WALTERS v KRUSE

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No. 8 4 - 5 1 1 IN THE SUPREME COURT OF THE STATE OF MONTANA Plaintiff and Appellant, -vsHAROLD V. KRUSE and NAOMI J. KRUSE, Husband and Wife, and ROBERT M. WILLETT, BRUCE MICHEL ROBERTS, and All other Persons claiming interest in described real property, Defendants and Respondents. ........................... KRIS ROBERT HIRT, Intervenor and Respondent, JAMES B. WALTERS, LEE McDONALD and RICK HILDEBRAND AND SANDY HILDEBRAND, Husband and Wife, Defendants and Appellants. APPEAL FROM: District Court of the Nineteenth Judicial District, In and for the County of Lircoln, The Honorable Robert M. Bolter, Judge presiding. COUNSEL OF RECORD: For Appellants: Sverdrup & Spencer, Libby, Montana Fennessy, Crocker & Allen, Libby, Montana For Respondents: Allen L. McAlear, Bozeman, Montana Submitted on Briefs: May 9, 1955 ~ecided: January 8, 1986 Filed: JAN 8 - I986 - - Clerk J u s t i c e W i l l i a m E . Hunt, S r . d e l i v e r e d t h e O p i n i o n o f t h e Court. Nr. The appellant, James Walters, brought a quiet title a c t i o n i n April. 1 9 8 1 i n I ; i n c o l n County D i s t r i c t C o u r t . named d e f e n 6 a n t s m a d e no a p p e a r a n c e and t h e C i s t r i c t C o u r t o r d e r e 6 t i t l e q u i e t e d i n a p p e l l m t VJalters on J u n e 8 , I n February 1983, t h e respondent, and action to The K r i s I-Tirt, set a s i d e t h a t decree. 1981. fil-ed a motion The D i s t r i c t Court c r d e r e d t h e d e c r e e s e t a s i d e and t h e p a r t i e s t h e n p r o c e e d e d on t h e o r i g i ~ a l q u i e t t i t l e a c t i o n a s i f a n a p p e a r a n c e had heen made. The District Court respondent, K r i s Roberts H i r t . quieted title in the This appeal followed. W e affirm. The i s s u e s p r e s e n t e d f o r rev: ' e w a r e : 1. Whether t h e District Court e r r e d in setting aside e v i d e n c e of f r a u d sufficient tc t h e q u i e t t i t l e decree. Whether 2. t h e r e wwas a l l o w t h e q u j e t t i t l e d e c r e e t o be set a s i d e . Whether 3. a diligent accorCance w i t h Rule 4 0 ( 5 ) , search was performed in b4.R.Civ.P. The f i r s t i s s u e i s 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 . i n s e t t i n g a s i d e t h e q u i e t t i t l e decree. issue controls an6 renders a Our d i s c u s s i o c o f t h i s discussion of the remaining i s s u e s unnecessary. T h i s m a t t e r c o n c e r n s a two p a r c e l t r a c t cf r e a l p r o p e r t y located i n Lincoln County, the property In 1958, h'aomi Kruse Sund. Harold from F o r r e s t and and The d e e d was r e c o r d e d i n L i n c c l n County. In purchased Montana. Vera 1 9 7 2 , t h e K r u s e s s o l d t h e p r o p e r t y by c o n t r a c t f o r d e e d to Robert W i l - l e t t . The c o n t r a c t was h e l d i n escrow i n Bonners Ferry, Idaho. payment o f t a x e s . The c o n t r a c t made as part of fcr I n 1 3 7 3 , W i l l e t t a s s i g n e d t h e c o n t r a c t to Bruce and K r i s F o b e r t s . and no p r o v i s i o n the The R o b e r t s ' m a r r i a g e was d i s s o l v e d divorce settlement Eruce assigned his i n t e r e s t . t o R r i s i n December 1974, and t h e n e x e c u t e d a q u i t c l a i m d e e d t o h e r i n August respondent. 1975. Pris i s now K r i s I I i r t , T h e r e was no n o t i c e o f a n y o f t h e s e t r a n s a c t i o n s r e c o r d e d i n L i n c o l n County where t h e l a n d i s l o c a t e d . L i n c o l n County c o n t i n u e d t o a s s e s s t a x e s on t h e p r o p e r t y The 1976 t a x e s were n o t p a i d t o t h e F r u s e s a s r e c o r d owners. and i n J u l y sale. t h e p r o p e r t y was o f f e r e d 1977, for public tax No b i d was r e c e i v e d on t h e p r o p e r t y and L i n c o l n County became t h e p u r c h a s e r . In J a ~ u a r y 1980, L e e McDonald purchase2 from L i n c o l n County v i a a t a x deed. p r o c e d u r e . contained an incorrect Februs-ry 1 9 8 1 , the and incomplete appellant, the property The t a x d e e d description. James W a l t e r s , In purchased the p r o p e r t y from M c D o ~ a l d . b 7 a l t e r s r e c o r d e d h i s d e e d . IE A p r i l 1981, W a l t e r s f i l e d a c o m p l a i n t t o q u i e t t i t l e t o t h e property. H e named a s d e f e n d a n t s i n t h a t a c t i o n t h e Kruses, Bruce Willett, Poberts, and "all other persons, ~lnknown. " On J u n e 8 , that the 1981, t h e D i s t r i c t C o u r t , h a v i n g d e t e r m i n e d defendants had been duly served, yet failed to a p p e a r a n d w e r e i n d e f a u l t , and h a v i n g d e t e r m i n e d t h a t p r o o f t o the satisfaction of title quieted in the t h e c o u r t h a v i n g been made, appellant. Appellant, Walters, conveyed two p a r c e l s t o R i c k a n d Sandy H i l d e b r a n d . was recorded respondent, in Cctober Rris Hirt, 1981. In the ordered then That deed meantime the h a d b e e n p a y i n g on h e r c o n t r a c t h e l d i n e s c r o w i n t h e I d a h o bank. The r e s p o n d e n t b e l i e v e d . t h a t the escrow September arrangement 1982, included respondent's payment f r i e n d who of taxes. lived next to In the p r o p e r t y a d v i s e d h e r t h a t somecr,e was l i v i n g end b u i l d i n g on the property. I n February 1983, K r i s I T i r t f i l e d c o n s o l i d a t e d motions to s e t a s i d e h e r d e f a u l t a n d t o i n t e r v e n e ir, t h e o r i g i n a l q u i e t t i t l e acrtion, a t h i r d p a r t y c o m p l a i n t on q u i e t t i t l e , and a n a c t i o n t o s e t a s i d e t h e t a x d e e d . the sale tax irregularities failure to failure to and incl-uding give use subsequent proper proper transfers lack of notice, tax She a l l e g e d tha.t. definite fraud deed were on procedure. void. for description, the court, and She named the McDcna.ld, a n d t h e H i 1 d e b r a . r . d ~ a s appellant, h i s predecessor, defendants. I n November 1983, t h e C i s t r i c t C o u r t s e t a s i d e i t s J u n e 1981, decree that Appellant, Walters, had title quieted in the appellant. t h e n moved t o s e t a s i d e t h i s judgment i n T h i s m o t i o n was d e n i e d . f a v o r c f t h e respondent., H i r t . The a p p e l l a n t t h e n f i l e d a n amended c o m p l a i n t and t h e n a t t e r went I n J u l y 1984, t h e D i s t r i c t C o u r t i s s u e d f j - n d i n g s to trial. o f f a c t and c o n c l u s i o n s o f law. The c o u r t found. t h a t L i n c o l n County d i d n o t h a v e j u r i s d i c t i o n t o i s s u e a t a x d e e d b e c a u s e t h e n o t i c e w a s m e t e r i a l . l y d e f e c t i v e i n s t a t i n g t h e amount d u e and in s e t t i n g f o r t h t h e clescription. defects, As a r e s u l t of the t h e c o u r t found t h a t K r i s R o b e r t s d i d not. l o s e h e r r i g h t t o redeem t h e p r o p e r t y by payment o f d e l i n q u e n t t a x e s and that title upon quieted payment in her of those favor taxes on she the land sh.ould h a v e not. the previously conveyed t o t h e H i l d e b r a r i d s . As t o t h e l a n d conveyed t o t-he I I i l d e b r a n d s , f o u ~ dt h a t title should remain the court i n th.e HiLZebrands a s bona fide purchasers for val-ue, b u t that should! pay H i r t For t h e p r o p e r t y the appellant Walters h e had conveyed t o them. J u d g n e n t was e n t e r e d q u i e t i n g t i t l e i n t h e r e s p o n d e n t s u b j e c t t o t h e Hildebrand's a p p e l l a n t ' s r i g h t t o redeem by p a y i n g G r t h e r e s p o n d e n t f o r t h e p a r c e l upGn which t h e Hil.debrands had Both t h e a p p e l l a n t s and H i l d e b r a n d s constructed buildings. a p p e a l ~ d . Subsequently t h e Hildebrands s e t t l e d t h e i r d i s p u t e and d i s m i s s e d t h e i r appeal. The f i r s t i s s u e w e m u s t d e c i d e i s w h e t h e r t h e D i s t r i c t Court e r r e d i n s e t t i n g a-side t h e q u i e t t i t l e decree. The r e s p o n d e n t , i n h e r c o n s o l i d a t e d m o t i o n and a c t i o n t o set aside the title quiet underlying tax deed appellant's prezecessor However, as property claimed 6eficient the that decree, under procedure in under there title, Court District the could which the deed no challenge6 claimed found, tax be also lGcDonald, his interest. description procedure valid the transfer of was so of any i n t e r e s t under any k i n d o f a c t i o n . The n o t i c e p u b l i s h e d i n the Section tax deed procedure referred to 25 and not to S e c t i o n 2 6 , t h e s e c t i o n i n which t h e l a n d l i e s . In addition t h e d e s c r i p t i o n r e f e r r e d t o a " T r a c t 1" i n H.E.S. 735--there i s no T r a c t 1 i n H . E . S . 735. T o compounl t h e d i f f i c u l t y i n locating t h e land, t h e description 2id not indicate north o r south f o r t h e township, o r e a s t o r w e s t f o r t h e range. Fe agree application with fcr the tax Cistrict deed was Court so that vague, the nctice incomplete of and e r r o n e o u s t h a t i t d o e s n o t a d e q u a t e l y i d e n t i f y t h e l a n z and is therefore f a t a l l y defective. Y e t t e r v. (Kont. 1 9 8 2 ) , 645 P.26 941, 9 4 2 , 39 St.Rep. G a l l a t i n County 905, 907. D e f e c t i v e n o t i c e of a p p l i c a t i o n f o r a t a x deed d e p r i v e s t h e county t r e a s u r e r of jurisdiction t o i s s u e t h e t a x deed. Edwards v. St.Rep. 914, 921. Walters (Kont. 1983), 664 P.2d 332, 937, 40 Because no valid tax deed has been issued respondent's right to redeer, the property has not. terminated. Section 15-18-101, MCA. Because of our holding a-s to the first issue it is not necessary to discuss the second and third issues. The judgment of the District We Concur:

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