Newsletter and Legal Memorandum

The Newsletter and Legal Memorandum - Statewide Title, Inc.

Found At: www.statewidetitle.com
Issue  97
Published:  8/1/2003

Case Update
Chris Burti, Vice President and Legal Counsel

Blumstein v. Collins,
COA02-656,
Filed: 20 May 2003 (Unpublished)

Plaintiffs filed a complaint in 1999 against the defendants alleging that they intentionally blocked a recorded easement running across defendants' property. The defendants denied this allegation and claimed that they had an easement across plaintiffs' property for the use of a spring on plaintiffs' property.

In 2001, the trial judge granted partial summary judgment finding that the plaintiffs were entitled to use the recorded easement and that the defendants were entitled to: “[T]he right to take water from the spring which is located on the lands of the Plaintiffs, which spring is the spring which was providing water to the lands now owned by Defendants on October 24, 1967, together with the right to maintain repair and place a reservoir at said spring and pipeline leading from said reservoir, along its then existing route to the lands of Defendants. . . .” After a subsequent trial, the jury fixed the location and width of plaintiffs' right of way on defendants' property.

Defendants appealed, alleging that the trial court erred in granting partial summary judgment in favor of the plaintiffs and by allowing the use of a deposition of a former owner of the plaintiffs' property, on the grounds that she was unavailable.

The defendants contended that the trial court erred because the deed conveying the right of way was not valid because of the lack of an adequate description. That deed included the following grants:

“Grantor's reserve the right to the use of spring water according to such use as is now made by them, along with the right of ingress, egress and regress in and to the above described property, giving and granting to Grantees a like right of ingress, egress and regress over the lands retained by Grantors as such right of way now exists on said lands.” (emphasis in the original). It is interesting to note that the Defendants counterclaimed for a determination of their easement rights based upon virtually identical language.

The Court had little trouble ascertaining that the ambiguity of the description was latent, thus permitting parol evidence as to the location. The Court cites Allen v. Duvall, 311 N.C. 245, 249, 316 S.E.2d 267, 270 (1984) (quoting Thompson v. Umberger, 221 N.C. 178, 180, 19 S.E.2d 484, 485 (1942)). “It is to be stressed that an alleged grant or reservation of an easement will be void and ineffectual only when there is such an uncertainty appearing on the face of the instrument itself that the court -- reading the language in the light of all the facts and circumstances referred to in the instrument -- is yet unable to derive therefrom the intention of the parties as to what land was to be conveyed. Id.; see also Bee Tree Missionary Baptist Church v. McNeil, __ N.C. App. __, __, 570 S.E.2d 781, 784 (2002).”

Literally, this means that the description is rendered void only after the evidence referred to in the grant proves inadequate to locate the easement. The Court clouds the logic of this statement when it states that the “law endeavors to give effect to the intention of the parties, whenever that can be done consistently with rational construction. When the terms used in the deed leave it uncertain what property is intended to be embraced in it, parol evidence is admissible to fit the description to the land -- never to create description. When, as here, the ambiguity in the description is not patent but latent -- referring to something extrinsic by which identification might be made -- the reservation will not be held to be void for uncertainty.” Implicit in this statement, standing alone, is that if there is a reference in the description to extrinsic evidence, “the reservation will not be held to be void for uncertainty.” It should be obvious that if the evidence referred to in the description fails to locate the easement with reasonable certainty, the grant or reservation will fail also.

With regard to the extrinsic evidence the defendants contended that the location of the easement is ambiguous because defendants stated, “When we purchased our property in 1994 there were no visible roads leading to the lands of the Plaintiff.” The court correctly applied the well established law of North Carolina concerning such evidence. “Since the deed creating the easement refers to “such right of way [as] now exists” was executed in 1967, whether there was a visible road leading to plaintiffs' property in 1994 does not create an issue of material fact as to whether an easement existed.” If the evidence establishes the facts as of the relevant date, it is sufficient to support the validity of the conveyance. A review of description cases will reveal that there is a heavily weighted propensity by our courts to validate conveyances. It is proper that such should be the case as that will most likely give effect to the intentions of the parties.

Contact to Make a Will

Tyndall v. Tyndall, No. COA 02-246

Plaintiffs filed suit in superior court alleging breach of a contract to make a will. The trial court granted defendants' motion for summary judgment and dismissed the case. Plaintiffs appealed, and the Court of Appeals reversed. The Court probably came to the correct result under the present state of the law in North Carolina and in carrying out the probable intent of the parties. However, the analysis and legal reasoning appear to leave something to be desired.

Richard Carl Tyndall, Jr. (now deceased) and Lucille Tyndall-Taylor were married and had one child, Richard C. Tyndall, III. They jointly owned a 280-acre farm when they separated in early1979. They entered into a separation agreement wherein they agreed to divide the farm equally. Additionally, the agreement provided that they would execute a Last Will and Testament devising their interest in the 280 acre farm to their son. Richard III was an unmarried adult with no children at that time. The parents were divorced and in 1987 Richard III married Elsie S. Tyndall, who gave birth to a son, Richard C. Tyndall, IV in 1998. Richard III subsequently died, survived by his wife Elsie, his son Richard IV, his mother Tyndall-Taylor, and the decedent Richard Carl Tyndall, Jr.

The Court’s analysis may be fairly summarized as follows:

1.) Separation Agreements are contracts that will be enforced according to their intent expressed and implied.
2.) The parties did not implicitly intend that Richard IV would be a beneficiary.
3.) An unnamed beneficiary to a contract can compel specific performance in equity.
4.) Under the facts as they transpired Richard IV would have inherited the property by virtue of the anti-lapse statue if the contract had been performed as expressed and therefore was entitled to equitable relief.
5.) Lucille Tyndall-Taylor is not barred from equitable relief because her actions in conveying the property were not in bad faith because they did not substantially alter the outcome.
6.) Plaintiffs are entitled to judgment as a matter of law, reversing summary judgment in favor of defendants and remanding the case to the trial court for entry of summary judgment in favor of plaintiffs.

This opinion ignores existing precedent, goes further than it needs to and leaves such cases subject to unnecessary uncertainty and litigation. A better analysis may be summarized as follows:

1.) A party to contract to make a will may have it specifically enforced in equity according to its express terms.
2.) Where the express terms are unambiguous, a determination of intent is unnecessary.
3.) Under the holding in Duncan v. Duncan, ___N.C.App. ___, ___ S.E.2d. ___, (2001), NO. COA00-1358, Filed: 6 November 2001, conveyance of the subject property during the lifetime of the party is not a breach of a contract to make a will entitling a party to equitable relief.
4.) A determination of Richard IV’s rights does not affect the outcome of the case.
5.) Lucille Tyndall-Taylor is entitled to judgment for specific performance as a matter of law under the undisputed facts, reversing summary judgment in favor of defendants and remanding the case to the trial court for entry of summary judgment in favor of plaintiffs.

Had Richard Jr. conveyed away the property during his lifetime, the plaintiffs would not have been entitled to any relief under Duncan. Therefore, a consideration of Richard IV’s rights if a will had been made is somewhat speculative at best. Since Lucille Tyndall-Taylor is alive and entitled to relief, his rights are unnecessary to a determination of her right to specific performance. By implication, the analysis of his rights has the potential to cloud the rights of third party transferees for consideration.

Family law practitioners may best apply the lessons derived from this case. In the vast majority of cases these provisions are intended to prevent the ex-spouses from squandering the property. Often, it is also the objective to prevent a subsequent spouse from acquiring an interest in the former marital property. These objectives can best be achieved by a well-crafted trust agreement. Issues such as encumbrance, transfer, descent and maintenance can all be agreed to at the outset and provisions to carry out the agreement of the parties drafted into the agreement. This mechanism is far more likely to produce the intended outcome than will result by relying on the interpretation of our courts as evidenced by these recent cases.



Recent Legislation
Chris Burti, Vice President and Legal Counsel

Priority Legislation

Senate Bill 629 should go a long way in cleaning up priority issue arising from subordination and simultaneous recording. This has been adopted as Session Law 2003-219 and will become effective for simultaneous recording after October 1, 2003. The subordination provisions apply to subordinations recorded after that date even though they affect instruments recorded prior to it. Subordination agreements will not need to be signed by the trustee and will not be required to state financial terms. Article 1 of Chapter 39 of the General Statutes is amended by adding a new section that reads:

"§ 39-6.6. Subordination agreements.
(a) A written commitment or agreement to subordinate or that subordinates an interest in real property signed by a person entitled to priority shall be given effect in accordance with its terms and is not required to state any interest rate, principal amount secured, or other financial terms. For purposes of this section, an "interest in real property" shall include all rights, title, and interest in and to land, buildings, and other improvements of an owner, tenant, subtenant, secured lender, materialman, judgment creditor, lienholder, or other person, whether the interest in real property is evidenced by a deed, easement, lease, sublease, deed of trust, mortgage, assignment of leases and rents, judgment, claim of lien, or any other record, instrument, document, or entry of court.
(b) The trustee of a deed of trust shall not be a necessary party to a subordination agreement unless the deed of trust provides otherwise.
(c) For purposes of G.S. 1-47, a commitment or agreement described in subsection (a) of this section is deemed a conveyance of an interest in real property.
(d) The section is not exclusive. No agreement that is otherwise valid shall be invalidated by failure to comply with the provisions of this section."

Two Deeds of Trust recorded at the exact same time have equal priority (unless second priority or subordination is specified in the junior instrument) as a result of the holding in Hood Comr. Of Banks v. Landreth 207 N.C. 621 (1935). Logic would suggest that the instrument recorded first in page order would have priority, but while this case referred to the order of indexing, it contains this statement, “ Obviously two entries could not occupy the same space at the same time on the records, and consequently it is necessarily apparent that in the act of entering a list of names on a record that one name had to come first”. It would seem that the inescapable conclusion would be that this holding must be applied to page order as well as indexing. These simultaneous recording issues have been addressed to a certain extent by amending N.C.G.S. Section 47-18(a) and N.C.G.S. Section 47-20(a).

N.C.G.S. Section 47-18(a)

" (a) No
(i) conveyance of land, or
(ii) contract to convey, or
(iii) option to convey, or
(iv) lease of land for more than three years shall be valid to pass any property interest as against lien creditors or purchasers for a valuable consideration from the donor, bargainor or lessor but from the time of registration thereof in the county where the land lies, or if the land is located in more than one county, then in each county where any portion of the land lies to be effective as to the land in that county. Unless otherwise stated either on the recorded instrument or on a separate recorded instrument duly executed by the party whose priority interest is adversely affected, instruments registered in the public record shall be presumed to have priority based on the order of recordation as determined by the time of recordation. If instruments are recorded simultaneously, then the order of recordation shall be presumed as follows, in order of priority:
(1) The earliest document number set forth on the recorded instrument.
(2) The sequential book and page number set forth on the document if no document number is set forth on the recorded instrument. The presumptions created by this subsection are rebuttable."

N.C.G.S. Section 47-20(a)

" (a) No deed of trust or mortgage of real or personal property, or of a leasehold interest or other chattel real, or conditional sales contract of personal property in which the title is retained by the vendor, shall be valid to pass any property as against lien creditors or purchasers for a valuable consideration from the grantor, mortgagor or conditional sales vendee, but from the time of registration thereof as provided in this Article; provided however that any transaction subject to the provisions of the Uniform Commercial Code (Chapter 25 of the General Statutes) is controlled by the provisions of that act and not by this section. Unless otherwise stated either on the recorded instrument or on a separate recorded instrument duly executed by the party whose priority interest is adversely affected, instruments registered in the public record shall be presumed to have priority based on the order of recordation as determined by the time of recordation. If instruments are recorded simultaneously, then the order of recordation shall be presumed as follows, in order of priority:
(1) The earliest document number set forth on the recorded instrument.
(2) The sequential book and page number set forth on the document if no document number is set forth on the recorded instrument. The presumptions created by this subsection are rebuttable."

Internet Property Tax Certification Procedure

HOUSE BILL 972 has been ratified and sent to the Governor for signature. A Committee Substitute was submitted 4/24/03 and we expect it to be adopted before the session ends. If adopted, this act will permit internet tax listings to have the effect of a Tax Collector’s certification pursuant to N.C.G.S. Section 105-361(a). In order to be able to utilize this procedure,
(a) the taxing unit must maintain an Internet web site with current information on the amount of taxes, special assessments, penalties, interest, and costs due on any real or personal property.
(b) the governing body of the taxing unit must adopt a resolution allowing a person to rely on the information.
(c) the web site must state the date that the information is current.
(d) the person relying on the web site information must keep a copy.

As the Tax Collectors are still liable on their bond, it seems unlikely that they will initiate implementation of this procedure and may well resist it. In areas where attorneys regularly obtain certificates under N.C.G.S. Section 105-361, the reduced workload may encourage support from the Tax Office.

SECTION 1. G.S. 105-361 is amended by adding a new subsection to read:

"(e) Internet. - If the taxing unit maintains an Internet web site on which current information on the amount of taxes, special assessments, penalties, interest, and costs due on any real or personal property is available, the governing body of the taxing unit may adopt a resolution to allow a person to rely on information obtained from the web site as if it were a certificate issued pursuant to this section as of the date stated on the web site. The web site must clearly state the date as of which the information is current. The person who relies on the web site information must keep and present a copy of the information as necessary or appropriate, as if the copy were a certificate issued under subsection (a) of this section. The tax collector shall be liable on the tax collector's bond for any loss to the taxing unit arising from an understatement of the tax and special assessment obligations contained in the information available on the web site."

SECTION 2. This act is effective when it becomes law.Priority Legislation

Senate Bill 629 should go a long way in cleaning up priority issue arising from subordination and simultaneous recording. This has been adopted as Session Law 2003-219 and will become effective for simultaneous recording after October 1, 2003. The subordination provisions apply to subordinations recorded after that date even though they affect instruments recorded prior to it. Subordination agreements will not need to be signed by the trustee and will not be required to state financial terms. Article 1 of Chapter 39 of the General Statutes is amended by adding a new section that reads:

"§ 39-6.6. Subordination agreements.
(a) A written commitment or agreement to subordinate or that subordinates an interest in real property signed by a person entitled to priority shall be given effect in accordance with its terms and is not required to state any interest rate, principal amount secured, or other financial terms. For purposes of this section, an "interest in real property" shall include all rights, title, and interest in and to land, buildings, and other improvements of an owner, tenant, subtenant, secured lender, materialman, judgment creditor, lienholder, or other person, whether the interest in real property is evidenced by a deed, easement, lease, sublease, deed of trust, mortgage, assignment of leases and rents, judgment, claim of lien, or any other record, instrument, document, or entry of court.
(b) The trustee of a deed of trust shall not be a necessary party to a subordination agreement unless the deed of trust provides otherwise.
(c) For purposes of G.S. 1-47, a commitment or agreement described in subsection (a) of this section is deemed a conveyance of an interest in real property.
(d) The section is not exclusive. No agreement that is otherwise valid shall be invalidated by failure to comply with the provisions of this section."

Two Deeds of Trust recorded at the exact same time have equal priority (unless second priority or subordination is specified in the junior instrument) as a result of the holding in Hood Comr. Of Banks v. Landreth 207 N.C. 621 (1935). Logic would suggest that the instrument recorded first in page order would have priority, but while this case referred to the order of indexing, it contains this statement, “ Obviously two entries could not occupy the same space at the same time on the records, and consequently it is necessarily apparent that in the act of entering a list of names on a record that one name had to come first”. It would seem that the inescapable conclusion would be that this holding must be applied to page order as well as indexing. These simultaneous recording issues have been addressed to a certain extent by amending N.C.G.S. Section 47-18(a) and N.C.G.S. Section 47-20(a).

N.C.G.S. Section 47-18(a)
" (a) No
(i) conveyance of land, or
(ii) contract to convey, or
(iii) option to convey, or
(iv) lease of land for more than three years shall be valid to pass any property interest as against lien creditors or purchasers for a valuable consideration from the donor, bargainor or lessor but from the time of registration thereof in the county where the land lies, or if the land is located in more than one county, then in each county where any portion of the land lies to be effective as to the land in that county. Unless otherwise stated either on the recorded instrument or on a separate recorded instrument duly executed by the party whose priority interest is adversely affected, instruments registered in the public record shall be presumed to have priority based on the order of recordation as determined by the time of recordation. If instruments are recorded simultaneously, then the order of recordation shall be presumed as follows, in order of priority:

(1) The earliest document number set forth on the recorded instrument.
(2) The sequential book and page number set forth on the document if no document number is set forth on the recorded instrument. The presumptions created by this subsection are rebuttable."

N.C.G.S. Section 47-20(a)

" (a) No deed of trust or mortgage of real or personal property, or of a leasehold interest or other chattel real, or conditional sales contract of personal property in which the title is retained by the vendor, shall be valid to pass any property as against lien creditors or purchasers for a valuable consideration from the grantor, mortgagor or conditional sales vendee, but from the time of registration thereof as provided in this Article; provided however that any transaction subject to the provisions of the Uniform Commercial Code (Chapter 25 of the General Statutes) is controlled by the provisions of that act and not by this section. Unless otherwise stated either on the recorded instrument or on a separate recorded instrument duly executed by the party whose priority interest is adversely affected, instruments registered in the public record shall be presumed to have priority based on the order of recordation as determined by the time of recordation. If instruments are recorded simultaneously, then the order of recordation shall be presumed as follows, in order of priority:

(1) The earliest document number set forth on the recorded instrument.
(2) The sequential book and page number set forth on the document if no document number is set forth on the recorded instrument. The presumptions created by this subsection are rebuttable."

Internet Property Tax Certification Procedure

HOUSE BILL 972 has been ratified and sent to the Governor for signature. A Committee Substitute was submitted 4/24/03 and we expect it to be adopted before the session ends. If adopted, this act will permit internet tax listings to have the effect of a Tax Collector’s certification pursuant to N.C.G.S. Section 105-361(a). In order to be able to utilize this procedure,

(a) the taxing unit must maintain an Internet web site with current information on the amount of taxes, special assessments, penalties, interest, and costs due on any real or personal property.
(b) the governing body of the taxing unit must adopt a resolution allowing a person to rely on the information.
(c) the web site must state the date that the information is current.
(d) the person relying on the web site information must keep a copy.

As the Tax Collectors are still liable on their bond, it seems unlikely that they will initiate implementation of this procedure and may well resist it. In areas where attorneys regularly obtain certificates under N.C.G.S. Section 105-361, the reduced workload may encourage support from the Tax Office.

SECTION 1. G.S. 105-361 is amended by adding a new subsection to read:

"(e) Internet. - If the taxing unit maintains an Internet web site on which current information on the amount of taxes, special assessments, penalties, interest, and costs due on any real or personal property is available, the governing body of the taxing unit may adopt a resolution to allow a person to rely on information obtained from the web site as if it were a certificate issued pursuant to this section as of the date stated on the web site. The web site must clearly state the date as of which the information is current. The person who relies on the web site information must keep and present a copy of the information as necessary or appropriate, as if the copy were a certificate issued under subsection (a) of this section. The tax collector shall be liable on the tax collector's bond for any loss to the taxing unit arising from an understatement of the tax and special assessment obligations contained in the information available on the web site."

SECTION 2. This act is effective when it becomes law.




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