Nelson v. Hughes
| Citation | 290 Or. 653,625 P.2d 643 |
| Decision Date | 17 March 1981 |
| Docket Number | No. 78-200-E,78-200-E |
| Parties | Betty Lou NELSON, Petitioner, v. Doug HUGHES and Wanda Hughes, Respondents. ; CA 15825 and SC 27125. |
| Court | Oregon Supreme Court |
Donald H. Coulter of Myrick, Coulter, Seagraves & Myrick, Grants Pass, argued the cause and filed a brief for petitioner.
Michael L. Mowrey of Brown, Hughes, Bird & Lane, Grants Pass, argued the cause and filed a brief for respondents.
Before TONGUE, Presiding C. J., and HOWELL, * LENT, LINDE, PETERSON and TANZER, JJ.
This quiet title suit involves a dispute between contract purchasers whose land sale contract was prior in time, but unrecorded, and a subsequent purchaser a grantee under a deed whose deed, though subsequent in time, was recorded. The disposition of the case turns on the allocation of the burden of proof to establish that the subsequent purchaser was or was not a bona fide purchaser for value without notice of the prior purchaser's claim. The Court of Appeals imposed the burden of proof upon the subsequent purchaser and reversed the lower court. We affirm the Court of Appeals.
The facts are without substantial dispute. In August, 1961, the defendants entered into a land sale contract with Robert and Betty Lou Dolands for the purchase of property in Josephine County. The land sale contract contained a metes and bounds description, was not acknowledged, and was not recorded at that time. A deed was placed in escrow.
The Dolands also owned adjoining land, which was subsequently platted and subdivided. In August, 1962, the Dolands deeded two of the subdivided lots to the plaintiff. 1 Plaintiff recorded the deed on August 29, 1962. On March 30, 1964, the land sale contract between the defendants and the Dolands was recorded in the Miscellaneous Records of Josephine County, Oregon. The defendants later paid off the land sale contract, and recorded the deed to their property on February 13, 1979.
Part of the land sold to the plaintiffs overlapped the property described in the defendants' land sale contract. Plaintiff filed suit to quiet title, asserting her title through the recorded deed of August, 1962. Defendants answered and counterclaimed, seeking to quiet their title, alleging their interest under the 1961 land sale contract. Defendants did not allege that the plaintiff was not a bona fide purchaser for value and without notice. Plaintiff did not allege her bona fide purchaser status in her complaint, her reply, or in her answer to defendant's counterclaim.
The trial court entered a decree quieting plaintiff's title.
At the time of the sales to the parties, ORS 93.640(1) provided:
"Every conveyance affecting the title of real property within this state which is not recorded as provided by law is void as against any subsequent purchaser of the same real property or any portion thereof, in good faith and for a valuable consideration whose conveyance is first filed for record, and as against the heirs and assigns of such purchaser."
In 1973, Oregon Laws 1973, ch. 696, § 19, amended ORS 93.640 to read in pertinent part:
"(1) Every conveyance, deed, land sale contract or other agreement or memorandum thereof affecting the title of real property within this state which is not recorded as provided by law is void as against any subsequent purchaser in good faith and for a valuable consideration of the same real property, or any portion thereof, whose conveyance, deed, land sale contract or other agreement or memorandum thereof is first filed for record, and as against the heirs and assigns of such subsequent purchaser. * * * "
The plaintiff contends:
1. Recording statutes are liberally construed to accomplish their purposes. Applying such liberal interpretative policy, executory land sale contracts were recordable within those types of statute which deal with recording of "conveyances" of land.
2. Plaintiff was not obligated to anticipate defenses to her quiet title cause of suit. If defendants desired to claim that plaintiff was not a bona fide purchaser under such quiet title complaint, they should have affirmatively raised that defense.
3. The burden should fall on the one whose failure to invoke the protection of the recording acts caused the dispute.
4. The evidence in the record, taken in conjunction with the statutory presumptions under ORS 41.360, made out a sufficient prima facie case of bona fide purchaser status for plaintiff.
As stated above, the disposition of this case turns on the allocation of the burden of proving that the subsequent purchaser was or was not a bona fide purchaser for value without notice of the prior purchaser's claim. We will first examine the policies which operate in determining the allocation of the burden of proof and will then look at prior decisions of this court which relate to the issues at hand. Before doing so, however, it is appropriate to focus upon some aspects of this case as to which there can be no disagreement.
The original conveyance from the Dolands to the defendants transferred the disputed property to the defendants. The Dolands thereafter owned only a security title, the vendors' interest under a land sale contract. There can be no disagreement that the defendants' contract, though unrecorded, was valid as a conveyance of equitable title to them. Therefore, the subsequent conveyance by the Dolands to the plaintiff at most conveyed the vendors security interest in the form of legal title, for the grantors had nothing left to convey.
In order for the plaintiff's interest to be effective, she must be a purchaser " * * * in good faith and for a valuable consideration whose conveyance (was) first filed for record * * * ." The plaintiff's displacement of the defendants' validly obtained interest arises only by virtue of the fact that the statute so provides. 2
Finally, there can be no dispute that if the defendants' unacknowledged land sale contract was recordable, and had been recorded, no question as to title would exist. In that sense, the defendants' "fault" in failing to record is a factor to weigh in allocating the burden of proof.
The factors which have been considered in allocating the burden of proof include the following:
1. Precedent; 4
2. Whether the facts are within the peculiar knowledge of a party;
3. Whether the party has the burden of pleading the affirmative allegation;
4. Upon whose case is the existence of the fact essential;
5. Probability. The extent to which a party's contention departs from conduct which would be expected in the light of ordinary human experience 6. Whether disfavored contentions (fraud, contributory negligence, statute of limitations, truth in defamation) should be handicapped;
7. In case of a statute, whether the application of the statute is essential to a party's right to recover;
8. In case of a statute, the policy which the statute aims to effect;
9. Timing. Whether matters occurring after the accrual of a cause of action should be treated as affirmative defenses;
10. Whether the burden should be imposed upon the one who pleads the facts;
11. Whether the burden should be imposed on the one who invokes the judicial remedy. 5 Looking at factors 2 through 10 listed above, it appears that the factors most relevant to this case are factors 2, 4, 7, 8, 10, and 11. 6
Factor 2 (whether the facts are within the peculiar knowledge of a party). Professor Cleary suggests the fairness of allocating the burden of an element of proof to the party who more likely is able to produce such evidence. 7 This principle was recognized and applied in Sorenson v. Kribs, 82 Or. 130, 161 P. 405 (1916). In this case the evidence is clearly within the power of the plaintiff to produce, and one or two questions to the plaintiff could have established her good faith. Though this factor is not determinative, we think that it is entitled to consideration. 8
Factors 4 (upon whose case is the existence of the fact essential) and 7 (whether the application of the statute is essential to a party's right to recover). These two factors are assuredly important in this case. The validity and enforceability of the plaintiff's claim is solely dependent upon the fact that she was a subsequent purchaser in good faith and for a valuable consideration. Unless that be the fact, the defendants own the property and the plaintiff does not. With a showing of such fact, the plaintiff owns the property and the defendants, claim is "void," according to the statute. This analysis points toward the conclusion that there must be a showing that the subsequent purchase was in good faith and for consideration, and to a holding requiring the subsequent purchaser to prove the application of the statute.
At the same time, such an analysis tends to beg the question by assuming that there must be a showing (by the presentation of evidence, in the usual case) that the subsequent purchase is in good faith and for value. Some courts have held that the one claiming under a prior unrecorded conveyance has the burden of proving that the subsequent purchaser had notice of the earlier conveyance, 9 in which case if there is no showing, one way or the other, as to the bona fideness of the subsequent purchaser, the subsequent purchaser prevails. Other courts hold that the one...
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