Case Title: Colorado Nat. Bank v. Miles

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1985-12-12T00:00:00Z

Document:
Colorado Nat. Bank v. Miles1985 WY 200711 P.2d 390Case Number: 85-72Decided: 12/12/1985COLORADO NATIONAL BANK, APPELLANT (PLAINTIFF), 

v. 

WILBURN H. MILES, A/K/A WILBURN H. MILES, JR., A/K/A BILL H. MILES; DOROTHY M. MILES; AND R AND R OIL COMPANY, APPELLEES (DEFENDANTS), 

CONTINENTAL ASSURANCE COMPANY; TEXACO, INC.; FIRST INTERSTATE BANK OF DENVER; AND SHARON L. KINNISON, TRUSTEE IN BANKRUPTCY FOR WILBURN H. MILES, (DEFENDANTS).
Supreme Court of Wyoming
COLORADO NATIONAL BANK, 
APPELLANT (PLAINTIFF), 

v. 

WILBURN H. MILES, A/K/A 
WILBURN H. MILES, JR., A/K/A BILL H. MILES; DOROTHY M. MILES; AND R AND R OIL 
COMPANY, APPELLEES (DEFENDANTS), 

CONTINENTAL ASSURANCE 
COMPANY; TEXACO, INC.; FIRST INTERSTATE BANK OF DENVER; AND SHARON L. KINNISON, 
TRUSTEE IN BANKRUPTCY FOR WILBURN H. MILES, (DEFENDANTS).

 
 
Appeal from the 
DistrictCourtofCampbellCounty, Terrence L. 
O'Brien, J.

 
 
Peggy Taylor 
Pfau, of Daly, Maycock, Anderson & Taylor, P.C., Gillette, for appellant.

Dan R. Price, 
II, and James P. Schermetzler, of Morgan, Brorby, Price & Roberts, Gillette, 
for appellee Dorothy M. Miles; Felix 
Sowada, of Preuit, Sowada & Hurich, Gillette, for appellee Wilburn H. Miles; Paul J. 
Drew, Gillette, for appellee R & R Oil Co.

Before THOMAS, C.J., 
BROWN and CARDINE, JJ., and ROONEY and GUTHRIE, JJ., 
Retired.

BROWN, 
Justice.

[¶1.]     This appeal results 
from a summary judgment granted in an action to determine the claims of several 
parties to two separate parcels of real property. Wilburn H. Miles, Jr., filed a 
petition for bankruptcy in federal bankruptcy court. Stockmens Bank & Trust 
Company (Stockmens Bank) filed a motion to stay the bankruptcy proceedings in 
order to foreclose several of its mortgages on the two parcels of land. The 
bankruptcy proceedings were stayed, and Stockmens Bank filed an action to 
foreclose its mortgages and to have its interest in the property adjudged 
superior to Continental Assurance Company (Continental), Texaco, Inc. (Texaco), 
Petro-Chem, Inc. (Petro-Chem), R & R Oil Company (R & R), and Sharon 
Kinnison, trustee in bankruptcy for Wilburn Miles, now replaced by Cherie Norman 
as trustee. Continental was subsequently dismissed from the action since its 
debt was fully paid and the mortgage released. Texaco did not file an answer, 
having assigned its interest in the land to R & R. Petro-Chem assigned its 
interest to First Interstate Bank of Denver (First 
Interstate).

[¶2.]     Appellant Colorado 
National Bank (CNB) subsequently purchased the mortgages held by Stockmens Bank 
and was substituted as plaintiff. There was a multitude of counterclaims and 
cross-claims filed by the parties. As noted above, the court granted summary 
judgment determining the respective rights of the parties. The court found, 
inter alia, that CNB should have judgment against Wilburn and Dorothy Miles on 
the two mortgages assigned to it by Stockmens Bank. The court also found that R 
& R could exercise its option to purchase one of the land 
parcels.

[¶3.]     CNB appeals from the 
summary judgment and raises the following issues:

"I. Did the district 
court err in finding that the station property was not partnership 
property?

"II. Did the district 
court err in finding no ratification of the mortgages occurred in this 
case?

"III. Appellant has 
standing to complain as to the validity of the option.

"IV. Did the district 
court err in finding R & R Oil Company to have a valid 
option?

"V. Did the district 
court err in allowing R & R Oil Company to have specific performance of its 
option?

"VI. The district court 
erred in granting specific performance to R & R Oil 
Company.

"VII. The district court 
erred in finding that the proceeds received from the sale of the station 
property could not be reached by creditors.

"VIII. The court erred in 
not awarding the judgment against Wilburn H. Miles for attorney's fees and costs 
granted to appellant on both the station and the home 
property."

[¶4.]     We will 
affirm.

[¶5.]     The factual history in 
the case is complex. The real property involved consists of two parcels: one is 
the residential property of Wilburn and Dorothy Miles, and the other is a 
service station known as Miles Texaco.

[¶6.]     The residential 
property was conveyed by warranty deed dated November 1, 1966, "to Wilburn and 
Dorothy Miles, husband and wife as tenants by the entireties." The service 
station property was also conveyed to Wilburn and Dorothy Miles as tenants by 
the entireties by deed dated September 19, 1968. A few months prior thereto, on 
April 1, 1968, Wilburn and Dorothy Miles leased the service station property to 
Texaco for a term of 15 years beginning July 1, 1969. The lease was recorded on 
August 15, 1968. The lease granted Texaco an option to purchase which stated in 
part: 

"* * * Lessor hereby 
grants to Lessee the exclusive right, at lessee's option, to purchase the 
demised premises, together with all structures, improvements and encumbrances 
(including leases which were not on the premises at the date of this lease) at 
any time during the initial term and any extensions or renewals of the term of 
this lease for the sum of One Hundred Thousand dollars ($100,000.00) * * 
*."

[¶7.]     On September 19, 1979, 
Texaco assigned the lease to R & R. This assignment was recorded on the same 
day. By letter dated June 26, 1984, R & R notified Wilburn and Dorothy Miles 
of its election to exercise the option to purchase the service station 
property.

[¶8.]     Meanwhile, on June 7, 
1976, Wilburn and Dorothy Miles mortgaged both parcels to Stockmens Bank. This 
mortgage was recorded on July 2, 1976. On July 30, 1982, Wilburn and Dorothy 
Miles again mortgaged both parcels to Stockmens Bank, said mortgage being 
recorded on August 18, 1982, and again on September 2, 1982. Both the 1976 and 
1982 mortgages were assigned to CNB on November 13, 1984.

[¶9.]     On July 10, 1978, 
Wilburn Miles, in separate instruments, mortgaged both the residential and the 
service station properties to CNB. The mortgages were recorded on July 12, 1978, 
and August 18, 1978, respectively. These mortgages were signed only by Wilburn 
Miles.

[¶10.]  In its summary judgment, the district 
court found in part:

"IT IS THEREFORE ORDERED, 
ADJUDGED AND DECREED that Colorado National Bank shall have judgment against 
Wilburn and Dorothy M. Miles for foreclosure of the mortgages recorded in Book 
351 of Photos on and in Book 633 of Photos on assigned to it by Stockmens Bank 
and Trust Company in the amount of Eighty Two Thousand One Hundred Seven Dollars 
and Sixty Six Cents ($82,107.66), which amount represents Eighty One Thousand 
One Hundred Ninety Six Dollars and Thirty Cents ($81,196.30) owed as of December 
19th, together with interest thereon at the rate of $41.425572 per day up 
through and including January 10, 1985.

"IT IS FURTHER ORDERED, 
ADJUDGED AND DECREED that in addition to the foregoing amount, Colorado National 
Bank be allowed its attorneys fees and costs in foreclosing said mortgage in the 
amount of Six Hundred Eight Dollars ($608.00), said amount representing the 
amount expended up through and including January 21, 1985. "IT IS FURTHER 
ORDERED, ADJUDGED AND DECREED that R & R Oil Company shall deposit the 
option purchase price of One Hundred Thousand Dollars ($100,000.00) with the 
clerk of this court;

"Said money shall be 
distributed as follows:

"A. Eighty Two Thousand 
One Hundred Seven Dollars and Sixty Six Cents ($82,107.66) plus interest at the 
rate of 10% per annum from January 10, 1985 to date of receipt by the clerk of 
court plus attorneys fees and costs in the amount of Six Hundred Eight Dollars 
($608.00) and interest thereon at the rate of 10% from January 21st to the date 
of receipt by the clerk of court to Colorado National Bank in full satisfaction 
of the claims it purchased from Stockmens Bank and Trust Company and the 
judgment against Wilburn H. Miles and Dorothy M. Miles.

"B. The remaining portion 
of the $100,000.00 shall be held for twenty (20) days with any party free to 
petition the Bankruptcy Court for an order directing disposition of the funds, 
for other proposed disposition, or for such other action that may be properly 
initiated and if no such action is taken, the remaining funds are to be paid to 
Wilburn H. Miles and Dorothy M. Miles, husband and wife, as tenants by the 
entirety.

* * * * * 
*

"IT IS FURTHER ORDERED, 
ADJUDGED AND DECREED that R & R Oil Company has properly exercised its 
option to purchase the property hereinafter described and upon payment of 
$100,000.00 to the clerk of court, Wilburn H. Miles and Dorothy M. Miles shall 
convey the property to R & R Oil Company which shall be free and clear of 
the claims of all the other parties to this action. * * *

* * * * * 
*

"IT IS FURTHER ORDERED, 
ADJUDGED AND DECREED that Colorado National Bank has no standing, in light of 
the court's ruling with respect to the mortgages it holds which did not come 
from Stockmens Bank, to block the exercise of the option by R & R Oil 
Company."

[¶11.]  In sum, the court found that CNB was 
entitled to judgment on the mortgages dated June 7, 1976, and July 30, 1982, 
assigned to CNB from Stockmens Bank. The court also found that R & R had 
validly exercised its option to purchase the service station. And the court 
found the two mortgages of July 10, 1978, only executed by Wilburn Miles to CNB 
could not block R & R's exercise of its option.

[¶12.]  When reviewing a summary judgment on 
appeal, we examine the judgment in the same light as did the district court, 
using the same material and information. Randolph v. Gilpatrick Construction Company, Inc., 
Wyo., 702 P.2d 142 (1985); and Lane Company v. Busch Development, Inc., 
Wyo., 662 P.2d 419 (1983). A party moving for summary judgment has the burden of showing 
there is no genuine issue of material fact. Dudley v. East Ridge Development 
Company, Wyo., 694 P.2d 113 (1985). A material fact is 
one which, if proved, would have the effect of establishing or refuting one of 
the essential elements of the cause of action or defense asserted by the 
parties. Samuel Mares Post No. 8, 
American Legion, Department of Wyoming v. Board of County Commissioners of the 
County of Converse, Wyo., 697 P.2d 1040 (1985). We view the record from the 
vantage point most favorable to the party opposing the motion, giving to him all 
favorable inferences which may be drawn from the facts. Noonan v. Texaco, Inc., 713 P.2d 160 
(Wyo. 1986) and Reno Livestock Corporation v. Sun Oil 
Company (Delaware), Wyo., 638 P.2d 147 
(1981).

I

[¶13.]  In its first issue, appellant CNB asks 
whether the district court erred in determining that the service station 
property was not partnership property. Appellee R & R states the argument 
thusly: "The District Court properly found that the mortgages granted to the 
appellant Colorado National Bank are unenforceable."

[¶14.]  Appellant's argument that the service 
station property was partnership property and therefore one partner (Wilburn 
Miles) could encumber the property is misplaced. As noted earlier, the warranty 
deed of September 19, 1968, conveyed the service station property to Wilburn and 
Dorothy Miles "as tenants by the entireties." The law in this state regarding 
alienation of property held by a tenancy by the entirety is clear. In Ward Terry and Company v. Hensen, 75 
Wyo. 444, 297 P.2d 213, 219-220 (1956), we said:

"* * * In the absence of 
an agreement to the contrary the income, rents and profits of an estate by the 
entirety are an integral, indivisible part thereof and frequently are the most 
important part. The estate itself, title and fee thereof, is indivisible between 
husband and wife and cannot be alienated or in any way disposed of unless they 
agree to the contrary. That indivisibility must logically extend to every part 
of the estate including the rents, income and profits thereof and hence neither 
spouse would alone be able to divest the other thereof voluntarily or 
involuntarily against the wishes of the other during the life of both. * * 
*"

[¶15.]  Professor E. George Rudolph, in his book 
entitled The Wyoming Law of Real Mortgages, p. 9 (Wyoming 
Law Institute 1969), states the following regarding tenancies by the 
entirety:

"* * * It is sufficient 
to note two of the principal characteristics of such tenancies. Both spouses 
must join in a deed to have an effective conveyance and, secondly, property held 
in such fashion is not subject to execution or other creditor's process for the 
separate debts of one of the spouses. * * *"

[¶16.]  It is clear from the deeds that both 
parcels of land were held by Wilburn and Dorothy Miles as husband and wife, 
tenants by the entireties. When Wilburn Miles alone mortgaged the properties to 
CNB, he did so on his own, without his wife's consent.

"There can be no 
severance of an estate by the entireties by the act of either spouse alone, and 
hence, neither can convey or dispose of any part of it so as to effect such a 
severance, though they may terminate the estate by a joint conveyance of the 
property. * * *" 41 Am.Jur.2d Husband and Wife § 71, p. 73 
(1968).

[¶17.]  Appellant contends that Wilburn Miles' 
mortgages to CNB were valid transfers of partnership property under § 17-13-203, 
W.S. 1977. Appellant also cites State 
Bank of Wheatland v. Bagley Bros., 44 Wyo. 244, 11 P.2d 572, reh. denied 44 
Wyo. 456, 13 P.2d 564 (1932), wherein two brothers had a partnership, one brother died and 
the other brother executed several mortgages to pay off partnership debts. 
Suffice it to say that such authority has no application to the present case 
because we are not dealing with property held by a partnership, per se, but 
rather property held in an estate by the entirety.

[¶18.]  Furthermore, Wilburn Miles did not 
purport to convey to CNB an interest in the entire property. Rather, the 
language in the mortgages specifically states that Wilburn Miles "holds an 
undivided one-half interest in the said premises."

[¶19.]  We think the trial court was correct in 
finding the two mortgages executed by Wilburn Miles alone were invalid and did 
not constitute a valid transfer of the interest in property held by tenants by 
the entireties.

II

[¶20.]  In its second issue, appellant asks 
whether the district court erred in finding Dorothy Miles had not ratified the 
mortgages executed to CNB by Wilburn Miles. Appellant asserts that although 
Dorothy Miles did not sign the mortgages executed by Wilburn Miles, she 
nevertheless ratified the mortgages by executing a later mortgage in favor of 
Stockmens Bank. The language in the later mortgage to Stockmens Bank upon which 
appellant relies is as follows:

"SUBJECT TO A MORTGAGE on 
Parcel I in the amount of $21,000.00 executed by Wilburn H. Miles in favor of 
The Colorado National Bank of Denver, A National Bank Association, dated 10 July 
1978 and recorded 12 July 1978 in Book 427 of Photos, of the records of Campbell 
County, Wyoming.

* * * * * 
*

"SUBJECT TO A MORTGAGE on 
Parcel II in the amount of $21,000.00 executed by Wilburn H. Miles in favor of 
the Colorado National Bank of Denver, dated 10 July 1978 and recorded 18 August 
1978 in Book 433 of Photos, of records of Campbell County, 
Wyoming."

[¶21.]  We have previously defined ratification 
as

"* * * the subsequent 
adoption and affirmance by one person of an act which another, without 
authority, has previously assumed to do for him, while purporting to act as his 
agent. * * *" Farmers' State Bank of 
Riverton v. Haun, 30 Wyo. 322, 222 P. 45, 51, reh. denied 31 
Wyo. 201, 224 P. 856 (1924).

A party alleging 
ratification has the burden of coming forth with adequate proof of such. Kover v. Hufsmith, Wyo., 496 P.2d 908 (1972); and McConnell v. 
Dixon, 68 Wyo. 301, 233 P.2d 877 (1951). Included in 
such burden is the need to prove the principal had full and complete knowledge 
of all material facts of the transactions and that the principal intended to 
ratify the acts of his agent. Kover v. 
Hufsmith, supra; Farmers' State Bank 
of Riverton v. Haun, supra. 

[¶22.]  In Cates v. Daniels, Wyo., 628 P.2d 862 
(1981), this court found that a contract to purchase real estate signed only by 
the husband was unenforceable since the wife had not signed the contract, had 
not authorized her husband to act as her agent, and had not ratified the 
contract. The court quoted § 16-1-101, W.S. 1977, which requires an agreement or 
contract for the sale of real estate to be "in writing, and subscribed by the 
party to be charged therewith." The court then found no ratification by the wife 
of the contract to purchase real estate signed only by the 
husband:

"Plaintiff Belva S. 
Daniels did not execute the contract for the purchase of Lot 30 nor did she give her husband written authority to 
execute said purchase agreement. The trial court correctly found that Belva S. 
Daniels did not ratify or adopt the purchase agreement for the purchase of 
Lot 30.

* * * * * 
*

"The trial court in ¶ 15 
of the judgment found that Belva S. Daniels did not constitute her husband, 
Charles E. Daniels, as her agent to purchase Lot 30. She was not a party to the contract to purchase 
Lot 30 and did not give her husband written 
authority to sign the contract for her. In Wallis v. Bosler, [70 Wyo. 129, 246 P.2d 771 (1952)], this court made it clear that for a person to be liable on a 
contract, he must be a party to the contract or must have given his agent 
written authority to sign the agreement on his behalf." Id., at 
867.

[¶23.]  We cannot find that Dorothy Miles 
ratified the mortgages executed by Wilburn Miles simply by signing a later 
mortgage which merely recited the former mortgages unsigned by her. Furthermore, 
it does not seem that Wilburn Miles was acting as Dorothy's agent when he 
executed the two mortgages in favor of CNB. He only purported to convey his 
undivided one-half interest in the property.

[¶24.]  As R & R states in its 
brief:

"What the appellant 
argues in effect is that by mortgaging her property to the Stockmens Bank and 
Trust Company Dorothy M. Miles conveyed an interest in that property to the 
appellant even though neither the later mortgage to the Stockmens Bank nor the 
earlier mortgage to the appellant contains any language of grant to the 
appellant of Dorothy M. Miles' interest and even though Dorothy M. Miles was 
never a party to any conveyance to the appellant."

[¶25.]  We think the trial court was correct in 
its determination that the two mortgages executed only by Wilburn Miles in favor 
of CNB were invalid. Dorothy Miles did not sign the mortgages and there simply 
is no showing that Dorothy Miles agreed to the mortgages or ratified them in any 
way. Such agreement is necessary to effect a valid transfer of property held by 
an estate by the entirety.

[¶26.]  Our decision in appellant's first and 
second issues makes it unnecessary for us to address the other issues in detail. 
The district court ruled that since the two mortgages executed by Wilburn Miles 
alone in favor of CNB were invalid, the appellant had no standing to contest R 
& R's option. Since we have upheld the district court's judgment, we need 
not address the issues raised by appellant regarding R & R's 
option.

[¶27.]  In its seventh issue appellant claims the 
district court erred in finding the proceeds from the sale of the station 
property could not be reached by creditors. It is difficult to see how 
appellants come to this conclusion when the court stated in its judgment, quoted 
above, that the remainder of such proceeds would be held for twenty days "with 
any party free to petition the bankruptcy court for an order directing 
disposition of the funds." Such a ruling does not mean the proceeds could not be 
reached by CNB. Since the court found, and we agree, that the two mortgages held 
by CNB executed only by Wilburn Miles could not encumber real property held by 
tenants by the entireties, such holding does not preclude CNB from making a 
claim to the bankruptcy court for such proceeds. The two mortgages signed only 
by Wilburn Miles purported to mortgage real property as security for the 
underlying obligation, represented by a promissory note. The district court's 
ruling that the real property could not be mortgaged as security for Wilburn 
Miles' debt did not invalidate the promissory note. See, e.g., 55 Am.Jur.2d 
Mortgages § 135 (1971).

[¶28.]  Affirmed.