Markgraf v. Welker
2015 ND 303
| N.D. | 2015Background
- Plaintiffs Markgraf and Shanahan (descendants of Kathryn Nelson) sued Welker and Ostrem to quiet title to mineral interests conveyed in a 1965 grant deed to "Arnold Hannah, Trustee," alleging W.J. Hannah intended a family trust (resulting or constructive) with Arnold holding title for beneficiaries.
- Plaintiffs offered documents (deeds, letters, check register, leases) and affidavits showing Arnold managed the property, accounted for income/expenses, and made disbursements to family members.
- Defendants moved for summary judgment arguing the 1965 deed conveyed title to Arnold individually ("Trustee" surplusage under N.D.C.C. § 47-09-12), the trust claim fails, and the quiet title claim is time-barred by the 20-year statute.
- Plaintiffs cross-moved for summary judgment asserting clear and convincing evidence created an implied (resulting) trust when the deed was executed.
- The district court denied defendants’ evidentiary challenges, found the documentary statements admissible as evidence of intent (not hearsay), concluded a resulting trust existed, and granted plaintiffs’ summary judgment.
- The Supreme Court reversed and remanded, holding summary judgment was inappropriate because material factual inferences conflicted and the court improperly resolved credibility/inferences at summary judgment; evidentiary rulings were affirmed but issues of trust creation and statute of limitations require further factfinding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Admissibility of documentary evidence/affidavits | Documents and letters show outward manifestations of intent to create a trust and are admissible (not offered for truth but to show intent). | Many exhibits are inadmissible hearsay and lack foundation; attorney affidavit insufficient foundation. | Court correctly refused to strike: documents characterized as non-hearsay verbal acts and supplemented foundation via plaintiff's supplemental affidavit and interrogatory responses. |
| Existence of implied trust (resulting or constructive) | The 1965 deed to "Arnold Hannah, Trustee" and Arnold’s subsequent conduct (accounting, disbursements, leases signed "Trustee") show intent to create a resulting trust by clear and convincing evidence. | Deed unambiguously conveyed title to Arnold individually; letters by Arnold state "no trust" and show family agreed he could keep minerals as compensation; evidence is inconsistent and requires credibility determinations. | Reversed: summary judgment for plaintiffs was improper because reasonable, conflicting inferences exist; implied trust is a factual question requiring trial. |
| Whether trust was repudiated (statute of limitations) | Trustee possession is possession of beneficiaries; statute of limitations does not bar the action unless the trust was repudiated. | If Arnold and siblings agreed before 1985 that Arnold would keep minerals, that repudiation would start the 20-year limitations period. | Not decided on summary judgment. Applicability of N.D.C.C. § 28-01-04 depends on whether an implied trust existed and whether it was repudiated; remanded for factual resolution. |
| Appropriateness of summary judgment | Plaintiffs: undisputed record establishes trust; judgment correct. | Defendants: disputes in record require weighing and credibility; summary judgment improper. | Court: summary judgment inappropriate where material credibility/inference issues exist; remand for further proceedings or trial on the stipulated record. |
Key Cases Cited
- Hamilton v. Woll, 823 N.W.2d 754 (N.D. 2012) (standard of review and limits on summary judgment).
- McColl Farms, LLC v. Pflaum, 837 N.W.2d 359 (N.D. 2013) (affidavits must show personal knowledge and admissible facts for summary judgment).
- Moen v. Thomas, 627 N.W.2d 146 (N.D. 2001) (statements showing parties’ words/acts are verbal acts, not hearsay, when offered to prove those words were spoken).
- Spagnolia v. Monasky, 660 N.W.2d 223 (N.D. 2003) (distinguishing resulting and constructive trusts; resulting trust based on outward manifestations of intent).
- McGhee v. Mergenthal, 735 N.W.2d 867 (N.D. 2007) (implied trust must be proved by clear and convincing evidence).
- Schroeder v. Buchholz, 622 N.W.2d 202 (N.D. 2001) (elements of constructive trust: unjust enrichment and confidential relationship).
- James v. Griffin, 626 N.W.2d 704 (N.D. 2001) (application of the 20-year limitations provision to quiet title claims).