Prescott v. Smits

• Decision Date: 13 December 1985
• Docket Number: No. 84-184,84-184
• Citation: 146 Vt. 430,505 A.2d 1211
• Court: Vermont Supreme Court
• Parties: Richard G. PRESCOTT and Nancy S. Prescott v. Dirk K. SMITS and Kay Smits.

Page 1211

505 A.2d 1211

146 Vt. 430

Richard G. PRESCOTT and Nancy S. Prescott v. Dirk K. SMITS and Kay Smits.

No. 84-184.

Supreme Court of Vermont.

Dec. 13, 1985.

Reargument Denied Jan. 22, 1986.

Peter F. Langrock and James W. Swift, of Langrock Sperry Parker & Wool, Middlebury, for plaintiffs-appellees.

Dinse, Erdmann & Clapp, Burlington, for defendants-appellants.

Before HILL, PECK, GIBSON and HAYES, JJ., and BARNEY, C.J. (Ret.), Specially Assigned.

HILL, Justice.

This case asks us to determine the nature and duration of a tenancy created by entry under a lease agreement which is unenforceable under the Statute of Frauds. The superior court found that a year-to-year tenancy was created and adjudged the defendants liable for one year's rent less payments made. We affirm.

In early 1982, defendants-appellants, Dirk Smits and Kay Smits, approached plaintiffs-appellees, Richard Prescott and Nancy Prescott, and inquired about leasing the Prescotts' farm located in Panton, Vermont. The parties negotiated the lease agreement over a two-month period. Defendants, experienced dairy farmers, personally inspected and examined the property during the course of these negotiations. The parties eventually agreed that defendants would lease the farm for three years beginning on May 1, 1982. An annual rental of $14,400.00 was agreed upon, the rent to be paid in equal monthly installments.

Defendants moved themselves and their herd onto the farm in March of 1982, with plaintiffs' approval. During the summer months they made rental payments to plaintiffs totaling $2,600.00. The plaintiffs drew up a lease incorporating the durational and rental terms cited above. The defendants, however, objected to certain other provisions of the lease agreement and refused to sign the instrument.

Defendants experienced problems from the outset of their tenancy. In April and May, eight of their cows died; six other cows suffered from various forms of mastitis. When defendants complained that their water supply was inadequate, plaintiffs installed a new pump at their own expense.

Defendants vacated the farm in October of 1982, without giving plaintiffs prior notice. In November defendants harvested corn which they had planted on the farm and removed it from the property.

Plaintiffs began reasonable efforts to re-lease the property toward the end of 1982. In March of 1983, the farmhouse was re-leased for a monthly rental of $250.00. In May the farmland was re-leased for an annual rental of $4,500.00.

Plaintiffs brought this action for nonpayment of rent. Defendants counterclaimed for damages suffered because of plaintiffs' breach of their agreement to furnish defendants a farm in condition reasonably fit for the operation of a dairy farm.

By statute, to sustain an action at law an agreement to lease property for more than one year must be signed by the party to be charged therewith, or by his agent. 12 V.S.A. § 181(5). All "[e]states or interests in lands, created or conveyed without an instrument in writing shall have the effect of estates at will only." 27 V.S.A. § 302; see Barlow v. Wainwright, 22 Vt. 88, 91-92 (1849) (quoting former statute).

It is not disputed that an estate at will can be converted to a year-to-year tenancy. See, e.g., Rich v. Bolton, 46 Vt. 84, 87 (1873); Silsby v. Allen, 43 Vt. 172, 177 (1870); Barlow, supra, 22 Vt. at 92. Defendants, citing Barlow, supra, and Rich, supra, however, maintain that such a conversion can only be effected where there is continued possession over a period of years and payment of annual rent. We disagree.

Entry and occupation under an invalid oral lease creates a tenancy which is either from year to year, from month to month, or strictly at will, depending on the circumstances of the case. See 3 G. Thompson, Commentaries on the Modern Law of Real Property § 1021, at 42 (1980).

Perhaps the leading indicator of a year-to-year tenancy where the nature and duration of the tenancy is left undetermined by the lease agreement is an agreement to pay annual rent. See Bolton supra, 46 Vt. at 87 (citations omitted). At trial defendants conceded they agreed to an annual rental term. Moreover, they went into possession and paid rent pursuant to that agreement. See 3 G. Thompson, supra, § 1100, at 344 (where a tenant enters into possession and pays some aliquot part of an annual rental, general doctrine of tenancy from year-to-year is applicable).

The fact that the defendants lived on the farm for less than a year is not determinative. In Silsby, supra, 43 Vt. at 177, this Court expressly noted that "[i]t is not the length of time that the tenant holds and pays annual rent that works the conversion. It is wrought by the fact that the tenant enters and holds under a stipulation to pay annual rent, and pays accordingly." Nor is the form of the payments made controlling. Although the defendants here made payments which would be consistent with either a month-to-month or a year-to-year tenancy, the character of the lease agreement itself convinces us that the trial court's conclusion that a year-to-year tenancy was created should be affirmed.

In the normal residential rental transaction, parties typically agree to month-to-month tenancies. Farmers, on the other hand, operate on a yearly calendar; they use the property for six months to pasture their animals and grow their feed which then lasts them through the winter while the land is unproductive and virtually useless. Consequently, the year-to-year tenancy doctrine is more readily applicable in an agricultural lease setting; it is invoked for the protection of landlords as well as tenants. See, e.g., Rhodes v. Sigler, 27 Ill.App.3d 1, 3-4, 325 N.E.2d 381, 383 (1975) (year-to-year tenancy arises where one is given possession under a parol agreement for indefinite term with annual reservations of rent--tenant farmers entitled to statutory notice of termination); see also Roseneau Foods, Inc. v. Coleman, 140 Mont. 572, 577, 374 P.2d 87, 90 (1962) (fact that the business conducted by the lessee fluctuated on a yearly basis held sufficient to overcome fact that rent was paid on...