Sleeping Indian Ranch v. West Ridge Group

• Decision Date: 12 September 2005
• Docket Number: No. 04SC691.,04SC691.
• Citation: 119 P.3d 1062
• Parties: SLEEPING INDIAN RANCH, INC., a Delaware corporation, Petitioner, v. WEST RIDGE GROUP, LLC, Respondent.
• Court: Colorado Supreme Court

119 P.3d 1062

SLEEPING INDIAN RANCH, INC., a Delaware corporation, Petitioner, v. WEST RIDGE GROUP, LLC, Respondent.

No. 04SC691.

Supreme Court of Colorado.

En Banc.

September 12, 2005.

Gregory J. Kerwin, Amanda J. Tessar, Monica K. Loseman, Gibson, Dunn & Crutcher LLP, Denver, Jerry B. Tompkins, Traylor, Tompkins, Black & Gaty, P.C., Grand Junction, for Petitioner.

Phillip Ernest Anselmo, Montrose, for Respondent.

Justice KOURLIS delivered the Opinion of the Court.

Sleeping Indian Ranch ("SIR") sought review of the court of appeals' opinion in Sleeping Indian Ranch, Inc. v. West Ridge Group, 107 P.3d 1028 (Colo.App.2004), reversing the district court's judgment in its favor. The district court quieted title in SIR to a portion of a 40-acre tract of land owned by West Ridge Group ("West Ridge"), on grounds that SIR's predecessor, the Perkins Group, had acquired title by adverse possession. The Perkins Group had contracted with Charles and June Ashby for the purchase of a 40-acre tract adjacent to the parcel West Ridge later purchased. The Perkins Group entered into possession in 1974, building a log cabin that actually encroached on the property later sold to West Ridge. Concluding that the Perkins Groups' exclusive possession of the adjacent property met all the indicia of adverse possession, the district court quieted title in SIR. The court of appeals reversed, holding that the Perkins Group had entered into a venture with the Ashbys for the purchase of both parcels and one other parcel, such that the Perkins Group was actually a vendee as to Parcel B and was thus barred by the vendor-vendee exception from asserting adverse possession against any portion of that parcel. SIR petitioned for certiorari review of the court of appeals' opinion.

We granted certiorari and now reverse.¹ The purpose of the vendor-vendee exception to the adverse possession rule is to preclude a purchaser from asserting that he can adversely possess property that he has otherwise contracted to buy. The exception does not apply here, because the evidence supports both the trial court's finding that the Perkins Group was in the process of purchasing only Parcel A, and had no contractual rights or obligations as to Parcel B, and also the trial court's finding that there was no joint venture or partnership as to the entire 120 acres. Accordingly, we reverse the court of appeals and remand for reinstatement of the quiet title decree and for other proceedings consistent with this opinion.

I. BACKGROUND

The underlying dispute arises from the purchase and subsequent transfer of a 120-acre tract of land located in Ouray County, Colorado. The parcel was subsequently treated as three contiguous 40-acre tracts. Three different parties entered into exclusive possession of those tracts beginning in 1974: Charles and June Ashby, Alfred Stuck, and Robert Perkins (ultimately the "Perkins Group"). The parties to this dispute, SIR and West Ridge, are successors in interest to two of those owners, the Ashbys and the Perkins Group.

Asserting adverse possession, SIR filed a complaint in Ouray County District Court on October 15, 2001, to quiet title to a portion of West Ridge's 40 acres. West Ridge moved to dismiss the complaint, contending that, for the duration of the adverse period, SIR's predecessor was a contract vendee of the Ashbys, who — under the terms of an installment land contract — did not obtain actual title until 1989. Thus, West Ridge continued, because the Perkins Group was a "vendee in possession," the adverse possession period could not have begun until 1989. West Ridge's contemporaneously filed counterclaim recognized the Perkins and Ashby parcels as distinct properties.² Treating West Ridge's motion as a motion for summary judgment, the trial court denied the motion, finding disputed issues of fact as to whether SIR had adversely possessed the property. Although the court recognized the principle that a vendee may not adversely possess against a vendor, the court noted that West Ridge's own pleadings established facts consistent with SIR's complaint: namely, that SIR sought to quiet title to a property distinct from the property that West Ridge's predecessor had conveyed to Perkins. The case proceeded to trial in August, 2002.³

Trial evidence disclosed the following title history for the 120-acre tract. The pertinent initial transaction involved a 1973 conveyance of an 800-acre tract of land located in Ridgeway, Colorado. Pursuant to an Agreement of Sale and Purchase, Murray Gell-Mann sold the parcel to Donald D. and Judith F. Ethridge (the "Ethridges"), and Darrell E. and Charlene M. Kinney (the "Kinneys").⁴ The Agreement was an installment land contract, requiring a down payment and annual installments of principal and interest. The contract was filed as an encumbrance of record on July 9, 1973. The deed was signed in June of 1973, but under the terms of the Agreement, was not recorded until 1983 — when the purchase price was paid in full. In 1973, the Ethridges and Kinneys entered into possession as joint tenants.

The same year, Charles C. Ashby and June M. Ashby (the "Ashbys") contracted with Ethridge and Kinney to purchase a 120 acre parcel through an "assignment and participation" agreement, under which the Ashbys assumed the Ethridge and Kinney obligations to Gell-Mann in proportion to the 120-acre tract.

A year later, Charles Ashby was having problems making the payments. He sought assistance from two friends, Robert Perkins and Alfred Stuck, also his business associates.

The nature of the Ashby, Perkins and Stuck transactions are at the heart of this case. Only Robert Perkins and Alfred Stuck provided testimony at trial. Both testified that in 1974 (or in that time frame), they entered into separate installment land contracts with the Ashbys to purchase 40 acres each of the 120-acre parcel, with the Ashbys retaining 40 acres. Although Perkins remarked that his purchase of the property "was always somewhat of an enigma," he asserted that he and Stuck had purchased distinct contiguous 40-acre tracts at $212 per acre (or one-third of the Ashbys' financial obligation) to be paid over a ten or fifteen-year period.

The real estate sales contracts between Ashby, Stuck and Perkins were, however, never memorialized. Although Perkins testified that he had received some documents from Ashby defining payment terms for 40 acres, there was no document precisely defining the arrangement introduced into evidence at trial. However, both Stuck and Perkins testified that the transaction was settled by "handshakes" among friends who had known each other for several decades. Both were quite clear that the intent of the parties was that Stuck, Perkins and Ashby would each end up with separately apportioned 40-acre parcels. To that end, Stuck and Perkins made separate payments to Ashby during the installment period.

Trial exhibits consisted primarily of correspondence between Ashby and Perkins, and between Perkins and those who shared ownership and possession of his parcel. The correspondence included a certificate of limited partnership of "Uncampahgre, Ltd.," identifying Ashby, Stuck and Perkins as partners. Other correspondence included a 1974 letter from Perkins to Ashby referencing notice to be sent to "those other parties who are involved in our 40 acres" for annual payments, and letters from Charles Perkins sent solely to members of the Perkins Group for their contributions to the construction of and improvements to the log cabin.

The "partnership" document sheds some light on the transaction. One page contained a sketch designating the parties to whom the Kinneys and Ethridges had sold separate portions of the 800-acre parcel. Specifically, in the area reflecting the 120-acres the Ashbys were purchasing, three separate portions are sectioned off. The westerly most section is marked "S. ASP," the middle section is marked "P. ASP," and the easterly most section is designated "A. ASP." On a preceding page, the document reflects that the 120-acres had been allocated as follows: (1) the SE 1/4 NW 1/4 Sec. 9, allocated to Dr. Stuck; (2) the SW 1/4 NE 1/4 (hereinafter "Parcel A"), allocated to Perkins; and (3) the SE 1/4 NE 1/4 Sec. 9 (hereinafter "Parcel B"), retained by the Ashbys. The document specified that the partnership was established for the purpose of purchasing the 120 acres. Nonetheless, evidence at trial indicated, and the trial court expressly found, that no partnership had been actually created. There was no testimony or other evidence about contributions to any partnership, partnership tax returns or any other indicia of a formalized partnership.

Concurrent with his agreement with the Ashbys, in 1974, Perkins transferred Parcel A to an evolving group of eight business associates, family members and friends referred to as the "Perkins Group". This transaction was also not recorded. The Perkins Group paid taxes on Parcel A from 1981 until the sale to SIR. From 1974 until 1996, the Perkins Group used the parcel as co-tenants.⁵

From the beginning, the Perkins Group used Parcel A solely for hunting purposes. Initially, some members of the group lodged at the Kinneys' property, while others camped out at Parcel A. In 1975, a camper trailer was placed on the property. The group began staying exclusively at Parcel A the following year when a sheep herder's tent was added to the property. They added a second trailer in 1977.

In 1976, the Perkins Group began construction of a cabin on Parcel A. Prior to building the cabin, Charles Perkins and another member of the group attempted to mark the boundary line between their property and Parcel B, by stepping off 30 paces to the west to avoid encroachment. Assuming the boundary had been properly marked, construction on the cabin was completed by 1978. The group strung barb-wire around the cabin and constructed a generator shed and an open-air outhouse in the vicinity. The...