Sun Valley Land and Minerals, Inc. v. Burt
| Decision Date | 26 May 1993 |
| Docket Number | No. 19719,19719 |
| Citation | 853 P.2d 607,123 Idaho 862 |
| Parties | SUN VALLEY LAND AND MINERALS, INC., an Idaho corporation, Plaintiff-Respondent-Cross Appellant, v. William R. BURT, Jean Burt and Cynthia Burt, in their collective capacity as the Last Board of Directors and Statutory Trustees of Deer Creek, Inc., a dissolved Idaho corporation, and Deer Creek, Inc., an Idaho partnership, Defendants-Appellants-Cross Respondents, and John H. Blasius and Blanche Blasius, husband and wife, and All Persons Unknown Claiming Any Legal or Equitable Right, Title, Estate, Lien, or Interest In the Property Described In the Complaint Adverse To Plaintiff's Title Thereto, and Doe 1-10 Inclusive, Defendants. |
| Court | Idaho Court of Appeals |
Kneeland, Korb, Collier, Legg & Haukaas, Ketchum, for appellant. Bruce J. Collier argued.
Hawley, Troxell, Ennis & Hawley, Ketchum, for respondents. Carol L. Shephard argued.
In this appeal, William, Jean, and Cynthia Burt (the Burts) contend that the district court erred when it granted summary judgment quieting title to real property in Sun Valley Land & Minerals, Inc. (Sun Valley), after determining that Sun Valley had received the property from a bona fide purchaser. The court also granted summary judgment to the Burts upon Sun Valley's claim that the Burts had slandered Sun Valley's title. The Burts challenge the quiet title decision, while Sun Valley cross-appeals the slander of title ruling. We affirm both judgments.
This appeal is the result of years of disputes regarding certain real estate transactions in Blaine County starting in 1951, involving many parties and covering thousands of acres. Lower court decisions regarding many of these transactions have already been appealed twice in Deer Creek, Inc. v. Clarendon Hot Springs Ranch, Inc., 107 Idaho 286, 688 P.2d 1191 (Ct.App.1984) and Burt v. Clarendon Hot Springs Ranch, Inc., 117 Idaho 1042, 793 P.2d 715 (Ct.App.1990) (Burt v. Ryan). What was once a fight over a vast area has been distilled to a controversy over one acre of land and the rights to the continuous flow of 1/2 inch of hot water from a geothermic spring.
First, we find it helpful to provide a list of the players in this saga. The Burts appear collectively as the last board of directors and trustees of a dissolved corporation, Deer Creek, Inc. (DCI). They claim the right and title to the one acre and 1/2 inch of hot water. Sun Valley appears claiming the same interests through a series of transactions beginning with First Federal Savings and Loan Association of Twin Falls (First Federal), which became the first mortgage holder of the property, and as the district court later found, a bona fide purchaser. The property was mortgaged to First Federal by Clarendon Hot Springs Ranch, Inc. (Clarendon), having come originally from DCI. Patrick Ryan was the majority shareholder and alter ego of Clarendon. Lloyd Walker was Ryan's attorney, Clarendon's president, and for a time acted as a trustee.
We present in abbreviated form the chain of transactions creating the basis for this dispute. In 1951, R.B. Randell conveyed real property by warranty deed to Lyle Potter. As stated in the deed, the sale included:
A 20-foot wide right of way for a ditch near the road to carry water from the spillway on the present dam site to other lands owned by [Potter] East of the real property hereby conveyed.
....
the right to 1/2 inch continuous flow of hot water from Clarendon Hot Springs, and one acre of land rectangular in form east of the dam and south of and adjacent to the 20-foot wide ditch right of way herein before granted.
In 1961, Potter conveyed thousands of acres to DCI by a warranty deed which described the property by legal subdivisions of twenty different sections. The deed also conveyed the one acre of land, the 1/2 inch of water from Clarendon Hot Springs, and the 20 foot ditch right-of-way, but the deed did not state in which legal subdivision--or even in which section--the one acre is located. Five years later, in 1966, DCI mortgaged all of this property it had acquired from Potter to John Hancock Mutual Life Insurance Company (John Hancock). 1 The mortgage and a correction mortgage were recorded that year, and not released until 1978.
In July, 1969, Randell conveyed by warranty deed to DCI other real property, carrying the following legal description, which we label description A:
SW 1/4 SW 1/4 of Section 26, S 1/2 SE 1/4 of Section 27, and N 1/2 NE 1/4 of Section 34, Township 3 North, Range 17 E, Boise Meridian, Blaine County, Idaho.
The deed was recorded on August 5, 1969. In a previous decision, the district court found that after this conveyance, DCI owned all the property within which the disputed one-acre parcel might be located.
On September 15, 1975, DCI conveyed by warranty deed to Clarendon property with a different legal description, which we label description B:
S 1/2 SE 1/4 of Section 27, and N 1/2 NE 1/4 of Section 34, and NW 1/4 of Section 34, all in Township 3 North, Range 17 E, Boise Meridian, Blaine County, Idaho.
The deed reserved to DCI the ditch right of way and "all water rights appurtenant thereto, including decreed water rights on Deer Creek" but did not specify any exception covering the one acre and 1/2 inch of hot water. The deed from DCI to Clarendon was recorded on September 24, 1975.
In the meantime, on September 17, 1975, Clarendon executed a note and mortgage to First Federal, covering the same property conveyed by DCI to Clarendon, namely the land encompassed by description B. First Federal recorded the mortgage on September 18. The mortgage did not except DCI's interest in the one acre and the 1/2 inch of hot water. On September 29, Sawtooth Title issued a title insurance policy to First Federal which also did not include such an exception.
Eventually, Clarendon fell behind in its mortgage payments to First Federal, which began judicial foreclosure proceedings. On April 19, 1982, the court granted First Federal summary judgment against Clarendon, entitling the former to foreclose and directing that the property be sold. DCI moved to intervene but the motion was denied. The property was sold, and in 1984, First Federal bought it at a sheriff's sale, the certificate for which was recorded on May 25, 1984.
Six months later, First Federal assigned its right, title and interest in the Clarendon note and mortgage to Traveler's Mortgage Corp. (Traveler's). The assignment also encompassed the summary judgment against Clarendon awarding foreclosure, the Sheriff's Certificate of Sale on Foreclosure, and the property. First Federal conveyed the land to Traveler's by quitclaim deed, and the notice of the assignment was recorded on November 16, 1984. Traveler's redeemed the property from the lien holders and received a Sheriff's deed on June 6, 1985. A Sheriff's Certificate of Sale of Real Estate on Execution, recorded on February 4, 1987, confirmed that Clarendon's interest was sold at public auction, without excluding the one acre and 1/2 inch of hot water, to Traveler's Leasing Corp., (previously Traveler's Mortgage Corp.). A series of quitclaim deeds brought the property into Sun Valley's possession in 1988.
In 1989, Sun Valley commenced the instant action against the Burts, as representatives of DCI, to quiet title to the property. Cross motions for summary judgment followed, and the court entered final judgment for Sun Valley on April 21, 1992. The Burts appeal from that judgment and from the court's two memorandum decisions preceding the judgment, filed on August 8, 1991, and October 31, 1991. Sun Valley cross appeals, arguing that the court erred when it determined that the Burts had not slandered Sun Valley's title by sending to Blaine County title companies a copy of the court's decision, and its findings and conclusions on remand, entered March 28, 1988.
The rules governing summary judgments are well known. Summary judgment is appropriate only when genuine issues of material fact are absent and the case can be decided as a matter of law. I.R.C.P. 56(c); Moss v. Mid-American Fire and Marine Insurance Co., 103 Idaho 298, 647 P.2d 754 (1982). Controverted facts are viewed in favor of the party resisting a motion for summary judgment. Where, as here, a jury has been requested, the nonmoving party is entitled to the benefit of reasonable inferences drawn from the evidentiary facts. Anderson v. Ethington, 103 Idaho 658, 651 P.2d 923 (1982).
Whitlock v. Haney Seed Co., 110 Idaho 347-48, 715 P.2d 1017-18 (Ct.App.1986).
1. First Federal was a Bona Fide Purchaser
1a. A Mortgagee May Become a Bona Fide Purchaser
As stated by the district court, the resolution of Sun Valley's quiet title action depends on whether First Federal took the land as a bona fide purchaser and was able to shelter Sun Valley in that protective status. The court answered this question in the affirmative. The Burts assert several errors in connection with this ruling, initially arguing that a mortgagee may not become a bona fide purchaser because the mortgage does not convey title.
A bona fide purchaser is one who takes real property by paying valuable consideration and in good faith, i.e., without knowing of adverse claims. I.C. § 55-606; § 55-812. The theory behind the rule is to protect innocent purchasers and to allow them to obtain and convey unsullied interests. Generally, a person must take property through a "conveyance" in order to be afforded the protective status of a bona fide purchaser. Although a mortgage is a lien, it is also considered a conveyance, which includes "every instrument in writing by which an estate or interest in real property is created, alienated, mortgaged, or encumbered, or by which the title to any real property may be affected, except wills." I.C. § 55-813 (emphasis added). A mortgagee may become a bona fide purchaser. I.C. § 55-606; Imig v. McDonald, 77 Idaho 314, 291 P.2d 852 (...
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