Court Opinion

ID: 9872280
Source: CourtListenerOpinion
Date Created: 2023-09-26 20:57:59.601323+00
Date Added: 2024-06-11T07:46:26.157296
License: Public Domain

Crothers, Justice,
concurring and dissenting.
[¶ 18] I concur in the result. But I respectfully dissent from the majority’s dis-positive legal holding. I agree we must reverse, but for a far different reason than expressed by the majority. I agree we must remand, but also for a far different reason than held by the majority.
[¶ 19] The majority correctly concludes that mortgage foreclosure statutes controlling ownership of rentals do not apply. Majority, at ¶ 9. The majority also correctly concludes that a district court does not err as a matter of law in not permitting a redemption period in every case. Majority, at ¶ 10. I respectfully submit that the majority does not correctly conclude the district court had discretion to decide which party was entitled to the rental payments for the time the purchasers were lawfully in possession of the land. See Majority, at ¶11.
[¶ 20] The majority reverses the district court’s award of the 2015 rental payment to the property seller. Id. at ¶¶11, 13. I agree that holding must be reversed. However, the majority remands for the district court to explain why it awarded the $164,202.40 rental payment to one party rather than the other. |d. at ¶13. I would remand for the district court to enter judgment for the purchasers because, as a matter of law, they are entitled to receive the payment for rental of the property *219they lawfully possessed during the 2015 growing season.
[¶ 21] The outcome here is controlled by both the holding and the underlying rationale in Nearing v. Coop, 6 N.D. 345, 70 N.W. 1044 (1897). Although an old case, the rationale and its underpinnings remain sound. See Johnson v. Finkle, 2013 ND 149, ¶ 17, 837 N.W.2d 132. There, Nearing was purchasing farmland from New England Mortgage Security Company on a contract for deed executed in 1891. Id. Nearing grew crops on the land and performed his obligations under the contract in 1892, 1893 and 1894. Id. In 1895 Nearing failed to make his land payment or pay taxes, thereby defaulting under terms of the contract. Id. at 1044-45.
[¶ 22] In April of 1895 New England Mortgage rented the land to Coop. Id. Nearing objected and advised Coop that he owned the land that was being financed under a contract for deed, Nearing and Coop subsequently agreed that Coop would pay Nearing to rent the land for the 1895 growing season. Id. at 1045. Coop farmed the land during the 1895 growing season but did not pay Nearing any rentals. Id. Nearing sued Coop to recover the unpaid rentals. New England Mortgage intervened as a defendant. Id. This Court held Nearing was entitled to recover the unpaid rentals from Coop because Nearing was entitled to “treat the land as his own.” Id. at 1046.
[¶ 23] The Court first noted Nearing was in default at the time of the transaction with Coop. Id. at 1044. The Court dismissed any significance of Nearing’s default on his ability to recover rentals from Coop, holding:
“But we regard the existence or nonexistence of default under the contract of purchase as entirely immaterial for the purposes of this action. It has been frequently held that where land is conveyed by contract specifying the time and manner of future payments therefor, which the grantee undertakes to make, the grantor agreeing that, upon the making of such payments, he will convey to the grantee by deed, the grantee at once upon the execution of the contract becomes the equitable and beneficial owner thereof, and that the grantor holds the legal title in trust for the grantee, and as his security for the performance of the covenants on the part of the grantee.”
Id. at 1045 (emphasis added).
[¶ 24] The Court further held that, as long as the contractual relationship between the vendor and vendee existed and Nearing was in possession of the land, “Nearing[ ] was entitled to treat the land as his own, to crop or rent the same as he might see proper, and, if rented, was entitled to receive or recover the rent therefor.” Id. at 1046.
[¶ 25] Here, the district court conducted a hearing on April 10, 2015, to address utilization of the disputed property during the 2015 crop year. On April 14, 2015, the court issued its order that the property should be rented on bids with the contract for deed purchasers having a “right of first refusal” to match the highest third-party bid. Purchasers did that and deposited $164,202.40 with the seller’s attorney. Trial was held on May 21, 2015, and the district court made its findings of fact, conclusions of law and order for judgment on September 18, 2015. Those findings, conclusions and order were amended on January 19, 2016. Judgment was entered on January 28, 2016.
[¶ 26] Under the facts of this case and the law provided in Nearing v. Coop, the purchasers were the legal owners entitled to the use, profits and rentals from the property until at least when their pay-*220merits were due 90 days and 120 days after entry of the district court’s judgment. As the purchasers and owners, they, and not the estate as the seller and contract for deed vendor, were entitled to rentals for the 2015 growing season.
[¶ 27] Rather than comport with this law and outcome, the majority relies on a general legal encyclopedia and a North Dakota specific performance case that generally describes a court’s equitable powers. Neither are controlling and both should be viewed as unpersuasive.
[¶ 28] The majority cites the encyclopedia Corpus Juris Secundum for the proposition that a party suing to cancel a deed generally can recover rents and profits from the land. Majority, at ¶ 11. Unsaid is that the article relates to the cancellation or rescission of a conveyance. 12A C.J.S. Cancellation of Instruments §§ 1-2, p. 497 (2015). Within the article, rescission and cancellation have the same meaning, which is to nullify the underlying agreement. Id. at § 3. North Dakota has long recognized that rescission unwinds the transaction and requires that parties be placed back into their pre-contracting positions as if the transaction did not occur. Raymond v. Edelbrock et al., 15 N.D. 231, 107 N.W. 194, 195 (1906) (“Rescission of a contract is the act of canceling it by restoring the conditions existing immediately before it was made. Rescission is effected by each party returning to the other what has been received pursuant to the contract or its equivalent.”). In that circumstance, logic dictates that a seller rather than a purchaser would be entitled to rents and profits from the land at issue because the sale is being nullified. Here, the transaction is not being rescinded; rather the seller is attempting to foreclose the contract for deed. In this action the contract is being enforced; not rescinded. Therefore, the CJS citation is unhelpful.
[¶ 29] The majority also cites Arhart v. Thompson, 75 N.D. 569, 579, 31 N.W.2d 56, 62 (1948), for the proposition that “a court of equity has the power to adjust the rights of the parties with regard to interest, rents and profits and make complete adjudication of all matters involved in the case.” Majority, at ¶ 11. However, that general statement was made in an action to specifically enforce a contract for the sale of real estate. 75 N.D. 569, 31 N.W.2d at 57. The Court ultimately held the purchaser was entitled to specifically enforce the purchase contract, and the statement was made to describe the conflicting equities when, during pendency of litigation, the seller had possession of the purchaser’s tendered purchase payment and rentals generated from the property but also had expenses for taxes, insurance and upkeep of the property. Id. at 62. In that context, the Court in Arhart held, “This court finds that the most equitable adjustment of this matter is to allow to the defendants rents that have been collected or have accrued on this property up to the time title is finally transferred to the plaintiff.” Id.
[¶ 30] The statement of a court’s exercise of general equitable authority in a specific performance case has little or no sway in this contract for deed foreclosure action. And, to the extent the district court might have equitable discretion in a contract for deed foreclosure action, that discretion is regulated by judicial decisions made directly in the context of contract for deeds. One such holding is Nearing v. Coop, extensively discussed above. The Nearing holding clearly directs that a contract for deed purchaser is entitled to rents and profits, just as a full legal owner would be entitled. Applied to this case, Justin Beckstrand and James Beckstrand, through his surviving spouse Cynthia Beckstrand, are entitled to rentals from *221the 2015 growing season and I would remand for entry of judgment accordingly.
[¶ 31] Daniel J. Crothers