Carlson v. Lilyerd

• Decision Date: 19 December 1989
• Docket Number: No. CX-89-1071,CX-89-1071
• Citation: 449 N.W.2d 185
• Parties: E. Jerome CARLSON, Respondent, v. J. Ralph LILYERD, et al., Appellants. J. Ralph LILYERD, et al., Appellants, v. E. Jerome CARLSON, Production Credit Association of St. Cloud, Respondents.
• Court: Minnesota Court of Appeals

Page 185

449 N.W.2d 185

E. Jerome CARLSON, Respondent, v. J. Ralph LILYERD, et al., Appellants.

J. Ralph LILYERD, et al., Appellants, v. E. Jerome CARLSON, Production Credit Association of St.

Cloud, Respondents.

No. CX-89-1071.

Court of Appeals of Minnesota.

Dec. 19, 1989.

Review Denied March 8, 1990.

Syllabus by the Court

1. Where shareholder/officers of family farm corporation claimed rights in the name of the family farm corporation but did not name the family farm corporation as a party to their suit, shareholder/officers had standing to seek relief when all parties agreed to consolidation of the action with another action arising out of the same transaction or occurrence that included the family farm corporation as a named party.

2. Sale or lease language of Minn.Stat. Sec. 500.24, subd. 6 (1986) includes assignment of a junior lienholder's interest.

3. A 1989 amendment of the definition of "immediately preceding former owner" under Minn.Stat. Sec. 500.24, subd. 6(b) precluding other than family farm entities from being an immediately preceding former owner is a clarification rather than a substantive change in existing law and therefore is retrospectively applicable.

4. Where the record before this court is inadequate to determine whether statutory prerequisites for relief are present, remand is appropriate.

Lawrence R. Johnson, Daniel D. Ganter, Jr., Steffen & Munstenteiger, Anoka, for E. Jerome Carlson.

James L. Wiant, Rinke-Noonan, St. Cloud, for Production Credit Ass'n of St. Cloud.

Ronald R. Frauenshuh, Jr., Ortonville, for appellants.

Heard, considered and decided by FORSBERG, P.J., and HUSPENI and KALITOWSKI, JJ.

OPINION

HUSPENI, Judge.

The trial court concluded that a statute requiring an offer of first refusal to the immediately preceding former owner of agricultural land when that land is sold did not apply to the instant case, and that appellants were not "the immediately preceding former owners" of certain agricultural land under that statute. Appellants allege both conclusions are error. In light of a recent statutory amendment and an insufficient record, we remand.

FACTS

In 1973 Big Meadow Ranch, Inc., a Minnesota corporation of which appellant J. Ralph Lilyerd was president and a shareholder and appellant Christel Lilyerd was secretary and a shareholder, executed a mortgage to Travelers Insurance Company on farm property owned by Big Meadow. Subsequently, Big Meadow executed mortgages to the Production Credit Association (PCA) in 1977 and 1982. All mortgages were secured by the same land.

In 1984 Big Meadow encountered financial difficulties. A Chapter 11 bankruptcy proceeding was initiated in January, 1985, which was subsequently converted to a Chapter 7 proceeding in August of that year. Bankruptcy proceedings were closed in February, 1986.

Upon Big Meadow's default on the first mortgage, Travelers foreclosed on the property. At the April 11, 1986 foreclosure sale, which all parties agree was appropriately conducted, Travelers was the high bidder.

On April 8, 1987, respondent E. Jerome Carlson acquired PCA's interests in the property. The next day Carlson recorded his acquisitions as well as his notice of intent to redeem the property in place of PCA. When Big Meadow had not attempted to redeem the property within one year of the foreclosure sale, Carlson did, and filed certificates of redemption on April 15 and May 6, 1987.

In February, 1988, Carlson initiated an unlawful detainer action against Big Meadow and the Lilyerds. After a March 1988 hearing, the trial court found that "the foreclosure proceedings were regular in all respects and fully complied with the requirements of [the statute]" and that "Carlson is entitled to immediate possession of the [p]remises."

On July 19, 1988, the Lilyerds sued Carlson and PCA alleging that they had been denied their statutory right of first refusal as the "immediately preceding former landowner." Subsequently, Carlson started a separate action against the Lilyerds and Big Meadow alleging that neither had an interest in the property. Carlson moved for a judgment on the pleadings in his action based on the results of the unlawful detainer action. A hearing on Carlson's motion, on the Lilyerds' motion to consolidate the files, and on the PCA's motion to dismiss the Lilyerds' complaint in their action, was heard March 17, 1989. At that hearing the parties agreed to consolidation of the files. Subsequently, in separate findings and conclusions, the trial court ordered judgment for Carlson in his action, stating that neither the Lilyerds nor Big Meadow were the immediately preceding former owners of the land. The trial court also dismissed the Lilyerds' action with prejudice, stating that the statute granting the right of first refusal was inapplicable to the Lilyerds' case and that the Lilyerds failed to state a claim upon which relief could be granted.

ISSUES

1. Did the Lilyerds or Big Meadow have standing to seek relief under Minn.Stat. Sec. 500.24, subd. 6?

2. Is Minn.Stat. Sec. 500.24, subd. 6 applicable to this case?

3. Were the Lilyerds denied a right of first refusal under Minn.Stat. Sec. 500.24, subd. 6?

ANALYSIS

Carlson, in his suit against the Lilyerds and Big Meadow, moved for "an order granting judgment on the pleadings * * * pursuant to Rule 12.03 of the Minnesota Rules of Civil Procedure." The Lilyerds, as plaintiffs in their case against Carlson and PCA, moved to consolidate the files. The trial court made its findings and conclusions and issued its orders

[u]pon the evidence adduced at the hearing, the files, records and proceedings herein and the Findings of Fact, Conclusions of Law and Order for Judgment in [the prior unlawful detainer action].

(Emphasis added.)

Because this case involves a motion for judgment on the pleadings where more than just the pleadings were considered, we review the trial court's determinations under a summary judgment standard. See Minn.R.Civ.P. 12.03; Hofstad v. Hargest, 412 N.W.2d 5, 7 (Minn.Ct.App.1987).

On appeal from a summary judgment it is the function of [an appellate] court only to determine (1) whether there are any genuine issues of material fact and (2) whether the trial court erred in its application of the law.

Betlach v. Wayzata Condominium, 281 N.W.2d 328, 330 (Minn.1979); Minn.R.Civ.P. 56.03. Additionally, "the nonmoving party has the benefit of that view of the evidence which is most favorable to him." Sauter v. Sauter, 244 Minn. 482, 484, 70 N.W.2d 351, 353 (1955), quoted in Nord v. Herreid, 305 N.W.2d 337, 339 (Minn.1981). Finally, "the moving party has the burden of proof." Hofstad, 412 N.W.2d at 7.

I.

Although questioned by the trial court, the issue of whether either the Lilyerds or Big Meadow had standing to seek relief under Minn.Stat. Sec. 500.24, subd. 6 was not addressed by the parties. We address it now to facilitate our consideration of the merits of the appeal.

The trial court apparently recognized that the Lilyerds, in their action against Carlson and PCA, had not included as a named party Big Meadow, the mortgagor of the property in question. The trial court stated:

The issue of whether [the Lilyerds] have standing to complain [about denial of a right of first refusal] cannot be resolved by motion since [the Lilyerds'] status appears to involve questions of fact.

We conclude that the trial court's concern was unnecessary. The Lilyerds' complaint states the record owner of the land to be Big Meadow but specifically notes that

[Big Meadow] was owned by and controlled by the individual plaintiffs [and] that the plaintiffs were the real parties in interest

* * * * * *

Thus the Lilyerds, in their action, did claim rights in the name of Big Meadow.

Under the rules of civil procedure

When actions involving a common question of law or fact are pending before the court, * * * it may order all the actions consolidated.

Minn.R.Civ.P. 42.01; see also Minn.R.Civ.P. 21. Rule 42.01 "is a flexible rule and * * * the procedure it contemplates is permissive and rests with the discretion of the trial court." Shacter v. Ricter, 271 Minn. 87, 92, 135 N.W.2d 66, 70 (1965). Further,

The fact that the dimensions of the separate actions may not be in all respects the same does not prevent consolidation if there exists between them the "common question of law or fact."

Shacter, 271 Minn. at 92, 135 N.W.2d at 69. Therefore, "in granting a motion to consolidate, the trial court must balance convenience against the possibility of prejudice." Id., 271 Minn. at 93, 135 N.W.2d at 70. The question common to both trial court actions was the nature of Carlson's title in light of the possible denial of a statutory right of first refusal. ¹ Because of this common question and because the parties agreed to consolidate, prejudice is not a concern. Thus, we conclude that the trial court properly exercised its discretion in consolidating these files. See Schacter, 271 Minn. at 92, 135 N.W.2d at 70 ("Since there is a fact question common to both actions, we cannot say that under the rule the trial court exceeded its power in making its order for consolidation"). As a result of the consolidation, the potential standing problems occasioned by Big Meadow's absence from the Lilyerds' suit as a named party were eliminated. ²

II.

By statute,

A state or federal agency or a corporation * * * when leasing or selling farm land * * * must offer * * * [the] land for sale or lease to the immediately preceding former owner at a price no higher than the highest price offered by a third party that is acceptable to the seller or lessor. * * * This subdivision does not apply if the former owner is a bankruptcy estate.

Minn.Stat. Sec. 500.24, subd. 6 (1986). ³ Here, Travelers was the high bidder at the foreclosure sale. After the sale, Big Meadow had one year to exercise its right of redemption and PCA as a junior lienholder also had a period during which it could redeem the property. See ...