Beckstrand Ex Rel. Beckstrand v. Beckstrand

2017 ND 20, 890 N.W.2d 213, 2017 WL 632888, 2017 N.D. LEXIS 28

• Court: North Dakota Supreme Court
• Decided: February 16, 2017
• Docket: 20160105 & 20160106
• Status: Published

Opinions

Sandstrom, Surrogate Judge.

[¶ 1] Justin Beckstrand and James Beckstrand, through his surviving spouse, Cynthia Beckstrand, appeal from a judgment awarding $164,202.40 in 2015 farm rental payments to Julie Beckstrand, the personal representative of John Beckst-rand’s estate. Because the district court’s findings are inadequate to explain the basis for its equitable decision to award the farm rental payments to Julie Beckstrand, we reverse and remand for the court to explain the rationale for its decision.

I

[¶2] This case involves a family dispute over property located in Benson County. John and Inez Beckstrand were the parents of Julie, James, and William Beckstrand. Justin Beckstrand is James Beckstrand’s son and John Beckstrand’s grandson.

[¶ 3] In 2001, John and Inez Beckstrand entered into a contract for deed to sell property to Justin and James Beckstrand. In 2007, John and Inez Beckstrand entered into a contract for deed to sell additional property to Justin and James Beckstrand. Annual payments were to be made on November 1 of each year under both contracts for deed. The last payment on the 2001 contract was due November 1, 2015. The last payment on the 2007 contract was due November 1, 2026. Inez Beckstrand died in 2010.

[¶ 4] Justin and James Beckstrand made no annual payments during 2013 and 2014 for either contract for deed. James Beckst-rand died in 2013 before John Beckstrand executed a will and died in 2014. John Beckstrand’s will provided in relevant part:

SPECIFIC BEQUEST. At the time of my death, any amount owing on a Contracts or Contract for Deeds which I may have entered into with James Beckstrand and/or Justin Beckstrand, I direct must be paid and divided as follows:

1. Unpaid payments from James Beckstrand shall be paid to Cindy Beckstrand.

2. Unpaid Payments from Justin Beckstrand shall be divided, One half (⅛) to be paid to my daughter Julie Beckstrand; and one half (½) to be shared equally between my grandchildren, John Beckstrand, Sandra Beckstrand, Joanna Beckstrand, Justin Beckstrand, Jeremiah White, and Elisha White Miller.

Time is of the essence in these payments being made. I further direct my personal representative to enforce time is of the essence standards in these payments being made.

[¶ 5] In late 2014, Julie Beckstrand, as personal representative of John Beckst-rand’s estate, sued Justin Beckstrand and James Beckstrand’s surviving spouse, Cynthia Beckstrand, to cancel by action the two contracts for deed. Because the bench trial was scheduled for May 21, 2015, after the spring planting season, the district court allowed Julie Beckstrand to rent the property to the highest bidder, giving Justin and Cynthia Beckstrand the right of first refusal if they met the highest bid. They did so and the district court allowed Justin and Cynthia Beckstrand to rent the property during 2015 for $164,202.40, with the rental payment deposited in Julie Beckstrand’s attorney’s account pending trial on the cancellation actions.

[¶ 6] The cases were tried together. The district court ruled Justin and Cynthia Beckstrand had defaulted on the contracts for deed. On the basis of John Beckst-rand’s will, the court found “John set forth a distribution (forgiveness) plan for any amount owed on the two Contracts for Deed. His intent to forgive the debt was clear in the will.” The court found “a reasonable redemption period is equitable for the defendants.” The court ordered:

1. Defendants shall pay the personal representative for the 2013 payments on each Contract for Deed plus noted interest from November 1, 2013, to present, all within 90 days of judgment being entered.

2. Upon timely payment of the amounts due in paragraph #1, the remaining debt amounts of the 2001 Contract for Deed are forgiven for both Defendants, under the language found on page 3 of the contract.

3. Upon timely payment of the amounts due in paragraph #1, the remaining amount of the 2007 Contract for Deed owed by the James Beckstrand estate shall be forgiven under the special bequest language of the will. Cynthia Beckstrand shall receive her share of the property described in the 2007 Contract for Deed, and shall owe no further payments.

4. Upon timely payment of the amounts due in paragraph #1, the special bequest language of the will controls as to Justin Beckstrand’s 2007 Contract for Deed debt. He shall pay his remaining ½ share of the 2007 Contract for Deed debt (principal plus all interest) to the estate of John Beckstrand for division as follows:. ,

Unpaid payments from Justin Beekst-rand shall be divided one half (½) to be paid to Julie Beckstrand and one half (½) to be shared equally between Sandra Beckstrand, Joanna Beckstrand, Justin Beckstrand, Jeremiah White, and Elisha White Miller.

This payment to be made within 120 days of entry of judgment. Since Justin is entitled to ½⅛ of the unpaid payments, he may reduce his total payment by his ⅜⅛ share. As for any remaining payments owed by the Estate of James Beckstrand or Cynthia Beckstrand for their ½ share on the 2007 Contract for Deed, are deemed forgiven and waived upon payment under the terms and conditions of Paragraph #1 of these Findings.

5. Any issues relating to the payment of any real estate tax payments for 2013 and 2014 have been resolved.

6. Upon timely payment of all debts, warranty deeds shall be issued by the personal representative of the estate, at the expense of the Estate.

7. The money paid to farm the disputed properties in 2015 was remedial for all parties so is not credited or deducted from the Contracts for Deed obligations herein. The estate may keep these funds located in Mr. Wang’s trust account.

8. Based on the default, defendants are responsible for plaintiffs reasonable attorney’s fees, which are found to be $11,841.75, plus whatever reasonable additional-fees were incurred between September 18, 2015 and December 18, 2015.

Judgment was entered on January 28, 2016.

[¶ 7] The district court had jurisdiction under N.D. Const, art. VI, § 8, and N.D.C.C. § 27-05-06. Justin and Cynthia Beckstrand’s appeal is timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const, art. VI, §§ 2 and 6, and N.D.C.C. § 28-27-01.

II

[¶ 8] The only issue raised by Justin and Cynthia Beckstrand in this appeal is whether the district court erred in failing to award them the 2015 payment they made to rent the land while the cancellation actions were pending.

[¶ 9] Their argument begins with the proposition that, when there is a contract for deed, the vendee is the equitable owner while the vendor holds the legal title as security for his claim, see, e.g., Johnson v. Finkle, 2013 ND 149, ¶ 18, 837 N.W.2d 132; Woodward v. McCollum, 16 N.D. 42, 49, 111 N.W. 623, 626 (1907), and therefore they are practically in the same position as a mortgagor and mortgagee. See, e.g., In re Faiman, 70 B.R. 74, 76 (D.N.D. 1987); Zent v. Zent, 281 N.W.2d 41, 46 (N.D. 1979); United Accounts, Inc. v. Larson, 121 N.W.2d 628, 634 (N.D. 1963). Justin and Cynthia Beckstrand argue the mortgage foreclosure statutes therefore apply, and because N.D.C.C. § 32-19-06 states the debtor is entitled to the rents during the redemption period, they are entitled to the 2015 rental payments. We disagree for several reasons.

[¶ 10] First, this Court has said N.D.C.C. § 32-19-06 applies only to actions for foreclosure of mortgages and land contracts. See Kautzman v. Kautzman, 2003 ND 140, ¶ 25, 668 N.W.2d 59. An action to foreclose a land contract is one of three distinct methods for cancelling a contract for deed, the other two being cancellation by a statutory proceeding and cancellation by action. See, e.g., Langenes v. Bullinger, 328 N.W.2d 241, 245 (N.D. 1982); J. Leahy, Cancellation of Land Contracts, 32 N.D. L. Rev. 5 (1956). Foreclosure or statutory cancellation actions are necessarily controlled by statutes. See, e.g., Bendish v. Castillo, 2012 ND 30, ¶¶ 7-9, 812 N.W.2d 398, and cases collected therein. Cancellation of a contract for deed by action, however, is an action in equity, and this Court will not interfere with the district court’s decision on equity unless an abuse of discretion is clearly established. Id. A court abuses its discretion when it acts arbitrarily, unconscionably, or unreasonably, or when its decision is not the product of a rational mental process leading to a reasoned determination. Id. at ¶ 9. Justin and Cynthia Beckstrand acknowledge that these cases are cancellations by action. They cite no cases applying the mortgage foreclosure statutes to cancellation by action. The mortgage foreclosure statutes do not apply.

[¶ 11] Second, cancellation by action is not subject to a statutory period of redemption, and a court does not necessarily abuse its discretion by refusing to allow a right to redeem. See, e.g., Johnson v. Mark, 2013 ND 128, ¶¶ 31-32, 834 N.W.2d 291, and cases collected therein. Here the court decided after trial to allow 90- and 120-day redemption periods from the date of entry of judgment. Even if a mortgage debtor is statutorily entitled to rents during the redemption period, the redemption period began in January 2016 when judgment was entered, after the 2015 crop year had ended.

[¶ 12] Third, although Justin and Cynthia Beckstrand argue the 2015 rental payments awarded to Julie Beckstrand are a “money judgment” that cannot be awarded in a cancellation of land contract case, see Langenes, 328 N.W.2d at 246, this award was not a money judgment related to amounts owing under the contracts for deed but was a distribution of rents collected during the pendency of the action. “Generally, a grantor who is entitled to the cancellation of a deed is also entitled to the fair rental value of the property, or the rents and profits of the land, for the time that the grantee was wrongfully in possession, including rents collected by the defendant while in possession and those accruing during the pendency of the suit.” 12A C.J.S. Cancellation of Instruments § 178, p. 657 (2015) (emphasis added; footnotes omitted), In an equitable action, “a court of equity has the power to adjust the rights of the parties with regard to interest, rents and profits and make complete adjudication of all matters involved in the case.” Arhart v. Thompson, 75 N.D. 569, 579, 31 N.W.2d 56, 62 (1948). The district court had discretion to weigh the equities in deciding which of the parties was entitled to the rental payments.

[¶ 13] A district court’s findings of fact, however, must be “adequate to understand and explain the basis for its decision.” Romanyshyn v. Fredericks, 1999 ND 128, ¶ 8, 597 N.W.2d 420. In its written findings and conclusions, the court simply said the rental payment “was remedial for all parties” and the “estate may keep these funds.” In its oral findings, the court said:

THE COURT: Well, because of the timing, it appeared to me that I wanted to avoid the waste of this land not being utilized....

And the complaints alleged default and it appears they were in default at the time of that awarding of a contract to farm the land in 2015. It was affirmed by me after trial.

It was open to bidders and the defendants had a choice to bid or not bid to farm the land; they chose to. They were able to harvest the ... crops and make a profit.

It appears to me to be separate and not part of the action that was going on; and, as such, the $164,000 is awarded to the plaintiff.

[¶ 14] This reasoning does not explain why the district court awarded the rental payments to one party over another, and makes it impossible for us to perform our appellate function. See Empower the Taxpayer v. Fong, 2013 ND 187, ¶ 7, 838 N.W.2d 452. We therefore reverse and remand for the court to explain the rationale for its decision. See, e.g., Gratech Co., Ltd. v. Wold Eng’s, P.C., 2007 ND 46, ¶ 20, 729 N.W.2d 326. The court may make any additional adjustment of the rights of the parties it considers equitable.

Ill

[¶ 15] The judgment is reversed and the case is remanded for further proceedings.