STATE v MIDLAND MATERIALS CO

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No. 82-375 I N THE SUPREME COURT O F THE STATE O F M O N T A N A 1983 THE STATE O F MONTANA, a c t i n g b y a n d t h r o u g h i t s Department of Highways, Plaintiff and Respondent, VS. MIDLAND MATERIALS C O . , Defendant. and R e s p o n d e n t , and TIMOTHY E . WOOD, Defendant Appeal from: Counsel of and A p p e l l a n t . D i s t r i c t Court of the Thirteenth J u d i c i a l D i s t r i c t , I n and f o r t h e County of Yellowstone Honorable Diane Barz, Judge p r e s i d i n g . Record: For Appellant: Bruce E. Lee, Bill.ings, Montana For Respondents: Crowley, Haughey, Hanson, Toole Montana J a m e s R. B e c k , H e l e n a , M o n t a n a & Dietrich, Submitted on b r i e f s : Decided: Filed: -- Clerk Billings, February 24, May 1 2 , 1 9 8 3 1983 Mr. J u s t i c e L . C . G u l b r a n d s o n d e l i v e r e d t h e O p i n i o n of t h e C o u r t . T h i s case stems from a n Nontana Highway Midland Materials Yellowstone judgment Midland and Court County, appellant, "State Pit," the denied the Co. determine whether Tim t o Edith I . Walters of granted Materials or Co., p r o p e r t y known as t h e District to Department "successor-in-interest" The i n t e r p l e a d e r a c t i o n brought , d e f e n d a n t Wood's From judgment that judgment, Wood, motion motion for Tim Wood . 1 9 7 4 E d i t h I . Walters c o n v e y e d b y deed t o M . G . Long p r o p e r t y t o and n o r t h and s o u t h w e s t of t h e i t 1 , excepting the ' S t a t e P i t 1 . In G . Long c o n v e y e d t h e ' M i d l a n d ' p r o d e f e n d a n t Midland M a t e r i a l s C o . by deed . . . ... " 3 . On February 4, 1981 the Montana D e p a r t m e n t o f Highways s e n t a l e t t e r to E d i t h Walters .. 1981 sent ... the Montana l e t t e r to a "5. Sometime p r i o r t o J u n e 2 5 , 1981 t h e Montana D e p a r t m e n t o f Highways p u b l i s h e d a N o t i c e of S a l e of t h e ' S t a t e P i t 1 p r o p e r t y "6. On J u n e 2 5 , 1 9 8 1 t h e Montana D e p a r t m e n t o f Highways, a c t i n g p u r s u a n t t o t h e a u t h o r i t y g r a n t e d b y 5 9 60-4-202 and 60-4-204, MCA, cond u c t e d a p u b l i c a u c t i o n a t B i l l i n g s , Montana The b i d d i n g a t of the ' S t a t e P i t 1 property. s a i d a u c t i o n was opened b y M r . J o e l Long o f Materials Co for defendant Midland $18,000.00. D e f e n d a n t Timothy E. Wood t h e n b i d $18,100.00. A f t e r an unsuccessful call f o r h i g h e r b i d s t h e a u c t i o n e e r concluded t h e sale a t t h e $18,100.00 h i g h b i d . M r . Joel Long t h e n a l l e g e d t o t h o s e p r e s e n t t h a t t h e y ( M i d l a n d Materials Co.) were s u c c e s s o r s i n i n t e r e s t t o E d i t h I . W a l t e r s and would l i k e t o e x e r c i s e t h e i r r i g h t to meet t h e h i g h b i d . M r . Long was i n f o r m e d by a Highway D e p a r t m e n t r e p r e s e n t a t i v e to send h i s c l a i m t o t h e S t a t e b y r e g i s t e r e d mail i n p r e s c r i b e d f o r m . . MCA. , summary submitted . .. " 4 . On February 6, Department of Highways Midland Materials Co. the District Judicial "1. On December 3 0 , 1 9 5 4 E d i t h I . Walters conveyed by deed t o t h e S t a t e Highway Commission o f Montana a t r a c t o f l a n d i n Yellowstone County, Montana (hereinafter 'State Pit' ) . was t h e f o r m e r owner of The p a r t i e s s t i p u l a t e d t h e f a c t s to be a s f o l l o w s : "2. In warranty adjacent 'State P 1975 M. perty to warranty the respondent, u n d e r s e c t i o n 60-4-204, Thirteenth summary by by appeals. "7. On J u n e 2 7 , 1 9 8 1 d e f e n d a n t Timothy E . Wood o b t a i n e d a q u i t c l a i m d e e d of t h e ' S t a t e P i t 1 f r o m E d i t h I . Walters whom he had f i r s t m e t and c o n t a c t e d a f t e r t h e p u b l i c a u c t i o n and a f t e r he had t a l k e d w i t h h i s a t t o r ney, Jeff Essman, a b o u t Midland Materials Co. I s claim t o be t h e s u c c e s s o r i n i n t e r e s t . . . . "8. Both d e f e n d a n t Midland M a t e r i a l s Co. and d e f e n d a n t T i m o t h y E. Wood claim t o be t h e s u c c e s s o r i n i n t e r e s t o f E d i t h I . Walters f o r t h e MCA, and a r e b o t h p r e p u r p o s e o f S 60-4-204, p a r e d t o p a y t h e h i g h b i d p r i c e to t h e S t a t e Highway Commission . .. " 9 . The S t a t e o f Montana, p r i o r t o t h e f i l i n g of t h i s s u i t , r e j e c t e d t h e claim o f Timothy E. Wood by l e t t e r d a t e d J u l y 2 , 1 9 8 1 . " S u b s e q u e n t t o t h e s t i p u l a t i o n and a £ t e r j u d g m e n t was e n t e r e d , Midland Materials a submitted check to the State for the f u l l p u r c h a s e p r i c e and a d e e d was m a i l e d t o them o n A u g u s t 2 5 , 1982. The deed, although mailed u n t i l t h a t d a t e . s t a y of State execution prior to but the signed On A u g u s t 2 4 , it was issuing not of to A u g u s t 2 5 , prior Tim Wood had o b t a i n e d served the was n o t deed. on a p p e l l a n t s o r The deed was a the sub- sequently recorded. The issue presented determining Midland interest" As as that t h i s case is w h e t h e r t h e D i s t r i c t C o u r t e r r e d Materials term is Co. used to in be the section in "successor-in60-4-204, is a n a p p e a l from a summary j u d g m e n t , MCA? we must f o l l o w t h e r u l e s as s e t o u t i n D a r r a h v . M i l b a n k Mutual I n s u r a n c e Company ( 1 9 8 3 ) -- . -- Mont . -- .- , 6 5 8 P.2d 3 7 4 , 40 S t . R e p . There we s t a t e d : " I n cases i n v o l v i n g summary j u d g m e n t t h e p r e t r i a l r e c o r d s m u s t be l o o k e d a t t o d e t e r m i n e whether t h e r e a r e any genuine i s s u e s of m a t e r i a l f a c t , 56 ( c ) M.R.Civ.P., Flemmer v . Ming ( 1 9 8 0 ) r 6 2 1 P.2d 1 0 3 8 , 37 S t . R e p . 1 9 1 6 , b e c a u s e summary j udgment i s o n l y p r o p e r u n d e r Rule 56(c) M.R.Civ.P., where the record d i s c l o s e s no s u c h i s s u e s e x i s t and t h e moving p a r t y is e n t i t l e d t o judgment as a matter of law. R e a v e s v . R e i n b o l d ( 1 9 8 0 ) r 6 1 5 P.2d 8 9 6 , St.Rep. 1500, (and cases cited 898, 37 t h e r e i n ) . A s t h e p u r p o s e of t h e p r o c e e d i n g is t o d e t e r m i n e whether t h e r e a r e any material i s s u e s o f f a c t i n v o l v e d , it s h o u l d be r e m e m b e r e d t h a t t h e f o r m a l i s s u e s p r e s e n t e d by t h e pleadings a r e not controlling. Byrd v. B e n n e t t ( 1 9 8 1 ) , 6 3 1 P.2d 6 9 5 , 38 S t . R e p . 1 0 8 3 . "The moving p a r t y i n a summary j u d g m e n t a c t i o n h a s t h e b u r d e n o f showing t h e c o m p l e t e a b s e n c e 117. o f material i s s u e s o f f a c t . Byrd v . B e n n e t t ( 1 9 8 1 ) , 6 3 1 P.2d a t 696; C e r e c k v . A l b e r t s o n l s I n c . ( 1 9 8 1 ) , 637 P.2d 5 0 9 , 5 1 1 , 38 S t . R e p . 1 9 8 6 , ( a n d cases c i t e d t h e r e i n ) ; Rumph v. Dale E d w a r d s , I n c . ( 1 9 7 9 ) , 6 0 0 P.2d 1 6 3 , 3 6 S t . R e p . 1 0 2 2 . " 658 P.2d a t 375. In case, this despite there the a b s e n c e of being no "successor-in-interest," this or Court legislative construing the intent this such prior legislature, the been of or any by t h e term MCA, as indication s t a t u t e as a w h o l e . shown, the i n s e c t i o n 60-4-204, is p r o v i d e d term has interpretation contained from issues by to the Guidance i n t e r p r e t a t i o n of in the Montana Highway D e p a r t m e n t , t h e a g e n c y c h a r g e d w i t h a d m i n i s t e r i n g the statute. Montana Power Company v . S e c t i o n 60-1-102, tion of the 1 8 2 Mont. t h e l e g i s l a t i v e p o l i c y and i n t e n t sec- MCA, Highway Cremer (1979) Code, placed a great a u t h o r i t y i n t h e h a n d s o f highway o f f i c i a l s . deal of trust and The p e r t i n e n t p a r t of t h a t s e c t i o n states: "Consistent with the foregoing determination and d e c l a r a t i o n s , t h e l e g i s l a t u r e i n t e n d s : " (1) t o p l a c e a h i g h d e g r e e of t r u s t i n t h e h a n d s o f t h o s e o f f i c i a l s whose d u t y i t is, w i t h i n t h e l i m i t s of a v a i l a b l e f u n d s , t o p l a n , d e v e l o p , o p e r a t e , m a i n t a i n , and p r o t e c t t h e highway f a c i l i t i e s of t h i s s t a t e f o r p r e s e n t a s w e l l as f o r f u t u r e u s e ; " ( 4 ) to p r o v i d e s u f f i c i e n t l y broad a u t h o r i t y t o e n a b l e t h e highway o f f i c i a l s a t a l l l e v e l s o f g o v e r n m e n t t o f u n c t i o n a d e q u a t e l y and e f f i c i e n t l y i n a l l areas of t h e i r r e s p e c t i v e r e s p o n s i b i l i t i e s , s u b j e c t to t h e l i m i t a t i o n s o f t h e c o n s t i t u t i o n and t h e l e g i s l a t i v e mand a t e h e r e i n a f t e r imposed S e c t i o n 60-1-102, ." MCA. Under this authority the Highway Department interpreted the terms "successor-in-interest" in the past has t o mean t h e a d j a - c e n t l a n d o w n e r whose c h a i n o f t i t l e c a n be t r a c e d t o t h e o r i g i n a l owner of the e n t i r e tract. c o n c l u s i o n of law N o . 7 . l e g i s l a t i v e p o l i c y and case o f C a s t l e s v . The D i s t r i c t C o u r t s o f o u n d i n i t s A f t e r c i t i n g s e c t i o n 60-1-102, i n t e n t s e c t i o n of MCA, the t h e Highway Code, the S t a t e ex r e l . Montana D e p a r t m e n t of Highways . ( 1 9 8 0 ) ; -- - - Mont 609 P , 2 d 1 2 2 3 , 37 S t . R e p . 2 3 4 , and t h e s t i p u l a t i o n e n t e r e d i n t o by a l l t h e p a r t i e s , it s t a t e d : " A l l of t h e s e f a c t o r s i n d i c a t e d t h a t a g e n c y i n t e r p r e t a t i o n of 60-4-204, MCA, b y Montana D e p a r t m e n t of Highways s u p p o r t s c o n c l u s i o n t h a t Midland M a t e r i a l s Co. i s 'successor i n i n t e r e s t . ' " Under case the law, it is clear that, the the the the when faced with p r o b l e m s o f s t a t u t o r y c o n s t r u c t i o n , t h e c o u r t m u s t show d e f e r e n c e a n d r e s p e c t t o t h e i n t e r p r e t a t i o n s g i v e n t h e s t a t u t e by t h e o f f i c e r s and a g e n c i e s c h a r g e d w i t h a d m i n i s t r a t i o n . v. Environmental 334, 344, P r o t e c t i o n Agency Department of Revenue v. Montana Power Co. (9th Cir. 1 9 7 9 ) , 6 0 8 F.2d P u g e t Sound Power and L i g h t ( 1 9 7 8 ) , 1 7 9 Mont. 2 5 5 , 5 8 7 P.2d 1 2 8 2 , N o r t h e r n Cheyenne T r i b e v. H a l l o w b r e a s t ( 1 9 7 6 ) , ' 4 2 5 U.S. 6 4 9 , 48 L.Ed.2d 274, 96 S . C t . 1793. "The p e r s u a s i v e n e s s of a n a d m i n i s t r a t i v e i n t e r p r e t a t i o n of a statute depends sideration, with the earlier [citation upon the validity and later omitted]" Montana (D.Mont. thoroughness of evident its reasoning pronouncements Blackfeet Tribe 1 9 8 1 ) , 507 F,Supp. of 446, and of its the its in consistency same Indians v. agency. State has of not "successor-in-interest" been I t s h o u l d a l s o be the In the t h e r e i s no s u b s t a n t i a l e v i d e n c e t o show t h a t t h e interpretation Department of 4 5 1 ( s e e a l s o , Montana Power Company v . E n v i r o n m e n t a l P r o t e c t i o n Agency, s u p r a ) . case a t bar, con- interpretation consistently noted advanced absurd r e s u l t i f adopted. made applied by over the the Highway years. t h a t t h e D i s t r i c t Court found t h a t by t h e a p p e l l a n t would lead to an I n c o n c l u s i o n of law No. 1 0 i t s t a t e d : " I n t h i s case 'successor-in-interest' can only r e a s o n a b l y r e f e r t o t h e p r e s e n t owner of t h e a d j a c e n t p r o p e r t y from w h i c h o r i g i n a l t r a c t of land the Montana D e p a r t m e n t of Highways Any o t h e r acquired its portion or s t r i p . i n t e r p r e t a t i o n would be u n r e a s o n a b l e as i t would- l e a d t o p a r t i e s w i t h o u t a n i n t e r e s t i n t h e a d j a c e n t land being allowed t h e advantage o f being a b l e t o match t h e h i g h b i d a t p u b l i c a u c t i o n by o b t a i n i n g q u i t c l a i m d e e d s f r o m o r i g i n a l o w n e r s who no l o n g e r had a n y ownership interest. " T h i s C o u r t h a s p r e v i o u s l y h e l d t h a t when c o n s t r u i n g s t a t u t e s , t h e i n t e r p r e t a t i o n s h o u l d be r e a s o n a b l e t o a v o i d s u c h a b s u r d r e s u l t s . Montana Power Co. v. Cremer, supra (and c a s e s cited therein). F o r t h e f o r e g o i n g r e a s o n s , w e b e l i e v e t h e D i s t r i c t C o u r t was c o r r e c t i n g r a n t i n g summary j u d g m e n t . A £ f irmed . Justice W e concur: &*&a = 2 A d $ Chief J u s t i c e Justices / Mr. Justice John C. Sheehy, dissenting: I dissent from the foregoing opinion. I would hold (1) the term "successor in interest" does not include a successor in title; (2) the appeal here is not moot by virtue of the delivery of a quitclaim deed by the Highway Department to Midla.nd Materials Co. ; (3) Timothy E. Wood, by virtue of the quitclaim deed which he received from the original grantor, Edith Walters, is merely a transferee, a successor in title, and not a "successor in interest"; and (4) the quitclaim deed to Midland Materials should be held null and void, set aside, and the Highway Department ordered to follow the proper statutory procedures if it intends to sell the land in question. The majority errs in this case because it misinterprets the term "successor in interest" both on the facts here and the applicable law. . First let us determine what a "successor i n interest" is. It certainly is not a successor in title. The two terms are not synomous. "In order to be a 'successor in interest,' a party must continue to retain the same rights as the a original owner without - change in ownership. There must be a change in form only and not in It does a from one substance. - - - not include - transfer -party to another ... "The City endeavors to apply the terms 'successor in interest,' and 'successor in title' as having the same meaning, but cites no law to support this .' I City of New York v. Turnpike claim . Development Corporation (S.Ct. Kings Co. 1962) , 36 Misc.2d 704, 233 N.Y.S.2d 887. . A successor in interest an owner of real property may be one who is substituted for the owner by operation of law, such as an heir, a personal representative, a trustee in bankruptcy, a purchaser at foreclosure, or any other change which is in form only and not in substance. It cannot include a transferee by deed or assignment from the owner because such a transferee or assignee is a successor in title, and not a successor in interest. Moreover, on the facts of this case, there can be no "successor in interest," because the original owner, Edith Walters, is at the time of these proceedings in existence and very much so. The Sta-terecognized that she was in existence by serving upon her a request for a waiver of her right as the original owner. The statute which applies says "The owner from whom the interest is originally acquired - - successor in interest shall have or his the o ~ t i o n to purchase theinterest by offering therecore an amount of money equal to <he highest bid received for the interest at the sale . . ." It can be discerned from the terms of the statute that an owner, and the owner's successor in interest, cannot coexist at the same time. does not. If the owner exists, the successor The successor in interest exists only if he is substituted in the place and stead of the original owner. In this case the deed from Edith Walters to Malcolm Long specifically excepted the property known as the State Pit. Malcolm Long acquired no right, title or interest in the State Pit by virtue of his deed from Edith Walters and neither did Malcolm Long ' s transferee, Midland Ma-terials Co. The majority relies on the interpretation of the term "successor in interest" by the Highway Department. Where that interpretation, a matter of law, is manifestly wrong, we should not follow such interpretation when the effect is to muddle what otherwise should be clear law. The same logic applies to the argument of Timothy Wood. He claims to be a successor in interest by virtue of a quitclaim deed obtained from Edith Walters after the purported. sale of the property had taken place. He did not thereby become a successor in interest, rather he became a successor in title. in interest. As a transferee, he is not a successor He can claim no right to meet the highest bid under section 60-4-204, MCA, as a mere transferee anymore than can Midland Materials Co. as a mere transferee. Midland Materials Co. also contends in this case that the appeal of Timothy E. Wood is moot because a quitclaim deed has been delivered by the Highway Department to Midland. Under the facts of this case, however, the judgment is not moot. On August 24, 1982, the District Court, acting ex parte, as it may under Rule 7, M.R.App.Civ.P., order with respect to its judgment. issued a stay The judgment was to the effect that Midland, upon payment of the proper money to the Highway Department would obtain a deed to the State Pit. However the deed was not delivered by the Highwa-y Department until after the date on which the District Court entered its supersedeas order. In that circumstance, the judgment is stayed and the issue is not moot for the purposes of Woods appeal. Am.Jur.2d A deed takes effect only upon legal delivery. Deeds S 78. 23 Here the delivery by the Highway Department, on August 25, 1982, was too late to avoid the effect of the supersedeas order of the District Court. The situation before us therefore should be clear: Midland Materials Co. is not a successor in interest to Edith Walters. Timothy Wood is not a successor in interest to Edith Walters. Edith Walters is no longer an owner because she has quitclaimed any interest she had in the State Pit. to Timothy Wood. It should be the object of the Highway Department in selling land which it does not need to obtain the greatest sum of money that the highest bidder would agree to pay at a pub]-ic auction. The actions of the Highway Department in this case have side-stepped that beneficial purpose. We should therefore order that the deed issued by the Highway Department in this case to Midland Materials Co. be declared null and void, and set aside, and the judgment reversed. If the Highway Department wishes in the future to sell the lands which would then have reverted to it, it must follow the statutory procedures, and be guided by our opinion in conducting the public auction.

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