Dixon v. Dixon

• Decision Date: 12 July 2017
• Docket Number: No. 20160438,20160438
• Citation: 898 N.W.2d 706
• Parties: Billie DIXON, Trustee of the Shirley A. Dixon Trust, Plaintiff and Appellee v. John W. DIXON, individually, Defendant and Appellant and John W. Dixon and Kimberly B. Dixon, as Conservators of the Estate of K.S.D., Defendants
• Court: North Dakota Supreme Court

898 N.W.2d 706

Billie DIXON, Trustee of the Shirley A. Dixon Trust, Plaintiff and Appellee

v.John W. DIXON, individually, Defendant and AppellantandJohn W. Dixon and Kimberly B. Dixon, as Conservators of the Estate of K.S.D., Defendants

No. 20160438

Supreme Court of North Dakota.

Filed July 12, 2017

Amy L. De Kok (argued) and Jade B. Jorgenson (on brief), Bismarck, ND, for plaintiff and appellee.

Gregory W. Hennessy, Williston, ND, for defendant and appellant John W. Dixon.

Kapsner, Justice.

[¶ 1] John Dixon appeals from a judgment reforming a warranty deed to except and reserve mineral interests in certain real property from the conveyance and retain the minerals as the property of the Shirley A. Dixon Trust. John Dixon argues the district court erred in reforming the deed because there was no evidence of a mutual mistake and the statute of limitations precluded the reformation claim. We affirm, concluding the district court did not err in reforming the deed and the statute of limitations argument was waived.

I

[¶ 2] In the 1960s Shirley Dixon purchased a tract of real property in McKenzie County described as:

Township 148 North, Range 98 West

Section 31: Lots 2 and 3, SE1/4NW1/4, NE1/4SW1/4, SE1/4

In 1972, the Shirley A. Dixon Revocable Trust was created. Shirley Dixon's husband, William Dixon, was appointed trustee. The trust agreement stated Shirley Dixon's children, Billie Dixon, John Dixon, Dotti Dixon Schmeling, and Patricia Syminow, would become the remainder beneficiaries of the trust upon her death and the trust property would be allocated equally among the children. The Section 31 property was transferred to the trust.

[¶ 3] In 1996, William Dixon, as trustee, executed a warranty deed conveying the Section 31 property. The deed granted John Dixon a life estate in the Section 31 property, with the remainder interest to John Dixon's surviving children in equal shares, and if John Dixon was not survived by children, the remainder would go to Shirley Dixon's three daughters as joint tenants. The deed stated it excepted and reserved all prior mineral conveyances, reservations and easements of record.

[¶ 4] In 2000, John Dixon's child was born. In December 2000, William Dixon requested John Dixon sign a mineral deed conveying an undivided three-fourths interest in and to the minerals in and under the Section 31 property equally to Billie Dixon, Patricia Syminow, and Dotti Dixon Schmeling. The deed stated, "It is the intent of the Grantors to convey to each of the Grantees an undivided 1/4th interest of the oil and gas minerals that the Grantors presently own on the above described property." John Dixon executed the requested mineral deed.

[¶ 5] In 2006, Patricia Syminow died. In 2009, William Dixon resigned as trustee and Billie Dixon was appointed successor trustee. William Dixon died in 2010, and Shirley Dixon died in 2015.

[¶ 6] In August 2013, Billie Dixon, as trustee, sued John Dixon, individually, and John Dixon and his wife, as the conservators of their child's estate, seeking injunctive relief, declaratory judgment, and to quiet title, or, alternatively, for reformation of the 1996 warranty deed. She alleged William Dixon intended to reserve the minerals in and under the Section 31 property from the 1996 Warranty Deed and retain the minerals as the property of the trust.

[¶ 7] After a bench trial, the district court found Shirley and William Dixon attempted to treat their children equally with respect to the trust and other property they owned, William Dixon executed the 1996 Warranty Deed conveying the Section 31 property to John Dixon, and Shirley and William Dixon gifted money to their other three children in an amount equal to the value of the surface interest of the Section 31 property. The court found Shirley and William Dixon realized a mistake was made in the 1996 Warranty Deed and they mistakenly conveyed the minerals to John Dixon instead of reserving them from the conveyance to remain in the trust. The Court found Shirley and William Dixon wanted the mineral interests to be split equally among their children and they requested John Dixon sign the 2000 Mineral Deed conveying an undivided three-fourths interest in the minerals in the Section 31 property equally to his three siblings. The court found the 2000 Mineral Deed did not correct the mistake because it only transferred a life estate interest in the minerals to the siblings. The court found the siblings executed mineral leases as if they each owned a one-fourth undivided mineral interest in fee simple, and Billie Dixon and Dotti Dixon Schmeling did not become aware of any problems or concerns with their ownership until 2012 or 2013 when they were contacted by an oil company questioning how the company should disburse royalties. The court found Billie Dixon proved by clear and convincing evidence that a mutual mistake was made in transferring the mineral interests to John Dixon through the 1996 Warranty Deed and the "botched attempt" of the "corrective" 2000 Mineral Deed. The court reformed the 1996 Warranty Deed to reserve and except the minerals and retain the mineral interests as property of the trust to be distributed in accordance with the trust's terms and conditions.

II

[¶ 8] In an appeal from a bench trial, the district court's factual findings are reviewed under the clearly erroneous standard and its conclusions of law are fully reviewable. KLE Constr., LLC v. Twalker Dev., LLC , 2016 ND 229, ¶ 5, 887 N.W.2d 536. A finding is clearly erroneous if there is no evidence to support it, if it is induced by an erroneous view of the law, or if, after reviewing all of the evidence, we are left with a definite and firm conviction a mistake has been made. Id. "A court's choice between two permissible views of the weight of the evidence is not clearly erroneous, and simply because we may have viewed the evidence differently does not entitle us to reverse the court." Krenz v. XTO Energy, Inc. , 2017 ND 19, ¶ 18, 890 N.W.2d 222. Whether a contract contains a mistake sufficient to support a claim for reformation is a question of fact. Freidig v. Weed , 2015 ND 215, ¶ 13, 868 N.W.2d 546.

III

[¶ 9] John Dixon argues the district court erred in finding there was a mutual mistake in executing the 1996 Warranty Deed requiring reformation of the deed. He claims William Dixon gifted the Section 31 property to him and money to the other three siblings, which were approximately equal gifts, and there was no mutual mistake.

[¶ 10] Under N.D.C.C. § 32-04-17, a deed may be reformed:

When, through fraud or mutual mistake of the parties, or a mistake of one party which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised on the application of a party aggrieved so as to express that intention so far as it can be done without prejudice to rights acquired by third persons in good faith and for value.

"A party seeking reformation has the burden to prove by clear and convincing evidence that a written agreement does not fully or truly state the agreement the parties intended to make." Freidig , 2015 ND 215, ¶ 12, 868 N.W.2d 546.

[¶ 11] Deeds are construed in the same manner as contracts and will be interpreted to give effect to the parties' mutual intention as it existed at the time of contracting. Freidig, 2015 ND 215, ¶ 10, 868 N.W.2d 546.

When the language of a deed is plain and unambiguous and the parties' intentions can be ascertained from the writing alone, extrinsic evidence is inadmissible to alter, vary, explain, or change the deed. If a contract is ambiguous, extrinsic evidence may be considered to clarify the parties' intentions. A contract is ambiguous when rational arguments can be made for different interpretations. Whether a contract is ambiguous is a question of law for the court to decide. On appeal, we independently review a contract to determine if it is ambiguous.

Goodall v. Monson , 2017 ND 92, ¶ 7, 893 N.W.2d 774 (quoting Nichols v. Goughnour , 2012 ND 178, ¶ 12, 820 N.W.2d 740 ).

[¶ 12] The 1996 Warranty Deed stated William Dixon, as trustee of the Shirley A. Dixon Trust, granted the Section 31 property to John Dixon, "for his lifetime, remainder to John's children in equal shares, as joint tenants, if he is survived by children, and if he is not survived by children, to our three daughters, BILLIE DIXON, DOROTHY SCHMELING and PATRICIA SYMINOW, as joint tenants." It also stated all prior mineral conveyances, reservations, and easements were excepted and reserved. The 2000 Mineral Deed stated John Dixon and his wife "grant, bargain, sell, convey, transfer, assign and deliver unto BILLIE DIXON, ... PATRICIA SYMINOW, ... and DOROTHY DIXON SCHMELING, ... an undivided three-fourths interest in and to all of the oil, gas, casinghead gas, casinghead gasoline, and other minerals in and under and that may be produced from [the Section 31 property]." The deed further provided, "It is the intent of the Grantors to convey to each of the Grantees an undivided 1/4th interest of the oil and gas minerals that the Grantors presently own on the above described property."

[¶ 13] The district court interpreted the deeds and concluded the 1996 Warranty Deed is unambiguous, but stated it was appropriate to consider extrinsic evidence in deciding whether the deed reflected the parties' true intention. The court explained, "The 1996 Warranty Deed while being unambiguous on its face is latently ambiguous when it is read with the 2000 Mineral Deed and Trust Agreement, and extrinsic evidence is allowed to explain the parties' intent."

[¶ 14] Although extrinsic evidence is generally not allowed when the language of a deed is unambiguous, a latent ambiguity may be explained by extrinsic evidence. Goodall , 2017 ND 92, ¶ 9, 893 N.W.2d 774. "A latent ambiguity is an uncertainty which does not appear on the face of the deed, but which is shown to exist for the first time by matter outside the writing when...