BOS Terra, LP v. Beers

July 14 2015
DA 14-0354
Case Number: DA 14-0354
IN THE SUPREME COURT OF THE STATE OF MONTANA
2015 MT 201
BOS TERRA, LP,
Plaintiff and Appellant,
v.
KENT and JULIE BEERS,
Defendants and Appellees.
APPEAL FROM: District Court of the Tenth Judicial District,
In and For the County of Judith Basin, Cause No. DV 13-1
Honorable Jon A. Oldenburg, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Thane Johnson, Johnson, Berg & Saxby, PLLP, Kalispell, Montana
For Appellees:
Jeffrey J. Oven, Elizabeth M. Varela, Crowley Fleck PLLP, Billings, Montana
Submitted on Briefs: March 25, 2015
Decided: July 14, 2015
Filed:
__________________________________________
Clerk
Justice Laurie McKinnon delivered the Opinion of the Court.
¶1 Bos Terra, LP, appeals from the final judgment of the Tenth Judicial District Court
finding that an easement created by a 1977 Real Estate Easement Agreement (Agreement)
was in gross, rather than appurtenant, and that Bos Terra had no rights under the Agreement
absent grantor’s consent to assignment. We affirm.
¶2 The parties raise three issues on appeal:
1. Whether the District Court erred when it granted summary judgment
determining that the June 20, 1977 easement was an easement in gross.
2. Whether the District Court erred in holding that Bos Terra is a third party
assignee and not a successor to the easement.
3. Whether the District Court erred when it denied summary judgment on Bos
Terra’s claim of a prescriptive easement in Enterprise Ditch because the Court
found use to be permissive?
FACTUAL AND PROCEDURAL BACKGROUND
¶3 The underlying facts are largely undisputed by the parties. In 1977, neighboring
Judith Basin ranch owners, E. Viola Barrett, Wayne and Marian Stevenson, and Viktor and
Lillian J. Kolar, signed a contract entitled “Real Estate Easement Agreement.” The contract
defines Barrett as “Grantor” and the Stevensons and Kolars as “Grantees” and provides, in
relevant parts:
Section One: Right of Way
In consideration of the sum of one dollar ($1.00) and other good and valuable
consideration . . . Grantor . . . hereby grants, sells, and conveys to Grantees
and their heirs and successors, a right of way for the purposes of laying,
constructing, operating, inspecting, maintaining, repairing, replacing,
substituting, and removing a pipeline . . . for the transportation of water from
the Judith River at a location and on a route to be selected by Grantees, on, in,
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over, and through the following land in Judith Basin County, State of Montana
[legal description of Barrett’s land].
Section Two: Term
The rights granted herein shall be possessed and enjoyed by Grantees, their
heirs and successors, so long as the pipeline and appurtenances constructed
hereto shall be maintained and operated by Grantees or Successors in
compliance with this Real Estate Easement.
Section Six: Assignments
The rights granted herein shall not be assignable together or separately and in
whole or in part without written permission signed by the Grantor. Such
permission will not be unreasonably withheld.
Section Thirteen: Effect of Agreement
This agreement shall be binding on the heirs, legal representatives,
successors and assigns of the parties hereto.
The Agreement thus describes the location of the pipeline, without making reference to a
dominant tenement, and contains a provision requiring consent from the Grantor before any
rights can be lawfully assigned to a third party. No other transaction documents or
documents of conveyance have been identified which establish, reference, or create a
dominant estate.
¶4 Pursuant to the Agreement, the Stevensons and Kolars installed a pipeline on Barrett’s
property that ran from the Judith River in a southerly direction to the top of a hill. At the top
of that hill, a new ditch - approximately 100 feet long - was dug to connect the pipeline to a
defunct irrigation ditch referred to throughout the district court proceedings as “Enterprise
Ditch.” The parties agree that at the time the Agreement was executed, Enterprise Ditch had
been abandoned and had not been used to irrigate any land by the Stevensons and the Kolars.
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Enterprise Ditch ran through Barrett’s property for approximately one mile, then through the
property of two other neighbors before entering onto the Stevensons’ and Kolars’ land. As a
result of this Agreement, Enterprise Ditch was reconstituted and the Stevensons and Kolars
began irrigating with water from the new system the following year in 1978. Over the
ensuing decades, the particular tracts of land irrigated by the water system changed, but the
neighbors continued the practice of communicating about putting the pump in each spring
and removing the pump each fall, and the least intrusive means to access Barrett’s property
for purposes of the Agreement.
¶5 Kent and Julie Beers acquired the Barrett property in 1999 and continued to grant
access to the Stevensons and the Kolars in the manner provided for in the Agreement.
Eleven years later, in February of 2011, Bos Terra acquired the Stevensons’ and Kolars’
property interests. Bos Terra, a large agribusiness company, converted the property from a
registered angus ranch operation to a feed lot. Shortly after the purchase, Bos Terra entered
the Beers’ property, without seeking permission, and began diverting water from the Judith
River with the purported intent of doubling the number of acres irrigated from 410 to 773.
Bos Terra asserted in the district court proceedings that it was a “successor in interest” and,
therefore, enjoyed the rights and benefits of the Agreement. The Beers believed Bos Terra to
be an assignee under the Agreement and on July 7, 2011, sent a letter to Bos Terra advising
that consent was needed for assignment of any rights. There was no reply to this letter nor to
a second sent January 16, 2012. Finally, by letter dated April 13, 2012, the Beers informed
Bos Terra that it “was prohibited from entering the property for any reason other than to
remove its equipment and restore the property as nearly as practical to its original condition.”
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The record establishes that up to this point Bos Terra had not sought, and the Beers had not
granted, consent to assignment of the rights in the Agreement. On January 31, 2013, the
Kolars and the Stevensons assigned all right, title, and interest in the property to Bos Terra.
On February 18, 2013, Bos Terra sought the Beers’ consent. The Beers refused and on April
2, 2013, Bos Terra filed a complaint in the Tenth Judicial District.
¶6 Bos Terra’s complaint sought a declaration that the real estate Agreement establishes
an easement appurtenant that runs with the land it purchased from the Stevensons and
Kolars; that Bos Terra’s property is the dominant estate and the Beers’ property is the
servient estate; and that the Beers must permit Bos Terra to exercise its rights under the
Agreement. In addition, Bos Terra sought partial summary judgment declaring that it has a
valid prescriptive easement across the Beers’ property.
¶7 The Beers filed a cross Motion for Partial Summary Judgment asserting the
Agreement creates an easement in gross and not appurtenant; that Bos Terra was required to
obtain consent from the Beers before any rights or interests under the Agreement could be
assigned to Bos Terra; and that Bos Terra has no rights or interests under the Agreement
absent Beers’ consent to assignment.
¶8 On February 2, 2014, the District Court issued its ruling on the cross Motions for
Partial Summary Judgment. The court, having found the issue of assignability
determinative, granted partial summary judgment to the Beers concluding (1) the Agreement
contained a valid consent to assignment provision which mandated written permission from
the grantor; and (2) Bos Terra had not acquired an easement in the ditch connected to the
pipeline and therefore had no right to access, occupy, or use the ditch on the Beers’ property.
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The issue of whether the Beers reasonably withheld their consent was submitted to a jury.
Following a jury trial, a verdict was returned on April 9, that the Beers had acted reasonably
in refusing consent to the assignment. The court’s final judgment incorporated its summary
judgment ruling and the jury’s verdict. Bos Terra appeals only the summary judgment ruling
to this Court.
STANDARD OF REVIEW
¶9 We review a district court’s ruling on summary judgment de novo, using the same
criteria as the district court set forth in M. R. Civ. P. 56. Hansen v. Bozeman Police Dep’t,
2015 MT 143, ¶ 12, 379 Mont. 284, ___P.3d___. Summary judgment is appropriate when
there is “no genuine issue as to any material fact and the movant is entitled to judgment as a
matter of law.” M. R. Civ. P. 56(c)(3).
DISCUSSION
¶10 1. Whether the District Court erred when it granted summary judgment determining
that the June 20, 1977 easement was an easement in gross.
¶11 An easement is a non-possessory interest in land. It is a right which one person has to
use the land of another for a specific purpose, or a servitude imposed as a burden upon the
land. Meine v. Hren Ranches, Inc., 2015 MT 21, ¶ 22, 378 Mont. 100, 342 P.3d 22 (citing
Blazer v. Wall, 2008 MT 145, ¶ 24, 343 Mont. 173, 183 P.3d 84). An easement can be either
“appurtenant” or “in gross.” Davis v. Hall, 2012 MT 125, ¶ 18, 365 Mont. 216, 280 P.3d
261. An easement appurtenant benefits one particular parcel of land, called the dominant
estate or tenement. See § 70-17-103, MCA. An easement in gross, on the other hand,
benefits the holder of the easement personally and is not necessarily tied to his or her
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ownership of a specific parcel of land. Blazer v. Wall, 2008 MT 145, ¶ 24, 343 Mont. 173,
183 P.3d 84. Thus, with an easement in gross, no dominant tenement exists and the
easement right does not pass with title to any land. Blazer, ¶ 24.
¶12 Under Montana law, an easement appurtenant must have both a dominant and a
servient tenement. Meine, ¶ 22; Davis, ¶ 18; Blazer, ¶ 24. The identities of the tenements
must be ‘ascertainable with reasonable certainty’ from the transaction documents. Davis,
¶ 20 (quoting Blazer ¶¶ 51, 54, 56-57). When the identity of the dominant tenement has
been omitted and cannot be ascertained from the documents of conveyance, an easement
appurtenant has not been “adequately described.” Davis, ¶ 20.
¶13 In the present case, the single conveyance document is the Agreement, which contains
no description of a dominant tenement. The Agreement does not state that it would run with
the land or make mention of the terms “easement appurtenant.” Bos Terra asserts that the
dominant estate was “the land obviously irrigated by the ditch” and that the Department of
Natural Resources and Conservation (DNRC) water change applications provided notice of
the dominant tenement. The record shows, however, that the land irrigated by the ditch has
changed over time, making it difficult to determine what property is the benefitted parcel.
Moreover, such an assertion satisfies neither the requirement that the dominant tenement be
adequately described, nor that the reference and description be contained within the
conveyance documents. While we have held that a dominant tenement can be described by
reference in an instrument of conveyance to a plat or certificate of survey in which the
easement is adequately described, this must arise expressly, not by implication. Blazer, ¶ 41.
Furthermore, a recorded instrument cannot impart constructive notice that an easement
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burdens a particular parcel of land for the benefit of another if the intended dominant and
servient estates are only ascertainable by resort to parol evidence. Blazer, ¶ 74. “Requiring
subsequent purchasers to investigate not only their chain of title but also the ‘context’ within
which each conveyance in the chain was executed would virtually destroy the utility of the
real estate recording system.” Broadwater Development, LLC v. Nelson, 2009 MT 317, ¶ 21,
352 Mont. 401, 219 P.3d 492. Thus, extrinsic evidence may not be used to supply a property
description of the dominant tenement when it has been omitted or cannot be ascertained from
the transaction documents. Broadwater Development, ¶ 21.
¶14 We also find it significant that if the easement was appurtenant, then there would have
been no reason to include the assignment provision in the Agreement. The provision for
assignment contemplates severing the right to use the easement from the land and
transferring that right to a third party. An appurtenant easement is attached to a specific tract
of land and cannot be extended for a purpose unconnected with the dominant tenement.
Leffingwell Ranch, Inc. v. Cieri, 276 Mont. 421, 432, 916 P.2d 751, 758 (1996).
¶15 No description of the dominant estate appears in the Agreement, in any document
referenced by the Agreement, or in any document appearing in the chain of title.
Accordingly, the Agreement does not create an easement appurtenant and the District Court
was correct in concluding that the easement was in gross.
¶16 2. Whether the District Court erred in holding that Bos Terra is a third party
assignee and not a successor to the easement.
¶17 The construction of a writing granting an interest in real property, such as an
easement, is governed by the rules of contract interpretation. Broadwater Development, ¶
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19; § 70-1-513, MCA. When a contract is reduced to writing, the intention of the parties is
to be ascertained from the writing alone, if possible. Section 28-3-303, MCA. Courts are to
consider the contract as a whole in order to give effect to every part if reasonably practicable,
each clause helping to interpret the other. Section 28-3-202, MCA. Montana law enforces
provisions for non-assignment in a contract. Rother-Gallagher v. Mont. Power Co., 164
Mont. 360, 364, 522 P.2d 1226 (1974).
¶18 In this instance, the District Court concluded that the Agreement contained a valid
assignment clause based upon its analysis of Sections One, Two, Six, and Thirteen of the
Agreement, Opinion, ¶ 3. The portions of those sections relevant to the specific issue of
assignability provide as follows:
Sections One: Right of Way
… Grantor and Lessee hereby grants, sells, and conveys to Grantees and their
heirs and successors…
Section Two: Term
The rights granted herein shall be possessed and enjoyed by Grantees, their
heirs and successors…
Section Six: Assignments
The rights granted herein shall not be assignable together or separately and in
whole or in part without written permission signed by Grantor. Such
permission will not be unreasonably withheld.
Section Thirteen: Effect of Agreement
This agreement shall be binding upon the heirs, legal representatives,
successors, and assigns of the parties hereto.
(Emphasis supplied.)
¶19 The district court reasoned that the operative sections, Section One (which defines the
right of way) and Section Two (which defines from whom, for how long, and under what
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conditions the right of way exists), apply only to the “Grantees, their heirs and successors.”
This construction is reasonable and consistent with the plain language of the sections, which
make no reference to “assigns.” Section Six of the Agreement (which provides that an
assignment is not effective without written permission from the grantor) is the only section,
apart from Section Thirteen, which refers to assignment and assignees. Section Six can be
reasonably construed with Section Thirteen (which provides upon whom the Agreement is
binding) to allow for transfers of the easement only to heirs and successors, or to approved
assigns. The District Court found this interpretation gives logical effect to all provisions of
the agreement. We agree; as long as the ranches were in the hands of the three families
(including their heirs and successors), the parties agreed that the rights would transfer
without written permission. Should any third parties become involved, however, then there
must be written consent from the grantor.
¶20 Finally, Bos Terra is neither an “heir” nor “successor,” as those terms are defined in
Montana probate law concerning succession of real property through descent and
distribution. An “heir” is defined as “persons, including the surviving spouse and the state,
who are entitled under the statutes of intestate succession to the property of a decedent.”
Section 72-1-103(22), MCA. “Successors” include “persons, other than creditors, who are
entitled to property under the decedent’s will[.]” Section 72-1-103(48), MCA. Use of
“heirs” and “successors” in the Agreement indicates an intent to benefit the families of the
grantor and grantees only, and not third party assignees. Bos Terra is neither an heir nor a
successor to the Agreement under Montana law.
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¶21 Based on the foregoing, the District Court correctly determined that the Agreement
contained a valid provision requiring grantor’s consent to assignment and that the Beers had
the right to reasonably withhold their consent to an assignment to Bos Terra.
¶22 3. Whether the District Court erred when it denied summary judgment as to Bos
Terra’s claim of a prescriptive easement in Enterprise Ditch because the Court found use to
be permissive?
¶23 A party seeking to establish a prescriptive easement has the burden of proving its use
was open, notorious, exclusive, adverse, and continuous for a full, consecutive, five-year
statutory period prior to filing the lawsuit. Swandal Ranch Co. v. Hunt, 276 Mont. 229, 233,
915 P.2d 840 (1996). See also § 70-19-401, MCA. Failure to prove any element for the full
prescriptive period is fatal to the entire claim. Grimsley v. Estate of Spencer, 206 Mont. 184,
196, 670 P.2d 85 (1983).
¶24 Here, Bos Terra argues that the use of Enterprise Ditch has been adverse, in spite of
the Agreement, since approximately 1978. Essentially, Bos Terra seeks to separate use of
the pipeline from use of Enterprise Ditch and maintains that because the Agreement refers
only to a pipeline that any use of Enterprise Ditch was adverse. Bos Terra claims that there
is no evidence that the Grantors (now deceased) provided permission to use the ditch, as
compared to the pipeline, that crosses their property. We find this argument unconvincing.
The purpose of the Agreement was to transport water from the Judith River for the use and
benefit of two neighbors, the Kolars and Stevensons. It would make no sense to interpret the
contract as providing only for a pipeline which was incapable of delivering the water to the
intended beneficiaries. Permission from the Grantor to use Enterprise Ditch is implicit in the
purpose of the Agreement to move water from the river to the Kolars’ and Stevensons’
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properties. The only reasonable and logical construction of the Agreement is that the
grantees’ right to use Enterprise Ditch to move water transported from the pipeline was
based upon implied, if not express, permission from the grantor. This is consistent with
neighborly accommodation and the desire to render assistance to neighbors and friends
without requiring a licensing agreement or contract for all aspects of the accommodation.
Lance v. Richardson, 2011 MT 195, ¶ 59, 361 Mont. 344, 260 P.3d 103.
¶25 The construction and interpretation of a contract is a question of law for the court to
decide. Ophus v. Fritz, 2000 MT 251, ¶ 19, 11 P.3d 1192 (internal citations omitted). We
review a district court’s conclusions of law for correctness. Ophus, ¶ 19. The District
Court’s ruling that the use of the ditch was permissive is consistent with a logical
interpretation of the parties’ intent and purpose of their Agreement. The court, therefore, did
not err in denying summary judgment to Bos Terra on its claim of a prescriptive easement.
Bos Terra’s adverse use, which began when consent was denied by Beers, was not
continuous for the required five-year statutory period prior to the filing of the proceedings.
Section 70-19-404, MCA.
CONCLUSION
¶26 The easement created by the Agreement failed to identify a dominant estate in any
transaction document, and was in gross. The Agreement contained a valid assignment
provision requiring consent of the grantor, and Bos Terra had no rights under the Agreement
absent a valid consent to assignment from the Beers. Finally, Bos Terra did not establish a
prescriptive easement because use of the Enterprise Ditch was permissive and not adverse.
¶27 Affirmed.
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/S/ LAURIE McKINNON
We Concur:
/S/ MIKE McGRATH
/S/ MICHAEL E WHEAT
/S/ BETH BAKER
/S/ JAMES JEREMIAH SHEA
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