Opinion ID: 2543464
Heading Depth: 1
Heading Rank: 2

Heading: The Infangers Should Be Estopped as Successors to the Bowlands.

Text: Among the Idaho cases in which successor estoppel has been a potential issue, few have squarely addressed the issue, because it was mooted by holdings on other issues, like failure of proof of inequitable conduct by the predecessors, see, e.g., Sun Valley Hot Springs Ranch, Inc. v. Kelsey, 131 Idaho 657, 662-63, 962 P.2d 1041, 1046-47 (1998); Herrmann v. Woodell, 107 Idaho 916, 922, 693 P.2d 1118, 1124 (Ct.App.1985), and failure of the party claiming estoppel to properly raise the issue in pleadings, see, e.g., Argyle v. Slemaker, 107 Idaho 668, 669-70, 691 P.2d 1283, 1284-85 (Ct.App.1984). The few cases that have addressed this issue have focused on the factually specific question of whether estoppel should run against a foreclosure sale purchaser of property based upon the actions of the prior owner. In a 1917 case this Court held, in part, that a successor may be estopped by the actions of a predecessor when the successor purchased the predecessor's interest at an execution sale and was not a bona fide purchaser without knowledge. See Mountain Home Lumber Co. v. Swartwout, 30 Idaho 559, 571, 166 P. 271, 274 (1917). In Mountain Home Lumber, Garrett, the predecessor in interest, sold a piece of land to a first purchaser. Two months later, Garrett purported to sell the same property to a second purchaser. These actions were sufficient to make Garrett the holder of an equitable trust in favor of the first purchaser, estopping Garrett from questioning the first purchaser's title. Id. at 570, 166 P. at 273-74. Subsequently, the appellant in the case obtained a civil judgment against Garrett, and believing him to still be the owner of the property in question, executed upon the property, purchasing the property at its own execution sale (foreclosure sale purchaser). This Court held that the foreclosure sale purchaser was not a bona fide purchaser as a matter of debtor/creditor law, and that, as a successor to Garret, the foreclosure sale purchaser was estopped to deny the validity of the title of the first purchaser. Id. at 571, 166 P. at 274. The Court reasoned that the successor could receive only such title and interest as Garrett had, and must be said to have taken the legal title in trust for [the first purchaser], and subject to every element of estoppel that could be urged against Garrett. Id. The holding in Mountain Home Lumber was cited in and bolstered by the holding in Rexburg Lumber Co. v. Purrington, 62 Idaho 461, 468, 113 P.2d 511, 513-14 (1941). In Rexburg Lumber, a judgment creditor foreclosed its lien on a debtor's property and then purchased the property at its own execution sale. Unknown to the purchasing creditor, the debtor's property was subject to an equitable trust in favor of another party. After holding that the creditor could not be a bona fide purchaser as a matter of debtor/creditor law, this Court held that the creditor acquired only the title of the debtor and that its title was consequently subject to hidden equities against the debtor's title. Id. at 468-69, 113 P.2d at 513-14. The holdings in Mountain Home Lumber and Rexburg Lumber addressed particular factual situations involving collateral issues of debtor/creditor law, but they were based on an underlying equitable principle that is equally applicable to the case at barequity will not allow a land possessor to be unconscionably injured by inequitable conduct simply because the perpetrator of the inequitable conduct transferred his or her tainted interests to another party. This underlying principle is reflected in cases from other jurisdictions, which hold that successors in interest may be estopped by the actions of their predecessors, at least where the successor had notice of the facts giving rise to the estoppel. See Evans v. Wittorff, 869 S.W.2d 872, 875 (Mo.Ct.App. 1994); Myers v. Key Bank, N.A., 113 A.D.2d 244, 495 N.Y.S.2d 755, 757 (N.Y.App.Div. 1985) aff'd, 68 N.Y.2d 744, 506 N.Y.S.2d 327, 497 N.E.2d 694 (1986);  Moore Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 939 (Tex.1972); Bratt v. Peterson, 31 Wis.2d 447, 143 N.W.2d 538, 542 (1966); McCarthy v. Union Pac. Ry. Co., 58 Wyo. 308, 131 P.2d 326, 332 (1942). Estoppel created by the actions of a predecessor in interest should be effective against a successor in interest, at least where the successor can be charged with knowledge of the facts giving rise to the estoppel. Equitable considerations require the application of successor estoppel in the situation presented here. The Infangers can be charged with notice of all recordings regarding the disputed property, since [e]very conveyance of real property acknowledged or proved, and certified, and recorded as prescribed by law, from the time it is filed with the recorder for record, is constructive notice of the contents thereof to subsequent purchasers and mortag(e)es. I.C. § 55-811. Consequently, they can be charged with notice of the quitclaim deed to the Edwards Street property, filed by the City. Additionally, the Infangers demonstrated knowledge that they might not be the owners of the disputed property when, after purchasing Lots 6 and 7 from Guth in December of 1988, they inquired about buying the Edwards Street property from the Bowlands. Finally, the Infangers acquiesced without comment as the Benders constructed an expensive structure on the disputed property. It would be inequitable to allow a past land transaction to be undone by a successor when the successor had notice of the transaction and his predecessor's acquiescence in the transaction at the time he purchased the land. Consequently, the Infangers stand in the same position as their predecessor, the Bowlands, and should be estopped. The application of successor estoppel is also necessary to preserve Idaho's public policy as represented in the above-quoted recording statute, I.C. § 55-811. To allow successors to challenge the validity of such transfers would subject real estate sales of this type to unending uncertainty and would effectively remove the efficacy of our recording systems as to this entire category of transactions. Because the Infangers can be charged with notice of the facts giving rise to an estoppel against their predecessor, I express no opinion as to whether estoppel can run against successors in interest without notice.