Markgraf v. Welker

• Citation: 873 N.W.2d 26
• Decision Date: 31 December 2015
• Docket Number: No. 20150116.,20150116.
• Parties: Kathleen MARKGRAF and Marilyn Shanahan, Plaintiffs and Appellees v. Connie WELKER, Vicki Ostrem, Margaret Rehmer, Robert Leroy Hannah, Jr., Robert Hannah, Cheryl Hannah, Donna Shilliam, William J. Hannah, Estate of William J. Hannah, Mary Hannah, Estate of Mary Hannah, Wilbert Hannah, Estate of Wilbert Hannah, Robert L. Hannah, Estate of Robert L. Hannah, Alan Hannah, Estate of Alan Hannah, Kathryn Hannah Nelson, Estate of Kathryn Hannah Nelson, Barbara Eggert, Estate of Barbara Eggert, Arnold Hannah, Estate of Arnold Hannah, Donald Hannah, Estate of Donald Hannah, Larry Erickson, Estate of Larry Erickson, and all other persons unknown claiming any estate interest in or lien or encumbrance upon, the real property described in the Complaint, whether as heirs, legatees, personal representatives, devisees, creditors, or otherwise, Defendants. Connie Welker and Vicki Ostrem, Appellants.
• Court: United States State Supreme Court of North Dakota

873 N.W.2d 26

Kathleen MARKGRAF and Marilyn Shanahan, Plaintiffs and Appellees

v. Connie WELKER, Vicki Ostrem, Margaret Rehmer, Robert Leroy Hannah, Jr., Robert Hannah, Cheryl Hannah, Donna Shilliam, William J. Hannah, Estate of William J. Hannah, Mary Hannah, Estate of Mary Hannah, Wilbert Hannah, Estate of Wilbert Hannah, Robert L. Hannah, Estate of Robert L. Hannah, Alan Hannah, Estate of Alan Hannah, Kathryn Hannah Nelson, Estate of Kathryn Hannah Nelson, Barbara Eggert, Estate of Barbara Eggert, Arnold Hannah, Estate of Arnold Hannah, Donald Hannah, Estate of Donald Hannah, Larry Erickson, Estate of Larry Erickson, and all other persons unknown claiming any estate interest in or lien or encumbrance upon, the real property described in the Complaint, whether as heirs, legatees, personal representatives, devisees, creditors, or otherwise, Defendants.Connie Welker and Vicki Ostrem, Appellants.

No. 20150116.

Supreme Court of North Dakota.

Dec. 31, 2015.

Andrew D. Cook (argued) and Lukas D. Andrud (on brief), Fargo, N.D., for plaintiffs and appellees.

Robert J. Pathroff (argued), Bismarck, N.D. and David T. Hermanson (appeared), Fargo, N.D., for appellants.

VANDE WALLE, Chief Justice.

[¶ 1] Connie Welker and Vicki Ostrem appealed from a summary judgment quieting title to certain Mountrail County mineral interests. Welker and Ostrem argue the district court erred in granting Kathleen Markgraf and Marilyn Shanahan's motion for summary judgment because Markgraf and Shanahan's claims are barred by the statute of limitations, the court relied on inadmissible evidence, and Markgraf and Shanahan did not prove the existence of an implied trust by clear and convincing evidence. We reverse and remand, concluding summary judgment was not appropriate.

I

[¶ 2] Markgraf and Shanahan brought an action against Welker and Ostrem to quiet title to minerals in and under property located in Mountrail County, described as:

Township 154 North, Range 93 West

Section 17: N1/2NW1/4, SW1/4NW1/4, NW1/4SW1/4

Township 156 North, Range 93 West

Section 25: SW1/4

Township 156 North, Range 92 West

Section 19: E1/2NW1/4, Lots 1 & 2

Lots 1, 2, 3, and 4, of Block 8, Original Townsite of Ross

Markgraf and Shanahan alleged W.J. Hannah owned 100% of the surface and minerals when he conveyed the property to "Arnold Hannah, Trustee" by grant deed in 1965, intending to create a family trust and appointing his son, Arnold Hannah, as trustee. Markgraf and Shanahan are descendants of Kathryn Nelson, W.J. Hannah's daughter and Arnold Hannah's sister. They claimed W.J. Hannah intended Arnold Hannah would hold the legal title to the property in trust for the benefit of himself; his siblings, Kathryn Nelson and Robert L. Hannah; and Margaret Rehmer, the only child of his deceased brother, Wilbert Hannah. They claimed Arnold Hannah held himself out as trustee in dealings related to the property, kept an accounting of the income and expenses related to the property, and made disbursements to the beneficiaries from the proceeds of the trust. They argued a resulting or constructive trust was created and Welker and Ostrem, as Arnold Hannah's heirs, do not have exclusive rights to the property. Welker and Ostrem answered and requested the complaint be dismissed.

[¶ 3] Welker and Ostrem moved for summary judgment, filing an affidavit and exhibits in support of the motion. They argued they were entitled to summary judgment because the 1965 grant deed transferring the property to "Arnold Hannah, Trustee" conveys the title to Arnold Hannah in his individual capacity, the word "Trustee" is surplusage under N.D.C.C. § 47–09–12, and Markgraf and Shanahan's claims for a resulting or constructive trust fail.

[¶ 4] Markgraf and Shanahan also moved for summary judgment, arguing a resulting or constructive trust was created when the property was conveyed to Arnold Hannah. They claimed that W.J. Hannah intended Arnold Hannah act as a trustee and manage the property for the benefit of the family and that Arnold Hannah acted as a trustee by managing the property, accounting for income and expenses, paying out disbursements from the proceeds of the property to family members, and paying himself a fee for his work related to the property. They filed supporting affidavits from Markgraf and their attorney, Andrew Cook, with attached exhibits.

[¶ 5] Welker and Ostrem opposed Markgraf and Shanahan's motion for summary judgment. They argued Markgraf and Shanahan's quiet title claims were barred by the twenty-year statute of limitations contained in N.D.C.C. § 28–01–04, an implied trust was not created, and there is not clear and convincing evidence of an understanding in 1965 that the mineral rights would be divided equally among W.J. Hannah's children.

[¶ 6] Welker and Ostrem moved to strike hearsay contained in Markgraf's affidavit under N.D.R.Civ.P. 56(e)(1). They claimed Markgraf's affidavit contained statements that were not based on personal knowledge and were inadmissible hearsay. They also moved to exclude the exhibits attached to Andrew Cook's affidavit, arguing the exhibits contained hearsay and lacked foundation.

[¶ 7] Markgraf filed a supplemental affidavit with attached exhibits. The exhibits were previously filed as attachments to Cook's affidavit. Cook also filed a supplemental affidavit.

[¶ 8] After a hearing, the district court granted Markgraf and Shanahan's motion for summary judgment and denied Welker and Ostrem's motion. The court denied Welker and Ostrem's motions to strike Markgraf's affidavit and to exclude the exhibits attached to Cook's affidavit. The court concluded the statute of limitations did not apply, Markgraf and Shanahan did not claim there was an express trust, and there was clear and convincing evidence that a resulting trust was created when the property was conveyed to Arnold Hannah.

II

[¶ 9] Welker and Ostrem argue the district court erred in granting Markgraf and Shanahan's motion for summary judgment.

[¶ 10] The standard for reviewing summary judgments is well established:

Summary judgment is a procedural device for the prompt resolution of a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. A party moving for summary judgment has the burden of showing there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. In determining whether summary judgment was appropriately granted, we must view the evidence in the light most favorable to the party opposing the motion, and that party will be given the benefit of all favorable inferences which can reasonably be drawn from the record. On appeal, this Court decides whether the information available to the district court precluded the existence of a genuine issue of material fact and entitled the moving party to judgment as a matter of law. Whether the district court properly granted summary judgment is a question of law which we review de novo on the entire record.

Hamilton v. Woll, 2012 ND 238, ¶ 9, 823 N.W.2d 754 (quoting Wenco v. EOG Res., Inc.,

2012 ND 219, ¶ 8, 822 N.W.2d 701 ). "Summary judgment is inappropriate if neither party is entitled to judgment as a matter of law or if reasonable differences of opinion exist as to the inferences to be drawn from the undisputed facts." Northern Oil & Gas, Inc. v. Creighton, 2013 ND 73, ¶ 11, 830 N.W.2d 556 (quoting Riedlinger v. Steam Bros., Inc., 2013 ND 14, ¶ 10, 826 N.W.2d 340 ).

A

[¶ 11] Welker and Ostrem argue the district court relied on inadmissible evidence to grant summary judgment and erred in denying their evidentiary motions. They claim a majority of the documents Markgraf and Shanahan offered in support of their implied trust claims were inadmissible because they are hearsay and lack foundation.

[¶ 12] Affidavits filed in support of or in opposition to a motion for summary judgment "must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant is competent to testify on the matters stated." N.D.R.Civ.P. 56(e)(1). An affidavit may be supplemented by depositions, interrogatories, or additional affidavits. Id. Statements in an affidavit must set out facts that would be admissible in evidence. McColl Farms, LLC v. Pflaum, 2013 ND 169, ¶ 30, 837 N.W.2d 359.

[¶ 13] "Hearsay statements are generally not admissible and will not be considered in deciding a motion for summary judgment unless the statements fall within an exception to the hearsay rule." McColl Farms, 2013 ND 169, ¶ 30, 837 N.W.2d 359. Hearsay is a statement the declarant makes outside of the current trial or hearing and is offered to prove the truth of the matter asserted. N.D.R.Ev. 801(c).

[¶ 14] Welker and Ostrem argue Markgraf and Shanahan submitted and the district court improperly relied on numerous exhibits, including letters from Arnold Hannah to family members containing information about the property, a 1981 handwritten statement about the property signed by Kathryn Nelson, a 1981 handwritten statement about the property and disbursements from the property's proceeds signed by Arnold Hannah, and a 2002 letter from Kathryn Nelson to the Mountrail County Register of Deeds. Markgraf and Shanahan argue the court did not err in admitting the documentary evidence because the statements included in the exhibits were not offered to prove the truth of the matter asserted and were not hearsay.

[¶ 15] This Court has held that statements offered to prove the existence of an oral contract or assent to a contract are "verbal acts" or "verbal conduct" and are not hearsay. Moen v. Thomas, 2001 ND 95, ¶ 12, 627 N.W.2d 146. A statement offered to prove the statement was made is not hearsay because it is not offered to prove the truth of the matter asserted.Id. at ¶ 11. A resulting trust is based on the parties' implied intentions, and a resulting trust exists...