IN THE SUPREME COURT
STATE OF NORTH DAKOTA
In the Trust of Curtiss A. Hogen Trust B,
created under the Last Will and Testament
of Curtiss A. Hogen Supreme Court No. 20170090
Civil No. 09-2015-CV-01717
Steven C. Hogen, Co-Trustee,
Petitioner and Appellee (Cass County District Court)
Rodney Hogen, Co-Trustee,
Respondent and Appellant
REPLY BRIEF OF APPELLANT
APPEAL FROM (A) THE POST-TRIAL OPINION AND ORDER OF THE
SAID DISTRICT COURT, AND (B) THE ORDER ON PETITION FOR
COMPLETE SETTLEMENT AND DISTRIBUTION OF TRUST OF THE
SAID DISTRICT COURT, BOTH DATED AND ENTERED MARCH 7, 2017
CASS COUNTY DISTRICT COURT, EAST-CENTRAL JUDICIAL DISTRICT
HONORABLE STEVEN E. McCULLOUGH
GARAAS LAW FIRM
Jonathan T. Garaas
Attorneys for Appellant
Office and Post Office Address
DeMores Office Park
1314 - 23rd Street South
Fargo, ND 58103
E-mail address: garaaslawfirmideaone
North Dakota ID # 03080
TABLE OF CONTENTS
TABLE OF AUTHORITIES page ii
ISSUES ON APPEAL 1-2
STATEMENT OF THE CASE 3-4
STATEMENT OF FACTS 5-6
LAW AND ARGUMENT 7-37
1. Remaindermen Steven and Rodney are fully vested tenant in
common of all land once held by the Trust upon Arline's death. 8-18
A. The Trust's interest in the lands terminated upon Arline's
2. Clear error as to "chose in action" against Rodney in the
amount of $305,961.65. 19-34
A. Error as to the purloined $23,329.75 from the Trust. 20-21
B. Lack of standing. 22-23
C. Bar of res judicata or collateral estoppel. 24-25
D. Bar of either N.D.C.C. § 59-18-05 or N.D.C.C.
§ 28-01-16. 26-27
E. Rodney's fiduciary duty and accounting should be limited
to crop 2007. 28-29
F. The amount of the "chose in action" is clearly erroneous. 30-34
3. The District Court did not exhibit an impartial, neutral, and
disinterested tribunal even the deliberations were tainted. 35-37
TABLE OF AUTHORITIES
North Dakota Cases
Estate of Hogen, 2015 ND 125, 863 N.W.2d 876 25
Hull v. Rolfsrud, 64 N.W.2d 94 (N.D. 1954) 14, 15
Kraft v. State Bd. Of Nursing, 2001 ND 138, 631 N.W.2d 572 37
Cases of Other Jurisdictions
Bridges v. State of California, 314 U.S. 252 (1941) 36
In re Hilgers, 371 B.R. 465 (Bankr. 10th Cir. 2007) 13
In re Schaefer's Estate, 121 N.Y.S.2d 233, (N.Y.Sur. 1953) 16
Manice v. Manice, 4 Hand 303, 43 N.Y. 303, 364,
1871 WL9576 (N.Y. Ct. of App. 1871) 16
Marie Roucco Family Trust v. Roucco, 40 Misc. 3d 1202(A),
972 N.Y.S. 2d 144 (table), 2013 WL 3186402,
2013 N.Y. Slip. Op 50998(U) 16
Watkins v. Reynolds, 123 N.Y 211, 25 N.E. 322 (1890) 14, 18
N.D.C.C. Chapter 28-32 37
N.D.C.C. § 28-01-16 26, 27
N.D.C.C. § 28-32-12.1 37
N.D.C.C. § 47-01-21 15
N.D.C.C. § 47-02-08 15, 18
N.D.C.C. § 47-02-10 15
N.D.C.C. § 47-02-11 15
N.D.C.C. § 47-02-15 15
N.D.C.C. § 59-02-11 18
N.D.C.C. § 59-03-14 14
N.D.C.C. § 59-03-20 14, 18
N.D.C.C. § 59-04.2-24(3) 33
N.D.C.C. § 59-04.2-25(1)(c) 33
N.D.C.C. § 59-12-10 13
N.D.C.C. § 59-18-05 26, 27
N.D.C.C. §59-19-02(3) 27
N.D.R.Civ.P. 11(b) 36
ISSUES ON APPEAL
[¶2] Appellee Steven Hogen [hereafter "Steven"] ignores issues presented by Appellant Rodney Hogen [hereafter "Rodney"]. Upon addressing all issues, on March 23, 2007 the date of the death of the Curtiss A. Hogen Trust B's sole lifetime income beneficiary, Arline Hogen [hereafter "Arline"] Rodney and Steven were fully vested with legal and equitable ownership of all real estate once held by them as co-trustees.
STATEMENT OF THE CASE
[¶4] No objection noted.
STATEMENT OF FACTS
[¶6] No objection noted, nor does Steven even present his own statement of the facts, merely adopting the lower court's recitation of "Procedural Facts" and "Substantive Facts" [App. pp. 627-39]. Steven adopts clear factual error as explained in Rodney's initial brief, and below.
LAW AND ARGUMENT
[¶8] 1. Remaindermen Steven and Rodney are fully vested tenant in common of all land once held by the Trust upon Arline's death.
[¶9] A. The Trust's interest in the lands terminated upon Arline's death.
[¶10] Within ¶ 25 of his brief, Steven acknowledges that the subject Trust's first purpose was to provide support for Arline during her lifetime through net income and discretionary principal payments. Steven also acknowledges "[t]his purpose ceased upon Arline's death." Upon Arline's death, Steven asserts the Trust has a second purpose which was "(a) to 'divide this Trust into equal shares so as to provide One (1) share for each living child of mine,' and then, after that happened, (b) '[e]ach share provided for a living child of mine shall be distributed to a child." Id. Within ¶ 26 of his brief, Steven asserts, "Curtiss's Will does not provide a time line for when (a) the equal division, and (b) the subsequent distribution must occur." Steven equates the words "divide this Trust" within the "division of the trust assets 'into equal separate share'' and claims that division "remained undone.." Id. It is Steven's position that the Trust did not terminate upon Arline's death because this task of dividing into equal shares and then distributing remains undone. Steven asserts that since the Trust's second purpose remains undone, the co-trustees retained all of their administrative powers, and were not limited to "winding up powers" after Arline's death. Appellee's Brief, ¶ 29.
[¶11] Rodney respectfully submits that Curtiss A. Hogen's Will, clearly and unambiguously, provides for a time line for when distribution is to occur. It directed the division to occur "[u]pon the death of the survivor of my said spouse and me...". App. p. 29.
[¶12] Secondly, Steven offers no relevant legal authority neither statute, nor case law that supports his position the co-trustee's administrative powers over trust assets, including real estate, remained in effect after Aline's death. Steven suggests that the co-trustees "were not limited to 'winding up powers' after Arline's death" but Steven offers neither case law, nor relevant statute, that supports his assertion. In ¶ 11 of his brief, Steven asserts, that "...Trust assets needed to be sold to pay mortgages and debts before a final distribution of Trust assets could be made...". Again, there exists no law to back up his false assertion. In ¶ 37 of his brief, Steven asserts, "As the district court found, it is apparent a sale of Trust farmland is necessary to pay Rodney's loans from Farm Credit Services, which are now in default." Again, there exists no law, nor cited law, that supports the lower court and Steven's false assertion.
[¶13] With ¶ 18 of his brief, Steven recognizes that the law in effect in 1993 - the year of Curtiss A. Hogen's death becomes part of the Trust contract. After acknowledging such legal principle, Steven cites N.D.C.C. § 59-12-10, a statute enacted in 2007 as part of North Dakota's Uniform Trust Code, as his statutory authority that the Trust did not terminate upon Arline's death. Rodney, in ¶ 46 of his original brief, had relied upon N.D.C.C. § 59-12-10 because such statute supports his position that the subject Trust terminated upon Arline's death. As originally noted, this provision of the Uniform Trust Code has been used by other courts as statutory authority that a trust terminates upon the death of lifetime income beneficiary. See, In re Hilgers, 371 B.R. 465, 470 (Bankr. 10th Cir. 2007).
[¶14] Rodney also supported his legal stance citing former N.D.C.C. § 59-03-14 and former N.D.C.C. § 59-03-20 [both historic statutes in effect in 1993 and 2007]. Steven ignores these historic statutes, and ignores Rodneys' supporting case law: Hull v. Rolfsrud, 64 N.W.2d 94, 107 (N.D. 1954); Marie Roucco Family Trust v. Roucco, 40 Misc. 3d 1202(A), 972 N.Y.S. 2d 144 (table), 2013 WL 3186402, 2013 N.Y. Slip. Op 50998(U); and Watkins v. Reynolds, 123 N.Y 211, 25 N.E. 322 (1890).
[¶15] Steven ignores Rodney's persuasive case law showing the subject Trust was a passive Trust upon Arline's death Rodney and Steven had obtained a vested remaindermen's interest as tenants in common in the real estate acquired through Curtiss A. Hogen's probated Will. Hull v. Rolfsrud, supra., page 107. See also, N.D.C.C. § 47-01-21 [stating in part: "property may be acquired by: ... 4. Will; or"]; and N.D.C.C. § 47-02-08 [in part: "Every interest created in favor of several persons in their own right is an interest in common...".]. At the time of Curtiss A. Hogen's death, Rodney and Steven's estate may be classified as a vested future interest, but defeasible, of the real property, but after Arline 's death their vested interest becomes indefeasible. N.D.C.C. § 47-02-15; N.D.C.C. § 47-02-10; and N.D.C.C. § 47-02-11.
[¶16] The direction in the subject Will to "divide" and then "distribute" is a passive trust that does not delay Steven and Rodney's full, indefeasible vesting of title to the real property. See, In re Schaefer's Estate, 121 N.Y.S.2d 233, (N.Y.Sur. 1953). See also Manice v. Manice, 4 Hand 303, 43 N.Y. 303, 364, 1871 WL9576 (N.Y. Ct. of App. 1871) stating in part, " Upon the same principle, in the present case, no estate will vest in the trustees during the time to be employed in making the partition, but the supposed trust to make partition can be performed in the exercise of a power".
[¶17] Steven offers no relevant legal authority neither statute nor case law supporting his position that the co-trustee's administrative powers over trust assets, including real estate, remained in effect after Arline's death. Rodney recognizes limited "winding up" powers, such as executing a deed, so the transfer of title to Steven and Rodney equally, upon Arline's death, can be shown in the Recorder's records.
[¶18] Steven cites historic N.D.C.C. § 59-02-11 to suggest that Rodney's deed, as a Trustee, of the lands to Steven is more than a ministerial act. Steven's legal logic is flawed after Arline's death, the real estate is no longer "trust property." The real estate automatically became Steven and Rodney's property, as tenants in common, under historic N.D.C.C. § 59-03-20, without need of a trustee's deed. Watkins v. Reynolds, supra., pp. 216-217; N.D.C.C. § 47-02-08 . Rodney's quit claim deed merely reflected what had happened automatically upon Arline's death; it involved a ministerial act.
[¶19] 2. Clear error as to "chose in action" against Rodney in the amount of $305,961.65.
[¶20] A. Error as to the purloined $23,329.75 from the Trust.
[¶21] Steven does not explain how expending $328.97 to repair a Trust's tractor is "purloining" from the trust. Steven does not explain how making a mortgage payment, on a mortgage guaranteed by both trustees, from post Arline's death farm income, involves purloining from the trust.
[¶22] B. Lack of standing.
[¶23] In ¶ 29 of his brief, Steven argues that Rodney's position as to standing is "specious", but offers no relevant statute or case law in support of such position.
[¶24] C. Bar of res judicata or collateral estoppel.
[¶25] In Estate of Hogen, 2015 ND 125, ¶ 43, 863 N.W.2d 876, this Court referencing both farming arrangements [the Curtiss Hogen Trust, and Arline ], determined Rodney's annual reconciliations satisfied his "specific obligations for the 2004 through 2006 crop years." Res judicata or collateral estoppel should bar Steven's claim for these crop years.
[¶26] D. Bar of either N.D.C.C. § 59-18-05 or N.D.C.C. § 28-01-16.
[¶27] Steven misapplies N.D.C.C. § 59-18-05. Such statute must be read with the provisions of N.D.C.C. §59-19-02(3). Since N.D.C.C. § 28-01-16 began running for farm contracts involving crop years 2004 through 2006, the appropriate statute of limitations is N.D.C.C. § 28-01-16. Steven's claim to have both real and personal property distributed under Curtiss' Will began to run on March 23, 2007. All of Steve's claims [before or after March 23, 2007 the terminating event] appear to be barred by N.D.C.C. 28-01-16, but may be barred by N.D.C.C. § 59-18-05 for crop year 2007 [or matters relating to the winding up of the trust].
[¶28] E. Rodney's fiduciary duty and accounting should be limited to crop 2007.
[¶29] Steven presents no relevant statute or case law to support his assertion the trustees could rent real property in 2008 [or thereafter] when Arline Hogen's death triggered the cessation of the Trust's "first" purpose. Remainderman Rodney has no fiduciary duty to pay rentals to the trust in 2008, and thereafter.
[¶30] F. The amount of the "chose in action" is clearly erroneous.
[¶31] For crop years 2004-2008, all of "expert witness" Bradley's input costs reflected in his report [App. p. 333] was taken from Rodney's tax returns. Tr. of 09/20/2016, pp. 50-51. When making findings, the lower court used Bradley's averages solely based upon Rodney's tax returns [i.e $59.99 in 2007 see, App. ps. 333; 647]. Steven's attempt to correct Bradley's mathematical error post-trial [see, App. p. 522] was not used by the court. The lower court accepted average income numbers based upon a flawed mathematical formula.
[¶32] Under Bradley's methods, the Trust failed to be paid sufficient crop proceeds if the Trust did not have proceeds from crops sales sufficient to reach MPCI estimates. App. 331. It is clear error to not credit Rodney for hail insurance proceeds.
[¶33] If the co-trustees can take the remaindermen's farm income after Arline Hogen's death, the co-trustees would have a duty to pay the ordinary expenses incurred with the administration of the farm asset [including mortgage debt] in order determine net income. N.D.C.C. § 59-04.2-24(3) and N.D.C.C. § 59-04.2-25(1)(c).
[¶34] If a viable "chose in action" exists, why not distribute it instead of selling land?
[¶35] 3. The District Court did not exhibit an impartial, neutral, and disinterested tribunal even the deliberations were tainted.
[¶36] "(I)nterference with impartial adjudication" has been recognized as a substantive evil. Bridges v. State of California, 314 U.S. 252, 298 (1941). Rule of Conduct have been developed to protect our constitutional right to due process of law. Appellant's Brief, Point 3, ¶s 88-89. Steven does not dispute the transgressions, nor evidence of judicial improprieties, identified by Rodney [Appellant's Brief, ¶s 91-110], nor does he identify any legal, ethical, or moral standard authorizing such transgressions except by diversion -- "(Rodney) cites no rule prohibiting a party from making filings with a court while a matter is under advisement." Appellee's Brief, ¶ 48. N.D.R.Civ.P. 11(b)[relating to certification of paperwork] is not honored by Steven by such filings, and Steven should be required to cite his authority for violating the general rules of professional conduct calculated to preserve "impartial adjudication" before complaining about the lack of a specific rule devised by man.
[¶37] Steven's reliance upon Kraft v. State Bd. Of Nursing, 2001 ND 138, ¶ 44, 631 N.W.2d 572 [Appellee's Brief, ¶ 47] is misplaced. Kraft, an appeal under N.D.C.C. Chapter 28-32, involving an underlying statute then-existing [N.D.C.C. § 28-32-12.1] forbidding ex parte communications, stands against ex parte communications which because such would render adversarial hearings virtually meaningless. There exists no known exemption from due process of law allowing for gratuitous communications predicated upon "contemporaneous email() via Odyssey ..". Appellee's Brief, ¶ 47.
[¶39] Rodney should receive his requested relief.
Respectfully submitted this 13th day of July, 2017.
Garaas Law Firm
Jonathan T. Garaas
1314 23rd Street South
Fargo, North Dakota 58103
E-mail address: garaaslawfirmideaone
ND Bar ID # 03080