20190197 - north dakota supreme court
TRANSCRIPT
1
IN THE SUPREME COURT STATE OF NORTH DAKOTA
Janice Rieger and Robert Rieger,
Plaintiff, Appellant, and Cross-Appellees,
vs.
Lyle Ackerman and Kathleen Rub, and all Persons Unknown who have or claim any interest in the property,
Defendants, Appellees, and Cross-Appellants.
SUPREME COURT NO. 20190197 Civil No. 19-2017-CV-00020
ON APPEAL FROM ORDER DATED APRIL 25, 2019 STATE OF NORTH DAKOTA
SOUTH CENTRAL JUDICIAL DISTRICT BEFORE HONORABLE DAVID E. REICH
ORAL ARGUMENT REQUESTED
APPELLANT’S BRIEF
Robert J. Pathroff (#07759)
VOGEL LAW FIRM Attorneys for Plaintiff, Appellant, and Cross-Appellees US Bank Building 200 North 3rd Street, Suite 201 PO Box 2097 Bismarck, ND 58502-2097 701.258.7899
Email: [email protected]
20190197FILED
IN THE OFFICE OF THE CLERK OF SUPREME COURT
SEPTEMBER 30, 2019 STATE OF NORTH DAKOTA
2
TABLE OF CONTENTS
Paragraph
TABLE OF CASES AND AUTHORITIES ................................................................ PG. 4
STATEMENT OF THE ISSUES PRESENTED FOR REVIEW ............................... PG. 5
ORAL ARGUMENT REQUESTED .................................................................................. 1
STATEMENT OF THE CASE ........................................................................................... 2
STATEMENT OF THE FACTS ........................................................................................ 7
I. JAN RIEGER WANTS TO KEEP A PORTION OF HER FAMILY LAND NEAR NEW LEIPZIG, WHILE HER TWO SIBLINGS WANT TO FORCE A SALE OF ALL THE LAND. ............................................. 7
II. JAN RIEGER PRESENTED A FEASIBLE PROPOSAL TO DIVIDE THE LAND WITHOUT “GREAT PREJUDICE” TO HER SIBLINGS.................................................................................................... 13
III. THE TWO PARTITION REFEREES CITED THE LACK OF A WATER WELL IN THE SUGGESTED 315-ACRE PARCEL OF JAN’S SIBLINGS AND THE NEED TO INSTALL A MILE OF FENCE TO SEPARATE JAN’S PROPOSED 160 ACRES AS THE PRIMARY OBSTACLES TO DIVISION................................................... 16
IV. THE RIEGERS TESTIFIED THEY WOULD PAY ANY PORTION THE COURT SHOULD DEEM EQUITABLE OF THE $19,189.75 TO DRILL A NEW WATER WELL AND THE $7,500 FOR FENCING TO OVERCOME THE PRIMARY OBSTACLES CITED BY THE REFEREES. .............................................................................. 20
V. WITH THE INSTALLATION OF A NEW WELL AND FENCING, THE ONLY VALUE IMPACT TO JAN’S SIBLINGS WOULD BE ANY ATTRIBUTABLE TO THE SIZE DIFFERENCE BETWEEN A 475-ACRE PARCEL AND A 315-ACRE PARCEL.................................................................................................... 23
VI. THE DISTRICT COURT’S ORDER IS SILENT ON WHETHER A DIVISION WOULD CAUSE “GREAT PREJUDICE” TO JAN’S SIBLINGS, ORDERS THE LAND SOLD UNLESS THE 315-ACRE TRACT CAN BE SOLD AT THE 2016 APPRAISED PER ACRE PRICE WITHIN SIX MONTHS, AND IS SILENT ON A DIVISION OF COSTS OF THE PARTITION ACTION. ............................... 28
3
LAW AND ARGUMENT ................................................................................................ 30
I. STANDARD OF REVIEW .................................................................................. 30
II. THIS COURT SHOULD REVERSE THE DECISION OF THE DISTRICT COURT BECAUSE IT FAILED TO PROPERLY APPLY NORTH DAKOTA LAW RELEVANT TO PARTITION ACTIONS IN ORDERING A FORCED SALE UNLESS A PORTION IS SOLD PRIVATELY FOR A CERTAIN VALUE WITHIN SIX MONTHS WITHOUT MAKING A FINDING ON WHETHER A PHYSICAL DIVISION WOULD CAUSE “GREAT PREJUDICE”. ....................................................................................................... 31
A. A Court must order a partition in-kind unless the party opposing partition proves that a physical division cannot be made without “great prejudice” to the owners. ......................................... 31
B. The District Court erred when it failed to make any conclusion on whether a physical division would cause “great prejudice” before essentially ordering the forced sale of the Land. ............................................................................................... 44
III. THE DISTRICT COURT ERRED WHEN IT FAILED TO ORDER THAT EACH PARTY PAY HIS OR HER SHARE OF THE COSTS OF THE PARTITION ACTION IN ACCORDANCE WITH THE PERCENTAGE OF EACH PARTY’S OWNERSHIP, INCLUDING REASONABLE COUNSEL FEES, AS IS REQUIRED BY SECTION 32-16-45 OF THE NORTH DAKOTA CENTURY CODE. ............................................................................................... 52
IV. THE DISTRICT COURT ERRED BY NOT ORDERING A PHYSICAL PARTITION WHEN THE EVIDENCE SHOWS JAN’S SIBLINGS WOULD NOT SUFFER “GREAT PREJUDICE” FROM PARTITION. .................................................................... 61
CONCLUSION ................................................................................................................. 75
4
TABLE OF CASES AND AUTHORITIES
Paragraph
Beach Railport, LLC v. Michels 2017 ND 240, 903 N.W.2d 88 ........................................................................30, 31, 44, 62 Berg v. Kremers 181 N.W.2d 730 (N.D. 1970) .......................................................31, 33, 35, 36, 40, 41, 70 City of Harwood v. City of Reiles Acres 2015 ND 33, 859 N.W.2d 13 ......................................................................................33, 61 Haggerty v. Nobles 244 Or. 428, 419 P.2d 9 (1966) ........................................................................................32 Leet v. City of Minot 2006 ND 191, 721 N.W.2d 398 ........................................................................................30 Lewis v. N. Dakota Workers Comp. Bureau 2000 ND 77, 609 N.W.2d 445 ..........................................................................................50 Schmidt v. Wittinger 2004 ND 189, 687 N.W.2d 479 ..............................................35, 36, 42, 43, 52, 57, 59, 71 Schnell v. Schnell 346 N.W.2d 713 (N.D. 1984) .........................34, 35, 36, 37, 38, 39, 44, 47, 64, 66, 67, 68 White v. Tillotson 256 Wis. 574, 42 N.W.2d 283 (1950) ...............................................................................33 Wolt v. Wolt 2010 ND 26, 778 N.W.2d 786 (N.D. 2010) ......................................................................69 North Dakota Century Code N.D.C.C. § 32-16 ...................................................................................2, 30, 31, 46, 51, 75 N.D.C.C. § 32-16-01 ..........................................................................................................31 N.D.C.C. § 32-16-12 ........................................................................................31, 45, 47, 74 N.D.C.C. § 32-16-13 ..........................................................................................................62 N.D.C.C. § 32-16-14 ..........................................................................................................62 N.D.C.C. § 32-16-41 ....................................................................................................37, 73 N.D.C.C. § 32-16-45 ...........................................................5, 29, 52, 53, 55, 57, 58, 60, 75
5
STATEMENT OF THE ISSUES PRESENTED FOR REVIEW
1. Did the District Court err when it failed to make any finding or conclusion in a partition action as to whether a physical division of the Land is possible without “great prejudice” to the owners before ordering the forced sale of the Land conditioned on unknown future events?
2. Did the Court err when it failed to order that each party pay his or her share of the costs of the partition action (1/3 Jan and Bob Rieger; 1/3 Lyle Ackerman; and 1/3 Kathleen Rub), including reasonable counsel fees, as is required by Section 32-16-45 of the North Dakota Century Code?
3. Did the District Court err when it failed to order that the Land be physically partitioned, rather than sold at auction, when the evidence presented at the partition trial demonstrated that the Land can be physically partitioned without “serious pecuniary injury” to Mr. Ackerman and Ms. Rub, the parties opposing physical partition?
6
ORAL ARGUMENT REQUESTED
[¶1] Jan and Robert Rieger request oral argument. The legal issues involve the
interpretation of statutes which could have important consequences for partition actions in
North Dakota.
STATEMENT OF THE CASE
[¶2] This is an appeal from the District Court’s April 25, 2019 Order and the District
Court’s August 16, 2019 Order on Post-Judgment Motion for Attorney’s Fees and Costs.
Wife and husband Janice and Robert Rieger, along with Ms. Rieger’s two siblings,
Defendants Lyle Ackerman and Kathleen Rub, own 473 acres of agricultural land in Grant
County, North Dakota as tenants in common. Disagreement arose between the three co-
tenant siblings over whether to physically divide the land or sell it as a whole, and the
Riegers commenced the present lawsuit to obtain a physical partition of the family land
pursuant to Chapter 32-16 of the North Dakota Century Code.
[¶3] Mr. Ackerman and Ms. Rub opposed the Riegers’ efforts to keep a one-third portion
of the family land. Mr. Ackerman and Ms. Rub advocated for the forced sale of all the land
and eventual apportionment of the proceeds between the three co-tenants. The partition
action was presented at a one-day bench trial.
[¶4] Following the trial, the District Court entered an Order that is silent on whether a
physical division would cause “great prejudice” to Mr. Ackerman and Ms. Rub, a
conclusion necessary to support an order that land be sold rather than physically divided
under the North Dakota partition statute. Rather than make that necessary finding, the
District Court’s Order requires the Riegers to either “prove up” a 2016 appraised value of
7
the whole of the land of $917,000 (by privately selling a two-thirds of the land it at that
value within six months), or proceed to a forced sale.
[¶5] The District Court’s Order is further silent on the mandatory apportionment of
attorney’s fees in a partition action between the co-owners. Because the District Court’s
Order does not address the issue of the apportionment of attorney’s fees as prescribed in
Section 32-16-45 of the North Dakota Century Code, the Riegers moved the District Court
for division of all fees and costs between the parties in proportion to each of their interests
in the family land (1/3 each). The District Court denied The Riegers’ Post-Judgment
Motion for Attorney’s Fees and Costs, reasoning in part that the motion for attorney’s fees
was premature due to the language in the Court’s Order allotting six months to sell two-
thirds of the land and the pending appeal to this Court.
[¶6] The Riegers timely appealed the District Court’s decision. (Notice of Appeal, App.
006-008; Notice of Filing the Notice of Appeal, App. 013-015). Mr. Ackerman and Ms.
Rub cross-appealed. (Notice of Cross-Appeal by Defendants, App. 009-011; Notice of
Filing the Notice of Appeal, App. 019-020).
STATEMENT OF THE FACTS
I. Jan Rieger wants to keep a portion of her family land near New Leipzig, while her two siblings want to force a sale of all the land.
[¶7] Wife and husband Jan and Bob Rieger own approximately 473 acres of agricultural
land in Grant County, North Dakota (the “Land”) adjacent to the corporate city limits of
New Leipzig along with Ms. Rieger’s two siblings, Defendants Lyle Ackerman and
Kathleen Rub, as tenants in common (the “Land”). The siblings own the Land in equal,
one-third undivided shares (1/3 Jan and Bob Rieger; 1/3 Mr. Ackerman; 1/3 Ms. Rub). The
Land is depicted here:
8
[¶8] (Nov. 14, 2018 Amended Referees’ Partition Report, App. 024). The Land consists
of three contiguous quarter sections: the NW1/4, SW1/4, and SE1/4, less a 5.01-acre parcel
in the NW1/4 containing a house and outbuildings sold on August 7, 2015 (the siblings
earlier agreed to sell the five-acre homestead with both a water well on the NW1/4 and
9
New Leipzig city water in the NW1/4 located on the northern part of the Land). (Tr. 30:1-
16; Warranty Deed dated Aug. 7, 2015, App. 026-030)). The depiction above shows a
yellow line around 315 acres located in the NW1/4 and N1/2S1/2. The Land also consists
of 160 acres shown below the yellow line in the S1/2S1/2.
[¶9] The W1/2 of the Land has been in the Ackerman family since 1910, when Nick
Ackerman, the siblings’ grandfather, purchased the Land. (Tr. 26:11-27:1-16; Ex. 17, 1910
Warranty Deed App. 031). The SE1/4 of the Land has been in the Ackerman family since
1956, when the siblings’ father Anthony Ackerman purchased it. The Land was deeded to
the three siblings out of the estate of their mother, Lillian Ackerman.
[¶10] Jan and Bob Rieger wish to keep a one-third portion of the Ackerman family Land.
Mr. Ackerman and Ms. Rub desire to each sell their respective one-third interest in the
Land. (See Tr. 81:11-82:1-8). Mr. Ackerman and Ms. Rub testified at trial that if the Land
was to be physically partitioned, they would combine whatever portions of the Land they
each are awarded, sell them together, and split the proceeds. (See Tr. 94:18-95:1-22; 106:1-
16).
[¶11] Ms. Rieger initiated this lawsuit to obtain a physical partition of the Land between
her and her siblings pursuant to Chapter 32-16 of the North Dakota Century Code, entitled
“Action for Partition of Real Property”. (See Complaint, App. 032-033). On January 8,
2019, Ms. Rieger executed a quit claim deed conveying her interest in the Land to herself
and Mr. Rieger as joint tenants. (See Quit Claim Deed, App. 034-036). A one-day Court
trial was held on February 26, 2019.
[¶12] Keeping a piece of the Land is very important to Ms. Rieger because the Land has
been in her family for generations and she grew up on the Land. (See Tr. 81:11-82:1-8).
10
Jan and Bob Rieger cherish “going home” to New Leipzig, where they both grew up, to
get away from the city and enjoy the outdoors. (Tr. 84:24-85:1-18). Ms. Rieger’s
connection to New Leipzig and to the Land remains very strong, and it is very important
to her to keep a piece of the Land in her family to pass on to her and Mr. Rieger’s children
and grandchildren. (Tr. 86:7-17). Currently, Gary Hertz, the siblings’ cousin, rents the
Land and utilizes the Land in his farming and ranching operation pursuant to a Farm Lease
with the siblings. (See Tr.31:22-32:1-18; Cash Farm Lease, App. 037-042). If awarded a
piece of the Land in a physical partition, the Riegers would likely continue to lease their
portion of the Land to Mr. Hertz and to visit the family Land from Minneapolis with their
children and grandchildren. See id.
II. Jan Rieger presented a feasible proposal to divide the Land without “great prejudice” to her siblings.
[¶13] Ms. Rieger’s main priority is to keep any portion of the Land. (Tr. 87:1-3). Ms.
Reiger indicated she would be willing to “draw straws” to keep any portion of the Land
rather than be forced to sell. Id.
[¶14] During the pre-trial process and at trial, the Riegers presented a proposed division
of the Land to the District Court which the Riegers submit would result in little to no value
loss to Mr. Ackerman and Ms. Rub given their stated desire to combine and sell whichever
portions of the Land they would retain in a division (Tr. 37:20-39:1-15). Under the division
the Riegers proposed, the Riegers would receive 160 acres in the S1/2 of the S1/2 of Section
1. Mr. Ackerman and Ms. Rub would split the other contiguous 315 acres, comprised of
the N1/2 of the S1/2 of Section 1 and the NW1/4 of Section 1. (Tr. 43:23-47:1-13). The
Riegers proposed this division because Mr. Rieger owns land immediately to the south of
11
the Land that would be contiguous with the S1/2S1/2 of the Land he and Ms. Rieger request
to keep under the proposal.
[¶15] Under the division suggested by the Riegers, Mr. Ackerman could retain the 155
acres in the NW1/4 and Ms. Rub could retain the 160 acres in the N1/2S1/2, or vice versa,
leaving them with a contiguous 315 acres for them to sell together, which is what they have
stated they plan to do with their shares of the Land See id. If the NW1/4 and N1/2S1/2 were
left as a contiguous 315-acre tract (as it would be for sale per Mr. Ackerman’s and Ms.
Rub’s stated intention to sell together), Mr. Ackerman and Ms. Rub’s 315 acres would have
consist of a contiguous 165 acres of crop land and 150 acres of pasture land.
III. The two partition referees cited the lack of a water well in the suggested 315-acre parcel of Jan’s siblings and the need to install a mile of fence to separate Jan’s proposed 160 acres as the primary obstacles to division.
[¶16] Two property appraisers, Dan Boris and Joe Ibach, were appointed by the District
Court to act as referees pursuant to the stipulation of the parties (See Stipulation for
Referees and Request for Appointment”, App. 043-045). On July 26, 2017, the Court issued
its “Order Appointing Referees”, ordering the referees to submit a report specifying the
manner in which they divide the property and the share, which shall be specifically
described, allotted to each party in accordance with each party’s 1/3 ownership.(Order
Appointing Referees, App. 046).
[¶17] The referees co-signed an April 10, 2018 report that, rather than recommending a
physical partition of the Land as required under statute and Order of the Court,
recommended selling the Land via public auction and dividing the proceeds
proportionately between the three siblings. (See April 10, 2018 Referees’ Partition Report,
App. 051). Only one water well exists on the Land, in the S1/2S1/2 Jan wishes to retain.
Id. In the referees’ April 10 report, the referees cited the lack of a water source in the
12
NW1/4 or N1/2S1/2 under Jan and Bob’s proposal as a major obstacle preventing a feasible
physical division of the Land. Id. (“The land that is now pasture in the N1/2S1/2 and
NW1/4 would no longer have a water source. As such, it would change from pasture to
essentially ‘waste’ as, without a water source, it has virtually no utility”). The report further
cited the cost of installation of fencing as an obstacle to division. See id.
[¶18] The Riegers moved for an Order requiring the referees to provide a recommended
physical partition of the Land rather than the conclusory report with a recommendation to
sell the Land. (Brief in Support of Motion for Order that Referees Provide a Recommended
Physical Partition, App. 058-068). The Court ordered that the referees supplement their
April 10, 2018 report to address the division scenario proposed by the Riegers: Riegers to
retain the S1/2S1/2, and Mr. Ackerman and Ms. Rub to retain the NW1/4 and N1/2S1/2 to
be sold together as one unit. (Amended Order, App. 072-073, ¶ 8). The Court ordered that
the referees address in their supplemental report the effect of drilling a water well in the
siblings’ proposed 315 acres, and also address the cost of fencing to divide Jan’s proposed
160 acres from her siblings’ proposed acreage. Id.
[¶19] The referees co-signed a November 14, 2018 supplemental report that again
provided conclusory remarks stating that the only equitable method of dividing the
property is to “sell the property in its entirety and divide the proceeds proportionately
between the owners.” (Nov. 14, 2018 Amended Referees’ Partition Report, App. 025). The
November 14, 2018 report did not address an opinion on value impact if a new well was to
be drilled on 315 contiguous acres to be held by Mr. Ackerman and Ms. Rub, and instead
valued all 146 acres of pasture in the 315-acre tract at $0. Id. (valuing pasture in 315-acre
13
tract at $0 when cut off from a water source)). The report stated that fencing of the one-
mile needed to separate off Ms. Rieger’s 160-acres would cost approximately $7,500. Id.
IV. The Riegers testified they would pay any portion the Court should deem equitable of the $19,189.75 to drill a new water well and the $7,500 for fencing to overcome the primary obstacles cited by the referees.
[¶20] The Riegers acknowledged at trial that the parties would need to do two things to
effectuate an equitable division: drill a water well and install straight fencing to divide two
parcels of land. (Tr. 59:3-12; 59:24-60:1-24). As part of the Rieger’s proposal, a new water
well would be drilled somewhere in either the NW1/4 or N1/2S1/2 to be retained by Mr.
Ackerman and Ms. Rub under the proposal. Id. In the referees’ reports, the partition
referees cited the lack of a water source in the NW1/4 or N1/2S1/2 under the Riegers’
proposal as a major obstacle preventing a feasible physical division of the Land. (See April
10, 2018 Referees’ Partition Report, App. 051 (“The land that is now pasture in the
N1/2S1/2 and NW1/4 would no longer have a water source. As such, it would change from
pasture to essentially “waste” as, without a water source, it has virtually no utility”); Nov.
14, 2018 Amended Referees’ Partition Report, App. 025 (valuing pasture in 315-acre tract
at $0 when cut off from a water source)). Bob Rieger testified that the obstacle raised by
the referees is very easily overcome by simply paying to the amount necessary to drill a
new water well somewhere in the 315-acre tract to be given to Mr. Ackerman and Ms. Rub
under the proposal, either the NW1/4 or N1/2S1/2. (Tr. 59:3-12).
[¶21] According to local water well driller Robert (“Bob”) Opp of Opp Well Drilling and
Supplies, Inc,, the total, all-in cost for him to drill a reliable, completed 250-foot well, along
with the solar system and pump system, including labor, mileage, and the mobilization fee
from Glen Ullin is $19,189.74. (See Robert Opp Trial Deposition Transcript, 22:5-16, App.
081; Bob Opp Drilling Estimate dated Jan. 29, 2019, App. 088-089). Bob drilled the
14
existing water well on the SW1/4 of the Ackerman Land in 1983 along with other wells in
the area. (Robert Opp Trial Deposition Transcript, 10:25-11:1, App. 078). Based on his
experience in the area, a 250-foot well drilled on the NW1/4 or N1/2S1/2 of the Land would
produce a good working water well. (See, Robert Opp Trial Deposition Transcript, 22:17-
23:1-9, App. 081).
[¶22] Similarly, installation of the necessary one mile of straight fencing to divide the
N1/2S1/2 and S1/2S1/2 of the Land, cost approximately $7500. (Nov. 14, 2018 Amended
Referees’ Partition Report, App. 025). The Riegers testified they are willing to pay
whatever portion of the cost to drill the water well in either the NW1/4 or N1/2S1/2 of the
Land and to install the one mile of necessary fencing the Court decides is equitable. (Tr.
59:3-12; 59:24-60:1-24).
V. With the installation of a new well and fencing, the only value impact to Jan’s siblings would be any attributable to the size difference between a 475-acre parcel and a 315-acre parcel.
[¶23] Mr. Rieger submitted to the Court at trial that once the obstacles of a new well and
fencing are addressed as proposed by the Riegers, the values of the siblings’ proposed
shares of the land would be relatively equal under the proposed 315-acre and 160-acre
division. Mr. Rieger explained the relative values of the proposed parcels to the Court
based on acreages and values pulled directly from a July 14, 2016 appraisal of the Land.
[¶24] Allied Appraisals of North Dakota, Inc. appraised the 475 acres of Land (233 crop;
242 pasture) in 2016 at $917,000. (July 14, 2016 Appraisal of Subject Property by Allied,
App. 128-129). The referees did not perform their own appraisal, and also relied on the
results of the Allied 2016 appraisal in their reports. (See April 10, 2018 Referees’ Partition
Report, App. 049; Nov. 14, 2018 Amended Referees’ Partition Report, App. 021). The
15
$917,000 appraised value is based on per acre values of $2,674 for crop and $1,215 for
pasture. (Tr. 53:4-15).
[¶25] Based on the acreages of crop and pasture land pulled directly from the Allied
appraisals, under the Rieger’s proposal, either Mr. Ackerman or Ms. Rieger would retain
89 acres of crop land and 66 acres of pasture land in the NW1/4, and either Mr. Ackerman
or Ms. Rieger would retain 76 acres of crop land and 66 acres of pasture land in the
N1/2S1/2. (See May 27, 2014 Appraisal of Subject Property by Allied, App. 160 (providing
NW1/4 acreages); July 14, 2016 Appraisal of Subject Property by Allied, App. 095
(providing N1/2S1/2 and S1/2S1/2 acreages)).
[¶26] When the per acres values for crop and pasture are applied to the acreages Mr.
Ackerman and Ms. Rub would be left with in the proposed 315-acre “NW1/4 plus
N1/2S1/2” contiguous tract, it yields a total value (based off the 2016 Allied appraisal) of
$623,460. (Tr. 57:13-21). When that total value is divided by two, for each Mr. Ackerman
and Ms. Rub, they would each receive $311,730 of value by retaining the 315-acre tract
proposed by Bob and Jan, versus the $305,666.67 they would receive under a hypothetical
$917,000 sale of the whole Land. See id. In other words, based off the numbers directly
from the 2016 Allied appraisal (the partition referees did not perform their own appraisal
of the Land), Mr. Ackerman and Ms. Rub would each receive $6,064 more in value if they
retain the 315-acre “NW1/4 plus N1/2S1/2” parcel than if the Land were to be sold as a
whole and the proceeds split between the three siblings.
[¶27] Referee Joe Ibach testified at trial to his opinion that there would be some
discounted value based on smaller size alone to the per acre price of 315-acre parcel, with
water access, compared with the 475-acre parcel left whole. (Tr. 126:22-128:16). Despite
16
not conducting his own appraisal, he discounted $250 per acre for the 165 acres of cropland
in the 315-acre parcel compared with 233 acres off the 2016 Allied appraisal price in the
475-acre parcel ($2,750 vs. $2,500). He based this discount on “economies of scale” in
modern farming:
A: …Again, it goes back to economy of scale. If I’m going to buy this and have more cropland acres, I’ll pay more because it’s going to be more economical for me, as a farmer, to move my machinery in there and farm 230 as opposed to 167 acres. And it might not sound like much but, again, in today’s market it’s a thought that’s going to go through a buyer’s mind. … Q. So where’s the cut off where large farm equipment is too big to – what’s the acreage cutoff from cropland where it’s too big to the extent that it devalues that type of acreage> A: I have no idea. It is just a reasonable assumption based on what we see in the marketplace.
(Tr. 127: 19-25; 128:11-16). Mr. Ibach acknowledged that the 150 acres of pastureland in
the 315-acre parcel would have greater than zero value with water access, but did not opine
on any specific discount to pastureland with water access of 150 acres versus 242 acres.
(Tr: 126:14-21). While the November 14, 2018 referees’report approximates the value of
the pasture land in the 160-acre parcel at $950 based on three sales in the Allied appraisal
ranging from $920-$1,250, it is silent on the value of the pastureland in the larger 315-acre
parcel in a scenario where the 315-acre parcel has a new well. (Nov. 14, 2018 Amended
Referees’ Partition Report, App. 022).
VI. The District Court’s Order is silent on whether a division would cause “great prejudice” to Jan’s siblings, orders the Land sold unless the 315-acre tract can be sold at the 2016 appraised per acre price within six months, and is silent on a division of costs of the partition action.
[¶28] Following the trial, the District Court ordered:
1. The parties shall have six months from the date of this order to attempt to sell the NW1/4 and the N1/2 of the S1/2 of Section 1. If the NW ¼ and the N1/2 of the S1/2
17
can be sold from 2/3 of the $917,000 amount indicated in the 2016 appraisal, or such other amount as may be agreed upon by the parties, the proceeds of the sale shall be divided equally between Lyle and Kathleen, and Lyle and Kathleen shall deed their interest in the S1/2 of the S1/2 of Section 1 to Janice; but,
2. If the NW1/4 and the N1/2 of the S1/2 cannot be sold for a satisfactory amount, and there is no sale pending, at the end of the six month period, then the entire 473 acre parcel shall be sold and the proceeds divided equally among the three siblings.
(Order on Partition, App. 244-245, ¶20). The reasoning in the District Court’s Order
assigns a $950 per acre value to the 146 acres of pasture land in the 315-acre parcel based
on the per acre value the referees assigned to the 98 acres of pasture in Jan’s proposed 160
acres. (Order on Partition, App. 244). However, the referees reached that value based on
a $265 per acre discount based on parcel size alone ($1,215 in 2016 appraisal versus $950
in referees’ report (See Nov. 14, 2018 Amended Referees’ Partition Report, App. 023). The
315-acre parcel should be valued higher based on the referees’ reasoning due to the larger
parcel size of the 315-acre parcel versus the 160-acre parcel under the Riegers’ proposed
division.
[¶29] The Court’s Order is silent on the issue of the mandatory division of attorney’s fees
requested by the Riegers in their post-trial brief. (Order on Partition, App. 238-245;
Plaintiff’s Post Trial Memorandum, App. 269-270). In response to the Court deciding not
to determine the issue of division of attorney’s fees under Section 32-16-45 of the North
Dakota Century Code in its Order on Partition, the Riegers submitted a Post-Judgment
Motion for Attorney’s Fees and Costs requesting the Court divide attorney’s fees expended
in the partition action in proportion to the parties’ respective interests pursuant to Section
32-16-45 of the North Dakota Century Code. (Brief in Support of Post-Judgment Motion
18
for Attorney’s Fees and Costs, App. 272-274). The Court denied this motion. (Order on
Post-Judgment Motion for Attorney’s Fees and Costs, App. 275-277). The Riegers timely
appealed the decision of the District Court. ((Notice of Appeal, App. 006-008; Notice of
Filing the Notice of Appeal, App. 013-015)). Mr. Ackerman and Ms. Rub cross-appealed
(Notice of Cross-Appeal by Defendants, App. 009-011; Notice of Filing the Notice of
Appeal, App. 019-020).
LAW AND ARGUMENT
I. Standard of Review
[¶30] Partition actions are governed by Chapter 32-16 of the North Dakota Century Code.
See generally N.D.C.C. ch. 32-16. “The interpretation and application of a statute is a
question of law.” Leet v. City of Minot, 2006 ND 191, ¶ 12, 721 N.W.2d 398. Questions of
law are fully reviewable on appeal. Beach Railport, LLC v. Michels, 2017 ND 240, ¶ 11,
903 N.W.2d 88. Therefore, statutory interpretation and application of the provisions of
Chapter 32-16 of the North Dakota Century Code pertinent to this appeal are fully
reviewable on appeal. See id; Leet, 2006 ND 191, at ¶ 12.
II. This Court should reverse the decision of the District Court because it failed to properly apply North Dakota law relevant to partition actions in ordering a forced sale unless a portion is sold privately for a certain value within six months without making a finding on whether a physical division would cause “great prejudice”.
A. A Court must order a partition in-kind unless the party opposing partition proves that a physical division cannot be made without “great prejudice” to the owners.
[¶31] When several hold real property as tenants in common, an action may be brought
for a partition of the real property, or for a sale of such property if it appears that a partition
cannot be made without great prejudice to the owners. N.D.C.C. §§ 32-16-01; 32-16-12.
The North Dakota partition statute, Chapter 32-16 of the North Dakota Century Code, is
19
clear that whether the Land can be physically partitioned or whether the Land should
instead be sold at auction is a legal question for the Court to decide, taking into account a
variety of factors:
If it is alleged in the complaint and established by evidence, or if it appears by the evidence without such allegation in the complaint, to the satisfaction of the court, that the property, or any part of it, is so situated that partition cannot be made without great prejudice to the owners, the court may order a sale thereof. Otherwise, upon the making of requisite proof, it must order a partition according to the respective rights of the parties as ascertained by the court…
N.D.C.C. § 32-16-12. Id.; Berg v. Kremers, 181 N.W.2d 730, 733 (N.D. 1970). The Court
must analyze all relevant factors to determine the appropriate method to partition the land.
Michels, 2017 ND 240, at ¶ 19.
[¶32] “Forced sales are strongly disfavored.” Id. The North Dakota Supreme Court has
made clear that the option of a forced sale is only to be employed to solve extremely “hard
cases”. See id. (the statutory power to order a sale to effect a partition of real property is
needed “to obviate hard cases”). The law favors partition in kind because it does not compel
a person to sell property against a person’s will and it does not disturb the existing form of
inheritance. Id. at 721. The power to force a sale “is an extraordinary and dangerous power,
and ought never to be exercised unless the necessity therefor is clearly established.” Id.
(quoting Haggerty v. Nobles, 244 Or. 428, 419 P.2d 9, 12 (1966). “[A]lthough a court must
occasionally order a sale in an appropriate case, ‘it is obnoxious to compel a person to sell
his property.’” Id.
[¶33] The burden of proving that a partition in kind cannot be made without great
prejudice is on the party demanding the sale. City of Harwood v. City of Reiles Acres, 2015
ND 33, ¶ 30, 859 N.W.2d 13. Mere “expressions of doubt” by a witness that the Land
divided would bring as much for each owner as if sold in one parcel are “‘not sufficient to
20
establish that the owners will sustain pecuniary loss by partition in kind which will warrant
an order of sale.’” Berg, 181 N.W.2d at 733 (quoting White v. Tillotson, 256 Wis. 574, 42
N.W.2d 283 (1950)).
[¶34] In determining if great prejudice would result from a partition, the question is not
whether physical partition or sale would provide optimal economic value or maximum
functional use. Schnell v. Schnell, 346 N.W.2d 713, 716 (N.D. 1984). The resultant parcels
need not be the economic, functional, or aesthetic equivalent of the original parcel. Id.
Rather, great prejudice exists when the value of the share of each in case of a partition
would be materially less than his share of the money equivalent that could probably be
obtained from the whole. Id. Thus, sale of land in partition should not be ordered unless it
is necessary to protect the parties from “serious pecuniary injury.” Id.
[¶35] The court is to take into consideration the owners’ stated intentions with respect to
their shares of the real property as an important factor in the court’s partition analysis. See
id. (reversing trial court’s order to sell property when court failed to take into consideration
wife’s stated willingness to lease land back to another owner); Berg, 181 N.W.2d at 733
(affirming order of the trial court partitioning four quarters of land between four owners
which took into consideration the witnesses’ testimony to their stated reasons and interests
in connection with the land)); Compare Schmidt v. Wittinger, 687 N.W.2d 479, 2004 ND
189, at ¶ 7 (where party opposing sale did not even appear at the evidentiary hearing to
refute evidence introduced by his brothers that land could not be physically partitioned).
[¶36] In analyzing the facts for and against partition in kind, courts look at the following
factors: (1) the situation of each owner (intentions with the land, right to preserve heritage
of labors and to pass property to heir, respective financial abilities, sentimental
21
attachments, willingness to lease back to other owners), and (2) the location and character
of the land (size and utility of respective shares, average acreage of similar tracts in the
area, availability of adjacent land, fencing, and water access). Berg, 181 N.W.2d at 735;
Schmidt, 2004 ND 189, at ¶ 7; Schnell, 346 N.W.2d at 716.
[¶37] North Dakota law allows courts to respect non-economic factors while still
adhering to the principles of equity. North Dakota courts have wide discretion to employ
“owelty”, or equalizing payments from one owner to another, contained at Section 32-16-
41, to bring about an equitable partition in kind rather than force a sale. See N.D.C.C. §
32-16-41. Section 32-16-41 demonstrates that North Dakota law still favors partition in
kind, even in situations where division of the land does not result in completely equal land
values. See id. North Dakota courts have further wide discretion to order that improvements
be made to property to be partitioned to accomplish an equitable physical division. See
Schnell, 346 N.W.2d at 721 (reversing trial court’s order to sell property and ordering the
trial court to devise a plan to partition property in kind, writing that court could easily order
the parties to install one and one-half mile of fencing, an extra access road, and convey
easements to each other to accomplish a physical partition). In all cases, the court has the
power to make compensatory adjustment between the respective parties according to the
ordinary principles of equity. Id.
[¶38] In Schnell v. Schnell, a divorced couple owned a ranch as tenants in common.
Schnell, 346 N.W.2d at 715. The husband petitioned to have the ranch partitioned and sold,
the trial court ordered the ranch be sold, and the wife appealed. Id. The trial court focused
principally on the fact that the Schnell Ranch was a “model” ranch, and stated that a
partition would destroy the usefulness and efficiency of the ranch. Id. at 716. The trial court
22
expressed concern that new machinery, wells, buildings, and fencing would be required if
the ranch was partitioned. Id. On appeal, the North Dakota Supreme Court said that
efficient agricultural management is a desirable objective, but it is only one factor among
several in an action for partition. Id. In analyzing the prejudice that may result, emphasis
must also be placed on the situation of the parties; their respective financial abilities,
including the ability of one party to purchase the property; the location and character of the
property; and the size and utility of the respective shares. Id. Sentimental reasons may also
be considered. Id.
[¶39] The Schnell Supreme Court reversed the trial court’s decision and found the ranch
could be partitioned without doing great prejudice to the owners based on the testimony,
diagrams, and pictures introduced which indicated that the ranch could be divided so that
each parcel would have sufficient water, pasture, hay, barn, and corral facilities. Id. at 721.
The Supreme Court held that none of the necessary alterations (one and one-half mile of
fencing, easements between the owners, and building a new road access) were significant
enough to require a sale, and that the trial court had the power to order that the parties
undertake such improvements to accomplish an equitable partition rather than force a sale.
Id. The Schnell Court also relied on the husband’s stated intentions with respect to the
purchase of adjacent lands, that the husband had already bid on an adjacent parcel, and that
the owner intended to lease back her portion of the land back to the other owner so he
would not suffer great prejudice if the land was physically divided. Id. at 719-20.
[¶40] Similarly, in Berg v. Kremers, the North Dakota Supreme Court upheld a physical
partition of four quarters of land of relatively equal value between four co-owners (two
plaintiffs, who were 25% and 25% owners, respectively; and two defendants, who were
23
30% and 20% owners, respectively). Berg, 181 N.W.2d at 733. Plaintiffs sought a partition
in kind and defendants sought a sale. Id. at 732. Rather than divide the land four ways, the
trial court ordered the land divided into two 50% undivided interests, one to the plaintiffs
and one to the defendants, who were mother and son. Id. at 735-36.
[¶41] The mother and son defendants appealed, arguing that the partition in kind caused
great prejudice. The Supreme Court held that the defendants failed to sustain their burden
of proof that a partition in kind would amount to great prejudice to the owners, based on
evidence that: the four quarters were of approximately equal value containing 259.85 acres
and 260.85 acres of tillable land as divided into half-section units; the property was good
agricultural land with access to good roads; it was an entire section of land readily divisible
into two half-section units which would sustain average farming operations in the area
involved; and that in North Dakota the demand is high for units of farmland from one-
quarter to a half-section. Id. at 735.
[¶42] The North Dakota Supreme Court in Schmidt v. Wittinger affirmed a trial court’s
finding, as not clearly erroneous, that land co-owned by three brothers be sold rather than
physically partitioned. Schmidt, 2004 ND 189, at ¶ 1. Two brothers, Donald and Kenneth
Wittinger, initiated a partition against a third brother, Alfred, seeking a sale. Id. at ¶ 2. Prior
to the partition, Alfred was hostile toward his brothers and refused to discuss or
communicate at all with his brothers about the land. Id. at ¶ 8. Alfred neither appeared nor
was represented by counsel at the partition trial to refute evidence introduced by Donald
and Kenneth that the land should be sold rather than partitioned in kind. Id. at ¶ 3.
[¶43] After the uncontested bench trial, the trial court ruled for Donald and Kenneth,
finding that a partition in kind would result in great prejudice to the owners. Id. at ¶ 8. The
24
Court listed many significant obstacles making a physical partition difficult, including:
surveying and constructing a substantial amount of fence along a meandering river which
made fencing extremely difficult; lack of road access if the property were divided due to
the river crossing the premises; the difficulty posed by the fact that Alfred refused to
communicate with others; the fact that multiple wells and dams would need to be
constructed to provide each parcel with a water supply; and a house on a section line that
could not be partitioned. Id.
B. The District Court erred when it failed to make any conclusion on whether a physical division would cause “great prejudice” before essentially ordering the forced sale of the Land.
[¶44] There is a strong presumption that a physical partition of the land should be made,
and the Court may only deviate from a physical partition of real property if such partition
cannot be made without great prejudice to the owners. Michels, 2017 ND 240, at ¶ 10;
Schnell, 346 N.W.2d at 716. “Unless great prejudice is shown, a presumption prevails that
partition in kind should be made.” Schnell, 346 N.W.2d at 716.
[¶45] The District Court altogether failed to make a finding or conclusion as to whether
a physical division of the land could be made without “great prejudice” to the owners. This
finding is a requirement under Section 32-16-12 of the North Dakota Century Code, and is
the central issue in this partition case. Instead of completing the appropriate analysis to
determine whether or not, based on all of the relevant factors, Mr. Ackerman and Ms. Rub
demonstrated a physical division of the Land cannot be made without “great prejudice” to
the owners at trial, the Court simply proceeded to its ultimate Order for the parties to
proceed to a forced sale unless the Riegers could “prove up” the 2016 Appraisal per acre
price within six months.
25
[¶46] In its Order, the District Court, citing its “wide judicial discretion in partition
actions to ‘do equity’” and “great flexibility in fashioning appropriate relief for the parties,”
rather than the clear “great prejudice” standard laid out in the partition statute, conditioned
the forced sale of the Land at auction on the happening, or lack thereof, of a future event.
More specifically, the District Court ordered (1) the parties shall have six months from the
date of the order to attempt to sell two of three suggested divisions of the family land for
two-thirds of the 2016 appraisal price, and if successful, Kathleen and Lyle would share in
the proceeds; and (2) if the two of three suggested divisions of the family land cannot be
sold, and there is no sale pending, at the end of the six month period, then the entirety of
the family land shall be sold and the proceeds divided equally between all three siblings.
(Order on Partition, App. 245). This method of resolving a partition action is
counterintuitive to the clear procedure outlined in chapter 32-16.
[¶47] A proper district court determination on the “great prejudice” question contained at
Section 32-16-12, N.D.C.C. should be based on the relative value of the whole of a parcel
versus its divided parts; it should not be based on whether the party favoring a division
(who does not carry the burden of proof) “proving up” some overall per acre value.
Whether or not the Riegers can find a private buyer to buy the 315-acre tract consisting of
the NW1/4 and N1/2S1/2 of the Land at the 2016 Appraisal per acre price does not go
toward whether Mr. Ackerman and Ms. Rub would suffer “serious pecuniary injury” from
a division. See Schnell, 346 N.W.2d at 716 (sale of land in partition should not be ordered
unless it is necessary to protect the parties from “serious pecuniary injury”).
[¶48] The Order requires the Riegers to “prove up” an unrealistic per acre price, or be
forced to sell Ms. Rieger’s one-third share in her inherited family land. Under the Court’s
26
Order, if the 2016 Appraisal per acre value is high (which the Riegers believe), the fact it
could not be privately sold for that price within six months would not show “serious
pecuniary injury” to Mr. Ackerman and Ms. Rub, since there is no certainty the whole of
the Land would achieve that sale price. Additionally problematic under the Court’s Order,
the likely buyers of the Land are local farmers and ranchers, who will know they can simply
wait six months and get all the land at a much lower price, making a sale at the 2016
Appraisal per acre price a practical impossibility.
[¶49] Without a finding or conclusion as to whether Mr. Ackerman and Ms. Rub
established a physical division could not be made without “great prejudice,” to them, the
District Court lacks the statutory authority to force a sale like the Land sale scheme
contemplated in the Order. Failing to determine that a partition in kind cannot be made
without great prejudice before forcing the sale of the Land constitutes an erroneous
application of the law, and is therefore reversible error.
[¶50] Further, this Court has discussed the strong public policy concern for the finality of
final orders and judgments. See e.g., Lewis v. N. Dakota Workers Comp. Bureau, 2000 ND
77, ¶ 10, 609 N.W.2d 445. At the close of a dispute presented to a court, parties are to be
afforded finality. Rather than giving the parties finality, in its Order, the District Court
poses two very different scenarios entirely based on variables, largely outside of the control
of the parties, in a short time-frame. This is contrary to the longstanding policy of this
Court that court orders and judgments are to be final and provide complete adjudication of
all issues in dispute. Not only did the District Court fail to make the proper determination
required to force the sale of the Land and completely disregard the mandates of the partition
statute, it also failed to afford the parties with any semblance of finality.
27
[¶51] Ultimately, in the name of its “wide discretion,” the District Court failed to follow
the clear statutory mandates outlined in ch. 32-16 of the North Dakota Century Code
governing partition actions, and failing to provide the finality that is owed to parties who
bring their disputes to the courts for resolution. The District Court’s discretion should not
expand further than the constraints clearly outlined in statute. Accordingly, the decision of
the District Court should be reversed.
III. The District Court erred when it failed to order that each party pay his or her share of the costs of the partition action in accordance with the percentage of each party’s ownership, including reasonable counsel fees, as is required by Section 32-16-45 of the North Dakota Century Code.
[¶52] The Riegers are entitled to division of attorney’s fees and costs as provided for in
Section 32-16-45 of the North Dakota Century Code:
The costs of a partition, including reasonable counsel fees, expended by the plaintiff or any defendants, for the common benefit, fees of referees, and other disbursements, must be paid by the parties respectively entitled to share in the lands divided in proportion to their respective interests therein and may be included and specified in the judgment. When, however, litigation arises between some of the parties only, the court may require the expense of such litigation to be paid by the parties thereto, or any of them.
N.D.C.C. § 32-16-45 (emphasis added). The North Dakota Supreme Court, when
interpreting this provision held “the cost of a partition action, including reasonable attorney
fees, must be paid by the parties in proportion to their respective interest in the property
and may be included and specified in the judgment.” Schmidt, 2004 ND 189, at ¶ 11
(emphasis added).
[¶53] Notably, the discretionary final sentence of Section 32-16-45 is inapplicable in this
case because the final sentence clearly only applies when only some of the co-owners are
involved in the partition litigation. N.D.C.C. § 32-16-45. Accordingly, any argument
seeking the Court’s discretion under the final sentence of Section 32-16-45, N.D.C.C. must
28
fail. The statutory division of costs of a partition action, including reasonable counsel fees,
is mandatory in this case, and each co-owner must pay the costs in proportion to her or his
share of the property regardless of whether Plaintiffs “prevail.” See id.
[¶54] Here, Bob and Jan Rieger hold a one-third interest, Mr. Ackerman holds one-third
interest, and Ms. Rub owns one-third interest in the Land. The parties agreed to pay the
referees one-third each pursuant to a stipulation. In the Riegers’ Post-Trial Memorandum,
they asked the Court to “order that each party pay his or her share of the costs of this
partition action, including reasonable counsel fees, in proportion to his or her interest in
the family land (1/3 Jan and Bob Rieger; 1/3 Lyle Ackerman; and 1/3 Kathleen Rub), as is
required by Section 32-16-45 of the North Dakota Century Code.” (See Plaintiffs’ Post-
Trial Memorandum, App. 269-270). Bob and Jan Rieger’s counsel submitted an “Affidavit
of Fees and Costs,” which contained all reasonable fees and costs incurred by Jan and Bob
Rieger in this partition action. (See Affidavit of Attorney Fees and Costs, App. 278-279).
However, the Court did not address apportionment of costs in its Order, as is required by
North Dakota law. (See Order on Partition, App. 238-245).
[¶55] The Riegers later moved the District Court for attorney’s fees pursuant to the
mandate in Section 32-16-45 of the North Dakota Century Code. (Brief in Support of Post-
Judgment Motion for Attorney’s Fees and Costs, App. 272-274). The District Court denied
the Rieger’s motion, stating it was premature due to the language in the Order on Partition
and because the Partition Order was appealed. (Order on Post-Judgment Motion for
Attorney’s Fees and Costs, App. -275-277). The District Court also commented it had
concerns that the eventual division would not fit the definition of partition, and there were
29
unanswered questions regarding whether the attorney fees requested were expended for the
“common benefit” of the parties as “required by the parties.” Id.
[¶56] The District Court was incorrect to question whether the “fees expended by
Plaintiffs were not expended ‘for the common benefit’ of the Defendants.” The mandatory
division of costs under the partition statute presumes the parties to a partition action will
be litigating to trial, and the Court will thereafter be dividing costs. It is common sense that
co-owners who agree on how to handle a property do not need to hire lawyers and referees
and proceed to a partition trial, which is adversarial by its very nature. If co-owners agreed
on whether and how to divide a co-owned property, there would be no need to litigate and
proceed to a partition trial for a judge’s decision. Rather, the parties would reach agreement
outside of court without a partition trial.
[¶57] The same “common benefit” argument made by Defendants was raised by the
defendant in the North Dakota Supreme Court case Schmidt v. Wittinger, 2004 ND 189,
687 N.W.2d 479, and rejected by the Court. In that case, Alfred Wittinger, the Defendant,
“assert[ed] that [d]amages and attorney’s fees taxed against [him] were not appropriate
given the adversarial posture of this case.” Id. at ¶ 11. In his briefing to the North Dakota
Supreme Court, Wittinger argued:
It does not appear that N.D.C.C. § 32-16-45 requires that costs and fees be awarded in a partition action. The plain language of the statute refers to costs “for the common benefit”. I did not want to see this land sold.
Reply Brief for Appellant, Schmidt, 2004 ND 189, 687 N.W.2d 479 (No. 13-01-C-00066),
2004 WL 2222590. Nevertheless, the North Dakota Supreme Court in that case held:
Under N.D.C.C. § 32-16-45, the cost of a partition, including reasonable attorney fees, must be paid by the parties in proportion to their respective interests in the property and may be included and specified in the judgment.
30
Schmidt v. Wittinger, 2004 ND 189 at ¶ 11. The division of costs under the partition statute
at Section 32-16-45, N.D.C.C. is mandatory unless only some of the co-owners are
litigating.
[¶58] It is a given that co-owners who proceed all the way to a partition trial do not agree
on what should be done with a co-owned property, or a partition trial would be unnecessary.
A reading of Section 32-16-45 that would require only the division of those costs incurred
to accomplish shared goals of parties on opposite sides of a partition litigation would render
the entire section a nullity, which simply cannot be the result under the law.
[¶59] In Schmidt, the Defendant opposed paying his portion of the costs and fees of the
partition action because allegedly, much of the litigation costs were not related to the
partition action, but rather to a demand for specific performance. See Reply Brief for
Appellant, Schmidt, 2004 ND 189, 687 N.W.2d 479 (No. 13-01-C-00066), 2004 WL
2222590. Again, however, this argument was not persuasive to the Court and was rejected.
Schmidt, 2004 ND 189 at ¶ 11 (affirming the trial court’s conclusion of law that “costs and
disbursements of [the] action” be “divided in proportion to their respective interests
therein.” Findings of Fact, Conclusions of Law and Order for Judgment at 7, Schmidt, 2004
ND 189, 687 N.W.2d 479 (No. 13-01-C-00066)). Further, the Defendant in Schmidt did
not even appear at the partition trial, and the North Dakota Supreme Court still upheld the
trial court’s taxation of the Plaintiffs’ costs and fees against him when his fees and costs
were presumably much lower than the Plaintiffs’, who had filed the partition action and
put on evidence at trial.
[¶60] Pursuant to Section 32-16-45 of the North Dakota Century Code, the District Court
erred when it failed to order Mr. Ackerman (1/3 owner) and Ms. Rub (1/3 owner) to
31
reimburse the Riegers their respective portion of the amount contained in the “Affidavit of
Fees and Costs.”
IV. The District Court erred by not ordering a physical partition when the evidence shows Jan’s siblings would not suffer “great prejudice” from partition.
[¶61] The evidence is clear that Mr. Ackerman and Ms. Rub, as the parties demanding a
sale, did not meet their burden to prove a partition in kind would cause them “great
prejudice”. See City of Harwood, 2015 ND 33, at ¶ 30 (the burden of proving great
prejudice is on the party demanding the sale). At trial, Mr. Ackerman testified that he agrees
with the conclusion of the partition referees that the Land should be sold at auction and the
proceeds of the sale divided among the three siblings. (Tr. 94:18-95:1-22). Ms. Rub
similarly testified that she agrees with the referee’s recommendation that the property be
sold and proceeds divided. (Tr. 106:1-16). Mr. Ackerman and Ms. Rub completely rely on
the report of the partition referees and failed to present additional evidence to meet their
burden of proving that a partition in kind cannot be made without great prejudice. (See Tr.
94:18-95:1-22; 106:1-16). Rather, the majority of the trial consisted of the Riegers, who do
not carry the burden of proof, proving the exact opposite.
[¶62] Under the partition statute, the Court enlists the assistance of Court appointed
referees to help determine how best to physically divide the Land among the cotenants. See
N.D.C.C. §§ 32-16-13; 32-16-14. The Court, however, is not required to adopt a conclusory
statement from its appointed referees regarding the feasibility of partition in kind. See
Michels, 2017 ND 240, at ¶ 19. The Court also cannot rely on the conclusory statements in
the referees’ reports in determining the appropriate method to partition the Land, especially
because neither of the referees’ reports considered all factors relevant to the partition
analysis. See id. Rather, the Court must undertake its own analysis and take into
32
consideration all of the applicable factors, including relevant non-economic factors. See id.
[¶63] Mr. Ackerman and Ms. Rub simply concurring with the referee’s report and
expressing their wish to sell all of the land and split the proceeds is not sufficient to meet
the burden of proving “great prejudice” to force the sale of the family Land. Rather, in
effect, Mr. Ackerman and Ms. Rub requested that the District Court rely on the conclusory
statements in the referees’ reports, which did not analyze all relevant partition analysis
factors, in determining the appropriate method to partition the Land.
[¶64] Great prejudice does not exist merely because a physical partition or sale would not
result in optimal economic value or maximum functional use, and the resultant parcels from
a physical partition need not be the economic, functional, or aesthetic equivalent of the
original parcel. Schnell, 346 N.W.2d at 716. Rather, great prejudice exists when the value
of the share of each case of a partition would be materially less than his share of the money
equivalent each would probably obtain from the whole. Id. A forced sale should not be
ordered unless it is necessary to protect the parties from “serious pecuniary injury.” Id.
[¶65] The evidence the Riegers presented at trial demonstrates that the Land can be
physically divided to give the Riegers the S1/2S1/2, leaving Mr. Ackerman and Ms. Rub
with approximately a half-section of land (315 acres less the homestead and small acreage
for the cemetery) in the NW1/4 and N1/2S1/2 to sell without “serious pecuniary injury” to
Mr. Ackerman and Ms. Rub.
[¶66] Mr. Rieger demonstrated through his testimony that based on the per acre numbers
direct from the 2016 appraisal, Mr. Ackerman and Ms. Rub would get more value under
the partition in-kind proposal than a sale. Because a Court must find a sale is necessary to
protect the parties from “serious pecuniary injury” to force a sale of the Land, it follows
33
that the Court must consider all of the evidence presented to it related to values of the Land
partitioned in-kind vs. partitioned by sale. See Schnell, 346 N.W.2d at 716.
[¶67] Based off the numbers directly from the 2016 Allied appraisal (the partition referees
did not perform their own appraisal of the Land), Mr. Ackerman and Ms. Rub would each
receive $6,064 more in value if they retain the 315-acre “NW1/4 plus N1/2S1/2” parcel
than if the Land were to be sold as a whole and the proceeds split between the three siblings.
(Tr. 57:13-21). It simply cannot be said that a sale is necessary to protect the parties from
“serious pecuniary injury”, as is required for the Court to order a sale, when the per acre
value numbers pulled directly from the most-recent appraisal performed of the Land
support that Mr. Ackerman and Ms. Rub will get more value under the partition in kind
proposal than a sale See Schnell, 346 N.W.2d at 716.
[¶68] The Riegers demonstrated at trial that the main obstacles to a partition posed by
Mr. Ackerman and Ms. Rub are easily overcome with two relatively inexpensive
alterations, including drilling a new water well (cost of $19,189.75 total), and installing
fencing to divide the parcels (cost of approximately $7,500). These minor obstacles are
similar to those present in the Schnell case, where the Supreme Court reversed the trial
court’s decision and found the ranch could be partitioned without doing great prejudice to
the owners. Schnell, 346 N.W.2d at 716. In Schnell, the Supreme Court held that none of
the necessary alterations (one and one-half mile of fencing, easements between the owners,
and building a new road access) were significant enough to require a sale, and that the trial
court had the power to order that the parties undertake such improvements to accomplish
an equitable partition rather than force a sale. Id. As in Schnell, in this case, drilling a
$19,189.75 well and installing one mile of straight fencing to divide the N1/2S1/2 and
34
S1/2S1/2 of the Land at a cost of $7,500 are not significant enough obstacles to require a
sale. The Court could have easily ordered that the parties undertake the drilling of the well
and installation of fencing. See Schnell, 346 N.W.2d at 716 (finding that the trial court had
the power to order that the parties undertake such improvements as are necessary to
accomplish an equitable partition rather than force a sale).
[¶69] The Court’s Order ignores Mr. Rieger’s testimony explaining that based on the per
acre values in the 2016 appraisal, Mr. Ackerman and Ms. Rub would suffer no pecuniary
injury from a division. The Court need not rely on expert testimony for Land valuations,
and instead can rely on valuations through certain non-expert testimony. A real property
owner, like Mr. Rieger, may testify as to the value of land without any further qualification
or special knowledge. See Wolt v. Wolt, 2010 ND 26, 778 N.W.2d 786 (N.D. 2010).
[¶70] However, in its Order on Partition, the Court relies entirely on the referees
“expressions of doubt” that the 315-acre parcel would achieve as high a sale price as a 475-
acre parcel. (Order on Partition, App. 244, ¶19). Also see Berg, 181 N.W.2d at 733
(quoting White v. Tillotson, 256 Wis. 574, 42 N.W.2d 283 (1950) (mere “expressions of
doubt” by a witness are “‘not sufficient to establish that the owners will sustain pecuniary
loss by partition in kind which will warrant an order of sale.’”).The partition referees did
not perform their own appraisal of the Land in preparing their report, and instead
discounted the values contained in the 2016 appraisal based on vague references to
“modern farming practices”. Neither referee collected or analyzed comparable sales data
from the prior three years, as would have been required of them to develop a market value
opinion. (See April 10, 2018 Referees’ Partition Report, App. 049 (“No appraisal report
was prepared by either of the referees”); Nov. 14, 2018 Amended Referees’ Partition
35
Report, App. 021).Mr. Ibach’s merely expressing doubt that the 315-acre parcel would
bring as much per acre as the 475-acre parcel based on a vague reference to “modern
farming practices” is not sufficient to establish “severe pecuniary injury” to overcome the
presumption of physical division in a partition action.
[¶71] The Riegers presented a detailed, feasible proposal to accomplish a partition in
kind. In that way, this case is easily distinguishable from the situation in Schmidt v.
Wittinger, where the defendant brother did not show up for trial to oppose the sale requested
by his brothers and refused to communicate with his brothers about his intentions for their
land. See Schmidt, 2004 ND 189, at ¶¶1-3. Further, the minor obstacles (which are
addressed with the drilling of a well and installation of fence) to an equitable partition in
kind raised by Mr. Ackerman and Ms. Rub and the partition referees here pale in
comparison to the scope of the many obstacles in play in Schmidt. See id. at ¶ 8 (surveying
and constructing a substantial amount of fence along a meandering river which made
fencing extremely difficult; lack of road access if the property were divided due to the river
crossing the premises; the difficulty posed by the fact that Alfred refused to communicate
with others; the fact that multiple wells and dams would need to be constructed to provide
each parcel with a water supply; and a house on a section line that could not be partitioned).
[¶72] Mr. Ackerman and Ms. Rub did not overcome the strong presumption of physical
division under North Dakota law. The physical division of the land proposed by the Rieger
that allows them to retain the S1/2S1/2, and allows Mr. Ackerman and Ms. Rub to retain
the NW1/4 and N1/2S1/2, would not create a substantial negative value impact to Mr.
Ackerman and Ms. Rub. In fact, it would provide Mr. Ackerman and Ms. Rub each $6,064
more in value than if the Land were to be sold as a whole and the proceeds split between
36
the three siblings. (Tr. 57:13-21). Accordingly, the evidence is clear there is no “great
prejudice” to Mr. Ackerman and Ms. Rub, and the District Court should have ordered that
the Land be physically divided rather than sold at auction.
[¶73] The District Court also failed to consider an equalization payment as authorized
under Section 32-16-41 in its minimal analysis. North Dakota courts have wide discretion
to employ “owelty”, or equalizing payments from one owner to another, contained at
Section 32-16-41, to bring about an equitable partition in kind rather than force a sale. See
N.D.C.C. § 32-16-41. When it appears that the partition cannot be made equal between the
parties according to their respective rights without prejudice to the rights and interests of
some of them, and a partition is ordered, the court may adjudge compensation to be made
by one party to another on account of the inequality. N.D.C.C. § 32-16-41. This statutory
discretion afforded to the court allows it to respect non-economic factors, such as the
Rieger’s sentimental attachment to the Land, while still adhering to ordinary principles of
equity. See id.
[¶74] Without opining as to whether Mr. Ackerman and Ms. Run met their burden to
show “great prejudice,” the District Court essentially ordered the forced sale of the entire
parcel. (Order on Partition, App. 238-245). The Section 32-16-12 of the North Dakota
Century Code requires the District Court to make a finding of “great prejudice” before it
can force the sale of the family Land rather than order a partition in-kind. The District
Court ordered a forced sale of the Land in error because the evidence presented at trial
clearly did not rise to the level of “great prejudice” to overcome the presumption of a
physical division of the Land. Accordingly, this Court should reverse the decision of the
District Court in its Order for partition by sale.
37
CONCLUSION
[¶75] This Court should reverse the decision of the District Court because it did not
follow the clear procedures and mandates of the North Dakota Partition Statutes contained
in chapter 32-16 of the North Dakota Century Code, including the required conclusion on
the existence of “great prejudice” to the owners if the Land is physically divided and the
mandatory requirement to divide the costs of a partition action, including reasonable
counsel fees, in proportion the owners’ share of the Land. The Court should render
judgment ordering physical partition. Alternatively, the Court should remand to the District
Court for the Court to issue a conclusion on whether there will be “great prejudice” from a
physical partition and the taking of any necessary additional evidence on that issue. On the
issue of attorneys’ fees, the Court should remand for the District Court to obtain proof of
Mr. Ackerman and Ms. Rub’s attorneys’ fees and to accomplish a division of attorney’s
fees based on the mandatory division of attorneys’ fees provision in the partition statute at
Section 32-16-45 of the North Dakota Century Code.
Respectfully submitted September 30, 2019.
VOGEL LAW FIRM By: /s/ Robert J. Pathroff Robert J. Pathroff (#07759)
US Bank Building 200 North 3rd Street, Suite 201 PO Box 2097 Bismarck, ND 58502-2097 701.258.7899
Email: [email protected] ATTORNEYS FOR Plaintiff, Appellant, and Cross-
Appellees
38
CERTIFICATE OF COMPLIANCE
[¶76] Pursuant to Rule 32(e) of the North Dakota Rules of Appellate Procedure, this brief
complies with the page limitation and consists of 38 pages.
[¶77] Dated this 30 day of September, 2019.
VOGEL LAW FIRM /S/ Robert J. Pathroff
BY: Robert J. Pathroff (#07759) US Bank Building
200 North 3rd Street, Suite 201 PO Box 2097 Bismarck, ND 58502-2097 701.258.7899 Email: [email protected] ATTORNEYS FOR Plaintiff, Appellant, and Cross-Appellees
