Anderson v. Anderson
435 N.W.2d 687 (1989)
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Rule of Law:
To qualify for protection under a recording statute as a good faith purchaser for valuable consideration, a subsequent purchaser must provide consideration that is substantial, not merely nominal. The burden of proving valuable consideration rests on the subsequent purchaser and cannot be satisfied solely by the recital of nominal consideration in the deed.
Facts:
- In 1922, Kari Anderson conveyed 280 acres to her four children, including Julia Anderson and James T. Anderson, as tenants in common, giving each an undivided one-fourth interest.
- On February 7, 1934, Julia Anderson executed a deed conveying her one-fourth interest to her brother, James T. Anderson, but this deed was not recorded at the time.
- The plaintiffs (successors to James T. Anderson) and their predecessors exclusively farmed the entire property, paid all property taxes, and satisfied a mortgage on it continuously from before 1936.
- On October 1, 1951, Julia Anderson executed a second quit-claim deed for the same one-fourth interest to her own children, Ida Mathews and Willie H. Anderson.
- The 1951 deed to Ida and Willie was recorded on October 11, 1951, and recited consideration of '$10.00 & OG & VC' (Other Good and Valuable Consideration).
- The defendants (heirs of Ida and Willie) have never been in possession of the land, nor have they received any profits or rents from it.
- The 1934 deed from Julia to James T. Anderson was eventually recorded on December 14, 1983.
Procedural Posture:
- The plaintiffs filed a quiet title action in a North Dakota trial court against the defendants to determine ownership of the disputed one-fourth interest in the land.
- The trial court found that the plaintiffs had not established adverse possession and that the defendants' predecessors were good faith purchasers for a valuable consideration.
- The trial court entered a judgment quieting title to the one-fourth interest in the defendants, giving their recorded 1951 deed priority over the plaintiffs' unrecorded 1934 deed.
- The plaintiffs, as the losing party, appealed the trial court's judgment to the Supreme Court of North Dakota.
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Issue:
Does the recital of nominal consideration in a subsequently recorded deed satisfy the 'valuable consideration' requirement of a recording statute, thereby giving it priority over a prior, unrecorded deed?
Opinions:
Majority - Meschke, Justice.
No. The recital of nominal consideration in a subsequent deed does not satisfy the 'valuable consideration' requirement of a recording statute. Recording acts are intended to protect those who honestly believe they are acquiring good title and invest a substantial sum in reliance on that belief, not those who pay a mere nominal consideration. The presumption of consideration for a written instrument does not apply to a second grant from a grantor who has already exhausted their rights in a prior conveyance. The party claiming protection as a subsequent good faith purchaser for value has the burden of proving valuable consideration with evidence other than the deed's recital. Here, the defendants relied solely on the deed's mention of '$10.00 & OG & VC,' which is nominal as a matter of law and therefore insufficient to constitute valuable consideration.
Concurring - Vande Walle, Justice
Yes, the plaintiffs should win, but the analysis should focus on the 'good faith' element, not 'valuable consideration.' Ida and Willie could not have been good-faith purchasers in 1951 because the plaintiffs' predecessors were in open and exclusive possession of the land—farming it, paying taxes, and satisfying the mortgage. This open possession put Ida and Willie on inquiry notice, creating a duty to investigate why their relatives were using and profiting from the entire property. Their failure to inquire for over 30 years defeats any claim to being good-faith purchasers, regardless of the consideration paid.
Analysis:
This decision significantly clarifies the 'valuable consideration' element within North Dakota's race-notice recording statute, aligning it with the majority U.S. rule that nominal consideration is insufficient. It establishes a clear precedent that the burden of proof is on the subsequent purchaser to affirmatively demonstrate, with extrinsic evidence, that substantial value was paid. This raises the bar for parties seeking protection under the statute and prevents them from using boilerplate recitals of nominal consideration to defeat a prior, unrecorded conveyance, thereby strengthening the position of the first grantee.
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