Schwenn v. Kaye
82 Oil & Gas Rep. 30, 155 Cal. App.3d 949, 202 Cal. Rptr. 374 (1984)
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Rule of Law:
Under the doctrine of after-acquired title, if a grantor purports to convey property in fee simple which they do not own and subsequently acquires title to that property, the title automatically passes to the grantee by operation of law, regardless of the grantor's motive for reacquiring the title or the grantee's prior knowledge of the title defect.
Facts:
- In 1965, Plaintiff Lillian Schwenn acquired real property which generated oil and gas royalties.
- In 1969, Schwenn gifted the oil and gas royalties to her daughter and son-in-law through a recorded grant deed.
- In 1974, Schwenn sold the real property to defendants Richard and Johanna Kaye using a grant deed that purported to convey the property in fee simple, without reserving the previously transferred oil and gas rights.
- The preliminary title report for the 1974 sale noted the existence of the oil and gas lease but did not mention the 1969 conveyance of the royalty rights.
- After the sale, the oil company began sending royalty payments to the Kayes.
- When the oil company was notified of the dispute, it ceased payments pending a court order.
- In anticipation of litigation to resolve the dispute, Schwenn's daughter and son-in-law reconveyed the oil and gas rights back to Schwenn.
Procedural Posture:
- Plaintiff Lillian Schwenn initiated an action to quiet title to oil royalties against defendants Richard and Johanna Kaye in a California superior court (the trial court).
- Following a court trial, the trial court found in favor of the defendants, the Kayes, and quieted title in them.
- Plaintiff Schwenn, the appellant, appealed the judgment to the California Court of Appeal, with the Kayes as appellees.
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Issue:
Does the doctrine of after-acquired title, as codified in Civil Code § 1106, operate to automatically transfer title to a grantee when the grantor later reacquires the property, regardless of the grantor's motive for reacquiring the title or the grantee's constructive notice of the initial title defect?
Opinions:
Majority - Compton, J.
Yes. The doctrine of after-acquired title automatically transfers title to the grantee when a grantor reacquires property they previously purported to convey, and this operation of law is not defeated by the grantor's subjective intent or the grantee's knowledge of the initial defect. The doctrine, codified in Civil Code § 1106 and based on the common law concept of estoppel by deed, protects a grantee's reliance on the title conveyed in the deed. Schwenn's grant deed to the Kayes purported to transfer the property in fee simple, with the operative word being 'grants,' and included no reservations. When she later reacquired the oil and gas rights, title passed to the Kayes by operation of law. Her motive for reacquiring the rights—to gain standing for litigation—is irrelevant, as is the Kayes' constructive notice of the prior conveyance. The court also held that parol evidence of Schwenn's intent was inadmissible to vary the clear and unambiguous terms of the grant deed.
Analysis:
This decision reaffirms the strict and automatic application of the after-acquired title doctrine in property law. It clarifies that the doctrine operates as a matter of law, separate from the grantor's subjective intent, thereby prioritizing the stability of land titles and the grantee's reliance on the public record and the deed's language. The ruling serves as a stark reminder that grantors must be explicit in reserving any rights not intended for conveyance, as the law will not look to extrinsic evidence or equitable arguments to override the clear legal effect of a grant deed followed by a reacquisition of title. This solidifies the principle that even a grantee with constructive knowledge of a title defect is protected by the doctrine.
