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Issue 86 Article 160
Recent Real Property Cases of Note
Chris Burti, Vice President and Legal Counsel
Buchanan v. Weber, ___ NCApp. ___, (2002), NO. COA01-978
This appeal determines the enforceability of a foreign judgment and points out their ineffectiveness in establishing title to real property. This dispute derived from a Kansas divorce judgment based upon a stipulation and agreement requiring disclosure of all real property. In 1996, defendant filed for divorce in Kansas and filed an information affidavit in that proceeding. The parties executed an agreement dividing their property. The agreement contained the following provision. "The parties acknowledge that each one has been furnished with sufficient information relating to the financial affairs of the other and that they have fully accounted for all property interest received prior to and during the marriage of the parties. Any property not disclosed and in which either party may have an interest of ownership shall, upon discovery of such ownership, be sold and the proceeds thereof divided equally between the parties hereto. This Agreement shall be considered an instrument of conveyance of one-half (1/2) interest in such property of the non-owning party hereunder." The agreement was incorporated into the divorce judgment. Defendant owned property in North Carolina and in the affidavit she identified it as having been "acquired during the marriage by a will or inheritance". The North Carolina property was actually deeded to her by her parents, first in remainder and later the reserved life estate.
An action was brought in North Carolina two years later and the defendant testified that her attorney decided to list the property in this fashion because it was originally intended to be a part of her inheritance. Plaintiff's sought enforcement of the foreign judgment, fraud in the inducement, negligent misrepresentation, breach of contract, specific performance and quiet title. Following a jury verdict that she had failed to disclose the property as required by the agreement, the trial court entered judgment in favor of plaintiff and ordered a judicial sale with the proceeds divided equally.
The Court of Appeals opines that the "dispositive issue on appeal is whether the Kansas divorce judgment attempted to determine the title to real property in North Carolina thereby making it unenforceable." The Court determines that it did, but in an ironical twist, ruled that the part of the judgment determining title could be "severed" and the rest enforced. Thus, the issue is not at all dispositive. The Court of Appeals cites Kirstein v. Kirstein, 64 N.C. App. 191, 192, 306 S.E.2d 552, 553 (1983) for the proposition that Ď[i]t is accepted law in North Carolina that courts of one state cannot determine title to real property located in another state.í Ö Thus, Ď[a] judgment seeking to apportion the rights of the parties to property outside the jurisdiction of the court rendering it may be given extra-state effect for many purposes, but it does not establish any right in the property itself, enforceable in the state of its situs.í McRary v. McRary, 228 N.C. 714, 718, 47 S.E.2d 27, 30 (1948)." Therefore, where the Kansas judgment purports to operate as an instrument of conveyance for a one-half interest, it is unenforceable. We do not disagree with the Courtís analysis of the law concerning enforcement of foreign judgments affecting title to North Carolina property. However, it should be pointed out that the right to have the property sold and the proceeds divided is analogous to a partition. It can be argued that it is a right in the property and affects title. If so, the entire judgment would be void in North Carolina as it pertains to this issue.
The ultimate disposition of the case also seems questionable based on the record as presented in the opinion. The Court states that the "dispositive issue that the jury was asked to determine was whether defendant failed to disclose her ownership of real property located in North Carolina". It may be that the dispositive issue should be, whether the case should have gone to the jury or having done so, is the verdict supported by the evidence. The Court noted that the plaintiff stated that he had not received, nor had knowledge of the defendantís affidavit filed in the Kansas action. It seems that, absent fraud, a party has constructive notice of all matters filed in an action as a matter of law. If so, the wording of the Kansas judgment would not support the trial courtís order since the affidavit disclosed the fact that the plaintiff owned property in North Carolina.
There may be a question of whether the misstated source of the title to the North Carolina property was materially misleading such that it would not constitute notice. As the property was a gift from her parents, it is presumed to not be marital property in North Carolina and not treated differently than inherited property. The misstatement should not be deemed material. Kansas may have a different rule. If not, the plaintiff would not have been successful there either. Relying on an contingency provision incorporated into a foreign judgment to divest the defendant of property may provide a recovery that we suspect the plaintiff would not otherwise be entitled to either jurisdiction. Since the operative portion of the judgment was conditional, that issue should be determined by the Kansas court.
Critical analysis aside, the opinion points up a title issue that can have serious implications for title examiners. We frequently are requested to insure title to property that has purportedly been vested in the owner by virtue of an order of a foreign domestic court docketed in the local Clerkís office. In most instances, these orders contain no conveying language whatsoever other than the term Ďawardí. This case points out that in the few instances where an order actually attempts to convey property in North Carolina, it is clearly void. One remedy may be to file a motion in the cause in the original jurisdiction and ask the court to order a conveyance. This may be futile exercise where the party can not be located, requiring one to bring an action here and put the foreign judgment into evidence.
Connolly v. Robertson, ___ NCApp. ___ (2002), NO. COA01-1047
Title companies are often requested to insure access to property without recorded easements or dedicated roads based on affidavits of long use. This case serves to illustrate the difficulty in proving access rights that are not perfectly clear. It deals with the consequences of a dispute over access when recorded instruments purport to grant an adjoining landowner a right in subdivision roads. Plaintiffs own lots in Summer Haven, a platted and recorded Buncombe County subdivision. One road provides access to these lots and has never been dedicated to the public, used as a public way or accepted by any governmental body. Deeds to the lots in Summer Haven run to the margin of the road and not the centerline.
Defendant is one of the owners of a large tract of land adjacent to the subdivision which the opinion refers to as the "Bee Tree Property". The Bee Tree Property has other access, but the defendant claimed that he and the other owners of the Bee Tree Property had an appurtenant access easement across the subdivision roads. Defendant rested his claim on a recorded 1927 agreement between H. A. and Vera Coggins (predecessors in title to Summer Haven) and C. T. Hodges and Carolina Florida Realty Company (predecessors in title to the Bee Tree Property). The agreement provided for a "full and unrestricted easement, right of way and perpetual right to the use of any and all of the streets . . . of the Summer Haven property[.]" The defendant's deed did not reference this right-of-way.
Plaintiffs sought to enjoin defendant from using the road to access the Bee Tree Property and defendant answered asserting a "right to ingress, egress and regress across said roadways as a result of an express grant of easement and fee simple ownership, or in the alternative, a prescriptive easement, easement by dedication, an implied easement or an easement by estoppel." At trial, the plaintiffs presented evidence of their ownership of lots in Summer Haven and expert testimony from an attorney that the 1927 agreement did not convey an interest in the roads. Defendant presented evidence, which included expert testimony from another attorney that the 1927 agreement did grant defendant an interest in the Summer Haven roads. Defendant's expert also attempted to present evidence that defendant owned the fee underlying the subdivision roads by deed from William T. Penrod, Jr. allegedly the sole heir to the unsold property and roads in Summer Haven. The trial court did not allow this opinion to be admitted as evidence. The plaintiffs' motion for a directed verdict was granted and the defendant appealed. The defendant contended that the trial court erred in directing verdicts against him on three issues; fee simple ownership, easement by prescription, and easement by express grant. The Court of Appeals determined that the defendantís evidence was insufficient to overcome the trial courtís ruling.
Subsequent to "several conveyances of lots in the Summer Haven subdivision, the remainder of the property was deeded to William T. Penrod, Sr. ("Penrod, Sr.") as trustee. Penrod, Sr. subsequently conveyed additional property in Summer Haven before dying and leaving any remaining but unspecified property not conveyed to his son, Penrod, Jr. Penrod, Jr. and his wife deeded this remaining property to defendant in 1999." The defendant's proffered expert opinion regarding fee simple ownership of the roads was based on "(1) a deed whereby Penrod, Sr. conveyed property to the plaintiffs' predecessors in title while he was trustee, (2) a deed from Penrod, Jr. and his wife to defendant, and (3) the affidavit of Penrod, Jr. stating that he was Penrod, Sr.'s sole heir and that his father owned all the roads in Summer Haven." The Court of Appeals noted that the evidence showed that "there was nothing in the Buncombe County public records officially granting Penrod, Sr. authority to hold the property as trustee. Secondly, there was no conclusive documentation to identify Penrod, Jr. as his father's sole heir. The only documentation establishing this allegation was Penrod, Jr.'s own affidavit and an unprobated, unrecorded copy of Penrod, Sr.'s will Ö having based his expert opinion on inadequate facts and data, the trial court did not abuse its discretion in excluding [the] expert opinion and directing a verdict on this issue."
Arguably, these interpretations of the sufficiency of the evidence are not well articulated. Negatives are rarely capable of being conclusively proved and one can not conclusively prove the absence of other heirs of a decedent. Recitations in deeds or estate administrations are just as self-serving as an affidavit and all must be evaluated by the jury if they are an essential element of proof. Trusts do not have to be of record to have efficacy. NCGS Sec. 43-63 provides "When any instrument affecting title to real estate describes a party as trustee Ö but does not indicate any beneficial interest, set forth his powers Ö and there is no recorded instrument Ö setting forth such powers, then the description Ö shall not be notice to any person thereafter dealing with the real estate of any limitation upon the powers of the party nor require any inquiry or investigation as to such trust or agency. Such trustee or agent shall be deemed to have full power to convey or otherwise dispose of the real estate ..." This provision effectively eliminates the trustee issue. It appears that the Court confused the requirements of proving legal title with those of record title. The Court stated the law correctly in the opinion, but the effect of the ruling seems to require proof of record title in order to withstand a motion for directed verdict. There is no assertion in the opinion that the plaintiffs claim to own the roads. Proof of record title is only required when it is necessary to prove superior title where both sides claim ownership of the land. In this trial, the defendant is only required to prove legal title to the roads to support his claim of ownership. As the court points out, upon a motion for a directed verdict, the non-movant is entitled to "the benefit of every reasonable inference arising from the evidence." Since legal title may be proved by matters that are not of record, it seems that this evidence should have gone to the jury.
The Courtís analysis and treatment of the issue of easement by prescription is straightforward, and we do not include it due to space limitations. It is worth reading since it discloses the common evidentiary problems associated with proving implied easements. Arguably, the Courtís treatment of the issue of express grant of easement is problematic because it also seems to have confused the requirement for proof of record title versus legal title. We base this on the Courtís discussion of the evidence. This can not be equated with the evidence in the record under review but it is all we have. Relevant portions of this analysis follows.
"Here, the condition precedent in the 1927 agreement stated that whenever both properties were subdivided into plats under the direction and approval of C. T. Hodges and H. A. Coggins, an easement to the Summer Haven roads would be granted. H. A. Coggins subsequently died in 1948. The only evidence defendant offered that the platting was done before his death was a notation on one of defendant's exhibits (showing a plat of both properties) that stated, in part: "Scale: 1" = 500' - 22 October 1935[,] Revised 1 February 1950[.]" In spite of the Courtís conclusion, the evidence showed that a plat was put to record and lots sold. That the agreement was conditioned on Cogginís approval doesnít negate his good faith obligation to complete the platting. As the agreement was recorded, the successors in interest would, arguably, have taken the property subject to this obligation. The plat of record should be considered evidence of satisfaction of the obligation. Presumably, the road touched the boundary of the Bee Tree Property and would tend to show compliance. While not conclusive taken alone, taken together, these facts are probative of the satisfaction of the condition. If so, the jury should have the responsibility of deciding if the weight of the evidence is sufficient to determine the ultimate facts.
When lawyers and jurists can disagree as to the probative effect of evidence in such disputes, no one can predict what a jury will find when evidence is submitted for determination. There was other access to the Bee Tree Property. Had title insurance been involved, loss would have been difficult for the landowner to prove. If the insurance issue is not resolved in a fashion that is satisfactory to the landowner, the attorney closing the transaction will be the object of the clientís ire. As we have always cautioned, title insurance is no substitute for good title.