Jack C. Neumann, et al., Respondents,
Roxann Anderson, Respondent, Kimberly S. Pronschinske, et al., Appellants.
County District Court File No. 85-CV-15-1892
J. Heuel, O'Brien & Wolf, L.L.P., Rochester,
Minnesota (for respondents Jack C. Neumann and Sandy M.
Anderson, Altura, Minnesota (pro se respondent)
J. Cassioppi, Jacob P. Harris, Fredrikson & Byron, P.A.,
Minneapolis, Minnesota; and Michael A. Murphy, Hammell &
Murphy, P.L.L.P., Caledonia, Minnesota (for appellants
Kimberly S. Pronschinske and Kim M. Pronschinske)
Considered and decided by Hooten, Presiding Judge; Johnson,
Judge; and Kirk, Judge.
1. In a
partition action, a referees' report is entitled to the
same force and effect as a jury's verdict or a district
court's finding and may be set aside by the district
court only in extreme cases.
Although a partition action is governed by statute, a
district court may exercise its general equitable powers by
ordering a remedy that accounts for the particular
circumstances of the case.
siblings own undivided one-third interests in two parcels of
rural property. One sibling commenced this action for a
partition. Two court-appointed referees issued a report
recommending that both parcels be awarded to one sibling, who
has leased both parcels for 14 years, and that she make
payments to the other two siblings for the value of their
respective one-third interests. The district court rejected
the referees' report and determined that the two parcels
would be physically divided so that each sibling would own an
equal amount of property. We conclude that the district court
erred by rejecting the referees' report, which is
consistent with the information provided to the referees and
is consistent with Minnesota law. Therefore, we reverse and
remand for confirmation and implementation of the
partition action concerns two parcels of rural property in
Winona County with a combined area of 260 acres. One parcel,
known as the Home Farm, consists of 160 acres, of which 62
acres are tillable farmland, 22 acres are open pasture, 68
acres are woods and ponds, and 8 acres are a road and
buildings. The other parcel, known as the Bethany Farm,
consists of 100 acres, of which 97 acres are tillable
farmland. The two parcels are not contiguous.
parcels were owned by Henry Neumann and Alice Neumann until
1995, when they conveyed the property to a revocable trust.
Henry and Alice operated a dairy farm using both parcels.
They had three adult children: Jack C. Neumann (hereinafter
Neumann), Roxann Anderson, and Kimberly Pronschinske.
2004, Pronschinske and her husband purchased Henry and
Alice's herd of dairy cattle and began leasing both
parcels. Since then, the Pronschinskes have lived in a mobile
home on the Home Farm with their children and have operated
an organic dairy farm. The Pronschinskes keep their herd of
dairy cattle on the Home Farm and grow organic feed on the
Bethany Farm. The Pronschinskes have obtained organic
certification for their dairy operation.
died in 2008. The following year, the Pronschinskes and Alice
(acting as trustee) entered into a written lease agreement
for both parcels. The agreement provided that the value of
any capital improvements made by the Pronschinskes would
"be applied to the purchase price of the farm in the
future" or, if the property were "sold to someone
else, " the Pronschinskes would "be allowed to
remove" the capital improvements "or be compensated
for them." The same language was included in written
lease agreements that were executed in 2010 and 2011. The
2011 agreement, which was signed by a bank that had been
appointed trustee, provided further that if the Pronschinskes
and the trust entered into a purchase agreement, the
Pronschinskes' rent payments would "be applied to
the purchase price."
died in 2012. Upon her death, Henry and Alice's three
children became the beneficiaries of the trust. The trustee
attempted to negotiate an agreement with the three
beneficiaries concerning the manner of distribution of the
trust's real property. Neumann and the trustee filed
petitions for instruction. The district court determined that
the trust agreement required the trustee to distribute the
property to the three children in equal shares. This court
affirmed. See In re H & A Neumann Revocable
Trust, No. A13-1150, 2014 WL 1407951 (Minn.App. Apr. 14,
2014). Thereafter, the trustee conveyed the two parcels of
real property to the three children, as co-tenants with equal
2015, Neumann and his wife commenced this partition action
against Anderson, Pronschinske, and Pronschinske's
husband. In their complaint, the Neumanns requested "a
partition of the Property according to the respective rights
and interest of the parties, as provided by statute." In
the alternative, the Neumanns requested a sale of the
property. The Neumanns also sought to require the
Pronschinskes to make payments to the Neumanns and Anderson
to ensure that both co-tenants received one-third of the fair
rental value of the property. In their answer to the
Neumanns' complaint, the Pronschinskes requested a
"partition of the Property according to the respective
rights and interests of the parties, as provided by
statute." The Pronschinskes also requested reimbursement
for their capital improvements to the property and for their
September 2015, the parties stipulated to the appointment of
two referees. The stipulation provided that the two referees
"shall act as disinterested referees and shall submit a
report to the parties in a reasonable period of time setting
forth their recommendation." The district court promptly
approved the stipulation and issued an order adopting its
August 2016, the referees issued a six-page report. The
report states that the referees "have personally met
with the Plaintiffs, Defendants, and their respective
attorneys" and "have personally viewed the property
and inspected all of the buildings as well as the
improvements completed by" the Pronschinskes. The
remainder of the report consists of 18 paragraphs of
"findings" and four paragraphs of
referees found that the parties agreed to use an appraisal
that had been performed in 2012, which valued the Bethany
Farm at $610, 000 and the Home Farm at $672, 000, for a total
value of $1, 282, 000. The referees found that the
Pronschinskes wish to remain on the property and that
"partition cannot be had without great prejudice
to" them because their home is located on the property,
because they have made substantial capital improvements to
the farm, and because they have taken steps to obtain organic
certification for their dairy operation. The referees also
found that Neumann and Anderson "have both expressed
orally and in writing their belief the property should be
sold" and that, in light of their desires to no longer
own the property, "partition can be had with appropriate
compensation or owelty."
referees concluded that the district court should enter an
order awarding the Pronschinskes both parcels, with credit
for $119, 000 of capital improvements, thereby reducing the
total value of the parties' combined interests to $1,
163, 000. The referees concluded that the district court
should order the Pronschinskes to pay $387, 667 (which is
one-third of $1, 163, 000) to both Neumann and Anderson for
their respective interests in the property.
December 2016, the Neumanns filed a motion to set aside the
referees' report. The Neumanns did not submit any
evidence to the district court. In January 2017, the
Pronschinskes moved to adopt the referees' report. The
Pronschinskes submitted as evidence the prior farm lease
agreements, a letter from Anderson and Neumann requesting the
immediate public sale of the land with no further appraisal,
a letter from a tax professional assessing the value of the
Pronschinskes' improvements, and two affidavits. In one
affidavit, Pronschinske stated, among other things, that she
and her husband had spent $236, 079 on capital improvements
to the Home Farm. In the other affidavit, the
Pronschinskes' farm-business advisor stated that both
parcels are critical to the Pronschinskes' dairy
operation because it would be prohibitively expensive for
them to purchase organic-certified feed if they were not able
to grow organic feed on the Bethany Farm.
resolving the pending motions, the district court issued an
interim order referring the matter back to referees for
clarification of their finding that a partition would cause
"great prejudice" to the Pronschinskes. In a
supplemental report, the referees clarified various aspects
of their initial report.
August 2017, the district court granted the Neumanns'
motion to set aside the referees' report and denied the
Pronschinskes' motion to confirm the referees'
report. The district court stated that the recommendations of
the "referees do not bind the Court but are
advisory." The district court also stated that, although
there is evidence that the Pronschinskes would be prejudiced
by a partition in kind, there was no evidence of great
prejudice to all owners, and no evidence that a division in
kind would reduce the value of the property. The district
court "recognize[d] that the Pronschinskes may
experience a business loss if the property is divided"
but stated that the Pronschinskes' "hardship is not
such that would require this Court to favor one co-tenant
over the other." The district court concluded that
Neumann, Anderson, and Pronschinske "are entitled to
judgment awarding them each 1/3 of the property."
Specifically, the district court stated that each of the
three children is "entitled to own . . . 86.666
acres" of the property. The district court further
concluded, "If the parties have an agreement with regard
to the specific shares to be allotted, such agreement shall
be submitted to this Court within 30 days from the date of
this Order" but that, "if there is no such
agreement, the parties shall notify the court within 30 days,
at which time this matter shall be referred back to the
referees for that determination."
and her husband appeal.
district court err by granting the Neumanns' motion to
set aside the referees' report, by denying the
Pronschinskes' motion to confirm the referees'
report, and by determining that the two parcels should be
partitioned in kind so that each of the three co-tenants owns
an equal number of acres of the property?
Pronschinskes argue that the district court erred by setting
aside and not confirming the referees' report.
Specifically, they argue that the district court erred by not
giving deference to the referees' findings and by
reasoning that the referees' recommendation is not
supported by law. They also argue that, in light of the
circumstances of this case, the district court erred in its