Miller v. Miller, No. A-08-247 (Neb. App. 12/2/2008)

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TED G. MILLER AND KAREN E. MILLER, HUSBAND AND WIFE, APPELLEES, v. RICHARD A. MILLER AND DEB MILLER, HUSBAND AND WIFE, APPELLANTS.

No. A-08-247.

Court of Appeals of Nebraska.

Filed December 2, 2008.

Appeal from the District Court for Garden County: KRISTINE R. CECAVA, Judge. Affirmed.

Paul E. Hofmeister, of Chaloupka, Holyoke, Hofmeister, Snyder & Chaloupka, P.C., L.L.O., for appellants.

Philip E. Pierce, of Pierce Law Office, for appellees.

INBODY, Chief Judge, and SIEVERS and MOORE, Judges.

MEMORANDUM OPINION AND JUDGMENT ON APPEAL

MOORE, Judge.

INTRODUCTION

Ted G. Miller and Karen E. Miller filed a complaint against Richard A. Miller and Deb Miller in the district court for Garden County, Nebraska, seeking, in part, a declaratory judgment that an agreement dated June 8, 2005, had no legal validity. The court bifurcated the matter and, following a trial on the validity of the June 8 agreement, declared that it was not an enforceable contract, was void ab initio, and was not a valid deed. Richard and Deb appealed, and we affirm.

BACKGROUND

This is a dispute regarding a family farming and ranching operation in Garden County (the ranch). Art and Bethel Miller owned and operated the ranch from 1964 until June 7, 2005, when they deeded the ranch to their son and daughter-in-law, Ted and Karen. Art and Bethel have a second son, Richard, who is married to Deb.

Richard helped Art and Bethel operate the ranch from approximately 1974 through August 2006. From approximately 1992 or 1993, Richard also helped his parents make financial and management decisions regarding the ranch. Richard also was employed at times as a crop insurance agent and had his own business raising horses for sale. Initially, Art and Bethel paid Richard a regular salary for his work until he married Deb, after which time Richard's compensation was in the form of being allowed to keep and graze his horses on the ranch and feed them with hay from the operation free of charge. For a period of time, Richard and Deb lived in Oklahoma and Richard commuted to work the ranch in Garden County for 2 or 3 weeks at a time, after which he would return to Oklahoma for a few days, then return again to the ranch to work. Deb is employed as a teacher and occasionally helped on the ranch in the past.

Ted moved away from the ranch and pursued a career at a chemical company. Karen is a registered nurse. Ted and Karen lived in Reno, Nevada, prior to and at the time they purchased the ranch. Ted returned to the ranch from time to time to work when needed. At the time of trial, Ted, Karen, and their family still owned their home in Reno and also lived in Oshkosh, Nebraska, near the ranch.

In 1992 and again in 2002, Art and Bethel filed for bankruptcy. The 2002 bankruptcy was still pending in 2005, and one of the creditors was threatening to foreclose on the ranch. The family discussed options to avoid foreclosure and keep the ranch in the family. In early 2005, Art, Bethel, and the parties decided that the best option was to sell the ranch and equipment to Ted and Karen and in return Ted and Karen would take out a loan to pay off the ranch's debts and to continue to operate the ranch. Richard agreed it would be preferable for Ted to obtain a loan because Ted's credit was better than Richard's. The parties agreed that the loan payments would be paid from the income of the farm and ranch operations.

The parties dispute whether Richard was to have an ownership interest in the property and what, if anything, would be required for Richard to obtain an interest in the farm and ranch operation. Bethel and Ted both testified that the parties agreed Richard would have a half interest in the property if he paid half of the debt. Bethel testified that Richard was going to sell some of his horses so he would have enough money to pay one-half of the mortgage and that ownership then would be half and half. Bethel also testified that Richard was to have half of the ranch after all of the ranch's debts were paid and that Richard and Ted were to share the operating expenses. Richard testified that he assumed an agreement between himself and Ted was going to be drafted at the same time as the deed transferring the ranch to Ted and Karen, which agreement would provide that Richard was to own half of the ranch.

On June 7, 2005, Art and Bethel executed a warranty deed transferring the ranch to Ted and Karen. A family meeting occurred on June 7 involving Art, Bethel, Ted, Karen, and Richard at Art and Bethel's house to discuss the ranch. Ted testified that everyone agreed that Ted and Karen would take out a loan to pay ranch indebtedness, which loan transaction was scheduled to take place the next day. They all agreed that it needed to be done or they would lose the ranch. At that discussion, Richard questioned his role in the operation and Ted responded that Ted had to buy into it and Richard could as well. Ted testified generally that everyone was aware that he and Karen would need to be record owners of the property in order to finance the loan because the ranch would serve as part of the security for the loan.

According to Ted, the parties met again the next morning on June 8, 2005, to ensure that everyone was committed to the arrangement before Ted and Karen went to sign the loan documents. Ted testified that if they had known that morning that Rick was going to insist on some kind of ownership agreement, they would have never gone ahead with the loan. After that meeting, Ted and Karen drove from Oshkosh to North Platte, Nebraska, where they signed the loan documents at a North Platte bank. To obtain the loan, they mortgaged their home in Reno. Afterward, they intended to drive to Denver, Colorado, where they would catch a flight back home.

After Ted and Karen left for North Platte on the morning of June 8, 2005, Richard learned that his parents had signed the deed transferring the ranch to Ted and Karen. Upon learning that information, Richard spoke with his mother about having an attorney write an agreement (the Agreement) that Richard and Ted would sign to evidence that Richard owned a one-half interest in the ranch. Richard and Bethel went into town to meet with their attorney.

The attorney drafted the Agreement under Bethel's direction, although only Richard and Ted were parties to the Agreement. Later at trial, the attorney stated that he understood Richard and Ted "were to operate the ranch, pay the debt, and after the debts were paid it would be half each." Paragraph 1 of the Agreement stated the legal description of the property and the two remaining paragraphs provided:

2. It is the agreement between [Ted] and [Richard] herein that [Richard] is and shall receive one-half (1/2) in the equity and ownership of the above described real estate. That [Ted] herein and his spouse are obtaining loan funds to pay liens against [the property]. [Ted] and [Richard] herein shall be responsible for operating and conducting the farming operations on the above described property and income from the property is to pay any loans due secured by Deeds of Trust against the above described property.

3. The parties herein agree that ownership of the property shall be held by [Ted] and [Richard] herein as Tenants in Common with each of the parties owning a respective one-half (1/2) interest as Joint Tenants between themselves and their respective spouses.

Bethel testified that the attorney prepared the Agreement in about 10 or 15 minutes and told her that it might not be legally binding. Richard testified that his mother did not mention this to him.

Following the meeting at the bank to sign the loan documents, Bethel called Ted and asked him to meet her in Ogallala on their way back to Denver which he did. Bethel testified that she asked Ted to sign the Agreement because Richard wanted it signed to feel protected, otherwise he would leave the ranch. Ted initially told Bethel that he was not signing the Agreement, although he did eventually sign it at her insistence to keep her happy. Ted testified that he did not really understand the agreement but took it to mean that Richard was going to buy into the ranch by selling some of his horses or mortgaging his home in Oklahoma. Richard signed the Agreement some time after Ted signed it. Neither Karen nor Deb signed the Agreement, and none of the signatures are notarized.

Following June 8, 2005, the farm and ranch operations continued in much the same manner they had before the loan and Agreement took place. Richard continued to work on the ranch, and Ted paid him a wage for his work. The horses remained on the ranch. Ted paid the ranch's bills, and Richard was expected to deposit the earnings from the farm and ranch operations into the ranch's bank account which Ted and Karen owned. The ranch continued to lose money. In August 2006, Ted and Richard arranged to meet with the attorney to draw up a partnership agreement, however that was not accomplished. Following that meeting, Richard did not return to the ranch to work, but only to check on his horses. On November 15, Ted sent a notice of termination and eviction to Richard and Deb requesting that they vacate the ranch and remove their horses. On November 21, Richard filed the Agreement with the Garden County register of deeds office. Richard stated that he had not filed the Agreement prior to this date because Ted indicated it would cause trouble with the bank.

Ted and Karen filed the complaint in this matter on January 8, 2007. The parties stipulated that the matter be bifurcated, and the court held a trial on the issue of the validity and effect of the Agreement on May 18. The court entered its order on August 23 and found that the Agreement was not an enforceable contract and was void ab initio. The court further found that the Agreement was not a deed and did not transfer title to any real estate or constitute a lien or encumbrance against any real estate. The...