State ex rel. Webster v. Lehndorff Geneva, Inc.

• Decision Date: 17 February 1988
• Docket Number: No. 69432,69432
• Citation: 744 S.W.2d 801
• Parties: STATE ex rel. William L. WEBSTER, Attorney General of Missouri, Respondent, v. LEHNDORFF GENEVA, INC., a Texas corporation, et al., Appellants.
• Court: Missouri Supreme Court

Page 801

744 S.W.2d 801

56 USLW 2469

STATE ex rel. William L. WEBSTER, Attorney General of Missouri, Respondent, v. LEHNDORFF GENEVA, INC., a Texas corporation, et al., Appellants.

No. 69432.

Supreme Court of Missouri En Banc.

Feb. 17, 1988.

James E. Reeves, Caruthersville, for appellants.

William L. Webster, Atty. Gen., Kent Barta and Paul M. Rauschenbach, Asst. Attys. Gen., Jefferson City, for respondent.

HIGGINS, Judge.

Pursuant to Chapter 350, RSMo, Lehndorff Geneva, Inc., a Texas Corporation, and its related business entities were ordered to divest themselves within 2 years of the Missouri farmland they owned. Appellants claim the trial court should have dismissed the case for failure to prosecute and attack the constitutionality of chapter 350. Affirmed.

The State's petition for divestiture, filed November 10, 1977, alleged that on January 6, 1977, Lehndorff, et al., acquired title to approximately 2700 acres of agricultural land in Mississippi County, Missouri, in violation of section 350.015, RSMo 1986. ¹ The defendants filed their motion to dismiss on December 16, 1977. The court overruled that motion December 18, 1979. The defendants filed their answer and responded to the attorney general's interrogatories in April of 1980. The case then lay dormant until July 11, 1983, when the court advised the parties that the case would be dismissed for want of prosecution unless some action occurred by August 15, 1983. The office of the attorney general then entered the appearance of another attorney and filed its motion for summary judgment. Defendants, on September 9, 1983, then filed a motion to dismiss for failure to prosecute. The case lay dormant for nearly 3 more years until May 28, 1986, when the attorney general presented the motion for summary judgment. The court sustained that motion and entered summary judgment April 10, 1987.

Appellants contend the trial court erred in granting the motion for summary judgment because the suit should have been dismissed for failure to prosecute. The general rule is that a dismissal for want of prosecution is within the sound discretion of the trial court. Shirrell v. Missouri Edison Co., 535 S.W.2d 446 (Mo. banc 1976). Reversal by an appellate court requires a finding that the trial court abused its discretion. Id. at 448. Because the ruling is discretionary it is presumed correct and appellant bears the burden of showing an abuse of discretion. Id. Judicial discretion is abused when a trial court's ruling is clearly against the logic of the circumstances then before the court and is so arbitrary and unreasonable as to shock the sense of justice and indicate a lack of careful consideration; if reasonable men can differ about the propriety of the action taken by the trial court, then it cannot be said that the trial court abused its discretion. Id. Appellants have not met their burden in establishing an abuse of discretion in this case.

Appellants acknowledge that delay alone does not require dismissal for failure to prosecute. In addition to the delay they claim the currently depressed market prices could cause them to be penalized far more seriously than had the case been brought to fruition earlier. Appellants' claim cannot be sustained, however, because they have failed to produce affidavits or any other evidence to support this claim. Nor have appellants cited cases which require dismissal in these circumstances. Had the defendants been truly concerned about the prejudicial impact of the delay in prosecution they could have called their motion to dismiss. Because they did not, the trial court could have found that defendants, who quietly accepted the benefits of ownership of the farmland, suffered no prejudice and should not now be heard to complain of the delay.

Appellants argue that chapter 350, RSMo, violates the equal protection clauses of the Missouri and United States Constitutions because it arbitrarily and without reasonable basis: (1) allows certain corporations to engage in agricultural activities but not others such as defendants; (2) allows individuals but not corporations such as defendants to own land and engage in agricultural activities; (3) allows any corporation to own farmland if owned prior to September 28, 1975; and (4) singles out appellants, whose shareholders are principally Europeans, for forced divestiture of their Missouri investment at a time when Missouri actively encourages foreign investment from the Far East.

The equal protection clause, as it applies to classifications relating to economic regulation, requires only that such classifications be rationally related to a legitimate state interest, City of New Orleans v. Dukes, 427 U.S. 297, 96 S.Ct. 2513, 49 L.Ed.2d 511 (1976). Such classification cannot operate to the disadvantage of a suspect class or impinge upon a fundamental constitutional right. State Bd. of Registration v. Giffen, 651 S.W.2d 475 (Mo. banc 1983), citing, San Antonio Independent School District v. Rodriguez, 411 U.S. 1, 93 S.Ct. 1278, 36 L.Ed.2d 16 (1973). Because corporations are not a suspect class and agricultural land ownership is not a fundamental constitutional right, appellants' arguments focus on the assertion that the classification of corporations under chapter 350 is arbitrary, unreasonable, and without rational bases.

Appellants' first two arguments are rejected because rational bases exist for permitting "authorized corporations" (section 350.010(2), RSMo 1986) ² and family farm corporations (section 350.010(5), RSMo 1986) ³ to own farmland while excluding nonexempt corporations such as appellants. An authorized corporation is one in which all shareholders are natural persons and receives at least two-thirds of its net income from farming. Thus farming cannot be a secondary business for such exempt corporations. A family farm corporation is a corporation in which at least one-half the stockholders are members of a family related to each other in a specified manner and in which active operation must include at least one person having ownership interest and exercising some management control. Nonexempt corporations cannot acquire any interest in family farm corporations.

The effect of the statute, which forms the rational basis for the classification established, is to prevent the concentration of agricultural land, and the production of food therefrom, in the hands of business corporations to the detriment of traditional family units and corporate aggregations of natural persons primarily engaged in farming. Thus, large publicly held corporations are prevented from acquiring and operating large tracts of farmland. The legislature apparently believed that the superior financial and other business resources of these corporations would have a detrimental effect on traditional farming entities. This is because the cyclical nature of the farming industry periodically causes depressed markets and losses which large, diversified corporations are better able to sustain. Thus the traditional farming entities would operate at a competitive disadvantage.

The statute also has the effect of prohibiting large corporations, already controlling much of the processing and distribution of agricultural commodities, from buying large tracts of land for production of the commodity in which they deal, so as to vertically integrate an industry to the competitive exclusion of traditional farming entities.

It is within the province of the legislature to enact a statute which regulates the balance of competitive economic forces in the field of agricultural production and commerce, thereby protecting the welfare of its citizens comprising the traditional farming community, and such statute is rationally related to a legitimate state interest. The United States Supreme Court upheld a similar statute against an equal protection attack in Asbury Hospital v. Cass County, 326 U.S. 207, 66 S.Ct. 61, 90 L.Ed. 6 (1945), and the Supreme Court of Nebraska recently rejected such an attack against a state constitutional provision in Omaha Nat. Bank v. Spire, 223 Neb. 209, 389 N.W.2d 269 (1986).

This analysis compels the same conclusion on appellants' claim that the statute violated their rights to equal protection because it authorizes nonexempt corporations, such as appellants, to engage in certain farming-related activities. Section 350.015 permits nonexempt corporations to hold such an interest incidental to a bona fide encumbrance; own farmland for research and experimentation; own farmland for production of crops for direct processing and not for resale; own farmland for the production of certain domestic animals, such as poultry, which is not land intensive; temporarily own farmland incidental to enforcement of liens or claims; and own farmland acquired for non-farming use.

Appellants fail to establish that this creates an arbitrary classification or is not supported by a rational basis. The statute is rationally related to a legitimate state interest in that it prevents the aggregation of farmland in large corporations to the competitive exclusion of traditional farming entities.

Appellants' claim that they were denied equal protection because, as European investors, they were singled out for enforcement of chapter 350, is unsupported by the record. It is the type of corporation and the nature of its activities that subjects it to scrutiny under chapter 350, not the origin of the investment. This is a case of first impression, and appellants have not offered evidence which shows the existence of similar corporations holding farmland.

The Court also rejects appellants' claim that they were denied equal protection because corporations owning land prior to September 28, 1975, were permitted to retain their farmland while those acquiring farmland after that date are required to divest their farmland. In City of New Orleans, 427 U.S. 297, 96 S.Ct. 2513, 49 L.Ed.2d 511, the court considered the...