Williston Co-op. Credit Union v. Fossum, 890349

• Decision Date: 09 August 1990
• Docket Number: No. 890349,890349
• Citation: 459 N.W.2d 548
• Parties: WILLISTON COOPERATIVE CREDIT UNION, Plaintiff and Appellant, v. Verlin FOSSUM, a/k/a Verlin L. Fossum; Richard A. Jensen; Loye A. Ashton, a/k/a L.A. Ashton; Defendants and Appellees, and Clifford E. Roth, Sr.; C. Eugene Roth, Jr.; Roth Realty; Oilfield Safety, Incorporated; First National Bank & Trust Company of Williston; American State Bank & Trust Company; State of North Dakota, acting through Workmen's Compensation, through Job Service of North Dakota, and through the State Tax Commissioner and the Department of Revenue; Midwest Federal Savings Bank; Metropolitan Federal Savings Bank; United Accounts, Incorporated; United States of America, acting through the Department of the Treasury; William Snyder & Sons, Incorporated; and Manger Insurance, Incorporated, Defendants. Civ.
• Court: North Dakota Supreme Court

Page 548

459 N.W.2d 548

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

Civ. No. 890349.

Supreme Court of North Dakota.

Aug. 9, 1990.

David W. Nelson (argued), Williston, for plaintiff and appellant.

Anseth & Zander, Williston, for defendants and appellees; argued by Janet Holter Zander.

Suess Law Firm, P.C., Williston, for defendants. No appearance.

LEVINE, Justice.

Williston Cooperative Credit Union appeals from a judgment declaring that its May 4, 1983, judgment against William H. Seay is not a lien against lot 5 and the north 40 feet of lot 4 in the Williston Basin Mineral Technology Subdivision (the property). We affirm.

Many of the facts relevant to this case are set forth in an earlier appeal, Williston Cooperative Credit Union v. Fossum, 427 N.W.2d 804 (N.D.1988) (Williston I ), and will not be repeated in this opinion. In Williston I, we remanded this case for a trial on the merits and set forth the applicable principles to resolve the issue in dispute:

"[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.

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"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.... 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.

* * * * * *

"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 evidencing an interest in or affecting title to the property." 427 N.W.2d at 807-808.

On remand, the Roths did not produce a written instrument as evidence of their interest in the property on or before May 4, 1983, and the trial court made no finding that there was such an instrument. ¹ Loye Ashton, however, testified that he and his co-owners had sold the property to the Roths. Ashton also testified that before May 4, 1983, the Roths had paid most of the purchase price for the property and had constructed a building on the property in which they were operating a business. The trial court found that prior to May 4, 1983, Williston Cooperative knew that the Roths were occupying the property and also found that "the Credit Union as a prudent person should have known on inquiry of the claims of other people on the property." The court ruled that Williston Cooperative's May 4, 1983, judgment was not a lien on the property.

Williston Cooperative asserts that, because the Roths did not show, by written instrument, that they had an interest in the property prior to May 4, 1983, the trial court erred in declaring that Williston Cooperative has no lien against the property. In making this assertion, Williston Cooperative relies upon Sections 47-19-41 ² and 47-19-42, ³ N.D.C.C. Those sections provide that an unrecorded written instrument conveying real estate is void as against any lawfully obtained judgment against the record title owner. However, they do not speak to the nature of the interest, written or oral, legal or equitable, that a judgment creditor takes subject to when the interest is held by a person in open and notorious possession of the property. We address that issue now.

Thompson's treatise on real property law generally instructs that a possessor's legal or equitable property interests take priority over the interests of a subsequent purchaser or judgment creditor with notice:

"One who purchases with notice that his vendor has agreed to sell to another takes subject to such agreement, although he has no actual notice that the agreement is in writing. He has notice enough to put him upon inquiry; and it is his own fault if he fails to inform himself as to the validity and legal force of the agreement." 8 Thompson on Real Property, Sec. 4326, p. 453.

"Actual possession is notice to all the world of the right or title of the person occupying the premises. It is constructive notice to all of whatever claim the possessor asserts, whether legal or equitable." 8 Thompson on Real Property, Sec. 4332, pp. 489-490.

"... a judgment lien is subject to every possible description of equity in favor of a third person against the debtor at the time the judgment lien attached, 'and it is immaterial whether the rights of such third party consist of an equitable estate or interest in the judgment debtor's land, an equitable lien on his land, or a mere equity against the debtor which attaches to or affects his land.' Even if the vendee has no deed, but has purchased only by parol contract, and has been put in possession, so that he has a valid equitable title, the land is not subject to judgments recovered against his vendor after the sale, and possession taken in pursuance thereof." 8A Thompson on Real Property, Sec. 4425, pp. 216-217.

The general rule is that contracts for the sale of real property and transfers of real property interests must be made by an instrument in writing. Section 9-06-04, N.D.C.C.; Section 47-10-01, N.D.C.C. However, part performance of an oral contract which is consistent only with the existence of the alleged contract removes it from the statute of frauds. Poyzer v. Amenia Seed & Grain Co., 409 N.W.2d 107 (N.D.1987). While partial payment of the purchase price alone is not justification for enforcing an oral contract to convey land, partial payment together with other acts such as possession or the making of valuable improvements may be sufficient to take a contract out of the statute of frauds. See Parceluk v. Knudtson, 139 N.W.2d 864 (N.D.1966). When improvements to the property are relied upon as part performance of an oral contract for purposes of removing it from the statute of frauds, the improvements made on the land must be valuable, substantial, and permanent. Vasichek v. Thorsen, 271 N.W.2d 555 (N.D.1978). Thus, part payment of the purchase price and substantial improvements to the property may...