Finstad v. Gord
2014 ND 72
| N.D. | 2014Background
- John and Lorie Finstad owned 400 acres in Ransom County and borrowed from Beresford Bancorporation; after foreclosure began they entered Chapter 12 bankruptcy and a settlement approved by the bankruptcy court.
- On December 30, 2005 the Finstads executed and delivered a recorded quitclaim deed to Beresford that conveyed “all of [the Finstads’] rights, title and interest” in the property.
- The Gords later loaned the Finstads money, received a mortgage and a June 7, 2006 quitclaim deed from the Finstads, and asserted a second mortgage.
- Beresford sent default notices and ultimately executed a quitclaim deed to the Gords in November 2008 after the Gords agreed to pay off Beresford’s mortgage balance.
- The Finstads sued in 2012 seeking quiet title and damages; the district court granted summary judgment dismissing Beresford and later granted summary judgment to the Gords, declaring the Gords owners.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Finstad→Beresford quitclaim deed was a conveyance of title or merely security (equitable mortgage) | Finstad: deed was part of a larger settlement and intended only as security; not an absolute transfer | Gord/Beresford: deed was absolute, delivered and recorded, conveying all rights | Court: deed was clear and unambiguous; delivery vested title in Beresford as written |
| Whether parol evidence may be used to show the deed was intended as security | Finstad: parol evidence admissible because deed is part of a mass of documents and ambiguous as to intent | Gord/Beresford: parol evidence barred by the parol evidence rule because deed is unambiguous | Court: parol evidence inadmissible — the unambiguous delivered deed governs |
| Whether an equitable mortgage should be recognized as against a subsequent purchaser (notice to third parties) | Finstad: equitable mortgage recognized (cites Myers) | Gord: third-party purchasers rely on recorded deed; unambiguous deed gives no constructive notice of an equitable mortgage | Court: equitable mortgage doctrine does not defeat an unambiguous recorded conveyance to a third party lacking notice; public may rely on record title |
| Whether the Finstads have standing to challenge the Beresford→Gord deed | Finstad: they assert mistake/accident and seek to void the later deed | Gord: Finstads no longer have any estate or interest after the Finstad→Beresford deed; thus no standing | Court: Finstads lack standing because they no longer have an interest in the property; challenge to Beresford→Gord deed dismissed |
Key Cases Cited
- Myaer v. Nodak Mut. Ins. Co., 812 N.W.2d 345 (N.D. 2012) (parol evidence rule and when extrinsic evidence may be considered)
- Bolyea v. First Presbyterian Church, 196 N.W.2d 149 (N.D. 1972) (delivery of a deed vests title when delivery is absolute)
- Estate of Duemeland, 528 N.W.2d 369 (N.D. 1995) (intent and legal consequences of conveyed interests)
- Schulz v. Hauck, 312 N.W.2d 360 (N.D. 1981) (recorded, unambiguous conveyance does not put third parties on notice of outside claims)
- Basin Elec. Power Coop. v. Miller, 310 N.W.2d 715 (N.D. 1981) (public entitled to rely on record title)
- Myers v. Eich, 720 N.W.2d 76 (S.D. 2006) (equitable mortgage analysis — cited by plaintiffs but distinguishable)