Burlington Northern, Inc. v. Hall, 10138

• Decision Date: 15 July 1982
• Docket Number: No. 10138,10138
• Citation: Burlington Northern, Inc. v. Hall, 322 N.W.2d 233 (N.D. 1982)
• Parties: BURLINGTON NORTHERN, INC., Plaintiff and Appellee, v. L. P. HALL, the unknown heirs of L. P. Hall, Lorena Vashti Hall, Ralph Mosser, Meta C. Mosser, Donald J. Hall, Wallace Hall, Leonard W. Hall, Mary Louise Joiner, Linas V. Hall, Martha Lou Hall, Edith Imoe, and all other persons unknown claiming any estate or interest in, lien or encumbrance upon, the property described in the Complaint, Defendants and Appellants. Civ.
• Court: North Dakota Supreme Court

Page 233

322 N.W.2d 233

BURLINGTON NORTHERN, INC., Plaintiff and Appellee, v.L. P. HALL, the unknownheirs of L. P. Hall, Lorena Vashti Hall, Ralph Mosser, Meta C. Mosser, Donald J. Hall, Wallace Hall, Leonard W. Hall, Mary Louise Joiner, Linas V. HallMartha Lou Hall, Edith Imoe, and all other persons unknown claiming any estate or interest in, lien or encumbrance upon, the property described in the Complaint, Defendants and Appellants.

Civ. No. 10138.

Supreme Court of North Dakota.

July 15, 1982.

Nilles, Hansen, Selbo, Magill & Davies, Fargo, for plaintiff and appellee; argued by John Michael Nilles, Fargo.

Harold H. Halstead, Mercer Island, Wash., and Mackoff, Kellogg, Kirby & Kloster, Dickinson, for defendants and appellants Hall; argued by Harold H. Halstead, Mercer Island, Wash.

Freed, Dynes, Reichert & Buresh, Dickinson, for defendants and appellants Mosser; argued by George T. Dynes, Dickinson.

SAND, Justice.

This is an appeal by the defendants, Ralph Mosser and Meta C. Mosser[hereinafter referred to as Mossers], and the heirs of L. P. Hall[hereinafter referred to as Hall heirs], from a district court judgment quieting title to mineral rights under 12 sections(approximately 7,750 acres) of land located in Golden Valley County, North Dakota, in Burlington Northern, Inc.[hereinafter referred to as Burlington Northern], and from a district court order denying the Hall heirs' and Mossers' motion pursuant to Rule 52(b),North Dakota Rules of Civil Procedure.

As of 1 April 1944 the records in the office of the Golden Valley County register of deeds reflect that Northwestern Improvement Co.[hereinafter referred to as Northwestern], was the named owner of the entire fee simple estate in the 12 sections of land and minerals.In 1944 Mossers entered into a contract for deed to buy the 12 sections of land from Northwestern.¹The contract for deed was dated 15 April 1944 and was not recorded by either Mossers or Northwestern; however, Mosser received a duplicate original of the contract.The contract for deed provided, in relevant part, as follows:

"... excepting and reserving unto the vendor [Northwestern] its successors and assigns forever all minerals of any nature whatsoever including coal, iron, natural gas and oil ..."

In 1948 Mossers listed for sale the 12 sections of land involved in the instant action along with an additional 5,000 acres of real property.A contract for deed dated 1 December 1948 between Mossers and L. P. Hall for the 12 sections and the additional 5,000 acres was executed by Hall on 14 December 1948 and by Mossers on 27 December 1948.

The testimony of Ralph Mosser reflects that his real estate agent prepared the contract for deed and that no attorneys assisted in the transaction because "he[Hall] was a good religious fellow, and I figured I was on the square.I didn't think we needed any."The contract for deed was recorded on 12 January 1949.It recited the following reservation of minerals unto Mossers:

"Reserving unto the first parties[Mossers], their heirs and assigns 50% of all mineral, oil, and gas rights on all of the above described lands where such rights are available."

On 27 December 1948, the same day Mossers executed the contract for deed with L. P. Hall, Mossers sent Northwestern their (Mossers') copy of the 1944 contract for deed and their final payments on the contract and, in fulfillment of its 1944 contract for deed, Northwestern deeded the 12 sections to Mossers by warranty deed dated 29 December 1948 and recorded 23 February 1949.The warranty deed from Northwestern to Mossers provided, in relevant part, as follows:

"... excepting unto the grantor [Northwestern], its successors and assigns, forever, as heretofore conveyed by the grantor, all minerals of any nature whatsoever, including coal, iron, natural gas and oil ...."

Mossers, by a warranty deed dated 29 August 1951, and in fulfillment of their 1 December 1948 contract for deed, deeded the 12 sections to Hall.That warranty deed was recorded on 7 September 1951.The warranty deed saved and excepted unto the Mossers:

"... fifty percent (50%) of all available or remaining minerals of any nature whatsoever including coal, iron, natural gas and oil ...."

Meanwhile, Northwestern, through a mineral deed acknowledged 20 January 1949 and recorded 29 April 1953, deeded the minerals in the 12 sections of land to Northern Pacific Railway.Burlington Northern is the successor in the interest of Northern Pacific Railway Co. L. P. Hall died on 2 February 1960 and Donald J. Hall, Leonard W. Hall, Mary Louise Joiner, Linas V. Hall, Edith Imoe, and Wallace Hall, individually and as guardian of the person and estate of Martha Lou Hall, an incompetent person, are successors to the interests of L. P. Hall and his wife, Lorena Vasthi Hall.

The instant action was commenced by Burlington Northern to quiet title to the mineral rights in the 12 sections of land.²Mossers' answer sought to reform and remove the mineral exceptions and reservations from the 1944 contract for deed and the 1948 warranty deed between themselves and Northwestern because they alleged the title instruments incorrectly expressed their true agreement.The Hall heirs' answer asserted that they were entitled to title to the minerals under the theories of equitable estoppel, adverse possession of both the surface and mineral interests, laches, and priority under the recording acts.The Mossers also cross-claimed against the Hall heirs for one-half of the mineral title, if any, that the Hall heirs obtained as a result of their claims against Burlington Northern.

The district court, after a bench trial, issued a memorandum opinion and findings of fact, conclusions of law and order for judgment and judgment in which it found that Burlington Northern was the owner in fee simple of all the minerals in or upon the 12 sections of land.

The Hall heirs and Mossers made separate post-trial Rule 52(b), NDRCivP, motions to amend and make supplemental findings of fact and conclusions of law.The district court denied those motions; however, the district court did find as an additional fact that if the Hall heirs prevailed on any of their claims against Burlington Northern, Mossers were then entitled to one-half of whatever mineral interests the Hall heirs were entitled to.The Hall heirs and Mossers appealed from the judgment and from the order denying their Rule 52(b) motions.

The Mossers apparently have abandoned their claim to reform the 1944 contract for deed and 1948 warranty deed between themselves and Northwestern and have raised only one issue on this appeal.That issue is whether or not they are entitled to one-half of the minerals, if any, that this Court determines belong to the Hall heirs.The Mossers conceded that if the Hall heirs are not successful on their claims against Burlington Northern, then Mossers cross-claim against the Hall heirs and their (Mossers) subsequent appeal is moot.Consequently, we will initially consider the issues raised by the Hall heirs.

The Hall heirs raised several alternative contentions for our consideration; however, these contentions all related to whether or not the trial court erred in quieting title to the minerals in the 12 sections of land in Burlington Northern.

The district court found and concluded that on the date of the contract for deed between Mossers and L. P. Hall, 1 December 1948, L. P. Hall was "chargeable with actual, constructive or implied knowledge of the terms of the 1944 contracts between Mossers and Northwestern."The district court found that on that date Northwestern was the record owner of the land and minerals; that L. P. Hall was contracting to purchase from a person (Mossers) with no record title; that given those facts, L. P. Hall had a duty to inquire of the title held by Mossers and was chargeable with knowledge of everything a diligent inquiry would have disclosed; that in the absence of an inquiry by L. P. Hall of the record owner, Northwestern, L. P. Hall should have asked to see Mossers' unrecorded contract for deed and Hall was not entitled to rely on the representation that they(Mossers) were buying the land and minerals on contract from Northwestern without asking Mossers to show him the contract for deed.

The Hall heirs contended that the major error of law made by the trial court related to the conclusion that L. P. Hall was chargeable with constructive notice of the terms of the 1944 contract between Mossers and Northwestern.The Hall heirs cited Werth v. Willer, 64 N.D. 119, 250 N.W. 543(1933), to support their assertion that L. P. Hall, as a vendee, had no duty to examine Mossers' title or point out any defects therein.The Hall heirs point out that they claim under an instrument recorded on 12 January 1949, and Burlington Northern claims under mineral deeds first recorded on 29 April 1953.

Our analysis of the issues raised by the Hall heirs requires us to initially consider the knowledge, actual or constructive, or duty of inquiry attributable to L. P. Hall at the time the contract for deed between Mossers and Hall was executed, 1 December 1948.At that time the Mossers' interest in the land was traceable through an unrecorded instrument executed between themselves and Northwestern, a copy of which was in the hands of Mossers.

An unrecorded instrument is valid as between the parties and those who have notice thereof.NDCC Sec. 47-19-46.Notice shall be either actual or constructive.NDCC Sec. 1-01-22.Actual notice consists of express information of a fact.NDCC Sec. 1-01-23.Constructive notice means notice imputed by the law to a person not having actual notice.NDCC Sec. 1-01-24;Stone v. Bartsch, 76 N.D. 721, 39 N.W.2d 1(1949).NDCC Sec. 1-01-25 describes as follows what is deemed constructive notice:

"Every person who has actual notice of circumstances sufficient to put a prudent man upon inquiry as to a particular fact and who omits to...