Harry E. McHugh, Inc. v. Haley

Bikdzell, J. This is an action by Harry E. McHugh, Incorporated, a corporation, to quiet title to an easement over property belonging to the defendant and to secure a permanent injunction against interference with the enjoyment thereof. The plaintiff had judgment in the district court and the defendant appeals to this court for a trial de novo. Prior to 1927 a corporation known as Bovey-Shute & Jackson, Incorporated, was the owner of lots numbered from one to six, inclusive, lots 9 and 10, and the south fifty feet of lots 7 and S, in block 22, of the original townsite of the city of Devils Lake. In 1918 it secured a franchise permitting the construction and maintenance of a spur track in the alley of this block and extending over the rear or south end of the lots above described, and it entered into a spur track agreement — 364 — with the Great Northern Railway, binding upon heirs, legal representatives and successors, to permit the railway company to use the track and any extension, connection or diverging spur for the purpose of serving business and industries other than the business and industries of the applicant. Under this franchise and agreement the spur track was constructed. In March, 1927, the plaintiff purchased from Bovey-Shute & Jackson, Incorporated, lots 1, 2, 3, 4, 5 and 6, in block 22, together with an easement over the remainder of the lots for the use of the spur track. The conveyance was made by a warranty deed which contained the following provision after the description of the property conveyed: “Also giving and granting to second party the right to the use, for transportation purposes, of the railroad spur track on the rear of Lots Seven, Eight, Nine and Ten of said Block Twenty-two, in accordance with spur track agreement dated August 19th, 1918, between Bovey-Shute Lumber Company and Great Northern Railway Company; provided the track shall not be used by second party for storage purposes; and provided that first party, its successors or assigns, will not cause the same to be removed or discontinued without the consent of second party.” This deed was recorded in the office of the register of deeds of Ramsey County on March 12, 1927, and in the course of a few days it was redelivered to the plaintiff with a certificate there1 on certifying to the fact that it had been recorded. At the time of recording it the register of deeds noted it in the numerical index only as against lots 1, 2, 3, 4, 5 and 6, failing to make any notation as against the remaining lots 7, 8, 9 and 10. On July 17, 1928, the defendant Ilaley purchased from Bovey-Shute & Jackson, Incorporated, and obtained conveyance by warranty deed recorded on the same day, the south or rear fifty feet of lots 7 and 8 and all of lots 9 and 10 in block 22. In purchasing this property the defendant relied on an abstract which failed to show that the lots purchased were affected by the plaintiff’s easement, the abstracter, apparently, having been misled by the failure of the register of deeds to make proper notation in the numerical index. The trial in the district court was concerned with two principal questions: (1) A question as to whether or not the plaintiff’s occupancy and use of the premises purchased by it and its limited use or non-use of the spur track were such as to furnish notice to the defendant of — 365 — tbe existence of tbe easement — mingled witb tbis is tbe question as to wbetber tbe plaintiff is now precluded to assert its easement as against tbe defendant on account- of conduct which, it is claimed, amounts to an apparent abandonment or waiver. (2) Assuming tbe defendant not to be chargeable witb notice of tbe plaintiff’s easement on account of tbe appearance of tbe property and tbe apparent use or disuse of the track and to be chargeable only with such notice as tbe record affords, as between tbe plaintiff and tbe defendant, wbicb one must sustain tbe loss incident to tbe failure of tbe register of deeds to note tbe easement upon tbe numerical index ? Tbis is a question of law depending upon a construction of tbe recording statute. Tbe true significance of tbe facts as disclosed in tbe record can only be determined by examining them in tbe light of tbe principles of law-applicable to tbe situation., The easement in question originated in an express grant contained in tbe deed of Bovey-Shute & Jackson, Incorporated, to tbe plaintiff. Easements so created are not terminated by-mere nonuser. 2 Tiffany, Real Prop. 2d ed. § 377. To use the expression of the Court of Appeals of New York in Welsh v. Taylor, 134 N. Y. 450, 460, 18 L.R.A. 535, 543, 31 N. E. 896, 899: “A person: who acquires title by deed to an easement appurtenant to land has the same right of property therein as be has in tbe land and it is no more-necessary that be should make use of it to maintain bis title than it is that be should actually occupy or cultivate tbe land.” Tbis distinction between tbe loss of easements resting in grant and those resting upon prescription through mere nonuser seems to find recognition in .our statute. Section 5340 of tbe Compiled Laws of 1913 states the manner in wbicb servitudes are extinguished. Eour methods are recognized as follows: “1. By tbe vesting of tbe right to tbe servitude and tbe right to tbe servient tenement in the same person. 2. By the destruction of tbe servient tenement. 3. By tbe performance of an act upon either tenement by tbe owner of tbe servitude or -with bis assent wbicb is incompatible witb its nature or exercise; or, 4. When the servitude ivas required by enjoyment, by disuse thereof by tbe owner of tbe servitude for tbe period prescribed for acquiring title by enjoyment.” (Italics supplied.) In tbe preceding sections there is express recognition of two methods of creating servitudes or easements, as in § 5335 where it is provided — 366 — that the extent of a servitude is determined by tie terms of tie grant or tie nature of tie enjoyment by wiici it was acquired. Wien, tiere-fore, in providing- for tie manner in wiici a servitude may be extinguished by .disuse or nonuser tie legislature limited tie provision to tie case where tie servitude was acquired by enjoyment, tie implication is clear that if it rested in grant disuse alone would not extinguish it. This effect of tie statute is recognized in Jones on Easements, § 864. Of course, this is not to say that nonuser by tie owner of tie easement coupled with adverse user of tie servient tenement for tie prescriptive period, or for tie period of limitation of actions, in a manner inconsistent with tie enjoyment of tie easement, would not defeat title. Such adverse user might have this effect whether tie easement rested in grant or had been acquired by prescription. Nor is it to say that an easement resting in grant may not be effectively abandoned, but nonuser alone does not constitute abandonment. Jones, Easements, § 866; 9 R. C. L. page 810. Washburn on Easements & Servitudes, 4th ed. at page 717, expresses tie rule as follows: “If tie easement has been acquired by deed, no length of time of mere nonuser will operate to impair or defeat the right. Nothing short of a use by tie owner of tie premises over wiici it was granted, wiici is adverse to tie enjoyment of such easement by tie owner thereof, for tie space of time long enough to create a prescriptive right, will destroy tie right granted.” 2 Tiffany on Neal Property, 2d ed. page 1379, thus states tie rule: “Nonuser in itself does not terminate an easement acquired by grant, and, as above stated, it is at most merely one of tie facts from wiici an abandonment may be inferred. Tie fact that tie nonuser continues for tie prescriptive period is immaterial, in tie absence of any adverse acts on tie part of tie owner of tie land.” And in tie same section, at page 1377, it is stated: “There are many cases to tie effect that an easement is extinguished by ‘abandonment’ thereof, by wiici is meant that a nonuser thereof, together with other circumstances, may, as showing an intention to make no further use of it, terminate tie easement. Tie question whether there has been such an abandonment is in each ease a question of fact. And it must be established, it has been said, by ‘evidence clear and unequivocal of acts decisive and conclusive.’ ” (Italics supplied.) — 367 — See also Murphy Chair Co. v. American Radiator Co. 172 Mich. 14, 137 N. W. 791; 19 C. J. 942, and tbe numerous cases cited in note 31. In tbe instant case tbe plaintiff acquired tbe easement by grant in March, 1927, so neither tbe nonuser by tbe plaintiff nor any adverse user of tbe defendant could have continued for tbe period of limitation. At most, then, such nonuser as is shown would merely constitute evidence of abandonment. Tbe plaintiff says that tbe evidence shows complete abandonment of tbe use of tbe spur track by covering it with materials, gravel, implements and debris and tbe transformation of what was a lumber yard and coal yard having use for tbe spur track into a sales agency and a garage which bad no use for it, and that this was effected immediately after tbe plaintiff purchased tbe premises and continued thereafter. But tbe evidence shows that tbe lots acquired by tbe plaintiff were at tbe end of tbe spur track and that in acquiring them it evidently contemplated tbe use of tbe track, for in tbe deed it secured tbe express grant of tbe easement. It further shows that tbe spur track branched off from tbe tracks of'the Great Northern Railway upon its right of way and ran down an alley to a point in tbe rear of tbe lots purchased by tbe defendant; that it there diverged from tbe alley and came upon tbe defendant’s lots and thence upon tbe plaintiff’s lots, leaving sufficient clear space between tbe alley and tbe rear of tbe plaintiff’s lots to permit of tbe construction of coal sheds with compartments or bins opening towards tbe spur track, so that coal could bo unloaded from tbe track into tbe bins. When tbe plaintiff purchased its property from Bovey-Sbute & Jackson, Incorporated, it made alterations thereon to accommodate its business by converting the principal structure into a garage and making some additional changes to facilitate tbe servicing of automobiles. In doing this it constructed a tile wall in such a manner as to cut off tbe end of tbe spur track and erected another structure of a semi-permanent character which further encroached upon this spur and thus prevented access over the spur track to approximately half of tbe sheds or bins which bad been constructed along tbe alley. But there remained some 87 feet of clear track on tbe plaintiff’s property. Tbe rear of tbe property subsequently purchased by tbe defendant bad been fenced and a gate bad been constructed across tbe track. One key to the lock on this gate was held by tbe railway company for convenience of ingress and egress and another was — 368 — beld by tbe plaintiff. Tbis gate bad been battered down about tbe time tbe defendant purchased tbe lots. While tbe alterations were going on in 1927 several carloads of building material were brought in over the spur track and thereafter some of tbe bins in tbe coal sheds were leased and occupied by tenants who bad occasion to bring in oil and building material in tbe same manner and to store it there, but tbe use made of the spur track at tbis time was somewhat limited compared to its former use by Bovey-Shute & Jackson, Incorporated, when tbe entire property was used for a lumber yard and incidental business. At tbe time tbe defendant purchased bis property there was some building material belonging either to tbe plaintiff or to tbe contractor that bad been piled near tbe track on tbe rear of lots 7 and 8; also, some crates, oil barrels and other debris stored there. There was also some gravel, both on tbe plaintiffs property and tbe defendant’s, but it did not cover tbe rails. In September, 1928, tbe defendant constructed a fence on bis premises, and it was understood by him and tbe plaintiff that a gate would be constructed and that tbe plaintiff would have a key. Tbe defendant understood that tbis was merely to permit tbe plaintiff to gain access by automobile under a privilege which be voluntarily granted. When tbis fence was built it was so constructed as to bar tbe passage of railway cars, a fact which was discovered by tbe plaintiff tbe following spring when a protest was at once made. Tbis, in our opinion, falls far short of being clear evidence of unequivocal acts consistent only with abandonment. Tbe trial court found that there was no abandonment and in bis memorandum decision said: “While there was some débris on tbe track part of tbe time, tbe evidence shows it was cleaned up and tbe track cleared. There was a talk between tbe parties in tbe fall of 1928 but plaintiff claims be understood be was to have a gate on tbe track. In tbe spring of 1929, plaintiff leased his coal sheds again to tbe Robertson Lumber Company, who sent a carload of material in on tbe spur towards those sheds. That clearly indicates that tbe plaintiff still intended to use bis right to tbe spur track. Tbe court does not think, therefore, that there was any abandonment of tbe easement by tbe plaintiff.” Tbe evidence when examined, in light of tbe rule that requires clear proof of abandonment, fully substantiates tbe view of tbe trial court. We are clearly of tbe — 369 — opinion that the easement in question could not be lost through mere nonuser and that it was not lost through abandonment. Was the easement, then, lost to the plaintiff by reason of the fact that the defendant purchased the servient tenement without actual knowledge of the easement and in reliance upon an abstract which failed to show that the lots were affected by the plaintiff’s grant, which failure had been induced by the omission of the register of deeds to make proper notation in the numerical index ? An answer to this question favorable to the defendant requires a favorable ruling .upon two propositions: First, it must be held that the plaintiff was a purchaser without notice; and, second, that the consequence of the failure of the register of deeds to make proper notation in the numerical index must, as a matter of law, be visited upon the plaintiff rather than upon the defendant. A subsequent purchaser to be protected under the recording act against a prior unrecorded conveyance, must be one who has purchased “in good faith, and for a valuable consideration, . . .” Comp. Laws 1913, § 5594. Good faith in this connection implies absence'of all information and belief of facts which would render the transaction un-conscientious. Section 7286. And knowledge of facts or circumstances sufficient to put a prudent man upon inquiry as to a particular fact gives constructive notice of the fact itself. Comp. Laws 1913, § 7290; Hunter v. Coe, 12 N. D. 505, 511, 97 N. W. 869, 871. A subsequent purchaser is bound to take notice of the rights that may be evident upon an inspection of the premises, as well as those of which he may learn by an inspection of the records. Smith v. Lockwood, 100 Minn. 221, 110 N. W. 980. Before.the defendant, therefore, as a subsequent purchaser of the servient tenement can claim the benefit of the recording act, it must be held that an inspection of the premises purchased would not have afforded notice of the rights claimed by the plaintiff. Lie necessarily takes subject to the easement if he has notice thereof, either actual or constructive. 2 Tiffany, Real Prop. 2d ed. § 380; 9 R. C. L. 806; 19 C. J. 939. As is said in Murphy Chair Co. v. American Radiator Co. 172 Mich. 14, 137 N. W. 791, supra, at page 28 of 172 Mich., page 796 of the Northwestern Reporter, “The purchaser of an estate, which is charged with an easement which is discoverable upon — 370 — examination, sncb as an open and visible roadway, takes his title subject to such easement, to the extent his grantor is bound thereby.” In Pollard v. Rebman, 162 Cal. 633, 124 Pac. 235, it is held that where a grantor conveys a servient tenement to another who takes without notice of a prior grant of a right of way or of the use of the way and with no knowledge of facts sufficient to put him on inquiry concerning it, the second grantee will take the land free from the burden of the easement; but that (page 634) “If the way is at the time in use, and, although not fenced, is marked on the ground either by the effects of the travel over it or by fences or other bounds, so that it is plainly visible and its use obvious to one who examines the premises, the purchaser is put on inquiry with regard to such easement and cannot claim as a purchaser without notice thereof. . . . He is bound to take notice of that which a reasonably careful inspection of the land would disclose to him.” But in that case it was held that there were not sufficient circumstances to put t-h.3 purchaser on inquiry. In Hatton v. Cale, 152 Iowa, 485, 132 N. W. 1101, it is held that the existence of a ditch across land puts a purchaser on inquiry as to the authority under which it is maintained regardless of record notice. See also Cook v. Chicago, B. & Q. R. Co. 40 Iowa, 451. In Kalinowski v. Jacobowski, 52 Wash. 359, 100 Pac. 852, it is held that the purchaser of a servient estate is charged with notice by the open and visible use of an easement and is not in such circumstances protected by recording acts. In Edwards v. Haeger, 180 Ill. 99, 54 N. E. 176, it is said that a purchaser of a servient tenement takes it subject to such easements as were apparent from an inspection of the premises and that to affect the subsequent purchaser by implication the apparent sign of servitude must have existed on the premises or the marks of the burden must have been open and visible thereon. Many additional authorities to the effect that a subsequent purchaser of a servient estate is charged with notice of the easement when such easement is apparent upon a reasonable inspection of the premises will be found collected in notes at 8 L.R.A. (N.S.) 418 and 41 A.L.R. 1442. The principle applied in them is just as applicable to an easement consisting in the right to use a piece of railroad track constructed with a view to rendering a special service as to any other type of servitude. No easement could give much more apparent evidence of its existence — 371 — than the right to use a continuous railway track over private land. The rails, their weight and their ordinary use in connection with heavy transportation equipment would at once suggest that they had been rightfully placed with a view to serving more than the temporary needs of those upon whose property they are present. In the instant case the condition of the premises at the time they were purchased by the defendant was clearly such as to charge the defendant with notice of the existence of the railway track and with such rights therein as were held by the plaintiff as an abutting property owner upon whose lots such track extended. If some of the rails had been torn up or if the physical appearance of the track were such as to indicate that it was not capable of being used or that it was no longer a continuous track, the purchaser might possibly have been justified in assuming that the plaintiff had no rights therein. But such are not the facts in this case. The facts are that the defendant had long been an owner of property across the alley in the same block and knew the use to which the spur track had been put by Bovey-Shute & Jackson, Incorporated. He knew the plaintiff had purchased lots from 1 to 6 and he knew that the condition of the track had not been changed to the extent that it was no longer capable of being used. He admitted that he made no inquiries. The track had been in fact used periodically as the plaintiff, the contractors and the plaintiff’s tenants had had occasion to use it. We are clearly of the opinion that under these facts the defendant was charged with knowledge independently of the record of what inquiry concerning the track would have disclosed. Hence, the defendant was not a subsequent purchaser in good faith'within § 5594 of the Compiled Laws of 1913. In coming to this conclusion we do not overlook the argument of the appellant with respect to nonuser, nor are we unmindful of the rule that the notice which springs, from the condition of the premises is analogous to the notice that comes from an open, visible and exclusive possession. It is said the user must be open and visible. 9 H. C. L. 806. But in this connection regard must be had to the condition of the premises — as to whether or not it was such as to put the purchaser upon inquiry; also, to the nature of an easement. The nature of the right is such that its actual use will be intermittent and it is a thing not capable of “that continuous possession of which lands are ordinarily sus — 372 — ceptible.” (9 R. C. L. supra.) To use the language of Chief Justice Gibson in Bird v. Smith, 8 Watts, 434, 441, 34 Am. Dec. 483, “It was not said that it (possession) must be continuous and unceasing; nor could the enjoyment be so, in the case of an easement, for it could not be kept so uninterruptedly in use as to leave the notoriety of it without break or interval; and a rule so strict as to require it, would extinguish the title to it at the coming in of the first purchaser. The law, however, is not so unreasonable as not to allow of those ordinary intermissions that are incident to the business to which the easement is subservient. Moreover, it is sufficient, where it exists, that there is something in the aspect of the premises to put a purchaser on his guard.” The condition of the premises in the instant case should have put the purchaser on his guard. Inquiry by him, instead of disclosing either nonuser or abandonment, would have disclosed merely a change in the use of the dominant estate which would probably require less use of the spur than formerly. Since in the circumstances disclosed in this record the defendant is in no event a purchaser in good faith and as such entitled to the protection of the recording act, it is unnecessary to express any opinion upon the very interesting question of law which counsel on both sides have so thoroughly and ably briefed. It is not only unnecessary to decide the question but in view of the conclusions as to the facts and their legal implications to which we are impelled by the record, obviously any expression concerning this question of law would be properly regarded as obiter. With respect to this question we find ourselves somewhat in the position of the Supreme Court of Utah in the recent case of Boyer v. Pahvant Mercantile & Invest. Co. — Utah, —, 287 Pac. 188. In that case the same question of law was not only thoroughly argued by counsel but it was decided and upon further-consideration the opinion was withdrawn and another opinion prepared holding that the mortgage index, though defective, disclosed enough to put an ordinarily prudent examiner on inquiry; whereupon the court mooted but did not decide the question as to who would sustain the loss incident to a deceptive omission from the index. In thus passing over without decision the question submitted, we must not be understood to be casting any doubt whatsoever upon the prior decisions in this jurisdiction where a similar or analogous ques — 373 — tion has been decided. We have reference particularly to Rising & Isaacs v. Dickinson, 18 N. D. 478, 23 L.R.A.(N.S.) 127, 138 Am. St. Rep. 779, 121 N. W. 616, 20 Ann. Cas. 484; Atlas Lumber Co. v. Canadian Mortg. & T. Co. 36 N. D. 39, 161 N. W. 604; Farmers Bank v. Raugust, 42 N. D. 503, 173 N. W. 793; and McGee v. Marshall, 54 N. D. 584, 210 N. W. 521. The question is one of statutory construction involving a construction of the recording act and before one can properly claim the benefit of a given construction he should be able to show that he would be benefited thereby. There is perhaps no better illustration of the narrow limits of the question than is afforded by the principal authority relied upon by the appellant, the Supreme Court of Iowa. Judge Dillon, oh behalf of the court, filed two opinions on consecutive days arising under different recording acts. In the case of Barney v. McCarty, 15 Iowa, 510, 83 Am. Dec. 427, relied upon by the appellant, it was held under the recording act of Iowa of 1843 that the total omission of the recorder to index a mortgage deprived the record thereof of the power of imparting constructive notice of its existence and contents and that a subsequent purchaser would be protected as against the mortgage so defectively recorded. But on the following day Judge Dillon filed an opinion in Barney v. Little, 15 Iowa, 527, arising under a recording act, cited as § 1213 of the Code of 1851, which required the recorder to index mortgages in such a manner as to show the description of the lands conveyed, holding that a subsequent purchaser was not protected as against a mortgage not so indexed as to give the description of the property affected. It follows from what has been said that the judgment appealed from must be affirmed. It is so ordered. ChbistiaNsoN, Ch. J., and Buree, Nuessle and Burr, JJ., concur.