The Next Step v. Redmon

2016 ND 85, 879 N.W.2d 71, 2016 N.D. LEXIS 100, 2016 WL 3021631
CourtNorth Dakota Supreme Court
DecidedMay 26, 2016
Docket20150333
StatusPublished

This text of 2016 ND 85 (The Next Step v. Redmon) is published on Counsel Stack Legal Research, covering North Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
The Next Step v. Redmon, 2016 ND 85, 879 N.W.2d 71, 2016 N.D. LEXIS 100, 2016 WL 3021631 (N.D. 2016).

Opinion

KAPSNER, Justice.

[¶ 1] The Next Step appeals from a judgment entered after the district court dismissed its quiet title action. We affirm, concluding unincorporated associations are incapable of holding title to real property.

I

[¶ 2] The Next Step, an unincorporated association, and Jamie Redmon, an individual, both claim title to residential real property located in Minot. Both parties claim ownership through''different quitclaim deeds they allege were executed by the prior owner of the property. The relevant conveyances follow:

Quitclaim deed by Orlin Swensrud to Holly Gates. ' Recorded in 1999. Quitclaim deed by Holly Gates to Daniel Foster. Recorded in 2008.
Quitclaim deed by Daniel Foster to The Next Step. Dated 2009. Recorded in 2014.
Quitclaim deed by Daniel Foster to Jamie Redmon. Dated and recorded in 2013.

Redmon alleged the quitclaim deed to .The Next Step was forged. Holly Gates, a co-founder of The Next Step, asserted it was not. Thé Next Step moved for summary judgment, and Redmon,,filed a response. The district court did not immediately rule on the motion; it instructed the parties to provide supplemental briefing on the issue of whether unincorporated associations are capable of holding title to real property in North Dakota. After the parties provided their supplemental briefs, the court entered an.order dismissing the case. The court held unincorporated associations are incapable of holding title to real property in North Dakota. The Next Step appeals.

H

[¶ 3] The Next Step argues the common-law rule prohibiting unincorporated associations from holding title to real property has been eroded. Redmon concedes courts have created exceptions to the common-law rule, but she asserts none are applicable in this case. “Whether the district court properly granted summary judgment is a question of law which we review de novo on the entire record.” Hamilton v. Woll, 2012 ND 238, ¶ 9, 823 N.W.2d 754.

[¶ 4] An unincorporated association is: “An unincorporated organization that is not a legal entity separate from the persons who compose it.” Black’s Law Dictionary 141 (9th ed.2009). Absent the exceptions discussed below, unincorporated associations are incapable of holding title to real property because they are not legal -entities. “The reasoning behind this common-law rule is sound: there must be some legal, identifiable party holding the interest who is responsible for liability-arising out of that ownership interest.” Winchell v. Montana Dep’t of State Lands, 262 Mont. 328, 865 P.2d 249, 252-53 (1993).

A voluntary unincorporated association may be nothing more .than individuals joining together based merely on common purpose or interest. Thus, it is *73 a maxim of the common law that, in the absence of statutory authority, such an association has no legal existence independent of those members who comprise the organization. Such being the case, the association at common law cannot, in its own name, (1) enter into contracts, (2) take, hold, or transfer property, or (3) sue or be sued.

Rock Creek Gardens Tenants Ass’n v. Ferguson, 404 A.2d 972, 973 (D.C.1979) (citations omitted). See also North Dakota Title Standards (2012), Standard 2-19 (“A conveyance to an unincorporated association does not vest title in such association.”); 2 Patton and Palomar on Land Titles § 416 (3d. ed.2015).

[¶ 5] The Next Step argues: “Since Askew [v, Joachim Mem. Home, 234 N.W.2d 226 (N.D.1975)] the common law no longer applies to unincorporated associations and their ability to enter into contracts, to sue and be sued, to deny their existence.” In Askew, we modified the common law to allow unincorporated associations to be sued when they have held themselves out to be legal entities; we based our holding on the principle of es-toppel. An architect sued Joachim Memorial Home, an unihcorporated nursing home, for damages the architect incurred after the nursing home abandoned a construction project. Askeiv, at 230-31. The nursing home argued it was immune from suit because it was an unincorporated association. Id. at 233. We recognized unincorporated associations could not be sued at common law. Id. at 234. But we determined the doctrine of estoppel precluded the nursing home from avoiding the lawsuit because the nursing home had held itself out as a legal entity cohducting business. Id. at 235-36. We concluded “that an association doing business as a legal entity may, if the facts and circumstances warrant, be estopped to deny its own existence.” Id. at 236.

[¶ 6] Askew did not abrogate the common law’s prohibition on unincorporated associations holding title to real property. Askew simply created an equitable exception to the common-law rule to be applied when “the facts and circumstances warrant.” Askew, 234 N.W.2d at 236. The logic behind the common law’s prohibition of unincorporated associations’ ownership of real property is still persuasive after Askeiv. “[T]here must be some legal, identifiable party holding the interest who is responsible for liability arising out of that ownership interest.” Winchell, 865 P.2d at 253. Otherwise, individuals would be able to conceal their identity and escape liability flowing from property ownership by simply holding property in the name of an unincorporated association.

HI

[¶ 7] The Next Step asserts that, even if the common-law rule has not been abrogated, this case warrants an exception. It argues we should either (1) adopt an exception that allows courts to construe a conveyance to an unincorporated association to vest ownership in the association’s members, or (2) adopt an exception that allows courts to construe such conveyances to be held in trust for the association. We conclude these exceptions are inappropriate for this case, and we adopt neither.

A

[¶ 8] The first exception allows a court to construe a grant to an unincorporated association to vest ownership in the association’s members when those members are ascertainable. The Montana Supreme Court has described the exception:

[W]hen an unincorporated association purportedly, owns property, the presence of “identifiable trustees” of the association makes for a group that can take *74 responsibility for the duties of ownership, and that therefore possess the land in lieu of the association.

Edwards v. Burke, 324 Mont. 358, 102 P.3d 1271, 1275 (2004). The United States Court of Appeals for the First Circuit has explained this exception only applies when the association’s membership is ascertainable:

[The common-law rule] is not absolute.

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Related

Winchell v. Montana Department of State Lands
865 P.2d 249 (Montana Supreme Court, 1993)
Edwards v. Burke
2004 MT 350 (Montana Supreme Court, 2004)
Anderson v. Vian Cemetery Ass'n
571 P.2d 880 (Court of Civil Appeals of Oklahoma, 1977)
Askew v. Joachim Memorial Home
234 N.W.2d 226 (North Dakota Supreme Court, 1975)
Rock Creek Gardens Tenants Ass'n v. Ferguson
404 A.2d 972 (District of Columbia Court of Appeals, 1979)
State v. Sunbeam Rebekah Lodge No. 180
127 P.2d 726 (Oregon Supreme Court, 1942)
Byam v. Bickford
2 N.E. 687 (Massachusetts Supreme Judicial Court, 1885)
Piper v. Taylor
188 N.W. 171 (North Dakota Supreme Court, 1922)
Hamilton v. Woll
2012 ND 238 (North Dakota Supreme Court, 2012)

Cite This Page — Counsel Stack

Bluebook (online)
2016 ND 85, 879 N.W.2d 71, 2016 N.D. LEXIS 100, 2016 WL 3021631, Counsel Stack Legal Research, https://law.counselstack.com/opinion/the-next-step-v-redmon-nd-2016.