Court Opinion

ID: 881924
Source: CourtListenerOpinion
Date Created: 2013-06-05 00:52:21.872771+00
Date Added: 2024-06-11T15:24:47.151645
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF MONTANA

THOMAS J. WINCHELL and DAVID WINCHELL,
                 Plaintiffs and Appellants,
         -vs-
STATE OF MONTANA, DEPARTMENT OF STATE
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              Defendants and Respondents.                                                     r

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APPEAL FROM:     District Court of the Seventeenth ~udicial~=itrict,
                 In and for the County of Dawson,
                 The Honorable H. R. Obert, Judge presidinq.

COUNSEL OF RECORD:
         For Appellant:
                 Thomas E. Smith; Moulton,    el ling ham, Longo       &     Mather,
                 ~illings, Montana
         For Respondent:
                 Lyle Manley; Dept. of State Lands, Helena, Montana

                                    submitted:   Sept. 1 5 , 1 9 8 9
                                      ~ecided: January 16, 1 9 9 0

Filed:
Justice William E. Hunt, Sr. , delivered the opinion of the
Court.

     Appellants, Thomas J. (Tom) and avid winchell, leased
land from the Department of State Lands (Department).
Following the Department's cancellation of their lease and
the Board of Land Commissioners' adoption of that decision,
the winchells petitioned for judicial review in the Seventh
Judicial ~istrictCourt, Dawson County. The ~istrictCourt
affirmed the decision. The winchells appeal to this Court.
We affirm.
     The sole issue raised on appeal is whether sufficient
grounds existed to justify the cancellation of State Lease
No. 0343 for mismanagement pursuant to § 77-6-113, MCA.
     In 1981, the Department of State Lands issued State
Lease No. 0343 to appellants, Tom and David winchell. The
477.9 acres of land covered by the lease formed a portion of
the common school lands, which are held in trust by the state
of Montana and administered by the Department. Income from
the lease of school trust lands is dedicated to the support
of the common schools of Montana.
     The winchell family has leased the property in question
for over 50 years. The lease that forms the basis of this
action was scheduled to run for a 10-year period, from
February 28, 1981 through February 28, 1991. Originally, the
acreage covered by the lease was to be used for grazing
purposes only. However, shortly after the parties executed
the agreement, they agreed to reclassify 32 acres as
agricultural land.    The winchells intended to develop a
water-spreading project for the purpose of cultivating an
alfalfa crop on the 32 acres.     To this end, and with the
financial backing of the Department and the united States
Soil Conservation Service (SCS), the Winchells constructed a
concrete diversion structure on a stream flowing through the
land.
      In 1983, the Winchells concluded that the water source
for the project was inadequate for producing a profitable
alfalfa crop. In 1984, they negotiated a lump-sum settlement
to repay the Department for the loan given them to develop
the water-spreading system.      Apparently, the parties were
confused as to whether the settlement payment reclassified
the 32 acres to grazing land. This question was resolved in
Winchell v. Department of State Lands (Mont. 1988), 764 P.2d
1267, 45 St.Rep. 2121 (Winchell -   I), where we affirmed the
District Court's issuance of a writ of prohibition against
the Department. In Winchell - we held that, upon payment of
                              I,
the lump-sum settlement, the 32 acres reverted to grazing
land.
      In May, 1984, Sharon Moore, land use specialist for the
Department's Eastern Land Office, visited the lease site.
Upon inspecting the land, she discovered a severe overgrazing
problem.    She observed that the cows on the property were
quite thin and, as she completed her inspection, they
followed her around bellowing as if       they were starving.
Moore also noticed that gravel had been   removed from a creek
bed and    a prairie dog town had been     established and was
thriving and growing.
     Moore called the Winchells several   days after her visit
and sent a follow-up letter dated May 14, 1984.        In the
letter, she advised that, to prevent further overgrazing
problems, the cattle must be removed from the land as soon as
possible.   She instructed the winchells to notify her when
they removed the cattle, which the Winchells failed to do,
although they testified that the cattle were taken off of the
lease site immediately after they received Moore's letter.
     Moore visited the site again in August, 1984.      Once
again, she observed severe overgrazing on the leased area.
Some of the land looked like little more than bare dirt.
Piles of manure were scattered about, indicating that the
fields had been grazed heavily during the summer. Moore also
sighted five to ten head of cattle on the property during
this inspection.
     Following the August inspection, Moore met with Tom
Winchell and learned that he had filed for bankruptcy. Moore
then performed a reappraisal of the lease site, in which she
recommended that the Department cancel the lease for poor
management, primarily due to the severity of the overgrazing
problem.   In October, 1984, she sent a memo to Mark Ahner,
area manager of the Eastern Land Office, outlining the
problems and recommending cancellation of the lease.
     Because of the pending bankruptcy proceedings, the
Department believed that it could not cancel the lease as
Moore recommended. However, on April 25, 1985, Ahner sent a
letter to the Winchells in which he placed several
restrictions on the lease.    These restrictions included 1)
grazing would be prohibited until after seed set in the fall
(approximately September 1st); 2 ) no more than 82 animal unit
months would be allowed on the native range land; and 3) no
grazing at all would be allowed on the 32-acre alfalfa field.
In addition, Ahner instructed the winchells to notify the
Department prior to turning any livestock onto state land and
to notify it within three days of removing animals from the
property.   Ahner also advised the winchells to repair the
concrete diversion structure, which had been damaged.
     Moore next visited the property on May 9, 1985. ~ u r i n g
this inspection, she observed cattle on the land and noted
that there remained a serious overgrazing problem.        The
prairie dog population was not under control and the concrete
diversion structure had not been repaired.
     Moore again visited the property on July 15, 1985, at
which time she observed three horses on the lease site. On
September 29, 1985, she observed three horses as well as 16
cow/calf pairs on the land.
     By motion dated January 22, 1986, the Department sought
an order from the Bankruptcy Court requiring the winchells to
advise in writing whether they assumed or rejected the lease.
Pursuant to a stipulation and order dated March 6, 1986, the
Winchells agreed to assume the lease, subject to the
following terms and conditions:
     1. No grazing will be allowed on the leased
     premises until after September 15th of each year.
     The condition will remain a portion of the lease
     until the state tract has been properly reclaimed
     as verified by a written re-evaluation from the
     Department of State Lands.
    2. No more than 82 animal unit months may        be
    utilized from native range land.
    3. Lessee will pay a one-quarter crop share for
    alfalfa hay cut from the water spreading system (32
    acres).  There will be no grazing on the alfalfa.
    In addition, debtor will be required to reseed the
    areas of the alfalfa fields which were destroyed by
    overgrazing.   Such alfalfa reseeding must be done
    to SCS specifications.     The reseeding must be
    completed during 1986 unless other plans are
    approved by the Department of State Lands in
    writing.
    4. prior to the turning out of any animal units on
    to the state land, the Lessee must notify the
    Eastern Land Office in Miles City in writing as to
    the number of livestock to be turned onto the state
    land and the date.     The Lessee must notify the
    Eastern Land Office in writing as to the date when
    such cattle are removed. Such notice must be given
    in writing within three days of taking the animal
    units off state land.
     5. The concrete diversion structure on the water
     spreading system must be repaired during 1986.
     6. The Lessee is required to adequately control
     the prairie dog population which exists on state
     land as required by the lease agreement.
     7. Any variations from this stipulation must
     receive prior written approval from the Department.
The stipulation was signed by Lyle Manley, attorney for the
Department, and Gerald B. Murphy, attorney for the Winchells.
     During 1986, Moore inspected the lease site six times.
During one visit in May, 1986, and two visits in July, 1986,
she sighted four horses in the alfalfa field.      During her
second July visit, she also noted that the concrete diversion
struct-urehad not been repaired and, as a result, gravel had
washed out onto the alfalfa field and the opening where the
structure had been had widened considerably.
     On September 4, 1986, Moore observed fo.urcow/calf pairs
in the alfalfa field.        She also encountered evidence
indicating that livestock had grazed on other portions of the
leased tract.
     On October 30, 1986, Moore observed 110 cows and calves
in the alfalfa field.      The alfalfa field had not been
reseeded.   The diversion structure had not been repaired.
Gravel had been removed from the creek bed.
     On November 25, 1986, the alfalfa field had not been
reseeded, no hay had been cut and the field was covered with
weeds. The prairie dog population was still out of control.
     Moore's final visit to the lease site occurred on May
29, 1987, after the Department had        sent notice of
cancellation to the Winchells.  At that time, she noted an
improvement in parts of the alfalfa field, although weeds
remained in the center of the field.       The prairie dog
population appeared to be fairly well under control.
However, several head of cattle were on the property.
     At no time did the Winchells inform the Department in
writing of the dates when livestock were turned onto or taken
off of the leased property.    At no time did the Winchells
repair the concrete diversion structure. At no time did the
Winchells ask for or receive permission to remove gravel from
the leased land, nor did they pay for the gravel that they
removed. At no time did the Winchells receive prior written
approval from the Department to allow a variation from the
provisions of the stipulation.
     In April, 1987, the Bankruptcy Court lifted the
automatic stay provided by the Bankruptcy Act. On April 3,
1987, the Department sent notice of cancellation of the lease
to the Winchells.    Pursuant to the Winchells' request, a
hearing on the matter was held on June 11, 1987. On October
16, 1987, the hearing examiner proposed an order cancelling
the lease, finding that the Winchells had mismanaged the
lease by overgrazing the land, failing to adequately control
the prairie dog population and weeds on the land, taking
gravel from the creek bed, failing to repair the concrete
diversion structure, failing to harvest the alfalfa crop and
failing to pay crop-share payments for the alfalfa crop. The
Board of Land Commissioners (Board) adopted the hearing
examiner's order on February 25, 1988.         The Winchells
appealed   to the District Court, which         affirmed the
cancellation order. The Winchells now appeal to this Court.
     Prior to the Board's adoption of the hearing examiner's
order, the Department attempted, in December, 1987, to cancel
automatically the lease for nonpayment of agricultural
rentals pursuant to 5 77-6-506, MCA. This attempt led to the
Winchells' application for a writ of prohibition, which the
District Court granted and we affirmed in Winchell - (see
                                                       I
discussion above).
     The standard of judicial review of a contested
administrative case is set out at        2-4-704, MCA, which
provides in pertinent part as follows:
     ( 2 ) The court may not substitute its judgment for
     that of the agency as to the weight of the evidence
     on questions of fact.     The court may affirm the
     decision of the agency or remand the case for
     further proceedings.    The court may reverse or
     modify the decision if substantial rlghts of the
     appellant have been prejudiced because:
     (a) the    administrative   findings,   inferences,
     conclusions, or decisions are:
    (i) in violation of constitutional or statutory
    provisions;
     (ii) in excess of the statutory authority of the
     agency;
     (iii) made upon unlawful procedure;
     (iv) affected by other error of law;
    (v) clearly erroneous in view of the reliable,
    probative and substantial evidence on the whole
    record;
    (vi) arbitrary or capricious or characterized by
    abuse of discretion or clearly unwarranted exercise
    of discretion.
     The Winchells argue that the decision of the hearing
examiner, which was subsequently adopted by the Board and
affirmed by the District Court, was clearly affected by an
error of law, thereby prejudicing their substantial rights.
The error of law relied upon by the Winchells is the hearing
examiner's conclusion that 32 acres of the leased land were
set aside for agric.ult.ura1
                           p.urposes.
     We agree with the Winchells that this conclusion was in
error for, as we held in Winchell - the acreage reverted to
                                   I,
grazing land in 1984. We do not agree, however, that this
erroneous conclusion prejudiced the Winchells' substantial
rights.
     The findings of fact and conclusions of law set forth by
the hearing examiner demonstrate that the lease was cancelled
for a number of reasons other than the Winchells' failure to
harvest the alfalfa crop or remit a crop-share payment.
Primary among the reasons for cancellation was the winchellsf
mismanagement by overgrazing and by failing to abide by the
restrictions placed upon the land by the Department in 1985
and the bankruptcy stipulation and order in 1986.
     The hearing examiner specifically determined that the
Winchells were in gross violation of S 77-6-113 (1)(h), MCA,
which provides:
     (1) It shall be a condition of all leases of
     agricult.ura1or grazing state lands that:

    (b) in the case of grazing lands, the lessee shall
    observe   the   ordinary rules    for good    range
    management and shall manipulate the numbers, class,
    distribution, and season of the range use and the
    handling, feeding, breeding, and marketing of
    grazing livestock with a view of securing the
    production of the maximum of livestock and
    livestock     products,   consistent    with    the
    conservation of the land resources and the
    perpetuation of its productivity, and to these ends
    the state land lease may not be abused by
    overgrazing.
     The facts leading to this conclusion were not clearly
erroneous but were supported by         substantial credible
evidence. The testimony and demonstrative evidence of Sharon
Moore graphically illustrated the deplorable condition of the
land. Photographic evidence demonstrated that in many places
the land had been stripped of vegetation, leaving little more
than bare dirt. Photos taken of the fence line between the
lease site and a neighbor's property revealed that the damage
extended only as far as the fence line, lending little
credence to the Winchells' contention that the damage was due
to hailstorms, drought and grasshoppers, not to overgrazing.
      Altho.ugh the Department directed the winchells to keep
livestock off of the land until the fall of each year, a
restriction the Winchells agreed to in the bankruptcy
stipulation, the evidence demonstrated that they consistently
ignored this restriction. ~ u r i n gthree visits to the site in
1985, and during five out of six visits to the site in 1986,
Moore observed livestock on the land. The winchells claimed
that the livestock was not theirs, that fences periodically
washed out, allowing neighbors' cattle to stray on the land.
Even assuming the contention is true, it is not relevant.
The winchells agreed that no grazing wo.uld be allowed on the
land before September 15th of each year.          If neighbors'
cattle strayed onto the land, it was the ~inchells'
responsibility to make sure that they were removed.
      The gross violation of a state lease by overgrazing
mandates cancellation of the agreement. section 77-6-113(2),
MCA. In addition, the Department may cancel a lease in order
to do justice to all parties concerned and to protect the
interests of the state.       section 77-6-210 (e), MCA.     The
evidence in this case amply demonstrated an abuse of state
land.    The winchells violated the ordinary rules of good
range management by allowing overgrazing of the land and by
repeatedly refusing to comply with the restrictions placed
upon the lease to alleviate the effects of the overgrazing.
The winchellst disregard for their responsibility for state
land justified the cancellation of the lease in order to
protect the interests of the state of Montana.
     Affirmed   .

We Concur: