Daily Development for Friday, December 1, 2000

By: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

VENDOR/PURCHASER; "IN GROSS" SALE: A sale in gross is created when words of estimation in a deed are combined with a negotiated lump sum sale price and an absence of any reference to a price per acre. When land is sold in gross, a variation in acreage from the number that the parties contemplated is not grounds for rescission or other relief.

Cedar Lane Ranch v. Lundberg, 991 P.2d 440 (Mont. 1999).

The Cedar Lane Ranch brought an action to quiet title to a portion of a quarter/quarter section laying west of a road after a highway survey revealed that the parcel contained approximately 13 acres and not 7 acres as originally thought. The original deed described the parcel as "a portion of the quarter/quarter section of approximately 7 acres off of the west side, all lying on the west side of the highway." The grantor of this parcel later conveyed adjacent land to the predecessors of the competing claimants in this case. That grant had described the parcel as a quarter/quarter section consisting of about 40 acres "except approximately seven acres" lying west of the road.

Since 1950 forward, the warranty deeds transferring the parcel omitted the legal description of the subject property. The District Court quieted title to the Ranch because, in its view the parcel that had been transferred originally was intended to be the entire property west of the roadway, even though it consisted of 13 acres and not seven acres. The parties to the subsequent transfers, when the property was not described at all, apparently intended to include the total amount of the property, since it had been fenced into the rest of the Ranch. Nevertheless, adverse possession probably was not available because the competing claimant had paid taxes on the property, and tax payments matter in adverse possession law in Montana (the majority never reached the issue of adverse possession).

The Supreme Court affirmed the summary judgment entered by the trial court quieting title n the Ranch. The Supreme Court held that the words "about and approximately" used in the 1902 and 1916 deeds mean the same as "more or less", and therefore concluded that the parties to the older deeds intended to convey a area bounded by the highway and section lines, rather than a precise number of acres. In other words, the transfer was made "in gross." When property is transferred in gross, the actual acreage conveyed is immaterial.

Although immaterial to the issue at hand, the court commented that in a sale in gross, the parties assume the risk of acreage variance at that time. The buyer takes the risk of any deficiency from the estimated amount and the seller takes the risk of any surplus. Further, the court pointed out that if its conclusion had been different, the competing claimant to the property would have great difficult pointing out which six of the thirteen acres had not been intended to be included.

A dissenting judge noted that there was no authority supporting the notion that when the parties used the words "approximately" they intended to include the possibility of a discrepancy of almost fifty percent in size. He also noted that there were no actual boundaries used by the grantors other than the road, and that the section lines were not really identified as boundaries of a parcel, but rather as the whole area from which the "approximately seven acres" was to be identified.

Comment 1: The editor has selected this case precisely because a difference of almost 50% indeed is very unusual in cases involving sales "in gross." At some point we must conclude that there was a fundamental mistake made by the parties.

But here, what the court was really doing was resolving a dispute that should have been resolved by adverse possession but could not be because of the lack of tax payments, which likely were not very significant in amount. The case is a good example of why the "payment of taxes" requirement makes little sense in the modern application of adverse possession law.

Comment 2: The editor views it as unfortunate that the majority opinion talked so much about the vendor/vendee issue of risk allocation in conveyances "in gross," suggesting that the fifty percent discrepancy here is "no big deal," and that trial courts in Montana ought to accept a transfer using the word "approximately" as transferring the risk of a shortfall of almost have the estimated amount of area.

Readers are urged to respond, comment, and argue with the daily development or the editor's comments about it.

Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last six years, these Reports have been collated, updated, indexed and bound into an Annual Survey of Developments in Real Estate Law, volumes 1‑6, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Maria Tabor at the ABA. (312) 988 5590 or mtabor@staff.abanet.org

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