Estate of Henderson v. Estate of Henderson

#26316-a-LSW
2012 S.D. 80

IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
****

ESTATE OF WALTER G. HENDERSON,
DAVID HENDERSON, PERSONAL
REPRESENTATIVE, Plaintiff and Appellee,

v.

ESTATE OF DORA R. HENDERSON,
SUSAN R. HENDRSON, PERSONAL
REPRESENTATIVE and INDIVIDUALLY, Defendant and Appellant,

and

ESTATE OF ANDREW M. HENDERSON,
a/k/a A.M. HENDERSON, DECEASED,
ROGER A. HUBBARD, SHARON M.
HENDERSON BOUCK and UNKNOWN
DEFENDANTS A-D, Defendants.

****
APPEAL FROM THE CIRCUIT COURT OF
THE SEVENTH JUDICIAL CIRCUIT
FALL RIVER COUNTY, SOUTH DAKOTA
****
THE HONORABLE JANINE M. KERN
Judge

****
KENNETH E. BARKER
TIMOTHY J. VANDER HEIDE
BRADLEY P. GORDON of
Barker Wilson Law Firm, LLP
Belle Fourche, South Dakota Attorneys for plaintiff
and appellee.

PATRICK DUFFY
Rapid City, South Dakota Attorney for defendant
and appellant.
****
CONSIDERED ON BRIEFS
ON OCTOBER 1, 2012
OPINION FILED 11/20/12
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WILBUR, Justice

[¶1.] Walter Henderson (Walter) brought a quiet title action to claim

ownership of an undivided 30 percent interest in a mineral estate in Fall River

County, South Dakota. Following a court trial, which confirmed Walter’s ownership

of the mineral interest in fee, Walter’s half-sister, Susan Henderson (Susan),

individually and as a representative of her deceased mother, Dora Henderson’s

(Dora) estate, appeals to this Court arguing that Walter’s cause of action is barred

by the statute of limitations under SDCL 15-2-13(1) and SDCL 15-3-2. We affirm.

FACTS AND PROCEDURAL BACKGROUND

[¶2.] Andrew Henderson (Andrew), the father of Walter, was the owner in

fee of certain mineral interests located in Fall River County, South Dakota. On

November 6, 1973, Walter and Andrew entered into an agreement, which granted

Walter an undivided 30 percent interest in Andrew’s entire mineral estate subject

to prior oil and gas leases as of September 18, 1972 (the Agreement). The

Agreement was signed by both Walter and Andrew and properly acknowledged by a

notary public on November 14, 1973. The language of the Agreement provides

“[u]pon the request of Grantee, and without the payment of further consideration,

Grantor agrees to execute and deliver to Grantee such conveyances, assignments

and other instruments as may be required to effectuate the foregoing provisions of

the Agreement.” The language also provides that “[t]his Agreement shall benefit

and be binding upon Grantor and Grantee and their respective heirs and assigns.”

As payment and consideration for his purchase of the undivided 30 percent mineral

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interest, Walter delivered to Andrew a $6,000 cashier’s check dated November 2,

1973.

[¶3.] Prior to the Agreement, Andrew had executed a number of oil and gas

leases of his 30 percent mineral interest. Following the execution of the Agreement,

Walter entered into additional oil and gas leases of his 30 percent mineral interest.

Walter received lease and bonus payments as a result of the oil and gas leases that

both he and Andrew negotiated. All of the oil and gas leases relating to the 30

percent mineral interest were recorded with the Fall River County Register of

Deeds.

[¶4.] Walter recorded the Agreement with the Fall River County Register of

Deeds on July 16, 1976, eight days after Andrew’s death. In his Last Will and

Testament, Andrew left Dora, Walter’s step-mother, only those mineral interests

and all other real and personal property Andrew owned at the time of his death.

Lastly, a Decree of Settlement of Final Account of Executrix: For Final Distribution

of Estate and Adjudicating Termination of Life Estates (Final Decree) was signed

for the estate of Andrew Henderson on September 17, 1982. The Final Decree

conveyed 70 percent of Andrew’s mineral estate to his surviving wife, Dora.

[¶5.] Following Andrew’s death, Dora negotiated and executed four oil and

gas leases that described her 70 percent interest in Andrew’s mineral estate. These

leases were recorded at the Fall River County Register of Deeds as of September 21,

1979; June 2, 1980; February 7, 1985; and March 5, 1985, respectively. Dora died

testate in Fall River County, on April 6, 2008, and the probate of her estate was

pending at the time of trial. Susan, the daughter of Andrew and Dora and the only

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heir in Dora’s will, was appointed the personal representative of her mother’s

estate.

[¶6.] Walter filed a quiet title action in order to assert his ownership in fee

of the undivided 30 percent interest in the mineral estate. Susan and other named

defendants filed a joint Answer that challenged Walter’s ownership to the 30

percent interest in the mineral estate and asserted counterclaims of conversion,

fraud, and punitive damages. Defendants also pleaded the affirmative defenses of

laches, statute of limitations pursuant to SDCL 15-2-13(1) and SDCL 15-3-2,

estoppel, failure of consideration, waiver, and failure to state a claim upon which

relief could be granted. Both sides moved for summary judgment and the motions

were denied by the trial court. In denying Susan and other named defendants’

summary judgment motion, the trial court concluded that “there is no issue of

material fact upon which Defendant could prevail on her statute of limitations

argument.”

[¶7.] A court trial on the quiet title action was held on January 6, 2012. 1

The trial court entered judgment in favor of Walter’s estate declaring Walter as the

owner in fee of the 30 percent undivided mineral interest. The court concluded that

Susan and the other named defendants had not pleaded a basis for their claim of

ownership in the undivided 30 percent mineral interest under SDCL 21-41-14.

Specifically, Susan and the other named defendants did not set forth the nature of

their claim to the property in their Answer, but instead, they “claim[ ] all right,

1. Prior to trial, Walter died. His nephew, David Henderson, was named as the
personal representative of Walter’s estate.

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title, and interest in the mineral estate because, by operation of law, Plaintiff

Walter Henderson has none.” As such, the trial court held that Susan and the other

named defendants’ Answer was legally deficient under SDCL 21-41-14 and “[t]he

failure of the Defendants to state the basis for their claim of ownership in the

subject property [was] fatal to their defense.” 2

[¶8.] Susan, the only party before this Court, 3 presents the following issue

on appeal: “Whether any statute of limitation applies to time-bar Walter’s quiet

title cause of action.” Because Susan claims that Walter has no ownership interest

in the 30 percent mineral interest, we first consider whether Walter has ownership

of the 30 percent mineral interest for purposes of quieting title under SDCL ch. 21-

41. Thus, this Court frames the issues as:

1. Whether the trial court erred when it concluded that Walter was
the owner in fee of the mineral interest described in the
Agreement, effective November 6, 1973.

2. Whether Walter’s quiet title action is time-barred by any
applicable statute of limitations.

2. Susan has not appealed this ruling. Based on SDCL 21-41-14, Susan, in
answering Walter’s Complaint, is required to “set forth fully and particularly
the origin, nature, and extent of his [or her] claim to the property[.]” SDCL
21-41-14 (emphasis added); see Nelson v. Stadel, 75 S.D. 218, 220-21, 62
N.W.2d 766, 767-68 (1954) (holding that a defendant’s answer in a quiet title
action was inadequate as it failed to set forth fully the origin, nature, and
extent of his claim to the property).

3. This Court notes that there are no transcripts from either of the two
summary judgment hearings nor is there a transcript of the trial showing the
testimony of witnesses, if any, or arguments by counsel to the trial court.
“‘Where the record contains no transcript, the record on appeal is confined to
those pleadings and papers transmitted from the circuit court.’” Selway
Homeowners Ass’n v. Cummings, 2003 S.D. 11, ¶ 15, 657 N.W.2d 307, 312
(quoting Baltodano v. N. Cent. Health Servs. Inc., 508 N.W.2d 892, 894 (S.D.
1993)).

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STANDARD OF REVIEW

[¶9.] “Findings of fact, whether based on oral or documentary evidence, may

not be set aside unless clearly erroneous, and due regard shall be given to the

opportunity of the trial court to judge the credibility of the witnesses.” SDCL 15-6-

52(a). Conclusions of law are reviewed under a de novo standard, “with no

deference to the trial court’s conclusions of law.” Detmers v. Costner, 2012 S.D. 35,

¶ 9, 814 N.W.2d 146, 149. “[I]n deciding a mixed question of law and fact, the

standard of review for . . . the application of law to fact [ ] depends on the nature of

the inquiry[.]” Stockwell v. Stockwell, 2010 S.D. 79, ¶ 16, 790 N.W.2d 52, 59. “‘If . .

. the question requires us to consider legal concepts in the mix of fact and law and to

exercise judgment about the values that animate legal principles, then the concerns

of judicial administration will favor the appellate court, and the question should be

classified as one of law and reviewed de novo.’” Id. (quoting Darling v. W. River

Masonry, Inc., 2010 S.D. 4, ¶ 10, 777 N.W.2d 363, 366). “The construction and

application of statutes of limitation presents a legal question that [this Court]

review[s] de novo.” Masloskie v. Century 21 Am. Real Estate, Inc., 2012 S.D. 58, ¶ 6,

818 N.W.2d 798, 800 (citing Jensen v. Kasik, 2008 S.D. 113, ¶ 4, 758 N.W.2d 87, 88).

ANALYSIS AND DECISION

[¶10.] 1. The trial court correctly concluded that Walter was the
owner in fee of the mineral interest described in the
Agreement, effective November 6, 1973.

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[¶11.] Susan contends that SDCL 15-2-13(1) 4 is applicable to this case to

time-bar Walter’s quiet title cause of action. Underlying this claim, Susan argues

that the Agreement between Walter and Andrew failed to produce a mineral deed

resulting in a breach of the contract between Andrew and Walter. Susan further

asserts that the breach of contract resulted in Walter’s failure to obtain “title” to the

30 percent mineral interest. Because Walter did not obtain a mineral deed from his

father within six years of the signing of the Agreement, Susan asserts that Walter

is time barred under SDCL 15-2-13(1) from asserting any ownership interest in the

30 percent mineral interest.

[¶12.] Susan also argues that, even if SDCL 15-2-13(1) does not apply, SDCL

15-3-2 5 prevents Walter from securing the relief sought in his Complaint. She

4. SDCL 15-2-13(1) provides in pertinent part,

[e]xcept where, in special cases, a different limitation is
prescribed by statute, the following civil actions other than for
the recovery of real property can be commenced only within six
years after the cause of action shall have accrued:

(1) An action upon a contract, obligation, or liability,
express or implied, excepting those mentioned in §§ 15-2-6
to 15-2-8, inclusive, and subdivisions 15-2-15(3) and (4)[.]

5. SDCL 15-3-2 provides:

No cause of action or defense to an action founded upon the title
to real property or to rents or services out of the same, shall be
effectual unless it appear that the person prosecuting the action
or making the defense, or under whose title the action is
prosecuted or the defense is made, or the ancestor, predecessor,
or grantor of such person, was seized or possessed of the
premises in question within twenty years before the committing
of the act in respect to which such action is prosecuted or
defense made.

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asserts that Walter was not seized or possessed of the right to the 30 percent

mineral interest within the 20 year time period in SDCL 15-3-2, and thus, his claim

is time-barred. To determine Susan’s claims, we must first examine Walter’s

ownership interest.

[¶13.] Under SDCL 21-41-1, 6 a quiet title action permits an individual who

has an estate or interest in real property, “whether in or out of possession [of the

property] and whether such property is vacant or occupied[,]” to test the validity of

any adverse claims of ownership of the real property for the purpose of quieting title

to the real property. SDCL 21-41-1; Swaby v. N. Hills Reg’l R.R. Auth., 2009 S.D.

6. SDCL 21-41-1 provides:

An action may be maintained by any person or persons having
or claiming to have an estate or interest in or lien or
encumbrance upon any real property, whether in or out of
possession thereof and whether such property is vacant or
occupied, against any person or persons claiming an estate or
interest in or lien or encumbrance upon the same or any part
thereof for the purpose of determining such adverse interest,
estate, lien, or encumbrance, and against all persons who appear
from the records in the office of the register of deeds, the county
treasurer, clerk of courts, or other public records in the county
where such land lies to have or ever to have had any estate or
interest in or lien or encumbrance upon such real property or
any part thereof and against personal representatives, heirs at
law, devisees, legatees, and creditors of any such person or
persons who may be deceased, whether such personal
representatives, heirs at law, devisees, legatees, and creditors be
known or unknown, and generally against all persons unknown
who may have or claim to have any estate or interest in or lien
or encumbrance upon such real property or any part thereof for
the purpose of quieting the title to such real property and of
determining such estate, interest, lien, or encumbrance, and in
such action any number of persons may be joined as plaintiffs,
whether holding as tenants in common, joint tenants, partners,
or in severalty, where the relief demanded in the complaint is
common to all of such plaintiffs.

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57, ¶ 43, 769 N.W.2d 798, 816 (citing Morse v. Pickler, 28 S.D. 612, 134 N.W. 809,

810 (1912) (stating that “‘[a]n action to quiet title may be maintained by any person

having an estate or interest in land, either legal or equitable’”)). The underlying

rationale to a quiet title action is to

“relieve [the individual, who is bringing the quiet title action,]
from the annoyance, and his property from the damaging and
depreciating effect, of the constant and standing assertion and
meanace [sic] of . . . unfounded claim[s]. He is not obliged to
‘suffer in silence’ until such time as the adverse claimant shall
see fit to formally and actively predicate judicial or other
proceedings upon his claim.”

Nelson v. Stadel, 75 S.D. 218, 220, 62 N.W.2d 766, 768 (1954) (quoting Clark v.

Darlington, 7 S.D. 148, 63 N.W. 771, 772 (1895)).

[¶14.] A party seeking to quiet title must state in his or her complaint

in general terms only that he has or claims title in fee to the
property, or a lien upon interest therein as the case may be,
which property must be described with sufficient certainty to
enable an officer on execution to identify it; that the defendants
are proper parties under the provisions of this chapter, and that
the action is brought for the purpose of determining all adverse
claims to such property and of quieting title thereto in the
plaintiff, or of determining the liens or interest of all parties in
and to such property, as the case may be.

SDCL 21-41-11. In answering a quiet title action, a defendant “must set forth fully

and particularly the origin, nature, and extent of his claim to the property; and may

set forth his rights in the property as a counterclaim and demand affirmative

relief.” SDCL 21-41-14.

[¶15.] “Title” is defined as “[t]he union of all elements (as ownership,

possession, and custody) constituting the legal right to control and dispose of

property; the legal link between a person who owns property and the property

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itself[.]” Black’s Law Dictionary 721 (3d pocket ed. 2006). Under South Dakota

law, a grant of a property interest “is to be interpreted in favor of the grantee . . . .”

SDCL 43-4-16. Additionally, “[a]n estate in real property . . . can be transferred

only . . . by an instrument in writing, subscribed by the party disposing of the same .

. . .” SDCL 43-25-1. However, “[a]s between the parties to the instrument, the

recording of a deed is not necessary to [the instrument’s] validity.” 26A C.J.S.

Deeds § 165 (2012) (stating that “[t]he recording of a deed has no particular efficacy

as between grantor and grantee”); 66 Am. Jur. 2d Records and Recording Laws § 47

(2012) (stating “a contract for the purchase of realty is valid between the parties

even if it is not recorded”); see Schleuter Co., Inc. v. Sevigny, 1997 S.D. 68, ¶ 11, 564

N.W.2d 309, 312 (stating that “the unrecorded contract for deed [for real property]

was binding on the parties . . . .”).

[¶16.] From this Court’s review of the entire record, the trial court correctly

determined that Walter was the owner in fee of the 30 percent mineral interest

described in the Agreement, effective November 6, 1973. The Agreement was

signed by both the grantor, Andrew, and the grantee, Walter, acknowledged, and

eventually recorded. Walter paid $6,000 to Andrew as consideration for the 30

percent mineral interest. Moreover, Susan does not dispute the authenticity of the

Agreement; the signatures of Andrew, as grantor, and Walter, as grantee; Walter’s

payment of $6,000 in consideration for the property; Andrew’s conveyance of the 30

percent undivided mineral interest to Walter; the binding effect of the Agreement

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on the parties to the Agreement and their heirs and assigns; or the authenticity of

Andrew’s Last Will and Testament and Final Decree. 7

[¶17.] Further, the language of the Agreement provides Walter the option of

requesting additional documents from Andrew to effectuate the provisions in the

Agreement. Notably, however, there is nothing contained within the Agreement

that mandates that Andrew give and Walter receive additional documents in order

for the Agreement to be valid.

[¶18.] Lastly, while possession of the property is not required in an action

governed by SDCL ch. 21-41, Walter exercised control over, and thus possession and

custody, of the mineral interests when he executed a number of oil and gas leases

pertaining to the 30 percent mineral interests. See SDCL 21-41-1 (providing that

“[a]n action may be maintained by any person or persons having or claiming to have

an estate or interest in or lien or encumbrance upon any real property, whether in

or out of possession thereof and whether such property is vacant or occupied, against

any person or persons claiming an estate . . .”) (Emphasis added.) As further

evidence, Walter received lease and bonus payments following the execution of

these leases. Based on the terms of the Agreement and Susan’s concessions, the

trial court correctly quieted title in favor of Walter by declaring him the owner of

the 30 percent mineral interest described in the Agreement.

[¶19.] 2. Walter’s quiet title action is not time-barred by any
applicable statute of limitations.

7. Susan does not dispute that the Final Decree conveyed only 70 percent of
Andrew’s mineral estate to Dora and her heirs and assigns.

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[¶20.] The trial court denied Susan’s summary judgment motion on the basis

that “there [was] no issue of material fact upon which [Susan] could prevail on her

statute of limitations argument” under SDCL 15-2-13(1) or SDCL 15-3-2. We agree.

[¶21.] Susan incorrectly casts this action as a breach of contract, and thus,

subject to the six year statute of limitations under SDCL 15-2-13(1). Susan

assumes that the Agreement required Andrew to produce a deed in order for

Andrew to convey to Walter the 30 percent mineral interest. The language of the

Agreement did not contain such a requirement. Therefore, there could be no breach

of the Agreement on that basis.

[¶22.] Further, Susan’s argument that Walter was not seized or possessed of

the right to the 30 percent mineral interest within 20 years prior to the filing of the

quiet title action assumes that Walter seeks ownership of the 30 percent mineral

interest by adverse possession. As previously stated, the Agreement conveyed

ownership in the 30 percent mineral interest to Walter. Thus, the 20 year time

limitation under SDCL 15-3-2 does not apply. Because this is not a breach of

contract action nor an attempt by Walter to assert his ownership interest through

adverse possession, the limitation periods set forth in SDCL 15-2-13(1) and SDCL

15-3-2 are not applicable.

CONCLUSION

[¶23.] The trial court correctly quieted title in Walter’s favor and concluded

that Walter was the owner of the 30 percent mineral interest described in the

Agreement, effective November 6, 1973. We affirm.

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[¶24.] GILBERTSON, Chief Justice, KONENKAMP, ZINTER, and

SEVERSON, Justices, concur.

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