Sahlman v. Lane, No. 813-12-02 Wncv (Katz, J., Feb. 23, 2005)

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STATE OF VERMONT                                          SUPERIOR COURT
Washington County, ss.:                            Docket No. 813-12-02 WnCv


SAHLMAN

v.

LANE


                                     ENTRY


        This is an action between Plaintiffs Robert Sahlman, and his son
Joshua Sahlman, and Joshua’s one-time girlfriend, Defendant Jennifer Lane
(now Moyer), to determine ownership of real estate purchased jointly by
Joshua and Jennifer. It is asserted that Father lent them some money to
purchase the property. About the time they first separated, Joshua
quitclaimed his interest to Jennifer, although by an unwitnessed, unrecorded
instrument. They briefly reunited, and then finally separated. After the
final separation, Joshua quitclaimed his interest to Father, who recorded this
second deed.

        We start our analysis of this problem by rejecting a substantial
subject of discussion in the legal memoranda–whether Joshua knew or
understood what he was doing when he executed the first quitclaim deed. It
is irrelevant. The uncommunicated mental reservations of a party to a
contract simply are not relevant. Quenneville v. Buttolph, 2003 VT 82, ¶
15. The fact that Joshua may not have well understood the import of what
he signed and acknowledged is not the issue. There is no meaningful proof,
or even argument, that he lacked the legal competence effectively to
contract, much less that he was induced to execute the deed by fraud. One
hundred fifty years ago, probably a good portion of the persons executing
deeds and mortgages in Vermont=s land records could not read. See, e.g.,
Willard v. Pinard, 65 Vt. 160, 163 (1892) (concluding a husband and wife
“uneducated in knowledge of books and of the art of reading and writing”
nevertheless competent to contract). Today, if there is anyone alive who
fully comprehends the significance of a habendum clause, or a warranty of
title, that person probably enjoys a lonely status. Contracts and deeds
between those legally competent are enforced as written, not reformed by
the relative intelligence of one or the other signatory. “[T]he understanding
of the parties must be deemed to be that which their own instrument
declares.” Haklits v. Oldenburg, 124 Vt. 199, 202 (1964).

        The deed, signed and acknowledged by Joshua, was required to be
witnessed, though it was not. See 27 V.S.A. ' 341(a) (amended, see 2004
Supplement, to eliminate the witness requirement altogether, though not
retroactively to this case, which was filed before November 1, 2004).
Though defective for this reason, the deed nevertheless is “evidence tending
to show an agreement on part of the grantor[] to execute a valid deed.”
Sheldon Slate v. Kurjiaka, 124 Vt. 261, 267 (1964); see also Black River
Assoc., Inc. v. Koehler & Dion, 126 Vt. 394, 399 (1967) (“Equitable title
must be respected by the parties to the sale, and by every subsequent
purchaser who has notice of it.”). Although effective as between the parties
to the instrument, lack of a required witness or acknowledgment may render
it by itself insufficient to constitute notice requiring a subsequent purchaser
to investigate the true ownership. Day v. Adams, 42 Vt. 510, 515 (1869).
But any subsequent purchaser may be put on notice to examine the grantee=s
claim, such as by that grantee=s act of possession of the property. See

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Gilchrist and Chamberlin v. Van Dyke, 63 Vt. 75, 78 (1890). The
phraseology of Asubsequent purchaser@ suggests Ainnocent purchaser for
value.@ There is no reason to believe Joshua=s father enjoyed the latter
status. There is no assertion or evidence that he gave any consideration,
other than the vague statement that Joshua was indebted to his father. Nor
is there evidence that Father believed he was acquiring anything more than
a one-half joint interest with the Jennifer. Father concedes Joshua revealed
he had signed something over to the estranged Jennifer, thereby putting
Father on notice to engage in inquiry prior to receipt of Joshua’s second-in-
time quitclaim. See Hemingway v. Shatner, 152 Vt. 600, 602 (1989)
(subsequent purchaser with notice of prior contract takes subject to first
purchaser=s equity). Of course, Father at all times knew she remained in
possession. Further, the facts in the record show that Father knew it was a
two-unit dwelling, the second of which was rented out, thereby permitting
the fair inference that Jennifer alone was receiving the rent.

       Vermont law has long recognized the concept of inquiry notice. See,
e.g., Mortgage Lenders Network–USA v. Sensenich, 2004 VT 107, & 9;
Meyers v. LaCasse, 2003 VT 86, ¶ 27 (“if a party has ‘sufficient facts
concerning [another's] interest in the property to call upon him to inquire,
he is charged with notice of such facts as diligent inquiry would disclose’”).
“The duty imposed by inquiry notice arises ‘when such information is
known which would prompt a person exercising reasonable care to acquire
knowledge of the fact in question.’” Pomfret Farms Ltd. v. Pomfret
Associates, 174 Vt. 280, 287 (2002) (quoting Tomasi v. Kelley, 100 Vt.
318, 323 (1927)). Here, Father=s memorandum tells us that ASometime
around January or February, 2000, Joshua informed his father, Robert, that
he signed a document authorizing Jennifer >to take care of the property
while he was gone.=@ Pltfs’ Summary Judgment Mem., 3; Pltfs’ Stmt. of
Undisputed Fact, &17. Although Father=s present recitation suggests that
Joshua did not know the nature of the instrument, it does not tell us whether
or not Joshua told his father AI don=t really know what I signed.@ But

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whether Joshua revealed his ignorance, thereby surely putting Father on
notice of an instrument of uncertain contents, or was merely silent, we
conclude that inquiry notice was triggered. If a party,

       had sufficient facts concerning the [adversary=s] interest in the
       property to call upon him to inquire, he is charged with notice
       of such facts as diligent inquiry would disclose.

               No rule can be established to determine what facts are
       sufficient to require further inquiry. It was appropriate to
       inquire of the [adversary] who appeared to be in possession.
       Under the circumstances it was equally important to inquire of
       the seller. And a failure to do so has been regarded as a lack
       of due care.

Black River Assoc., 126 Vt. at 399-400 (citations omitted). Here, had Father
inquired of Joshua, at the least he would have learned that Joshua really had
no idea of what he had signed. That alone triggered the duty to inquire.

        We therefore conclude that Joshua=s unwitnessed and unrecorded
quitclaim to Jennifer was at all times effective, as between the two of them.
It also is effective as to Joshua=s father, who was on inquiry notice to
ascertain the facts of his son=s title or equity purportedly conveyed in the
second deed. For failure to have made such inquiry, Father may neither
benefit from his ignorance of the facts or gain the advantage of first
recordation.

       Summary judgment granted for Defendant and against Plaintiffs.
Counsel for Defendant to draft declaratory judgment appropriate for
recording.


       Dated at Montpelier, Vermont, _______________________, 20__.
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    __________________________
                         Judge




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