Neff v. Sandtrax Inc.

• Decision Date: 15 June 2011
• Docket Number: 08CV0610; A142518.
• Parties: Geoffery E. NEFF and Peggy Neff, husband and wife, Plaintiffs–Appellants,v.SANDTRAX, INC., an Oregon corporation; H. Richard Burkholder; S. Jean Burkholder; Richard J. Burkholder; and Tonya A. Burkholder, Defendants–Respondents.
• Court: Oregon Court of Appeals

243 Or.App. 485

259 P.3d 985

Geoffery E. NEFF and Peggy Neff, husband and wife, Plaintiffs–Appellants,

v.SANDTRAX, INC., an Oregon corporation; H. Richard Burkholder; S. Jean Burkholder; Richard J. Burkholder; and Tonya A. Burkholder, Defendants–Respondents.

08CV0610; A142518.

Court of Appeals of Oregon.

Argued and Submitted July 30, 2010.Decided June 15, 2011.

Roger Gould, Coos Bay, argued the cause for appellants. With him on the brief was Gould Law Firm, P.C.William A. McDaniel, Coos Bay, argued the cause for respondents. With him on the brief was Whitty, Littlefield, McDaniel & Bodkin, LLP.Before ORTEGA, Presiding Judge, and SERCOMBE, Judge, and LANDAU, Judge pro tempore.ORTEGA, P.J.

Plaintiffs appeal from a judgment regarding the boundary between their parcel and defendants' parcel. The boundary dispute arises from the existence of two possible locations for a section corner: the “BLM corner” or the “Buckingham corner.” ¹ The boundary between plaintiffs' and defendants' parcels depends on the corner's location, resulting in a disputed area of .12 acres. Finding for defendants on their affirmative defense of estoppel, the trial court declared that the boundary is determined by reference to the BLM corner. We review the trial court's legal conclusions for errors of law, and we are bound by its factual findings if there is any evidence to support them.²State v. S.T.S., 236 Or.App. 646, 654–55, 238 P.3d 53 (2010). For the reasons set forth below, we affirm.

Plaintiffs and defendants bought their respective parcels from a common grantor, Neifert.³ Together, the parcels comprise a thin strip of land bounded generally by old U.S. Highway 101 on one side and by railroad property on the other. When Neifert bought what is now defendants' parcel, the previous owner showed him some flags and indicated that they marked the boundary between the two parcels.⁴ A few years later, Neifert bought what is now plaintiffs' parcel. Consequently, he owned both parcels involved in this litigation.

Defendants bought their parcel from Neifert the following year. The purchase included a residence (where the individual defendants live), a business, outbuildings, and a parking lot. When defendants were considering that purchase, Neifert walked the property with them, showing them the line that he had been shown, and told them that it was the boundary. Neifert intended for defendants to rely on his representation.

Defendant Richard Burkholder testified that he and his codefendants believed Neifert's representation and that “we all relied on that as being the boundary.” On cross-examination, Burkholder acknowledged some uncertainty about whether he might still have purchased the property without the disputed area:

“Q. * * * [I]f you had known that the boundary line was actually at the edge of the pavement, you wouldn't have bought[ ] any of this, would you?

“A. Not necessarily.

“Q. You mean you would have?

“A. At the time we did not even know about that line, or know that it was there. And at the time, we never even thought about it. So, I don't know what our decision would have been. I don't—I can't speak for the other three owners.

“Q. Well, you're saying that you relied upon learning that the boundary was up on the hill in your decision to buy. In truth, you would have bought[ ] it even if you knew that-had learned that the line was at the edge of the pavement, wouldn't you?

“A. There's a possibility, yes.”

Burkholder was not asked whether he would have agreed to the same purchase terms if he had been told that the boundary was in a different place. On redirect, he testified that defendants bought the land expecting to receive everything up to the line identified by Neifert and thought that that was part of the deal. After purchasing the property, defendants used the disputed area to test buggies and ATVs used in their business.

Defendants hired Troy Rambo to survey and mark the boundary and place stakes for fence construction. Rambo, using the BLM corner, placed the boundary line in about the same position as the original flagging. Defendants then began building a fence a few inches on their side of that surveyed line.

Soon afterward, plaintiffs bought their parcel. When they first looked at the property, flags marked the line where the fence is now located, and the fence was partly built. There was no visible indication of a different boundary line. Plaintiff Geoffery Neff testified that he assumed that defendants thought that the boundary was at the same location as the fence. Before completing the purchase, however, plaintiffs learned of potential problems with the boundary between their parcel and defendants' parcel. Plaintiffs had a survey done by Jerry Estabrook, who noted the existence of two locations for the section corner. Estabrook believed that the Buckingham corner was the proper reference point for the boundary between plaintiffs' and defendants' parcels. According to Estabrook, the original legal description of defendants' parcel was based on a 1948 survey that used the Buckingham corner, and defendants' deed uses that same legal description. Based on Estabrook's survey, plaintiffs agreed to buy the property.⁵

Plaintiffs negotiated a $33,000 decrease in the sale price for their parcel, based on questions about the boundary. Plaintiffs believed the boundary with defendants' parcel to be the only problematic boundary. Neifert, for his part, understood the boundary with defendants' parcel to be the marked line, and he did not perceive any problem with that boundary. Rather, he suspected a problem with a different boundary. He agreed to a price reduction because he believed that the parcel's actual size might be less than had been listed.

Subsequently, plaintiffs filed this action seeking a declaration that they are the owners of the property at issue, as well as an injunction prohibiting defendants from asserting any claim to the property. Defendants prevailed on an affirmative defense of boundary by estoppel.⁶ The trial court reasoned that Neifert would be estopped from asserting a different boundary given that he represented to defendants that the boundary was where the BLM corner places it, defendants bought their parcel based on that representation, and they then used the disputed property as their own. The court further reasoned that plaintiffs were on inquiry notice of that estoppel as a result of their knowledge that that boundary line was marked by some flags and a partially built fence, that there were questions about the location of the boundary and the size of the parcel, that defendants claimed the disputed area as their own, and that Neifert did not know the size of the parcel that he was selling. The trial court concluded that, under the circumstances, a reasonable and prudent person would have inquired of Neifert or defendants about the basis for defendants' belief that the fence was on the boundary; such an inquiry would have led “to the information that Neifert had represented and defendants had understood that the boundary was located where the flags marked a line and the construction of the fence had been started representing the boundary.”

Plaintiffs appeal. They contend that the trial court erred in finding that defendants were entitled to prevail on their affirmative defense of boundary by estoppel. According to plaintiffs, Neifert would not be estopped because defendants failed to show that they relied on his representation in deciding to buy their parcel. Plaintiffs also contend that a mistake, by itself, cannot form the basis for estoppel regarding the location of a boundary. Furthermore, plaintiffs argue, they are not estopped, because they made no representation to defendants and they had neither actual nor inquiry notice of Neifert's representation. In their view, they adequately inquired by having Estabrook perform a survey: “such inquiry led plaintiffs to know that defendants were mistaken on their belief of the location of the line. And if defendants' understanding of where the line was located came from Neifert, he, too, was mistaken.”

Defendants respond that they did, in fact, rely on Neifert's representation in purchasing their parcel and using the disputed area in their business. They further argue that plaintiffs had a “duty to make inquiry as to why the defendants were in possession of the disputed property and why they were claiming to be its owner. Had they done so, by either inquiring of the Neiferts or the defendants, they would have had actual knowledge of * * * Neifert's representations.” We agree with defendants, and with the trial court, that Neifert would be estopped from denying that the boundary was where he represented it to be and that plaintiffs were bound by Neifert's representation.

Where a seller represents a particular line to be the boundary between the property that he is selling and the property that he is retaining and he induces a buyer to buy up to the purported boundary, the seller is estopped from later denying the accuracy of his representation of the boundary. Clark v. Hindman, 46 Or. 67, 79 P. 56 (1905). In Clark, the plaintiff had bought land from her father, who identified a particular line as the boundary between her property and his remaining property and built a fence on that line. The plaintiff paid to have a house built on a site that was selected by her father, who supervised the construction of the house, which turned out to encroach over the boundary described in the deed. Id. at 71–73, 79 P. 56. The issue was whether the father's acts estopped him and his wife, to whom he had transferred the remaining property, from asserting the boundary described in the deed. Id. at 74, 79 P. 56. Concluding that the father and his wife were so estopped, the court explained that a party

“ ‘is estopped to deny the line between his own and the adjoining land to be the true line if he has sold and conveyed land up to such line, has...