Haas v. Earley

443 S.W.2d 861, 1969 Tex. App. LEXIS 2011

Opinions

OPINION

GREEN, Chief Justice.

Appellee Cecil Earley sued appellant Dr. Nelson W. Haas under the Texas Declaratory Judgment Act to recover the proceeds paid by others for a lease of the cotton allotment for the crop years 1966, 1967, and 1968 on the farm cash-rented for grazing purposes to appellee as tenant by appellant as owner and landlord. By cross-action appellant sought the same relief as against appellee. A trial was had before the court without a jury, and judgment was rendered favorable to appellee. This appeal is from such judgment. The record contains no findings of fact or conclusions of law.

The evidence establishes that during the latter part of the Summer 1964, appellee had lost his grazing lease on which he had been pasturing about 150 head of cattle, and needed to locate land for a new lease. He was no farmer, had no farming equipment, and was interested solely in grass land for his cattle. He approached appellant for the purpose of securing a lease of appellant’s land. On September 11, 1964, appellant as landlord and appellee as tenant entered into the lease contract involved in this litigation, styled a “Cash Farm Lease,” which covered approximately 310 acres of land in Cameron County, Texas, owned by appellant. The consideration to be paid by appellee was $3,000.00 per year. The contract was on a form furnished by the Farm Home Administration of the U. S. Department of Agriculture, and was completed by appellant’s attorney and signed by appellant and appellee.

A portion of the farm had been cultivated by tenants of appellant, and as the result of one tenant failing to properly protect the cotton allotment, the Cameron County Agricultural Stabilization and Conservation Service Committee (hereafter referred to as A.S.C.S.), which administered the federal cotton allotment program in Cameron County, had penalized appellant by reducing the cotton allotment on the land described in the lease from its 1964 level of approximately 102.9 acres to 84.1 acres. Hence appellant was anxious that this allotment be kept intact while appellee had the land under lease for grazing purposes. Accordingly, the following clauses were written into the contract:

“B.l. USE OF LAND

All leased land to be used for grazing cattle, except that portion, if any, necessary for planting of cotton to preserve Landlord’s

Footnotes

•

* cotton allotment.”

and

“F.2. Government programs. — The farm will be operated in compliance with Government programs as follows: Tenant agrees to protect Landlord’s * cotton allotment and do whatever is necessary to preserve same.”

The lease was for a period of five years, with a provision for an option for an additional five years. We are not concerned with, or passing upon the validity of, the option provision. The first year’s cash, lease payment of $3,000.00 was waived by landlord as compensation for improvements to be made on the land by tenant, such as interior fences and cross-fences, corrals, cattle pens, feed sheds, etc. needed for the pasturage, grass-feeding, and handling of appellee’s cattle.

Before the execution of the lease contract in September 1964, Dr. Haas had farmed this 310 acres as three separate farms with different tenants. In order to reconstitute the land into one farm on the records of A.S.C.S., appellant and appellee in January 1965, executed certain forms in A.S.C.S. office naming appellant as “Owner” and appellee as “Operator”. An operator is defined in the federal regulations (29 Fed.Reg. 13370, Sec. 719.2) as a “Person who is in general control of the farming operations during the program year.” An owner is a “Person who has legal ownership of farmland.”

Under the appropriate federal laws and regulations in effect on September 11, 1964, the cotton allotment on the land could be protected in two ways: (1) by annually releasing the allotment to A.S.C.S., which could then reassign it to other farmers in the county, or (2) by planting cotton on the land. Appellee testified that it was not his desire or intention to plant any cotton on the land if the landlord’s allotment could otherwise be legally protected. For the crop year 1965, appellee executed a release of the allotment to A.S.C.S. Since it was necessary that landlord join in the release, appellant did likewise. Once every third year, which in this instance turned out to be in 1966, it was necessary to plant some cotton in order to preserve the allotment, although as to this lease only one-tenth of an acre had to be so planted. But such planting became unnecessary because of a new law dealing with cotton allotments which will now be discussed, and which gave rise to the controversy in this suit.

Prior to 1965, a cotton allotment was considered to be no more than a regulatory device of national farm policy used to limit the • supply cotton in order to‘ raise prices and to allocate to the individual land owner a share of the national crop or market and certain federal benefits provided by law to cotton growers. A cotton allotment was not property to be bought, sold, or leased, separate and apart from the land. Agricultural Allotments as Property, 79 Harvard Law Review 1182 (1966); Cotton Allotments: Another New Property, 45 Tex.Law Review 734 (1967). However, in 1965 to become effective with the crop year 1966, Congress enacted legislation which, for the first time, authorized the transfer of cotton allotments by sale or lease from one individual to another, separate and apart from the underlying land. Food and Agriculture Act of 1965, § 405, 79 Stat. 1197, 7 U.S.C. § 1344b (Supp.1965). See the two law review articles cited supra. As a consequence of this legislation, a cotton allotment became a new and valuable type of intangible property.

As a result of the 1965 legislation, the cotton allotment on this 310 acre tract for the crop years 1966, 1967 and 1968 had taken on a new value, since it could now be sold or leased apart from the land to farmers in the county who wished to farm cotton. Each party to the lease contract here involved claimed to have the right to lease the allotment and to keep as his own the cash proceeds of the lease. Appellant attempted in a hearing before the members of the A.S.C.S. committee to have his name substituted for appellee’s on their records as operator of the farm, but failed. Under the law, it was necessary for both operator and owner to sign any transfer. After some negotiations, appellant and appellee jointly signed, on December 29, 1965, a lease or transfer of the cotton allotment on the land in question for the crop year 1966 “under protest,” with each party receiving one-half of the consideration of $1,160.00, without prejudice to the right of either party to seek judgment against the other for the sum ($580.-00) received as the other’s disputed portion. Thereafter, by agreement of the parties and their lawyers, the allotments for 1967 and 1968 were leased pursuant to transfers executed by both parties, and the proceeds placed in escrow pending the outcome of this litigation.

Appellant presents his case on appeal by the following Point of Error No. One:

“The trial court erred in holding that Appellee is the owner of the proceeds of any lease of the cotton allotment in question, and- further erred in failing to declare Appellant the owner of the cotton allotment in question and the person entitled to the proceeds of any leases of same.”

We sustain this point of error, and reverse and render the judgment.

As heretofore shown, the lease contract expressly provided that all of the leased land was to be used by tenant for grazing of cattle except that portion, if any, necessary to preserve landlord’s cotton allotment; and the tenant agreed to do whatever was necessary to preserve landlord’s allotment. Appellee testified that these provisions were placed in the lease for landlord’s benefit, and that when the contract was signed, it appeared that this actually was a burden on tenant. His testimony shows that at that time he was not interested in the cotton allotment for any purpose except to perform his contractual obligations. Both appellant and appellee expressly treated and considered this as “Landlord’s allotment.” It clearly was not within the contemplation of either party that appellee would receive any money or make a profit in dealing with appellant’s cotton allotment.

The fact that both “Owner” and “Operator” had to sign the transfer had no effect on the ownership of any rights in the cotton allotment, particularly since the operator’s only interest in the land was pasturage for his cattle. Although as between these parties and the A.S.C.S. the appellee was named as the person in general control of the farming operations, the rights as between appellee and appellant were fixed by their lea-se contract. The designation of appellee as “operator” related only to “control” of farming operations in the various dealings with the agencies of the federal government for the program year. It did not create property rights. The office manager of A.S.C.S. who testified on behalf of appellee stated that he was not acquainted with the terms of the lease, had not read the contract, and was not considering the provisions of the lease contract in giving his testimony. He was, as we understand his evidence, concerned with the many and various regulations of the U. S. Department of Agriculture as between the A.S.C.S. and these parties.

Under the undisputed evidence discussed above and what we consider to be the proper construction of the lease contract and other documents mentioned, we hold that the proceeds of the leases of the cotton allotment to others for 1966, 1967 and 1968 belonged to appellant Haas, and that he is entitled to judgment for same.

The judgment of the trial court is reversed. Judgment is here rendered that appellant Dr. Nelson W. Haas is the owner of the cotton allotment on the land here involved, and is entitled to the proceeds of the leases thereof. Appellant shall recover from appellee the sum of $580.00 with interest at 6% per annum from January 7, 1966, being the date of payment to appellee under protest of one-half of the proceeds of the lease of the 1966 allotment, and judgment is rendered that appellant Haas is entitled to receive all monies heretofore placed in escrow as the consideration received from the lease of the 1967 and 1968 cotton allotments on this land, and any sums, if any, which may have subsequently been paid during the pendency of this appeal. Costs are assessed against appellee.

Reversed and rendered.

Emphasis added