Hodny v. Hoyt

• Decision Date: 11 June 1976
• Docket Number: No. 9193,9193
• Parties: Wm. F. HODNY and Doris L. Hodny, Plaintiffs-Appellants, v. Comfort L. HOYT et al., Defendants-Appellees, v. The Answering Defendants, Richard M. HOYT, et al., Third-Party Plaintiffs andAnswering Defendants, v. GRAND LODGE OF the KNIGHTS OF PYTHIAS, DOMAIN OF NORTH DAKOTA, Third-PartyDefendant and Appellant.
• Court: North Dakota Supreme Court

Page 350

243 N.W.2d 350

Wm. F. HODNY and Doris L. Hodny, Plaintiffs-Appellants, v. Comfort L. HOYT et al., Defendants-Appellees, v. The Answering Defendants, Richard M. HOYT, et al., Third-Party Plaintiffs andAnswering Defendants, v. GRAND LODGE OF the KNIGHTS OF PYTHIAS, DOMAIN OF NORTH

DAKOTA, Third-PartyDefendant and Appellant.

No. 9193.

Supreme Court of North Dakota.

June 11, 1976.

Syllabus by the Court

1. Where the record shows that there were no members in the Lodge and that it had no assets, and no evidence was presented that the Lodge had actually continued to function in any manner, we cannot conclude that the finding of fact by the trial court that the Lodge had ceased to exist in 1934 was clearly erroneous. (Rule 52(a), NDRCivP)

2. Until there has been a legally recognizable denial or repudiation of the trust by the trustee the possession of the trustee (of an express or continuing trust) is presumed to be that of the cestui que trust and the statute of limitations does not run between them.

3. To set the statute of limitations in operation, there must be a distinct repudiation of the trust by the trustee, amounting to a denial of its existence, and no mere tacit failure of the trustee to perform his duty should be held to amount to a repudiation.

4. For a trustee's repudiation of an express trust to be sufficient to set the statute of limitations in motion in his favor against the beneficiary, the beneficiary must have notice of the repudiation, and under North Dakota law the trustee is required to inform the beneficiary of his acquisition of any duty or adverse interest to the beneficiary before he will be considered to have such notice.

5. Section 47--19A--11 of the Marketable Record Title Act provides that the Act shall not apply to any rights of any remainderman upon the expiration of any life estate or trust created before the recording of a deed of conveyances.

6. The burden rests on the person who claims the property under a deed from the trustees to establish that the conditions of the trust deed have been met so as to justify the chain of conveyances under which he claims.

7. A party will not be barred by laches from asserting a claim when he had no knowledge and has no reason to know that there has been a repudiation or breach of the trust.

C. J. Schauss, Mandan, for plaintiffs-appellants.

Sperry & Schultz by Alfred C. Schultz, Bismarck, McCrady, Kreimer, Ravick & Bonistalli by Joseph J. Bonistalli, Pittsburgh, Pa., for defendants-appellees.

SAND, Judge.

This is an appeal from the judgment of the Morton County District Court refusing to quiet title in William and Doris Hodny to certain land in Morton County in accordance with their petition and holding that the heirs of Abbie Hoyt were entitled to possession of the land in question.

The land over which this dispute arose is described as the Southwest Quarter of Section Four, in Township One Hundred Thirty-eight North, Range Eighty-one West of the Fifth Principal Meridian, in Morton County, North Dakota.

On November 5, 1924, the owner of this land, Comfort L. Hoyt, transferred the land by trust deed to A. W. Patterson, John L. Bowers, and George F. Wilson, as Trustees. Under the terms of the trust, the trustees were to hold the land for Mandan Lodge No. 14, Knights of Pythias of the Domain of North Dakota for ten years. After the expiration of ten years the land was to be deeded to the Mandan Lodge, if the Lodge was still in existence. The land was to be conveyed to the Grand Lodge prior to the expiration of the ten-year period if the Grand Lodge of the Knights of Pythias of the Domain of North Dakota constructed a 'Pythian Home' on the land or on another suitable location near Mandan. The trust also provided that any income from the land be held in trust for the Mandan Lodge or the Grand Lodge.

In the event the Mandan Lodge ceased to exist before the ten years expired and the Grand Lodge had failed to construct the Home in that time, the land was to be conveyed by the trustees to Annie S. Hoyt and Abbie Hoyt, if living, and if not, to John S. Hoyt and his heirs.

It is undisputed that the Grand Lodge did not construct a Pythian Home. However, the question of whether the Mandan Lodge was in existence in 1934 is in dispute. The trustees did not convey the land at the end of ten years (1934) to the Mandan Lodge or to Annie or Abbie Hoyt. The land was rented out in 1926, and continued to be rented out after 1934. The rent money was paid to the trustees and placed in an envelope marked 'Trustee for the Knights of Pythias.'

All of the original trustees named in the trust deed are now deceased. Albert Patterson died in 1933, George Wilson in 1934, and John Bowers in 1955.

Comfort L. Hoyt died September 17, 1925. His estate was probated in Morton County and a decree was issued transferring his property to Annie and Abbie Hoyt. The property under consideration in this action was not mentioned in that decree. Annie Hoyt died in 1933, leaving Abbie Hoyt as her sole heir. Abbie made no claim to the land in 1934 or at any time thereafter. Abbie Hoyt died in 1963. She left a will with a residuary clause under which her property would pass to her heirs, the defendants in this case.

From 1926 until his death in 1969, Ed Pulkrabek rented the land. Pulkrabek paid the rent to the trustee John Bowers, until Bowers' death in 1955. After that the rent was paid to Bowers' attorney, who deposited the money in the bank to the account of J. L. Bowers, Trustee for the Knights of Pythias.

In 1960 or 1961, Pulkrabek sublet the land to Francis J. Kahl. Kahl, believing Pulkrabek to be the owner of the land, paid the rent to him. Following Pulkrabek's death, Kahl, being uncertain as to whom he should pay the rent, asked his attorney and the State's Attorney what he should do. He was advised to have the land put on the tax rolls, which he did in 1970. Prior to that time no taxes had been levied on the land. He also started a search for the heirs of Comfort Hoyt.

In 1973, William Hodny made inquiries regarding the purchase of the land from the Knights of Pythias. On August 6, 1973, three trustees were appointed by the district court as successors to the trustees initially named. On October 10, 1973, a special warranty deed was executed by the trustees conveying the property in question to the Grand Lodge of the Knights of Pythias, which later conveyed it by a quitclaim deed to Hodny for the sum of $16,000. Hodny also paid the back taxes for 1970, 1971, and 1972. The record does not disclose a tax deed having been issued to Hodny, and neither does he claim to have received one.

Hodny, after acquiring the quitclaim deed, informed Francis Kahl that he was the owner of the land and proceeded to fence that side of the land which abutted on a section of Kahl's own land. Kahl refused to acknowledge Hodny's ownership of the land and removed sections of the fence.

Hodny and his wife then brought an action to quiet title to the land in himself and his wife, naming as defendants Comfort L. Hoyt, Annie S. Hoyt, Abbie Hoyt, John S. Hoyt, and all persons unknown claiming under one of the decedents. Following the commencement of this action, Francis J. Kahl interposed an answer. Hodny moved for and was granted summary judgment against Kahl. Richard M. Hoyt, John A. Hoyt, Catherine Sellers, Michaela F. Junge, Eleanor G. Kistler, and Lorraine H. Kelly then petitioned the court for leave to intervene and were made defendants in the action. A default judgment was granted against the original defendants in the action. The later defendants, Richard M. Hoyt, et al., were excepted from this judgment and continued the suit in the district court.

Francis Kahl appealed from the summary judgment granted in favor of the Hodnys. Richard A. Hoyt, et al., appealed from the judgment rendered against Comfort L. Hoyt, Et al. The North Dakota Supreme Court held the judgments were not appealable because of failure to conform with the requirements of Rule 54(b), North Dakota Rules of Civil Procedure. Hodny v. Hoyt, 224 N.W.2d 826 (N.D.1974).

The trial from which this appeal was taken was then held, which resulted in a judgment for Richard A. Hoyt, et al., on August 20, 1975. Hodny now appeals from this judgment, claiming that the finding of fact by the trial court that the Knights of Pythias Lodge of Mandan was not in existence in 1934 was clearly erroneous and that the court erred by holding that there was no repudiation of the trust by the trustees insofar as it related to the Hoyt heirs. Hodny also claims that the court erred in holding that the statute of limitations did not bar action by the Hoyt heirs, that the Marketable Record Title Act did not bar the Hoyt heirs, that laches did not bar the claims of the Hoyt heirs, and that the plaintiffs have no estate or ownership in the property.

At the heart of the controversy is the question of whether Mandan Lodge No. 14 of the Knights of Pythias existed on November 5, 1934, the date on which the land was to be conveyed either to the Lodge or to the Hoyts, depending on the situation. The Hoyt heirs, as third-party plaintiffs and answering defendants, contend that this is the only issue in the case, and that if the Mandan Lodge ceased to exist prior to November 5, 1934, the appellant, Hodny, had no claim whatsoever to the property. Hodny, however, claims that the existence of the Lodge in 1934 is not essential to his claim, and that there are other theories, such as repudiation of trust, adverse possession, laches, and chain of title under which he is entitled to the property.

The trial court found as a fact that Mandan Lodge No. 14 of the Knights of Pythias was not in existence in 1934. Under Rule 52(a), North Dakota Rules of Civil Procedure, this court will not set aside the trial court's finding of fact unless it is found to be clearly erroneous.

A review of the evidence presented at the trial shows the following:

The...