Steele v. Pfeifer

• Citation: 310 N.W.2d 782
• Decision Date: 07 October 1981
• Docket Number: No. 13202,13202
• Parties: Edna M. STEELE and Thomas J. Batcheller, Plaintiffs and Appellants, v. Ada E. PFEIFER, Robert E. Nelson, Peggy I. Nelson, Elton F. Johnson, Karmen C. Johnson, Kandace C. Johnson, Karla Lee Johnson, Lynn Henrickson and Josefina R. Henrickson, and all persons unknown who have or claim to have any interest in or lien or encumbrance upon the premises described in the Complaint, Defendants and Appellees.
• Court: South Dakota Supreme Court

Page 782

310 N.W.2d 782

Edna M. STEELE and Thomas J. Batcheller, Plaintiffs and Appellants, v. Ada E. PFEIFER, Robert E. Nelson, Peggy I. Nelson, Elton F.

Johnson, Karmen C. Johnson, Kandace C. Johnson, Karla Lee

Johnson, Lynn Henrickson and Josefina R. Henrickson, and all

persons unknown who have or claim to have any interest in or

lien or encumbrance upon the premises described in the

Complaint, Defendants and Appellees.

No. 13202.

Supreme Court of South Dakota.

Argued March 19, 1981.

Decided Oct. 7, 1981.

Robert L. Thomas of May, Johnson, Doyle & Becker, Sioux Falls, for plaintiffs and appellants; Joel T. Hagen of Burns & Hagen, Sioux Falls, on the brief.

Thomas J. Welk of Boyce, Murphy, McDowell & Greenfield, Sioux Falls, for defendants and appellees.

DUNN, Justice (on reassignment).

This is an appeal from a judgment in a quiet title action subjecting the land in question to the terms and conditions of an easement for the use of a water well. We affirm.

In 1958 Howard and Selma Ahrendt (Ahrendts) purchased Lots 2, 3, 20, and Tract A of Lot 19; Carl W. (Carl) and Ada (Ada) Pfeifer purchased Lots 1 and 21; Loren (Loren) and Phyllis (Phyllis) Pfeifer purchased Lots 4, 5, 18, and Tract B of Lot 19. At the time of these purchases, these lots were outside the city limits of Sioux Falls, South Dakota.

There was no public water supply to the properties, but Lot 20 contained an existing well. Prior to the purchases of the lots, the property owners discussed the possible use of the well and orally agreed to purchase and build a 3500-gallon reservoir, to install a master pump, and to have separate pumps draw water from the reservoir to the respective homes of the individual lot owners. They also agreed to share the costs of operating the well.

In 1959 the purchasers reduced their oral agreements to writing. They executed an "easement," ¹ and the following day they executed an "agreement." ² Neither written document was recorded at that time. Over the years, the parties shared equally the use and costs of the well according to these documents.

Appellant Edna M. Steele (Steele) and her husband purchased Lot 20 and Tract A of Lot 19 from the Ahrendts in 1965. At the time of the purchase, the Steeles were informed by the realtor of the existence of the well and that other people were using it. About a week after the Steeles had moved into their new home, Loren and Phyllis went to the Steeles and explained the arrangements regarding the use of the well.

In 1970, after the death of both Loren and Steele's husband, Steele asked Phyllis what the agreement was concerning the well. Since neither Steele nor her husband had signed any papers concerning the use of the well, she was unsure of the specific contents of the agreement. Phyllis showed Steele the "agreement" that had been signed with the Ahrendts. Phyllis told Steele that she did not have any other documents regarding the well. Steele was not shown a copy of the "easement."

In 1970 Phyllis sold Lots 4 and 5 to Robert and Peggy Nelson (Nelsons). Prior to Nelsons' purchase, Carl and Phyllis informed them that there was an easement on the well, that they would own one-third of the well, that they had a right to use the well, and that they could go onto Lot 20 to look after the well. The property owners continued to use the well and share in its expenses after the Nelsons moved into their home.

After the lots in question were incorporated within the city limits of Sioux Falls, Steele petitioned for city water. She was connected to the public water system in November, 1973 and discontinued her use of the well. A short time later, Steele asked the Nelsons and Pfeifers to connect to the city water system and to discontinue their use of the well, since they had no further legal right to the well. Nelsons then attempted to locate a written easement. They found a copy of the "easement" at the Home Federal Savings and Loan in Sioux Falls. After discussing the validity of the "easement" with their attorneys, Nelsons recorded it on December 5, 1973.

On August 14, 1974, Steele executed a contract for deed for the sale of her land to Appellant Thomas J. Batcheller (Batcheller). Prior to the sale, Batcheller was informed of the problems surrounding the well and of the "easement." After the purchase, Nelsons and Batcheller discussed the use of the well. Nelsons informed Batcheller that they believed they had a legal right to use the well and that they would continue to do so. In 1974 Nelsons hooked up to the city water system, but continued to water the lawn and garden with the well water. Nelsons were unaware of the "agreement" until the night before this case went to trial.

In December of 1978 Steele and Batcheller began this quiet title action, which was tried to the court in August of 1979. On May 9, 1980, the circuit court found the easement to be a valid easement under South Dakota law and entered a judgment in favor of appellees. The circuit court specifically held that "Tract A of Lot 19 and Lot 20 is (sic) subject to the easement ... in favor of the owners, and their heirs, executors, administrators, successors and assigns of Lot 4, 5, 18, Tract B of Lot 19 and Lot 21." Conclusion of Law III.

This court presumes that the findings of fact of the circuit court are correct and places the burden to show error in the findings upon appellant. Cuka v. Jamesville Hutterian Mut. Soc., 294 N.W.2d 419 (S.D.1980); Hilde v. Flood, 81 S.D. 25, 130 N.W.2d 100 (1964). We will not disturb the findings of the circuit court unless they are clearly erroneous. SDCL 15-6-52(a); Shaffer v. Honeywell, Inc., 249 N.W.2d 251 (S.D.1976).

Steele contends that the "easement" and "agreement" are void in light of SDCL 43-28-17, since the warranty deed transferring the property in question to her was recorded before the "easement." The provisions of SDCL 43-28-17 state:

Every conveyance of real property other than a lease for a term not exceeding one year is void as against any subsequent purchaser or encumbrancer including an assignee of a mortgage, lease, or other conditional estate of the same property, or any part thereof in good faith and for a valuable consideration whose conveyance is first duly recorded. The term "conveyance" as used in this section, embraces every instrument in writing by which any estate or interest in real property is created, aliened, mortgaged, or encumbered or by which the title to any real property may be affected, except wills and powers of attorney.

Appellees, however, rely on SDCL 43-28-14, which states: "An unrecorded instrument is valid as between the parties thereto and those who have notice thereof."

Reading these provisions together and in harmony, it must be determined whether Steele was in fact a good faith purchaser without knowledge of the existence of the easement. The circuit court, in its Finding of Fact XVI, found that "Steele as the result of her conversation in 1965 with Loren and Phyllis Pfeifer and the payments received from the Pfeifers and Nelsons had knowledge of facts that would have put a prudent person upon inquiry whether any unrecorded conveyance existed as to her property."

In the similar case of Wiege v. Knock, 293 N.W.2d 146, 148 (S.D.1980), we stated:

Appellants contend, however, that since no documents were on record revealing plaintiffs' water rights, they should not be bound to any permanent water right easement. We are not persuaded by this argument. Notice of an easement is generally imputed to a purchaser where the easement is of such character that a purchaser acting with ordinary diligence would know or learn of its existence. Thus, where the easement is open and visible, the purchaser will be charged with notice even though the easement was created by a grant which was not then recorded. The grantee is bound where a reasonably careful inspection of the premises would disclose the existence of the easement or where the grantee has knowledge of facts sufficient to put a prudent buyer on inquiry.

"If facts are sufficient to put a purchaser of a title or lien upon inquiry of any adverse right or equity of a third party, his want of diligence in making such inquiry is equivalent to a want of good faith." Madson v. Ballou, 63 S.D. 501, 505, 260 N.W. 831, 833 (1935).

The circuit court found that Steele had sufficient facts to put a prudent person on inquiry. The circuit court properly imputed knowledge of the easement to Steele and concluded that it was valid under South Dakota law. We hold that there is sufficient evidence in the record to support the circuit court's findings of fact and conclusions of law in regard to this issue.

Appellants also contend that if the "easement" was valid, its effect is limited to the right to lay, maintain, operate, and replace water lines on appellant's property. They contend that the "agreement" grants the right to take water from the well, but that the "agreement" was a license, personal to the parties denominated therein, not assignable, and revocable.

The circuit court did not make findings of fact or conclusions of law regarding the "agreement," except to acknowledge its execution. The findings of fact and conclusions of law proposed by appellants, incorporating the above argument, were refused by the circuit court. The issue was properly before the circuit court and it ruled adversely to appellants. The issue has been briefed and argued, and is properly before us on appeal.

Appellants allege that the documents which were prepared by the same attorney and executed on successive days should be read together. We agree. In Ponderosa-Nevada, Inc. v. Venners, 90 S.D. 579, 584, 243 N.W.2d 801, 803 (S.D.1976) (( ) in original) (citation omitted), this court said, " 'Where (there are) several contracts relating to the same matters, between the same parties and made as parts of the same transaction, they should be considered together and treated as one contract.' " The intent of ...