NO. 83-557
IN THE SUPREFIE COURT OF THE STATE OF MONTANA
1984
JEANETTE ANN PETERSON,
Plaintiff and Appellant,
-vs-
DEANA HOPKINS, et al.,
Defendants and Respondents.
APPEAL FROM: District Court of the Fifteenth Judicial District,
In and for the County of Sheridan,
The Honorable 11. James Sorte, Judge presiding,
COUNSEL OF RECORD:
For Appellant:
Smith Law Firm, Helena, Montana
For Respondents:
Crowley, Haughey, Hanson, Toole 6 Dietrich,
Billings, Montana
Robert P. Ryan, Billings, Montana
Submitted on Briefs: March 23, 1 9 8 4
Decided: June 14, 1984
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-- -- - - - - -.
Clerk
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
Jeanette Ann Peterson appeals from the "summary"
judgment of the District Court, Fifteenth Judicial District,
Sheridan County, granted in favor of the defendants in an
action to quiet title to the mineral interest in certain real
property. We reverse the judgment in favor of the defendants
and direct judgment in favor of the plaintiff, Jeanette Ann
Peterson.
In 1949, Peterson acquired tit1.e to a certain piece of
real property in Sheridan County, Montana. She sold. the
property to Donald L. and Louella Blair on April 30, 1956,
through a contract for deed. Under the terms of the contract
and the accompanying warranty deed, Peterson sold all surface
rights and one-half of the mineral interest in the property.
Peterson specifically reserved to herself the remaining
one-half mineral interest.
On October 9, 1958, Peterson assigned the contract for
deed with the Bl-airs to George Hopkins, a/k/a Walter G.
Hopkins. As consideration for the assignment of the contract
for deed, Hopkins agreed to pay off a. $6,000 note owed by
Peterson's husband. Hopkins eventually received the $6,720
in payments due on the contract for d.eed and the deed was
duly recorded by the Blairs.
Peterson leased her one-half interest in the minerals to
various lessees from 1950 to 1980. In 1980, the Anschutz
Corporation checked the chain of title on the property
covered by the contract for deed and discovered what they
considered to be a defect in Peterson's title to the one-half
mineral interest which she had reserved in the contract for
deed. The Anschutz Corporation noted that the assignment to
Hopkins of the contract for deed contained a description
which purported to be a description of the real property
covered in the contract for deed, but which actually
described the entire surface and all of Peterson's mineral
interest in the property. Because of this description, the
Anschutz Corporation asserted that Peterson had conveyed to
Hopkins not only the payments due under the contract for
deed, but her one-half interest in the mineral estate as
well. The Anschutz Corporation then procured an oil and gas
lease from Hopkin's heirs of the mineral rights previously
leased by Peterson.
Peterson brought an action to quiet title to the
one-half mineral interest in the property on April 7, 1982.
Trial was held, and at its conclusion the District Court
granted the defendants' motion for summary judgment. This
appeal followed.
The issues for our review are as follows:
I) Whether the District Court erred in holding that the
assignment of the contract for deed unambiguously conveyed
all of Peterson's interest in the subject property and that
she retains no right, title or interest in the minerals
underlying the property.
2) Whether the District Court erred in disregarding the
extrinsic evidence offered by Peterson to show that the
parties to the assignment did not intend to assign to Hopkins
the one-half mineral interest reserved by Peterson in the
contract for deed.
3) Whether the District Court erred in holding that
Peterson's claim is barred by the statute of limitations and
that she is estopped from claiming title to the one-half
mineral interest.
4) Whether t h e D i s t r i c t Court e r r e d i n holding t h a t
P e t e r s o n i s b a r r e d from a s s e r t i n g h e r c l a i m t o t h e o n e - h a l f
m i n e r a l i n t e r e s t by t h e d o c t r i n e o f l a c h e s .
5) Whether t h e District Court e r r e d i n holding t h a t
Hopkins p a i d P e t e r s o n a d e q u a t e c o n s i d e r a t i o n f o r t h e o n e - h a l f
mineral i n t e r e s t .
"SUMMARY" JUDGMENT
The judgment i n favor of the defendants is referred t o
by t h e p a r t i e s a s a summary judgment, though e n t e r e d a f t e r a
trial.
The District Court, adopting verbatim the proposed
f i n d i n g s o f f a c t , c o n c l u s i o n s o f law and o r d e r , s u b m i t t e d by
o n e of d - e f e n d a n t s , h e l d t h a t b e c a u s e t h e a s s i g n m e n t o f the
c o n t r a c t f o r d e e d " c l e a - r l y and unambiguously conveyed a l l o f
plaintiff's i n t e r e s t i n t h e property, including t h e subiect
mineral interest, plaintiff h a s no r i g h t , title, interest,
estate, l i e n o r encumbrance i n o r upon s a i d p r o p e r t y . " In
r e a c h i n g t h i s c o n c l u s i o n , t h e D i s t r i c t C o u r t r e l i e d upon t h e
following language contained i n t h e assignment: ". . . and
s a i d F i r s t P a r t y does f u r t h e r convey, remise, release and
forever q u i t claim unto t h e Party of t h e Second P a r t , his
h e i r s and a s s i g n s , a l l h e r r i g h t , t i t l e and i n t e r e s t i n and
to the r e a l property hereinbefore described, together with
t h e c o n t r a c t f o r deed thereon."
If t h e assignment i s considered only i n l i g h t of this
p a r t i c u l a r p r o v i s i o n , i t would a p p e a r t h a t t h e D i s t r i c t C o u r t
correctly concluded t h a t t h e one-half mineral i n t e r e s t was
conveyed to Hopkins. Examining the assignment in its
e n t i r e t y , however, w e f i n d t h a t t h e D i s t r i c t C o u r t e r r e d i n
g r a n t i n g judgment i n f a v o r o f t h e d e f e n d a n t s .
Immediately following the provision in the assignment
relied upon by the District Court is a provision which reads:
"TO HAVE AND TO HOLD unto the Party of the Second Part, his
heirs and assigns, together with all rights, privileges and
benefits thereunto belonging, but subject, nevertheless, -
to
all terms and conditions - - aforementioned described
of the
contract forever. I' (Emphasis added. From this, it appears
that the assignment was subject to the reservation of the
one-half mineral interest by Peterson as one of the terms and
conditions of the contract for deed. Under this provision,
therefore, the assignment could not convey all of plaintiff's
right, title and interest in the one-half mineral interest.
The seeming conflict between the two provisions creates
an ambiguity in the assignment. Where the language of a
written contract is clear and unambiguous, there is nothing
to construe and the duty of the court is to apply the
language, as written, to the facts of the case. Martin v.
Community Gas and Oil, Jnc. (Mont. 1983), 668 P.2d 243, 40
St.Rep. 1385; Kartes v . Kartes (1981), 195 Mont. 383, 636
P.2d 272. However, where an ambiguity exists in the contract
and the contract, taken as a whole in its wording and
phraseology is reasonably subject to two different
interpretations, the court must construe the contract to
determine the intent of the parties. Section 28-3-301, MCA;
Souders v. Montana Power Co. (Mont. 1983), 662 P.2d 289, 40
St.Rep. 583; Lemley v. Bozeman Community Hotel Co. (Mont.
1.982), 651 P.2d 979, 39 St.Rep. 1877. In doing so, the court
should look to the whole contract and its purpose and is not
bound by any single expression or provision. St. Paul Fire
and Marine Ins. Co. v. Cumiskey (Mont. 1983), 665 P.2d 223,
40 St.Rep. 891; Rumph v. Dale Edwards, Inc. (1979), 183 Mont.
359, 600 P.2d 163.
The first indication of the parties1 intent appears in
the title of the document--"Assignment of Contract for Deed."
Under the terms of the assignment, Peterson covenants that
she "does sell, assign, transfer and set over unto the Party
of the Second Part, his heirs and assigns, all her right,
title and interest in and to - certain contract - -
a for deed
. . ." (Emphasis added.) The terms of the assignment further
provide that the legal description contained in the
assignment is to be a description of the real estate covered
by "said contract." As assignee under the contract, Hopkins
wa.s to receive "all moneys to become due under the terms and
provisions of said contract." To secure the receipt of the
payments due under the contract for deed, the assignment
further provided that all right, title and interest in the
real property was quitclaimed to Hopkins.
From the terms of the assignment, therefore, it appears
that the document was intended by the parties to be an
assignment of a contract for d-eed, not a deed of the surface
and mineral interests in a certain piece of real estate.
Thus, although the legal. description referred to in the
provision relied upon by the District Court may be construed
to include the one-half mineral interest reserved by
Peterson, the assignment was subject to the terms and
conditions of the contract for deed which included the
reservation of the one-half mineral interest.
To support our interpretation, we need only to examine
the conduct of the parties to the assignment. It is
well-settled that where the language of a contract is
doubtful and ambiguous, the conduct of the parties under the
contract is one of the best indications of their true intent.
Souders v. Montana Power Co. (Mont. 19831, 662 P.2d 289, 40
St.Rep. 583; Rumph v. Dale Edwards, Inc. (1979), 183 Mont.
359, 600 P.2d 163. Here, Peterson leased. her interest in the
minerals from 1950 to 1980. At no time from the execution of
the assignment to his death in 1975, did Hopkins claim any
right to all of the minerals or make any demand upon Peterson
for the one-half mineral interest which she had reserved in
the contract for deed. Thus, the parties' conduct is
consonant with an interpretation of the assignment that
Hopkins did not bargain for or receive the one-half mineral
interest which Peterson had reserved in the contract for
deed.
Rule 56 (c), M.R.Civ.P., provides that before summary
judgment may be granted it must be shown that "there is no
genuine issue as to any material. fa-ct and that the moving
party is entitled to a judgment as a matter of law." Based
upon our interpretation of the assignmen.t of the contract for
deed, we find that the District Court erred in granting the
defendant's motion for summary judgment. The language of the
assignment does not "clearly and unambiguously" convey all of
Peterson's interests in the real property described in the
assignment of the contract for deed. On the contrary, the
assignment is, by its terms, subject to the terms and
conditions of the contract for deed, which clearly includes
the reservation of the one-ha.lf mineral interest. Here,
judgment should properly be granted to Peterson rather than
to the defendants, as a matter of law.
USE OF EXTRINSIC EVIDENCE
The District Court disregarded the extrinsic evidence
offered by Peterson's counsel at trial to aid the court in
interpreting the assignment, because the court found that the
assignment of the contract for deed was not ambiguous.
Section 28-2-905, MCA, provides in pertinent part:
"28-2-905. When extrinsic evidence concerning a
written agreement may be considered. (1) whenever
the terms of an asreement have been reduced to
writing by the parties, it is to be considered as
containing all those terms. Therefore, there can be
between the parties and their representatives or
successors in interest no evidence of the terms of
the agreement other than the contents of the
writing . . ."
However, subsecti-on ( 2) provides :
" (2) This section does not exclude other evidence
of the circumstances under which the agreement was
made or to which it relates, as described in
1-4-102, or other evidence to explain an extrinsic
ambiguity or to establish illegality or fraud."
Therefore, where a written instrument is ambiguous,
extrinsic evidence may he utilized to discover the parties'
intent. St. Paul Fire and Marine Ins. Co. v. Cumiskey (Mont.
1983), 665 P.2d 223, 40 St.Rep. 891; Adams v. Chilcott
(1979), 182 Mont. 511, 597 P.2d 1140. Because we have
determined that the assignment was ambiguous, the extrinsic
evidence offered by Peterson's counsel was admissible to show
the parties' intent.
Part of the excluded evidence was the testimony of Dale
Forbes, the attorney who drew up the assignment. When asked
if it was his intention to include anything more than what
was covered by the contract for deed in the legal description
of the rea.1 property contained in the assignment, Forbes
replied that the purpose of the assignment was primarily to
transfer and secure for his client the proceeds of the
contract for deed; the legal description was meant to include
only the real estate covered by the contract for deed.
STATUTE OF LIMITATIONS
The District Court held that because Peterson waited
more than 25 years to bring the quiet title action, her claim
is barred by the "applicable statute of limitations" and she
i.s estopped. from claiming title to the mineral interest.
Generally, the "applicable statute of limitations" is
determined by the nature of the cause of action. Sections
27-2-201 through 27-2-215, MCA. For example, under section
27-2-202, MCA, the period prescribed for the commencement of
an action upon any contract, obligation, or liability founded
upon an instrument in writing is within 8 years. Some causes
of action, however, do not fall clearly within the provisions
of the specific statutes of limitation found in the code.
Normally in these cases, the residual statute of limitation,
section 27-2-215, MCA, would be applicable. This is not the
case, however, where, as here, the cause of action concerns
real estate. Grogan v. Valley Trading Co. (1904), 30 Mont.
229, 76 P. 211; Burt v. Cook Sheep Co. (1891), 10 Mont. 571,
27 P. 399.
In many jurisdictions, the right of a plaintiff to have
his title to land quieted, as against one who is asserting
some adverse claim, is not barred while the plaintiff or his
grantors remain in actual possession of the land, claiming to
be the owners. The reason for this rule is that while the
owner in fee remains liable to an action upon the adverse
claim, he or she has a continuing right to the aid of a court
of equity to determine the nature of such claim and its
effect on his or her title, or to assert any superior equity.
Persons in possession ma.y wait until their possession is
disturbed or until their title is attacked before taking
steps to vindicate their right. 65 Am.Jur.2d Quieting Title
$ 55 (1972); Oates v. Nelson (1.969), 269 Cal.App.2d 18, 74
Section 70-19-402, MCA, provides that:
"70-1.9-402. Action or defense arisinq - - title
out of
- ~rowertv or ~rofzs--wossession within - -
to s
.
5 vears
req;i.red. AN x gause of *action or defense to an
action, arising out of the title to real property
or to rents or profits out of the same, can be
effectual unless it appears that the person
prosecuting the action o r making the defense or
under whose title the action is prosecuted or the
..
defense is made or the ancestor, predecessor, or
gra-ntor of such person wa.s seized or possessed of
the premises in question within 5 years before the
commencement of the act in respect to which such
action is prosecuted or defense kia.de."
From this section, it would appear that in Montana
seizure or possession within five years of the cause of
action is the only limitation imposed by statute on one who
wishes to quiet title to real property.
In an early Montana case involving a dispute as to
whether the stat.utes of limitation i.n effect at the time
barred an action concerning water rights previously fixed by
a court decree, we held that, " [sluits to adjudicate water
rights a-re in the na.ture of actions to quiet title to realty.
[Citations omitted.] The running of time tends to strengthen
rather than destroy title determined by decree." Missoula
Light & Water Co. v. Hughes (1938), 106 Mont. 355, 363, 77
P.2d 1041, 1046. Al-though title here was not determined by
decree, the principle is the same.
Because Peterson was seized of the mineral interest
within the five-year limitation period imposed by section
70-19-402, MCA, she was entitled to wait until her title was
questioned before filing a.n action to quiet title to the
one-half mineral interest. Peterson's cause of action was
not, therefore, barred by the "applicable statute of
limitation" and she is not estopped from a.sserting title to
the one-half mineral interest.
LACHES
In its findings of fact and conclusions of law, the
District Court stated that "because plaintiff has waited over
24 years to commence this lawsuit, she is barred by the
doctrine of laches from asserting her claims in this mineral
interest." However, the length of time within which rights
are not asserted is not the only consideration. King v.
Rosebud County (Mont. 1981), 631 P.2d 711, 38 St.Rep. 1145;
Matter of Estate of Wallace (1980), 186 Mont. 18, 606 P.2d
136. The doctrine of laches applies when a. party has been
negligent in asserting a right, and where there has been an
unexplained delay of such duration as to render enforcement
of the asserted right inequitable. Anderson v. Baker (1981),
196 Mont. 494, 641 P.2d 1035; Mountain View Cemetery v.
Granger (1978), 175 Mont. 351, 574 P.2d 254. Thus for the
doctrine of laches to apply, two requirements must be met:
1.) negligence in asserting a right and, 2) unexplained delay
which would render enforcement of the asserted right
inequitable.
The Court addressed these dual requirements in Mountain
View Cemetery v. Granger (1978), 175 Mont. 351, 574 P.2d 254.
In that case, the Cemetery sought to establish its right to
an ea.sement by prescription across neighboring property. The
Cemetery had used the property in question as a. roadway for
approximately 45 years before it was prevented from such use
by the Grangers. In answering the Grangers' claim that the
Cemetery was barred br laches from enforcing a prescri-ptive
l
easement, this Court held:
". . . However, we see no duty imposed on the
Cemetery to take action declaring its easement
until such time as the Grangers threatened the
actual enjoyment of the use of the road. The
Cemetery had no duty to seek judicial enforcement
of an easement until the easement's benefits were
in jeopardy." 175 Mont. at 358, 574 P.2d at 258.
The Court also noted that the only harm which resulted
from upholding the ea.sement arose from the Grangers' own
precipitous and. premature actions.
Here the case is much the same. Peterson was under no
duty to seek a judicial determination of her right to title
until that title was challenged. A person cannot anticipate
all challenges which may arise in the future. Also lacking
in this case is any harm or inequity. Hopkins' heirs were
unaware of their possible claim to the one-half mineral
interest until the possibility was brought to their attention
in 1980 by the Anschutz Corporation. Therefore, the lapse of
time between the execution of the assignment and the filing
of the quiet title action did not render enforcement of
Peterson's claim inequitable. I
The doctrine of laches, however, does bar Hopkin's heirs
from asserting any rights to the one-half mineral interest.
In Lowrance v. Gunderson (1-971),157 Mont. 532, 536, 487 ~ . 2 d
511, 514, this Court held:
"That laches was very applicable to the case
presented by the plaintiff here is supported by
this Court's holding in Kavanaugh v. Flavin, 35
Mont. 133, 138, 88 P. 764, citing Harnmond v.
Hopkins, 143 U.S. 224, 12 S.Ct. 418, 36 L.Ed. 134,
wherein it is stated:
"'No rule of law i.s better settled than that a
court of equity will not aid a party whose
application is destitute of conscience, good faith,
and reasonable diligence, hut will discourage stale
demands, for the peace of society, by refusing to
interfere where there have been gross laches in
prosecuting rights, or where long acquiescence in
the assertion of adverse rights has occurred. The
rule is peculiarly applicable where the difficulty
of doing entire justice arises through the death of
the principal participants in the transactions
complained of, or of the witness or witnesses, or
by reason of the original transaction having become
so obscured by time as to render the ascertainment
of the exact facts impossible.'
"See also Akey v. Great Western Rldg. & Loan Assn.,
110 Mont. 528, 104 P.2d 10; Barrett v. Zenisek, 132
Mont. 229, 315 P.2d 1001; O'Hanlon v. Ruby Gulch
Min. Co., 64 Mont. 318, 209 P. 1062; Riley v.
Blacker, 51 Mont. 364, 152 P. 758."
Peterson exercised complete control over the one-half
mineral interest for almost 30 years. During that time,
Hopkins, a party to the assignment, never asserted a right to
the mineral interest. Only 24 years later, after Hopkin's
death, do his heirs claim an interest in the minerals which
the parties never intended to exist.
CONSIDERATION
Because we have d.etermined that Peterson did not
transfer all of her right, title and interest in the one-half
mineral interest to Hopkins under the terms of the assignment
of the contract for deed, the issue of adequate consideration
need not be considered.
The judgment of the District Court in favor of the
defendants is reversed and judgment granted in favor of the
plaintiff, Jeanette Ann Peterson and against the defendants
claiming a mineral interest under the assignment of October
9, 1958 to George Hopkins a/k/a Walter G. Hopkins, d.eceased.
We Concur: