Tuesday, January 23, 2018
In-Kind Partition and Adverse Possession – Two Important Concepts in Agriculture
Farmers, ranchers and rural landowners frequently deal with many types of legal issues. Two of those sometimes involve the rules surrounding partition of farmland and adverse possession. These are two issues that heavily depend on state law and, as a result, the same set of facts can produce a different depending on the particular state.
In today’s post I take a look at a couple of recent cases that have again highlighted the importance of these issues.
Unfortunately, an all too common problem in estate planning for farm families is that farmland is left to multiple children equally as co-owners at the death of the surviving parent. That can create problems, particularly if there is at least one child that wants to continue farming the land and siblings that don’t. The sibling (or siblings) that don’t want to farm will often want to “cash out” their inheritance. Can the farmland be split-out between the siblings? That’s often difficult to accomplish, as a recent case illustrates.
In Wihlm v. Campbell, No. 15-0011 (Iowa Sup. Ct. Jan. 12, 2018), vac’g., 886 N.W.2d 617 (Iowa Ct. App. 2016), three siblings inherited approximately 300 acres of farmland as tenants in common when their father died. The land was divided into several parcels and two of the siblings brought partition actions seeking to have the properties sold and the proceeds divided. The other sibling (the defendant) wanted an in-kind division with respect to her share of about 79 acres and the homestead. The trial court ordered the entire property sold with the proceeds divided equally. The defendant appealed. An appraiser had testified at trial that if the property were sold at auction he would recommend selling it in separate parcels to bring a higher total selling price. The appraiser also testified that the tract that the defendant sought would be worth approximately one-third of the total value of the 300-acre tract. He also testified that an in-kind division would be fair and equitable. Another appraiser testified that it would be better to sell the entire tract together, but still another appraiser testified that more money could be realized on sale if separate tracts were sold.
The appellate court noted that the trial court had concluded that the defendant had failed to prove that the division of the properties in kind was equitable and practicable based on the testimony of two of the appraisers. But, the appellate court disagreed, noting that an appraisal is much more certain than speculation and that, in this case, the appraiser’s opinion was well supported. Accordingly, the court held that the defendant had proved that the division of the property was equitable and practicable. The court remanded the case for an in-kind partition of the property that the defendant requested, and for partition by sale of the balance with the proceeds split by the other siblings.
On further review, the Iowa Supreme Court vacated the court of appeals’ opinion on the basis that the defendant failed to meet her burden to prove that the partition in-kind was equitable and practicable. The Supreme Court gave no analysis for its opinion other than noting a 1968 Iowa Supreme Court opinion that stated the rule pertaining to partition of real estate “is unequivocal in favoring partition by sale and in placing upon the objecting party the burden to show why this should not be done in the particular case.” The Court followed that view in Newhall v. Roll, 888 N.W.2d 636 (Iowa 2016). Apparently, the conflicting testimony of the appraisers was insufficient to allow the defendant to prove that the division of the properties in-kind would be equitable and practicable.
Another topic that often arises in rural settings involves adverse possession. Adverse possession can involve boundary issues as well as access to property. But, again, the rules surrounding this issue are highly dependent on state law concerning the elements that must be establish to prove adverse possession. A recent case illustrates how the adverse possession rules work in Texas. Adverse possession gets particularly “messy” when mineral rights are also involved.
The facts of Hardaway v. Lou Eda Korth Stubbs Nixon, No. 04-16-00252-CV, 2017 Tex. App. LEXIS 10957 (Tex. Ct. App. Nov. 22, 2017) date back over 100 years. In the late 1800s, the Eckford’s owned, among other property, a 147.5-acre tract in Karnes County, Texas as community property. Mrs. Eckford was appointed as guardian of the community estate in 1893. Mr. Eckford died intestate on November 10, 1896. Under the laws of intestacy, one-half of the real property, which was community property, passed to Mrs. Eckford, and the other half of the real property passed to the couple’s nine surviving children. Mrs. Eckford conveyed portions of the property throughout her life, including a conveyance to the defendant’s predecessor in interest. When Mrs. Eckford died in 1928, her court appointed administrator advised the trial court that “all of the real estate” belonging to the estate should be sold to pay claims and expenses. Ultimately, in 1939, the administrator purported to sell all of the property once owed by the Eckfords as community property, including the 147.5 acres to the defendant’s predecessors.
The defendant’s parents entered into a mineral lease with Texas Oil & Gas Corp. in 1978 leasing the mineral rights in the entire 147.5 acres. At some point before 2012, Burlington Resources Oil & Gas Company and East 17th Resources, LLC (BRO&G) discovered information that led them to believe that the heirs of the Eckford’s owned an unleased one-half interest in the 147.5-acre tract that the defendant possessed. BRO&G believed that the defendant and the Eckford’s heirs were cotenants with regard to the 147.5 acres. As a result, BRO&G sought out and entered into mineral leases with numerous Eckford heirs. In 2012, because some of the numerous Eckford heirs could not be located, BRO&G instigated a receivership proceeding. The defendant intervened in the receivership action alleging sole ownership of the entire 147.5-acre tract. Ultimately, the defendant filed a motion for partial summary judgment in which he alleged full ownership of the property as a matter of law.
The trial court granted summary judgment in the defendant’s favor with regard to ownership of the property based only on constructive ouster and subsequent adverse possession. The Eckford heirs appealed. The appellate court held that a party claiming adverse possession as to a cotenant must not only prove his possession was adverse, but must also prove some sort of ouster. In addition, Texas law requires a summary judgment movant to do more than assert and prove “long-continued” possession under a claim of ownership and nonassertion of a claim by the titleholder to prove constructive ousters as a matter of law.
The appellate court determined that the only ground for summary judgment as to constructive ouster set forth in the defendant’s motion is long-continued possession coupled with absence of a claim by the Eckford heirs. The court determined that this neither asserted or established that they took “unequivocal, unmistakable, and hostile acts.” Therefore, the defendant failed to prove constructive ouster as a matter of law on the sole ground asserted in their motion. Accordingly, the appellate court reversed the trial court’s grant of summary judgment and remanded the matter to the trial court.
There are many cases involving these two issues, and the cases mentioned above are just a very small sample that illustrate an aspect of the real estate-related issues that rural landowners face. The cases also point out that a good lawyer well versed in these type of issues is good to have in tow.