This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
STATE OF MINNESOTA
IN COURT OF APPEALS
James A. LaBorde, et al.,
Frank Castleman, et al.,
Pearl W. Watson,
a/k/a P. W. Watson,
a/k/a Pearl Williams Watson,
a/k/a Perl Watson, et al.,
Henry J. Hand,
Crow Wing County District Court
File No. C999172
Bradley N. Beisel, Hoeschler & Beisel, LLP, 282 US Trust Center, 730 Second Avenue South, Minneapolis, MN 55402-2444 (for appellants)
Karen E. Marty, 3601 Minnesota Drive, Suite 880, Bloomington, MN 55435 (for respondent)
Considered and decided by Klaphake, Presiding Judge, Kalitowski, Judge, and Harten, Judge.
U N P U B L I S H E D O P I N I O N
Appellants James and Kathryn LaBorde and appellants Frank and Jacqueline Castleman argue (1) that the record lacks clear and convincing evidence of a “lost deed” upon which respondent Henry Hand could be awarded an interest in the subject property; and (2) because the LaBordes are bona fide purchasers under Minn. Stat. § 507.34 (2002), their interest in the subject property cannot be challenged. We affirm.
In actions to prove the existence and execution of lost deeds to real property, “[t]he proponent of a lost deed bears the burden of establishing the deed by clear and convincing evidence.” Perbix v. Hansen, 419 N.W.2d 101, 104 (Minn. App. 1988) (citing Buttruff v. Robinson, 181 Minn. 45, 46, 231 N.W. 414, 414 (1930) (holding that “to establish a lost deed the evidence must be something more than a mere preponderance. It must be clear and convincing.”)). The burden of clear and convincing evidence is “less than that required by the ‘beyond a reasonable doubt’ standard in criminal matters” and is met when the truth of the fact to be proven is “highly probable.” Rogers v. Moore, 603 N.W.2d 650, 657 (Minn. 1999) (citing State v. Profit, 591 N.W.2d 451, 464 (Minn. 1999)). “In making such an evaluation, circumstantial evidence is entitled to as much weight as any other evidence.” Rogers, 603 N.W.2d at 657.
Here, sufficient circumstantial evidence exists to support the district court’s finding that attorney Levinson drafted a deed that conveyed Monroe Hand’s interest in the subject property to his nephew, Henry Hand, and that this deed was lost after being properly executed and delivered.
At trial, Henry Hand introduced exhibits 12 through 15 to prove the existence of the lost deed. Exhibit 12 is a signed letter that attorney Levinson sent to both Monroe Hand and Henry Hand. It is dated July 12, 1971, and discusses the bill for the legal services the attorney performed for the Hands. Exhibit 13 is the actual bill that was attached to exhibit 12. The bill charges $10.00 for “services in drawing deed from Monroe Hand to Henry Hand.” Exhibit 14 is an unsigned letter from Levinson to Mr. Fitzpatrick, a Brainerd attorney. The letter is dated July 12, 1971, and it states that
Monroe Hand has now executed a quit claim deed of his interest in the property which came to him as the sole heir of Alberta, conveying the property to his nephew, Henry J. Hand, Jr. As soon as we get a certificate from our court of record that the deed has been executed pursuant to the laws of Illinois, we will forward it to you for recordation.
(Emphasis added.) Finally, exhibit 15 is the photocopy of the unsigned, unrecorded deed from Monroe Hand purporting to convey an undivided one-half interest in the subject property to Henry Hand. Each of these documents supports the district court’s finding of a “lost deed.”
Additionally, the actions of Henry Hand support the finding that Henry Hand owns a one-half interest in the subject property. Beginning in 1971, Henry Hand has continuously paid the property taxes for his interest in the subject property. Until the LaBordes believed they acquired the entire interest in the subject property in 1999, no other individual paid those property taxes. This explains why the Crow Wing County auditor’s records listed Henry Hand as a taxpayer and fee owner of an undivided one-half interest in the subject property.
Moreover, the Castlemans took actions that acknowledged Henry Hand’s interest in the property. The Castlemans contacted Henry Hand on more than one occasion about buying Hand’s interest in the land. Hand refused to sell his interest in the land, but agreed to partition the land into east and west parcels. Exhibit 4 shows a survey that was conducted in order to divide the land into two separate halves. Exhibit 20 is an affidavit from Henry Hand from 1985 stating that Hand accepts the west parcel of the property. Thus, the evidence presented at trial shows that the Castlemans recognized the existence of Hand’s interest in the property.
The attorney letters, Henry Hand’s payment of the property taxes, and the behavior of the Castlemans all indicate that Henry Hand has an interest in the subject property. Accordingly, based on the totality of the circumstances, sufficient circumstantial evidence exists to support the district court’s finding of a “lost deed” that granted Henry Hand an interest in the subject property.
Appellants argue that even if a lost deed gave Henry Hand an interest in the subject property, appellants LaBordes are bona fide purchasers and thus, under Minn. Stat. § 507.34 (2002), their interest in the subject property cannot be challenged. We disagree.
Appellants support their contention by arguing that the state conveyed Henry Hand’s interest in the subject property to Jacqueline Castleman in 1995 following a 1994 tax forfeiture of part of the subject property due to the nonpayment of real estate taxes. In 1995, Ms. Castleman purchased the forfeited interest and obtained a state deed that gave her title to “Gov. Lot 2 Sec. 32 (E 1/2 of SW 1/4), except part sold to J. Castleman Und. 1/2 interest Township 137, Range 26.” (Ex. 25). Appellants contend that the language in this deed conveyed any title held by Hand and that when the LaBordes purchased the Castlemans’ interest in the subject property, the LaBordes acquired the entire subject property. Then, when the LaBordes recorded their interest, they became bona fide purchasers.
There are two problems with appellants’ argument. First, Jacqueline Castleman did not acquire Henry Hand’s interest in the subject property in 1995. A deputy auditor at the county auditor’s office testified that the records showed that a half interest in one-half of the subject property was forfeited for nonpayment of taxes. But the auditor testified that the half interest that was forfeited belonged to Ms. Castleman. The auditor then explained that after a property is forfeited, if an owner wishes to repurchase the property, they receive a state deed, which is a conveyance of forfeited land. Thus, based on the auditor’s testimony, in 1995 Ms. Castleman only repurchased her original one-half interest in the west parcel of the subject property. That was the property that was forfeited and that was the property conveyed in the state deed.
Second, the LaBordes do not qualify as bona fide purchasers. Minn. Stat. § 507.34 (2002) describes the situation when unrecorded conveyances become void. The statute states that
[e]very such conveyance not so recorded shall be void as against any subsequent purchaser in good faith and for a valuable consideration of the same real estate, or any part thereof, whose conveyance is first duly recorded * * * .
There is no dispute that the LaBordes recorded their interest in the property before Henry Hand recorded his interest and that the LaBordes paid valuable consideration for the property. But the LaBordes were not good-faith purchasers.
A “purchaser in good faith” under the recording act is one who gives consideration without actual, implied, or constructive notice of any inconsistent, outstanding rights of others. Miller v. Hennen, 438 N.W.2d 366, 369 (Minn. 1989). A finding of implied notice is based upon actual knowledge of facts that put the purchaser on further inquiry notice. Id. at 370. “[A] purchaser is charged as a matter of law with constructive notice of any properly recorded instrument.” Howard, McRoberts & Murray v. Starry, 382 N.W.2d 293, 296 (Minn. App. 1986). The Minnesota Supreme Court has defined constructive notice as a creature of statute and, as a matter of law, imputes notice to all purchasers of any properly recorded instrument even though the purchaser has no actual notice of the record. Miller, 438 N.W.2d at 369-70.
Here, the recorded documents show that the Castlemans had an undivided one-half interest in the land. The recorded chain of title for the other one-half interest in the property established an interest in Monroe Hand. Thus, Monroe Hand’s recorded interest in the property put the LaBordes on constructive notice of another person’s interest in the subject property.
Moreover, even though there was no recorded deed showing Henry Hand’s interest in the subject property, James LaBorde testified at trial that he found tax statements for the subject property with Henry Hand’s name and address on them. Rather than contact Hand, LaBorde questioned Mr. Castleman, who told him Hand had no interest in the property. LaBorde made no further inquiry.
Based on the facts LaBorde knew, we conclude LaBorde had implied notice of Henry Hand’s interest in the property. And because LaBorde failed to contact Henry Hand, we further conclude that LaBorde failed to make a reasonable inquiry into Henry Hand’s rights to the subject property, and that such an inquiry would have revealed Henry Hand’s interest in the property. Thus, the LaBordes are not entitled to the protections afforded good-faith purchasers.