We have now one other reminder of the significance of placing agricultural leases in writing. This one comes from the Texarkana Court docket of Appeals in Coniglio v. Woods. [Read opinion here.]
Background
Candido John Coniglio, Sr. (“Senior”) owned a 5,100 acre farm in Fannin County which was managed by his son, Candido John Coniglio, Jr. (“Junior”). Michael Woods owned the adjoining farm.
Woods employed employees to chop hay on his property. Senior agreed to permit Woods to chop and bale 107 acres of hay on Senior’s property in change for giving Woods a portion of the hay crop with Woods getting 60% and Senior and Junior getting 40%. Beginning in 2015, Woods minimize Senior’s hay based mostly on this oral settlement. Senior and Junior testified this oral settlement was on a year-to-year foundation, however Woods claimed he and Junior entered right into a five-year lease of the farm, which might enable him to chop and bale hay till December 31, 2020.
In 2016, Woods drafted a letter that was despatched to the County FSA Workplace stating: “That is to tell you that Michael J. Woods operated my farm no. 1077 (roughly 107 acres) agriculturally for hay. This lease settlement started in 2015 and can proceed by December 31, 2020.” The letter was signed by Woods and Junior.
Litigation
Woods filed go well with towards Senior and Junior for a breach of the written farm lease settlement.
Junior and Senior asserted the Statute of Frauds as an affirmative protection, claiming that the contract, if any, that shaped the premise of the claims was too ambiguous. They argue that the one settlement was a year-to-year hay splitting settlement and never an settlement to lease the property. Junior admits to signing the FSA letter however says he solely did so as a result of Woods instructed him he wanted it for his subsidy funds. Junior didn’t take any cash in change for the lease and didn’t take into account the letter to represent a farm lease.
The trial court docket discovered the letter did represent a memorandum of settlement that glad the Statute of Frauds, and the events had been sure by the phrases of the settlement. It additionally discovered that Senior breached the settlement by excluding Woods from the property. Thus, the court docket granted partial abstract judgment as to the breach of contract declare with a listening to for damages to come back later.
A few months later, Woods added extra events–entities owned by Senior– as defendants and added quite a lot of claims together with tortious interference with potential contract, unjust enrichment, and violations of the Texas Misleading Commerce Practices Act. Senior filed a solution on behalf of the entities. Woods moved to strike the reply arguing the entities couldn’t characterize themselves with out counsel and that their reply was filed past the time set forth within the scheduling deadline. After the reply was stricken, the court docket entered judgment towards Senior and the entities, collectively and severally, for a complete of over $1.25 million.
Senior and the entities appealed.
Court docket of Appeals Opinion
The Texarkana Court docket of Appeals reversed. [Read Opinion here.]
Abstract judgment was improper
The court docket held that abstract judgment was improper because of the existence of disputed info. Particularly, the size of the lease and whether or not the letter was supposed to be a lease settlement had been each disputed.
Senior testified he was unaware of any written lease and that he allowed Woods to chop hay on a year-to-year foundation. Junior testified that Woods had permission to chop and bale hay on a year-to-year foundation and that he did so for 2 years. Additional, Junior stated he solely signed the letter in order that Woods might get his FSA subsidies and that he by no means supposed for it to be a lease settlement. Junior claims that when he instructed Woods in 2018 he didn’t want Woods to chop his hay, Woods didn’t protest.
Woods testified that the events operated below an oral settlement till he and Junior entered right into a five-year lease confirmed by the USDA letter. Woods additional testified that regardless of what he believes was a written lease settlement, Senior and Junior concurrently leased the farm to different events and acquired hire, which interfered along with his skill to make use of the farm. This included permitting one other farmer to chop hay in 2020 and a photo voltaic farm to start building the identical yr. He additionally offered a letter from the FSA workplace, asserting the letter to be a sound 5-year lease.
Statute of Frauds was not glad
When a promise or settlement can’t be accomplished inside a yr, it falls throughout the Statute of Frauds and isn’t enforceable except it’s in writing and signed by the particular person to be charged. Equally, a lease of land for a yr or extra should additionally fulfill these necessities. Particularly, the Statute of Frauds requires “{that a} memorandum of an settlement…be full inside itself in each materials element and comprise all the important parts of the settlement in order that the contract may be ascertained from the writings with out resorting to oral testimony.” The fabric phrases of an settlement should be set forth with “an affordable diploma of uncertainty and definiteness.”
The court docket discovered the USDA letter inadequate to satisfy the Statute of Frauds. Though it presupposed to memorialize a lease, it lacked quite a lot of materials phrases. First, it stated that Woods “operated” the farm prior to now below unspecified phrases and with out defining what “operated” means. It didn’t clarify whether or not Woods was obligated to do something going ahead. The letter contained not one of the phrases of the lease, however merely acknowledged that it will proceed to December 2020. It didn’t embrace phrases of consideration or value, didn’t clarify what different rights Woods might need usually related to leases, and was inadequate to ascertain the events’ obligations. As a result of there was no legitimate written settlement, Woods was not entitled to abstract judgment.
Reply mustn’t have been stricken
The court docket additionally discovered that the entities’ reply mustn’t have been stricken. The choose struck the reply based mostly on a scheduling order to which the entities weren’t a celebration. They need to have been given the usual time to reply the grievance, with which they complied. Thus, the default ruling was reversed and the entities can be given the possibility to reply.
Ruling
In mild of this, the trial court docket judgment is reversed and remanded for additional proceedings. The deadline to attraction has not but handed, so it’s unclear whether or not Woods will attraction this choice.
Key Takeaways
If I’ve stated it as soon as, I’ve stated it 1,000,000 occasions. It’s important for all agricultural leases to be put in writing. This doesn’t imply a two sentence letter to the FSA workplace. It additionally doesn’t imply a easy examine field kind with blanks to examine. Taking the time to draft a written lease settlement protects the rights of each events and protects the connection between them. This endeavor needn’t be overly advanced. We have now leasing assets out there right here and the Ag Lease 101 web site has good assets as properly.
Moreover, it bears mentioning {that a} celebration ought to by no means signal something with out studying and understanding what it means. Right here, Junior signing the letter for the FSA workplace that referred to the events’ settlement as a “lease” with a 5-year time period was problematic when he claims that he didn’t perceive or intend for there to truly be a multi-year lease on the property.
Supply: Texas Agriculture Regulation Weblog
