Lake Canal Reservoir Co. v. Beethe

Decision Date22 March 2010
Docket NumberNo. 08SC401.,08SC401.
Citation227 P.3d 882
PartiesLAKE CANAL RESERVOIR COMPANY; Lake Canal Company; Alden V. Hill; and Ann L. Deseran, Petitioners v. Douglas C. BEETHE; Terese L. Beethe; Chris Woodruff, County Assessor; John LeFebvre, County Treasurer; and Susie Velasquez, Trustee of Weld County, Respondents.
CourtColorado Supreme Court

LiPuma Law Associates, LLC, Richard T. LiPuma, Loveland, Colorado, University of Denver, College of Law, Robert S. Anderson, Denver, Colorado Attorneys for Petitioners.

Otis, Coan & Peters, LLC, Jennifer Lynn Peters, Charles M. Shoop, Greeley, Colorado, Attorneys for Respondents.

No appearance by or on behalf of: Chris Woodruff, County Assessor; John LeFebvre, County Treasurer; and Susie Velasquez, Trustee of Weld County.

Justice EID delivered the Opinion of the Court.

Petitioners Lake Canal Reservoir Company and Lake Canal Company ("Lake Canal"), Alden Hill ("Hill"), and Hill's sister Ann Deseran ("Deseran"), brought suit against Respondents Douglas Beethe and Terese Beethe ("the Beethes") to quiet title and to void a 1997 treasurer's deed that conveyed a parcel of land to the Beethes. The Beethes contended that the action was barred under the applicable five-year statute of limitations. See § 39-12-101, C.R.S. (2009) (requiring that an action for the recovery of land for which a tax deed has been issued must be brought within five years after the issuance of the deed). The trial court disagreed, concluding that the statute of limitations period did not apply to the action because the deed was void. More specifically, the trial court based its conclusion that the deed was void on the grounds that insufficient notice was given for the tax sale, that taxes were inappropriately assessed on the property because it comprised a reservoir used for irrigation purposes, and that the property was not accurately described. The trial court ultimately issued a judgment declaring the deed void and quieting title in Hill and Deseran.

The court of appeals reversed and remanded. Lake Canal Reservoir Co. v. Woodruff, No. 06CA1467, slip op., 2008 WL 963043 (Colo.App. Apr.10, 2008) (not selected for official publication). It agreed with the trial court that the statute of limitations would not apply to a void deed. The court of appeals held, however, that the deed in this case was voidable, rather than void, because it was not void on its face. The court found that because extraneous evidence was necessary to determine the validity of the deed, it was merely voidable. The court therefore concluded that the void deed exception to the statute of limitations did not apply.

We granted certiorari,1 and now affirm the ruling of the court of appeals, although on a different rationale. We hold that the line between a void and a voidable tax deed does not depend on the nature of the evidence used to determine the deed's defect, but rather on the nature of the defect itself. Under our caselaw, a deed is void and therefore not subject to the statute of limitations when the taxing entity had no jurisdiction or authority to issue the deed. See, e.g., Crisman v. Johnson, 23 Colo. 264, 271, 47 P. 296, 299 (1896), declined to follow on other grounds by Bd. of Comm'rs v. Timroth, 87 P.3d 102 (Colo.2004). In this case, the defects alleged by the petitioners — namely, that the property in question was improperly assessed, that notice of the tax sale was inadequate, and that the property was insufficiently described — do not challenge the authority or jurisdiction of the taxing entity. The void deed exception to the statute of limitations therefore does not apply in this case. Accordingly, we affirm the court of appeals' conclusion that the deed in question was voidable, rather than void, and remand the case to the trial court for further proceedings consistent with this opinion.

I.

This case involves a tract of land of 50.30 acres in Weld County containing a reservoir ("the Reservoir Tract").2 Lake Canal holds a perpetual easement to use the reservoir on the Reservoir Tract. Hill and Deseran own a tract of land adjoining the Reservoir Tract to the north, and they assert that they have adversely possessed a portion of the Reservoir Tract. The Beethes purchased a separate adjoining tract of land to the south in April 1992. The Beethes' tract and the Reservoir Tract had long been taxed as one tract. Upon discovering that the Reservoir Tract was, in fact, a separate tract, the Weld County tax assessor added the Reservoir Tract as a separate parcel to the tax rolls. The assessor exempted 21.11 acres used as a reservoir, and taxes were levied on the remaining portion of the Reservoir Tract.

The then-owner of record, who is not party to this appeal, did not pay the taxes, and the Beethes purchased a tax lien on the Reservoir Tract in November 1993. The Weld County treasurer's office then issued a deed conveying the Reservoir Tract to the Beethes; this deed was recorded in February 1997. The petitioners claim that they only learned of the Beethes' claim to the land in 2003. In November 2003, they filed this action against the Beethes3 seeking to quiet title to the Reservoir Tract and to set aside the treasurer's deed issued to the Beethes. We therefore have a dispute between neighbors over land previously owned by an owner of record who is not a party to this appeal. Hill, Deseran, and the Beethes claim to have used the land for a variety of recreational and farming purposes.4

The trial court concluded that the treasurer's deed purporting to convey the Reservoir Tract to the Beethes was void because Weld County tax officers had not complied with statutory assessment and notice requirements and because the description of the assessed property was inaccurate.5 With regard to notice, in particular, the court found that Weld County had provided statutorily inadequate notice because it did not provide a tax delinquency notice to Hill and Deseran, did not order a full title report, did not serve notice on numerous parties who occupied the Reservoir Tract or on parties with a record interest, and omitted the property's section number in the published notice. See § 39-11-128(1)(a), C.R.S. (2002). In addition, the trial court found that the assessment was invalid because witnesses from the Weld County tax assessor's office could not explain why only 21.11 acres, instead of the entire Reservoir Tract, were exempted from taxation in accordance with the constitutional constraint that a reservoir exclusively used by its owner for irrigation purposes is not to be separately taxed. See Colo. Const. art. 10, § 3(1)(d). Finally, the trial court found that the description of the Reservoir Tract was indefinite, because it exempted only 21.11 unspecified acres from taxation. The trial court concluded that due to the deficiencies described above, the tax deed was void, and it therefore fell within the exception to the statute of limitations period for void deeds. The trial court then quieted title in favor of Hill and Deseran for the part of the Reservoir Tract not subject to Lake Canal's easement.6

On appeal, the court of appeals reversed and remanded. It agreed with the trial court that notice of the tax sale was defective and that the Reservoir Tract was inaccurately assessed. However, the court of appeals stated that the trial court's findings were sufficient to find the tax deed voidable, rather than void. The court noted that a voidable deed was one that required the court to "analyze extraneous evidence" not clearly visible upon a reading of the tax deed itself. Lake Canal Reservoir Co., No. 06CA1467, slip op. at 5. The court concluded that two of the issues that the trial court considered would require extraneous evidence. First, extraneous evidence would be necessary to determine whether notice was deficient, as the tax deed itself contained no statements regarding efforts taken to provide notice. Second, because reservoirs are only exempt from separate taxation when used exclusively by their owners for irrigation purposes, see Colo. Const. art. 10, § 3(1)(d), deciding whether the Reservoir Tract was inappropriately assessed would require extraneous evidence to determine how and by whom it was being used. As to the indefinite description, the court found that a plausible reading of the tax deed's language could keep the deed from being void on its face. See Lake Canal Reservoir Co., No. 06CA1467, slip op. at 13 (the Beethes' deed is not void if it "expressly includes the 21.11 tax-exempt acres within the description of the property conveyed"). Thus, the tax deed was voidable, but not void.

The court recognized that the five-year statute of limitations does not apply to either 1) a void deed or 2) a quiet title action against a tax deed holder who is not in possession of the property. It concluded that the first exception was not applicable in this case because the deed was voidable, not void. The court remanded the case for further findings to determine whether the Beethes were in possession of the Reservoir Tract when the quiet title claim was filed and thus whether the petitioners' claims could fall within the second exception to the statute of limitations.

We granted certiorari, and we now affirm, although on a rationale that differs from that adopted by the court of appeals. We hold that the line between a void and a voidable tax deed does not depend on the nature of the evidence used to determine the deed's defect, but rather on the nature of the defect itself. Under our caselaw, a deed is void and therefore not subject to the statute of limitations when the taxing entity had no jurisdiction or authority to issue the deed. In this case, the defects alleged by the petitioners — namely, that the property in question was improperly assessed, that notice of the tax sale was inadequate, and that the property was insufficiently described — do not challenge the jurisdiction or authority of the taxing entity. The...

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