Tuesday, June 11, 2013

Application Of State Law's 40-Year Look-Back Provision Allows Wild Deed To Extinguish Earlier-Created Valid Property Interests, Serve As Root Of Title; Wyoming Supremes On Applying Statute: We Have No Choice - Our Hands Are Tied ... To Rule Otherwise Would 'Undercut The Operation & Purpose Of The Entire [State Marketable Title] Act!"

From a recent Justia.com Opinion Summary:

  • Plaintiffs owned property that was conveyed by warranty deed to J.A. Reed.

    In 1968, Reed conveyed the property to Julianne Biggane, and in 2006, the Biggane Trust transferred the property to Plaintiffs.

    Prior to Reed's transfer of the property to Biggane, a pole line easement across the property was granted to PacifiCorp's predecessor in interest. Reed, however, signed the easement grant as president of Continental Live Stock Company, rather than in his personal capacity, at a time that the company had no interest in the underlying land.

    Therefore, the easement was a "wild deed."(1)

    At issue before the Supreme Court was whether a "wild deed" can be the "root of title" under the Wyoming Marketable Title Act. This case arose when Plaintiffs filed an action seeking to have the easement declared invalid because it emanated from a wild deed.

    The district court held that the Act validated PacifiCorp's easement across Plaintiffs' property.

    The Supreme Court affirmed, holding that a wild deed may constitute the root of title under the Act, and a wild deed serving as a root of title that does not bear a defect "on its face" is not an "inherent defect" in the chain of record title under the Act.(2)
Source: Justia.com Opinion Summary: Esterholdt v. PacifiCorp.

For the court ruling, see Esterholdt v. PacifiCorp., 2013 WY 64 (Wy. May 22, 2013).

(1) For those wondering what the hell a "wild deed" is, the Wyoming Supreme Court answers the question ifootnote 1 of the ruling:
  • A "wild deed" is "[a] recorded deed that is not in the chain of title, usu. because a previous instrument connected to the chain of title has not been recorded." Black's Law Dictionary 477 (9th ed. 2009).

    Such a deed has also been called a "maverick" deed. Conine & Morgan, supra ¶ 1, at 187.

    The more genteel definition is "a stray, accidental or interloping conveyance." Exchange Nat'l Bank of Chicago v. Lawndale Nat'l Bank of Chicago, 243 N.E.2d 193, 196 (Ill. 1968).
(2) From the ruling:
  • Can a "wild deed" be the "root of title" under the Act?

    [¶12] This is a question of first impression for this Court. Not surprisingly, courts across the nation have not been uniform in answering the question. Jay M. Zitter, Annotation, Construction and Effect of "Marketable Record Title" Statutes, 31 A.L.R.4th 11, 21-29 (1984).

    The district court agreed with the appellees and with the courts of Florida and Oklahoma that a wild deed suffices as a root of title. See Mobbs v. City of Lehigh, 655 P.2d 547, 550 (Okla. 1982) (void tax deed can be root of title); City of Miami v. St. Joe Paper Co., 364 So.2d 439, 446-49 (Fla. 1978) (fraudulent deed in claimant's chain of title did not negate effect of the Act); and Marshall v. Hollywood, Inc., 236 So.2d 114, 120 (Fla. 1970) (same).[6]

    The Illinois case relied upon both below and in this Court by the Esterholdts is Exchange Nat'l Bank of Chicago v. Lawndale Nat'l Bank of Chicago, 243 N.E.2d 193, 195-96 (Ill. 1968) (giving effect to a wild deed under the statute could result in stranger to title divesting record owner of title).

    [¶13] Even without the conclusions of the district court and the guidance of the Florida and Oklahoma cases, we would be hard-pressed to apply our rules of statutory construction to the Act and find that a wild deed could not be a root of title. A full recitation of those rules would be cumbersome, and is not necessary here. Instead, we will repeat a few of the central guiding principles: (1) our primary purpose is to give effect to legislative intent; (2) we first make an inquiry into the ordinary and obvious meaning of the words of the statute; and (3) if a statute is unambiguous, we simply give effect to its plain meaning. Union Pac. Res. Co. v. Dolenc, 2004 WY 36, ¶ 13, 86 P.3d 1287, 1291 (Wyo. 2004).

    [¶14] We note first that the statutory definition of "root of title" is "that conveyance or other title transaction in the chain of title of a person purporting to create the interest claimed by the person. . . ." (Emphasis added.) Wyo. Stat. Ann. § 34-10-101(a)(v). This definition clearly refers to an instrument in any person's chain of title that purports to create that person's claimed interest. The instrument must have been recorded at least forty years in the past.

    [¶15] Next, Wyo. Stat. Ann. § 34-10-103 provides that any person meeting certain criteria not relevant or contested here, who has an unbroken chain of title of record to the claimed property interest for forty years or more, has a marketable chain of title under the Act. The facts set forth above, see supra ¶¶ 4, 5, show that PacifiCorp meets the requisite criteria, and that there has been nothing recorded to divest PacifiCorp of its interest in the easement. Wyo. Stat. Ann. § 34-10-104.

    Finally, the provisions of Wyo. Stat. Ann. § 34-10-105 make it clear that the establishment of a marketable record title under the Act renders "null and void" all interests whose existence "depends upon any act, transaction, event or omission that occurred prior to the effective date of the root of title."

    [¶16] In the law review article mentioned above, two University of Wyoming College of Law professors recognized that wild deeds are given operative effect under the Act. Conine & Morgan, supra ¶ 1, at 198 ("[T]he Act is capable of . . . recognizing a new title, free of all prior claims and defects, in a grantee holding under a wild or maverick deed."). Conine & Morgan note that the Act is based upon the Model Marketable Title Act, with its essential provision being

    "that if a person has an unbroken record chain of title for a specific number of years back to his "root of title" (i.e., the most recent transaction in his chain of title that has been of record for the specified length of time), all conflicting claims and interests which are based on a title transaction prior to that root of title are extinguished."
    Conine & Morgan, supra ¶ 1, at 183.

    The Act therefore does not require the claimant to be a bona fide purchaser, or that he or she has been in possession of the land. Id. at 190. Further, the Model Marketable Title Act was drafted to apply its benefits to any interest in land, including easements. Id. at 193 (citing Note, The Indiana Marketable Title Act of 1963: A Survey, 40 Ind. L.J. 21, 27 (1964) and Note, The Minnesota Marketable Title Act: Analysis and Argument for Revision, 53 Minn. L. Rev. 1004, 1015 (1969)).

    [¶17] We cannot find anything in the Act that suggests that a wild deed cannot be the root of title for a contestant in a controversy under the Act. In fact, such an interpretation would render the methodology of the Act pointless. The Act does not contemplate simply reviewing the chain of title of the purported landowner back through time immemorial, with the purported landowner retaining title so long as there is nothing in his or her record chain of title interfering with that retention of title.

    Instead, the statutory methodology is to go back forty years from the date of the controversy, and then go back to the first root of title filed before that date. So long as the chain of title of the person holding that root of title is not disrupted, he or she holds marketable title. In that sense, the concept of the potential validity of a wild deed is written into the Act as if it appeared on its face.

    Is a "wild deed" an inherent defect in the chain of title?

    [¶18] Wyo. Stat. Ann. § 34-10-104(a)(i) provides that marketable title (as that term is defined in the Act) is subject to "[a]ll interests and defects which are inherent in the chain of record title." Relying upon an Oklahoma case and a Florida case, the district court determined that a defect not appearing on the face of the deed was not an inherent defect. See Allen v. Farmers Union Coop. Royalty Co., 538 P.2d 204, 209 (Okla. 1975) (mineral deed that recited grantor's interest both as "oil, gas, and other minerals," and as "oil, gas, coal, iron, and other minerals and mineral royalty" was inherently defective on its face and could not serve as root of title); and Reid v. Bradshaw, 302 So.2d 180, 183-84 (Fla. Dist. Ct. App. 1974) (conveyance of homestead without signature of both husband and wife was an inherent defect on face of deed, and could not serve as root of title).

    [¶19] We have, for the most part, already answered this question with our answer to the first question. If a wild deed can, as we have found, serve as root of title in a chain of title under Wyo. Stat. Ann. § 34-10-101(a)(v), it goes without saying that it cannot, at the same time, be an inherent defect in that chain of title under Wyo. Stat. Ann. § 34-10-104(a)(i).

    The purpose of the Act is to facilitate land title transactions by putting a forty-year limit on title searches, plus the amount of time between the forty-year period and the root of title. Where there is no defect on the face of the root of title, and the "inherent defect" in the chain of title can only be determined by examining title records preceding that date, the purpose of the Act would be thwarted.

    In the present case, the defect in the easement, i.e., that Reed signed it on behalf of a company having no interest in the property, is only determinable by examining the title records preceding the date of the easement. Therefore, it is not an inherent defect to which the root of title is subject under Wyo. Stat. Ann. § 34-10-104(a)(i).

    [¶20] Clearly, this is an astonishing result. That a wild deed can extinguish an earlier valid ownership interest seems contrary to traditional concepts of real property law. However, the purpose of the Act is to simplify and facilitate land title transactions by allowing reliance on a 40-year record chain of title and extinguishing older interests. Wyo. Stat. Ann. § 34-10-102. See also Conine & Morgan, supra ¶ 1, at 185.

    Were we to ignore the plain language of the Act and interpret it as some courts have done to be inapplicable when a claim is based upon a wild deed, we would, as Conine & Morgan have said, undercut the operation and purpose of the entire Act.

    The legislature's intent was that the simplification of title be a paramount goal over the preservation of ancient property interests not properly retained under the Act. Consequently, the courts must take care in holding that the intent of the legislature did not extend that far in circumstances which might have appeared unjust prior to the passage of the Act. The Act is purposefully far-reaching and a narrow judicial interpretation can easily effect a judicial repeal of the legislation.
    Conine & Morgan, supra ¶ 1, at 201 n.61.


    [¶21] A wild deed, as defined herein, may constitute the "root of title" under Wyo. Stat. Ann. § 34-10-101(a)(v), and a wild deed serving as a root of title that does not bear a defect "on its face" is not an "inherent defect" in the chain of record title under Wyo. Stat. Ann. § 34-10-104(a)(i). We affirm the district court.

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