Wehner v. Schroeder

335 N.W.2d 563, 1983 N.D. LEXIS 340
CourtNorth Dakota Supreme Court
DecidedJune 24, 1983
DocketCiv. 10329
StatusPublished
Cited by26 cases

This text of 335 N.W.2d 563 (Wehner v. Schroeder) 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
Wehner v. Schroeder, 335 N.W.2d 563, 1983 N.D. LEXIS 340 (N.D. 1983).

Opinions

PAULSON, Justice.

This is an appeal from a judgment which dismissed the complaint of Christ N. Weh-ner and Helen Wehner requesting reformation of a deed based upon an alleged innocent mutual mistake and which quieted title to the minerals at issue in Albert Tor-maschy and Genevieve Tormaschy. We reverse and remand.

This case involves fifty percent of all oil, gas, and minerals under 160 acres of land in Stark County, North Dakota. In 1950 Christ and Helen Wehner sold the 160 acres to Frank Sehroeder and Barbara Schroeder. The contract for deed that the parties executed stated “That second parties [Schroe-ders] retain 50% of all oil gas and mineral on said land.” The Wehners contend that the reference to “second parties” in the deed was a mistake and that the deed should have stated that they (the first parties) retained fifty percent of the minerals. Later in 1950 the Wehners executed a warranty deed conveying the 160 acres to the Schroeders. However, the warranty deed did not contain any mineral reservation. The Wehners allege that the reservation of minerals contained in the contract for deed was omitted from the warranty deed because of an innocent mutual mistake by the Wehners and the Schroeders. This warranty deed is the instrument the Wehners want reformed.

In 1950 the Wehners gave up possession of the land to the Schroeders. The Schroe-ders executed a mineral deed conveying an undivided one-half mineral interest to R.V. Hodge in 1951. The validity of this conveyance is not disputed. In 1951 both the Wehners and the Schroeders executed mineral leases which involved the land at issue. At this time the problem of the mineral ownership existed, although it was not recognized until later. It is undisputed that' R.V. Hodge owned fifty percent of the minerals under the 160 acres, but in 1951 the issue existed regarding whether the Weh-ners or the Schroeders owned the other fifty percent mineral interest.

In 1963 the Schroeders sold the 160 acres to John Tormaschy and Eva Tormaschy, and executed a warranty deed which contained no mineral reservation. John testified at trial that he believed the Schroeders had sold one-half of the minerals and that the other half was sold to him along with the 160 acres. A few years later, John and Eva Tormaschy sold the 160 acres to their son and his wife, Albert Tormaschy and Genevieve Tormaschy. The purchase by Albert and Genevieve involved three re[565]*565corded documents — (1) a contract for deed containing no mineral reservation dated 1966, (2) a mineral deed conveying a one-half mineral interest dated 1966, and (3) a warranty deed containing no mineral reservation dated 1974. Since they received the mineral deed, Albert and Genevieve have leased this mineral interest several times.

In 1978 the Wehners discovered the alleged mistake in the 1950 warranty deed, and in 1981 they began the present action. The Wehners’ complaint requests that the court reform the warranty deed and quiet the title to the fifty percent mineral interest in their names. Albert and Genevieve Tormaschy counterclaimed seeking a judgment quieting title in their names. Before trial defendants Nick Schroeder, Ragina Linster, Katherine Kurtz, and Louise Clark stipulated that they did not claim any interest in the land and minerals involved and that they consented to any judgment enjoining them from ever asserting a claim in the property.

The trial judge found that John and Eva Tormaschy claimed no interest in the land or minerals. Therefore, the trial judge had only to determine whether Christ and Helen Wehner or Albert and Genevieve Tor-maschy possessed legal title to the fifty percent mineral interest. The trial judge determined that the Wehners’ claim was barred by statutes of limitation and by § 32-04-17 of the North Dakota Century Code which prohibits revision of a contract for fraud or mistake when the revision would prejudice rights acquired by third persons in good faith and for value. The trial judge then granted a judgment dismissing the Wehners’ complaint and quieting title to the fifty percent mineral interest in Albert and Genevieve Tormaschy. The two issues raised by the Wehners on appeal are whether or not the 1950 warranty deed can be reformed under § 32-04-17, N.D.C.C., and whether or not the Wehners’ claim is barred by any of the statutes of limitation.

Section 32-04WL7, N.D.C.C., provides:

“Revision of contract for fraud or mistake. — When, through fraud or mutual mistake of the parties, or a mistake of one party which the other at the time knew or suspected, a written contract does not truly express the intention of the parties, it may be revised on the application of a party aggrieved so as to express that intention so far as it can be done without prejudice to rights acquired by third persons in good faith and for value.” [Emphasis added.]

In Sieger v. Standard Oil Company, 155 Cal.App.2d 649, 318 P.2d 479, 484 (1957), a California court interpreted California Civil Code § 3399, which is almost identical to § 32-94-17, N.D.C.C., and stated:

“The conjunctive used in the last phrase [‘in good faith and for value’] is expressive of the general common law on the subject. To become a bona fide purchaser one must have acquired title without notice, actual or constructive, of another’s rights and also must have paid value for the same.”

See Ell v. Ell, 295 N.W.2d 143, 153 (N.D. 1980); Annot., 79 A.L.R.2d 1180. The deed at issue in the instant case can be reformed only if the rights of third persons, acquired in good faith and for value, are not prejudiced. The trial court found that Albert and Genevieve Tormaschy are such third-party bona fide purchasers and that the reformation sought by the Wehners would prejudice their rights. We disagree with the trial judge’s determination that the Tormaschys acquired the mineral interest “in good faith”, i.e., without actual or constructive notice of the Wehners’ claim.

In Sickler v. Pope, 326 N.W.2d 86, 95 (N.D.1982), we stated that “[a] person dealing with real property is charged with notice of properly recorded instruments affecting title”. In the instant case the contract for deed and the warranty deed were recorded in 1950. A search of the title abstract should have disclosed the discrepancy between the two instruments executed by the Wehners and the Schroeders. A title examination should have made the Tormaschys aware of the potential problem and caused them to investigate further.

[566]*566In Finding of Fact No. 10, the trial judge stated that Albert and Genevieve Tor-maschy had no notice “except as may have been communicated to them by the recording of the deed and contract between the Plaintiffs [Wehners] and Schroeders during the year 1950”. In this finding the trial judge recognized the possibility of the existence of constructive notice. We believe Albert and Genevieve Tormaschy had constructive notice of a possible claim by the Wehners through recorded instruments and, as a result, they are not third-party bona fide purchasers. Therefore, § 32-04r-17, N.D.C.C., does not prohibit the Wehners from attempting to obtain reformation of the warranty deed.

The trial judge also found, however, that the Wehners’ quiet title claim was barred by a statute of limitations.

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Wehner v. Schroeder
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Bluebook (online)
335 N.W.2d 563, 1983 N.D. LEXIS 340, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wehner-v-schroeder-nd-1983.