Slope County, By and Through Bd. of County Com'rs v. Consolidation Coal Co.

• Citation: 277 N.W.2d 124
• Decision Date: 15 March 1979
• Docket Number: No. 9545,9545
• Parties: SLOPE COUNTY, North Dakota, By and Through its BOARD OF COUNTY COMMISSIONERS, Plaintiff and Appellant, v. CONSOLIDATION COAL COMPANY, a Delaware Corporation, Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 124

277 N.W.2d 124

SLOPE COUNTY, North Dakota, By and Through its BOARD OF

COUNTY COMMISSIONERS, Plaintiff and Appellant, v. CONSOLIDATION COAL COMPANY, a Delaware Corporation,

Defendant and Appellee.

Civ. No. 9545.

Supreme Court of North Dakota.

March 15, 1979.

Robert A. Keogh, Dickinson, for plaintiff and appellant.

Fleck, Mather, Strutz & Mayer, Bismarck, for defendant and appellee; argued by Gary R. Wolberg, Bismarck.

SAND, Justice.

Presented in this case is the issue of whether or not the ownership by Consolidation Coal Company of certain lands in Slope County was reasonably necessary in the conduct of its mining operations. The Slope County District Court found the ownership was within the exception of North Dakota Century Code Ch. 10-06 which prohibits corporate ownership of agricultural lands except as are reasonably necessary in the conduct of the corporation's business. We affirm.

The land in question, consisting of approximately 720 acres, was acquired by Truax-Traer Coal Company in 1954. In 1962, Traux-Traer merged with Consolidation Coal Company and the real property was subsequently deeded to Consolidation in 1966. Since its acquisition by Consolidation, the property has been leased, with the possible exception of brief periods of time, to area farmers for agricultural purposes.

On 1 November 1976, a complaint was filed by Slope County alleging the land was not reasonably necessary in the conduct of Consolidation's business and in accordance with Ch. 10-06, NDCC, such land should escheat to the county for public sale. A statement of facts was stipulated to by the parties and on 13 July 1978 a judgment was entered dismissing the complaint. Slope County appealed.

Section 10-06-03, NDCC, states in pertinent part:

"Any corporation . . . which . . . has acquired or hereafter shall acquire any rural real estate, used or usable for farming or agriculture . . . shall dispose of such real estate, except such as is reasonably necessary in the conduct of its business, within ten years from the date that it was so acquired. During said ten-year period, the corporation may farm and use such lands for agricultural purposes."

Section 10-06-06, NDCC, provides:

"In case any corporation, either domestic or foreign, violates any provision of this chapter or fails, within the time fixed by this chapter, to dispose of any real estate to which it has acquired title and which is not reasonably necessary for the conduct of its business, then title to such real estate shall escheat to the county in which such real estate is situated upon an action instituted by the state's attorney of such county, and such county shall dispose of the land within one year at public auction to the highest bidder, and the proceeds of such sale, after all expenses of such proceedings shall have been paid, shall be paid to the corporation which formerly owned the land."

This court determined in a prior opinion that the phrase "except such as is reasonably necessary in the conduct of its business" in § 10-06-03, NDCC, refers to such real estate as is reasonably necessary for carrying on a business or activity which a corporation was created to carry on. Asbury Hospital v. Cass County, 72 N.D. 359, 7 N.W.2d 438 (1943), Affirmed 326 U.S. 207, 66 S.Ct. 61, 90 L.Ed. 6. Because there is no question that coal mining is the business Consolidation was created to carry on, the issue in this case is whether or not the land located in Slope County and owned by Consolidation Coal is reasonably necessary for the carrying on of that business. Consequently, construction of the term "reasonably necessary" is important in the determination of this case.

We conclude the term "reasonably necessary" as used in § 10-06-03, NDCC, refers to that which is useful, convenient, or suitable, and not inconsistent with the legitimate objectives of the corporation. See Fisher v. Pilcher, 341 A.2d 713, 717 (Del.Super.1975); Childers v. Brown, 81 Or. 1, 158 P. 166, 168 (1916); Texas Co. v. State, 198 Okl. 565, 180 P.2d 631, 639 (1947); State v. International Paper Co., 342 P.2d 565, 569 (Okl.1959). The term is to be distinguished from more exacting degrees of necessity, such as absolute, strict, or indispensable. See Fisher v. Pilcher, supra; State v. International Paper Co., supra.

Our interpretation of the term "reasonably necessary" in connection with a corporation's right to own property in the conduct of its business is in accordance with at least three North Dakota district court decisions ¹ and two opinions of the North Dakota Attorney General issued from 1942 to 1968. ² Although not per se authority for purposes of our interpretation of the statute, we note these decisions and opinions have been publicized and relied upon by the citizens of this state. We give considerable weight to the inference that because the North Dakota Legislature has made no change in the statutory language since the decisions and opinions were issued, the interpretation adopted by those decisions and opinions was in harmony with the legislative intent.

The determination of whether or not a particular piece of land is reasonably necessary in the conduct of a corporation's business is not always easily resolved and does not necessarily depend upon the present actual use of the land by the corporation. The business of the corporation will play a dominant role in this determination. If the property is reasonably necessary for the business when acquired, is held for that purpose, and is actually used for the purpose for which it was acquired, then it should be treated as necessary to carry on the business. The necessity for its actual use need not be a present one; it may arise in the future. See German Insurance Co. v. Commonwealth, 141 Ky. 606, 133 S.W. 793 (1911).

The parties disagreed if the determination of whether or not land is reasonably necessary in the conduct of a corporation's business is a finding of fact or a conclusion of law. Because this distinction becomes important in determining our standard of review, we find it necessary to examine the question. In reaching our determination, the following statement by the Supreme Court of Oregon in Henzel v. Cameron, 228 Or. 452, 463, 365 P.2d 498, 503 (1961), is particularly relevant:

"Whether a finding is a 'finding of fact' or a 'conclusion of law' depends upon whether it is reached by natural reasoning or by fixed rules of law. Where the ultimate conclusion can be arrived at only by applying rules of law the result is a 'conclusion of law.' Mallinger v. Webster City Oil Co., 211 Iowa 847, 234 N.W. 254, 256. A 'finding of fact' is a conclusion drawn by way of reasonable inference from the evidence. State Acting By and Through Oregon State Board of Higher Education v. Cummings, 205 Or. 500, 288 P.2d 1036, 1051, 289 P.2d 1083; Griffith v. Gardner, 9 Cir., 196 F.2d 698."

Thus, it has been said that if facts are undisputed and only one, if any, inference can reasonably be drawn from those facts, the determination of that inference is a question of law. When, however, facts are not in dispute but permit the drawing of different inferences, the drawing of one such permissible inference is said to be a finding of fact. Village of Prentice v. Industrial Commission, 38 Wis.2d 219, 156 N.W.2d 482 (1968). Findings of fact are the realities as disclosed by the evidence as distinguished from their legal effect or consequences. Cortner v. National Cash Register Co., 25 Ohio Misc. 156, 262 N.E.2d 586, 588 (1970).

Except for the rule that the purpose and objective of the corporation must be taken into consideration, there are no rules of law applied in determining if land is reasonably necessary in the conduct of a corporation's business. Such a determination is arrived at only by an examination of evidence, including the inferences drawn therefrom. Accordingly, we conclude such a determination is a finding of fact subject to the "clearly erroneous" rule of review set forth in Rule 52(a), North Dakota Rules of Civil Procedure. See also, United States v. Yellow Cab Co., 338 U.S. 338, 341, 70 S.Ct. 177, 94 L.Ed. 150 (1949) (determinations of design, intent, and motive were findings of fact); United States v. One 1955 Model Ford 2-Door Coach, 261 F.2d 125 (5th Cir. 1958) (determination of reasonable time was a finding of fact); Leavitt v. Scott, 338 F.2d 749 (10th Cir. 1964) (determination of residence for purposes of diversity of citizenship was finding of fact); Lakewood Manufacturing Co. v. C. I. R., 453 F.2d 451 (6th Cir. 1972) (determination of reasonableness ...