Opinion ID: 891677
Heading Depth: 5
Heading Rank: 3

Heading: The District Court Properly Excluded Extrinsic Evidence of Amrep's and the City's Intent Because Cloudview's Good Faith Purchaser Status Extinguished the City's Claimed but Unrecorded Interests.

Text: {35} As the Court of Appeals correctly noted, `[a]n easement should be construed according to the intent of the parties.' Cloudview, No. 29,510, slip op. at 19 (quoting Olson v. H & B Props., Inc., 118 N.M. 495, 498, 882 P.2d 536, 539 (1994)); see Restatement (Third) of Prop.: Servitudes § 4.1(1), at 496-97 (A servitude should be interpreted to give effect to the intention of the parties ascertained from the language used in the instrument, or the circumstances surrounding creation of the servitude, and to carry out the purpose for which it was created.). {36} Based on these general principles, the Court of Appeals relied upon contract law to conclude that the district court erred when it failed to consider all of the extrinsic evidence presented by the City to show that the Plat was ambiguous as to the true intent of the parties regarding the designation and future use of Parcel F. AMREP, 2010-NMCA-075, ¶ 11, 148 N.M. 542, 238 P.3d 911; see Mark V, Inc. v. Mellekas, 114 N.M. 778, 781, 845 P.2d 1232, 1235 (1993) (holding that the district court should have allowed the parties to submit extrinsic evidence to show that the meaning of a contract was unclear); C.R. Anthony Co. v. Loretto Mall Partners, 112 N.M. 504, 508-09, 817 P.2d 238, 242-43 (1991) ([I]n determining whether a term or expression to which the parties have agreed is unclear, a court may hear evidence of the circumstances surrounding the making of the contract and of any relevant usage of trade, course of dealing, and course of performance. (footnote omitted)). The City argues that this rule of contract interpretation should be applied to plats as well as contracts. See Wilson v. Owen, 261 S.W.2d 19, 23 (Mo.1953) (explaining that where the meaning of writing on a plat is in doubt, the court can look to extrinsic evidence to determine the parties' intent). {37} However, the legal treatment of language in a recorded plat is different than the legal treatment of language in a contract. An easement described in a recorded instrument must be in writing and duly recorded in the office of the county clerk of the county where the easement is situated. Section 14-9-1. More importantly, when interpreting the nature and extent of an easement, we place heavy emphasis . . . on the written expressions of the parties' intent. Restatement (Third) of Prop.: Servitudes § 4.1 cmt. d, at 499. Easements are intended to bind successors to interests in the land, as well as the contracting parties, and are generally intended to last for an indefinite period of time. Id. The recorded instrument is often the primary source of information available to a prospective purchaser of the land. Id. Therefore, the language in a granting instrument should be interpreted to accord with the meaning an ordinary purchaser would ascribe to it in the context of the parcels of land involved. Id. Consideration of extrinsic evidence that may illuminate a particular meaning adopted by the creating parties is generally inappropriate because the creating parties intended to bind and benefit successors for whom the written record will provide the primary evidence of the [easement]'s meaning. Id. at 499-500. An easement should be construed according to its express and specific terms as a manifestation of the intent of the parties. Sanders v. Lutz, 109 N.M. 193, 194, 784 P.2d 12, 13 (1989). But [w]hen the express terms of an easement are ambiguous, the intent of the parties should be determined from the language of the granting instrument in conjunction with the surrounding circumstances. Olson, 118 N.M. at 498, 882 P.2d at 539. {38} To allow extrinsic evidence to establish an ambiguity in the meaning of language in a plat, when the language itself is unambiguous, would frustrate the purpose of our law that governs the recording of instruments affecting real estate. To ensure that subsequent purchasers of property have notice of prior claims of interest, New Mexico law provides that all writings affecting the title to real estate shall be recorded in the office of the county clerk of the county or counties in which the real estate affected thereby is situated. Section 14-9-1. The inevitable consequence of this requirement is the constructive knowledge that flows from it because [s]uch records shall be notice to all the world of the existence and contents of the instruments so recorded from the time of recording. NMSA 1953, § 14-9-2 (1886-87). {39} The purpose for requiring the recording of instruments affecting real estate in the county where the property is situated is to provide a place and a method by which an intending purchaser . . . can safely determine just what kind of title [the purchaser] is in fact obtaining. Romero v. Sanchez, 83 N.M. 358, 361, 492 P.2d 140, 143 (1971) (internal quotation marks and citation omitted). The recording requirement seeks to protect [good faith] purchasers against loss from adverse claims of interest that are not disclosed by any public record and not ascertainable by due diligence. Id. (internal quotation marks and citation omitted); see also Arias v. Springer, 42 N.M. 350, 359, 78 P.2d 153, 159 (1938) (The object of the statute is to prevent injustice by protecting those who, without knowledge of infirmities in the title, invest money in property or mortgage loans; and those who have acquired judgment liens without such knowledge.). {40} Thus, Section 14-9-3 provides that unrecorded instruments asserting interests in real estate shall not affect the title or rights of purchasers to real estate if the purchaser did not have knowledge of the existence of such unrecorded instruments. See Jeffers v. Doel, 99 N.M. 351, 353, 658 P.2d 426, 428 (1982) (explaining that the statute protects innocent purchasers for value without notice of unrecorded instruments (internal quotation marks and citation omitted)). {41} Municipalities are not exempt from the recording requirements. Municipalities are entitled to have instruments affecting real estate [conveyed] to them . . . to be duly recorded in . . . the various counties in which the real estate is situated. NMSA 1978, § 14-9-7(A) (1987). When a municipality records an instrument affecting real estate, that instrument shall have the full legal effect of recording and be legal notice of the rights of the public entities [to the] interests conveyed or granted. Section 14-9-7(B). {42} The final recorded plat is what governs in this case, and the recorded plat unambiguously grants a drainage easement to the City. Because the drainage easement is unambiguous, Cloudview did not have a duty to investigate any additional adverse claims the City might have had to the title of Parcel F. Even if the City and Amrep intended drainage easement to mean open space, their intent is now irrelevant in light of Cloudview's good faith purchaser status. When a good faith purchaser takes real property without notice of an unrecorded easement, the unrecorded easement is extinguished under Section 14-9-3. See Restatement (Third) of Prop.: Servitudes § 7.14 cmt. a, at 440 (The basic rule is that all unrecorded servitude benefits, regardless of the manner of their creation, are subject to extinguishment under the recording act.). We agree with the Restatement that the benefits produced by subjecting [easements] to extinguishment under the recording act will outweigh the social costs because prospective purchasers will be able to rely on the property records. Id. {43} Cloudview is a good faith purchaser who took Parcel F subject only to the City's recorded drainage easement. See § 14-9-2 (charging subsequent purchasers with constructive notice of all recorded documents within the purchaser's chain of title). We hold that each of the City's claimed but unrecorded interests in Parcel F have been extinguished by Cloudview's good faith purchaser status. Further, under the circumstances of this case, neither the scope nor the purpose of the easement may vary from drainage as expressed on the VHWU1 recorded plat.