Eberle v. McKeown

• Decision Date: 12 June 1968
• Docket Number: No. 10444,10444
• Citation: 83 S.D. 345,159 N.W.2d 391
• Parties: Mary D. EBERLE and Alfred M. Eberle, Plaintiffs and Respondents, v. Wayne McKEOWN, Defendant and Appellant.
• Court: South Dakota Supreme Court

Page 391

159 N.W.2d 391

83 S.D. 345

Mary D. EBERLE and Alfred M. Eberle, Plaintiffs and Respondents, v. Wayne McKEOWN, Defendant and Appellant.

No. 10444.

Supreme Court of South Dakota.

June 12, 1968.

Cheever & Mydland, Brookings, for defendant and appellant.

McCann & Martin, Brookings, for plaintiffs and respondents.

HOMEYER, Judge.

This is a suit brought by plaintiffs, Mary D. Eberle and Alfred M. Eberle, as lessors, to recover rents claimed to be due them under a farm lease, with the defendant, Wayne McKeown, as lessee, and for a termination of the lease. Upon trial to the court, judgment was entered in favor of plaintiffs for $5,145.13 of which $3,033.61 represented the balance of plaintiffs' share of corn, hay, and small grain for the year 1965. There is no dispute as to the latter amount. The remainder of the judgment, to wit, $1,950.82 represents unpaid balances from participation in federal agricultural programs found to be due plaintiffs for the years 1963 and 1964 and the full amount for the year 1965. Defendant concedes he owes $160.70 on the Eberle's share of the 1965 government payment. The court also found that McKeown had violated the terms of the lease and terminated the lease as of March 1, 1967. Defendant appeals.

The lease covers 629 1/2 acres known as the Eb-Dol farm near Brookings and is for a term of eight years beginning March 1, 1963. It is on a form prepared by the Economics Department of the Agricultural Experiment Station at South Dakota State University and is known as 'South Dakota Improved Farm Lease'. It purports to contain the main features of both cash rent and share-rent leases and is intended to give the landlord greater security of rent and property in exchange for greater freedom of operation by the tenant.

In brief it required the lessee to pay (1) as an annual rent for cropland on which crops are planted the cash value of 2/5 share of the annual average harvested yields for Brookings County based upon average monthly prices; (2) a like share computed the same way on alfalfa and hay land; (3) a stipulated cash rent for storage buildings and silo; (4) a 2/5 share of government payments on land retired or withheld from production. A preliminary rent payment was to be made on small grains and hay on October 1st and on row crops on December 1st of each year with final rent deferred until crop reports were published.

The primary dispute between the parties arises over the following provision in the lease: '2. Annual Rent for Government Controlled Land: The tenant agrees to pay as annual rent on land retired or withheld from production by governmental programs two fifths share or percent of any such governmental payment.'

The Eb-Dol farm participated in the Feed Grain Program of the Agricultural Stabilization and Conservation Service for each of the years 1963, 1964 and 1965. The program is designed to control feed grain surpluses and to maintain and improve farm prices by limiting producing acres. Producers ¹ of feed grains by diverting a certain minimum acreage ² from production of barley, corn and grain sorghums to approved conservation uses, usually summer-fallow, are entitled to diverted acre and price support payments in variable amounts determined by a history of yields, price support allowances and loan rates. The Eb-Dol farm has a corn base of 228 acres and a barley base of 122 acres. Regulations permitted producers to choose to divert acreage from either barley or corn, or part from barley and part from corn, with payment rates based on kind or kinds of feed grain crops actually diverted.

In 1963 the parties diverted 70 acres of which 63.4 acres was from barley production and 6.6 acres from corn production. The minimum rate of $5.83 per acre or $369.62 was paid for land diverted from barley production and $8.44 per acre or $55.70 for corn land diverted. The total diverted acre payment in 1963 was $425.32.

In 1963 McKeown planted 46.8 acres of barley and 221.4 acres of corn, the latter being the balance of the corn base with the former slightly under the barley base. The program provides for price support payments on acres planted of each commodity. These are determined by multiplying historical yields with a per bushel rate fixed by the Secretary of Agriculture. In 1963 the barley yield was 31 bushels and the rate 14 cents per bushel resulting in a $4.34 per acre price support. The corn yield was 37 bushels and the rate was 18 cents per bushel or a price support of $6.66 per acre. Barley price support payments were $203.11 and corn payments $1,474.52 for a combined total of $1,677.63.

In 1964 diverted acre payments were $2,840.60 and price support payments.$1,000.35. ³ In 1965, diverted acre payments were $401.77 and price support payments $2,199.04. ⁴

McKeown contends the Eberles are only entitled to a 2/5 share of the diverted acre payments under the contract. The Eberles maintain and the court found they were entitled to a 2/5 share of all government payments including price support payments on acres planted during each of the years 1963, 1964 and 1965.

A contract should be considered as a whole and all of its parts and provisions will be examined to determine the meaning of any part. The intention of the parties is to be ascertained from the entire instrument and not from detached portions. Bedell v. Steele, 71 S.D. 609, 28 N.W.2d 369; 17A C.J.S. Contracts § 297, 17 Am.Jur.2d, § 259. So considered, it is our opinion the Eberles were entitled to a 2/5 share of the price support payments under the terms of the lease.

Had the farm not been placed in the Feed Grain Program, the Eberles would have received a 2/5 share of the crop from each acre in the Eb-Dol farm. By participating a certain portion of such acreage was diverted from normal production and certain payments were made on those acres. In addition and as further compensation and incentive for the program the producers were entitled to additional payments on the acres which were actually planted. Price support payments depended upon diverting at least 20% Of the feed grain base of the farm from production. Without such diversion, no price support payments would have been made. With diversion the return from acres planted was augmented. A unilateral sharing of such increase by the tenant would be contrary to the provisions of the contract considered as a whole for it is obvious that except for cash rent of buildings it required the tenant to pay as rent an agreed percentage of farm income subject to any benefit or detriment accruing to him by reason of use of average county yields and monthly prices.

McKeown so testified and other portions of the record reveal considerable flexibility and fluctuation in annual diverted acre payments. In some years payments were at reduced rates for minimum diversion and substantially larger if maximum or near maximum acres were diverted. In other years no payments were made for minimum diverted acres and no benefits accrued to producers except for price support payments and loan privileges. In the latter instance, to give the lease the effect for which McKeown contends would result in all government payments accruing to him and none to the Eberles under administrative regulations when 20% Of the feed grain base was withheld from production. ⁵ This clearly was not intended by the lease.

We recognize that under the terms of the lease final rent is determined by using average yields in the county on crops plainted and average monthly prices on such crops. This is of no significance since such prices do not include amounts paid under the feed grain program. The price support payments result from limiting the production of crops and should be shared as other income from cropland.

That the trial court was correct in reaching that conclusion as to the meaning of the lease does not require the affirmance of the judgment in toto. The McKeown answer included an affirmative defense that payments for the 1963 and 1964 crop years were made and accepted by plaintiffs as settlement in full and these were accords and satisfactions for these two years. It appears without dispute that on July 27, 1964 when the final balances owed for rent were determined, McKeown issued his check to Eberles with a notation 'final 1963 cash rent'. On December 7, 1965 under similar circumstances he issued his check on which was written '1964 cash rent final'. The 1963 rent check included only $170.12 and the 1964 rent check included $1,136.24 as the Eberle's share of the government payments. These were $671.06 and $400.14 less than the amount Eberles were entitled to under the lease which the trial court allowed and included in the judgment. The Eberles accepted the 1963 and 1964 checks, but refused the 1965 rent settlement check. We are of the opinion the trial court was in error in allowing recovery of the additional $671.06 and $400.14 due them under the lease for the years 1963 and 1964.

At common law where a claim or demand was liquidated payment or acceptance of a part did not discharge the balance and did not constitute a valid accord and satisfaction...