482 N.W.2d 626 | N.D. | 1992
Russell L. KIKER, Jr., Plaintiff and Appellee,
v.
William D. WALTERS, Sr., and Imperial Oil of North Dakota, a North Dakota corporation, Defendants and Appellants,
Lillian Y. Walters, William D. Walters, Jr., Carrie Smith, Robert T. Smith, Lillian Walters Kaiser, Marvin L. Kaiser, Leo Kaiser, Selina Kaiser, Duane C. Petersen, Defendants.
Duane C. PETERSEN, Plaintiff,
v.
Russell L. KIKER, Defendant.
Supreme Court of North Dakota.
*627 Vogel, Brantner, Kelly, Knutson, Weir & Bye, Ltd., Fargo, for plaintiff and appellee Russell L. Kiker, Jr., argued by Steven A. Johnson. Appearance by Kermit E. Bye.
Dorsey & Whitney, Minneapolis, Minn., for defendants and appellants William D. Walters, Sr., and Lillian Y. Walters; argued by Roger J. Magnuson.
Winkjer, McKennett, Stenehjem, Trotter & Reierson, Williston, for defendants and appellants Imperial Oil of North Dakota, William D. Walters, Jr., Carrie Smith, and Robert T. Smith; argued by Mark L. Stenehjem.
*843 Lawrence D. DuBois (argued), of Fleming, DuBois & Trenbeath, Cavalier, for plaintiff, appellant, and cross-appellee.
David L. Petersen (argued), of Dahl, Greenagel, Currie & Petersen, Grafton, for defendants, appellees, and cross-appellants.
ERICKSTAD, Chief Justice.
William D. Walters, Sr., and Imperial Oil of North Dakota have appealed from the judgment entered in an interpleader action brought by Russell L. Kiker, Jr. We reverse in part, affirm in part, and remand.
Kiker brought an interpleader action against Walters, Imperial, and others. The complaint alleged, among other things: (1) The parties are "owners in common of certain mineral interests and oil and gas properties", the record title to which is in Kiker's name; (2) Kiker collected income from the properties and distributed it to the parties pursuant to various oral agreements; (3) Disputes arose between the parties in 1987; (4) In 1988, Kiker stopped distributing the income and began placing it in a savings account, which he "will deposit with the Court at its request to be properly invested until this matter is resolved"; (5) The defendants have made conflicting claims to the undistributed income and to the underlying properties; (6) Kiker is in doubt as to what amount of income should be distributed to each party and as to how the properties should be conveyed to the parties; and (7) Kiker brought the action to settle claims of the parties to the undistributed income and to the underlying properties "and thereafter to absolve himself from any liability for any such claims, or other matters that pertain thereto." The complaint sought as relief:
"1. That the defendants be required to interplead and settle among themselves and with the plaintiff their rights in the undistributed royalty and mineral income and their rights in the various properties;
* * * * * *
"3. That thereafter, the plaintiff be generally discharged and released from all liability and from any claims arising out of the distribution of the royalty and mineral income and the various properties;
* * * * * *
"5. That plaintiff be granted such other and further relief as the Court deems just and equitable."
Imperial and Walters each answered, counterclaimed for an accounting, and demanded a jury trial. The trial court struck the demands for jury trial. Imperial, supported by Walters, sought an order "excluding from the trial of this action any evidence relating to ownership of the Lillian Glovatsky minerals or lease or the responsibilities relating to such ownership." In its brief in support of that motion, Imperial asserted: (1) Kiker was asserting that Imperial and Walters owned "an interest in minerals known as the Lillian Glovatsky minerals"; (2) "Neither Imperial Oil, Mr. Walters nor any [of] the other defendants have claimed any interest in these minerals"; and (3) The Glovatsky minerals are the basis of a separate lawsuit seeking to quiet title to the Glovatsky minerals. The latter assertion is undisputed. The trial court denied the motion.
Kiker requested Walters and Imperial to admit the following:
"1. Exhibit A attached hereto accurately reflects your ownership interest in the mineral interests described therein.
"2. That as the equitable owner of the mineral interests described in Exhibit A, you should be held responsible and agree to indemnify Russell L. Kiker for any future liabilities which may arise which are directly related to ... your ownership interests, including, but not limited to, severance taxes, income taxes, and oil company adjustments."
*628 Exhibit A described numerous assignments of oil and gas leases, overriding royalty assignments, and deeded mineral interests. Walters and Imperial admitted ownership of almost all the properties asserted to be owned by them and to their responsibility for certain expenses and tax obligations associated with their ownership of the properties. Neither Walters nor Imperial admitted any ownership interest in the Glovatsky minerals.
At trial, the parties agreed on the ownership of all the properties in issue except the Glovatsky minerals and agreed on an accounting and apportionment of the undistributed funds, except for those attributable to the Glovatsky minerals. The trial court determined the ownership of all the properties in issue, except the Glovatsky minerals, in accordance with the parties' stipulation. The court determined that Imperial was the owner of the Glovatsky minerals in issue in this case. The court apportioned the undistributed income to the parties according to their ownership of the royalty and mineral interests in issue and held that the owners of the royalty and mineral interests are responsible for liabilities arising out of their ownership of the properties and must indemnify Kiker "for any future liabilities which may arise which are directly related to their ownership interests including, but not limited to, severance taxes, income taxes, and oil company adjustments." Judgment was entered accordingly.
Imperial and Walters appealed, contending that the trial court erred in determining the ownership of the Glovatsky minerals in this interpleader action. Imperial also contends that the trial court erred in denying its request for a jury trial.
Interpleader, whether pursuant to statute[1] or rule,[2] is a device for resolving multiple adverse claims to a fund or liability in one proceeding. It originated as a device by which a defendant could "protect himself from double vexation upon a single liability." 7 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d, § 1701 (1986). "Rule 22 provides interpleader to dispose of the awkward situation where multiple claims are made against one party so that he might be exposed to double or multiple liability." L. Bucklin, Civil Practice of North Dakota, Commentary, Rule 22, N.D.R.Civ.P. (1991 Rev.). Interpleader "allows a stakeholder who is uncertain if and to whom he is liable for money or property held by him to join those who are or might assert claims against him." 7 Wright, Miller & Kane, supra, § 1702. It "is a proceeding whereby the rights of rival claimants to a fund or property held by a third person having no interest therein may be adjudicated." 45 *629 Am.Jur.2d, Interpleader § 1 (1969). Interpleader may also be used to protect the individual claimants when their claims exceed the fund available. State Farm Fire & Casualty Co. v. Tashire, 386 U.S. 523, 87 S. Ct. 1199, 18 L. Ed. 2d 270 (1967).
"A basic jurisdictional requirement of statutory interpleader is that there be adverse claimants to a particular fund." Indianapolis Colts v. Mayor and City Council of Baltimore, 741 F.2d 954, 956 (7th Cir.1984), cert. denied, 470 U.S. 1052, 105 S. Ct. 1753, 84 L. Ed. 2d 817 (1985). See also Libby, McNeill, and Libby v. City Nat'l Bank, 592 F.2d 504 (9th Cir.1978); Gaines v. Sunray Oil Co., 539 F.2d 1136 (8th Cir.1976). "Where there is no adverseness among the claimants an interpleader action will not lie." 21 Federal Procedure, L.Ed. § 49:4 (1984). There must be exposure to multiple liability. Id.; 7 Wright, Miller & Kane, supra, § 1704. A prerequisite for interpleader is two or more claimants adverse to each other. 7 Wright, Miller & Kane, supra, § 1705; 45 Am.Jur.2d, Interpleader § 7 (1969). The requirement of adverse claimants "is not met where only one claimant asserts a claim to a fund and the other claimants disclaim any such interest." 21 Federal Procedure, L.Ed. § 49:4 (1984). An interpleaded party whose pleading effectively disclaims any interest in the property or fund in issue has "pleaded himself out of court." Dupeck v. Union Ins. Co., 216 F. Supp. 487, 492 (E.D.Mo.1962). Where all but one of two or more claimants withdraws or disclaims any interest in the interpleaded property, there is no risk of multiple liability and interpleader is inappropriate. Dallas Bank & Trust Co. v. Commonwealth Dev. Corp., 686 S.W.2d 226 (Tex.App.1984); 3A Moore's Federal Practice, ¶ 22.08[1].
As the foregoing authorities illustrate, interpleader is appropriate only if there are two or more adverse claimants asserting interests in the fund or property held by the stakeholder. One claimant is insufficient. Withdrawal or disclaimer by all but one claimant renders interpleader inappropriate. Section 32-11-02, N.D.C.C., and Rule 22(a), N.D.R.Civ.P., both specifically require the presence of multiple adverse claimants for interpleader.[3] Section 32-11-02, N.D.C.C., requires that there be "two or more persons" claiming "the whole or any part of the same money, personal property, or effects" in the possession or control of another person and that their rights be "adverse to the right of any other claimant." Rule 22(a), N.D.R.Civ.P., requires that there be more than one person with "claims against the plaintiff" and that their claims be "such that the plaintiff is or may be exposed to double or multiple liability." Here, both Imperial and Walters disclaimed any interest in the Glovatsky minerals. There were no adverse claimants to the Glovatsky minerals and Kiker was not exposed to double or multiple liability. We therefore conclude that interpleader was not authorized as to the Glovatsky minerals.
The fact that, as asserted by Kiker, "[t]he scope of this action involved more than a claim for interpleader," did not authorize the trial court to determine the ownership of the Glovatsky minerals, in which Imperial and Walters disclaimed any interest and as to which interpleader was improper. "[I]nterpleader ... cannot be used to solve all the vexing problems of multiparty litigation arising out of a mass tort. But interpleader was never intended to perform such a function, to be an all-purpose `bill of peace.'" State Farm Fire & Casualty Co. v. Tashire, supra, 386 U.S. at 535, 87 S. Ct. at 1206, 18 L.Ed.2d at 278. "[I]nterests of party convenience and judicial economy that would be served by trial of all claims in a single proceeding `cannot compel the otherwise inappropriate joinder of claims in interpleader.'" Libby, McNeill, and Libby v. City Nat'l Bank, supra, 592 F.2d at 509 (quoting Gaines v. Sunray Oil Co., supra, 539 F.2d at 1142). An interpleader action is not the proper *630 vehicle for determining the ownership of property in which the defendants disclaim any interest. Cf. State v. Brakke, 474 N.W.2d 878, 882 (N.D.1991) ("A criminal theft trial is not the proper vehicle for resolving property law questions of this nature."). "When we consider all the peculiarities of this case" [Federal Savings & Loan Ins. Corp. v. Albrecht, 379 N.W.2d 266, 269 (N.D.1985) ], we believe that, "in the interests of justice" [State v. Robideaux, 475 N.W.2d 915, 916 (N.D.1991)], the ownership of the Glovatsky minerals at issue in this case would be more appropriately determined in the separate pending lawsuit in which persons who are not parties in this action are seeking to quiet title to the Glovatsky minerals. We conclude that the trial court erred in determining the ownership of the Glovatsky minerals in this interpleader action.
Because of our conclusion that interpleader was not authorized as to the Glovatsky minerals, we need not address the issue of the trial court's denial of Imperial's request for a jury trial. "Questions, the answers to which are not necessary to the determination of a case, need not be considered." Hospital Services, Inc. v. Brooks, 229 N.W.2d 69, 70 Syllabus ¶ 3 (N.D.1975).
The judgment is reversed with respect to the Glovatsky minerals, affirmed in all other respects, and the matter is remanded for the entry of amended findings, conclusions, and judgment.
VANDE WALLE, J., and DOUGLAS B. HEEN, Surrogate Judge, concur.
DOUGLAS B. HEEN and VERNON R. PEDERSON, Surrogate Judges, sitting due to the disqualifications of LEVINE and GIERKE, JJ., members of this Court when this case was heard. Justice JOHNSON not being a member of this Court at the time this case was heard did not participate in this decision.
MESCHKE, Justice, dissenting.
I respectfully dissent. The majority opinion's conclusion, "that interpleader was not authorized as to the Glovatsky minerals", is puzzling.
Precedent from the federal court system is not apt to frame the jurisdiction of our trial courts. The power of federal trial courts is dependent upon Congressional dispensation. United States Constitution, Art. 3, § 1 ("The judicial power of the United States shall be vested ... in such inferior courts as the Congress may from time to time ordain and establish.")
Only the jurisdiction of the Supreme Court is derived directly from the Constitution. Every other court created by the general government derives its jurisdiction wholly from the authority of Congress. That body may give, withhold or restrict such jurisdiction at its discretion, provided it be not extended beyond the boundaries fixed by the Constitution. The Constitution simply gives to the inferior courts the capacity to take jurisdiction in the enumerated cases, but it requires an act of Congress to confer it.
Kline v. Burke Construction Co., 260 U.S. 226, 43 S. Ct. 79, 82-83, 67 L. Ed. 226 (1922). (Citations omitted.) Unlike the controlled jurisdiction of federal courts, the power of our state trial courts is fundamentally different.
A North Dakota trial court is vested with "original jurisdiction of all causes, except as otherwise provided by law...." North Dakota Constitution, Art. VI, § 8. See NDCC 27-05-06. Rudnick v. City of Jamestown, 463 N.W.2d 632, 636 (N.D. 1990): "The constitutional grant of original jurisdiction to the district court creates a court of general jurisdiction with the power to determine all controversies which can possibly be made the subject matter of civil action."
The difference between the constitutional structures of the federal and state trial courts necessitates different analyses of their distinct powers. Those differences make it fundamentally wrong to "look to relevant federal case law construing the federal rule [22, F.R.Civ.P., on interpleader] for guidance in construing our own rule" about interpleader, as the majority opinion does. See note 2 in the majority opinion.
*631 "These rules shall not be construed to... limit the jurisdiction of the district court of North Dakota...." NDRCivP 82. "There shall be one form of action to be known as `civil action'." NDRCivP 2. Under NDRCivP 8(a), no label is required, but only "a short and plain statement of the claim". "Relief in the alternative or of several different types may be demanded." Id.
Interpleader is an equitable remedy, not solely dependent on formulation by statute or by rule. 45 Am.Jur.2d Interpleader § 1, p. 433 (1969). See also 45 Am.Jur.2d Interpleader §§ 21, 22 p. 448-451, (1969) on state and federal statutory interpleader. That Kiker labeled his pleading "Complaint for Interpleader and Petition for Permission to Deposit Funds with Clerk of the District Court" does not warrant the majority's facile conclusion that "the trial court erred in determining the ownership of the Glovatsky minerals in this interpleader action." We are long past the formula and label pleading stage of the common law. In addition, besides seeking to deposit funds, Kiker also sought to confirm his accounts and to obtain indemnity for contingent liabilities.
Viewing the evidence in the light most favorable to the trial court's findings, as we should, we know that, in late 1976, Russel L. Kiker Jr., Marvin L. Kaiser, William D. Walters Sr., and Duane Peterson formed a group to invest in oil and gas interests in the Williston Basin. They agreed to keep the existence of the group confidential. Although profits were to be split, all purchases would be made in Kiker's name. Shares varied, depending on contributions of capital to each acquisition.
Though his role was not publicly known, Walters Sr. was the leader and coordinator. The venture was vastly successful in investing in interests that became valuable, winding up with six assignments of oil and gas leases, six overriding royalty assignments, and twenty-two mineral deeds of varying amounts of mineral acres, many producing. The parties to this lawsuit, other than the four original members of the group, all received their interests through assignments by one of the group of four. Thus, Imperial Oil, Lillian Walters, William Walters Jr., Lillian Kaiser, Carrie Smith, and Robert Smith all received their interests from Walters Sr.
In January 1977, pursuant to instructions from Walters Sr., Kiker, on behalf of himself, Kaiser, and Walters Sr., (but not Peterson), purchased 20 mineral acres in Dunn County from Pete and Lillian Glovatsky, that later became part of the prolific Little Knife field. On the same date, per instructions from Walters Sr., Kiker leased the minerals to Target Energies, Inc., a corporation solely owned by Kaiser. Until recently, record title to these Glovatsky minerals remained in Kiker's name, and record title to the lease remained in Target's name.
After oil development began in 1979, Kiker distributed the oil proceeds from these Glovatsky minerals to himself, 37.5 percent; to Imperial (Walters Sr.'s assignee), 37.5 percent; and to Kaiser, 25 percent. Walters Sr. was the major stockholder and president of Imperial through November of 1988. Similarly, Kiker, Kaiser, and Walters Sr., through Imperial, each received one-third of the proceeds from the Target lease of these Glovatsky minerals. Quarterly, Kaiser prepared an accounting of the income from the Glovatsky minerals and lease, and delivered it, along with disbursement checks, to himself, Kiker, and Walters Sr. From 1979 through 1987, Walters Sr. and Imperial received and accepted over $600,000 solely from the Glovatsky minerals and lease.
Shortly after the Target lease of the Glovatsky minerals was recorded, a dispute arose with the William Herbert Hunt Trust Estate, which claimed priority of its unrecorded oil and gas lease from Glovatsky, dated July 22, 1972. According to Kiker and Kaiser, Walters Sr. had spent many days coaching and instructing Kiker and Kaiser about how to testify at their depositions and in the 1977 trial. As a result of the trial and the subsequent appeal, Target was held to be a bona fide purchaser for value. Hunt Trust Estate v. Kiker, 269 N.W.2d 377 (ND 1978). Target's lease was *632 deemed to have priority over the Hunt lease, and Kiker's group greatly benefitted from the oil development that followed.
In 1987, Kiker attempted to get Walters Sr. to join in a disclosure to Hunt, but Walters Sr. did not respond to these attempts. Then, Kiker and Kaiser approached Hunt. They admitted to Hunt that they had given false testimony about their business relationship at the 1977 trial, and they divulged the involvement of Walters Sr. and Imperial. In late 1988, Kiker and Kaiser settled with Hunt by each paying Hunt $305,500, and by transferring to Hunt their entire interest in the Target lease. In addition, though Hunt had no claim to the minerals, Kiker and Kaiser transferred to Hunt their combined 62.5 percent interest in the Glovatsky minerals. In exchange, Hunt released and discharged Kiker and Kaiser from any further liability for the Glovatsky debacle.
Before commencing this action, Kiker unsuccessfully sought to dissolve the group and to transfer record ownership of the properties, all still in Kiker's name, to the rightful owners. As part of that effort, in 1988, Kiker ceased distributing the income from the properties, and he placed the income in a separate interest-bearing account for the benefit of the owners. Because Kiker was unable to get everyone to agree, particularly Walters Sr. and his assignees, to indemnify him for liabilities for severance taxes, income taxes, and oil company adjustments, Kiker's settlement attempts were unsuccessful. It was not until shortly before this action began that Walters Sr. and Imperial disclaimed any interest in the Glovatsky minerals and lease.
In February 1989, Kiker sued to determine the rights and responsibilities of each member of the group and of their respective assignees in the properties and the withheld income. Appropriately, Kiker also sought indemnification for various existing and contingent liabilities connected to the properties.
At trial of this action, the parties stipulated to the ownership of all of the properties, except for the Glovatsky minerals in Kiker's name. The parties also agreed to the accounting and apportionment of all withheld funds except for those attributable to the Glovatsky minerals.
In mid-1989, months after this action was begun by Kiker, Hunt sued Kiker, Kaiser, Walters Sr., and Imperial in Dunn County, seeking damages from Walters Sr. and Imperial for fraud, conspiracy to defraud, unjust enrichment, and slander of title, based on the income that Hunt would have received if its lease had been determined to have priority. Chevron, which in 1979 had obtained an assignment from Hunt of its lease of the Glovatsky minerals, later joined in that litigation. Cryptically, the majority opinion concludes that "the ownership of the Glovatsky minerals at issue in this case would be more appropriately determined in" this separate lawsuit by Hunt and Chevron.
Walters Sr. does not claim that any of the trial court's findings of fact are clearly erroneous. He only argues that the trial court's "hearing and deciding the issue of ownership of the ... Glovatsky minerals was both prejudicial and purposeless here, because that same issue, in the form of a quiet title count, was present in the Dunn County action brought by Hunt...." Similarly, Imperial does not claim that any of the trial court's findings are clearly erroneous, but rather argues that the "trial court abused its discretion by allowing Kiker, with his unclean hands, to prosecute this action as to the Glovatsky minerals". There is no overriding principle of law that directs a joint venture, even an unscrupulous one, to dissolve and to litigate their individual responsibility with outsiders, rather than among themselves. See 46 Am.Jur.2d Joint Ventures, § 48 (1969) ("[I]n a settlement and accounting between joint venturers, each is chargeable with the consequences of his own derelictions or misconduct.")
The separate lawsuit by Hunt and Chevron was begun after this lawsuit was started. Generally, "the exercise of concurrent jurisdiction is controlled by the principle of priority." 20 Am.Jur.2d Courts § 128 (1965). Ordinarily, the first of two courts with concurrent jurisdiction that acquires *633 jurisdiction of a case "may dispose of the whole controversy." 21 C.J.S. Courts § 188 (1990). Walters Sr. and Imperial have not supplied any reason why we should direct the trial court to depart from this priority principle. We should affirm the trial court's determination of the disputes among the members and assignees of the group venture, regardless of the pending claims by outsiders against some, but less than all, of the group.
Because the majority reverses and directs that ownership of the Glovatsky minerals is to be determined in the Hunt lawsuit, the majority does not address the trial court's denial of Imperial's request for a jury trial. This assents to the relief sought by Imperial. Because I believe that it is wrong to let Walters Sr. and Imperial choose their own forum for settling this account with their joint venturers, I would affirm the trial court's denial of a jury trial as well.
The trial court explained the reasons why it denied a jury trial:
Since this action has the attributes of a dissolution, quiet title action, action for specific performance, and equitable accounting, which are all equitable actions, there is no right to a trial by jury. Except for the cross-claims between Kaiser and Peterson, the remaining counterclaims and crossclaims also seek specific performance, accounting, and incidental and dependent on the outcome of the accounting, money damages. Money damages merely incidental or dependent upon the equitable action do not give a right to a trial by jury. Lithun v. Grand Forks Public School, Etc., 307 N.W.2d 545 (N.D.1981).
Walters Sr. and Imperial "presented no evidence supporting their counterclaims [for damages] against ... Kiker", the trial court found. In my opinion, the trial court did not abuse its discretion in denying Imperial a jury trial.
Because I would affirm the trial court in all respects, I respectfully dissent.
VERNON R. PEDERSON, Surrogate Judge, concurs.
LEVINE, Justice.
Jack Green appeals from a district court judgment quieting title to certain property in him but requiring him to pay Warren and Judy Gustafson for the value of improvements they made to the property. The Gustafsons cross-appeal. We reverse the judgment and remand for further proceedings.
In 1947, Marvin Green and his two sons, Robert and George, acquired a house in Milton, North Dakota. Although the three held title as tenants in common, Marvin occupied the home as his residence. George died in 1963 and his 1/3 interest passed by intestate succession to his five children.
Marvin died in 1972. His will bequeathed his 1/3 interest in the property to *844 Robert. William Heigaard was appointed executor of Marvin's estate and also served as attorney for the estate.
Robert died intestate in June 1975, before his father's estate was settled. Robert's sole surviving heir was his son, Jack. Heigaard was hired to probate Robert's estate by the personal representative, Lynn Bjarnason.
In August 1975, Heigaard, as executor of Marvin's estate, advertised the property for sale on bids. The advertisement did not indicate the divided ownership of the property. Warren and Judy Gustafson submitted the high bid of $7,550 for the property. Heigaard accepted their bid and the Gustafsons tendered a check for ten percent of the price. The check was never cashed, however, and remained in Heigaard's file until this action was commenced in 1988.
After the Gustafsons' bid was accepted, Heigaard allowed them to take possession of the property and authorized them to make improvements.[1] At the time they purchased it, the house had been vacant for over three years and was uninhabitable. There was no running water, no heat, and the electrical wiring was substandard. Over the course of the next thirteen years, the Gustafsons completely renovated the house, including installation of new plumbing, new wiring and a new heating system, at a cost of over $45,000. They also paid all utilities and insurance.
On November 6, 1980, the Final Decree of Distribution in Robert's estate was issued and the estate was closed. This decree purported to transfer the property in its entirety to Jack Green, although Robert had held title to only a 1/3 interest in the property.
In December 1980, Heigaard commenced a quiet title action on behalf of Marvin's estate. Named defendants included George Green's five children and Robert Green, who had died in 1975 and whose estate had already been distributed. The suit did not name Jack Green, Robert's estate or the Gustafsons as defendants, nor were they served. Judgment was entered in 1981 quieting title in the Marvin Green estate and against the named defendants.[2]
The Gustafsons continued to live in the house without objection until 1986, when they learned that the real estate taxes for 1976 through 1985 were delinquent and the property was in danger of loss to the county. Heigaard, as executor of Marvin's estate, negotiated with the county to reduce the outstanding taxes to $3,000. The Gustafsons then paid $3,000 to the estate and the estate in turn paid the $3,000 to the county. Since 1986, the Gustafsons have regularly paid the taxes.
When it became apparent that Jack Green would not consent to a conveyance to the Gustafsons, Heigaard, on August 22, 1987, issued a personal representative's deed of distribution, purportedly conveying Marvin's estate's interest in the property to Jack. Marvin's estate was finally closed on November 4, 1987.
In May 1988, Jack commenced an eviction action against the Gustafsons. They answered and counterclaimed, asserting ownership of the property. The case was transferred to district court by stipulation. Jack served an amended complaint, seeking to quiet title, to evict the Gustafsons and to recover nearly $30,000 in damages for fair rental value. The Gustafsons filed an amended answer and counterclaim, seeking to quiet title in themselves or, alternatively, seeking reimbursement for the value of the improvements made to the property.
The case was tried to the court. The court determined that Jack was the owner of the property and that the Gustafsons were not entitled to specific performance of the contract for sale. The court concluded, however, that the Gustafsons had held under color of title in good faith and accordingly were entitled to recover the value of the improvements. See Section 32-17-08, N.D.C.C. The court reserved the question of the value of the improvements, and gave *845 Jack the choice of two options: (1) he could ratify the sale to the Gustafsons, or (2) he could retain the property but pay the Gustafsons the value of the improvements, less the value of the Gustafsons' use and occupancy.
Jack elected not to ratify the sale and so a second trial was held, limited to issues of valuation. The trial court found that the present value of the property was $44,000; the value of the improvements was $39,000; the value of the unimproved house and lot was $5,000; and the value of the Gustafsons' use and occupancy of the unimproved house and lot from September 1975 to December 1990 was $4,575. The court again gave Jack two options: (1) he could convey the property to the Gustafsons for $9,575 ($5,000 unimproved value plus $4,575 use and occupancy), or (2) he could retain the property by paying the Gustafsons $34,425 ($39,000 for improvements less $4,575 for use and occupancy).
Jack appealed, asserting that the Gustafsons are not entitled to recover for the value of improvements and challenging various findings of fact on value. The Gustafsons cross-appealed, asserting that the trial court erred when it refused to enforce the contract for sale.
The dispositive issue on appeal is whether the trial court erred in quieting title in the property in Jack or whether the Gustafsons had a valid claim of title in the property. Our resolution of this issue requires careful juxtaposition of several divergent legal theories and produces a result which lies somewhere between the two extremes urged by the parties.
The first issue presented is whether Heigaard had authority to sell the property. The parties concede that this issue is governed by the provisions of Title 30.1, N.D.C.C., the codification of the Uniform Probate Code.
Section 30.1-18-11, N.D.C.C. [U.P.C. § 3-711], gives a personal representative broad powers over the property of the estate:
"Powers of personal representatives In general.Until termination of his appointment, a personal representative has the same power over the title to property of the estate that an absolute owner would have, in trust however, for the benefit of the creditors and others interested in the estate. This power may be exercised without notice, hearing, or order of court."
Section 30.1-18-15(6), N.D.C.C. [U.P.C. § 3-715], specifically authorizes the personal representative to "[a]cquire or dispose of an asset, including land for cash or on credit, at public or private sale"; and Section 30.1-18-15(23) provides that the personal representative may "[s]ell, mortgage, or lease any real or personal property of the estate or any interest therein."
Section 30.1-18-14, N.D.C.C. [U.P.C. § 3-714], provides broad protections to parties dealing with the personal representative:
"A person who in good faith either assists a personal representative or deals with him for value is protected as if the personal representative properly exercised his power. The fact that a person knowingly deals with a personal representative does not alone require the person to inquire into the existence of a power or the propriety of its exercise...."
The intent of these provisions is to adequately protect persons dealing in good faith with a personal representative and to avoid the necessity of court orders in routine probate administrations. See 1 Wellman, Uniform Probate Code Practice Manual 319 (2d ed. 1977). As further noted by Professor Wellman:
"Section 3-714 explicitly protects purchasers from the possibility that a sale which a PR may have made was unnecessary or at too low a price or even against the terms of a will. The purchaser is explicitly excused from examining the terms of the will, court records relating to the appointment, or other sources that might be relevant to the question of whether the sale is proper as between the fiduciary and those entitled to the inheritance." 1 Wellman, Uniform Probate Code Practice Manual, supra, at 407.
*846 Jack concedes that these statutes authorized Heigaard to sell the estate's interest in the property to the Gustafsons.[3] However, Jack asserts that the purported sale of the entire property, when the estate included only a lesser interest, rendered the sale void. The Gustafsons assert that because Heigaard was also the attorney for Robert's estate, which at the time of the sale included an undivided 1/3 interest in the house, he also had apparent authority to sell that interest in the property. Thus, they assert, the protections of Section 30.1-18-14, N.D.C.C., apply.
We agree with Jack that Heigaard's authority to sell the property extended only to Marvin's estate's interest therein, which consisted of Marvin's 1/3 interest and the 1/3 interest of George's heirs which was quieted in Marvin's estate in the action to quiet title. The Uniform Probate Code provisions that authorize the personal representative to sell property extend only to property included in the estate. It is axiomatic that the personal representative is not thereby empowered to exercise dominion over property which was never owned by either the decedent or the estate. Furthermore, the advertisement of the sale clearly indicated that Heigaard was selling the property as the executor of Marvin's estate. Heigaard did not purport to act on behalf of Robert's estate during the sale transaction. Under these circumstances, Heigaard's actions could not, and did not, affect title to the 1/3 interest held by Robert's estate and subsequently deeded to Jack.
However, Heigaard's inability to convey the entire property does not render the contract a nullity. Parties often enter into a contract for a future conveyance when the seller does not presently have clear title. See, e.g., McLaughlin v. Lambourn, 359 N.W.2d 370, 373 nn. 1 & 4, 374 (N.D.1985). This is not a case of mistake, where the parties never agreed to the same performance. At the time he entered into the contract for sale, Heigaard expected to clear the title and fully intended to perform. His subsequent inability to do so did not affect the validity of the contract with the Gustafsons and they were entitled to seek appropriate remedies for breach against the estate.
Those available remedies include specific performance, albeit not the complete performance envisioned in the contract. The well-established general rule is that "where there is a deficiency in the quantity of land contracted to be sold the vendee ... is entitled to specific performance to the extent of the [vendor's] ability to perform with a proper abatement of the purchase price to the extent of the value of the deficiency." Gunsch v. Gunsch, 71 N.W.2d 623, 631 (N.D.1955). As stated in Pomeroy's venerable treatise:
"Partial incapacity.Where the defendant's title fails as to a part of the subject-matter, or is partially defective, the plaintiff may elect and be entitled to a specific enforcement of the contract, so far as it can be enforced; and may claim and receive compensation for the deficiency."
4 Pomeroy, Equity Jurisprudence § 1405b (5th ed. 1941); see also 11 Williston, Contracts § 1436 (3d ed. 1968). The rule applies with equal force where the seller, agreeing to convey full title, owns only a partial interest in the property. See, e.g., Townsend v. Vanderwerker, 160 U.S. 171, 182, 16 S. Ct. 258, 261, 40 L. Ed. 383, 386-387 (1895); Chastain v. Schomburg, 258 *847 Ga. 218, 367 S.E.2d 230, 231 (1988); Atkin v. Cobb, 663 S.W.2d 48, 51 (Tex.Ct.App. 1983); Bee Jay Industrial Corp. v. Fina, 98 A.D.2d 738, 469 N.Y.S.2d 438, 440 (1983).
Applying the rule to this case, the Gustafsons had a valid contract with the estate for sale of the property. The estate never owned Robert's 1/3 interest, which subsequently devolved to Jack. The estate did, however, own a 2/3 interest in the property and the Gustafsons were entitled to seek specific performance of the contract to that extent, with an abatement of the purchase price.
The parties have not cited Section 32-04-08, N.D.C.C., which provides:
"Remedy of specific performance must be mutual.Neither party to an obligation can be compelled specifically to perform it, unless the other party thereto has performed, or is compelled specifically to perform, everything to which the former is entitled under the same obligation, either completely or nearly so, together with full compensation for any want of entire performance."
In Knudtson v. Robinson, 18 N.D. 12, 118 N.W. 1051 (1908), the court strictly applied an earlier codification of the statute, holding that a contract for sale of 960 acres of land could not be enforced against a seller who only owned 640 acres of the specified land.
Later cases, however, suggest a more liberal application of the statute. In Gunsch, supra, the buyer under a contract for deed sought partial specific performance where the seller had previously conveyed one-half of the mineral rights to a third party. The court discussed Knudtson, supra, but held that the purchaser was entitled to specific performance to the extent of the seller's ability to perform, with a substantial abatement for the value of the lost mineral rights. Gunsch, supra, 71 N.W.2d at 631.
In Jonmil, Inc. v. McMerty, 265 N.W.2d 257, 259 (1978), the court further addressed its more liberal interpretation of Section 32-04-08:
"At first blush this statute suggests that there must be complete, full mutuality on both parties before the remedy of specific performance is applicable. However, on further analysis, and particularly upon review of the case law, as found in Alfson v. Anderson, 78 N.W.2d 693 (N.D.1956), and its predecessors, it appears to us the statute merely requires that both parties must have an obligation and a remedy. The obligation may be either in the form of damages or specific performance. It is not necessary that both parties to a contract are entitled to the identical remedy of specific performance."
This view of the statute was reaffirmed in Wolf v. Anderson, 334 N.W.2d 212, 215 (N.D.1983).
Furthermore, it has been recognized that the statute is merely a declaration of the long-standing common law rule. See, e.g., Knudtson v. Robinson, supra, 118 N.W. at 1052; Pederson v. Dibble, 12 N.D. 572, 98 N.W. 411, 412 (1904). We presume that, in specifically adopting the common law rule, the legislature intended its application to extend no further than under the common law. As noted in Reeves & Co. v. Russell, 28 N.D. 265, 148 N.W. 654, 655 Syll. ¶ 8, 9 (1914), "[t]he common law must... be considered in the construction and application of statutes declaratory thereof, and such statutes construed and applied as continuations of or legislative declarations of the common law.... The statute will not be presumed to alter the common law `other than what has been specified and besides what has been plainly pronounced.'" See also 2B Sutherland, Statutory Construction § 50.02 (1992) ("Where a statute attempts to restate the existing common law, the latter becomes an especially important factor in determining legislative intent.").
Under the established common law rule, lack of mutuality did not preclude a purchaser from seeking partial specific performance where the seller did not own all of the property included in the contract. See, e.g., Gunsch, supra, 71 N.W.2d at 630-631; 4 Pomeroy, Equity Jurisprudence §§ 1405, 1405a, 1405b (1941); 11 Williston, Contracts § 1434 (1968). Thus, we conclude that Section 32-04-08, N.D.C.C., as a *848 declaration of the common law, does not bar specific performance in this case.
Jack asserts, however, that enforcement of the contract is barred by the statute of frauds. We have recently discussed the applicable statutory provisions in Williston Cooperative Credit Union v. Fossum, 459 N.W.2d 548, 551 (N.D.1990):
"The general rule is that contracts for the sale of real property and transfers of real property interests must be made by an instrument in writing. Section 9-06-04, N.D.C.C.; Section 47-10-01, N.D.C.C. However, part performance of an oral contract which is consistent only with the existence of the alleged contract removes it from the statute of frauds. Poyzer v. Amenia Seed & Grain Co., 409 N.W.2d 107 (N.D.1987). While partial payment of the purchase price alone is not justification for enforcing an oral contract to convey land, partial payment together with other acts such as possession or the making of valuable improvements may be sufficient to take a contract out of the statute of frauds. See Parceluk v. Knudtson, 139 N.W.2d 864 (N.D.1966). When improvements to the property are relied upon as part performance of an oral contract for purposes of removing it from the statute of frauds, the improvements made on the land must be valuable, substantial, and permanent. Vasichek v. Thorsen, 271 N.W.2d 555 (N.D. 1978). Thus, part payment of the purchase price and substantial improvements to the property may remove an oral contract from the statute of frauds and create an enforceable contract constituting an enforceable equitable property interest."
Jack argues that there has not been sufficient part performance in this case to remove it from the statute of frauds. Specifically, he asserts that no part of the purchase price was paid because the Gustafsons' check was never cashed, thereby rendering insufficient any partial performance by the Gustafsons.
We need not determine whether tender of a check which is not cashed constitutes partial payment of the purchase price, because partial payment is not a necessary prerequisite to enforcement of the oral contract. In Syrup v. Pitcher, 73 N.W.2d 140, 146 (N.D.1955), the court held:
"[W]e do not believe that part payment of the purchase price is always an indispensable element of part performance of an oral contract. Where a purchaser takes possession under an oral contract for the sale of land with the consent of the vendor and while in such possession makes valuable and lasting improvements on the premises in reliance on the contract, there is a sufficient part performance to take the case out of the statute of frauds, although no part of the purchase price be paid."
See also Anderson v. Mooney, 279 N.W.2d 423, 428-429 (N.D.1979). It is undisputed that the Gustafsons took possession pursuant to the oral contract of sale and made substantial permanent improvements to the property in reliance upon that contract. We conclude that, under these circumstances, the statute of frauds does not bar specific enforcement of the oral contract of sale of the property.
Jack also asserts that he now holds legal title to the property by the August 22, 1987 deed of distribution from Marvin's estate and that the Gustafsons cannot specifically enforce the contract against him. This was apparently the basis for the trial court's refusal to grant specific performance.
Jack's argument, however, ignores the effect of the doctrine of equitable conversion, which provides that once parties have entered into a valid, enforceable contract for the sale of land, equitable title vests in the purchaser and the seller holds bare legal title as security for payment of the balance of the purchase price. United Bank of Bismarck v. Trout, 480 N.W.2d 742, 748 (N.D.1992). Equity regards the realty as "converted" into personalty. Trout, supra, 480 N.W.2d at 748. The doctrine applies only when there is a valid contract for sale which could be specifically enforced. Trout, supra, 480 N.W.2d at 748. Where there has been sufficient partial performance to remove an oral contract from the statute of frauds, an enforceable contract exists which creates an enforceable, equitable property interest. Williston *849 Cooperative Credit Union v. Fossum, supra, 459 N.W.2d at 551.
When Heigaard executed the deed of distribution, purporting to convey the property to Jack on August 22, 1987, the Gustafsons had a valid, enforceable contract to purchase the 2/3 undivided interest held by the estate. Thus, the Gustafsons had equitable title to that 2/3 interest and the estate retained bare legal title as security for the purchase price.
It is axiomatic that a deed cannot convey a greater interest or estate in the property than the grantor has. 23 Am. Jur.2d Deeds § 336 (1983); see Feiler v. Wanner, 340 N.W.2d 168, 171 (N.D.1983). A deed which purports to convey a greater interest than that held by the grantor conveys only the lesser interest actually held by the grantor. Van Sickle v. Olsen, 92 N.W.2d 777, 784 (N.D.1958). Thus, Heigaard's deed of distribution to Jack conveyed only bare legal title, held as security for payment of the purchase price. The property had been "converted" to personalty by the doctrine of equitable conversion, and that is all Jack received by the deed. See United Bank of Bismarck v. Trout, supra, 480 N.W.2d at 748. Accordingly, the Gustafsons are entitled to enforce the agreement against Jack, and, upon payment of the purchase price agreed upon by the personal representative of Marvin's estate and the Gustafsons, with an appropriate abatement, may compel Jack to convey title to the 2/3 interest. Jack retains the 1/3 undivided interest in the property that he received through Robert's estate.
An action to quiet title is equitable in nature. Rohrich v. Rohrich, 434 N.W.2d 343, 346 (N.D.1989); Lindvig v. Lindvig, 385 N.W.2d 466, 474 (N.D.1986). Similarly, specific performance and equitable conversion are grounded in equity and governed by equitable principles. Alfson v. Anderson, 78 N.W.2d 693, 701 (N.D. 1956); Clapp v. Tower, 11 N.D. 556, 93 N.W. 862, 863 (1903). Accordingly, our review in this case has been guided by equitable principles.
We conclude that the trial court erred in quieting title to the property in Jack. The Gustafsons have an enforceable, equitable property interest in a 2/3 undivided interest in the property. We reverse the judgment and remand for further proceedings in accordance with this opinion.[4] The parties shall bear their own costs on appeal.
ERICKSTAD, C.J., and VANDE WALLE and MESCHKE, JJ., concur.
GIERKE, J., a member of the Court when this case was heard, resigned effective November 20, 1991, and did not participate in this decision. JOHNSON, J., not being a member of this Court at the time this case was heard, did not participate in this decision.
NOTES
[1] Section 32-11-02, N.D.C.C., provides in part:
"Whenever two or more persons make claim for the whole or any part of the same money, personal property, or effects in the possession or control of any other person ... and the right of any such claimant is adverse to the right of any other claimant, or is disputed or doubtful, and the ... person in control of any part of such property, money, or effects is unable to determine to whom the same rightfully belongs, ... the person in the possession or control of any such property, money, or effects [may deposit the money, property, or effects with the clerk of the court or a depositary designated by the district court and] thereupon shall be relieved from further liability to any person on account of such property, money, or effects."
[2] Rule 22(a), N.D.R.Civ.P., which is virtually identical to Rule 22, F.R.Civ.P., from which it was derived, provides:
"Persons having claims against the plaintiff may be joined as defendants and required to interplead if their claims are such that the plaintiff is or may be exposed to double or multiple liability. It is not ground for objection to the joinder that the claims of the several claimants or the titles on which their claims depend do not have a common origin or are not identical but are adverse to and independent of one another, or that the plaintiff disclaims liability in whole or in part to any or all of the claimants. A defendant exposed to similar liability may obtain like interpleader by way of cross-claim or counterclaim. The provisions of this rule supplement and do not in any way limit the joinder of parties permitted in Rule 20."
Because our rule is virtually identical to the federal rule from which it was derived, we look to relevant federal caselaw construing the federal rule for guidance in construing our own rule. Farmers Union Oil Co. v. Harp, 462 N.W.2d 152 (N.D.1990); First Nat'l Bank & Trust Co. v. Scherr, 456 N.W.2d 531 (N.D.1990); Thomas v. Thomas, 382 N.W.2d 639 (N.D.1986).
[3] Because § 32-11-02, N.D.C.C., and Rule 22(a), N.D.R.Civ.P., both require multiple adverse claimants, this is not a case in which "a court-promulgated procedural rule prevails in a conflict with a legislatively-enacted rule of procedure." City of Fargo v. Dawson, 466 N.W.2d 584, 586 n. 4 (N.D.1991).
[1] Jack Green challenges the trial court's finding that Heigaard authorized improvements. In light of our disposition of this case we find it unnecessary to reach this issue.
[2] No issue has been raised regarding the propriety of the judgment quieting title. There is no indication on the record that that judgment was appealed.
[3] The parties have not cited Section 30.1-12-01, N.D.C.C. [U.P.C. § 3-101], which provides that property devolves upon death to the devisees or heirs. In Feickert v. Frounfelter, 468 N.W.2d 131, 132 (N.D.1991), we construed the statute to mean that property passes upon death, not upon distribution. However, both the statute and Feickert recognize that devolution is subject to administration, and the personal representative has "power over the title" during the administration of the estate. Feickert, supra, 468 N.W.2d at 132; Section 30.1-18-11, N.D.C.C. [U.P.C. § 3-711]. The personal representative has specific authority to sell or dispose of property of the estate, see Section 30.1-18-15(6) & (2), N.D.C.C. [U.P.C. § 3-715], and the provisions of Section 30.1-12-01 do not restrict that authority.
If a personal representative improperly disposes of property of the estate, the remedy of the devisee or heir is directly against the personal representative. Section 30.1-18-12, N.D.C.C. [U.P.C. § 3-712].
[4] Our holding makes it unnecessary to decide the other issues raised by the parties. However, based upon the parties' prior actions, it is likely that partition of the property will eventually be necessary. We therefore will briefly address one issue which may recur.
The primary point of contention between the parties has been who is entitled to the value of the improvements made by the Gustafsons. The effect of our holding today is that the Gustafsons have held equitable title to an undivided interest in the property. Accordingly, the parties have been, in effect, co-tenants. In a partition action, a co-tenant may be granted an allowance for the value of substantial, necessary, and permanent improvements which enhance the property's value. E.g., Berg v. Kremers, 181 N.W.2d 730, 736 (N.D.1970); Gjerstadengen v. Hartzell, 9 N.D. 268, 83 N.W. 230, 233 (1900). In the event partition is sought, it will be for the trial court to determine the extent of the allowance to the Gustafsons for the improvements, keeping in mind that partition is an equitable remedy governed by equitable principles. See Schnell v. Schnell, 346 N.W.2d 713, 715 (N.D. 1984); Eastman v. Nelson, 319 N.W.2d 134, 136 (N.D.1982).