United Bank of Bismarck v. Trout, 910120

• Decision Date: 04 February 1992
• Docket Number: No. 910120,910120
• Parties: UNITED BANK OF BISMARCK, Plaintiff and Appellee, v. Kye TROUT, Jr. and Steven Trout, Defendants and Appellants. Civ.
• Court: North Dakota Supreme Court

Page 742

480 N.W.2d 742

UNITED BANK OF BISMARCK, Plaintiff and Appellee, v. Kye TROUT, Jr. and Steven Trout, Defendants and Appellants.

Civ. No. 910120.

Supreme Court of North Dakota.

Feb. 4, 1992.

As Amended Feb. 20, 1992.

Gerry Gunderson (argued), of Wheeler Wolf, Bismarck, for plaintiff and appellee.

William C. Kelsch (argued), of Kelsch, Kelsch, Ruff & Austin, Mandan, for defendants and appellants.

LEVINE, Justice.

Kye Trout, Jr., and Steven Trout appeal from a county court judgment evicting them from land owned by United Bank of Bismarck [the Bank]. We affirm.

The Bank prevailed in a mortgage foreclosure action against Kye Trout, Jr., and in April 1990 received a sheriff's deed to 212 acres of ranch land in rural Burleigh County. Kye remained on the property after the expiration of the redemption period and negotiated with the Bank to lease the property. When no lease agreement could be reached, the Bank listed the property for sale with a realtor.

Dennis Collins, a friend of the Trouts from California, negotiated to purchase the property. The Bank and Collins entered into a purchase agreement, dated October 1, 1990, whereby the Bank agreed to sell the property to Collins for $155,000. The agreement required Collins to pay $46,500 as earnest money, and the parties were to enter into a contract for deed for the balance at 12% interest, with three annual payments of $45,175.

On October 10, 1990, Collins leased the property to Steven Trout and Steven's wife, Davie, for $100 per month. Steven is Kye's son. Steven and Davie moved onto the premises on December 1, 1990. In addition, Kye has apparently remained on the premises until the present time.

Although Collins executed the October 1, 1990, purchase agreement, he tendered only $30,000 of the $46,500 earnest money agreed upon. The Bank accepted his offer by signing the purchase agreement on October 9, 1990, but made a notation conditioning its acceptance upon receipt of the remaining earnest money. The Bank also sent Collins a contract for deed. A series of letters and long distance telephone calls followed, with Collins promising to tender the balance of the earnest money. On December 17, 1990, the Bank sent Collins a letter setting a deadline of December 31, 1990, for receipt of the balance of the earnest money. The letter also advised that, unless the executed contract for deed and requested funds were returned by the due date, the Bank would declare the $30,000 earnest money forfeited as liquidated damages. Collins signed and forwarded the contract for deed to the realtor, but failed to tender any additional funds. Collins never paid the remaining earnest money, and the Bank never signed the contract for deed.

The Bank thereafter declared the $30,000 forfeited and on January 14, 1991, paid the realtor its $9,300 sales commission. The Bank advised Collins of its position, but stated its willingness to complete the transaction and credit the $30,000 towards the purchase price. After further negotiations, the Bank agreed to sell the property to Collins, on slightly different terms than previously set, if Collins tendered additional funds by February 12, 1991. On February 11, Collins sent a mailgram requesting additional time to complete the transaction. The Bank refused any further extension.

On January 16, 1991, the Bank served a Notice of Intention to Evict upon Kye and Steven. On February 15, 1991, the Bank commenced this eviction action in the County Court of Burleigh County. The county court ruled that Collins had no title in the property and therefore had no interest to lease to the Trouts. Judgment was entered on March 13, 1991, evicting Kye and Steven from the property. Kye and Steven have appealed, ¹ raising the following issues:

I. Did the county court have jurisdiction to decide the issue of title to real property?

II. Was Collins an indispensable party?

III. Did Collins acquire title through equitable conversion?

IV. Was the Bank required to foreclose or cancel the purchase agreement through judicial proceedings?

V. Did the Bank wrongfully declare forfeiture of the $30,000?

I.

The Trouts assert that the county court was without subject matter jurisdiction to decide the issue of title to the real estate. The county court held that the Bank held title to the property and that title had not been transferred to Collins.

In support of their assertions, the Trouts rely upon Goodman Investment, Inc. v. Swanston Equipment Co., 299 N.W.2d 786 (N.D.1980). In Goodman, we relied upon a since-repealed statute in noting that "if a forcible-detainer action is brought in county court of increased jurisdiction and a question of title is raised, the county court is divested of jurisdiction and the matter must be certified and transmitted to the district court of the county." Goodman, supra, 299 N.W.2d at 791. The relevant statute, Section 33-01-06, N.D.C.C., provided in pertinent part:

"Procedure when title to or boundary of real estate in issue.--A question of title to or boundary of real property cannot be determined in a county justice court, and when such question arises upon a material issue joined as prescribed in this title, or when such question arises by controversy in the evidence as to a fact material to the determination of the issues in the action, the county justice must discontinue the trial and forthwith must certify and transmit to the district court of his county all the pleadings and papers filed with him in such action...."

Although the statute on its face applied to county justice court, we held in Herzig v. Herzig, 286 N.W.2d 116, 118 (N.D.1979), that it also applied to county courts of increased jurisdiction.

In Herzig, supra, 286 N.W.2d at 118-119, we explained the policy bases underlying the statute and questioned whether those policy bases had been eroded:

"County courts of increased jurisdiction are courts of limited jurisdiction. They have and can exercise no powers except such as are expressly granted, or are necessarily implied from powers expressly granted, by statute. The Legislature has specifically provided that a question of title to or boundary of real property cannot be determined in a county justice court. Section 33-01-06, N.D.C.C. The apparent intent of the Legislature in enacting this statute was to prohibit county justices, who were often traditionally untrained in the law, from determining difficult legal questions of title to real property. Changes that have since taken place in our judicial system, and in the legal training and background of our judges, justify a reexamination of the need for certification of title or boundary disputes in forcible detainer actions to the district court. Accordingly, the Legislature may want to examine this statute and others which result in fragmentation of our judicial system. If an office is filled by persons admitted to practice law in all of the courts of this state, especially if the office is made a full time position, and the occupant thereof is appropriately compensated, there should be no need for transfer and the person occupying that office should be able to conclude all proceedings properly commenced in that court."

The 1981 Legislature completely revised the county court structure, effective January 1, 1983, by abolishing the previous three-tiered system of county courts and creating a single county court in each county, with full-time law-trained judges. 1981 N.D.Sess.Laws Ch. 319; 1981 Report of the North Dakota Legislative Council 70 (1981); see Matter of Estate of Binder, 366 N.W.2d 454, 456 (N.D.1985). Chapter 33-01, N.D.C.C., was repealed, including the provision requiring transfer of cases to the district court when an issue of title was raised. See 1981 N.D.Sess.Laws Ch. 319, Sec. 51. Thus, the Legislature has removed any statutory impediment to the county court's exercise of jurisdiction in an eviction action where an issue of title has been raised.

The purpose of these revisions has been to improve the county court and enlarge its jurisdiction and powers. South Forks Shopping Center, Inc. v. Dastmalchi, 446 N.W.2d 440, 442 (N.D.1989); Matter of Estate of Binder, supra, 366 N.W.2d at 456-458. The current provision authorizing county court jurisdiction over eviction actions is Section 27-07.1-17(1)(d), N.D.C.C.:

"Jurisdiction of county courts. A county court of any county of this state has jurisdiction in the following types of cases:

"1. Civil cases with not more than ten thousand dollars in controversy. The jurisdiction of the county court extends to the following actions:

* * * * * *

"d. An action for eviction from real property irrespective of value when the amount demanded therein for rents and profits or damages does not exceed ten thousand dollars."

In addition, the eviction statute itself provides that "[a]n action of eviction to recover the possession of real estate is maintainable in the proper county court." Section 33-06-01, N.D.C.C. [emphasis added].

The county court has all incidental powers necessary for the effective adjudication of those matters within its exclusive original jurisdiction. Matter of Estate of Ridl, 455 N.W.2d 188, 191 (N.D.1990); Matter of Estate of Sorensen, 411 N.W.2d 362, 364 (N.D.1987). Because the county court has been given original jurisdiction over eviction actions, it must have the incidental authority to determine title to the property involved in order to effectively exercise that grant of jurisdiction. It is generally recognized that an eviction action frequently requires resolution of questions of title. See 25 Am.Jur.2d Ejectment Sec. 1 (1966). The county court's ability to carry out its jurisdictional mandate would be significantly hampered if jurisdiction could be defeated by merely placing title in issue.

We reject the Trouts' assertion that the county court may not try title to the property because the jurisdiction statute does not specifically enumerate that power. We have never...