U.S. Through Farmers Home Admin. v. Redland

• Decision Date: 21 February 1985
• Docket Number: Nos. 83-188,83-189,s. 83-188
• Citation: 695 P.2d 1031
• Parties: UNITED STATES of America, acting Through the FARMERS HOME ADMINISTRATION, Appellant (Intervenor), v. Richard REDLAND, Dorothy Redland, James Wyckoff, and John Wyckoff, Appellees (Plaintiffs), v. Jack C. MALMBERG, Emil A. Malmberg and Mrs. Donald Malmberg, a/k/a Sybil Malmberg, individuals, d/b/a Three Quarter Circle Land and Cattle Company (Defendants). Jack C. MALMBERG, Emil A. Malmberg, and Mrs. Donald Malmberg, a/k/a Sybil Malmberg, individuals, d/b/a Three Quarter Circle Land and Cattle Company, Appellants (Defendants), v. Richard REDLAND, Dorothy Redland, James Wyckoff, and John Wyckoff, Appellees (Plaintiffs).
• Court: Wyoming Supreme Court

Page 1031

695 P.2d 1031

UNITED STATES of America, acting Through the FARMERS HOME ADMINISTRATION, Appellant (Intervenor), v. Richard REDLAND, Dorothy Redland, James Wyckoff, and John Wyckoff, Appellees (Plaintiffs), v. Jack C. MALMBERG, Emil A. Malmberg and Mrs. Donald Malmberg, a/k/a Sybil Malmberg, individuals, d/b/a Three Quarter Circle Land and Cattle Company (Defendants).

Jack C. MALMBERG, Emil A. Malmberg, and Mrs. Donald Malmberg, a/k/a Sybil Malmberg, individuals, d/b/a Three Quarter Circle Land and Cattle Company, Appellants (Defendants), v. Richard REDLAND, Dorothy Redland, James Wyckoff, and John Wyckoff, Appellees (Plaintiffs).

Nos. 83-188, 83-189.

Supreme Court of Wyoming.

Feb. 21, 1985.

M.L. Barton of Hill, Eichelberger, Young, Barton, Riverton, and R. Dennis Ickes (argued), Salt Lake City, Utah, for appellants (defendants) in No. 83-189.

Richard A. Stacy, U.S. Atty., Dist. of Wyoming, and Toshiro Suyematsu (argued), Asst. U.S. Atty., Dist. of Wyoming, for appellant (intervenor) in no. 83-188.

S.B. Freeman, III of McCarty, Bormuth & Freeman, Cody, and Calvin A. Calton (argued), of Calton & Hamman, Billings, Mont., for appellees (plaintiffs) in nos. 83-188 and 83-189.

Before ^* THOMAS, C.J., and ROSE, ^** ROONEY, BROWN and CARDINE, JJ.

CARDINE, Justice.

This appeal is from a judgment settling claims arising out of an option for the transfer of federal grazing rights. The judgment awarded specific performance and damages which included actual damages, attorneys' fees, costs and exemplary damages. The judgment also provided for subordination of a lien of the Farmer's Home Administration. The defendants, Malmbergs, and the United States, intervenor, have appealed this decision. We will affirm in part and reverse in part.

This controversy centers around the ownership of the Chapman Animal Unit Months (hereinafter called AUMs) grazing rights. The Redlands, who owned these rights, transferred their interest to the Wyckoffs on July 21, 1977, with an option to repurchase. On March 1, 1978, they reacquired 50% of the AUMs. These AUMs were attached to the base property of the Bar K-B Ranch. On September 27, 1978, the Redlands sold the ranch to the Malmbergs, retaining the Chapman AUMs. At this time the Malmbergs signed an option for purchase of the Chapman AUMs, which provided the right of purchase for six months and a right of first refusal for an additional six months. At the end of this time, the Malmbergs were to transfer the Chapman AUMs from the Bar K-B property to land to be acquired by the Wyckoffs and Redlands to which the AUMs could attach. The Bar K-B Ranch property was by now part of the Three Quarter Circle Land and Cattle Company. The Wyckoffs signed this option sometime in April 1979. In September 1979, when the option expired, the parties agreed to extend the period because the Wyckoffs and the Redlands had been unable to acquire a new base property. The Bureau of Land Management was involved in the discussions concerning the option and knew that the AUMs had been excluded in the sale even though the Three Quarter Circle Land and Cattle Company was the record owner.

On December 18, 1979, the Malmbergs wrote to the Redlands requesting that they have the grazing rights transferred from the Three Quarter Circle Land and Cattle Company by March 1, 1980 or to make some arrangement concerning those rights which would satisfy the BLM. By February 29, 1980, the Redlands and Wyckoffs had acquired a base property to which the AUMs could be attached. The parties met at the BLM office on this date to sign a grazing transfer agreement. At this time there were trespass charges against the Chapman AUMs which had not been resolved. Malmberg testified that he signed the transfer with the condition that the BLM not act on it until the trespass charges were either resolved or arrangements made so that the trespass liabilities would go with the transfer. Redland testified that he did not hear this condition. Redland testified that he offered to put the amount of the trespass charge into an escrow account, but that this offer was ignored. The concerned parties signed the transfer agreement.

After this date the BLM asked for advice from their solicitor concerning the trespass violations. He stated that:

"[I]f disciplinary action should be necessary some time in the future for this or any other adverse action, any suspensions or cancellations would be from the Three Quarter Circle Ranch grazing preference."

The memorandum also stated that the solicitor saw no reason to delay or reject any transfer of preference because of the trespass situation; that if the parties met the qualifications specified in the regulations, the transfers could be approved. When the Malmbergs found that their ranch might be liable for the trespass, they withdrew the transfer. The trespass charges were dismissed on July 22, 1981.

In the Spring of 1979, the Wyckoffs ran their cattle on the grazing lands. The Malmbergs paid the grazing fee and were reimbursed by the Wyckoffs. After the transfer was withdrawn, in April of 1980, the Malmbergs refused to allow the Wyckoffs' cattle on the grazing rights. At this time they took the position that the Wyckoffs had had a reasonable amount of time to transfer the AUMs and since they had not done this, they no longer had a right to the AUMs. At some point, the Malmbergs relied on the theory that the initial transfer from the Redlands to the Wyckoffs in 1977 terminated their interest in the AUMs by operation of law. Their theory was that grazing rights cannot be owned by one who does not own the necessary base property and therefore the transfer effectively terminated the rights. The Malmbergs used the Chapman AUMs for the grazing seasons of 1980, 1981, and at least part of 1982. On March 31, 1981, the Malmbergs traded a portion of the Chapman AUMs to the Sun Land and Cattle Co. for different AUMs. On October 10, 1981, the Malmbergs signed a lien with the Farmers Home Administration (hereinafter FmHA) against their interest in the Chapman AUMs.

The Redlands and Wyckoffs initiated this lawsuit alleging breach of contract. After the evidentiary hearing, a second hearing was held on damages. The United States intervened between the two hearings to protect the FmHA lien on the Malmberg cattle which dated from the sale of the ranch.

Appellants and appellant-intervenor have raised numerous issues on appeal, however, we find the following issues dispositive:

1. Whether a Wyoming state court has jurisdiction to settle the dispute.

2. Whether or not there was an enforceable contract to transfer the grazing rights.

3. Whether the damages awarded were appropriate.

4. Whether the court properly imposed an equitable and statutory lien on the cattle with priority over the United States' lien.

I

The Land Department of the United States, which includes the Bureau of Land Management, is vested by statute with substantially exclusive jurisdiction to determine questions of fact, determining " * * * the disposition, acquisition, and control of the public lands, so long as the legal title thereto remains in the United States * * *." 63A Am.Jur.2d Public Lands § 39. However, state courts may enforce contracts between parties concerning public lands. 63A Am.Jur.2d Public Lands § 124. State courts have a related jurisdiction with the Land Department, " * * * they may protect a possession lawfully acquired, or restore one wrongfully interrupted, for that is a matter which is not confided to the Land Department, and may be dealt with by the courts in the exercise of their general powers. * * * " Northern Pacific Railway Company v. McComas, 250 U.S. 387, 39 S.Ct. 546, 548, 63 L.Ed. 1049 (1919). Appellants contend that the question to be resolved is not an interpretation of a contract, but rather whether the parties are qualified to lease federal lands under the Taylor Grazing Act, 43 U.S.C. § 315, et seq., and therefore the case raises a federal question which is exclusively within the province of the Secretary of the Interior and the federal courts.

In this situation, it is not necessary to decide the ultimate ownership of the Chapman AUMs as determined by federal regulations. By limiting our decision to the rights between the respective parties and determining the legal effect of the contract, we find that this inquiry does not conflict with the BLM's exclusive jurisdiction determining ownership or control of grazing rights. We note that other states have resolved questions which involve the Taylor Grazing Act when the underlying question was a contract determining the rights of various parties. Watson v. Barnard, 155 Mont. 75, 469 P.2d 539 (1970); Phoenix Title and Trust Co. v. Smith, 101 Ariz. 101, 416 P.2d 425 (1966); Force v. Peccole, 77 Nev. 143, 360 P.2d 362 (1961). See also, Dredge Corp. v. Husite Co., 78 Nev. 69, 369 P.2d 676 (1962).

II

Appellants contend that there was not an enforceable contract because the Wyckoffs did not have control over the subject matter, i.e., the Chapman AUMs. They base this argument on the theory that the Redlands lost control over the AUMs when they transferred their interest to the Wyckoffs in 1977 and that this transaction terminated their rights "as a matter of law." Therefore the Wyckoffs had no interest which could be transferred in the option agreement in 1978. They cite 43 C.F.R. 4115.2-1(e)(8)(i) ¹ in support of this proposition. We cannot allow appellants to attack the subject matter of the option by raising defenses which might or could have happened but did not. Possibly the BLM could have made a determination that these rights terminated; however, it did not at that time and presumably does not now regard these rights as terminated.

Appellants also contend that there was no consideration, mutuality or obligation; and, furthermore, the contract should be deemed illegal, impossible, and fraudulent. Whether a contract has been entered into depends upon the...