Fargo Loan Agency v. Larson

• Decision Date: 02 February 1926
• Docket Number: 5042
• Citation: 207 N.W. 1003,53 N.D. 621
• Court: North Dakota Supreme Court

207 N.W. 1003

53 N.D. 621

FARGO LOAN AGENCY, a Corporation, Respondent, v. L. E. LARSON and Bresden-Larson Lumber Company, a Corporation, Appellants

No. 5042

Supreme Court of North Dakota

February 2, 1926

Appeal from the District Court of Stark County, Lembke, J.

Modified and affirmed.

Judgment affirmed. No costs on this appeal awarded either party.

Harvey J. Miller, for appellants.

G. R Brainard and Otto Thress, for respondent.

PUGH District Judge. BURKE, BIRDZELL, NUESSLE, and JOHNSON, JJ concur. Mr. Chief Justice CHRISTIANSON did not participate, Honorable THOMAS H. PUGH, Judge of the Sixth Judicial District, sitting in his stead, by request.

OPINION

PUGH, District Judge.

Plaintiff alleges defendants converted 288 bushels of wheat belonging to it by the terms of a farm lease of the land on which the grain was grown. The case was tried to a jury at the November, 1924 term of the district court of Stark county. At the close of the evidence, plaintiff and defendants made motions for directed verdicts, which motions were denied by the court and the issues submitted to the jury, which rendered a verdict in favor of the plaintiff for $ 43.43. Thereupon, plaintiff moved for judgment non obstante for a sum equivalent to the value of 288 bushels of wheat at the price of $ 1.41 per bushel, which plaintiff claimed was the highest market price of the wheat between the time of the alleged conversion and the trial of the case; and defendants likewise moved for judgment of dismissal of said action. The trial court granted plaintiff's motion and judgment was accordingly entered in favor of the plaintiff in the sum of $ 406.08 and the costs of the action, and it is from this judgment defendants have appealed.

Plaintiff as owner of the east half of the northwest quarter and lots 1 and 2 of section 19, township 137, north, of range 96, west, situated in Stark county, North Dakota, entered into a leasing contract with Mike P. Wanner, whereby the latter agreed to farm the land, during the farming season of 1923, on shares, plaintiff to furnish the seed and pay half the threshing machine bill, and each to have one half of the crops raised. It was further agreed that the lessee should sow the land to wheat; that in the event the land should remain listed for state hail insurance, the lessee should pay the one half of same and that his share of the crop should stand as security therefor; that the lessee should pay a note of $ 149.76 and interest, and that his share of the crops should be charged therewith; that the lessee should deliver lessor's one-half share of the crop in an elevator; that the remainder of the crop should be safely stored by lessee and to remain in the possession of the lessor until all the covenants of the lease should be fulfilled; and, that if any of the land should be planted to grain other than wheat, the plaintiff reserved the right to select wheat in place thereof. There is also a clause in the contract in the form of a mortgage, reciting, in effect, that lessee mortgaged to lessor his interest in the crops to secure the performance of all acts agreed to be performed on the part of the lessee.

January 25th, 1923, Wanner made chattel mortgage in favor of defendant Bresden-Larson Lumber Company, covering one half of the crops to be raised on said premises during the year 1923, to secure his note to defendant in the sum of $ 1,248.60, which was not paid at the time of the conversion or at the time of the trial.

It is admitted that Wanner harvested from said land 850 bushels of wheat and certain oats and barley. It is undisputed that plaintiff elected to take wheat in the place of the oats and barley. Wanner delivered 434 bushels of the wheat to plaintiff and stored the remainder in a granary on said premises, in accordance with the terms of the contract, to be held until the provisions thereof had been performed. The granary door was locked and the windows fastened or boarded up. It is also undisputed that on September 14th, 1923, defendant Bresden-Larson Lumber Company, sent trucks from New England to said premises to haul said stored wheat to New England. The granary was broken into by the men in charge of the trucks and 312 bushels of said wheat taken therefrom. Plaintiff learned of the taking of the wheat about December 13th, 1923. Thereafter, plaintiff, through its attorney, G. R. Brainard, interviewed Jones, the agent for Bresden-Larson Lumber Company, upon several occasions, in an effort to obtain an adjustment of the matter; and said attorney had some correspondence with L. E. Larson, an officer of the defendant company, in regard to a settlement of the matters in difference. Jones stated to Brainard that he expected to be able to obtain a settlement of the controversy and that suit would not be necessary. These negotiations for settlement covered some considerable time; they failed, and this action was commenced July 25th, 1924.

We first note appellant's contention that the farm lease was executed by the parties thereto October 28th, 1922. That at the time it was executed, there was no provision therein relative to the note of $ 149.76; that said provision was written into the contract April 9th, 1923, subsequent to the date of the execution of defendant's chattel mortgage on the crop, and consequently subsequent and inferior to the lien of said chattel mortgage. The undisputed testimony, however, shows the contrary, and is a sufficient answer to appellant's contention. Wanner testified he did not know whether he was to have the use of this land until shortly before seeding time the spring of 1923; that he went to Dickinson three or four times to see Brainard, attorney for the plaintiff, and also wrote letters to him relative to the leasing of the premises, that no contract was made for the land the fall of 1922; that it was signed the spring of 1923, and when signed the conditions relative to the note then appeared in the contract. Brainard, who was looking after the land for plaintiff, testified the negotiations relative to leasing the land between Wanner and himself commenced in September, 1922, and were not completed until the contract, embodying the condition relative to the note, was accepted by Wanner. The evidence shows positively that the contract was not signed until shortly before seeding time, the spring of 1923. It is dated April 9th, 1923, and Wanner, in writing, acknowledged receipt of a copy of it on that date.

Appellant asserts that the note in question was not in the nature of an advancement under the contract, and did not, therefore, constitute a lien on Wanner's share of the crop, superior to the lien of appellant's chattel mortgage. Wanner understood the contract to be that he was to give to plaintiff, for the lease of the land, one half of the crops grown and harvested therefrom, and in addition thereto, from the other half of the crop was to pay the note, hail insurance, one-half the threshing bill and other advances, if any, made him by plaintiff. The plaintiff so understood the contract, for Brainard testified that Wanner could not have had the use of the land on any other conditions. Indeed there is no controversy whatever between the parties to the lease as to the terms thereof. Each endeavored to perform the conditions of the lease conformably to the mutual understanding of its terms. Both landlord and tenant are in accord that the wheat stored in the granary was in the possession of the plaintiff, and was stored for the purpose of protecting plaintiff, to the extent of its interest therein.

The owner of farm land and the lessee have the undoubted right to incorporate in their contract of lease such conditions in relation to the crops to be raised therefrom as they in good faith mutually agree upon; and those claiming through or under the tenant acquire no greater rights in the subject of the contract, than the tenant has under that contract.

At the time of the execution of defendant's mortgage, the mortgagor, Wanner, had no interest whatever, as tenant or otherwise, in the land in question or the crops to be raised thereon during the farming season of 1923 covered by the mortgage. Later, by and through the execution of the lease contract, executed April 9th, 1923, he did acquire an interest in the property described in the mortgage. The title, right and interest acquired by the mortgagor, by virtue of that contract, inured to the mortgagee as security for the debt owing it by mortgagor. Comp. Laws 1913, § 6731; First Guaranty Bank v. Rex Theatre Co., 50 N.D. 322, 195 N.W. 564. And related back to the execution of the mortgage. Defendant's mortgage, however, attached only from the time of the execution of said lease contract, and to the extent only of the lessee's interest in the crops. Comp. Laws 1913, § 6706; Grand Forks Nat. Bank v. Minneapolis & N. Elevator Co., 6 Dakota 357, 43 N.W. 806; Iverson v. Soo Elevator Co., 22 S.D. 638, 119 N.W. 1006.

The rules for the interpretation of contracts like the one in suit, are clearly set forth in the case of Merchants' State Bank v. Sawyer Farmers' Co-op. Asso. 47 N.D. 375, 14 A.L.R. 1353, 182 N.W. 263, as follows:

"It is a well-settled principle of law that the ownership of realty carries with it as an incident thereto the prima facie presumption of the ownership of both the natural products of the land, such as grass and trees, and the emblements, or annually grown crops, but such presumption is not conclusive. And the owner of land may, in parting with the use of it to another, make such conditions and reservations in relation to the land itself or to the products growing from it as he chooses, instead of parting with the full right. 17 C. J 381. And where the owner of land, in parting with the use of...