Court Opinion

ID: 9538379
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:35:52.898982+00
Date Added: 2024-06-11T14:57:49.929992
License: Public Domain

*1198ROVIRA, Justice,
dissenting:
I respectfully dissent. The majority opinion is based on the propositions that (1) unless otherwise provided by statute, a purchaser is bound by recitals in conveyances or other instruments of transfer in his chain of title regardless of whether the instrument is recorded; (2) the policies and language of the Colorado recording act dictate no different result; and (3) Fees was placed on inquiry notice as to the information contained in the records of the Bureau of Land Management located in Denver.
My analysis leads to a different conclusion and necessitates starting with the Colorado recording act and reaching the question, argued by the parties and decided by the court of appeals, which the majority finds it unnecessary to resolve, whether the Colorado recording act is a “race-notice” or a “pure notice” statute.
I also disagree that Fees is under a duty of inquiry as to matters reflected in the Bureau of Land Management records.
I.
In his petition for certiorari Page, Jr., argued that:
1. the Colorado recording statute is not applicable as between interests to real property within a single chain of title;
2. the Colorado recording statute should be construed as a “race-notice” rather than as a “pure notice” recording statute;
3. because his reservation of the 2% overriding royalty had been filed in the office of the Bureau of Land Management, and because Fees’ duty of inquiry as to its assignor’s title to the oil and gas lease included the duty to examine the Bureau’s records, Fees is chargeable with “inquiry” notice of the reservation of the royalty.
Page, Jr., characterized the action to quiet title to the 2% overriding royalty as “an attempt by a grantee [Fees] to repudiate a reservation by a remote grantor [Page, Jr.] in an assignment necessary to the grantee’s title.” On the basis of this characterization, he argued that the Colorado recording statute does not apply to the facts of this case, contending, in effect, that the statute is not applicable as between interests to real property within a single chain of title. The majority opinion has accepted this analysis.
The Colorado recording statute, section 38-35-109, C.R.S.1973, provides as follows:
“A11 deeds, powers of attorney, agreements, or other instruments in writing conveying, encumbering, or affecting the title to real property, certificates, and certified copies of orders, judgments, and decrees of courts of record may be recorded in the office of the county clerk and recorder of the county where such real property is situated and no such instrument or document shall be valid as against any class of persons with any kind of rights, except between the parties thereto and such as have notice thereof, until the same is deposited with such county clerk and recorder. In all cases where by law an instrument may be filed, the filing thereof with such county clerk and recorder shall be equivalent to the recording thereof.” (Emphasis added.)
The statute governs the validity of “instruments in writing . . . affecting the title to real property.” This phrase is clearly broad enough to encompass instruments which fall both within and without the chain of title of the party for whose protection the recording statute is intended, i. e., the person “with any kind of rights” to real property who takes his interest without actual or constructive notice of, and who is not a party to, such an instrument. An instrument within the scope of the statute is not valid against a protected party “until the same is deposited with ... [the] county clerk and recorder.” The plain language of the statute thus: (a) makes its provisions applicable to the document in which Page, Jr., reserved the 2% overriding royalty; and (b) renders the reservation in that unrecorded document ineffective as against Fees, who was not a party to the document and who had neither actual nor constructive notice of its contents.
*1199Recording statutes should be liberally construed to promote their underlying purposes, one of which is the enhancement of the extent to which a transferee of an interest in real property may rely on the state of record title as it appears at the time of the conveyance to him. See 1 R. Patton & C. Patton, Patton on Land Titles § 6 (1957); 8 C. Thompson, Commentaries on the Law of Real Property § 4291 (1963 Repl.Vol.). Indeed, section 38-34-101, C.R. S.1973, specifically requires that we construe the Colorado recording statute liberally. It provides:
“It is the purpose and intention of articles 34, 35, 40, and part 1 of article 41 of this title to render titles to real property and every interest therein more secure and marketable, and it is declared to be the policy in this state that this article and all other laws concerning or affecting title to real property and every interest therein and all recorded instruments, decrees, and orders of courts of record, including all proceedings in the suits or causes wherein such orders or decrees have been entered or rendered, shall be liberally construed with the end in view of rendering such titles absolute and free' from technical defects so that subsequent purchasers and encumbrancers by way of mortgage, judgment, or otherwise, may rely on the record title and so that the record title of the party in possession is sustained and not defeated by technical or strict constructions.”
In my opinion, application of the statute to instruments both within and without the chain of title of the party who claims its protection serves this legislative mandate, giving effect to the express language used by the General Assembly in section 38-35-109.
In support of its position that the recording statute is inoperative within a single chain of title to real property and that a grantee cannot claim under an instrument without confirming it, the majority cites the following authorities: Cowell v. Springs Company, 100 U.S. 55, 25 L.Ed. 547 (1869); City National Bank v. City of Bridgeport, 109 Conn. 529, 147 A. 181 (1929); Ambarann Corp. v. Old Ben Coal Corp., 395 Ill. 154, 69 N.E.2d 835 (1946); Newcomb v. Chapman, 344 P.2d 1058 (Okl.1959). These cases, however, establish three narrower principles, none of which control the applicability of the statute to the facts of this case.
The first of these principles is that a grantee is estopped to deny the validity of the recitals in or provisions of the instrument which he takes from his immediate grantor. Cowell v. Springs Company, supra; City National Bank, supra. Accord, Dixon v. Abrams, 145 Colo. 86, 357 P.2d 917 (1961). Fees does not seek to deny the validity of any part of the document through which Shawnee assigned the lease to Fees. Therefore, this principle has no effect in the context of this case.
The second principle is that a remote grantee is similarly estopped to deny the validity of the recitals in or provisions of a deed from his remote grantor, after that deed has been recorded. Ambarann Corp. v. Old Ben Coal Corp., supra. Contra, Carter v. Thompson, 167 Ark. 272, 267 S.W. 790 (1925). Because the document in which Page, Jr., reserved the 2% overriding royalty had not been placed of record when Fees, a remote grantee with respect to Page, Jr., took title to the undivided one-half interest in the working and operating rights under the lease, this principle does not apply to the facts of this case.
The third principle established by the cited authorities is that a remote grantee may not adopt inconsistent positions with respect to his remote grantor’s title to an interest in real property, relying on the validity of that title to support his own claim, while at the same time seeking to deny that title with respect to an opposing claim. Newcomb v. Chapman, supra. Because Fees does not seek to deny that Page, Jr., held good title to an undivided one-half interest in the working and operating rights under the lease, as of the April 1960 conveyance to Page, Sr., this third principle is inapplicable to this case.
*1200The position taken by the majority opinion is inconsistent with both the plain language of the Colorado recording statute and the underlying purpose of the statute, viz., enhancement of the extent to which a transferee of an interest in real property may rely on record title as it exists at the time of the conveyance to him.1 Therefore, I would reject the conclusion that Fees may not rely on the Colorado recording statute to quiet title to the 2% overriding royalty simply because that royalty was reserved by Page, Jr., in an unrecorded document which forms a remote link 'in Fees’ chain of title.
II.
The majority having concluded that Fees is charged with notice of, and bound by the reservation of the overriding royalty has not found it necessary to determine whether the Colorado recording act is a “race-notice” or a “pure notice” statute.
Since I differ with the majority on this basic issue, I think it necessary, in order to complete the analysis, to state my views on this question.
Page, Jr., contends that section 38-35-109 should be construed as a “race-notice” recording statute, pursuant to which a transferee of an interest in real property can prevail over a prior conflicting interest in that property only if he takes without notice of the prior interest and secures priority of record as against that interest. I disagree with this construction of the statute. Section 38-35-109 is most appropriately characterized as a “pure notice” recording statute, pursuant to which the subsequent transferee, in order to prevail over the prior interest, must take without notice but need not secure priority of record as against that interest.
The court of appeals was correct in stating that Eastwood v. Shedd, 166 Colo. 136, 442 P.2d 423 (1968), has no binding prece-dential effect on our decision in the instant case. In Eastwood, this court characterized the Colorado recording statute as a “race-notice” statute. However, that characterization was wholly unnecessary to the decision in Eastwood and, as obiter dictum, is not controlling here.2 Parker v. Plympton, 85 Colo. 87, 273 P. 1030 (1929); Young v. People, 54 Colo. 293, 130 P. 1011 (1913). See also Note, The Colorado Recording Act: Race-Notice or Pure Notice? 51 Den.L.J. 115, 118-120 (1974). Therefore, I treat the issue of the proper construction of the Colorado recording statute as one of first impression in this state.
Because the Colorado recording statute does not explicitly require that the transferee of real property secure priority of record as against a prior transferee, it more closely resembles the prototypical “pure notice” statute than the prototypical “race-notice” statute. 4 American Law of Property § 17.5 (A. J. Casner ed. 1952). In addition, the wording of section 38-35-109 is that of the typical “pure notice” statute, rather than that of the typical “race-notice” statute. Compare Mass.Gen.Laws Ann. ch. 183, § 4 (West) (a “pure notice” statute) with Mich.Stat.Ann. § 26.547 (a “race-notice” statute). See 1 R. Patton & C. Patton, Patton on Land Titles § 9 (1957).
As noted in Part I of this dissent, section 38-34-101, C.R.S.1973, requires us to construe the Colorado recording statute liberally in order to “render title to real property and every interest therein more secure and marketable.” Characterization of section 38-35-109 as a “pure notice” recording statute best serves this legislative policy. The “pure notice” construction tends toward security and marketability of titles, *1201because it enables a transferee of an interest in real property, when he evaluates the validity of that interest with respect to possible prior transfers, to rely on record title as it exists at the time of the conveyance to him, without regard to the possibility of subsequent recording of a prior transfer. On balance, a “pure notice” statute provides the greater ■ incentive toward prompt recording of documents of conveyance, enhancing the completeness of title records and, hence, the security and marketability of title to real property. See Note, supra, 51 Den.L.J. at 122-123.
In addition, the “pure notice” construction recognizes the equities which exist between: (a) a transferee of an interest in real property who takes without notice of a prior unrecorded transfer; and (b) the prior transferee who has failed to promptly record his interest, “negligently . . . [leaving] the way open for his grantor to convey to another who has no notice.” 1 R. Patton, supra, at § 19.
For these reasons, I would affirm the construction of section 38-35-109 as a “pure notice” recording statute. Because Fees took title to the oil and gas lease without notice of the reserved 2% overriding royalty, it was entitled to prevail as against Page, Jr., in the action to quiet title to that royalty.
III.
The majority opinion holds that Fees was on “inquiry” notice of Page, Jr.’s 2% overriding royalty and would not be protected by the recording act because: (a) the document in which the reservation was made had been filed with the Bureau of Land Management at the time of the assignment to Fees; and (b) that filing constituted a circumstance sufficient to trigger a duty of inquiry by Fees because the county records were insufficient. I disagree. The court of appeals correctly concluded that the filing in the office of the Bureau of Land Management was not sufficient, in the circumstances of this case, to serve as the basis for the imputation to Fees of constructive, or “inquiry,” notice of the reservation of the 2% overriding royalty. Bolack v. Underwood, 340 F.2d 816 (10th Cir. 1965); Dame v. Mileski, 80 Wyo. 156, 340 P.2d 205 (1959). See Cohen v. Thomas & Son Transfer Line Inc., 196 Colo. 386, 586 P.2d 39 (1978). See generally 4 American Law of Property §§ 17.11-17.16 (A. J. Casner ed. 1952); 1 R. Patton & C. Patton, Patton on Land Titles § 14 (1957).
I would affirm the judgment of the court of appeals.
Chief Justice HODGES and Justice LEE join me in this dissent.

. The Appellate Division of the New York Supreme Court has rejected Page, Jr.’s argument, holding the New York recording statute fully applicable to documents within the chain of title of the transferee who claims the protection of the statute. Ebling Brewing Co. v. Gennaro, 189 App.Div. 782, 179 N.Y.S. 384 (1919).

. In Plew v. Colorado Lumber Products, 28 Colo.App. 557, 481 P.2d 127 (1970), the court of appeals relied on Eastwood, supra, and implicitly dealt with the Colorado recording statute as a “race-notice” statute. As is the case with Eastwood, however, Plew was without binding precedential effect on the opinion of the court of appeals in the case before us.