Modrok v. Marshall , 523 P.2d 172 ( 1974 )

OPINION

ERWIN, Justice.

This appeal challenges a judgment dispossessing the appellant, William H. Mod-rok, of his former residence.

Modrok was divorced from his wife in 1971. The decree awarded his spouse $14,525.00 to be derived from proceeds of the sale of their Anchorage home. No sale occurred until 1973 when Modrok was ordered to show cause why he should not be held in contempt for failure to sell the house. The contempt hearing, held on February 28, 1973, produced a stipulation that Modrok’s interest in the property would be quitclaimed to his former spouse if no sale occurred within thirty days. To this end, Modrok executed a statutory quitclaim deed; but within thirty days following, no sale took place. On April 3, 1973, Modrok’s former wife executed a warranty deed to Lynwood and Mollie Marshall, the appellees, in exchange for $41,730.00. Mrs. Modrok received the money due her from the divorce property settlement after encumbrances on the property and fees were paid, and Modrok was left with less than $300.00. When Modrok refused to vacate the residence, Mr. and Mrs. Marshall brought an action for forcible detainer. The superior court found them entitled to immediate possession of the premises, and Modrok has appealed.

A suit for forcible detainer under Alaska statutes¹ substitutes the authority of the courts for private force to compel a citizen wrongfully in possession of real property to surrender it to another with a superior claim. It is well-settled that where title to the property is in dispute, dispossession by this summary procedure may not be ordered. Instead, the plaintiff must establish his paramount title in an action for ejectment.²

Modrok’s central position is that his claim of fraud involving execution of the quitclaim deed to his former spouse, from whom the Marshalls purchased the property, puts title in issue and renders the forcible detainer statute inapplicable. The proper procedure, in his view, is to adjudicate the question: who holds title to the residence ? Modrok also claims that plaintiffs’ failure to ever occupy the property as well as his quiet possession for more than three years bar this suit.

The Marshalls reply that they hold title under a warranty deed from Mrs. Modrok and are entitled to the law’s customary protection of a bona fide purchaser for value without notice. In this status, they would be immune to any equitable claims, such as fraud in procuring the quitclaim deed, which Modrok might be able to assert against his former wife; accordingly, they may dispossess Modrok in an action for forcible detainer.

It is not disputed the Marshalls were aware through their agent, real estate salesman Richard R. Tast, that the property had been involved in divorce litigation and that Modrok remained in possession. In addition, the purchase price was $41,730.00, considerably below the appellant’s appraisal of $58,065.00. These facts, Modrok argues, make it impossible for the Marshalls to claim the protected status of bona fide purchasers.

It is a settled rule of property that circumstances such as these, which suggest outstanding equities in third parties, impose a duty upon the purchaser to make a reasonable investigation into the existence of a claim.³ Given suspicious facts, the status of bona fide purchaser turns upon whether there was a prudent inquiry into their import. In purchasing the residence, the Marshalls had a duty to look beyond their chain of title because Modrok’s continued possession of the dwelling after he had deeded out his interest was sufficient by itself to put reasonable buyers to inquiry.⁴

Tast testified that he had demanded evidence of Mrs. Modrok’s title to the residence. Her attorney provided a copy of the appellant’s quitclaim deed and an explanation of the circumstances in which he promised to dispose of or quitclaim the property. The record discloses that Tast attempted to call Modrok and his attorney several times. On the one occasion he was able to reach Modrok’s attorney, Tast was given an explanation of the divorce settlement consistent with what he had learned from Mrs. Modrok’s attorney. Finally, Tast testified that he went to the property but that Modrok was not at home.

We believe the Marshalls, through their agent, carried out a prudent inquiry into the existence of the appellant’s alleged equities. They obtained an explanation of the divorce settlement from Modrok’s attorney which accorded with the existence of a valid quitclaim deed to his former wife. Their agent made repeated efforts to telephone Modrok, going to the premises once. Under the circumstances, we agree with the superior court that the Marshalls were not chargeable with notice of a possible claim of fraud by the appellant against their grantor.

If, as Modrok argues, the quitclaim deed was obtained “as a result of fraud and misrepresentation” on the part of his former wife,⁵ his claim must be against her and not against the Marshalls.

The appellant also contends that the statutory action of forcible detainer cannot be invoked where the plaintiffs have never occupied the contested property or the defendant has been in possession for more than three years. These positions are untenable. AS 09.45.070(a) recognizes a cause of action where, without entry by force, one in quiet possession withholds property from another entitled to possession after a demand to relinquish it.⁶ It is not essential that the person alleging the detainer ever have been in possession of the premises.⁷

AS 09.45.150 allows the party in possession, or those under whom he holds, to plead “three years’ quiet possession of the premises immediately preceding the commencement of the action” as a bar to summary dispossession for unlawful detainer; but this may not be asserted where “the estate of the party in the premises is ended.” ⁸ Modrok executed a quitclaim deed to his former spouse and then failed to sell the property within thirty days. At the close °f this period, under the terms of their stipulation, Modrok no longer held an interest in the property. His “estate in the premises . . . ended”, AS 09.45.150 does n°t protect him.

Under our statutes, an appeal from a judgment restoring real property to a plaintiff entitled to possession must be secured by a bond equal to “twice the rental value of the real property . . . from the rendition of the judgment until final judgment in the action . . . .” AS 09.45.080. At the conclusion of the trial, the superior court determined that an appeal would consume one year and that the rental value of the property for this period would be $4,500.00. Accordingly, Modrok was ordered to post a bond in the amount of $9,000.00.⁹ Upon issuance of our mandate in this appeal, the Marshalls will be entitled to that portion of the bond equal to twice the rental value of the property from the date of judgment below to the date of our mandate.

We affirm the judgment of the superior court and remand the case for determination of the amount of the bond due the ap-pellees.

BOOCHEVER, J., not participating.

1 . AS 09.45.060-09.45.160. Sections pertinent to this appeal are

09.45.070. Action for forcible entry or detention. (a) When a forcible entry is made upon a premises, or when an entry is made in a peaceable manner and the possession is held by force, the person entitled to the premises may maintain an action to recover the possession.

09.45.090. Unlawful holding by force. The following are cases of unlawful holding by force within the meaning of §§ 60-160 of this chapter:

(1) when the tenant or person in possession of a premises fails or refuses to pay the rent due on the lease or agreement under which he holds, or deliver up the possession of the premises for 10- days after demand made in writing for the possession;

(2) when, after a notice to quit as provided in §§ 60-160 of this chapter, a person continues in the possession of the premises at the expiration of the time limited in the lease or agreement under which that person holds, or contrary to a condition or covenant in the lease or agreement, or without a written lease or agreement;

(3)when, after a notice to terminate the tenancy as provided in this title with reference to termination of estate at will or by sufferance, a person continues in possession of the premises after expiration of the time for determining the tenancy.

09.45.150. Inquiry into merits of title. In an action to recover the possession on the land, tenement, or other real property where the entry is forcible or when the possession is unlawfully held by force, there shall be no inquiry into the merits of the title. Three years’ quiet possession of the premises immediately preceding the commencement of the action by the party in possession on those under whom he holds may be pleaded in bar thereof unless the estate of the party in the premises is ended.

2 . Miners’ & Merchants’ Bank v. Brice, 5 Alaska 418, 419 (D.Alaska 1915); Steil v. Dessmore, 3 Alaska 392, 399 (D.Alaska 1907). Compare AS 09.45.060 with AS 09.-45.630. Where the plaintiff is in possession, he may free himself of claims by others to the property through an action to determine an adverse claim. AS 09.45.010; see Elbing v. Hastings, 3 Alaska 125 (D.Alaska 1906).

3 . See, e. g., Whitehead v. Foxhill, 105 F.Supp. 966, 968, 13 Alaska 726, 728 (D. Alaska 1952) (possession by other than record owner); Rabbit v. Atkinson, 44 Cal.App.2d 752, 113 P.2d 14, 17 (1941) (purchase price substantially below fair market value).

4 . E. g., Natural Resources, Inc. v. Wineberg, 349 F.2d 685, 689-690 (9th Cir. 1965), cert. denied, 382 U.S. 1010, 86 S.Ct. 617, 15 L.Ed.2d 525 (1966); Whitehead v. Foxhill, 105 F.Supp. 966, 968, 13 Alaska 726, 728 (D. Alaska 1952); Webb v. Stewart, 255 Or. 523, 469 P.2d 609, 615-616 (1970).

5 .We have difficulty discerning the substance of this fraud. The appellant argues that

he had been directed by the court in a pending divorce proceeding between him and his wife, Mildred Modrok, to execute such a quitclaim deed, merely as security for his wife’s interest in the proceeds of the sale of the family residence, out of the proceeds of which he was required by the terms of an order entered in the divorce case to pay the sum of $14,525.00.

Apparently, the fraud lay in his former spouse’s effort to have a court order Modrok to sell or convey to her the property in satisfaction of his obligations under the divorce decree. The record of the contempt hearing is unambiguous that Modrok agreed to sell the property or relinquish all claim of title in favor of his former wife at the end of thirty days. There is no suggestion that the deed was executed “merely as security for his wife’s interest in the proceeds of the sale . . . .” When Modrok failed to sell within thirty days, his former spouse, under the terms of their agreement, held title and was free to convey the property.

6 . Compare AS 09.45.070(a) which states:

When a forcible entry is made upon a premises, or when an entry is made in a peaceable manner and the possession is held by force, the person entitled to the premises may maintain an action to recover the possession. (emphasis added)

with Schroeder v. Woody, 166 Or. 93, 109 P.2d 597, 598-599 (1941).

7 . See West Side Trust & Savings Bank v. Lopoten, 358 Ill. 631, 193 N.E. 462, 465 (1934).

8 . See note 1, supra.

9 . However, the court’s formal Findings of Fact recite $9,000.00 as the annual rental value. We believe this disparity to be the consequence of a simple oversight on the part of the Marshalls’ attorney. Because the bond was correctly undertaken for $9,000.00, the typographical error has no effect upon this appeal.