Case Title: GREGORY v CITY OF FORSYTH

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1980-02-19T00:00:00Z

Document:
No. 14584 IN THE SUPREME COURT OF THE STATE OF MONTANA 1979 ARTHUR A . GREGORY and DOROTHY R. GREGORY, Plaintiffs and Appellants, VS. THE CITY OF FORSYTH et al., Defendants and Respondents. Appeal from: District Court of the Sixteenth Judicial District, Honorable A. B. Martin, Judge presiding. Counsel of Record: For Appellants: Lee Overfelt argued, Billings, Montana For Respondents: William Meisburger argued, Forsyth, Montana Submitted: December 14, 1979 Decided : E B 19 1984 Filed: E# 1 3 l m Clerk M r . J u s t i c e Gene B. Daly d e l i v e r e d t h e Opinion of t h e Court. P l a i n t i f f s appeal from a f i n a l judgment of t h e D i c t r i c t Court, s i t t i n g without a jury, i n t h e S i x t e e n t h J u d i c i a l D i s t r i c t , i n and f o r the County of Rosebud, i n an a c t i o n f o r refund of t a x e s p a i d under p r o t e s t t o t h e C i t y of Forsyth. The D i s t r i c t Court determined t h a t t h e s t a t u t e of l i m i t a t i o n s , s e c t i o n 93-2607(4), R.C.M. 1947, now s e c t i o n 27-2-203, MCA, barred p l a i n t i f f s ' claim and t h a t t h e d i s p u t e d land was annexed t o t h e C i t y of Forsyth by acquiescence. P l a i n t i f f s , Arthur and Lorothy Gregory, a r e t h e owners of t h r e e p a r c e l s of r e a l property l o c a t e d i n Rosebud County, Montana. The Gregories purchased t h e s e p a r c e l s i n 1964 and received a q u i t c l a i m deed a s t i t l e . The deed described t h e p a r c e l s by metes and bounds and r e f e r r e d t o one of t h e p a r c e l s a s p a r t of "Lord's Addition t o Forsyth, Montana." Lord's Addition was p l a t t e d and dedicated t o t h e C i t y of Forsyth i n 1907. The deed d i d n o t s p e c i f i c a l l y d e s i g n a t e whether t h e o t h e r two p a r c e l s , " t h e disputed property" com- p r i s i n g one a c r e of land, w e r e within t h e C i t y of Forsyth. From t h e t i m e of t h e purchase u n t i l 1976, both t h e C i t y of Forsyth and t h e Gregorys considered t h e disputed property t o be i n s i d e t h e municipal boundaries of t h e c i t y . Property t a x e s w e r e r e g u l a r l y a s s e s s e d and paid; c i t y ordinances were enforced; and c i t y s e r v i c e s , including sewer, water, f i r e and p o l i c e p r o t e c t i o n , w e r e provided. C i t y maps d a t i n g back t o 1938 and 1945 show t h e disputed property t o be w i t h i n c i t y l i m i t s . Also, i n 1961 a f t e r pub- l i c a t i o n of n o t i c e , a l l of t h e c i t y ordinances were r e c o d i f i e d , and t h e disputed p r o p e r t y was again included w i t h i n c i t y boundaries. I n 1967, f o r reasons u n r e l a t e d t o t h i s appeal, Gregory obtained a n a b s t r a c t of t i t l e f o r h i s l a n d and checked f o r mortgages, l i e n s and s a t i s f a c t i o n of l i e n s . The a b s t r a c t d i d n o t i n d i c a t e whether t h e p r o p e r t y was i n s i d e t h e c i t y l i m i t s . I n 1972, a p l a t of t h e Gregorys' land was prepared by a surveyor. The p l a t e x p r e s s l y d e f i n e d t h e property, i n c l u d i n g t h e d i s p u t e d p o r t i o n , a s "a p a r c e l of land s i t u - a t e d i n t h e C i t y of Forsyth, Montana." I t was n o t u n t i l 1976 t h a t t h e Gregorys f i r s t suspected t h a t p a r t of t h e i r p r o p e r t y was o u t s i d e t h e c i t y l i m i t s . I n a conversation w i t h a l o c a l r e s i d e n t , Gregory w a s t o l d t h a t h i s p r o p e r t y was n o t annexed t o t h e c i t y . Upon i n v e s t i g a t i o n , Gregory discovered t h a t t h e disputed p r o p e r t y was n o t p a r t of t h e d e d i c a t e d Lord's Addition and had never been s t a t u t o r - i l y annexed. T h e r e a f t e r t h e Gregorys paid t h e i r c i t y t a x e s under p r o t e s t . On January 20, 1977, t h e Gregorys f i l e d s u i t f o r recovery of t h e t a x e s paid under p r o t e s t and f o r a j u d i c i a l d e c l a r a t i o n t h a t t h e d i s p u t e d p r o p e r t y i s o u t s i d e t h e c i t y boundaries and t h e r e f o r e nontaxable. A t t r i a l on August 15, 1978, t h e o n l y w i t n e s s was Arthur A. Gregory. H e t e s t i f i e d t h a t he thought t h e d i s p u t e d p r o p e r t y was i n s i d e t h e c i t y l i m i t s by reason of t h e c i t y maps he had observed posted on t h e door of t h e County A t t o r n e y ' s O f f i c e . The D i s t r i c t Court held, among o t h e r t h i n g s , t h a t t h e 1964 deed and 1967 a b s t r a c t c o n s t i t u t e d means of knowledge s u f f i c i e n t t o p u t t h e Gregorys upon i n q u i r y a s t o t h e e x t e n t of t h e c i t y l i m i t s and t h a t t h e i r f a i l u r e t o discover t h e t r u e f a c t s w i t h i n t h e t i m e p r e s c r i b e d by t h e s t a t u t e of l i m i t a t i o n s , s e c t i o n 93-2607(4), R.C.M. 1947 barred t h e i r claim. The c o u r t a l s o concluded t h a t t h e d i s p u t e d p r o p e r t y was annexed by acquiescence. The p l a i n t i f f s appeal from t h a t f i n a l judgment. Three i s s u e s have been presented t o t h i s Court f o r review: 1. Whether f a i l u r e t o comply w i t h t h e s t a t u t o r y annex- a t i o n procedures f o r towns and cities d e f e a t s t h e c i t y ' s claim t h a t t h e s u b j e c t p r o p e r t y i s w i t h i n t h e c i t y l i m i t s of Forsyth, Montana. 2. Whether t h e c o u r t e r r e d i n holding t h a t t h e Gregorys' c l a i m was barred by t h e s t a t u t e of l i m i t a t i o n s . 3. Whether t h e c o u r t e r r e d i n holding t h a t t h e Gregorys acquiesced t o t h e i n c l u s i o n of t h e i r land i n t h e c i t y and w e r e t h e r e f o r e estopped from a s s e r t i n g t h e c o n t r a r y . The p a r t i e s ' argument f o r t h e most p a r t i s a shallow swipe a t t h e second and t h i r d i s s u e s , i.e. t h e s t a t u t e of l i m i t a t i o n s , d i l i g e n c e , discovery requirements and acquiescence. The f i r s t i s s u e was c a r e f u l l y avoided and t h e r e was no i n depth t r e a t m e n t of t h e n e c e s s i t y of compliance w i t h s t a t u t o r y annexation procedures. The g e n e r a l r u l e i s t h a t municipal boundaries may be extended only a s p r e s c r i b e d by law. 2 McQuillin, Municipal Corporations § 7.14 a t 317 (3rd r e v . ed. 1979). Since t h e j u r i s d i c t i o n of a c i t y t o extend i t s boundaries is a s p e c i a l power, conferred by t h e l e g i s l a t u r e , a s u b s t a n t i a l compliance w i t h a l l t h e mandatory requirements of s t a t u t o r y law i s e s s e n t i a l . McQuillin, supra, 5 7.29 a t 422; Pool v. Town of Townsend (1920), 58 Mont. 297, 304, 191 P.385, 386. I n Pool, it was argued t h a t c e r t a i n land was brought w i t h i n t h e town boundaries by common law d e d i c a t i o n and a l s o by t h e f i l i n g of a p l a t which displayed t h e land a s w i t h i n t h e Town of Townsend. This Court r e j e c t e d t h e s e c o n t e n t i o n s and held: " ' I n t h i s s t a t e t h e r e i s no common law i n any c a s e where t h e law i s d e c l a r e d by t h e Code.' (Sec. 6213, Rev. Codes [Section 12-104, R.C.M. 1947, now s e c t i o n 1-1-108, MCAI.) I f then, t h e Codes provide t h e means by which a n addi- t i o n becomes a p a r t of a c i t y o r town and sub- j e c t t o i t s j u r i s d i c t i o n , t h e means s o provided must be held t o be e x c l u s i v e . " Pool, supra, a t 304, 191 P. a t 386. Montana's adherence t o t h i s view was r e c e n t l y underscored i n Missoula Rural F i r e D i s t r i c t v. C i t y of Missoula (1975), 168 Mont. 70, 540 P.2d 958. The C i t y of Missoula urged t h a t earlier law which provided f o r summary annexation of land "wholly surrounded" by a c i t y ( s e c t i o n 11-403, R.C.M. 1947, now s e c t i o n s 7-2-4501 t o 7-2-4504, MCA) was s u f f i c i e n t a u t h o r i t y f o r annexation by t h a t method. This Court held t h a t s i n c e summary annexation was n o t provided f o r under t h e Planned Community Development A c t of 1973 ( s e c t i o n 11-514, R.C.M. 1947, e t s e q . , now s e c t i o n 7-2-4701, MCA, e t s e q . ) , t h e s t a t e d purpose of which was t o develop a system f o r "adding t o and i n c r e a s i n g c i t y boundaries" ( s e c t i o n 11-515, R.C.M. 1947, now s e c t i o n 7-2-4703, MCA), it was excluded a s a method of annexation. Missoula Rural F i r e D i s t r i c t , supra, a t 74, 540 P. 2d a t 960-961. There a r e important p o l i c y c o n s i d e r a t i o n s which favor a t l e a s t s u b s t a n t i a l compliance w i t h s t a t u t o r y annexation procedure. The l e g i s l a t i v e h i s t o r y of Montana's annexation laws demonstrates t h a t p u b l i c n o t i c e and p a r t i c i p a t i o n ( p a r t i c u l a r l y f o r t h e persons a f f e c t e d by a proposed annex- a t i o n ) a r e c a r d i n a l . There i s , however, no argument t o be heard t h a t t h e s t a t u t o r y scheme f o r annexation i s n o t e x c l u s i v e . The second i s s u e concerns t h e a p p l i c a t i o n of t h e s t a t u t e of l i m i t a t i o n s by t h e t r i a l c o u r t , i. e. , s e c t i o n 93-2607 ( 4 ) , R.C.M. 1947, now s e c t i o n 27-2-203, MCA. P l a i n t i f f s contend t h a t t h e s t a t u t e d i d n o t s t a r t t o r u n u n t i l discovery of t h e f a c t s by t h e aggrieved p a r t y . Ordinary d i l i g e n c e should be e x e r c i s e d i n discovery. Ray v. Divers (1928), 81 Mont. 552, 264 P. 673, 675. The g i s t of t h e C i t y ' s argument i s t h a t p l a i n t i f f s d i d n o t e x e r c i s e due d i l i g e n c e because of t h e i r f a i l u r e t o read t h e deed and a b s t r a c t c a r e f u l l y . But t h e s e documents do n o t i n d i c a t e whether t h e land i s w i t h i n t h e c i t y l i m i t s . Rather, t h e c i t y map formed t h e b a s i s f o r p l a i n t i f f s ' conclusion t h a t t h e land was i n s i d e t h e c i t y . Reasonable d i l i g e n c e would r e q u i r e i n s p e c t i o n of t h e c i t y map and ordinance. These w e r e t h e o n l y d i r e c t o f f i c i a l evidence of t h e C i t y ' s boundaries. A s such, any r e l i a n c e on them was j u s t i f i e d . Any o t h e r method would involve, f i r s t , a n assumption t h e ordinance was d e f e c t i v e , and second, a s e a r c h of a l l annexation proceedings. C l e a r l y , t h i s i s beyond t h e p a l e of reasonable d i l i g e n c e . I n f a c t , p l a i n t i f f s ' discovery of t h e d e f e c t i n t h e ordinance came a s a r e s u l t of a conversation with a l o c a l r e s i d e n t . The C i t y contends t h a t f o r t h e purposes of t h e s t a t u t e of l i m i t a t i o n s , s e c t i o n 93-2607(4), R.C.M. 1947, t h e "discovery" requirements are i d e n t i c a l t o I s r a e l s o n v. Mountain T r a c t o r s Co. (1970), 155 Mont. 69, 73, 467 P.2d 149, 152, wherein t h i s Court explained t h a t an aggrieved p a r t y must show some i n t e n t i o n a l concealment and d i l i g e n c e b e f o r e he can r e l y on t h e discovery exception t o t h e g e n e r a l r u l e t h a t t h e s t a t u t e begins running upon t h e occurrence of t h e f r a u d . Here, p l a i n t i f f admitted t h a t t h e r e had been no concealment, and t h u s p l a i n t i f f s ' cause of a c t i o n expired i n 1966. Before addressing the parties' points of argument as to when the two year statute of limitations, section 93-2607(4), R.C.M. 1947, now section 27-2-203, MCA, started running, the issue of whether this statute of limitations applies to plaintiffs' claim deserves discussion. Section 27-2-203, MCA provides: "Actions for relief on ground of fraud or mistake. The period prescribed for the commencement of an action for relief on the ground of fraud or mis- take is within 2 years, the cause of action in such case not to be deemed to have accrued until the discovery by the aggrieved party of the facts constituting the fraud or mistake." In Opp v. Boggs (1948), 121 Mont. 131, 140, 193 P.2d 379, 385, this Court stated: "This section of our statute 'applies only to actions for fraud or mistake within the common acceptance of the term.'" "Mistake" is defined in Black's Law Dictionary as "some unintentional act, omission or error arising from ignorance, surprise, imposition or misplaced confidence . . . A Mistake exists when a person, under some erroneous conviction of law or fact, does, or omits to do, some act which, but for the erroneous conviction, he would not have done or omitted." Black's Law Dictionary 1152 (4th Ed. 1968). The "mistake" provision of section 93-2607(4) has rarely been discussed by this Court. In a suit for reformation and enforcement of a contract for the sale of corporate assets based on mutual mistake, this Court deemed the statute to be applicable and to have commenced running when the plaintiff realized the mistake. Favero v. Wynacht (1962), 140 Mont. 358, 373374, The mistake in the instant case was a mutual mistake of fact. Both the City and the Gregorys (as well as their predecessors i n t i t l e ) erroneously believed t h e d i s p u t e d p r o p e r t y t o be i n s i d e t h e c i t y l i m i t s . Application of s e c t i o n 93-2607(4) t h u s appears t o be a p p r o p r i a t e . The Gregorys contend t h e two year s t a t u t e of l i m i t a - t i o n s commenced running when they discovered i n 1976 t h a t t h e d i s p u t e d land was n o t annexed o r p a r t of t h e dedicated Lord's Addition. They maintain t h a t reasonable d i l i g e n c e would n o t r e q u i r e i n q u i r y and ascertainment of f a c t s incon- s i s t e n t w i t h t h e c i t y ordinances and maps. The c r i t i c a l q u e s t i o n i s whether t h e Gregorys had e i t h e r c o n s t r u c t i v e o r a c t u a l n o t i c e before 1976 of f a c t s which should have p u t them on i n q u i r y . F a l l s Sand and Gravel Co. v. Western Concrete, Inc. (D. Mont. 1967), 270 F.Supp. 495, 503-504. The D i s t r i c t Court found t h e 1964 q u i t c l a i m deed and 1967 a b s t r a c t c o n s t i t u t e d such n o t i c e . The deed merely described t h e p a r c e l s conveyed by metes and bounds. Apart from l o c a t - i n g t h e p a r c e l s , t h e f a c t t h a t one p a r c e l w a s designated a s p a r t of L o r d ' s Addition t o Forsyth has no independent s i g n i - f i c a n c e . A s s t a t e d i n American Min. Co. v. Basin & Bay S t a t e Min. Co. (1909), 39 Mont. 476, 482, 104 P. 525, 526: "We t h i n k t h e b e t t e r r u l e t o be e s t a b l i s h e d i n t h i s s t a t e i s t h a t t h e recording of t h e instrument i s t o be considered w i t h o t h e r f a c t s and circumstances i n determining whether t h e p l a i n t i f f i s t o be charged w i t h n o t i c e , e i t h e r a c t u a l o r c o n s t r u c t i v e , b u t t h a t t h e f a c t of recording a l o n e w i l l n o t s o charge him." Here, t h e record is c l e a r t h a t a t least s i n c e 1938 t h e c i t y maps and ordinances defined t h e d i s p u t e d p r o p e r t y t o be w i t h i n t h e C i t y of Forsyth. M r . Gregory t e s t i f i e d t h a t he r e l i e d on t h e s e o f f i c i a l documents. The a b s t r a c t l i k e w i s e c o n t a i n s nothing t o p u t t h e Gregorys on i n q u i r y . The l a s t page of t h e a b s t r a c t i n d i c a t e s t h a t a l l t a x e s w e r e p a i d a s of t h a t d a t e . It i s a l s o n o t a b l e t h a t i n 1972, when t h e Gregorys's property, i n c l u d i n g t h e d i s p u t e d p o r t i o n , was p l a t t e d by a p r o f e s s i o n a l surveyor, t h e land was defined a s " a p a r c e l of land s i t u a t e d i n t h e C i t y of Forsyth, Montana." These circumstances, i n combination w i t h t h e C i t y ' s a c t i v e and continuing e x e r c i s e of j u r i s d i c t i o n over t h e d i s p u t e d p r o p e r t y f a i l t o c o n s t i t u t e n o t i c e of any e r r o r i n t h e d e s i g n a t i o n of municipal boundaries. The C i t y l a y s g r e a t stress on t h e fraud c a s e s c o n s t r u i n g t h e "discovery" element i n s e c t i o n 93-2607(4). I s r a e l s o n , supra; Lasby v. Burgess (1930), 88 Mont. 49, 289 P. 1028; and Kerrigan v. O'Meara (1924), 71 Mont. 1, 227 P. 819 a r e c a s e s t h a t r e q u i r e an a f f i r m a t i v e showing of i n t e n t i o n a l concealment a s a c o n d i t i o n precedent t o recovery under s e c t i o n 93-2607(4). However, t h e s e c a s e s a r e a l l fundamen- t a l l y d i s t i n g u i s h a b l e i n t h a t fraud, u n l i k e mistake, i s an i n t e n t i o n a l a c t of misrepresentation. Mistake, by d e f i n i t i o n , i s u n i n t e n t i o n a l . Annexation can o n l y be accomplished by s t a t u t o r y proce- d u r e s a s set f o r t h , supra. However, w e do n o t wish t o l e a v e t h e impression t h a t acquiescence has no p l a c e i n t h e law. "The g e n e r a l r u l e t h a t p r o p e r t y owners are estopped by reason of long-continued acquiescence t o q u e s t i o n d i r e c t l y t h e v a l i d i t y of t h e extension of boundaries of a m u n i c i p a l i t y s e e m s t o be w e l l s e t t l e d . " 56 Am.Jur.2d Municipal c o r p o r a t i o n s 8 80 a t 134 (1971). See a l s o , 2 McQuillin, supra, § 7.09 a t 294. Although Montana has never recognized t h i s p r i n c i p l e , o t h e r j u r i s d i c t i o n s have a p p l i e d t h e d o c t r i n e of acquiescence t o a f t e r - t h e - f a c t c h a l l e n g e s of a l l e g e d l y d e f e c t i v e annexation proceedings. Annot., 101 A.L.R. 581 (1936); 18 A.L.R.2d 1255 (1951). Acquiescence has a l s o been found t o be p r o b a t i v e in ascertaining the location of municipal boundaries which, by their description, are uncertain or obscure. 2 McQuillin, supra, . § 7.05 at 280, S 7.09 at 294; Town of Brookline v. Town of Newfane (Vt. 1966), 224 A.2d 908, 911; Crescent City v. Dodd (1933), 131 Cal.App. 153, 18 P.2d 999, 1001. However, "neither usage and custom nor contemporaneous construction will prevail over a plainly designated boundary line." 56 Am.Jur.2d Municipal Corporations $ 41 at 103; Town of Stephens City v. Zea (1963), 204 Va. 82, 129 S.E.2d 14, 18. As stated in McQuillin, "the ---- rule as to establishment of municipal - boundaries - by acquiescence does not apply where the period -- of acquiescence is short or where -- the boundary involved is - clearly otherwise than claimed." McQuillin, supra, § 7.09 at 295 (emphasis added). See also, La Porto v. Village of Philmont (N.Y.App. 1976) 346 N.E.2d 503, 506; Crescent City, supra, at 1001; -- Town of Brookline, supra, at 911. In the instant case, the boundaries of the City of Forsyth are clear. T h ~ ~ & - . Furthermore, the Gregorys are not, by this suit, attacking the validity of annexation proceedings. No such proceedings were ever conducted. Therefore, the doctrine of acquiescence could not apply to these facts. Therefore, we find the City of Forsyth failed to substan- tially comply with the annexation procedure and the property in dispute is not, therefore, subject to municipal taxes. Under the circumstances of this case, the statute of limitations, section 93-2607(4), now 27-2-203, MCA, is deemed to have commenced running in 1976. The doctrine of acquiescence does not apply to boundaries that are easily or clearly defined. The judgment of t h e D i s t r i c t Court i s vacated and t h e cause remanded f o r f u r t h e r proceedings i n conformity w i t h t h i s opinion. J u s t i c e W e concur: Chief J u s t i c e a e . ~ J u s t i c e s