McManus, v. Kluttz, North Carolina Court of Appeals, COA03-608, filed: August 3, 2004

This decision of the North Carolina Court of Appeals affirmed the trial court’s grant of partial summary judgment in favor of the plaintiff in case involving competing claims of title to a strip of land contained within overlapping deed descriptions. Many of the appellate decisions involving the evidentiary issues necessary to prove adverse possession set out the hornbook rules and ultimately find a required element missing. As such, they are more useful as a guide to defending claims of adverse possession. Predicated upon the facts as reported, this appears to be a well reasoned decision and should provide an excellent evidentiary guide for successfully establishing adverse possession. Additionally, this Court reasoned out the lappage issues and thereby provides an excellent roadmap for the alternative form of relief. An edited summarization of the facts as reported by the Court follows.

In 1979, the Clayton Fulcher Seafood Company conveyed a tract of land on Harkers Island in Carteret County to Bessie Scott. A survey was performed according to the deed's metes and bounds description, and metal stakes were placed to mark the boundaries and were shown on the survey map. Bessie Scott died and title passed to her son, Elliot Anderson Scott.

In 1990, the plaintiff and her (now deceased) husband purchased the property. Subsequently, another registered land surveyor performed a second survey of the property. This surveyor physically identified all but two boundary stakes from the previous survey though they were no longer visible above ground. The Court noted that the surveyor identified every stake along the purported common boundary of the parties. The surveyor marked the property boundaries by setting flags and wooden "witness" stakes beside the original metal stakes. The plaintiff testified that these stakes and flags remained in the ground "for the first five or so years" after the property was purchased. There is a small home on plaintiff's property. Subsequent to the purchase, she and her husband added a second story. The disputed strip of land lies immediately west of the home. The plaintiff and her predecessors in title maintained and cleared the yard and the disputed strip of land. Both surveys identified the disputed strip as falling within the boundaries of her property. The plaintiff and her husband believed they owned the strip and actively maintained it after "1990 by seeding, mowing the grass, planting three pampas bushes, and paying the related property taxes."

The land owned by defendants since 1964 abuts the disputed strip. There is a house trailer on the property that is only used occasionally. The property is used primarily for storing automobiles and other business items. The record revealed that the defendants' yard "is unkempt and overgrown with waist-high scrub brush, weeds, and smilax." The Court stated that the photographs in evidence and testimony "show that the overgrown nature of the property creates a visible distinction between the land maintained by plaintiff and the land maintained by defendants."

The defendants allege they own the disputed strip based on the description in their deed. In 2001, a third registered land surveyor prepared a map of the defendants' property based on the metes and bounds description in their deed. This map identifies the disputed strip as being part of the property owned by defendants. The map also shows that the eastern boundary line of the defendants' land running through part of the plaintiff's home. The surveyor stated that he did not find any readily visible survey markers.

Subsequently, that year, the defendants' son "bulldozed the strip, tearing out the grass and pampas bushes and destroying a drainpipe running from plaintiff's home." After this, the plaintiff hired a fourth registered land surveyor to perform yet another survey of the property. Like the first two, he identified the disputed strip as being within the boundaries of the property owned by the plaintiff. The Court stated that he also "physically located and identified every stake on the western line of plaintiff's land that was referenced in the previous survey" while performing the survey.

The plaintiff’s complaint alleged that the defendants' claim of ownership was a cloud upon her title, which she acquired by seven years adverse possession under color of title. The defendants denied that the plaintiff had met the requirements for adverse possession and they alleged superior title and fee simple ownership of the strip of land. The trial court granted partial summary judgment in favor of the plaintiff by virtue of seven years adverse possession under color of title.

On appeal, the defendants contended that genuine issues of material fact exist concerning the character of the plaintiff's possession and holding of the property under known and visible lines and boundaries. The Court of Appeals concluded that any questions of fact were immaterial and that summary judgment was appropriate.

The Court prefaces the analysis of the applicable law by noting that "Section 1-38(a) of the North Carolina General Statutes provides that one acquires title to real property after possessing it for seven years under color of title and under known and visible lines and boundaries. N.C. Gen. Stat. § 1-38(a) (2003). In addition, such possession must be actual, open, hostile, exclusive, and continuous for the required time period. Merrick v. Peterson, 143 N.C. App. 656, 663, 548 S.E.2d 171, 176, disc. review denied, 354 N.C. 364, 556 S.E.2d 572 (2001)."

"Adverse possession under color of title is occupancy under a writing that purports to pass title to the occupant but which does not actually do so either because the person executing the writing fails to have title or capacity to transfer the title or because of the defective mode of the conveyance used. Cobb v. Spurlin, 73 N.C. App. 560, 564, 327 S.E.2d 244, 247 (1985). In North Carolina, a deed may constitute color of title so long as it contains an adequate description of the land. Marlowe v. Clark, 112 N.C. App. 181, 186, 435 S.E.2d 354, 357 (1993). In addition, the claimant must prove that the boundaries described in the deed cover the land in dispute. McDaris v. "T" Corporation, 265 N.C. 298, 300-01, 144 S.E.2d 59, 61 (1965). Since plaintiff's deed contains a thorough metes and bounds description of the property, and because three maps and the testimony of two surveyors show the disputed land as falling within the boundaries of the deed, the requirement of color of title is satisfied. See e.g. Willis v. Johns, 55 N.C. App. 621, 624-25, 286 S.E.2d 646, 648-49 (1982)."

The defendants argued that summary judgment was improper because genuine issues of material fact exist concerning plaintiff's possession of the land under known and visible lines and boundaries. They contend that N.C.G.S. Section 1-38(b)(1)-(2), requires the plaintiff to prove that the boundaries are marked by stakes or other monuments that are at least eighteen inches above ground level for the entire seven year period.

The Court dismisses this argument noting that "the addition of § 1-38(b) did not abrogate the provisions of § 1-38(a), but was merely "designed to facilitate proof of possession under known and visible lines and boundaries, which is often difficult with respect to farmland and woodland not actually occupied." James A. Webster, Jr., Webster's Real Estate Law in North Carolina § 14-12, at 660 (1998) (emphasis added). Thus, § 1-38(b) simply provides one undisputable method by which a claimant may establish possession under known and visible lines and boundaries in difficult cases. However, since § 1-38(a) remains valid, claimants may still prove known and visible lines and boundaries under common law methods."

The court opined that the dramatic difference in yard maintenance of properties that has existed for roughly thirty years prior to the initiation of this lawsuit placed in evidence (apparently uncontroverted) created a visible line marking the extent of the plaintiff's possession. "Based on all of these facts, we conclude that the waist-high overgrowth in defendants' yard, and the contrasting maintenance of plaintiff's yard, creates a sufficiently visible line to apprise defendants of the extent of possession claimed by plaintiff. Therefore, the requirement of possession under known and visible lines and boundaries is satisfied. As such, defendants' asserted questions of fact regarding the placement of markers are immaterial because they do not affect the outcome of the case. See Kessing, 278 N.C. at 534, 180 S.E.2d at 830."

The Court states that "even if the dramatic difference in growth and maintenance does not create sufficiently known and visible lines and boundaries, the matter can be resolved by the applicability of lappage rules to this case. Lappage cases are a specific type of adverse possession case in which the deeds of each party encompass the disputed property. As such, the deeds are said to "lap" upon each other. See James A. Webster, Jr., Webster's Real Estate Law in North Carolina § 14-13, at 660-61 (1998). Since the metes and bounds descriptions in both plaintiff's and defendants' deeds include the strip of land west of plaintiff's home, the disputed property is lappage."

"In order to make out a superior title to land that is lappage, it is necessary to ascribe exclusive possession to one of the claimants. Accordingly, our courts have formulated certain rules to establish possession of the lappage. See Price v. Tomrich Corp., 275 N.C. 385, 392-94, 167 S.E.2d 766, 771-72 (1969). See also Webster, Webster's Real Estate Law in North Carolina § 14-13, at 660-61. One rule is that a junior grantee claiming title by seven years adverse possession under color of title does not have to show that the boundaries of the lappage were visible on the ground, so long as he establishes the required adverse possession within those lines. See Allen v. Morgan, 48 N.C. App. 706, 709, 269 S.E.2d 753, 754 (1980); Price, 275 N.C. at 394, 167 S.E.2d at 772. Therefore, any questions about the visible lines and boundaries created by differences in growth and maintenance are resolved by the applicability of lappage rules. Accordingly, plaintiff can gain title to the disputed property even without known and visible boundaries on the ground so long as she can establish the elements of adverse possession within the boundaries identified by her deed."

"Regarding actual possession, there is evidence that plaintiff has been in actual physical possession of the disputed property for over seven years. Since 1990, plaintiff and her husband planted grass and pampas bushes on the disputed track and maintained the strip by mowing the lawn and keeping weeds down. In addition, it is the general rule that where one enters upon a portion of land, but asserts ownership of the whole land based on color of title, the law extends his possession to the outer bounds of his deed so long as the land is not held adversely by another. Willis, 55 N.C. App. at 625, 286 S.E.2d at 649; Vance v. Guy, 223 N.C. 409, 413, 27 S.E.2d 117, 121 (1943). Thus, plaintiff is also deemed in possession of the tract because she has lived in her home within the boundaries of her deed for over seven years, her deed encompasses the disputed tract of land, and because there is no evidence of competing possession by any other person."

The defendants argued that material issues of fact exist concerning the open character of plaintiff's possession. The defendants introduced evidence that the lawn care done by the plaintiff’s agents was seasonal, that people parked on her property occasionally and that their son never saw her on the property. The Court questioned whether this evidence was sufficient to rebut the evidence of the plaintiffs occupancy that it bore upon and noted that "despite the conflicting testimony offered by defendants, summary judgment was appropriate because the undisputed evidence was sufficient to place defendants on notice of an adverse claim." Later the Court recapitulates this issue by saying that the "plaintiff has continuously lived in her home since 1990. In addition, plaintiff has regularly subjected the land to use during the course of her possession by adding a second story to her home, planting grass and bushes along the disputed property, and hiring a maintenance worker to mow the lawn. No other evidence, other than the defendants' allegations that plaintiff was rarely seen at her house and surrounding property, indicates that plaintiff ceased occupying the property for any amount of time during the required period. Therefore, the acts of residence and yard maintenance support the inference that plaintiff's occupation of the land extended over the required seven year period."

The defendants next argued that plaintiff's possession was not hostile because her use of the land was permissive. The defendants introduce evidence statements that they had made that provided plaintiff and her husband with notice that a potential boundary issue. The statements reported were clearly not of a permissive nature so it may be inferred that the thrust of the implicit argument was that the continued occupancy must have been permissive since no immediate action was taken. The Court states that "notice is not equivalent to permission. Moreover, Mr. Kluttz's statement that "it's your business to do what you want to" removes him from the situation altogether, rather than assert his role as an owner of the land giving permission. Certainly, choosing not to involve oneself in another person's affairs cannot be construed as permission. Finally, Mr. Kluttz's statement that "I'd straighten it out or move the house back" appears to be a denial of permission. Viewed in this light, Mr. Kluttz's conversation actually heightens the hostile nature of plaintiff's possession because she and her husband continually resided in the home, and remodeled the home, without ever moving it away from defendants' alleged property line. Accordingly, any factual issues presented by the alleged conversation are immaterial because at most it provided notice but not permission, and at worst it increased the hostile nature of plaintiff's possession."

It is conventional wisdom in our profession that it is far better to defend a title case than to prosecute one. The vast majority of problems we deal with involve undeveloped land where proof of any occupancy on the part of any party is dubious at best. In such cases the conventional wisdom hold true because the burden on the plaintiff is to make out a prima facie case of title. If that can be challenged successfully, there is no burden on the defendant to prove superior title. This case establishes that where there is clear and convincing evidence of occupation in an overlap case with little to rebut it, summary judgment is appropriate. Where summary judgment is a real possibility, it is likely to be no disadvantage to be a plaintiff.

It is very important to note that an attorney carefully examining the title to either of the parties’ property would be unlikely to discover this problem. In all likelihood, the only way that it would come to the attention of a closing attorney would be by one of the parties disclosing the issue or by the commissioning of a competent survey that revealed the occupation and overlap. While the case is highly illustrative of the importance in recommending a survey even though the whole world has told your client that they "don’t have to get one", its primary usefulness is as a corrective guide when a problem finally surfaces.

Statewide Title, Inc. is an agent for three national underwriters, Stewart Title Guaranty Company, Lawyers Title Insurance Corporation and Chicago Title Insurance Company. Our customers are expressing their concerns, which Statewide Title shares, about the positions of our insurers on various issues. Chicago Title has provided the following responses to our questions, and they have invited us to share them with our readers:

"Our in-house counsel provided key leadership roles with the Bar Association Real Property Section, spending literally hundreds of hours speaking, corresponding, and preparing materials (much of which is still on the Section’s web site) and garnering active participation by the practicing bar to defend the recent FTC "attacks." We continue to regularly educate out of state lenders, agents, potential customers and even local attorneys about the need to have representation by an attorney at the closing table and that it is not just a paper shuffle. Chicago Title has no intention of handling real estate closings in the state of North Carolina."

"We have not paid any lobbyists in the state of North Carolina for anything related to changing the present closing system. Like most other title companies, we have supported the NC Land Title Association and its lobbyist who works on many matters of mutual concern with the Real Property Section. Along with all major title companies doing business in North Carolina, Chicago Title is involved in trade organizations, like the American Land Title Association which is involved in political issues across the country. To our knowledge, no efforts have been directed at settlement services in the state of North Carolina."

"All title companies have bank agents, whether in NC or elsewhere. No title company can control what those banks do internally, other than assuring that any title agencies properly following underwriting guidelines in issuing title coverage. Chicago Title does not have any bank agents involved in settlement shops."

We will provide the responses from other underwriters in future editions.