Green v. Gustafson

• Decision Date: 19 March 1992
• Docket Number: No. 910106,910106
• Citation: 482 N.W.2d 842
• Parties: Jack D. GREEN, Plaintiff, Appellant and Cross-Appellee, v. Warren GUSTAFSON and Judy Gustafson, Defendants, Appellees and Cross-Appellants. Civ.
• Court: North Dakota Supreme Court

Page 842

482 N.W.2d 842

Jack D. GREEN, Plaintiff, Appellant and Cross-Appellee, v. Warren GUSTAFSON and Judy Gustafson, Defendants, Appellees and Cross-Appellants.

Civ. No. 910106.

Supreme Court of North Dakota.

March 19, 1992.

Lawrence D. DuBois (argued), of Fleming, DuBois & Trenbeath, Cavalier, for plaintiff, appellant, and cross-appellee.

David L. Petersen (argued), of Dahl, Greenagel, Currie & Petersen, Grafton, for defendants, appellees, and cross-appellants.

LEVINE, Justice.

Jack Green appeals from a district court judgment quieting title to certain property in him but requiring him to pay Warren and Judy Gustafson for the value of improvements they made to the property. The Gustafsons cross-appeal. We reverse the judgment and remand for further proceedings.

In 1947, Marvin Green and his two sons, Robert and George, acquired a house in Milton, North Dakota. Although the three held title as tenants in common, Marvin occupied the home as his residence. George died in 1963 and his 1/3 interest passed by intestate succession to his five children.

Marvin died in 1972. His will bequeathed his 1/3 interest in the property to Robert. William Heigaard was appointed executor of Marvin's estate and also served as attorney for the estate.

Robert died intestate in June 1975, before his father's estate was settled. Robert's sole surviving heir was his son, Jack. Heigaard was hired to probate Robert's estate by the personal representative, Lynn Bjarnason.

In August 1975, Heigaard, as executor of Marvin's estate, advertised the property for sale on bids. The advertisement did not indicate the divided ownership of the property. Warren and Judy Gustafson submitted the high bid of $7,550 for the property. Heigaard accepted their bid and the Gustafsons tendered a check for ten percent of the price. The check was never cashed, however, and remained in Heigaard's file until this action was commenced in 1988.

After the Gustafsons' bid was accepted, Heigaard allowed them to take possession of the property and authorized them to make improvements. ¹ At the time they purchased it, the house had been vacant for over three years and was uninhabitable. There was no running water, no heat, and the electrical wiring was substandard. Over the course of the next thirteen years, the Gustafsons completely renovated the house, including installation of new plumbing, new wiring and a new heating system, at a cost of over $45,000. They also paid all utilities and insurance.

On November 6, 1980, the Final Decree of Distribution in Robert's estate was issued and the estate was closed. This decree purported to transfer the property in its entirety to Jack Green, although Robert had held title to only a 1/3 interest in the property.

In December 1980, Heigaard commenced a quiet title action on behalf of Marvin's estate. Named defendants included George Green's five children and Robert Green, who had died in 1975 and whose estate had already been distributed. The suit did not name Jack Green, Robert's estate or the Gustafsons as defendants, nor were they served. Judgment was entered in 1981 quieting title in the Marvin Green estate and against the named defendants. ²

The Gustafsons continued to live in the house without objection until 1986, when they learned that the real estate taxes for 1976 through 1985 were delinquent and the property was in danger of loss to the county. Heigaard, as executor of Marvin's estate, negotiated with the county to reduce the outstanding taxes to $3,000. The Gustafsons then paid $3,000 to the estate and the estate in turn paid the $3,000 to the county. Since 1986, the Gustafsons have regularly paid the taxes.

When it became apparent that Jack Green would not consent to a conveyance to the Gustafsons, Heigaard, on August 22, 1987, issued a personal representative's deed of distribution, purportedly conveying Marvin's estate's interest in the property to Jack. Marvin's estate was finally closed on November 4, 1987.

In May 1988, Jack commenced an eviction action against the Gustafsons. They answered and counterclaimed, asserting ownership of the property. The case was transferred to district court by stipulation. Jack served an amended complaint, seeking to quiet title, to evict the Gustafsons and to recover nearly $30,000 in damages for fair rental value. The Gustafsons filed an amended answer and counterclaim, seeking to quiet title in themselves or, alternatively, seeking reimbursement for the value of the improvements made to the property.

The case was tried to the court. The court determined that Jack was the owner of the property and that the Gustafsons were not entitled to specific performance of the contract for sale. The court concluded, however, that the Gustafsons had held under color of title in good faith and accordingly were entitled to recover the value of the improvements. See Section 32-17-08, N.D.C.C. The court reserved the question of the value of the improvements, and gave Jack the choice of two options: (1) he could ratify the sale to the Gustafsons, or (2) he could retain the property but pay the Gustafsons the value of the improvements, less the value of the Gustafsons' use and occupancy.

Jack elected not to ratify the sale and so a second trial was held, limited to issues of valuation. The trial court found that the present value of the property was $44,000; the value of the improvements was $39,000; the value of the unimproved house and lot was $5,000; and the value of the Gustafsons' use and occupancy of the unimproved house and lot from September 1975 to December 1990 was $4,575. The court again gave Jack two options: (1) he could convey the property to the Gustafsons for $9,575 ($5,000 unimproved value plus $4,575 use and occupancy), or (2) he could retain the property by paying the Gustafsons $34,425 ($39,000 for improvements less $4,575 for use and occupancy).

Jack appealed, asserting that the Gustafsons are not entitled to recover for the value of improvements and challenging various findings of fact on value. The Gustafsons cross-appealed, asserting that the trial court erred when it refused to enforce the contract for sale.

The dispositive issue on appeal is whether the trial court erred in quieting title in the property in Jack or whether the Gustafsons had a valid claim of title in the property. Our resolution of this issue requires careful juxtaposition of several divergent legal theories and produces a result which lies somewhere between the two extremes urged by the parties.

The first issue presented is whether Heigaard had authority to sell the property. The parties concede that this issue is governed by the provisions of Title 30.1, N.D.C.C., the codification of the Uniform Probate Code.

Section 30.1-18-11, N.D.C.C. [U.P.C. Sec. 3-711], gives a personal representative broad powers over the property of the estate:

"Powers of personal representatives--In general.--Until termination of his appointment, a personal representative has the same power over the title to property of the estate that an absolute owner would have, in trust however, for the benefit of the creditors and others interested in the estate. This power may be exercised without notice, hearing, or order of court."

Section 30.1-18-15(6), N.D.C.C. [U.P.C. Sec. 3-715], specifically authorizes the personal representative to "[a]cquire or dispose of an asset, including land ..., for cash or on credit, at public or private sale"; and Section 30.1-18-15(23) provides that the personal representative may "[s]ell, mortgage, or lease any real or personal property of the estate or any interest therein."

Section 30.1-18-14, N.D.C.C. [U.P.C. Sec. 3-714], provides broad protections to parties dealing with the personal representative:

"A person who in good faith either assists a personal representative or deals with him for value is protected as if the personal representative properly exercised his power. The fact that a person knowingly deals with a personal representative does not alone require the person to inquire into the existence of a power or the propriety of its exercise...."

The intent of these provisions is to adequately protect persons dealing in good faith with a personal representative and to avoid the necessity of court orders in routine probate administrations. See 1 Wellman, Uniform Probate Code Practice Manual 319 (2d ed. 1977). As further noted by Professor Wellman:

"Section 3-714 explicitly protects purchasers from the possibility that a sale which a PR may have made was unnecessary or at too low a price or even against the terms of a will. The purchaser is explicitly excused from examining the terms of the will, court records relating to the appointment, or other sources that might be relevant to the question of whether the sale is proper as between the fiduciary and those entitled to the inheritance." 1 Wellman, Uniform Probate Code Practice Manual, supra, at 407.

Jack concedes that these statutes authorized Heigaard to sell the estate's interest in the property to the Gustafsons. ³ However, Jack asserts that the purported sale of the entire property, when the estate included only a lesser interest, rendered the sale void. The Gustafsons assert that because Heigaard was also the attorney for Robert's estate, which at the time of the sale included an undivided 1/3 interest in the house, he also had apparent authority to sell that interest in the property. Thus, they assert, the protections of Section 30.1-18-14, N.D.C.C., apply.

We agree with Jack that Heigaard's authority to sell the property extended only to Marvin's estate's interest therein, which consisted of Marvin's 1/3 interest and the 1/3 interest of George's heirs which was quieted in Marvin's estate in the action to quiet title. The Uniform Probate Code provisions that authorize the personal representative to sell property extend only to property included in the estate. It is axiomatic that the personal...