IN COURT OF APPEALS
In re the Marriage of:
Kelly Danielson, petitioner,
Filed September 12, 2006
Cook County District Court
File No. 16-F7-04-000055
Cheryl M. Prince, Gabriel D. Johnson, Hanft Fride, P.A., 1000 U.S. Bank Place, 130 West Superior Street, Duluth, MN 55802-2094 (for appellant)
Timothy A. Costley,
Considered and decided by Willis, Presiding Judge; Dietzen, Judge; and Ross, Judge.
S Y L L A B U S
1. Parol evidence is not admissible to contradict, alter, or explain a quitclaim deed that is unambiguous on its face.
2. In a dissolution proceeding, a district court lacks personal jurisdiction over a nonparty to the matter being litigated and cannot adjudicate the property rights of the nonparty. When a nonparty is alleged to have an interest in a marital asset and where the existence or extent of that interest is disputed by a party, the district court may (a) exclude the asset from the property division and, after resolution of any third-party disputes regarding the various interests in the asset, later divide the marital portion of the asset as omitted property; or (b) include the asset in the property division by awarding each party a percentage interest in whatever may later be determined to be the marital interest in the asset; or (c) divide the asset as if there is no nonparty interest in it, subject to the judgment being reopened and adjusted under Minn. Stat. § 518.145, subd. 2 (2004).
O P I N I O N
On appeal from the judgment dissolving the parties’ marriage, appellant Kelly Danielson challenges the district court’s property division. Because the district court erroneously admitted and considered evidence beyond the language of an unambiguous deed to alter its terms, we reverse and remand.
Appellant and respondent Shane Danielson began living together in 1993 on respondent’s family farm. In 1994, respondent and his brother, Mark Danielson, each inherited undivided one-half interests in the farmstead from their parents’ estates. In 1996, appellant and respondent decided to begin an ostrich-farming business on the farmstead but needed a loan to capitalize the venture.
The parties found a lender that would loan the money based on appellant’s good credit history. But to approve the loan, the lender required that appellant have an equity interest in the farmstead. Respondent and Mark Danielson, as grantors, then executed a quitclaim deed in the office of the attorney for the closing company that closed the loan for the lender. The quitclaim deed conveyed the farmstead to appellant and respondent as joint tenants. Mark Danielson was not a grantee on the deed. Thereafter, the parties closed on the financing loan.
Appellant and respondent married in 1998, but in 2004, appellant petitioned for dissolution. A bench trial was held in May 2005 to resolve issues arising from the dissolution. At trial, Mark Danielson testified that the parties asked him to sign a quitclaim deed so that they could obtain financing. He agreed to do so but believed that he would retain his ownership interest in the farmstead and that the conveyance was not intended as a gift to appellant. Respondent testified that the deed was executed for financing purposes and that he and his brother intended to remain owners of the property. Appellant objected to this “extraneous” testimony as prohibited by the statute of frauds. The district court overruled the objection but permitted posttrial briefing on the matter.
The district court entered its judgment in August 2005. It found that despite the quitclaim deed, Mark Danielson retained a one-half ownership interest in the farmstead, which the parties “hold and have held . . . in trust” for him. The court determined that respondent’s one-half interest in the farmstead was marital property valued at $200,000. It found that the equity in that portion was $120,000, which it divided equally between appellant and respondent. The court also awarded the farmstead to respondent. Appellant now challenges the admission of evidence of the parties’ intent regarding the quitclaim deed and, alternatively, challenges what she alleges is the district court’s imposition of a constructive trust on half of the farmstead in Mark Danielson’s favor, and the associated findings of fact and conclusions of law.
1. Did the district court erroneously admit and consider parol evidence to alter the terms of the deed?
2. Did the district court erroneously exercise personal jurisdiction over someone not a party to the dissolution and erroneously adjudicate the property interests of that nonparty?
Appellant argues that the district
court erred by admitting and considering parol evidence to vary the terms of
the quitclaim deed. The parol-evidence rule is not a rule of
evidence, but a substantive rule of contract interpretation. Anchor
Cas. Co. v. Bird Island Produce, Inc., 249
prohibits the admission of extrinsic evidence of prior or contemporaneous oral agreements, or prior written agreements, to explain the meaning of a contract when the parties have reduced their agreement to an unambiguous integrated writing. Accordingly, when parties reduce their agreement to writing, parol evidence is ordinarily inadmissible to vary, contradict, or alter the written agreement.
Alpha Real Estate Co. of Rochester v. Delta
Dental Plan of
Here, the quitclaim deed states that
Mark Danielson and respondent “hereby convey(s) and quitclaim(s)” the farmstead
to appellant and respondent, and notes that “total consideration for the transfer of this property is $500.00 or
less.” (Emphasis added.) The quitclaim deed does not name Mark
Danielson as a grantee, and its plain language does not indicate that the
transfer was either limited or reserved; and on its face, it is a complete
transfer of all interests of respondent and Mark Danielson as grantors to
appellant and respondent as grantees. See
Appellant also argues that the
district court’s “imposition” of what appellant characterizes as “a
constructive trust” in favor of the nonparty Danielson “was improper.” A constructive trust is a “judicially created
equitable remedy imposed to prevent unjust enrichment of a person holding
property under a duty to convey it or use it for a specific purpose.” Wright
v. Wright, 311 N.W.2d 484, 485 (
The district court found that the
“parties hold and have held an undivided 1/2 interest in the property in trust
for Mark Danielson” and that Danielson retained an equitable ownership interest
in the farm. By ruling that Mark
Danielson retained an interest in the property, the district court exercised
jurisdiction over a nonparty to the dissolution (Mark Danielson) and
functionally awarded to that nonparty an interest in property that, on its
face, was marital property. But in a
dissolution proceeding, a district court lacks personal jurisdiction over a
nonparty and cannot adjudicate a nonparty’s property rights. Sammons
v. Sammons, 642 N.W.2d 450, 457 (
When the parties to a dissolution
proceeding seek division of a marital asset in which a nonparty may have an
interest and the existence or extent of that nonparty’s interest is disputed, the
district court may initially exclude the asset from the dissolution judgment’s property
division and, after resolution of any third-party disputes bearing on the various
interests in the asset, later divide the marital portion of the asset as
“omitted property.” See Neubauer v. Neubauer, 433 N.W.2d 456, 461 n.1 (
D E C I S I O N
Because the quitclaim deed was
unambiguous, the district court erred both by admitting and considering parol
evidence to determine the meaning of the deed.
The district court also erroneously exercised personal jurisdiction over
a nonparty and erroneously adjudicated that nonparty’s property interest. We therefore reverse and
remand for reconsideration of the marital interest in the farmstead in a manner consistent with this opinion. On remand, the district court may, in its discretion, reopen the record.
Reversed and remanded.
Christopher J. Dietzen, Judge
 For purposes of this appeal, we assume that the
question of parol evidence is properly before this court by virtue of
appellant’s assertion to the district court that it should not have admitted “extraneous”
evidence regarding the quitclaim deed. Cf. Thiele
v. Stich, 425 N.W.2d 580, 582 (