Twn, Inc. v. Michel

• Decision Date: 24 February 2006
• Docket Number: No. 20041121-CA.,20041121-CA.
• Parties: TWN, INC., a Utah corporation, Plaintiff and Appellee, v. Uwe MICHEL and Ullrich Michel, Defendants and Appellants.
• Court: Utah Court of Appeals

131 P.3d 882

2006 UT App. 70

TWN, INC., a Utah corporation, Plaintiff and Appellee, v. Uwe MICHEL and Ullrich Michel, Defendants and Appellants.

No. 20041121-CA.

Court of Appeals of Utah.

February 24, 2006.

Bruce J. Nelson, Jeffery S. Williams, Nelson Christensen & Helsten and Richard M. Hymas, Nielsen & Senior PC, Salt Lake City, for Appellants.

Vincent C. Rampton and Ross I. Romero, Jones Waldo Holbrook & McDonough, Salt Lake City, for Appellee.

Before Judges BILLINGS, ORME, and THORNE Jr.

OPINION

ORME, J.

¶ 1 This matter returns to the Court of Appeals following our remand. See TWN Inc. v. Michel, 2003 UT App 70, 66 P.3d 1031. Uwe and Ullrich Michel now appeal from the trial court's decision to quiet title to an eighty-three-acre parcel of land in favor of TWN, Inc. We reverse.

BACKGROUND

¶ 2 TWN and the Michels each claim title to an eighty-three-acre tract of undeveloped land that straddles the border between Salt Lake County and Utah County. The Michels claim title to the land through a chain of title dating back to the 1980s. TWN claims title to the property by way of a quitclaim deed it received in 1998 from Richard Christenson, which deed purported to convey Christenson's interest in the property to TWN. TWN filed this action in 1999 to quiet title to the property.

¶ 3 The dispute about who holds title to the property traces back to a series of transactions in the 1980s and 1990s that involved Christenson and Zions Bank. In 1984, Zions Bank was the record owner of the property when Utah County sold the property at a tax sale. Christenson purchased the property at the tax sale and took title to the property in his own name. In 1985, Zions Bank reimbursed Christenson the amount he paid to purchase the property and, in return, Christenson executed a quitclaim deed to Zions Bank. The 1985 deed to Zions Bank, however, identified the grantor as "Richard A. Christenson, Trustee." In 1986, in a transaction involving multiple properties, Zions Bank sold the property to Franklin Financial, a company wholly owned by Christenson, with Zions Bank financing the sale and taking a deed of trust to the property. When Franklin Financial defaulted on its loan, however, Zions Bank foreclosed on its deed of trust and sold the property at a nonjudicial foreclosure sale in 1993. The Michels were the highest bidders at the sale and received a deed to the property following the foreclosure sale.

¶ 4 In TWN's quiet title action both parties moved for summary judgment and the trial court granted summary judgment in favor of TWN.¹ In essence, the trial court concluded that because the 1985 deed to Zions Bank included the title "Trustee" after Christenson's name, the deed only conveyed whatever interest Christenson held as trustee on behalf of some undisclosed trust and did not convey his personal interest in the property. Consequently, in the trial court's view, Christenson had not conveyed his personal interest to Zions Bank, thus allowing him later to rightfully convey his personal interest to TWN by way of the 1998 quitclaim deed. The Michels appealed, and this court reversed the grant of summary judgment in favor of TWN and remanded the case for further proceedings. See TWN, 2003 UT App 70 at ¶ 15, 66 P.3d 1031.

¶ 5 On remand, the trial court correctly read our opinion as framing one key issue for its consideration: Whether in executing the 1985 deed to Zions Bank, signing with the title "Trustee" after his name, Christenson intended to convey only an unidentified trust's apparently nonexistent interest in the property or whether the "Trustee" designation was merely descriptio personae, such that Christenson had actually conveyed his own personal interest in the property, which was the interest he had received at the tax sale. A two-day bench trial was held to resolve that issue in August 2004.

¶ 6 Christenson testified at the trial. At the outset of his testimony, counsel for TWN presented Christenson with an affidavit dated January 14, 1999, bearing Christenson's signature. After a line of questioning meant to establish that Christenson could not testify from memory about the contents of the affidavit or about the events it memorialized, even after reviewing it, counsel for TWN requested the trial court's permission to allow Christenson to read the affidavit into the record, under rule 803(5) of the Utah Rules of Evidence, as a "[r]ecorded recollection." Utah R. Evid. 803(5). The Michels objected on the grounds that TWN had not established that the document did not actually refresh Christenson's recollection and, more importantly, that TWN had not established that the affidavit was made or adopted by Christenson when the matter was fresh in his memory, as required by rule 803(5).²

¶ 7 Indeed, although Christenson's affidavit was dated and sworn to in 1999, it concerned the details of the execution of the 1985 deed to Zions Bank some fourteen years earlier. In the 1999 affidavit, Christenson attested to what his intentions were when he signed the 1985 deed to Zions Bank as "Trustee." In the affidavit, he averred that he signed the 1985 deed to Zions Bank as "Trustee" with the intention of transferring the interest, if any, of Cape Trust and not his own personal interest in the property. The trial court, implementing its understanding of rule 803(5), ultimately allowed Christenson to read the affidavit into the record, but the affidavit was not physically received into evidence.

¶ 8 After Christenson's 1999 affidavit was read into the record, counsel for TWN elicited testimony from Christenson that it was contrary to his usual business practice to sign a conveyance as "Trustee" if he was intending to convey an individual interest. Based on the 1999 affidavit and Christenson's testimony, the trial court concluded that Christenson was acting on behalf of a trust when he executed the 1985 deed to Zions Bank and, therefore, he had retained his personal interest in the property — legal title to the property — after the execution of the 1985 deed.³ Thus, the trial court also concluded that legal title continued with Christenson personally until 1998 when he conveyed his personal interest in the property to TWN.⁴ Accordingly, the trial court quieted title in TWN, free and clear of any claim of right or interest by the Michels. The Michels now appeal the trial court's ruling.

ISSUES AND STANDARDS OF REVIEW

¶ 9 While the Michels raise several issues in their brief, we need only address two closely related issues, as they are determinative of the appeal. First, we consider whether the trial court erred in allowing Christenson to read his 1999 affidavit into the record under rule 803(5) of the Utah Rules of Evidence. "[T]he appropriate standard of review of a trial court's decision admitting or excluding evidence under rules 802 and 803 depends on the particular ruling in dispute." Hansen v. Heath, 852 P.2d 977, 978 (Utah 1993). This is because "the exceptions to the hearsay rule listed in rule 803 vary as to whether the trial court's analysis involves a factual or legal determination or some combination thereof." Id. Generally, we review a district court's ruling on the admissibility of evidence for an abuse of discretion. See State v. Workman, 2005 UT 66, ¶ 10, 122 P.3d 639. Insofar as the trial court's determination involves factual questions, we review for clear error. See id. If the trial court's determination implicates legal questions, however, we review for correctness. See id.

¶ 10 Second, we consider whether the trial court correctly found that the "Trustee" designation on the 1985 deed to Zions Bank was not merely descriptio personae, but that Christenson in fact only transferred a trust's nonexistent interest in the property, not his own personal interest that he acquired at the tax sale. While the question of whether the evidence sufficiently rebuts the descriptio personae presumption, see TWN, Inc. v. Michel, 2003 UT App 70, ¶ ¶ 12-14, 66 P.3d 1031, appears to present a mixed question of fact and law, the trial court's pertinent "findings" are actually conclusions of law and not findings based on disputed facts. The question, then, is whether the undisputed facts in this case sufficiently support the trial court's legal conclusion that the descriptio personae presumption has been rebutted. We review such legal conclusions for correctness. See State v. Pena, 869 P.2d 932, 936 (Utah 1994).

ANALYSIS

¶ 11 In the prior appeal of this case, see TWN, Inc. v. Michel, 2003 UT App 70, 66 P.3d 1031, we held that, under the descriptio personae doctrine, the presumption on remand was that "[t]he unexplained use of the word `trustee' on a real property deed does not, absent other circumstances suggesting the creation or existence of a trust, create a trust or implicate only a trust interest." Id. at ¶ 12. Thus, we concluded that, on remand, Christenson's intention to dispose of trust property (or more accurately, a trust's nonexistent interest in property) by executing the 1985 deed to Zions Bank had to "be made clearer than simply placing the unadorned word 'trustee' after his . . . name." Id. at ¶ 14. "Otherwise, the presumption of descriptio personae will apply, and the deed will operate as if the word `trustee' were not there." Id.

¶ 12 In our prior opinion, we noted the two methods by which a party can overcome the presumption: (1) "A trustee-grantor [could] include on the deed such language as `in my capacity as trustee for the XYZ trust'" or (2) "a party may resort to extrinsic evidence to show that a trust was, in fact, intended." Id. We also noted that "[w]hen parties wish to convey a trust interest, as opposed to a personal interest, they must be explicit and forthcoming about this intention if they hope to attain it." Id. at ¶ 14 n. 5 (emphasis added). Because the deed in the instant case lacks the type of language that would clearly indicate that Christenson was actually acting in his capacity as t...