Swanson v. Swanson

• Decision Date: 12 April 2011
• Docket Number: No. 20090289.,20090289.
• Citation: 2011 ND 74,796 N.W.2d 614
• Parties: Michael SWANSON, James Swanson, Robert Swanson and Candyce Johnson, Plaintiffs and Appelleesv.Glenn K. SWANSON, aka G.K. Swanson, Defendant and AppellantMaggie McMillan, John F. Renick, Martha E. Renick, Riley Garrison, Peter Ellingson, aka Pete Ellingson, George Perrin, Arles O. Smith, Liberta Smith, Herman Soenke, Etta Soenke, David Keller, Cynthia Keller, Anna Garrison, aka Anna Swanson, Asmundur Swanson, William S. Swanson, the unknown heirs, devisees, legatees and successors in interest of William S. Swanson, deceased; Arlo C. Swanson, E. Lorraine Swanson, as Trustee of the E. Lorraine Swanson Revocable Trust, any unknown heirs, devisees and legatees or successors in interest of any of the named Defendants, be they deceased; all persons unknown claiming any interest in the property described in the complaint, DefendantsandGlenn K. Swanson, Third Party Plaintiff and Appellantv.E. Lorraine Swanson, Third Party Defendant and Appellee.
• Court: North Dakota Supreme Court

796 N.W.2d 614

2011 ND 74

Michael SWANSON, James Swanson, Robert Swanson and Candyce Johnson, Plaintiffs and Appellees

v.Glenn K. SWANSON, aka G.K. Swanson, Defendant and AppellantMaggie McMillan, John F. Renick, Martha E. Renick, Riley Garrison, Peter Ellingson, aka Pete Ellingson, George Perrin, Arles O. Smith, Liberta Smith, Herman Soenke, Etta Soenke, David Keller, Cynthia Keller, Anna Garrison, aka Anna Swanson, Asmundur Swanson, William S. Swanson, the unknown heirs, devisees, legatees and successors in interest of William S. Swanson, deceased; Arlo C. Swanson, E. Lorraine Swanson, as Trustee of the E. Lorraine Swanson Revocable Trust, any unknown heirs, devisees and legatees or successors in interest of any of the named Defendants, be they deceased; all persons unknown claiming any interest in the property described in the complaint, DefendantsandGlenn K. Swanson, Third Party Plaintiff and Appellant

v.E. Lorraine Swanson, Third Party Defendant and Appellee.

No. 20090289.

Supreme Court of North Dakota.

April 12, 2011.

Michael S. McIntee, Towner, N.D., for plaintiffs and appellees and third-party defendant and appellee.Rudra Tamm, Bismarck, N.D., for defendant and appellant.MARING, Justice.

[¶ 1] Glenn K. Swanson appeals from the trial court's judgment quieting title to certain real property located in Bottineau County in Michael Swanson, James Swanson, Robert Swanson, and Candyce Johnson (“Swanson children”). We conclude the trial court improperly analyzed the notice requirement for good-faith purchasers under the law and erred in finding the Swanson children acted in good faith. Therefore, we reverse the judgment of the trial court and remand for entry of judgment consistent with this opinion.

I

[¶ 2] The specific real property at issue has the following legal description: “SW 1/4 of Section 33, Township 161 N, Range 75 W, Bottineau County, North Dakota,” and consists of 169 acres of farmland. Anna Swanson, the stepmother of Glenn Swanson and William Swanson, owned this property in June 1963. On June 1, 1963, she conveyed the property to William Swanson by warranty deed. Glenn Swanson, an attorney and William Swanson's brother, prepared and notarized the deed, which was recorded on December 2, 1966.

[¶ 3] On June 10, 1963, William Swanson and his wife, E. Lorraine Swanson, executed a warranty deed conveying the property to William Swanson and Glenn Swanson as joint tenants. At the time of the deed's execution, Lorraine Swanson did not have an ownership interest in the property; she signed the deed merely as an accommodation to waive any homestead claim. The trial court found Glenn Swanson prepared the June 10, 1963, deed and presumably kept the deed in his possession for more than 42 years. The trial court also found that, in November 1969, Glenn Swanson executed and recorded a mortgage on the property in favor of his brother, Arlo Swanson.

[¶ 4] William Swanson died on July 11, 1999. His funeral took place a week later in Florida, but his ashes were buried in North Dakota during an inurnment ceremony in the summer of 2001. Glenn Swanson testified that at the 1999 Florida funeral, he asked Lorraine Swanson to look for William Swanson's copy of the June 10, 1963, joint tenancy deed, effectively asserting an ownership interest in the property. In 2000, despite Glenn Swanson's asserted ownership interest, Lorraine Swanson, as personal representative of William Swanson's estate, conveyed the property to herself as trustee of her revocable trust by a personal representative's deed of distribution dated April 3, 2000, and recorded in May 2000. A year later, at the 2001 inurnment ceremony, Glenn Swanson again asserted an interest in the property by advising Robert Swanson, the son of William and Lorraine Swanson, that he, Glenn Swanson, owned the property. Regardless of his ownership claim, however, on June 18, 2003, Lorraine Swanson, as trustee of her revocable trust, executed a warranty deed conveying the property to her four children and retaining a life estate for herself. This deed was recorded on July 21, 2003.

[¶ 5] The trial court found that Glenn Swanson did not discover the June 10, 1963, joint tenancy deed until two years after the Swanson children recorded their deed. The court found Glenn Swanson discovered the deed in his files some time in the spring or summer of 2005, and recorded it on November 2, 2005. Then, in the summer of 2006, while he was visiting the home of Lorraine Swanson's niece, Glenn Swanson showed Lorraine Swanson the recorded joint tenancy deed and advised her he was the rightful owner of the property under the deed.

[¶ 6] In January 2008, the Swanson children commenced this quiet title action against Glenn Swanson and other defendants to declare that Glenn Swanson had no valid claim of ownership in the property. Glenn Swanson responded with a counterclaim against the Swanson children, seeking to quiet title in his name. He also brought a third-party action against Lorraine Swanson based on her conveyance under the warranty deed.

[¶ 7] On July 14 and 15, 2009, the trial court held a bench trial. After the trial, the court issued its memorandum opinion and order for judgment, finding Glenn Swanson had no interest in the property and quieting title in the Swanson children. The court concluded the Swanson children's claim to the property had priority under N.D.C.C. § 47–19–41. In reaching this conclusion, the court found the Swanson children had acted in good faith when they recorded the deed and had paid valuable consideration for the property at issue. The court dismissed Glenn Swanson's counterclaim and third-party complaint.

II

[¶ 8] On appeal, Glenn Swanson argues the trial court erred in quieting title in the Swanson children because they were not good-faith purchasers and did not pay valuable consideration for the property conveyed from Lorraine Swanson's trust. Rather, Glenn Swanson asserts that under the June 10, 1963, deed, the property passed to him in 1999 as a joint tenant by operation of law when William Swanson died.

[¶ 9] The dispositive issue on appeal is whether the trial court erred in finding the Swanson children acted in good faith when they acquired the property from their mother as a trustee of her revocable trust. The status of the Swanson children as good-faith purchasers depends on whether they had notice, actual or constructive, of Glenn Swanson's ownership claim. “A party's status as a good faith purchaser without notice of a competing interest is a mixed question of fact and law.” Diocese of Bismarck Trust v. Ramada, Inc., 553 N.W.2d 760, 768 (N.D.1996). The factual circumstances necessary to determine whether a party has attained the status of a good-faith purchaser without notice constitute findings of fact. Id. On the other hand, a trial court's ultimate determination a party acted in good faith constitutes a conclusion of law “because the determination describes the legal effect of the underlying factual circumstances.” Id. Sections 47–19–41 and 1–01–25 of the North Dakota Century Code are relevant to determining whether the Swanson children were good-faith purchasers.

[¶ 10] Section 47–19–41, N.D.C.C., provides that “[e]very conveyance of real estate not recorded shall be void as against any subsequent purchaser in good faith, and for a valuable consideration....” Section 1–01–25, N.D.C.C., further explains that “[e]very person who has actual notice of circumstances sufficient to put a prudent person upon inquiry as to a particular fact and who omits to make such inquiry with reasonable diligence is deemed to have constructive notice of the fact itself.” We have consistently held that a purchaser who fails to make the requisite inquiry cannot claim the protection of a good-faith purchaser status for purposes of N.D.C.C. § 47–19–41. See Hunt Trust Estate v. Kiker, 269 N.W.2d 377, 381 (N.D.1978) (citing Pierce Tp. of Barnes County v. Ernie, 74 N.D. 16, 19 N.W.2d 755 (1945)). Rather, a person who fails to make the proper inquiry will be charged with constructive notice of all facts that such inquiry would have revealed. See Northern Pac. Ry. Co. v. Advance Realty Co., 78 N.W.2d 705, 715 (N.D.1956) (stating the purchasers had sufficient notice to put them on inquiry and holding they had constructive knowledge of the adverse interest claims as a result of their failure to inquire). Accordingly, the determination of the Swanson children's status as good-faith purchasers turns first on whether they had “actual notice of circumstances sufficient to put a prudent person upon inquiry.” N.D.C.C. § 1–01–25. If the facts or circumstances were sufficient to put a prudent person on inquiry, then the Swanson children had a duty to conduct such inquiry with reasonable diligence. See id. We conclude the circumstances in this case gave rise to a duty to inquire and, when the Swanson children failed to make any inquiry, they lost the protection of a good-faith purchaser status for purposes of N.D.C.C. § 47–19–41.

III

[¶ 11] In its memorandum opinion and order, the trial court found that in the summer of 2001, at William Swanson's inurnment ceremony, “Glenn [Swanson] advised William and Lorraine's son Robert that he (Glenn) owned the Property.” The trial court concluded Glenn Swanson's comment at the 2001 ceremony “must be deemed to be sufficient to have put the [Swanson children] on notice of Glenn's purported claim of ownership.” We agree with the trial court that the Swanson children had actual notice of circumstances sufficient to put a prudent person on inquiry, thus requiring them to inquire further into Glenn Swanson's purported interest, but disagree with the trial court that the Swanson children acted in good faith.

[¶ 12] It has long been established that the information sufficient to put a prudent person on inquiry “may consist of a statement made by the claimant of the adverse right.” 5 Basil Jones, Tiffany on Real Property § 1285 ...