Williston Co-op. Credit Union v. Fossum, 870346

• Decision Date: 15 August 1988
• Docket Number: No. 870346,870346
• Citation: 427 N.W.2d 804
• Parties: WILLISTON COOPERATIVE CREDIT UNION, Plaintiff and Appellee, v. Verlin FOSSUM a/k/a Verlin L. Fossum and Richard A. Jensen, Defendants and Appellants, and Loye A. Ashton, a/k/a L.A. Ashton; Clifford E. Roth, Sr.; C. Eugene Roth, Jr.; Roth Realty; Oilfield Safety, Inc.; First National Bank & Trust Co. of Williston, American State Bank & Trust Co.; State of North Dakota, acting through Workmen's Compensation, through Job Service of ND, and through the State Tax Commissioner and the Department of Revenue; Midwest Federal Savings Bank; Metropolitan Federal Savings Bank; United Accounts, Inc.; United States of America, acting through the Dept. of the Treasury; William Snyder & Sons, Inc.; and Manger Insurance, Inc., Co-Defendants. Civ.
• Court: North Dakota Supreme Court

Page 804

427 N.W.2d 804

WILLISTON COOPERATIVE CREDIT UNION, Plaintiff and Appellee, v. Verlin FOSSUM a/k/a Verlin L. Fossum and Richard A. Jensen Defendants and Appellants and Loye A. Ashton, a/k/a L.A. Ashton; Clifford E. Roth, Sr. C. Eugene Roth, Jr.; Roth Realty; Oilfield Safety, Inc. First National Bank & Trust Co. of Williston, American State Bank & Trust Co.; State of North Dakota, acting through Workmen's Compensation, through Job Service of ND, and through the State Tax Commissioner and the Department of Revenue; Midwest Federal Savings Bank; Metropolitan Federal Savings Bank; United Accounts, Inc.; United States of America, acting through the Dept. of the Treasury; William Snyder & Sons, Inc.; and Manger Insurance, Inc., Co-Defendants.

Civ. No. 870346.

Supreme Court of North Dakota.

Aug. 15, 1988.

Anseth & Zander, Williston, for defendants and appellants; Janet Holter Zander (argued).

Nelson & Hickman, Williston, for plaintiff and appellee; Linda L. Hickman (argued).

LEVINE, Justice.

Verlin L. Fossum and Richard A. Jensen appeal from a summary judgment in favor of Williston Cooperative Credit Union. We affirm in part, reverse in part and remand.

Appellee Williston Cooperative Credit Union (Williston Cooperative) obtained a money judgment against William H. Seay on May 4, 1983. Under NDCC Sec. 28-20-13, ¹ that judgment became a lien on Seay's undivided one-third interest in five lots of the Williston Basin Mineral Technology Subdivision (Williston Basin subdivision) located in Williams County, North Dakota. The five lots are described as follows:

Lots 1-2-3-4 and 5 of the WILLISTON BASIN MINERAL TECHNOLOGY SUBDIVISION, Williams County, North Dakota, according to the Plat thereof on file with the Register of Deeds in and for said County.

Appellants Fossum and Jensen, along with Loye A. Ashton, purchased the same undivided one-third interest from William Seay in September 1983 and gave First National Bank & Trust Co. of Williston (First Nat'l Bank) a mortgage for the purchase price. The mortgage was executed and recorded in October 1983.

Williston Cooperative commenced the present lawsuit in April 1987, requesting, inter alia, (1) a declaration that its judgment lien is superior to every other security interest claimed by any of the defendants, ² (2) a decree of foreclosure of its judgment lien, and (3) sale of as much of the five lots as would satisfy the judgment against Seay.

Both sides moved for summary judgment, which was granted in favor of Williston Cooperative. The trial court declared Williston Cooperative's judgment lien superior to any subsequently recorded security interest, and decreed foreclosure and sale of an undivided one-third interest in the five lots. Only Jensen and Fossum appeal from the judgment.

At issue is whether summary judgment was appropriately granted in favor of Williston Cooperative. Summary judgment is a procedural device available for promptly and expeditiously disposing of a controversy without a trial if there is no dispute as to either the material facts or the inferences to be drawn from the undisputed facts, or whenever only a question of law is involved. Umpleby By And Through Umpleby v. State, 347 N.W.2d 156 (N.D.1984). On appeal from a summary judgment we view the evidence in the light most favorable to the party against whom the summary judgment was granted. Ibid.

Jensen and Fossum first argue that the record presents a genuine issue of material fact whether Williston Cooperative knew, when it obtained its judgment against William Seay, that part of the five lots partially owned by Seay was occupied by a third party, C. Eugene Roth. We agree.

Jensen and Fossum relied on the affidavit of Kelvin Miller, an employee of Williston Cooperative, that on September 29, 1987, Gene Roth and his company, Oilfield Safety, Inc., were in possession of and doing business from the land. Jensen and Fossum also submitted Fossum's affidavit which in essence set forth deposition testimony of C. Eugene Roth, Jr., given in another lawsuit. Clearly, the deposition testimony is hearsay and as such subject to exclusion upon proper objection. Rule 801, NDREv.

Rule 56(e), NDRCivP, requires that affidavits be made on personal knowledge; set forth facts that would be admissible in evidence and show affirmatively that the affiant is competent to testify to the matters included in the affidavits. See 6 Moore's Federal Practice p 56.11[1.2] p. 99; Production Credit Association v. Foss, 391 N.W.2d 622, 625 (N.D.1986). However, without timely objection, otherwise inadmissible evidence may be considered by the court making a summary judgment determination. Hadland v. Schroeder, 326 N.W.2d 709, 714 (N.D.1982).

No objection to the Fossum affidavit was made to the trial court, so the affidavit is in evidence for purposes of the summary judgment determination. It recounts that Roth's negotiations for the purchase of lot five and the North 100 feet of lot four began on November 12, 1981; that Roth made a bank withdrawal to start paying for a building on the premises; that Roth constructed a building on the property and that on April 6, 1982, Roth made full payment of $30,000 for the property. The affidavit further discloses that Roth moved into the building and began conducting business in June 1982 in "open and notorious" fashion. Jensen and Fossum argue that this open and notorious occupation gave Williston Cooperative notice of the Roth claim to the property, ³ thereby depriving Williston Cooperative of good faith status, under NDCC Sec. 47-19-41.

NDCC Sec. 47-19-41, North Dakota's recording act, states:

"Every conveyance of real estate not recorded shall be void as against any subsequent purchaser in good faith, and for a valuable consideration, of the same real estate, or any part or portion thereof, whose conveyance, whether in the form of a warranty deed, or deed of bargain and sale, or deed of quitclaim and release, of the form in common use or otherwise, first is deposited with the proper officer for record and subsequently recorded, whether entitled to record or not, or as against an attachment levied thereon or any judgment lawfully obtained, at the suit of any party, against the person in whose name the title to such land appears of record, prior to the recording of such conveyance...."

Thus, a judgment lien is valid as against an unrecorded conveyance of which the judgment creditor had no notice at the time the judgment was obtained. Agricultural Credit Corp. v. State, 74 N.D. 71, 20 N.W.2d 78 (1945); Ildvedsen v. First State Bank, 24 N.D. 227, 139 N.W. 105 (1912).

One with actual knowledge of facts which would put a prudent person upon inquiry as to the claims of others in the property is deemed to have constructive notice of only those facts which an inquiry would have revealed. See Burlington Northern, Inc. v. Hall, 322 N.W.2d 233, 238 (N.D.1982); Putnam v. Dickinson, 142 N.W.2d 111, 122 (N.D.1966). Thus, actual notice of occupation by the Roths would give Williston Cooperative constructive notice only of those facts which its properly pursued inquiry in all probability would have disclosed. See also Hunt Trust Estate v. Kiker, 269 N.W.2d 377, 380 (N.D.1978); Harry E. McHugh, Inc., v. Haley, 61 N.D. 359, 369, 237 N.W. 835, 838-39 (1931).

Ordinarily, notice is a question of fact and therefore a bar to summary judgment. Burlington Northern R.R. v. Scheid, 398 N.W.2d 114, 116 (N.D.1986). Under NDCC Sec. 47-19-41, notice which would impeach a judgment lienor's good faith is notice of a prior, unrecorded conveyance. Agricultural Credit, 74 N.D. at 76, 20 N.W.2d at 80. "Conveyance," as used in the recording act, is defined in NDCC Sec. 47-19-42 as an "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 a will or power of attorney." Therefore, notice of a prior, unrecorded written instrument is the only notice which would affect the result in this case, and thus the only notice issue which is material.

The question becomes whether the record contains any evidence permitting a reasonable inference (1) that Williston Cooperative had actual knowledge that Gene Roth and Oilfield Safety were in occupation of the property on or before May 4, 1983, the date of the judgment, and (2) that inquiry by Williston Cooperative on or before May 4, 1983, would have revealed a prior, written instrument ⁴ evidencing an interest in or affecting title to the property.

The evidence most favorable to Fossum and Jensen is (1) the affidavit of Fossum already discussed; (2) the affidavit of September 29, 1987, stating that the affiant Kelvin Miller "knows [Oilfield Safety] to be conducting business from part of the premises;" and (3) a plat of the Williston Basin subdivision filed August 10, 1983, which contains a notation dated July 25, 1983, signed by Gene Roth, of a contract for deed on lot five, block one, in the name of Oilfield Safety, Inc.

Considering the evidence in the light most favorable to Fossum and Jensen, we believe a finder of fact could reasonably infer that Roth and his business were on the property before May 4, 1983. Further, from the evidence of the plat and Roth's payment and construction of a building, a reasonable inference may be drawn that there was a written contract for deed. Because there are genuine issues and...