Title: Chornuk v. Nelson

State: north-dakota

Issuer: North Dakota Supreme Court

Document:

IN THE SUPREME COURT STATE OF NORTH
DAKOTA 2014 ND 238Harry W.
Chornuk and Linda D. Chornuk, Plaintiffs and Appelleesv. Craig Nelson and Julie Nelson, Defendants and AppellantsNo. 20140124Appeal from the District Court of McKenzie County, Northwest Judicial District, the Honorable Joshua B. Rustad, Judge.AFFIRMED.Opinion of the Court by Crothers, Justice.Michael J. Maus (argued), P.O. Box 570, Dickinson, N.D.
58602-0570 and Mark C. Sherer (on brief), 103 1st
Avenue West, Suite 101, Dickinson, N.D. 58601, for plaintiffs and appellees.Aaron R.
Hartman (argued), 90 South Seventh Street, 3600 Wells Fargo Building, Minneapolis, Minn.
55402, and Jordon J. Evert (appeared), P.O. Box 417,
Williston, N.D. 58802-0417, for defendants and appellants.Chornuk v. NelsonNo. 20140124Crothers, Justice.[¶1] Craig and Julie Nelson appeal from a judgment quieting title in certain real
property in Harry and Linda Chornuk and awarding the Chornuks damages for conversion, and
from an amended judgment modifying the damage award. The Nelsons argue the district court
erroneously found they did not purchase the property in good faith and erred in quieting title of
the property in favor of the Chornuks. We affirm.I[¶2] The disputed property is located in McKenzie County and is described as a
1.667 acre tract in the northwest quarter and southwest quarter of section 17, township 150 north,
range 90 west.[¶3] In January 1986, Norman and Mildred Dahl
conveyed the property to the Chornuks by warranty deed, but the deed was not recorded until
June 24, 2010. On June 17, 2005, after Norman Dahl's death, Mildred Dahl conveyed the same
property by warranty deed to the Nelsons as part of the conveyance of approximately 44.5 acres.
The deed was recorded on July 5, 2005.[¶4] In September 2010,
the Chornuks sued the Nelsons to quiet title to the property and sought damages for claims of
trespass and conversion. The Nelsons moved for summary judgment, arguing they were entitled
to judgment as a matter of law and to have title quieted in their favor because they recorded their
deed to the property more than five years before the Chornuks recorded their deed. The Chornuks
opposed the motion, arguing a question of fact exists whether the Nelsons had constructive
notice of the Chornuks' interest and whether the Nelsons were good-faith purchasers. The district
court denied the Nelsons' motion, concluding summary judgment was not appropriate because a
genuine issue of material fact existed.[¶5] After a bench trial, the
district court quieted title in favor of the Chornuks. The court found the Chornuks mowed the
property three or four times per year, planted trees on the property, installed drip irrigation lines
for the trees, installed flower boxes on the property and performed other general maintenance.
The court found that the Chornuks' actions were sufficient to put a prudent person on notice
someone else had an interest in the property and that the Nelsons were required to conduct
further inquiry before purchasing the property from Mildred Dahl. The court found the Nelsons
had constructive notice of the Chornuks' interest and were not good-faith purchasers. The court
awarded the Chornuks $2,830 in damages for trees the Nelsons cut down on the property. A
judgment was entered.[¶6] The Nelsons moved for
reconsideration, arguing the damage award was not supported by the evidence. The court granted
the Nelsons' motion. After a hearing, the court ordered the damage award be reduced to $360 and
entered an amended judgment.II[¶7] The
Chornuks argue the Nelsons waived their right to appeal from the judgment because they
voluntarily paid the damages awarded in the judgment.[¶8] "[A]
party who voluntarily pays a judgment against him waives the right to appeal from the
judgment." State ex rel. Storbakken v. Scott's
Elec., Inc., 2014 ND 97, ¶ 6, 846 N.W.2d 327 (quoting
Ramsey Fin. Corp. v. Haugland, 2006
ND 167, ¶ 9, 719 N.W.2d 346).
However, "payment or acquiescence under coercion or duress does not constitute a waiver."
Schwab v. Zajac, 2012 ND 239, ¶ 8, 823 N.W.2d 737 (quoting
Haugland, at ¶ 8). We look at the facts and
circumstances of each case to determine if the judgment was voluntarily paid, and "the party
seeking dismissal of the appeal bears the burden of showing the judgment was paid voluntarily."
Schwab, at ¶ 8 (quoting Mr. G's Turtle Mountain Lodge, Inc. v. Roland
Twp., 2002 ND 140, ¶ 13, 651 N.W.2d
625).[¶9] After the trial, judgment was entered awarding the
Chornuks $2,830 in damages. The Nelsons moved for reconsideration of the amount of the
damages, and their motion was granted. Before a hearing on the motion was held, the Chornuks
caused an execution of judgment to be filed, directing the sheriff to satisfy the judgment out of
the Nelsons' personal property. The judgment was satisfied through this process, which cannot be
considered "voluntary payment" by the Nelsons. See Twogood v. Wentz, 2001 ND 167, ¶ 20, 634 N.W.2d 514 (payment of
cost judgment in the face of a sheriff's execution did not waive right to appeal). The Nelsons did
not voluntarily pay the judgment and they did not waive their right to appeal.III[¶10] In an appeal from a bench trial, the
district court's factual findings are reviewed under the clearly erroneous standard and conclusions
of law are fully reviewable. C & C Plumbing
and Heating, LLP v. Williams County, 2014 ND 128, ¶ 6, 848 N.W.2d 709. "A finding of
fact is clearly erroneous if it is induced by an erroneous view of the law, if there is no evidence to
support it, or if, after reviewing all the evidence, we are left with a definite and firm conviction a
mistake has been made." Id. (quoting
Trosen v. Trosen, 2014 ND 7, ¶ 20, 841 N.W.2d 687). The trial
court determines the witnesses' credibility and we will not second-guess the court's credibility
determinations. C & C, at ¶ 6.[¶11] The Nelsons argue the district court erred in quieting title to the property
in the Chornuks. The Chornuks and the Nelsons purchased the disputed property from the Dahls.
The Chornuks purchased the property in 1986, and the Nelsons purchased the property in 2005.
Although the Chornuks purchased the property in 1986, they did not record the deed until 2010,
five years after the Nelsons recorded their deed for the property. The Nelsons argue they acquired
their interest in the property in good faith and for valuable consideration, the Chornuks did not
record their deed until after the Nelsons purchased the property and recorded their deed, and
therefore their interest is superior to the Chornuks' interest under N.D.C.C.
§ 47-19-41.[¶12] "An unrecorded instrument is
valid as between the parties thereto and those who have notice thereof." N.D.C.C.
§ 47-19-46. "Every conveyance of real estate not recorded shall be void as against
any subsequent purchaser in good faith, and for a valuable
consideration . . . ." N.D.C.C. § 47-19-41 (2010)(1). Although the Chornuks' deed had not
been recorded when the Nelsons purchased the property, the district court was required to decide
whether the Nelsons were good-faith purchasers or had notice of the Chornuks' interest in the
property.[¶13] The Nelsons argue the district court erroneously
found they did not purchase the property in good faith. "Good faith" is "an honest intention to
abstain from taking any unconscientious advantage of another even through the forms or
technicalities of law, together with an absence of all information or belief of facts which would
render the transaction unconscientious." N.D.C.C. § 1-01-21. "[A] good faith
purchaser must acquire rights without actual or constructive notice of another's rights." Farmers Union Oil Co. of Garrison v. Smetana,
2009 ND 74, ¶ 16, 764 N.W.2d 665 (quoting Diocese of Bismarck Trust v. Ramada,
Inc., 553 N.W.2d 760, 768 (N.D.
1996)); see also Swanson v.
Swanson, 2011 ND 74, ¶ 9, 796 N.W.2d 614. Actual notice
is express information of a fact, N.D.C.C. § 1-01-23, and constructive notice is
notice imputed by the law to a person who does not have actual notice, N.D.C.C.
§ 1-01-24. "Every person who has actual notice of circumstances sufficient to put a
prudent person upon inquiry as to a particular fact and who omits to make such inquiry with
reasonable diligence is deemed to have constructive notice of the fact itself." N.D.C.C.
§ 1-01-25. A person who has actual notice of circumstances sufficient to put a
prudent person upon inquiry, and who fails to make the requisite inquiry, "cannot claim the
protection of a good-faith purchaser status" and "will be charged with constructive notice of all
facts that such inquiry would have revealed." Swanson, at ¶ 10.[¶14] The issues of good faith and constructive notice require an examination of
the information the purchaser possessed. Smetana, 2009 ND 74, ¶ 16, 764 N.W.2d 665. To have
constructive notice, the information the person possesses "must be sufficient to assert the
existence of an interest as a fact, which in turn gives rise to a duty to investigate." Id. (quoting Diocese of Bismarck, 553 N.W.2d at 768). We have further
explained:"The information need not be so full and detailed as to
communicate a complete description of the opposing party interest. It is sufficient if it asserts the
existence of a right or interest as a fact . . . . It need not state all
the particulars or impart complete knowledge. It is enough if he has reasonable ground
to believe that a conflicting right exists as a fact." Swanson, 2011 ND 74, ¶ 12, 796 N.W.2d 614 (quoting
Nygaard v. Robinson, 341 N.W.2d 349, 356 (N.D. 1983)).[¶15] Whether a party acted in good faith is a question of fact. Smetana, 2009 ND 74, ¶ 15, 764 N.W.2d 665. Generally,
the question of whether a party had notice is also a question of fact. Erway v. Deck, 1999 ND 7, ¶ 11, 588 N.W.2d 862. A party's
status as a good faith purchaser without notice of a competing interest is a mixed question of fact
and law, and we have explained:"The factual circumstances relating to
events surrounding the transaction—the realities disclosed by the evidence as distinguished from
their legal effect—constitute the findings of fact necessary to determine whether a party has
attained the status of a good faith purchaser without notice. A court's ultimate determination that
a party is not a good faith purchaser for value is a conclusion of law, because that determination
describes the legal effect of the underlying factual circumstances." Smetana, at ¶ 16 (quoting Diocese of Bismarck, 553 N.W.2d at 768).[¶16] Here,
the district court quieted title to the property in the Chornuks, concluding the Nelsons had
constructive notice and were not good-faith purchasers. The court
found:"[The Chornuks] presented testimony that they had planted trees
on the subject property and had various equipment parked there over the years. They had also cut
the grass three or four times a year since 1986 and had installed drip systems for the trees along
with flower boxes. In addition, their grandson had played on the property and picked weeds and
watered the property. [The Chornuks] also submitted that they had spent money on planting the
trees in a total amount of $2,830 and that the trees had been destroyed by the [Nelsons] in
2010."[Craig Nelson] admitted he had seen the [Chornuks] watering trees and mowing grass,
but that he hadn't discovered the other unrecorded deed until much later. [The Nelsons] denied
they saw [the Chornuks] storing property." The court found the Nelsons
drove by the property on a "near-daily" basis and the Chornuks' acts of mowing the property three
or four times per year, planting trees, installing a drip line for the trees, installing flower boxes on
the property and performing other general maintenance placed the Nelsons on notice of the
Chornuks' interest in the property and the Nelsons were required to conduct further inquiry. The
court concluded the Nelsons had constructive notice of the Chornuks' interest and were not
protected as good-faith purchasers.[¶17] Evidence was presented
at trial supporting the district court's findings. Evidence establishes the disputed property is
adjacent to the Chornuks' house. Harry Chornuk testified they planted trees on the disputed
property three times, built and installed flower boxes on the property, mowed the grass and
performed other maintenance on the land every year since 1986. He testified they planted trees on
the property in 1994 and 1999. Linda Chornuk testified they installed the flower boxes on the
property a few years after they purchased the property. Harry Chornuk testified they also installed
a drip system for watering the trees, manually watered the trees when the drip system was not
working properly and occasionally parked equipment on the property. The Chornuk's grandson
testified that he is eighteen years old and lives with the Chornuks, that he mowed the disputed
property and helped take care of the land and that he played with his cousins on the property
when he was younger. The Chornuks presented photographic evidence of an aerial view of their
property, showing a line of trees along the outside edge of the property, which create a border
around the property and include the disputed property within the tree border. Harry Chornuk
testified they planted the trees all the way around the property so their property was surrounded
by trees.[¶18] To determine whether the Nelsons had
constructive notice, the district court was required to consider the information the Nelsons
possessed when they purchased the property in June 2005. Harry Chornuk testified the Nelsons
live about one-half mile north of the Chornuks' property and the Nelsons use a road running in
front of the Chornuks' property to get to their house. Harry Chornuk testified the Nelsons also
own the property to the south and to the east of the Chornuk property. Craig Nelson testified he
drives past the disputed property daily and sometimes multiple times per day, he saw the
Chornuks mowing the grass and watering the trees on the property and he knew Dahl was not
using the property when he purchased it. Julie Nelson testified she drives by the property
multiple times per day. She also testified that they knew the Chornuks were mowing and taking
care of the property when they purchased it and that they thought they would be neighborly and
let the Chornuks continue to use the property since it was next to the Chornuks' house. Craig
Nelson testified he did not ask Dahl whether the Chornuks had purchased or were renting the
property or whether Dahl had previously sold the property. He testified to knowing someone
planted trees on the property and to seeing the Chornuks watering the trees and mowing the grass
before he purchased the property.[¶19] The district court did not
make any specific findings about when the Chornuks' activities on the property occurred.
However, the court is required to consider the information the purchaser possessed when the
property was conveyed and sufficient evidence exists about the Chornuks' activities before the
Nelsons purchased the property for the court to make findings. Evidence established the
Chornuks mowed the property and performed other maintenance on the property every year since
1986, they installed the flower boxes a few years after they purchased the property and they
planted the trees in the 1990s. We can infer the court's findings are based on the evidence of the
Chornuks' activities prior to the Nelsons purchasing the property in 2005. See Rustad v. Rustad, 2014 ND 148, ¶ 15, 849 N.W.2d 607 (quoting
P.A. v. A.H.O., 2008 ND 194, ¶ 14, 757 N.W.2d 58) ("When the
district court fails to specifically address a particular item, . . . [the] court's
findings of fact are not clearly erroneous if supporting evidence is 'fairly discernable by
deduction or inference' in the record.").[¶20] The Nelsons argue
no evidence shows they knew who planted the trees or who installed the flower boxes on the
property. They claim they only knew the Chornuks were mowing the grass and watering trees on
the property, but that such evidence is not sufficient to support the court's finding they had notice
of the Chornuks' interest and a duty to inquire. We do not agree.[¶21] Evidence established the property is located adjacent to the Chornuks'
house and trees were planted on the edge of the property creating a border around the Chornuks'
property, including around the disputed property. Although the Nelsons did not testify that they
knew who planted the trees or installed the flower boxes, they testified they were aware someone
planted the trees and they knew the Chornuks were using and maintaining the property. There
also was evidence the Chornuks watered the trees and the Nelsons were aware the Chornuks
were caring for the property. Evidence also established the Nelsons knew the Chornuks were
mowing the grass and performing other general maintenance on the property. The Nelsons
testified they drive by the property multiple times per day and they knew Dahl had not been using
the disputed property when they purchased it. The district court could make reasonable
inferences based on the evidence. See State
ex rel. Heitkamp v. Family Life Servs., Inc., 2000 ND 166, ¶ 26, 616 N.W.2d 826. The open and
notorious possession and occupancy of property by a person other than the grantor is sufficient to
charge a purchaser with knowledge of the rights of the occupant. See Farm Credit Bank of St. Paul v. Martinson, 478 N.W.2d 810, 813 (N.D. 1991);
Agricultural Credit Corp. v. State, 74 N.D. 71, 78, 20 N.W.2d 78, 81 (1945). The court
found the Chornuks' possession and occupancy was open and notorious. The evidence supports
the court's finding the information the Nelsons possessed prior to purchasing the property was
sufficient to put a prudent person on notice and give them reasonable grounds to believe a
conflicting right existed. The Nelsons had constructive notice of the Chornuks' interest in the
property.[¶22] The evidence supports the court's findings about
the Chornuks' activities on the property and that the Nelsons had constructive notice of the
Chornuks' interest in the property. The Nelsons admit they did not inquire about the Chornuks'
interest before purchasing the property from Dahl. Because the evidence supports the district
court findings, the Nelsons were not good-faith purchasers.IV[¶23] We conclude the Nelsons were not good-faith purchasers and the district
court did not err in quieting title to the property in the Chornuks. We considered all remaining
issues or arguments and conclude they either are unnecessary to our decision or are without
merit. We affirm the judgment and amended judgment.[¶24] Daniel
J. CrothersLisa Fair McEversDale V. SandstromGerald W. VandeWalle,
C.J.Allan L. Schmalenberger, S.J. [¶25] The Honorable Allan L. Schmalenberger, S.J., sitting in
place of Kapsner, J.,
disqualified.Footnote:1.
Section 47-19-41, N.D.C.C., was amended in 2013 and the current version became effective
on August 1, 2013. See 2013 Sess. Laws ch. 350. This action was filed in 2010, and
therefore the prior version of the statute applies.