Schiewe v Schiewe, 2016 ABQB 4

Court of Queen ’ s Bench of Alberta Citation: Schiewe v Schiewe, 2016 ABQB 4 Date: 20160104 Docket: 1203 17504 Registry: Edmonton Between: Calvin Lyle Schiewe Plaintiff - and - Douglas Arthur Schiewe Defendant - and - Douglas Arthur Schiewe and Grant Schiewe Plaintiffs by Counterclaim - and - Calvin Lyle Schiewe Defendant by Counterclaim _______________________________________________________ Reasons for Judgment of L.A. Smart , Master in Chambers _______________________________________________________ Background

[ 1 ] Calvin Schiewe claims a half ownership of a quarter

section of land located in the County of Leduc registered in the name of his brother, Douglas Schiewe. Douglas has defended on the basis that Calvin is entitled to only a one-third interest in those lands as is his brother Grant Schiewe. Douglas and Grant by counterclaim allege they have a one-third interest each in a quarter

section of land also located in the County of Leduc registered in the name of Calvin Schiewe. Douglas, in the alternative, claims a one half interest in both quarters. Calvin applies to have the counterclaim of Douglas and Grant as it relates to the one-third interest claims dismissed summarily. Douglas has cross applied seeking dismissal of Calvin’s claim conditional on his counterclaim being dismissed. The Story [ 2 ] Arthur Schiewe farmed in Leduc County and had three sons, Calvin, Douglas and Grant. In 1985, Arthur entered into a Partnership Agreement with Douglas. At that time, Douglas was entitled to become the owner of a quarter

section of land (actually two adjoining parcels of approximately 1/8 of a

section each) referred to as the Leduc Lands. That agreement contemplated that the Partnership would conduct farming operations on lands separately owned by each of them and other lands that may be leased by the Partnership. In 1989, Calvin joined the Partnership and by way of an Addendum to Partnership Agreement, it was acknowledged by Douglas that Calvin would be entitled, inter alia, to become the registered owner of the north parcel of the Leduc Lands. In 1991, Calvin acquired another quarter

section of land referred to as the Calmar Lands. [ 3 ] In 1994, Grant joined the Partnership. No written amendments were made to the Partnership Agreement. Grant in his affidavit says that upon his joining the Partnership discussions were held about the acquiring of a piece of land to which he would receive legal title and equalize the landholdings among the brothers. In 2003 the Partnership was converted to a Corporation. For convenience, I will refer to the farming operations as “Schiewe Farms”. In 1997, three quarter sections referred to as the Southfork Parcel were purchased by Schiewe Farms.

At the time of acquisition, Grant says that it was agreed that he would obtain title to one of the quarter sections, however, at the time of purchase it was necessary for all of the partners to take title to secure mortgage financing. [ 4 ] On June 25, 1997, Douglas and Calvin executed a Memorandum of Agreement (Memorandum) stating that it was intended to confirm certain legal understandings between them with respect to their legal claim to properties which had been purchased and registered in their names.

It was also intended that the agreement would permit Douglas to consolidate the two 80 acre parcels and subdivide out a 2 acre parcel which could be mortgaged by him to finance construction of a dwelling on it. Once certain conditions were met, Douglas would apply to consolidate the 2 acres into the quarter

section and re-subdivide it back to the two 80 acre parcels. It confirmed that despite how titles were registered, Calvin and Douglas would each have an undivided one-half interest in the Calmar Lands and to the Leduc Lands once consolidated. Upon re-subdivision of the Leduc Lands, Calvin would receive title to the north 80 acre parcel. [ 5 ] In 1999, Schiewe Farms went through difficult financial times and as a consequence the Calmar, Leduc and Southfork Parcels were listed for sale. The Southfork Parcel was sold and used to pay off some of the debts of Schiewe Farms with the balance retained by Schiewe Farms.

Grant says that it was agreed among them that in order to compensate him for the loss of the Southfork Parcel another parcel would be purchased once the finances of Schiewe Farms improved. Title to that property would be placed in Grant’s name alone.

Sometime after the Southfork Parcel was sold, Grant says it became apparent that it would be too expensive to acquire a parcel for him comparable to the Leduc Parcel or the Calmar Parcel and it was discussed and agreed that he would receive a one third interest in the Calmar and Leduc Parcels. [ 6 ] It is Grant’s evidence that Schiewe Farms made the mortgage payments and paid the taxes on the Calmar and Leduc Parcels when he joined the partnership and continued to make such payments until 2007 when the mortgages were fully paid.

Grant, who did the bookkeeping, says that the mortgage and property taxes paid were by way of additional distributions to Calvin and Douglas above what was paid to the other partners/shareholders. Calvin says that it was his understanding that amounts paid on the mortgage and property taxes reduced his other distributions.

Douglas didn’t seem to know how the amounts for the land were dealt with but subsequently by affidavit says that Grant did not get amounts equivalent to the amounts paid on the mortgages and taxes. [ 7 ] After the mortgages had been paid on the Calmar Parcel and the Leduc Parcel, applications are made to subdivide both those parcels. Copies of the Application(

s) for Subdivision submitted to the County of Leduc are attached to Grant’s affidavit. The County of Leduc rejected those applications and they were never completed. Also exhibited is a second application for the Leduc Parcel which would have seen those lands subdivided into four parcels. Grant says that three smaller parcels were to be held by each of Calvin, Douglas and Grant with the fourth and a larger parcel to be held in all of their names.

This second application has a stamp on it indicating it was conditionally approved by the Leduc County. [ 8 ] Calvin does not dispute that he signed the Subdivision Application for the Calmar Parcel. He does question the date on the applications but provides no insight as to what the proper date might be. Oddly, the second application for the Leduc Parcel is dated the same date as the first two applications.

Also, on June 30, 2008, Calvin granted a mortgage to secure a line of credit for the Schiewe Farms’ operations some two days before the date on the subdivision applications. [ 9 ] In response to Grant’s affidavit and questioning, Calvin filed a supplementary affidavit observing that Grant had been living on his father’s property since prior to 2009 and since 2009 has been residing in the 3000 square foot house which stands on the property. An application to subdivide this property was conditionally approved in December, 2011.

Calvin states that the intention was that Grant would get title to the subdivided portion of those lands and the home to equalize landholdings between all contributors to the farming operations, being his brothers, his father and himself. During questioning in the action, it was acknowledged by Grant that it was his father’s intention that he received the parcel subdivided out from his father’s land which in his parents’ eyes was a step towards equalization as between him and his brothers.

Grant also by way of supplementary affidavit has disclosed that his father has passed away and all of his father’s assets were bequeathed to his mother and that he would not be receiving any distribution of land or any other property from his estate. Discussion

[ 10 ] Calvin’s position is that the Memorandum of June 25, 1997 between him and Douglas governs in the circumstances. As I understand Douglas’s cross application if the allegations with respect to the one third interests are unsuccessful then Douglas agrees the Memorandum applies. Although the pleadings are not clear in this regard, Calvin’s counsel acknowledged that Douglas would have a one half interest in the Calmar Lands under the Memorandum.

In that context Calvin and Douglas appear not to be in disagreement, hence the application to dismiss the actions as between them. [ 11 ] Douglas describes the Memorandum with Calvin in his pleadings as expired. There is nothing in that Memorandum that would cause it to expire by its terms nor does Douglas specifically address what has occurred to cause it to expire. Grant and Douglas go on to take the position that the events and circumstances that transpired give rise to an oral Beneficial Ownership Agreement. Calvin says that no such agreement was ever made.

In that sense there is a direct conflict in the evidence between the parties. There is no doubt that there was much discussion among the brothers and their father about treating each of the sons equally. It also appears that a number of different steps were taken to achieve that end. Unfortunately none of these efforts resulted in accomplishing that objective. Indeed, it would seem most recently Art obtained provisional approval to subdivide his land to meet that objective.

As with all of the other attempts, it did not come to fruition. [ 12 ] There is a dispute as to whether or not Calvin and Douglas received unequal distributions in order to pay for the Leduc and Calmar Parcels. Accepting, without deciding, that Grant is correct in that regard, there appears to be a good argument that Grant may be entitled to compensation from Schiewe Farms and/or his brothers. [ 13 ] Over the years there were many “understandings” and no doubt the best of familial intentions to acquire similar landholdings for Grant.

The written agreements provide for ownership of the Leduc and Calmar Lands to be with Calvin and Douglas. Nothing in writing has been presented that would vest any legal or beneficial ownership with the Partnership, the farm Corporation or Grant. No financial statements or other books of record from the Partnership or farm Corporation are in evidence that might suggest some claim to ownership or even how or what distributions were made to the partners/shareholders or how they were to be treated.

Decision [ 14 ] Despite the events that took place, the evidence simply falls short of establishing an agreement or some form of proprietary estoppel entitling Grant to an interest in the Leduc and Calmar Lands. Based on the factual record before me I am satisfied that the claim that Calvin, Douglas and Grant each have a one third interest in the Leduc and Calmar Lands is bound to fail. As noted above Grant may well be entitled to compensation for the unequal distributions by the Partnership and the farm Corporation.

Limitations issues have been raised in that regard but I am not satisfied I can make that determination on the existing record. [ 15 ] Accordingly, I direct that the claim as it relates to the one third interest claimed in the Leduc and Calmar Lands by Grant and Douglas be dismissed. Given the state of the pleadings, I do not think it is appropriate to dismiss the action as between Calvin and Douglas. Douglas’s alternative claim shall remain.

In addition, the pleadings to the extent that Grant may be entitled to compensation for the extra payments made to Calvin shall not be dismissed although amendments will be necessary to re-structure the relief sought. [ 16 ] Calvin shall have one set costs for this application as against Grant and Douglas. Dated at the City of Edmonton, Alberta this 4th day of January, 2016. L.A. Smart M.C.C.Q.B.A. Appearances: Christopher G. Hoose Stillman LLP for the Applicant/Plaintiff/Defendant by Counterclaim Alisha Hurley Miller Thomson LLP for the Respondents/Defendants/Plaintiffs by Counterclaim