Hoyt v. American Traders, Inc.

• Jurisdiction: Oregon
• Parties: , 65 A.L.R.4th 507, 55 USLW 2215 Martha W. HOYT, Respondent on review, v. AMERICAN TRADERS, INC., A Washington corporation, Petitioner on review. TC 84-1701-A33635 and SC S32398.
• Citation: 725 P.2d 336,301 Or. 599
• Docket Number: NJ-2,CA
• Court: Oregon Supreme Court
• Decision Date: 03 September 1986

Page 336

725 P.2d 336

301 Or. 599, 65 A.L.R.4th 507, 55 USLW 2215

Martha W. HOYT, Respondent on review, v. AMERICAN TRADERS, INC., A Washington corporation, Petitioner on review.

TC 84-1701-NJ-2, CA A33635 and SC S32398.

Supreme Court of Oregon.

Argued and Submitted on March 11, 1986.

Decided Sept. 3, 1986.

[301 Or. 600] A. E. Piazza, Medford, argued the cause and submitted the brief for respondent on review.

Richard A. Stark, Medford, argued the cause for petitioner on review. With him on the brief was Stark and Hammack, Medford.

Before PETERSON, C.J., and LENT, LINDE, CAMPBELL, CARSON and JONES, JJ.

PETERSON, Chief Justice.

The question is whether the filing of a petition for dissolution that contains the description of real property owned by the parties as tenants by the entirety gives lis pendens notice, under ORS 93.740, to subsequent purchasers and incumbrancers, thus creating priority of interest. The answer involves the application of the lis pendens statute, ORS 93.740 and the dissolution statutes, ORS 107.105 and 107.115.

The plaintiff (whom we shall call the wife) filed a petition for dissolution of the marriage and requested that the real property at issue, which was specifically described in her petition, be awarded to her as her sole and separate property. The complaint was filed on March 20, 1980. At and before that time, the wife and her husband owned the real property as tenants by the entirety.

On April 26, 1980, the husband was served with a complaint in which the defendant herein, American Traders, Inc., sought a money judgment against him. The complaint was filed in the Superior Court of Snohomish County, Washington. On July 16, 1980, a money judgment was entered against the husband. On August 20, 1980, American Traders registered that judgment in Jackson County, Oregon, under ORS chapter 24. American Traders claims a lien upon the husband's interest in the described real property. ¹ ORS 24.115; ORS 18.350(1). ²

On April 27, 1981, a decree of dissolution of the marriage was granted and the wife was awarded, as her sole and separate property, all right, title and interest in the described real property. The decree specifically provided that it would operate as a deed of conveyance of that property.

Thereafter, the wife, as plaintiff herein, filed a proceeding for declaratory relief against the defendant American Traders in which she alleged:

"Plaintiff contends the doctrine of lis pendens applies * * * and that by reason thereof and by reason of decree of the Circuit Court of Jackson County, Oregon, awarding all of said property interest to plaintiff, defendant, by the registration of said judgment, does not have a lien against said real property."

American Traders, in turn, alleged that "the Doctrine of Lis Pendens does not apply * * * and that [American Traders] has a valid existing lien against an undivided one-half ( 1/2) interest in the * * * real property, which lien is superior to any interest of the [wife]."

Both the wife and American Traders moved for summary judgment. The trial court granted American Traders' motion, and entered a judgment that American Traders "be, and it hereby is, declared to have a judgment lien on the premises * * *."

On wife's appeal to the Court of Appeals, the Court of Appeals reversed, holding that the doctrine of lis pendens applies in dissolution cases if the property is described with particularity in a pleading. Hoyt v. American Traders, Inc., 76 Or.App. 253, 709 P.2d 1090 (1985). American Traders asserts that, under existing Oregon dissolution statutes and case law, the doctrine of lis pendens does not apply in dissolution cases "until final decree is entered."

LIS PENDENS

The term lis pendens means "a pending suit," Black's Law Dictionary 1081 (Rev. 4th ed 1968), and usually refers to a doctrine or rule that "the filing of a suit concerning real property is notice to people who obtain an interest in the property after commencement of the suit that they will be bound by the outcome of the suit." Land Associates v. Becker, 294 Or. 308, 313-14, 656 P.2d 927 (1982). ³ Regarding the application of lis pendens, we stated in Land Associates that

" * * * [i]t is a necessary doctrine; without it every change of ownership or lesser interest in real property would require a modification of the suit and would require continual checking of the records to be sure that someone had not obtained property rights in the property in question." Id. at 314, 656 P.2d 927.

Before the turn of the century, in Oregon lis pendens was not controlled by statute. See Houston v. Timmerman, 17 Or. 499, 21 P. 1037 (1889); Walker v. Goldsmith, 14 Or. 125, 12 P. 537 (1886). The Houston court held that the filing of a divorce complaint could not be a basis for common-law lis pendens regarding real property sought by the wife in the proceedings and described in the complaint because the primary nature of the suit related to the status of the parties vis a vis the marriage, and that the court did not have jurisdiction to affect any title or interest in real property until the decree of divorce was entered. 17 Or. at 508-09, 21 P. 1037. ⁴

In 1909, the legislature enacted Oregon Laws 1909, chapter 93, section 1 (now ORS 93.740), providing:

"In all suits in which the title to or any interest in or lien upon real property is involved, affected or brought in question, any party thereto at the commencement of the suit, or at any time during the pendency thereof, may file of record with the county clerk or other recorder of deeds of every county in which any part of the premises lies, except in the county in which the suit is brought, a notice of the pendency of the action containing the names of the parties, the object of the suit, and a description of the real property in the county involved, affected, or brought in question, signed by the party or the attorney of the party. From the time of filing the notice, and from that time only, the pendency of the suit is notice to purchasers and incumbrancers, of the rights and equities in the premises of the party filing the notice. * * * "

The only legislative history for this provision is found in the 1909 Senate and House Journals. These records do not reveal the source of the provision. They do reveal that the part of the statute excepting the county in which the suit is brought from the filing provisions was added as an amendment to the original bill. The language has remained unchanged since 1909.

THE STATUTES

ORS 93.740 applies "[i]n all suits in which title to or any interest in or lien upon real property is involved, affected or brought in question * * *." The statute provides that "any party thereto at the commencement of the suit, or at anytime during the pendency thereof, may file" a notice of lis pendens with the recorder of deeds in the county where the real property is situated "except in the county in which the suit is brought." The notice must contain

"the names of the parties, the object of the suit, and the description of the real property in the county involved, affected or brought into question * * *. From the time of filing the notice, and from that time only, the pendency of the suit is notice, to purchasers and encumbrancers of the rights and equities in the premises of the party filing the notice."

The county in which the suit is brought is exempted from the notice filing provisions of the statute. Read literally, the statute does not allow the filing of a notice of lis pendens in the county in which the suit is brought. The inescapable implication is that the filing of a complaint in a suit involving, affecting or bringing into question the title to or any interest in or lien upon real property itself provides the notice of the pendency of the action, if it contains the names of the parties, the object of the suit, and the description of the real property involved, affected, or brought in question. Paraphrased, as it involves this case, we read ORS 93.740 to mean that from the time of filing a complaint in a civil action in which the title to or any interest in or lien upon real property is involved, affected or brought into question, the pendency of the civil action is notice, to purchasers and incumbrancers, of the rights and equities in the property of the party filing the civil action.

The doctrine of lis pendens states that "the filing of a suit concerning real property is notice to people who obtain an interest in the property after the commencement of the suit that they will be bound by the outcome of the suit." Land Associates v. Becker, supra, 294 Or. at 313-14, 656 P.2d 927.

The effect of notice is to give the party filing the civil action priority over the lien of a subsequent judgment against the defendant. The lien of a subsequently recorded judgment is extinguished to the extent of the interest awarded to the party filing the civil action. Land Associates v. Becker, supra, 294 Or. at 314, 656 P.2d 927 (holders of interests arising after commencement of foreclosure suit are bound by decree of foreclosure and thus their interests were foreclosed along with those of buyer and joined creditors).

As stated above, the wife's petition for dissolution specifically described the real property in dispute and requested that the property be awarded to her. The main questions are (1) whether the filing of the petition was in a "[suit] in which the title to or any interest in or lien upon real property is involved, affected or brought in question * * * ", and (2) whether the pendency of the action was notice of "rights and equities in the property of the party filing the civil action." To answer those questions, we turn first to the dissolution statutes.

The applicable dissolution statutes are ORS 107.105 and 107.115. When the dissolution case was pending, ORS 107.105(1)(e) (1979) in part provided as follows:

"Whenever the court grants a decree of marital annulment, dissolution or...