Orr v. Mortvedt

• Decision Date: 20 July 2007
• Docket Number: No. 04-1968.,04-1968.
• Parties: Stephen L. ORR, Shirlee Orr, Ronald E. Cameron, Randy Sevde, and Colleen Katerie Sevde, Appellees, v. Jeffrey MORTVEDT and Susan Mortvedt, Appellants.
• Court: Iowa Supreme Court

735 N.W.2d 610

Stephen L. ORR, Shirlee Orr, Ronald E. Cameron, Randy Sevde, and Colleen Katerie Sevde, Appellees, v. Jeffrey MORTVEDT and Susan Mortvedt, Appellants.

No. 04-1968.

Supreme Court of Iowa.

July 20, 2007.

Robert W. Goodwin of Goodwin Law Office, P.C., Ames, for appellants.

William J. Koehn and Heather L. Palmer of Davis, Brown, Koehn, Shors & Roberts, P.C., Des Moines, for appellees.

HECHT, Justice.

The defendants appeal from the district court's ruling denying their request for reformation of a deed and declaring: (1) they have the right to use and enjoy only that portion of a man-made lake covering an abandoned rock quarry within the legal description of their deed; (2) the plaintiffs may erect a fence, berm or other structure in the lake marking the borders of their properties; and (3) the plaintiffs may drain the water covering their respective properties and reopen the quarry. We affirm.

I. Background Facts.

The Twedt family owned a rock quarry and land surrounding it in Hamilton County. The mining of the quarry was discontinued, and the excavated area consisting of approximately thirty acres became a lake filled by ground water springs and normal rainwater run-off. The Twedt family subsequently sold the real estate in a series of transactions over a period of years. Each of the transactions resulted in the conveyance of a portion of the lake bed and land surrounding it.

In the first transaction, Randy Sevde and Colleen Katerie Sevde purchased approximately twenty acres of the lake bed along with adjacent land situated east, south and west of the lake in 1994. In the second transaction in the series, Jeffrey and Susan Mortvedt purchased a tract west and north of the lake, including the northern tip of the lake bed, in 1996. In 1998, Stephen and Shirlee Orr acquired a parcel situated primarily on the east side of the lake and including that part of the lake bed located between the parts previously purchased by the Sevdes and the Mortvedts. In the last conveyance of relevance to this case, the Orrs soon thereafter conveyed a portion of the property they had acquired, including a part of the lake bed, to Ronald Cameron.

A boundary dispute arose between the Mortvedts and the Orrs. The Mortvedts contended their property extended to the water's edge on the west side of the lake. The Orrs disagreed, claiming a survey undertaken and filed of record at the time of the Mortvedts' purchase confirms that the Mortvedts' east boundary line lies west of the water's edge and establishes that the Orrs own a narrow strip of land on the west side of the lake. This boundary dispute escalated when the Orrs cut down trees and planted other vegetation on the disputed narrow strip of land. Disharmony also resulted from the neighbors' inability to agree about their respective rights to use the lake. The Sevdes and the Orrs objected when the Mortvedts used, for fishing and boating, parts of the lake beyond the boundaries of the lake bed owned by the Mortvedts.

The Orrs, the Sevdes, and Cameron filed this action seeking: (1) a resolution of the boundary dispute between the Orrs and the Mortvedts; (2) an adjudication of whether the owners of the lake bed have a legal right to access the entire lake or only that portion of the lake within the legal descriptions of their respective deeds; (3) a declaration that they have the right to drain the water covering their property and fence it; (4) a determination that they are entitled to exclusive possession, use and enjoyment of the minerals located within their respective properties; and (5) compensatory damages for trespass and injunctive relief to prevent future trespasses by the Mortvedts.

The Mortvedts filed a counterclaim seeking a declaration that: (1) they have a legal right to use the entire lake; (2) the plaintiffs have no right to drain the water from the lake and reopen the quarry; (3) the plaintiffs be required to restore the lake water level to that which prevailed when the Mortvedts purchased their property in 1996; and (4) the plaintiffs have no legal right to install or maintain a fence in the lake. The Mortvedts also sought reformation of their deed to conform it to the understanding of the parties to the 1996 conveyance: that the Mortvedts' east property line extends to the lake water's west edge. They also requested compensatory damages for the loss of the trees removed by Stephen Orr from the narrow strip of land claimed by both the Mortvedts and the Orrs.

After a bench trial, the district court filed a decision declaring in relevant part: (1) the parties are entitled to the exclusive possession, use and enjoyment of the water covering the real estate described in their respective deeds; (2) the parties own any minerals located on the real estate described in their respective deeds; (3) the Mortvedts are prohibited, absent express written permission, from entering upon or using the water overlaying the properties owned by the Sevdes, the Orrs, and Cameron, who are legally entitled to construct a fence, berm or other structure to mark the boundaries of their properties; and (4) the Sevdes, the Orrs, and Cameron are entitled to drain the water covering, mine minerals from, and restore wetlands upon their properties. The court denied the defendants' counterclaim.

The Mortvedts appeal, contending the district court erred in concluding: (1) the lake is not "public water" as defined by Iowa Code sections 455B.261(17) and 455B.262(3) (2003); (2) their deed should not be reformed; and (3) they are not entitled to damages for the loss of the trees destroyed by Stephen Orr.

II. Scope of Review.

This case was filed and tried in equity. Our review is de novo. Breitbach v. Christenson, 541 N.W.2d 840, 843 (Iowa 1995).

III. Discussion.

A. Reformation of the Mortvedt Deed.

The Mortvedts contend the district court erred in failing to reform their deed to locate the boundary between their property ("Parcel C") and that of the Orrs ("Parcel B") at the water's edge on the west side of the lake. As the parties seeking reformation, the Mortvedts introduced evidence and requested a finding that their deed does not describe the intended boundary line. See Kendall v. Lowther, 356 N.W.2d 181, 187 (Iowa 1984) (stating that the party seeking reformation bears the burden of establishing by clear and convincing evidence that a written instrument fails to reflect the contracting parties' intent). The Mortvedts offered evidence tending to prove their grantor intended the water's edge on the west side of the lake would be the eastern boundary of the property conveyed to the Mortvedts. This evidence included the contract between the grantor-estate and the Mortvedts describing the property to be conveyed as "[i]ncluding all land west and north of [the] water." The Mortvedts also offered the testimony of Loren Twedt, a co-executor of the grantor-estate, and Eldon Boswell, a realtor for the estate, who both affirmed such intent. The plaintiffs objected to the Mortvedts' offer of the real estate contract and the testimony of Mr. Boswell and Mr. Twedt on the grounds that such evidence violated the parol evidence rule and the statute of frauds.

In its decision rejecting the Mortvedts' prayer for reformation of their deed, the district court concluded Boswell's testimony and the real estate contract violated both the parol evidence rule and the statute of frauds. The court also concluded the remedy of reformation is not available to the Mortvedts because the Orrs, whose property interest in the disputed strip of land would be directly affected if the remedy were granted, were not parties to the Mortvedts' deed.

We need not address the Mortvedts' contention that the district court erred in its ruling on the parol evidence and statute of frauds objections because the district court correctly concluded the remedy of reformation is unavailable to the Mortvedts under the circumstances of this case. We will only order reformation of a deed against a party to it, a person in privity with a party, or a person with notice of the relevant facts. See Burner v. Higman & Skinner Co., 133 Iowa 315, 316, 110 N.W. 580, 580 (1907). Reformation will not be ordered to the prejudice of innocent third persons. 76 C.J.S. Reformation of Instruments § 54 (1994); see also Lee v. Brown, 482 So.2d 293, 297 (Ala.1985) (declining to reform a deed to the detriment of an adjoining landowner who was an innocent purchaser); Statler v. Painter, 84 Ark.App. 114, 133 S.W.3d 425, 429 (2003) (same); Schlenz v. Dzierzynski, 134 Ill.App.3d 937, 89 Ill.Dec. 736, 481 N.E.2d 287, 290 (1985) (same); Chandelle Enters. LLC v. XLNT Dairy Farm, Inc., 282 Wis.2d 806, 699 N.W.2d 241, 247-48 (Ct.App.2005) (same). Notwithstanding the Mortvedts' assertions to the contrary, we find the Orrs were innocent third parties as to the transaction between the Twedt estate and the Mortvedts.

Stumbo & Associates Land Co. was hired to prepare a survey when the Mortvedts purchased their land from the Twedt estate in 1996. That survey of Parcels B and C describes the real estate by metes and bounds and denotes the boundary between the parcels as a straight line running from essentially north to south, as shown on the illustration below:

NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE

The legal description of Parcel C in the Mortvedts' deed to Parcel C refers expressly to the Stumbo survey.

The Mortvedts contend, however, that the Stumbo survey put the Orrs on inquiry notice of the Mortvedts' claim that the boundary between the two parcels is marked by the water's edge rather than the straight, solid boundary line shown on the survey. The Mortvedts support their position by reference to a dotted line denominated by the surveyor as "edge of water" and drawn on the survey adjacent to the straight, solid line to illustrate the approximate location of the water's edge on the west side of the lake. Although the survey...