Opinion
No. 129.
Argued September 8, 1968. —
Decided October 1, 1968.
APPEAL from a judgment of the circuit court for Rock county: ARTHUR L. LUEBKE, Circuit Judge. Affirmed.
For the appellants there were briefs by Geffs, Geffs, Block Geffs of Janesville, and oral argument by Jacob Geffs.
For the respondents there was a brief by Wickhem, Consigny Sedor of Janesville, and oral argument by Robert H. Consigny.
This is an appeal from a judgment of the circuit court for Rock county which dismissed the plaintiffs' action on a cognovit note given by the defendants to the plaintiffs in the amount of $10,000 as earnest money on the proposed sale of real estate. The plaintiffs-sellers brought their action alleging that the defendants-purchasers had forfeited the earnest money because of their unjustified refusal to complete the transaction. The defense of the purchasers is that the title to the property in question was unmerchantable.
The facts out of which this litigation arises are these. Prior to March 29, 1965, Oscar W. Baldwin and Ralph Patterman were the owners of a certain farm located in Rock county in the vicinity of the Sugar River. Duane B. Anderson and Thomas M. Jones were engaged in the real estate business in Illinois. The Baldwin-Patterman farm was listed with them for sale. Anderson and Jones decided to buy the farm themselves. They prepared an offer to purchase, which was accepted by Baldwin and Patterman about March 29, 1965. The description of the property in the offer to purchase provided:
". . . the following described real estate in the County of Rock, State of Wisconsin, consisting of 413 acres more or less 80 acres lying in the West 1/2 of the S.W. 1/4, of Sec. 22 T 1 N. R. 10 E. and 80 acres more or less lying in the West 1/2 of the N.W. 1/4 of Sec. 27 T. 1 N. R. 10 E. and 253 acres more or less lying the part North of Sugar River in the South 1/2 of Sec. 27 T. 1 N. R. 10 E. More commonly known as the Baldwin and Patterman Farm. Permission granted to attach corrected legal description."
The agreement provided for a purchase price of $117,500, of which $10,000 (in the form of a cognovit note) was payable as earnest money at the time of the signing of the offer to purchase, and $7,000 was to be paid on the date of closing, which was set on December 15, 1965. The balance was to be paid in installments over a period of time.
The agreement provided that the sellers were to furnish a complete abstract of title showing merchantable title to the premises or a merchantable title guaranty policy. Subsequently, the sellers delivered to the purchasers' attorney, David A. North, abstracts of title for the property which was the subject of the transaction.
Among other objections, Attorney North objected to the description of that part of the property which was described in the abstract as Lot 2 and Lot 3. He stated that he could not determine the present boundary lines of the lots from that description.
During the month of February, 1966, there was an exchange of letters between the attorney for the purchasers and a representative of a title company, which endeavored to furnish a binder policy that would satisfy the purchasers' objection. Again, the objection of the purchasers was the use of the terms, "Lot 2" and "Lot 3," which it was felt was vague and left the location of the boundaries uncertain. In a letter of February 14, 1966, Attorney North asked for a map or plan which would show the boundaries of the lots to be conveyed, so that the purchasers would know exactly what area was covered by the insuring agreements of the title policy. Such map or sketch was never furnished.
Despite the objections raised, the sellers' attorney, approximately a week before March 1, 1966, the deadline for transfer of possession, submitted a copy of the proposed land contract. The description of the property therein was not in the terms of the offer to purchase but rather reflected the descriptions found in the abstracts. The real estate was described in the land contract as:
"The SE 1/4 of the SE 1/4 of Section 27; Lot 2 and the West 36 acres of the NW 1/4 of the NW 1/4 of Section 27; The East 60 acres of the North Half of the SE 1/4 of Section 27; The NE 1/4 of the SW 1/4; the West Half of the NW 1/4 of the SE 1/4; The East Half of the NW 1/4 of the SW 1/4; The South half of the West Half of the NW 1/4; Also Lot 3, all in Section 27, containing 153 acres of land more or less; The West Half of the SW 1/4 of Section 22; Also the East 8 rods in width of the NW 1/4 of the NW 1/4 of Section 27, containing 4 acres of land, more or less. Containing in all 413 acres of land, more or less, according to Government Survey, excepting, however, land conveyed to the Town of Avon, and Rock County, Wisconsin, all of said lands being situated in Township 1 North, of Range 10 East, in the Town of Avon, Rock County, Wis."
In addition to stating the terms of payment and various other incidentals which customarily appear in a land contract, there also appeared the declaration that, "The Purchasers hereby state that they are satisfied with the title as shown by the abstract-title commitment submitted to them for examination."
At the closing on March 1, 1966, the objection to the use of the term, "Lot 2," was renewed by the purchasers. During the course of their conference that day, the parties inspected the records at the register of deeds' office and examined the government survey field notes, the journal entries, and a 1962 geological survey of the area. Examination of these documents revealed that, since the time of the original government survey in the 1830's, the Sugar River had changed its position and moved northward from its original course. The original government survey showed that Lot 2 and Lot 3 had as their southern boundary the Sugar River. An examination of survey records showed that 31 acres of the described property was now south of the river. It was agreed that prior to this time the purchasers had assumed that all of the Baldwin-Patterman farm was north of the present site of the river. However, at the register of deeds' office the vendors acknowledged that they had assumed and exercised ownership rights over the described land south of the river.
Various compromises were discussed in an effort to close the deal. Considered was the possibility of a quiet-title action or the abatement of the purchase price to reflect the 31 acres which lay south of the present course of the river. The upshot of this conference was a failure to effect a closing.
Sometime later, Attorney North attempted to reopen negotiations, but in the course of his conversation with the sellers' attorney, he found that the cognovit note which was given in lieu of $10,000 earnest money had already been reduced to judgment. When he discovered that judgment had been taken on the cognovit note on February 10, 1966, prior to the attempted closing, further negotiations came to an abrupt halt.
The purchasers' motion to set aside the cognovit judgment was granted, and this action arises out of the vendors' renewed action to collect on the note.
The defense asserted by the purchasers was the lack of a showing of merchantable title. It is the argument of the purchasers that the description used in the land contract, "Lot 2 . . . according to Government Survey, " described the parcel of property as it appeared in the original government survey of the 1830's. This original survey clearly showed the Sugar River as the southern boundary of both Lot 2 and Lot 3.
The purchasers point out that whether or not the subsequent change in location of the Sugar River affects the property depends on the manner in which the river course changed. They contend that, if the river changed as a result of accretion, the property now lying south of the Sugar River might well have its rightful title not in Baldwin and Patterman but in the hands of the titleholders of the property to the south of the Sugar River in 1833 and their successors in title. The purchasers concede that, if the change was by avulsion, the original government survey continues to describe the boundaries of the property at the present time. They contend, however, that, in the absence of such a showing, there is a doubt raised and, hence, the title to the entire parcel is unmerchantable.
The circuit judge made a finding of fact that the original offer contemplated the purchase of the entire Baldwin-Patterman farm, including that portion, if any, that lay south of the present course of the Sugar River. He concluded as a matter of fact that it was the intention of the parties to buy and sell an entire farm of 413 acres and not just a part of it. He pointed out that, if only the area north of the river were contemplated, the acreage would be some 31 acres short. He agreed with the legal position of the purchasers that, in the absence of a clear disposition of the question of whether the river had changed as a result of avulsion rather than accretion, the title to Lot 2 and Lot 3 was subject to reasonable doubt. He held that, inasmuch as the purchasers had intended to buy the whole farm, the title to the entire farm, as contracted for and as described in the land contract prepared by the vendors, was unmerchantable. The sellers have appealed from the judgment dismissing the complaint.
The sellers argue that the trial court's finding that it was the intention to sell the entire farm including what might lie on the south side of the present river course should be set aside. They point to the offer to purchase, which recites, "the part North of Sugar River." Even though admitting that the acreage was 31 acres less than stated in the offer to purchase, they point out that the 413 acres was "more or less." They also argue that the purchasers had an opportunity to inspect the farm and that, in response to a specific inquiry, one of the sellers pointed out to one of the buyers that the southern boundary of the farm was the Sugar River (this apparently is now acknowledged by the sellers to be an inaccurate statement).
Perhaps a contrary finding could have been made, but this court has frequently stated that the test of a trial court's finding is not whether another finding could have been upheld but whether the finding that was made can be upheld as being not contrary to the great weight and clear preponderance of the evidence. Clark v. Moru (1963), 19 Wis.2d 503, 504, 120 N.W.2d 888; Druml Co. v. Capitol Machinery Sales Service Co. (1965), 29 Wis.2d 95, 98, 138 N.W.2d 144; Ochiltree v. Kaiser (1963), 20 Wis.2d 191, 196, 121 N.W.2d 890. In making its findings, the trial court took into consideration all of the instruments involved in the transaction as well as the conduct of all of the parties. We pointed out in H. R. Truck Leasing Corp. v. Allen (1965), 26 Wis.2d 158, 163, 131 N.W.2d 912, that, "In determining the parties' intent, it is appropriate to consider factors happening before and after the signing of an agreement."
The trial court properly took into account not only the words of the offer to purchase, but also the words of the proposed land contract which reflected the vendors' interpretation of the vendees' offer to purchase. The trial judge reasonably interpreted the land contract to mean that the vendors wished to convey all of the farm. He found:
"That the parties intended to convey all of the premises known as the Baldwin and Patterman Farm, whether north or south of the Sugar River, in accordance with the customary abstract description, wherever the actual boundaries extended as disclosed by the accepted legal description, notwithstanding that the purchasers were under the impression that the southern boundary ended at the Sugar River while the sellers were not sure whether or not and, just where, it might extend beyond."
The trial judge placed emphasis upon the description which the sellers placed in their proposed land contract: "413 acres of land, more or less, according to Government Survey."
The trial court found as a matter of fact that this reference to the original government survey indicated that the sellers intended to convey the whole farm as it was at the time of the original survey. His position is clearly supportable in Wisconsin law. This court has previously stated in Wisconsin Realty Co. v. Lull (1922), 177 Wis. 53, 62, 187 N.W. 978:
"Express reference to the United States government survey makes the plat as recorded in pursuance to the field notes, if not a substantial part of the deed, at least an appropriate source of reference in so ascertaining the real intention." In accord are Jefferis v. East Omaha Land Co. (1890), 134 U.S. 178, 195, 10 Sup. Ct. 518, 33 L.Ed. 872; Cragin v. Powell (1888), 128 U.S. 691, 696, 9 Sup.Ct. 203, 32 L.Ed. 566; Clark, Law of Surveying and Boundaries (3d ed.), p. 440, sec. 440; cf. Sheppard v. Wilmott (1891), 79 Wis. 15, 47 N.W. 1054.
The court also noted that there had been no express reservation by the vendors, although the original description would purport to convey property to the old government survey line including the 31 acres now south of the river.
It is apparent from the conduct of the vendors at the closing conference that they knew their paper title extended south of the river. At the closing conference they acknowledged that they had in fact on various occasions exercised dominion over that area as part of the Baldwin and Patterman farm. It is undisputed, and we concur in the trial judge's conclusion, that the description as it appeared in the land contract purported to convey all of the original Lot 2 and Lot 3.
While, undeniably, there are facts that tend to support the argument of the vendors, nonetheless, the finding of the trial court that the parties intended to sell the entire Baldwin and Patterman farm of 413 acres, more or less, as it was according to the government survey, was not against the great weight and clear preponderance of the evidence. The finding, therefore, must be sustained.
Was the vendor able to show merchantable title to Lots 2 and 3 at the time of closing
This court in Douglas v. Ramon (1931), 205 Wis. 439, 446, 237 N.W. 260, defined merchantable or marketable title:
"What constitutes a marketable or merchantable (the terms are synonymous) title to real estate has been considered by this court in several cases. The general rule applicable is not difficult of statement, but it is often not easy to determine whether a particular defect falls within the rule. In the opinion of Mr. Justice PINNEY in Harrass v. Edwards, 94 Wis. 459, 464, 69 N.W. 69, it is stated that although a title is good, if there is reasonable doubt as to its validity it is not marketable. A material defect is such as will cause a reasonable doubt and just apprehension in the mind of a reasonably prudent and intelligent person, acting upon competent legal advice, and prompt him to refuse to accept it. If such doubt exists as to make the title subject to probable attack by legal proceedings, or depends upon facts which can only be established by parol evidence if attack is made upon it in such proceedings, the title is not marketable. In Stack v. Hickey, supra, it is stated that a marketable title is one that can be held in peace and quiet; not subject to litigation to determine its validity; not open to judicial doubt."
In the instant case, the alleged title defect arose out of facts which could be determined, if at all, only by resort to further testimony and parol evidence not of record.
What the vendors sought to convey and the purchasers to acquire was the entire farm, including government Lots 2 and 3. One of the defendants' witnesses, Richard H. Batterman, a surveyor, stated a "Government lot usually borders on a river or meandering stream or lake or ocean." A fractional lot is defined by Clark, Law of Surveying and Boundaries (3d ed.), p. 201, sec. 195, as:
". . . those irregular tracts of land designated on the plats of surveys by the land department of the government. They are to be found only in fractional sections or fractional tracts. They are formed, either, (a) . . . (b) By meandered lakes, ponds or rivers which may cover a part of a section; . . ."
It is apparent that the intended boundary "according to Government Survey" was the course of the Sugar River at the time of that survey. The evidence indicated that the Sugar River had moved northward almost a quarter of a mile during the one hundred thirty years since the government survey. There was testimony that this change could have occurred either by accretion or by avulsion.
Accretion is defined as the increase in land caused by the gradual deposit by water of material on the shores, which deposit replaces the water at this location with dry land. 3 American Law of Property, p. 855, sec. 15.26; 5A Thompson, Real Property, p. 599, sec. 2560. Professor Jacob H. Beuscher, an authority on real estate titles and water law, called as a defense witness, stated that the term, "accretion," refers to a gradual and natural accumulation of materials on the shore, so as to build up new land so that it replaces the water that was at this location before the material was built up. If the lot is bounded by a river which gradually shifts its course by the process of accretion, the person whose land is bound by the river will gain or lose land depending upon the direction in which the river moves. See also, 3 American Law of Property, p. 856, sec. 15.27; 5A Thompson, Real Property, p. 599, sec. 2560; Rondesvedt v. Running (1963), 19 Wis.2d 614, 620, 121 N.W.2d 1; Jansky v. Two Rivers (1938), 227 Wis. 228, 236, 278 N.W. 527; Doemel v. Jantz (1923), 180 Wis. 225, 193 N.W. 393, 31 A.L.R. 969.
The effect of accretion is to vest title to the accreted soil in the riparian owner. Thus, if the Sugar River moved north as a result of accretion, the soil deposited upon the property of the riparian owner to the south vested in him title to the accreted soil, and to the extent that the accreted soil was derived from the riparian owner to the north (the Baldwin-Patterman farm), the riparian to the north lost title to the soil. If the change was by accretion, Baldwin and Patterman no longer had title to the point of the original government survey — the course of the river as it existed in the 1830's — but only to the present course of the river. The testimony indicated that the change of the river course also might have resulted from avulsion. Professor Beuscher stated:
"The term avulsion is used to describe a sudden change of course in a stream so that the stream shifts from its old channel to a new channel in a very short time; as for example flood stage."
A change in a water course by avulsion does not result in a change to the title of property so affected. 5A Thompson, Real Property, p. 612, sec. 2561; Attorney General ex rel. Becker v. Bay Boom Wild Rice Fur Co. (1920), 172 Wis. 363, 178 N.W. 569. Professor Beuscher summarized the effect upon a riparian title when a water course changed suddenly by avulsion as contrasted to the effect of a gradual change by accretion. He stated:
". . . in the case of avulsion the boundaries do not change. The boundary, if it was the thread of the original channel, continues to be there in the original channel at the thread. In the case of accretion the boundary of the land shifts as the material is built up. That is to say, the man who owns the shore against which the new material is deposited owns the material that is deposited, so that he can have continued access to the water."
Professor Beuscher was asked, in respect to fractional Lot 2: ". . . can an opinion of merchantability be stated, without knowing whether the change in the river was due to avulsion or accretion?" The witness stated that:
". . . until one knew whether the change was sudden; that is to say, was by avulsion or was by accretion, he could not determine who had title to that part of Lot 2 between the river as it flowed when the survey was originally made and the river in its present course."
He further stated that the marketability of all of Lot 2 could not be determined unless he knew whether the stream had been changed by avulsion or accretion. Professor Beuscher went on to state what is known as the doctrine of doubtful title. He said:
". . . the doctrine of doubtful title is that a buyer of land is entitled to a title that won't get him involved in litigation; and that if a title is such that it might reasonably involve litigation, then he is not required to accept it."
As stated in Douglass v. Ransom, supra, p. 446:
"If such doubt exists as to make the title subject to probable attack by legal proceedings, or depends upon facts which can only be established by parol evidence if attack is made upon it in such proceedings, the title is not marketable."
In the instant case, whether the purchasers had merchantable title to Lots 2 and 3 as described by the government survey depended upon facts unknown at the time of closing that could be proved only by parol. Whether the location of the river changed as the result of avulsion as contrasted to accretion is admittedly in doubt. There was reasonable doubt, therefore, that the title was merchantable; and, accordingly, the purchasers were justified in refusing to close the transaction upon the terms contended for by the vendors.
While opinion evidence was offered on the question of merchantability, we base our conclusion not upon the opinions offered, which were pro and con, but rather upon the law as applied to the facts found by the trial judge. We conclude as a matter of law that the title was not merchantable.
The title insurance policy specifically excluded any guaranty of the boundaries, and in the instant case it was the location of the boundaries that constituted the nexus of the dispute. In view of all the circumstances, it was patently unreasonable for the vendors to expect the purchasers to accept the declaration of the land contract acknowledging that they are "satisfied with the title." The title binder was not in this respect sufficient to fulfill the conditions of the offer to purchase.
As a final argument, primarily posed in the reply brief of the appellants, it is contended that merchantable title is assured by secs. 893.05 and 893.06, Stats. A review of those statutes and the cases decided thereunder is indicative of the fact that these statutes are not in point. They have reference to actions to recover real property or the possession of real property. However, even if those statutes could be invoked to clarify the doubts as to merchantability, they are not applicable in this action. The title of the vendors may indeed be perfect. It may be possible that the shift in the course of the river was the result of avulsion and not of accretion. In appropriate proceedings various presumptions may be invoked in aid of the plaintiffs' title. However, issues of that nature are not before the court at this time. The question is not what the plaintiffs may be able to prove as the result of a quiet-title action, but what the state of the record shows the condition of that title to be in view of the records presently available and the facts as now known. Anyone inspecting the record as it now stands must be assailed with reasonable doubts. Under the facts appearing herein, the title is not merchantable.
By the Court. — Judgment affirmed.