Desert Partners IV, L.P. v. Benson

Filed 1/15/19 by Clerk of Supreme Court
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2019 ND 19Desert Partners IV, L.P., and Family Tree Corporation, Plaintiffs and Appellees
v.
Thomas H. Benson, Leatrice Benson, Brian Benson;
and all other persons unknown claiming any
estate or interest in, or lien or encumbrance upon,
the property described in the Complaint, Defendants
and
Ann P. Kemske, Jon Kemske, Defendants and Appellees
and
John Benson, Defendant and Appellant
No. 20180112
Appeal from the District Court of McKenzie County, Northwest Judicial
District, the Honorable Robin A. Schmidt, Judge.
AFFIRMED.
Opinion of the Court by Jensen, Justice.
Nicholas C. Grant, Dickinson, ND, for plaintiffs and appellees Desert Partners
IV, L.P. and Family Tree Corporation.
Paul Brutlag, Morris, MN, for defendants and appellees Ann P. Kemske and
Jon Kemske; submitted on brief.
John Benson, self-represented, Minnetonka, MN, defendant and appellant.
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Desert Partners IV, L.P. v. Benson
No. 20180112
Jensen, Justice.
[¶1] John Benson appeals a district court judgment in a quiet title action
determining Desert Partners IV, L.P. and Family Tree Corporation, Inc. own 32 net
mineral acres in McKenzie County. Benson asserts the district court abused its
discretion in denying his request for a continuance of the trial and erred in its
conclusion that Desert Partners and Family Tree were good-faith purchasers of the
minerals. We affirm.
I
[¶2] In two deeds dated November 16, 1984, and January 1, 1985, John Benson,
Edward Benson, Louise Benson, Geri Benson, and Ann Kemske each received an
undivided one-fifth mineral interest in 160 acres from their grandparents. On May 4,
1985, the Benson grandchildren executed a power of attorney giving Thomas Benson
limited authority to act on their behalf with respect to their mineral interests in
Montana and North Dakota. The power of attorney was recorded on December 2,
2015.
[¶3] In 1990, Kemske conveyed her mineral interest to Thomas Benson, but he did
not record the deed until April 2012. In 2005, Thomas Benson recorded a statement
of claim of mineral interest indicating that he and Leatrice Benson, Edward Benson,
Louise Benson, Geri Benson, and Ann Kemske owned the minerals in and under 160
acres in McKenzie County. Thomas Benson executed the statement of claim as
power of attorney, presumably under the authority of the 1985 power of attorney.
[¶4] On April 15, 2010, Kemske executed a deed conveying the minerals to Family
Tree. Family Tree recorded the deed on May 12, 2010. Family Tree conveyed 24 net
mineral acres to Desert Partners on May 12, 2010, and Desert Partners recorded that
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deed on June 2, 2010. In February 2009, before conveying her mineral interest to
Family Tree, Kemske leased the interest to T.S. Dudley Land Company, Inc.
[¶5] Thomas Benson conveyed his interest from Kemske to John and Brian Benson
in May 2010. John and Brian Benson recorded their deed on June 3, 2010, and re-
recorded their deed on June 4, 2010 to revise the legal description.
[¶6] Desert Partners and Family Tree sued several parties, including John Benson,
to judicially determine the ownership of the mineral interest they acquired from
Kemske. The dispute, in summary, arises from Kemske’s transfer of her interest to
Thomas Benson through a deed executed in 1990, but not recorded until 2012,
Kemske’s transfer of the same interest to Family Tree in April 2010 with the deed
being recorded on May 12, 2010, and Family Tree’s conveyance to Desert Partners
on May 12, 2010 with the deed being recorded on June 2, 2010. Subsequently, on
June 3, 2010 and June 4, 2010, John Benson and Brian Benson recorded and re-
recorded the deed from Thomas Benson.
[¶7] Family Tree and Desert Partners moved for summary judgment, arguing
Family Tree was not aware of the unrecorded deed from Kemske to Thomas Benson
and that it purchased the minerals in good faith. The district court granted their
motion. In Desert Partners v. Benson, 2016 ND 37, ¶ 15, 875 N.W.2d 510, this Court
reversed and remanded, concluding there were disputed issues of material fact
involving whether Family Tree and Desert Partners were good-faith purchasers of the
disputed minerals.
[¶8] On remand, the bench trial was initially scheduled for November 1, 2016.
John Benson informed the district court the morning of trial that he could not
participate because he was under the influence of narcotic pain medication. The court
rescheduled trial for February 17, 2017. Before the scheduled trial date, Benson again
alleged he could not participate at trial due to his health. On March 10, 2017, the
court entered a Final Order for Continuance of Trial, which included notification that
“the Court will not continue this matter again for [Benson’s] health concerns.” The
court rescheduled trial for October 3, 2017. At 4:58 p.m. on October 2, 2017, a
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person identifying herself as Benson’s “Personal Care Attendant/Power of
Attorney/Medical Proxy” emailed the court informing it Benson would not be able
to attend the trial due to his health. The court proceeded with the trial on October 3,
2017 without Benson present. At trial, witnesses for Family Tree testified about the
purchase of Kemske’s mineral interest. Following trial, the court concluded that
Family Tree and Desert Partners purchased the minerals in good faith. The court
entered a judgment awarding Desert Partners and Family Tree ownership of the
minerals.
II
[¶9] John Benson argues the district court erred in not granting a continuance to
accommodate what he described as a sudden medical emergency and that the court
denied him a fair and impartial hearing by not affording him an opportunity to testify
and present evidence.
[¶10] This Court has previously noted that “the district court has broad discretion
over the presentation of evidence and conduct of a trial, in addition to whether to
grant a motion for a continuance, and the court’s decision will not be reversed on
appeal absent an abuse of discretion.” Carroll v. Carroll, 2017 ND 73, ¶ 11, 892
N.W.2d 173 (citing Wilson v. Wilson, 2014 ND 199, ¶ 7, 855 N.W.2d 105; Rickert v.
Dakota Sanitation Plus, Inc., 2012 ND 37, ¶ 31, 812 N.W.2d 413). A court abuses
its discretion when it acts in an arbitrary, unreasonable, or unconscionable manner,
it misinterprets or misapplies the law, or its decision is not the product of a rational
mental process leading to a reasoned determination. Tornabeni v. Creech, 2018 ND
204, ¶ 16, 916 N.W.2d 772. Rule 6.1(b), N.D.R.Ct., states that “[m]otions for
continuance shall be promptly filed as soon as the grounds therefor are known and
will be granted only for good cause shown, either by affidavit or otherwise.”
[¶11] The district court did not abuse its discretion in proceeding with the trial on the
third scheduled trial date. A person identifying herself as Benson’s “Personal Care
Attendant/Power of Attorney/Medical Proxy” sent an email to the court at 4:58 p.m.
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on October 2, 2017, the day before trial. The email is not an affidavit, is not a
medical record, was not compiled by Benson’s physician and consists primarily of
hearsay statements. Even if we were to consider the email as a motion for a
continuance, the “motion” was not supported by an affidavit and the email was not
otherwise sufficient to establish good cause for a continuance under N.D.R.Ct. 6.1(b).
We also note that this would have been the third continuance of the trial at Benson’s
request because of his health. Following the prior continuance the court expressly
informed Benson that no further continuances would be granted because of his health.
See Carroll, 2017 ND 73, ¶ 13, 892 N.W.2d 173 (upholding denial of a continuance
in part because district court “found [movant] had been ‘well notified ahead of time’
trial would occur on that date”). Under these circumstances, the district court did not
abuse its discretion in proceeding with trial without Benson present.
III
[¶12] Benson argues the district court erred in ruling Desert Partners and Family
Tree purchased the minerals in good faith. He contends Family Tree failed to make
a proper inquiry into the ownership of the disputed minerals in light of the statement
of mineral claim recorded by Thomas Benson in 2005.
[¶13] In Desert Partners, 2016 ND 37, ¶ 15, 875 N.W.2d 510, this Court stated:
The statement of claim provides constructive notice on the record about
Ann Kemske’s ownership and authority to convey the disputed mineral
interests in 2010, when she executed the mineral deed to Family Tree.
The statement of claim was recorded in 2005 and was constructive
notice to all purchasers subsequent to that recording under N.D.C.C. §
47-19-19. We conclude the statement of claim imposed a duty of
further inquiry on Family Tree to ascertain the state of the ownership
of the disputed mineral interests, and Family Tree is deemed to have
constructive notice of the facts an inquiry would have revealed.
[¶14] This Court has recognized that the determination of whether a party was a
good-faith purchaser without notice of a competing interest is a mixed question of fact
and law. Sundance Oil & Gas, LLC v. Hess Corp., 2017 ND 269, ¶ 12, 903 N.W.2d
712. We have also noted that the facts “necessary to determine whether a party has
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attained the status of a good-faith purchaser without notice constitute findings of fact.
On the other hand, a trial court’s ultimate determination a party acted in good faith
constitutes a conclusion of law.” Swanson v. Swanson, 2011 ND 74, ¶ 9, 796 N.W.2d
614 (citations omitted). “A good-faith purchaser must acquire rights without actual
or constructive notice of another’s rights.” Sundance, at ¶ 14 (quoting Desert
Partners, 2016 ND 37, ¶ 13, 875 N.W.2d 510).
[¶15] We review a district court’s findings of fact under the clearly erroneous
standard of review. Tornabeni, 2018 ND 204, ¶ 22, 916 N.W.2d 772. A finding of
fact is clearly erroneous if it is induced by an erroneous view of the law, is not
supported by any evidence, or if, although there is some evidence to support the
finding, we are left with a definite and firm conviction a mistake has been made. Id.Questions of law are fully reviewable. Workforce Safety and Insurance v. Beaulieu,
2018 ND 213, ¶ 12, 917 N.W.2d 211.
[¶16] At trial, witnesses for Family Tree testified they conducted a search of the title
records to ascertain the state of ownership of the minerals. Maggie Atkinson, a
landman with knowledge of common industry practices regarding examination of
mineral title, testified she examined the title to the disputed minerals in April 2010.
She testified “that based on the records, . . . Ann Kemske had a one-fifth interest.” She
testified she does not rely on a statement of claim to conclude a party owns a mineral
interest. She testified that the parties listed on a statement of claim believe they own
a mineral interest and “are trying to protect that interest . . . so [the minerals] don’t
become dormant and abandoned.” She testified that at the time of her search, there
was nothing appearing in the public records indicating Kemske did not own the
minerals.
[¶17] Keith Foster, Family Tree’s Vice President of Mineral Acquisitions, testified
he dealt with Kemske in 2010 when she sold her minerals to Family Tree. Foster
testified Family Tree subscribes to a leasing activity website, and through that site
Family Tree became aware of Kemske’s leasing activity. He testified about Family
Tree’s standard practice in acquiring mineral rights. He testified a mineral owner
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would first execute a mineral deed to Family Tree, then Family Tree would verify title
before recording the deed and paying the owner for the minerals. He testified Family
Tree recorded Kemske’s deed and paid Kemske after Atkinson reviewed title to verify
Kemske owned the minerals. He testified that before acquiring Kemske’s minerals,
he spoke with other Benson family members, including Thomas Benson, about
purchasing their mineral interests. Foster testified that during his discussions with
Thomas Benson, Benson did not indicate he owned Kemske’s minerals. The district
court found both Atkinson’s and Foster’s testimony was credible.
[¶18] Family Tree’s inquiry into the title records in April 2010 after Kemske
executed the deed indicated Kemske owned the disputed minerals because Kemske’s
deed to Thomas Benson was not recorded until 2012. Foster testified Thomas Benson
made no mention of his ownership of Kemske’s minerals when speaking with Foster.
While the 2005 statement of claim executed by Thomas Benson as power of attorney
may have indicated that he had authority to act on behalf of the other owners, the
extent of his authority was unknown because the power of attorney was not recorded
until 2015. Kemske’s lease of the minerals in 2009 showed she had authority to act
on her own behalf with respect to her minerals. Family Tree ascertained the state of
the ownership by examining title and determined Kemske owned the disputed
minerals.
[¶19] On remand, following the earlier appeal, the district court tried the case to
determine what additional inquiry Family Tree undertook to ascertain the ownership
of the mineral interests in light of the statement of claim recorded in 2005. The court
concluded that on the basis of the testimony and evidence, Family Tree and Desert
Partners acted in good faith in purchasing Kemske’s minerals. After reviewing the
record, we conclude the district court’s findings of fact were not clearly erroneous and
the court did not err as a matter of law in concluding Desert Partners and Family Tree
were good-faith purchasers of Kemske’s mineral interests.
IV
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[¶20] We have considered Benson’s remaining arguments and conclude they are
either unnecessary to our decision or without merit. The district court did not abuse
its discretion in proceeding with trial without Benson being present. The court’s
findings were not clearly erroneous, nor did the court err as a matter of law in
concluding Family Tree and Desert Partners were good-faith purchasers of the
mineral interests from Kemske. The judgment is affirmed.
[¶21] Jon J. Jensen
Lisa Fair McEvers
Daniel J. Crothers
Jerod E. Tufte
Gerald W. VandeWalle, C.J.
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