875 N.W.2d 510
N.D.2016Background
- Dispute over mineral interests in 160 acres in McKenzie County originally derived from conveyances by Elmer Benson to five grandchildren, including John Benson and Ann Kemske.
- In 1990 the Kemskes executed a deed quitclaiming their interest in the 160 acres to Thomas Benson; that deed was not recorded until April 9, 2012.
- In 2005 a recorded "statement of claim of mineral interest" (executed by Thomas Benson as power of attorney for several owners) was on the title records addressing ownership of the minerals.
- On April 15, 2010, Ann Kemske executed and Family Tree recorded a mineral deed (May 12, 2010) conveying her mineral interests (including the disputed interest) to Family Tree; Family Tree then conveyed part to Desert Partners (recorded June 2, 2010).
- Desert Partners and Family Tree sued to quiet title in January 2013; district court granted summary judgment to plaintiffs, but this Court reversed and remanded for procedural notice defects, then on remand the district court again granted summary judgment to plaintiffs; John Benson appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs were good-faith purchasers for value under pre-2013 N.D.C.C. § 47-19-41 | Family Tree/Desert Partners: they recorded the 2010 mineral deeds without actual notice of the unrecorded 1990 Kemskes→Thomas deed and thus are protected as subsequent purchasers for value | John Benson: plaintiffs had constructive notice because the 2005 recorded statement of claim should have prompted inquiry; therefore Family Tree was not a good-faith purchaser | Court: Reversed — existence of the 2005 recorded statement of claim raised a duty to inquire, creating genuine issues of material fact about good faith and constructive notice; summary judgment inappropriate |
| Whether constructive notice arises from the 2005 recorded statement of claim | Plaintiffs: no actual knowledge of the 1990 deed, and record did not show the unrecorded deed | Benson: the 2005 statement of claim was of record and imposed duty to investigate ownership | Court: The recordation of the 2005 statement provided constructive notice that imposed a duty of inquiry on Family Tree; issues of fact remain |
| Whether district court should have granted defendant’s motion for summary judgment on equitable grounds | Benson: equitable relief should favor him because plaintiffs lacked good faith | Plaintiffs: equitable relief unnecessary if they are good-faith purchasers | Court: Denied — equitable claim depended on the same factual dispute about good faith, so summary judgment was improper |
| Whether judgment improperly quieted title in fee simple to entire 160 acres | Plaintiffs: sought to quiet title to the mineral interests they acquired (not necessarily fee simple to entire 160 acres) | Defendants: judgment might be overbroad | Court: Noted the judgment appeared broader than plaintiffs’ claim and remanded for further proceedings |
Key Cases Cited
- Tibert v. Nodak Mut. Ins. Co., 816 N.W.2d 31 (N.D. 2012) (summary judgment standards)
- Myaer v. Nodak Mut. Ins. Co., 812 N.W.2d 345 (N.D. 2012) (summary judgment standards)
- Riedlinger v. Steam Bros., Inc., 826 N.W.2d 340 (N.D. 2013) (summary judgment and reasonable inferences)
- Farmers Union Oil Co. v. Smetana, 764 N.W.2d 665 (N.D. 2009) (good-faith purchaser and summary judgment principles)
- Swanson v. Swanson, 796 N.W.2d 614 (N.D. 2011) (failure to make inquiry forfeits good-faith purchaser protection)
- Erway v. Deck, 588 N.W.2d 862 (N.D. 1999) (constructive notice via inquiry doctrine)
- First Nat’l Bank v. Big Bend Land Co., 164 N.W. 322 (N.D. 1917) (record of instrument is notice of its contents)
- Wheeler v. Southport Seven Planned Unit Dev., 821 N.W.2d 746 (N.D. 2012) (record notice principles)
- Bangen v. Bartelson, 553 N.W.2d 754 (N.D. 1996) (record notice principles)