NO. 94-121
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
Y A BAR LIVESTOCK COMPANY,
Plaintiff and Respondent, ‘
v.
DEC 2 3 1994
MILES HARKNESS, et al.,
1: Cd >-:+~
Defendants and Appellants. CLERK OF SUPP‘-&‘~.~~~~
STATE OF meNrwk
APPEAL FROM: District Court of the Fifth Judicial District,
In and for the County of Beaverhead,
The Honorable Frank M. Davis, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Stuart R. Whitehair, Bozeman, Montana
For Respondent:
Carl EM. Davis, Schulz, Davis & Warren,
Dillon, Montana
Submitted: November 15, 1994
Decided: December 23, 1994
Filed:
Chief Justice J. A. Turnage delivered the Opinion of the Court.
Miles Harkness, Max Harkness, Leila Dallas, Evelyn Erickson,
Doris Haws, Milton Harkness, Colleen Rasmussen, Stacy Turner, Nancy
Goodrow, Wade Draper, Amy Dean Raymond, Richard Wayne Harkness,
Dorothy Lee Harkness Messick, Robert Earl Harkness and Gale
Harkness (the heirs) appeal the decision of the Fifth Judicial
District Court, Beaverhead County, quieting title to certain real
property located in Beaverhead County to YA Bar Livestock Company
(YA Bar). We reverse.
The sole issue is whether the District Court erred in
determining that YA Bar had adversely possessed the land of its
cotenants.
In order to fully understand the issue raised on appeal, a
review of the historical and procedural background is necessary.
All parties to this litigation, including the heirs, the current
shareholders of YA Bar, and the predecessors in interest to YA Bar
are descendants of Ernest I. and Arabina Harkness. Ernest I. and
Arabina had six children: Ernest B. Harkness, Guy L. Harkness, Ross
A. Harkness, Earl D. Harkness, Bessie (Harkness) Lewis and Jessie
(Harkness) Jensen. In 1931 Earl D. Harkness homesteaded and
patented 448.22 acres of land located in Beaverhead County, Montana
(S1/2SW1/4 Section 3; Lots 1 & 2, S1/2NE1/4, N1/2SE1/4, SE1/4SE1/4
Section 4; NW1/4NE1/4, NE1/4NW1/4--Section 10, Township 14 South,
Range 10 West, M.P.M.). In 1936 Earl conveyed this land to his
father, Ernest I. Harkness. Three years before, in 1933, Ernest I.
had sold his ranch, which consisted of various lands in the same
2
general vicinity as the 448.22 acre parcel, to his eldest son
Ernest B. Harkness. Earl and Ernest I. moved to Idaho and did not
return to Montana. In 1944 Ernest I. Harkness died. His wife,
Arabina, died in 1946. The 448.22 acres in question were included
in Arabina's estate at the time of her death. Ernest B. was
appointed executor of Arabina's estate pursuant to the terms of her
will. Arabina's will was admitted to probate in Idaho and in
Beaverhead County, Montana. Arabina was preceded in death by one
of her children, Earl. She was survived by her five remaining
children: Ernest B., Guy, Ross, Bessie, Jessie, and Earl's six
children: Amy (Harkness) Raymond, Richard Harkness, Robert
Harkness, Dorothy (Harkness) Messick, Melvin Harkness, and Miles
Harkness. At the time of Arabina's death, the Harkness family tree
was as follows:
HARKNESS FAMILY TREE
As previously stated, the 448.22 acres in question were
included in Arabina's estate. The I.nventory and Appraisement and
the Petition for Final Settlement and Distribution of Arabina's
estate filed for by Ernest B. also included this parcel, except
that approximately 40 acres was omitted from the legal description
3
of the parcel in these two documents (NE1/4NW1/4 Section 10,
Township 14 South, Range 10 West, M.P.M., Beaverhead County,
Montana).
Ernest B. sought to acquire title to the 448.22 acres, as he
was the sole remaining Harkness living in Montana and the parcel in
question was compatible with the ranch land he had purchased from
his father in 1933. Ernest B. received quitclaim deeds from his
living brothers and sisters: Ross, GUY, Bessie, and Jessie.
However, the quitclaim deeds also omitted the 40 acres from the
legal description. Earl's six children did not quitclaim their
interest in the land to Ernest B.
The District Court, in conformity with the petition of Ernest
B., ordered distribution of Arabina's estate. The court distribut-
ed a 5/6 interest in the parcel to Ernest B. and a l/6 interest to
Earl's six children (l/36 per child). This Final Settlement and
Distribution again omitted the 40 acre parcel. All heirs therefore
took their respective share of the omitted 40 acre parcel pursuant
to the "any and all other property not now known or hereafter
discovered" clause of Arabina's will.
The net result from the above transactions left the title to
the land following Arabina's death and the probate of her will as
follows:
408.22 acres (448.22 acre parcel minus the omitted 40 acres)
S/6 Ernest B. Harkness
l/6 children of Earl Harkness (l/36 for each: Amy,
Richard, Dorothy, Robert, Melvin and Miles)
40 acres
l/6 Ernest B. Harkness
l/6 Ross Harkness
4
-_
l/6 Guy Harkness
l/6 Bessie (Harkness), Lewis
l/6 Jessie (Harkness) Jensen
l/6 children of Earl Harkness (l/36 for each: Amy,
Richard, Dorothy, Robert, Melvin and Miles)
Ernest B. received a i/6 interest in the 408.22 acre parcel
pursuant to the quitclaim deeds from his four siblings and pursuant
to his petition for distribution of Arabina's estate. He received
a l/6 interest in the 40 acre parcel pursuant to the "any and all
other property clause" of Arabina's will.
The six children of Earl Harkness received a l/6 (l/36 per
child) interest in the entire 448.22 acre parcel. Each child
received a I/36 interest, their respective l/6 interest in their
deceased father's l/6 interest, of the 408.22 acre parcel pursuant
to the distribution of Arabina's estate. They each likewise
received a similar l/36 interest in the omitted 40 acres pursuant
to the "any and all other property clause" of Arabina's will.
The remaining offspring of Arabina each received a l/6
interest in the omitted 40 acres pursuant to the "any and all other
property clause" of Arabina's will. Jessie (Harkness) Jensen, the
heirs of Ross Harkness, and the heirs of Bessie (Harkness) Lewis
failed to appear in the quiet title action and default was entered
against them. The heirs of Guy Harkness are parties to this action
and seek to maintain their respective share of Guy Harkness's I/6
interest in the omitted 40 acres.
In 1950 Ernest B. Harkness formed YA Bar Livestock Company.
Ernest B. and his wife, Ruth, conveyed all their ranch property to
the corporation. Included in this conveyance was the disputed
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448.22 acres. YA Bar has used the 448.22 acres extensively in its
ranching operation. The parcel is integrated into the other deeded
and leased lands operated by YA Bar. The ranch, including the
parcel in question, has been mortgaged six times. YA Bar has
leased mineral rights and granted easements over the 448.22 acres
without the knowledge or consent of the heirs. YA Bar has paid all
taxes levied on the parcel and received all rents and profits as if
it was the sole owner of the land.
In 1987, Ernest B. Harkness died. The current shareholders of
YA Bar are Ernest B.'s son, Bernard Harkness; Bernard's wife, Jean
Harkness; Ernest B.'s daughter, Bonnie (Harkness) McNich; and her
husband, R.M. McNich. YA Bar found the property unmarketable when
a title commitment listed the heirs' interest in the 448.22 acres.
YA Bar sought quitclaim deeds from the heirs to clear title to the
parcel. The heirs refused to grant YA Bar quitclaim deeds.
YA Bar instituted this quiet title action, claiming it had
adversely possessed the land of its cotenants. The District Court
agreed and quieted titled to YA Bar. The heirs appeal from the
District Court's decision.
Did the District Court err in determining that YA Bar had
adversely possessed the land of its cotenants?
This Court reviews the findings of a trial court sitting
without a jury to determine if the court's findings are clearly
erroneous. Rule 52(a), M.R.Civ.P. A district court's findings are
clearly erroneous if they are not supported by substantial credible
6
evidence, if the trial court has misapprehended the effect of the
evidence, or if a review of the record leaves this Court with the
definite and firm conviction that a mistake has been committed.
Interstate Prod. Credit Ass'n v. D&aye (1991), 250 Mont. 320, 323,
820 P.2d 1285, 1287.
For a claim of adverse possession to succeed, the claimant
must prove that the property was claimed under color of title or by
actual, visible, exclusive, hostile and continuous possession for
the full statutory period of five years. In addition, the claimant
must have paid the taxes on the property throughout the entire
statutory period; Smithers v. Hagerman (1990), 244 Mont. 182, 189,
197 P.2d 177, 182.
Section 70-19-404, MCA, governs adverse possession against a
landowner who has legal title to the property in question. This
section states:
[TJhe person establishing a legal title to the property
is presumed to have been possessed thereof within the
time required by law, and the occupation of the property
by any other person is deemed to have been under and in
subordination to the legal title unless it appears that
the property has been held and possessed adversely to
such legal title for 5 years before the commencement of
the action.
Section 70-19-404, MCA. The heirs gained a legal interest in the
property following the probate of Arabina's estate; therefore, any
use of the property by YA Bar is presumed to be subordinate to the
heirs' interests
Additionally, adverse possession by one cotenant against
another cotenant requires an even higher standard than adverse
possession against a stranger. To adversely possess against a
7
.
cotenant, the claimant must meet the above requirements and also
"oust" the cotenant from the property. This additional requirement
is necessary because any possession of land by one cotenant is
considered to be consistent with and in recognition of the
cotenancy. Fitschen Bros. Comm. Co. v. Noyes' Estate (1926), 76
Mont. 175, 246 P. 773. In Fitschen, this Court explained this
concept as follows:
When a cotenant . . enters on the common land he is
exercising a right which his title gives him; and his
resulting possession is presumed to be consistent with
his assumed title, and therefore to be the possession of
his cotenants and himself. But the doctrine has
been long since held . . that one tenant in common may
so enter and hold as to render the entry and possession
adverse, and amount to an ouster of a cotenant. And so,
where OI-iCe it appears that the party occupying the
premises holds not in recognition of, but in hostility
to, the rights of his cotenants, his possession ceases to
amount to constructive possession by them, becomes
adverse, and, if maintained for the period provided for
by the statute of limitations, will vest in the possessor
a sole title by adverse possession to the premises.
Fitschen, 246 P. at 179.
A cotenant must give his or her fellow cotenants notice that
possession of the land is no longer consistent with the cotenancy
and that he or she asserts a claim as sole owner of the property.
In Fitschen this Court further stated:
While it is t:rue that actual ouster of the cotenants must
appear, this does not necessarily imply an actual
physical ouster, but it is sufficient if the grantee
claims exclusive ownership and by his conduct denies the
right of others to any interest in the property.
Fitschen, 246 P. at 779. The theory of adverse possession against
a cotenant was again explored by this Court in LeVasseur v.
Roullman (1933), 93 Mont. 552, 20 P.2d 250. In further discussing
8
the difficult hurdle a cotenant must clear to adversely possess
against a fellow cotenant, this Court stated:
All acts done by a cotenant and relating to or affecting
the common property, are presumed to have been done by
him for the common benefit of himself and the others.
The relation between him and the other owners is always
supposed to be amicable rather than hostile; and his acts
are therefore regarded as being in subordination to the
title of all the tenants, for by so regarding them they
may be made to promote the interests of all.
[Plossession of a cotenant . . . is the possession of all
the cotenants.
However, one tenant in common may oust his cotenant
and make his possession adverse. But, as prima facie the
possession of every cotenant is presumed to be by virtue
of his title, and not in hostility to the rights of his
cotenants . . In order to sustain the claim that he
has obtained title by adverse possession, the claimant
must show that his cotenants had sufficient notice of his
exclusive and hostile claim.
. . The knowledge must be either brought home to
him, or the occupier must make his possession so visibly
hostile, notorious, and adverse, as to justify an
inference of knowledge on the part of the tenant sought
to be ousted . . .
LeVasseur, 20 P.2d at 252.
Thus, to adversely possess against a cotenant, the claimant
must oust the fellow cotenants. A cotenant can oust a fellow
cotenant by giving the fellow cotenant notice that he or she is
claiming an interest hostile and adverse to the fellow cotenant's
interest.
YA Bar has failed to meet this standard. The heirs claim that
they were unaware of their interest in the 448.22 acre parcel until
they received quitclaim deeds from YA Bar in 1991. YA Bar does not
claim that the heirs knew of the cotenancy nor did it present any
9
,
evidence which would show how the heirs would have received such
notice. YA Bar did not establish that the children of Earl
Harkness received any notice of their inheritance from their
grandmother, Arabina. YA Bar did not show that Earl's children had
ever received deeds to the property or that YA Bar had presented
them with quitclaim deeds in 1946 as it did the other heirs. YA
Bar did not claim to have informed the heirs of their interest
until the issuance of the quitclaim deeds in 1991. We conclude
that YA Bar's use of the 448.22 acres in conjunction with its other
ranch lands did not give the heirs sufficient notice to constitute
an "ouster" as discussed in Fitschen and LeVasseur.
YA Bar next argues that when cotenants are unaware of the
existence of a cotenancy, they are in essence "strangers" and
therefore only the general elements of adverse possession are
required. YA Bar relies on two cases, Nicholas v. Cousin (Wash.
Ct. App. 1969), 459 P.Zd 970, and City and County of Honolulu v.
Bennett (Haw. 197G), 552 P.2d 1380, for this proposition
In Nicholas, the Washington Court of Appeals found that a
cotenancy existed, although neither party was aware of it. The
court carved out an exception for adverse possession between non-
knowing cotenants, stating:
When the cotenant in possession of land is a non-knowing
cotenant, i.e., one who is unaware of the existence of
the cotenancy, subjectively he is a stranger to the title
held by the non-possessing cotenant; and, therefore, may
possess the requisite intent of a "stranger" for adverse
possession. If he does possess the "stranger's" intent,
and his conduct complies with the general statutory
requirements for ouster by adverse possession, his claim
is perfected.
10
. . . .
A non-possessing cotenant who is unaware of his
position as a cotenant is in the same position as any
other member Iof the public at large. Thus, when a person
claims sole and exclusive ownership of property and the
non-possessing cotenant has notice of this claim, actual
or constructive, he is bound in the same way as those
who, by mistake of fact or law, are ignorant of their
interest and have allowed strangers to claim adversely to
their property rights.
Nicholas, 459 P.2d at 975. Thus, under Washington law, a non-
knowing cotenant can adversely possess against a fellow non-knowing
cotenant just as he or she would against any other member of
society, by satisfying the general statutory elements for adverse
possession.
In Bennett the Supreme Court of Hawaii created another,
although narrower, exception for adverse possession by a non-
knowing cotenant. That court ruled that if a cotenant acting in
good faith has no reason to believe that a cotenancy exists, then
actual notice to the fellow cotenant is not required. Bennett, 552
P.2d at 1391.
However, it is unnecessary for us to either adopt or reject
the analysis of Nicholas or Bennett because under either theory YA
Bar would be charged with knowledge of the cotenancy. Nicholas and
Bennett both rely on the claimant being a non-knowing cotenant.
Since we conclude, as discussed below, that YA Bar must be charged
with knowledge of the cotenancies, Nicholas and Bennett are
inapplicable.
Ernest B. Harkness, the predecessor in interest, founder, and
37 year president of YA Bar was the executor of Arabina's estate.
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Ernest B. therefore knew how Arabina's estate was distributed. The
Final Settlement and Distribution of Arabina's estate granted a
l/36 interest in the 408.22 acre parcel to each of Earl Harkness's
six children. Ernest B., asp executor of Arabina's estate, filed
the Final Settlement and Distribution which resulted in the
creation of those interests. Ernest B. requested and received
quitclaim deeds to the 408.22 acre parcel from his four remaining
siblings. Ernest 13. did not, however, receive quitclaim deeds from
Earl's six children. These facts clearly establish that Ernest B.
knew of the heirs' interests in the 408.22 acre parcel.
‘IA Bar claims it was a non-knowing cotenant and held the
entire parcel as sole owner under "color of title." The facts and
circumstances of this case do not support YA Bar's claim. Color of
title is created by a document "which has the appearance or gives
the semblance of title but is not such in fact." Stevenson v. Owen
(1984), 212 Mont. 287, 295, 687 P.2d 1010, 1015. However, not
every deficient conveyance will create color of title in the
grantee. In Joseph Russell Realty Co. v. Kenneally (1980), 185
Mont. 496, 605 P.2d 1107, this Court found that a claim of color of
title must be made in good faith. In denying defendant's claim of
color of title, this Court stated:
Adverse possession under color of title is posses-
sion based on a written instrument which purports to pass
title but which in reality does not. . . .
. . .
[Color of title is created by] a title that is
imperfect, but not so obviously so that it would be
apparent to one not skilled in the law. (citation
omitted). Under Montana law, "an instrument which
12
. ,
purports to convey land or the right to its possession is
sufficient color of title as a basis for adverse posses-
sion if the claim is made in qood faith." (citations
omitted).
Russell, 605 P.Zd at 1111.
Ernest B. Harkness purported to transfer sole ownership of the
448.22 acre parcel to YA Bar, a corporation in which he was the
president and a major shareholder.. Since Ernest B. had knowledge
of Earl's children's interest in the property, this conveyance was
not made in good faith. At least one court has held that a grantor
cannot create color of title in land in which he does not have an
interest by transferring the land to a corporation or a trust in
which he has an interest. In State v. King (W.Va. 1915), 87 S.E.
167, the West Virginia Supreme Court concluded that the claimant
did not create color of title by deeding land he did not own to a
trust which he controlled. The court stated:
[A] deed made by a man to himself could not well be
supposed to have the characteristics of color of title.
. . . .
. . [T]he doctrine [of color of title] fairly and
conclusively assumes that there has been a transaction
between two or more persons by which a futile effort to
pass title from one to another has been made, a transac-
tion in which the actors were prompted by good intentions
and honest motives . . .
Kinq, 07 S.E. at 171-72.
This rule of law was confirmed by the West Virginia Supreme
Court in State v. .Altizer Coal Land Co. (W.Va. 1925), 128 S.E. 286.
The court held that a grantor could not create color of title by
conveying land which he did not own to a corporation in which he
was the president and majority shareholder. Altizer, 128 S.E. at
13
. ,
288-90. YA Bar claims to have created color of title in just this
manner. Ernest B. owned a 5/b interest in the 408.22 acre parcel.
In 1950 he purported to grant this land to YA Bar as sole owner.
YA Bar now claims to hold the parcel under color of title as sole
owner. Ernest B. knew of the other interests in the parcel, did
not act in good faith in conveying the parcel as sole owner and
therefore YA Bar cannot claim to hold the parcel under color of
title.
YA Bar is also charged with notice of the various interests in
the 40 acre parcel. The Final Settlement and Distribution of
Arabina's estate omitted the 40 acre parcel. The quitclaim deeds
received by Ernest B. from his four siblings likewise omitted the
40 acres. However, in 1950 when Ernest B. conveyed his property to
YA Bar, he included the 40 acre parcel in the conveyance. Ernest
B. owned only a I/6 interest in the 40 acre parcel yet purported to
convey the entire parcel as sole owner. The 40 acres was not
distributed solely to him by Arabina's Final Settlement and
Distribution nor by the quitclaim deeds from his siblings. The
"reappearance" of the omitted 40 acres in the deed from Ernest B.
to YA Bar puts Ernest B. and YA Bar on further notice of the other
potential claims to the 40 acre parcel.
We conclude that the District Court erred in finding that YA
Bar had adversely possessed the land of its cotenants. YA Bar did
not give the heirs sufficient notice to constitute an ouster under
Fitschen or LeVasseur. YA Bar was not a non-knowing cotenant, and
14
. I
therefore the theories discussed in Nicholas and Bennett are
inapplicable.
We note that 'YA Bar was not without a remedy when it wished to
extinguish the cotenancy. A party is not bound to remain an
unwilling cotenant with another party. The law provides a remedy
through the laws of partition. A cotenant can institute partition
proceedings to have the cotenancy terminated and the land or the
proceeds from the sale of the land equitably divided. Sections TO-
29-101 through -221, MCA.
We reverse the decision of the District Court.
Chief Justice
We concur:
Judge, sittkg in place&of
Justice John C. Harrison
15
December 23, 1994
CERTIFICATE OF SERVICE
I hereby certify that the following certified order was sent by United States mail, prepaid,
to the following named:
STUART R. WHITEHAIR
Attorney at Law
P.O. Box 6493
Bozeman, MT 59715
Carl M. Davis
SCHULZ, DAVIS & WARREN
P.O. Box 187
Dillon, MT 59725
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF, MONTANA