Kaberna v. Brown ( 2015 )

#27109-a-LSW
2015 S.D. 34IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
****
FRANK J. KABERNA, JEAN A.
RADEMACHER, ROBERT
RADEMACHER, THE ESTATE OF
DONALD KABERNA and
THE DONALD KABERNA TRUST, Plaintiffs and Appellees,
v.
KAREN BROWN and DAVID BROWN, Defendants and Appellants.
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APPEAL FROM THE CIRCUIT COURT OF
THE FIRST JUDICIAL CIRCUIT
CHARLES MIX COUNTY, SOUTH DAKOTA
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THE HONORABLE BRUCE V. ANDERSON
Judge
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TIMOTHY R. WHALEN
Lake Andes, South Dakota Attorney for plaintiffs
and appellees.
WANDA HOWEY-FOX of
Harmelink, Fox & Ravnsborg
Yankton, South Dakota Attorneys for defendants
and appellants.
****
CONSIDERED ON BRIEFS
ON MARCH 23, 2015
OPINION FILED 05/20/15
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WILBUR, Justice
[¶1.] Karen and David Brown appeal a judgment by the circuit court
ordering the partition in kind of real estate in which they owned an undivided one-
fourth interest with Karen’s siblings and their respective spouses. We affirm.
Background
[¶2.] Frank E. Kaberna (Frank E.) and Josephine Kaberna established two
trusts, each in their respective names, on December 19, 1996, for the equal
disposition of real property, “share and share alike,” to their four children: Karen,
Frank, Jean, and Don. The two trusts were funded with 533 acres of real property
consisting of crop land, pasture land, and a homestead (Homestead). The
Homestead consisted of a residence (Homestead Residence), livestock facilities,
grain storage, equipment storage, and other assorted buildings. Most of the trust
property has been owned by the Kaberna family for over 70 years.
[¶3.] Frank E. died in 2000, and Josephine died in 2003. Karen and Don
served as successor trustees. In April 2012, the trust property was finally
distributed in accordance with the terms of the two trusts. Each of the four
children, along with their spouses, received a one-fourth undivided interest in the
real property. Don, who died prior to the commencement of the underlying action,
is survived by his wife Carol Lynn Kaberna. In the end, the real property subject to
this action was owned one-fourth by Frank, one-fourth by Karen and David, one-
fourth by Jean and Robert Rademacher, and one-fourth by Carol individually and
as the legal representative of Don’s estate and trust.
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[¶4.] Jean is married to Robert Rademacher (Bob). Jean and Bob reside in
Huron, South Dakota. Carol lives outside of Wagner, South Dakota, on farmland
that she and Don acquired. Frank is unmarried and lives at the Homestead
Residence, where he has lived for over 20 years. Frank farms approximately 700
acres of land and stores his farm equipment in the buildings located on the
Homestead. He also raises guinea hens, peacocks, geese, and ducks at the
Homestead.
[¶5.] The Browns own and live on a farm immediately adjacent to the
Homestead. The Browns own a second farm, which they are currently selling to
their daughter on an installment basis. The Browns operate over 1,100 acres of
land. Upon Frank E.’s death in 2000, Karen purchased Frank E. and Josephine’s
cattle, sheep, and hogs (the Livestock Operation). The Livestock Operation consists
of about 150 cattle, 50 sheep, and 15 hogs. The Browns used most of the pasture
land surrounding the Homestead for the sheep and cattle. They also used the
feedlot, pens, and outbuildings for their Livestock Operation.
[¶6.] Upon Josephine’s death in 2003, the Browns leased crop and pasture
land surrounding the Homestead. Before Don died, Don and Carol met with the
Browns and specifically told Karen that they would not reimburse her for the cost of
any improvements that she made to the real property, and that if she did make any
improvements, she did so at her own peril. The leases further required Karen to
maintain and repair the facilities on the leased premises at her own expense.
Indeed, the Browns made improvements to some of the property located on the
Homestead. The improvements included a new fence, the replacement of old gates,
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the replacement of loaders at the silo, and the addition of a large livestock chute.
The Browns paid for the improvements at a total cost of $41,072.
[¶7.] Frank, Jean, Bob, the Estate of Don, and the Donald Kaberna Trust
(collectively, “the Plaintiffs”) brought the underlying partition action against the
Browns. At trial, the Browns offered extensive evidence of the antagonistic history
between the parties. The circuit court found, “It is abundantly clear . . . that the
Kaberna siblings do not get along.” The court acknowledged that “evidence of the
alleged ‘fault’ between the parties is not probative of the issues before the [c]ourt,
but clearly shows the [c]ourt that a partition of the real property subject of this
action is paramount to the well being of the Kaberna family.” The Plaintiffs and the
Browns both agreed that any partition ordered by the court should be fashioned so
that Frank and Karen do not have regular contact with each other.
[¶8.] The Plaintiffs retained the services of Bryan Maas (Maas), a certified
appraiser from Maas & Associates, Inc., to appraise the real property. Maas
appraised the property at a value of $1,600,000. 1 The Browns did not dispute the
value of the appraisal. In addition, Maas submitted a partition proposal for
dividing the real property (the Maas Plan). The Maas Plan divided the crop and
pasture land between the parties and carved out a small, six-acre tract of land for
Frank that included the Homestead Residence as well as a few other buildings on
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1. Maas had been retained prior to the commencement of the action as well. He
made several appraisals of the property at issue. The parties attempted to
craft a division plan for the property based on Maas’s earlier appraisal, but
they were unable to come to an agreement. As a result, the Plaintiffs brought
the underlying action.
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the Homestead. The majority of the Homestead and livestock facilities were to be
distributed to Karen.
[¶9.] The Browns hired Gregg Hubner, a certified appraiser, to assess the
Maas Plan and craft an alternative proposal (the Hubner Plan). Hubner considered
the Maas Plan impractical because Frank and Karen’s joint occupancy of the
Homestead proved unworkable. Hubner further thought that, under the Maas
Plan, the parties would have difficulty establishing the lot lines and separating the
utilities that served the property. In light of these considerations, the Hubner Plan
recommended that Karen receive the entire Homestead property along with the rest
of the property she would receive under the Maas Plan. This would require Frank
to move from the Homestead Residence to a new location. In turn, Karen would
make a $200,000 equitable adjustment payment to the Plaintiffs. The circuit court
found that this proposal amounted to a “partial forced sale by some of the
Plaintiffs.” 2
[¶10.] After it became apparent to the Plaintiffs that the Maas Plan was
problematic because it placed Frank and Karen in regular contact with each other,
the Plaintiffs submitted a proposal that modified the Maas Plan (the Modified Maas
Plan). The Modified Maas Plan essentially divided the Homestead area in half and
awarded one half each to Frank and the Browns. Frank would receive the six-acre
farm site with the Homestead Residence and 18 acres of surrounding land including
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2. The circuit court further found that Hubner “appears to have relied upon
inaccurate information which was provided to him by the Defendants, was
guided by Dave throughout the visit he made to the property, and appears to
(continued . . .)
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the property that the Browns improved. The Browns would receive 16 acres of the
surrounding land. If this proposal was not accepted by the court, the Plaintiffs
urged the circuit court to revert back to the original Maas Plan so that Frank would
not be displaced from his home.
[¶11.] The Browns strongly opposed the Modified Maas Plan. The Browns
argued that to partition the property in any fashion that leaves them without their
buildings and structures for sheep will cause them to suffer “financial ruination.”
They contended that their ranching and farming operation could not continue
without the improvements on the Homestead or without replicating those
improvements on another property. The court, however, noted that the “bulk of the
[Browns’] income is not from their sheep operation, but is from other farming
activities or other sources.” Nonetheless, the court noted that the Browns “have
other structures on their other farms and real property near the home place that
will allow them to easily transfer their sheep operation off the home place.”
[¶12.] The circuit court rendered an extensive memorandum decision on
February 20, 2014, and findings of fact and conclusions of law on May 7, 2014. The
court ultimately adopted the Modified Maas Plan. The court found that the
Modified Maas Plan was “simple, fair, equitable, and easily accomplished and
effectuate[d] a plausible and equitable manner of partitioning the real property
subject to this action.” The court noted that the Browns “had the burden of proving
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(. . . continued)
have been coached heavily by the Defendants to recommend a partition plan
which merely parroted the Defendants’ desires.”
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that they would suffer a ‘great prejudice’ if the land were not sold to them as they
proposed.” The court found that the Browns “failed [to] present sufficient facts or
evidence to carry this burden and there are no facts of any nature or sort in
evidence which would support the contention that the [Browns] have met this
burden.” The Browns appeal the partition order and raise the following two issues
for our review:
1. Whether the circuit court erred in adopting the Modified
Maas Plan.
2. Whether the circuit court erred in admitting the Modified
Maas Plan in contravention of the court’s pretrial order.
Standard of Review
[¶13.] An action for partition of property “‘is a proceeding in equity and the
court has the inherent jurisdiction to adjust all the equities in respect to the
property.’” Englehart v. Larson, 1997 S.D. 84, ¶ 12, 566 N.W.2d 152, 155 (quoting
Braaten v. Braaten, 278 N.W.2d 448, 450 (S.D. 1979)). “Equitable actions are
reviewed under an abuse of discretion standard.” Eli v. Eli, 1997 S.D. 1, ¶ 8, 557
N.W.2d 405, 408. “An abuse of discretion ‘is a fundamental error of judgment, a
choice outside the range of permissible choices, a decision, which, on full
consideration, is arbitrary and unreasonable.’” Gartner v. Temple, 2014 S.D. 74,
¶ 7, 855 N.W.2d 846, 850 (quoting Arneson v. Arneson, 2003 S.D. 125, ¶ 14, 670
N.W.2d 904, 910).
[¶14.] We review factual determinations under a clearly erroneous standard.
Id. ¶ 8 (quoting State v. Guthrie, 2002 S.D. 138, ¶ 5, 654 N.W.2d 201, 203). “The
question is not whether this Court would have made the same findings the [circuit]
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court did, but whether on the entire evidence we are left with a definite and firm
conviction that a mistake has been committed.” Id. (quoting Estate of Olson, 2008
S.D. 97, ¶ 9, 757 N.W.2d 219, 222). We review the circuit court’s conclusions of law
de novo with no deference given to the circuit court. Id. (quoting Guthrie, 2002 S.D.
138, ¶ 5, 654 N.W.2d at 204).
Analysis
[¶15.] 1. Whether the circuit court erred in adopting the Modified
Maas Plan.
[¶16.] The partition and sale of real estate is governed by SDCL chapter 21-
45. SDCL 21-45-1 provides:
When several cotenants hold and are in possession of real
property as partners, joint tenants, or tenants in common, in
which one or more of them have an estate of inheritance or for
life or lives or for years, an action may be brought by one or
more of such persons for a partition thereof according to the
respective rights of the persons interested therein and for a sale
of such property or a part thereof, if it appear that a partition
cannot be made without great prejudice to the owners.
“If it appear 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[.]” SDCL 21-45-28. “‘Unless great prejudice is
shown, a presumption prevails that partition in kind should be made. Forced sales
are strongly disfavored.’” Eli, 1997 S.D. 1, ¶ 10, 557 N.W.2d at 408 (quoting Schnell
v. Schnell, 346 N.W.2d 713, 716 (N.D. 1984)). “The proponent of the forced sale has
the burden of proving great prejudice.” Gartner, 2014 S.D. 74, ¶ 11, 855 N.W.2d at
851.
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[¶17.] The Browns argue that the circuit court’s decision was unfair,
inequitable, unreasonable, and has caused “great prejudice” to them. 3 The Browns
advance several arguments in support of their claim that the court erred when it
adopted the Modified Maas Plan. First, the Browns argue that the court erred
when it refused to award them with the property that they improved and when it
refused to compensate them for the value of the improvements. A circuit court has
“discretion to deny entirely any award for the value of improvements in a partition
action[.]” Iverson v. Iverson, 87 S.D. 628, 633, 213 N.W.2d 708, 711 (1973). The
court personally inspected the Homestead and found that “many of the
improvements are antiquated, outdated, in poor condition, and of little value,” and
there “is clearly nothing unique about the improvements aside from their
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3. It is important to note, however, that although the Browns repeatedly claim
on appeal that they were greatly prejudiced by the circuit court’s decision,
they do not argue that a partition in kind cannot be made without great
prejudice to them. Instead, the Browns merely argue that the Modified Maas
Plan causes great prejudice to them. In their appellate brief, the Browns
contend that “the manner that the trial court allocated the land greatly
prejudices the Defendants,” and therefore “the case should be reversed
allowing them to continue their farming operation and allocating the real
property in a manner to allow the family farm to be maintained and
partitioned in an equitable fashion for all of the parties not just some of the
parties.” We have said that “a party has access to the remedy of partition by
sale only in limited circumstances—when ‘it appears 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.’” Gartner, 2014 S.D. 74, ¶ 11,
855 N.W.2d at 851 (quoting SDCL 21-45-28). Because the Browns do not
present any argument or cite to any authority that tends to suggest that the
property “is so situated that partition cannot be made without great prejudice
to the owners[,]” the Browns have failed to satisfy their burden of proving
whether a forced sale is appropriate under these facts. See id. Accordingly,
our review is limited only to whether the circuit court abused its discretion
when it adopted the Modified Maas Plan. See Eli, 1997 S.D. 1, ¶ 8, 557
N.W.2d at 408.
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sentimental value.” This finding is supported by the testimony at trial of both Maas
and Hubner. Hubner testified that all of the buildings were “functionally obsolete,”
and Maas agreed with this conclusion.
[¶18.] The Browns have not presented any argument that persuades us that
these findings were clearly erroneous. Consequently, the circuit court did not err
when it fashioned a partition in kind that distributed the improved property to
Frank. Nor did the court err when it refused to award any extra compensation to
the Browns for the improvements they made. The court explicitly found Karen was
told that she would not be compensated for any improvements that were made
while she leased the property. “The rule at common law is that a tenant in common
cannot compel his cotenants to contribute to his expenditures for improvements
placed by him on the common property without the consent or agreement of the
cotenants.” Johnson v. Hendrickson, 71 S.D. 392, 398, 24 N.W.2d 914, 917 (1946).
“It is a well-settled principle that, in the absence of an agreement that the landlord
will pay for improvements or a statute imposing liability on the landlord, a tenant is
not entitled to compensation for improvements made to the leasehold even though
they cannot be removed by the lessee.” Commercial Trust and Sav. Bank v.
Christensen, 535 N.W.2d 853, 858 (S.D. 1995).
[¶19.] Next, we address the Browns’ argument that the circuit court erred
because the adoption of the Modified Maas Proposal “forces [them] out of the
livestock business and/or forces them to expend significant sums of money to
replicate the improvements that they have paid for and that they need to continue
their operation.” The court considered this argument and found that “although
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Karen does have significant capital invested in her [livestock] operation, . . . only a
small portion can be attributed to the livestock improvements on the homestead, as
most of the capital is in farming equipment, the livestock itself, and other items.”
Furthermore, the court found that, while the Browns “point to their tax returns to
show the financial impact on their operation, such returns fail to show the
breakdown of the improvements made at the homestead site, but rather shows all
capital improvements for the Browns’ total farming operation[.]” Lastly, the court
noted that “the tax returns Karen submitted in evidence do not show a significant
income from her livestock business, and it is certainly not her only means of living
or getting by in life.”
[¶20.] Again, the Browns have failed to show that the circuit court erred in
this regard. In fact, this argument is wholly unsupported by the evidence presented
at trial. The Browns own two farms and operate over 1,100 acres of land. The
Livestock Operation is only a fraction of their total farming income. The Browns
may relocate the Livestock Operation if they desire. 4 On this point, the court stated
that it was “sympathetic to the displacement and relocation of the Browns’ livestock
operation, . . . but the [c]ourt was ultimately swayed by the great impact of
removing [Frank] from [his] home of twenty-years when compared to [the] impact of
displacement and relocation of the livestock operations that were operating based
upon antiquated improvements.” This can hardly be described as an abuse of
discretion.
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4. The Browns presented no evidence about the cost of moving the Livestock
Operation.
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[¶21.] The remaining arguments asserted by the Browns on this issue lack
sufficient merit for our consideration. In fashioning the partition in kind, the
circuit court addressed the character and location of the land, the accessibility to
the various parcels of property, practicality of partitioning the land, improvements
to the property, and the importance of agricultural land to family members. The
court concluded that the Modified Maas Plan was “the most fair and equitable
partition plan in this matter.” We agree. There is nothing in the record that leads
us to believe that this conclusion was “a fundamental error of judgment, a choice
outside the range of permissible choices, a decision, which, on full consideration, is
arbitrary and unreasonable.” See Gartner, 2014 S.D. 74, ¶ 7, 855 N.W.2d at 850
(quoting Arneson, 2003 S.D. 125, ¶ 14, 670 N.W.2d at 910).
[¶22.] 2. Whether the circuit court erred in admitting the
Modified Maas Plan in contravention of the court’s
pretrial order.
[¶23.] The Browns argue that the circuit court erred when it admitted the
Plaintiff’s Modified Maas Plan into evidence (Exhibit 19). The court entered a
pretrial order stating that “the parties hereto shall . . . submit copies of said exhibits
and a list of exhibits to each other and the court on or before June 7, 2013.” The
Plaintiffs notified the court and the Browns on the first day of trial, June 13, 2013,
that they intended to offer Exhibit 19 into evidence as a demonstrative exhibit. The
Browns objected. The next day of trial, June 14, 2013, the Plaintiffs reoffered the
exhibit into evidence as an actual exhibit as opposed to a demonstrative exhibit.
The court admitted the exhibit as a demonstrative exhibit.
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[¶24.] “This Court reviews evidentiary rulings under an abuse of discretion
standard.” Eagle Ridge Estates Homeowners Ass’n, Inc. v. Anderson, 2013 S.D. 21, ¶
12, 827 N.W.2d 859, 864 (quoting Meadowland Apartments v. Schumacher, 2012
S.D. 30, ¶ 24, 813 N.W.2d 618, 624) (internal quotation marks omitted). “‘With
regard to the rules of evidence, abuse of discretion occurs when a trial court
misapplies a rule of evidence, not when it merely allows or refuses questionable
evidence.’” Wilcox v. Vermeulen, 2010 S.D. 29, ¶ 7, 781 N.W.2d 464, 467 (quoting
State v. Asmussen, 2006 S.D. 37, ¶ 13, 713 N.W.2d 580, 586).
[¶25.] The Plaintiffs argue that “the Browns do not come to this Court with
clean hands on this issue.” At the pretrial conference on May 29, 2013, the Browns
disclosed their partition proposal to the circuit court and the Plaintiffs. On June 7,
2013, the Browns provided the court with three new proposals, Exhibits C, DD, and
JJ. According to the Plaintiffs, they reviewed the new partition proposals from the
Browns and prepared Exhibit 19 as a result. The court addressed Exhibit 19 and
Exhibit JJ on the second day of trial.
The court: Well my issue is neither of them prove a fact.
Plaintiffs’ counsel: No, they don’t.
The court: They just demonstrate each party’s proposal so I
consider them both demonstrative, and I’m going to consider
both of them - -
Counsel: Okay.
The court: - - in my analysis.
Counsel: That was my concern.
The court: Yeah. No, ah, neither of them prove a fact.
Counsel: Correct.
The court: They just assist the court in understanding a
proposal.
Counsel: That’s, that’s exactly what I wanted the [c]ourt to do.
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The court: All right. Any problem with that, [Defendants’
counsel]?
Defendants’ counsel: No, Your Honor.
[¶26.] Even assuming that the circuit court abused its discretion in admitting
Exhibit 19 into evidence, the Browns have failed to demonstrate prejudice. Exhibit
19 modified the Maas Plan (Exhibit 16). The difference between Exhibit 19 and
Exhibit 16 is that Exhibit 19 provided Frank with 18 more acres of the Homestead
property. This property included the improvements made by the Browns. Karen
testified about the improvements. Furthermore, the court received the Browns’
income tax returns containing depreciation schedules and itemized deductions for
farm related expenses. Karen testified as to these exhibits as well. We conclude
that the court did not abuse its discretion. See Eagle Ridge, 2013 S.D. 21, ¶ 12, 827
N.W.2d at 864.
[¶27.] We affirm.
[¶28.] GILBERTSON, Chief Justice, and ZINTER, SEVERSON, and KERN,
Justices, concur.
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