Daily Development for Friday, December 14, 2001

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

DEEDS; CONDITIONS: Quitclaim deed granting land to highway district, but providing the land would revert to grantors upon the dissolution of the highway district or cessation of use by the district, and stating that the "rights and obligations hereunder shall extend to the heirs, representatives, successors and/or assigns of the respective parties, except as herein limited," allowed transfers of rights not only by grantors to their successors and/or assigns, but also by the highway district to its successors and assigns. Consequently, when the successor used the property for highway purposes, the condition remained unbreached.

Daugharty v. Post Falls Highway District, 9 P.3d 534 (Idaho 2000).

The Robisons conveyed 1.22 acres of property to Kootenai Highway District No. 4 ("District No. 4"). The deed specified that, upon "the dissolution of said highway district or upon the cessation of the district in the use of said strip of land, it shall revert to the grantors." The Robisons transferred their interest in the remainder to the Daughartys and the Ratliffs ("Plaintiffs"). Subsequently, elections were held as to whether the District No. 4 and the Pleasant View Highway District should be consolidated, which the voters approved. The new district, Post Falls Highway District ("Post Falls"), was divided into four districts three years later by another election. The Daughartys and the Ratliffs thereafter filed suit for a declaration that District No. 4 had, in effect, a "life estate," and that when District No. 4 was consolidated and then re-designated, the estate ended, thus triggering a reversion. Accordingly, by this argument, Post Falls no longer had an interest in the property.

Upon cross motions for summary judgment, the trial court granted Post Falls's motion and denied the Plaintiffs' motion. Plaintiffs appealed.

The Supreme Court of Idaho affirmed the decision of the trial court, holding that even though District No. 4 underwent many modifications in name and size, the District No. 4 was never dissolved pursuant to the then applicable Idaho Code. The Court noted that, at all relevant times, the geographic area comprising District No. 4 was never reduced in size. Because District No. 4 was never dissolved and could not have triggered a reversion as required by the terms of the conveyance deed.

The Plaintiff's argued that in any event the District was no longer using the property, but a different district was doing so. The court concluded that the phrase providing that "rights . . . hereunder shall extend to . . . assigns" meant that the District had the power to transfer its use rights to another District, and the modifying phrase on the transfer right "except as herein limited" did not invoke the earlier language condition rights on continued use by the original District. It concluded that the grantors' intent was not to require highway use by the District but rather highway use by the District or any transferee, so long as the District wasn't actually dissolved.

A dissenter noted that in fact the District was effectively dissolved, as the trial court had held, and that a different district was using the land. The specific language of the grant provided for a reversion in the original District did not use the land. Other language required that the land also be used for highway purposes. The grantor clearly had two separate conditions in mind.

Comment 1: The Editor is constrained to agree with the dissenter on the literal language of the grant. Further, the Editor agrees with the dissent and the trial court that, in this case, where the functions of the original District have wholly displaced the original District, that original District is de facto dissolved sufficient to trigger the condition in the deed, even though the statutory procedures for formal dissolution have not been satisfied. But the Editor wonders whether any of that should matter.

The fundamental purpose of the deed was to facilitate public highway purposes. If the state has reorganized the method by which it delivers highway services, but the highway is still in place and maintained by the public, it would appear that the overall purpose of the deed was still being met. In context, it would not seem wise to read the grantor's intent right out of the deed by being overly literal. Surely the grantor understood the structural vagaries of public institutions.

Comment 2: On the other hand, the Editor might reach a different conclusion if the new owner of the property was not substantially the same political entity. It appears that the voter base for the new District is considerably larger. Will this water down local control of highway decisions? Is the old District area now going to be taxed for benefits serving the other district? If the grantor's intent possibly was to prevent just what happened - an alteration in the political control that the grantor thought was important - then perhaps the condition should be invoked. The Editor doubts that this was the case here, but the court didn't even appear to think that the question was relevant. To the Editor, it should have been dispositive.

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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