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AGRICULTURAL LAW EMPHASIS INDIANA

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					             Nature and Meaning of
                 Property-- #9
• Class 9, Sept. 9 -- Chapter 4
• Homework #2 returned & comments.
• Quiz #3--critique
•   Recitation:
•   Cases         Students
•   Stoltzfus - Nathan Fleck; (holding) Luke Harrison
•   Adams - Chris Geswein; (holding) Ryan Holtkamp
•   Jackson - Gretchen Humphrey, (holding) Joshua
                                                Johnson
• If you are not getting mine,Send an E-mail to
  <gah104@insightbb.com>
        Quiz #3 -- True or False
• 1. Farm operators with less
   than 10 employees are           • 4. Farmers don’t withhold
   generally exempt from OSHA        federal income taxes from
   inspections.                      independent contractors.

• 2. We can consider               • 5. At least in Indiana, a “tort
   workman’s compensation law        lawyer” would rather avoid
   among the tort-liability          workman's comp recovery
   avoidance or reduction            for his injured client, and
   statutes in Indiana.              recover under common law
                                     tort rules.
• 3. It is legal for a farmer to
  allow his or her 15 year old
  child to drive a 100 pto
  horsepower tractor.
    Homework #2 Comments.
• Parol evidence rule not applicable. This
  rule says, generally, what is written
  overrides what was discussed, but not in
  the document.
• Not promissory estoppel either. This
  applies when a party is stopped from
  performing because the other party has
  made important steps when he or she
  thought there was a deal.
• Not partial performance either. ??
• UCC does not apply to real estate, but it
  applies to the tractor deal.
     Homework #2 -- Comments.

• Most everyone agreed there was a legally
  enforceable deal for the tractor due to the
  “mail box” rule.
• Ah, but maybe the sale of the land should be
  tied to the tractor deal. ??
• The deal for the land is another matter.
• Could it be that it matters whether it is the
  “buyer” or the seller that backs out?
    Homework #2 -- Comments.
• While this buyer may have implied he had the
  money ($380,000 cash), usually a land deal
  is subject to available financing.
 – So that is an out for the buyer.
 – He thought the price was right, but his lender
   may have disagreed.
• “When does the land buyer get out of a
  deal?”
• This may be an interesting topic for a
  research paper.
 What is Great about America?
• What would you say to grades K-3 on
  Sept. 11?
 Property -- An Introduction

• Law is critical to the definition of
   property.
• Without laws, there may be no
   property rights, but
• the law limits ones rights in property, and defines
  responsibilities of property owners.
        Real or Personal Property?

• Real property is land, things fixed to the land and
 other things appurtenant to the land (easement), e.g.,
   – land, rights to go over the land (easements)
   – buildings
   – fences
• Personal property is all that is not real estate, e.g.,
   – Tangible items:
      • equipment, machinery
      • livestock, crop inventory …
   – Intangibles:
   Property Distinction Issues

• When does what was personal property
  become real estate?
  – In the case of a sale, specify in the sales
    contract what goes with the land.
• What about growing crops?
  – Part of the land: trees, bushes or grass
  – Annually planted crops: corn, wheat, soybeans,
    vegetables are considered personal property.
Stoltzfus v. Covington County
             Bank
    • D.Ct. of Appeal of Fl, ‘63, 154 So. 2d 866
    • Action:
    • Issue:

    • Facts:
                   Stoltzfus

• Action: Conversion? And injunction to keep
  Gillis off property?
• Facts: Gillis farmed land in ‘61 and ‘62 that he
  tried to buy from Stoltzfuz, but failed to make
  a second payment in 1962.
• Bell bought this farm at a foreclosure sale.
                      Stoltzfus

• Bell filed suit to prevent Gillis from removing crops,
  fencing, and asked that he return harvested corn.

• A lower court allowed Gillis to keep the corn and
  to enter to harvest beans and hay, but enjoined
  (order to not) him from harvesting the balance of
  the corn crop.
                              Stoltzfus
• Issue: Are annually produced crops part of the
    realty or are they personal property?
• Holding: The crops in dispute were personal
   property (fructus industriales) and not
  (fructus naturales)
   – Gillis as the farmer (like a tenant) would be entitled to
    his crop (or share).
   – Therefore the crops did not belong to the real estate
    mortgagee (i.e., bank).
   – Orders were rendered in favor of Gillis accordingly
• Law/Rule: What is grown annually is personalty,
  and what is not such as timber, fruit trees, sod are
  not, and go with the real estate.
  History of Real Property Rights
• U.S. law has its base in the feudal system of
  England developed after the Norman
  Conquest of 1066.
• Ownership and control was in a pyramid.
  – A king or the Church was at the top.
  – Tracts were granted to friends or allies.
     • “military tenure”
     • Holders of the land supplied soldiers to the
       king.
     • A tiller of the soil was at the bottom with few
       rights.
 History of Real Property Rights


• Leasehold and Freehold estates
• Leasehold is the use of land for a limited
  period of time.
• Freehold:
• fee simple estate, the highest type of
  ownership which is inheritable and
  transferable and divisible into many other
  lesser estates.
       Fee Simple Estate

• Full ownership
• Estates are presumed in “fee” unless they
  are specifically limited such as a life estate
• Transferable by gift, sale, or by
  devise or inheritance,
• Potentially of infinite duration with
  respect to ones heirs or devices.
History of Real Property Rights


• Life estate
• rights similar to the fee estate holder-- use
  it, rent it, pay the taxes, maintain it, …
• but, the rights vanish with death as well as
  the rights of a “stand-in” tenant in common
  law (Indiana).
Life Estates and Remainders

• A life estate may be transferred, gifted
  or sold, but
• The life tenant cannot devise (by will)
  nor can it be inherited—interest ends at
  death.
   Life Estates and Remainders

• Life tenant must leave the property “as he or
  she received it!”
• Life estates are often provided for surviving
  spouses,
• to insure income, and perhaps a place to
  live (and for other relatives or “companions.”
• Usually with the remainder designated to
  children (or the grandchildren)
• Problems, problems, problems!
 Adams v. Adams, Ct. of Appeals
            of Ky., ‘63, 371 S.W. 2d 637

• Action:

• Issue:

• Facts:
                         Adams
• Action: By nephews for right under the will to
    operate the farm, for conversion of the timber, and to
    have the court set a “fair” rent.
•   Facts: In ‘51 Adams died, and left an estate in a 400-
    acre farm to his surviving spouse for life or until she
    remarried,
•   with a power in his nephews to operate the farm
•   a succeeding life estate in the nephews with their
    issue as the remaindermen.
•   LT, pl., Adams, collected rent and paid the owners
    expenses (taxes, insurance, and repairs)
•   LT also sold off timber from the land.
             Adams

• Holding:




• Law:
                      Adams
• Issue: What are the rights and duties of the LT relative
  to the nephews and their issue (remaindermen)?
• Applicable Law: The LT must pay the owner’s
  expenses and preserve the estate as found (devised or
  given) for the remaindermen.
• Holding: LT must pay the taxes, and maintain the
  property and cannot shift those expenses.
   – A rent set by the chancellor of $4,200 is not
      unreasonable
   – By Ky Statute LT is liable in treble damages for the
      timber removed without permission or accounting.
   Problems with life estates!
• Maintenance of the property and “proper” rental
  arrangements
• Insurance coverages on facilities
   – No common law duty to insure!
   – And life tenants are not responsible for acts of
     nature nor those of third parties
   – Who should be the insured parties?
• Improvements -- Businesses need to respond to
  opportunities and “good investments” e.g., Govn’t program
  options, say CRP
• Dealing with third parties such as in eminent
  domain situations.
    Real Estate Co-ownership --
       Tenancy in common
• Each co-tenant owns an undivided interest in the
  whole property interest.
• Each tenant’s interest may be sold or mortgaged.
• At death, a tenant’s interest passes by will or by
  intestacy (law of descent) as inheritance.
• Individual co-tenants may “make deals”
   – Without a “vote”
   – But, required to account to the other tenant(s)
   – Right to partition prevails
      • One co-tenant may force a sale!!
   Real Estate Co-ownership --
      Tenancy in common
• TIC is a typical way that sisters and brothers
  and others take from a decedent.
• Given the above, is there a better way?
• Sisters and brothers often are “at odds!”
• Better ways or additional tools:
   – always use “buy- sell agreements” (Restrictive
    Transfer Arrangements)
  – Use a trust with “built in features,” such as
    RTAs.
      Real Estate Co-ownership --
             Joint tenancy
• Created by “magic words” of conveyance
• Presumption is against joint tenancy
• Each tenant owns an undivided interest in the
  whole.
• Each tenant’s interest may be sold or mortgaged.
• Upon a joint tenant’s death, his or her interest
  passes to the surviving tenant or tenants by
  process of law.
• Right to partition exists for ordinary joint tenancy.
• A typical form of ownership
   – for spouses
   – for older persons and their only child.
     Jackson v. O’Connell,S. Ct. of Ill,
             1961, 177 N.E. 194

• Action:
• Issue:
• Facts:
                         Jackson
• Action: To determine the parties’ interests.
• Applicable law: Property law with respect to joint
  tenancy and tenancy in common.
• Facts: Neil devised properties to his three sisters,
  Nellie, Anna and Katherine as joint tenants
   – Nellie later quitclaimed (deeded) all her interest in
     the properties to Anna.
   – The next year Nellie died.
   – Later, Anna died, and by her will, she left
     “whatever interest she had in real estate to four
     nieces.”
• Issue: What is the interest of the four nieces? Or
  what is the effect of Nellie’s deed to Anna?
                   Jackson
• Holding:
• Defendant, Katherine, has 2/3s after Anna’s
  death. The 1/3 undivided interest devised to
  Anna in joint tenancy, goes by right of
  survivorship to Katherine at Anna’s death.
• Katherine has 2/3s of the properties, and
  the four nieces share 1/3, the share
  Nellie took out of the joint tenancy when
  he deeded it to Anna.
• Query: What fraction does each niece
  have and what is the co-ownership form
  now?
                 Jackson
• Law/Rule:
• A joint tenant has a right to convey his or
  her interest which severs that interest
  from the other joint tenant(s),
• but the other joint tenants remain as such
  with respect to their original interests.
   Real Estate Co-ownership --
     Tenancy by the entirety
– In Indiana, tenants by the entirety is
  reserved for married (traditional)
  couples.
    • No right to partition!
    • Right to survivorship, like ordinary
      joint tenants
– TBTE is the law in 19 states, including
  Illinois.
  Real Estate Co-ownership --
            Community property
– All property acquired during marriage is
  owned equally by spouses, I.e., it is
  community property.
– Property acquired before marriage
  remains separate property.
– Gifts and inheritances are also separate
  property.
– Recognized in nine states and in Alaska
  by “election.”

				
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