improved in recent years. See NDCC 28-29-06 at note 3 above. But a modest economic recovery may not save every hardpressed producer following a depression, even with substantial delay. We believe that the trial court fairly considered both general agricultural conditions and the particular effects of those conditions on Asbridges' economic situation. The sheer size of Asbridges' debt and defaults, without any payments for over seven years except a small $1,000 payment during one bankruptcy delay, suggests little equitable standing for more delay. It is the extremely indebted and deeply distressed nature of Asbridges' operations, more than a ruinous market for their produce, that makes their situation hopeless. Given the accumulated delays exceeding seven years, combined with constant increases of Asbridges' debt, we conclude that the trial court did not misapply the confiscatory-price statutes in declining more delay in this case. We affirm the foreclosure decree. ERICKSTAD, C.J., and VANDE WALLE, J., VERNON R. PEDERSON, Surrogate Judge and LAWRENCE E. JAHNKE, District Judge, concur. VERNON R. PEDERSON, Surrogate Judge, and LAWRENCE E. JAHNKE, District Judge, sitting in place of LEVINE and GIERKE, JJ., disqualified.