NO. 94-121

IN THE SUPREME COURT OF THE STATE OF MONTANA

1994

Y A BAR LIVESTOCK COMPANY,

Plaintiff and Respondent, ‘

v.

MILES HARKNESS, et al.,

DEC 2 3 1994

1:

Defendants and Appellants.

Cd >-:+~

CLERK OF SUPP‘-&‘~.~~~~

STATE OF meNrwk

APPEAL FROM: District Court of the Fifth Judicial District,

In and for the County of Beaverhead,

The Honorable Frank M. Davis, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Stuart R. Whitehair, Bozeman, Montana

For Respondent:

Carl EM. Davis, Schulz, Davis & Warren,

Dillon, Montana

Filed:

Submitted: November 15, 1994

Decided: December 23, 1994
Chief Justice J. A. Turnage delivered the Opinion of the Court.

Miles Harkness, Max Harkness, Leila Dallas, Evelyn Erickson,

Doris Haws, Milton Harkness, Colleen Rasmussen, Stacy Turner, Nancy

Goodrow, Wade Draper, Amy Dean Raymond, Richard Wayne Harkness,

Dorothy Lee Harkness Messick, Robert Earl Harkness and Gale

Harkness (the heirs) appeal the decision of the Fifth Judicial

District Court, Beaverhead County, quieting title to certain real

property located in Beaverhead County to YA Bar Livestock Company

(YA Bar). We reverse.

The sole issue is whether the District Court erred in

determining that YA Bar had adversely possessed the land of its

cotenants.

In order to fully understand the issue raised on appeal, a

review of the historical and procedural background is necessary.

All parties to this litigation, including the heirs, the current

shareholders of YA Bar, and the predecessors in interest to YA Bar

are descendants of Ernest I. and Arabina Harkness. Ernest I. and

Arabina had six children: Ernest B. Harkness, Guy L. Harkness, Ross

A. Harkness, Earl D. Harkness, Bessie (Harkness) Lewis and Jessie

(Harkness) Jensen. In 1931 Earl D. Harkness homesteaded and

patented 448.22 acres of land located in Beaverhead County, Montana

(S1/2SW1/4 Section 3; Lots 1 & 2, S1/2NE1/4, N1/2SE1/4, SE1/4SE1/4

Section 4; NW1/4NE1/4, NE1/4NW1/4--Section 10, Township 14 South,

Range 10 West, M.P.M.). In 1936 Earl conveyed this land to his

father, Ernest I. Harkness. Three years before, in 1933, Ernest I.

had sold his ranch, which consisted of various lands in the same

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general vicinity as the 448.22 acre parcel, to his eldest son

Ernest B. Harkness. Earl and Ernest I. moved to Idaho and did not

return to Montana. In 1944 Ernest I. Harkness died. His wife,

Arabina, died in 1946. The 448.22 acres in question were included

in Arabina's estate at the time of her death. Ernest B. was

appointed executor of Arabina's estate pursuant to the terms of her

will. Arabina's will was admitted to probate in Idaho and in

Beaverhead County, Montana. Arabina was preceded in death by one

of her children, Earl. She was survived by her five remaining

children: Ernest B., Guy, Ross, Bessie, Jessie, and Earl's six

children: Amy (Harkness) Raymond, Richard Harkness, Robert

Harkness, Dorothy (Harkness) Messick, Melvin Harkness, and Miles

Harkness. At the time of Arabina's death, the Harkness family tree

was as follows:

HARKNESS FAMILY TREE

As previously stated, the 448.22 acres in question were

included in Arabina's estate. The I.nventory and Appraisement and

the Petition for Final Settlement and Distribution of Arabina's

estate filed for by Ernest B. also included this parcel, except

that approximately 40 acres was omitted from the legal description

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of the parcel in these two documents (NE1/4NW1/4 Section 10,

Township 14 South, Range 10 West, M.P.M., Beaverhead County,

Montana).

Ernest B. sought to acquire title to the 448.22 acres, as he

was the sole remaining Harkness living in Montana and the parcel in

question was compatible with the ranch land he had purchased from

his father in 1933. Ernest B. received quitclaim deeds from his

living brothers and sisters: Ross, GUY, Bessie, and Jessie.

However, the quitclaim deeds also omitted the 40 acres from the

legal description. Earl's six children did not quitclaim their

interest in the land to Ernest B.

The District Court, in conformity with the petition of Ernest

B., ordered distribution of Arabina's estate. The court distributed a 5/6 interest in the parcel to Ernest B. and a l/6 interest to

Earl's six children (l/36 per child). This Final Settlement and

Distribution again omitted the 40 acre parcel. All heirs therefore

took their respective share of the omitted 40 acre parcel pursuant

to the "any and all other property not now known or hereafter

discovered" clause of Arabina's will.

The net result from the above transactions left the title to

the land following Arabina's death and the probate of her will as

follows:

408.22 acres (448.22 acre parcel minus the omitted 40 acres)

S/6 Ernest B. Harkness

l/6 children of Earl Harkness (l/36 for each: Amy,

Richard, Dorothy, Robert, Melvin and Miles)

40 acres

l/6 Ernest B. Harkness

l/6 Ross Harkness

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-_
l/6 Guy Harkness

l/6 Bessie (Harkness), Lewis

l/6 Jessie (Harkness) Jensen

l/6 children of Earl Harkness (l/36 for each: Amy,

Richard, Dorothy, Robert, Melvin and Miles)

Ernest B. received a i/6 interest in the 408.22 acre parcel

pursuant to the quitclaim deeds from his four siblings and pursuant

to his petition for distribution of Arabina's estate. He received

a l/6 interest in the 40 acre parcel pursuant to the "any and all

other property clause" of Arabina's will.

The six children of Earl Harkness received a l/6 (l/36 per

child) interest in the entire 448.22 acre parcel. Each child

received a I/36 interest, their respective l/6 interest in their

deceased father's l/6 interest, of the 408.22 acre parcel pursuant

to the distribution of Arabina's estate. They each likewise

received a similar l/36 interest in the omitted 40 acres pursuant

to the "any and all other property clause" of Arabina's will.

The remaining offspring of Arabina each received a l/6

interest in the omitted 40 acres pursuant to the "any and all other

property clause" of Arabina's will. Jessie (Harkness) Jensen, the

heirs of Ross Harkness, and the heirs of Bessie (Harkness) Lewis

failed to appear in the quiet title action and default was entered

against them. The heirs of Guy Harkness are parties to this action

and seek to maintain their respective share of Guy Harkness's I/6

interest in the omitted 40 acres.

In 1950 Ernest B. Harkness formed YA Bar Livestock Company.

Ernest B. and his wife, Ruth, conveyed all their ranch property to

the corporation. Included in this conveyance was the disputed

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448.22 acres. YA Bar has used the 448.22 acres extensively in its

ranching operation. The parcel is integrated into the other deeded

and leased lands operated by YA Bar. The ranch, including the

parcel in question, has been mortgaged six times. YA Bar has

leased mineral rights and granted easements over the 448.22 acres

without the knowledge or consent of the heirs. YA Bar has paid all

taxes levied on the parcel and received all rents and profits as if

it was the sole owner of the land.

In 1987, Ernest B. Harkness died. The current shareholders of

YA Bar are Ernest B.'s son, Bernard Harkness; Bernard's wife, Jean

Harkness; Ernest B.'s daughter, Bonnie (Harkness) McNich; and her

husband, R.M. McNich. YA Bar found the property unmarketable when

a title commitment listed the heirs' interest in the 448.22 acres.

YA Bar sought quitclaim deeds from the heirs to clear title to the

parcel. The heirs refused to grant YA Bar quitclaim deeds.

YA Bar instituted this quiet title action, claiming it had

adversely possessed the land of its cotenants. The District Court

agreed and quieted titled to YA Bar. The heirs appeal from the

District Court's decision.

Did the District Court err in determining that YA Bar had

adversely possessed the land of its cotenants?

This Court reviews the findings of a trial court sitting

without a jury to determine if the court's findings are clearly

erroneous. Rule 52(a), M.R.Civ.P. A district court's findings are

clearly erroneous if they are not supported by substantial credible

6
evidence, if the trial court has misapprehended the effect of the

evidence, or if a review of the record leaves this Court with the

definite and firm conviction that a mistake has been committed.

Interstate Prod. Credit Ass'n v. D&aye (1991), 250 Mont. 320, 323,

820 P.2d 1285, 1287.

For a claim of adverse possession to succeed, the claimant

must prove that the property was claimed under color of title or by

actual, visible, exclusive, hostile and continuous possession for

the full statutory period of five years. In addition, the claimant

must have paid the taxes on the property throughout the entire

statutory period; Smithers v. Hagerman (1990), 244 Mont. 182, 189,

197 P.2d 177, 182.

Section 70-19-404, MCA, governs adverse possession against a

landowner who has legal title to the property in question. This

section states:

[TJhe person establishing a legal title to the property

is presumed to have been possessed thereof within the

time required by law, and the occupation of the property

by any other person is deemed to have been under and in

subordination to the legal title unless it appears that

the property has been held and possessed adversely to

such legal title for 5 years before the commencement of

the action.

Section 70-19-404, MCA. The heirs gained a legal interest in the

property following the probate of Arabina's estate; therefore, any

use of the property by YA Bar is presumed to be subordinate to the

heirs' interests

Additionally, adverse possession by one cotenant against

another cotenant requires an even higher standard than adverse

possession against a stranger. To adversely possess against a

7
.

cotenant, the claimant must meet the above requirements and also

"oust" the cotenant from the property. This additional requirement

is necessary because any possession of land by one cotenant is

considered to be consistent with and in recognition of the

cotenancy. Fitschen Bros. Comm. Co. v. Noyes' Estate (1926), 76

Mont. 175, 246 P. 773. In Fitschen, this Court explained this

concept as follows:

When a cotenant . . enters on the common land he is

exercising a right which his title gives him; and his

resulting possession is presumed to be consistent with

his assumed title, and therefore to be the possession of

his cotenants and himself. But the doctrine has

been long since held . . that one tenant in common may

so enter and hold as to render the entry and possession

adverse, and amount to an ouster of a cotenant. And so,

where OI-iCe it appears that the party occupying the

premises holds not in recognition of, but in hostility

to, the rights of his cotenants, his possession ceases to

amount to constructive possession by them, becomes

adverse, and, if maintained for the period provided for

by the statute of limitations, will vest in the possessor

a sole title by adverse possession to the premises.

Fitschen, 246 P. at 179.

A cotenant must give his or her fellow cotenants notice that

possession of the land is no longer consistent with the cotenancy

and that he or she asserts a claim as sole owner of the property.

In Fitschen this Court further stated:

While it is t:rue that actual ouster of the cotenants must

appear, this does not necessarily imply an actual

physical ouster, but it is sufficient if the grantee

claims exclusive ownership and by his conduct denies the

right of others to any interest in the property.

Fitschen, 246 P. at 779. The theory of adverse possession against

a cotenant was again explored by this Court in LeVasseur v.

Roullman (1933), 93 Mont. 552, 20 P.2d 250. In further discussing

8
the difficult hurdle a cotenant must clear to adversely possess

against a fellow cotenant, this Court stated:

All acts done by a cotenant and relating to or affecting

the common property, are presumed to have been done by

him for the common benefit of himself and the others.

The relation between him and the other owners is always

supposed to be amicable rather than hostile; and his acts

are therefore regarded as being in subordination to the

title of all the tenants, for by so regarding them they

may be made to promote the interests of all.

[Plossession of a cotenant . . . is the possession of all

the cotenants.

However, one tenant in common may oust his cotenant

and make his possession adverse. But, as prima facie the

possession of every cotenant is presumed to be by virtue

of his title, and not in hostility to the rights of his

cotenants . . In order to sustain the claim that he

has obtained title by adverse possession, the claimant

must show that his cotenants had sufficient notice of his

exclusive and hostile claim.

. . The knowledge must be either brought home to

him, or the occupier must make his possession so visibly

hostile, notorious, and adverse, as to justify an

inference of knowledge on the part of the tenant sought

to be ousted . . .

LeVasseur, 20 P.2d at 252.

Thus, to adversely possess against a cotenant, the claimant

must oust the fellow cotenants. A cotenant can oust a fellow

cotenant by giving the fellow cotenant notice that he or she is

claiming an interest hostile and adverse to the fellow cotenant's

interest.

YA Bar has failed to meet this standard. The heirs claim that

they were unaware of their interest in the 448.22 acre parcel until

they received quitclaim deeds from YA Bar in 1991. YA Bar does not

claim that the heirs knew of the cotenancy nor did it present any

9
,

evidence which would show how the heirs would have received such

notice. YA Bar did not establish that the children of Earl

Harkness received any notice of their inheritance from their

grandmother, Arabina. YA Bar did not show that Earl's children had

ever received deeds to the property or that YA Bar had presented

them with quitclaim deeds in 1946 as it did the other heirs. YA

Bar did not claim to have informed the heirs of their interest

until the issuance of the quitclaim deeds in 1991. We conclude

that YA Bar's use of the 448.22 acres in conjunction with its other

ranch lands did not give the heirs sufficient notice to constitute

an "ouster" as discussed in Fitschen and LeVasseur.

YA Bar next argues that when cotenants are unaware of the

existence of a cotenancy, they are in essence "strangers" and

therefore only the general elements of adverse possession are

required. YA Bar relies on two cases, Nicholas v. Cousin (Wash.

Ct. App. 1969), 459 P.Zd 970, and City and County of Honolulu v.

Bennett (Haw. 197G), 552 P.2d 1380, for this proposition

In Nicholas, the Washington Court of Appeals found that a

cotenancy existed, although neither party was aware of it. The

court carved out an exception for adverse possession between nonknowing cotenants, stating:

When the cotenant in possession of land is a non-knowing

cotenant, i.e., one who is unaware of the existence of

the cotenancy, subjectively he is a stranger to the title

held by the non-possessing cotenant; and, therefore, may

possess the requisite intent of a "stranger" for adverse

possession. If he does possess the "stranger's" intent,

and his conduct complies with the general statutory

requirements for ouster by adverse possession, his claim

is perfected.

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. . . .

A non-possessing cotenant who is unaware of his

position as a cotenant is in the same position as any

other member Iof the public at large. Thus, when a person

claims sole and exclusive ownership of property and the

non-possessing cotenant has notice of this claim, actual

or constructive, he is bound in the same way as those

who, by mistake of fact or law, are ignorant of their

interest and have allowed strangers to claim adversely to

their property rights.

Nicholas, 459 P.2d at 975. Thus, under Washington law, a nonknowing cotenant can adversely possess against a fellow non-knowing

cotenant just as he or she would against any other member of

society, by satisfying the general statutory elements for adverse

possession.

In Bennett the Supreme Court of Hawaii created another,

although narrower, exception for adverse possession by a nonknowing cotenant. That court ruled that if a cotenant acting in

good faith has no reason to believe that a cotenancy exists, then

actual notice to the fellow cotenant is not required. Bennett, 552

P.2d at 1391.

However, it is unnecessary for us to either adopt or reject

the analysis of Nicholas or Bennett because under either theory YA

Bar would be charged with knowledge of the cotenancy. Nicholas and

Bennett both rely on the claimant being a non-knowing cotenant.

Since we conclude, as discussed below, that YA Bar must be charged

with knowledge of the cotenancies, Nicholas and Bennett are

inapplicable.

Ernest B. Harkness, the predecessor in interest, founder, and

37 year president of YA Bar was the executor of Arabina's estate.

1 1
Ernest B. therefore knew how Arabina's estate was distributed. The

Final Settlement and Distribution of Arabina's estate granted a

l/36 interest in the 408.22 acre parcel to each of Earl Harkness's

six children. Ernest B., asp executor of Arabina's estate, filed

the Final Settlement and Distribution which resulted in the

creation of those interests. Ernest B. requested and received

quitclaim deeds to the 408.22 acre parcel from his four remaining

siblings. Ernest 13. did not, however, receive quitclaim deeds from

Earl's six children. These facts clearly establish that Ernest B.

knew of the heirs' interests in the 408.22 acre parcel.

‘IA Bar claims it was a non-knowing cotenant and held the

entire parcel as sole owner under "color of title." The facts and

circumstances of this case do not support YA Bar's claim. Color of

title is created by a document "which has the appearance or gives

the semblance of title but is not such in fact." Stevenson v. Owen

(1984), 212 Mont. 287, 295, 687 P.2d 1010, 1015. However, not

every deficient conveyance will create color of title in the

grantee. In Joseph Russell Realty Co. v. Kenneally (1980), 185

Mont. 496, 605 P.2d 1107, this Court found that a claim of color of

title must be made in good faith. In denying defendant's claim of

color of title, this Court stated:

Adverse possession under color of title is possession based on a written instrument which purports to pass

title but which in reality does not. . . .

. . .

[Color of title is created by] a title that is

imperfect, but not so obviously so that it would be

apparent to one not skilled in the law. (citation

omitted). Under Montana law, "an instrument which

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. ,

purports to convey land or the right to its possession is

sufficient color of title as a basis for adverse possession if the claim is made in qood faith." (citations

omitted).

Russell, 605 P.Zd at 1111.

Ernest B. Harkness purported to transfer sole ownership of the

448.22 acre parcel to YA Bar, a corporation in which he was the

president and a major shareholder.. Since Ernest B. had knowledge

of Earl's children's interest in the property, this conveyance was

not made in good faith. At least one court has held that a grantor

cannot create color of title in land in which he does not have an

interest by transferring the land to a corporation or a trust in

which he has an interest. In State v. King (W.Va. 1915), 87 S.E.

167, the West Virginia Supreme Court concluded that the claimant

did not create color of title by deeding land he did not own to a

trust which he controlled. The court stated:

[A] deed made by a man to himself could not well be

supposed to have the characteristics of color of title.

. . . .

. . [T]he doctrine [of color of title] fairly and

conclusively assumes that there has been a transaction

between two or more persons by which a futile effort to

pass title from one to another has been made, a transaction in which the actors were prompted by good intentions

and honest motives . . .

Kinq, 07 S.E. at 171-72.

This rule of law was confirmed by the West Virginia Supreme

Court in State v. .Altizer Coal Land Co. (W.Va. 1925), 128 S.E. 286.

The court held that a grantor could not create color of title by

conveying land which he did not own to a corporation in which he

was the president and majority shareholder. Altizer, 128 S.E. at

13
. ,

288-90. YA Bar claims to have created color of title in just this

manner. Ernest B. owned a 5/b interest in the 408.22 acre parcel.

In 1950 he purported to grant this land to YA Bar as sole owner.

YA Bar now claims to hold the parcel under color of title as sole

owner. Ernest B. knew of the other interests in the parcel, did

not act in good faith in conveying the parcel as sole owner and

therefore YA Bar cannot claim to hold the parcel under color of

title.

YA Bar is also charged with notice of the various interests in

the 40 acre parcel. The Final Settlement and Distribution of

Arabina's estate omitted the 40 acre parcel. The quitclaim deeds

received by Ernest B. from his four siblings likewise omitted the

40 acres. However, in 1950 when Ernest B. conveyed his property to

YA Bar, he included the 40 acre parcel in the conveyance. Ernest

B. owned only a I/6 interest in the 40 acre parcel yet purported to

convey the entire parcel as sole owner. The 40 acres was not

distributed solely to him by Arabina's Final Settlement and

Distribution nor by the quitclaim deeds from his siblings. The

"reappearance" of the omitted 40 acres in the deed from Ernest B.

to YA Bar puts Ernest B. and YA Bar on further notice of the other

potential claims to the 40 acre parcel.

We conclude that the District Court erred in finding that YA

Bar had adversely possessed the land of its cotenants. YA Bar did

not give the heirs sufficient notice to constitute an ouster under

Fitschen or LeVasseur. YA Bar was not a non-knowing cotenant, and

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therefore the theories discussed in Nicholas and Bennett are

inapplicable.

We note that 'YA Bar was not without a remedy when it wished to

extinguish the cotenancy. A party is not bound to remain an

unwilling cotenant with another party. The law provides a remedy

through the laws of partition. A cotenant can institute partition

proceedings to have the cotenancy terminated and the land or the

proceeds from the sale of the land equitably divided. Sections TO29-101 through -221, MCA.

We reverse the decision of the District Court.

Chief Justice

We concur:

Judge, sittkg in place&of

Justice John C. Harrison

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December 23, 1994

CERTIFICATE OF SERVICE

I hereby certify that the following certified order was sent by United States mail, prepaid,

to the following named:

STUART R. WHITEHAIR

Attorney at Law

P.O. Box 6493

Bozeman, MT 59715

Carl M. Davis

SCHULZ, DAVIS & WARREN

P.O. Box 187

Dillon, MT 59725

ED SMITH

CLERK OF THE SUPREME COURT

STATE OF, MONTANA