Case Title: Grose v. Sauvageau

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1997-07-17T00:00:00Z

Document:
Grose v. Sauvageau1997 WY 91942 P.2d 398Case Number: 96-75Decided: 07/17/1997Supreme Court of Wyoming

Michael 
E. GROSE and Patricia A. Grose, husband and wife, Appellants

(Defendants),

v.

Peggy SAUVAGEAU, Appellee 
(Plaintiff).

                                   

 

Appeal from District Court, Converse County, Barton 
R. Voigt, J.

 

 

      Thomas E. 
Campbell of Hand & Campbell, P.C., Douglas, for 
Appellants.

       Patrick M. 
Hunter, Casper, for Appellee.

 

Before TAYLOR, C.J., and 
THOMAS, MACY, GOLDEN, and LEHMAN, JJ.

 

      TAYLOR, 
Chief Justice. 

[¶1]            Appellants 
challenge the district court's grant of summary judgment quieting title in favor 
of appellee. Appellants acknowledge that their quitclaim deed to the subject 
property was not without defects, but claim the district court erred when it 
determined that appellee's conduct did not preclude her claim of title. Despite 
the allegations of inappropriate conduct, appellants' failure to acquire or 
record a valid deed to the property necessitates the legal recognition of the 
quitclaim deed filed by appellee as a subsequent good faith purchaser without 
notice pursuant to Wyo. Stat. § 34-1-120 (1997).

 

[¶2]            
Affirmed.

 

I. ISSUES

 

[¶3]           Appellants, Michael E. 
Grose and Patricia A. Grose (the Groses), present the following issues for 
review:

 

        
    1. Whether the 
Court erred in quieting title in the subject property in 
Sauvageau.

 

        
    2. Whether 
Sauvageau had notice of Groses' interest but failed to 
inquire?

 

        
    3. Whether 
Sauvageau can be considered a "good faith" purchaser?

 

            4. Whether the defects in 
Groses' deed from Ryberg benefit Sauvageau?

 

[¶4]            Appellee, Peggy 
Sauvageau (Sauvageau), responds:

 

1. Can a deed from a stranger in title, to wit the 
deed from Ryberg Const. Co. to the Appellants, convey any interest in the 
property.

 

            2. Do the 
Appellants have a right to reformation of a deed from a stranger in title when 
they paid no consideration for the 
property?

 

            3. If the 
unrecorded deed from Ryberg Const. Co. to the Appellants was valid to convey an 
ownership to the property was the 
Appellee:

 

        
                
(i) a bona fide purchaser;

 

        
                
(ii) in good faith;

 

        
                
(iii) without notice.

 

II. FACTS

 

[¶5]            According to Mrs. 
Grose's affidavit submitted in support of summary judgment, the story began when 
the Groses became interested in obtaining land for their children's 4H projects. 
In July 1991, Mrs. Grose went to the courthouse in Converse County, Wyoming to 
research several lots which were of interest to her family. She emerged with the name of "Ryberg 
Construction." The record does not explain how Mrs. Grose found this name, since 
it is undisputed that the record owner of the subject lot was H. Carl Ryberg. 
Mrs. Grose then contacted Mr. Ryberg via telephone and discussed two lots he 
owned in Rolling Hills which had been acquired by Converse County for back taxes in 1989. 
Mrs. Grose and Mr. Ryberg agreed that Mr. Ryberg would send two quitclaim deeds 
for the lots and the Groses would pay the back taxes. The lot which is the 
subject of this controversy, Lot 153, is located in Rolling Hills adjacent to 
the Groses' business property and between their business property and the land 
belonging to Sauvageau.

 

 [¶6]          On July 26, 1991, the 
Groses paid the back taxes on Lot 153 and received a Certificate of Purchase. 
True to his word, Mr. Ryberg signed and sent a quitclaim deed. However, the 
quitclaim deed professing to transfer Mr. Ryberg's interest in Lot 153 had 
numerous deficiencies: it was undated; it incorrectly named Ryberg Construction Co. as the grantor; it lacked a 
description of the property; and it lacked a completed or dated notarization of 
Mr. Ryberg's signature. In addition, Mr. Ryberg's signature did not contain any 
reference to the relationship between Mr. Ryberg and the grantor, Ryberg 
Construction Co. Undaunted by these technicalities, Mr. Grose entered a 
description of the property and back-dated the documents to August 25, 1989 in 
order to reflect a date shortly after the tax sale to Converse County.  The Groses made no attempt to record the 
deed or redeem the property.

 

[¶7]            The Groses built 
improvements on the property, including fences, a barn, and installation of 
water, as well as a riding arena and a corral. They seeded the property and 
informed the town council of their intent to plant trees. Unfortunately, the 
operation of the premises was not without incident.

 

[¶8]            In 1993, the 
Grose children inadvertently left one of the gates ajar, allowing several pigs 
to escape and roam through nearby properties. After the pigs were apprehended 
and returned by officers of the sheriff's department, the Groses were notified 
that Sauvageau believed that during their short-lived freedom, the pigs had routed Sauvageau's horses through a 
fence. Although skeptical about the guilt of their pigs, the Groses paid half of 
Sauvageau's veterinarian bill. This is the first incident in the record which 
portends the hostile relationship between the Groses and 
Sauvageau.

 

 [¶9]          In August 1994, the 
Groses again had the misfortune of an errant swine seeking liberation through an 
open gate. This escape resulted in the Groses receiving a citation for having an 
animal at large. One week earlier, the Groses had been cited for exceeding the 
number of animals allowed on their lot. At a hearing held in September 1994 on the citations, the 
Groses eventually pled guilty to both charges and, under the judge's instruction 
to secure an animal variance for Lot 153, the Groses prepared an application and 
obtained the required signatures of adjacent landowners.

 

 [¶10]       At the next regular 
Rolling Hills town council meeting, however, the Groses allege that Councilwoman 
Sauvageau was instrumental in preventing approval of their application. When the 
subject of the variance was raised, the Groses submitted their application for 
the Lot 153 variance and then informed the town council of their intent to 
request another variance for their adjoining property in the future. At that 
point, the discussion regarding the current application was tabled. The Groses 
were then brought to task by Councilwoman Sauvageau regarding the legality of 
the water installation on the property. Later in the evening after the town 
council members met in executive 
session, the town council reconvened only to pass an emergency ordinance which 
expanded the variance ordinance to include an annual review of the application 
and the signed approval of all property owners within 500 feet of the land at 
issue. The requirements contained in the new ordinance gave Councilwoman 
Sauvageau the ability to veto the Groses' variance by withholding her 
signature.

 

[¶11]         Hostilities 
continued, and in November 1994 prior to Councilwoman Sauvageau's bid for 
re-election, Mrs. Grose penned a letter to the local newspaper "questioning some 
of the people running for council." Sauvageau was not 
re-elected.

 

 [¶12]       Shortly thereafter, 
allegedly because "[t]he difficulties between [Sauvageau] and the Groses had 
become so bad," Sauvageau "determined to check on the ownership of the property, 
in the off chance that the Groses were 
mere lessees of the property." When Sauvageau inquired at the County Clerk's 
recording office, she discovered that the record owner of the property was H. 
Carl Ryberg. Upon contacting the County Treasurer's office, Sauvageau learned 
that the Groses held the property by virtue of a Certificate of Purchase. She 
then confirmed there had been no notice of application for a tax deed and 
subsequently hired legal counsel to investigate whether she could purchase and 
redeem the property. Sauvageau states that her purpose was to "acquire * * * a 
buffer lot between the [Groses] and their livestock, and 
[herself]."

 

 [¶13]       On November 28, 1994, 
Sauvageau and Mr. Ryberg executed a contract to purchase Lot 153 for $50.00, 
with the agreement to pay an additional $200.00 if Sauvageau was successful in 
redeeming the property. In return, Sauvageau received a quitclaim deed from Mr. 
Ryberg transferring all his interest in the property to Sauvageau. During these negotiations, Mr. 
Ryberg did not inform Sauvageau or her attorney about the quitclaim deed he 
previously had signed and sent to the Groses. Sauvageau freely admits, however, 
that her actions were secretive in hopes that the Groses would not be alerted 
and apply for a tax deed before she 
could redeem the property.

 

[¶14]         The next day, 
November 29, 1994, Sauvageau recorded her deed, paid Converse County the amount 
required by statute, and obtained a certificate of redemption. Sauvageau then 
demanded that the Groses vacate the 
property. The Groses refused, claiming ownership by virtue of the unrecorded 
quitclaim deed from Ryberg Construction Co., executed by Mr. Ryberg and dated 
prior to the deed recorded by Sauvageau.1

 

 [¶15]       Sauvageau filed a 
quiet title and ejectment action. The Groses responded by denying Sauvageau's 
title and counterclaiming to quiet title. The Groses also counterclaimed for 
intentional infliction of emotional distress, for tortious interference with 
contract, and asserted a lien on the property for improvements.  
The parties then filed cross motions for 
summary judgment. The district court granted summary judgment quieting title in 
favor of Sauvageau, and dismissed the remaining counterclaims. After their 
motion for rehearing was denied, the Groses timely filed this appeal challenging 
only the district court's decision regarding title to the 
property.

 

III. STANDARD OF REVIEW

 

[¶16]         Summary judgment 
is only to be granted on the joint showing that there is no genuine issue of 
material fact and that the moving party is entitled to judgment as a matter of 
law. W.R.C.P. 56. A fact is material if proof of that fact would have the effect 
of establishing or refuting an essential element of a cause of action or a 
defense. Hronek v. St. Joseph's Children's Home, 866 P.2d 1305, 1307 (Wyo. 
1994). The purpose of summary judgment is to eliminate the necessity of bringing 
the issues to a full trial, "permitting an end to unfounded claims and avoiding 
the heavy expense * * *." Bluejacket v. Carney, 550 P.2d 494, 496 (Wyo. 1976). See also England v. Simmons, 728 P.2d 1137, 1141 (Wyo. 1986). Summary judgment is a drastic remedy, and therefore, if 
the evidence is subject to conflicting interpretations, or reasonable minds 
might differ as to its significance, summary judgment is improper. Weaver v. 
Blue Cross-Blue Shield of Wyoming, 609 P.2d 984, 987 (Wyo. 1980). If the evidence in the record supports the summary 
judgment granted by the district court on any legal basis, however, we will 
affirm. Century Ready-Mix Co. v. Campbell County School Dist., 816 P.2d 795, 799 
(Wyo. 1991).

 

  [¶17] 
    In this case, 
the parties agree that the Groses were in possession of the property, that 
Sauvageau knew they were in possession, and that if Sauvageau had inquired of 
the Groses, the Groses would have told her of the quitclaim deed they had 
obtained from Mr. Ryberg. As the district court stated, "[t]he only questions 
are the legal conclusions to be drawn from these facts."

 

IV. DISCUSSION

 

 [¶18]       The Groses' claim that 
Sauvageau's failure to make direct inquiry of the Groses' interests, and her 
admitted efforts to acquire the property without notifying the Groses, defeats 
her status as a bona fide purchaser in good faith, and therefore, her 
entitlement to the property. Wyo. Stat. § 34-1-120 
provides:

 

        
    Every conveyance 
of real estate within this state, hereafter made, which shall not be recorded 
as required by law, shall be void, 
as against any subsequent purchaser or purchasers in good faith 
and for a valuable consideration of 
the same real estate or any portion thereof, whose conveyance shall 
be first duly 
recorded.

 

 [¶19]       To prevail in a 
contest under Wyo. Stat. § 34-1-120, Sauvageau must show that she is a "bona 
fide purchaser," which is: (1) a purchaser in good faith; (2) for a valuable 
consideration, not by gift;2 (3) with no actual, constructive or 
inquiry notice of any alleged or real infirmities in the title; and (4) who 
would be prejudiced by the cancellation 
or reformation. First Interstate Bank of Sheridan v. First Wyoming Bank, N.A. 
Sheridan, 762 P.2d 379, 382 (Wyo. 1988); Crompton v. Bruce, 669 P.2d 930, 935 
(Wyo. 1983); North Am. Uranium, Inc. v. Johnston, 77 Wyo. 332, 316 P.2d 325, 
328-29 (1957); York v. James, 60 Wyo. 222, 148 P.2d 596, 598-99 
(1944).

 

      A. 
NOTICE

 

 [¶20]       The purpose of the 
recording statutes is to provide protection for those diligent enough to conduct 
a search of title records.  First 
Interstate Bank of Sheridan, 762 P.2d  at 383. However, "[f]ailure to record a 
deed does not render it void where prior to the conveyance subsequent purchasers 
are put on due inquiry and with 
reasonable investigation the existence of the deed could have been determined." 
Doenz v. Garber, 665 P.2d 932, 936 (Wyo. 1983) (citing Soppe v. Breed, 504 P.2d 1077, 1080 (Wyo. 1973)).

 

  [¶21] 
    A subsequent 
purchaser must take "with[out] actual, constructive, or inquiry notice * * *." 
First Interstate Bank of Sheridan, 762 P.2d  at 383. See Matter of Estate of 
Hite, 829 P.2d 1173, 1176 (Wyo. 1992) and Thomas v. Roth, 386 P.2d 926, 929 
(Wyo. 1963). Sauvageau did not have actual notice of the Groses' unrecorded quitclaim deed. Neither did she 
have constructive notice of the deed, since even if the Groses' deed was 
recorded, the improper acknowledgment defeats constructive notice. Low v. 
Sanger, 478 P.2d 60, 63 (Wyo. 1970); Torgeson v. Connelly, 348 P.2d 63, 66 (Wyo. 
1959). The district court concluded, 
however, that the Groses' possession of the property put Sauvageau on inquiry 
notice which required her to inquire directly of the Groses as to their claimed 
interest in the property.

 

 [¶22]       The district court 
relied on the concurring opinion of Justice Raper, Retired, in Van Patten v. Van 
Patten, 784 P.2d 218, 222 (Wyo. 1989), wherein he quoted Healy v. Wostenberg, 47 
Wyo. 375, 399, 38 P.2d 325, 333-34 
(1934):

 

            "Possession of 
real property by a person other than the vendor is notice to the purchaser of 
whatever rights or interests, legal 
or equitable, in the fee which the occupant has or claims and which would 
be disclosed on a proper and 
reasonable inquiry of him.  Indeed, 
such possession is notice of all facts in             reference to the 
title which due and diligent inquiry of the occupant would disclose. 
Therefore possession is notice of 
the rights of those under whom the possessor claims."

 

(Emphasis added.) See also 
58 Am.Jur.2d, Notice, § 21 (1989) and 66 C.J.S., Notice, § 11(c) (1950). The 
facts of that case, however, are easily distinguished from the undisputed facts 
in this record. In Van Patten, 784 P.2d  at 222-23, Justice Raper, Retired, went 
on to state:

 

            No reasonable 
inquiry whatsoever was made to determine the occupants', appellants', claims 
of right. * * 
*

 

        
    * * 
*

 

        
    * * * Possession 
by others puts the subsequent claimant on notice and requires 
reasonable investigation of the rights of such 
possessors.

 

(Emphasis added.) We do not 
agree that a reasonable investigation requires direct inquiry of the occupant in 
every case.

 

 [¶23]       Inquiry notice is 
based on the premise that the failure to make inquiry by someone with sufficient 
knowledge to create a duty to do so will be attributed to their own negligence. 
The loss resulting from such negligence will not be relieved in a court of 
equity. North Am. Uranium, Inc., 316 P.2d  at 329. While Sauvageau was well aware that the Groses had 
possession of the property and had made improvements upon it, she diligently 
searched the records only to discover that the Groses' possession of the 
property was entirely consistent with the rights of the record owner. Therefore, 
the Groses' possession of the property did not create a situation which would put Sauvageau 
on guard as to the possibility of an unrecorded instrument or an alternative 
claim to the property. Thus, there was not "sufficient knowledge" to create a 
duty to further investigate the Groses' claims.

 

[¶24]         Public policy 
requires that subsequent purchasers be able to rely on the title shown in public 
records. While in some cases a search of the record may not be sufficient, 
third-party possession of property constitutes inquiry notice to a subsequent 
purchaser only when "it is an `actual, open, visible, and exclusive possession' 
inconsistent with the title of the record owner." Nussbaumer v. Fetrow, 556 N.W.2d 595, 598 (Minn.App. 1996); Clay 
Properties, Inc. v. Washington Post Co., 604 A.2d 890, 896 (D.C.App. 1992). 
Since the Groses' possession of the property was fully explained in the public 
records, Sauvageau had no duty to search further.

 

      B. GOOD 
FAITH

 

[¶25]         The Groses 
contend that "Sauvageau's claim to having acted in `good faith' is destroyed by 
her own words:"

 

            The Defendants 
and I are not on good terms, and the less I speak to them the better. As such, 
when I wanted to determine what 
right they had to the property, I researched the real estate records 
and found that they were the 
holders of a certificate of purchase on the property, and that they could 
apply for a tax deed. I consulted 
with my attorney, and subsequent to such consultation determined that 
I would try to purchase the 
property and redeem it, hopefully before the Defendant's [sic] were able 
to get a tax deed. After 
investigation, I determined that I did not want the Defendant's [sic] to know 
I was interested in the property, 
since they might have been able to get a tax deed before I redeemed 
the property.

 

The term "good faith" is not 
defined in the statute. Prior Wyoming cases addressing the elements of a 
subsequent purchaser within Wyo. Stat. § 34-1-120 describe "good faith" as an 
element separate from that of "notice." First Interstate Bank of Sheridan, 762 P.2d  at 382; Crompton, 669 P.2d  at 935; North Am. Uranium, Inc., 316 P.2d at 328-29; York, 148 P.2d  
at 598-99. The facts of those cases, however, did not require the court to 
distinguish one from the other.

 

[¶26]         The Groses argue 
that "good faith" under Wyo. Stat. § 34-1-120 requires more than merely lack of 
notice, but cite to no supporting case law. Instead, they point to the 
definition of good faith as addressed in cases involving the implied covenant of 
good faith and fair dealing in contracts. Wilder v. Cody Country Chamber of Commerce, 868 P.2d 211, 220 (Wyo. 
1994) (good faith excludes types of conduct which "violate community standards 
of decency, fairness or reasonableness"); Cone v. Ivinson, 4 Wyo. 203, 33 P. 31, 
34 (1893), affd, 4 Wyo. 203, 35 P. 933 (1894) (good faith consists in an honest 
intention to abstain from taking any unconscientious advantage of another, even 
through the forms or technicalities of law). Unfortunately, the definitions of the duty owed to another party in 
a contractual relationship give little guidance in the context of the "good 
faith" required under a "race-notice" statute.

 

[¶27]         While we agree 
that Sauvageau's conduct was hardly a model of good sportsmanship, we do not 
believe her actions constitute "bad faith" removing her from the protection 
afforded by Wyo. Stat. § 34-1-120. The 
Groses do not allege that Sauvageau made representations upon which they relied 
in their claim to title.  Neither do 
the Groses claim that Sauvageau's actions, prior to the time she recorded her 
deed, prevented them from attempting to record their deed or apply for a tax 
deed as contemplated by statute. 
Finally, there are no allegations or any illegal or fraudulent conduct. See 
Lewis v. Investors Leased Group II, 118 Or. App. 361, 848 P.2d 113 (1993) (prior 
mortgagees were entitled to priority over subsequently executed deed of trust in 
same property when mortgagor's controlling principal fraudulently obtained 
release of prior trust deed by escrow agent).  Consequently, the Groses allege no 
affirmative actions which would preclude 
a finding of "good faith" under Wyo. Stat. § 
34-1-120.

 

  [¶28] 
    The Groses have 
been reimbursed in full with interest for the taxes which they paid for 
possession of the property. They also have an undisputed right to recover for 
the value of the improvements which they placed upon the property. As between 
the quitclaim deed held by the Groses and the deed recorded by Sauvageau, the 
latter must prevail.

 

V. CONCLUSION

 

[¶29]         The Groses' 
third-party possession of the property was not contrary to the rights of the 
record title holder, and therefore Sauvageau had no "inquiry notice" requiring 
direct contact with the Groses regarding the basis of their claim to the 
property.  The Groses raised no 
issue of material fact as to Sauvageau's good faith under Wyo. Stat. § 34-1-120. Summary 
judgment is affirmed.

     

    

FOOTNOTES

1 It 
appears that the Groses contacted Mr. Ryberg after learning of the deed to 
Sauvageau, but Mr. Ryberg informed them he forgot he quitclaimed the property to 
them and refused to sign a 
corrected deed.            

2 The 
parties do not dispute that Sauvageau paid valuable consideration for the 
property.