Nampa Highway Dist. No. 1, v. Knight, Docket No. 47029

• Court: United States State Supreme Court of Idaho
• Writing for the Court: MOELLER, Justice
• Citation: 166 Idaho 609,462 P.3d 137
• Parties: NAMPA HIGHWAY DISTRICT NO. 1, a body politic corporate of the State of Idaho, Plaintiff-Respondent, v. Brian K. KNIGHT and Lisa M. Knight, husband and wife; Manuel Dominguez and Maria Dominguez, husband and wife, Defendants-Appellants, and Chicago Title Insurance Company, et al, Defendants. Nampa Highway District No. 1, a body politic corporate of the State of Idaho, Plaintiff-Respondent, v. Quicken Loans Inc., a Michigan corporation; Defendant-Appellant, and Brian K. Knight, et al, Defendants. Nampa Highway District No. 1, a body politic corporate of the State of Idaho, Plaintiff-Respondent, v. Mortgage Electronic Registration Systems, Inc., a Delaware corporation, Defendant-Appellant, and Brian K. Knight, et al. Defendants.
• Docket Number: Docket No. 47071, Docket No. 47096,Docket No. 47029
• Decision Date: 17 April 2020

166 Idaho 609
462 P.3d 137

NAMPA HIGHWAY DISTRICT NO. 1, a body politic corporate of the State of Idaho, Plaintiff-Respondent,
v.
Brian K. KNIGHT and Lisa M. Knight, husband and wife; Manuel Dominguez and Maria Dominguez, husband and wife, Defendants-Appellants,
and
Chicago Title Insurance Company, et al, Defendants.

Nampa Highway District No. 1, a body politic corporate of the State of Idaho, Plaintiff-Respondent,
v.
Quicken Loans Inc., a Michigan corporation; Defendant-Appellant,
and
Brian K. Knight, et al, Defendants.

Nampa Highway District No. 1, a body politic corporate of the State of Idaho, Plaintiff-Respondent,
v.
Mortgage Electronic Registration Systems, Inc., a Delaware corporation, Defendant-Appellant,
and
Brian K. Knight, et al. Defendants.

Docket No. 47029
Docket No. 47071
Docket No. 47096

Supreme Court of Idaho, Boise, February 2020 Term.

Opinion filed: April 17, 2020

Davison, Copple, Copple & Copple, LLP, Boise, for Appellants Manuel and Maria Dominguez. E. Don Copple argued.

Angstman Johnson, Boise, for Appellants Brian and Lisa Knight and Quicken Loans, Inc. Wyatt B. Johnson argued.

Hawley Troxell Ennis & Hawley, LLP, Boise, for Appellant Mortgage Electronic Registration Systems, Inc.

Jones Williams Fuhrman Gourley, PA, Boise, for Respondent. Kimbell D. Gourley argued.

MOELLER, Justice

166 Idaho 612

Nampa Highway District No. 1 (NHD) brought this action against the named defendants seeking to quiet title to a thirty-three-foot-wide strip of land constituting the south half of West Orchard Avenue in Canyon County, Idaho. NHD claims that a 1941 deed conveyed the land to NHD. Appellants¹ argued that because the deed was not recorded until 1989, it does not affect their interests pursuant to the "Shelter Rule," which protects a purchaser with notice if their predecessor in interest was an innocent purchaser. The district court granted summary judgment in NHD's favor. Appellants timely appealed. For the reasons stated below, we reverse.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual Background

This case involves the real property located at 2505 West Orchard Avenue, Nampa, Idaho, currently owned by Appellants Brian and Lisa Knight (the Knight Property), and the real property located at 2403 West Orchard Avenue, Nampa, Idaho, currently owned by Appellants Manuel and Maria

166 Idaho 613

462 P.3d 141

Dominguez (the Dominguez Property). Years prior, the Knight Property and the Dominguez Property were part of a larger tract of land (the Property), with the known chain of title starting with W.A. and Lou Dedman in 1920.

On April 5, 1920, the Dedmans transferred their interest in the Property to Ora Lupton by deed. The deed was recorded on May 12, 1920.

In 1921, West Orchard Avenue (the Road) was constructed along the front of the Property as a twenty-two-foot-wide two-lane road. This portion of the Road has remained twenty-two feet in width since 1921.

Approximately twenty years later, on June 2, 1941, NHD held a board meeting wherein a delegation appeared seeking to put the Road in condition for oiling. The minutes from the meeting explain that "Commissioners set Thursday afternoon, June 5th, as a time for visiting this road and asked that deeds for right of way for 66-foot road be secured." A couple months later, NHD held another board meeting. The minutes from the meeting explain that

[a] committee from Orchard Avenue again appeared to learn of steps taken to improve Orchard Avenue Road. It was learned that an engineer had done some work on this road to establish center lines, and the Committee was definitely told that they should submit Right of Way deeds for thirty-three feet on each side of center of road to establish this road before definite plans be made to improve the road. The deeds were to be filed in the office of the Nampa Highway District.

On August 4, 1941, J.G. and Ora Lupton conveyed a thirty-three-foot-wide strip of land on each side of the centerline of the Road to NHD via a Deed of Right-of-Way. However, NHD did not record the deed at that time. The Deed of Right-of-Way states:

Whereas, it is desirable, proper, and necessary that a public highway be laid out and opened for public use 33 feet wide on each side of a line, commencing at a point in the intersection of the center line of the existing public highway with the section line between Sections 19 and 20 in Township 3 N. R. 2. W. R. M. thence Easterly along said North Boundary line of Section 20 a strip of land 33 feet wide and extending thence Easterly distance of 2640 feet more or less along the North boundary line of the Northwest Quarter of Section 20.

Although the purpose of the conveyance was to "improve the road," NHD never improved the road.

In 1945, Ora Lupton died and the probate of her estate resulted in the transfer of her interest in the Property to her surviving spouse, J.G. Lupton. J.G. Lupton died in 1958, and the probate of his estate resulted in the transfer of his interest in the Property to his heirs, Howard Lupton and Marvin Lupton. The same day it was transferred by the estate, Marvin Lupton transferred his interest in the Property to Howard Lupton. Howard Lupton divided the Property into several parcels, including those that eventually became the Knight Property and the Dominguez Property.

On June 21, 1963, Howard Lupton transferred his interest in one of the parcels, the Knight Property, to Billy and Vonda Downs by deed. On August 31, 1983, Howard Lupton transferred his interest in another parcel, the Dominguez Property, to Roy and Judith Beets by deed. Neither deed referenced the right-of-way.

On February 21, 1989, over forty-seven years after the Deed of Right-of-Way was executed, NHD recorded the deed. The record does not reveal why NHD recorded the deed at that time or why it was not recorded earlier.

Following the recording of the Deed of Right-of-Way, the Downses conveyed their interest in the Knight Property to the Knights by deed. The deed was recorded on July 17, 1998. The Knights are the current owners of the Knight Property. The Knights subsequently granted a Deed of Trust to Chicago Title Insurance Company as Trustee on behalf of Appellant Mortgage Electronic Registration Systems, Inc. (MERS), as the beneficiary and nominee for Appellant Quicken Loans Inc., and its successor and assigns.

On May 24, 1999, the Beets transferred their interest in the Dominguez Property to Kalvin and Julie Wilkinson. The Wilkinsons

166 Idaho 614

462 P.3d 142

transferred their interest in the Dominguez Property to Manuel Dominguez who subsequently transferred his interest to Manuel and Maria Dominguez. The deed was recorded on July 24, 2018. Manuel and Maria Dominguez are the current owners of the Dominguez Property.

B. Procedural Background

On October 25, 2018, NHD filed a Complaint for Declaratory Judgment and Quiet Title seeking to quiet title to a thirty-three-foot-wide strip of land as described in the Deed of Right-of-Way in NHD. NHD also sought a declaratory judgment decreeing that it holds title to the thirty-three-foot-wide strip of land in fee simple or, alternatively, that it has an easement.

All parties moved for summary judgment. NHD asked the district court to grant summary judgment in its favor because there was no genuine issue of material fact that the Knights and the Dominguezes, as well as their predecessors in interest, were not bona fide purchasers. NHD argued that Appellants and their predecessors had notice of NHD's interest in the deeded right-of-way either pursuant to the recorded Deed of Right-of-Way or pursuant to the construction, use, maintenance, and physical possession of the Road by the public. Accordingly, NHD asserts that it acquired fee simple title to the property described in the right-of-way deed. Appellants asked the district court to grant summary judgment in their favor because they each acquired the status of a bona fide purchaser under what is known as the "Shelter Rule" since their predecessors in interest, i.e. , the Beets and the Downses, were bona fide purchasers. Therefore, NHD's interest in the right-of-way property is void as against Appellants.

Following a hearing, the district court entered its Order on Motions for Summary Judgment. The court held that Appellants are not protected under the Shelter Rule because they failed to prove their predecessors in interest were bona fide purchasers. The court explained that, because the Road has existed as a public highway since 1921, every subsequent purchaser had constructive notice of a possible adverse claim and therefore had a duty to inquire further, which Appellants failed to prove they did. The court also held that the plain language of the Deed of Right-of-Way expressly granted thirty-three feet on each side of the centerline, not eleven feet, and to find otherwise would misinterpret the plain language of the deed. Finally, the court held that the Deed of Right-of-Way conveyed fee simple title to NHD rather than a mere easement. Appellants timely...