Gangle v. Spiry ( 2018 )

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2018 S.D. 55
IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
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GARY J. GANGLE, Plaintiff and Appellee,
v.
A. WILLIAM SPIRY and
PATRICIA M. SPIRY, Trustees of
THE A. WILLIAM SPIRY 2012
IRREVOCABLE TRUST, Defendants and Appellants.
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APPEAL FROM THE CIRCUIT COURT OF
THE FIFTH JUDICIAL CIRCUIT
MARSHALL COUNTY, SOUTH DAKOTA
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THE HONORABLE TONY L. PORTRA
Judge
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JOEL E. ENGEL III
Woods, Fuller, Shultz & Smith P.C. Attorneys for defendants and
Sioux Falls, South Dakota appellants.
GARY J. GANGLE
Lake City, South Dakota Pro se plaintiff and appellee.
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CONSIDERED ON BRIEFS
MAY 21, 2018
OPINION FILED 07/11/18
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KERN, Justice
[¶1.] Gary Gangle brought an action to quiet title to real property owned by
A. William Spiry (Spiry) and Patricia M. Spiry, as trustees of the A. William Spiry
2012 Irrevocable Trust, under a claim of adverse possession. Spiry opposed
Gangle’s adverse-possession claim on the basis that Gangle and his predecessor in
interest occupied the disputed property with Spiry’s consent. Spiry also filed a
counterclaim against Gangle to quiet title to an adjacent property under a claim of
adverse possession; however, Spiry voluntarily dismissed the counterclaim before
trial. After conducting a bench trial, the circuit court found that Gangle was not
subject to any oral agreement Spiry had with Gangle’s predecessor in interest and
that Gangle was entitled to the disputed property by adversely possessing it for 40
years. In its final judgment, the circuit court also dismissed Spiry’s counterclaim
with prejudice. Spiry appeals. We reverse the order of the circuit court and remand
the case for entry of judgment consistent with this opinion.
Facts and Procedural History
[¶2.] Max Sckerl owned pasture land bordering Roy Lake, in Marshall
County, South Dakota. Spiry approached Sckerl about purchasing property along
the lake. Accordingly, Sckerl platted portions of his waterfront property into lots,
and on October 8, 1968, Spiry purchased Lot 1 from Sckerl.1 The dimensions of
Lot 1 were substantially larger and extended further east than the other lots
1. The property platted by Max Sckerl is referred to as the Sckerl’s Roy Lake
Subdivision and is legally described as the Northeast Quarter of the
Southwest Quarter in Section 27, Township 126, North of Range 55, West of
the 5th P.M., Marshall County, South Dakota.
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platted by Sckerl. At the time, a fence did not exist between Lot 1 and Sckerl’s
remaining pasture to the east. Spiry also purchased Lot 2 from Sckerl the following
year, which borders Lot 1 to the south.2
[¶3.] On November 20, 1968, Gangle’s father purchased Sckerl’s pasture
land to the east of Lot 1. In 1969, Gangle and his father constructed a barbed-wire
fence running north and south through Lot 1 in an attempt to separate the newly
acquired pasture land from Spiry’s property. Gangle was aware Spiry’s property
extended east of the fence that he and his father constructed. Gangle testified, “I
knew [Spiry] had property over there [to the east] but I never knew where his
property was.” The amount of Spiry’s property that Gangle and his father had
fenced off was less than an acre.
[¶4.] Spiry discovered the fence that Gangle and his father constructed
across Spiry’s property in the summer of 1969. Rather than require him to move
the fence, Spiry gave Gangle’s father verbal permission to keep the fence in place
and to use his property east of the fence. At trial, Spiry testified that “[i]t saved
[him from] mowing and as long as [he] still owned it and [he] could still use the
property as [he] wanted to, [he] had no objection to [Gangle’s father] fencing it off
into his pasture.”
[¶5.] In August 1975, Gangle’s father passed away. Spiry, as a practicing
attorney in the area, handled the probate of his estate. Gangle’s father left the land
to his three children, but Gangle subsequently bought out his brother’s and sister’s
2. The property was eventually deeded to the A. William Spiry 2012 Irrevocable
Trust.
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interests in the property via contracts for deed, which Spiry also prepared. During
his interactions with Gangle involving the probate and contracts for deed, Spiry did
not discuss the fence crossing his property with Gangle. However, in August 1976,
Spiry had his son and a hired man place three fence posts in the approximate
location of the corner of Spiry’s property extending east of the fence. While the
fence posts were actually about 30 yards into Gangle’s pasture and not on Spiry’s
property, Spiry put the posts in place to indicate his ownership of the property east
of the fence that Gangle occupied.
[¶6.] Gangle continued to graze his cattle in the same manner on the
disputed property for the next 40 years with no objection from Spiry. In 1996,
Gangle and Spiry met at the property to discuss a stream at the northeast corner of
Lot 1 that Gangle’s cattle used for water. After the conversation, Spiry was
comfortable “that [Gangle] understood that [the] fence was on [Spiry’s] property.”
However, Gangle disputed that a discussion about the fence took place, pointing to a
letter sent by Spiry on July 29, 1996, that encompassed only an issue with the cattle
watering out of the stream and an agreement with Gangle’s father regarding the
same. In 2006, Gangle platted some of his property lying east of the lots in the Roy
Lake Subdivision. The plat confirmed Spiry’s property line extended east of the
fence Gangle constructed in Lot 1. Spiry replatted Lot 1 in 2015 into three separate
lots that were classified as Lots 1A, 1B, and 1C. The fence line runs through Lot 1C
with the disputed property lying east of the fence.
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[¶7.] On August 17, 2017, the circuit court held a bench trial regarding
Gangle’s action to quiet title to the disputed property under a claim of adverse
possession. Prior to the evidentiary portion of the trial, Spiry voluntarily dismissed
his counterclaim seeking to quiet title under a claim of adverse possession to a 30-
foot strip of land owned by Gangle that is adjacent to the dedicated road across from
Lot 2A.3 Without objection from Gangle, the circuit court dismissed the
counterclaim.
[¶8.] Spiry and his son testified at trial regarding their use of the property
in Lot 1C east of the fence. Spiry’s son testified that he occasionally piled unwanted
brush or tree trimmings on the property, climbing over the fence to retrieve the
wood when he needed it for fires down by the lake. In response, Gangle and his wife
disputed Spiry’s claim that he used the property east of the fence, testifying that
they never saw such a brush pile.
[¶9.] In a letter decision issued on September 19, 2017, the court framed the
issue between the parties as “whether [Spiry’s] permissive use to [Gangle’s father]
3. Lot 2A lies to the south of Lot 1B.
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also applied to [Gangle] as [his] successor in interest.” The court held that it did not
and that Gangle proved by clear and convincing evidence he had acquired the
disputed property by adverse possession. Incorporating the memorandum decision,
the circuit court entered findings of fact and conclusions of law on October 19, 2017.
In its final judgment, the circuit court quieted title to the disputed property in
Lot 1C in favor of Gangle and dismissed Spiry’s counterclaim with prejudice.
[¶10.] Spiry appeals, raising two issues for our review:
1. Whether the circuit court erred in quieting title to the disputed
property in Gangle’s favor on a claim of adverse possession.
2. Whether the circuit court erred in dismissing Spiry’s
counterclaim with prejudice.
Standard of Review
[¶11.] “Proof of the individual elements of adverse possession present
questions of fact for the circuit court, while the ultimate conclusion of whether they
are sufficient to constitute adverse possession is a question of law.” Underhill v.
Mattson, 2016 S.D. 69, ¶ 9, 886 N.W.2d 348, 352. Therefore, we review a circuit
court’s factual findings for clear error and its legal conclusions de novo. Id.
“Moreover, issues of statutory interpretation and application are matters of law
reviewed de novo.” Ashby v. Oolman, 2008 S.D. 26, ¶ 10, 748 N.W.2d 132, 135.
Analysis and Decision
[¶12.] 1. Whether the circuit court erred in quieting title to the
disputed property in Gangle’s favor on a claim of adverse
possession.
[¶13.] Being the record owner of Lot 1C, Spiry is presumed to possess the
property unless Gangle can prove he adversely possessed the property for 20 years
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prior to the action being commenced. SDCL 15-3-7; Cuka v. Jamesville Hutterian
Mut. Soc’y, 294 N.W.2d 419, 421-22 (S.D. 1980). Property that has been actually
and continuously occupied under a claim of title exclusive of any other right is
subject to adverse possession. SDCL 15-3-12. “To establish title by adverse
possession, the claimant must be in actual, open, visible, notorious, continuous and
hostile occupation for the statutory period.” Titus v. Chapman, 2004 S.D. 106, ¶ 27,
687 N.W.2d 918, 925; see also SDCL 15-3-1 (providing the statutory period for
adverse possession is 20 years). The claimant’s occupation must be of such a nature
as “to give the true owner notice of actual possession and to put him on inquiry as to
the invasion of his rights.” Hamad Assam Corp. v. Novotny, 2007 S.D. 84, ¶ 7, 737
N.W.2d 922, 924. The claimant has the burden of proving adverse possession by
clear and convincing evidence. City of Deadwood v. Summit, Inc., 2000 S.D. 29, ¶
15, 607 N.W.2d 22, 26.
[¶14.] In this case, it is undisputed that Gangle was in actual, open, visible,
notorious, and continuous occupation of Spiry’s property east of the constructed
fence in Lot 1C for the statutory period of 20 years. However, Spiry argues that
Gangle’s claim of adverse possession must fail because his use of the disputed
property was not hostile. “[P]ossession which is not hostile cannot be adverse.”
Broadhurst v. Am. Colloid Co., 85 S.D. 65, 75, 177 N.W.2d 261, 266 (1970). Also, we
have stated that “[c]ontinued use which is permissive is insufficient to fulfill the
requirement of . . . hostile use.” Travis v. Madden, 493 N.W.2d 717, 720 (S.D. 1992);
see also 3 Am. Jur. 2d Adverse Possession § 44, Westlaw (database updated May
2018).
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[¶15.] Spiry asserts that the permission given to Gangle’s father to use the
property east of the fence should apply to Gangle as his successor in interest and
that the circuit court erred in ruling otherwise. The question whether a permissive
use can ripen into one of hostility by merely transferring property is one of first
impression for this Court. However, many other courts have addressed this issue,
and it is well established that permissive use cannot ripen into adverse possession
until a positive assertion of a right hostile to the record holder is made known to
him.4
4. See Blalock v. Conzelman, 751 So. 2d 2, 5 (Ala. 1999) (“[A] possession
permissive in its inception cannot become adverse to the owner until a
positive assertion of a right hostile to the owner is brought to him.”); Emerson
v. Linkinogger, 382 S.W.3d 806, 812 (Ark. Ct. App. 2011) (stating that
permissive occupancy can become hostile and adverse when “notice of the
hostility of the possessor’s holding has been brought home to the owner by
actual notice or by a holding so open and notorious as to raise a presumption
of notice equivalent to actual notice”); Johnson v. Raddohl, 32 N.W.2d 860,
861 (Minn. 1948) (“Where the original entry is permissive, the statute does
not begin to run against the legal owner until an adverse holding is declared
and notice of such change is brought to the knowledge of the owner.”); Rice v.
Pritchard, 611 So. 2d 869, 872 (Miss. 1992) (“[P]ermission of the record owner
can never ripen into adverse possession until there is a positive assertion of a
right hostile to the record owner which is made known to him.”); Imperial
Serv. Corp. v. Phipps, 288 N.W.2d 749, 750 (Neb. 1980) (stating the same);
Apodaca v. Hernandez, 302 P.2d 177, 180 (N.M. 1956) (stating the same);
Woodland v. Woodland, 147 N.W.2d 590, 598 (N.D. 1966) (stating the same);
Hutchinson v. Taft, 222 P.3d 1250, 1254 (Wyo. 2010) (“There must be either
actual notice of the hostile claim or acts or declarations of hostility so
manifest and notorious that actual notice will be presumed in order to change
a permissive or otherwise non-hostile possession into one that is hostile.”); see
also 2 C.J.S. Adverse Possession § 82, Westlaw (updated June 2018) (“A
permissive occupant cannot change his or her possession into adverse title no
matter how long possession may be continued, in the absence of a clear,
positive, and continuous disclaimer and disavowal of the title of the true
owner brought home to the latter’s knowledge.”).
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[¶16.] For example, the Supreme Court of Rhode Island, in Barrow v. D & B
Valley Associates, LLC, 22 A.3d 1131, 1134 (R.I. 2011), specifically addressed
whether a permissive use of a strip of land expired when the owners of the
dominant parcel conveyed their property. In Barrow, the plaintiffs sought to quiet
title to a strip of land between the boundary of their land and a stone wall situated
on defendant’s property that ran parallel to the property line. Id. at 1131-33. The
plaintiffs’ predecessors in interest received permission from the defendant to use
the strip of land on his property in exchange for endorsing a development project in
the neighborhood. Id. at 1132-33. After the plaintiffs acquired the land from their
predecessors, they continued to use the strip of land in the same manner as their
predecessors had before them. Id. at 1133. More than a decade later plaintiffs
learned, as a result of an appraisal of the property, that the strip of land belonged to
the defendant. Id.
[¶17.] Although the plaintiffs asserted a claim for adverse possession to the
strip of land, the Supreme Court of Rhode Island, affirming the lower court, held
that the plaintiffs were not entitled to the disputed property because the permission
granted to plaintiffs’ predecessors did not become hostile upon the subsequent
transfer of the dominant parcel to the plaintiffs. Id. at 1135. The court stated that
“[a] permissive use may become hostile only when the permission has been
withdrawn or when events have occurred indicating that the original permission no
longer obtained.” Id. at 1134. It further concluded that “[w]hen permission is
granted for a particular use, a later use of the same kind cannot be characterized as
adverse.” Id.
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[¶18.] We agree with the Rhode Island Supreme Court and other courts that
permissive use does not ripen into a claim of hostility by the mere transfer of the
dominant estate. In making its ruling herein, the circuit court primarily relied on
its finding that Spiry “did not have an agreement, oral or in writing, with anyone
other than [Gangle’s father]” in determining that Gangle’s use was not permissive.
However, a permissive agreement with Gangle is not dispositive of the issue.
Rather, Spiry’s permission to Gangle’s father continued through the subsequent
transfer to Gangle absent proof that Gangle’s permissive use changed into one of
hostile occupation that would have put Spiry on notice. It is apparent upon review
of the record that Gangle’s use of the property never changed from that of his
father’s. As the Supreme Court of Wisconsin aptly stated:
The law is very rigid with respect to the fact that a use
permissive in the beginning can be changed into one which is
hostile and adverse only by the most unequivocal conduct on the
part of the user. The rule is that the evidence of adverse
possession must be positive, must be strictly construed against
the person claiming a prescriptive right, and that every
reasonable intendment should be made in favor of the true
owner.
Lindokken v. Paulson, 272 N.W. 453, 455 (Wis. 1937). Accordingly, we conclude the
circuit court erred in quieting title to the disputed property in favor of Gangle
because his permissive use never ripened into one of hostility necessary to claim
title by adverse possession.5
5. Both parties presented arguments in their briefs regarding the doctrine of
acquiescence; however, the circuit court did not mention the doctrine in its
letter decision, findings of fact and conclusions of law, or its judgment.
Therefore, we decline to address it.
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[¶19.] 2. Whether the circuit court erred in dismissing Spiry’s
counterclaim with prejudice.
[¶20.] Spiry next contends that the circuit court erred by dismissing with
prejudice his counterclaim to quiet title by adverse possession to a small strip of
land owned by Gangle that is across from Lot 2A. Before the first witness was
called at trial, Spiry’s counsel stated, “[W]e’d move to dismiss [our] counterclaim as
we do not wish to pursue it.” The circuit court then asked Gangle if he objected, and
he responded in the negative. The court dismissed the claim but did not indicate
whether the dismissal was with or without prejudice. In their proposed findings of
fact and conclusions of law and judgments, the parties took opposing positions on
the nature of the dismissal. The circuit court’s final judgment dismissed the
counterclaim with prejudice. Spiry argues this was in error because under SDCL
15-6-41(a), “it is generally presumed that a voluntar[y] dismissal of a claim will not
result in a dismissal with prejudice.”6
[¶21.] SDCL 15-6-41(a) sets forth the requirements for a voluntary dismissal
of an action by a plaintiff. A plaintiff may voluntarily dismiss an action as a matter
of course without a court order “[b]y filing a notice of dismissal at any time before
6. Gangle opposes Spiry’s argument by contending that Spiry’s counterclaim is
considered compulsory under SDCL 15-6-13(a) and that a dismissal with
prejudice was proper because res judicata would bar the claim. See Glover v.
Krambeck, 2007 S.D. 11, ¶ 17, 727 N.W.2d 801, 805 (“The doctrine of res
judicata serves as claim preclusion to prevent relitigation of an issue . . .
which could have been properly raised and determined in a prior action.”).
However, Gangle did not make this argument below nor did he object to
Spiry’s voluntary dismissal of the counterclaim. Thus, we need not address
whether the counterclaim was compulsory or permissive because res judicata
may be pled as a possible defense if Spiry elects to refile the claim.
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service by the adverse party of an answer or of a motion for summary judgment,
whichever first occurs, or . . . [b]y filing a stipulation of dismissal signed by all
parties who have appeared in the action.” SDCL 15-6-41(a)(1). If these
requirements are not met, then “an action shall not be dismissed at the plaintiff’s
instance save upon order of the court and upon such terms and conditions as the
court deems proper.” SDCL 15-6-41(a)(2). Unless otherwise specified in the notice
of dismissal, stipulation, or order of the court, the dismissal is without prejudice.
SDCL 15-6-41(a)(1), (2).
[¶22.] Even though Gangle argues that SDCL 15-6-41(a) only applies to
voluntary dismissals made by plaintiffs, this argument is contrary to the plain
language of the statute. SDCL 15-6-41(c) provides:
The provisions of § 15-6-41 apply to the dismissal of any
counterclaim, cross-claim, or third-party claim. A voluntary
dismissal by the claimant alone pursuant to paragraph (1) of
§ 15-6-41(a) shall be made before a responsive pleading is served
or, if there is none, before the introduction of evidence at the
trial or hearing.
(Emphasis added.) The record reveals that Spiry did not file a notice of dismissal or
stipulation, see SDCL 15-6-41(a)(1); therefore, the provisions of SDCL 15-6-41(a)(2)
apply because Spiry moved for voluntary dismissal by order of the court. See SDCL
15-6-7(b) (“An application to the court for an order shall be by motion which, unless
made during a hearing or trial, shall be made in writing[.]”).
[¶23.] We have not previously addressed whether a dismissal with prejudice
rather than without prejudice is improper under SDCL 15-6-41(a)(2). Because
SDCL 15-6-41(a)(2)’s language is identical to its federal counterpart, Fed. R. Civ. P.
41(a)(2), we look to decisions of the federal courts for analytical assistance. The
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circuit court’s decision to allow a defendant to voluntarily dismiss an action is
reviewed for abuse of discretion. Thatcher v. Hanover Ins. Group, Inc., 659 F.3d
1212, 1213 (8th Cir. 2011). A defendant, by order of the court, may have an action
dismissed without prejudice, unless “the [plaintiff] would suffer some plain legal
prejudice other than the mere prospect of a second lawsuit.” Cone v. W. Va. Pulp &
Paper Co., 330 U.S. 212, 217, 67 S. Ct. 752, 755, 91 L. Ed. 849 (1947). As such,
“[m]any courts have taken the sensible position that dismissals without prejudice
generally should be granted by the district court if no prejudicial effects would
result for the opposing party.” 9 Charles Alan Wright et al., Federal Practice and
Procedure § 2364 (3d ed.), Westlaw (database updated Apr. 2018); see also 8 James
W.M. Moore et al., Moore’s Federal Practice § 41.40[5][a] (3d ed. 2016) (“A motion
for voluntary dismissal that is not opposed or met with a relevant objection should
generally be granted.”).
[¶24.] Even so, the decisions of the federal appellate courts vary on what
factors to consider when ruling on a motion for voluntary dismissal.7 But here, we
need not determine what factors should be considered because the circuit court
dismissed the counterclaim with prejudice without any analysis of the equities or
risk of prejudice to Gangle. Based upon our review of the record, we conclude the
7. See 9 Wright et al., supra ¶ 22, § 2364 (discussing the different factors
articulated by federal appellate courts in determining whether to grant a
dismissal); see also 8 Moore et al., supra ¶ 22, § 41.40[6] (listing the most
common factors federal courts consider on a motion for voluntary dismissal
as: “(1) the extent to which the suit has progressed, including the defendant’s
effort and expense in preparing for trial, (2) the plaintiff’s diligence in
prosecuting the action or in bringing the motion, (3) the duplicative expense
of relitigation, and (4) the adequacy of plaintiff’s explanation for the need to
dismiss”).
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court abused its discretion by dismissing the counterclaim with prejudice, especially
in light of the fact that Gangle did not oppose Spiry’s voluntary dismissal.
Therefore, we reverse the judgment of the circuit court and remand for correction of
the judgment to reflect that Spiry’s counterclaim be dismissed without prejudice.
Conclusion
[¶25.] The circuit court erred in quieting title in favor of Gangle because
Gangle’s permissive use did not change into one of hostile occupation that would
have put Spiry on notice. Moreover, the circuit court abused its discretion in
dismissing Spiry’s counterclaim with prejudice. The decision of the circuit court
quieting title in favor of Gangle is reversed. On remand, the court shall issue an
order reflecting that Spiry’s counterclaim is dismissed without prejudice.
[¶26.] ZINTER, Acting Chief Justice, and JENSEN, Justice, and KNOFF,
Circuit Court Judge, and SEVERSON, Retired Justice, concur.
[¶27.] KNOFF, Circuit Court Judge, sitting for GILBERTSON, Chief Justice,
disqualified.
[¶28.] SALTER, Justice, not having been a member of the Court at the time
this action was assigned to the Court, did not participate.
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