Kellogg v. Dearborn Information Services

• Decision Date: 28 July 2005
• Docket Number: No. 04-623.,04-623.
• Court: Montana Supreme Court
• Parties: Stephen C. KELLOGG, Plaintiff and Appellant, v. DEARBORN INFORMATION SERVICES, LLC, a Montana Limited Liability Company, Defendant and Respondent.

Page 20

119 P.3d 20

2005 MT 188

328 Mont. 83

Stephen C. KELLOGG, Plaintiff and Appellant, v. DEARBORN INFORMATION SERVICES, LLC, a Montana Limited Liability Company, Defendant and Respondent.

No. 04-623.

Supreme Court of Montana.

Submitted on Briefs May 3, 2005.

Decided July 28, 2005.

Rehearing Denied August. 30, 2005.

For Appellant: Thomas A. Budewitz, Helena, Montana.

For Respondent: Jack R. Tuholske, Tuholske Law Office, Missoula, Montana.

Justice W. WILLIAM LEAPHART delivered the Opinion of the Court.

¶ 1 Stephen Kellogg appeals from the District Court's adoption of the Referees' report partitioning the property he jointly owns with Dearborn Information Services (Dearborn). We affirm.

¶ 2 We address the following issues on appeal:

¶ 3 1. Whether the District Court had the power to impose a servitude forbidding building on parts of the partitioned property.

¶ 4 2. Whether the District Court's findings of fact are sufficient to support the imposition of building restrictions.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 5 This action involves a tenancy in a rural valley — the Joslin Basin — in Lewis and Clark County. Kellogg and Dearborn own the property as tenants-in-common, having purchased it from the late Bruce Nelson in October 2000. A married couple, Joe Campbell and Tani Converse, own Dearborn. At one time Nelson owned much of the land in the valley, which he carved-up into haphazardly shaped small holdings. Nelson sold a great number of these holdings, creating a community of dozens of summer and permanent homes in the pristine valley. This hodgepodge of properties, and the difficulties that arose in recording them and locating easements to the various properties, created what the Referees characterized as a "Title Company's nightmare." The tenancy at issue is what Dearborn aptly describes as "a swiss-cheese like remainder parcel" of a little over 600 acres and 25 tracts.

¶ 6 Kellogg and Dearborn jointly purchased the tenancy with the intention of dividing it between themselves. Both live in homes on, or surrounded by, the property. Negotiations between the neighbors quickly broke-down and relations soured. In this acrimonious context, Kellogg brought suit against Dearborn in November 2001, requesting that the District Court partition the property. The District Court thereafter appointed referees pursuant to § 70-29-202(1), MCA, and ordered the Referees to survey the property and make a report recommending how best to divide it between the two tenants-in-common.

¶ 7 Surveying the property proved to be quite an undertaking as many of the public records describing it turned out to be incorrect. After a great deal of effort in establishing exactly what land was, and was not, a part of the property, the Referees settled on a plan of division. Most of the details of the plan are not relevant to this opinion. The dividing line between the two halves of the property for the most part follows Joslin Creek, which runs through a meadow separating the two parties' residences. The one recommendation that Kellogg objects to on appeal is the Referees' proposal to impose "no build" zones on sections of each half, including much of the aforementioned meadow. In their report the Referees stated the following regarding the "no build" zones: "No residential structures nor permanent agricultural structures (excepting fences, corrals or stock water facilities) should be built in these areas. These restrictions should appear in the deeds to these tracts and should be clearly identified in new Certificates of Survey and/or retracement Surveys." (Emphasis in original.) The Referees' stated reasons for the "no build" zones are that they should "reduce the need for any new permanent service roads and alleviate future discord." As to the effect the restrictions will have on the value of the property, the Referees stated that they "concurred that neither party's ownership would be significantly diminished in value through such prohibitions."

¶ 8 Kellogg challenged the "no build" restrictions, asking the court to reject the Referees' recommendation. He argued that the Referees do not have the power to recommend such a restriction in a partition action. The District Court disagreed and adopted the Referees' report in its entirety. Kellogg now appeals the court's imposition of the "no build" zones.

STANDARD OF REVIEW

¶ 9 When the referees in a partition action submit their report to the district court, the court "may confirm, change, modify, or set aside the report...." Section 70-29-212, MCA; Tillett v. Lippert (1996), 275 Mont. 1, 6, 909 P.2d 1158, 1160. This Court reviews the district court's findings of fact in a partition action to determine whether they are clearly erroneous. Troglia v. Bartoletti (1994), 266 Mont. 240, 244, 879 P.2d 1169, 1171. A finding is clearly erroneous if it is not supported by substantial evidence, if the district court misapprehended the effect of the evidence, or if a review of the evidence leaves this Court with the firm conviction that a mistake has been made. Troglia, 266 Mont. at 244, 879 P.2d at 1171. We review the district court's conclusions of law to determine whether they are correct. Flood v. Kalinyaprak, 2004 MT 15, ¶ 14, 319 Mont. 280, ¶ 14, 84 P.3d 27, ¶ 14.

DISCUSSION

ISSUE ONE

¶ 10 Whether the District Court had the power to impose a servitude forbidding building on parts of the partitioned property.

¶ 11 Kellogg asserts that the District Court did not have the power to impose "no build" zones on the partitioned property. He points out that neither he nor Dearborn requested such a servitude in their pleadings. Additionally, he argues that the only statutory power given to referees (and thus to the district court) to impose a servitude on a party to a partition proceeding is the power to create roads. Section 70-29-205(2), MCA, allows referees to "set apart a portion of the [partitioned] property for a way, road, or street...." Since the servitude in question here is not a "way, road, or street," Kellogg reasons that neither the Referees nor the court possesses the power to impose a "no build" zone.

¶ 12 In addition to § 70-29-205(2), MCA, however, stands § 70-29-209, MCA. That statute states that when a partition cannot be made equally — that is, when it is not feasible to award each tenant-in-common an equal section of the property — the court "may adjudge compensation to be made by one party to another on account of the inequality...." This refers to the ancient practice of owelty, through which a court avoids ordering a partition by sale when a property cannot be equally divided. See Kravik v. Lewis (1984), 213 Mont. 448, 455, 691 P.2d 1373, 1376. Section 70-29-209(2), MCA, grants the court broad powers in making this adjustment: "In all cases the court has power to make compensatory adjustment between the respective parties according to the ordinary principles of equity."

¶ 13 Although owelty often arises in the form of a monetary award, historically these "ordinary principles of equity" have included the power to impose servitudes. For example, one partition case from Massachusetts involved a court granting an air and light easement to one tenant-in-common, thus imposing a servitude on another. Bornstein v. Doherty (1910), 204 Mass. 280, 90 N.E. 531, 532, cited in Matter of Marta (Del.1996), 672 A.2d 984, 987. In justifying this grant, the Massachusetts Supreme Judicial Court stated, "There is no doubt of the jurisdiction of the court, in [partition] proceedings, to annex reasonable easements to one part of the land, and impose reasonable servitude upon another part...." A few years previous, the Virginia Supreme Court of Appeals squarely held: "`Where lands are incapable of exact or fair division, the court has power to compensate by a charge upon the land by way of rent, servitude, or easement.'" Martin v. Martin (1897), 95 Va. 26, 27 S.E. 810, 811 (quoting Pomeroy's Equity Jurisprudence § 1389). Given this expansive understanding of a court's equitable powers, and given that § 70-29-209(2), MCA, grants such powers to the district court, we conclude that it is within the court's powers to impose a servitude such as a "no build" zone.

¶ 14 Kellogg argues that, since neither party sought to impose a "no build" zone, the court exceeded its powers in imposing one. In seeking to have the property partitioned, Kellogg did not seek to have the property divided along a particular line. That was left to the discretion of the court. Likewise, even though neither party sought to impose "no build" zones, the court, in exercising its equitable powers, had the discretion to adopt the Referees' recommendation in that regard.

¶ 15 The dissent states that the issue of the "no-build zone" arose at "the end of the litigation by way of judgment," thereby inferring that Kellogg was caught off guard and should not be faulted for failing to raise constitutional objections. Such was not the case. When the referees' report recommending a "no-build zone" was filed, the District Court ordered the parties to file objections thereto before the Court decided whether to adopt the recommendations. Although Kellogg had advance notice that the District Court was entertaining adoption of the no-build zone and filed an objection contending that the recommendation exceeded statutory authority, he did not argue that the no-build zone constituted an unconstitutional taking of his property. Thus, in arguing that the judgment herein interferes with the fundamental constitutional right of "[p]ossessing and protecting property" under Article II, Section 3, of the Montana Constitution and amounts to an unconstitutional "taking" of Kellogg's property, the dissent addresses theories which were neither raised in nor addressed by the District Court. A party may not raise new arguments or change his legal theory on appeal because it is unfair to fault the trial court on an issue that it was never given an...