Stenehjem, ex rel. v. National Audubon Society, Inc., 844 N.W.2d 892

Background

National Audubon Society (Audubon) purchased a 263-acre tract in Stutsman County in 1988 and recorded the deed; since then the land has been used primarily for conservation and enrolled in conservation programs, with a portion leased for hay.
North Dakota’s Corporate Farming Law (N.D.C.C. ch. 10-06.1) generally prohibits corporate ownership of farmland but contains a nonprofit exception requiring earlier incorporation/registration dates that Audubon did not meet.
The Attorney General learned of potential violations while litigating a separate enforcement action (Stenehjem v. Crosslands) and, after a tolling agreement, sued Audubon in 2009 — over 20 years after the 1988 purchase.
Audubon raised affirmative defenses including laches, statute of limitations, estoppel, waiver, and also challenged the statute’s constitutionality; the district court dismissed the State’s enforcement action on laches and preserved the statute’s constitutionality for potential later review.
The North Dakota Supreme Court affirmed, holding laches may be asserted against the State in narrow circumstances and, on these facts, laches barred the State’s divestiture claim; the court declined to reach Audubon’s constitutional challenges.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether laches can be asserted against the State in a sovereign enforcement action	Laches should not apply to the State, or if it does it should be extremely limited as with estoppel	Laches is available against the State in limited, case-by-case circumstances where equity requires it	Laches is not absolutely barred; it may be applied narrowly against the State after weighing inequities vs. public interest
Whether laches barred this suit given the delay (notice, prejudice, and changes in position)	Long delay notwithstanding, enforcement of public rights should not be defeated; the State contends it lacked timely notice and should be permitted to vindicate the statute	Audubon argued the 20+ year delay, improvements, and reliance (recorded deed, taxes paid, habitat restoration) would cause prejudice if divestiture were ordered	Court held laches applicable: the 20-year delay and prejudice from forced divestiture outweigh public interest here
Whether presumptions of official notice (recorder transmitted deed; AG performed duty) cancel each other and affect laches notice element	State argued affidavits show routine noncompliance and that presumptions were rebutted, so AG lacked notice	Audubon argued recorder’s recording gives a presumption the document was transmitted and AG’s delay rebutted presumption that AG regularly performed enforcement duties	Court found recorder’s duty presumptively performed and AG’s duty rebutted by long delay; notice/evidence of awareness in 2005 supports laches finding
Whether the court should decide Audubon’s constitutional challenges to ch. 10-06.1	State urged consideration to support enforcement powers	Audubon cross-appealed asserting Commerce Clause and Equal Protection violations	Court declined to decide constitutionality because laches provides an alternative dispositive ground

Key Cases Cited

State v. Crosslands, Inc., 782 N.W.2d 632 (N.D. 2010) (background enforcement litigation and policy context for corporate farming law)
Blocker Drilling Canada, Ltd. v. Conrad, 354 N.W.2d 912 (N.D. 1984) (equitable estoppel may be applied against the government in rare, case-by-case circumstances)
A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020 (Fed. Cir. 1992) (distinguishing laches from equitable estoppel and articulating laches factors)
State v. J.P. Lamb Land Co., 401 N.W.2d 713 (N.D. 1987) (corporate farming statute history and continuing obligation analysis)
Williams Cnty. Soc. Servs. Bd. v. Falcon, 367 N.W.2d 170 (N.D. 1985) (laches requires prejudice from delay; not applied where facts do not show undue prejudice)
Bakken v. Duchscher, 827 N.W.2d 17 (N.D. 2013) (laches is generally a fact question reviewed for clear error)