Muhlenkort v. Union County Land Trust

• Decision Date: 14 September 1994
• Docket Number: No. 18494,18494
• Citation: 530 N.W.2d 658
• Parties: Connie MUHLENKORT, Plaintiff and Appellee, v. UNION COUNTY LAND TRUST, The Union County Abstract and Title Company, and Title Insurance Company of Minnesota, Defendants and Appellants. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 658

530 N.W.2d 658

Connie MUHLENKORT, Plaintiff and Appellee, v. UNION COUNTY LAND TRUST, The Union County Abstract and Title Company, and Title Insurance Company of Minnesota Defendants and Appellants.

No. 18494.

Supreme Court of South Dakota.

Considered on Briefs Sept. 14, 1994.

Decided April 19, 1995.

Rehearing Denied May 23, 1995.

Dennis C. McFarland, Sioux Falls, John F. Murphy, Donley and Murphy, Elk Point, for plaintiff and appellee.

Rick Entwistle, Woods, Fuller, Shultz & Smith P.C., Sioux Falls, for defendants and appellants.

Mark A. Moreno, Schmidt, Schroyer, Colwill & Moreno, Pierre, for amicus curiae S.D. Land Title Ass'n.

TRANDAHL, Circuit Judge

Union County Land Trust, (Trust), Union County Abstract and Title Company, (Abstractor) and Minnesota Title Insurance Company (Insurer) appeal a judgment of the circuit court which awarded Muhlenkort damages due to her judgment lien on real property bought by the Trust and the professional negligence of Insurer and Abstractor in omitting to list the judgment lien as an encumbrance on the property. We affirm, in part, and reverse in part.

FACTS AND PROCEDURAL HISTORY

This action originated from a judgment and decree of divorce granted to Connie Muhlenkort from her husband Henry Muhlenkort. The 1980 judgment provided that all payments to be made by Henry Muhlenkort to Connie pursuant to their stipulation and agreement were to become a lien upon four tracts of real property which Henry owned or had an interest. ¹ The judgment was filed on January 8, 1980 with the Union County Clerk of Courts. Concurrent with the filing and docketing of the judgment, Connie executed and delivered a quit claim deed to her ex-husband conveying her entire interest in the four tracts of property described in the divorce decree. ² The deed was recorded with the Union County Register of Deeds on the same date. However, the deed recited that the conveyance was "subject to a judgment lien filed January 8, 1980."

On May 28, 1985, Connie Muhlenkort executed a quit claim deed to Marcus and Helen Muhlenkort conveying her remaining security interest in one of the four tracts of property listed in the divorce decree. Connie conveyed her interest and understood that she would still have a lien on the remaining three tracts of real estate. She also knew that plans were being made for all four tracts to be sold. The remaining three tracts of property were sold and conveyed to the Trust and a warranty deed was recorded with the Union County Register of Deeds on April 18, 1986. Also on that date, Abstractor issued a title insurance policy on the three tracts of property to State Bank of Alcester and the Trust. Neither the title report nor the insurance policy listed the judgment and decree of divorce or the judgment lien in favor of Connie Muhlenkort. The proceeds from the sale of the three tracts was $379,842.00. However, there was at the time of sale encumbrances on the property amounting to approximately $417,614. In addition, the selling expenses were approximately $44,404. The sale of the property resulted in a net loss of over $93,000.

Connie applied for an order to show cause to the Honorable Jay H. Tapken on May 9, 1986 and sought an accounting of the proceeds from the sale of the property. At the show cause hearing on June 24, 1986, Connie was supplied with a one page copy of the title insurance policies and a copy of the closing statement which revealed that there was no equity in the property. Henry Muhlenkort never received any proceeds from the sale of the three tracts of property. Judge Tapken entered an order on July 14, 1986 granting to Connie a statutory lien in the amount of $17,500 on all real property that Henry Muhlenkort had an interest.

Connie Muhlenkort commenced this action on April 27, 1992. At the court trial held before the Honorable William J. Srstka, Jr., no live witness testimony was presented. The only evidence received during the court trial was from the parties' exhibits and the only testimony was presented by deposition. The parties also stipulated to many of the facts prior to trial. The trial court concluded that Connie Muhlenkort's lien was a "special lien" and therefore valid for twenty years. Therefore, the court concluded that the Trust and Insurer, as insurers of the title to the property were jointly and severally liable to Muhlenkort for the value of her judgment against Henry Muhlenkort. In addition, the trial court concluded that Abstractor was liable to Muhlenkort due to its professional negligence in failing to discover her judgment lien. A judgment was entered accordingly on August 9, 1993.

STANDARD OF REVIEW

We note first our standards of review in this case. We review a trial court's findings of fact under a clearly erroneous standard. In applying this standard, we have stated "we will not disturb the court's findings 'unless they are clearly erroneous and we are, after a review of all the evidence, left with a definite and firm conviction that a mistake has been made.' " In re E.D.J., 499 N.W.2d 130, 134 (S.D.1993). If the record contains evidence to support the trial court's decision, we will not disturb a trial court's finding of fact on appeal. SDCL 15-6-52(a); McLaughlin Elec. Supply v. Am. Empire Ins., 269 N.W.2d 766, 769 (S.D.1978). All conflicts in the evidence must be resolved in favor of the trial court's findings. Kost v. Kost, 515 N.W.2d 209, 213 (S.D.1994); Matter of Estate of Gibbs, 490 N.W.2d 504, 507 (S.D.1992). However, when the evidence is presented without the appearance of live witnesses but is presented by way of deposition and stipulated facts, we are free to determine the facts as if presented here for the first time unaided by any deference to the trial court. State Automobile Casualty Under. v. Ruotsalainen, 136 N.W.2d 884, 888 (S.D.1965); State v. Abourezk, 359 N.W.2d 137 (S.D.1984); Zacher v. Homestake Min. Co. of Cal., 514 N.W.2d 394, 395 (S.D.1994).

We review a trial court's conclusions of law under a de novo standard. State v. Harris, 494 N.W.2d 619, 622 (S.D.1993) (citing Rusch v. Kauker, 479 N.W.2d 496, 499 (S.D.1991)). Under this standard of review, "conclusions of law 'are given no deference by this court on appeal.' " Rusch, 479 N.W.2d at 499; Harding Cty. v. S.D. Land Users Ass'n, 486 N.W.2d 263, 264 (S.D.1992); Beville v. Univ. of S.D./Bd. of Regents, 420 N.W.2d 9, 11 (S.D.1988).

STATEMENT OF THE ISSUES

I. WHETHER MUHLENKORT'S JUDGMENT AND DECREE OF DIVORCE FILED WITH THE UNION COUNTY CLERK OF COURTS ON JANUARY 8, 1990, WAS PROPERLY DOCKETED, THEREBY CREATING A VALID LIEN ON THE REAL PROPERTY?

II. WHETHER MUHLENKORT'S LIEN EXPIRED PRIOR TO COMMENCING THIS ACTION?

III. WHETHER ANY OF THE DEFENDANTS ARE LIABLE IN TORT TO MUHLENKORT?

IV. IF ANY OF THE DEFENDANTS ARE LIABLE IN TORT, WHETHER MUHLENKORT'S TORT CLAIMS ARE BARRED BY THE APPLICABLE STATUE OF LIMITATIONS?

V. WHETHER PLAINTIFF'S CLAIM IS BARRED BY THE DOCTRINES OF WAIVER, LACHES, COLLATERAL ESTOPPEL AND RES JUDICATA?

VI. WHETHER MUHLENKORT WAS DAMAGED BY ANY ACTION OR OMISSION OF ANY OF THE DEFENDANTS?

ISSUE ONE

WHETHER MUHLENKORT'S JUDGMENT AND DECREE OF DIVORCE FILED WITH THE UNION COUNTY CLERK OF COURTS ON JANUARY 8, 1990, WAS PROPERLY DOCKETED, THEREBY CREATING A VALID LIEN ON THE REAL PROPERTY?

The Trust, Abstractor, and Insurer, collectively referred to as defendants, contend that Muhlenkort's judgment lien was not properly docketed and is, therefore, invalid. Defendants point to the Union County Clerk of Court judgment docket which shows Muhlenkort's lien. The docket fails to recite a dollar figure in the amount column of the judgment but instead contains a "see file" notation. Defendants contend that reciting the amount of judgment is an essential element of a validly recorded lien and the absence of the amount is fatal. We disagree with defendants' interpretation of the judgment lien recording statute.

SDCL 15-16-6 provides that the clerk shall docket the judgment by entering in the judgment docket "the sum recovered or directed to be paid, in figures." Although no dollar amount was stated in the docket, all other required entries were present. Whether the "amount of judgment" is or is not essential is not the test for a valid judgment lien. The proper test as set out in Muller v. Flavin, 13 S.D. 595, 83 N.W. 687 (1900) is whether the judgment lien substantially complied with the statute's requirements. Although, we have not recently considered this issue, we believe our decision in Muller, which involved the precursor to SDCL 15-16-6, is still appropriate.

We agree that it is the clerk's duty to follow the dictates of the statute; however, a failure to literally comply with the statute's provisions should not impair a judgment creditor's rights when the docket entry is sufficient to apprise a third party of the existence and character of the judgment and "would induce a prudent and cautious man to make an examination of the proceedings." Muller, 13 S.D. at 614, 83 N.W. at 693. A judgment lien is valid provided there has been substantial compliance with the statute's requirements or at least the docket entry was sufficient to impart constructive notice of the judgment lien of the same. Id.

Here, the judgment docket clearly contained sufficient entries to put a prudent and cautious person on notice of the existence of a judgment lien. Certainly an abstract and title insurance company, which is in the business of searching out title encumbrances to real property, could have easily discovered the nature and existence of Muhlenkort's judgment lien had they checked the clerk's docket. The absence of a judgment amount, while not technically in statutory compliance, does not defeat an otherwise valid judgment lien. The purpose of docketing a judgment, as defendants have admitted, is to provide notice to interested parties. There can be no question that the docket entries substantially complied with the statute and...