Summary of Decision November 30, 2010

[SPECIAL NOTE: This opinion uses the "Universal Citation." It was given an "official" citation when it is issued. You should use this citation whenever you cite the opinion, with a P.3d parallel citation. You will also note when you look at the opinion that all of the paragraphs are numbered. When you need to provide a pinpoint citation to a quote the universal portion of the citation will use that paragraph number. The pinpoint citation in the P.3d portion will need to have the reporter page number. If you need assistance in putting together a citation from this, or any future opinion using the Universal Citation form, please contact the Wyoming State Law Library and we will provide any needed assistance]

Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court

Case Name: King v. Board of County Commissioners of the County of Fremont

Citation: 2010 WY 154

Docket Number: S-09-0227, S-09-0228

URL: http://tinyurl.com/2ue3tkh

Appeal from the District Court of Fremont County, Honorable Norman E. Young, Judge

Representing Appellant (Plaintiffs and Intervening Plaintiff): Jason A. Neville and Keith J. Dodson, Williams, Porter, Day & Neville, Casper, WY for Edward & Janice King; and Steven F. Freudenthal of Freudenthal, Salzburg & Bonds, Cheyenne, WY for Hanson’s North Fork Ranch.

Representing Appellee (Defendant): Jodi A. Darrough, Deputy Fremont County Attorney, Lander, WY.

Date of Decision: November 30, 2010

Facts: These appeals arise from the district court’s determination of the status of a county road which fell under the jurisdiction of the Appellee. The Appellants alleged that the records concerning the existence of that road were not properly recorded or stored by Fremont County and, hence, the road had never been created as contemplated by the governing statutes. In addition, Appellants contended the road had been vacated or abandoned. As a matter of undisputed fact and law, the district court held the road had been created and further, that as a matter of law it still existed because it had not forthrightly and officially been vacated or abandoned.


Issues: Whether Appellants filed a timely notice of appeal after the entry of the partial summary judgment order. Whether the district court’s entry of summary judgment based upon its finding that the road was properly established was in error. Whether the district court erred when it dismissed the case in reliance on State ex rel. State Highway Commission v. Meeker, 294 P.2d 603 (Wyo. 1956). Whether Appellants were bona fide subsequent purchasers, and thus purchased their land without the road clouding their title. Whether Appellants filed a timely notice of appeal after the entry of that order.

Holdings: W.R.C.P. 54(b) allows a district court to certify orders that adjudicate fewer than all claims upon an express determination that there is no just reason for delay and upon the express direction for the entry of judgment. No such determination was sought or granted in this case. However, Appellants were not required to appeal the partial summary judgment until the remaining issues were decided.

The statutes in effect when the road was created are found in Wyoming Compiled Statutes 1910, §§ 2513-2531. Section 2523 requires that a survey and record of the road “be filed in the office of the county clerk.” The Appellants contend that this step was not perfected, although the documentation required to be assembled by the governing statutes was in the possession of Fremont County at the time this action arose, as well as at all times in the interim between 1913 and the present day. However, it is not disputed that the grantor/grantee index did not provide those examining property titles any information about the road. Further, unless a title examiner inquired of a county clerk employee about the existence and actual location of the records pertaining to county roads, then whether or not a particular parcel of land was burdened by a county road would not be evident. It is this flaw that is the mainstay of the Appellants’ contentions herein and on that basis, it is contended that the road should be declared not to have ever come into existence.

It is not the physical location of these records that create the ultimate issue in this case but whether or not they were made of record for purposes of providing constructive notice. The district court relied in significant part on the case of Lakewood v. Mavromatis, 817 P.2d 90 (Colo. 1991) in deciding to grant a partial summary judgment in favor of the Commission with respect to the validity, ab initio, of the road. Although that case differs from the present case on the facts because a road was never built on the tract of land in question, the Colorado Supreme Court concluded that placing the road petition and incorporated plat in the road book in the office of the county clerk was adequate to dedicate the tract as a public highway, but it did not provide constructive notice to bona fide subsequent purchasers of the governmental entity’s interest in the disputed parcel of land. Based on that case, the district court concluded that the remaining issues would be required to be tried; to wit: (1) whether or not Appellants had actual notice of the road and (2) whether or not they are bona fide subsequent purchasers of the property they now own that may be subject to the Commission’s interest in the road. The district court concluded that the Wyoming Legislature also intended to require the recording of the road petition in compliance with the Wyoming Recording Act. However, failure to do so did not void the established road, especially with regard to the parties in the initial road proceedings because they had actual notice of the road. The district court indicated that this case was complicated because it was unclear if the road was ever established on the ground. Moreover, while there was evidence that at least a faint “track” of the road could be found on the ground for most of its distance, it had been fenced over in places, it had been washed out in places, it was blocked by vegetation in places, a wellhead was in its course, and a building had been placed along its course so that it disappeared into, and then re-emerged on the other end of, the building.
However, based on the totality of the circumstances, the district court will be affirmed in its decision that there were no genuine issues of material fact as to whether the road had been created in the first instance.

The Appellee Commission subsequently filed a motion to dismiss on the basis that once a county road has been created, it can only be extinguished through formal vacation proceedings. Prior to a trial, the district court reconsidered its previous ruling in light of the case State ex rel. State Highway Comm’n v. Meeker, 294 P.2d 603 (Wyo. 1956). The failure to record an instrument which is not required to be recorded does not affect or vitiate the instrument as to anyone, and it is valid not only between the parties thereto, but also to subsequent purchasers and encumbrancers. Until 1953 Wyoming had no statute which required the transfer of title by eminent domain to be recorded in the ordinary and regular books of record kept for the transfer of property by conveyances. Based on that case, the wording of the statutes in place in 1913, the fact that the road had never been “formally vacated,” and the circumstance that the County Road Book gave constructive notice of the road had inquiry been made of the county clerk, the district court held that the motion to dismiss should be granted.

The heart of the controversy in this case lies in the tension between Wyoming’s long-standing “unrecorded conveyance” statute and those statutes that deal with the creation of county roads. The records of the road in question were maintained in the manner mandated by these statutes. Eventually, the “recorded” documents with respect to county roads were moved to the county planning office and later to the county roads/transportation department. However, at all times the records were available to the public had inquiry been made about them to the county clerk or to other county departments. Moreover, county roads, cannot be vacated except by official action of the county commissioners of a county. Appellants participated in an effort to vacate the road, but that was unsuccessful. Wyo. Stat. 24-3-201 et seq. authorize a county to remedy a problem such as the one that has arisen in the present action. However, these statutes do not mandate action on the part of counties and are not determinative of the issues raised herein. The existing statutes, as well as the cases interpreting them over the years, track closely with common law principles that have long played a key role in issues such as this. Two of the most important of those are: “Once a road, always a road;” and, where a road is created by a statutory procedure such as that in play here, such a road cannot be abandoned, vacated, or disestablished without there being clear action on the part of the governmental entity that created the road to vacate, abandon, or disestablish it. For these reasons, the district court was correct that there was no genuine issue of material fact as to whether the road had been created. In addition, the road has not been vacated, abandoned, or disestablished by Fremont County and, therefore, it is still a county road as a matter of law.

The district court’s partial summary judgment order is affirmed. The district court’s order dismissing the further claims of Appellants is also affirmed.

J. Hill delivered the opinion for the court.

J. Burke files an opinion concurring in part and dissenting in part, in which J. Voigt joins. I respectfully dissent from that part of the majority’s decision affirming the dismissal of the Appellants’ claims in reliance on State Highway Comm’n v. Meeker, 75 Wyo. 210, 294 P.2d 603 (Wyo. 1956). Mr. Meeker challenged the county’s ownership of a highway right-of-way across his property on the basis that there was “no instrument of record in the office of the county clerk showing the highway.” The right-of-way had been acquired through eminent domain, however, and the Court found “no statute which required the transfer of title by eminent domain to be recorded” in the public record. The Court said that “failure to record an instrument which is not required to be recorded does not affect or vitiate the instrument as to anyone, and it is valid not only between the parties thereto, but also to subsequent purchasers.” “Hence,” the Court wrote, “it is quite clear that the title the State acquired under the condemnation proceedings in 1950 is valid and good against any subsequent purchaser of the same property.” However, Meeker detours from a long line of Wyoming cases emphasizing that county road easements must be placed on the public record. These cases establish that the Wyoming Legislature and the Court have consistently, with the exception of Meeker, said that county roads must be placed on the public record.

This policy extends not to county roads only, but to all real property conveyances. “Public policy requires that subsequent purchasers be able to rely on the title shown in public records.” Applying Meeker to the case at hand, however, means that the Appellants cannot rely on their title as shown in the Fremont County Clerk’s property records. That seriously undermines “the purpose of our recording statutes, which entitle one to rely on public records and determine whether or not a certain property is subject to liens, prior encumbrances or other outstanding claims.

The Court in Meeker indicated that the proceedings of the Board of County Commissioners gave Mr. Meeker constructive notice of the Commissioners’ decision to acquire the highway right-of-way. As stated in a droll but persuasive argument offered by Appellants in the present action, if the ruling in Meeker is controlling in this case, then every conveyance of land would have to be accompanied by a review of all proceedings of the county commissioners back to 1890.

Because of its anomalous nature and impracticable result, the decision in Meeker should be limited to its peculiar facts. By the time of trial in the Meeker case, “construction of the highway was commenced and substantially completed. That is not true of the road in the present action. In addition, Mr. Meeker “was in possession of the land in question as lessee during all of the time the eminent domain proceedings were taking place and must have had notice thereof.” Appellants were not in possession of the land in question in 1913 when the County Commissioners undertook to establish the road.

More significantly, Meeker is distinguishable on legal grounds. That decision rested on the Court’s finding “no statute which required the transfer of title by eminent domain to be recorded” in the public record. In the current case, there is at least one statute requiring the road easement to be recorded. In 1919, the Wyoming Legislature enacted a statute requiring Boards of County Commissioners, within their respective counties determine what if any such roads now or heretofore travelled but not heretofore officially established and recorded, are necessary or important for the public use as permanent roads, and to cause such roads to be recorded, or if need be laid out, established and recorded, and all roads recorded as aforesaid, shall be highways. No other roads shall be highways unless and until lawfully established as such by official authority. The County Commissioners of Fremont County undertook to establish the road in question, but failed to record it. This statute imposed upon them the duty of rectifying that failure. Notably, this statute makes no distinction between roads acquired by eminent domain and those acquired by other means. Because this statute required the easement in question to be recorded, the ruling in Meeker is not controlling here.

Accordingly, the district court’s decision to dismiss the claims raised by the Appellants should be reversed and remanded to the district court with instructions to proceed to trial on the question of whether the Appellants are bona fide subsequent purchasers for value who took title to their properties without notice of the road easement.

Summary 2007 WY 94

Summary of Decision issued June 8, 2007

[SPECIAL NOTE: This opinion uses the "Universal Citation." It was given an "official" citation when it is issued. You should use this citation whenever you cite the opinion, with a P.3d parallel citation. You will also note when you look at the opinion that all of the paragraphs are numbered. When you need to provide a pinpoint citation to a quote the universal portion of the citation will use that paragraph number. The pinpoint citation in the P.3d portion will need to have the reporter page number. If you need assistance in putting together a citation from this, or any future opinion using the Universal Citation form, please contact the Wyoming State Law Library and we will provide any needed assistance]

Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court.

Case Name: Bentley v. Director of the Office of State Lands and Investments

Citation: 2007 WY 94

Docket Number: 06-131

Appeal from the District Court of Carbon County, Honorable Wad E. Waldrip, Judge

Representing Appellants (Plaintiffs): Karen Budd-Falen and Brandon L. Jensen, Budd-Falen Law Offices,Cheyenne, Wyoming. Argument by Mr. Jensen.

Representing Appellees (Defendants): Patrick J. Crank, Attorney General; Michael L. Hubbard, Deputy Attorney General; Bridget Hill, Assistant Attorney General; C. Levi Martin, Senior Assistant Attorney General; Susan K. Stipe, Senior Assistant Attorney General.

Issues: Whether the district court erred when it dismissed appellants' causes of action relating to the Board of Land Commissioners' easement to the Wyoming Game and Fish Commission. Whether the district court erred when it found that the water rights which were historically attached to Section 16 were severed by the easement and, therefore, conveyed to the Wyoming Game and Fish Commission.

Facts: In 1992, the State Board of Land Commissioners ("Board") began contemplating a sale of school lands in Carbon County where the Dome Rock Reservoir is located. In response to public concern that sale of the land would prevent public use of the reservoir for fishing purposes, the Board approved an easement in favor of the Wyoming Game and Fish Commission in 1993. The land was subsequently advertised for public auction subject to the easement. It was purchased by John Anselmi, who entered into an installment sales contract with the Board.

In 2000, Mr. Anselmi assigned the sales contract to Appellants. A short time later, the Game and Fish easement was recorded with the county clerk. In 2002, when the Bentleys made full payment under the sales contract, the State of Wyoming issued a patent conveying the land to them. The Bentleys initiated this action in 2004, seeking a declaration that the easement was void, injunctive relief, and damages. The district court upheld the validity of the easement and determined that the water rights appurtenant to the publicly auctioned land had also been transferred to Game and Fish.

On appeal, the Bentleys claim that their ownership of Section 16 is not subject to the easement because: 1) the easement was not created and validly established prior to their purchase of the property; and 2) they had no notice of the easement at the time they purchased the property. Invoking bona fide purchaser status, they assert the easement cannot be enforced against them, relying upon the operation of Wyo. Stat. Ann. § 34-1-120. The Bentleys' argument is premised on the nature of the State's ownership after the Sales Contract was executed. As stated in their brief, "as of June 3, 1993, the State of Wyoming no longer owned Section 16; and therefore, no longer owned any interest in which to convey an easement." The Bentleys contend that any interest granted by the State after June 3, 1993, cannot be enforced against them.

Holdings: In an installment land contract, the seller agrees to accept payments from the buyer, usually over a period of time, until the price set by the contract has been paid. When all payments have been made, the seller is bound to convey title to the buyer. The buyer must record an installment contract for the purchase of state lands in the county where the property is located. However, a buyer does not acquire a complete equitable title until paying the purchase-money and complying with the other conditions precedent. A buyer's interest under an installment land contract is equitable in nature, and legal title remains with the seller. The State possesses the same rights as any other seller under an installment land contract and continues to retain legal title to the property. Until the full purchase price is paid, the State is not bound to convey; there are many uncertain events to happen before it will be known whether it will ever have to convey, and it retains for certain purposes, its old dominion over the estate. In the present action, the Appellants took assignment of the contract when it was still executory and assumed the risks inherent in purchasing an equitable interest, which is subject to outstanding equities and possible imperfections. They could not acquire full "equitable title" until they were entitled to a patent, i.e., when full payment under the Sales Contract had been made. Thus, under the executory Sales Contract, the State retained legal title to Section 16 and transferred only a limited equitable interest. After Appellants made full payment under the Sales Contract, they received a patent in accordance with Wyo. Stat. Ann. § 36-9-112(a). Patent number 2992 issued on May 16, 2002, and was recorded on May 24, 2002. The patent specifies that the Appellants' title to Section 16 is subject to the easement. Although Appellants have framed their causes of action and arguments on appeal as if there are inconsistent claims to Section 16, the patent is consistent with the existence of the easement. The Appellants' real complaint is that they do not believe their patent conveyed all they were entitled to receive under the Sales Contract. However, once a contract for the sale of realty has been executed, its provisions merge with the conveyance and are no longer separately enforceable. The Appellants' rights are therefore controlled by the patent. Because the patent specifies that title is subject to the easement, the Appellants' title is indeed subject to the easement.
The Appellants acknowledge that they did not obtain legal title until the patent issued in 2002, but they assert that two principles - relation back and equitable conversion - apply under the circumstances. According to the Appellants, equity transforms the nature of the interests discussed above to recognize in them full ownership of Section 16 prior to the patent. They reason that their full ownership in Section 16 thereafter divested the State of the ability to convey an easement to Game and Fish. However, even when viewed in a light most favorable to the Appellants, it is clear they seek relation back of a legal title they have not acquired. They claim entitlement to an unencumbered fee interest, free from the easement, under the Sales Contract. However, the doctrine of relation has never been applied to rectify a perceived deficiency in a patent, i.e., the owner's claim that his earlier, equitable interest was not fully realized by the conveyance. The Section 16 patent, by its terms, conveyed title subject to the easement. Even if it were concluded that the patent related back, that legal fiction would not provide the Appellants the relief they desire. Under these circumstances, the district court properly concluded that the Appellants did not present any reason and justice did not require the application of the doctrine of relation.
The Appellants also assert that equity made them full owners of Section 16 and divested the State of ownership before the patent issued. The equitable conversion theory treats the interest of the purchaser to be tangible real estate from the time the installment land contract or contract for deed is executed and considers the purpose of the retention of title by the vendor to be a security interest, with the contractual right to the balance of the purchase price treated as personalty. The application of equitable conversion to installment land contracts has been rejected in Wyoming.
Although no official grant of easement was recorded until 2000 and the Board's approval lacked material terms and formalities required in a formal conveyance of an interest in state land, it is also true that the intent to create an easement was demonstrated by the Board's actions. Evidence showed that there was application, approval, and recited consideration, which reflected a clear intent to convey the easement in the future. This documented intent may not have the formal, legal significance of creating an easement, but it is highly relevant to a determination of competing equitable interests in land. Additionally, the board of land commissioners may, at their discretion, grant permanent rights-of-way or easements across or upon any portion of state or school lands, upon such terms as the board may determine, for any ditch, reservoir, railroad, public highway, telegraph and telephone lines, or other public conveyances. Having already determined that the State held legal title to Section 16 on the date it granted the easement, the Appellants' repeated assertions that the November 28, 2000 grant was void on that basis is rejected.
To prevail in a contest under Wyo. Stat. 34-1-120, the Appellants must show that they have the status of a "bona fide purchaser," which is: (1) a purchaser in good faith; (2) for a valuable consideration, not by gift; (3) with no actual, constructive or inquiry notice of any alleged or real infirmities in the title; and (4) who would be prejudiced by the cancellation or reformation. The term 'purchaser', shall be construed to embrace every person to whom any estate or interest in real estate shall be conveyed for a valuable consideration, and also every assignee of a mortgage or lease, or other conditional estate. The term "conveyance", shall be construed to embrace every instrument in writing by which any estate or interest in real estate is created, alienated, mortgaged or assigned, or by which the title to any real estate may be affected in law or in equity, except wills, leases for a term not exceeding three (3) years, executory contracts for the sale or purchase of lands, and certificates which show that the purchaser has paid the consideration and is entitled to a deed for the lands, and contain a promise or agreement to furnish said deed at some future time. Appellants, who were paying valuable consideration and expecting a conveyance of Section 16, were "purchasers" within the meaning of the recording act. However, they did not receive a conveyance to Section 16 until they received the patent. The Sales Contract was an executory contract, specifically excluded from the statutory definition of conveyance. Accordingly, the fact that the Sales Contract was recorded does not change the operation of Wyo. Stat. Ann. § 34-1-120. By its express terms, the statute provides no protection for a purchaser who was not the first to record a conveyance. For purposes of this appeal, the first conveyance to be recorded was Easement No. 5382. The Appellants' conveyance, the patent, was recorded two years later.
Moreover, the Appellants are likewise ineligible for protection under the recording act because they cannot demonstrate that they are bona fide purchasers. Under the third prong of that inquiry, the Appellants would have to prove that they lacked "actual, constructive or inquiry notice of any alleged or real infirmities in the title" to Section 16. This they cannot do. While they might not have discovered documentation of the easement before they received their assignment, the assignment itself reflects a defect in the title, i.e., it was retained by the State. Any effort to check the county clerk's records would have revealed that their predecessor in interest lacked the ability to convey legal title to Section 16. It is apparent that the Appellants did not make such efforts.
Additionally, the Appellants' claims that they lacked notice of the easement are solidly refuted by the very facts alleged in their complaint. Their complaint states that at the time of their purchase, Section 16 featured a roadway to the reservoir, a parking lot, and signs announcing that the reservoir was a public fishery. Also, members of the public used the fishery. According to the Appellants, that public use was known to them and was ongoing. The improvements visible upon physical inspection of the property, as well as the continual access and use by the public, provided inquiry notice of an easement. Perhaps conceding the import of these facts, counsel for the Appellants admitted actual knowledge of the easement at the hearing on the motion to dismiss.
As the foregoing demonstrates, the Appellants' reliance upon the recording act to void the easement is misplaced. The protections afforded by recording acts generally do not extend to equitable interests as such holders are not considered bona fide purchasers. It is apparent from their pleading that the Appellants are not entitled to relief under Wyo. Stat. Ann. § 34-1-120.
A purchaser under an installment contract, although lacking a conveyance, may have a remedy in equity. However, resort to principles of equity is of no assistance to the Appellants. Their equitable interest was preceded in time by a public interest, documented in public records, of which they had knowledge. The inchoate, equitable interest purchased by Game and Fish arose prior to the Appellants' equitable interest under the Sales Contract. Where the purchase is only of an equitable title, it is ordinarily taken with all its imperfections and outstanding equities, notwithstanding the fact that a valuable consideration may have been given and that there may have been no notice of the equity or defense against the title. Accordingly, the Appellants' ownership of Section 16 could equitably be made subject to a prior equitable interest, even if they had no knowledge of it. However, the Appellants did have knowledge of public use. There is no indication that they possessed Section 16 in a manner that was inconsistent with the easement. The public continued to access Dome Rock Reservoir without interference. In this case, equity favors upholding the easement which was prior in time to the Appellants' interest, is consistent with the clearly expressed intent of the Board and Game and Fish, and ultimately benefits the public.
As a general rule, a water right beneficially used upon land becomes appurtenant to the land. And, when the land is conveyed, the water right passes with it. However, in this case, the water rights could be, and were, identified and separately transferred to the Game and Fish. Although the Board's reference to "any rights" language could have been more precise, there is no question which reservoir was involved because Dome Rock Reservoir is the only reservoir on Section 16 and was also the subject of the easement. It is obvious that water in the reservoir is essential to a public fishery, the interest served by the easement. Thus, the Board sufficiently demonstrated its intent to convey its water rights to Game and Fish, along with the easement. This intent was manifested in the patent, which excludes the reservoir water rights.
The Appellants also assert that the conveyance was invalid and could not have severed the water rights because the Board did not petition the State Engineer's Office for change in use, change in point of diversion, enlargement of use, or change in place of use of the water. The water rights at issue are for stored water, not for the direct use of the natural unstored flow of any stream. Appellants appear to overlook this distinction. The fact that the reservoir rights were permitted for irrigation does not impact the ownership of the rights conveyed by the Board when it granted the easement to the Game and Fish.
Additionally, the Appellants claim that the indications of an easement upon Section 16 would not have alerted them to the transfer of water rights in Dome Rock Reservoir. While that may be true, as discussed above, the Appellants' claims that they lacked notice are unavailing because they accepted an assignment of a mere equitable interest, subject to all imperfections and competing claims.
Appellants failed to state a claim for relief which would invalidate the easement, and the district court properly dismissed those causes of action. Their equitable interest in Section 16 did not prevent the Board from granting a valid easement to Game and Fish. The district court was also correct in holding that the water rights were severed and conveyed to the Game and Fish with the easement.

Affirmed.

J. Burke delivered the opinion for the court.

Link: http://tinyurl.com/2ujnlj