Egli v. Troy

• Decision Date: 17 November 1999
• Docket Number: No. 98-831.,98-831.
• Citation: 602 N.W.2d 329
• Parties: John A. EGLI and Margaret L. Egli, Appellees, v. Todd M. TROY, Diana J. Troy, Joseph Ranson a/k/a Joseph H. Ranson, Jr., and Diane Ranson a/k/a Diane C. Ranson, Appellants, v. Rosemary E. Greve, Appellee.
• Court: Iowa Supreme Court

602 N.W.2d 329

John A. EGLI and Margaret L. Egli, Appellees, v. Todd M. TROY, Diana J. Troy, Joseph Ranson a/k/a Joseph H. Ranson, Jr., and Diane Ranson a/k/a Diane C. Ranson, Appellants, v. Rosemary E. Greve, Appellee.

No. 98-831.

Supreme Court of Iowa.

November 17, 1999.

Les V. Reddick, Todd L. Stevenson, and D. Flint Drake of Kane, Norby & Reddick, P.C., Dubuque, for appellants.

William C. Fuerste of Fuerste, Carew, Coyle, Juergens & Sudmeier, P.C., Dubuque, for appellees John A. Egli and Margaret L. Egli.

Timothy J. Healy, Farley, for appellee Rosemary E. Greve.

Considered by McGIVERIN, C.J., and LARSON, CARTER, CADY, and ANDREASEN,¹ JJ.

LARSON, Justice.

When these plaintiffs, the Eglis, discovered a home being built on land they thought was theirs, they brought an action against the parties building the house, the Troys, as well as other adjoining neighbors, the Ransons, who the Eglis claim were also asserting dominion over some of the Egli land. The Eglis' action was brought under Iowa Code chapter 650 (1995) to establish ownership of the land by acquiescence.

The Troys and Ransons brought in their seller, Rosemary Greve, on a third-party petition asserting breach of a special warranty deed given to the Ransons (who later conveyed part of it to the Troys). The district court, Robert J. Curnan, Judge, entered summary judgment against the Troys and Ransons on their third-party claim against Mrs. Greve. Later, the court, Lawrence H. Fautsch, Judge, ruled in favor of the Eglis on their claim that the property in question was bounded by a fence line. This is so, according to the court, because the fence line had been established for over ten years and the adjoining owners had acquiesced in the fence as a boundary. We affirm the acquiescence ruling but reverse the summary judgment in favor of the third-party defendant.

I. Facts.

Two parcels of land in Dubuque County are involved. Both are shaped as right triangles, and both are located on the east side of a common fence line, forming the hypotenuse for both triangular tracts. The tracts, whose right-angle legs are shown with heavy marking on the attached plat, are designated on the plat as "disputed area 1" and "disputed area 2." The house is being built in disputed area 1.

The Eglis claim they own the two tracts because they and their predecessors on the east side of the fence have treated the fence as the boundary, and the Troys, Ransons, and their predecessors on the west side of the fence have acquiesced in that boundary line for over ten years. See Iowa Code § 650.14.

Rosemary Greve, who gave a special warranty deed to the Ransons, was brought in as a third-party defendant. The extent of her liability under that deed is discussed in the following division.

II. The Special Warranty Deed.

When the Ransons purchased their property from Elmer and Rosemary Greve in 1988, part of it was purchased for cash, with a warranty deed, and the balance was purchased on an installment contract. The contract was paid off in 1996. In the meantime, Elmer Greve had died. When the Ransons paid off the contract, a court officer's deed was given to convey Elmer's share of the land to the Ransons. Rosemary Greve conveyed her interest by the special warranty deed now at issue. The deed provided in part:

Grantors do Hereby Covenant with Grantees and successors in interest to Warrant and Defend the real estate against the lawful claims of all persons claiming by, through or under them, except as may be above stated.

The Ransons, relying on the covenants of this deed, seek protection in the event they lose on the Eglis' claim of title by acquiescence. The district court granted Greve's motion for summary judgment, ruling that Greve could not be held liable under any covenants of the deed because the suit by the Eglis was not a claim by "persons claiming by, through or under" her.

Special warranty deeds such as this, covenanting only against liens or encumbrances by the seller, are commonly used to convey legal title on satisfaction of an installment real estate contract.

Under a contract for a deed the vendee is customarily in possession for a number of years before the deed is executed. He is thus in a position to make and suffer liens and other encumbrances upon the property. The vendor in his deed naturally does not want to warrant that the title is free from such liens. If a general deed form, and not the special form warranting only for the acts of the grantor, is used, it is recommended that a statement similar to the following be added to the deed in the space for listing encumbrances:

... that they are free from incumbrances except as to any liens or incumbrances created or suffered to be created by the acts or defaults of the grantee.

1 Marlin M. Volz, Jr., Iowa Practice § 7.32, at 163 (3d ed.1996).

We have not previously considered special warranty deeds under similar circumstances. The parties cite an old Iowa case, Funk v. Creswell, 5 Iowa 62 (1857), which discussed various types of warranties in deeds but lends no help in this case. Nor do any other Iowa cases. Other courts, however, have discussed the role of special warranty deeds. The North Dakota Supreme Court has stated, "under a special warranty deed a grantor is liable if the grantee's ownership is disturbed by some claim arising through an act of the grantor." Stracka v. Peterson, 377 N.W.2d 580, 583-84 (N.D.1985). In Central Life Assurance Society v. Impelmans, 13 Wash.2d 632, 126 P.2d 757, 763 (1942), the Washington Supreme Court held a special warranty deed normally warrants title only against claims held by, through, or under the grantor, or against incumbrances made or suffered by him, and it cannot be held to warrant title generally against all persons. The Arkansas Supreme Court has stated a special warranty deed "simply warrants the title against all defects therein done or suffered by the grantor." Reeves v. Wisconsin & Arkansas Lumber Co., 184 Ark. 254, 42 S.W.2d 11, 12 (1931) (emphasis added).

The issue before us is whether a grantor who has allegedly acquiesced in the establishment of an encumbrance on real estate is responsible for a claim "by, through or under" the vendor, as these third-party petitioners claim. We believe the warranty in this case covers claims permitted by the vendor as well as those affirmatively created by her. If that were not so, encumbrances such as mechanics' liens, which are imposed by others, would be excluded from the warranty. We do not believe that would be a reasonable interpretation of the warranting language.

The third-party defendant, Greve, does not appear to challenge this as a legal proposition or claim an acquiescence cannot constitute a breach of warranty under such a deed. She argues principally that, even assuming acquiescence can give rise to a claim covered by the warranty, any title acquired by her neighbors across the fence through acquiescence occurred long before she and her husband acquired title in 1964. Therefore, according to her, any acquiescence in the boundary line during the time the Greves owned the property would be irrelevant.

The acquiescence, if any, cannot be pinpointed in terms of time. In fact, the district court, in denying the Eglis' motion for summary judgment (in which they attempted to fix a pre-1964 acquiescence as a matter of law) stated, "the court cannot find as a matter of law that the boundaries were established by acquiescence prior to the Greves' 1964 purchase of the ... property." We agree; the third-party petitioners should be permitted to show when, with respect to the Greves' ownership, the acquiescence occurred.

We hold that the special warranty deed warranted against claims arising through acquiescence by the Greves as well as any affirmative acts by them. A genuine issue of material fact was generated as to whether the Greves were responsible for any part of the ten-year period of acquiescence. It was therefore error for the court to grant summary judgment in favor of Greve. We reverse and remand for further proceedings on the third-party petition.

III. The Court's Finding That the Fence Line Was Established by Acquiescence.

An action under Iowa Code chapter 650 to establish a boundary is considered on appeal as an ordinary action. Iowa Code §§ 650.4, 650.15. The district court's judgment has the effect of a jury verdict, and on appeal the only inquiry is whether the findings are supported by substantial evidence. Ollinger v. Bennett, 562 N.W.2d 167, 170 (Iowa 1997). The Troys and Ransons argue that the record does not meet that test. They argue that the fence in question was only a barrier, apparently for grazing livestock, and not intended to be a boundary. See Brown v. McDaniel, 261 Iowa 730, 735, 156 N.W.2d 349, 352 (1968)

.

Under Iowa Code section 650.14 [i]f it is found that the boundaries and corners alleged to have been recognized and acquiesced in for ten years have been so recognized and acquiesced in, such recognized boundaries and corners shall be permanently established.

"Acquiescence"...