author: NEUMANN, Justice. KAPSNER, Justice, NEUMANN, Justice.

text:
    2002 ND 122
    JOHNSON FARMS, a general partnership, Plaintiff and Appellant, v. George G. McENROE and Donna McEnroe, Defendants and Appellees.
    No. 20010148.
    Supreme Court of North Dakota.
    July 17, 2002.
    Petition for Rehearing Jan. 22, 2003.

      Douglas A. Christensen, Pearson Christensen, Grand Forks, for plaintiff and appellant.
    Robert Vaaler, Grand Forks, for defendants and appellees.
   NEUMANN, Justice.

[¶ 1] Johnson Farms, a general partnership, appealed a judgment dismissing its causes of action against George G. McEnroe and Donna McEnroe (collectively, “McEnroe”). We reverse and direct entry of judgment for Johnson Farms.

I

[¶ 2] This is the third appeal in Johnson Farms’ litigation to enforce an alleged oral agreement to purchase from McEn-roes real property adjacent to Grand Forks. See Johnson Farms v. McEnroe, 2000 ND 137, 613 N.W.2d 497 (“Johnson Farms II ”); Johnson Farms v. McEnroe, 1997 ND 179, 568 N.W.2d 920 (“Johnson Farms I ”).

[¶ 3] In a February 12, 1996, complaint, Johnson Farms alleged it and McEnroe agreed Johnson Farms would purchase 59.17 acres of land from McEnroe for $9,000 per acre, for a total of $532,530, to be structured as a “like kind” exchange. Johnson Farms alleged it bought Ryehart farmland on November 16, 1993, for $373,000, and exchanged it for 30.61 acres of McEnroe land, which was equivalent to $12,185.56 per acre, on January 18, 1994, and that George McEnroe later gave Johnson Farms an option, until April 1,1995, to pay the balance by providing “like kind” property acceptable to McEnroe or depositing $159,530. Johnson Farms alleged that in January 1996, George McEnroe advised he would no longer honor the option. Johnson Farms sued for specific performance of the parties’ oral agreement or for a return of the $97,510 overpayment it paid for the 30.61 acres it acquired in the exchange for the Ryehart land.

[¶ 4] The trial court granted McEnroe’s motion for summary judgment. Johnson Farms appealed. To decide whether summary judgment had been appropriately granted we reviewed the evidence in the light most favorable to Johnson Farms, the party who opposed the summary judgment. Johnson Farms I, 1997 ND 179, ¶ 2, 568 N.W.2d 920. Viewing the evidence in that light, we noted the Ryehart transaction “resulted in Johnson Farms effectively paying $3,185.56 per acre more than the agreed $9,000 per acre sale price for that 30.61 acres of property” and “Johnson Farms then owed the McEn-roes $159,530 for the balance of the 59.17 acres.” Id. at ¶ 3. We also said:

If Johnson Farms does not succeed on its claim for specific performance, it has a claim against the McEnroes for a refund of the difference in value of the amount paid for the Ryehart property and the value of the McEnroe property it received in exchange.

Id. at ¶ 22. We reversed the summary judgment and remanded for trial. Id. at ¶ 31.

[¶ 5] After a trial, the trial court found the parties’ only oral agreement was for the purchase of 30.61 acres, and found Johnson Farms overpaid $91,930 for the 30.61 acres conveyed to it:

[T]he only oral contract that ever existed between the parties, that is material to this case, is their oral agreement by which Johnson Farms agreed to exchange the Rychart property it purchased in November of 1993 for 30.61 acres of property described above. The Court further finds that the oral agreement for such exchange included an agreement of the parties that the property exchanged by the Defendants had an agreed value of $9,000 per acre, and that the Plaintiff intended to convey to the Defendants in exchange for Defendants’ property a tract of land having a value corresponding to the 30.61 acres of the Defendants’ land valued at $9,000 per acre.
[T]he tract of land traded by the Defendants to the Plaintiff pursuant to the oral agreement between the parties was valued at the agreed price of $9,000 per acre, or a value of $281,070.00. The price paid by the Plaintiff for the Ryc-hart property traded to the Defendant George McEnroe was $373,000.00, $91,930.00 more than the agreed value of the land traded by Defendants to Plaintiff for said property. This constituted an overpayment by the Plaintiff of $91,930.00.

Johnson Farms II, 2000 ND 137, ¶ 4, 613 N.W.2d 497. We found the trial court’s findings were inconsistent, id. at ¶ 7, and said:

It is evident the trial court found the parties agreed to a purchase price of $9,000 per acre for the January 1994 transaction based solely upon the purchase price set forth in the option added to the amount paid by Johnson Farms for the Rychart property, divided by 59.17 acres. This is tantamount to a finding that the Rychart property exchange was only the first part of an overarching agreement for the purchase of the entire 59.17 acres. The trial court’s use of this method to calculate the overpayment is internally inconsistent with its finding that the only agreement between the parties was for the purchase of the 30.61 acres of land in January 1994.

Id. at ¶ 11. We continued:

The pivotal issue in this case is whether there was an oral agreement for the purchase of the entire 59.17 acres of the McEnroe property. The trial court’s express finding and its method of determining Johnson Farms’ overpayment for the initial 30.61 acre exchange provide opposite answers to this question.... We conclude the trial court’s inconsistent findings do not support the judgment, and we reverse and remand for a new trial on all issues.

Id. at ¶ 13.

[¶ 6] After a retrial, the trial court readopted some of its earlier findings of fact, withdrew others, made new or additional findings of fact, and ordered dismissal of Johnson Farms’ claims for specific performance or damages for overpayment. The court made the following findings of fact:

“10. FOUND the only oral contract that ever existed between the parties, that is material to [t]his case, is their oral agreement by which Johnson Farms agreed to exchange the Rychart property it purchased in November of 1993 for 30.61 acres of property described above.”
32. FOUND that the Plaintiff has failed to provide convincing proofs of the elements ... necessary to show the existence of an oral contract between the parties under which Johnson Farms had agreed to buy all 60 of the McEnroe’s available acres, before the Rychart property became available for exchange.
33. FOUND that the price of $373,000 for the property deeded by the McEnroe’s to Johnson Farms in January and July of 1994 was fair and reasonable in exchange for the Rychart property which had been purchased at auction on November 16, 1993 by Johnson Farms in the name of Nor Agra, Inc for that same price.
37. FOUND that the tracts deeded by the McEnroe’s to Johnson Farms in January and July 1994 were then of greater value per acre to Johnson Farms for their development purposes than were the northerly and westerly acres retained by George McEnroe because the easterly acres were adjacent to installed streets and sewers and closer to already developed residential property.

The trial court explained its earlier inconsistent findings:

The inconsistency arose from the trial Court’s application, in the 1998 trial, of the last sentence in ¶ 22 of Johnson Farms v. McEnroe, 1997 ND 179, 568 N.W.2d 920 which stated:
“If Johnson Farms does not succeed on its claim for specific performance, it has a claim against the McEnroes for a refund of the difference in value of the amount paid for the Rychart property and the value of the McEnroe property received in exchange.”
At the 1998 trial this court understood the Supreme Court’s statement, just quoted, as a directive to be literally applied .... Had the Court not believed itself bound to award that money judgment to plaintiff under those circumstances it would not have done so.

Johnson Farms appealed from a judgment dismissing its causes of action.

II

[¶ 7] On appeal, Johnson Farms challenges the trial court’s findings of fact. Johnson Farms argues the trial court’s finding no oral agreement for the sale of sixty acres and that the exchange of the Rychart property was a fair and reasonable exchange is clearly erroneous.

[¶ 8] We review a trial court’s findings of fact under the clearly erroneous standard of N.D.R.Civ.P. 52(a). Center Mut. Ins. Co. v. Thompson, 2000 ND 192, ¶ 20, 618 N.W.2d 505. A trial court is required, under N.D.R.Civ.P. 52(a), to make findings of fact and conclusions of law to enable the appellate court to understand the trial court’s factual determinations and the basis for its conclusions of law and judgment. Webster v. Regan, 2000 ND 18, ¶ 6, 605 N.W.2d 808. A trial court’s findings of fact and conclusions of law should be stated with sufficient specificity to assist us in our review and to afford a clear understanding of the trial court’s decision. Radspinner v. Charlesworth, 346 N.W.2d 727, 730 (N.D.1984). A finding of fact is clearly erroneous when, although there is some evidence to support it, a reviewing court is left with a definite and firm conviction that a mistake has been made. Rassier v. Houim, 488 N.W.2d 635, 638 (N.D.1992).

[¶ 9] On a case remanded without specific instructions, the general rule is a trial court has the power to reverse its findings of fact without receiving new evidence. See Imperial Chem. Indus. Ltd. v. National Distillers & Chem. Corp., 354 F.2d 459 (2d Cir.1965); see also V.G. Lewter, Annotation, Power of the Trial Court, On Remand for Further Proceedings, to Change Prior Fact Findings as to Matter Not Passed Upon By Appellate Court, Without Receiving Further Evidence, 19 A.L.R.3d 502 (1968). However, a concern is raised when the trial court’s explanation for changing its findings of fact is its supposed misunderstanding of our prior opinion, rather than the evidence or facts of the case.

[¶ 10] In the present case, the trial court changed its findings of fact on remand. At the conclusion of the trial following our first remand, the court found Johnson Farms established an oral contract had been made between Johnson Farms and McEnroe for a trade of property. The trial court also determined Johnson Farms had made an overpayment for the 30.61 acres it received, and was due $91,930 from McEnroe for the overpayment. Following our second remand, the trial coui’t reversed that finding, holding that the facts now indicate the exchange was for property of equal value, and no refund for overpayment was due Johnson Farms.

[¶ 11] The trial court’s explanation for the reversal of its finding was a claimed misunderstanding of a sentence in Johnson Farms I, 1997 ND 179, ¶ 22, 568 N.W.2d 920. The last sentence of paragraph 22 states, “If Johnson Farms does not succeed on its claim for specific performance, it has a claim against the McEn-roes for a refund of the difference in value of the amount paid for the Ryehart property and the value of the McEnroe property it received in exchange.” Id. The trial court explained in its March 19, 2001, opinion that it felt bound by our directive to award Johnson Farms a judgment for overpayment after concluding the claim for specific performance failed. The trial court further explained that had it not felt so bound by our first opinion, it would have held that Johnson Farms “was not entitled to any refund on the Ryehart exchange because the evidence showed that the Ryehart and McEnroe properties were found to be of equal value.”

[¶ 12] We hold the trial court’s finding on this point is clearly erroneous. A review of the evidence presented indicates there existed an oral contract between the parties. Bert Johnson has claimed there was an agreement between Johnson Farms and McEnroe for the exchange of 59.17 acres at $9,000 per acre. Johnson’s testimony was supported by a number of witnesses who testified that an agreement was reached between the parties. Tim Crary testified both Johnson and McEnroe told him they had reached an agreement, and that he had attended auctions with McEnroe, who attempted to purchase land to trade. Terry Longtin testified McEnroe told him he traded sixty acres to Johnson and was looking for some land to complete the trade. Douglas Herzog testified that at a city planning meeting McEnroe said he had completed a sixty acre deal with Johnson. John Botsford testified Johnson told him about the agreement, and that Tom McEnroe submitted a bid on behalf of his father for land to complete part of the trade at one of Botsford’s auctions.

[¶ 13] McEnroe’s actions after the option allegedly expired support the conclusion that there was an oral agreement between the parties. McEnroe claims the option expired on April 1, 1995. -However, the evidence clearly indicates McEnroe continued to look for property to complete the transaction after the option expired. See Johnson Farms I, 1997 ND 179, ¶ 7, 568 N.W.2d 920. Tim Crary testified he went with Johnson and McEnroe to look at some Hagen property to complete the sale in June 1995, after the option had expired. McEnroe decided he did not want the Ha-gen property because it was too expensive. Crary also testified that in November 1995, McEnroe refused a trade for property near Thompson, North Dakota, because he wanted cash to complete the deal. Crary also indicated McEnroe requested in November 1995, that Johnson release some of the 59.17 acres so he could include it in a sale with another party. Terry Longtin testified that in the late fall of 1995, McEnroe told him he was still looking for property to complete the transaction.

[¶ 14] Perhaps the most convincing evidence indicating an oral agreement between the parties is contained in the numbers in this case. Johnson Farms has maintained throughout these proceedings that McEnroe orally agreed in 1993 to sell Johnson Farms 59.17 acres of land for $9,000 per acre, for a total purchase price of $532,530. See Johnson Farms II, 2000 ND 137, ¶ 7, 613 N.W.2d 497. In the trial court’s second memorandum opinion, it found the parties agreed to a purchase price of $9,000 per acre for the January 1994 transaction based solely upon the purchase price set forth in the option added to the amount paid by Johnson Farms for the Rychart property, divided by the 59.17 acres. Id. at ¶ 11. We agree that the evidence supports Johnson' Farms’ claim that the separate transaction theory is preposterous because McEnroe offered to sell the remaining 27.94 acres in the option for $159,530, or $5,585.78 per acre, only one month after McEnroe sold 30.61 acres for $12,185.56 per acre. Id. at ¶ 9. Any reasonable inferences that can be drawn from this evidence support Johnson Farms’ claim that an agreement existed to sell 59.17 acres for a price of $9,000 per acre.

[¶ 15] Even though there may have been some slight evidence to support the trial court’s revised finding that the parties had exchanged properties of equal value, in reviewing all of the evidence in this case, we are left with a definite and firm conviction a mistake has been made. The evidence is overwhelmingly to the contrary. We conclude it was error for the trial court to find the parties had exchanged properties of equal value based only on its new interpretation of our opinion. We reverse the trial court’s judgment dismissing Johnson Farms’ claims against the McEnroes, and direct entry of a judgment in favor of Johnson Farms and against the McEnroes for $91,930.00, the amount the trial court found on remand to be an overpayment for the McEnroe property, plus interest from January 18, 1994, to date of entry of judgment, at the rate of 6 percent per year.

[¶ 16] GERALD W. VANDE WALLE, C.J., and THOMAS J. SCHNEIDER, D.J., and MARY MUEHLEN MARING, JJ., concur.

[¶ 17] The Honorable THOMAS J. SCHNEIDER, D.J., sitting in place of SANDSTROM, J., disqualified.

KAPSNER, Justice,

[¶ 18] I respectfully dissent.

[¶ 19] In Johnson Farms II, we remanded for a new trial on all issues. We noted, however, the “pivotal issue in this case is whether there was an oral agreement for the purchase of the entire 59.17 acres of the McEnroe property.” 2000 ND 137, ¶ 13, 613 N.W.2d 497. The thrust of the majority opinion is that there is no issue on whether the oral agreement was for the entire 59.17 acres but rather a fact finder could make only one determination — an agreement existed to sell 59.17 acres for $9,000 per acre. Further, the majority says the trial court has changed its findings but on the “pivotal issue” the trial court has twice found the only oral contract was for an exchange of 30.61 acres. See ¶¶5 and 10 of the majority opinion. Citing only evidence which was part of the record in Johnson Farms I and Johnson Farms II, the Court now determines the court’s finding on the extent of the oral contract is clearly erroneous. It is unclear to me how the Court can reach this result after remanding for a new trial on all issues. If a fact finder could not have found the oral agreement covered only 30.61 acres, this Court should have said so in its earlier opinion.

[¶ 20] “We will not reverse a trial court’s factual findings merely because we may have viewed the evidence differently, and a choice between two permissible views of the weight of the evidence is not clearly erroneous.” Corbett v. Corbett, 2001 ND 113, ¶ 6, 628 N.W.2d 312. The majority opinion reiterates testimony which supports a finding that an agreement existed for 59.17 acres of land. However, there is testimony from which a fact finder, making determinations of credibility, could find the oral agreement only covered 30.61 acres.

[¶ 21] Bert Johnson testified: (1) In 1992 he and McEnroe began discussing Johnson Farms’ possible purchase from McEnroe of 80 acres, for which he offered $7,000 an acre and for which McEnroe was asking $11,000 per acre; (2) McEnroe “wanted to hold back 20 acres, so we negotiated on the 60 acres that were left;” (3) In the summer of 1993„ they agreed McEnroe would convey 59.17 acres for $9,000 per acre; (4) “I offered him cash. He wanted to make a land trade so he didn’t have to pay the taxes;” (5) They agreed Johnson Farms would purchase land and exchange it; (6) Before purchasing the Rychart property, he knew Johnson Farms was committed to pay “$9,000 an acre times 59.17 acres;” (7) The initial exchange for the Rychart property was to be approximately the East Half of the McEnroe land; and (8) The East Half of the McEnroe land was “going to be conveyed originally,” because “[i]t was ready for development,” as 34th Street “runs along the north side of the ground, ... [а]nd there’s water and sewer on that street.”

[¶ 22] George McEnroe testified: (1) In 1992 and 1993, he and Bert Johnson discussed sale of the land; (2) In 1993 Johnson orally offered “$10,000 an acre cash price for ... 60 acres;” (3) “I told him that I’d accept it and ... I said, ‘When you come in I’ll have an earnest money agreement prepared. You bring your checkbook, you put money down on the product and we’ll have a deal;’ ” (4) Johnson never bought the land for $10,000 an acre; (5) When Johnson “came back he said he couldn’t pay ten, he could only pay eight;” (б) He “eventually agreed to sell him the land that we exchanged for 30 acres on the eastern end;” (7) He sold or traded 30 acres for the Rychart farm and later gave Mr. Johnson “an option on an additional approximately 30 acres;” and (8) He has never agreed to sell the 60 acres to Johnson for $9,000 an acre.

[¶ 23] McEnroe testified about the option price: “Bert was hung up on $159,530, that’s what he was hung up on, and I always wanted to get more money for the property but that’s all he wanted to pay;” “[t]hat’s the only offer Bert made;” and he directed his “attorney to place the figure 159,530 in the option agreement.”

[¶ 24] Thus, there is evidence from which the trial court could, as it did, reasonably infer there was no contract for all 59 acres, and the exchange of the Rychart property, purchased for $373,000, for 30 acres of the McEnroe land was agreed upon.

[¶ 25] On a reading of the bare transcript, perhaps I too would have found, as the majority opinion now dictates, the oral agreement was for the exchange of 59.17 acres at a price of $9,000 per acre. However, I cannot say I am left with a definite and firm conviction the fact finder was wrong on the evidence that he heard in person. I would affirm.

[¶ 26] CAROL RONNING KAPS-NER, Justice.

On Petition for Rehearing.

NEUMANN, Justice.

[¶ 27] On August 28, 2002, Johnson Farms petitioned for rehearing. We granted the petition, restored this cause to the calendar, requested briefs and heard arguments. In the original opinion in this case, Johnson Farms v. McEnroe, 2002 ND 122, 647 N.W.2d 698 (“Johnson Farms III”), a majority of this Court held the trial court clearly erred in finding no oral agreement existed, the exchange was for property of equal value, and no refund for overpayment was owed to Johnson Farms. We concluded the evidence clearly showed an oral contract existed between the parties to sell 59.17 acres to Johnson Farms for $9,000 per acre. We reversed the trial court’s judgment dismissing Johnson Farms’ claims and directed entry of judgment in favor of Johnson Farms and against McEnroe for $91,930, the amount of the overpayment, plus interest. Johnson Farms petitioned for rehearing because it was not provided a remedy for the McEnroes’ failure to convey the remaining 27.94 acres. We now remand, with instructions.

[¶ 28] On rehearing, Johnson Farms asks this Court to direct an order for specific performance of the contract or, alternatively, for a remand to the trial court for a determination of monetary damages. While we decline to direct an award for specific performance, we agree this case should be remanded to the trial court for a determination of the appropriate remedy. We therefore withdraw the part of Johnson Farms III that directed entry of judgment in favor of Johnson Farms for the amount of overpayment, $91,930, plus interest, and remand this case to the trial court to review the existing record, consider the equities, and determine the appropriate remedy from among those possible: specific performance, damages based on the value of the property as of the date of breach plus interest, or refund of the overpayment plus interest.

[¶ 29] If on remand the trial court determines specific performance is not the appropriate remedy, under all of the facts and equities in this case, it may determine Johnson Farms is entitled to monetary damages. Bumann v. Maurer, 203 N.W.2d 434, 438 (N.D.1972) (stating damages are to be awarded “only when specific performance is impossible or impracticable”). If appropriate, the monetary damages to be awarded would equal:

[T]he difference between the price agreed to be paid and the value of the estate agreed to be conveyed at the time of the breach and the expenses properly incurred in examining the title, and in preparing to enter upon the land, and the amount paid on the purchase price, if any, with interest thereon from the time of the breach.

N.D.C.C. § 32-03-13. If the trial court determines monetary damages are the appropriate remedy, it may supplement the record by taking evidence on the issue of value as of the date of breach.

[¶ 30] Finally, the trial court may choose to order judgment in favor of Johnson Farms for the amount of overpayment, $91,930, plus interest, if the trial court decides the remedy from Johnson Farms III is appropriate.

[¶ 31] The trial judge who has presided over this matter to this point has retired. It is therefore necessary, and we direct, that this case be reassigned by the presiding judge of the judicial district. We note the successor judge must comply with the requirement of Rule 63, N.D.R.Civ.P., regarding certification of familiarity with the record.

[¶ 32] This case is remanded to the trial court for further consideration and disposition consistent with this opinion.

[¶ 33] GERALD W. VANDE WALLE, C.J., and MARY MUEHLEN MARING and THOMAS J. SCHNEIDER, JJ., concur.

I adhere to my dissent. CAROL RONNING KAPSNER, Justice.

[¶ 34] The Honorable THOMAS J. SCHNEIDER, D.J., sitting in place of SANDSTROM, J., disqualified.

      . The trial court found the option was not exercised in either way before April 1, 1995.

      . "[I]n July 1994, the McEnroes conveyed an additional .62 acres of land to Johnson Farms as part of the transaction.” Johnson Farms v. McEnroe, 2000 ND 137, ¶ 10 n. 1, 613 N.W.2d 497.


source: Caselaw Access Project

author: KAPSNER, Justice.

license: Public Domain

text:
    2003 ND 3
    Maria L. HIGGINS, Petitioner, Appellant and Cross-Appellee, v. Paul E. TRAUGER, County Auditor of Morton County, Respondent and Appellee. Steve Thilmony and Garry Strandemo, Plaintiffs, Appellees and Cross-Appellants, v. William Higgins; Sanitary Plumbing and Heating; Dakota Northwestern Bank, National Association, n/k/a Norwest Bank Bismarck, National Association; United Accounts, Inc.; B & D Supply, Inc. and all other persons unknown claiming any estate or interest in or Lien or encumbrance upon the property described in the Complaint, Defendants.
    Nos. 20020132, 20020133.
    Supreme Court of North Dakota.
    Jan. 17, 2003.

      William C. Severin (on brief), and Susan Schmidt (argued), Severin, Ringsak & Morrow, Bismarck, for petitioner and appellant Maria L. Higgins.
    Charles S. Miller, Jr., Fleck, Mather & Strata, Bismarck, for respondent and ap-pellee Paul E. Trauger.
    James P. Rausch, Rausch Law Office, Bismarck, for plaintiffs and appellees Steve Thilmony and Garry Strandemo.
   KAPSNER, Justice.

[¶ 1] Maria L. Higgins appealed from a judgment and amended judgment quieting title to Morton County property in William Higgins and Harry Reynolds as tenants in common, and dismissing her petition for writ of mandamus directing Morton County Auditor Paul E. Trauger to issue tax deeds to the property to her. Maria argues the trial court erred in ruling she and her husband, William, acted in collusion to divest Reynolds of his interest in the property. In their cross-appeal, Steve Thilmo-ny and Garry Strandemo argue a prior judgment quieting title to the property in them should be reinstated because William did not appeal from that judgment. We affirm.

I

[¶ 2] These appeals follow our remand in Higgins v. Trauger, 2001 ND 149, 632 N.W.2d 463. The factual background of this controversy is detailed in that opinion and we need not repeat it here except to the extent necessary for an understanding of the parties’ positions in this appeal. William and Reynolds were co-owners of Morton County property located by the “strip” between Bismarck and Mandan. Reynolds resided on the property, but William paid the taxes on the property until allowing them to go delinquent in 1994 and the auditor acquired the property through tax sales. In 1998, Maria Higgins purchased the tax sale certificates for the property. On March 22, 2000, the date the auditor had erroneously informed the parties was the last day to redeem, Reynolds, with the assistance of Thilmony and Stran-demo, paid the treasurer the amount required to redeem. Reynolds then quit-claimed his interest to Thilmony and Strandemo.

[¶ 3] Maria sued the auditor, seeking a writ of mandamus compelling him to issue her tax deeds to the property because no one had redeemed by March 21, 2000, the actual last day to redeem. Thilmony and Strandemo sued to quiet title to the property, and the trial court consolidated the cases. The trial court granted summary judgment against Maria, ruling Reynolds had the right to rely on the auditor’s representations. The court quieted title to the property in Thilmony and Strandemo and dismissed Maria’s petition for writ of mandamus.

[¶ 4] In Higgins, 2001 ND 149, ¶ 19, 632 N.W.2d 463 (footnote omitted), we reversed, concluding “[t]he redemption period expired on March 21, 2000, and Reynolds’s belated attempt to redeem on March 22 was too late as a matter of law.” We also ruled, however, summary judgment was improperly granted on the claim of the auditor, and of Thilmony and Strandemo, that Maria’s purchase of the tax sale certificates should be treated as a purchase or redemption under former N.D.C.C. § 57-24-18, by her husband, William.

We conclude the auditor’s affidavit raises a genuine issue of material fact whether Maria and William Higgins entered into a collusive arrangement to avoid the prohibitions in N.D.C.C.'§ 57-24-18. If they did so, Maria Higgins’s purchase of the tax sale certificates should be treated as a purchase, or redemption, by William Higgins, and William Higgins and Reynolds should be restored to their prior status as co-owners of the disputed property. If they did not enter into a collusive arrangement, a writ of mandamus should issue compelling Trauger, the Morton County Auditor, to issue Maria Higgins the tax deeds to the property.

Higgins, at ¶ 24.

[¶ 5] Attorney Bruce Bair, Maria, and the auditor testified at the evidentiary hearing on remand. The trial court ruled Maria and William acted in collusion to deprive Reynolds of his interest in the property.

[I]t was the intention of Maria Higgins and her husband, William Higgins, to proceed in a manner and fashion designed and intended to permit Maria Higgins to acquire title by Tax Deed free and clear of any interest or estate of the then other co-owner, Harry Reynolds.
The actions of Maria Higgins and her husband, William Higgins, were designed to circumvent the provisions of the then applicable statute, N.D.C.C. § 57-24-18 so as to divest the other co-owner, Harry Reynolds, from any right, title or interest in and to the subject real property heretofore described.
[T]he actions of Maria Higgins and William Higgins constitute collusion to the extent that they were intended and designed to circumvent the application of the above-cited statute then in effect.
[A]s a matter of law the purchase of the' tax sale certificates by Maria Higgins constituted a redemption of the premises from the effect of the real estate tax sales for the benefit of her husband and the other co-owner of the premises, Harry Reynolds.
[A] redemption of the premises is deemed to have occurred and record title to the above-described real property is deemed vested in the then owners of the premises, William Higgins and Harry Reynolds, as tenants in common.

[¶ 6] The court dismissed the petition for writ of mandamus and the quiet title action. These appeals followed.

II

[¶ 7] Maria argues the trial court erred in ruling she and her husband acted in collusion to divest Reynolds of his interest in the disputed property.

[¶ 8] In Higgins, 2001 ND 149, ¶ 22, 632 N.W.2d 463, we quoted Black’s Law Dictionary 264 (6th ed.1990) in defining collusion as “ ‘[a]n agreement between two or more persons to defraud a person of his rights by the forms of law, or to obtain an object forbidden by law.’ ” Collusion has also been defined as “a secret arrangement between two or more persons, whose interests are apparently conflicting, to make use of the forms and proceedings of law in order to defraud a third person, or to obtain that which justice would not give them.” Span, Inc. v. Associated Int’l Ins. Co., 227 Cal.App.3d 463, 277 Cal.Rptr. 828, 839-40 (Cal.Ct.App.1991) (citation omitted).

[¶ 9] Collusion has been described as “the equivalent of conspiracy.” Runyan v. Farmers’ Bank, 210 Iowa 147, 230 N.W. 418, 421 (Iowa 1930). Proof of an actual agreement is not necessary, and it is sufficient to show that the parties, with knowledge that concerted action was contemplated and invited, gave their adherence to and participated in the collusive scheme. See First City Nat’l Bank v. Brazosport Towing Co., 585 F.Supp. 115, 117 (S.D.Tex.1984). Compare State v. Gonzalez, 2000 ND 32, ¶ 17, 606 N.W.2d 873 (stating an agreement to commit a conspiracy need not be explicit but may be implicit in the fact of collaboration or existence of other circumstances). Collusion does not require fraudulent conduct. See Dynamic Marine Consortium, S.A. v. LATINI, MV, 179 F.3d 278, 280 (5th Cir.1999); Estate of Farish v. United States, 233 F.Supp. 220, 228 (S.D.Tex.1964).

[¶ 10] What constitutes collusion will differ with each fact situation. Span, Inc., 277 Cal.Rptr. at 840. The burden of proof on the issue of collusion rests with the party asserting that collusion has occurred. Estate of Farish, 233 F.Supp. at 228. Whether collusion has occurred is a finding of fact which this Court will not reverse on appeal unless it is clearly erroneous. Black v. Peterson, 442 N.W.2d 426, 430 (N.D.1989). A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if there is no evidence to support it, or if, after reviewing all the evidence, we are left with a definite and firm conviction a mistake has been made. Moen v. Thomas, 2001 ND 95, ¶ 19, 627 N.W.2d 146. Because a state of mind is rarely proven directly and must usually be inferred from conduct and circumstances, evidentiary conflicts and factual questions about state of mind are properly for the trier of fact to decide and are not appropriate for appellate second guessing. See State v. Franck, 499 N.W.2d 108, 111 (N.D.1993).

[¶ 11] In this case, Bair was a friend and neighbor of Maria and William who occasionally performed legal services for them. He testified that, during the late 1980s and early 1990s, William had personally invested more than $43,000 in the disputed property through payments on a contract for deed, taxes and insurance. Maria admitted William and Reynolds had “disagreement[s]” over the property because Reynolds never paid any of the taxes, and William had earlier attempted to bring a partition action against Reynolds. Bair testified that when Maria and William approached him in 1997, “they were concerned about trying to recover their financial investment” in the property. Bair recommended that Maria “purchase the tax certificate if they were going to go that way” because, according to Bair, “I was concerned about mortgages, and liens, and that type of thing, and, of course, she had never, ever been involved in the real estate in any way, and she, I felt, would have a better chance of getting a clear title.” Bair testified he advised Maria that the purchase of tax sales certificates “would be a good investment” for her and that if no one redeemed, she would acquire title to the premises and William and Reynolds would lose their interest in the property.

[¶ 12] Maria testified that she purchased the tax sale certificates with a check written on the couple’s joint, or “family,” checking account. She testified that she deposited between $9,000 and $10,000 in the joint account when the couple first married. Bair testified Maria had not been employed outside the home since he had known her and William had transferred “substantial property” to her to avoid “serious estate tax problem[s].” Maria testified she purchased the tax sale certificates for investment purposes, but admitted she had never purchased tax sale certificates for other property. Maria also testified William simply got “tired” of paying taxes on the property.

[¶ 13] The auditor testified Maria and William together visited his office on “several occasions” and the couple never mentioned “this property being a good investment vehicle.” The auditor testified he believed their reason for wanting to purchase the property was to acquire it “away from Mr. Reynolds.”

I guess basically, you know, they have been having problems with Harry owned joint the land with Bill, and they were wondering any way they could, as far as Harry, how could they buy him out or get out of the land, because there were both names on the title. And I guess I probably suggested a tax certificate method as far as the law would probably suffice, I guess, or do it.

[¶ 14] The trial court found that, although they did not act with “fraudulent intent,” Maria and William acted in collusion to attempt to acquire the property free of any interest of Reynolds in violation of former N.D.C.C. § 57-24-18. This finding is supported by the record. Maria and William are married, and a family relationship “may be considered evidence tending to prove a collusive arrangement.” Higgins, 2001 ND 149, ¶ 22, 632 N.W.2d 463. Maria purchased the tax certificates with a check written on the couple’s joint account, even though she had investment accounts in her own name. Maria had never before purchased a tax certificate. See First Congregational Church v. Terry, 130 Iowa 513, 107 N.W. 305, 306 (Iowa 1906) (noting as relevant factor in assessing collusive arrangement that “an old and intimate acquaintance ... who never before or since purchased a piece of land for taxes, bought it in”). Maria and William together visited the auditor’s office to check on the status of any redemption of the property. Yet, although William had made a substantial financial investment in the property throughout the years, and had been served with notice of the redemption period, William made no effort to redeem. It is unusual that William would allow the property to pass from his hands for the relatively small amount required to redeem it unless he felt “the certainty that the certificate was in the hands of a friend on whom he could rely.” Terry, 107 N.W. at 306. See also Turner v. Edwards, 207 Minn. 455, 292 N.W. 257, 259-60 (Minn.1940) (noting as relevant factor in assessing collusive scheme that “amount required to redeem was considerably less than the value of the house” and “Edwards made no effort to secure funds with which to pay the taxes and prevent the acquisition of title by her daughter”).

[¶ 15] A permissible inference which could be drawn from the evidence in this case is that Maria and William planned to have Maria purchase the tax sale certificates, rather than have William redeem the property, so they could acquire the property free of any interest of Reynolds and protect William’s substantial investment in the property. This constitutes the use of the forms and proceedings of law to obtain an object forbidden by law, Higgins, 2001 ND 149, ¶ 21, 632 N.W.2d 463, and we conclude the trial court’s finding of collusion is not clearly erroneous. Therefore, the trial court did not err in treating Maria’s purchase of the tax sale certificates as a redemption by William, thereby resulting in William and Reynolds being co-owners of the property.

Ill

[¶ 16] In their cross-appeal, Thil-mony and Strandemo argue the original judgment quieting title in them alone should be reinstated because William, a named defendant in the quiet title action, did not appeal from that judgment. Thil-mony and Strandemo’s argument rests on the mistaken assumption that no one appealed from the original quiet title judgment.

[¶ 17] The quiet title action and the mandamus action were consolidated by the trial court under the parties’ agreement. The record shows that Maria’s notice of appeal in the prior appeal stated she was appealing from both the mandamus and quiet title actions. See Higgins, 2001 ND 149, ¶ 1, 632 N.W.2d 463. Although Maria was not specifically named a defendant in the quiet title action, the defendants in that action include “all other persons unknown claiming any estate or interest in or lien or encumbrance upon the property described in the complaint.” Maria, Thil-mony and Strandemo executed a stipulation of facts in the quiet title action and Maria filed a motion for summary judgment in the quiet title action. Consequently, Maria was an “unknown” person who claimed an interest in the property, she appeared in those proceedings, and she had standing to appeal from the judgment in the quiet title action. Thilmony and Strandemo’s argument that the trial court’s original quiet title judgment should be reinstated because William did not file an appeal is without merit.

IV

[¶ 18] The judgment and amended judgment are affirmed.

[¶ 19] GERALD W. VANDE WALLE, C.J., and DALE V. SANDSTROM, WILLIAM A. NEUMANN, and MARY MUEHLEN MARING, JJ., concur.

      . The court in Terry, 107 N.W. at 306-07, after finding a collusive arrangement, further stated in dictum that a wife could not obtain a valid tax title against her husband or others to whom he owed a duty to pay the taxes. In Higgins, 2001 ND 149, ¶ 22, 632 N.W.2d 463, we rejected the "outdated” proposition that a purchase of tax sale certificates by the spouse of the property owner should be treated as a matter of law as a redemption by the owner. We adhere to that position in this case.


text:
    2003 ND 9
    Curtis D. JUNDT, Plaintiff, Appellee and Cross-Appellant, v. JURASSIC RESOURCES DEVELOPMENT, North America, L.L.C., a North Dakota limited liability company, Missouri River Royalty Corp., Rainbow Gas Company, Rainbow Energy Marketing Corp., Defendants, Appellants and Cross-Appellees, and Loren R. Kopseng, Defendant.
    No. 20010313.
    Supreme Court of North Dakota.
    Jan. 22, 2003.
    Rehearing Denied Feb. 21, 2003

      Daniel S. Kuntz (argued), Tracy Vigness Kolb (appeared), and James S. Hill (on brief), Zuger, Kirmis & Smith, Bismarck, N.D., for plaintiff, appellee and cross-appellant.
    Sheldon A. Smith (argued) and Scott K. Porsborg (appeared), Smith Bakke Oppe-gard Porsborg Wolf, Bismarck, N.D., for defendants, appellants and cross-appellees.

       The Honorable James M. Bekken, D.J., sitting in place of VandeWalle, C J., disqualified.

   KAPSNER, Justice.

[¶ 1] Jurassic Resources Development, North America, L.L.C., a North Dakota limited liability company (“Jurassic”); Missouri River Royalty Corporation (“Missouri River”); Rainbow Gas Company (“Rainbow Gas”); and Rainbow Energy Marketing Corporation (“Rainbow Energy”) appealed a judgment requiring them to cancel Curtis D. Jundt’s membership interest units in Jurassic and pay him $300,000. Jundt cross-appealed from the judgment; a December 5, 2000, amended order on summary judgment motions; an October 12, 2000, order on a summary judgment motion; and a December 13, 2001, amended memorandum opinion and unchanged findings of fact, conclusions of law, and order for judgment. We affirm in part, reverse in part, and remand for further proceedings.

[¶ 2] In 1984, Loren Kopseng and Donald Russell formed Missouri River. Later, they and others formed a number of other companies, including Rainbow Gas, Rainbow Energy, Montana Heartland, L.L.C. (“Montana Heartland”), and United Energy Corporation, a holding company.

[¶ 3] Jundt left his position with Willi-ston Basin Interstate Pipeline Company (“WBI”) in 1997 and became an employee of Rainbow Gas. Jundt and Kopseng formed Jurassic. The initial members of Jurassic were Missouri River, Rainbow Gas, and Rainbow Energy.

[¶ 4] Jurassic’s initial operating agreement executed on January 26, 1998, named the following individuals to Jurassic’s Board of Governors: Jundt; Donald Russell, President of Missouri River; Loren Kopseng, President of Rainbow Gas; and Stacy Tschider, President of Rainbow Energy. Missouri River, Rainbow Gas, and Rainbow Energy invested money in Jurassic, and were issued a total of 10,000 membership units. Jundt did not invest money in Jurassic and did not, initially, receive any membership units in it.

[¶ 5] Russell, Kopseng, Tschider, and Jundt executed an after-payout statement of membership interest on January 26, 1998, providing, in part:

Time of Repayment. The members will be repaid their contributions at the time the present value of the proven reserves discounted by using the present value discounted at 30%; plus other assets of the company exceed the past capital contributions and any accrued future capital contributions plus interest calculated at the prime rate of BNC Bank of Bismarck. Jurassic Resources may make dividend payments to pay back the capital contribution amounts plus interest at their discretion anytime Jurassic Resources has the ability to pay dividends.

It also authorized the managing governors to issue Jundt a member certificate for 4,925 membership units (32.833 percent of 15,000 total membership units), as well as 75 units to two other individuals, “after the payout of the capital contributions and interest to Missouri River Royalty Corp., Rainbow Gas Company, and Rainbow Energy Marketing Corp.”

[¶ 6] Jurassic’s member control agreement, executed on January 26, 1998, provides in part:

3.08 Additional Capital Contributions. No member shall have any obligation to make additional capital contributions to the Company or to fund, advance, or loan monies which may be necessary to pay deficits, if any, incurred by the Company during the term hereof. Members may make loans to the Company from time to time, as authorized by the Board. Any payment or transfer accepted by the Company from a Member which is not a capital contribution complying with Section 3.01 shall be deemed a loan and shall neither be treated as a contribution to the capital of the Company for any purpose hereunder, nor entitle such Member (as such) to any increase in such Member’s Percentage Interest. Any such loan shall be repaid at such times and with such interest (at rates not to exceed the maximum permitted by law) as the Board and the lending Member shall reasonably agree.
ARTICLE IV
TAX MATTERS
4.01 Tax Characterization and Returns. The Members acknowledge that the Company will be treated as a “partnership” for tax purposes. Within 90 days after the end of each fiscal year, the President will cause to be delivered to each person who was a Member at any time during such fiscal year a Form K-l and such other information, if any, with respect to the Company as may be necessary for the preparation of such Member’s federal or state income tax (or information) returns, including a statement showing each Member’s share of income, gain, or loss and credits for such fiscal year for federal or state income tax purposes.

Jurassic began a program of gas exploration and production. Differences arose and Jundt left in 1999.

[¶ 7] Jundt sued to enforce his right to 4,925 membership units of Jurassic, and alleged Kopseng and the corporate defendants breached their obligation of good faith to Jundt and violated their fiduciary duties to Jurassic by, among other things, diverting a business opportunity belonging to Jurassic by acquiring property from WBI for Montana Heartland, which is owned by Jurassic’s corporate members, rather than Jurassic.

[¶ 8] The trial court found, among other things:

3. All tax write-offs were by agreement of the parties to go to the money investors in the business venture they mutually agreed to pursue.
4. Shallow gas leases were acquired and developed into production in Montana through the efforts of the plaintiff and capital and loans contributed by the corporate defendants, as well as the efforts of the defendant Loren R. Kop-seng.
5. The defendants acknowledged the plaintiff was entitled to his 4,925 membership interest units in Jurassic Resources Development North America, L.L.C., a North Dakota Limited Liability Company, effective March 9, 2000.
6. Concerns about the expenditure of company funds in the fall of 1998 led to action by the Board of Governors on February 22, 1999, which in turn led to the plaintiffs departure from the company.
7. The debts of the company exceed the appraisal value determined by the Special Master as of November 27, 2001.
8. The plaintiff and the defendants no longer have a business relationship that will allow them to work together.
9. The plaintiffs efforts in developing the assets of the company have contributed value to the company notwithstanding the debts the company has acquired in the process.
10. The defendant Loren R. Kop-seng has not deliberately acted to oppress the plaintiff in his management or member interest units in the company.

The trial court concluded, among other things:

12. Through the efforts of the plaintiff and through the capital and loans provided by the corporate defendants, and through the efforts of the defendant Loren R. Kopseng, Jurassic Resources Development North America, L.L.C., a North Dakota Limited Liability Company, has acquired assets and value that are not entirely equitably offset by its debts.
13. Liquidation and partition are not appropriate equitable remedies in this case.
14. The plaintiffs claims against the defendant Loren R. Kopseng are DISMISSED WITH PREJUDICE.
15. It is equitable for a JUDGMENT to be AWARDED in favor of the PLAINTIFF against the remaining defendants canceling the plaintiffs membership interest units in Jurassic Resources Development North America, L.L.C., a North Dakota Limited Liability Company, and requiring the remaining defendants to pay the sum of $300,000 to the plaintiff.

The trial court’s judgment dismissed Jundt’s claims against Kopseng and ordered the corporate defendants to cancel Jundt’s membership units in Jurassic and pay him $300,000.

[¶ 9] The corporate defendants appealed, contending the trial court abused its discretion in awarding Jundt $300,000 as an equitable remedy. Jundt cross-appealed, contending the trial court improperly granted summary judgment on part of his claim when it determined the defendants did not breach their fiduciary duty to Jurassic when they diverted a business opportunity (the acquisition of oil and gas properties controlled by WBI in the Pine Gas Field) belonging to Jurassic to Montana Heartland, which was owned by all of the corporate Jurassic owners. Jundt is not an owner of Montana Heartland.

I

[¶ 10] Jurassic, Missouri River, Rainbow Gas, and Rainbow Energy contend the district court abused its discretion in awarding Jundt $300,000 as an equitable remedy. “An abuse of discretion by the trial court is never assumed; the burden is on the party seeking relief to affirmatively establish it.” Gepner v. Fujicolor Processing, Inc., 2001 ND 207, ¶ 13, 637 N.W.2d 681. “A trial court abuses its discretion only when it acts in an unreasonable, arbitrary, or unconscionable manner, when its decision is not the product of a rational mental process leading to a reasoned decision, or when it misinterprets or misapplies the law.” Rose v. United Equitable Ins. Co., 2002 ND 148, ¶ 5, 651 N.W.2d 683.

[¶ 11] The parties stipulated to the appointment of a special master. The stipulation was formalized in an order drafted by Jundt’s counsel, which appointed the Ryder Scott Company “as a Special Master pursuant to Rule 53, N.D.R.Civ.P., for the purpose of providing fair market value appraisals of’ specified assets owned or controlled by Jurassic, Pine Gas Gathering Company, and Montana-Heartland Company. The order also provided:

The Special Master shall submit its draft report and preliminary appraisals to the parties for comment by November 9, 2001. The parties may file comments with the Court and Special Master by November 16, 2001 pursuant to Rule 53(f)(5). The Special Master shall file its final report and appraisals with the Court on November 26, 2001 and serve copies on the parties.... The parties shall advise the Court on November 27, 2001 if they intend to file objections to the Report pursuant to Rule 53(f)(2). The Court will use the report and appraisals, after considering any objections of the parties, to find the fair1 market values of any relevant properties to which the parties have not previously agreed to a method of valuation, distribution or liquidation.

[¶ 12] The defendants contend the parties stipulated they “would be bound by the special master’s findings of the fair market value of Jurassic as of the date of trial.” The special master found “the Fair Market Value of the reserves and future production and income attributable to certain leasehold interests and the Pine Gas Gathering System of Jurassic ‘et al’ as of November 27, 2001,” was $2,286,000. The defendants assert “the debt and capital contributions the defendants had in Jurassic at that time totaled $5,568,000,” leaving Jurassic with a negative value. The trial court awarded Jundt $300,000 for his membership units in Jurassic. The defendants contend the trial court abused its discretion in awarding Jundt $300,000.

[¶ 13] The record does not show the parties agreed to “be bound by the special master’s findings of the fair market value.” The order reflecting the parties’ stipulation says only that the trial court will “use the report and appraisals ... to find the fair market values of any relevant properties.” It does not say the court or the parties will adopt or be bound by the special master’s report or findings.

[¶ 14] The defendants contend the trial court did not apply the clearly erroneous standard required by N.D.R.Civ.P. 53 and there is no evidence establishing the special master’s findings were clearly erroneous. The trial court’s order appointing the Ryder Scott Company as a special master to provide fair market appraisals of specified properties does not specifically require the special master to make findings of fact or conclusions of law. The trial court did not specifically adopt or reject the special master’s determination “the Fair Market Value of the reserves and future production and income attributable to certain leasehold interests and the Pine Gas Gathering System of Jurassic ‘et al’ as of November 27, 2001” was $2,286,000. In its memorandum opinion, the trial court said it “REJECTS the use of the value set by the Ryder Scott appraisal in an equitable resolution of this case.” In its findings of fact, however, the trial court recognized Jurassic’s debts “exceed the appraisal value determined by the Special Master as of November 27, 2001.” The trial court also found: “The plaintiffs efforts in developing the assets of the company have contributed value to the company notwithstanding the debts the company has acquired in the process.” The trial court explained in its memorandum opinion:

Notwithstanding the debts owed by Jurassic, the Court finds there to be a significant value to the defendants to retain the ownership of Jurassic free and clear of any interest of Jundt, if for no other reason than they can control the future of Jurassic and the way in which the debts are paid and the assets exploited. In a worse case scenario of Jurassic ultimately losing money, it will be to the advantage of the defendants for them to be able to control the final “crash” of Jurassic.
An equitable resolution by the Court also takes into account Jundt’s claims about over allocated expenses, attorney fees and transportation charges to the extent the Court has any limited concerns over those claims. The Court intends through its equitable resolution to end all controversy among the parties so they can all get on with their own endeavors free and clear of any concern about anything anyone is doing with Jurassic. Fully understanding its equitable resolution is not based on gas reserves, future prices or future costs, and fully understanding it has made no adjustments whatsoever as to the value of Jurassic based on any claims of Jundt, and fully understanding the debts owed by Jurassic to BNC National Bank and the corporate defendants, the Court finds that the equitable resolution of this case is the AWARD OF A JUDGMENT TO JUNDT AGAINST JURASSIC AND THE CORPORATE DEFENDANTS IN THE AMOUNT OF $300,000. The Court intends through this equitable resolution that no party will be awarded costs and/or attorney fees.

[¶ 15] The defendants contend “Jundt waived his right to challenge the special master’s determination by failing to provide the special master any evidence he possessed that Jurassic had a higher value.” They argue Jundt “should not have been allowed to challenge the special master’s findings at trial,” because he did not file “ ‘objections’ to the report by November 27, 2001.” However, on November 27, 2001, the first day of trial, the trial court noted the time for objecting was “still running.”

[¶ 16] Jundt and the defendants told the trial court they wanted to sever their business relationship. At a motions hearing, one of the defendants’ attorneys told the court: “We don’t want [Jurassic] to be liquidated. That would cause considerable tax problems for all of the partners here.” The trial court found the parties “no longer have a business relationship that will allow them to work together” and concluded “[[liquidation and partition are not appropriate equitable remedies in this case.” The court concluded cancellation of Jundt’s membership interest units in exchange for payment of $300,000 by the corporate defendants was the appropriate equitable remedy.

[¶ 17] However, N.D.C.C. § 10-32-119(1) authorizes a court to grant such equitable relief in only limited circumstances:

1. A court may grant any equitable relief it considers just and reasonable in the circumstances or may dissolve, wind up, and terminate a limited liability company:
a. In a supervised voluntary winding up and termination pursuant to section 10-32-118;
b. In an action by a member when it is established that:
(1) The governors or the persons having the authority otherwise vested in the board of governors are deadlocked in the management of the affairs of the limited liability company and the members are unable to break the deadlock;
(2) The governors or those in control of the limited liability company have acted fraudulently, illegally, or in a manner unfairly prejudicial toward one or more members ...
(3) The members of the limited liability company are so divided in voting power that ... they have failed to elect successors to governors whose terms have expired or would have expired upon the election and qualification of their successors;
(4) The limited liability company assets are being misapplied or wasted; or
(5) An event- of dissolution has occurred under subdivision a, d, or e of subsection 1 of section 10-32-109 but the limited liability company is not acting to wind up its affairs;
c. In an action by a creditor when:
(1) The claim of the creditor has been reduced to judgment and an execution on the judgment has been returned unsatisfied; or
(2) The limited liability company has admitted in writing that the claim of the creditor is due and owing and it is established that the limited liability company is unable to pay its debts in the ordinary course of business; or
d. In an action by the attorney general to dissolve the limited liability company in accordance with section 10-32-122 when it is established that a decree of termination is appropriate.

None of the grounds specified in N.D.C.C. § 10-32-119(1) have been established. Nor have any grounds for ordering a sale of membership interests under N.D.C.C. § 10-32-119(2) been established. Accordingly, the trial court was without authority to grant equitable relief under N.D.C.C. § 10-32-119. We, therefore, conclude the trial court abused its discretion in ordering the corporate defendants to pay Jundt $300,000 in exchange for his membership interest units as an equitable remedy.

II

[¶ 18] Jundt contends the trial court erred in ruling he was not entitled to tax write-offs flowing from his interest in Jurassic.

[¶ 19] The trial court found: “All tax write-offs were by agreement of the parties to go to the money investors in the business venture they mutually agreed to pursue.” The court explained in its memorandum opinion:

Jundt as the owner of 4,925 units of Jurassic since March 9, 2000, (Exhibit 436), claims he should have received (and presumably should continue receiving) about one-third of the tax benefits claimed by the three corporate defendants ... Jundt refused to provide CPA Nitschke with his tax returns as he refused to provide them to the defendants .... Without Jundt’s personal tax information the impact of this tax benefit cannot be accurately calculated nor can its impact on Jundt’s taxes be determined. As to this claim Jundt has the burden of proof. Jundt has failed to carry his burden of proof as what he has offered is far too speculative.
Additionally, both Kopseng and Russell testified that the money investors were to take the tax write-offs as without being able to claim the tax benefits money investors would not invest in such ventures. The memo Kopseng prepared dated February 10, 1997, (Exhibit 402), to begin this whole process specifically provided in the third full paragraph:
The financial aspects of the corporation are that the silent partners are to put up the money and derive all wri-teoffs during the firm’s conception and initial payout period so there will be a before and after payout scenario. The payoff provision is inserted to guarantee the financial group their writeoffs during the planned start up period which is scheduled to be conducted as a loss.
Jundt clearly knew and understood all the write-offs would go to the money investors.

[¶ 20] Jurassic’s Member Control Agreement executed on January 26, 1998, does not provide that the “money investors” were to get all the tax write-offs. It states, in part:

4.01 Tax Characterization and Returns. The Members acknowledge that the Company will be treated as a “partnership” for tax purposes. Within 90 days after the end of each fiscal year, the President will cause to be delivered to each person who was a Member at any time during such fiscal year a Form K-l and such other information, if any, with respect to the Company as may be necessary for the preparation of such Member’s federal or state income tax (or information) returns, including a statement showing each Member’s share of income, gain, or loss and credits for such fiscal year for federal or state income tax purposes.

Michael Schmitz, a certified public accountant called as a witness by the defendants, testified that “loss to Mr. Jundt [would] be a passive loss,” which “is suspended until he can use it,” and there is “[n]o limitation on a carry-over.” He testified on cross-examination that Jundt was entitled to tax write-offs:

Q. Mr. Schmitz, if Mr. Jundt was entitled to his membership interest on February 1, 1999, wasn’t he entitled to receive the portion of the tax write-offs attributable to that interest after that date?
A. He was entitled to receive them if he was — if he was entitled to the ownership interest, he was entitled to the tax write-offs. Whether he could use them or not, I don’t know.
Q. (By Mr. Kuntz continuing) The other owners wouldn’t be entitled to take those write-offs after he had earned his interest just because Mr. Jundt couldn’t use them; would they?
A. That’s correct.

[¶ 21] We conclude the trial court’s finding the parties agreed the money investors were to get all the tax write-offs is clearly erroneous, and the trial court erred in ruling Jundt was not entitled to claim any of the tax write-offs. The actual amount of the tax write-offs is controlled by Article IV of the Member Control Agreement.

Ill

[¶ 22] Jurassic was negotiating to acquire WBI properties before Jundt left Jurassic. After Jundt left Jurassic, Montana Heartland acquired the properties. Jundt asserted the defendants breached their fiduciary duty to Jurassic by diverting a Jurassic business opportunity to Montana Heartland, which is owned by the corporate Jurassic owners. Jundt contends the trial court improperly granted summary judgment dismissing his claim the Jurassic defendants breached their fiduciary duty to Jurassic by diverting a Jurassic business opportunity to Montana Heartland.

[¶ 23] We recently reiterated the test for resolving a motion for summary judgment:

Summary judgment is a procedural device for promptly and expeditiously disposing of an action without a trial if either party is entitled to judgment as a matter of law and if no dispute exists as to either the material facts or the inferences to be drawn from undisputed facts, or if resolving factual disputes will not alter the result. The evidence must be viewed in the light most favorable to the party opposing the motion, and that party will be given the benefit of all favorable inferences which can reasonably be drawn from the evidence.

Mr. G’s Turtle Mtn. Lodge, Inc. v. Roland Township, 2002 ND 140, ¶ 21, 651 N.W.2d 625 (citations omitted). A party opposing summary judgment must present evidence raising an issue of material fact. Id. at ¶ 22.

[¶ 24] In granting the defendants’ motion for summary judgment with regard to the Montana Heartland issue, the trial court said:

The defendants’ Motion for Summary Judgment Re: Montana Heartland is GRANTED to the extent the Court finds the WBI leases acquired by Montana Heartland were not a business opportunity that belonged to Jurassic, and thus the value of Jurassic does not include the value of the now developed WBI leases owned by Montana Heartland.

[¶ 25] This Court has not ruled on the corporate opportunity doctrine. Section 10-32-86(1), N.D.C.C., requires a governor of a limited liability company to discharge his or her duties in good faith. Section 10-32-119(4), N.D.C.C., provides “all members in a closely held limited liability company owe one another” a duty “to act in an honest, fair, and reasonable manner in the operation of the limited liability company.” “[T]he fiduciary obligation of undivided loyalty imposed upon directors and officers precludes them from appropriating a business opportunity which belongs to the corporation.” Joseph W. Bishop, Jr., The Law of Corporate Officers and Directors § 3.05 (2002). “The law has long recognized the doctrine of corporate opportunity which prohibits one who occupies a fiduciary relationship to a corporation from acquiring, in opposition to the corporation, property in which the corporation has an interest or tangible expectancy or which is essential to its existence.” 3 Fletcher Cyc. Corps. § 861.10 (2002 Rev. Perm. Ed.).

[¶ 26] As the reporter’s note to American Law Institute, Principles of Corporate Governance: Analysis and Recommendations § 5.05 (1994) states, in part:

1. The cases and commentators generally recognize the existence of a rule or doctrine of corporate opportunity, although there is confusion as to the manner in which it is to be applied....
2. The cases offer varying bases for determining whether the corporate opportunity doctrine will be deemed applicable to a given factual situation.
8. The cases offer a variety of justifications for a corporation’s rejection of an opportunity, including the corporation’s financial inability to take the opportunity.

“What constitutes the usurpation of a corporate ‘opportunity’ is the subject of considerable litigation.... [H]owever, a single definitive test has not yet emerged.” Joseph W. Bishop, Jr., The Law of Corporate Officers and Directors § 3.05 (2002).

Four tests have been established as standards for identifying a corporate opportunity: the “line of business” test, the “interest or expectancy” test, the “fairness” test, and the “ALI” test. Under any test, a corporate opportunity exists when a proposed activity is reasonably incident to the corporation’s present or prospective business and is one in which the corporation has the capacity to engage. Whether or not a given opportunity meets the requisite relationship is largely a question of fact to be determined from the objective facts and surrounding circumstances existing at the time the opportunity arises. Whether or not an officer has misappropriated a corporate opportunity does not depend on any single factor.

3 Fletcher Cyc. Corps. § 861.10 (2002 Rev. Perm. Ed.).. “[A] director is not required to use his or her own money or credit to finance the business of the company.” Id. at § 862.10.

[¶ 27] The circumstances presented in this case do not provide a basis for determining which of the tests for determining if there has been a usurpation of a corporate opportunity may most appropriately be adopted in this jurisdiction. Under any of the theories, Jundt has failed to meet his burden. Jundt, the only individual or entity claiming diversion of a Jurassic corporate opportunity, owns fewer than one-third of the membership interest units in Jurassic. The corporate defendants own two-thirds of the membership interest units. Under paragraphs 1.11 and 2.09 of the Jurassic Operating Agreement, the members and the board of governors may take actions by the affirmative vote of a majority of the members or governors unless “otherwise required by law or specified in the Articles of Organization of the Company or a member control agreement.” Thus, the corporate defendants had the power to control Jurassic’s business decisions. The managing governors of Jurassic that were representing the corporate owners of Jurassic membership interest units and owned Montana Heartland knew Jurassic was negotiating to acquire WBI properties before Jundt left Jurassic, and, therefore, knew of the opportunity. The majority owners impliedly disclosed to themselves and to Jurassic all of the relevant facts about Jurassic’s asserted corporate opportunity to purchase WBI properties and elected to forego the opportunity. Such implied disclosure and consent to Montana Heartland’s acquisition is a permissible inference. See Lussier v. Maw-Van Dev., Inc., 4 Haw.App. 359, 667 P.2d 804, 813 (1983) (Where company president disclosed opportunity to purchase property to shareholders, company was financially incapable of making the purchase, shareholders failed to object to president’s purchase of the property, “[t]he only reasonable inference from such facts is an implied consent by the shareholders.”). Financial inability justifies a corporation in rejecting an opportunity. A.C. Petters Co., Inc. v. St. Cloud Enters., Inc., 301 Minn. 261, 222 N.W.2d 83, 86 (1974). The defendants here asserted Jurassic lacked the financial ability to take advantage of the opportunity. There is evidence supporting the court’s finding that Jurassic’s debts exceeded the appraised value of its assets. Jundt made no showing Jurassic had the financial ability to take the opportunity without additional investment of money or credit by the owners. There was no showing of a corporate opportunity Jurassic had the financial ability to pursue. We conclude the trial court did not err in granting summary judgment dismissing Jundt’s claim the defendants diverted a Jurassic business opportunity to Montana Heartland.

[¶ 28] The judgment is reversed to the extent it ordered cancellation of Jundt’s membership interest units in Jurassic, ordered payment of $300,000 to Jundt, and denied Jundt’s claim to tax write-offs. The judgment and orders appealed from are otherwise affirmed. The matter is remanded for further proceedings in accordance with this opinion.

[¶ 29] WILLIAM A. NEUMANN, Acting C.J., JAMES M. BEKKEN, D.J., MARY MUEHLEN MARING, and DALE V. SANDSTROM, JJ, concur.


author: MARING, Justice.

text:
    2003 ND 10
    John B. DENNISON, Plaintiff and Appellee v. NORTH DAKOTA DEPARTMENT OF HUMAN SERVICES, successor to the Public Welfare Board of North Dakota, Defendant and Appellant.
    No. 20020186.
    Supreme Court of North Dakota.
    Jan. 23, 2003.

      Terry W. Elhard, Ashley, N.D., for plaintiff and appellee.
    Matthew Arnold Sagsveen, Assistant Attorney General, Bismarck, N.D., for defendant and appellant.
   MARING, Justice.

[¶ 1] The North Dakota Department of Human Services, as successor to the Public Welfare Board, appealed from a judgment quieting title to land in McIntosh County to John B. Dennison. We affirm.

I

[¶ 2] In 1925, Katharina Deglau conveyed a tract of land in McIntosh County to Christoph Retzer. On August 6, 1951, Carlyle D. Onsrud, the executive director of the Public Welfare Board, executed a homestead statement for old-age assistance benefits under N.D.R.C. § 50-0707 (1943) on behalf of Christoph Retzer’s wife, Magdalena Retzer. The homestead statement, which was recorded on August 13, 1951,’ said Magdalena Retzer had applied to the McIntosh County Welfare Board for benefits, and the County Welfare Board had approved her application in March 1951. The statement said “Magdalena Retzer (Christoph Retzer, deceased husband, is the title owner) occupies, a homestead, which he own[ed],” described Magdalena Retzer’s one-third interest in the land, and said any conveyance or encumbrance of the land by Magdalena Ret-zer without the approval of the Public Welfare Board would be null and void.

[¶ 3] By warranty deed, dated August 31, 1951 and recorded October 8, 1952, Magdalena Retzer conveyed her interest in the land to her seven children. There is no evidence the Public Welfare Board approved the conveyance, and it has not released its homestead statement. On October 7, 1952, a probate court issued a final decree in the probate of Christoph Ret-zer’s estate. The decree, which was recorded on October 8, 1952, acknowledged that Magdalena Retzer had conveyed all her interest in her husband’s estate to the seven Retzer children and said they each received an undivided one-seventh interest in the land.

[¶ 4] The Retzer children conveyed their interest in the land to John Martz by warranty deed recorded on November 3, 1952. In 1980, Martz conveyed the land by warranty deed to himself and his wife, Paulina Martz, as joint tenants. John Martz died in 1985. In 1986, Paulina Martz conveyed the land by quitclaim deed to Oscar Martz, as her trustee, and in 1991, he conveyed the land by warranty deed to Clifford and Esther Hildebrand. In 2000, the Hildebrands conveyed the land by warranty deed to Dennison.

[¶ 5] Dennison brought this action against the Department, as successor to the Public Welfare Board, to quiet title to the tract of land. The trial court initially granted the Department summary judgment, ruling, “[t]he state has a recorded interest in the property and the North Dakota Marketable Record Title Act (N.D.C.C. Ch. 47-19.1) does not bar the state from asserting its interest in the property.” The court concluded the Department “retains whatever interest it may have had in the property and Dennison retains the remainder of [the] interest in the property.”

[¶ 6] In Dennison v. North Dakota Dept. of Human Servs., 2002 ND 39, ¶ 1, 640 N.W.2d 447, we held the State’s restraint on alienation was a right or interest in the land which ordinarily was excepted from the Marketable Record Title Act under N.D.C.C. § 47-19.1-11(2). We also held there were unresolved issues regarding the nature and duration of the State’s right or interest in the land, which required determination in the context of Dennison’s quiet title action. Dennison, at ¶¶ 1, 17. We said the record was silent about the total amount of old-age assistance Magdalena Retzer received; when or if she has died; and if she has died, whether the State pursued a claim against her estate, or whether the time has expired for a claim against her estate. Id. at ¶ 17. We said those issues must be resolved in the context of Dennison’s quiet title action and the Marketable Record Title Act to fully decide the adverse claims to the tract of land, and we reversed the judgment and remanded for further proceedings. Id. at ¶¶ 17-18.

[¶ 7] On remand, the trial court found Magdalena Retzer received $4,638 in old-age assistance, she. died at the age of 79 on August 21, 1959, no probate was filed to administer her estate, and the State did not pursue a claim against her estate. The court found the State had a legitimate claim against Magdalena Retzer, but failed to pursue the claim in a timely manner and the land was no longer subject to the State’s claim. The court quieted title in the land to Dennison. The Department appealed.

II

[¶ 8] The Department argues the State’s interest in the land survives until affirmatively relinquished, and no statutory limitation or bar extinguishes that interest in the land.

[¶ 9] In Dennison, 2002 ND 39, ¶ 16, 640 N.W.2d 447, we said:

The State’s restraint on alienation effectively ran against the recipient of old age assistance benefits and not against the land itself. As a recipient of old age assistance benefits, Magdalena Retzer’s conveyance of her interest in the land to her children was void. However, the language of N.D.R.C. § 50-0707 (1943) does not void an instrument of conveyance executed by someone other than a recipient or applicant for old age assistance benefits, and a transfer evidenced by a court order or personal representative’s deed was not rendered void by the language of that statute. Under N.D.R.C. § 50-0734 (1943), when a recipient of old age assistance died, the State, subject to funeral, last illness, and administrative expenses, had a preferred claim against the recipient’s estate for the amount of old age assistance paid under N.D.R.C. ch. 50-07 (1943). See also Shuck v. Shuck, 77 N.D. 628, 44 N.W.2d 767 (1950); State v. Wehe, 72 N.D. 186, 5 N.W.2d 311 (1942); State v. Whitver, 71 N.D. 664, 3 N.W.2d 457 (1942). Section 50-0734 N.D.R.C. (1943), cross-referenced N.D.R.C. § 30-1818 (1943) for the order of payment of claims against an estate.

[¶ 10] Under Estate of Hillesland, 86 N.W.2d 522, 525 (N.D.1957), a homestead statement was not a statutory lien on the property of a person receiving old -age assistance; rather, a homestead statement was a restraint on alienation which ran against the recipient of old age benefits and not against the land. See Dennison, 2002 ND 39, ¶ 16, 640 N.W.2d 447. As a recipient of old age benefits, Magdalena Retzer’s 1951 conveyance of her interest in the land to her children was void. However, all property in North Dakota has an owner, see N.D.C.C. § 47-01-09, N.D.R.C. § 47-0109 (1943), and because the conveyance of her interest in the land to her children was void, Magdalena Retzer effectively retained her interest in the land. When Magdalena Retzer died in 1959, her interest in the land passed to her heirs by operation of law, subject to creditors’ claims. See N.D.R.C. ch. 30-08 (1943) (administration of estates of intestates); N.D.R.C. § 56-0103 (1943) (property of intestate passes to heirs, subject to administration); N.D.R.C. § 56-0104 (1943) (order of succession to intestate’s property). See also Stevahn v. Meidinger, 79 N.D. 323, 329-30, 57 N.W.2d 1, 6-7 (1952); Aberle v. Merkel, 70 N.D. 89, 93-4, 291 N.W. 913, 915-16 (1940). Under N.D.R.C. § 50-0734 (1943), the State, subject to funeral, last illness, and administrative expenses, had a preferred claim against Magdalena Retzer’s estate for the amount of old age assistance paid her. See Dennison, 2002 ND 39, ¶ 16, 640 N.W.2d 447. See also N.D.R.C. § 30-1818 (1943). At that point, the State’s interest, a restraint on alienation which ran against the recipient of old age assistance benefits and not against the land itself, was subject to probate law.

[¶ 11] We reject the State’s claim there is no statutory limitation or bar that extinguishes the State’s interest in the land. Because the State’s interest ran against the recipient of old age assistance benefits and not against the land, the State’s claim was against Magdalena Ret-zer, and there is no longer anyone against whom the claim against her can be asserted. The trial court found “[n]o probate was filed to administer [Magdalena Ret-zer’s] estate and the State did not pursue a claim against her estate.” There was no probate of Magdalena Retzer’s estate under the law in existence when she died, but the State, as a creditor, was entitled to petition for administration of her estate. See N.D.R.C. § 30-0802 (1943). The parties have cited no provisions under prior law extinguishing the State’s claim against Magdalena Retzer’s estate, but the probate provisions effective on July 1, 1975, extinguished any claims against her estate at least by 1978. See N.D.C.C. § 30.1-35-01(2) (transition provisions for uniform probate code); N.D.C.C. § 30.1-12-08 (ultimate time limit for probate, testacy, and appointment proceedings); N.D.C.C. § 30.1-19-03 (limitations on presentation of claims, including claims by the State). The State’s restraint on alienation did not run against the land. Rather, it ran against Magdalena Retzer, and any claim the State had against her estate was extinguished at least by 1978.

[¶ 12] In 1952, Magdalena Retzer’s children conveyed the land by warranty deed to John Martz. Under N.D.C.C. § 47-10-15, the Retzer children’s after-acquired property passed by operation of law to John Martz. See also N.D.R.C. § 47-1015 (1943). In 1980, John Martz conveyed the land by warranty deed to himself and his wife as joint tenants. Under N.D.C.C. § 47-19.1-01, Dennison has an unbroken chain of title to the tract of land which has been recorded ■ for more than twenty years, and he has marketable title to the land.

[¶ 13] We affirm the judgment quieting title to Dennison.

[¶ 14] VANDE WALLE, C.J., ' NEUMANN and KAPSNER, JJ., and ALLAN L. SCHMALENBERGER, District Judge, concur.

[¶ 15] The Honorable ALLAN L. SCHMALENBERGER, District Judge, sitting in place of SANDSTROM, J., disqualified.