Property Law

Paul F. Sherman, Esquire

Doctrine of merger requires complete unity of title in both dominant and servient estates to effect extinguishment of easement.  Maune, et al. v. Beste, et al., No. 96177 (Mo. App. E.D., October 25, 2011), Ahrens, C.

The Beste property was landlocked until 1989. The garage on the Beste property (then owned by Doss family) was accessed over the Krakow Store Property. The Doss family sold the Beste property to the Pryor family in 1938. Harry and Elizabeth Beste acquired their property in 1946, then conveyed to Defendants Beste in 1989. Defendants still use the garage and access their garage from Highway A the same way today, across the Krakow Store Property.

The Nieders purchased the Krakow Store Property in 1922, selling it to Margaret Nieder, Mabel Beste and Elizabeth Beste in 1964. They conveyed it to Krakow Store, Inc. in 1981, then in 1988 to Bernard Beste, Mabel Beste and Rudolph Nieder. Mabel Beste and Jeff Nieder conveyed the Krakow Store Property to Plaintiffs Maune in 1995.  

The trial court granted Defendants a prescriptive easement, finding adverse use was made openly, obviously, continuously, and uninterrupted for ten  years. Up until 1989, this was the Beste property’s only access to the highway. Permission was never requested.

Held: Affirmed.
On appeal Plaintiffs contend in Point I the Defendants did not prevail without testimony of a specific defined path, but the surveyor’s legal description was determined sufficient.

For Point II, Plaintiffs argue the easement was extin-guished by the doctrine of merger when both dominant and servient estates were owned by Elizabeth Beste from 1964 to 1981.
However, Elizabeth Beste was co-owner, with her husband Harry in the Beste Property (dominant) from 1946 to 1989. But her ownership interest in the Krakow Store Property (servient) was different, with Mabel Beste and Margaret Nieder, then the Krakow Store, Inc. and others before sale to Plaintiffs Maune. Complete unity of title is required to extinguish.

A party cannot offer inconsistent evidence and rely on that inconsistency to create a question of fact and avoid summary judgment. However, elaboration of deposition testimony by a subsequent affidavit held not to constitute an affirmative contradiction. Calvert v. Plenge, No. 96073 (Mo. App. E.D., November 1, 2011), Odenwald, K.

Defendant Plenge owned 1200 acres of farm land in 2000. In 2001, Defendant entered into an agreement with Plaintiff and transferred the land by deed to Plaintiff Calvert.

Defendant argues the arrangement was an equitable mortgage with title to be restored in her upon her request, claiming this was an arrangement to avoid losing her land in unrelated litigation.  Plaintiff claims the transfer was a sale for the outstanding debt on the land. Thereafter, Defendant became a cash renter to Plaintiff. When Defendant stopped paying rent, Plaintiff filed this action in 2009 to have her ejected from the land. Defendant counterclaimed for breach of contract, fraud, undue influence, breach of fiduciary relations and unjust enrichment.

The trial court granted Plaintiff summary judgment based on the five year statute of limitations, § 516.120, because Defendant just demanded return of her land in 2003. Defendant admitted at deposition her 2003 demand, but subsequently by affidavit in response to motion claimed she rescinded her 2003 demand. Was the affidavit inconsistent?   The trial court decided yes, granting Plaintiff summary judgment.

Held: Affirmed.
  On closer examination the appellate court disagreed with the trial court’s disregard of Defendant's affidavit. However, Defendant did not appeal the trial court’s holding that even if her affidavit was considered, Plaintiff was still entitled to summary judgment. Therefore, judgment affirmed.  

Interpreting contract language, if ambiguous, allows for parol evidence to determine intent of the parties, and credibility deference is extended the trial judge acting as fact-finder in doing so. Ries v. Shoemake, as Personal Representative of the Estate of William McCleney, No. 30667 (Mo. App. S.D., February 14, 2012), Bates, J.

Ries sued McCleney for breach of real estate contract and fraudulent misrepresentations about the subject property. McCleney owned 170 acres in Texas County on which he built two lakes then applied for a permit for the lakes, which was denied by the Missouri Department of Natural Resources (“MDNR”). Ries, from Minnesota, wanting to buy Missouri land for a retirement home overlooking lakes, was shown this land by McCleney. Parties entered into a contract to purchase this land on May 24, 2004 for $325,000. Per a signed addendum, McCleney was to provide verification of permits for lake development. Closing occurred June 18, 2004. Ries was unaware permits had been denied until July 18, 2004, when he was faxed denial paperwork by the MDNR. Ries filed this suit in July 2006. After bench trial in March 2010, the trial court found for Ries $160,000 in actual damages, $17,000 for attorney fees and $60,000 in punitives. This appeal follows.

Point I denied.  McCleney claimed the trial court erred in finding breach, arguing the addendum language “verify” only required he find lake permits if they existed, but they did not. However, even if ambiguous the court can look to parol evidence to determine parties’ intent. Intent to require McCleney obtain the permits was supported.

Point II denied. Concerning material misrepresentations, McCleney argued Ries could have discovered everything material about the lakes prior to closing. However, the evidence was clear McCleney knew and did not disclose to Ries. Deference to the trial court regards credibility.

Point III (damages) and Point IV (punitive damages) were also affirmed.   

Applying § 443.055.1(3), the loan at issue for priority purposes was correctly interpreted a construction loan and not a purchase money loan.  Altom Construction Co., et al. v. BB Syndication Services, Inc., et al., No. 30966 (Mo. App. S.D., February 15, 2012), Rahmeyer, N.

Gage Excavating (“Gage”) and Hollister Interchange Development (“HIDC”) planned a water park, convention center and condo development in 2007 south of Hollister, Missouri, at a cost of approximately $155,000,000. BB Syndication Services (BBSSI) provided funding securing itself variously, including a partnership agreement with Wilderness Resort Group, operator of the project. Altom was hired by HIDC through Gage as a subcontractor for excavation work on the project. Great River was hired by HIDC for civil infrastructure plans and specs.  The project stopped when financing ended. Altom filed, then Great River filed, petitions to enforce mechanic’s liens which also named BBSSI as the mortgagee. The lien priority issue presented was whether BBSSI’s loan was a purchase money loan (as BBSSI claimed) or a construction loan. The trial court found BBSSI’s loan was a construction loan and this finding was affirmed on appeal. Section 6.13 of the Interim Loan represents the loan to constitute a “construction loan.”  The trial court correctly determined  § 443.055.1(3) applied because this loan was for the infrastructure construction. Therefore, the properly filed mechanic’s liens take priority over the BBSSI construction loan.

Regarding Great River, BBSSI also contended that because the plans were not complete (66.5%), Great River’s work was impracticable and incapable of performance under § 429.105.7, RSMo. However, it was noted that Great River stopped work when payment was not made. Even so, those Great River plans were being used. In deference to the trial court, substantial evidence supported these plans bringing value to the project.

Held: Judgment affirmed.

Proper notice of redemption and applicable redemption time period interpretation. Transferred to Supreme Court, pending as SC92390.  Sneil, LLC v. Tybe
Learning Center, Inc., et al.,
No. 96828 (Mo. App. E.D., February 28, 2012), Ahrens, C.

On August 28, 2006, Sneil successfully bid for Property in St. Louis County at a tax sale conducted by the St. Louis County Collector (“Collector”). At the time of sale, Tybe was the owner and Regions Bank had secured its loan with a Deed of Trust on the Property. This was a first offering tax sale. The notice letter provided both Tybe and Regional Bank by Sneil’s counsel dated August 9, 2007 did not include the duration of the redemption period. The Collector provided Sneil a Collector’s Deed on December 6, 2007, recorded December 18, 2007. On February 27, 2008 Sneil filed a petition to quiet title and eject Defendants.

The trial court found Sneil made no efforts to contact Defendants Tybe or Regions Bank any time prior to its letter dated August 9, 2007, and mailed August 27, 2007. This letter was sent one day after the redemption period expired August 26, 2007. Therefore, the trial court denied Sneil the relief requested.

On appeal, Sneil claimed right to redeem was not limited to one year, but could last up to two (2) years under § 140.410, RSMo. The Eastern District has held the first and second offering tax sales have a one year redemption period which begins on the date of the tax sale. Notice sufficient within the one year redemption period must be provided at least 90 days before the Collector’s Deed can issue inder § 140.405, RSMo.

However, Sneil relies on Western District case authority in support. The Eastern District agrees with the trial court, but transfers the case to the Supreme Court due to general interest and importance.

Held: Transferred to the Supreme Court, pending as SC92390.

David F. Neiers, Esquire
Dawn Humphreys, Esquire

Deed delivered in escrow and death of grantor prior to closing of escrow is sufficient delivery of deed to be deemed effective as of the date delivered in escrow based on the relation back doctrine and therefore terminating a previously recorded beneficiary deed. Thomas R. Hammack, as an individual and as co-trustee by and on behalf of the beneficiaries of the Hammack Family Farm Trust  v. Coffelt Land Title, Inc., No. 72477 (Mo. App. W.D., September 6, 2011), Welsh, P.J.

On February 7, 1997, Stanley Hammack executed a beneficiary deed that would transfer his one-half interest in a 1,040 acre farm (the “Farm”) to the Hammack Family Farm Trust (the “Farm Trust”) upon his death. On December 3, 1998, Stanley and Jeannette Hammack, as well as Stanley’s brother Thomas and his wife, signed a contract to sell the Farm as well as a general warranty deed transferring title to the buyers of the Farm. The contract provided for a $10,000 down payment and the balance, $380,000, to be paid at closing. On December 6, 1998, Stanley Hammack died. The sale of the Farm was closed by Coffelt Land Title, Inc. (“Coffelt”) and it paid the balance of the sale proceeds in equal amounts to Jeannette Hammack and Thomas Hammack. After the closing, Thomas Hammack learned of the beneficiary deed and made demand on Coffelt to pay Stanley’s one-half interest in the Farm sale proceeds to Thomas Hammack and Jeannette Hammack as co-trustees of the Farm Trust. Coffelt refused said demand and Thomas Hammack, as trustee of the Farm Trust, sued Coffelt for breach of contract and negligence. At trial, the court determined that the December 3, 1998 deed was effective to transfer title and ruled in favor of Coffelt. A deed is operative upon delivery and delivery to a third person to be held by that person for the delivery to the grantee operates as valid delivery as long as there are no reservations or right of control over the deed by the grantor. Delivery in escrow is a conditional delivery that is deemed delivered upon the satisfaction of the conditions and relates back in time to the date it was delivered by the grantor to the escrow agent. As such, the December 3, 1998 deed was delivered prior to Stanley’s death and upon satisfaction of the conditions (payment of the purchase price), the deed became effective December 3, 1998 and terminated Stanley’s February 7, 1997 beneficiary deed.

Trial court judgment in favor of Coffelt Land Title, Inc. was affirmed.

Exculpatory provision in lease releasing the landlord from its own negligence was enforceable when said provision was written in all capital letters and stood out from the rest of the lease provisions. Abbott v. Epic Landscape Productions, L.C., et al., No. 72867 (Mo. App. W.D., September 20, 2011), Smart, J.

Charles Abbott (“Abbott”) was a tenant at the Fountainhead apartment complex when he slipped and fell on an icy patch of the parking lot. Abbott suffered injuries which led to his leg being amputated.  Abbott sued the owners of the apartment complex for negligence based on its treatment of the parking area after it snowed. The owner of the apartment complex moved to dismiss the complaint on the grounds that Abbott agreed to an exculpatory provision in his lease. The trial court granted the motion to dismiss and Abbott appealed. Among other things, Abbott argued that the exculpatory clause in the lease was unenforceable because one cannot exonerate oneself from future liability. Missouri law does not prohibit releases of future negligence, but exculpatory provisions require clear, unambiguous, unmistakable, and conspicuous language in order to release a party from his or her own future negligence. The exculpatory provision in Abbott’s lease was in all capital letters and was the only provision in the lease in all capital letters.

The exculpatory provision was conspicuous and therefore enforceable and the trial court’s order dismissing the claims against Fountainhead is affirmed.

Profitability of agricultural use is not a consideration in determining whether property is agricultural for tax assessment purposes. Rinehart v. Bateman, No. 73954 (Mo. App. W.D., February 21, 2012), Martin, J.

Robert and Donna Bateman (the “Batemans”) own real property in Clay County, Missouri. The property is unimproved and used for hay cultivation, which was admittedly not profitable. The property was classified as agricultural and assessed based on its fair market value. The Batemans appealed to the county board of equalization, which upheld the assessor’s findings. The Batemans then filed a complaint with the State Tax Commission (“STC”). At the hearing, the Batemans argued that the property is agricultural because it is used for hay cultivation and therefore should be assessed based on its productive capability. The assessor argued that the property was vacant and unused agricultural property and should be assessed based on its fair market value based on sales comparables. The assessor argued that the fact that the hay cultivation operations were not profitable and were unlikely to become profitable, the use was not truly agricultural, but instead a ruse to secure a more favorable valuation. The STC, after an evidentiary hearing, found that the property was being used for agricultural purposes and assessed the value of the property based on its productive capability. The assessor filed for judicial review where the trial court reversed the STC finding. The Batemans appealed. The assessor argued that the Batemans’ hay cultivation operations were not a legitimate agricultural use because they were not profitable and they were intended to manipulate the valuation of the property. The statutory definition for agricultural use is a used devoted primarily to the raising and harvesting of crops. The assessor acknowledged that hay cultivation is agricultural use, but relied on the argument that it must be profitable to qualify for productive capability valuation. The appellate court rejected that argument as the statute is devoid of any discussion of profitability as a condition before property can be classified as agricultural.

  The appellate court upheld the state tax commission’s finding that the property was agricultural and should be assessed based on it productive capability.

Claims in petition seeking declaratory relief are suits affecting title to real estate and therefore subject to § 508.030 requirement that such actions be brought in the county in which the real estate is located. HFC Investments, LLC, et al. v. Valley View State Bank d/b/a Valley View bank, et al., No. 72962 consolidated with No. 73071 (Mo. App. W.D., February 21, 2012), Ahuja, J.

HFC Investments, LLC and BEO5 Investments, LLC (collectively, “HFC”) sold property located in Johnson County, Kansas to Valley View State Bank and 95th Street Service Corporation (collectively, “Valley View”). Under the agreement whereby HFC transferred title to Valley View, HFC obtained an option to repurchase the property under specified conditions. HFC attempted to exercise its option, but Valley View denied such right. HFC sued Valley View in Jackson County, Missouri for various claims, a couple of which sought a declaratory judgment. The trial court granted Valley View’s motion to dismiss based on § 508.030, RSMo, which requires that actions affecting title to real estate be brought in the county in which the property is located. The appellate court affirmed the trial court dismissal reasoning that due to the counts in the petition seeking declaratory relief, the petition, in its entirety, was a suit affecting title to real estate and subject to § 508.030.

Held: Trial court's grant of Valley Views motion to dismiss is affirmed.