No. 8 4 - 5 1 1 IN THE SUPREME COURT OF THE STATE OF MONTANA
Plaintiff and Appellant, -vs- HAROLD V. KRUSE and NAOMI J. KRUSE, Husband and Wife, and ROBERT M. WILLETT, BRUCE MICHEL ROBERTS, and All other Persons claiming interest in described real property, Defendants and Respondents. ........................... KRIS ROBERT HIRT, Intervenor and Respondent,
JAMES B. WALTERS, LEE McDONALD and RICK HILDEBRAND AND SANDY HILDEBRAND, Husband and Wife, Defendants and Appellants.
APPEAL FROM: District Court of the Nineteenth Judicial District, In and for the County of Lircoln, The Honorable Robert M. Bolter, Judge presiding. COUNSEL OF RECORD: For Appellants:
Sverdrup & Spencer, Libby, Montana Fennessy, Crocker & Allen, Libby, Montana For Respondents: Allen L. McAlear, Bozeman, Montana
Submitted on Briefs: May 9, 1955 ~ecided: January 8, 1986
Filed: JAN 8 - I986
- - Clerk Nr. J u s t i c e W i l l i a m E . Hunt, S r . d e l i v e r e d t h e O p i n i o n o f t h e Court.
The appellant, James Walters, brought a quiet title
a c t i o n i n April. 1 9 8 1 i n I ; i n c o l n County D i s t r i c t C o u r t . The
named d e f e n 6 a n t s m a d e no a p p e a r a n c e and t h e C i s t r i c t C o u r t
o r d e r e 6 t i t l e q u i e t e d i n a p p e l l m t VJalters on J u n e 8 , 1981.
I n February 1983, t h e respondent, K r i s I-Tirt, fil-ed a motion
and action to set a s i d e t h a t decree. The D i s t r i c t Court
c r d e r e d t h e d e c r e e s e t a s i d e and t h e p a r t i e s t h e n p r o c e e d e d
on t h e o r i g i ~ a l q u i e t t i t l e a c t i o n a s i f a n a p p e a r a n c e had
heen made. The District Court quieted title in the
respondent, K r i s Roberts H i r t . This appeal followed.
W e affirm.
The i s s u e s p r e s e n t e d f o r rev: ' e w a r e :
1. Whether t h e District Court e r r e d in setting aside
t h e q u i e t t i t l e decree.
2. Whether t h e r e wwas e v i d e n c e of f r a u d sufficient tc
a l l o w t h e q u j e t t i t l e d e c r e e t o be set a s i d e .
3. Whether a diligent search was performed in
accorCance w i t h Rule 4 0 ( 5 ) , b4.R.Civ.P.
The f i r s t i s s u e i s w h e t h e r t h e D i s t r i c t C o u r t e r r e d . i n
s e t t i n g a s i d e t h e q u i e t t i t l e decree. Our d i s c u s s i o c o f t h i s
issue controls an6 renders a discussion of the remaining
i s s u e s unnecessary.
T h i s m a t t e r c o n c e r n s a two p a r c e l t r a c t cf r e a l p r o p e r t y
located i n Lincoln County, Montana. In 1958, Harold and
h'aomi Kruse purchased the property from F o r r e s t and Vera
Sund. The d e e d was r e c o r d e d i n L i n c c l n County.
In 1 9 7 2 , t h e K r u s e s s o l d t h e p r o p e r t y by c o n t r a c t f o r
d e e d to Robert W i l - l e t t . The c o n t r a c t was h e l d i n escrow i n Bonners Ferry, Idaho. The c o n t r a c t made no p r o v i s i o n fcr
payment o f t a x e s . I n 1 3 7 3 , W i l l e t t a s s i g n e d t h e c o n t r a c t to
Bruce and K r i s F o b e r t s . The R o b e r t s ' m a r r i a g e was d i s s o l v e d
and as part of the divorce settlement Eruce assigned his
i n t e r e s t . t o R r i s i n December 1974, and t h e n e x e c u t e d a q u i t
c l a i m d e e d t o h e r i n August 1975. Pris i s now K r i s I I i r t ,
respondent. T h e r e was no n o t i c e o f a n y o f t h e s e t r a n s a c t i o n s
r e c o r d e d i n L i n c o l n County where t h e l a n d i s l o c a t e d .
L i n c o l n County c o n t i n u e d t o a s s e s s t a x e s on t h e p r o p e r t y
t o t h e F r u s e s a s r e c o r d owners. The 1976 t a x e s were n o t p a i d
and i n J u l y 1977, t h e p r o p e r t y was o f f e r e d for public tax
sale. No b i d was r e c e i v e d on t h e p r o p e r t y and L i n c o l n County
became t h e p u r c h a s e r .
In J a ~ u a r y 1980, L e e McDonald purchase2 the property
from L i n c o l n County v i a a t a x deed. p r o c e d u r e . The t a x d e e d
contained an incorrect and incomplete description. In
Februs-ry 1 9 8 1 , the appellant, James W a l t e r s , purchased the
p r o p e r t y from M c D o ~ a l d . b 7 a l t e r s r e c o r d e d h i s d e e d .
IE A p r i l 1981, W a l t e r s f i l e d a c o m p l a i n t t o q u i e t t i t l e
t o t h e property. H e named a s d e f e n d a n t s i n t h a t a c t i o n t h e
Kruses, Willett, Bruce Poberts, and "all other persons,
" ~lnknown.
On J u n e 8 , 1981, t h e D i s t r i c t C o u r t , h a v i n g d e t e r m i n e d
that the defendants had been duly served, yet failed to
a p p e a r a n d w e r e i n d e f a u l t , and h a v i n g d e t e r m i n e d t h a t p r o o f
t o the satisfaction of t h e c o u r t h a v i n g been made, ordered
title quieted in the appellant. Appellant, Walters, then
conveyed two p a r c e l s t o R i c k a n d Sandy H i l d e b r a n d . That deed
was recorded in Cctober 1981. In the meantime the
respondent, Rris Hirt, h a d b e e n p a y i n g on h e r c o n t r a c t h e l d
i n e s c r o w i n t h e I d a h o bank. The r e s p o n d e n t b e l i e v e d . t h a t the escrow arrangement included payment of taxes. In
September 1982, respondent's f r i e n d who lived next to the
p r o p e r t y a d v i s e d h e r t h a t somecr,e was l i v i n g end b u i l d i n g on
the property.
I n February 1983, K r i s I T i r t f i l e d c o n s o l i d a t e d motions
to s e t a s i d e h e r d e f a u l t a n d t o i n t e r v e n e ir, t h e o r i g i n a l
q u i e t t i t l e acrtion, a t h i r d p a r t y c o m p l a i n t on q u i e t t i t l e ,
and a n a c t i o n t o s e t a s i d e t h e t a x d e e d . She a l l e g e d tha.t.
the tax sale and subsequent transfers were void. for
irregularities incl-uding lack of definite description,
failure to give proper notice, fraud on the court, and
failure to use proper tax deed procedure. She named the
appellant, h i s predecessor, McDcna.ld, a n d t h e H i 1 d e b r a . r . d ~ a s
defendants.
I n November 1983, t h e C i s t r i c t C o u r t s e t a s i d e i t s J u n e
1981, decree that had quieted title in the appellant.
Appellant, Walters, t h e n moved t o s e t a s i d e t h i s judgment i n
f a v o r c f t h e respondent., H i r t . T h i s m o t i o n was d e n i e d . The
a p p e l l a n t t h e n f i l e d a n amended c o m p l a i n t and t h e n a t t e r went
to trial. I n J u l y 1984, t h e D i s t r i c t C o u r t i s s u e d f j - n d i n g s
o f f a c t and c o n c l u s i o n s o f law. The c o u r t found. t h a t L i n c o l n
County d i d n o t h a v e j u r i s d i c t i o n t o i s s u e a t a x d e e d b e c a u s e
t h e n o t i c e w a s m e t e r i a l . l y d e f e c t i v e i n s t a t i n g t h e amount d u e
and in s e t t i n g f o r t h t h e clescription. As a r e s u l t of the
defects, t h e c o u r t found t h a t K r i s R o b e r t s d i d not. l o s e h e r
r i g h t t o redeem t h e p r o p e r t y by payment o f d e l i n q u e n t t a x e s
and that upon payment of those taxes she sh.ould h a v e the
title quieted in her favor on the land not. previously
conveyed t o t h e H i l d e b r a r i d s .
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No. 8 4 - 5 1 1 IN THE SUPREME COURT OF THE STATE OF MONTANA
Plaintiff and Appellant, -vs- HAROLD V. KRUSE and NAOMI J. KRUSE, Husband and Wife, and ROBERT M. WILLETT, BRUCE MICHEL ROBERTS, and All other Persons claiming interest in described real property, Defendants and Respondents. ........................... KRIS ROBERT HIRT, Intervenor and Respondent,
JAMES B. WALTERS, LEE McDONALD and RICK HILDEBRAND AND SANDY HILDEBRAND, Husband and Wife, Defendants and Appellants.
APPEAL FROM: District Court of the Nineteenth Judicial District, In and for the County of Lircoln, The Honorable Robert M. Bolter, Judge presiding. COUNSEL OF RECORD: For Appellants:
Sverdrup & Spencer, Libby, Montana Fennessy, Crocker & Allen, Libby, Montana For Respondents: Allen L. McAlear, Bozeman, Montana
Submitted on Briefs: May 9, 1955 ~ecided: January 8, 1986
Filed: JAN 8 - I986
- - Clerk Nr. J u s t i c e W i l l i a m E . Hunt, S r . d e l i v e r e d t h e O p i n i o n o f t h e Court.
The appellant, James Walters, brought a quiet title
a c t i o n i n April. 1 9 8 1 i n I ; i n c o l n County D i s t r i c t C o u r t . The
named d e f e n 6 a n t s m a d e no a p p e a r a n c e and t h e C i s t r i c t C o u r t
o r d e r e 6 t i t l e q u i e t e d i n a p p e l l m t VJalters on J u n e 8 , 1981.
I n February 1983, t h e respondent, K r i s I-Tirt, fil-ed a motion
and action to set a s i d e t h a t decree. The D i s t r i c t Court
c r d e r e d t h e d e c r e e s e t a s i d e and t h e p a r t i e s t h e n p r o c e e d e d
on t h e o r i g i ~ a l q u i e t t i t l e a c t i o n a s i f a n a p p e a r a n c e had
heen made. The District Court quieted title in the
respondent, K r i s Roberts H i r t . This appeal followed.
W e affirm.
The i s s u e s p r e s e n t e d f o r rev: ' e w a r e :
1. Whether t h e District Court e r r e d in setting aside
t h e q u i e t t i t l e decree.
2. Whether t h e r e wwas e v i d e n c e of f r a u d sufficient tc
a l l o w t h e q u j e t t i t l e d e c r e e t o be set a s i d e .
3. Whether a diligent search was performed in
accorCance w i t h Rule 4 0 ( 5 ) , b4.R.Civ.P.
The f i r s t i s s u e i s w h e t h e r t h e D i s t r i c t C o u r t e r r e d . i n
s e t t i n g a s i d e t h e q u i e t t i t l e decree. Our d i s c u s s i o c o f t h i s
issue controls an6 renders a discussion of the remaining
i s s u e s unnecessary.
T h i s m a t t e r c o n c e r n s a two p a r c e l t r a c t cf r e a l p r o p e r t y
located i n Lincoln County, Montana. In 1958, Harold and
h'aomi Kruse purchased the property from F o r r e s t and Vera
Sund. The d e e d was r e c o r d e d i n L i n c c l n County.
In 1 9 7 2 , t h e K r u s e s s o l d t h e p r o p e r t y by c o n t r a c t f o r
d e e d to Robert W i l - l e t t . The c o n t r a c t was h e l d i n escrow i n Bonners Ferry, Idaho. The c o n t r a c t made no p r o v i s i o n fcr
payment o f t a x e s . I n 1 3 7 3 , W i l l e t t a s s i g n e d t h e c o n t r a c t to
Bruce and K r i s F o b e r t s . The R o b e r t s ' m a r r i a g e was d i s s o l v e d
and as part of the divorce settlement Eruce assigned his
i n t e r e s t . t o R r i s i n December 1974, and t h e n e x e c u t e d a q u i t
c l a i m d e e d t o h e r i n August 1975. Pris i s now K r i s I I i r t ,
respondent. T h e r e was no n o t i c e o f a n y o f t h e s e t r a n s a c t i o n s
r e c o r d e d i n L i n c o l n County where t h e l a n d i s l o c a t e d .
L i n c o l n County c o n t i n u e d t o a s s e s s t a x e s on t h e p r o p e r t y
t o t h e F r u s e s a s r e c o r d owners. The 1976 t a x e s were n o t p a i d
and i n J u l y 1977, t h e p r o p e r t y was o f f e r e d for public tax
sale. No b i d was r e c e i v e d on t h e p r o p e r t y and L i n c o l n County
became t h e p u r c h a s e r .
In J a ~ u a r y 1980, L e e McDonald purchase2 the property
from L i n c o l n County v i a a t a x deed. p r o c e d u r e . The t a x d e e d
contained an incorrect and incomplete description. In
Februs-ry 1 9 8 1 , the appellant, James W a l t e r s , purchased the
p r o p e r t y from M c D o ~ a l d . b 7 a l t e r s r e c o r d e d h i s d e e d .
IE A p r i l 1981, W a l t e r s f i l e d a c o m p l a i n t t o q u i e t t i t l e
t o t h e property. H e named a s d e f e n d a n t s i n t h a t a c t i o n t h e
Kruses, Willett, Bruce Poberts, and "all other persons,
" ~lnknown.
On J u n e 8 , 1981, t h e D i s t r i c t C o u r t , h a v i n g d e t e r m i n e d
that the defendants had been duly served, yet failed to
a p p e a r a n d w e r e i n d e f a u l t , and h a v i n g d e t e r m i n e d t h a t p r o o f
t o the satisfaction of t h e c o u r t h a v i n g been made, ordered
title quieted in the appellant. Appellant, Walters, then
conveyed two p a r c e l s t o R i c k a n d Sandy H i l d e b r a n d . That deed
was recorded in Cctober 1981. In the meantime the
respondent, Rris Hirt, h a d b e e n p a y i n g on h e r c o n t r a c t h e l d
i n e s c r o w i n t h e I d a h o bank. The r e s p o n d e n t b e l i e v e d . t h a t the escrow arrangement included payment of taxes. In
September 1982, respondent's f r i e n d who lived next to the
p r o p e r t y a d v i s e d h e r t h a t somecr,e was l i v i n g end b u i l d i n g on
the property.
I n February 1983, K r i s I T i r t f i l e d c o n s o l i d a t e d motions
to s e t a s i d e h e r d e f a u l t a n d t o i n t e r v e n e ir, t h e o r i g i n a l
q u i e t t i t l e acrtion, a t h i r d p a r t y c o m p l a i n t on q u i e t t i t l e ,
and a n a c t i o n t o s e t a s i d e t h e t a x d e e d . She a l l e g e d tha.t.
the tax sale and subsequent transfers were void. for
irregularities incl-uding lack of definite description,
failure to give proper notice, fraud on the court, and
failure to use proper tax deed procedure. She named the
appellant, h i s predecessor, McDcna.ld, a n d t h e H i 1 d e b r a . r . d ~ a s
defendants.
I n November 1983, t h e C i s t r i c t C o u r t s e t a s i d e i t s J u n e
1981, decree that had quieted title in the appellant.
Appellant, Walters, t h e n moved t o s e t a s i d e t h i s judgment i n
f a v o r c f t h e respondent., H i r t . T h i s m o t i o n was d e n i e d . The
a p p e l l a n t t h e n f i l e d a n amended c o m p l a i n t and t h e n a t t e r went
to trial. I n J u l y 1984, t h e D i s t r i c t C o u r t i s s u e d f j - n d i n g s
o f f a c t and c o n c l u s i o n s o f law. The c o u r t found. t h a t L i n c o l n
County d i d n o t h a v e j u r i s d i c t i o n t o i s s u e a t a x d e e d b e c a u s e
t h e n o t i c e w a s m e t e r i a l . l y d e f e c t i v e i n s t a t i n g t h e amount d u e
and in s e t t i n g f o r t h t h e clescription. As a r e s u l t of the
defects, t h e c o u r t found t h a t K r i s R o b e r t s d i d not. l o s e h e r
r i g h t t o redeem t h e p r o p e r t y by payment o f d e l i n q u e n t t a x e s
and that upon payment of those taxes she sh.ould h a v e the
title quieted in her favor on the land not. previously
conveyed t o t h e H i l d e b r a r i d s .
As t o t h e l a n d conveyed t o t-he I I i l d e b r a n d s , the court
f o u ~ dt h a t title should remain i n th.e HiLZebrands a s bona fide purchasers for val-ue, b u t that the appellant Walters
should! pay H i r t For t h e p r o p e r t y h e had conveyed t o them.
J u d g n e n t was e n t e r e d q u i e t i n g t i t l e i n t h e r e s p o n d e n t s u b j e c t
t o t h e Hildebrand's G r a p p e l l a n t ' s r i g h t t o redeem by p a y i n g
t h e r e s p o n d e n t f o r t h e p a r c e l upGn which t h e Hil.debrands had
constructed buildings. Both t h e a p p e l l a n t s and H i l d e b r a n d s
a p p e a l ~ d . Subsequently t h e Hildebrands s e t t l e d t h e i r d i s p u t e
and d i s m i s s e d t h e i r appeal.
The f i r s t i s s u e w e m u s t d e c i d e i s w h e t h e r t h e D i s t r i c t
Court e r r e d i n s e t t i n g a-side t h e q u i e t t i t l e decree.
The r e s p o n d e n t , i n h e r c o n s o l i d a t e d m o t i o n and a c t i o n t o
set aside the quiet title decree, also challenge6 the
underlying tax deed procedure under which lGcDonald,
appellant's prezecessor in title, claimed his interest.
However, as the District Court found, the description of
property claimed under the tax deed procedure was so
6eficient that there could be no valid transfer of any
i n t e r e s t under any k i n d o f a c t i o n . The n o t i c e p u b l i s h e d i n
the tax deed procedure referred to Section 25 and not to
S e c t i o n 2 6 , t h e s e c t i o n i n which t h e l a n d l i e s . In addition
t h e d e s c r i p t i o n r e f e r r e d t o a " T r a c t 1" i n H.E.S. 735--there
i s no T r a c t 1 i n H . E . S . 735. T o compounl t h e d i f f i c u l t y i n
locating t h e land, t h e description 2id not indicate north o r
south f o r t h e township, o r e a s t o r w e s t f o r t h e range.
Fe agree with the Cistrict Court that the nctice of
application fcr tax deed was so vague, incomplete and
e r r o n e o u s t h a t i t d o e s n o t a d e q u a t e l y i d e n t i f y t h e l a n z and
is therefore f a t a l l y defective. Y e t t e r v. G a l l a t i n County
(Kont. 1 9 8 2 ) , 645 P.26 941, 9 4 2 , 39 St.Rep. 905, 907.
D e f e c t i v e n o t i c e of a p p l i c a t i o n f o r a t a x deed d e p r i v e s
t h e county t r e a s u r e r of jurisdiction t o i s s u e t h e t a x deed. Edwards v. Walters (Kont. 1983), 664 P.2d 332, 937, 40
St.Rep. 914, 921. Because no valid tax deed has been issued
respondent's right to redeer, the property has not. terminated.
Section 15-18-101, MCA.
Because of our holding a-s to the first issue it is not
necessary to discuss the second and third issues.
The judgment of the District
We Concur: