Court Opinion

ID: 9799293
Source: CourtListenerOpinion
Date Created: 2023-08-31 06:58:16.780889+00
Date Added: 2024-06-11T09:17:58.060937
License: Public Domain

*905SANDSTROM, Justice,
dissenting.
[¶ 43] I respectfully dissent. The Audubon corporation cannot rely on its ongoing and longtime violation of the Corporate Farming Law to justify its continuing violation. Like all persons, the Audubon corporation is presumed to know the law and is properly precluded from claiming benefit from its wrongful conduct.
I
[¶44] This Court has previously indicated that compliance with North Dakota’s Corporate Farming Law is a continuing obligation:
The 1981 amendments repealed the exception relied upon by the district court in its 1965 decision, leaving in effect statutory language which forbids the ownership of land by a corporation except under circumstances not here pertinent. That language provides no authorization for a corporation such as Lamb to own farmland. Rather, the unambiguous language of the 1981 amendments can only be construed to mean that the Legislature intended that a corporation’s continuing ownership of farmland is subject to those amendments.
State v. J.P. Lamb Land Co., 401 N.W.2d 713, 717 (N.D.1987) (footnote omitted).
[¶ 45] When there is a continuing obligation, laches does not apply. See, e.g., Richter v. Richter, 126 N.W.2d 634, 637 (N.D.1964) (“It has been held that, since a divorce decree providing for the payment of alimony is a continuing order, the enforcement thereof cannot be barred by laches, and that mere lapse of time alone will not suffice to defeat a claim for alimony due.”).
[¶ 46] The Audubon corporation bought farmland in violation of the Corporate Farming Law. Under the caselaw of this Court, the Corporate Farming Law does not hold corporations liable only for a once-in-time violation of the law, but rather requires a continuing obligation of compliance. See J.P. Lamb Land Co., 401 N.W.2d at 717. The Audubon corporation is therefore subject to a continuing obligation to not own farmland. Because there was a continuing obligation which Audubon violated, I would conclude that laches does not apply in this case.
II
[¶ 47] Even if the doctrine of laches applied in this case, I disagree with the majority’s position that the unclean hands doctrine does not apply to prevent the Audubon corporation from asserting the defense of laches. The “clean hands” doctrine generally provides:
“Clean hands” is a legal euphemism which refers to the acceptability, cleanliness, and decency of the claim put forth. It means that a claim tainted with deceit and impurity of motive, which, if of decent character, would perhaps receive approval, will unhesitantly be ignored. It means that whenever a party who seeks to set the judicial machinery in motion and obtain some equitable remedy has violated conscience or good faith, or another equitable principle in prior conduct with reference to the subject in issue, the doors of equity will be shut[.]
27A Am. Jur.2d Equity § 98 (footnote omitted).
[¶ 48] The State argues the Audubon corporation cannot assert the equitable remedy of laches because of its unclean hands in acquiring property in violation of North Dakota law. See Majority, at ¶ 21. Concluding the unclean hands doctrine does not apply in this case, the majority responds by stating, “[T]here is nothing in the record to show that Audubon had actual, as opposed to presumed, knowledge the *906land purchase violated state law, engaged in any misconduct to delay the suit, or attempted to hide or mislead the State concerning its acquisition and ownership of the property in any way.” Id. at ¶ 23. Contrary to the majority’s reasoning for refusing to apply the doctrine of unclean hands, this Court has previously held, “Every person generally is charged with knowledge of the provisions of statutes and regulations and must take notice thereof.” Gonzalez v. Tounjian, 2003 ND 121, ¶ 20, 665 N.W.2d 705. “To each petitioner knowledge of the law must be presumed.” State v. Hanna, 31 N.D. 570, 154 N.W. 704, 707 (1915); see also Paulson v. Ward Cnty., 23 N.D. 601, 137 N.W. 486, 487 (1912) (“With knowledge of the law thus imputed and conclusively presumed, the acceptance of the warrant operated as an accord and satisfaction.... ”). For the Audubon corporation to overcome the presumption it knew it was violating the law, it must make some showing to the contrary.
[¶ 49] This Court has recognized the potential danger in allowing businesses to claim ignorance of the law:
Even if neither the seller of the securities nor the purchaser of the securities was cognizant of the restriction contained in Section 40-57-10, N.D.C.C., such a fact could not justify a rescission of the contract under Subsection (1), as such a fact would not constitute a misapprehension or a misunderstanding by the parties of the meaning of any particular law. It might instead constitute an ignorance of the law. If we were to permit a rescission based upon ignorance of the law, we would set a precedent which could completely upset the business community of this state.
Security State Bank v. State of North Dakota, 181 N.W.2d 225, 234 (N.D.1970).
[¶ 50] In order to prove it did not know the law, the Audubon corporation would have to show that its agents did not know the law. See, e.g., Am. Bank Ctr. v. Wiest, 2010 ND 251, ¶ 15, 793 N.W.2d 172 (“Generally, the knowledge of the board of directors, officers, or agents of a corporation is imputed to the corporation.”). This rationale has been applied in the criminal context as well:
Except as otherwise expressly provided, a person’s good faith belief that conduct does not constitute a crime is an affirmative defense if he acted in reasonable reliance upon a statement of the law contained in:
1. A statute or other enactment.
2. A judicial decision, opinion, order, or judgment.
3. An administrative order or grant of permission.
4. An official interpretation of the public servant or body charged by law with responsibility for the interpretation, administration, or enforcement of the law defining the crime.
N.D.C.C. § 12.1-05-09.
[¶ 51] In this case, the Audubon corporation has made no showing that its agents did not know the corporation’s purchase of the farmland was illegal. This is insufficient to overcome the presumption that the Audubon corporation had knowledge of the law.
[¶ 52] “If the wrong is shown to be merely collateral to the complainant’s cause of action, it does not constitute a matter of defense.” 27A Am.Jur.2d Equity § 104. Audubon’s violation of North Dakota’s Corporate Farming Law goes to the core of this action in equity. I would therefore conclude that even if laches applied in this ease, the Audubon corporation is prevented from asserting this defense, because it has unclean hands as a result of its acquiring the farmland in violation of the Corporate Farming Law.
*907III
[¶ 58] It is only through a double standard — charging the Attorney General with presumed knowledge of Audubon’s unlawful acts, at ¶¶ 25-27, but exonerating Audubon from its presumed knowledge of the unlawfulness of its acts, at ¶ 23 — that the majority achieves its result. The majority says presumed knowledge of the Attorney General is enough, but says Audubon has to have actual knowledge. If presumed knowledge is the requirement of both the Attorney General and Audubon, Audubon loses. If actual knowledge is required of both the Attorney General and Audubon, Audubon loses. It is only through a double standard that Audubon prevails, and such a double standard is inconsistent with justice and equity, and the principles reflected in Blocker Drilling Canada, Ltd. v. Conrad, 354 N.W.2d 912 (N.D.1984).
IV
[¶ 54] Although the majority does not decide it, Audubon corporation has cross-appealed, challenging the constitutionality of North Dakota’s Corporate Farming Law. The law is presumptively constitutional, Weeks v. Workforce Safety & Insurance, 2011 ND 188, ¶ 9, 803 N.W.2d 601, and the district court’s analysis persuasive.
V
[¶ 55] I would reverse and remand.
[¶ 56] DALE V. SANDSTROM