No. 85-57
IN THE SUPREME COURT OF THE STATE OF MONTANA
1985
MICHAEL J. McCARTHY and MARGARET
I.
; RICE,
Plaintiffs and Respondents,
TIMBERLAND RESOURCES, INC.,
Defendant and Appellant.
APPEAL FROM: District Court of the Twentieth Judicial District,
In and, for the County of Sanders,
The Honorable James B. Wheelis, Judge presiding.
COUNSEL! OF RECORD:
For Appellant:
Douglas & Bostock; William A. Douglas, Libby, Montana
For Respondent:
James A. Manley, St. Ignatius, Montana
Submitted on Briefs: June 28, 1985
Decided: December 31, 1985
Filed:
f ~ d "
Clerk
Mr. Justice William E. Hunt, Sr. , delivered the Opinion of
the Court.
Respondents, McCarthy and Rice, purchasers of land on a
contract for deed from appellant Timberland Resources, Inc . ,
unable to record their deed in Sanders County 5or lack of
acceptable description, brought an action against appellant
to rescind the contract and for damages and attorneys fees.
The District Court of the Fourth Judicial District qranted
their motion for summary judgment. Defendant Timberland
Resources appeals.
We affirm.
The issue is whether a purchaser under a contract for
deed may rescind the contract on the grounds the deed is not
marketable when a county refuses to record the deed because
the description, although it correctly describes the land,
does not meet statutory requirements.
In 1978, defendant Timberland Resources, Inc., purchased
land in Sanders County, Montana, from Trout Creek Land
Company. The land was purchased in contiguous ten-acre
parcels lying in two government survey sections. The deeds
for these parcels were recorded in Sanders County on November
2, 1978. On July 16, 1979, appellant and respondents entered
into a contract for deed to sell these parcels to the
respondents. A notice of real estate contract was filed the
same day in Sanders County.
The description of the land in the quit claim deed to
defendant and in the notice of real estate contract are
identical and are described as follows:
Tract 16--N+ S+ SW& SW$ Sec. 23 and N& S+ SE$
SE % and SEg NE% SE% SE% Sec. 22 T24N R32W-20
Principal meridian, Montana, Sanders County,
State of Montana
Although Sanders County had previously recorded both the
deed from Trout Creek Land Company to Timberland Resources,
Inc. and the Notice of Real Estate Contract from Timberland
Resources, Inc. to plaintiffs it refused to file the deed
from plaintiffs to a prospective buyer because of an Attorney
General Opinion of May 8, 1981. That opinion, requested by
the Sanders County Attorney, concluded that the description
to be recorded in the future must be in compliance with
section 76-3-401, MCA. That section provides:
All divisions of land for sale other than a
subdivision after July 1, 1-974, into parcels which
cannot be described as one-thirty-second or larger
aliquot parts of a United States government section
or a United States government lot must be surveyed
by or under the supervision of a registered land
surveyor.
The Attorney General opinion of May 8, 1981, concluded
that section 76-3-401, ECA, required that the
one-thirty-second or larger aliquot parts of a United States
government section or a government lot must be contained in
the same section or lot. We disagree with the Attorney
General opinion. The requirement of section 76-3-401, MCA,
can be satisfied if the parcel contains not less than 20
acres and is an aliquot part of a government section or lot
and if it is divisible into aliquot parts of a goverment
section or lot and the parcel is physically contiguous, even
though the aliquot parts may be located in more than one
government section or lot. In this case, the parcel- is 22%
acres and is not divisible as an aliquot part of a government
section or lot.
While the parties here talk of "20 acre parcels," the
description shows, and the District Court found, there was
224 acres of land purportedly contracted for by the parties.
On June 16, 1979, plaintiffs entered into a contract to
purchase this land from defendant Timberland for investment
purposes. The purchase price was $25,000. Plaintiffs made a
downpayment of $1,500 and began making payments of $271 per
month.
Plaintiffs later found a party willing to purchase the
land for $28,000 but because Sanders County refused to record
any document containing the form of the description in the
contract and deed as used by defendant in its agreement,
plaintiffs were unable to complete the sale. Plaintiffs then
brought this action to rescind the contract, and for damages
for loss of profit and for attorneys fees. Attorneys fees
were provided for in the contract. Plaintiffs also asked for
rescission for a mortgage on their land that defendant had
represented as not affecting their land. The mortgage was
removed prior to the hearing and is not part of this action.
Defendant maintains that the title is marketable and
that Sanders County is unjustified and without legal
authority to refuse to record the deed. Defendant takes the
position that the filing of the deeds and other matters with
descriptions as contained in the contract between the
plaintiffs and the defendant filed before the July 1981
Attorney General's Oplnj.on bars the county from refusing to
accept documents with the sa.me description subsequent to that
opinion. The defendant further argues that since it is the
county that caused plaintiffs' problem because of the refusal
to record plaintiffs1 deed, plaintiffs should have brought
their action against the county rather than the defendant.
Sanders County has not been made a party to this action by
a.ny of these pa-rties.
The problem with defendant's argument is that the
plaintiffs as purchasers got a lawsuit with their contract.
In order to get a recordable title plaintiffs are required to
bring an action either for rescission as they have done here,
or an action against the county to require it to record their
deed. On October 5, 1983, defendant was served with process
in this action to rescind the contract with the plaintiffs.
This Court has said. on this subject of marketable title:
The purchaser cannot be required to take a doubtful
title, and title is declared "doubtful" when, among
other things, "the probability of litigation
ensuing a.gainst the purchaser in respect of the
matter in doubt is considerable," as the court
"will not compel the purchaser to buy a lawsuit,"
and "where there has been a decision by the court
. ..
adverse to the title
thinks the decisj-on wrong. "
...
though the court
Plaintiff s covenant
was that on the d.ay set for final performance, she
would furnish an abstract showing "clear title" to
the real property, which covenant required her to
convey a "marketable title."
The term "marketable title" is difficult of
definition . . ..
The most practical test is as to
whether the title is such that a third person may
reasonably raise a question after the time the
contract would have been completed. If the
condition of the title warrants such attack, the
purchaser may reject the title as "unmarketable."
1
(Citations omitted..
Silf~~ast
v. Asplund, et al. (19331, 93 Mont. 584, 5961 2 0
P.2d 631, 637.
The m a t t e r was h e a r d by t h e D i s t r i c t C o u r t on August. 1 4 ,
1984, more than t e n months later and t h e c o u r t i s s u e d i t s
o r d e r g r a n t i n g t h e summary judgment on November 5 , 1 9 8 4 , more
t h a n a y e a r l a t e r and s t i l l n o t h i n g was done t o r e s o l v e t h e
issue. During the time the d . e f e n d a n t made no effort to
c o r r e c t t h e p r o b l e m s w i t h t h e d e s c r i p t i o n e i t h e r by a s u r v e y
or by an action to compel Sanders County to accept the
description.
From t h e r e c o r d it i s c l e a r t h a t t h e d e f e n d a n t c o u l d n o t
d e l i v e r a marketable t i t l e t o t h e p l a i n t i f f s .
The judgment o f t h e D i s t r i c t
W e Concur:
/
Justices
Mr. Justice Fred J. Weber specially concurs as follows:
I agree with the holding of the majority opinion that
the judgment of the District Court is affirmed because the
defendant was unable to deliver marketable title to the
plaintiffs.
The majority states that the requirement of 5 76-3-401,
MCA, can be satisfied if the parcel contains not less than 20
acres and is an aliquot part of a government section or lot
and if it is divisible into aliquot parts of a government
section or a lot and the parcel is physically contiguous,
even though the aliquot parts may be located in more than one
government section or lot. I do not agree with that
statutory interpretation.
The majority would approve the use of the following
description: N$ S+ SW% SW% Sec. 23 and SE% NE% SE% SE% Sec.
22. Even though the two ten acre tracts are located in
different sections, that would be held by the majority to be
a sufficient description.
Section 76-3-401, MCA, clearly says that a parcel must
be surveyed if it cannot be described as a one-thirty-second
or larger aliquot part of a section. If the section in
question is 640 acres as is the normal government section,
then the smallest parcel would be a 20 acre aliquot part such
as S+ SW& SW% of Sec. 23. That is the smallest parcel which
may be described under the statute without a survey.