August 22, 1980

Mr. John M. Sieh, Chairman 
Oahe Conservancy Subdistrict Board 
Post Office Box 1985 
Aberdeen, South Dakota 57401

Official Opinion No. 80-57

SDCL 46-18-13:  Shareholder of Family Farm Corporation as Landowner

Dear Mr. Sieh:

You have requested an official opinion from this office in regard to the following factual situation:

FACTS: 

This year six director positions are up for election on the Oahe Conservancy Subdistrict Board of Directors.  Pursuant to SDCL 46-18-14 it is the duty of the Subdistrict Board of Directors to certify the nominations of candidates to the respective county auditors in the director areas. Pursuant to SDCL 46-18-13 the 'candidate for director shall be an owner of real property in the director area he is to represent if elected.' 

Each prospective candidate was requested to furnish to the Subdistrict the legal description of one parcel of land that he owned in the director area. These legal descriptions were checked with the appropriate county officials. It has come to our attention that one prospective candidate, X, who has filed a nominating petition for director area 4 comprised of rural Edmunds and Walworth Counties, is a shareholder in a family farm corporation.  X does not own any other real property in the director area.

Based on the above facts, you have asked the following question:

QUESTION: 

Is a shareholder of a family farm corporation an 'owner of real property'  pursuant to SDCL 46-18-13?

SDCL 46-18-13 provides: 

The district board shall fix the number not to exceed eleven members and shall fix the qualifications of the subdistrict board to effect an equitable representation within the subdistrict.  Each candidate for director shall be an owner of real property in the director area he is to represent if elected.

In a strict legal sense, it is the corporate entity of which X is a shareholder which owns fee simple title to the real property. Nevertheless, it is my opinion that X qualifies as an 'owner of real property' within the meaning of SDCL 46-18-13.

Statutory provisions relating to elections must be interpreted and construed in accordance with the purpose for which they were enacted.  29 C.J.S. Elections, §  7(4), p. 44.  Election law should be interpreted to 'secure the rights of duly qualified electors and not to defeat them.'  29 C.J.S. Elections, §  7(4), p. 45.  In my opinion an overly strict interpretation of the term 'owner' would be 'directly subversive of the policy of the act.'  Cf., Black Hills Mining Corp., 68 S.D. 79, 298 N.W. 677, 679 (1941).  The underlying policy of SDCL 46-18-13 is 'to place the ultimate power and responsibility of determining all questions of policy affecting the irrigation districts upon the owners of the agricultural and horticultural lands therein.'  Cf., People v. Milin, 89 Col. 556, 5 P.2d 249, 253 (1931).  It  cannot be disputed that a shareholder in a family farm corporation who is actively engaged in the farm operation is as vitally interested in the questions of policy which will be determined by the subdistrict board as is a neighbor who owns property in fee simple.

The South Dakota Family Farm Act is drafted in such a way as to insure that shareholders have a vital interest in the farming operation being operated on the land held by the corporation: 

As used in this chapter, unless the context otherwise plainly requires,  'family farm corporation' means a corporation founded for the purpose of farming and the ownership of agricultural land in which the majority of the voting stock is held by the majority of the stockholders who are members of a family related to each other within the third degree of kindred, and at least one of whose stockholders is a person residing on or actively operating the farm, and none of whose stockholders are corporations; . . . SDCL 47-9A-14.

Since the Legislature refers to the characteristic of ownership when defining a family farm corporation, I believe that an interpretation allowing a shareholder in a family farm corporation to be a landowner under SDCL 46-18- 13 is consistent with the policy underlying the statute, and is the favored interpretation since it will not defeat the rights of otherwise qualified electors and candidates.  This interpretation is not unprecedented, since it  has been held that ownership of shares in a farm corporation is equivalent to ownership of an interest in real property.  E.g., Frick v. Webb, 281 F. 407 (D.C. Cal. 1922), aff'd.  363 U.S. 326, 44 S.Ct. 115, 68 L.Ed. 323 (1923); See generally, Anno., Scope and Import of Term 'Owner' in Statute Relating to Real Property, 95 A.L.R. 1085.

Based on the foregoing it is my opinion that a farmer who holds shares in a family farm corporation organized pursuant to SDCL 47-9A qualifies as an 'owner of real property' under SDCL 46-18-13 and that X's petition may therefore be certified by the board pursuant to SDCL 46-18-14.

Respectfully submitted,

Mark V. Meierhenry
Attorney General