Class 35

1
Class 35

• Landlord/tenant Chap. 15 pp. 436-456
• Recitation
• Case Page Student
• L.U.CattleCo. 439 Brooke
  Baker
• Moudry 442 Andrew
  Cook
• Wanous 445
  Stephanie Duvall
• Bert 447
  Micaela Shipe
• Olson 449
  Daniel Shonkwiler
• Borders 452 Tanya
  Hadley

2
Indiana Farmland Lease LawChapter 15--Overview

• A lease or rental arrangement is a contract.
• Oral leases for Indiana farming are valid!
• Written leases are a good business practice, and
• common place for most acreages.
• Indiana has a three month notice to quit
  statute.
• Term leases are for a set (stated) time period.
• Term leases require no notice to quit!
• Landowner (landlord) involvement in the farm
  operation matters for federal income, estate, and
  social security tax purposes.
• A UCC type (consensual) lien may be a good idea.

3
Farm Tenancy

• At least 50 of the farm cropland is not
  owner-operated.
• Alternative landowner operator/worker
  relationships
• -- Employer-employee
• -- Independent contractor (custom operator)
• -- A partnership!!
• -- A tenancy (landlord-tenant)
• -- A lease or rental arrangement or . The
  document is critical.
• --- But, actions may overcome words!

4
Indiana Farmland Leases

• Writing requirement?
• -- Oral leases are valid as an exception to the
  statute of frauds.
• Notice to Quit (lease termination)
• without other provisions, 3 months advance before
  the end of the lease year
• none needed for a term leases!
• At least one Indiana trial court has held a term
  lease may be oral.

5
L.U. Cattle Co. v. WilsonCol. Ct. of App. 86

• Action?
• Damages (costs and lost profits) from breach of
  an oral lease.
• Issue?
• Was there a valid lease?
• Facts Land was sold to Wilson.
• But, what about the lease?
• A discussion of lease took place between Wilson
  and Kroeger of L.U. Cattle with an agreement to
  plant alfalfa not corn as before per Wilsons
  desire, but fertilizer required for the alfalfa
  with barley to be sowed and harvested before
  sowing alfalfa.

6
L.U. Cattle Co.

• Facts -- Wilson received a writing from Kroeger
  about the earlier discussion, but Wilson did not
  respond. ???
• At the end of October, the land was plowed and
  fertilized by the tenant, L. U. Cattle Co.
• In, January, tenant sent a "Lease Agreement" to
  Wilson which by phone, it is alleged, he agreed
  to sign.
• Query Implications of the later statement in
  Indiana?

7
L.U. Cattle Co. v. Wilson

• More Facts
• -- In March, Wilson refused to sign the lease
  agreement, but sent a check for the fertilizer.
• -- Kroeger did not cash the check instead he sued
  Wilson for damages costs and lost profits from
  the prospective barley crop due to a breach of
  oral contract.
• -- Trial court held there was an oral lease, and
  awarded damages to the tenant.
• Any questions?

8
L.U. Cattle Co.

• Holding?
• The trial court was correct. There was a lease.
• -- Court found an oral contract for the lease.
• -- All the essential terms were specified Term,
  rent, the property to be leased.

9
L.U. Cattle Co.

• Holding --
• While Colorado statute of frauds requires a
  written signature for contracts longer than a
  year, but
• -- with partial performance of an oral contract
  it is enforceable as long as
• -- partial performance is substantial, referable
  to the agreement, and known to the other party
• (Does that seem reasonable?)
• Rule?

10
Legal Classification of Agricultural Tenancies

• Year to Year
• -- Common in the Midwest.
• -- unless there is adequate notice the lease
  renews and continues automatically!
• -- Farmland leases are often created by an oral
  agreement or
• -- they may start with a written lease and then
  continue on orally.
• Better to keep current in writing!

11
Moudry v. Parkos S. Ct. of Nebr. 84

• Action?
• Termination of a lease
• Issue What is required before the court to
  prove proper termination of a lease?
• Facts-Tenant entered into farm lease with
  landlord for a period from
• -- 3/1/80 to 2/28/81 (customary lease year).
• - Tenant had been renting since 1950 under a
  stormy relationship.

12
Moudry

• Facts
• There was a written lease at times.
• - July 81 owner served notice that lease was to
  terminate.
• Trial court found that lease had terminated and
  tenant had to vacate.

13
Moudry

• Opinion
• The expiration of the lease on 2/28/81 merely
  converted the lease to a tenancy from
  year-to-year, once the tenant stayed in
  possession.
• -- In Nebraska, a tenancy from year to year can
  only be terminated by agreement of parties,
• or by notice given six calendar months in advance
  of the day ending the original period.

14
Moudry

• -- Despite a Notice to Quit delivered by the
  Sheriff, such was not held to be effective!
• The content of the notice was not shown in
  court!
• -- Judgment in favor of the landowner is
  reversed.
• Rule The Sheriffs return receipt is the best
  supporting evidence of a timely notice, but dont
  forget to attach the actual notice document!!

15
Wanous v. Balaco S. Ct. of Ill. 52

• Action
• To enforce purchase option on a lease.
• Issue
• Was the option to purchase one of the terms of
  the
• year to year tenancy?
• Facts A written lease was executed for June 1,
  1945 to March 1, 1950.

16
Wanous

• Facts
• -- The lease had a provision which allowed Wanous
• the right to purchase during any part of the
  term
• for 13,500.
• -- Plaintiff remained in possession, and paid
  rent
• until March 29.
• -- Balaco served notice on plaintiff that his
  tenancy would terminate May 1, 1951.

17
Wanous

• -- At this point Balaco tried to take advantage
  of the purchase option.
• -- Trial court found for the defendant on a
  motion of summary judgement.

18
Wanous

• Holding
• The continued possession, and the payment of rent
  did not renew the old lease!
• It created a new tenancy from year to year on the
  same terms as the old lease, only so far as they
  are applicable to the new conditions.
• The option to purchase is not applicable to the
  new tenancy. It is not a contract term that may
  carryover.
• Why not? Rule?

19
Bert vs. RhodesSt. Louis Ct. of App. 24

• Action?
• Damages for trespass by the landlord!
• Issue?
• May Rhodes the landowner enter to sow ?
• Facts Rhodes leased to Bert for a five year
  term.
• -- Bert, the tenant, filed suit after the
  landlord entered sowed clover on 30 ac. of
  wheat oats.
• -- Rhodes charges Berts plowed out of 7 acres of
  alfalfa without the landowners consent.
• Trial court held for the landowner, based on the
  local custom of sowing legume a in small grain to
  preserve the fertility of the soil.

20
Bert

• Holding No, the landowner cannot come in during
  a lease and take over.
• -- Unless the lease specifies otherwise, the
  tenant has total control over the land.
• --- Tenants can do what he or she wants with the
  land, within reason.
• The tenant was shown to have done no harm to the
  land and was in control of his operation.

21
Bert

• Holding-- -- Rhodes felt Bert violated the lease
  by plowing up an alfalfa field.
• However, the lease gave to tenant control to do
  what he wants with the land on all tillable
  acres.
• Rule If a landlord wants to manage (what to grow
  where, and tillage practice) the farm via the
  lease he or she can do that, but get it in
  writing!
• Note Farm program rules impose conservation
  plans--else no benefit from certain govnt
  payments!
• Query Is this an important issue in drafting a
  lease today? What else?

22
Olson v. BedkeS. Ct. of Idaho, 76

• Action?
• Termination of a lease
• Issue?
• Standard of good farming?
• Facts Frank and Glen Olson leased to Herman
  Ruby Bedke, who had allegedly failed to comply
  with the material terms of the lease.
• -- Olson's complaint charged poor farming
  practices by the Bedke's
• -- failed to irrigate, allowed erosion, and poor
  weed control.

23
Olson

• Holding?
• Thompson on Real Property -- on farm lands, the
  tenant is liable for waste for affirmative or
  negligent acts which constitute poor husbandry.
• Also, see Eliason v. Eliason, and Anderson v.
  Hammon failure of a farm lessee to follow good
  farm practices.
• Rule?

24
Olson

• Remanded to the trial court on these and other
  grounds.
• Idaho's statutory provisions, gives the Olson's
  the right to revoke their contract with the
  Bedke's in case of waste, and "poor husbandry."

25
Liability for Injuries on the Premises

• Generally, the landlord is not liable to the
  tenant or to third parties for their injuries on
  the premises
• -- because the tenant has sole possession and
  control of the premises.
• -- One exception is when the tenant or a 3rd
  party is injured while lawfully on the premises
  due to a concealed or hidden defect or hazard.
• If the landlord knew of the hazard, landlord is
  liable.

26
Liability for Injuries on the Premises

• If a tenant knows or should know of defects,
  tenant is likely to be held liable for having
  failed to correct the condition.
• Landlord is not likely to be liable for acts of
  the tenant since, generally, nothing the tenant
  does can be referred to the landlord.
• When both tenant and landlord know of a defect in
  the premises leading to a third party injury,
  they may be jointly liable.

27
Liability for Rent in Case of Fire or Other
Disaster

• Tenant should not have to pay rent on an
  improvement that was destroyed.
• Tenant may be entitled to a deduction in rent
  once a productive building is lost.
• Likewise, a landlord may have no duty to rebuild
  a structure lost to fire or storm,
• unless the lease requires such.

28
Crop Ownership

• In common law, a crop belongs to the tenant until
  it is harvested and divided.
• A tenants exclusive right in a crop tends to be
  true even in a share lease, unless other
  provisions are agreed to or there is a statute
  that governs.
• Since the crop belongs to the tenant, legal
  rights for damage to the crop are in the
  tenant--even though there is a share rent.