NO. 93-326
IN THE SUPREME COURT OF THE STATE OF MONTANA
RONALD J. STEVENSON and VICKI R.
STEVENSON, husband and wife,
Plaintiffs and Respondents,
EDWARD ECKLUND and MARY ECKLUND,
husband and wife; JOHN C. WOOD and
CAROL A. WOOD, husband and wife; and
THE STATE OF MONTANA,
Defendants and Appellants.
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Mark P. Sullivan, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Donald L. Ostrem, Graybill, Ostrem & Crotty, Great
Falls, Montana (Woods)
For Respondents:
Patrick F. Flaherty, Great Falls, Montana
(Stevensons)
Submitted on Briefs: November 23, 1993
Decided: December 2 2 , 1993
Filed:
Justice Karla M. Gray delivered the Opinion of the Court.
The sole issue before this Court is whether the Eighth
Judicial District Court, Cascade County, erred in concluding that
a breach of the covenant of warranty contained in a warranty deed
occurred. Because no party other than the covenantee lawfully
asserted ownership over the property conveyed by the deed, we
conclude that the covenant of warranty was not breached. We
therefore reverse the court's denial of the Woods' motion for
summary judgment and grant of summary judgment in favor of the
Stevensons on that issue.
This case stems from a boundary dispute involving Lots 7
through 9 and 10 through 12, in Block 1 of the J.L. Largent
Addition to the town of Ulm, Montana. The dispute arose from an
error in the original plat recorded in 1910. According to the 1910
plat, Block 1, containing twelve lots, was 600 feet long. In fact,
its length was 700 feet.
The School District in Ulm acquired Lots 1 through 3 and Lot
4 in 1904 and 1916, respectively. The School District became aware
of the discrepancy in the 1910 plat as early as 1954. After
purchasing Lots 5 and 6 in 1966, the School District had Lots 1
through 6 restaked to correct the error. The surveyor used a rule
of survey known as the doctrine of apportionment to correct the
discrepancy in the 1910 plat. Under that doctrine, when a tract
contains more or less area than that assigned to it in a recorded
plat, the excess or deficiency is distributed among all the lots
comprising the tract in proportion to their respective areas.
2
Because the lots in Block 1 were of equal size, the surveyor
increased the width of Lots 1 through 6 from 50 to 58.33 feet.
The record does not indicate when John and Carol Woods (the
Woods) acquired Lots 7 through 12. In January of 1975, however,
they conveyed their interest in Lots 10 through 12 to Edward and
Mary Ecklund (the Ecklunds) by quitclaim deed. The Woods showed
the Ecklunds lot lines reflecting a 58.33 foot width. This width
was subsequently confirmed when the Ecklunds had Lots 10 through 12
resurveyed. Survey pins were placed on their property accordingly.
In October of 1977, the Woods conveyed Lots 7 through 9 to Ronald
and Vicki Stevenson (the Stevensons) by warranty deed after showing
them lot lines also reflecting a 58.33 foot width. Lots 9 and 10,
owned respectively by the Stevensons and the Ecklunds by 1977,
shared a common boundary.
In 1985, Edward Ecklund began to exert acts of ownership over
part of Lot 8 and all of Lot 9. He mowed the lawn, started to
build a fence, and demanded that the Stevensons vacate the
property. In October of that year, the Stevensons filed a
complaint against the Ecklunds seeking to quiet title to Lots 7
through 9.
In their answer, the Ecklunds asserted that the disputed
property was actually part of Lots 10 through 12. They also
alleged via a counterclaim that the Stevensons had erected a
structure on their Lots 10 and 11 and requested the court to order
the Stevensons to either purchase the property or remove the
structure. Through the course of litigation, they maintained that
the doctrine of apportionment was improperly applied to increase
the width of each of the lots in Block 1.
The Stevensons filed an amended complaint in August of 1990,
adding the Woods as defendants. The Stevensons alleged that the
covenant of warranty contained in their deed from the Woods had
been breached by the Ecklundsl assertion of ownership.
The Woods and the Stevensons concurred on the issue of the
doctrine of apportionment and requested the District Court, in
separate motions for summary judgment, to determine that the
doctrine had been properly applied to correct the 1910 plat. The
court denied the motions, determining that a factual dispute
existed concerning the dimensions of the lots. The Stevensons
subsequently moved for summary judgment on the covenant of warranty
issue, arguing that the covenant had been breached as a matter of
law. The court denied the motion, again stating that a factual
dispute existed.
The Woods filed another motion for summary judgment in January
of 1993, asserting that the Ecklunds could not establish a lllawful
claimH to any of the Stevensonsl property because the doctrine of
apportionment had been properly applied. On that basis, the Woods
argued that no breach of the covenant of warranty contained in
their deed to the Stevensons occurred.
On March 31, 1993, the District Court granted partial summary
judgment in favor of the Woods. The court concluded that the
doctrine of apportionment applied to the 100-foot discrepancy in
the 1910 plat, reversing its prior refusal to grant summary
judgment on that issue, Thus, the boundary dispute between the
Stevensons and the Ecklunds was resolved in favor of the
Stevensons. As a result, the court dismissed the Ecklundsl
counterclaim against the Stevensons.
The court denied the Woods' motion for summary judgment,
however, insofar as it related to the breach of the covenant of
warranty. The court determined that a breach had occurred,
concluding that the Ecklundsl assertion of ownership was '!not
unlawful.Ir It reversed its previous denial of the Stevensons'
motion for summary judgment on that issue, effectively granting
summary judgment in their favor. The court ruled that the
Stevensons were entitled to damages as a matter of law, and
scheduled a hearing to determine the amount of attorney's fees that
they incurred in defending their title to the property. Upon
stipulation of the parties, however, the court entered a final
judgment in accordance with its resolution of the summary judgment
motions and awarded $7,000 to the Stevensons. The court stayed the
judgment pending appeal.
The Woods appeal only from the court's denial of their motion
for summary judgment and simultaneous grant of summary judgment in
favor of the Stevensons relating to the breach of the covenant of
warranty. We conclude that no breach of the covenant of warranty
occurred and, therefore, reverse the District Court on that issue.
Our standard in reviewing summary judgment is the same as that
used by the district courts. Emery v. Federated Foods [Mont.
19931, - P.2d -, I 50 St-Rep. 1454, 1456. Summary judgment
is appropriate when the pleadings, depositions, and other documents
on file demonstrate that no genuine issues of fact exist and the
moving party is entitled to judgment as a matter of law. Rule
56 (c), M.R. Civ.P. Here, the District Court's summary judgment
rulings turned on its legal conclusion that the Ecklunds' assertion
of ownership over property in Lot 9 was "not unlawful." Our review
of legal conclusions is plenary. Steer, Inc. v. Dept. of Revenue
(1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603.
The Woods assert that because the doctrine of apportionment
was properly applied to correct the 100-foot discrepancy in the
1910 plat, the Ecklunds had no legal basis to support their
assertion of ownership over part of Lot 9. Absent a lawful
assertion of ownership, the Woods contend that no breach of the
covenant of warranty occurred, relying on 5 30-11-110, MCA, and
Green v. Baker (1923), 66 Mont. 568, 214 P. 88. We agree.
A covenant of warranty indemnifies the covenantee against a
loss or injury resulting from a defect in the covenantor's title.
Capital Hill Shopping Center v. Miles (1977), 174 Mont. 222, 230,
570 P.2d 295, 298. It must conform, as did the covenant of
warranty contained in the Stevensons' deed, with 5 30-11-110, MCA.
That statute requires a covenant of warranty to provide, in
substance, that a covenantee is protected from persons "lawfully
claimingN the conveyed property. Section 30-11-110, MCA, reflects
the common law requirement that a covenantee prove the assertion of
a paramount title that resulted in the covenantee's actual or
constructive eviction in order to support a breach of the covenant
of warranty. Green, 214 P. at 91.
Thus, we focus on whether the Stevensons proved an assertion
of paramount title by the Ecklunds over the property in Lot 9 that
resulted in eviction. Only in the presence of such proof would the
Ecklunds' assertion of ownership be a "lawful claimu resulting in
a breach of the covenant of warranty in the Stevensons' deed.
Throughout the litigation, the Stevensons maintained that the
Ecklunds had no lawful claim to any of their property. They argued
that the discrepancy in the 1910 plat regarding the size of Block
1 was properly resolved by applying the doctrine of apportionment.
At no time did they allege actual or constructive eviction from the
property in dispute. In accordance with the Stevensons' position,
the District Court ruled that the doctrine of apportionment had
been properly applied. No party has asserted error in this ruling.
The Stevensons' position and the District Court's resolution
of the boundary dispute in their favor precludes the conclusion
that a breach of the covenant of warranty occurred. Absent proof
that the Ecklunds asserted paramount title resulting in the actual
or constructive eviction of the Stevensons, the Ecklunds' assertion
of ownership over property in Lot 9 does not constitute a "lawful
claim" that can serve as a basis for a breach of the covenant of
warranty. In other words, unless the Ecklunds prevailed in their
assertion of ownership over property of the Stevensons, no breach
of the covenant of warranty could occur.
The Stevensons argue, without citing authority, that the
Ecklunds' belief that their assertion of ownership had a legal
basis is sufficient to establish a breach. This position is
inconsistent with Green, which requires that paramount title be
proved and that the covenantee be actually or constructively
evicted. Green, 214 P. at 91. A warrantor is not bound to defend
against an unlawful claim of title, but only against claims that
are, in fact, superior. Chaney v. Haeder (0r.App. 1988), 752 P.2d
854, 856-57; Roper v. Elkhorn at Sun Valley (Idaho 1980) , 605 P.2d
968, 972-73; 20 Am.Jur.2d Covenants, Conditions, and Restrictions
5 56 (1965).
The Stevensons also assert that they were unable to obtain
title insurance or refinance the underlying loan on the property
during the pendency of the litigation. On that basis, they argue
that the property was "encumbered," resulting in a breach of the
covenant of warranty. We disagree.
The mere showing of a cloud on the title is not sufficient to
establish a breach. Roper, 605 P.2d at 972; 20 Am.Jur.2d
Covenants, Conditions, and Restrictions 5 56 (1965). Thus, even if
the Ecklunds' assertion of ownership clouded the Stevensons' title
in the eyes of the title insurance company or the lending
institution, the claim was not paramount to the Stevensons' title
as required by Green.
The Stevensons also argue that the covenant of warranty was
breached under Wagner v. Cutler (1988), 232 Mont. 332, 757 P.2d
779. They quote at length from Waaner, but neither develop an
argument nor apply that case to the facts before us. In Waaner, we
addressed the scope of a covenant of warranty contained in a
C*i
special warranty deed. Waqner is not relevant in determining
whether a breach of the covenant of warranty occurred here.
Finally, the Stevensons contend that S 27-1-316(1) (c), MCA,
supports the court's award of attorney's fees as a measure for
damages resulting from the breach of the covenant of warranty. It
is true that 27-1-316(1) (c), MCA, provides that expenses incurred
by the covenantee in defending his possession are part of the
detriment caused by a breach of the covenant of warranty. However,
the statute does not serve as a basis for an award of attorney's
fees where, as here, no breach is established.
Because the Stevensons did not establish that the Ecklunds had
asserted a lawful claim of ownership on the disputed property under
Montana law, we hold that the District Court erred in concluding
that a breach of the covenant of warranty occurred. We reverse the
District Court's denial of the Woods1 motion for summary judgment,
and simultaneous grant of summary judgment in the Stevensons'
favor, relating to the covenant of warranty and direct it to modify
its judgment consistent with this opinion.
?
Reversed.
We Concur:
Chief Justice
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