K & K Farming, Inc. v. Federal Intermediate Credit Bank of Omaha

• Decision Date: 12 April 1991
• Docket Number: No. 89-048,89-048
• Citation: 237 Neb. 846,468 N.W.2d 99
• Parties: K & K FARMING, INC., a Nebraska Corporation, Appellant and Cross-Appellee, v. FEDERAL INTERMEDIATE CREDIT BANK OF OMAHA, Appellee and Cross-Appellant.
• Court: Nebraska Supreme Court

Page 99

468 N.W.2d 99

237 Neb. 846

K & K FARMING, INC., a Nebraska Corporation, Appellant and Cross-Appellee, v. FEDERAL INTERMEDIATE CREDIT BANK OF OMAHA, Appellee and Cross-Appellant.

No. 89-048.

Supreme Court of Nebraska.

April 12, 1991.

Syllabus by the Court

1. Ejectment: Proof. In an action for ejectment there is no burden on the defendant to show title, but the plaintiff must show title in the plaintiff.

2. Ejectment: Evidence. A plaintiff in an ejectment action must prevail, if at all, upon the strength of his own title and not upon the weakness of his adversary's title.

3. Ejectment: Appeal and Error. Since an action in ejectment is one at law, a trial court's findings will not be set aside on appeal unless clearly wrong.

4. Judgments: Appeal and Error. In reviewing the judgment awarded in a bench trial of a law action, the Supreme Court does not reweigh evidence, but, rather, it considers the evidence in the light most favorable to the successful party, and resolves evidentiary conflicts in favor of the successful party, who is entitled to every reasonable inference deducible from the evidence.

5. Ejectment. The essential elements of an action for ejectment are legal estate, a right of possession in the plaintiff, and unlawful detention by the defendant.

6. Statute of Frauds: Contracts: Evidence. The memorandum required by the statute of frauds is evidence of an oral contract and must contain the essential terms of the contract. Generally, the memorandum should contain the names of the parties, a description of the land, the price, the general terms of the agreement, and the signature of the vendor.

7. Statute of Frauds: Contracts: Evidence. The memorandum required by the statute of frauds is not the contract, but only written evidence of an oral contract.

8. Courts: Judgments: Appeal and Error. Where the record demonstrates that the decision of the trial court is correct, although such correctness is based on different grounds from those assigned by the trial court, the Supreme Court will affirm.

9. Judgments: Appeal and Error. A correct result will not be set aside merely because it was based upon incorrect reasoning.

10. Appeal and Error. An issue not presented to and passed upon by the trial court may not be raised on appeal.

Michael G. Helms and Mark R. Scherer, of Schmid, Mooney & Frederick, P.C., Omaha, for appellant.

William G. Dittrick and Anne M. O'Brien, of Baird, Holm, McEachen, Pedersen, Hamann & Strasheim, Omaha, for appellee.

HASTINGS, C.J., and BOSLAUGH, WHITE, SHANAHAN, GRANT, and FAHRNBRUCH, JJ.

FAHRNBRUCH, Justice.

K & K Farming, Inc. (K & K), the plaintiff in the trial court, appeals a district court determination in favor of the defendant, Federal Intermediate Credit Bank of Omaha (FICB), that K & K has no interest in a particularly described 2,560 acres of real estate in Rock County, Nebraska, and no right to the rents and profits derived therefrom. We affirm.

In disposing of this ejectment action, the district court for Rock County also found that K & K is estopped from claiming title, possession, or control of the property.

In an action for ejectment there is no burden on the defendant to show title, but the plaintiff must show title in the plaintiff. See Nuttelman v. Julch, 228 Neb. 750, 424 N.W.2d 333 (1988). A plaintiff in an ejectment action must prevail, if at all, upon the strength of his own title and not upon the weakness of his adversary's title. Kozak v. State, 189 Neb. 525, 203 N.W.2d 516 (1973), overruled on other grounds, Lillich v. Lowery, 211 Neb. 757, 320 N.W.2d 463 (1982); Comstock v. Kerwin, 57 Neb. 1, 77 N.W. 387 (1898).

Since an action in ejectment is one at law, a trial court's findings will not be set aside on appeal unless clearly wrong. Griggs v. Oak, 164 Neb. 296, 82 N.W.2d 410 (1957). See, also, Metropolitan Utilities Dist. v. Pelton, 236 Neb. 66, 459 N.W.2d 193 (1990). In reviewing the judgment awarded in a bench trial of a law action, the Supreme Court does not reweigh evidence, but, rather, it considers the evidence in the light most favorable to the successful party, and resolves evidentiary conflicts in favor of the successful party, who is entitled to every reasonable inference deducible from the evidence. Howells Elevator v. Stanco Farm Supply Co., 235 Neb. 456, 455 N.W.2d 777 (1990); Wurst v. Blue River Bank, 235 Neb. 197, 454 N.W.2d 665 (1990).

FACTUAL BACKGROUND

The history of this action is best understood if reviewed in chronological order. Considered in the light most favorable to the successful party, FICB, the facts are as follows: In 1972, K & K was incorporated for the purpose of conducting farming operations. Gerald R. Kirwan, Jr., was the president and sole shareholder of K & K. Between 1973 and 1974, Kirwan and his wife, Leona, through land contracts, purchased the subject real estate, comprising 2,560 acres in Rock County, Nebraska. Upon completion of payments over a 10- to 20-year period, the Kirwans were to receive warranty deeds which were placed in escrow.

On March 5, 1980, the Kirwans assigned their interest in the land contracts to the Valentine Production Credit Association (PCA) as security for loans to be used for annual operating expenses, which loans subsequently were drawn against a $4.7 million line of credit. In subsequent years, the line of credit and the Kirwans' indebtedness increased. Later, during the 1982 crop season, Kirwan pledged his stock in K & K to Galyen Petroleum Company (GPC) to secure the payment of a fuel bill in excess of $300,000.

On November 1, 1982, Kirwan recorded a "Notice of Contract of Sale" in the Rock County register of deeds' office. That filing gave notice of a purported contract of sale in which the Kirwans had agreed to sell the subject property, along with other real estate, to K & K.

With the downturn in the farm economy, the Kirwans were forced to file a chapter 11 bankruptcy petition in early 1983. Thereafter, the Kirwans defaulted on the PCA loan, and on August 10, 1984, PCA transferred the security assignments to the FICB.

On November 7, 1985, in order to foreclose on the K & K stock, GPC filed a "Motion for Relief from the Automatic Stay" in the Kirwans' bankruptcy proceeding. FICB filed an objection to this motion. Relying upon a stipulation executed by Richard Galyen, president and shareholder of GPC, individually and as an officer of the corporation, that GPC's interest in the bankruptcy estate was limited to the stock of K & K, FICB withdrew its objection. The stipulation contained a list representing all of K & K's assets. The list contained no real estate.

Threatened with foreclosure of the subject property by FICB, the Kirwans executed and delivered a conveyance of the subject property to FICB on February 26, 1986. The next day, FICB paid off the balances due on the original land contracts and subsequently recorded the deed the Kirwans had given it.

Subsequent to July 7, 1987, Galyen personally became the sole stockholder of K & K. On October 26, 1987, K & K filed an action in the district court for Rock County to eject FICB from the subject property. In its petition, K & K alleged it owned the subject property and alleged two causes of action: (1) that FICB should be ejected and (2) that K & K had a right to rents collected since FICB's possession. A separate interpleader action by third-party lessees was consolidated for trial with K & K's suit. The lessees tendered their rental payments to the clerk of the district court for Rock County, pending the outcome of the action between K & K and FICB. It was stipulated that the rentals were to be paid to the successful party in K & K's ejectment case.

Following trial of the ejectment action, the district court issued its judgment on December 16, 1988, holding in substance that K & K had no interest in the subject property and dismissing K & K's ejectment petition with prejudice. The court also found in the lessees' interpleader case that the funds paid by the lessees of the subject property to the clerk of the district court should be paid to FICB.

ASSIGNMENTS OF ERROR

In its appeal, K & K claims the trial court erred (1) in holding that K & K is estopped from asserting its interest in the subject property and (2) in holding that FICB has a continuing valid interest in the subject property.

In reference to its first assignment of error, K & K argues that it made a prima facie showing of its claimed interest in the subject property.

The essential elements of an action for ejectment are legal estate, a right of possession in the plaintiff, and unlawful detention by the defendant. Johnston v. Robertson, 171 Neb. 324, 106 N.W.2d 192 (1960); Neb.Rev.Stat. § 25-2124 (Reissue 1989). Through the testimony of Kirwan and Patrick Moylan, a former attorney, K & K attempted to prove that on November 1, 1982, the Kirwans, by written land contract, sold the subject property, along with an additional 5,300 acres, to K & K, as evidenced by a recorded notice.

K & K argues that a recorded notice of a contract of sale is prima facie evidence of a vendee's interest in the subject real estate. Neb.Rev.Stat. § 76-238 (Reissue 1990) provides, in pertinent part:

All deeds, mortgages and other instruments of writing which are required to be or which under the laws of this state may be recorded, shall take effect and be in force from and after the time of delivering the same to the register of deeds for recording, and not before, as to all creditors and subsequent purchasers in good faith without notice....

Relying on this statute, K & K claims that "[t]he necessary and logical effect of this statutory language is that a recorded instrument evidencing an interest in real property is sufficient to at least establish prima facie evidence of the interest expressed therein, as against subsequent creditors or purchasers." Brief for appellant at 10. The trial court stated that K & K had not proved a prima facie...