Title: WALTERS v KRUSE

State: montana

Issuer: Montana Supreme Court

Document:

No. 84-511 IN THE SUPREME COURT OF THE STATE OF MONTANA Plaintiff and Appellant, -vs- HAROLD V . KRUSE and NAOMI J. KRUSE, Husband and Wife, and ROBERT M. WILLETT, BRUCE MICHEL ROBERTS, and All other Persons claiming interest in described real property, Defendants and Respondents. ........................... KRIS ROBERT HIRT, Intervenor and Respondent, JAMES B . WALTERS, LEE McDONALD and RICK HILDEBRAND AND SANDY HILDEBRAND, Husband and Wife, Defendants and Appellants. APPEAL FROM: District Court of the Nineteenth Judicial District, In and for the County of Lircoln, The Honorable Robert M. Bolter, Judge presiding. COUNSEL OF RECORD: For Appellants: Sverdrup & Spencer, Libby, Montana Fennessy, Crocker & Allen, Libby, Montana For Respondents: Allen L . McAlear, Bozeman, Montana Submitted on Briefs: May 9, 1955 ~ecided: January 8, 1986 Filed: JAN 8 - I986 - - Clerk N r . J u s t i c e William E. Hunt, Sr. d e l i v e r e d t h e Opinion o f t h e Court. The a p p e l l a n t , James Walters, brought a q u i e t t i t l e a c t i o n i n April. 1981 i n I;incoln County D i s t r i c t Court. The named defen6ants made no appearance and t h e C i s t r i c t Court o r d e r e 6 t i t l e q u i e t e d i n a p p e l l m t VJalters on June 8 , 1981. I n February 1 9 8 3 , t h e respondent, K r i s I - T i r t , fil-ed a motion and a c t i o n t o set a s i d e t h a t decree. The D i s t r i c t Court c r d e r e d t h e d e c r e e s e t a s i d e and t h e p a r t i e s then proceeded on t h e o r i g i ~ a l q u i e t t i t l e a c t i o n a s i f an appearance had heen made. The D i s t r i c t Court q u i e t e d t i t l e i n t h e respondent, K r i s Roberts H i r t . T h i s appeal followed. W e a f f i r m . The i s s u e s p r e s e n t e d f o r rev: ' e w a r e : 1. Whether t h e District Court e r r e d i n s e t t i n g a s i d e t h e q u i e t t i t l e decree. 2 . Whether t h e r e wwas evidence of fraud s u f f i c i e n t t c allow t h e q u j e t t i t l e d e c r e e t o be set a s i d e . 3 . Whether a d i l i g e n t s e a r c h was performed i n accorCance w i t h Rule 4 0 ( 5 ) , b4.R.Civ.P. The f i r s t i s s u e i s whether t h e District Court erred. i n s e t t i n g a s i d e t h e q u i e t t i t l e decree. Our d i s c u s s i o c of t h i s i s s u e c o n t r o l s an6 r e n d e r s a d i s c u s s i o n o f t h e remaining i s s u e s unnecessary. This m a t t e r concerns a two p a r c e l t r a c t cf r e a l p r o p e r t y l o c a t e d i n Lincoln County, Montana. I n 1958, Harold and h'aomi Kruse purchased t h e p r o p e r t y from F o r r e s t and Vera Sund. The deed was recorded i n Linccln County. I n 1972, t h e Kruses s o l d t h e p r o p e r t y by c o n t r a c t f o r deed to Robert Wil-lett. The c o n t r a c t was held i n escrow i n Bonners F e r r y , Idaho. The c o n t r a c t made no p r o v i s i o n f c r payment of t a x e s . I n 1373, W i l l e t t assigned t h e c o n t r a c t to Bruce and K r i s Foberts. The Roberts' marriage was d i s s o l v e d and a s p a r t o f t h e d i v o r c e s e t t l e m e n t Eruce assigned h i s i n t e r e s t . t o R r i s i n December 1974, and t h e n executed a q u i t claim deed t o h e r i n August 1975. P r i s i s now K r i s I I i r t , respondent. There was no n o t i c e o f any o f t h e s e t r a n s a c t i o n s recorded i n Lincoln County where t h e land i s l o c a t e d . L i n c o l n County continued t o a s s e s s t a x e s on t h e p r o p e r t y t o t h e Fruses a s r e c o r d owners. The 1976 t a x e s were n o t paid and i n J u l y 1977, t h e p r o p e r t y was o f f e r e d f o r p u b l i c t a x s a l e . No b i d was r e c e i v e d on t h e p r o p e r t y and Lincoln County became t h e purchaser. I n J a ~ u a r y 1980, Lee McDonald purchase2 t h e p r o p e r t y from Lincoln County v i a a t a x deed. procedure. The t a x deed contained an i n c o r r e c t and incomplete d e s c r i p t i o n . In Februs-ry 1981, t h e a p p e l l a n t , James Walters, purchased t h e p r o p e r t y from McDo~ald. b7alters recorded h i s deed. IE A p r i l 1981, Walters f i l e d a complaint t o q u i e t t i t l e t o t h e property. H e named a s defendants i n t h a t a c t i o n t h e Kruses, W i l l e t t , Bruce P o b e r t s , and " a l l o t h e r persons, ~lnknown. " O n June 8 , 1981, t h e D i s t r i c t Court, having determined t h a t t h e defendants had been duly served, y e t f a i l e d t o appear a n d w e r e i n d e f a u l t , and having determined t h a t proof t o t h e s a t i s f a c t i o n o f t h e c o u r t having been made, ordered t i t l e q u i e t e d i n t h e a p p e l l a n t . Appellant, Walters, t h e n conveyed two p a r c e l s t o Rick and Sandy Hildebrand. That deed was recorded i n Cctober 1981. In t h e meantime t h e respondent, R r i s H i r t , had been paying on h e r c o n t r a c t h e l d i n escrow i n t h e Idaho bank. The respondent believed. t h a t t h e escrow arrangement included payment of t a x e s . I n September 1982, r e s p o n d e n t ' s f r i e n d who l i v e d n e x t t o the p r o p e r t y advised h e r t h a t somecr,e was l i v i n g end b u i l d i n g on t h e p r o p e r t y . I n February 1983, K r i s I T i r t f i l e d c o n s o l i d a t e d motions t o set a s i d e h e r d e f a u l t and t o i n t e r v e n e ir, t h e o r i g i n a l q u i e t t i t l e acrtion, a t h i r d p a r t y complaint on q u i e t t i t l e , and an a c t i o n t o set a s i d e t h e t a x deed. She a l l e g e d tha.t. t h e t a x sale a n d subsequent t r a n s f e r s were void. f o r i r r e g u l a r i t i e s incl-uding l a c k o f d e f i n i t e d e s c r i p t i o n , f a i l u r e t o g i v e proper n o t i c e , f r a u d on t h e c o u r t , and f a i l u r e t o use proper t a x deed procedure. She named t h e a p p e l l a n t , h i s predecessor, McDcna.ld, and t h e Hi1debra.r.d~ a s defendants. I n November 1983, t h e C i s t r i c t Court set a s i d e i t s June 1981, d e c r e e t h a t had q u i e t e d t i t l e i n t h e a p p e l l a n t . Appellant, Walters, t h e n moved t o set a s i d e t h i s judgment i n f a v o r c f t h e respondent., H i r t . T h i s motion was denied. The a p p e l l a n t t h e n f i l e d an amended complaint and t h e n a t t e r went t o t r i a l . I n J u l y 1984, t h e District Court i s s u e d fj-ndings o f f a c t and conclusions o f law. The c o u r t found. t h a t Lincoln County d i d n o t have j u r i s d i c t i o n t o i s s u e a t a x deed because t h e n o t i c e w a s meterial.ly d e f e c t i v e i n s t a t i n g t h e amount due and i n s e t t i n g f o r t h t h e clescription. A s a r e s u l t o f t h e d e f e c t s , t h e c o u r t found t h a t K r i s Roberts d i d not. l o s e h e r r i g h t t o redeem t h e p r o p e r t y by payment o f d e l i n q u e n t t a x e s and t h a t upon payment o f t h o s e t a x e s she sh.ould have t h e t i t l e q u i e t e d i n h e r f a v o r on t h e land not. p r e v i o u s l y conveyed t o t h e Hildebrarids. A s t o t h e land conveyed t o t-he IIildebrands, t h e c o u r t f o u ~ d t h a t t i t l e should remain i n th.e HiLZebrands a s bona f i d e p u r c h a s e r s f o r val-ue, b u t t h a t t h e a p p e l l a n t Walters should! pay H i r t For t h e p r o p e r t y he had conveyed t o them. Judgnent was e n t e r e d q u i e t i n g t i t l e i n t h e respondent s u b j e c t t o t h e Hildebrand's G r a p p e l l a n t ' s r i g h t t o redeem by paying t h e respondent f o r t h e p a r c e l upGn which t h e Hil.debrands had c o n s t r u c t e d b u i l d i n g s . Both t h e a p p e l l a n t s and Hildebrands a p p e a l ~ d . Subsequently t h e Hildebrands s e t t l e d t h e i r d i s p u t e and dismissed t h e i r appeal. The f i r s t i s s u e w e must decide i s whether t h e D i s t r i c t Court e r r e d i n s e t t i n g a-side t h e q u i e t t i t l e decree. The respondent, i n h e r c o n s o l i d a t e d motion and a c t i o n t o set a s i d e t h e quiet t i t l e d e c r e e , a l s o challenge6 t h e underlying t a x deed procedure under which lGcDonald, a p p e l l a n t ' s prezecessor i n t i t l e , claimed h i s i n t e r e s t . However, as t h e D i s t r i c t Court found, t h e d e s c r i p t i o n o f p r o p e r t y claimed under t h e t a x deed procedure was s o 6 e f i c i e n t t h a t t h e r e could be no v a l i d t r a n s f e r o f any i n t e r e s t under any kind o f a c t i o n . The n o t i c e published i n t h e t a x deed procedure r e f e r r e d t o S e c t i o n 25 and n o t t o S e c t i o n 2 6 , t h e s e c t i o n i n which t h e land lies. I n a d d i t i o n t h e d e s c r i p t i o n r e f e r r e d t o a "Tract 1" i n H.E.S. 735--there i s no T r a c t 1 i n H.E.S. 735. T o compounl t h e d i f f i c u l t y i n l o c a t i n g t h e l a n d , t h e d e s c r i p t i o n 2 i d n o t i n d i c a t e n o r t h o r south f o r t h e township, o r e a s t o r w e s t f o r t h e range. Fe agree w i t h t h e C i s t r i c t Court t h a t t h e n c t i c e o f a p p l i c a t i o n f c r t a x deed was s o vague, incomplete and erroneous t h a t it does n o t adequately i d e n t i f y t h e l a n z and i s t h e r e f o r e f a t a l l y d e f e c t i v e . Y e t t e r v. G a l l a t i n County (Kont. 1 9 8 2 ) , 645 P.26 941, 9 4 2 , 39 St.Rep. 905, 907. Defective n o t i c e of a p p l i c a t i o n f o r a t a x deed d e p r i v e s t h e county t r e a s u r e r o f j u r i s d i c t i o n t o i s s u e t h e t a x deed. Edwards v. Walters (Kont. 1983), 664 P.2d 332, 937, 40 St.Rep. 914, 921. Because no valid tax deed has been issued respondent's right to redeer, the property has not. terminated. Section 15-18-101, MCA. Because of our holding a-s to the first issue it is not necessary to discuss the second and third issues. The judgment of the District We Concur: