Higley v. Woodard

• Decision Date: 29 September 1993
• Docket Number: No. 19275,19275
• Citation: 861 P.2d 101,124 Idaho 531
• Parties: Afton C. HIGLEY and Mary Louise Jacobsen, as personal representative of the Estate of Fred Jacobsen, Plaintiffs-Appellants-Cross Respondents, v. Van J. WOODARD and Margareta J. Woodward, husband and wife, Defendants-Respondents-Cross Appellants.
• Court: Idaho Court of Appeals

Page 101

861 P.2d 101

124 Idaho 531

Afton C. HIGLEY and Mary Louise Jacobsen, as personal representative of the Estate of Fred Jacobsen, Plaintiffs-Appellants-Cross Respondents, v. Van J. WOODARD and Margareta J. Woodward, husband and wife, Defendants-Respondents-Cross Appellants.

No. 19275.

Court of Appeals of Idaho.

Sept. 29, 1993.

Adamson & Summerhays, Pocatello, for appellants. Dannis M. Adamson argued.

Loveless, Neilsen & Loveless, Pocatello, for respondents. Michael B. Neilsen argued.

WINMILL, Judge pro tem.

This is an appeal from a decision of the district court adopting the findings of fact and conclusions of law of a special master appointed to preside over an accounting requested by the plaintiffs ¹ regarding the defendants' duty to pay rent under a written farm lease. For the reasons set forth below, we affirm.

The relevant facts may be summarized as follows. Dale T. and Helen B. Smedley (Smedley) acquired fee title, through a land exchange, to 736 acres of real property near Salmon, Idaho. Smedley did not intend to use the property for farming and ranching purposes but rather expected to develop it into a residential subdivision. However, in order to keep the property green and attractive to potential buyers, Smedley needed someone to farm and ranch the undeveloped portion of the property until his plan came to fruition. Thus, the defendants, Van J. and Margareta J Woodward (Woodward) entered the picture. Smedley and Woodward entered into a initial written lease agreement in November of 1977. However, this agreement was later superseded by the parties executing a document entitled "Farm Lease on Shares." The lease, effective as of November 1, 1977, was for a term of thirty years and involved all the farmable land included in a 736 acre tract.

The lease provided that Woodward was to pay rent in the form of one-half of all the crops grown on the land after deducting: (1) immediate familial living expenses, (2) payment of farm operating expenses, and (3) payments on any farm operating loans. Smedley was obligated under the lease to pay all taxes, assessments, and water-right expenses that would be levied upon the leased premises. The lease provided that upon its termination Smedley would convey 20 acres of property to Woodward. As time passed, additional matters transpired that were not addressed or provided for in the lease. For example, Smedley conveyed approximately 35 acres of land to Woodward, rather than the 20 acres provided for in the lease. Woodward never paid any rent to Smedley, nor did Smedley ever ask for a formal accounting for any rent that might be due under the lease.

Smedley's development plans never materialized and he found himself in severe financial difficulties in 1984. Thereafter, the plaintiffs acquired the property from Smedley either through foreclosure proceedings or by voluntary transfer to satisfy debts which Smedley had incurred. ² In one foreclosure action brought by the plaintiff Jacobsen, Smedley and Woodward were named as defendants. Although the action was primarily a foreclosure proceeding, Woodward was required to provide information, by way of interrogatories, regarding the net farm profit and rent paid according to the terms of the lease for the years 1977 through 1985. The district court's foreclosure order, entered December 15, 1987, specifically recognized Woodward's right to remain in possession of the premises provided that he was current in his lease obligations.

Despite the change in ownership, Woodward remained in possession and continued to farm the property as a whole. In November of 1988, the plaintiffs demanded that Woodward account to them for all transactions that had occurred under each year of the lease. Woodward was in the process of complying with their demand when the present suit was filed in January of 1989. In their complaint, the plaintiffs again demanded an accounting of all the transactions that had taken place under the lease and added a demand for a judgment for any amounts determined to be owing them. Woodward counterclaimed for monies that he had expended for taxes and assessments on the property which were to be paid under the lease by the lessor.

The district court appointed, pursuant to I.R.C.P. 53(a), a special master to preside over the accounting action. The special master conducted a hearing wherein witnesses testified, documentary evidence was introduced and admitted, and briefs were filed and considered. The special master's report recommended that the district court deny the relief requested by the plaintiffs because their claim was partially barred by the applicable statute of limitation and was precluded by the doctrine of res judicata because of the accounting provided in the Jacobsen foreclosure. However, the master also concluded that if the statute of limitation and the doctrine of res judicata did not bar the plaintiffs' claims, Woodward nevertheless owed the plaintiffs nothing because he had adequately accounted for all income and expenses incurred in his operation under the lease on shares from its inception through 1989. The special master also recommended that Woodward's counterclaim be denied. No objections were lodged regarding the special master's findings of fact and conclusions of law as provided by I.R.C.P. 53(e)(2). After reviewing the record and evidence presented, the district court entered an order adopting the special master's finding of fact and conclusions of law. This appeal followed.

Standard of Review

Initially we note the standard of review for the district court's adoption of the findings of fact and the conclusions of law of the special master. The district court is required to adopt the special master's finding of fact unless they are clearly erroneous. I.R.C.P. 53(e)(2); Rodriguez v. Oakley Valley Stone, Inc., 120 Idaho 370, 377, 816 P.2d 326, 333 (1991). In turn, the master's findings which the court adopts in a non-jury action are considered to be the findings of the court. I.R.C.P. 52(a); Seccombe v. Weeks, 115 Idaho 433, 435, 767 P.2d 276, 278 (Ct.App.1989) (citing 9 CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 2615 (1971)). Furthermore, the findings of the court will not be set aside on appeal unless clearly erroneous. I.R.C.P. 52(a). Consequently, our standard for reviewing the trial court's findings of fact is to determine whether they are supported by substantial, although conflicting, evidence. Seccombe, at 435, 767 P.2d at 278 (citing Rasmussen v. Martin, 104 Idaho 401, 404, 659 P.2d 155, 158 (Ct.App.1983)).

In contrast, the master's conclusions of law are not binding upon the district court, although they are expected to be persuasive. Rodriguez, at 378, 816 P.2d at 334. This permits the district court to adopt the master's conclusions of law only to the extent they correctly state the law. Id.; see 5A JAMES W. MOORE et al., MOORE'S FEDERAL PRACTICE p 53.12 (2nd ed. 1980). It necessarily follows that, to the degree the district court adopts the master's conclusions of law, they are also the conclusions of the court. Accordingly, our standard of reviewing the trial court's conclusions of law is one of free review. See Clark v. St. Paul Property & Liability Ins. Co., 102 Idaho 756, 757, 639 P.2d 454, 455 (1981).

Issues on Appeal

The plaintiffs raise six issues on appeal. Although not stated with clarity, those issues appear to fall into three categories which can be summarized as follows: (1) whether the district court erred by adopting the special master's findings that the plaintiffs' action was partially barred by the applicable statute of limitation and by the doctrine of res judicata; (2) whether it was error for the district court to adopt the findings of the master that the plaintiffs were bound by the waivers to conditions and covenants of the lease by their predecessor-in-interest and whether it was error to adopt the master's finding that the lease was more facade than substance; and (3) whether the district court erred by failing to note that the master improperly concluded the trial for accounting and whether it was error to adopt the master's finding that Woodward had adequately accounted to the plaintiffs. We will consider each argument in turn.

Statute of Limitation and Res Judicata

The special master recommended that the relief requested by the plaintiffs be denied as to certain years, because their claim was partially barred by the applicable statute of limitation and by the doctrine of res judicata. However, the master went on to consider the merits of the plaintiffs' claims. The master concluded that even if the statute of limitation and the doctrine of res judicata did not bar the plaintiffs' claims, Woodward's accounting, which the master accepted, demonstrated that he owed the plaintiffs nothing under the terms of the farm lease. Where the judgment of the lower court is based upon alternative grounds, the fact that one of the grounds may have been in error is of no consequence and may be disregarded if the judgment can be sustained upon one of those other grounds. Leydet v. City of Mountain Home, 119 Idaho 1041, 812 P.2d 755 (Ct.App.1991) (citing Fischer v. Fischer, 92 Idaho 379, 382, 443 P.2d 463, 466 (1968)). See Fox v. Board of County Commissioners, 121 Idaho 684, 827 P.2d 697 (1992). Because we conclude, for the reasons set forth below, that the master's acceptance of Woodward's accounting was supported by substantial evidence, we find it unnecessary to consider the plaintiffs' claim that the district court erred in adopting the master's recommendation that the plaintiffs' claims be dismissed under the statute of limitation and the doctrine of res judicata.

The Master's Characterization of the Lease on Shares

The plaintiffs argue that the district court erred by adopting the master's findings that the lease was more facade than substance and that the plaintiffs, as successors to the original lessor,...