Daily Development for Tuesday, March 26, 2002

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

BANKRUPTCY; AVOIDANCE; "STRONG ARM" POWER; MISTAKE IN DEED: Expert witness testimony would be required for the Bankruptcy Court to determine whether a scrivener's error (mis-drawn legal description) in the deed by which the debtor acquired title was sufficiently grave to destroy the good recordation of a subsequent lien against all the property of the debtor, such that the lien could be avoided in bankruptcy on the basis of the strong-arm power of a hypothetical bona fide purchaser under Bankruptcy Code '544(a)(3).

Rice v. La Sher Oil Company (In re Akel), 269 B.R. 800 (Bankr. E.D.Ark. 2001).

The legal description in the vesting instrument had a facial ambiguity: it recited that twenty (20) acres were conveyed, consisting of half of a quarter section when, as we know, twenty acres is really half of a quarter of a quarter section -- 640 / 4 / 4 / 2 = 20. Indeed, the description left out one of the "....of the NE 1/4..." The court denied a motion for summary judgment seeking to uphold the bona fide recordation of the subsequent lien, for the lack of expert testimony showing that "...an individual with knowledge of the platting system would know by reading the description the precise location of the property, even with the error" (p. 802). For if the vesting instrument did not impart good record notice of the debtor's title, the subsequent lienor could not be duly recorded as against the avoiding powers of the bankruptcy trustee standing in the shows of a bona fide purchaser of real property.

Reporter's Comment: It is hard to imagine that the deed was not good for Recording Act purposes. The opinion excerpts only a couple of lines from the legal description, whereas the entire instrument would be read together to determine the intent of the parties and the notice effect of its recordation. The error of over-inclusion on which the Bankruptcy Court focused may have been immaterial so long as some complete description of the property appeared somewhere in the grant, by application of the doctrine of falsa demonstratio non nocet, cum de corpore constat (see Robert C. Natelson, Modern Law of Deeds of Real Property, '8.11, 184 (Little, Brown 1992) (obvious error does not invalidate if an accurate statement can be reconstructed)).

The case would take on particular interest to conveyancing lawyers if the debtor's grantor had owned the entire half-quarter section (80 acres) at the time the conveyance purported to restrict the grant by enumeration to 20 acres. There are two traditional rules on whether the enumeration of a quantity of land can control the rest of the description: see, e.g., 3 Robert T. Devlin, The Law of Deeds, '1044, 2027-2028 (3rd ed. 1911) (ordinarily an enumeration of quantity does not control the description of a greater area) and Id., '1045, 2029 (in some cases, the intent for the description to be governed by the enumerated quantity can be ascertained and therefore the enumeration will control). But ambiguity of this class does should not defeat the notice effect of recordation as to a lesser estate conveyed.

The Reporter for this case is Jim Stillman of the California Bar.

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