Coverston v. Egeland

• Decision Date: 18 April 1955
• Docket Number: No. 7502,7502
• Citation: 69 N.W.2d 790
• Parties: William COVERSTON, Plaintiff and Respondent, v. Harry EGELAND, Defendant and Appellant.
• Court: North Dakota Supreme Court

Page 790

69 N.W.2d 790

William COVERSTON, Plaintiff and Respondent, v. Harry EGELAND, Defendant and Appellant.

No. 7502.

Supreme Court of North Dakota.

April 18, 1955.

Syllabus by the Court.

1. A valid tax deed clothes the grantee with a new and complete title under an independent grant from the sovereign authority of the state.

2. The recording of a properly executed trust deed in the office of the register of deeds gives constructive notice of the trust with respect to real property described in the deed and lying within the county in which the deed is recorded.

3. An order entered in trust proceedings by which the district court assumes jurisdiction and supervision of a trust entered upon the notice prescribed by Section 59-0405 NDRC 1943 has the force and effect of a judgment.

4. Interests in real property disclosed only by documents in a trust file in the office of the clerk of the district court which are not shown by dockets or indices to affect the real property are not interests 'shown of record in the office of the register of deeds, the clerk of the district court, or the county auditor of the county in which such land lies,' within the meaning of the provisions of Section 32-1707 NDRC 1943.

5. Where a trust deed has been duly recorded and the district court has in proper proceedings acquired jurisdiction and assumed supervision of the trust, persons shown by the trust file in the office of the clerk of the district court to have an interest in real estate that was trust property cannot be proceeded against as persons unknown in an action to quiet title to property that formed a part of the trust.

6. The terms 'merchantable' and 'marketable' are ordinarily synonymous when used in connection with real estate titles.

7. A marketable title is one that is free from reasonable doubt.

8. Where a judgment quieting title has been rendered in an action in which jurisdiction has not been obtained of all possible claimants to the property and the judgment is therefore not binding upon some of them, the judgment and findings may nevertheless be considered as evidence bearing upon the marketability of the title.

9. A tax deed valid upon its face is prima facie evidence of the truth of the facts recited in the deed with respect to the tax deed proceedings upon which it is based.

10. Where a certain theory as to the measure of damages or the amount of recovery is pursued by the parties and the court in the trial of an action and evidence supporting the theory has been introduced without objection, the theory upon which the case was tried may not be attacked in the appellate court whether it is correct or not.

Daniel S. Letnes and H. G. Ruemmele, Grand Forks, for defendant-appellant.

Day, Stokes, Vaaler & Gillig, Grand Forks, for plaintiff-respondent.

MORRIS, Judge.

This is an action for damages for breach of contract wherein the plaintiff seeks to recover on the allegation that on April 16, 1952, the parties entered into a written agreement whereby the plaintiff sold and the defendant agreed to purchase Lot 11, Block 7, Dacotah Place Addition, Grand Forks, North Dakota, for the sum of one thousand dollars and that the defendant breached the contract by refusing to make the payments therein provided. The defendant in answer to plaintiff's claim sets up that the plaintiff failed to make a tender of marketable title to the premises involved in accordance with the provisions of the contract within thirty days and has never since made a tender of a marketable title and that the plaintiff is in default under his agreements and covenants.

The written contract involved herein is designated 'Earnest Money Receipt.' It is dated April 16, 1952, and acknowledges the receipt from Harry Egeland of one hundred dollars as earnest money in part payment of the purchase price of the lot involved in this action which was sold to Harry Egeland for the sum of one thousand dollars, one hundred dollars being paid in cash and nine hundred dollars payable on or before thirty days. The receipt further states: 'We agree that the title to said premises is marketable and that conveyance will be made clear of the all encumbrances, * * *.' It is signed by the R. H. Sutton Real Estate Company. Attached to the receipt is an agreement signed by Harry Egeland to purchase the premises described above at the price and on the terms stipulated therein. Also attached is this statement: 'I hereby approve and accept above offer to purchase and authorize R. H. Sutton Real Estate Co. to close sale and act as my agent in this transaction.' which is signed by the plaintiff.

The plaintiff promptly furnished to the defendant an abstract of title which the defendant submitted to an attorney for examination. That attorney's opinion, dated April 18, 1952, recites the following:

'From this examination I am of the opinion that W. M. Coverston, of Grand Forks, N. D. is the owner in fee simple of said Lot, but that his title is not merchantable, because

'(1) Title was acquired by W. M. Coverston, by Tax Deed on October 2, 1945, as shown at entry #60 of the abstract. The record title owner prior to the time when the County took title, as shown at entry #59 and on October 2, 1940, was the First National Bank of Grand Forks, North Dakota, a corporation, as Trustee, pursuant to a certain written Trust Agreement dated September 17, 1926, as set out at entry #55 of the abstract.

'(2) At entry #61 there is a Judgment in an action wherein W. M. Coverston is the Plaintiff against various defendants, which Judgment is dated May 4, 1946. In my opinion this action did not make the title merchantable. An examination of the records of the Office of the Clerk of District Court, Grand Forks County, North Dakota, discloses the Receiver of the First National Bank of Grand Forks placed the jurisdiction over the Trust in the District Court in the year 1936, and that the First National Bank of Grand Forks was discharged as Trustee on November 5, 1936, when the First National Bank in Grand Forks consented to act and became the acting Trustee of the Trust until July 13, 1949, when they were discharged by Order of the Court.

'The file discloses that Lot 11, in Block 7, Dacotah Place Addition to Grand Forks, was sold to Charles Breen, also known as Chas. A. Breen, of Grand Forks, on or about June 26, 1930, and that most likely a deed was issued to said Breen.

'It would be my opinion that the First National Bank in Grand Forks, as Trustee of the said Trust should have been named a Party Defendant, and that Charles Breen, also known as Chas. A. Breen, should also have been named a Party Defendant, and that neither of these parties are included in the designation of 'unknown persons' and that so far as their interests are concerned at the time of the action the Court acquired no jurisdiction over them and could not adjudicate their interests. This file also shows that Canada North Dakota Land Company, Ltd., Caroline W. Fraser, and Grace A. Fraser, the Trustors in the Trust Agreement, had no further interest in the trust or the property of the trust in 1936, and that the Home Builders Investment Company was entitled to all interest in the trust.'

The plaintiff was promptly notified of the objections to the title and about a week later he, together with Mr. Sutton of the real estate firm, went to see the defendant. The plaintiff told the defendant that he would get the title fixed up and would have the title quieted a second time. The testimony is sharply conflicting as to what happened next. The plaintiff testified that he told the defendant that he would have title quieted a second time and the defendant agreed to wait until the second action was completed and would take the property. The defendant testified that he told the plaintiff that if the title was not cleared in thirty days the defendant could not use the lot. Sutton corroborates the defendant's testimony with respect to that conversation. There apparently were some further negotiations regarding the matter, for on December 22, 1952, defendant's counsel receipted to plaintiff's counsel for the abstract of title.

The one hundred dollar payment referred to in the earnest money receipt was in the form of a check signed by the defendant, dated April 14, 1952, and payable to the Sutton Real Estate Company. Mr. Sutton retained the check, refused to deliver it to the plaintiff, and later returned it to the defendant. On May 9, 1952, the plaintiff instituted a second action to quiet title to the lot in question. Proceedings in this action were conducted with dispatch and a second judgment quieting title in the plaintiff was rendered on July 8, 1952. This judgment obviated all of the objections to the marketability of the title raised by the examining attorney in his opinion of April 18, 1952.

The defendant refused to accept conveyance of the property on the ground that marketable title had not been perfected within thirty days from the date of the earnest money receipt and he was no longer bound thereby. In May 1953 the plaintiff sold the lot for five hundred dollars. In this action plaintiff asks damages in the sum of five hundred dollars, which is the difference between what the defendant had agreed to pay and what the plaintiff was finally able to sell the lot for. The case was tried to the court without a jury and the court found that the plaintiff and the defendant entered into a subsequent agreement wherein the plaintiff agreed to quiet title to the property to satisfy the objections of the examining attorney and that in compliance with this agreement the second action to quiet title was brought and additional tender of title made. He also found that the defendant refused to perform pursuant to the written agreement or the subsequent oral agreement and that plaintiff thereafter sold the property for five hundred dollars, which was the best price then obtainable. On the basis of these findings the trial court re...