374 P.3d 580
Idaho2016Background
- In 2003 the Knapps leased land to Lockridge (assigned to Canyon Outdoor) for a billboard and separately sold Canyon Outdoor an easement for a $12,000 lump sum; neither the lease nor the easement contained a legal description or were recorded. Canyon Outdoor built the sign in 2003.
- In 2006 the Knapps sold the property to Tiller; the warranty deed was unrestricted and a title policy did not disclose any easement. Tiller reviewed the lease but did not see a recorded easement.
- Tiller testified he believed the lump sum was prepayment of the lease and that he had no knowledge of a separate easement until Canyon Outdoor faxed the easement to him in 2013.
- Canyon Outdoor argued Tiller had constructive notice (or actual notice) because the lease referenced a lump-sum option to sell a permanent easement and the Knapps mentioned a lump sum; thus the easement should bind Tiller despite nonrecording.
- The district court granted summary judgment for Tiller, finding the easement unrecorded and Tiller lacked actual or constructive notice and had conducted a reasonable investigation; the Idaho Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument (Tiller) | Defendant's Argument (Canyon Outdoor) | Held |
|---|---|---|---|
| Whether an unrecorded easement is enforceable against a subsequent purchaser who bought in good faith for value | Tiller: The easement was unrecorded; he had no actual or constructive notice and conducted a reasonable investigation, so he took title free of the easement under I.C. §§55-606/55-812 | Canyon Outdoor: Knowledge that the Knapps received a lump sum plus lease language about a lump-sum easement option put Tiller on inquiry notice; he should have further investigated and thus is not a BFP | Court: Affirmed — easement unenforceable against Tiller because he lacked actual/constructive notice and conducted a reasonable investigation |
| Whether Tiller had constructive notice from vendors’ statements and lease language | Tiller: The vendor told him lump sum was prepayment; he had the lease, an unrestricted deed, and a title policy showing no encumbrances | Canyon Outdoor: The lease’s lump-sum easement clause plus the Knapps’ statements should have prompted inquiry and put Tiller on notice | Court: The facts reasonably support inference Tiller was not on notice; mere mention of a lump sum without an easement document did not establish constructive notice |
| Whether Tiller conducted a reasonable investigation of title | Tiller: He reviewed the lease, obtained a warranty deed and title policy, and reasonably relied on those | Canyon Outdoor: Tiller should have contacted Canyon Outdoor or otherwise investigated beyond the vendor’s statements | Court: Reasonable investigation is fact-specific; given deed, title policy, and vendor statements, Tiller’s investigation was reasonable |
| Whether Canyon Outdoor should receive appellate attorney fees | Canyon Outdoor: Seeks fees under I.C. §12-121 | Tiller: Opposes; not prevailing party sought fees | Court: Denied — Canyon Outdoor is not the prevailing party; each side bears its own fees |
Key Cases Cited
- Benz v. D.L. Evans Bank, 152 Idaho 215, 268 P.3d 1167 (Idaho 2012) ("good faith" under recording statutes requires actual or constructive knowledge)
- W. Wood Investments, Inc. v. Acord, 141 Idaho 75, 106 P.3d 401 (Idaho 2005) (purchaser who fails to investigate open and obvious claims cannot act in good faith)
- Langroise v. Becker, 96 Idaho 218, 526 P.2d 178 (Idaho 1974) (good faith requires a reasonable investigation of the property)
- Shawver v. Huckleberry Estates, L.L.C., 140 Idaho 354, 93 P.3d 685 (Idaho 2004) (standard for reviewing cross-motions for summary judgment)
- Wood v. Simonson, 108 Idaho 699, 701 P.2d 319 (Idaho Ct. App. 1985) (purchaser cannot rely solely on vendor when circumstances would cast suspicion and require further inquiry)